Founding Partner at NEXT VENTŪRES: Melanie Strong

Early days, Adidas had almost 100% market share in soccer. So Nike was just starting to take a look at soccer. My job at that point was to manage brand websites that were not commerce enabled. Ultimately, that led to working on Nike's digital products.

I was in Cyprus at the time, and I was a young kid. There were no social media like today, and the reach that you had with those in Cyprus was extreme. I cannot fathom how you managed to get into such a small country in the middle of nowhere to get all that interest from young people.

We were really good at scouting talent before they became a LeBron James. We had people on the ground in Europe, scouting out the next Cristiano, let's say, and building a relationship with that player before Adidas or Puma or Umbro at the time had the opportunity to build a partnership and sponsorship with them.

Great. Melanie, it's good to see you again. We met yesterday. You mentioned that we met. It's been two years. I remember it as yesterday when you reached out to invest in Terra. You have been one of our best investors since. So it's incredible to have you here. I wanted to do this discussion together and hear about your journey, your journey in Nike. How did the company evolve? When did you join? And then touch a bit about Next Ventures and how you launched with Lance. Where about we start with that?

I started at Nike in ancient times in 2002, back when we did not have an e-commerce enabled website. Yes, there was a time when we did not have e-commerce enabled sites. My first job was managing a few websites for Nike. I have a journalism background, so that sort of made the most sense. Early days, early in my career there, I had absolutely no business working at Nike because even for an entry-level job, as you can imagine, they required an MBA.

They wanted 8 to 10 years of brand experience. I didn't have any of that, but I happened to be a good runner. Part of my interview, as I learned when I arrived at Everton, was running twice around Nike's headquarters. Luckily, I had mostly Nike gear ready to go, but they didn't prep me on that one.

Was it literally the last round of interviews, for example, or what?

It was my first and only interview. It was a full day of panel interviews, which I later learned I completely bombed. But I went for a run with a person who would become a hiring manager. He was like, "You know what, you're a good runner, we'll teach you all the other things." Eventually, I got the job.

What was the first role?

Digital producer for nikerunning.com and nikeacg.com. I also worked on a few projects.

Where was Nike then? How big of a company was it?

It was probably 20 million in revenue, give or take. We had just started getting into soccer. Back then, and I say this because I know you and I are both fans of football. Early days, Adidas had almost 100% market share in soccer. So that gives you a sense of how long ago it was from a brand diversification perspective. Nike was just starting to take a look at soccer. We still had ACG, which you may or may not be familiar with.

ACG stands for all conditions gear. It was an outdoor snow kind of action sports-oriented category. My job at that point was to manage brand websites that were not commerce enabled and then to obviously take them through this digital revolution, this commerce revolution of becoming shoppable. Ultimately, that led to working on Nike's digital products. I had the opportunity to work on Nike Run Club, which was Nike's first foray into an app experience that tracked your miles and connected you with a community of runners.

Super fun, very nerve-wracking experience because we weren't good at those things at Nike early on. Part of my job as a head of Nike running marketing was to teach people how to use the Nike Run Club app and to make sure they evangelize their experience. But it wasn't always accurate. If you know anything about runners, accuracy is really important. The difference between running a mile and running 1.2 miles is significant.

We weren't always good at that early days. But it was a really cool way for me to understand how a brand like Nike could create digital experiences, create member journeys. That was sort of the forefront of understanding membership from a brand perspective. Super fun. I had the opportunity, as you know, to go and work in different regions of the world with Nike. I was in Argentina working on football.

I was in South Africa working on the World Cup in 2010. I spent a number of years working in Latin America, sort of the southern hemisphere.

What did you do in the World Cup?

I was the marketing lead. I was partnering with the team on the ground there, basically telling the story of the World Cup in Johannesburg. The retail experiences there, we opened up a facility called the House of Football in Soweto. Every time Nike does something in a market around a big sporting event like the Olympics, they do something to leave the community better than it was before the event.

In the case of South Africa and Joburg, we created the House of Football, which my understanding is it's still there and it's still hosting kids from a very underserved, impoverished community within Johannesburg, teaching them how to play football, but also giving them access to great medical care, dental care. HIV testing was super important at that time. It was a really cool opportunity to see what the Nike brand could do in a community like that to not only obviously teach kids how to play and love sports, but also create an opportunity to provide them health care. Really, really essential requirement if they were going to be able to also play football.

If we go back to that, Melanie, the Nike football, as you mentioned at the beginning, was not a big brand when it was compared to Adidas because Adidas, as you mentioned, had most of the market share. What are the things that... I remember the videos, the Jogamonito that you were doing and all of that back in the day. What were the important things to do for Nike to become recognizable?

I love these stories because they do translate to the work we do today in early-stage venture. If you're not the first mover, Nike was not the first mover in football, how do you create a market for yourself? How do you disrupt the leader in that space? How do you convert consumers? Nike was really good at that. We did a couple of things. We went out and started to sign players. We signed national teams, local clubs, and started to make a name for ourselves. Because back in the day, teams were not signing up players.

So what gave you the idea to sign up players?

We had success in other sports doing that work. We knew if we were going to win over the hearts and minds and feet of fans, we needed to find the next star player. We were really good at scouting talent before they became a LeBron James. There's, I think, a very famous story about the LeBrons, the Michael Jordans, Nike's ability to find these incredible athletes before they became the household brands and names they are today.

We had people on the ground in Europe scouting out the next Cristiano, let's say, and building a relationship with that player before Adidas or Puma or Umbro at the time had the opportunity to build a partnership and sponsorship with them. The other part of that is going and buying that market share. We did that by purchasing Umbro. Early days, that was, I think, a really important opportunity for us to acquire not only some consumer love through the acquisition of Umbro, but also the England Football Club, the national club.

They were sponsored by Umbro and thus post-acquisition sponsored by Nike. Those were the kinds of ways. Again, not unlike what you have to do as a founder and CEO and what a lot of early-stage founders think about when you're trying to take market share from a competitor, how can you both play in their backyard, but also be different and nimble and start to chip away at their ownership in a space?

I think it has to do a lot with hiring as well, because if you are going for the undiscovered talent, you probably have to be doing similar things in how you discovered Cristiano Ronaldo early days. If we go there, actually, did you have people on the ground looking at 16-year-old players, for example? How is this technically done?

Sure. Yeah, we always had scouts in our markets. We weren't everywhere, but Europe was obviously very important and still is for Nike, Latin America, and then North America. Later, I think we built a more robust kind of scouting platform and team for parts of Asia and the rest of the world. But yeah, we had people who were either part of the Nike family, they were employees or they were hired by us.

They were partners of ours, just going out and spending time in youth leagues. I'm more familiar with the North American model of soccer, going out and watching kind of the high school matches, seeing who the rising stars are, following the coaches who we know have a reputation for creating the next generation of talent, and then just being there first and developing personal relationships. I think that's where movies like The Heir movie or Phil Knight's book, if you've ever read Shoe Dog, do a really nice job of showing how that early strategy of going out and just meeting face to face and winning that way was super important.

That's a very long-term view of the world, because you are taking a bet that is going to work in five years, for example. How was this instilled in the company?

One of the things I loved about Nike, and I think about this a lot with our portfolio companies today, we didn't spend a lot of time worrying about our competition. I could say this is the case for some of our most successful portfolio companies. Aura is not spending a lot of time looking at what Whoop is doing. I think they're spending a lot of time knowing what they know about their business strategy, their brand.

I think it's really important to build a brand identity that has its own unique meaning in the world, and then who your core consumer is, and then going out and exceeding that consumer's expectations. I think we were really good at thinking that way, not worrying about the 95% market share Adidas had, but rather, what can Nike bring to the world of football or soccer that other brands haven't executed on, and let's go do that flawlessly.

Let's go innovate. Let's go inspire. Nike was exceptional when they focused on something, at doing that well, and just having the confidence, maybe a little bit of swagger to know that in time we could really win. We were always in the business of winning. If that took five years, fine, but as long as the goal and the signals were there to show that winning was possible.

You mentioned that you need two things. One is going after them, discover talent, and then going after acquisitions and buying the big brands. Were you doing something else, or was that the secret sauce of how things worked?

You needed to be better in the ways your company could deliver on that better. In Nike's case, product innovation was always its North Star. Once we signed the Christianos, we needed to make him a better boot. We needed to make him better apparel. We needed to also provide him with the best training gear and really surround him with product innovation and all the ways he required that to perform at his best.

I had the luxury of spending some time with Cristiano and visiting his home gym in Madrid at the time. He took his training very seriously. It was athletes like him who really, I think, helped us understand how to expand the brand into the training space. What happens on the pitch really is as important as what happens off the pitch if you're going to be a world champion player. We needed to understand what these athletes wanted from their equipment that they weren't getting today, what other services, access we could provide to them that they weren't getting through other brand partners, and again, just exceed their expectations.

Then basically, the strategy was finding the undiscovered talent and then giving them everything they need to become the best.

In the ways in which you are already exceptional, which would not have been then and certainly isn't now, things like coaching recommendations or nutrition or the other ways. At the time, we probably weren't as focused on mental training. That obviously evolved. In the ways Nike was exceptional then and I think still is today around product innovation and moving the needle in how to make athletes perform better and faster and recover better and faster.

We just were always really good at that. That was the sort of focus Phil brought to the company when he started, Phil and Bill Bowerman. We were really good at that, spending time obsessing every player's needs and then delivering something that met those needs.

No, Melanie, I'm now remembering these days I remember Ronaldo, for example, or Rooney. I remember that Rooney back in the day was very good at doing exceptional shots on target versus Ronaldo in those days was very fast. I remember that the actual shoes that they had was focused on that. Ronaldo had the speedy things and then the Rooney had the target things. Then everybody, if you liked Cristiano Ronaldo, then you would get the shoe that was for the speed and all that. You would associate yourself with that. The products were built on that. Now we are mentioning it, it kind of makes sense.

In every category at Nike, we thought this way. If you were a lightweight speed runner, we knew how to design a specific shoe for you and for that shoe to look the way you wanted it to perform. I think we did that in football or soccer very effectively in every category. I think we did a really nice job of taking what could help elite athletes perform better, but making it accessible. Sometimes that happened through marketing, for sure.

Sometimes it happened through grassroots experiences. We spent a lot of time making sure that we were connecting with everyday athletes around the world through training experiences, through sponsoring local events, just giving people an opportunity to try the product. Because we knew if we could get them in the shoe, they would fall in love with the shoe.

For those players that you mentioned, how early were you personally involved? Was it after they became great players or was it very, very early on? Or how did it work?

I think it depends on the player and the region. Nike was massive, obviously, still is. In the case of soccer, I didn't start working on that business until 2009. Then my job as head of marketing for football in emerging markets was essentially to work with our teams in key cities like Sao Paulo, Buenos Aires, Johannesburg, Sydney, Singapore, places where we had sponsored teams or athletes, where we felt there was a huge market opportunity.

My job was to spend time helping those local teams identify the next Cristiano, let's say. I spent most of my time at Nike working in Beaverton, in Oregon at world headquarters. Our jobs were typically more upstream. Future product concepts, consumer concepts, understanding what athletes were going to want from Nike in the future, anticipating those needs. Whereas the folks who were leading the brand on the ground in our key cities generally owned more of those relationships.

We spoke the other time about the fuel bans.

Yeah.

That was one of my favorite wearables ever. The first wearable I ever bought actually was the shoe port that you are placing inside of the shoes. It was a website, remember? I was speaking with someone yesterday, I was trying to remember. There was a website, you are connecting the USB to upload all your data. Then the fuel ban came out. I still remember it was the biggest thing at the time. How involved were you into it?

I was involved in all those things early days. So even before Nike's partnership with Apple, we had a partnership with Philips, and we made these really funky pods. They look like little submarines. You would tie them to the top of your shoe. This was before we designed the pod for the insole of your shoe. That came along with the Apple partnership. But prior to that, almost as soon as I started Nike, I met a mentor of mine who I've mentioned to you, Michael Chow.

He's back at Apple. Nike stole him for a number of years from Apple to come work on those early tracking products. My job at that time as the head of running marketing was to help Michael and his team on the hardware and product side, design a great product that we wanted to market to consumers. What is it going to do? What's the user experience going to look like? We developed an online training tool that synced with the pods on your shoe so that you could collect that data and interpret it and make sure that you were running and training at the level you were supposed to be.

The sensors in the shoes shortly followed. Those were launched to correlate with the launch of the Nike Run Club app. Again, super fun opportunity to work on wearables.

What brought that idea to the table? I remember them. And at the time, you didn't really... I don't even remember if there were other wearables. Probably there were a couple of them. But that was a very innovative product. How was the process of discovering that product inside of Nike? How did it work?

It was hard. If you were to ask the people who worked on the digital product and technology side of the business how it worked to have an idea, like launching an app, launching a piece of hardware, the FuelBand, they would tell you it was hard because the company wasn't naturally designed to do that kind of work. I think they figured it out over time. But it did come from the same insight that every product innovation idea came from, which was, okay, there's a problem that an athlete is experiencing, hopefully a lot of athletes are experiencing.

How can Nike solve that problem? One of the ways we wanted to do that was through digital technology. It took a while to get those ideas sold in at Nike. As you can imagine, we've always had a very rigorous board review process. We've always had incredible people, including Steve Jobs, on the Nike board. Ideas like that needed to be approved by the board.

Steve Jobs was on the board?

Yeah. I believe Tim Cook is still on the board. Steve was at our event when we launched the Nike Run Club app, as was this athlete named Lance Armstrong.

Okay. That's where you met him?

Say it again.

That's where you met with Lance?

Yeah. I met him in 2004. We worked on the Yellow Wrist Band, launch of the Livestrong Band, if you remember that. Not a wearable per se.

I'm trying to remember it.

Of course. The funny thing, Melody, is that I was in Cyprus at the time, and I was a young kid. There were no social media like today, and the reach that you had with those in Cyprus was extreme. I cannot fathom how you managed to get into such a small country in the middle of nowhere to get all that interest from young people.

It's the power of the local teams. We had great people.

How did this work? Let's say for Livestrong, for example, and all of that, what was the approach in those, let's say, emerging markets, maybe, or in the small countries before having access with Facebook, for example, or Instagram?

It was really dependent on in-person contact. You were doing grassroots marketing. You were finding places where kids and athletes played sports. You were finding the people who were most trusted by those kids and athletes. Then you were connecting with them through inspiration, really, at the end of the day. Marketing was such a core competency for Nike. As long as I've been a Nike consumer, even way before I joined, we were really good at storytelling and really good at connecting with people emotionally, really good at standing for things that matter to athletes and everyday people.

I think that there was just an ability to break through in smaller markets because the stories were so compelling. You could say that about the wristband. You could say it about the fuel band. You and I have chatted more recently about all my learnings and our learnings working on that launch. It was so scary to launch something like that into the marketplace. We knew it wasn't perfect, but we knew it had the potential to be amazing.

At some point, one of the mantras at Nike was always progress, not perfection. We were comfortable because we'd gotten to the place where our consumer believed us and also forgave us when we didn't meet their expectations that if the fuel band wasn't perfect, we'd still figure it out. We launched a product knowing it had some bugs or it had some opportunity to be better. Nonetheless, I'm super proud of having worked on that.

We sunset it in 2018. For a while, there were lots of headlines in media around it being an epic failure, a big failure for Nike. It's funny to work in this space now.

Oh, yeah.

We're early investors in Oura Ring. I spent a lot of time with that team talking about what we learned from the fuel band and how the fuel band has set the mark for the whole wearable market to come. I'm really proud of that despite it being seen as unsuccessful at the time.

Can we go there? What was the approach with the fuel band? How did you start thinking about it? I saw that you are early investors in Humane as well. I think I see some similarities in the marketing approach, which is pre-launch a year ago. They started all these hidden and secretive kind of revealing little bit of information every time before a very big release. Was this a similar approach with the fuel band or was it something else? How did you do it?

Oh, sure. I would say that was the case with any highly innovative and exciting new launch from Nike. We spent a good three to six months preceding, preheating, we called it, the market, giving early product to highly influential people who could give us feedback on it and help us be better when we did launch. People who could help us with the launch when it did happen. There was a very, I think, rigorous and thoughtful process around on how to preheat a market and essentially get it ready for a launch.

What are the secrets, Melanie? So you would go to those very influential people, let them test it and you would expect the word of mouth coming from them or how would you do it?

That certainly was part of it. Ideally, we were iterating on the product with athletes and influencers, you know, so we were co-creating with them. I think that's a really important part of, I hate the word influencer, but for lack of a better word, when you partner with someone because of the reach they have, ideally you want that relationship to be more than transactional, you know. In early days we prided ourselves on not paying for a lot of our entertainment marketing and celebrity relationships.

People just wanted to work with Nike and I see that at Aura. There are a lot of folks, athletes, entertainers, very famous people who come knocking on Aura's door and so they get a lot of organic reach and energy from that very personal and real interest and I think that level of authenticity is really important. We were really good at finding those people, finding people who already love the Nike brand, who happen to also be very credible with a consumer set, maybe a hard to reach community and we would spend time building relationships with them, building product with them, experiences.

They would be part of our launch. I mean you take the Nike Run Club launch, the app launch as an example. We hosted it at the Javits Center in New York. We took over a massive space, built out a whole experience, invited media, our athletes, Steve Jobs was there, again like Lance, Paula Radcliffe, our best athletes across every sport category regardless of their connection to running were invited to participate in this big event.

But I'd say most importantly were those core community leaders who had actually been working with us on the app for a very long time to get it right because as big of a brand as Nike has become, you can't bet on your own credibility. At some point, you also have to bet on having people who believe in your brand, who have their own unique reach, own unique way of saying why to choose Nike versus another brand and I think that played out for the Fuel Band too.

Just being able to acknowledge why it could help people be more active, how to use data to incentivize and gamify activity. I mean it seems silly and kind of basic to say that now but at the time in 2010 or even earlier when the teams in the digital sport group started working on that product, this wasn't an idea. This wasn't a thing that had been vetted but we felt like if anyone was going to build something like this, we had a good shot at doing it well and I think the marketing around the Fuel Band was exceptional.

We had subsequent efforts in hardware after that as well, just smart shoes. There was a program called ESP which was embedded technology into basketball and training footwear that seamlessly track things like hang time for basketball players with the idea that we could eventually incorporate that into a consumer experience and then that never really happened. I actually stole a whole bunch of those sensors and put them in skateboarding shoes when I was running the skateboarding category because we thought of all the communities where that kind of data might resonate.

Maybe skaters would want to know a little bit more about their movement in this 3D space through the lens of smart skate sneakers or skate shoes. Yeah, it was really fun to be part of a company that I think was comfortable moving the needle in certain ways and failure was okay if it helped us be smarter and I take a lot of that into the work we do now with our portfolio companies, having that level of confidence within the realm of staying focused.

I think the culture that you can create when you have this sort of vision for your company can create great work regardless of whether you're building in a consumer-oriented business or an enterprise business, you know this. You're still building a brand around your company and I think that that's a really important and meaningful work.

Melanie, it sounds there were so many experiments from Nike and that only can happen in a culture of experimentation and a culture that allows you to do that. How were the teams structured and what allowed that innovation to happen?

We always started from the lens of the consumer and it sounds really cliche to say that now. But we did and I think when you are orienting an organization around your end customer and not your group think, what does the CEO think, what does the board think we should do, what do our senior leaders think, but rather who are we designing this thing for? In Nike's case, a shoe or a piece of apparel or a product and then being really intentional around understanding that person's needs and so because we did operate very efficiently from the start to the end around a consumer concept or a problem, there was a lot of space to innovate there especially early on.

If you're working on a product concept that won't launch for 18 months and that was generally the cycle we worked on. We had four quarters every year, every quarter we launched a new concept for the brand. You're working on several quarters of ideas at a time because there's this 18-month journey from let's say idea to launch. Within that space, you have a lot of opportunity to be creative around how to solve a problem.

And one of the reasons why I love the work I do now and was drawn to working in the entrepreneur and startup space was because that mindset was always embraced and rewarded at Nike. Thinking differently, thinking outside of the traditional sports paradigm within a certain realm that was really embraced and I loved that. I mean certainly at the end of the day, we needed to drive a business, but we had the opportunity within those business objectives to deliver those results in a lot of different ways.

I think celebrating diversity within the world of sports for Nike was also a way to drive performance innovation. You have athletes all over the world. Perhaps there is an incredible insight that can come from Cyprus from a kid who's playing football who faced the unique problem.

It's a tough one in Cyprus because we have like 20 players or something.

You never know. I'm just playing to the audience here. Be that what it may, when you are serving international consumers, there are great ideas that can come from Japan, for example. There was a whole line of product inspired by the Japanese athlete and consumer that was very attractive across the world because I think people really resonated with how culturally different some of those designs were.

I think just we had had a really good time figuring out how to solve athletes' problems in different ways and there was a lot of flexibility from leadership to have fun while we were doing that.

Yeah.

To serve the customer so well, did you have a lot of small teams internally or was it top-down driven? Was it bottom-up driven? How were the teams inside?

Entirely depended on the category and the style of leadership within that category. When I was there, and this has changed in the last three years, when I was there, we were category driven. Everyone who worked on running worked together. Everyone who worked on football or women's worked together. You had a lot of alignment around your consumer and how you were going to serve that consumer in a unique way.

That gets really hard, by the way, when you have 15 different sport divisions. A couple of years ago, John Donahoe, the new CEO, came in and helped the company reorganize by gender. We'll see how that goes, especially acknowledging gender is no longer seen as a binary concept, but I also understand they were trying to simplify the organization. I think a lot of it, because it was such a big company, just depended on the style of leadership and the culture within that team.

For me, I really enjoyed my time in running, football, and skateboarding. I think if you do a good job of reflecting the culture of the sport on your team, it just naturally feels fun. You naturally want to do better work for that community of athletes. Skateboarding, obviously, was super cool. Despite not being a core skateboarder, I love the community, the art, the culture, the fashion, the music around skateboarding.

We tried to embody that for all of our team members within SB. If you worked in Nike SB, we wanted it to feel like skateboarding to you. We wanted to hire skaters, and we did. I feel like leaders at Nike who did a good job of building culture and a culture around innovation and trying new things, I think, really harnessed that from the consumer side.

The really crazy thing is that by doing this approach, it's not that you actually got part of the market share. You actually increased the market share so much. Because if you go 20 years before, running was not running that it is today, or football was not the football that it is today. All of that innovation from Nike in so many different segments basically grew the market, grew people, make them so interested into it.

Absolutely. One of our metrics we were gold on as business leaders was to increase participation in our sport. You wanted to attract more consumers of all ages, but especially young people, to playing sports for all the reasons you would imagine. Obviously, it helps Nike. You have a larger addressable market. You create more loyalty with that consumer earlier on, and there are all the societal benefits that come from playing sports.

As hard as it was to work there sometimes, and I feel this way now with the whole person health focus of Next Ventures, you know that you're helping people be better. You're helping people live healthier lives. You're having such a huge positive impact on society that despite this feeling and sounding corporate speak, I felt like at Nike, we were really making things different and better. We weren't just selling shoes.

I feel that way now as an investor in health and wellness companies. We want to help them grow, and we want to drive returns for our LPs, but we're also scaling the impact of healthy choices and healthier living and better health outcomes through the lens of our portfolio. We want to capture that as we grow.

If we go there, Melanie, let's say you mentioned that you met Lance in 2004. Can you walk us through that? How did you meet, and then how did you decide to start On2gether?

Yeah, the question I feel like everyone always wants to ask. Why Lance? I wonder if he gets that question. Why Mel? He was an exceptional athlete to work with. I started at Nike, as I said, in 2002. We launched the yellow wristband with him in 2004. At the time, Phil was still the CEO. He didn't want to put the swoosh on the yellow band because he wasn't sure it was going to be successful, so it just said Livestrong.

If you find people who have the yellow band without the swoosh, that is like Gen 1 OG Livestrong band. Eventually, of course, we put the swoosh on it because it was so successful. But we worked on that launch with him. At the time, I was, as I said, in running, so I did it through the lens of nikerunning.com and ACG and how we were getting our communities in those two categories exposed to Livestrong.

And then when I was head of Nike running for North America marketing, he was training for the New York City Marathon while he was also competing as a cyclist. And so I got to work with him on telling that story of how does a Tour de France winner also train for a marathon. And then we put a whole event together with him in New York City when he ran. And then I lost touch with him, as everyone at Nike did, when all of his self-inflicted wounds came out in 2012.

And it wasn't until 2018 when we got reconnected, where we started to talk about what next ventures could become. And as you can imagine, it took me some time to figure that out. Like, okay, Lance, what does he bring to the table that is complementary to what I do? Or what kind of person is he now? I spent a lot of time getting to know him and his wife and his people and all the advisors and friends and some of our LPs now who are just sort of helping to mentor him in this chapter.

And at some point, like the caliber of the people who have believed in him despite his mistakes is, as you know, exceptional. And so I felt like I'd found sort of my perfect teammate to build this fund because there are plenty of things that I feel like I bring to the table. But his level of reach and his personal story, which is still very motivating for him. We have a strategic partnership with the American Cancer Society.

Be hard pressed to tell you that we would have built that without Lance. There are certain investments in our portfolio that certainly came to us because of Lance's story. So we started talking about this in 18 and I left Nike in June of 19. It's very scary to leave the company I had essentially grown up at. But I had known that I wanted to make this change into early stage. I just didn't know how.

I didn't know if I was going to join another more established firm or start something from scratch. And I have never for a single moment regretted the choice to start from scratch. I just think it helps me be a better investor.

Why a fund, Melanie? Why specifically you wanted to start a fund?

I like the portfolio of businesses that you get to invest in and advise and partner with when you're a fund manager. I sort of like our bets as a firm. When we're diversified across a portfolio of companies, I think I spent so many years living and working through the lens of this monolith of the Nike brand. Despite having a lot of really disparate and different experiences within Nike, I kind of wanted the opposite.

So if Nike was a huge publicly traded 50 billion revenue company, I wanted to go to the start of things. I wanted to see what it was like to build something from the beginning. And I thought I had a better chance of scaling the things that I've learned in my career through this side of the table as an investor versus an operator. And it was scary. I mean, I think when we first met, we talked a little bit about my unique pedigree.

It's not the typical VC pedigree. And how does that benefit, hopefully, the founders that we invest in? We also had the good fortune of meeting and bringing on Julian Eysen, our third partner, in late 2020. Very significant move in terms of someone who not only, I think, sees the world.

Another legend.

Yes, an absolute legend. Olympic track and field star, founder, eight years at Golden Gate Capital. He compliments Lance and my background, but also comes to the table with the same belief around why we want to build and grow this fund, which is, as I said, sort of scaling the impact of these businesses who are helping people live healthier lives. And so the mission is really what drives us. And it's not, honestly, that different from Nike's mission, which was to innovate, inspire for every athlete in the world. We want to do much the same through the lens of Next Ventures.

Yeah, Melanie, that's the thing that the most helpful thing for entrepreneurs in general is basically, it sounds like you aggregate the wisdom, you aggregate all the experience by doing all of these things. And Nike became a massive company over time. So then instead of applying that knowledge to one more company, you can help a portfolio of companies and pass that wisdom, pass that knowledge, so many people can be successful.

So I think that being the outsider that you mentioned is actually much more powerful. And then when you created the fund, I would guess that at the beginning, it was different to find those entrepreneurs to invest in than it is today. So can you walk us through a bit about that? Like, how did you try to find the first companies to invest in? And then how did this change over time?

Yeah, that's a great question. We had the luxury of a lot of inbound in the beginning, and we still do. And again, it's an honor every day to be in this seat, where we can interact and meet with so many incredible founders. We leaned, I think, on our respective networks in the beginning to just say, hey, we're early stage, we can lead rounds, but we're really looking for companies that are solving X problem, or we're really interested in innovative solutions to the consumerization of healthcare, let's say.

And we would kind of throw that out there to our advisors and our respective communities and see a lot of really interesting opportunities come in that way. I think what's really cool about our evolution as a team, and we're now five years into this, we can now be very targeted around a sector. Yeah, we want to really... This is where Humane came from. Julian had spent a lot of time understanding this idea of sensor fusion.

At what point are there wearables? This is a problem you're solving. At what point are these discrete independent apps and wearables that are not integrated into other data that we may be collecting around our whole health and wellness journey? And how can we better use those touch points to create a more seamless understanding of someone's daily life, health decisions, activity, and thus hopefully create better outcomes through that understanding?

And honestly, that was one of the reasons why we were excited about Terra. As you mentioned, I was looking back at some of our early emails and communications and meetings in March of 21. And I have the email the moment when Julian se

Sent us the note with a little bullseye emoji for your company. And I promise there is a much more scientific and rigorous diligence process than the bullseye emoji. But it was really his leadership around, okay, all this data is out there. How do we normalize it and make it easier to integrate this data into experiences horizontally across a consumer's journey? That led us to you and it led us to Humane. So to that end, we do spend more time now understanding where there's opportunity in health and wellness and then going out and seeking people who are building in that space.

Wow. So you create your own version of these things should exist and then you're trying to find who are the best in the world that they're doing that very thing.

Exactly.

How do you find that wisdom? Is it that you go to universities? Is it that you're seeking from research of what's there? Or is it that you hear things from entrepreneurs? How do you create that? Is it that, or do you have something that you've seen over the years that made you define that?

It's really all those things. It is yes to the universities. So Julian and I both teach and I think that's really important. So being in the academic environment, being around students who are leading research and having thought-provoking conversations, I think sometimes can happen more in the university environment where you're not hamstrung by reality. I love being in that type of community.

So we'll always spend time there. I think it's really important to not go back to the same echo chamber of all the funds you co-invest with and all the same people who are looking at the same deals. I think that you can get so far that way and you can see great opportunities through that more traditional sourcing mechanism, but we have had more luck playing to our strengths. So understanding where we have unusual access, and I would say that's where Lance is spectacular.

As you know, he has, because either people just want to hear from Lance and are sort of curious when he reaches out or because he spends time in spaces with leaders of particular interest to you and our founders. I think we have just an unusual level of access to people building in this space, but not in the spaces where a lot of traditional VCs are. And I love that. My background working at Nike gives me access to unique thinkers, builders that I think is different from some of the more traditional established VCs.

And same with Julian. You know, Julian intentionally goes out. He's part of the Kauffman Fellowship, as you know. He's trying to make sure he is in spaces where he is exposed to different types of ideas. We spend a lot more time, as you may have noticed, doing content creation as well. So Jordan Piscaccio, our vice president, is really, really thoughtful about taking some of these ideas, like sensor fusion, consumerization of healthcare, and turning that into content and sending a Substack article out into the world and seeing what comes back.

And we always find incredible companies that way. That's how we found Pear Team. One of our most recent investments was just through having a dialogue about what we're seeing and thinking and seeing if someone was solving for that out there in the world and inviting them to come and talk to us. So it's really all those things. I think if you're doing your job well as an investor, you're not leaning on the same community to bring you the same ideas.

Yeah. I think that's very important. By the way, you mentioned writing. It's so powerful. It's unbelievable. Anything that we get out from Terra as well, it's like so many people read it. I made some of my best friends by actually writing articles. It's unbelievable because people reach out and then you meet them in person. It's a very different experience.

Now, when you define that and you know and you found the companies, and let's say that you found five companies, you go and you speak to these entrepreneurs and how do you figure it out? Who is the most promising, like what are you looking for?

We spend a ton of time diligencing, especially because we like to lead. So we're putting a big stake into a company generally early on. We spend a lot of time understanding how the founding team thinks, how they work and operate. We obviously do a lot of reference work around each founding team we interact with if we get to the point where we really have conviction that they have something special.

We have an incredible group of advisors, leaders across each of the verticals we look at in whole person health. So we certainly lean on them in all aspects for sourcing, doing diligence, being contrarian. I think it's really easy as an investor and I lean towards optimism, which may or may not be obvious. So that's just who I am and I tend to see the best possible outcome in a lot of situations and from a lot of companies.

You then need to know that about yourself and surround yourself with contrarians, people who are going to poke holes at why you believe there's a positive outcome. Why do you think this company can return the fund? What if this happens? That's a really important part of our process. We have a rigorous investment committee decision making process like I think most firms do, but it comes down often to the people and then the particular way that the people are solving a problem.

I think there are some advantages that are more, that have stood the test of time, better or worse than others. First mover is hard. It's hard to maintain a first mover advantage. So if that is the competitive strength, if that is a differentiator in a company, we have to do a little more diligence to see what else is there. Those are things I think you only learn with time. People, people, people, I mean, trust your gut.

Again, these are very cliche classic pieces of advice from investors, but man, we've made the biggest mistakes when we haven't trusted our gut or really focused on the people part of the diligence. As you know, that can only come through meeting over a period of time, ideally meeting in person and talking to a lot of folks who've been with that founder for a long time and understanding how they think.

I think, and you could say this as well as a co-founder and CEO, we've only known difficult times as a fund. We launched in late 19. We raised in 2020 during COVID. 21 was a weird year. Valuations were crazy. We tried really hard not to get wrapped up in the group think mentality of that moment in time. And then we had this economic downturn we're still coming out of. And so what we appreciate are seeing the stories of how founders have led their companies through these types of moments.

Maybe they led a company during the last recession. Maybe they had to wind down a company. As much as those may seem like strikes against you as a founder, if you have led an organization through challenging moments, we have more conviction. We have more conviction in your ability to learn from those challenges and not make those same mistakes again.

If you are used to the war, it's much easier to live in peace. So I agree with what you have said.

Last question I wanted to ask you is, in this space we are at, what do you think is going to happen in the future? What are the things and what are the innovations that you think are going to be defining the industry in the next five to 10 years?

There are trends happening now that I think are interesting, perhaps worrisome, but also create opportunity. It is so difficult to find a primary care physician. And there are less people who want to work in healthcare. That's going to require innovation. It's going to require people, consumers, and then healthcare providers thinking differently around closing that gap between someone in need and the person who can solve that need.

I'm hopeful about the ways in which that will positively impact healthcare. I think climate change is going to require the world to operate differently. Places to play sport, places to do activity, how to think about access to water and air differently. And these can sound like very dire, dark topics, but they're going to create opportunity for innovation. And some of those things might have applications that are greater than we think.

I think the ways in which mobility and how we get from point A to point B are going to change the ways in which we think about the importance of personal interaction. I'm hopeful coming out of COVID, despite a lot of futurists predicting we were going to be living in a virtual world where we never saw one another. Guess what? People actually want to be with one another in real life physical environments.

Thank goodness, right? And so people are going back to gyms and they're going back to work. And it's hybrid. It's a bit of both. And there's been a step change required post COVID where I think people are now accepting that you can do both things. You can be a bit virtual in your personal life and in your work life and a bit in person in your personal and work life. And I think that that's interesting.

So despite the world changing a lot since we started this fund, I think those changes all create opportunity. I'm not afraid of technology. We're not afraid of AI, obviously. We've made a few investments there long before it was popular to do so. And I believe that those technologies will be used for good. And I believe more people will be comfortable using technology to solve problems that otherwise might be solved in a more difficult way.

And so I get really hopeful about all the ways in which we're evolving to better meet consumers' expectations. I'm particularly interested in food and nutrition. I'm interested in climate tech. I'm interested in maybe because I live in a farming community outside of Portland, Oregon. I'm really interested in access to food, sustainably sourced products, and the ways in which those ideas intersect with our whole person health thesis.

Excellent. Melanie, thank you so much.

Yeah. Thank you for having me.