The new art and science of marketing, with Known’s Ross Martin and Kern Schireson

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1:30You're sitting on a more than$10 million hole. You have to stop production on a Super Bowl spot that you have to deliver in just days. And you're told, actually, the company's out of business. And everybody that you have that just moved to London, they probably have to come back pretty quick. That's how we started last year. What'd you do? I think we cried for a second. This was a terrifying moment for Known, the marketing agency co-founded by Ross Martin. But the abrupt loss of a major client refocused the team and made them stronger. The fact that we've been able to grow as quickly as we have is ludicrous.

2:14And yet, we still make stupid mistakes. And we still get punched in the gut. and when that happens, how we respond and how our people respond and how we support one another is our culture.

2:34You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. And then you go back to, this is totally going to be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. Working out of a three-bedroom apartment. Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We have it made just how you do it. This is Masters of Scale. I'm Jeff Berman, your host. This week on the show, Ross Martin and Kern Shearson take us inside their award-winning, rapidly scaling agency.

3:18It's called Known, and it is changing the game in marketing by blending truly innovative AI-powered data science with edgy, creative work. In this episode, Ross and Kern reveal how their scrappy, fast-growing agency is able to punch way above its weight, why a focus on culture pays off big, and the advice they have for someone who needs to make a marketing dollar stretch as far as possible.

3:48Welcome to Masters of Scale. Thanks for having us. I have known you guys a long time, Ross, a very long time in your case. I don't know how you two know each other. What's the backstory of how you two know each other? This is actually the question we were most worried about. This is the one. I'm leading with the worst possible question. You said there were no gotchas. And here we are. Here we are. I'll give you the abridged, which is that my grandfather dated Ross's wife's grandmother. They ended up marrying different people. This is literally, we're talking in late 20s, 1920s, 1920s for your younger listeners.

4:26And they stayed friends and their kids grew up together, multi-generation family friends. Kern grew up good friends with the family that Ross eventually married into. And when Kern first moved to New York, Ross's wife thought the two men would become fast friends. She couldn't have been more right. Ross was already a rising star at what was then MTV. And his wife made him hang out with me and befriend me. I was running like a little research company. What? Little research company? But I didn't know anybody in New York. And so Ross's wife generously made Ross take me out to dinner and befriend me.

5:09Kern's tall and very strong. And so for someone who can be a wise-ass like me, you need protection. It was a my bodyguard kind of situation. That's what it was. Yeah, okay. And he just made me feel more safe and secure out here in the corporate world. So I took him everywhere. The first time we worked together, he was then running an entrepreneurial group at Viacom. Kind of a creative agency inside Viacom, effectively. That's right, called MTV Scratch. And they were doing really innovative consulting deals to amplify the impact of the cultural currency of MTV with some of Viacom's largest advertisers.

5:47And it sometimes required research and insights. And I had this research and insights firm. So the first project I ever did with Ross and the way we started working together and really started to identify the symbiotic relationship that we've really developed was I did four focus groups for Sundrop, which is a carbonated soda. It's a Mountain Dew competitor, mostly in the southern U.S. And they did a deal with Scratch and I did four focus groups to identify functional benefits of Sundrop. So you're doing this work, Ross. You're working at Viacom. Kern, you have your own data and research agency deeply partnered with Viacom.

6:27There comes a point, Ross, where you leave Viacom, you launch your own business. And then not very long later, if I remember correctly, you guys come together to form a new company, which is known where you are now. How did that come about? So I think a lot of the magic that I felt like we were creating when we were partnering together with him inside Viacom and the outside continued after he left. And he was running this brand strategy and business innovation firm that was really unlocking huge territories with brands. And then the question came, how do we actually capture the value? How do we really operationalize these insights and opportunities and push them out into the marketing activations and endpoints?

7:16I didn't have a complete solution. We were really doing analytics. We would identify areas of opportunity, but we didn't have a media agency. We didn't have a creative agency. We didn't make stuff. but we understood the potential energy that was being created in the insight and the business strategy. So I think that the real reason why our companies came together was because our clients wanted it to happen. And all we did, as Kern likes to say, when we combined these businesses in 2020 was use private equity to remove the structural impediments. Here's the thing, Jeff. If it wasn't us and our partners who put this together, it would have been some other Drogonis that did it.

8:01We think that the model we have today was inevitable. In 2020, Ross had a creative agency called Blackbird. Kern was running the data-savvy Shearson Associates. Those two, alongside yet another agency called Stun Creative, joined forces to form Known. Over the last 30 years, all of the continents of marketing capabilities have been pulled apart. If you're a marketer today, you may have your media agency over here, your research teams all the way back there, your creative agencies over here. All of the parts are disconnected. And so much fidelity is lost. And when the parts are not connected, it's the client who loses.

8:49So what we did, and you can think about it as we combined these things back together because we believe that the only way to win in the environment that we are in as a marketer today is for those parts to be unified and aligned. And look, Kern and I are different leaders with different styles that happen to be super complimentary. But I think if you look at my career, I think one of the things I'm known best for is building internal culture and building cultures of creativity and innovation. I will tell you that this has been the absolute hardest part of the job at Known. Why? Because we launched a company and then hundreds of people didn't get to be in the same room together ever.

9:31In fact, we all were sent home. A year and a half. And we had to go live in our spare bedroom or in our closet or in our basement and get to know each other through rectangles. And building a culture when you're separated by so much time and space and the limitations of Zoom or whatever is like the hardest thing I've ever had to do. So how'd you do it? I think we started to look for what are the things that we actually have in common and what are the values and characteristics of a successful knowner. What we did was we said, hey, we've got some of the most brilliant people in the world in this company.

10:05What do we have in common? The two things that rose to the top. This is from asking our own teams, but also our observations as leaders. One, they were all holding themselves and still do to a standard that's higher than anybody else could hold them to. And the second thing is when we surveyed our whole company and we said, what's the one word you'd use to describe your colleagues? I thought innovative, brilliant, genius, whatever. Kind. Kind. The people who work at Known are really super kind and they care about one another. They care about doing a great job, but they also care about making sure that the people to their right and left are also very successful.

10:43That's a unique thing. And it's something that uniquely happens in a company of our size and shape in this time that's employee owned. So this is our thing. If we mess it up, that would really suck. You know, Ross talked about the complementarity of how we approach this differently. And one way that we talk about this is Ross building culture and really owning what we would think of as the known belief system. and I really focus on the operating system. We needed to be accountable to our clients' business success. And when we structure deals, we always put a component of the fee at risk or call it an incentive around real bottom line results for those clients.

11:30And those incentives are essentially what fuel our bonus pool at known. So the client's success is the company's success, is the individual success across every business unit. And it creates a system where nobody gets to point the finger at anybody else. We either won or we lost for our clients. They either got the ROI, grew their brand, grew their business, hit their targets, or they didn't. And if they don't, we don't. And what that did was create a litmus test right away for the people who kind of got it and wanted to do marketing differently. And the people who said, wait a second, I like to stay in this lane right here.

12:16I am an expert at X and that's all I want to do. Those aren't the right people for us. We are one team. We never stopped learning. And that's become more important than ever before. How do you institutionalize that? It's hard. So one thing we were just working on before we got over here, you've obviously heard about Skeptic, which is really the core technology that we've built over the last very many years, and we've invested a lot. It's called Skeptic because it's never satisfied with its own answers. In a nutshell, what is Skeptic? Skeptic is Known's proprietary operating system for modern marketing.

12:49It includes tools that cover all aspects of the marketing supply chain, from audience insights to the creation of assets and the delivery of those assets at scale across platforms in an optimized way. Known is five and a half years old. The fact that we've been able to grow as quickly as we have is ludicrous. And yet, we still make stupid mistakes. And we still get punched in the gut. And when that happens, how we respond and how our people respond and how we support one another is our culture. And we've taken some big hits. Is there an example you can share? How about last year when one of our biggest clients was hours from bankruptcy, went into administration in London and left us holding the bill?

13:32you're sitting on a more than$10 million hole. You have to stop production on a Super Bowl spot that you have to deliver in just days. And you're told that actually the company's out of business. Wow. And everybody that you have that just moved to London, they probably have to come back pretty quick. Wow. That's how we started last year. What'd you do? I think we cried for a second. Yeah, right. You're entitled. I don't think that most companies our size would have been able to survive that kind of hit for lots of reasons. And again, we're independent. I think it catalyzed probably the most interesting re-examination of our business model that we've had because we realized that scale can be your best friend or your worst enemy.

14:15And that we were in love with that client and that opportunity in part because of the size of it. So we ignored some signals around risk and we ignored some signals that should have been cautionary flags because we loved the scale of the Super Bowl spot. We loved the scale of the media investment we were managing. We loved the scale of being in London with a native client there. And we started to ask ourselves, what is the highest, best use of known? And are we missing opportunities to have an enormous impact without necessarily the exposure. And part of this was out of necessity because we had a big hole to fill in the budget and the scaled media RFPs are slow and they come along every so often.

15:05So we said, what are the kinds of things we could do to bend the shape of the curve for some pretty big clients pretty quickly? And we came up with a new suite of products that we started pushing out into the market that allowed us to more rapidly impact our clients' top and bottom lines. And we sold a ton of them. And it was, I think, without the necessity, without the kind of oh, s*** moment of we just lost what had become our biggest client. I don't know that we would have gone back to the drawing board that aggressively, but that set us up for what is now coming into 2025 as the best year in our history.

15:46Yeah, a$10 million hole can be quite a mother of innovation. It was actually a$30 million hole. I'm just talking about the$10 million that we had already spent. But think about this for a second. And you cover companies in lots of different categories who talk about scaling. I think we realized a couple of years into Known, we were playing other people's game. Even though you would set yourselves up not to. I know. We fell into the trap. Because that's just how the industry worked. That's where the center of gravity was. Yes. We lost ourselves in that. And what we've realized since is that, yes, we continue to scale revenue.

16:17and we continue to scale profitability and impact. All those things are true, but we have stopped being confused about whether we are brains or brawn. We're not brawn, right? So, and you can apply that to every industry that your listeners are working in today. We are rewarded by being smarter than our competition and not by being bigger. Still ahead, Ross and Kern give advice for founders who, like all of us, need to make their marketing dollars work harder.

17:02Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more. Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25. If you're ready to take your startup from idea to impact, then AWS is your launchpad. From data storage to machine learning to secure app hosting, AWS gives you the tech trusted by the world's fastest scaling startups.

17:52And here's the best part. Join AWS Activate today and you could score up to$100 ,000 in AWS credits tailored to your stage and network. Go to aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one.

18:35So if you're scaling, make it simple with Deal. Go to deel.com slash M-O-S and get up to three months free. Welcome back to Masters of Scale. You can find this conversation and more on our YouTube channel. Think about two different customers of yours. One that's a really established, scaled company and what you're doing for them, and one that's more of an insurgent challenger brand and how you're helping them and how those two are different in how they work and how you work with them. So let's first talk about a company that we really admire in a space that we have worked in very successfully for almost two decades, before Noam was even known.

19:20The entertainment industry, right? That's a space where you're just seeing so much disintermediation and so much chaos and confusion that, you know, it's like, well, who's going to be left standing? We've been able to work with almost every business and brand in entertainment. So we've launched nine of the last 12 streaming services. If you put a plus in front of masters of scale, we will turn you into a streaming service in 24 hours. We definitely know how to do that. Our science, our media, our creative, our strategy team, we all do that. But one of the really impressive brands over time continues to be Disney.

19:57And we have deep respect for them. And we work across the Disney portfolio in lots of different ways. And we share a lot of the same values and vision for where the industry is headed. In a world where it's difficult to know where to put your media dollars, they're a great bet. And they've also been able to invest for the last however many years in their own technology in a way that it's evolved to meet the needs of marketers and agencies, unlike really any of their competitors. So we are helping them tell that story. And Ross, that's because they touch the customer across so many different spots.

20:35They do. I mean, the Disney ecosystem. They're touching the theme park, physical retail stores with the streaming service, with ESPN, et cetera. Like, there's just so many touch points. And not only do they have the touch points, they have the foundational asset that so many other platforms are searching for, which is really powerful stories. And they've become so sophisticated from a data science perspective that they are more and more able to deliver exactly what a viewer or a consumer or, as they would say, a guest wants. And they can surprise and delight everyone in a way that almost nobody really can keep up with anymore.

21:09As a media agency, we are helping them tell that B2B story. We also, as a media agency, buy quite a bit of media in the Disney ecosystem. From Disney on behalf of other clients. On behalf of all of our other clients. Yeah. We're also making a show right now for Hulu for one of our clients. A Disney-controlled asset, right? Correct. Yeah. So here you have three major components of our relationship with one of the greatest entertainment companies of all time. Right. Where we feel like real business partners with them. And we have a deep trust and a relationship that enables us and our clients to do things in the Disney ecosystem that you want to be able to do.

21:49If you were to look at like a client of ours that's obviously much smaller and is more of a challenger brand, we also work with a company called Slate Auto. Slate, for those who don't know, is a new kind of electric vehicle. It's a truck. It sells for a base of$20 ,000. Nobody can believe that price point for a new car of any kind. And it's totally customizable. You can make this thing look and act like anything you want it to look like. And the team that's behind it, they would describe themselves as a bunch of bandits and free radicals. And they are doing all the things you're not supposed to do in that category when you launch a car.

22:30Such as what? Such as the reveal itself. When they revealed the EV for the first time, they didn't go to like an auto show and like there's no like curtain and ribbon and all that. They didn't make like a car commercial that looks like all the other car commercials. They just put the cars on the street in L.A. And people were like, what the is that car? Like, I've never seen anything like that. And then thanks to their brilliant creative, what they came up with was they wrapped each and every one of the demo cars as if it were a fake business. So like a taxidermy, my family business or a raw meat delivery business or a.

23:12They all seem like a fake Saturday Night Live commercials. That's what this whole thing was when we launched it. And so there actually was a fake commercial created. they put that fake commercial that was a real commercial for a fake business with a real car in the one place you would definitely want to put it, which is right after the monologue on Saturday Night Live, which is where Saturday Night Live puts fake commercials. Because you don't know as a viewer, am I meant to fast forward through this because this is a real commercial? This is actually entertainment. That's right. That's what it is.

23:41So I get the art of that, right? There is a vision, there's creativity, there's, oh, I see it. Where does the science come into that? How do you get confidence, reasonable confidence that that's going to actually perform. So there are a couple of things. We are their media AOR and helping them sort of 360 with media placement, science, audience science. Agency of record for those who don't live in this world. So there are two ways that that comes to life. One is in the transactional side of picking spots, buying them, planning them, helping make sure that it aligns to audience goals, reach and frequency goals.

24:14And we have a bunch of tools and capabilities to do that. But Slate, like many modern companies, also has an internal team that handles some specific channels and platforms directly. So how do you engage and interact in that? Well, what we've done is deployed Skeptic across our teams, meaning the technology platform that our data scientists and buyer scientists and audience scientists use to identify and predict and then measure the intended reach and frequency of the spot we're putting in Saturday Night Live and make sure that that's balanced with the right kinds of spots in other shows and places.

24:55They also have hands on keyboards in that same platform. I don't think any other agency has ever done this before, has ever actually opened up its operating system and said, our planners and buyers are going to be in the same back end as your internal planners and buyers. There is no other platform for people to jump in and see with absolute transparency and clarity the decisions we're making, how we're making them, why we're making them, and the opportunity that creates for the piece of the puzzle that they still own in-house. We think it's the business model of the future, which is not just saying we're transparent, but actually inviting you into the kitchen and letting you examine it as closely as you want.

25:46So what I put in front of you, this is the Ironman. For folks who are listening, Ross just put his phone in front of me with Skeptic up on it. So there's about 65 apps in here right now, and it looks like about two are added each week right now at minimum. And every one of these gets better the more you use it, right? And so these are tools that are designed in response to client needs, things that make us more predictive and precise. And there are agencies who have stuff like this, but you're never going to see it. And you're definitely never going to touch it as a client. We just believe that our clients want to take agency.

26:16They don't want to give it up. They want to be able to control their destiny. I want to talk about one other element of how AI is going to affect this world. One, we're already seeing share drop from search, drop from Google and go to GPTs, right? I mean, ChatGPT is literally taking search share from Google and GPT optimization. We haven't even been around long enough for that to be a real thing yet, I don't think. You'll tell me if I'm wrong. And then two, we're starting to see the social platforms, TikTok in particular, YouTube to a large extent, to be flooded with AI content, and that's only going to explode.