The Power of Language in Business Models

“What will my customers like and buy?” The timeless retail question today is answered with enterprise-grade purchasing, inventory, and sell-through analytics for big box sellers, but not SMBs. SMBs have long made these decisions with their guts and intuition. But what if a marketplace powered with those same analytics could enable small shops to purchase with the same information? Faire has discovered this opportunity is worth $1 million in sales per day, and growing. 

Faire is a wholesale marketplace that helps retailers find and buy wholesale, while also connecting makers with physical stores or businesses. and it was built using a data-first model that evens the playing field for those small shops. On this episode of Up Next in Commerce, Marcelo Cortes, the Co-founder and CTO of Faire, joined us to explain how the company got started and the steps it took to reach the billion-dollar valuation it boasts today. Much of the success is thanks to Faire’s ability to analyze data and iterate based on what that data tells them, but it is also built on a sense of community between makers and buyers, who have been able to find each other in a world filled with outside noise.

Key Takeaways:

• Implementing personalization throughout the buyer & seller journey is key when setting up a two-sided marketplace
• You need to have a message people understand quickly that really resonates with them
• Being able to iterate quickly and build on the go allows you to be more nimble and capitalize on data you are collecting to create a better business and experience

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Transcript:

Stephanie:

Hey everyone, and welcome to Up Next in Commerce. This is your host, Stephanie Postles. Today, we have Marcelo Cortes joining the show, the co-founder and CTO of Faire. Marcelo, how's it going?

Marcelo:

It's great. It's great to be here, thanks for inviting me.

Stephanie:

Yeah, thanks. It's fun having someone, you said you were in Toronto, or a little bit north, right?

Marcelo:

Yeah, that's right. Our office in Canada is in Kitchener-Waterloo, which is about an hour from Toronto.

Stephanie:

Cool. Do you ever make it out to the San Francisco area?

Marcelo:

I do in normal times, I go very often. I usually go there once a month.

Stephanie:

Next time you're around, you'll have to stop by our studio and we can do an in person interview.

Marcelo:

Yeah, that would be great. I hope that can happen soon.

Stephanie:

Yeah, I hope so too. Fingers crossed. I would love to hear a little bit about Faire, and your background and role at Faire.

Marcelo:

Yes, of course. Faire was founded in 2017. Me, Max and Daniele are the co-founders, the original co-founders. Jeff also started the company with us, but he left and came back after a few years. Faire is a wholesale marketplace. We help retailers, basically mostly physical stores, brick and mortar, find products to buy wholesale. Then on the other side of our marketplace, we have all the brands or makers on our platform that are selling products, and we help connect those makers with the physical stores.

Stephanie:

Very cool. The makers reminded me, in a way, of the Etsy makers that normally would never be able to have their products in a large retailer, like a Nordstrom. Is that accurate?

Marcelo:

Yeah. We are somewhere in between Etsy ... I would like to say there is a little bit of intersection with Etsy, but a little bit a level above as well, where we do have smaller manufacturers or makers that have a small operation, but we also have some more sophisticated ones that have warehouses and things like that.

Stephanie:

Cool. How did you think about creating Faire? How did that idea come about?

Marcelo:

Yeah, it's an interesting story. Max, who is our CEO, back in the day after he graduated from school, he was working on bank consulting. He was always an entrepreneur by heart, so he was always trying to do businesses on the side. A friend of his asked him if he was willing to try to build a business of selling a product or distributing a product in the United States. The product was actually a physical umbrella, a rain umbrella that was manufactured in New Zealand, called Blunt Umbrellas. It's a very cool umbrella. It has cool shapes, cool colors, doesn't break with wind. He was like, "Yes, let's do this on the side."

Marcelo:

That's when he learned how the wholesale industry works, especially in North America. He searched on Google, how do I start selling products, or how do I distribute products wholesale like everybody else does? Basically, there were a few ways. You can go find sales reps or hire sales agencies to have all the sales reps trying to sell your products. You have to go to trade shows. He did all of those things. Eventually, he got this company to be successful distributing the product in North America. But at the same time, throughout all this process, he couldn't stop thinking that there's a lot of areas here that could be improved with technology. This whole market is really in the dark of technology.

Marcelo:

Years later, we met at Square. We all worked at Square together for four or five years each. Combining the expertise we had there with dealing with small businesses with this idea of, how can we really add technology to wholesale distribution, make it better? We finally came to the conclusion that ... we found the data that's available online as well on products, and on makers and on retailers, we could put it all together and build this idea that could add a lot of value to everybody in the industry.

Stephanie:

That's awesome. Were there any technologies or insights that you gained while you guys were at Square that you took into the business when creating Faire?

Marcelo:

Basically, there isn't anything .... technology that's advanced. There were combinations of many smaller things. For example, the fact that if you think of a small store, a brick and mortar store that might have one to five locations, which is usually our target audience, they're trying to compete with much larger brick and mortar stores, big buck stores, or with eCommerce. They have no data. If you think of Walmart, they have data on all their products. They know what sells well where, what time of the year. The little store, they're buying products basically all by intuition. They see a few products, they look at it and they have to make a decision whether they're customers are going to like it or not.

Marcelo:

We realized that we can actually build something that will give them the ability of having the same type of tools that much larger businesses, or big buck stores, or eCommerce platforms have, to make much more well informed decisions on what products are going to work well in their stores. On top of that, another thing that we learned a lot of course at Square is how to deal with underwriting the small businesses. We helped Square do Square Capital, which is the landing program that they have at Square. Part of that process, we learned a lot about how do you decide how much credit to give to a store like this? That's also part of what we do.

Marcelo:

As a store comes into our platform, we give them the ability to buy products that they can pay 60 days in the future. We give them credit to buy products, and we allow them to return any of those products if it doesn't work. So, basically-

Stephanie:

Yeah, that's huge. When I saw that you all did that, I'm like, wow, I don't know how you make that work. But not only giving store owners credit and saying you don't have to pay me right away, and you can return products? I haven't heard of anyone else doing that.

Marcelo:

Yeah, that's how we are combining and adding technology to this ecosystem to make those things possible. We have to do our job well to be able to offer these value propositions. We have to make sure that we are recommending the right products to the stores, and guiding them into buying the right amounts as well. We can't just let them buy way more than they would be able to sell. We should be steering them away from products that we don't think are going to perform well in their store. If we do that part of the job well, the other part is also making sure that the makers or brands that we're onboarding on the platform are also very high quality and good, so that, again, the products that we are selling have a much higher chance of performing well in stores.

Stephanie:

How did you build that platform to cater to different types of clients? I can see the one person in Arizona making bracelets versus the larger person who's used to fulfilling large quantities, because maybe they've sold on other platforms before, and then different sized retailers. How did you build a platform that caters to all of them?

Marcelo:

Yeah, it's a very hard problem. That's another place where technology is used to our own advantage. We need to be very good at serving customers differently, and providing a completely customized experience to different types of stores. That's what we do. That's why data science is so important for us, and we have a very strong data science team tackling this problem of ranking and personalization. The reality is, we really treat each customer differently. Every different store that comes to our platform, they have a completely different experience. If you are a store that sells gifts, you're going to see a lot of gifts. The more we learn about you, the things that you like to see, the search that you make, the products that you sell and you buy from us, the more accurate we get at serving you products that will connect well with your store.

Marcelo:

But what we can't have, for example, in our platform is that you are a store that sells apparel mostly. You come to our website and all you see is candles, or back products or things that are completely disconnected from your business. From day zero, we have spent a lot of time and effort making sure that we have data, and we are very data driven, and we are building a very custom experience for every different person that comes to our website.

Stephanie:

Yeah, that seems super important because it can be really easy to get lost when there's tons of products, and you're automatically seeing the wrong one to start with. How do you gather that data on, especially a new customer who's never bought from you before and they're coming on for the first time, how do you have any data to even know what to show them?

Marcelo:

Yeah. Sometimes it's hard. Sometimes we can't do it and we have to start with products in different categories, and then start to learn as they navigate the website. But there are things you can do in advance as well. Even a brand new customer ... they usually have a reason why they came to your website. A lot of those reasons are they were recommended by somebody, they clicked on a link somewhere. If they come from an ad, it's very easy to know what's the ad that they clicked on, and we at least have some idea of what caught their interest. Obviously we have too this mark into serving things or products that are related to what are where they came from. If they clicked on an ad for a candle, we're going to show them similar types of candles, or of course that same candle that they clicked on. But we are also trying to show, oh, here's some apparel categories as well, or here's some best sellers in a different category.

Marcelo:

Again, we have to show relevant data, and then show enough of other types of data that we can give them a chance to tell us more about who they are and what they are interested in.

Stephanie:

Got it. Then most likely, I'm guessing you encourage that sign up process, so then you can learn more and more about them. Then you can recommend products even further after that?

Marcelo:

Exactly. As they sign up, we have some quizzes. We ask them for more information. We keep adding and changing how we do that, of course. But we will try to do a Netflix style, like, what are the types of products that you're interested in, or categories? How big is your store? Things like that. The reality is, we are in 2020. Every little store, brick and mortar store, they have a presence. Once we learn who they are, what store they are, we will find if they have a website, and we will learn more about them by looking at data that we can see online. Publicly available data that's on the internet as well.

Stephanie:

Got it. Yeah, that's so cool. I saw that you leveraged machine learning and AI to recommend and show these retailers what's going to do well in their store. How do you know what would do well in San Francisco versus Washington DC? What do you utilize to help teach the retailers what they should and shouldn't buy?

Marcelo:

Yeah. That's obviously part of our secret sauce. There isn't-

Stephanie:

You don't want to share that with me? Come on, Marcelo.

Marcelo:

No, I can share it for sure. It's just ... there isn't a very easy answer. It's not like, oh, if you're in San Francisco it's for sure that you're going to sell candles very well. But there is a lot of input and a lot of signals that we gather. I can give you some examples that make a lot of sense and they're very obvious. For example, we have so many stores on our platform today. There's a lot of correlation. Remember I told you Max was selling those umbrellas, Blunt Umbrellas?

Stephanie:

Mm-hmm (affirmative), yup.

Marcelo:

Even from his time selling those umbrellas, he realized and he learned very quickly that there are correlations between products as well. If there is a store that sells well the umbrella, there are some products that will also sell well in that store. They could be completely different categories of products. It could be a watch. It could be a sunglass. But the customers that are usually interested in this Blunt Umbrella, which is a high end umbrella, are also going to like and very likely buy products that are in a similar style, or similar type of high level upper cost product.

Marcelo:

Imagine now instead of one umbrella, we have millions of products that we sell, and we get data back from these stores. We know what's selling in each one of these cuts because they're buying it again from us. So we start to be able to correlate things. You can have a gift shop in New York, and you're selling three products that are very similar to a store in San Francisco. Now you add the fourth product, and that product performs very well in your store in New York as well. It's very likely that that store in San Francisco will also have that fourth product performing well.

Stephanie:

Got it. That's really cool. Have you ever thought about running on the side a point of sale system that you can put in the store, so then you don't only have access to the stuff that's sold from Faire, but then you have access to their entire inventory and catalog? Then you really have full insights into what's happening in that store, what sells together. Then you can even recommend things at, I guess, a better pace?

Marcelo:

Yeah, 100%, we have thought about that.

Stephanie:

Are you doing it? Did I already uncover more secret sauce?

Marcelo:

Maybe. What we do today, of course we don't have our own point of sale system today. But what we do is, we integrate with their point of sale systems.

Stephanie:

Got it.

Marcelo:

We add value to them if they connect their point of sales with us as well. For example, imagine that you are a small store and you just placed an order for 20 products. Then next week, you're going to receive all those products in your store. You need to start selling them right away, but you restore all of them in your point of sale. So it takes time and effort. You need to type in the prices, the descriptions. You need to upload photos to the point of sale system. If you were a store that gave us access to your point of sale system, we do that completely automated for you. As you place an order, as soon as the order arrives in your store, all the products automatically show up in your point of sale system.

Stephanie:

Got it. Yeah, that's definitely-

Marcelo:

Of course with that, we get some more data from the point of sale that we can help with recommendations as well, and learning more about what performs well in your store.

Stephanie:

Cool. Yeah, that's awesome. When you started out, did you build your eCommerce platform from scratch? Or did you buy and eventually move everything over to custom? What did that transition look like?

Marcelo:

Yeah, that's a good question. We actually built everything from scratch, and we built it on the go. On the early days, we started ... and we went to Y Combinator in San Francisco. When we were accepted at Y Combinator, it was end of 2016, I was still working at Square. Max had left already. Daniele was still working at Square. We basically quit our jobs at Square, and we started Faire in January, 2017 at Y Combinator. We had nothing built. We had this pressure that three months later, we would need to do a Y Combinator demo day presentation to thousands of investors, and we needed something to show. Usually the companies that join Y Combinator, they have been doing something already for a year or two, and they get there to try to scale their business. We started from scratch.

Stephanie:

I was going to say, that's ... well, maybe it's not unheard of now because I think they do accept a lot more people now. But back in 2016, if you didn't have an actual product, you probably weren't going to get accepted if they couldn't see something. So that's awesome.

Marcelo:

Yeah. But then what we had to do is build it on the go. That's also a lot of how ... it dictates a lot of how we operate today and through the history of the company. We have always been very data driven. When we started, of course we knew this idea of let's let people try the products before they buy. We told Max, we're like, "We really believe in your idea, but let's prove that people really want this."

Marcelo:

Again, without any technology or any website, we went into stores that Max had contacts with because he used to sell the umbrella. We told them, "Listen, we are going to give you products that we think are going to do well in your store. You don't need to pay us. If you sell the products, you pay us. If you don't sell them, we will come back and pick the products up." The stores were like, "You just want to give me free products to try to sell? We're going to do it, for sure."

Stephanie:

Yeah, no brainer.

Marcelo:

That's how we validated the idea. We also got lucky because we had no idea what we were doing when it came to picking products, so we just bought random products. Turns out that one of the products we bought, it's called Pyropets. It's this candle in the shape of animals. When they burn, the skeleton of the animal shows up.

Stephanie:

Oh, that's awesome.

Marcelo:

Yeah, it's pretty cool.

Stephanie:

I need to look that up.

Marcelo:

It's very cool. They have many different animals. That was one of the products that we gave to the store in San Francisco. The feedback we got from the store right after was that, "Listen, I would never have bought this candle to sell in my store. But since you gave it to me for free and I could try it, I put it on the shelves," and the candle happened to become one of their best sellers.

Stephanie:

Wow.

Marcelo:

That's when we saw, okay, there is definitely something here, especially if we can use data to find actual good products, not just random products that we picked on the internet. From that point on, we started to build the experience on the go. Very quickly, we built a website where people could place orders. They would see products and place orders. Everything in the background happened manually. An order would be placed on the website. Basically, people would be able to add products to cart and check out. We didn't even collect payment information. We weren't even charging people. We would deal with payments later over the phone.

Stephanie:

Oh man, that's great.

Marcelo:

Yeah. We would get an order. We had one contractor that we hired in the early days, he would be in charge of calling the manufacturer and placing the order over the phone. He would call the maker and be like, "Hey, just got an order. Five Pyropets to be shipped to this store in San Francisco. Here are the details. Here's our company credit card, we're going to pay for this order." There was no automation, nothing else built behind the scenes. Again, we kept building it on the go behind the scenes very quickly.

Marcelo:

Fortunately, there are a few good things that happened with our company. Very quickly, we found product market fit in the summer of 2017. We started to grow a lot. But by that time, we had automated all of this process. We financial managed to build all the technology so that all this order placement with the makers, and the fulfillment and everything, was fully automated. But it was really like building the train as the train's going forward.

Stephanie:

Yeah. But a lot of people ... some of the best advice is do things that don't scale in the beginning. That's how you learn what you actually need to build on the backend, instead of doing it all upfront and realizing, oh, that's actually not even how the seller or buyer interact with our platform and now we need to redo it. Now you guys are valued at over a billion, right? A billion dollar valuation, or higher, probably.

Marcelo:

That's right.

Stephanie:

That's insane. Congrats, that's awesome.

Marcelo:

Thank you. Yeah.

Stephanie:

When you were setting up your website in the beginning, is their any best practices, either setting up the buyer side or the seller side where you're like, we've seen this work really well on the buyer side of the platform? Or these types of ... setting up the eCommerce like this, or having certain pop ups or anything? Anything that you would recommend to someone who's looking at starting a marketplace, or improving the marketplace that they're already running?

Marcelo:

it's very hard to learn without doing it. We didn't have any facts. We never built a marketplace or an eCommerce platform before. What we did do is, we moved very fast and we built very simple things. We spent a lot of time scoping things down. We thought we had very good intuition that something is going to work. Of course, eCommerce is a problem that's figured out today. There is many very successful eCommerce platforms that you can see how they do things. We always looked at the successful examples when we built our things, and then we tried to build our own version of it. We built the simplest thing possible. We all talk about building the simplest possible thing, but we really tried to do it. We spend time removing anything that would be essential, but we managed to build things that would add value.

Marcelo:

We built things very fast. We launched things very fast. We gathered information on how people are using it very fast. Then we integrated a lot, improving the experience with our learnings. Many times, our intuition was wrong, and things that we built were not the right things, and we shut it down. But at least we didn't spend a lot of time doing those things.

Stephanie:

Was there anything that you shut down that you see a lot of other store owners using right now where you're like, oh, we saw that didn't work well, you might want to look into that on your store?

Marcelo:

Well, it's hard to know what is not working for other people. It might not have worked for us. There is one very interesting thing. It's not really, I think, we'd do it. But when we were in the early days trying to finding product market fit, our very first idea for Faire, as I told you, we walked into these stores and we told them, "Just keep this product. If you sell them, you pay us. If you don't, we are going to take them back." This is pretty much a consignment system. That's what we wanted to build. That was our very first big mistake, I think. We were very sure that we could build a successful consignment eCommerce platform where we would connect to the point of sale systems in the stores, and we would know when they sell something, and they would pay us when they sell. They would keep things, I don't know, until they don't want them anymore.

Marcelo:

Turns out that the word consignment, the term consignment is really ... people really dislike it in our market. They think of consignment as products that nobody can sell, and they are willing to give it to you for free to try to sell it for them.

Stephanie:

Yeah. That's what first comes to mind when I hear that word. It's like when you go and you can sell your clothes to a company, and they're like, "Well, we can either do consignment or we'll just give you money upfront." You're like, oh, I'd rather just have money because I don't want to take that risk of you not being able to sell it because you bury it down in a bin somewhere.

Marcelo:

Exactly. It turned out that whenever we told people consignment, they ran away from us. We couldn't understand it. We're like, it's a good thing, we're giving you very good products. We've built this machine that finds good products, and we'll let you carry them for free. Then we changed our message. We started to call it try before you buy. We're like, listen ... we completely erased the word consignment from our vocabulary. We were like, "This is try before you buy."

Stephanie:

That's great.

Marcelo:

You get the products, you have 60 days to pay. Within those 60 days, you can return anything. If you sell, great. Basically, we didn't change much of the consignment idea, but it completely changed how customers understood our business.

Stephanie:

Yeah, that's great. Such a good lesson too of how little things like that can go a long way, and how just doing those simple tests could really help your business completely transform into a way bigger one if you stop using certain words that maybe are throwing someone off, that you're so deep in the weeds you didn't even realize it.

Marcelo:

100%. There is this, of course, concept that people talk a lot of, product market fit. But in this case, there's this other concept that people don't talk much about, which is the message product fit. You need to have a message that people really understand quickly what you're trying to do, and it resonates with them.

Stephanie:

Yeah. You guys would have to have two different messages, one for the buyer, one for the seller, and not try and make them both be the same, I'm guessing.

Marcelo:

100%. The way of selling Faire to a maker or a seller is much different than the way we sell to the stores or buyers.

Stephanie:

Do you have different teams focused on that messaging? Because it seems like it'd be hard to where different hats where it's like, one second I'm trying to think how the buyer things, and then I'm going to shift over and think how the seller thinks. Is it different teams, or the same one working on all of that?

Marcelo:

Yeah. Today, it's completely separate teams. Sales teams, ops teams, everything is completely separate. The market team is the same. The messaging is one team that creates both. But how we deal with them internally in operations and sales is completely separate teams, and also product. There is teams building products for the makers, and there is teams building products for the retailers.

Stephanie:

Cool. That's awesome. I saw you guys had a podcast that you just launched, and it made me want to ask a little bit about your content strategy. What was the thought behind launching that podcast and the goals behind it? And what kind of ROI you're looking at for that project, if any? If you want to talk a little bit about that, that'd be great.

Marcelo:

Yes. The podcast was also part of a thing that we wanted to do for a while. But our customers, even though we are online, our customers are not online. We are dealing with offline local retailers, and they love community. That's one of the initiatives that we're trying to build, to help them with community, to listen to each other's stories, to learn from each other's mistakes and connect them more. It was especially important to launch it now with this whole COVID-19 era. People need more information-

Stephanie:

Yes. Yeah, perfect timing.

Marcelo:

We rushed it out at this point to really get more data and get more information. And really, to support more of the retailers and makers in this time that they really need it.

Stephanie:

That's great.

Marcelo:

Yes, thank you. For me, I love listening to it. It's so ... I am motivated to listen to our customers stories, and how they are struggling or how they are being creative to deal with these issues. The feedback I have seen so far has been amazing as well. People really love listening to each other's stories and hints. Again, they see that other people are also struggling, they're not alone in this. They feel more connected. So far, the feedback has been amazing. I personally love to listen to these stories.

Stephanie:

Yeah. No, that's really fun. I love anything like that that shows I'm not the only one in the struggle right now, and then that you can bypass any future struggles that maybe you don't have to go through if you hear someone else detailing it. You can skip right over it, if possible.

Marcelo:

It's called Brick and Order.

Stephanie:

Brick and Order?

Marcelo:

Yes.

Stephanie:

Is it on Apple, Google, everywhere?

Marcelo:

Yes, it is.

Stephanie:

Cool. Yeah, we will also link that up in our show notes so people can find it.

Marcelo:

Thank you.

Stephanie:

Because it sounds like it's a good one. With the pandemic right now, and putting out different types of content and all that, how have you had to shift, if at all, your business model? Because I'm assuming what people were coming to buy before COVID-19 is very different than what they're coming to your site to buy now. How did you have to think about shifting not only what you were maybe recommending, but also what you were suggesting to stores who are probably, a lot of them closing down right now? How did you make that transition or shift?

Marcelo:

Yeah. COVID has been very big for our company. It hit our customers really hard. Our customers, of course, are small stores. Most of them are still shut down at this point. It was a big transition for us as a company, as well as for our customers. We are this high growth startup that has been adding more customers on both sides of our marketplace very quickly, and a lot of our focus is on growth and adding value to these stores. Suddenly this happened, and we had to shift focus very quickly.

Marcelo:

The first thing we did when this whole thing started to happen is, of course, to take care of the employees and making sure that everybody's safe. We started working from home very quickly, I think seven weeks ago. Then very quickly, we shifted focus to, okay, now how about the business? Very fast, we had to change from this high growth mindset, sell, sell, sell, to how do we help our customers get through this pandemic? For us, we are a well funded company. We have a lot of money in the bank. It's easier to, again, slow down and survive for whatever it takes, a few years, a few months. But we were really worried about our customers. We're like, what's going to happen with these small brick and mortar stores or the small makers around?

Marcelo:

We started collecting data. That was the first thing we did. We ran surveys with thousands of makers and retailers on our platform to understand their financial situation. We were asking things like, do you have money in the bank to be shut down for two, three months? How is it going to affect your business? We collected all of this data. We of course shared the aggregate of the data with the community, with everybody on our marketplace. Then we changed focus very quickly to try to help makers and retailers do the right things for them to survive. There was so much confusion on what's going to happen, so much information all over the place that they had a hard time, and they were all overwhelmed with it.

Marcelo:

We tried to inform them. We tried to guide them on what are the right things to do right now. We changed our focus from growth to helping our customers survive this pandemic. We built tools to help them apply for the government relief funds.

Stephanie:

That's great, much needed. Applying for that was crazy.

Marcelo:

Yeah. We tried to help guide them through it and help them understand all these programs. It's a lot of legislation, a lot of language. We tried to spend hours ourselves learning about everything, and writing it in a very simple way that they will understand it, and they know what applies to them and what don't apply to them. We built financial calculators so that they can understand what are the things they need to do? Do they need to renegotiate rent? How can they reduce expenses so that they can basically survive longer with the funds that they have?

Marcelo:

Then the next thing that we did is really, okay, now another way of helping stores survive this is helping them adapt to this new world. First thing we did is help stores and makers, makers that could sell essentials, they could make different things, or they were already making those different things that were essentials. We started to help them focus on that. For stores, the same. We're like, listen, you might not be selling gifts right now, but you could be selling masks, you could be selling hand sanitizers. You could be selling other categories, like food, that's still in high demand. We definitely changed recommendations. We guided people into adapting their business into this new world.

Stephanie:

Wow, that's great. Did you see the makers be be able to shift and adapt quickly, or what did that look like when you were recommending maybe tangential things, but also maybe something that hey hadn't focused on before that.

Marcelo:

Honestly, it really impressed us at how resilient our community is, our customers are. Most stores, especially small business owners, they have survived for so long against brick and mortar stores. They survived Amazon, giant online eCommerce, to keep their business operating. So they are also surviving. They're being super creative on how they change their business to survive this pandemic. Stores, of course, struggled more than makers because, again, they were completely shut down, and some of them didn't even have access to go to their store. Makers adapted much faster. Some of them already had wide presences, and they just had to switch more of their traffic to online. But the stores also were very resourceful. They are really trying very hard to survive. They are doing a lot of the things and following a lot of our recommendations as well.

Stephanie:

That's awesome. Yeah, that's so great hearing how you shifted everything you were doing to focus on how to help them, give them the tools that they needed that didn't exist in the marketplace, because who knew that this was coming down the pike? What were some of the top learnings from the survey that you sent out that you heard? Because something that comes to mind I just heard about was that apparel retailers, smaller ones don't have more than two month often times of cash on hand to keep them going. What were maybe some overall themes that you got from your survey that maybe you were surprised by?

Marcelo:

Yes. At the time, and remember that the survey was done over a month ago now when this whole pandemic really stared, but I'll tell you some of the numbers and the things that we learned here.

Stephanie:

Yeah, I would love that.

Marcelo:

76% of the retailers only had enough capital available for up to three months of operating expenses.

Stephanie:

Wow. Yeah, that's crazy.

Marcelo:

At the time, and I'm pretty sure this has shifted a lot since then, but at the time only 30% of the retailers had anything with regards to selling online.

Stephanie:

Some of that seems hard to believe. It makes you realize the importance of surveying someone and not just going forward with assumptions that you have about them, because I would've never thought the numbers were that high.

Marcelo:

Yes. We keep trying to survey them more often as well to see how it's changing. Other things that we learned was that 45% of retailers, they were already connecting with other businesses. Again, trying to build more community, learning more from each other and sharing information. 41% of the makers at that time had already started changing or reprioritizing their product assortment.

Stephanie:

That's good, being scrappy entrepreneurs.

Marcelo:

Yeah. Of course, we adapted. We started launching and selling a lot more face masks. Today, we have already over 200 brands that are selling face masks on our platform. The masks that we sell, they are produced in the United States by local makers. Most of the products that we sell are actually today still made or partially made in the United States. With the results of the survey, we tried to also create a lot of educational content to help everybody else learn about what's happening and how people are shifting their focus to try to help more of our customers to do it as well.

Stephanie:

How are you getting the word out about that educational content? How do you bring traffic to the content you're making?

Marcelo:

Yeah, there is a few ways to do it. Of course, we very often email all this information directly to the customers on our platform. We have two blogs. We have a blog for makers, we have a blog for retailers. We have community forums for retailers and we have a community forum for makers as well, both on Facebook at this time. We also have hosted a few webinars that had almost thousands of people attending at the same time.

Stephanie:

Oh, very cool. How do you see the webinars paying off? Do you see people enjoying that? Do you think that's a good use of time? What have you seen perform the best?

Marcelo:

We got amazing feedback from the webinar. People oversubscribed. We actually had a hard time dealing with all the subscriptions because ... the platform we were using was not ready for the amount of people that showed up.

Stephanie:

That's a good problem to have.

Marcelo:

Yes, always a good problem to have. But me, being the CTO and having to deal with the technology makes my life harder.

Stephanie:

What did you do to have to try and quickly ...

Marcelo:

We used to platforms at the same time, and that accommodated all the traffic. But yeah, people came back and they watched again and re-watched it. They shared it a lot. Webinar is not a thing that we have done a lot, but we are definitely going to be doing more of it.

Stephanie:

Yeah, that's very interesting. With everything that's happening now, what kind of digital commerce trends or patterns do you see coming down the road? Especially because you're so close to retailers and makers, it seems like you guys would have a good idea on what the future could look like if you had a crystal ball. How are you maybe thinking about what the future looks like, and how to adjust Faire based on where you think it's headed?

Marcelo:

I really wish I could ...

Stephanie:

Come on, Marcelo. Just tell me the future.

Marcelo:

I had a crystal ball. Of course, we can't tell the future, but we can pay attention to how fast and what direction things are going. It's obvious that everybody's trying to do things differently online and remote. How that's going to affect makers and retailers too, yet to be seen. I think honestly, from my own personal experience and from the platform, there will be a lot of behaviors that will change, that we do expect to change, but they are for the better. For example, curbside pickup is a thing. I don't think it was nearly as popular as it has become. I think it is going to be a thing that will stick with us. People do enjoy the ability of buying something, and whenever they have a chance, they go and grab it.

Marcelo:

I think for our platform specifically, that's going to become a very powerful thing. Because now, as I said, we launched this shop neighborhood. We can get consumers to find cool products online that they would never have found otherwise. They will find all these stores around them where they can go and find those products, they can buy it online and go pick it up. Not only go pick up the product that they bought, but they can also see all the other products in the stores, and actually meet the people that are selling this in person. That's one thing that people already loved in local shopping. They like the experience of walking into a shop, and talking to the owner and listening to the stories of the makers or the products.

Stephanie:

Yeah, that's how eCommerce started. I think back to, I don't know if you watched this, Marcelo, but Little House on the Prairie, huh? Any fans of that? They would basically, the shoppers would go into the store, and they would talk to the store owner and say their problem. He would go in the back and figure out exactly what they needed, and then would check back in with them to make sure it solved the problem. It's getting back to the roots of Little House on the Prairie days.

Marcelo:

Yeah. My prediction if I had a crystal ball here, if I were to make a prediction for the future is that, what this is going to change is that it's going to make the relationship between online and offline stronger. There will be more intersections. There is a world in which you are both online and offline at the same time, and that's the wold we're living in. We have been getting to this world slowly by having only online interactions and only offline interactions. I think what this is really accelerating is the merge of the two where you have both online and offline experiences with the same companies at the same time.

Stephanie:

Yeah, I definitely can see that happening. Are there any digital transformations or tech transformations you see necessary to make that happen?

Marcelo:

I think the technology, a lot of the technology already exists. Of course we have all this video technology, video chatting, video broadcasting. They have been available for a while now. But the applications of these technologies are going to change a lot. Again, another thing that we are working on, I feel like I'm here just marketing the things that we have been doing, but-

Stephanie:

Hey, that's all right. I'm sure people can learn from it.

Marcelo:

Another thing that we are working on is a product that will allow people to connect virtually, the same way that they have been doing offline. Think about it as the experience of a local market where makers are going to just be able to show videos, or have a live experience where they connect directly with many or very few of their customers at once, in a private or public type of meeting set up.

Stephanie:

Got it. To deepen the relationship that maybe all was virtual, or through just emails or just ordering, and you never know who's on the other side. You're trying to enable that relationship more kind of in person, but virtually? Is that how to think about it?

Marcelo:

Exactly. It's hard to give you more details yet, but we are going to be launching it this summer.

Stephanie:

That's great. When it comes to thinking about digital transformation, I know earlier you said that you would look to successful examples of other companies, of how they set up their eCommerce stores or strategies they were utilizing. That was the early days. Is there anyone now that you look towards as a leader when it comes to digital eCommerce, or someone that you're following closely where they have best practices that you guys like to keep tabs on?

Marcelo:

I don't think there is one company. I think, of course, coming from Square, we look a lot at Square and what they have been doing. But I think our platform is special in the way that we combine these local stores, these local relationships into an online global marketplace. I think of our platform as being or having some intersection with Pinterest, for example, which creates a very nice experience for people to navigate through things that they are interested in. We as a platform, I want our customers to enjoy this experience of finding products. Our customers, if you think about it, they start at a small store because they love to find products to show people, to sell, to show their friends. To be able to get these type of people to shop online, we need to create an enjoyable experience for them as well. They need to come to a website where they enjoy navigating, they enjoy looking at products. We're going to show products that are always relevant. They can keep diving deeper into a category and finding new, cool products that they like.

Marcelo:

Again, it's not just looking at eCommerce, but looking at what are the platforms that are offering the best possible experience that really get people to be hooked onto them? And trying to merge it all into our own platform.

Stephanie:

Yeah, I love that. I think that's such a good reminder that just because maybe you sell clothing, you shouldn't just look at other clothing companies. You should maybe look at how food companies are doing it, or like you said, looking at Pinterest and how they display images. Trying to just tap into completely different verticals to then pull those best practices up into your company, I think is super smart. All right. We have a couple minutes left. We always do a lightening round at the end where you answer a question in a minute or less. I was thinking about starting with the harder one first, and then doing the fun ones afterwards. How does that sound?

Marcelo:

Sounds good. Let's try.

Stephanie:

All right. All right, Marcelo. It's your job to stay ahead of tech and expectations and competition in the industry. In your expert opinion, what's up next for eCommerce pros?

Marcelo:

Oh, I need to think. This is a hard one.

Stephanie:

Yeah, got to start with the hard one first. Then we get to the fun ones.

Marcelo:

Yeah. Answering from experience, of course, that's very important. That's Faire. eCommerce is not just about showing products anymore, or letting people navigate through categories of products. The future of eCommerce is really a very customized, personalized experience. Data science is mandatory for successful eCommerce today.

Stephanie:

Yup, completely agree on that. All right. What's up next on your reading list or podcast list? It can be your own podcast, if you want, the Brick and Order.

Marcelo:

It's definitely our own podcast, talking about podcasts. I have enjoyed it so much. It inspires me to keep doing my work. The next book that I'm reading, I have just started, is Finding Genius, which is VC related. It's not really eCommerce, but it's pretty interesting.

Stephanie:

That's great. Yeah, exploring different industries and verticals. That's what it's all about. What's up next on your Netflix or Hulu cue?

Marcelo:

I have just been watching random things. I haven't had much time to watch TV lately with all the things we have been doing. I finished watching The Vikings on Netflix. That was the last series I watched.

Stephanie:

Very cool.

Marcelo:

After that, only random movies that I just find. They might even be old movies. There's nothing exciting. Usually I fall asleep if I start watching it.

Stephanie:

Hey, that can be a good way to slowly drift off to sleep.

Marcelo:

Yes.

Stephanie:

Once you can leave your cottage in Toronto, what's up next for travel destinations for you?

Marcelo:

Oh, that's an easy one. I was just about to grow on a cruise.

Stephanie:

Oh, where to?

Marcelo:

Actually, I was considering going on the cruise when this whole thing started. Max and Daniele were telling me, "There is no way you're getting to a cruise ship right now." We were going from New York all the way to the Caribbean and back.

Stephanie:

Oh, fun. Well, hopefully-

Marcelo:

I'm hoping to do that at some point in the future. I was really excited about it.

Stephanie:

Yeah, I hope so too. All right. Then the last one, what's up next on your shopping list? It can be tech stuff, it can be something you saw on Faire that you're like, I want to try and order that. Groceries, anything.

Marcelo:

On Faire, I have been ordering a lot of things. The next thing that I want to buy is a drone.

Stephanie:

A drone? Okay. What kind of drone are you thinking?

Marcelo:

As I am at the cottage, that's why I want to buy a drone. As I have stayed at the cottage since this social distance has started, I would love to have a drone that I could use to explore the forest around us here, and maybe find some of the animals that are around. Deer, and rabbits and things like that. That's next on my shopping list.

Stephanie:

That's fun. Well, maybe all the COVID stuff has a little plus that is making you explore different hobbies that you didn't have before.

Marcelo:

Exactly.

Stephanie:

All right. Well, this has been a really fun interview. Everyone go check out Brick and Order after this. I know I'm going to do that. Marcelo, thank you for coming on the show.

Marcelo:

It's my pleasure. Thank you very much for having me.