On this week's episode of Inside Outside Innovation, we sit down with Barry O'Reilly, author of Unlearn and Lean Enterprise and co-founder of the new Venture Studio, Nobody Studios. Barry and I talk about the ins and outs of a new model of creating and investing in startups called Venture Studios, and we discuss the power of collaborative innovation. Let's get started.

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Interview Transcript with Barry O'Reilly, Author of Unlearn and Lean Enterprise & Co-founder of the Venture Studio, Nobody Studios

Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host Brian Ardinger, and as always, we have another amazing guest. You may have heard of Barry O'Reilly. He has been part of the Inside Outside Innovation community for a while. He's the author of Unlearn and Lean Enterprise. And co-founder of Nobody Studios, which we're going to have him talk a little bit more about that. Welcome, Barry.

Barry O'Reilly: Thanks very much for having me. Yeah, it's great to be here.

Brian Ardinger: It's great to have you back. You've followed Inside Outside the community. You've been a huge proponent of what we've done, and quite frankly, a huge mentor to me to understand this whole world of innovation and how do we get through it.

I'm excited to talk about your new venture, which is Nobody's Studios. You've spent a lot of time as an author, as a consultant, working with big companies. Helping really develop the whole lean startup movement. And now you've decided to jump into the investment space and create a a studio where you're gonna hopefully incubate some amazing new startups in the world.

Barry O'Reilly: Yeah. Well, first of all, one thing I want to congratulate you on is your new book. Literally it sits outside in my reading area. There are people that walk past it and see it all the time and pick it up. So, I just want to congratulate you on getting that done, and I really enjoyed reading through it. So, congratulations to yourself on that and highly recommend folks check it out.

So in terms of Startup Studio, the real inspiration for me was, as you said, I've had the chance to work with some phenomenal people over the last number of years. Helping them either identify products that they wanted to build in enterprises or work with scaling startups that were sort of building their business and taking them as far as they could.

And I was enjoying a lot of the sort of advisory side, but I've been sort of doing a lot of that now for, you know, close to a decade. And I was just getting itchy fingers, if you will. You know, I was like helping all these people, like I do a little bit of an angel investing. I, you know, would take sweat equity or be an advisor for these startups.

Help enterprises build products, but I miss a daily grind of sort of being like right in there, building day in, day out. So, I knew I was just sort of looking for the right opportunity for me to bring a lot of my skills to bear and rather than put time in for money, put energy in for equity in these businesses and build something that would fire outlast me if you will.

You know, started to share that with a few people and one of my good friends, Lee Dee, who was actually under advisory board of AgileCraft with me, which we sold to Atlassian and has now become JiraAlign. He introduced me to a guy called Mark McNally. And Mark was based down in Orange County. He was sort of interested or starting this idea of a company called Nobody Studios.

And instantly I was just attracted to the name. Anything that's sort of contrarian and odd. I was like, why did you call this thing Nobody? And you know, part of the mission was we were going to build these companies. We really need to try and like put our egos at the door, if you will, and like be humble, challenge ourselves, work together to build these great businesses.

And really the studio, it in itself is a sort of mix of all the best parts that I believe of the startup ecosystem that I can help with. We're not a VC. We do raise our own capital, but we raise our own capital so we can incubate our companies and ideas that we believe in. But we're not just an incubator.

We have the capital to keep building, and we're not an accelerator where we just sort of put people through a program and give them the Y Combinator stamp and, and they go out the door. So, it's actually bringing all of these components together. We raise our own capital. We have our own ideas that we incubate these companies.

We find founders and teams to help us bring these companies to life. And then the goal is to create really a repeatable, scalable business model and a fundable company where we've incubated something to the point that it's the high-quality business, it's maybe found product market fit, and they're ready to sort of go and get external capital.

And that for us is sort of us doing our job well. But what we're actually optimizing from a business model point of view is to try a aim for early to mid-size exits. So, for those businesses to be actually, purchased, merged into, acquired, maybe even an early I P O, who knows? But that's necessarily our business model.

So, by incubating and building these companies, we're actually looking to exit them for early to mid-stage exits. And that's how we will essentially generate more capital to go back into the studio to build more businesses.

Brian Ardinger: So, let's talk a little bit more about the tactics around this. So nobody's studios you're looking to, I think, incubate a hundred companies over the next five years. That takes a lot of people, a lot of founders, a lot of great ideas. How do you tactically go about starting the studios.

Barry O'Reilly: To be honest, and we share that with people. Half of the people run away from us, and half of the people run towards us when they hear that. For me, like that's actually the good sign of a big harry audacious goal, if you will.

It's the calling card for some people. It helps sort of people who aren't thinking like that choose a a different option. With having a big audacious goal like that, you know, it forces you to start recalculating how you build businesses. So, when people hear a hundred companies in five years, they instantly think, oh, that's 20 companies a year.

Like, how are you going to do that amount? But actually, it's a sort of exponential scale that we work on. So, on a first year, which was sort of 2021, our goal was actually to create three companies and learn and build both the systems to create companies as well as the actual businesses themselves. And then last year our goal was to try and create five companies, which was almost, if you will, like a 50% increase in company creation.

And, if you sort of start to work those numbers out over the next five years, we basically go from three to five to 11 to 17 to 32, to 43, and then suddenly you're at a hundred, right? So, it's us also building the infrastructure capabilities and the systems to support and source a lot of these founders.

At the same time, the studio is growing in maturity and understanding and people, if you will, as we go along. So, it's very much think big, start small, which many people probably have heard me say many times and then scale over time. And that's literally how we've got on.

Currently we are into our second year. We actually have 11 companies that are in development. Four are already in market and it's working. So, it's very exciting to be sort of just like learning by doing. There's lots of mistakes we're making along the way. But the great part about it is when lessons are learned, they're compounded across the entire portfolio.

Say we make a mistake about how to kick off founders on company two. If we correct it on company three, then every company benefits from that afterwards. And that's been one of the probably most unique aspects of this, is the speed at which we learn when we make corrections. We're actually able to propagate that across a huge number of companies. So, it's been very exciting. Still lots to do, but we're up and running.

Brian Ardinger: So, this idea of a venture studio, there's other folks that are doing it. I've seen other folks trying to maybe pair with corporates where they work with a corporation and help incubate ideas and companies that come out of that corporation and that. Then, obviously you have the traditional kind of Techstars accelerator model, that kind of stuff. How does this actually work? So, do you have a stable of either ideas or a stable of founders and you put them together or how's it come together?

Barry O'Reilly: Yeah, so there's three ways that businesses, if you will, are sort of come into the studio. First, we have our own set of ideas. Surprise, surprise, there's no shortage of ideas for businesses. But we do have an internal process where we review a lot of the ideas. We do some initial customer discovery, and the ones that we have conviction on, we start to essentially make a first small investment in.

And a lot of the reasons that would make us sort of green light, if you will, one of these ideas is not only seeing that there's an opportunity in the market, but we have a potential founding team in place. And we've discovered, cuz we are co-founders of these businesses. And remember, we're not just on the sidelines cheering like I'm a co-founder, not only of Nobody's Studios, but every single company that we create. Like I'm in there in those companies, day in, day out.

The next way is actually we do mini acquisitions. We think eventually we'll do like 30% of our own, probably 30% that we do these mini acquisitions. These are like typically, I'll give you an example of one of our companies is Thought Format. It's a serverless, no code platform.

And these were two brothers based in London who had been sort of working their day jobs and building this product in their evenings and weekends. And I actually met them at a conference in London probably about four years ago, and they just instantly struck me as two guys who were really like figuring it out.

I was impressed that they would, you know, still work a day job and then work other evenings on weekends on bringing this thing to life. So when we started the studio, I instantly called them and said, look, how about we basically give you the opportunity to go full-time and work on this product? And interestingly, one of our other businesses, Ovations, which is an on-demand speaker platform, is built on top of Thought Format.

So, we instantly started to get this platform that we can accelerate our product development, but also accelerate the value of these companies by collaborating together. And then finally, we think one option will be that we will do some corporate collaborations, but the, the way we sort of think of it is more of a, a made to acquisition type model.

So, what we do is we tend to have very open dialogue with a lot of these corporates who have to make acquisitions actually for their business to survive. But the price of startups are so expensive now based on the valuations that they raise at. Most founders are pricing them out of their most likely exit, which is an acquisition from day one. Right?

They might be a Series A company and they take 10 million at a 50 million valuation and they have to sell that company at half a billion dollars. But so investors will get the money that they're expecting back. So, you know, no enterprise in their right mind is going to pay half a billion dollars for a Series A stage company.

Yeah, exactly right. So, so what we've discovered is actually if we have these very open dialogues with a lot of businesses to say, well, you probably need a data analytics solution for your business. So, you probably need, some sort of AI automation, a service for your business. We have what we describe as sort of a open conversation with them, and if we think it's a business that we believe in, and they could potentially be an either an early investor or a acquirer of that business, we may go build it. Right.

And for us, if we incubate, because most of our companies we incubate for just under a quarter million dollars, and if we incubate it for that and sell it for 20 million, we'll do that all day and twice on Sundays. Brian, and so that's sort of a very different approach for how the open market is operating, if you will. Again, I think that's going to be a big competitive advantage for us.

Brian Ardinger: Do you see those corporate environments where the startups have access to an early test customer, for example, is that a, a benefit or are you seeing it more as a acquisition and or test run.

Barry O'Reilly: Yeah, well this is the fun thing about test customers, right? So, we have this notion of building blocks in our studio where Thought Form is a great example. It's a building block for another one of our company's Ovations because it sits on top of it.

So Thought Form's first ever customer, if you will, was another company in our portfolio. One company was like, oh, we'll build on your platform, and we'll be able to give you fast feedback on your platform, how it performs, what works, what doesn't in a relatively sort of safer environment.

So, what's really powerful for us is that we're building all these businesses that create capabilities that we need internally in our own business, and then we can build our more customer facing, B2C type products, if you will, on top of those services. So, we're getting this sort of virtuous loop straight out the gate.

First set of early customers to testament that are also part of your portfolio, so, it's collaborative, if you will. Because they're both getting benefits from working with one another. That's sort of been another like little bit of a secret sauce for us, if you will. Where we've been able to accelerate the development of a lot of these companies.

Or another company we're building is one called Web Delics, which is basically the WebMD of psychedelics to help people understand plant-based medicine and therapies. And straight away, that's a, if you will, a content business. And we've built another one, Parent Tipity, which is a parent creator community.

Now, there's a lot of behaviors and aspects of these businesses that are similar, both in terms of how they're producing content and become information sources. So, when we build those capabilities for one of our businesses, we can essentially share them across all the businesses that are content focused.

We just get these massive sort of uplift inefficiency about how quickly we can build. How cheaply we can build. Like some of these companies were launching for under $50,000. Right? Which is, that's as much as you pay for a pitch Deck in San Francisco. It's pretty fun.

Brian Ardinger: How big is the team then? I'm as assuming that you add folks onto the particular startups as they grow and, and kind of expand.

Barry O'Reilly: Yeah, so we have people that work at the studio level, so folks like myself as a chief incubation officer. I'm working across the portfolio. And then we have teams that, people that work within the individual new companies or NewCos as we tend to call them, or portfolio companies. So, at, at the moment we're probably in the region of about a hundred folks, I would say, either both in the companies that we're building or in the studio itself.

And the studio really comprises of everything from. A typical executive team is, Mark McNally. He's our Chief Nobody, as we call him. I look after incubation. We've a marketer, we've a C F O, Head of Operations. And then like just staff that help. Don't work across the companies. Product leaders. Technology leaders and so forth.

And then within each of the companies, it can sort of vary as you mentioned, but we always look for sort of a triad to start. So, a tech lead, a product lead and design lead. And then there's a lot of marketing, business operations, team support, project management to sort of get them moving. And then engineers. So that's pretty much how the teams have formed and pretty fun making progress.

Brian Ardinger: It's a great model and, and I'm excited to see where, where it goes. One of the interesting things about the model too is how you went about and how you're going about raising capital and, and making it accessible to not your traditional just, angel investors or accredited VC firms out there. So can you talk a little bit about Nobody's Studios and your partnership with Republic and how you're going about raising capital for the studio.

Barry O'Reilly: Yeah, so one of the core tenants of the studio is that we're global first and we're also crowd enabled. Or is what we call crowd infused. One of the questions about like, why would we create a hundred companies in five years?

Like we can't hire enough people to create those companies, that it's just impossible. So, one of the things that we flipped our mind around is, well how can we actually bring more people into the Nobody community to be part of our world? Initially when we were starting to build our companies, we were thinking we're going to need a lot of people to help us ideate, to help us, do customer research, to test, as you were asking earlier.

And then we started thinking also about like ownership, if you will. So many people are locked out of the venture ecosystem and have probably wondered why it might look like, imagine I could own a piece of Google before it became Google. Or how do I even get involved in owning a piece of a startup?

And as you said, for a long time, that right, if you will, has only been given to very high net worth individuals or people that were in certain circles that would even have access to these type of deals. So, we wanted to try and shift that a bit and give access to all. As well as create this huge community of owners and studio and actually contributors to the studio.

So, while we've raised a lot of our own capital through traditional means of angel funding, and we've done really well, we've raised close to 4 million, if you will, through private markets. But then we want to bring more people to that system. So, we became one of the first venture studios ever to offer equity crowdfunding to the world, which means anyone.

You don't have to be an accredited investor, just any person on the street. You'll be a bus driver, a nurse, whatever you are. You're able to invest and own a piece of Nobody's Studios and become a venture investor. And we're really, really proud of that because we've sort of opened up and given access to all where anybody who's interested in early-stage business startups or our technology and the impact it's going to have on their future, they can actually own a piece of the studio, just like the same shares that I own.

By going to Republic and making an investment from a couple hundred dollars right up to a couple of thousands and being Nobody. So, it's really special. We've had, you know, hundreds of of people already join. And what's special about that is that now these people are owners, but they can also contribute to the companies we're making. Give us feedback, bring their ideas, and that gives us more, if you will, human capital as well as financial capital to build all these businesses, we're going after.

Brian Ardinger: I like the concept quite a bit. The fact that this democratization of innovation, everything from technology to access to markets to the pandemic, have all kind of converged in such a way that you can build anything from anywhere now. And why not open up that from a capital perspective as well, is an interesting take on the whole process and hopefully, yeah, like you said, it will provide a competitive advantage for you as well to actually access talent that may not have been able to access in the past because of different barriers or or ways of working.

Barry O'Reilly: Absolutely. Right, and you know when, now you know when you're a Nobody shareholder. You got an idea, where do you think you're going to bring it? Right. And that's great. That's an advantage to us, as you mentioned. This is really special for us. You know, like to have so many people who want to ideate with us, build with us, challenge us, give us feedback on our ideas before they go to market.

And this is really going to be something quite special, I think, where people can sort of live within a realm that they've never maybe had the opportunity to and maybe have always wanted to. And technology is going to have such a huge impact on our future, so why not own a piece of that future or own a piece of the companies that are going to shape it? And giving people that access is something that we're, we're really proud of and we're excited to see, what more we can do.

For More Information

Brian Ardinger: Well, I'm looking forward to my t-shirt and being, being a Nobody myself. If people want to find out more about, Nobody's studios or the fundraise through Republic, what's the best way to that?

Barry O'Reilly: Yeah. So if you're curious to learn more about what we're doing and make an investment, please go to Republic.com/nobodystudios where Nobody Crowd on pretty much every social media platform and NobodyStudios.com if you want to dig in and see what's on our website. Thank you very much for inviting me to share a little bit of our story.

I'm delighted you've become a Nobody. Your t-shirt is in the posts, where you're going to be seeing a Nobody Studios Venture investor photo on your Twitter feed, I'm sure soon. So, yeah, thank you for joining us, on this mission. I'm sure it's going to be the adventure of a lifetime.

Brian Ardinger: Well, Barry, it's always a pleasure to spend time with you, so thank you for coming on Inside Outside Innovation and looking forward to having further conversations as the world unfolds.

Barry O'Reilly: Thank you very much.

Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.

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