How We Scaled Nike Innovation from the Shoelace Room | Michael Newton (Part 3/4)

Intro - 00:00:06: Welcome to The Biotech Startups Podcast by Excedr. Join us as we speak with first-time founders, serial entrepreneurs, and experienced investors about the challenges and triumphs of running a biotech startup from pre-seed to IPO with your host, Jon Chee. In our last episode, Michael Newton shared how he broke into private equity straight out of college, learned the business on the fly, and was shaped by mentors who influenced his leadership style. If you missed it, check out part two. In part three, Michael reflects on leaving finance for Stanford, where he reconnected with his interest in science and healthcare and started thinking seriously about entrepreneurship. He also discusses the risks and rewards of stepping off the traditional career path in pursuit of something more mission-driven.

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Michael Newton - 00:01:06: They had a class in the second year where you could basically start working on a startup. And so, a classmate of mine and I kind of ran with this idea of what was called pay-per-mile auto insurance. And so, it actually is an idea that had been done in a few Commonwealth countries, but it hadn't been brought to the US at that time. Nobody was doing it. And the idea was that you kind of have this, like, win-win-win situation where by pricing insurance per mile, you could incent people to drive fewer miles. Right? You would then save them money, the second win. Right? And then the third win would be, like, all the environmental and safety benefits that come from that. And so, we worked on that a lot. I had looked back on, like, "Oh my God, I had no idea what I was doing." But we worked on that a lot. We entered the Harvard Business School competition. We got second place. Just as a quick aside, the company that got first place is called Cloudflare and is, like, one of the biggest tech companies in the world.

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Jon Chee - 00:02:06: My wife works at Cloudflare.

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Michael Newton - 00:02:08: Oh, really? Yeah. So, Matt Prince and Michelle Zatlyn.

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Jon Chee - 00:02:11: Yeah. Yeah. Yeah. She's at the office today.

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Michael Newton - 00:02:13: That's hilarious.

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Jon Chee - 00:02:14: Yeah. Yeah. So, I love that. What a small world. Yeah. Yeah. Yeah.

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Michael Newton - 00:02:17: That's so funny, Jon.

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Jon Chee - 00:02:18: My wife's been there for almost, like, a decade now.

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Michael Newton - 00:02:21: Good. That's awesome. Because it's just been a rocket ship.

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Jon Chee - 00:02:25: Yeah. She's having a blast.

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Michael Newton - 00:02:26: I'm glad to hear that. So I joke, I'm like, "Well, if you have to lose to somebody, at least they, like, really made it, you know?"

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Jon Chee - 00:02:33: Yeah. That's exactly it.

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Michael Newton - 00:02:34: You're like, "You lost to the champion." Yeah. Yeah. Yeah.

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Jon Chee - 00:02:37: It's not too shabby. Yeah.

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Michael Newton - 00:02:38: Yeah. And, I mean, what they built is just, like, unbelievable. We basically, my, you know, colleague, a classmate at the time and, um, insurance is regulated on a state-by-state basis, and there were only two states that were basically allowing you to do this type of pricing. One was Texas, one was Oregon. Had no interest in moving to Texas. And so, we kind of started this business. We moved to Oregon. We raised almost $5,000,000 at a tough time to raise money to kind of get this thing going out of San Francisco. And we basically got the business, you know, started, and it's a very, like, actuarial—it's an insurance product. Right? So it's very actuarial-driven. And what we kind of quickly learned was that the risk profile for American drivers is such that it makes actually pricing this insurance super tough. And, essentially, what there was is, like, the incremental risk per mile. It gets pretty wonky, basically, but it, like, didn't drop enough that you could actually make this work. And so, we basically figured out that on a standalone basis and you would assume you would get low-mileage drivers, you could actually offer the product and clear enough of a profit. But the problem was, back in 2008-2009, the key problem was that you needed to monitor. Right? And so, you couldn't get a cheap cell phone plan. You couldn't give somebody an app or whatnot. You had to put what was called an OBT-II chip inside the car. And it had to have, like, a cellular connection. And those connections were, like—we, like, talked to AT&T, and, like, I was like, you're talking about, like, four cars, like, $20 a month or something. I don't remember. And it just destroyed the business model straight up. And so, we gave it the college try. We learned a shitload. Like, we had a good experience, and we ended up shutting the business down. And we did it pretty quickly. Right? Because we'd done work during business school, and then we were able to do it pretty quickly. But at that point, we'd moved out to Oregon. And, actually, my girlfriend at the time, now my wife, um, she had gotten a job with a company that was doing really interesting, actually, GPU-based technology that ultimately got acquired by Amazon. But what was interesting is that we moved out there for my thing, and she got this great job. And then when my thing ended, she had this good job. And so, I was like, "Okay. What's my next thing?" And that's—Portland, Oregon is the Nike magnet. Right?

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Jon Chee - 00:04:48: Yeah. Yeah.

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Michael Newton - 00:04:49: Especially back then. Yeah. Like, you know, back when Nike dominated. And so, I ended up originally doing some consulting with Nike and then ended up having, unexpectedly, you know, a ten-plus-year career at Nike. And so, we ended up, like, going from—we had a month-to-month lease on this, like, you know, shitty apartment in Portland to then all of a sudden, like, we had two kids in Portland. We owned two homes. Like, we made our life there. And it was great for us. Like, we had a really great time, and we can get into my Nike experience or whatnot, but, you know, very unexpected. Like, very unexpected. We were, like, ready to move back to New York at any time.

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Jon Chee - 00:05:26: Yeah. The serendipity, again, like, how this all kind of comes together. And I, you know, it's kind of those things where as you—like, before we hit record, it's kind of these things, like, you look back and you're just like, "Oh, there's just, like, these moments that just, like—where you think you would imagine your life is gonna go in one way, but just something—meet someone, an opportunity arises, and it just goes in a complete other way." And you can only, like, kind of see that as you're kind of, like, looking in the rearview mirror and just see it all piece together. But that's really cool because, like, I'm a big Nike geek. I, like, I read Shoe Dog, like, annually.

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Michael Newton - 00:06:00: It's a great book.

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Jon Chee - 00:06:01: Yeah. So good. So good. And I don't believe I know anyone who's worked at Nike, so I'm, like, really excited to hear about your experience there. So, like, what was the first role and, like, responsibilities at Nike, and how was that?

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Michael Newton - 00:06:16: Well, so it was interesting. My first job was kind of a step in the wrong direction, if you will. Yeah. Right? Because, actually—because I was consulting. And because, literally, we were like, "We could go back to the East Coast at any time," I was kind of buying some time as we figured out how things would go. And I ended up doing some consulting for them to work on an initiative they had to use balance sheet capital to make venture investments. And so, I actually kind of went back to investing. But the thesis was that you would invest with Nike Capital to drive sustainability and technology into the supply chain primarily. And so, I got—for a period, I wasn't doing that for that long, but I got to do some pretty cool stuff where I was like, "Okay, we're investing in new dyeing technologies for apparel and textiles." Right? Like, a whole bunch of different things. And Nike, you know, Nike still, but back then in particular, a Nike calling card would open any door, really. And so, I did that for a little while. But through that work, I worked a lot with the people who were trying to bring innovation into either footwear or apparel. But, actually, what happened was innovation as an organization at that time didn't actually exist. It was just dispersed throughout all parts of the company. And they had a gentleman named Mike Jonker, who's a real mentor and friend of mine. Uh, they asked him to basically start building Nike Innovation. And I remember very vividly, we had a one-on-one, and we were talking about some of these investments we were exploring and whatnot and who was involved with it. And in his office in Nike, I remember the specific place, the Pete Sampras building. I know exactly where it was. This is where at Nike, all these whiteboard tables are everywhere. Right? And it's a whiteboard table. And on his whiteboard table, he had an org chart for how he envisioned Nike Innovation coming together, and he was gonna be the first vice president of Nike Innovation. And then there was, like, all, you know, an organization here. And I literally took a red marker, and I drew myself into the org chart. Yeah. I was like, "You need me to come, like, make this happen," basically. And sure enough, like, it took a little while, but, like, I was able to do that. So Mike Jonker was the first employee of Nike Innovation. His assistant, Monique Reicher, was the second employee, and Michael Newton was the third employee. And I kid you not, they started it in what was called the Shoelace Room because it was the only place they could find space. But it was basically the room where they store all the shoelaces for prototyping. And then that wasn't big enough for us, so I sat in the hallway, uh, right outside. And this was in the Mia Hamm Building where, like, all of the prototyping and all that stuff was being done. But at that time, like, all that was, like, reporting into footwear, and apparel's totally different, and there's no, like, real, like, organization. And so slowly over time, we built Nike Innovation into what it is today. And now Nike Innovation has a dedicated building. It's named after LeBron James. There's, like, hundreds of people who work there, and it's like a real powerhouse. And so, I just had this kind of unique opportunity to kind of start to ride this thing. And so, we built all the strategy. We put together a whole bunch of, like, you know, obviously, the financial side of it. Like, what are the projects? How do we do it? And there's a lot of—I wasn't involved in this. It was a lot of do we—that just led to this, like, kind of series of jobs and roles at Nike that I never would have anticipated. And I ended up working a lot on how do you start to kind of finance and build the operational to get these projects to scale. And it's become a real trend for me now. Something I'm very focused on is, like, the hard thing, and it's why I'm in the business I'm in now of, like, how do you get something physical—innovation, sustainability, right, better performance, whatever it is—like, to scale, like, and how do you figure it out? And so, we just worked a ton on a bunch of projects, but the one that's, like, most well-known is Nike Flyknit. Right? It's a whole upper technology. It's a platform for the company now. Uh, we launched at the London Olympics in 2012, but, like, this is maybe my craziest Nike experience. I literally carried the first pair ever to China to start to build out the manufacturing facility. And so, Steve Wright, a colleague of mine, we went over there, and we visited, like, all these factory partners. And we figured out who we're gonna work with and why. And we built a factory in Ningbo, China. We built a factory in Sri Lanka. You know? And we just got it to the place where, like, I mean, it was—we were doing the machinery—the manufacturer is based in Stuttgart, Germany. We worked with HSBC out of Hong Kong to put together the financing deal to make this all work. And so, we just got to work on some really neat things like that that were, you know, changing the way Nike served the consumer. And Nike, I mean, the company was on fire back then. The company's in a really tough spot right now. And if you've seen the stock at all, it's, like, not a pretty picture. But, like, it was on fire back then. And it was just, like, such a fun place. Right? There were people who obsessed over the athlete. Frankly, it wasn't that concerned about, like, kind of quarterly results and all that stuff because everything was just, like, hitting on all cylinders. And so, we just, like, got to do, like, crazy stuff and, like, really cool stuff. And so, I ended up spending a lot of time in Asia. And through my work at, like, innovation, they asked me to then go start to work within our supply chain organization and start to bring innovation into our supply chain organization, including trying to figure out how we do local manufacturing. So, we built a factory in Guadalajara, Mexico, and then just was doing a lot of initiatives to drive innovation into basically existing factory partners or work with new factory partners. And it was everything from how do you cut more efficiently to how do you put in data and analytics to do, you know, faster supply chain work, a whole bunch of different things. And, yeah, it was just kind of a wild experience that was very like, we were, like, talking about the millions of items. Right? Like, how do you, like, pump out a real volume? You know, these were, you know, figuring out global logistics patterns. So it goes very tactical and, like, extremely operational. And I just loved it. I just, like, really enjoyed that. And to do it at a company like Nike, it's like, okay. Okay. You're working for Whirlpool. It's like, "Oh, I'm making better dishwashers or whatever." Right now, it's like, "Oh, okay. It's, like, pretty cool. Like, we're working on cool product that people love. It's sexy." Like and, by the way, it's like, "Oh, I—I remember I was once in a meeting, and the person who walked out of the room before me was Maria Sharapova."

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Jon Chee - 00:12:48: Oh my god.

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Michael Newton - 00:12:49: Or I was at the gym working out, and LeBron was there. You know? Or you're in the cafeteria, and, literally, Michael Jordan is, like, buying your coffee.

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Jon Chee - 00:12:53: That's so crazy.

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Michael Newton - 00:12:54: And so, it was just like a unique environment on that. And it gave me—people were great. The company was just like a rocket ship at that point. You know, obviously, there were always challenges. It was a big company with bureaucracy and all those things, but it was just like, it was really a blessing for us and for our, you know, family. And, you know, we ended up having two kids in Oregon and doing a bunch of work there, and it just was, like, never—I mean, my wife's from Belgium. I don't think she even knew where the hell Oregon was.

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Jon Chee - 00:13:22: You're just like, "Where are we?" Like, this is—Yeah.

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Michael Newton - 00:13:25: No. Seriously. It's like, um,

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Jon Chee - 00:13:26: Like, what is this place?

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Michael Newton - 00:13:28: Yeah. And Portland's like Coke Zero. It's not even Coke, Diet Coke. Yeah. Yeah. Yeah. So you know, like, it is a—it's a—and back then, actually, Portland has gone through some really rough times. It was also on fire back then. It was, like, the time when every week, the New York Times was like, "The best restaurant in America is in Portland," and, "The best outdoors is in Portland," and, like, "The hipster paradise is in Portland." And it was awesome.

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Jon Chee - 00:13:50: Yeah.

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Michael Newton - 00:13:50: So we just kind of hit on this moment there and this opportunity at Nike that was super formative for me in many, many ways and just, like, learned a ton from some really great people.

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Jon Chee - 00:14:00: Yeah. I mean, just hearing about this, like, starting Nike Innovation from, like, the three of you, it's almost like you'd started a startup within a larger organization. Like, and Nike Innovation, did you have, like, a lab where you're, like, prototyping and, like, basically workshopping these kind of, like, technological ideas? And what is the first step to, like, actually trying to figure out if you can scale this and get it to the masses? Because I can't imagine just like, "Alright. We're good. Like, factory time."

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Michael Newton - 00:14:30: Well, the factories are amazing. Like, so the Asian suppliers in particular, like, you could almost, like, throw them, like, a napkin sketch, and they would... So you have to give incredible credit to those people. And, uh, actually, some of my best memories and best relationships were with our factory partners in Asia. But, no, I mean, Flyknit took years to get to market, and it was, like, tough for a lot of reasons—technical reasons, internal reasons, financial reasons. Like, all these things are dull. Like, these things were really hard and really thoughtful. And a lot of times, the technology wouldn't play out. You know? So, I mean, I'll give you a very specific example. Like, right now, you've probably seen On has this new spray-on technology that they're—they just opened a factory in Zurich about it. And, like, it's a neat technology. We had, essentially, technology like that. We were working on that a decade ago, right, more than a decade ago, but we couldn't figure it out. We never got it to be commercial for a number of reasons. And I'm lucky to know some people at On now and whatnot, and I think what they're doing is, like, awesome. Right? And they've pushed through, the technology's advanced. Like, they figured out a bunch of stuff. Like, good on them. I've tried on the shoes. They're pretty neat, actually. And so, you know, there's a lot of wins that we like to talk about, but there was a shitload of failures too. But there's some real big things, like getting Flyknit up and running, getting the company to embrace recycled polyester. That was just a huge thing, really championed by a woman named Hannah Jones, who's an amazing woman. Uh, she went on to do a bunch of really crazy things too. And you kind of learn in that situation, and I struggled. And it's one of the reasons I'm not at a big company now because actually in my heart, even though I was there for ten-plus years, I'm not necessarily the most big-company-native person. And as I got more senior, you dealt with more bureaucracy, basically. And I don't mean that in, like, a nasty, like, pejorative sense, like, in the literal sense of it's just there's more bureaucracy. And I think at a certain point, you know, you're just like, "Okay. This machine is an amazing machine, but is it, like, the machine that I'm right for at this moment?" And, you know, it just got to a point where I was ready to go do something different. But, like, I mean, I, like, have so much respect and love for that place and, like, the people there. Um, and it just, yeah, taught me a lot because I come out of, you know, working on Wall Street. I'd then gone to HBS. I'd done the startup thing. I, like, I was super aggressive, running super hard, get shit done. And you kind of learn that that's not always the most effective approach. And in a place like Nike, it's almost never the most effective approach. So I was just thinking this journey I went through of, like, learning how to be a really good contributor, learning how to run small teams. Right, learning how to run big teams, then learning how to run teams of teams. Right? And so, like, that journey, I think Nike was just, like, an incredible laboratory, and there were some amazing people to get to follow and, you know, learn from and whatnot. There's a couple of people there, a guy named Eric Sprunk, who was the COO of the company, a guy named Michael Spillane, who was the president of product, who I was just fortunate to work relatively closely with, uh, Tom Clarke, who was the president of innovation, uh, just a bunch of people who just, like—they would kick your ass, but they also, you know, did it in a really good way. And you could just learn and watch them and see how they tell these things to them. Really incredible leaders. So it's another opportunity. I mean, my whole life up until now, basically, I've been a part of these, like, stupidly amazing institutions, basically. You know, I went to, like, great schools in New York City. I went to Dartmouth. I went to, you know, HBS. I went to Nike. Like, these are like, you know, North Bay, ever.

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Jon Chee - 00:17:53: Absolutely. And I guess, like, as you're reflecting back on the Nike experience, like, what were some, like, key lessons that Nike taught you that only Nike could have taught you as an organization and the people there?

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Michael Newton - 00:18:05: Yeah. I think there's, um, truly—you know, Phil, like, you've read Shoe Dog a number of times. Like, I think Nike was able to truly be consumer-obsessed in a way that few companies are. And, actually, part of the downfall of Nike over the last couple of years is I think it lost a bit of that. And they'll get it back. And I know I'm like a long-term, very strong bullish guy on Nike, but, I mean, there was always like—the quote on the wall is like, you know, "Always listen to the voice of the athlete." And so, I just think, like, in that unique way, with a very tangible product and what product you could go use. Right? Like, I was like, "Oh, I've run in the craziest shoes you can imagine." Like, you know, just shit that, you know, some of it became real stuff. Like, I—we work very much, um, well, on a whole bunch of products that then they were like—we'd have air bubbles bursting on us. You know? We were out on a run. We'd be, like, three miles away, and all of a sudden, like, literally, the shoe would fall apart. We're like, "Oh, no."

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Jon Chee - 00:18:53: Yeah. Yeah.

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Michael Newton - 00:18:54: You know, stuff like that. But I think it really was just very much, like, if you keep the North Star of building excellent product and be very authentic to that consumer, kind of the rest takes care of itself. I mean, obviously, that's not true in, like, the literal sense, but, like, you need that first. But, also, as you can imagine, like, it was an incredibly competitive place.

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Jon Chee - 00:19:13: Yeah. I can imagine.

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Michael Newton - 00:19:15: So, I mean, you've read the book from Phil. Like, you've watched, I'm sure, the movie Air. Air is, like, very full of fiction, but it's like a fun movie, and you get the vibe of it. But I remember I was in a—in a meeting that Phil Knight spoke at, and he literally—he was like—well, he closed his speech, and he was like, "You know, and all else fails, just go fucking destroy those three-striped motherfuckers." Right? I mean, like—yeah. You know? It was just like—we were just—and it wasn't like nobody had a specific grudge against, like, no. It was like, "No. We're competitors." Right? And we're better when we're competing against something. And, you know, so whether it be University of Oregon running against Berkeley. Yeah. Yeah. Yeah. Yeah. Back in the day or, you know, whatever it was, like, how do you bring out the best of each other as being a competitor? And, yeah, I think, like, there's just some real place of it. I mean, sports is an amazing analogy for life. Right? You just make, like, incredible friends through environments like that. So, you know, I feel very, very grateful for the experience that I had there, and it's a really wild place in many ways. It's changed a lot recently, but I think it will get its mojo back.

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Jon Chee - 00:20:20: Yeah. Absolutely. I think so too. And I love the North Star. You just, like, always have to remember why do we do this, and that's for every organization. And every company has its own North Star. But, like, you gotta remember. I can imagine as companies become larger, more successful, there's just more moving parts. It kind of has this entropy. There's, like, natural entropy to it. Even as things are, like, experiencing that, you gotta, like, will it back and bring it back. Even in small organizations, like—and we're small. And you can just see it naturally start to disperse. And it's like I always felt like a lot of leadership is just, like, beating that drum to remind you why do we do this.

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Michael Newton - 00:21:03: Yeah. Well, it's interesting. I mean, Nike went through essentially what I—like, if I look at what changed in the company and why it struggled recently, I think it essentially is because it went from being a founder-led company to being a professionally managed company. And actually, at HBS, I remember we, like, studied this, and there's a lot of literature on, like, these things. But it was a company where when it was truly founder-led and whatnot, they could just be really authentic to the original mission of that business. And, of course, like, there were pressures from Wall Street and all that stuff. But still at the end of the day, you had this generation of people. Because Phil Knight had left being the leader, but he was still super involved. And you had people who were, like, part of the founders. So when I was there, primarily, Mark Parker was the CEO, and Mark was this designer who kind of just, like, exuded the ethos of the company. And so, it was just, like, very authentic to that. But then that generation kind of moved out. They chose to bring in an outsider. He'd been on the board, but he was, like, a kind of professional CEO. He'd been the head of Bain before. Uh, I've, you know, met John Donahoe many times, have a ton of respect for him, but he just wasn't the right leader at the right time for the business. And you combine that with the pandemic, I think a lot of pressure around, like, how do you, you know, drive quarterly results. And instead of just focus on, like, what Nike was super good at, they started to, like, milk and, you know, try to, like, just maximize every aspect of the business, you know, moving away from distribution relationships, like, not having streetwear follow athletic authenticity. They tried just to push streetwear as its own thing. And, like, I just think that got to a place where it just was, like, a little too much for the brand to maintain. And so, you know, it has kind of lost that. And, you know, the world's changed a lot. You know? These new brands are able to create really amazing products in ways that are easier than it used to be.

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Jon Chee - 00:22:44: Yeah. And I—I think this is just an observation as someone who's just, like, interested in business and business history. It's just, like, every kind of, like, cohort or just, like—you know, you talked about, like, the founder-led companies. How do you properly succession plan and keep that mojo? I don't know. There's only a handful of companies that have done it. You mentioned Munger earlier. It's like, how does Berkshire continue without the two of them at the helm? Yeah. I don't know. I don't have the answer, but it's always a—it's always a question I've asked myself. It's like, how do these—these companies—and maybe there isn't a good answer for it.

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Michael Newton - 00:23:20: I agree. I think it's super, super hard. And, actually, if I were to join a company that I thought was about to go through, like, a founder transition, I wouldn't join it. Right? Like, I wouldn't have joined Apple, like, just when, like, Steve, you know, was leaving and, you know, Tim was coming in. Now, obviously, now it's gone through that evolution, and the company's done amazingly well. Right? There's no doubt about that. I'm like, you know, Tim's obviously done an amazing job leading that business. I had the chance—he was on a board at Nike. I had the chance to meet him a few times, which is pretty cool. But a company that's kind of gone through, yeah, you can join, you know? But, like, it's super hard. The company that I think does an amazing job with it—and there's actually because you probably listen to the Acquired podcast.

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Jon Chee - 00:23:58: Yep.

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Michael Newton - 00:23:58: Right? Everybody—like, that podcast is like—you know, they're like royalty.

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Jon Chee - 00:24:02: Yeah.

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Michael Newton - 00:24:02: But Hermès.

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Jon Chee - 00:24:04: Yes. Hermès is that episode.

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Michael Newton - 00:24:06: Super example. And, you know, they just build up, like, the family and people, and they're just, like—they are, like, maniacal about maintaining the vision of the business. And what's interesting is actually, at times, I think they kind of probably were, like, losing because of that. But now if you look at it, Hermès is kicking ass. Yeah. Right? Because they actually have, like, really maintained a super authentic brand, the level of quality, right, how they treated their consumer, how they thought about pricing in the pandemic. They just kept true to their roots. And Hermès is now like, as a single brand—I don't know the stock price right now—but Hermès, I think, is probably worth more than all of LVMH, which is, like, kind of wild. Right?

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Jon Chee - 00:24:47: Yeah. That's so crazy.

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Michael Newton - 00:24:49: So I think there's, like, some companies that have really figured that out. But if you told me, like, obviously, Zuckerberg's not going anywhere, but if you're like, "Hey. Zuck's out and this thing's going over," I would short Facebook stock. Yep. Right? One that's gonna be super interesting is gonna be NVIDIA with Jensen because that's gonna come more quickly. I mean, he's in great shape, and he's not that old, but, like, obviously. So, you know, we'll see. Microsoft moved through it, but they had some terrible times.

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Jon Chee - 00:25:12: Yeah. Yeah. Yeah. Yeah.

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Michael Newton - 00:25:14: Terrible times. Starbucks is another example that fucked it all up. Yep. Right? Howard Schultz had to come back to the business, I think, three times.

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Jon Chee - 00:25:21: Yeah. Yeah. He—they're just like,

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Michael Newton - 00:25:23: "We need—go back. Go back. Go back." Yeah.

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Jon Chee - 00:25:25: It's just like—I've always wondered. It's like, how do you channel that energy throughout and just have it permeate? Not that I, you know, I don't quite know, but, like, I think that's why at least to bring it back to Nike, isn't the current CEO someone who was a lifer? Yeah. I can't remember what his first role at Nike was. But yeah.

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Michael Newton - 00:25:44: I know. He was, like, a sales guy, like, when he was super young. Yeah.

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Jon Chee - 00:25:48: Yeah. And just, like, that is, like, the only kind of, like, working theory I have is, like, you have to have someone who's, like, lived in that era of where that kind of energy was, like, everyone was on the—like, that North Star and just, like, lived it.

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Michael Newton - 00:26:02: Yeah. I know. I agree with you. I mean, I met Elliott a few times, and because we were in different parts of the organization, he was all on the sales side, and I was always on the product side. I just didn't know him that well. But, I mean, obviously, I know a lot of people who know him very well. And I just have tremendous, tremendous respect for him because he is just resoundingly known for being an incredible leader and somebody who just, like, cares deeply about people. I think he's been given an incredibly difficult challenge. And the playbook can't be at Nike now. It'd be like, "Okay. Well, we kind of tried to do something. We messed it up. It didn't work. So let's just go back to what we were doing." Well, like, the five years of that kind of mess up, like, the whole world has changed. And you've ceded a ton of ground to people. You used to go into a running specialty goods store, and it was like Nike had, like, three-fourths of the wall. And then Nike decided in its infinite wisdom to, like, "Oh, we're gonna sell all our shoes directly because everybody's gonna come to us." They seeded all the space, and all of a sudden, it's like, "Okay. Well, On gets a lot of space. HOKA gets a lot of space. Brooks gets a lot of space." So it's not like all of a sudden, like, Nike walks back in there. It's like, "Oh, sorry. We treated you like shit. We want our wall space back." Like, no. It doesn't work that way. You gotta earn that back. And so, you know, I think Elliott has the relationships with those kind of partners and whatnot, but the product's gonna be great. And, like, you know, it's gonna take a while. But I agree. I think in that moment, like, bringing back somebody who's, like, got the real DNA and is, like, a founding generation type person was the right move.

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Jon Chee - 00:27:23: Yeah. It reminds me of, like, the—you know, to nerd out on Acquired a little bit, just like the Costco episode. I think the current CEO was, like, moving pallets, and he spent his whole life at Costco. And now he's the CEO. It's kind of like, yeah, like, lives and breathes the Costco, like—and you—you've seen it from the very, very—

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Michael Newton - 00:27:40: And he'll never let the hot dogs be more expensive.

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Jon Chee - 00:27:43: Yeah. Yes. Exactly.

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Michael Newton - 00:27:45: But what are the companies, like, that can do that? Right? Because I think there are some companies that are more like cults, you know, if you will. Like, they will—and so you're like, you need to maintain that, and you need to have the people who have been there throughout their whole career. But then there's, you know, other companies who are different. You know? It's like, "Nope. You can bring in a real professional CEO. They can do a great job. You know? They can really deliver."

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Jon Chee - 00:28:03: Yeah. And that's not to poo-poo on people who are from other organizations because there are plenty of folks who are coming from the outside and going in and running companies exceptionally well. It's just like a stylistic difference, but it's an interesting kind of thought experiment of, like, what it takes to do that. But it's like a lot of it is, like, it's like it comes back to, like, the attitude.

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Michael Newton - 00:28:24: I think it really does. Yeah. It comes back—

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Jon Chee - 00:28:27: to the attitude because there's like—if your attitude is like, "We're just gonna hit quarterly numbers." Yeah.

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Michael Newton - 00:28:32: When Phil Knight started Nike, it was about serving the athlete. He was a runner. He worked with Bill Bowerman. They wanted to make better product, and they were, like, just totally, like, obsessed with this. And so that—that attitude and whatnot. And then, yeah, it becomes a multi-billion dollar company. Sure. But, like, you know, the attitude is there. You know, I think there's a lot of companies that have been started where, no. This is just about, like, how we kind of make money. And so, Harvey Golub, who I had mentioned before I worked with, had been at McKinsey. He went on to run American Express super successfully. And I don't think there was like, "Oh, there's not this, like, culture of ethos," stuff like—and I could be wrong because I never worked at American Express—of American Express, but, like, you know? So I think he's able to go in there and be like, "Okay. We're just, like, a super efficient business. How do we do this?" Like, there's not, like, a lot of—this is gonna sound bad because I don't mean it, though—but there's not, like, a lot of heart in it. And I'm sure people are obsessed with American Express and have a lot of heart and, like, care for the consumer, but I think it's different than Costco or Nike, all these different places.

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Jon Chee - 00:29:27: Yeah. I think there's, like, a million ways to make a million bucks. There's, like, so many different ways, and nothing against, like, banking or investment banking or, you know? But they're just motivated differently. It's just like a different motivation and, I guess, aligning those motivations. If you're motivated to just make the most money as quick as possible and for as long as possible, that can be your North Star. Like, yeah. Is—is this a different North Star?

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Michael Newton - 00:29:50: Yeah. No. I mean, there's tons of hedge funds who that's all they do. Right? And their whole culture is, like, just around that.

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Jon Chee - 00:29:56: Just different. It's, like, a different North Star. So it sounds like you had an incredible experience at Nike surrounding yourself with just legends. Just, like, absolute legends. When did you know it was time to move on, and did you know what was up next?

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Michael Newton - 00:30:11: I did not know what was up next. And so, that's how my crazy biotech journey gets started, and so we can get there. But there's a couple of things. So, you know, the business at Nike was, as I mentioned, was kind of changing. The leadership was changing, whatnot. A few of the people and senior leaders who I'd been really attached to had started to kind of leave the business, and so that started to change some things. As a family, we really wanted and saw an opportunity to go overseas. And my wife being from Europe, um, makes that, you know, easier for us. And I think we just came to see an opportunity, like, "Okay. This chapter is kind of coming to a close." I was super fortunate. The company was very, very generous to me, and, like, they gave, you know, the ability to, like, leave on good terms and, like, everything like that. So, um, that was awesome. But, yeah, it was just right. It kind of became clear. It was like, you know, "I'm not gonna get what I want out of the next steps at Nike for a variety of reasons, and there's this next chapter for us." And we wanna, you know, show our kids there's a little bit what we talked about in the earlier conversation, like, get them to a place where, uh, they could be, you know, in a whole different environment that could help them grow and learn and be exposed to different things. And so, we're really fortunate to, like, you know, come over to Europe and get settled here. So I left Nike. My last day at Nike was 05/31/2023. And I should say as well, my wife ended up working at Nike too.

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Jon Chee - 00:31:28: Oh, wow.

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Michael Newton - 00:31:28: Yeah. So she had been working for the startup, and at a certain point, she moved over. And the startup got acquired by Amazon and whatnot. She ended up working at Nike too. And so, what ended up happening was it made sense for me. I was like, "I was ready to leave or whatnot," and she was able to transfer her role to Europe. And so, we actually, like, got to be able to move over here. And so, I actually just—you know, May 31st was my last day. I took the summer off. You know, my wife had to like—she was working really hard and hit the ground running, so I was able to bring the kids over, get settled. They went back to summer camp. We got the house set up. You know, just a lot of those stuff. You know? Um, and, you know, frankly, I've been working kind of nonstop, you know, since, basically—well, even before business school, since, you know, graduation of college. And so, it was nice. I took a little bit of a summer off, and I just was networking and trying to find other opportunities. And I knew my whole thesis was, you know, "If I'm gonna stay at a big company to do that, like, let me just stay at Nike." Right? Like, I built that. But this was like, "No. Life is short. I wanna go do something, like, as dramatically different as possible." You know? So I was really looking at mostly small companies. There were some bigger things that came up. But I was lucky to get put in touch with this opportunity where, you know, Qorium, our company, had essentially had kind of two years of scientific development proving out the product and the process and kind of the core bioprocess underneath that. And, you know, they were ready then to, like, take it to the next level. And so, they hired a headhunter out of London, and I got put in touch with them. And we started to get to know each other. It turns out we had some connections actually between—it's a small world. And, uh, you know, I just kind of got to the point where they're like, "Damn. You know? Do you really wanna do this?" And I think I was smart enough to know that I didn't know what I didn't even know, not to quote Donald Rumsfeld, but I was definitely a little like, "I don't even know, and I don't know." But I was, you know, dumb enough to believe I could kind of figure it out.

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Jon Chee - 00:33:17: Sometimes you need that.

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Michael Newton - 00:33:18: Well, because, I mean, honestly, to your point, like, biology is hard.

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Jon Chee - 00:33:22: Yeah.

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Michael Newton - 00:33:22: Like, biology is really hard. These are, like, long games, and we're making great progress. And I'm, like, fired up about what we're doing, but I didn't understand fully what it would be at that time. But for me, it was: I can come be a CEO for the first time to a venture-backed business, essentially, a really international company in the Netherlands. And so, I went from having, you know, a multi-hundred person team at Nike, Portland, Oregon, you know, huge global, you know, company, Fortune 500, to, like, being the CEO of a venture-backed company based in Maastricht, not even in Amsterdam. The company's not even in Amsterdam. It's outside. And you're just like, "Wow. Okay. This is—this is a big change." And it was awesome. It continues to be awesome, but, like, it really did fulfill my goal, which was to say, "How can I continue to press myself to ensure my learning curve is as steep as possible to get the diversity of experience and kind of see what we can do?" And in that same vein of what we talked about before, Jon, is, like, I really do believe that, like, hard things are hard. Right? Obama used to have the little plaque on the Resolute desk that was like, you know, "Hey. Hard things are hard." But it's like, we gotta go do them, or we gotta go try. And, you know, I'd look at this business and I say, you know, leather's really big. It's a huge—it's a $100,000,000,000 industry. People are trying to disrupt it. You can't do it. We have a very clear thesis. The only way you could do it is with real leather. And so, biology allows you to do that, which is cool. And it's much more sustainable on a lot of product benefits and stuff like that than you can do. But, also, I just came to understand, and you know this a thousand times better than I do, Jon, because we're getting directly into your wheelhouse, is what synthetic biology, like, has to become for humanity is just, like, unbelievable. And I think very few people, like, outside of this field, yeah, understand it. And, you know, cultivated food has gotten a lot of, like, attention and the boom and bust of data there and whatnot. But, like, we need to harness biology to be the factory of the future for us. And starting with leather is a pretty good place to start because it's like a simple monoprotein. It's not regulated. Right? Like, there's a lot of things. It's got a relatively high price point. Like, there's a lot of things that dynamically, structurally help it be a good spot, but it's bloody hard. But I'm excited to basically be part of, like, what I think is, like, the future of synthetic biology. I just don't know. Like, I don't think its potential is gonna be unlocked, like, in our lifetimes. Right? Like, this is, like, a hundred-year-plus journey, and it's gonna be unbelievable. Like, when we figure out how to harness and really control the biological pathways, like, the world's gonna be our oyster. You know? It's really—I mean, from a healthcare perspective, obviously, but just, like, when you're, like, able to basically use cells to make whatever we need, like, it's gonna be incredible. But it's still bloody hard. I mean, we're talking about, like, you know, still trying to figure out how you build, like, you know, single-gene-edit modifications to enable cell-like modification, and, like, that doesn't work perfectly. You know? Like, you said it before. It's, like, one step forward, two steps back, four steps forward.

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Outro - 00:36:19: Thanks for listening to this episode of The Biotech Startups Podcast with Michael Newton. In part four, you'll hear how Qorium came to life sparked by a mission-driven mindset and a transformative scientific vision. Michael also reflects on the lessons he's learned as CEO and how his early experiences continue to shape the way he builds teams, leads through uncertainty, and makes decisions. If you're enjoying the series, be sure to subscribe, leave a review, and share it with a friend. Thanks for listening. The Biotech Startups Podcast is produced by Excedr. Don't want to miss an episode? Search for The Biotech Startups Podcast wherever you get your podcasts and click subscribe. Excedr provides research labs with equipment leases on founder-friendly terms to support paths to exceptional outcomes. To learn more, visit our website, www.excedr.com. On behalf of the team here at Excedr, thanks for listening. The Biotech Startups Podcast provides general insights into the life science sector through the experiences of its guests. The use of information on this podcast or materials linked from the podcast is at the user's own risk. The views expressed by the participants are their own and are not the views of Excedr or sponsors. No reference to any product, service, or company in the podcast is an endorsement by Excedr or its guests.

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