Mystery | The Easy Button for Connection at Work

Hi, everyone. Welcome back to Gray Matter, the podcast from Greylock, where we share stories from company builders and business leaders. I'm Sarah Guo, a general partner at Greylock. We're excited to produce another episode of our Work From Anywhere series about the changing world of work. My guest today is Shane Kowalski, who is the founder and CEO of Mystery. The company is addressing the growing problem of employee engagement. High performing teams need to be engaged to have trust and leadership to build bonds with coworkers. The pandemic and the widespread shift to remote work has made those objectives 10 times harder to achieve. While the pandemic appears finally to be modulating, many of the changes that it brought to the workplace are here to stay. From hybrid models to remote first or largely distributed teams, the physical office is simply no longer the default place where many employees interact with. And so many of the natural opportunities to build morale and connection have disappeared. Let's talk about what we can do. So welcome, Shane. Shane, you and the Mistry founding team saw these problems in morale and employee connection and you built a product to help. Can you start by describing how Mistry works?

Yeah, absolutely. So Mistry is the first end to end platform for proactive employee engagement. And what that means is we give people, leaders, HR teams, all the way from the CEO down to team managers, a real lever to move important employee engagement metrics like sense of belonging, cross team cohesion, intra team cohesion, things like that. And we do that right now through virtual events that employees actually will enjoy going to and are really designed around hitting those types of metrics. So if I'm joining one of those events, it might be me and my existing team for intra team cohesion, or we might be pairing you with the cross team or somebody that you might not even know that you're similar to based on employee interest graphs. All in all, it's a way that a team can just enjoy and have fun, but while also moving the metric and bonding and finding those important connections that were lost in a distributed workforce.

Yeah, the easy button for team connectivity and fun sounds amazing right now when so many people are struggling with this, it also sounds like very hard to achieve. Where did the idea come from? Like, why did you believe that that's something you could deliver with a platform?

Yeah, so Mystery actually has its roots a little while back when we first started, we launched as a consumer experiences business. Personally, I have a passion for marketplaces. I've worked in two prior and saw an opportunity that basically every business experience marketplace that had started had in some ways stumbled and or failed. And I thought we could solve that problem by not only creating a lot more yield efficiency for suppliers, but really solving some of the back end economics, but also just by adding a lot of productization to the experience sector. We were in in person experiences, things like actually going on a date night as an example. Once Covid hit and we saw kind of the shift to distributed work, everyone that we talked to really had the problems with not only isolation and feeling disconnected, but everyone was leaving their jobs. I've always been a firm believer in the power of experiences to connect to people. People truly do bond through shared experience, whether that's past, present, which is a current shared experience. And we knew we had some earned insights about how to essentially scale and make incredible and magical experiences for folks. And we knew that this opportunity was just so good we had to jump on it and move towards it.

Tell us a little bit about a period of time where you were cycling through different consumer and in person delivery experiences. What's an earned insight or a hard won product learning from that?

Yeah, absolutely. So to give a little more light, the first product that we launched easily would be called Stitch Fix for a Night Out. So you'd come to our website, you'd tell us what you like and don't like, and we plan and book and execute an entire night out of the city, two to four stops where you wouldn't know where you were going until you got there. Hence the word mystery. The idea was that it was a marketplace where we could pick when, where and how people spent their money. You know, physically move bodies around the city and solve a lot of really important problems. For the experience sector, everyone knows restaurants are pretty bad. Business experience and activity providers are even worse. The average one runs at about a 10 to 20% yield efficiency. So we learned a lot about what makes a magical experience, even through that, even just the power of expectations for an experience. We've kept the name Mystery in many ways because it is the single largest lever that you can pull from a product perspective to make an experience amazing. And I'll give you an example. Most people, when they talk about experience design, they talk about the hero's journey. The hero that goes through the darkness of the sorrow and comes out the other end victorious and has to, you know, trial and triumph, whatever it is, you know. And people look at that and they see the hero. Mystery looks at that and sees expectations being lowered and then subsequently raised. And we realize that most happiness and joy is just the manipulation of expectations and the best way to productize an amazing experience is to take expectations and kind of throw them out the window. All the way from that to, you know, an understanding of when I arrive at a restaurant, what is the most magical experience? And it's little things like if we know you love red wine and you sit down at the table, well, the waiter should say like, hey, Sarah, like, you love red wine. I've got a tempranillo in the back. I think you should try it out. It's how you're greeted, how you're open into this experience. There's so many amazing things you can do with technology that really makes experiences just magical and amazing. And it's a basic, basic concept. I think one of the things that a way it got described to me that I love is experience. Design is a lot like a comic book. When you're reading a comic book and you're going pain to pain in your head, you're seeing all this amazing action and color. When on the page you're just seeing a pow icon or something like that. You never see a character blink in a comic book, but in your head, it's always so much more amazing. Well, with technology, you can take all of these vast data sets about who you are, what you like, all these things about your background and, and merge into all these amazing hospitality experiences that you know. When you're filling out a survey and saying, I love red wine, you're probably like, okay, like, what's that for? But then once you're at that experience, you're at the table and they're like, hey, I know you love red wine. You don't think back to like, oh, I filled out that survey. They know that about me. Of course they did it. It's like, oh, my God, how did they know? Like, that is incredible. And it's a lot of those basic learnings. In the early days of our product, we planned thousands and thousands of these date nights. We just learned a lot about what it took to scale an amazing. And those are just two examples of many. When Covid originally hit, we got to learn a whole different part of the business. As you can imagine, not a whole lot of folks looking to go on a surprise night out in the middle of a pandemic. Our product went from great and prospering to illegal in about seven days. And we're not the kind of team that sits around and waits for things to happen to us. So we really, really quickly in seven days. This is back when we thought Covid was like this 12 month thing. It was like, no Way it'll be here by summer.

And.

And we had a bunch of small businesses that we worked with that were going to go out of business. So we pivoted to what we called mystery night in, which was the same value prop to consumers. It was a date night in. You didn't have to plan versus a date night out. It was a box of activities, local goods and a hot meal delivered to your doorstep. A lot of pain doing that in a week. We launched in seven days. But we delivered thousands upon thousands of these nights and learned all the absolute trial and triumph of physical good iteration and how to make seamless experiences even better with some physical component. Just more tools in the toolkit for us as we start to build this virtual event marketplace. Now for corporates, just a ton of learnings about how these things come together and experiences. But yeah, I'd say just to tail off that story, summer of 2020 came and the night in business we had was doing well. But a consumer DC business was not really a passion space for me or the team. So we started exploring. You know, we know we can provide scalable magical experiences. Where should that work? And like I mentioned, with everything that's happening in distributed work, with the lack of connection, it was just an obvious bet.

Yeah. Well, I remember when we first met, I said like, wow, like the, you know, the technology and the learnings that you guys have could be taken to many different areas. And you said a few things that really stuck with me. One was just a passion for understanding, like what makes people connected. But two was like, how much better of a business it was if the logistics pain gets constrained to like, I need everyone to be online and sometimes there are physical goods, but mostly not. And I can offer people data support for hospitality and do all these magical things with software in the background if we're all interacting digitally. But perhaps even better than that, like, people are really sick of most virtual experiences that don't have this level of thought and product design behind them. And so expectations have been lowered to the floor. And so I think that fits really well into your framework. I know you guys have had a ton of demand since making the move. Why don't you tell us a little bit about where Mistry is as a company today, like geographically, size, whatever you want to say about customers.

So Today we're about 32 folks. We're a remote first company that split around, I think, eight states and three time zones. We just recently raised a series A led by none other than the amazing Sarah Guel. Today we've raised just about $24 million. And with that money, you know, we have this amazing opportunity to really own proactive engagement as a space, grow the team and start to expand our offering. We're primarily focused on virtual events. Virtual events, really, like you mentioned, people have very low expectations for them. Even if I were to just use an example, a virtual event versus in person event one, like which one do people want to join? They're going to say in person almost every time today. And then which one does the company want people to join? They're also going to say in person because they think, oh, like virtual events are just worse. What we found and what we know to be true is that while the floor of quality for a virtual event is very, very low, it's as bad as like you hop onto a Zoom call, the guy's late, the half the team doesn't show up, everyone has their video off, you know, it's not. You don't even know who's there. And the worst Zoom event in history starts the same way. It starts with, you know, in normal times we'd be in my studio, but I'm just really glad that we all take a minute and just, just appreciate that we're bonding together. It's just like that. That shit's terrible. So the floor is very, very low versus like, you know, an in person event. The worst thing you're going to get is, is a happy hour and you're going to get some drinks with your colleagues, right? If it's a happy hour after work, turns out the parents with kids at home aren't going to make that right. The people that don't drink aren't going to be at that happy hour. You know, you're sure you're getting vulnerability in people's emotions because they're drinking a little bit, but the ability of connecting the right people at the right time in the right place with virtual events is truly, truly magical. And people keep saying, oh, like maybe there's a golden bullet of like, what's going to solve this? There's a hybrid work or morale around the office. The reality is virtual events are the future. We just need to iterate on this up and up and up until we're able to make these. A year from now, we'll look back and say, God, why would I do an in person event? All that to be said, we're looking at trying to see where it makes sense for us to plan. For us, the outcomes matter first, not the experience. So what events are actually moving the needle is it employee rewards? Is it food and Bev? Is it maybe off sites as a product? Those are the things that we'll maybe explore. But in the next year, we're really, really doubling down on virtual events that move the needle for employee engagement in big part, just because there's just a hilarious sucking sound in the market. There's no head of people out there in the Fortune 500 and below that won't jump at the opportunity to say, hey, here's an actual lever to build cohesion in your team. And we have a once in a century chance to really build what I think could be considered like one of the more impactful and meaningful changes in the way that we work.

I think if some significant fraction of the world feels better connected at work, which also makes people more productive at work because of Mystery, that's a big goal to try to go after. So we're not at zero, but we're close to starting at the beginning. Like, who's using Mystery already?

Yeah. So Mistry is used by thousands of teams today across companies like Amazon, Microsoft, kpmg, Ford, Uber, IBM, Stripe, hundreds more. We just passed the thousand customer mark very recently in 2020, we were operating kind of a transactional marketplace. We still hadn't quite figured out how to make these events actually move the needle up until really around August of last year. But the second that we figured that out, the second that we started finding some of these patterns of events that did work and did move the needle, all of a sudden recurring revenue and ARR started coming in the door and it's really been a phase change for us. We exited this zero to one mentality of how do we build something scrappy that provides value and say this is the right unit of scale and we need to scale this from 1 to 10. And what that means is we were able to more than double the amount of teams using us every quarter in 2021.

I realize it may not be obvious to people who haven't run managed marketplaces before. Who are the hosts at Mistry?

Yeah, the hosts at Mystery today are a pretty wide variety of folks. Everyone from small businesses who we used to work with in the date night out business. So these are restaurants that are offering cocktail classes and cooking classes all the way through to YouTube personalities, to previous America's Got Talent hosts to even for some of our larger events, we partnered with some of the biggest agencies in the world to offer celebrity level experiences where we can have some of the top comedians in the world joining a virtual event. It is pretty wide Variety today, I think in reality what we have is a system that you know, is able to decide when, where and how money is spent. So we're able to create an insane amount of leverage for these activity suppliers that work with us.

Awesome. Can you talk a little bit about the phrase employee engagement has become very popular over the last few years and we've used it as well. There are existing companies in that space. I think of them as quite different. How do you position mstree versus some of these other tools around, you know, pulse surveys and measurement?

Up until now, primarily because of the way HR teams have been funded, there's only really ever been observability technology built for HR teams and people teams in big part because employee engagement as a term of things that matter to companies, we're always kind of a silent killer. The office did a good enough job. If you look at what people science would tell you, you need from a connection perspective. You need an individual at a company to be connected to their intra team, their manager, their close collaborative team, their leadership, and they should actually have a best friend. There's a lot of studies that show having a best friend at work is a huge indicator for both satisfaction, productivity and retention. But when distributed work happened, we essentially lost all connection. But our manager and our intra team, the people that we work with most regularly. And all of a sudden this silent killer, this thing that mattered but wasn't having a huge impact, turned into the largest active killer for both retention and productivity. Not only does disengagement affect how people are working and how productive they're able to be, but look at the great resignation, which is a term I'm sure we're all sick of hearing. But if you look at the stats behind the great Resignation, the top three reasons people have left their job are all relational. It's all because when we left the office, we lost connections to coworkers, managers and leaders. All that to say a lot of the technology up until now has been about observability and can, you know, they call it continuous listening, which is like how do I get this data in more than like a quarterly survey that's like how do you feel about your boss? How do I get that more regularly? And really that's where most of the technology been built. On the other end you have a lot of these kind of marketplace companies that have started, you know, employee rewards that might work. They have corporate gifting that makes it corporate gifting super easy. In person events that makes it super easy. The problem is that those two things that Actual analytics of what the metrics are and the transactions that are happening to actually move the needle. Not only do they have different buyers at companies where HR teams own engagement all up, but they're not connected. None of these software solutions have said, hey, we're only going to do an event if it actually has roi. And I think that's really where I see the big opportunity for mystery. Because not only are we able to throw events that people love to join, but they actually work for a people team. And people teams have essentially been doing brand marketing until now. They're throwing money at the problem, hoping it works. They're referring to the other business leaders who are also throwing money at it and hopefully it works. Maybe it doesn't. We think about 90% of the entire morale budget is completely wasted on T shirts you don't need on corporate swag that's going to sit in the back of your closet and launches that are sent to you that, yeah, maybe you feel good for a little bit. Fun fact. Gift cards for employees is a massive, massive market. Why do we give employees gift cards if you wouldn't give your significant other a gift card? Because it means nothing when you get it. It's like, oh, okay.

It's just, it's just the easy thing. It's what people have access to. Easy.

People have been optimizing towards making it easy to spend money and we're optimizing towards making it easy to move actual metrics and really help roi.

Yeah. How do you think about outcomes at Mystery and knowing you're moving the needle?

So today we use a lot of what is considered best in industry. There's questions that have been developed on studies, what people generally call people science that are likert scale based questions. I feel like I can take risks at work is the question that leads to a sense of belonging score, which we think is fine. We're currently using those types of questions in our own feedback loops to prove to companies that the way they track things, we're able to move those. But part of the really huge opportunity for Mistry is to say, yeah, maybe how I feel I can take risks at work is relevant to my sense of belonging. But maybe we should just be tracking how many deep connections does each employee have. Like I mentioned, you should have a manager connection, a leadership connection, a best friend. But this is a whole kind of open space to turn people science into data science. And I think long term, redefine a lot of the metrics on what actually matters for, you know, the jobs to be done for Mystery, which are productivity and retention.

So you've used the analogy before of companies like Qualtrics and Medallia changing how the world thought about customer satisfaction. People were, you know, using CSAT and, you know, thumbs up, thumbs down, binary ratings and they really advocated the idea of NPS and much richer understanding of your customers. Like, do you feel like we're moving in a similar direction on employee engagement?

Yeah, I think unquestionably we know a lot of the inputs about how cohesion happens and it's no longer good enough to ask a randomized survey. How do you feel connected to your cross collaboration team? We have the infrastructure layers available to know on a minute level how connected people feel. And if we don't take that as opportunity zone to be able to create and innovate, I think we'd be foolish.

Can you paint a picture for our listeners of the favorite Mystery experience you've been a part of so they can picture doing it for their teams?

So my favorite mysteries are ones that trigger a sense of I'm joining an event. Like I mentioned, a big part of experience design is expectations. So my favorite event that I've been a part of was an event actually designed at Mystery to improve leadership connection. So it's a little selfish, my connection to my team, where everybody got a box the day before that said don't open the box. Everyone signed on to the event at the right time and a host showed up and we all opened up our boxes and the host started with the very, very beginning with, all right, everyone, everyone, you guys seem to think that Brennan. Brennan's the hot sauce guy on the team. Brennan, open your box. Look at what we have in front of you and describe to the team what you're seeing. That's a really basic way of opening in the right way, creating good hospitable experience. But then we all walked through a hot sauce making class with an amazing instructor who has his own line of hot sauces that were included in the gift. And we made hot sauce like literally everyone in their kitchens. And it was a mess and everyone's ruining it and messing it up and we're all talking and enjoying. But then at the end of the event, a comedian hopped onto the event and starts interviewing me. Like a kind of like a Hot One style interview where he's asking me questions while I'm eating spicy peppers. And I'm like, I used to be as like not a spice person. Actually, very oddly during COVID Like, I can eat much spicier food but not this spicy. Food. So I'm like crying answering some of these questions. You know, it's like a modern day dunk tank where like, sure, it's a little embarrassing for me, but I'm humanizing myself to the team. And that was just an experience that not only. Everyone had a ton of fun with. It was unexpected. It, you know, people on the team got to talk about how they had different levels of spice levels that they really enjoyed. And we were able to customize the box based on people's spice levels. So if I, you know, was really spicy, like, I love spicy food, I got a pretty hot pepper versus a cooler pepper. And we can do that all while, you know, basically just a click of a button, right? Yeah, I can literally just click go. And based off the interest graphs we have, we can manage and create an experience that is that amazing. So that's like just an example of an experience I really like.

Yeah. Well, I am excited to put one of my partners on the hot seat for that. What do you think is the biggest misconception customers and users have coming in about mystery?

The single biggest misconception is just the opinion of virtual events at large. Today, people look at a virtual events marketplace and look at all of our competitors and they see a bunch of people that have shoved irrelevance into a zoom box and think, oh, God, not another zoom meeting. They don't think, I'm going to leave this meeting crying, laughing, or I'm going to leave this meeting like, having met someone that I didn't know I met. And like, we also have a ton of shared interests that we've created a bond over. And I think that's the thing that in many ways it is. You just have to experience it. You have to see how different it really is.

Well, I'm excited for the future and the tens of thousands of people who have experienced mystery events to spread the gospel. Shane, thanks so much for doing this podcast with us.

Yeah, absolutely. Thanks for having me.