Ep526: Mark McNally – Take Some Money off the Table

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reuse risk in their lives to reduce risk in your life. Go to my worst investment ever.com today and take the risk reduction assessment I created from the lessons I've learned from more than 500 guests. Fellow risk takers, this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guests. Mark McNally. Mark, are you ready to join our mission?

Mark McNally 00:42
I am. Let's do it, Andrew. All right.

Andrew Stotz 00:45
Well, let me introduce you to the audience. And I think you've got some good lessons for our mission. Mark. McNally is a serial entrepreneur with broad experience scaling companies from startup to multinational establishments, a passionate product and marketing strategist, Mark is one of the original innovators in the E commerce space, rapidly expanding online buying internationally since the 90s. March June journey has crossed 14 startups that have raised over 300 million US dollars and have seen over $5 billion in exits. These startups pioneered their days from machine learning, and E commerce to healthcare and consumer products. You continues in that spirit as the founder, and chief nobody at nobody studios, founded in 2020. Bart, take a minute and tell us about the value you bring to the world.

Mark McNally 01:46
Thank you, man. Look, I think most of my colleagues in the folks I get the pleasure to work with flow will say that my value is my ability to think bigger than the average person to be comfortable swinging bigger than most folks. And actually believe that by swinging bigger, you actually improve your odds of success. And yeah, commonly told, but people would join our journey, that the idea that they're being a part of something bigger than they're even capable of imagining is what gets them out of bed. And so I always try to make sure I'm playing that role every day.

Andrew Stotz 02:23
Exciting in when we talked before, you know, I can see that, you know, you like to join the dots and all that maybe just give a little intro about not what you're doing it nobody studios just so the audience can understand.

Mark McNally 02:38
Yeah, look, inspired and informed by, you know, 14 startup career of all of interest founded and funded and a lot of things we got right there. So enjoyed an IPO along the way, multiple exits, my handful of bankruptcies. One of the things I started to see, the last three or four or five years in venture capital is we just I think the entire industry is getting it wrong. And I think that we're heading to a massive kind of recalibration. I feel bad for the current generation of entrepreneurs, because one of the things that inspired me as I was always doing mentorship, or angel investing, and, you know, or some kind of consulting along the way, and I just kept hearing again and again and again from founder's all that mattered to them was valuations. And then you drop terms like unicorn and DECA corn, like it was just, you know, peanuts on a table, you know, and I'm just like, these guys don't know what it means to build real businesses. And they don't even understand the economics that they've lost control of their companies. And they don't understand the economics that they now have to sell their companies for billions of dollars to have an exit. And I know that when the money when the music stops and valuations come back down to some kind of reality, then those companies aren't gonna be able to get funding, and every investor is gonna be wiped out and down rounds. And a lot of the employees that work really hard for years are going to be cut. And I just been through it so many times. I was wondering to myself, why are we getting this wrong and after so many lessons, and so nobody Studios is of interest to you, we create our own companies. We do it often. We do it aggressive with a goal to do 100 companies in five years. We are myopically focused on the very earliest stages of company creation. So zero to 18 months from taking a concept from a whiteboard into the market with customers. Then we bolted on to other investors so the company can leave its nest and stand on its own two feet. And then we're focused on making keeping the cap tables lean enough that we can be optimized for earlier and mid stage Excellence, which is where we think the real gap is in the market. Got it?

Andrew Stotz 04:35
Yeah, I'm reminded of episode 235 When I interviewed Rand Fishkin, and he talked about don't be afraid to stand up against the growth at all cost venture capital model. And I think you know, when I hear what you're saying somewhat resonates with some some of the stuff that he shared and I think it's, it's valuable because most of the guys in your space, it's just growth and valuation, and they don't care about the business. So I think that's the particular value that you bring. So fantastic. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking will be tell us a bit about the circumstances leading up to an Intel is your story.

Mark McNally 05:20
Well, yeah, I get to go way back. My very first startup that I got involved in, when I came out of the military was just a startup rocket ship dream, you know, a couple guys had this idea, they could connect buyers and suppliers on this new thing called the internet. And that was back in 96. I joined as employee a, we grew with 100 employees. I was in the upper five executives of that company when we went public on the NASDAQ in 99. So, on one hand, it was just wild, you know, we got to almost a $5 billion market cap and everything, you know, Mark 25 year old Mark McNally ever dreamt of being available to him was but I learned a really important lesson. But basically, a upside return is only realized investment if you take money off the table. And, you know, a couple of years later, the market corrected itself. And we're in really good company with companies like real income, real calm, going bankrupt, and Amazon was at $1.27 a share. And a lot of companies went down when the market corrected itself. And you know, so for me, that was the worst because it's all 25 year old Mark lose eight figures and net worth really, really quickly. And had to had to live with those those lessons from well,

Andrew Stotz 06:31
I'm curious, like, is there a day or a moment in your life at that time where you kind of felt like, holy crap, I just, you know, it all kind of fell in for me. I was riding so high, was there any particular time or day that you really can remember? Like, it all kind of hit you?

Mark McNally 06:50
Well, yeah, I must. My birthday is April 18. And April 18 2000, I got my margin call from a well known investment bank. And I was really conservative. When I took margin, I'm still talking to my stock broker, I'm like, Look, I'm willing to take six or 7% coverage on my stock. And that was enough for me to start playing around with but no one could have fathom that stock would drop 94%. You know, and, and so yeah, getting that margin call was a really interesting lesson for for 25 year old, I'll never forget that day.

Andrew Stotz 07:21
I'm curious, like, how did that affect your confidence? So a lot of times when we get hit like that, it sets us back, you know, emotionally? Or were you able to immediately bounce back and it didn't bother you?

Mark McNally 07:32
Oh, gosh, you know, I'll give a lot of respect to my colleagues and mentors at the time, who were, you know, my age now, you know, I was, I was really, you know, quite young for the executive team. And, you know, I'm ready to look on their face looks very different than mine, because they did feel like oh, man, that might have been my last good shot, you know, my career. And I was lucky enough to look at it and say, Hey, I'm still young. And I've got all these lessons. And I figured out how to do that one. So I can do it easier and faster again, and I've been on that quest, since when you're part of something like that, you know, kind of gets you hooked. Yeah, at least a Demuth key mystifies what it looks like to go big. So yeah, I think that was always a gift for me. But, you know, one of the lessons for me also was just when you're part of a wealth creation event like that, and then a wealthy creation event like that, you learn a lot about people and things I never expected to understand about people's dynamics and how they play a role. And I mean, multiple times I could have sold chunks of stock, the pressure was immense not to, and how you let someone else impose their will upon you with those kinds of pressures. And yet, it could have changed the financial future, you know, me and my family is this was interesting lesson and one that I'll never forget.

Andrew Stotz 08:40
So how would you summarize, if you were to kind of say, you know, 123, these are the things I learned from that experience? Well,

Mark McNally 08:48
one, I learned, first and foremost, that you can't get to an ammeter with people's Seabees, and you got to look past and who they really are, how they're going to deal with adversity. I've came to be very sensitive to any kind of manipulative type personalities, because I didn't want to have that in my life. And also how people are going to mistake, you know, the scorecard, the financial scorecard for who they are as a human being, you know, I really saw people that if the stock was good one day, or one week, or one month, they just thought they're a better person. And watching that in real time was a real shock to me. But one that I promised would not be me moving forward. You know, I guess the big lesson I repeat is they don't have to be to demystify what it looks like going big for me was a gift. Because everything I'm a part of now I feel like you know, sky's the limit if you get the why right execution, right. And I mean, brilliant people every day who just don't believe going big as something that they do is something that Elon Musk does, or Steve Jobs. It's like a different person. So that was a gift for me.

Andrew Stotz 09:51
Yeah, yeah. And maybe I'll summarize a few things I'd take away I mean, the first thing that I would say is that trust only happens over time. There is no hack or shortcut for building trust. Unlike other things where you could say, okay, for fitness, maybe you got a hack, you could go, you know, to a, you know, a fitness resort for two weeks. And you could do amazing things, you know, of course, it's not going to necessarily last forever. But the point is, is that with trust, even if you went, and you did something together with somebody, it builds a bit. But that only happens by trust only happens by seeing people's reactions in seriously adverse events. And I think about my best friend Dale, when we started a coffee factory here in Thailand many years ago, we face some pretty extreme events and watch his behavior through the whole thing to never ever take for himself. And always be thinking about, okay, how do I make sure I protect the whole business, the employees, the shareholders, and all that made me think I'll put whatever I have behind him, and he's lived up to that for decades. So trust is the first thing you made me think about. The other thing I'd thought about, you know, about this concept of being connected to the market, you know, and how, when I started as a stockbroker, in Thailand, I was in the research and we had sales, and we had sales, trading, and all that buzz is happening. And, you know, I just was never that interested in like watching the market, I was much more interested as an analyst to dig deep into something. So I just really wasn't drawn into that. And then to watch the financial people eat behind the scenes, here, we are at a broker, and we're servicing the biggest clients in the world. And I just think that these guys are just all riding a roller coaster. And, you know, I swear, I've never been able to do it. And maybe there's research out there. But if we were to do research on the performance of investment professionals with their own money, I suspect, it's terrible. And it's terrible, because they are just totally affected by the movements of the market. And so I think you just remind me that, you know, don't think that the people behind the scenes are some wise guys that are really thinking this thing through, they're just going on a roller coaster ride. And oftentimes, they think that they're doing the right thing by bringing you along.

Mark McNally 12:07
Yeah, now I remember, we were getting ready for our secondary offering in Wall Street, and one of the largest banks, investment banks in the world, and the managing director was sitting there looking at our model, and we were so proud that we were gonna be profitable in about two years. And he ripped into us for not being aggressive enough. And he said, I don't want to see profits for 10 years, you're not growing fast enough. And, you know, in the.com, bubble blew up with that same guy has been quoted by The Wall Street Journal saying, Yeah, across the board, we bet on the wrong young guys. And these guys didn't have experiences, like, you know, what really goes on in the boardrooms and the direction they give you, you know, for me, it really, you know, taught me to develop my gut and my instincts and fight tooth and nail for the right businesses. So, and the other thing just was just taking money off the table, you know, I think I've learned that one universal investment by Australia's it doesn't matter what it says in the portfolio, doesn't matter how great bitcoin is, today, it'll go down, it'll go up, it's, you know, investment returns, or when you take money off the table. And, you know, I think sometimes when you're young in your career, especially if something's going really well, it can be really hard to think of getting off the train, if you're afraid it's gonna keep going up. And I had some really interesting lessons in that first journey to there's an old, you know, older school executive that, you know, he was selling stock often and weekly, and the rest of us were holding on. And, you know, I remember having a conversation with him and thinking, Man, you sold that stock last week, and it went up x, y, and z. This week, what a cool, and he's like, and I'll sell it again next week, you know, and when the market crashed, he was one that every is going to ask him to invest in their new companies, you know. And another one, we're trying to do an acquisition actually two acquisitions, exact same kind of story, where we were offering a load of stock. And both of the executives, these two companies said, You need to offer me your maximum cash offer, because I'm walking out of here with cash in a suitcase. And that was like literally the same words for both of them. And both of them doing really, really well right now. And so yeah, that taught me some lessons to get comfortable with that and with, but nobody will be building lots of companies, you know, 10 to 15 years can be our pace. And so you also realize not to fall in love with any one deal as long as we can keep building good companies and accepting them. That's a good business, and some will be bigger than others, but you can't fall in love with the upside.

Andrew Stotz 14:21
You know, I was in a deal where I helped a group to sell their business and we all use the same investment banker, you know, who was on the deal, who set up the bank accounts and everything. So then all of these guys had, you know, a lot of money in the bank, and all of a sudden they getting calls from their investment banker and from their private banker, and all that and, and I talked to that private banker and I just said, look, here's the deal. Never, ever call me. If I have anything that I need from you, I'll call you. So he never called me and for the other guys, they listened to all the stuff that he said and I swear All of them probably lost 50% of the money that they made through their deal after, we're talking about 15 to 18 years of hard work to build up that money. And then they just listened to people. And then you know, next thing you know. So based upon what you learn from this story and what you continue to learn, what one action would you recommend our listeners take to avoid suffering the same fate?

Mark McNally 15:26
Yeah, I'll just double down on that last point, set your goals get a little try to be a little more unemotional about it. You know, the whole idea of having set prices that you know, you want to sell a certain portion at and get comfortable with that early on before you're emotional, I think is a way to do it. And, you know, if you're talking to a professional gambler, they'll say the best time you can be gambling is when you're playing with the houses money. So take your principal staple to the table, take some return, and then play on the house as money. And so for me, that's certainly the way I've come to. And I can be as instinctual as anybody, but I've just come to try to put some things and rules in place to take the emotions out of it as much as possible.

Andrew Stotz 16:02
Great advice. In fact, we use kind of the opposite in the stop loss where we say, okay, if this was from 100, to 280, I'm going to sell, you know, 50% of it. And here you're saying, look, if I put in 10, and that goes up to 100. I'm selling 10% of it. That's it. That's my goal. That's my, and then when it goes to 200, I'm selling, you know, and so predetermined future action. All right, what is a resource that you'd recommend for our listeners?

Mark McNally 16:30
Oh, I have to bet on myself on that one. So I was on a podcast not too long ago. And the last question he was asked was, how are you going to know when you succeed mark? And I say, well, there'll be a day in the future where entrepreneur I've not met in person in a country that I have not been to physically is going to identify a problem that I don't necessarily resonate with, and proposes a solution and a business that might even be dubious about and goes and creates it and solves a problem in the Bible business using nobody studios. That'll be the day we arrived. And it's sooner than I even hoped when I started this so that that'll be the resource I can offer other entrepreneurs worldwide.

Andrew Stotz 17:11
So people should go to tell us about the website and all that so that anybody listening thinks I got that great idea. I got that great potential.

Mark McNally 17:19
Yeah, nobody, nobody studios.com And I'm pretty open book. So Mark at Mar K, nobody studios calm and we'll be the first venture studio that will be crowdfunded, we're launching SEC registered crowdfunding at the end of this quarter. So actually 1000s of investors worldwide, but their, their passions, their ideas their network brought to bear and that's actually part of our rocket fuel is to to be the first global of interest to do so pretty fired up.

Andrew Stotz 17:44
Fantastic. Well, we'll have all the links for that in the show notes. So check it out. And hopefully some of the listeners out there will be that person with that great idea that you're even dubious about, but man, they may Exactly. Make it work. Alright, last question, what's your number one goal for the next 12 months?

Mark McNally 18:04
Oh, gosh, a lot of really amazing people have trusted, but a lot of trust in me to pull this off this year. And this is gonna be a big year for us. We're gonna be building on our core team getting the funding behind us launching 15 companies and I try to remind myself every single day that I'm a steward of that trust. And, and that's my number one goals in this year, looking myself in the mirror straight my eyes and feeling proud of what I did with that trust.

Andrew Stotz 18:31
Beautiful. Well, listeners, there you have it another story of loss to keep you winning. If you haven't yet taken the risk reduction assessment, I challenge you to go to my worst investment ever.com right now and start building wealth the easy way by reducing risk. As we conclude, Mark, I want to thank you again for joining our mission and on behalf of a Stotz Academy I hereby award you alumni status for turning your worst investment never into your best teaching moment. Do you have any parting words for the audience?

Mark McNally 19:03
Just love your format. And as you can see from the way we talk about our own studio, we're contrarian in nature and I love that about you. So keep up the good work.

Andrew Stotz 19:11
Awesome. Well, that's a wrap on another great story to help us create, grow and protect our wealth fellow risk takers. This is your worst podcast host Andrew Stotz thanking you for joining our mission. And I'll see you on the upside.