Up Next In Commerce

It doesn’t matter how great your product is if no one knows it exists. That’s why marketing matters. But not every company has the resources to go all out on a big-name CMO or to commit a large yearly budget to specific marketing efforts — especially when the digital world is changing so quickly. So what’s an ecommerce brand to do in order to get its message across to the right people?Erik Huberman founded Hawke Media to answer that question, and for more than seven years he and his team have been making marketing more accessible to businesses of all shapes, sizes and stages. On the episode of Up Next in Commerce, Erik explains how companies should be planning their marketing budgets and what the revenue threshold is that companies need to aim for before they can even think about scaling. Plus, he digs into his entrepreneurial and investor roots to give some advice to those out there who are just getting started, including the hard truth about what it means to be an entrepreneur, and some tips on new and emerging platforms where you can grow your personal and professional brands. (And yes, we are talking about Clubhouse!)Main Takeaways:Same Problems, Different Speeds: Even the biggest brands in the world face the same key struggles as the new start-up making waves: access to talent. The difference is the speed at which the companies at both ends of the spectrum can move. With more decision-makers involved and more stakeholders to answer to, bigger companies have to be more methodical and intentional about who they bring in to help, whereas smaller companies can make decisions fast, but there is more volatility with every choice. Join The Club: New platforms like Clubhouse are on the rise, and finding a way to capitalize on them is the biggest challenge currently facing businesses competing for market share. Listen in to hear Erik and Stephanie dive into the Clubhouse wormhole and the opportunities that await.I Get So Emotional: Marketing is about eliciting emotion from the person you’re selling to, whether it is B2B or B2C. By establishing an emotional connection and presenting a value proposition that a buyer can clearly see as a solution to a problem, a level of trust is created that will lead to a long-lasting relationship.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, Co-Founder at Mission.org. Today, on the show, we have Erik Huberman, the Founder and CEO at Hawke Media. Erik, welcome to the show.Erik:Thanks for having me.Stephanie:I am excited to have you on. I was just chatting up a bit before telling you how we are actually a client of Hawke Media, full disclosure to anyone listening. It's been amazing. But I would love it if you could go through what is Hawke Media for anyone who doesn't know?Erik:Yeah, sure. We're an outsourced CMO and marketing team to companies. So, what that means is we basically go into companies, identify what the holes are in their marketing, organization, or strategy. And then we can spin up different experts on an ala carte month-to-month basis, whether it's a Facebook marketer, an email marketer, a fractional CMO, et cetera. We've got about almost 200 full time people. We manage marketing for about 500 different companies from small startups to Fortune 100.Erik:Our mission, for lack of a better word, is to create accessibility to great marketing. So, the idea is we really saw that it was really hard to, for most companies, get access to great marketers. We wanted to make a place where we had amazing marketers, amazing talent, people that were top of their game, but it was super easy to work with them. That was a challenge we saw on the market that didn't exist, a solution didn't exist. That's how we got started.Stephanie:That's awesome. Yeah, it's been really fun. We did the CMO thing first. It was cool, because you do get access to people who have been CMOs at big companies before and they have all this expertise. But we had them for three months. And then they transitioned us on to the next stage of implementation of social and other things. It was just really fun to be able to have access to talent like that without actually having to hire them as an FTE or something.Erik:Yeah, that's exactly the model. I came from building and selling a couple ecommerce companies and just wish this existed. My last ecommerce company, we were heavily funded. So, I had a 10-person marketing team of talented people, but they all worked or they could have all worked half time or less and gotten what I needed to be done. So, we had toyed with the idea of, "Could we hire these guys out to other companies? Because they're a great team, but we don't need them all full time. But we need all their expertise." So, that's part of where it came from, the idea was born.Stephanie:Okay, cool. What ecommerce companies did you have before this?Erik:I had a company called Fame Wizard first, which was online music business coaching for musicians. Then a company called Swag of the Month. It was a T-shirt subscription company, long before Dollar Shave and all that. And then an activewear brand called Ellie that's still around, the E-L-L-I-E.Stephanie:That's awesome. So, what things did you learn at those companies that maybe you brought either to Hawke Media or to how you're maybe advising brands today?Erik:Yeah, really quick bullet points. Fame Wizard have a customer that has money. Having independent artists as your customer is really hard to build a business off of. Swag of the Month, the need for working capital and financing, which funny enough, we just launched our financing and working capital arm of Hawke Media a couple months ago. And then the third one, Ellie, don't overcomplicate it. If it's working, double down on it. Also, that I don't like having other people make decisions for me, because that's when I was working with a committee and I was not the main decision maker. They screwed up a lot.Stephanie:I like that you have bullet points. You're like, "I already got it covered. I already know."Erik:Yeah. I've definitely walked away with very specific, "Don't do that again."Stephanie:Yup. Yeah, that's great. So, are you able to share some brands that you work with? So, we can get the scope of who-Erik:Yeah.Stephanie:... that you guys are learning from and working with right now and teaching.Erik:Yeah, I mean, it's the full scale in terms of small startups, most people haven't heard of, and hopefully, we change that. Tamara Mellon, we started with it when they were a tiny business and skyrocketed them for a couple years. GREATS, the sneaker company, we built for three years with them and they sold to private equity. Incase, the phone case, until they sold to Incipio. It's ironic. We get a lot of companies to scale and then we get fired, but it's par for the course.Erik:And then we also work with big brands, Nike, Unilever, Estee Lauder, Red Bull, et cetera, as well. And then a lot of small brands that don't necessarily want to be the next big VC-backed company that are $3-, $4-, $5-, $10-million companies while we're working with them. That's what they want to be. They slowly grow and run a lifestyle business that pays them a couple million bucks a year and do great.Stephanie:Yup. Do you see the big brands having the same type of struggles as the smaller ones, or is it very separate where you have to put very different skill sets depending on the company size?Erik:No, the expertise are similar and the struggle is similar in the sense of access to talent is really one of the biggest... True knowledgeable, experienced talent is what everyone's struggling with. The way we have to operate is different, because when you're dealing with a small business, a lot of times you're dealing with the owner, CEO. They can do whatever they want. There's no one they're reporting to, even if they have investors who usually have control. When you're dealing with bigger companies, you're dealing with publicly traded companies, a lot more processes, a lot more checkboxes, a lot longer time to make decisions. So, it's a lot slower. So, that's why I look at our client base like a distributed portfolio.Erik:The startups are super fun, because you can do whatever you want, you can get going quickly, et cetera. But they're also super volatile on the other end, where they'll fire you overnight for one small thing. Whereas big companies, they take forever to sign, take forever to make changes, but they also stick with you forever. So, we've worked with a lot of these bigger companies for years and years and years, because they're used to signing three-, four-, five-year contracts, even if we are month to month.Stephanie:That's good. So, what are some challenges you're hearing right now around either marketing challenges or business challenges that you guys are tackling that's maybe different than what you were hearing in 2020 or 2019?Erik:Yeah, I mean, 2020 was all COVID, but the silver lining was the market share of spending online almost over doubled. So, our clients on average doubled their revenue on what we were operating for them. So, that was really good. What we saw what changed towards the later end of the year and now into this year, so, now that market share hasn't diminished that much. Instead of 13% of consumer spending, being online pre-COVID, it went up to 30. Now, I think it's at 27%. So, it's still massive increase.Erik:So, we are seeing that now, all the big CPG companies and all these bigger companies that back to the point can't make quick decisions, unless the world's falling apart, cut everything. They usually do that and then they slowly roll back. They're all really coming back strong into digital, because they're seeing so much more market share there. So, what happened was the cost to advertise on Facebook and Google during Q2 and part of Q3 dropped about 30%, because there was less competition on it. Q4, October and November were insane, October because of the election and then November, holidays hit. December, they carry over a little bit, but they do lessen.Erik:And then I think now, I am anticipating advertising continuing to get more costly, because now, again, 13% of these big companies marketing online is now 27, they're going to spend more to capture that market, which means you're going to compete with them. So, if you're a small or medium business competing, there's a good chance that cost to advertise online increases significantly. So, not necessary what companies are looking for but what they should be is ways to increase their ownership of their customers, because if it costs you more to get a customer, the way to combat that is to increase your lifetime value to a customer. It's a math equation. It's that simple.Erik:So, how do you do that? You find ways to increase your lifetime through merchandising, through retention, through customer experience. When I say merchandising, having other products and services you can sell to the same customer. There's just a lot of things you can do, and then just continuing the communication like email marketing, SMS, chatbots, ongoing content, just all the ways you can create a walled garden around your existing customer base for them to buy more from you. The companies are going to win, which is why you see Amazon just skyrocketing. They were a book company at one point. Now, they sell you anything.Stephanie:Yeah, I love The Everything Store talking about how he and his wife are going and dropping off books to try and ship them out. That was a good book for anyone who hasn't read it yet. So, I mean, I'm thinking about myself as a smaller company right now. We're talking about ad costs are going up. It's going to be harder to compete against bigger brands. If you haven't acquired those customers yet and you don't have anyone to talk to, it seems like there's definitely an opportunity to be more strategic of finding new channels, whether it's the TikToks of the world or the Clubhouse.Stephanie:Shout out to Hillary, you just got me onto Clubhouse. But it feels like there's a bunch of new channels popping up that could help democratize community building a bit more or yeah, finding your audience in different channels that bigger brands maybe won't hop on as quickly.Erik:That's funny. I just got accused of being addicted to Clubhouse. So, my wife has actually had to say, "When we're eating, put that thing away." It's just the past week, but that platform is taking off. Yeah, it's always about working for diversifying. The problem is Facebook and Google still perform so much better than these other platforms that they need to catch up. TikTok will absolutely compete as they build out their ad platform.Erik:I think it's a no brainer in the way that the platform's built, but they need to do a better job of their targeting and everything, which when I say that, no one's spamming. It's just too early. Snapchat seems to be getting their legs under on Twitter. Hopefully, we'll figure it out. Stephanie:Yup, yup. I agree. Are there any new places that maybe are lesser known, where you're like, "We're trying out this one little thing in the back alley here that no one else knows about"?Erik:I mean, your know about Clubhouse. Clubhouse doesn't plan on monetizing through advertising, but as a community builder, it's crazy. I've been on it one week. I've 11,000 followers. I'm not an influencer. Twitter, I have a bunch of followers, but that's unusual for me.Stephanie:What are you doing on Clubhouse then? Because I get on there, and I'm like, "Hi." For anyone who can't see this, my awkward waving in Zoom. I don't know what I'm doing on there.Erik:Yeah, I've been fortunate enough to spend the past decade building a pretty solid network. So, when I got on there, a bunch of my friends were the people on stage that people want to hear from. So, guys like Daymond John and Lewis Howes and [inaudible] were all pulling me up to talk with them. And then other guys, like Grant Cardone, who I never knew before this now, start pulling me around with them. So, it's been a week, but all of a sudden, I've connected with a bunch of these heavy hitters that I've never knew before, that now we're also jumping on calls offline and connecting. So, for me, basically, I was on two flights a week almost in 2019. So, I spent most of my time traveling to shows and conferences and meeting people. This is scratching that itch.Erik:So, for the people that really want to network and build that network and learn from other people, this is the perfect platform for someone like me. It's not for everyone. So, I've gotten on stage. I've talked a lot. I mean, there's millions of people on it. Thankfully, I've been very lucky to build what I've built. A lot of them are looking for advice on how to build their businesses. So, now at this point, this is my fifth business I built. We've bootstrapped it. I've invested in, I think, 30 other companies. I've had a few exits, had some successes there. So, a lot of times, I can give some quick guidance to someone on there. So, I've done a lot of that, which has been fun.Stephanie:Yeah. So, since no one else has talked about this, this is why I'm diving even deeper into this. So, someone that can listen and be like, "Okay, I'm going to try that out too," are you speaking on there when you're saying you're on stage? Are you getting invited from someone? Are you just creating a room yourself? Tell me a bit about how that's working.Erik:Yeah. So, I mean, just to recap the platform, basically, it's super simple. All you see is a person's headshot, their little icon. It's all voice. So, you just talk. So, there's the stage and then there's the audience. Whoever's on stage can talk and you can mute your mic and talk. You got as many people on stage as you want, like a panel, and then anyone can come in and listen. So, as mentioned before we started this, I like to talk. So, me sitting in a room and talking and I've been in rooms with 20 people on stage, 30 people on stage, where I chime in once every 30 minutes.Erik:A lot of the habits that are starting to come on there are just people rotating on the stage asking questions of the panelists and just doing Q&A for hours, but it's people asking about, "How do I build my business? I'm struggling with this. What do I do here?" And then what I've seen is a lot of altruism, which has been fun. I've opened up my direct messages on Instagram through that. So, it's like, "If anyone needs help, just hit me up." So, making connections to VCs, to funding, to whoever could be a good distributor or a partner, give them advice, trying to help people.Erik:What I've seen also is a lot of people that aren't in L.A., New York, Austin, or Silicon Valley, that don't have access to these networks are all of a sudden... There was a whole world of amazing entrepreneurs I didn't even know until I got on this thing. It's a lot of the BIPOC community is getting on there and really helping each other. Not that I am one of them, I tried to help and very passionate about diversity and inclusion. So, we do a lot of charity work around bridging the opportunity gap. So, I've seen this as an amazing tool for that, because there's so many people that don't have access to... I've grown up around entrepreneurs. My dad's successful frankly. I grew up around people that have started businesses. I had a pretty easy path of role models.Erik:Most of these people don't or a lot of these people don't and that are coming from inner cities, et cetera. They are now on this. I do get pinged maybe 100 times a day actually on that thing, asking to be their mentor. I'm like, "You don't have to make anything official here. What can I help with? Let me answer your questions," that kind of stuff. So, that's been super rewarding, but I do see this as we're all stuck at home right now, where you are means nothing.Erik:So, this is a way for everyone to be connecting. But without having to be on video, it also makes a lot more people comfortable having a conversation. With voice, people are not as rude, demeaning. Social media has a problem on the tech side. We all know it, where it's like when you can just text whatever you want... We deal with it all the time with clients. If we have an angry client and we're on email, we'll get hate mail. Then I pick up the phone and call them and they're like, "Hey, how are you?" It's like, "What?" Same thing, I really think there's something there.Erik:The curiosity I have is as a social media platform... I'm sorry, this is all going to Clubhouse. But just as a social media platform, on Facebook, you might spend 3 minutes, 5 minutes, 10 minutes at a time scrolling through Facebook. Clubhouse, I'm watching people spend 12 straight hours in a day. I've never seen a social platform that people just zoom in and go. So, I'm really curious what that turns into. I think they'll end up monetizing by adding tips to panels, so you can actually tip the panelists or paid speakers, I think that's what we're going to see. Because they said they want to make money for their content creators, and they don't plan on adding ads.Erik:So, I think that's going to be interesting. But for brands to answer your question, I think for personal brands, it's massive. You're a CEO or whoever you are, building your brand on there and starting to talk. I mean, we had a channel the other day, where it was a bunch of beauty entrepreneurs from the south, bunch of women that had built beauty brands bringing up young beauty brands to talk to them. There were women coming on stage to talk about their brand and then going, "I've made $300 in the past two months on my website. The audience just bought $7,000 worth of items."Stephanie:Wow.Erik:That's happening. It's an eight-month old platform, but really got popularity two weeks ago. So, it's interesting to see where that can go.Stephanie:Yeah, I mean, that makes sense, especially around the theme too of, I mean, bigger brands too leaning into becoming their own media companies and getting on there and leading not just from their brand perspective but being thought leaders. Their brand is behind the scenes. If you offer value, someone won't mind if it's coming from someone at a large company that's like, "Well, sounds so smart. So, I'm sure they work at whatever big company that is," but they're the one on there offering the best tips.Erik:Yup. That's the other thing is there's no BS-ing it. When you talk enough, people are going to know whether you know what you're talking about or not. I've seen it. The rest of the two people on the stage are like, "Wait, what?" People call each other out, because I think people feel responsible, including myself. The audience is taking this advice. I jumped into a panel yesterday that was talking about Bitcoin. Some guys said, "There's absolutely no risk in investing in Bitcoin. You just put as much money as you can." I was like, "Hold on for a fucking second. Excuse me." Yeah, so there's that too.Erik:And then I do think there's a whole community and personal aspects that were like 21 Savage is one of the biggest followed people on. He does DJ sets every night with Sir Mix-a-Lot and all sorts of other people. It's not just business. There is a lot of other fun conversations. Overheard LA did a whole thing where they were saying, "What's the weirdest story you've had in COVID around dating?" There's comedy shows. There's all sorts of fun stuff.Stephanie:Yeah, that's awesome. So, when you're on there giving tips to businesses and people who are trying to learn, what are the top questions that you're asked or what things do you talk about that resonate most with business owners?Erik:So everybody wants funding. These are all early, early businesses. Everybody goes, "How do I get funding? How do I get a grant or a loan or funding?" If you need money to get started, that's a bad sign. Don't get me wrong. There's high tech companies and certain companies that you can't get around it. But most of the initial funding for businesses comes from friends and family if you need it. If you need a heavy amount of funding and it's not something high tech, you have to be real if you're the right person to start that business. That's one. There's a lot of people that pitch for that while starting with the hardships story, something that's like, "This is what I'm struggling with." I've noticed that it doesn't get the reaction you'd hoped for.Erik:Compassion is a big thing. I think for help, people do, but if you lead with that to try to get someone to be part of you in business, it shows the wrong focus. It's not to diminish what people are going through. A lot of people have had a really hard time recently and in general, but I do notice that when you lead with that versus excitement and optimism, you're going to attract a lot more people with optimism.Stephanie:That's a good one. Yeah, I've definitely seen a lot of people who come with the story where you're like, "I should feel bad, but also as a businessperson who maybe is either going to invest or partner with you, we'd be in this together. I need to know that you have another reason to want to push this forward. It's not just this." So, that's a good point. All right, give me more.Erik:The COVID excuse, I'm not very nice about this one, but I have too many friends that have done well in spite of COVID. Not because they got lucky. Someone came on the other night as like, "I've launched my ecommerce company last a year ago, but because of COVID, we've had a really hard time." It was like, "Take a beat. Because of COVID, your ecommerce company has had a tough time." We just went over the stats of ecommerce. I was like, "Explain that." It wasn't ecommerce. It was the person couldn't get out of their way. So, that's generally the advice I end up giving to, because again, there's a lot of people trying to get started. It's just go.Erik:My biggest learning in entrepreneurship in general is no one's that smart. It's just people that went for it and got lucky. I really believe that, including myself. I don't think that I'm not impressive. I think I went for it. I timed it right, meaning I got lucky. Meaning, because of the way the world worked, I knew about ecommerce right when the world wanted to build all the ecommerce and I was one of the only free agents in LA with a reputation of being successful. So, that's a big one.Erik:So, with COVID, I have a friend that owns 20 gyms across Canada that got shut down overnight, done. He's been doing it for 20 years. He three days later decided to launch a virtual training platform and has done millions in revenue in 2020 as a gym owner and was able to keep his entire staff, pivot, not lose money, and now have a whole new revenue stream that when things do reopen, he's got both.Erik:So, I have a friend that owns a chain of restaurants in L.A. He's not thriving, but his businesses are all still open. He's making money. He's made a living. There's ways to operate that you can actually get through this. I watch some of our clients, ecommerce brands. They're like, "Cut everything." I'm like, "What do you mean cut everything? The numbers are good. I get that the news is scary, but you're doing well. Do not cut." The companies that cut, I don't know if any of them recovered, the companies that I know that cut with us. And then we had a whole bunch of other companies that stuck with us, our average client in Q2 doubled their revenue.Erik:So, interesting if you think about what happened in Q2 of 2020. So, yeah, getting back to it, the biggest one is like don't give yourself excuses, go for it. That's a lot of what we're talking about. And then we get into sometimes deeper marketing conversations like, "What do I do to get started in marketing? If I don't have a budget yet, where should I spend my money? Should I run Facebook ads right away?", those kind of questions.Stephanie:Yeah, I love that. It reminds me too of doing things in haste, there's a good quote. That was around investing, but it's like the person who's scrambling to themselves when the news sounds bad or something, they're never the ones who do well or find a good ROI. I thought I'd be the person sitting and waiting most times and play the long game, instead of reacting to the news or quickly stopping or starting something really quickly. It's probably never that necessary to jump on something.Erik:Correct. You have to give yourself that luxury, so to speak. So, what I learned myself out of this was I'm keeping more money in the bank going forward, so that I can take a beat. Even if I see my business losing money, I can go, "Deep breath. What's the right long term plan here?" Not just react because I got to stay in business tomorrow. That's where a lot of businesses got stuck is we're in such a great economy. People are just spending all their money on growth. All of a sudden, it cut off. So, you have no money in the bank, that can be a bad situation.Stephanie:Yeah, I agree. So, you're talking about many of them don't have budgets and they're trying to start marketing or launched an ecommerce shop or something. How would you go about that? Because I used to read quite a few books that talked about scrappy ways to do it, whether it was just putting up a landing page and then maybe linking to products, reselling them. There's so many things that we've been taught when it comes to being scrappy and starting something without having to invest money, but how would you do it now in 2021?Erik:Yeah. Everybody loves to throw around the MVP model, minimum viable product. The problem with it is people go to minimal and not viable. Meaning, you make a product that gets out there, but it's not really viable. It's not really what somebody's going to buy from. It's a landing page that sends you to a site that says you can check out but you can't or whatever it is. People think that just getting up and running is good. You got to commit.Erik:If you're just getting started, keep the day job, make money along the way. If you can't work a day job, then you get started on midnights and weekends, you're not going to be a good entrepreneur, because welcome to entrepreneurial life. So, that's actually a good way to get used to it in my opinion.Erik:Also, it never happens as fast as you want it to or almost never. So, it buys you time. You're not under some ultimatum that if this doesn't work in six months, I can go back to work. It's like well, just give yourself as much time as you need. Switch over when it can support your lifestyle. So, to get started, I mean, there's a few ways. If you're trying to launch a new product, you might need to put in 10, 20, 30, 50 grand to get started. That's actually a thing. That's where the friends and family come in if you're launching a new shoe line or something, but start small. Sell out. It's okay. Meaning, sell your product, not sell out as a jab or anything. It's okay to have a small run in the beginning.Erik:And then in terms of marketing, I've really honed in on this focus, actually, through a lot of answering these questions on Clubhouse is where we invest our investment threshold and where we like to look at companies is 20 grand a month in revenue. Because honestly, that's when you've been able to get over the scrappy period and you started to build a sustainable business. Still small, but there's something there. That's traction to us. To me, it's like get to that point without spending too much money.Erik:Partnerships, get someone that has your audience that you're trying to reach and find a way to make them talk about you to their audience. That could be press. That could be influencers. That could be other brands that collaborate with you. That could be many different ways. But start there, start building that organic reach groups. If you're selling shoes, not in COVID, but in general, sell them out of your trunk. Don't make it so it just has to be through your website either.Erik:My view is focus on one thing, and don't narrow yourself in other ways. The idea of being direct consumer and not opening up every other distribution channel for your brand is crazy to me. Go omni-channel, open up retail, open up everything else, and build a model that makes sense for all of those, and then see where the least path of resistance is. Maybe Nordstrom decides you got the coolest sneaker ever and you get a $5-million order. You're able to ask the right people, so you can protect yourself, because a lot of those big box will return the entire order when they don't put it on the shelves.Stephanie:Oh, wow.Erik:So, there's ways of that-Stephanie:[inaudible 00:25:50].Erik:That's why retail is hard. Walmart, they charge you for the products that don't sell and send it back to you. So, you got to be careful on those agreements and what you take on, but listen, it can also set you up for the rest of your life getting a deal like that. So, open it up to do all those things and be scrappy about it. Instead of throwing other people's money and trying to grow and hoping it works, find ways to make money right away. As someone that has bootstrapped a business and owns it with my partner, but the two of us, it's awesome. We tell our team all the time, "Anything you want to do, we can do it. Just ask." We're not reporting to anyone. We don't have people on our board or investors that we have to report to that are going, "I don't agree. I'm worried about the risk of my money." Not all investors do that, but some do. So, yeah, if you can keep ownership, it's a lot of fun. It's stressful at times too, because there's no one else backing me up. It all falls on you. But once you get through those hardships and get used to that challenge, because it never ends, it actually becomes pretty fun.Stephanie:Yeah, yeah, that's definitely my viewpoint on investors too. Unless they're very strategic, they're going to open up a network for you. They're going to give you something that you can't get otherwise. If you're just going after money, you probably needed to look elsewhere. I mean, my friends and family, not so much. I would have never been able to raise any money from them properly. But, thinking about it more strategically, instead of just, "Here's some dollars," because we had a guest on the show, who I forget who they were.Stephanie:Maybe Hillary can remind me in our prep doc here, but they're talking about how they built their company based off a Kickstarter Indiegogo type of thing, because they had this whole quote that was, "Don't rely on friends and family." Because if that's how you think you're going to fund your product, you're already going to fail. Account for them to maybe only be 3% of what you need or something like that. Only 3% of your product will be bought from them. The rest, you need to go out and form those email newsletters. Find your audience elsewhere, or else, there's no point in you trying if that's your only goal.Erik:Yeah, I would say that with smart money, which I agree with, if you're going to take money, take smart money that knows what they're doing and can help you. But a lot of times you can get that help without even taking their money. That's the other part. There's an anecdote about call someone for advice and they'll give you money. Call someone for money and they'll give you advice. So, if you want connections, most people that have been successful, most not all, but most are really willing to pay it forward, I've noticed. They want to help. They can't help everyone, but when you catch them at the right time... And then for anybody, it's a game of numbers. If you're looking for help, reach out to as many people as possible. Someone's going to say yes.Stephanie:Yup, I agree. So, the one area that we sometimes neglect on this show is B2B commerce, because of course, everyone's focused on B2C. But I saw that you put out a list of tips for B2B ecommerce companies. I was hoping you could walk through, what are you guys seeing for B2B companies? Do you work with B2B companies? How are you advising and marketing for them right now?Erik:Yeah, I mean, in the nutshell, B2B marketing is actually very similar to B2C, except for the end goal with B2C is a transaction. B2B generally is to drive a qualified lead, but you're still marketing to an individual. That's the part that I think people really forget. When I'm marketing to B2B, I'm not marketing to a business. I'm marketing to the decision maker at that business. So, it's still a person. So, instead of marketing to someone that likes dogs and biking, I'm marketing to someone that has this title at this type of company, who's a marketing manager at a Fortune 500, whatever it is. So, it's just a different targeting methodology.Erik:And then the way you position the company is still value proposition. You still want to get an emotional reaction. That doesn't mean like go crazy with it. So, don't take that too verbatim, but people justify emotion with logic. So, if you can hit the emotional reptilian side of the brain and get with any type of marketing and get them to feel like you're going to do something for them, that's the best way to get someone. So, Hawke Media is all B2B obviously. We don't use it that much now, but we're about to ramp it back up. Have you seen our commercial with the lemonade stand?Stephanie:No.Erik:Super fun. We filmed this less than a year into business, I think. I sat with my business partner. Again, we're marketing to business owners. That was our main target. They were like, "What do people like?" I'm like, "Puppies and kids." It was just when GoDaddy got banned from the Super Bowl for putting a puppy mill as a joke commercial. I was like, "No, let's not do that. So, let's go with kids." So, we basically created the commercial about a bunch of kids in a really corporate office.Erik:But when I say kids, eight, nine year old's running around, skateboarding, throwing paper airplanes, freaking out. The owner, this little blonde girl going like, "I can't take this. Who's handling our Facebook ads? Who's doing this?", and just freaking out. And then we come in and we got you. I was in the commercial too. We explained that. It shows them at the end, a bunch of kids making it rain with cash and dancing and having fun.Stephanie:That's cute.Erik:It was fun. It got people's attention, but the whole point was, "We got you. I know you're freaking out, but we're not and we got you." That's how it came off. That emotional connection, even though we're talking about B2B, which you'd think is super logical. How much do you cost? How much money you're going to make me? No. Why people hire us, the logic reason is bandwidth's our expertise. The emotional reason is, "Please someone just handle this. I don't know what's going on here. I just want to grow and I need someone to take it off my plate," or "I don't know what I'm doing." We need someone to just come in calmly and help us.Erik:Understanding that in B2B is super important, because then everything you do with positioning yourself is like, "We're here. We got you. We know what we're doing." You can sleep easy at night is our positioning. Now, you change that. And then how you execute on that, same channels, Facebook, search, email marketing, press, all the things we use for our clients, creating your own content is the stuff we use for ourselves.Erik:I'd say any marketing is aspirational. Not meaning I aspire to be like something great, but more like, "I'm currently at this state, and I want to be here." It's as simple as my socks have holes in them. I want comfortable socks and you go buy socks. This aspiration doesn't have to be something groundbreaking. So, understanding that you need to position yourself as that aspiration, the solution to getting the person from where they are to where they want to be, no matter what you're selling, B2C, B2B, is the most important part.Stephanie:That's really good. Yeah, I mean, I think about the ads to B2B and they're so lame. A lot of times, they make things so corporate. It's like, "I'm pretty sure any corporate citizen will not want to watch another corporate style ad." They want something new and different and love to just connect with the person. Even if it's a title that you're connecting with, there's someone behind that title. If you wouldn't like it, they probably won't either.Erik:Yes, exactly. That's been the awesome thing about Hawke and its marketing specifically is I'm the customer, literally, who would be buying from us. That's why I created it. So, I get to make things that I didn't want to see. You just nailed it. I hate the boring, stodgy, men and women in suits. We've been trusted for 25 years. Who cares? That's not why I'm hiring you.Stephanie:It's like the stock photography, where you go on there. It's like all these people in offices and business suits. I'm like, "Who's buying this stock photography? This is horrible."Erik:My favorite, I used it again recently. So, that's why it reminded me. Remember that photo shoot they did with the baboon doing stock photos in an office. I just found it. My brother-in-law asked me what I was up to this weekend, I sent him the baboon banging on the keyboard. I'm like, "Just working." That was a great shoot. That was so perfect. Yet so many people did not get the point of that, which is this is ridiculous. Why are we taking office stock photos?Stephanie:Yeah, yeah, that's funny, but I mean, a lot of people use them for a while. I guess it worked for probably a solid week, and then everyone realized it's not working anymore.Erik:No, no, a lot of people still use the office photos. Listen, that's not going to be the only driver of your business. You don't have to be perfect in marketing. If you have a good product or service, marketing helps, but it's not critical. So, a lot of people get away with really bad marketing and still have a really good business.Stephanie:Yeah, the one theme that I've heard from quite a few people on the show is that the organic videos and natural things are all performing way better than stock photography or anything that seems like it was built out of the box. Are you seeing that as well?Erik:It depends. It depends on what type of product it is. If it's a product that needs a lot of trust, you need production value. Meaning, a supplement or something that people are looking to solve a problem. They don't want to see that you threw something together. If it's like fashion or lifestyle products that people aren't really worried, you can get away with that a lot more.Stephanie:Yeah, I like that. So, one other thing, I don't know how much do you guys experiment with TV, because I was listening to a good episode. I forgot what podcast it was, but I think it was Gary Vaynerchuk, where he was essentially saying, "All TV is dead except for Super Bowl ads." That's the only ads that actually work. Every other TV commercial, they don't work anymore. They're dead.Erik:Gary's a friend and I think he has nailed what he's doing. He's a super bright guy, but I think a lot of times, he speaks in hyperbola. Nobody ever gets held to these big grandiose claims. I called a friend out for claiming that Bitcoin will be at 50 grand by Sunday. And then Sunday came around, I screenshot it and I sent it back. I'm like, "What the hell, man?" He's like, "Whatever, it'll happen in the next month." It's a habit that a lot of people got into, making these giant claims. I'll be real, TV does work. You got to buy it, right? Yeah, we do some TV, some radio. It's not a big part of our business. I'm not trying to hype it up.Erik:But once you have an amazing funnel and you really know who your customer is and you're really good at nurturing leads... Meaning, not just letting them come to your site and hopefully, they buy, but capturing email, capturing their phone number to text them and follow up and really nursing them. Again, you know your audience and you know your messaging. So, you know how to attract your audience and get them to buy. TV is still one of the cheapest places to get a 30-second impression from a massive audience. So, both TV and radio are still very viable options as you scale, but you can do a lot of digital before you have to go there.Stephanie:Yeah, yeah. Yeah, I agree. We had one of our podcasts aired on radio. They took it and turned into a one-hour special for Veterans Day. It's called The Story. Some people were like, "Radio is dead. Why would you want radio?" I'm like, "Do you know how many people still listen to radio?" Actually, it's still very legit if you can get on radio. I mean, it's huge.Erik:Most people are sitting in their car. They're not going anywhere. They're not changing the station either, because, frankly, there's not that many options. You can get a lot of people that are doing nothing. The hard part is to get them to remember things, but it works. We've had a lot of luck, especially event sales. When we're doing big events like TED and stuff like that and trying to sell tickets, DutyCon was a good one, radio works really well.Stephanie:Yup. Yeah, like you said, getting that CTA, where it's not something that's distracting or they crash, but seriously, going by what I just talked about.Erik:Yeah, exactly.Stephanie:All right, only couple minutes left. Let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready?Erik:I'm ready.Stephanie:All right. What's up next on your podcast list?Erik:Who is or what?Stephanie:Either, who or what? What are you listening to?Erik:Oh, well, we have our own. So, who would be Rachel Zoe.Stephanie:You have her coming up?Erik:Yeah, we've worked with her for years. She's awesome. Yeah, so that's the next one. And then after that is Rob Dyrdek, I think. I want to get more into How I Built This. He's awesome. I just think that that's always an interesting story. My podcast is more about their life story. His is really about how they built their company. So, I like the life story too. My podcast was I wish someone did this. So, I'm just going to do it and hit up cool people and find out how they got where they are. Yeah, so my podcast is Hawke Talk.Stephanie:Awesome. Yeah, I will be checking it out. What's up next on your reading list?Erik:Whatever my business partner assigns me. I am not a voracious reader, and my partner is. So, he's decided-Stephanie:He assigns it to you?Erik:He's decided as of last month that he's going to give the executive team including me a book a month that he wants us to read and be on the same page on. I'm all about it, because I don't have any motivation on my own to really do it. I'll pick up a book now and then probably a couple a year. Most of the time, I end up listening to it on Audible. I'll buy the book. I buy all my friends' books. My wife rolls her eyes every time. I got to support, but I don't read any of them. Sorry, guys. We're coming out with our own book towards the end of the year called The Hawke Method. It's how we grow companies, basically.Stephanie:That's awesome. I love that. What one thing do you not understand today that you wish you did?Erik:I wish I understood the public markets more. I've put money in it now and started to try to learn it, but I've surface level things I understand. But when we started getting into derivatives and the complicated side of finance, I'm still not completely clear. I've also shied away in some ways, but I think when you overcomplicate it, it's too complicated for everyone. That's when we get into the housing crisis and things like that, but I also would love to understand it so that I can call bullshit on it sometimes, because I realized in my entire career, no one's that smart. If it's complicated, it's probably a problem.Stephanie:Yup, that's a good one. What favorite piece of tech are you enjoying right now? It can be new or something you've used for a long time. It can be an app or anything.Erik:Yeah, I will say the one that surprised me the most is the Oculus, because I've been a naysayer of VR. I'm like, "VR is too isolating. It's stupid, blah, blah, blah." But once I got one and I ended up helping an organization called YPO do an event with Oculus and got one, and I'm like, "Oh, wow, no, this is interesting." There's actually something to VR and the experience you can have. Most people can only use it for 45 minutes at a time, but I think it's really cool. I think there's something coming down the pike with that that I think will be really cool.Stephanie:Yup, yeah, we wrote a 2021 Trends Report. That was something I'm keeping an eye on is how to use that when it comes to not only following influencers, but shopping from feeds and watching live events, but also being able to get it while watching it and stuff. I think there's a little work to be done, like you said. I know a lot of people especially myself still get dizzy and not feeling very good after, for me, 10 minutes, but it seems like once that gets a bit better, there's a lot of opportunity, especially for ecommerce companies if they can figure out how to make it an event and something fun that people want to attend.Stephanie:Plus, also, it's like The Container Store in Netflix series. You want to buy with the Netflix series ad, even though they don't really slap you over the head with Container Store stuff, but you're like, "But I need that specific box to put my scarves in."Erik:Yes, exactly. No, I think that's exactly it is. The business model needs to be fixed around the content for VR, because it's just not good enough yet to track enough content and things to do. But once that turns into a much more prolific platform, I think that you'll see it hockey stick quick.Stephanie:Yup. All right, last one, what is the nicest thing someone has ever done for you?Erik:Oh, I have to think of a nice thing, because I feel like if I'm going to say the nicest, it's going to be...Stephanie:Or you can say the meanest too. You're like, "Oh, this person was really mean to me."Erik:I had a business partner that really screwed me up, but I don't need to give it any credence. Not my term.Stephanie:Nicest then.Erik:I'm trying to think of nicest. I mean, the fortunate thing is many, many people have done a lot of nice things for me. A lot of people taking bets on me before I had any reason to deserve them. My parents were always great to me. My wife's great to me. I'm surrounded by people that do nice things for me. So, I will say a nice thing that stands out that I never give enough credence to is when I graduated college, I went into real estate a week before the whole banking industry collapsed. I made $350 that year.Erik:Six months in, a friend of mine's dad called me. I was a guitarist growing up. My drummer in my band's dad called me and said, "Hey, I've been watching you. You seem to be like a young, aspiring entrepreneur. I like your grind and your spirit here. I want to help people like my son, who is still pursuing music, figure out how to do the business side of things. So, they can actually at least make a living being a musician. I think there's a thing we could do here." I spent a couple months putting a business plan together, showed it to him. He not quite disappeared but went MIA for three months.Erik:Called me July of 2009 and said, "Hey, I'm putting in a quarter million dollars. I think I can raise this another $750,000. You're going to run it. Let's go." That became my first online company. So, that guy put in his own quarter million dollars, got his friends to put in $750,000 million invested in an online music company in 2009. And then put me in charge of it, gave me 5% of the company and paid me minimum wage, which I was grinding.Erik:It was a bet. Don't be wrong. It could have really worked out for him, but I also think of that as that guy set me up as an entrepreneur in a lot of ways too. I don't know what I would have been doing without that opportunity. I'd probably still have grinded through real estate unless something else popped up for something. That put me into digital. That did a lot of things for me. I'm still in touch with them, but that was a big one.Stephanie:That's a good story. I'm glad I asked. Yeah, that's really good. Cool. Well, Erik, this has been a very fun interview. I want to bring you back for another round in the future to hear how 2021 is going. Where can people find out more about you and Hawke Media?Erik:Definitely, Clubhouse.Stephanie:I'll see you there.Erik:Yeah, [erikhuberman on any social platform's fine. And then Hawke Media, if you ever want to reach out, is just hawkemedia.com. We do free consultations. Always happy to help.Stephanie:Cool. All right. Thanks so much for joining us.Erik:Yeah. Thanks for having me.

Imagine this: You’ve developed a new product. One that you know works… and that you know people need. There’s just one minor problem: Selling that product requires you to not only enter a battlefield filled with regulatory land mines, but face competition with billions of dollars at its disposal. We’re seeing this situation play out in the multi-trillion-dollar industry that is supplement and pharmaceutical sales. It’s an industry that entrepreneurs everywhere are trying to make waves in, and just like any other industry, finding success means coupling the right product with the right strategy.Zak Williams was able to kick the door open with his company, PYM, which sells all-natural amino acid-infused chews that have proven mental health benefits. Zak is the son of the late actor, Robin Williams, and he is using his own experiences navigating the ups and downs of mental health to help him build PYM into a company that advocates for mental health support in whatever way works best for the individual. Practically, that means working out a business strategy that allows PYM to not compete against big pharma, but sit alongside it. And it includes developing new kinds of convergent experiences that allow consumers to operate in a physical and digital world simultaneously. Zak explains all of that and more on this episode of Up Next in Commerce. Main Takeaways:Play Where You Can Win: For companies that are selling natural products, trying to sell in the same channels as big pharma would be a mistake. Not only will you not be able to make the same claims about proven solutions, but you will not be able to afford to acquire enough customers to make it worth it. Instead, find other channels or methods of marketing where you can stand out, either organically, or in a more affordable way.Do Your Research: Making wild, unproven claims has always been a bad strategy for brands, but it is especially reckless when it comes to how something can affect a person’s physical or mental health. Invest in real research to back up the claims you are making, and be authentic with your message. Rather than trying to convince customers your product can cure something, help them open their minds to new experiences and products that might be part of a daily ritual or personal blend of what works on an individual basis.Convergent Experiences: As a new normal emerges post-pandemic, brands will need to focus on creating convergent experiences that allow people to engage in the physical world while still using a digital experience to achieve goals and objectives.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Welcome back to Up Next in Commerce. This your host, Stephanie Postles, co-founder at Mission. Today I'm chatting with Zak Williams, the co-founder and CEO at Pym. Zak, welcome to the show.Zak:Thank you so much, Stephanie. It's a pleasure to be here.Stephanie:Yeah. I'm very, very excited to have you on. I was going through my amazing prep dock, and I first thought that Hillary was playing a joke on me when she wrote down Zak's the son of actor Robin Williams. She likes to put in silly things to see if I'm going to go with it. Then I'm like, oh wait, this is actually real. I started reading a bit about your story and your company, and I would love for you to actually start with that. Tell me a bit about what led you to Pym, and yeah, expand on that, because I was really excited to hear about the full story.Zak:Yeah, certainly. What led me to starting Pym, the mental health support company, started very early on in life. I had anxiety throughout my teens that manifested into something more extreme after my dad, the entertainer, Robin Williams, died by suicide. I found myself experiencing bouts of depression, also extreme anxiety and stress episodes. I was feeling like my life was becoming unmanageable. I was trying to use alcohol to self medicate and was trying to find any other solution that would work. I tried cannabis products, had prescription pharmaceuticals, which work for many people. For me, I didn't find the solution that necessarily helped me in a way that would work in perpetuity. Then I found some help in things like talk therapy and alike.Zak:Through that experience, a couple things happened. One was I was diagnosed with post-traumatic stress disorder and was dealing with a lot of issues associated with that. The other thing is I started to find help and support through committing to service, specifically working with mental health organizations, not for profits; supporting them around things like governance, organizational development, fundraising initiatives, strategy, business development. Whatever it is they needed help with, I wanted to jump in and support because I found actually that commitment to mental health organizations really helped me. Through that experience, another thing started to happen, which I found that me sharing my story and what I went through really helped others while helping myself. I found that being vulnerable and taking a lens of vulnerability and opening up really ultimately ended up starting that process of healing for me. I found that mental health advocacy is one component.Zak:The second component is when I took self medication out of the equation, using alcohol, and by the end I was drinking alcoholically and it was just not good for my mental health. I was feeling very emotionally dysregulated and not having a great time. When I cut out alcohol, I was still really stressed and really anxious, and realized that I needed something to support me throughout the day. I found a solution that my wife introduced me to. My wife, Olivia June, who's also co-founder of Pym. She turned me on to amino acid formulations, which when I tried them were a game changer. They helped me feel clear and erased the anxiety that I was feeling and that was ultimately crippling me. She was introduced to this sublingual tincture by one of her doctors. When I tried it, I was just like wow, this is transformative.Zak:Armed with the insights of mental health advocacy is very healing for me, and amino acid formulations really helped support me throughout the day, I realized there was an opportunity to develop something that was very near and dear to my heart, but also helpful for people while focused on the core mission of mental health support. I started Pym with the lens of creating a brand that stands for mental health support, like Red Bull stands for energy. In starting the company, we kicked off the food science and product development element of that in 2019 and created something that was both safe and effective, while also being delicious. We worked with a food scientist named Lena Kwak, who was the director and research and development for The French Laundry, which is a restaurant in northern California; a very well-known internationally regarded restaurant in California. We wanted to create something that had a great taste and smell and a texture that felt unique but also toothsome.Zak:We came upon something that we ended up testing with our early beta testers that they liked and they found effective. We kicked off the commercialization phase when we decided that everything was in line with not only how we wanted it, but how our beta testers felt it should be. Through that process, we hired the chief operating officer of Sugarfina; a wonderful man named Scott Cuillard who came on as our chief operating officer, and he accelerated the process of commercialization by 200%. Now we're at market. We're just getting this feedback from our customers and early advocates that our product is a lifeline and it's helping people in a very significant way and we're doing these giveback campaigns where we're supporting mental health organizations, starting with Bring Change to Mind, which is an organization I'm on the board of that focuses on developing communities and high schools for mental health support, while launching campaigns to break down the stigma associated with mental health.Zak:Moving into 2021, we will be deepening our relationship with Bring Change to Mind and have a portion of our proceeds of every sale going to supporting building mental health communities and high schools. That's what we've been up to in a nutshell. The why behind it relates very much to mental health advocacy. We see ourselves as a brand that stands for advocacy and we want to really triple down on supporting the movement associated with mental health. That's what we're all about.Stephanie:That's great. It seems like this kind of product would have a lot of barriers to entry, because when I think about the market right now around mental health products and CBD and cannabis and all this stuff, there's already a market there. There's already been a lot of messaging, a lot of advertising before a product based on amino acids, which honestly, I haven't even really heard of that. Tell me a bit about how you overcame those barriers and educated new audiences or are starting to. I know you just recently launched, but tell me a little bit about that process to really get your product on the front of people's mind.Zak:Sure. Amino acid formulations for mental health support is not a new thing. We didn't miraculously come upon something that was new to the world. They were gaining momentum and popularity as a way to provide mental health support by balancing out the endocrine system in the 80s and 90s. Something happened in the 90s that set off an era of a pill to solve all your problems in life. Kind of that era of taking a curative approach to symptoms. Do you know what that event might be?Stephanie:I'm guessing you're talking about prescription pills, but I don't know what the event is.Zak:Yeah. Actually, it's a very specific prescription pill. It was the creation of Prozac. The profound thing about Prozac is it was a product that would function as an antidepressant that would not kill you if you took it in excess or stopped taking it, because at the time, the available toolkit of prescription pharmaceuticals had toxicity associated with them. In certain situations, you could take a product and if you stopped taking it, you would be at risk of severely debilitating affects in the like. Prozac created kind of a safe mechanism to provide mental health support. By the way, I'm a big believer in prescription medication being helpful for many, many millions of people. I don't want to make it seem like I'm not supportive, but the momentum that amino acid formulations were getting kind of fell by the wayside and didn't favor of this era that lasted a couple decades of a pill to solve all your problems.Zak:It's only been in the last five plus, just over five years, from my perspective, that the whole idea of seeing the individual as a system, as a collection of interacting organs and functions working together to help support and sustain the body, that idea and premise has really been embraced in a major way by the medical community. Going hand in hand with that is the idea and premise that you can take certain products, to kind of balance yourself out, because they provide support for a number of different systems and create kind of a balanced ecosystem to better help you. That's kind of where amino acid formulations kind of come into play.Zak:From our perspective, we just concentrated these existing amino acids in a way in which they actually provided a more comprehensive form of support for stress and anxiety with our first product. That's the story in brief, but the challenge is very specifically we need to popularize amino acid support as a way of providing mental health support, because there's science and research behind. Science, research and studies behind amino acids being helpful for people, but people aren't too aware of it.Zak:As part of forming the company and making the effort to formulate something that's helpful for people, we established the science advisory board from Harvard Medical School, UCSF, USC, and MIT, and with specific focus on neuroscience and neuroendocrinology, with some mental health epidemiology being an element of that as well. As part of that, we are in the process of establishing a pre-trial study, which we'll then use as a foundation to go into an actual clinical study that we'll be using to really get a deeper understanding of how we can provide decisive support for the mind and the body. We're kind of in the brave new world of natural compounds providing support both for the brain and the mind and also the body, but I'm an advocate and believer in compounds that are safe and effective.Stephanie:Yeah. It does feel like the timing's right. 2020 is a year where I've at least seen a very big shift in not only healthy living, but people actually looking into the source of what they're ingesting and thinking about healthy alternatives to not only their diet but also things they're taking, whether it's prescriptions or whatever it may be. Stephanie:It feels like the market's ready for it, but then figuring out ways, like you're doing, to pull it together and put it in an easily, I guess, consumable format where people kind of know, oh, here's the five things that are coming together, here's what they're going to do. Someone's already done the science behind me, instead of trying to piecemeal these extracts and things off of Amazon together to try and fix a need based on all the YouTubers and influencers and people who are telling you oh, this is good for this, and this is good for this. It's so much information now.Zak:Right. That's what I was doing. I was cobbling together an experience that helped me, but it was a bunch of different products. I agree. I think that there is a major opportunity on the research side too. There's some great companies that are focused on establishing more research through studies. Some registered, some focused more so on doing the research to really understand how things work prior to actually doing registered studies. There's organizations and companies that are focused on actually creating frameworks to do the testing. I will give a specific shout-out to my buddy, Jeff Chen, who was one of the founders of the Cannabis Research Initiative at UCLA, and he recently started a company focused on doing research around natural compounds. His new company, Radical Science, is hyper-focused on establishing frameworks, specifically clinical frameworks, around testing for natural products. It's so essential that people actually really start understanding what it is they're putting in their body to support themselves.Stephanie:How do you approach that regulatory field? Like you said, to me, it sounds so scary entering a market like this one where you're doing things for the first time, it's new, people aren't used to it. How did you approach this field and did you find any quick paths to get past some of the crazy rules and regulations to be able to actually start creating a product and testing it and seeing how it would work?Zak:Yeah. Great question. It wasn't a cold start for me. I have several years of experience working with complex compliance and regulatory environments due to investing, advising, working within the cannabis industry.Stephanie:Got it. Okay. That's good background. You weren't a newbie to this. I've done this before.Zak:No. The lens we take. I say we in terms of our team and our advisory board is prioritizing compliance and safety. In starting the company, we sought the most sophisticated advising we could get. We need to continue prioritizing safety as front and center with what we do. We're a dietary supplement as a product class, and it's important to consider how we make claims. We are very cautious with how we do so because from our perspective, we are given the privilege and opportunity to provide support for people given a specific framework, and we want to be considerate of that framework. The key thing for us is as we go about doing studies and the like is we want to develop a deeper understanding of how we're actually providing support for people.Stephanie:Is your goal to not just be a dietary supplement eventually?Zak:The big goal for us would be to become a doctor recommended product, or there's a class of products called a medical food. What a medical food is is a product that is meant to support specific disease states in the like. It's a product class. It means there's a lot of research behind how it's been effective to support different states. You can make specific sets of claims.Zak:From our lens, the reason why medical food establishing that type of status is important for us is because that way we can actually say we've done X amount of research, it's shown to be statistically significant, and we can really make these specific claims around supporting people. That's a process. That takes a long time to do. It's not inexpensive. There's stages that we're required to kind of get through to get to that point.Stephanie:How much money are you estimating it could cost to have your product become medically food stamped? That's a weird term.Zak:There's a range. Depends on what type of condition we're seeking to support and how long the study is meant to be conducted. Generally, these studies are months long. In some cases, over a year. It's not inexpensive. Let me frame it like that.Stephanie:Yeah. I guess that it what makes me worry about maybe new entrepreneurs who see opportunities or if they're like you, but they don't have connections and they don't have the story that you have and maybe the status. You'll probably be like, don't say that, but you have a lot of things that maybe a lot of others don't. It seems like innovation's going to kind of stall if it takes so much money to get something natural into the world, or a blend of something natural, and then to be recommended over top of prescription drugs where these pharmaceutical companies have huge amounts of money and marketing.Stephanie:I read this whole book about... what was it called? Let me think. It was called like the cure to cancer or cure of cancer. Something that was abour apricot oil and the apricot seed. I don't know if you've ever read this before, but it was about how this guy was showing that apricot oil, I think that's the kind of oil it was, was having a big impact on cancer and cells and all this. All a sudden, these big pharmaceutical companies start putting out hits on him. He had to go to a whole different country to prescribe it. It seems like an insane world to even try to do something new just to start, and then also not having a huge budget or connections. It doesn't feel like anyone can enter this market, really.Zak:There's ways to do it. The barrier to entry in terms of launching a natural product is not as high as, say, launching a pharmaceutical product. You have to make certain assertions to say hey, this product will be effective. It seems to help people, and you have to generate demand. We've very much in the business of demand-gen. From a Pharma perspective, I would say that pharmaceutical companies are actually taking a lens of openness towards utilizing natural compounds to better support people.Stephanie:They're not taking out hits on you.Zak:No. Where it gets challenging is if you're going out and saying, we have a mental health support solution, and you go in certain channels where you're trying to advertise, you just get squished. You just can't afford to acquire a customer when you're talking about going in a channel which people are seeking certain mental health support solutions through search, for example.Stephanie:You have to find ways to maybe be innovative to not have to rely on the same channels as maybe the big Pharma companies and find ways to get to the users who are probably looking for that, but they just don't know exactly what to look for or the terms to search for.Zak:The big advantage that entrepreneurs should look for when it comes to creating an edge, an unfair advantage in this space is distribution advantages.Stephanie:Tell me more about that.Zak:Direct to consumer, there are some advantages, but there's also some disadvantages. We have had limited success with paid search. It's just hard for us because when people are searching for specific needs, that can be very expensive from an SEM perspective.Stephanie:What do you do instead if paid search is expensive for us? What kind of channels are you maybe looking at instead or experimenting with where maybe you're finding better results?Zak:We've had enormous success with earned media and organic SEO in the like, but that's a strategy we set out from the get go in applying. I come by our company and the products very honestly. Part of what I do in mental health advocacy is just share on a story consistently and when it's combined with Pym, people are curious. Sometimes they end up being drawn and attracted to our product. The thing too, which we found has been helpful for folks is that we're not advocating for a product to be a cure-all. It's actually kind of I don't want to say the opposite, because that's not quite what it is, but it's kind of adjacent to that. Really what we're saying for is our product's a catalyst. We want to get people into the mindset of prioritizing mental health hygiene as part of their daily rituals. Hopefully our product's a catalyst. If they're taking our product as the solution for their mental health support over the course of their day, that's great, but ideally, they should be doing other things to best support themselves.Stephanie:I think that's the messaging that will win going forward. All the companies I've had on the show so far, so many people talk about authentic messaging and not just having the same kind of corporate speak like maybe they used to years prior or something. I think thinking about how to craft that going forward, it's actually more trustworthy if you say something like, this isn't a fix. This is meant to be a part of your daily routine along with exercise and eat healthy and whatever else you need to do to stay healthy.Zak:Yeah. The thing for us we really want to push for and advocate for, something I call enrichment loops. Meaning if you come to our product and take it on a consistent basis, hopefully it adds value every time. Meaning you're clear headed, you can learn something, you can engage in an activity that's helpful. If that's not the solution for you, then we're not going to push it on you. Do something else that helps you. Again, this is where prescription pharmaceuticals, if you're finding a solution with prescriptions, by all means, take that solution. If it's meditation, if it's mindfulness activity, if it's a fitness regimen, If it's nutrition. For most people, it's most likely a mix. For me, it's a mix of meditation, eating well, some fitness, but I could definitely be better on it. I take Pym because it helps me. I'm a big believer in talk therapy and community support groups. That's my mix.Zak:To close on the unfair advantages in distribution. If you have a digital channel like an app or something, we're exploring creating a companion experience. That gives you an ownership of being able to really provide unique insight, pushed out notifications, establish a foundation of data that better helps you understand what it is a customer needs and there's an advantage there. I think blending DTC with Omnichannel is a huge opportunity, but Omnichannel can often work as just establishing brand presence that ultimately pushes people into DTC, or vice versa. It could be DTC that ultimately pushes people into a daily loop, ideally an enrichment loop, around purchasing products at their natural grocer. Okay. I'll close at that, but I think focusing on unfair advantages in distribution is how entrepreneurs will get ahead in a very challenging space.Stephanie:The one thing I've heard a lot is a lot of entrepreneurs that I've talked to on the show, a lot of them have really good stories, but not everyone tells it. Some people are hesitant to tell their story. Did you experience this with everything that happened? Did you ever feel a need to pull back and you weren't sure if you wanted to share or you weren't sure what you wanted to talk about? Tell me a bit about how you thought about sharing your story and resonating with people. Were you scared at an point to do that, because I've heard a lot of people have been? I don't know to tell.Zak:Regarding story, look, the lens I take is that there's great strength in vulnerability. I've been guarded a large part of my life, and not sharing my experience and alike, I've realized that I was losing out on opportunities to help people. I was given many advantages in life, and there are elements that have been disadvantageous. Instead of seeing it as that and seeing it as kind of a foundation for resentment or being annoyed around certain things, I say, this is just part of my experience. There might be shared experiences or there might be something that would be unique to your experience or not very many people, and I think that needs to be embraced.Zak:My whole thing is share my perspective and story. As it relates to Pym, try to be considerate of really the advocacy that underlines what we're doing as well because that's what really matters at the end of the day. I think people just need to find what it is that they want to tell, and really understand that they're crafting their story in the present, in the now. You don't want someone else's story. Own your own. It's a muscle. I had a lot of fear and anxiety around sharing stuff for a large part of my life.Stephanie:Now you're talking about even before your dad's passing you were not very vulnerable. What pushed you to want to start sharing, and why do you think you were holding back before?Zak:I think I was doing certain things that I was ashamed of. Drinking has always been a problem for me. I'll be perfectly honest, and it was something that only came to a head where I was like whoa, this is getting out of control after my dad died by suicide, but prior to that, it was something that was a challenge and I wasn't liking doing it. I think there were elements of my story that I was ashamed of, perfectly frankly. To be perfectly frank about it. In that, I realized there's certain elements of my story that are private and I relate to being considerate of the sphere of individuals or communities that are titled to that. Then there's elements that I love to share and talk about. The thing for me is when it comes to mental health, talking about mental health and alike, I like talking about it because it's very healing for me.Stephanie:Mm-hmm (affirmative).Zak:Yeah.Stephanie:Very cool. Before the show started, we were talking a little bit about converging experiences, and I want to hear how you're thinking about this, especially with probably giving certain talks that now, this past year, had to all be virtual and not as much in person. Tell me a little bit about how you're thinking about online and offline blending and what you guys are betting on for next year.Zak:Well, the big bet we're making is that people will continue needing mental health support products.Stephanie:After 2020, yes.Zak:Yeah. Here's the thing is that relative to the pandemic, there's been a shift into the COVID pandemic. We can talk about the parallel mental health pandemic, which is a thing too. There's been a shift to kind of embracing and engaging, or customers, communities, populations embracing and engaging in digital experiences, whether it's telehealth, things like that or for meetings, remote work, Zoom, things like that. We're hitting the stage where we're starting to see what a post-pandemic world will look like. Just little glimpses of it. There will likely be people wanting to connect with other people in person, people wanting to go out and shop and dance and eat out in the open. There will be certain habits and there will be people who have become acclimated to digital experiences, but people will also want to go out into the world. I think it'll be interesting to see the blend of online and offline that's going to be this new paradigm. I think as we're thinking about it Pym, we're very much thinking about establishing a companion experience to support people throughout their daily activity. Zak:For us, there is a need to really establish a better understanding of how people are requiring mental health support products and experiences. In the neuroscience community, there's something called an adjuvant experience, which has shown to be very helpful. What adjuvant means is... it's very simple. It's just something in something else.Stephanie:Something in something else. Wait. What? Sounds simple, but I don't get it.Zak:No, it's just an adjuvant experience is talk therapy and some sort of prescription protocol.Stephanie:Oh. Okay. Blending two things together. Got it.Zak:Yeah. That's adjuvant experience. From our lens, we wanted to create an adjuvant experience that is fun, accessible and accretive in terms of delivering value and support for people. The two things that are most helpful, at least based upon my experience talking with researchers and doctors and scientists about how consumer oriented mental health support experiences can help people is insight and community. The insight component involves behavioral recommendations, maybe data, specific things that help people live a life that they want to live. The community component involves supporting authentic connection with people. Those are the hints in terms of how we're thinking about developing an adjuvant experience, which ideally we hope to be convergent.Zak:I see there's an enormous opportunity, and it's very hard to get right. I'll say that. It's in the cake walk, because you need to really factor in blending the online and offline experience into something that feels natural and seamless and ideally, fun. I think a lot of companies are going to be taking that tack, because events are going to be really big, people are going to start eating out again, people are going to start shopping beyond just kind of going out and doing a foray out into the wild and then coming back.Stephanie:Oh, it just went to Costco. What a blast.Zak:For instance, where Target has really done an excellent job is on their pick-up experience. It's been a game changer for Target this year in 2020. Where you shop, you order online, and then you go to Target and you pick things up. You pick stuff up. That's technically a convergent experience, blending online and offline because it involves you having to engage in the physical world and using a digital experience to achieve your goals and objectives. I think most companies are going to have to think about that in a very meaningful way in order to maintain an edge. I think telehealth platforms have achieved a huge boost this year, but there's going to be some reversion, and it's not going to be a reversion to the previous me. They need to think about okay, what is it that we can do to establish an edge to further support people when they go out into the world again?Stephanie:Mm-hmm (affirmative).Zak:That's essentially what I mean by convergent experience. From a mental health support perspective, it's really about developing an adjuvant experience. X and Y together at last to create better support for people than the individual parts.Stephanie:Got it. I love that. That's a very good example and description, and I feel like I learned a new word. This is a win all around.Zak:Hey, it's my pleasure.Stephanie:All right. We have about 10 minutes left. I want to shift over to the lightening round. The lightening round is brought to you by our friends at Salesforce commerce cloud. This is where I'm going to ask you a question, and you have one minute or less to answer. Do you think you're ready, Zak?Zak:Yes.Stephanie:All right. What's up next on your Netflix view or Hulu or whatever you use?Zak:I'm excited about watching The Crown. It's been on my list for ages, and we're starting to get through our queue. Stephanie:A lot of people have said that, so I'm guessing you're going to enjoy it. All right. What one thing do you not understand today that you wish you did?Zak:I wish I spoke Japanese.Stephanie:That's a good one. I love Japan. It's my favorite.Zak:I love Japan too. For me, the process of learning a new language is already daunting for me. I'm not a polyglot. I don't learn other languages easily. At some point, I should just take the plunge and just start. That's my goal, learning Japanese.Stephanie:That's awesome. Sounds like a good goal. If you were to have a podcast, what would it be about and who would your first guest be?Zak:My podcast would be about getting to the very core of people's experiences, like what's their truth. Whether they know it or not, hopefully we can uncover that truth. What is it that they're all about? My first guest would likely be one of my favorite people on the planet, Dr. Adam Gazzaley, who is an advisor for Pym and a scientist and a profoundly interesting person that I'd love to get to the bottom of finding his truth.Stephanie:This sounds like a good show. I think this needs to happen. What's the nicest thing someone's ever done for you?Zak:Well, I'm a big fan of my son, Mickey.Stephanie:That's good.Zak:Having my wife, Olivia, her having carried Mickey for nearly a year.Stephanie:That's sweet.Zak:That was extremely thoughtful and considerate of her.Stephanie:That was very sweet. I like that. All right. Well, I have two more. What's up next on your reading list?Zak:There's a bunch of things, but the main one is Jim Simons' biography.Stephanie:Cool. All right. Then the last one, what one thing will have the biggest impact on ecommerce in the next year?Zak:The one thing that will have the biggest impact on ecommerce in the next year would be, I think, oh man. That's a really good question. I think it very much relates to more seamless experiences, frictionless experiences. Even though it is quick and can be considered convenient, it could be so much more convenient. I think the disrupters that are establishing quick checkouts, embedded checkouts, connecting wallets to checkout experiences, things like that, that's going to be a game changer, because people who have an edge there are going to really be able to see the difference in their bottom line. I know that's a very tactical consideration.Stephanie:That's a good answer.Zak:I think that's really one of the game changers.Stephanie:Yeah. You'll have to check out our interview with the CEO of Fast. It was very fast, and a good interview and definitely opened up my eyes to what a frictionless ecommerce world could look like.Zak:I think Fast is great.Stephanie:Yeah. All right, Zak. Thanks so much for coming on here and sharing your story and being vulnerable. Where can people find out more about you and Pym?Zak:Well, you can find out more about me through tuning into this podcast and other advocacy work I do specifically. I'll push people to advocacy. I work with organizations called Bring Change to Mind, United for Global Mental Health, Inseparable, and then Project Healthy Minds. Those are the four mental health organizations I work with. You can find out more about me through the work that I do with those organizations, and then you can find out more about Pym at youcanpym.com. Y-O-U-C-A-N-P-Y-M dot com.Stephanie:Amazing. I will be checking it out after this. Thanks so much. It was really a pleasure to have you on and love to have you back in the future when your app is out.Zak:Awesome, Stephanie. Such a pleasure.

Let’s get this out of the way now: most companies will not have someone go from intern to CEO in a matter of months. That’s a situation unique to James Standley and Solé Bicycles. What isn’t out of the ordinary, though, are the many challenges and hurdles that James and his team had to deal with when scaling Solé into the success it is today.On this episode of Up Next in Commerce, James takes us through the trials and tribulations of the Solé journey, including various shipping and manufacturing disasters and lawsuits that nearly bankrupted the company, and he explains how he worked his way out of those troubles and what he learned along the way. Plus, he gives some secrets on what’s working well for Solé now, such as the strategy of finding different touchpoints to reach customers in a way that has absolutely nothing to do with selling to them. Main Takeaways:Starts With Heart: While the relationship with your supplier or manufacturer might seem like a cut-and-dry part of business, it has to go deeper than surface level. f you are working with overseas partners, taking the time to meet, and understand, the people you work with in person and form a relationship with them will carry you further and ease some pain if there are ever problems in the supply chain process.    What You’re Known For: Through unique partnerships and marketing opportunities, there is potential to reach people in different ways, even if that means you’re not necessarily selling them a product with every touchpoint. Having a relationship with customers is more important than selling to them at every opportunity, because if they know you for one thing and then find out you sell something else, they are more likely to buy from you across the board. Shot on an iPhone: There will always be a place for highly-produced, glossy marketing materials. But, more and more these days UGC and lower-budget content is what is resonating with consumers. As opposed to showing potential buyers something they have to aspire to, like a model, highlighting people and experiences that are familiar to them as they are now will convert better. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone. This is Stephanie Postles and you're listening to Up Next in Commerce. Today on the show, we have James Standley. He's the president and founding partner at Sole bicycles. James, welcome.James:Hey, how are you guys doing?Stephanie:Doing good. Thanks for joining us.James:Yes, I'm super excited to talk about all things ecommerce with you guys.Stephanie:Yeah. I was just looking through your website and I am very excited to get a bicycle after this. I didn't even know I needed one, but now I do.James:Totally, totally, yeah. We have tons of great bikes and yeah, and tons of cool different colorways and options and a bike for just about anyone's kind of need.Stephanie:Awesome. Tell me a bit about how you started Sole. I think it was in college, right?James:Yeah. My business partners, that I ended up starting the business with and I, we met back, funny enough, my first venture, which was a music festival I helped start back in college. We were both partners in that.Stephanie:It was called the Coachella for the Mountains, right?James:Yeah. It was called Snowball, and the idea was Coachella meets on the mountains. Yeah, there was this guy, Chad Donnelley, who I knew through the lacrosse world. I played college lacrosse and he came up with the concept and I was always involved in music. Growing up, I was a concert pianist, and I had DJ'ed in college and been in bands growing up. We met through the lacrosse world, and he came up with this idea. He had reached out to me just to ask my opinion on the project and what I thought about it. At the time, I was a freshman in college and he was asking me about it and I ended up just going back to him and say, "Hey, I want to be a part of this. I think this is amazing."James:I was part of that initial team. We kicked off this event with ... Our first, we had Edward Sharpe and the Magnetic Zeros, and Bassnectar, and Pretty Lights, and Diplo and all these amazing artists come out and sold like 15,000 tickets. It was a really cool first venture and a first event. Yeah, so Jake and John, my original founders with Sole, they were partners in it as well, and they helped get some of the money for the project. We met, first year was a huge success and we stayed in contact. At the same time, they were coming up with the idea for Sole, and going back that summer, between my freshman year and my sophomore year of college, they were looking for some additional help on Sole.James:I said I'd come in and I've got a more like operational financial sort of background or mind, and they were more of the creatives and the visionary type of people. I came in, helped clean things up. We got the business off the ground. Then going through the summer, they ended up going and raising some money and starting another business, and I ended up taking over the business. I went from being technically an intern in May to the CEO in August. Yeah, so that's how I got involved. Shoot, that was 2011. So, we're going on nine years ago, and I've been CEO ever since.Stephanie:Wow. Very cool. That's a wild story. How many bikes were you guys selling when you took over, and where are you at now? So I can get the scale of the company.James:Totally, totally. Yeah. Our first year we were featured on this big Forbes article and the business sort of took off, and I think we sold maybe a thousand bikes our first year, which was a lot for a first year business. This past year we're going to sell about 15,000 bikes.Stephanie:Wow.James:Yeah. We've grown quite a bit.Stephanie:That's great. What is the selling point of Sole bikes? How's it different?James:Totally, totally. Yeah, for us, our main selling point is you go look at the bike and it's just going to look different than any other bike you've ever seen before. We're really heavy on our marketing and design and colorways and wanted to make something that's really, really simple, easy to use, easy to maintain, but also looks really beautiful, and something that has a personality, and really people can relate to. I think a bicycle, for most companies, is more of a utility product, something that's really spec-driven.James:For us, we wanted to make something that people were really, really proud of, and it's like, they can relate to, and find a colorway that really matches their personality, or they could this store music fixed tapes or find these other ways that people can relate to the product. That's really allowed us to set ourselves apart from other bike brands.Stephanie:Cool. It seems like pricing is also a big thing. The one thing I've always thought is, why the heck are bikes so expensive? Why? How'd you get your guys cost down so much?James:Totally. Totally. Yeah. Yeah. The biggest way we do it is we work directly with a manufacturer and we sell directly to our customers. Just the natural, by cutting out some of the normal distributors or middlemen, we're able to offer what would be a traditionally higher price point products for a lower price and pass those savings onto the consumer by selling direct.Stephanie:Tell me a bit more about that, because what did that look like finding a manufacturer? I think I saw you found, in the early days, your manufacturer on Alibaba. Right? Which I was like, oh, that's interesting because I feel like Alibaba ... I've been there before and there's a lot going on. There's a lot of people. It's hard to know who to trust, it's hard to know if they're going to send me something good. How did you guys go about finding a manufacturer there? Did it work out well? Give me some behind the scenes.James:Totally. Totally. Yeah. Our first, when we got the business kicked off, we actually were involved in this Ali-Baba business plan competition. Back when we were in college, Jake and John had applied for this business plan competition. They won it and we got a $15,000 grant from Alibaba. That grant or that money paid for them to initially go over, meet our first supplier who Alibaba had helped set up, and we got our first order of bikes in. That's what the initial financing that got the business kicked off. But over time, went through a few different suppliers and really had to iterate our process.James:I spent a lot of time over in China meeting with different suppliers, refining the product, getting it to a place where it is today. It took a lot of trips over there and a lot of refining.Stephanie:In the early days when you're picking your suppliers and manufacturers, what would you do differently this time around? What lessons did you learn or what things did you maybe stumble on in the early days that you can avoid if you were to redo it now?James:Totally. What I would recommend is, we got placed with the supplier via Alibaba, and we just worked with the first person we were placed with. I think we ended up switching a few different suppliers over time, but what really ended up getting us with a supplier that we were super happy with is we went over there, and I went to one of the big trade shows, and we ended up visiting another 15 or 20 during this trip I went on about year two or three, and that trip we ended up finding the supplier we worked with, still to this day.James:We really got to go out and meet these people and do your diligence and find the supplier that makes the most sense for you, and not just use the first one that you end up getting placed with or you end up meeting with. You got to go over there and develop a relationship with them. I mean, it's so important. They have this saying there. It's first, you drink tea, then you drink Maotai and then talk business. What I mean by that is, they want to meet you, the different suppliers and the different people over there want to meet you. They want to build a personal relationship, and then they want to talk business because it's so important there to have a personal relationship, as well as a business relationship.James:If you're going to try to source something from China or overseas, I'd recommend going over there and meeting these people and spending time with them, and learning, meeting them as people, and really developing a relationship, because that's going to help that business relationship over time and make a really, really strong business relationship.Stephanie:Yep. If you don't go and meet them and you didn't really do your due diligence, what kind of problems could a new company encounter? Did you encounter any issues in the early days with some of your suppliers that you stopped working with?James:Totally, totally. Yeah. The supply chain for a bicycle is pretty complex. For our product alone, there's over 50 parts. Those 50 parts come from 20 different other suppliers, and then those have to come into an assembler, the assembler puts the product together and then it's shipped over. There's a ton of different things that could go wrong. A good example would be we had one of our biggest shipments ever, at the time for the business. We had put in an order for summer, and it was like 2000 units. We had also set up a big sale online with a company called fab.com. At the time, they were having ... I don't know if you remember the company, fab.com, but they were one of the fastest companies to a billion dollar valuation, I think, and people were talking about it as the next Amazon.James:It was having this really big moment. We were selling really well on there. We partnered with them and we were like, hey, we're going to bring in a bunch of units. Let's have a really, really big sale. We have this massive sale. We sell like 1,500 to 2,000 units, pre-sell them, and ends up being the biggest sale ever on fab up to that point. So, do the sale, goods come in, and then we ship all the product out. Well, our manufacturer had packaged the bikes slightly incorrect to where ... The crank arm usually woven through the front wheel, which is detached, and then tucked to the side of the bike when it's shipped. They were all packaged slightly off that almost every single bike came with one of the spokes popped off.James:You get your brand new bike that you just bought offline, brand new, beautiful bike, you open it up, and one of the spokes popped off, which it's like ... You can't ride it, but it's a small problem, but it's not an easy problem to fix. Oh my gosh, that situation almost bankrupt us. What ended up happening we-Stephanie:What did you guys do?James:Yeah, we had the product on credit. We had given we had been sold the product on credit, so we went back to the supplier and we were like, hey, this is going to bankrupt us. We got to figure something out, and they refused to take any discount on it. Then, our advisor was like, "Hey, we're going to just hold payment until we get something settled." They ended up serving us a lawsuit. They came to America, served us a lawsuit.Stephanie:Oh my gosh.James:So we were served, and had to go through this entire ... Mind you, I'm like 21 years old at the time. I'm still in school. We get served a lawsuit. I'm like, oh my gosh, what is going on? So, we had to hire a lawyer who was our body. He was only like 30 and we didn't have a ton of money. We had to put together a case and actually go out and defend ourselves.Stephanie:Yeah, did you win?James:We go through this, and we hired this lawyer, and he's like, "Look, you guys don't have the money, [inaudible] afford me, so I'm going to teach you how to build this case." I went and actually built this timeline of everything that's happened, and we came up with a case theory and counter sued them. They responded and deposed me. I had to go through this 40 exhibit eight hour deposition. But we held our ground and got through it. After that, it got to the point where it was like, financially it made the most sense to settle and were able to settle for what ended up being about half off of what the original was. Yes.Stephanie:That's wild. I'm just imagining being in college, dealing with it. How was that experience being in college? I'm just thinking, all of a sudden, you have this company and you're having to go to China and now you're getting sued. What was the college experience like for you when you were having something very different than probably a lot of your peers go on?James:To be honest, it was really exciting. You felt like it was just so cool to be building something and going through this. We were so ignorant, I think, going through a lot of this stuff, which I think ended up actually helping us. It was just very shoot from the hip and like figure it out. Yeah, so many of these different scenarios could have totally bankrupt us or ended us, but I think it builds a lot of character by going through these different situations and surviving it and learning from it and growing from it. Yeah, it was exciting. It was really fun and exciting. The goal was just like, don't go bankrupt, don't die. Keep fighting and figure it out.Stephanie:That's good. I like that. I could see it also just making it seem like, well, what else ... Nothing can really scare me. I've gotten sued. I almost went bankrupt. There's nothing too scary out there after that. I think it's a good place to be.James:Yeah. I think it's part of building a business. You're going to face adversity and a lot of ... There's a reason nine out of 10 businesses fail. There's so many things that can go wrong with building a business, but you have to learn to embrace those challenges and know that you just got to fight through it. There's not always a way to figure it out, but there's oftentimes, if you keep working at it and keep fighting, you can find ways to get through these things. If you do get through them, these are like business cards, I guess you could say, or things that'll stick with you and you could grow and build on as you continue to build your business.James:After going through all this stuff over so many different situations over so many years, we've now learned to embrace the challenge and just know, hey, here there's going to be some new challenge, every year, there's going to be some new thing that's going to ... we're going to get hit with, and you just have to learn to embrace it and take it head on and not let it beat you up.Stephanie:Yeah. I love that. You guys seem really good at partnerships. I've seen some of the very well-known companies that you work with, who they get their own custom bikes built, and you've got things with artists going on and music and all that. How do you how do you view that strategy in your playbook to be able to access new customers and new markets, and how do you even develop those partnerships?James:Totally, totally. A lot of that was built from, again, when we started the company, we weren't the traditional bike guys. We were coming from the music background and fashion background. A huge art scene. We had all these relationships early on, and just out of pure having those relationships, we intertwined it in business, and you have the fixed tape series, which one of our early employees was a professional DJ, so he's like, "Hey, I got this idea. Let's create an hour long mix to listen to while I'm riding our bike, and we'll go get some other DJ friends to do it." That piece of content. Just that, that we created that and it's been rolling ever since. We just launched the Sofi Tukker one, which was, I think our 76th mix tape.Stephanie:That's cool.James:Then that artist creates that mix, and some of these DJs are very globally known DJs. We posted on our SoundCloud and they showed on their SoundCloud, and it creates this nice piece of content that people can come back to and find Sole, or find that mix each month. It's funny because we're not ... you wouldn't think of us as a music business or a bike business, but there's people out there in the world that only know us as the fixed tape company. There are people who'll find out, they'll be like, "Oh my gosh, you guys sell bikes. I thought you were just the fixed tape company or something." It's just organic sort of different little marketing tricks that we've, or little tactics we've built over the years.James:They just are organic, unique way to reach new customers and relate with our customers. We do the different partnerships. Again, I'll use the Sofi Tukker example. They're a big DJ group. If you don't know them, they're a big DJ group, globally known. I think one other fun facts, I think they have a platinum record in every country in the world except Antarctica. They're pretty big and they're up and coming. They had a song that's called Purple Hat. One of the lines in the song is purple hat cheetah print. We thought, how cool would it be to make a purple hat, their purple cheetah print bike? So, we had connections.James:One of their agencies or marketing companies or whatnot. So, we were able to get a pitch in front of them and they were super stoked on it. Yeah, now we're selling purple hat cheetah print bikes. Again, it's a cool way to ... What other bike companies are selling purple cheetah print bikes? It's just a unique way to reach new customers and provide a unique product and put a cool product out in the world that no one else was doing. I think it's just thinking that way with the bike industry has allowed us to build up these partnerships and set ourselves apart from other bike companies.Stephanie:Yeah. When you're doing these partnerships, these partners can also sell it on their website. Right? So, it's not all being sourced back to your website as a central hub. You're essentially letting these partners also sell the bikes on their websites as well. Right?James:Totally, totally. Yeah. For each partnership's bespoke and different in their own way. Sometimes like, we did a partnership with Wildfox, which is a women's centric fashion brand. We did these like really beautiful floral prints all over a bicycle. They took them in and they sold them through all their retail shops, as well as their partner wholesale shops, as well as their website, and we sold on our website. There's a bunch of different ways we can structure it. But yeah, it's usually just bespoke to whatever that partnership is.Stephanie:Well, that's a good segue into, I mean, when you're thinking about, you've got these mixed tapes going out and partnerships that aren't anywhere close to like the biking industry, how are you tracking conversions? Is your goal to try and get people to listen to these mixed tapes and then come back and buy bikes? Or how do you think about what your goals are around these different projects that you're doing?James:Totally, totally. With the fixed tapes, I think we're trying to push out a certain amount of content each month and each quarter. Then we go out and we build content calendars around what are different initiatives that we can tap into? I think when we're thinking about content, we like to look and start with email. Email is like one of our highest converting marketing channels. We're constantly filling and adding to our email list, and then from there, we're trying to push out two to three emails a week. We're mapping out our email pushes. We say, what are the different content initiatives that we can tap into? So, we try to do a fixed tape every two months. We try to do artist series every quarter and large-scale partnership once or twice a year.James:We map out all these different things we're trying to do, and then we funnel, and then that leads into email. With email, where you can't really just send very bland marketing type style emails every month. You're not going to get good engagement. So, we have to create stuff that's engaging. I think we've just gotten so good at creating this stuff very cost-effectively that it ends up paying for itself through the conversions of email. It's also a great brand building. They're all great brand building initiatives, and they all kind of build on themselves.James:If I do a big large-scale partnership with like a Sofi Tukker, that's going to come back and open up new opportunities down the road for other potential brands, or other potential artists. It's sort of all builds on itself as we go bigger and bigger.Stephanie:When you're talking about emails really high, when it comes to converting customers, how do you think about creating that engaging content? What pieces of content are working or what emails work best?James:I think one of them more interesting fun little emails that we came up with years ago and it's like the easiest thing [inaudible] to create ever, is we do what we call Sole Saturday. Sole Saturday, it's one photo by the Sole team and then three user-generated photos. Every bike we ship out has a little tag on it that says tag at Sole bicycles hashtag, and you use hashtag of the bicycle for a chance to be featured.James:Then, what we do is as we're spelling product, customers are going out and taking photos for us, and every Saturday we feature three of our customers. That, again, it's just like ... we're using user generated content and it's creating a nice email that people can go back to and see if they're featured. It's actually very high converting as well.Stephanie:That's fine. Do you think having actual customers and photos is where a lot of brands are going to be headed, less about the models and the people who look perfect and more about ... Is this someone who reminds me of myself and I can see myself riding that bicycle, yeah, feeling a better connection with them?James:Totally, totally. It's funny you say that. Because even when you look at ... you go to our paid spend or paid marketing, a lot of times the [inaudible] produced sort of content where it's on a really ... Get a really expensive content creator to produce it and it looks very professional, versus like content that's shot on iPhone or content that's just shot with customers' photos. That ends up converting a lot better than the higher produced stuff. I think that's just the people can relate more to it.Stephanie:Yeah. I agree. What kind of channels are you putting that content or the more natural looking content that your customers are creating? What channels are you finding are working best right now to convert customers?James:We're constantly testing when we're doing Facebook and Instagram ads. I've been serving different type of ads to different audiences on Facebook and Instagram with different types of content, the more professionals type of content versus the more just shot from iPhone vibe. Even like, over the last year, we've had a big uptick on our online business because of COVID, and people being at home and wanting to find a way to get outside and escape from this madness.James:One of the craziest things that we found was iPhone ads or the story ads-specific, so had to build just enough format for iPhones were converting at like crazy, crazy higher row ads versus just more static or traditional images or ads on the Facebook or Instagram. That was like a crazy thing we came up on this year.James:There's a very beautiful, simple ad where it's just like the bike on the beach and you have the sky in the background and then the sand below it. Then just the brand and a little copy below it. That little ad actually absolutely killed it for us this year.Stephanie:That's great. Are you still using, maybe not that ad, but still putting new ads into the story section on iPhones?James:Yeah. I recommend any brand out there that's doing ... I mean, I've been learning a lot of this as we go and trying to get better at it, but when you're creating your ads on Facebook and Instagram for when you're setting that ad up, you can actually split it so that it's like, you have this certain photo for the stack set up and then you have a different photo for when it's served on story. My biggest eyesore, or I hate is, when you're on a story and you get an ad, and it's like an ad that's built for the display. So, it has the kind of squared picture and then it has the words under that.James:I don't know if you guys have seen that, but it's such an eyesore to me compared to a beautiful ad that's like really built for the stories. Just making sure that you have the ad set, the story specific ads, it'll help your conversion so much. That's helped us a ton.Stephanie:Yeah, that's a really good point. What kind of return on spend should a brand expect from the iPhone story ads versus maybe Instagram or Facebook or Tik-Tok.James:That's a tough question. I think it's specific to the brand and the product they're selling, and then, even the time of the year. For us right now, our ROAS is way lower than like the middle of summer. It's almost like a 10th of what it was during the summer. That's just because it's seasonality, our product. We saw specific ... static first story during the summer, I think it was converting 3 or 4X of what it was static. But that's specific to us. I think every brand is different, every product's different. But yeah, I think that can give you an idea of the potential.Stephanie:Yeah, very cool. Is there any other new marketing channels that you're trying out, that you're like, I'm not sure if this will work, but we are allocating some funds here to try this out?James:No, for now we're focusing just on Facebook, Instagram. We're doing Google AdWords and media retargeting. I want to dip my toes in some other things. I want to try the Tik-Tok and I want to try some Pinterest. I've heard about the Tik-Tok, but the tracking is not that great on it. We haven't done anything yet. Also, Tik-Tok's I think for a little bit lower age or younger demographic than what our target audience is, so we haven't tried-Stephanie:I don't know. We've had a lot of people on here saying Tik-Tok works well. That originally, it was just the dancing videos and younger people and all that. People are like, it seems like there's still a good arbitrage opportunity on Tik-Tok right now, because the attribution and tracking might be worse, but you still get a lot of the benefit of going onto a new platform before they increase the pricing and actually understand what kind of conversions they're hitting. I don't know, [crosstalk] to check out.James:Totally, totally. There we go. That's my takeaway from this. We'll give it a go. We'll give it a go.Stephanie:Yeah, give it a whirl and see. When new customers are coming on your website, I want to talk a bit about like, how do you guide them through the funnel? How do you personalize things and show them, not only content, but also maybe a bike that would work for them or that might peak their interest?James:Totally. Totally. It's an interesting ... there's a few things we do. We have about our bikes page, where it's like, which Sole are you? That walks them through the different, we have like six different models. You have the single-speed fixed gear, you have the City Bike, you have the Dutch Step through, you have the three speed City Bike, and then you have the Coastal Cruiser. Top Bar and Coastal Cruiser are down and slanting more. We have a page that we'll walk the customers through the difference between all of those and the pros and the cons of each of those. That can explain the style.James:Then once you know the style, what we do different than maybe other companies is we actually ... Each product, each colorway has its own product variant versus like, you may go see a single-speed version of one of our competitors and they keep all the colors on one product page. We create the personality and each colorway has its own personality and its own page. It really helps customers, like okay, I like the red bike, and see the lifestyle on it, and just for that red bike. The red bike would be [inaudible] for a walk and it's got its own story, help the customer really fall in love with that product, and tell a story around each of them, versus them all being bundled up on the one page.Stephanie:That's great. Very cool. Then, I was seeing a couple of retail stores that you were partnering with, probably pre-COVID, but it seems like there'd be a really good opportunity to have those partners also kind of market and share for you while they're getting in front of their own new customers as well. It seems like they would kind of take on the budget, the marketing budget to then share your brand under their brand, if that makes sense.James:Totally, totally, totally. Yeah. We're seeing a big uptick with like these online third party wholesalers and distributors. That's been, for us, I think our product, it's got such a great look and feel to it that it can transcend from, not just traditional sporting goods or traditional bike-centric channels. We can sell on sites like an Urban Outfitters or on Zola, or some of these other more lifestyle driven sites that want a cool lifestyle product in the bike space.James:That's one of our big initiatives that we're trying to get on more of these like third-party digital wholesaler channels, because in the last year, what we've seen the biggest takeaway from all this is like, everything is going digital much faster than it was prior to COVID.Stephanie:Yep. Are those partners showcasing your brand? Are they more white labeling, like ordering the bikes and then putting under their brand to say, okay, this is an Urban Outfitters bike, or are they actually saying no, this is Sole [crosstalk 00:33:32].James:Yeah, we're selling us as Sole. Yeah, we're selling us Sole through these third parties.Stephanie:That's good. That's awesome. How are you getting in front of these big partners? Urban Outfitters is huge and super popular. How did you even get in front of them and convince them to partner with you guys to sell your bikes?James:Yeah, just cold email them. Right?Stephanie:I hear you cold emailing. Tell us your secrets. Come on, James.James:Very easy. Yeah, we'll go out there. If we believe our product could fit in someone's store or someone's space, then we'll hit them up. We're very confident in our product and our brand and we'll sell them on it. It works a ton. Then there's other partners that have reached out to us and want us to work with them. I think, a good example we were connecting ... Target reached out to us and we've just recently started selling on Target's website, which I think is ... It's interesting with them. Target's trying to, in each of their product categories, bring a more 21st century brand in. I think like we really fit that really lifestyle driven 21st century brand for a product.James:Normally, there's not a lot of brands in the space that have that kind of fit. I think we really fit those as well. That's an exciting one for us. Then, like I said, the Zola. Zola's a massive, or one of the biggest wedding registry sites. We're one of the only bike brands on there as well, and do really, really well on there.Stephanie:Ooh, that's a good angle. I wouldn't think to put a bike on a wedding registry website, but that's awesome, because a lot of times it's just the same old, same old. You're like, I don't need more plates, but I can go for a bike. I would put on my registry.James:We sell so many likes there. You'd be really, really surprised. It's a great wedding gift. We have a his and hers, so almost every single order that goes there, it's two bikes, obviously.Stephanie:Yeah. That's awesome. Really good strategy. How are you keeping up with fulfillment in the backend? Especially when you're integrating all these partners like Target and Urban Outfitters, what happens if target has a big surge and they've got a bunch of traffic come to their website, and all of a sudden, you've got 500 bike orders? How are you guys keeping up behind the scenes to make sure that you don't go out of stock or have issues on the backend?James:Totally, totally. This was something that this year that we've invested a lot of time and energy and effort into, is leveraging technology to make sure all of this stuff runs super smooth. We're using a third party warehouse that has their own systems. Then, we have to use an EDI software or partner to connect to a lot of these systems. It's just spending the time, energy and effort to really automate all this stuff and make sure all these systems talk to each other, and there's inventory pushes going out multiple times a day. You put in the front end work to automate all this stuff so that you can avoid those problems.James:There's systems that say, hey, there's inventory pushes that happen multiple times a day to all these systems, so if there's a big spike on say Target, that inventory is removed and pushed out to the other channels so that there's no overselling or minimal over selling. That still happens a little bit here and there because the inventory pushes don't go out all the time. It's a couple times a day, but yeah, it's just about leveraging. There's a ton of technology out there, like using the technology to your advantage to automate the stuff.Stephanie:What are some big bets that you guys at Sole are making over the next couple of years? Where do you think the bicycle market is headed? What are some things that you're betting on that you're not sure if they're going to pay off or not over the next couple of years?James:Yeah, totally. I think it goes back to digital. We're super focused on digital right now and we're super bullish on digital. We're investing in this technology to make sure that we're set up the scale and then we want to continue to expand where we're selling and who we're selling in front of. Then, on top of that, it's continuing to expand how we market our product and where we market our product and the media partners we can use to get in front of these different people. I think the biggest thing ... People having a stay at home as a result of COVID has set all these new habits. I think they say like, it takes three weeks to set a habit, and what? We've all been at home since April.James:Everyone's having to shop from shop online and shop at home. Once we come out of COVID, those habits, I don't think are going to go away. For us, we're super bullish on making sure we have a really solid foundation with, not only our website, but the online e-retail partners that we're selling through so that, as we come out of COVID, we continue to have really strong distribution digitally to the future.Stephanie:Yep. I could see some of the retail partners leaning on you guys also for maybe advice and best practices. I've seen some of the bigger companies kind of looking at, not that you're a startup, but looking at startups, looking at people who are able to be agile and move quickly, and trying to figure out like, well, what are you guys doing? Tell us what are the best practices right now, because what we've been doing for the past couple of years was just thrown up into the air and we have to rewrite how we do things now. So, do they ever hit you up and be like, "Hey James, how should we set this up? Or how are you guys doing this so we can replicate this?"James:Totally. No, no, no. There's always like other people in the industry that we're talking to. There's always people that we ... Whether it's people in the bike industry or other businesses, other friends that have businesses. Again, always happy to talk with them. For us, you say that we aren't a startup, we are a startup. We've been doing this for 10 years, I still feel like it's a startup. Our team's still pretty lean. There's only 10 of us. We're super nimble and able to move quick, which is great and allowed us to pivot and make changes when things like COVID happened, that bigger companies can't do.James:Once we find successes, we can double down and grow on those. Yeah, we're staying nimble and going with the flow and learning quick. Yeah.Stephanie:That's great. All right, cool. Let's jump over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, James?James:I am ready.Stephanie:All right. Stephanie:What is your favorite business book that you think about or refer back to [crosstalk 00:40:28]?James:It's not a business book per se, but it is You Can't Hurt Me by David Goggins.Stephanie:Oh, okay. I like that. I actually have not heard of that. I don't think.James:The quick hitter on it, it's about overcoming adversity and pushing yourself. I think that's so important in business is understanding that you can overcome adversity and always setting your bar higher and higher. Again, it's not technically a business book, but I think there's ton of good business lessons you can learn from it.Stephanie:I like that. That sounds good. I'll have to check it out. If you were to have a podcast, what would it be about, and who is your first guest be?James:Oh my gosh. If I were to have a podcast, I would talk about ... Personally, my favorite thing outside of business and bicycles is traveling. I would do a travel blog and my first guess would be, Oh my gosh, I would pick Barack Obama.Stephanie:There you go. I'd listen to that. That sounds good. What is the nicest thing anyone's ever done for you?James:Oh my gosh. The nicest thing that anyone has ever done for me. The nice thing, oh, this is big.Stephanie:Heavy.James:My friend, Mario and Ken, in the early days when we started up our USC shop, these guys would come out every year and work for back to school, which is our craziest time of year for that shop. We sell like a thousand bikes in two weeks, and they would come out and stay at my place, crash on my floor and help us every year for the first four years. So, shout out to Mario and Ken.Stephanie:Oh, that is really nice. That's a good answer. What trend or tech do you not understand today that you wish you did?James:What trend or tech? Tik-Tok.Stephanie:There you go.James:I don't get it, but I feel like I need to get it.Stephanie:Okay. I've had some other people say that as well, so you're in good company. Others don't also do not understand it. All right. Then the last bigger one. What one thing will have the biggest impact on ecommerce in the next year? It can't be COVID because we've had too many people say that.James:I think the big thing impact on ecommerce, I think it's going to be shipping. I feel like shipping is going to change drastically over the next one to five years. You have like Amazon starting to do their drones. We're starting to see in LA these little robots that are delivering food. Then, on top of that, FedEx and UPS are just killing everyone with all their fees and their pricing. We've been in peak surge charges since July. I just feel like there's so much potential for disruption there, shipping.Stephanie:Yep. Oh, that's a good answer. Yeah, I agree. I see a lot of companies, a couple of them actually are in Canada who are trying to get one and two day shipping. I think a lot of more companies will be leaning into that once they figure out how to make that work, and they also see how reliant they are on the FedExs, the UPSs, and how much it disrupts businesses.James:Totally, totally. Please someone come out here, please help us [inaudible 00:43:54], it's so expensive to ship bikes.Stephanie:Well, maybe James, that can be your next business. You've done a lot in your day. You might as well just start a shipping company as well.James:There we go. There we go.Stephanie:All right, James. Well, thanks for coming on the show. Where can people find out more about you and Sole bicycles?James:Totally. You can check us out at solebicycles.com, or our Instagram, which we update daily, @solebicycles, and then my personal is @JimmyStans.Stephanie:All right. Thanks so much.James:Thank you guys so much. Appreciate it.

There are some big-ticket items that most people have and need, but absolutely hate shopping for. Mattresses fall into that category. In fact, studies have shown that people would rather go to the dentist than buy a new mattress. Helix Sleep is trying to take the pain out of that experience. Adam Tishman is the co-founder and co-CEO of Helix Sleep, and on this episode of Up Next in Commerce, he explains why his DTC mattress company is different from the rest, and why those differences matter. He explains the reason it was critical to spend time researching, testing, and perfecting a product before bringing it to market and how that upfront effort created priceless brand equity. Adam also dives into personalization, but he takes it beyond the need to simply give customers a personalized experience, and explains why data-collection and a personalization strategy that includes personalized products can help you expand your business more successfully when you are ready.Main Takeaways:Slow And Steady: With a physical product that is dependent on reviews, rushing to market could spell disaster. Take the time to do the research, test, iterate, and develop a product that is review-ready before you present it to your customers.You’re Not Me: With certain products, there is a specific customer set or type of person for whom the product is made. With mattresses, every person has unique needs, so the product has to be personalized as much as possible. Finding the best way to understand your customers’ needs should be a top priority, and through multiple touchpoints and quizzes, you can gather the data necessary to provide the best experience and product.The Beginning of a Beautiful Friendship: By cultivating data and delivering personalized products and experiences for your customers, you are inherently forming a stronger relationship with them than a typical brand. Not only are you collecting insights that can be used to help you expand into new product lines, you are also creating a network of previous customers who are more likely to trust the brand and try something new.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone. This is Stephanie Postles. Co-founder at mission.org, and your host. Today, we're chatting with Adam Tishman, the co-founder and co-CEO at HelixSleep. Adam, welcome to the show.Adam:Hey Stephanie, thanks so much for having me.Stephanie:Yeah, I'm excited to have you. so I have never said co-CEO before, which I kind of want to start there. Tell me a bit about being a co-CEO at a company.Adam:Yeah, definitely. So we founded the business, myself and two other co-founders, out of business school. And over the sort of evolution of the company and where we've been over the past five years, we actually run it with myself and one of the other co-founders as sort of the two headed dragon as co-CEOs. And then our third founder is our CFO and COO. And it works really well because it allows us to sort of manage different areas of the business at the CEO level and also work really collaboratively together as well.Stephanie:Awesome. So you co-founded HelixSleep and that was back in 2015, right?Adam:Yeah. So it was founded by myself and, as I said, two other co-founders back in business school, back in 2015. The three of us had moved to a new city to go to school, went through the process of buying a mattress just for ourselves. And it was sort of uniquely terrible in many ways, whether it was really confusing pricing and really expensive pricing in the store, really just bad in-store buying experience. We actually found out later doing research that buying a mattress is actually rated as a worse experience than going to the dentist. And the last thing was, it was just really confusing. If you don't buy mattresses all the time, which no one really does, and it's something that you buy somewhat infrequently, people have a really hard time understanding how to buy it. And so for us, we sort of saw the problem, saw some of the solutions that others in our category were trying to fix this problem, and felt like we could sort of come in and solve it in a much better, more efficient way.Stephanie:Got it. So five years ago it feels like so long ago, what was the market like back then? I mean, who were some of the up and coming people and what kind of unique angle did you guys see in the market at that time?Adam:Yeah, definitely. So five years ago, I would say the direct to consumer, or just generally buying mattresses online, was pretty nascent. It was predominantly, people were going into stores. There was actually a while where people were buying beds on phones, but we sort of saw the market, which is very consolidated at the traditional brand retail level. So you have sort of Simmon's, Tempur Sealy, Sleep Number, Casper, which is the most well known and largest player of the D to C mattress brands head launched recently and had really done a good job at showing that this was a category that could generate interest online, somewhat of an atypical category with low, as I mentioned, low ecommerce penetration. What we saw as the issues that I mentioned earlier, we felt that Casper and a lot of the other brands that were starting to pop up were sort of maybe filling in one friction, but replacing it with a different friction.Adam:So all of us, including Helix, offer products directly to consumers at much better price points, helping out that value chain issue with traditional retailers. Everyone tries to provide a much better buying experience through a really good user experience on the website, 100 night trial, free shipping, et cetera. The issue where we really differentiate at Helix is around the product itself. So what Casper did and what pretty much every other planner space did was said, "It's really challenging to choose a mattress. So we're going to just get rid of choice altogether, and offer one type of mattress for every single person."Adam:And what we found doing a whole ton of research and talking to people, and it sort of makes sense that if you think about it implicitly, is that there really is a wide variety of needs and preferences as it relates to your mattress and to the way that you sleep, the same way that we all don't fit in the same clothing. We all don't have the same exercise routine that works best for us, the same diet. Sleep is quite personal. Adam:So one of our missions was effectively, could we help customers understand the right products for them through a sleep quiz that asks questions about things that you knew about yourself? So your body type, your height, your weight, do you tend to sleep on your back or your stomach? Do you get hot at night? Do you get cold? Do you have back pain? Do you like a bed a little bit firmer or softer? And then we take that information and effectively translate it into the best mattress for you. So the order of the layers in the mattress, the density of those layers, the types of materials, the density of those materials, are all really important for getting the best night's sleep and effectively that's what we're doing. So we like to think of it as sort of providing a technology enriched solution as a salesperson. So instead of going into the store and sort of hanging out with sales person, we do that online through our quiz.Stephanie:Very cool. And yeah, what I love about what I read about you guys was that you did a ton of research. I think I read that you went through 100 plus page PhD dissertations, and you partnered with researchers in Europe to make sure you really understood how to create this algorithm and this quiz. Tell me a bit about your thought process there, because I think that's so different than a lot of D to C companies right now who are just trying to get that quick launch, take advantage of the market, and are just going really quickly instead of taking a step back and doing the research and figuring out how to solve the problem.Adam:100%. I think for us, none of the three of us came from a traditional mattress background, right? And so we did what three nerdy guys would do, which is we started to do research. And we actually had this idea and stumbled across a PhD dissertation on sleep ergonomics, which is the study of the sort of spinal alignment of your back while you're sleeping. You hear a lot about spinal alignment and ergonomics and sort of office chairs, but this was really the first PhD dissertation on that, with bodies lying down. And we actually noticed that at the bottom of the PhD dissertation, the head author had left his email address. And so we emailed him.Adam:A couple of days later, we got on a Skype call with him. They were located in Europe and then about a week and a half later, we actually flew to Europe and met with them and effectively worked with them to translate their initial science into the crux of our initial algorithm, which over the last five years, we've sort of wholly taken ownership of, and refined quite a lot. And so it was sort of a funny story because it really was, we got on a plane and went to Belgium and had to figure out where we were going and all those types of things. But it was really important because we felt like we had a scientific base for the hypothesis that we were making.Adam:I think to your second part of the question, it's really interesting, this tension around, do I want to get to market as quickly as possible, or do we want to take a step back, feel really confident in the research, the development, the product testing? As you mentioned, we went through many, many versions of the mattress, many, many versions of the algorithm on how we matched people. And the approach that we took was that you really only get to come out to the world and present your product once, at least in physical products, that's sort of our belief as differentiated, perhaps, from a more technical product where you can have an MVP. We couldn't really sell a mattress that was only 50% as good as we wanted it to be one day, because we would get terrible product reviews, and we couldn't sort of build brand equity that way. And so we did a lot of work upfront to make sure that the product is where we wanted it to be.Stephanie:That's great. I mean, it seems like there's a lot of room to partner with researchers around a bunch of different topics, but what was that partnership like? I mean, when you went over to Belgium and you're essentially building out a model or an algorithm based on this person's research, were they like, "I want a piece of the pie, I want a little equity," or were they ready to give you all the information for free?Adam:Yeah, definitely. So we ended up working out a deal with them where effectively, they provided consulting services in exchange for equity in the business. Of course, that could have been consulting services for money. At the time, this was literally very, very early days. It was actually before we started working with them before we had raised our seed round. So there wasn't any money to pay them really. And so we went ahead with an equity relationship, which we felt made sense at the time. We still feel like it makes sense today. We don't really work with them at all and have not for a while, but it was really helpful to sort of supercharge our learning and understanding in terms of the development of the product and the algorithm.Stephanie:Very cool. I mean, have you had to iterate the model? Do you see people requesting different sleeping habits or behaviors? Have things changed for the past five years where you've actually had to change the model a couple times?Adam:Yeah, a lot actually. It's one of the biggest, from a consumer perspective, our differentiation is about providing personalization and a more custom mattress buying experience, but from a business bottle perspective, our ability to look at our algorithm or our model and effectively improve it is a really big lever to what makes us unique. And so if you think about what we're doing, is we're taking, as I said, information about yourself, matching it to a mattress. And so over the years, we've effectively, having sold hundreds of thousands of beds, we just have a lot more data. So we've been able to improve both the way that we match you, so person A with these attributes, are you getting matched to bed XYZ, and sort of edit, that as well as making physical product improvements to the beds themselves.Adam:So a lot of people talk about AB testing and talk about opportunities with using data to improve your product as it relates to your digital product, right? Your onsite conversion or your UX or something like that. We have taken that mentality to the physical product as well. And we've actually been able to reduce our return rate, improve customer satisfaction, improve average order value, all the main metrics associated with product and product satisfaction, by effectively looking at it in that light.Stephanie:Got it. And I also it was reading that the return rate, if you overemphasize how you have free returns and the 100 day, night guarantee and all that, if you overdo that, you'll be able to sell a lot more just because people have peace of mind. Even though I think I saw at least, I mean, it was a Casper stat, but it was only 10% of the people or less actually returned their mattress. Do you guys go about that same way of thinking of overemphasize things to make people feel like it's a risk free purchase?Adam:Yeah, I think there's two things there. I think that in our category, offering a fairly long return period, it's typically 100 nights, is kind of necessary, because you need to make someone feel confident in purchasing such a large, but really expensive item, right? Average order values in our category are really high. And so people want to feel really confident in the product that they're ordering. And that's why all of these brands are offering free returns, free shipping. In many cases, or in most cases, really generous policies around warranties, et cetera. It's just offering more opportunity to make someone feel comfortable with spending those dollars. So we definitely approach it that way.Adam:I wouldn't say that we necessarily overemphasize it. The reality is, most people need around two to four weeks to get used to a new mattress. And then after that, you don't really need another 70 days, but people tend to like that process. And in terms of return rates, you're right that return rates, they're honestly, I mean, Casper's return rate is probably higher than that number you said, but they're not as bad as retail, traditional apparel or something where return rates are 40, 50% or something like that.Stephanie:Yep. What happens when a mattress is returned? Where does it go?Adam:Yeah, that's a good question. So we do a few things. So when customers want to return a product, first, we work with them to see why, because there are ways we actually can improve the product experience after the fact. So we can send you a topper that adjusts the feel or other things along those lines, but in cases where mattresses need to be returned,, at Helix, at least we actually donate the vast majority of them. So we have a network of donation partners across the country where we will donate them. In some cases, we cannot donate them, either because there's state laws against it, or city laws against it, or if someone's located in a somewhat remote area. And in which case, we work with junk removal partners that end up recycling them. So all of our beds are technically, in the 100 night period, considered lightly used. So they're eligible for donation.Stephanie:That's great. So I was reading there's about over 100 companies now that sell mattresses online. How do you show how different your mattresses are and the algorithm that you have going on? How do you showcase that value proposition on your website or your advertising?Adam:Yeah, definitely. So it's a good question. And it's funny. That quote comes up a lot, the 100 plus mattress companies. It's one of those weird categories where there is a very long tail of players. So you probably have 10 to 15 players that have reached any semblance of scale, and then 80 that are very, very small. I mean, you would almost consider them, the equivalent would be like a mom and pop shop in retail world. What I will say is that buying a mattress is a long lead process. So when you decide you want to buy a bed, you're typically in market for it for a week, a few weeks, months even.Adam:And what that means is that you have many touch points with multiple brands, right? And you can imagine it's like buying a car, it's like buying anything that's expensive. And so across that journey, we feel like we do a really good job of sort of elevating our brand proposition and really personalizing our messaging specifically to consumers in ways that really speak to them so that our differentiation shines. The other thing is that, because of the way that we customize beds, and also that we really spend a lot of time on making sure that the product quality is excellent, is we just win a lot of awards. So we were named GQ's best mattress, Wired best mattress, whole host of others. And then we also get awards for specific affinity groups. So best mattress for back sleepers, best mattress for plus size consumers, or something like that. And we're able to elevate those messages on individual mattresses.Stephanie:Got it. Yeah. I saw, I think it was your organic line that won an award. How did you guys think about developing a new product that was organic materials? And also, launching like that, does it make your other products maybe not look as good? Or how did you guys think about that? Will it help or hurt us putting out an organic line? Because when I looked at it and I look at any organic products, it always makes you think, "Oh, well, what's in the other one if this one's made of natural materials and no chemicals?" So how did you guys think about that balance?Adam:Yeah, that's a great question. So we actually thought about that question a lot, and where we ended up and it's almost the core strategy of Helix is that throughout the first three and a half years of our business, we were holistically a single D to C brand Helix, right? Started out as just mattresses and then extended into other sleep products, pillows, sheets, box springs, adjustable bases, et cetera. And then about a year and a half ago, we took a step back, saw what we were building, which was this really fast, growing profitable brand, and in a category that we were sort of one of the leaders in, but what we saw under the hood was this really excellent collection of skillsets across our team, across our technology, some in-house built technology, across our supply chain capabilities and relationships. Could we view ourselves less as a single brand and more as a platform on which we could build a portfolio of home good brands?Adam:And that is the strategy that we are currently on. And so Helix is our sort of most well-known largest brand, but Birch, which is our organic line, or our organic brand, was launched about a year ago. And it is actually a sort of related, but completely separate brand. So if you were to go to birchliving.com, you would effectively see an entirely organic ecosystem with the goal of really feeling, I mean, truthfully feeling authentic to consumers that care about organic products, that supply chain is 100% sustainable. It's just a much different consumer. And so we want to make sure we talk to that niche consumer in a specific way that is perhaps different than a typical Helix consumer. And we've extended that process out more recently with the launch of All Form, which is our actually our first step out of the bedroom into the living room, which is a modular furniture brand.Stephanie:I love that. I mean, that seems so smart because it's different consumers are looking for different things and like you were just mentioning, if you're comparing the two, then you might actually walk away feeling bad if you went with the one that wasn't organic, but when you have it on a completely different site, you're really meeting the needs of the person who's coming there instead of trying to put everything on one site. So I love that.Adam:Yeah. I think it's certainly a slightly different strategy, but we just feel like consumers, especially online consumers, want niche experiences and want experiences that really speak to who they are, and their preferences. And we were sort of already doing that on the product side with Helix, but it made sense to do it in this scenario on the brand side with Birch as well.Stephanie:Yep. How do you keep track of everything that's happening under the different brands and the different websites? I mean, how do you make sure any learnings that happen at Birch are maybe transferred over to Helix and over to the furniture line? How do you keep it cohesive when you essentially have now three or four different businesses running?Adam:Yeah. It's hard for sure. I think we're currently operating under a shared services model, so we don't have a team that just does Helix and a team that just does Birch or a team that just does All Form. We're just not there. The other two brands are just not at that scale yet, but so that makes this actually a little bit easier because you have the same people that work in a functional area,, working across all of the brands, but it's certainly challenging, for sure. And we've been able to take a lot of learnings from Helix specifically, which is an older brand. It just has a lot more data. It has more customers on a daily and monthly basis, and leverage those learnings across the other brands, which it's typically in that direction from a [inaudible 00:22:02].Stephanie:Yeah. I mean, there seems like there's a big opportunity to also re-target prior customers because you already know how to talk to them. You've already sold to them before, and then showing them your new furniture line or the pillows or bed frame, even if it's on a different website, you kind of already know how to communicate that to them in a way that has converted in the past.Adam:Yeah, absolutely. I mean, I think that's the core business case, right? And from a business perspective, we like that because it allows us to acquire a customer, build a lot of good will with that customer, and then sell them more products, right? Obviously, but from a consumer perspective, we also think it adds a lot of value to the customer journey because customers that are in market for things like mattresses tend to be in market for other home good products. Maybe you're moving, maybe you're renovating, maybe you got married, maybe you had a kid. Something is predicating your reason for being in market. And in many cases, if we can sort of create a lot of good will with you and then offer you more products, it's not just good for our business. It's also good for the customer because it makes shopping easier, right? it makes your purchase cycle and shopping and all of that a lot easier. And so that's what we're starting to do now. And where we're excited to move in the future.Stephanie:Okay, cool. So I also saw that you guys, I don't know if you still have showrooms, but you did have some showrooms in New York. And the process was that a customer would come in and they would take the quiz and then they would go to the showroom and maybe hang out for an hour, take a nap, try out the mattress. How has that model changed? And what's going on with maybe not having the ability to bring people into a showroom and try it out?Adam:Yeah, definitely. So we had a showroom in New York. It's obviously been closed for the last nine months. It was a really unique experience because it felt extremely personal, because it was really personal. It almost felt more like you were getting a piece of clothing tailored because you would show up, in many cases you would actually make an appointment in advance. We would have your information. We would actually build the bed for you on the spot. You'd be part of that process. And then you could hang out, test it, et cetera. And we tried to make the experience really, really great. It's unfortunate that we've had to close it. We have plans of moving into a more aggressive thoughts around potentially showrooms or retail units going forward.  Stephanie:And so when thinking about your marketing toolkit, what are some of your favorite channels to get in front of new customers right now?Adam:Yeah, so I think that we approach marketing extremely holistically. We have a very, very diversified marketing approach. Part of the reason for that is we think it just mitigates risk. It's very scary when 80% of your marketing budget is in one single channel, especially if one of those channels is a technology marketplace, or if it's Google or Facebook, and all of a sudden the Google algorithm changes, or Facebook gets rid of a targeted audience and that's it. And that actually happened in the home goods category a few years ago on Facebook.Stephanie:What did they take away?Adam:Yeah, I think it was 2018. They took away, there was a way that Facebook could help identify new movers, and they took that away, and we weren't super hit by it, but I know a lot of home goods brands and a lot of mattress companies, it was overnight, 30% of your ads disappeared, that kind of thing. So we don't do that.Stephanie:That's interesting that we're even talking about new movers because I'm in the process of moving right now and thinking about, "Do I just want to buy a new mattress, so when we get there, it's already set up?" Because it's going to take maybe a week or so to get all my stuff there. That's very smart to target people like me.Adam:Yeah. And so we try to avoid that just being too aggregated in a single channel. And so we're really diversified. The other thing is we operate almost all of our channels in house. It's just really important to us to be internal and holistic about it. So yeah, I mean in terms of channels that we love, it's nothing crazy. We're obviously across all the digital channels, radio, podcast, direct mail, all of those. I think if there is magic, the magic for us is really around thinking through the customer funnel holistically and making sure we understand and attribute accordingly with a pretty diversified marketing stack.Stephanie:Cool. So when thinking about 2021, what kind of trends are you most excited about, or new behaviors that you've seen occurring that you guys are excited about?Adam:Yeah. I think there's a lot. I think obviously just in general, COVID has really accelerated ecommerce adoption in atypical categories. And so I think that's pretty exciting to see where that settles once, hopefully, the world gets back to normal. I think a few areas that we're particularly interested in is there's a lot of movement on payment options and better opportunities for people to pay, which is sort of exciting. Another one is really around blending products and services. So sort of offering services and attaching them to products and using those as ways to better convert customers, and the tools available to do that are pretty interesting.Adam:Yeah, and then just for us, it's really around continuing to personalize our web experience, provide better customer experience, and those types of things. So I think 2021 is going to be a really interesting year. I think it's actually going to be two distinct years in one, the first half and the second half will be just completely different for a lot of businesses. And I actually would encourage anyone that's thinking about either starting a business or budgeting for a business to think about the world that way, you might actually want to have budgets for a beginning of the year plan and a second half of the year plan, because it's just really hard to know where we'll be. I feel confident in knowing where we'll be for the next three to four months, but after that, it's going to be a completely new experience.Stephanie:Yeah. Yeah. I completely agree. So I want to dig a bit more into, you were just mentioning about merging products and services, and I haven't heard anyone talk about that yet. So I want to hear more, what are you thinking around that? What kind of tools are popping up that you have top of mind?Adam:Yeah, so I think for us, merging products and services, there's a few forms of it. One, which is at its most face value, it's just offering more services as if they were products. So that would be things like white glove delivery, things like old mattress removal, those types of services, which technically aren't really physical products, but they help convert customers into buying your physical products. Perhaps the more interesting areas as it relates to customer experience, and can you empower your customer experience team to provide service as opposed to just being an answer center? Right?Adam:So I think a lot of people view customer experience or customer service as an area where people go and ask questions, but can you be more proactive in providing service, whether that service be design consultation, be helping think through answering questions, or whatever it might be that really activate almost a little bit more a sales channel. I think that that's really interesting as well for us. And then I know a lot of other people are thinking about other types of services they can offer. Obviously, this is just what we're thinking about. But I think that you're going to see a lot more web experiences that are trying to provide a service-like experience to a consumer in addition to a product.Stephanie:Got it. Yeah. And it seems like once some of those services start happening, though, a lot of times, they can become commoditized where then the consumer just starts to expect it. I mean, I'm even thinking about contactless delivery and things like that, where it might cost some businesses extra money to be able to do that, or take a mattress away or whatever it may be. But I think eventually it will become standard, and that businesses need to start planning for, what are the consumers looking for now? And what will eventually have to be absorbed into the margin because it's commoditized?Adam:Absolutely. Yeah. I mean, I think that if what you're adding is something that can be easily commoditized, it certainly will be. If what you're adding is differentiated, unique, and valuable, then you should be able to charge for that value, right? It's sort of that simple. And so I think the example I use, white glove delivery, that's not unique to us. We're not the only people that can do that obviously.Adam:And so offering that, perhaps, could be something that becomes table stakes, or something that consumers come to have a level of expectation, but offering really niche opportunities to engage with someone on our CX team to help you through the buying process, that's not a commodity, right? That's something that you can really get to an amazing place through training and through branding and through just the entirety of your ecosystem, in my opinion. And so I definitely agree that some of these things could be monetized, but if you're doing them right, you should be able to, either, it should show up in your financials somewhere, whether it's you can charge more, your conversion rate is better, et cetera.Stephanie:All right. Let's move over to the lightning round, brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question and you have a minute or less to answer. Are you ready, Adam?Adam:I hope so.Stephanie:All right. First up, if you had a podcast, what would it be about and who would your first guest be?Adam:If I had a podcast, I mean, this is a boring answer right now. It would be on effectively what I was just talking about, which is the future of D to C. And my first guest would probably be Jeff Raider from Harry's.Stephanie:Oh, that's a good one. Awesome. What's up next on your Netflix queue?Adam:I'm about to finish the last episode of Queen's Gambit and I love it. It's really cool. I like it a lot.Stephanie:So good. I like that too, it's awesome. What topic or trend do you not understand today that you wish you did?Adam:I dabbled in high-level cryptocurrency a year and a half ago and I just don't understand it at all. So I wish I knew it better because I think there's opportunity there, but I'm not sure I'm the guy that's going to find it.Stephanie:What's the nicest thing someone's ever done for you?Adam:Wow. The nicest thing someone's ever done for me?Stephanie:I get that response a lot. "Whoa, deep."Adam:Yeah, I mean that's deep. I don't know. I mean, my wife married me. That was pretty nice. I'm pretty happy about that.Stephanie:What a nice lady.Adam:I know, right? What a nice... I guess that the nicest thing... I'll just bring it back to Helix. I don't know if that's a boring answer or not, but we had some pretty awesome early advisers that really didn't need to give the time that they gave, and it was just immensely valuable. So I'll go with that.Stephanie:That's a good one. All right. And then the last one, what one thing will have the biggest impact on ecommerce in the next year?Adam:Well, the real answer is COVID and the vaccine, that is the answer. And I think that anyone that tells you it's not macroeconomic facts is lying. From an internal standpoint, I'll go back to something I said earlier. I think that the movement in payment processing is a pretty big deal and not a lot of people are thinking about it, and I think that's going to be a big deal.Stephanie:Yep. Cool. All right, Adam. Well, thanks so much for coming on the show. Where can people find out more about you and Helix?Adam:Yeah, definitely. So come check us out. It's HelixSleep.com for Helix. For Birch, it's BirchLiving.com. And for All Form, the modular sofa brand, it's AllForm.com. Yeah. And that's sort of the best place to check us out and learn more.Stephanie:Awesome. All right. Well, thanks so much and have a great night.Adam:All right. Thank you so much.

Businesses are always looking for the most effective strategies and tactics to create the best customer experience possible, and in the world of ecommerce, that’s getting harder every day. We wanted to dig into some of the trendiest ways ecommerce brands are weaving their way through this maze, so we invited our good friend Jon Feldman on this episode of Up Next in Commerce to show us the way.   As a senior manager of product marketing at Salesforce, and someone who talks to commerce business owners and operators on a daily basis, Jon knows a thing or two about what’s on their minds, the challenges they face, and the questions they are dying to get answers to. He’s also seen first-hand what kinds of major and minor changes ecommerce companies are making that have had the biggest impact. So how are small website tweaks having a ripple effect on call centers? What will happen to the customer journey as commerce moves to the edge? And what kinds of technology and platforms will brands need to lean on to win across a new ecommerce landscape? Find out all of that and more right here. Main Takeaways:On The Edge: Commerce has already shifted from retail stores to store-specific websites. Next, we’ll see more of a migration to shopping on the edge, with commerce happening on content websites and away from the traditional retail site. This sets up a question of customer loyalty and trust that brands have to answer and prepare for.Know Who They Are, Not Where They Shop: As ecommerce becomes more distributed and marketplaces and virtual shopping experiences crop up, brands need to accept that they will have less control over where a customer finds them or how the brand is represented. Instead of trying to funnel people to a specific site, make sure that however a customer ultimately finds you, when they buy your product, the experience with your systems, shipping, customer service and everything else meets their needs.Opportunities Abroad: The world continues to become more and more interconnected, which also means that the opportunity to spot product trends abroad and introduce them to a “new market” in another country is also shrinking.. Luckily it's easier than ever before to market and ship products around the world, so you are probably only a few backend adjustments away from being able to expand across borders.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie Postles:Welcome back to Up Next in Commerce, this is your host, Stephanie Postles, co-Founder at Mission.org. Joining us today is Jon Feldman, a senior manager at Salesforce who works on Commerce Cloud. Jon, welcomeJon:Stephanie, great to be here. Thanks for having me.Stephanie Postles:I'm excited to have you. I think before we start, because we haven't had many Salesforce people in the show, I was hoping you go through your background, what led you to Salesforce, and what you do today.Jon:Yeah, absolutely. I started doing internet commerce at ATG back before Oracle bought it in like 1997 in their professional services group. I was at ATG for eight years and I did implementations around the world, honestly. I was in New York for a while, West Coast and East Coast, and that was super awesome. I met a ton of people and learned a lot about how people use commerce systems. After that, I went and did a four-year stint at a consulting company, doing the same thing. I guess, it's not as exciting. And then I went to Restoration Hardware for four years. I was the senior director of IT/ecommerce, which was really rad, until I got laid off, which was a super bummer.Jon:And as I was trying to figure out what I was going to do with my career after being laid off. I was like, "I really don't feel like there are a lot of jobs that are senior directors of IT/ecommerce in a lot of places." And so I thought I'd try marketing and I switched over to product marketing. And I've really been enjoying it ever since. I've been at Salesforce for about two years now and talking all about the commerce product. It's a lot of fun, honestly.Stephanie Postles:That's great. What does the best day in the office look like to you?Jon:Best in the office. It's interesting because we're at a big evolution point for Salesforce marketing, I think, particularly for Commerce Cloud. The company was built around physical events. For Commerce Cloud, we had three big stations every year, we have the National Retail Federation, which is coming up in January, we have Connections in the middle of the year, and we have Dreamforce at the end of the year. And those are our big opportunities to talk to clients. And of course, with the pandemic and travel stopping, those have all gone away, which if you are a company that sells software, that's problematic because you need to be talking to customers to generate leads and keep the machine rolling.Jon:And so, because of that, we've been trying a lot of stuff with video, and my job is really around how we talk to customers through video and how we continue to generate a conversation in an audience with potential customers and existing customers when we can't see them in person. And so for me really fun days are days when we're working on new video stuff. I think that at a high level, a lot of the video that's created is repurposed webinar, and it is just like, here's just a bunch of stuff.Jon:And for me, the fun stuff is how we can modernize the format and talk to customers in a way that they're like, "Wow, this is actually interesting and engaging," and not like, 45 more minutes on payments. Anyways. So that's what a good day is.Stephanie Postles:Awesome. So on the topic of video, a lot of different companies right now are talking about that as well, about what they're leaning into in 2021, they see a lot of opportunities there, not only with YouTube, but also TikToK. What are you guys seeing in that area?Jon:Taking a step back, I think that modern video is YouTube. YouTube is the number two search engine on the internet. And so there's a format to YouTube, which is 10 to 15 minutes long, really clear call to action, and then there are like a million genres underneath that. And I think that as we think about it, it's, how do we get into a format that is more fun and interesting and engaging, and that has a clear call to action? Yeah, I think for us, it's really about, how do we modernize the format? How do we engage on video in a way that isn't just a 45-minute program on a topic.Stephanie Postles:When you're talking to customers every day, what are some of the trends and themes you're hearing from them right now and maybe how they're thinking about next year?Jon:Yeah. In my role, making all these videos, we talk to customers all the time because Salesforce doesn't want to make a video unless there's a customer interview, which I think is really smart because at the end of the day, customer's the one who have the interesting stories. Obviously, a lot of a lot of what we talk about, it's the impact of code and retail sales closing, or things being pushed to digital because if you look at the numbers on their own, they're pretty remarkable. I have access to Salesforce numbers, and its biggest Cyber Week doubled. Some of our biggest customers are seeing 500% of what they did.Jon:And that's interesting, but I think that it hides some of the really interesting storylines. I think it's easy to talk about the numbers, but one of those common things we hear from our customers is that COVID has pushed a lot of people online, it's increased the volume of their business, the velocity is much higher, and that in turn has exposed a lot of problems that they've had in their supply chain. And that little things that weren't a big problem had become really problematic as the scale goes up. And that's manifesting in everything from more attention, to deflecting calls from call centers, because we talked to Hibbett Sports and they were getting a ton of questions about the order cancellations.Jon:They implemented online order cancellations and it had this huge impact on their call center. Even though obviously you're losing revenue when someone's able to cancel the order, the impact of taking that pressure off the call center was worth it. And that also manifested on the front end where we find that-Stephanie Postles:Oh, interesting.Jon:The thing which I think is really interesting about those call center things is how there's always just little things that make enormous changes in the volume. I remember Restoration Hardware, one of the big efforts we had was to just put dimensions to the objects on every product display page, because at the time, the biggest three reason for returns at Resto was that stuff wouldn't fit through the door. And we weren't telling anybody how big it was, so you'd show up with this giant couch that was designed for like a palace in France and it wasn't going through a US standard door. Yeah, really interesting stuff along those sides.Stephanie Postles:Yep. We had someone previously on who talked about spotting bottlenecks, and it reminds me of that. Maybe people aren't looking at their customer service department or figuring out... There's so many things to look at right now. So many companies are saying their models were breaking and they had to rebuild things from scratch. And I think taking a step back and figuring out what are the biggest bottlenecks, like you guys were doing with your one customer, how they were able to look at their call center, is a great first step. That's interesting adding order cancellations online.Jon:To your point, what I think I've seeing through a lot of this is that companies are taking a broader view of what the whole customer experience is and looking for ways to work around some of these bottlenecks. Intuitively, as somebody who's done a lot of these implementations, I think that oftentimes those bottlenecks are in places where systems touch or there are like decision points and financial trees. You don't have to turn the whole thing off, but make changes that make it easier and faster for customer to go through it. It just takes stress out of the whole organization.Stephanie Postles:So what other trends are you hearing from your customers right now? And do you think these things are here to stay, or do you think the world's going to pivot back to where it was before and some of these are going to be short-term fixes that maybe aren't needed in a longterm?Jon:It's a really interesting question. I was talking to another customer, they were bringing up this really interesting point that, 2021 comps are going to be a really tricky thing to work with because the market was so crazy this year and next year, you're going to have to figure it out. You're going to have to say, "Hey, was the push online to COVID forever or short?" To your point. The other thing about what I think the future is going to hold and where commerce is is that, originally, a lot of commerce happened at a retail building, And that made a lot of sense, you own the customer that were in your store, no distractions, ready to go. And then a lot of stuff moved online and customers gravitated towards your website, where you could still have a very curated experience and it could still be on your terms, make everything happen.Jon:I think that as I look forward, we're going to see more shopping on the edge, which is where products are going to be more deeply integrated at the content sites or in marketplaces, or you're going to be finding places to shop which are not the traditional website. And I think to the question, I think that then becomes a really big customer loyalty question of like, if I'm on a content site and I see an ad for Home Depot, do I trust that it's really Home Depot? Do I believe Home Depot is going to fulfill? It brings that whole question of, what is my relationship?" And image of that vendor up And, "Am I going to transact with them outside?"Jon:But internally, we think that something like 15% of commerce next year is going to happen at the edge. So I'm really excited to see how that goes.Stephanie Postles:That's interesting. So how can a brand prepare for that? Like you said, a lot of these brands right now are thinking about community building and how to build up that loyalty. There's so many new DTC companies popping up, so there's a lot of competitions. They're all trying to figure out how to really get ahead. So how can they prepare for that if you're saying now it might start turning into shopping in other places to where you're not going to see the brand front and center anymore?Jon:Totally. And it's interesting because I think a lot of people approach that as a technology problem, like, "We're going to buy a bunch of software and it's all going to be magic." My personal belief is that technology is an enabler, but it doesn't actually solve any problems on its own. And so the specific things that I would, if I was to presume to tell someone what to do with their business, it would be that, "I think you really need to focus on what your customer is and how you can build loyalty and build a customer experience that is so great that they would prefer it." I think that if you look at Amazon, arguably the shopping experience is a disaster, but the fulfillment is so strong that you have trust that if you're able to find whatever it is in that haystack, that it's going to come to you and it's going to look largely like the picture has.Jon:I think that if I was thinking about going to DTC and I was thinking about how to do that, it's about really knowing who my customer was, what they liked, and where to meet them. Because I think the relevancy of where your product shows up and how that customer journey ties into your system relationship with that company are going to be the most important things. Because ultimately, we've lost control of the presentation, it's owning the customer and just being wherever they are, because then that's the consistent thing, is you are where they are. Not that you're always on your website.Stephanie Postles:That's interesting. When you're thinking about shopping on the edge, is that referring to Amazon or is Amazon excluded and it's more talking about newer marketplaces that are popping up, like the Fairs of the world or Italic or places like that where maybe they're sourcing products, or is it all of it?Jon:I would argue that Amazon to some degree is the edge, their marketplace is this... anyone can put stuff in there, so your brand has to compete there against the knockoffs and events, that similar stuff. So I think the edge is marketplaces and a host of other non-traditional stuff. The single sourcing stuff, I'm not as sure about, white labeling stuff I think is slightly different. When we talk about it, we really mean that, hey, your products are just going to be in places that you'd never expected. And I think honestly, we think a lot about content alongside content when we talk about it.Stephanie Postles:Yeah. You were just mentioning Amazon and knockoff products, and one interesting thing, which I didn't know, maybe it's because I don't have an ecommerce company at the moment, is that you have to win that Buy Box. Did you know this where you have all these competitors and you actually have to win out the Buy Box and be able to like brand gate your brand to make sure that no one else can show up under there? There's so many things like that I think a new commerce owner would not really know until they start figuring out that people are now showing up under their listing and there's fraudulent people there. It sounds like a lot of times, you find out or see things going wrong until you learn how things actually work.Jon:Yeah, totally. I didn't know that, but it doesn't surprise me. Retail has always been monetized. Like if you want a good placement at the grocery store, you're certainly paying for it. None of that stuff happens by accident. No, it doesn't surprise me. I think that it all comes back to the brand management. It speaks to how much of a pain in the butt it is to curate a brand, even if at the edge you still have to be controlling it, you have to be really mindful of what's showing up on your PDP on Amazon and who they're showing next to you. Yeah, it's really tough. I think at the end of the day, the control you have is the loyalty, because that transcends the market that you're in.Jon:Because if you're buying like an LED light on Amazon to like do podcasting, you've got 62 million choices, 90%, they're all like the same product with different brand names on it. There's no way to stand out in that marketplace. Even if you have won Buy Box, I think it's loyalty.Stephanie Postles:Yep. Are there tools right now... If this is going to be the way of the future, buying on the edge, are there any tools that curate where you can sell things, how things are going, all in one place for a business owner, so if it does start moving to that model and maybe their product is now selling in like 50 different areas... I'm just imagining the chaos of trying to keep track of pricing and orders and even knowing where you're showing up and what's happening there. Do you know of tools for that?Jon:Yeah, it's interesting. Certainly, at Salesforce, we have some ideas and tools. We have some aggregation tools that make it really easy to plug your existing Salesforce Commerce Cloud catalog into other places. But I think ultimately, when you think about a commerce solution for a company, it's really a platform. Because what you're describing, it can turn very chaotic. I'm selling on 50 stores and I have 50 skews and they're all going to different order management systems, and that all gets crazy. Personally, I think the architecture to do this is to have all of those places centralized into a central order processing, central order capture, central service thing, so that no matter where it is, even if...Jon:I think people go into this thinking that, "My customer is only going to shop from me on one channel," but they may be buying something on eBay and they may be buying something on that content blog. How do you link those two things together? So the architecture I think is always the central order capture and service thing and that you have either APIs or integrations that allow you to then push that content in a way that makes sense onto the places and appears at the edge. But I think that all the capturing transactional stuff, if at all possible, runs through your engine. I mean, obviously the marketplace is going to want to own it, but it's not all marketplaces.Stephanie Postles:Yep. We've just finished pulling together a top trends of 2021, and we're talking about platforms, so it's relevant. We've talked to a lot of companies where they've mentioned that they outgrew their platforms. And so one point that we were making in the article was that a lot of companies right now are seeing the ability to scale a lot quicker than maybe prior to 2020, just because so many people were pushed online, new demographics are online. You can grow a lot quicker, at least this year, than maybe prior years. I'm sure you guys see this as well, new customers potentially coming your way.Stephanie Postles:How do you know they're ready for Commerce Cloud? What kind of problems are they encountering with their current platforms where you're like, "Oh yeah, you've outgrown it," because I think I've heard this at least 10 times from guests who've come on the show, like, "Well, things just started going wrong and we knew it," but they didn't always have details. It was just like everything was going wrong. So I wanted to hear some from you guys, what are you hearing?Jon:Well, let me take off my Commerce Cloud hat, because I think it's an interesting question because I actually think that that's a platform agnostic problem. I'd love to say, "Oh, you solve those problems on Commerce Cloud." I implemented ATG for 15 years, and my belief is that enterprise software is elastic, can do anything. And then it's implemented and then it's like in cement and it's very inflexible for a lot of it. And I think that companies outgrow these when either their original implementations didn't model their business processes completely or didn't anticipate the change that they would have to use.Jon:And I think that what happens is that if you're a business person within an organization and you need to like launch Wishlists and you're an IT person who hears this and you're like, "Wishlist, that can take me a full year to do." I think those agenda, those feelings that, "Wow, this platform is fundamentally broken." So don't blame this author, it doesn't really matter. I think it means that you need a new implementation and a new truing of your business processes with your IT processes so that what you're putting onto the internet is once again in sync with what you're doing and what your dreams are.Jon:That's what I think when people say they're outgrowing, there's so much friction getting just their basic business processes done that they feel that they need to just throw it out and start over it. And I empathize with that, I think that there are truly some systems regardless of the software where just it's better to start over.Stephanie Postles:Yep, that makes sense. Another thing that we talked about in the report was about these demographic changes that are coming and how many more people are online. How are you thinking about that right now with meeting those people? Some of them are brand new with ordering online, they're now getting used to it and they're probably pretty sticky going forward, but how are you guys thinking about these new users online?Jon:Yeah, it is a really interesting question. For me, an interesting analogy is fitness. In a previous life, I was also a fitness instructor that had small boutique fitness. And you can arguably do everything you can in a group setting at home. There's really no magic, there's no secret thing except someone's yelling at you and telling you what to do. And you've had all those fitness places closed and now everything's at home and you have this huge proliferation of home fitness stuff, Peloton, Mirror, Apple's coming out with a product, and all that's really rad. But the question is, and I think it's exactly the same with the fitness as it is with ecommerce, how sticky is that really?Jon:When the fitness studios open up again, are people going to rush back to them? Is there something inherent about that in-person experience that people are going to go back to no matter what? As I think about that, my conclusion across retail and fitness is the same, which is that some people really miss that in-person component, regardless and are going to do it, and are going to go back. But I think that even with that chunk of people going back, it's not going to be, at least initially, be the same level that it was before, because the internet is the new technology. It's something that in the last 20 years is new, and I think is going to have a longterm impact now that everybody's been forced into it for a broad array of daily services that it's going to be stickier.Jon:So I don't think it's going to be quite as crazy. I think the 2021 comps are going to be lower online, but I think it'll still be higher than 2019.Stephanie Postles:Yeah, I agree. We just had Stitch Fix on the show, and it was really interesting because they were talking about starting to at least test out or try out GPT-3 and how they're focused on figuring out ways to process the natural language, which is what the technology is for, because a lot of these new users are coming on and they're typing very formally, they want a formal answer. They want to make sure they get a response in the way that they would expect it. And so Stephanie from Stitch Fix was just talking about how she thinks about personalizing the messages and reacting to the user depending on how they're typing in their question, how they're asking for things, to make sure they meet the user where they're at.Stephanie Postles:Which I thought was a really interesting take on personalization and a use of GPT-3, which I hadn't really heard of, at least in the world of ecommerce.Jon:It is. It's really interesting. And I would suspect that that's different from vendor to vendor that some people... Stitch Fix will probably see some of that more formal stuff as more professional people are trying to put together AI-inspired wardrobes. And other places, I could see... I'm stumbling around trying to say it's interesting, because all of those are technologies that ultimately will replace the interaction that you would have with a human. I worked at Restoration Hardware for a long time, and so this idea of human curation being something that you can't replace with AI, that there's something inherently wonderful and irreplaceable about that, the person who like knows the product line back and forth and is able to work with you to help you identify it.Jon:I didn't buy the full Resto thing where it's like... There's no way to do it all in technology, because I don't believe that everybody wants that kind of transaction every time, but in these situations, it's really interesting to see how people are trying to make up for that, that human curation, human taste's thing with AI on scale now. Oh, it's fixed, it's obviously doing great.Stephanie Postles:Yeah. To their credit, they always keep a human stylist to finalize things and make sure that they're still choosing things from a human perspective. So they do do that, but I have also seen it go very wrong when most recently I was calling a phone provider that I'm working with for my new internet in Austin, and they have it where they have the little robot pretend typing, it literally sounds like-Jon:Ugh, that's horrible.Stephanie Postles:I'm like, "What? Don't look try that." I know it's a machine, but when you try and add that extra emphasis to try and improve, I don't even know what they're doing, I'm like, that actually makes it worse, I'd rather you just tell me, "This is a robot. If you don't want to talk to a robot, let me know." Or something.Jon:Or you use your experienced people. What are you doing? We know it's a robot.Stephanie Postles:You ain't typing, you're not fooling me, and anyone that you do fool, I feel very, very sorry for.Jon:Yeah. It's interesting too because it's almost like we're going to address that real person thing by pretending, by trying to... Because I think no one's surprised when they deal with an AI thing, they're not disappointed, so why pretend that there's a person behind it?Stephanie Postles:Yeah. That was my biggest learning back in the day at Google was, if you're going to build these new pieces of tech and you're going to start having machines interact with people for, I don't know, restaurant bookings or whatever it may be, be up front with them because people are fine with it if you let them know, but no one is fine with it if they feel tricked. And I feel the same thing now with chat bots and anything that's happening on your website, people are fine if they know it's a bot, but don't try and pretend to be a person for then that person or the customer to revisit and be like, "Hey, I just talked to Sally last time and Sally's here again, and there's Sally again, Sally's just everywhere. Oh wait, I was tricked, it's not really a person."Stephanie Postles:That's when I think that you can do things well, or you might get away with it once, but you actually might anger a customer if you trick them.Jon:Yeah. Tricking customers never a good look, I don't think. My customer journey steps six is, trick them into thinking they're talking to a person.Stephanie Postles:Oh, that's a good quote, tricking the customers never a good strategy.Jon:No, it's not. I don't know, I would be very curious to know what the designer's life on that last stage of Stitch Fix is like. Is it that the AI has come up with banana stuff and you got to piece it back together. I think that'd be fascinating to see how much manual adjustment they have to do, because it's, I don't know, I think people are pretty good at feeling out when there isn't a real human behind it.Stephanie Postles:Oh yeah, yeah. I think so too. The other thing I wanted to talk about a bit was trends from abroad. So we've had quite a few guests on the show, some of which I think are actually customers that you guys sent us, and they've found different products, maybe in, I don't know, Japan or Thailand or something. And then they either created the product there and brought it back to the US, or they just brought the trend back here and figured out how to make it here. And I wanted to hear, how are you guys thinking about commerce abroad right now? Are you guys looking into that area? Do you even have customers who are overseas? And where do you see the world headed outside of just the US?Jon:Yeah, no doubt. There's two things in there, the first one is this idea that you would bring a foreign concept to another country and introduce it as your own product. And certainly, that happens all the time. And the other is, if you are a company working abroad or even in the United States and you want to address a global market to prevent just that happening, how would you do it? I think actually they're really intertwined because we do see a strong trend right now of companies serving a much more global market from their domestic website.Jon:20 years ago, you couldn't find a payment processor that would take international cards in the states, you were getting stuff shipped out of the country, there was this forward carriers. All those services to make it easier, though, very expensive to ship out of the United States really weren't there. But now, you can find a product anywhere and it can be sourced from anywhere. I remember that my son had a plushy stuffed animal and he was given us a gift and it came from Japan, and we were terrified that something would happen to it. And so we bought another one from Japan, which is... I think increasingly what we're seeing is that, because of global commerce and because of the increasingly connections to this both payments and fulfillment systems, it's much easier to be fulfilling anywhere in the world.Jon:I was talking to Sally Beauty yesterday and they were talking about how, when they launched in Canada and COVID hit, they just fulfilled from all their stores because they didn't have a local DC and they couldn't do the inter-country commerce. It's like really interesting stuff. But I think that thing goes back to that question, I think it's going to be harder for someone to be like, I've seen this amazing concept in the Philippines, so I'm going to bring it back to the states because no one's ever heard of this and do it because I think that it's so much easier for that company in the Philippines to find and sell into a market anywhere now.Jon:We've actually talked about it at Salesforce, is that this idea that you really need to be thinking, even if you're not directly selling to a global audience and what's going to happen when someone from Switzerland comes to your B2B side and wants to buy your ball-bearings, how are you going to make that happen? So, yeah, I think it's interconnected in just that way.Stephanie Postles:Yeah. That's a really smart take. So basically the opportunity that used to be there where people would go to a country that maybe not everyone in the US has been to and come back and be like, "Look at this amazing thing," I mean, that's what happened with Red Bull. They went overseas, found it, brought the recipe back here and then it became a hit. It's essentially that opportunity is now closing because we are able to shop abroad, there's a lot of great things happening with localization, and the payments automatically switching over to wherever you're entering in from, and fulfillment's becoming easier, so definitely the gap is closing now around that.Jon:Oh, absolutely. I nerd out on audio stuff, and I've got this bananas like Mic arm that I bought from Germany. And I got most of them from a local US distributor, but there were some weird parts because of my microphone I needed. And I just went to their site and it's shipped from Germany and they took my American Express and it came in two weeks. There wasn't some weird customs thing and it wasn't this big process, it was just like, oh yeah, here we go. Boom. And it shows up. I think market's everywhere.Stephanie Postles:Yeah. That's cool. I do think there's still a big opportunity though to find very overpriced items and just do a D2C method. We just had on Solé Bicycles, and they said that's exactly what they did. And now they're being sold in Urban Outfitters and they have a bunch of other big partners, but their bikes are, I think like $400 and you can customize them. And there's so many spots that I still see at least here in Palo Alto, I see people riding around with these bikes and there's these big, you've probably seen this Jon, big boxes on the front where their kids are all in the front of them.Jon:Oh, yeah.Stephanie Postles:Three to $4,000, and a lot of people are going to Europe to have to ship them from Europe and then it's even more expensive. And when I see that kind of stuff I'm like, "Oh, there should definitely be an option because this should not be a $4,000 bike to just have a bike with a big wooden box on the front of it."Stephanie Postles:When talking about potential opportunities or not, abroad, the one thing that we were focusing on a little bit was looking at the internet penetration. And so right now, a lot of, I mean, this is more of a VC who's looking into this, but she had a really good quote talking about places like Latin America that have a really high GDP per capita, similar to China, but then their internet penetration being only 4%. So how are you thinking about maybe approaching markets like that, where you have really high GDP for the amount of people that are there, they're ready to work, but then their internet penetration is so low, how are you guys thinking about that?Jon:It's interesting. And I would get to this, both internet penetration as well as last mile fulfillment. A while ago I did a project on one of the major retailers in South America out of Santiago Chile, and their big problem was actually getting the product to people and actually payments as well for those final mile pieces. Internet penetration is tricky, I don't know, frankly, I'm a little surprised to hear that because I feel with the proliferation of phones, I feel I'm so ubiquitous right now that everybody has some ability to transact on their phones. It could obviously just be my own sitting here in San Francisco bias.Jon:I don't know. The only people that have the capital to do that are going to be like Google and Facebook where you would see already moving into those. I don't know. I don't have an answer to that one.Stephanie Postles:I think that regulations are definitely something that's tricky in some of those areas, and I just think the payment thing, and I know inflation has been an issue where alternative currencies in some of these countries have been looked into, whether it's Bitcoin or whatever it may be. But I think there's a lot of opportunity there, but a lot of times they didn't get focused on like, can the people keep their money? Is inflation out of control? Can they actually spend it? And there are a lot of issues, but I also think there's a lot of opportunity once you can get past that barrier and figure out how do we get these people online and transacting like the rest of the world.Jon:Interesting. Is that a good thing?Stephanie Postles:Yeah. The 4% right now, I wouldn't say it's good because it's like... It's maybe good for their local economy because they're only spending very locally apparently, but they're not getting access to the rest of the world, which there's got to be some reason there, I just don't know enough about it and why not. But when I saw that quote, I'm like, yeah, that's a lot of people who could be coming online for the next like five years or so.Jon:It's like when a AOL put users on Usenet, I was like, "Man, everyone is AOL."Stephanie Postles:What is Usenet? I was on AOL, but I don't know what Usenet is.Jon:Back in the day, Usenet was like the original internet forum system, it's where like all.nerd.games and like rec.games.pinball, my favorite one in college, it was where the nerds hung out. And I remember it was this exclusive community of college students and internet nerds, and AOL was going to take all of their unwashed people and bring them onto the Usenet forums, and here we are, internet broken.Stephanie Postles:Okay. Now, I know, I learned something very awesome and new today about AOL, brings me back to my days of putting up my away message, BRB, going to eat a sandwich.Jon:Yeah. And it's funny because Salesforce just bought Slack, and so now all of us are thrust back into Slack and everyone's like, "How does any of this work?" It's really interesting to feel so old, "What do you do with status?"Stephanie Postles:We just had Slack's CTO on, IT Visionaries actually. And it was perfect timing because then I think it was two days later it was like, Salesforce acquired Slack and we're like, "Ha ha, we're right on it." We just had [crosstalk 00:36:50].Jon:Step ahead.Stephanie Postles:Timing news check.Jon:It'd be an interesting acquisition, I think it's going to be really good for the company.Stephanie Postles:Do you think you guys will be able to figure out the away messages and how to use it?Jon:Well, anything connected to the world's number one CRM is going to have outstanding away messages though.Stephanie Postles:That'll be fun. Fun to hear about. The one thing earlier that you mentioned, I think is also an interesting trend was about fulfilling from stores. So we've had a couple of brands come on where they were like, "Well, we didn't do this before, but with COVID and our warehouses maybe getting shut down, and then we had all this inventory sitting in stores, we actually started using them to fulfill the orders. And then we realized that, "Oh, it's more efficient to do that because if someone orders from California and our stores are in Oregon, it's better to ship from Oregon than to ship from our warehouse that was maybe in Virginia or something."Stephanie Postles:And so they started using a more localized method and fulfilling it based on where the person was ordering from, which apparently, a lot of them weren't doing before. So do you see this staying around even when retail starts to open up again? Do you see them continuing to use maybe retail to also fulfill orders or maybe reverting back to warehouses or PPLs?Jon:Well, I think that fulfilling from stores is for sure in the future, and I think that there are a couple of reasons. One is that warehouse space is just getting so expensive, particularly around in city areas. Amazon just spent $200 million for the old Greyhound lot here in South of San Francisco, it's crazy money. So if you already have a physical presence, I think in my experience, living here in San Francisco, Best Buy is doing unbelievable job of this where when COVID closed their stores, they turned them into distribution centers, and you can do all your buy online, pickup in store. When it reopened, they did the mix thing.Jon:I think that people will continue to use those mixed models. And I think that the benefits are actually on both sides, it helps the consumers get stuff faster and frankly allows a wider variety of stuff to be stocked because you can have more stuff in stores than you can in a single warehouse is my belief. But from the company standpoint, you can shift stuff more quickly and you also... My wife just got a job doing this, she works up at Sport Space, which is a small sports retailer here in the Bay Area, and she's doing ecommerce fulfillment from their store.Jon:And so they have like 15 stores and they use every one of them as a warehouse, and their volume over the holidays has gone way up, but they've coped with it because they have a zillion DCS. I think the trick to it although, is that really for it to work properly, you need integrated inventory. And that can be really tough depending on your backend systems. But if you can get that, then I think it's a total no-brainerStephanie Postles:Oh, that's smart. We when we were talking to Wellesley, they were saying the same thing about they used to have these stores where, they're B2B, they are plumbing and HVAC and stuff, and so they would have these big stores that you would go and talk to the salesperson and place your order, and you could look around and all this. And she was saying in the future, they're thinking about moving to just, they don't even really need a store. They have this huge warehouse behind the scenes, like a shoppable warehouse and you just come to the curb and continue picking your stuff up.Stephanie Postles:They don't really need their store anymore, and that's the way they're thinking about the future could look for a lot of businesses, either shoppable warehouse or just order online, and if you need to come pick it up in person there's a very mini, mini store out front of the warehouse that you can transact there if needed.Jon:Absolutely. I think that, certainly, I'm biased here in California and I see what it sees in San Francisco, but certainly the downtown area, the metropolis of San Francisco is still completely shut down, very few people are going to work. And all of that real estate is shut down both in terms of offices and the commercial stuff on the ground that I don't think that there's any reason to think that all that's going to open up exactly the way it was before. I think there's going to be a lot of innovation in the physical retail space, particularly in places that are based on worker and office traffic and not like suburban weekday traffic.Stephanie Postles:Yeah. What kind of innovations do you see coming? Because I do think retail will be transforming. A lot of the retail stores, I think, we'll have to have that in-person experience component or event or something to bring the people into the store because they're so used to shopping online at this point, probably it's like, "Well, what reason do I have to actually go to a store and be in-person and talk to someone?" Or whatever it may be. What kind of changes do you see coming for physical retail?Jon:Yeah, absolutely. I think that just drawing up on what we've talked about already in this call, I think that you will see a deep emphasis on stores that really are just, or the staffing levels in stores that really are just warehouses. If you are a Costco, you just don't need that many people because the vacuum is the single vacuum and that's what you're going to buy. But for stores, I think that the physical retail transformative places where taste is the big thing, or there are multiple products that are equivalent and you want someone to help you curate, this is my Resto vocabulary.Jon:But ultimately, a human just going to actually help you walk out of the store with something that's a better fit for what you want. I think that that's the future because... Where was I? I was in line the other day, and I walked to the place because I just wanted to get this one thing and I'm waiting in line, it's like, there's no advantage to this, to, "I know what I want, I want to get out of here as fast as possible transaction." But in a transaction where I'm like, "Tell me which one of these is the right one?" That's where I think physical retail is going to shine.Stephanie Postles:Yeah. I agree. A couple of times I've been in line maybe at, I don't know, a T.J. Maxx, not recently obviously, or something, but I would just give up because I'm like, "This line's too long, I came here for a reason and now I'm in-patient. Goodbye." That's happened multiple times, I'm like, "Why can I not just walk in and walk out with this stuff and just hit my credit card with it or whatever it may be." I know Amazon was experimenting with that, but to me, that's going to be the way the future, because I don't want to wait in another dang line ever again. I'm spoiled.Jon:No, absolutely. And I think self-checkouts too. I did the Amazon Go store and I found the whole thing very weird because you're very aware that there's a camera in the shelf and everywhere, they're recording everything, but that was the best ever. But to your point, I think that people get used to a faster transaction that they're not. I totally get, you need full service, but no one has the time to sit and wait, or I guess some people do, but it gets frustrating and it's a bad customer experience.Stephanie Postles:Where do you see the world headed for ecommerce? I mean, big picture, any higher-level things that you guys are preparing for that we haven't covered yet? Or why you guys are working on the things you're working on right now?Jon:Yeah. I think probably we're working on stuff which will make having a really amazing customer journey easier. I think that you can say broad... I think there's an argument today that commerce tools on their own are commoditized. At the end of the day, you can build whatever you need with any of the major packages from just a pure commerce standpoint. And so I think the question becomes, what are the tools that are going to help you have a complete customer journey because you're going to be losing control of the specific place that you're going to meet your customer, so how do you continue to build journeys that are amazing anywhere? That's really where I think we're going right now.Stephanie Postles:What things are you focusing on then? When you say, making sure you have a good customer journey, I think a lot of people say that, but not everyone actually gets, what does it mean to have a good customer experience and journey. So what kind of things are you focused on right now to make sure that happens?Jon:Yeah, absolutely. I think it's a fair question. And I think a lot of people are like, headless ecommerce? But that's a technology. I think really what you're looking at are ways that you can 100% of the time know who you're talking to as a company and identify your customer. And specifically what that means to customer journeys is that means that when you start with a marketing campaign, that whatever that messaging and whatever you know about them is then reflected in the commerce campaign, is reflected in the order management, and then all the way through to the service.Jon:So a customer experience at that point is actually the experience of the totality of interacting with your brand, of discovering it, transacting with it, and then enjoying the product or whatever is after it. So that's what we mean by the customer journey, the full thing and how you can make that coherent and make sense and not like, "Oh man, well, you're in supports domain. Godspeed, I don't even know what those guys do."Stephanie Postles:Yep. I love that, especially knowing who your customer is. We had on Domm from Fast, and that was his biggest thing is even though they're known for that one-click checkout, he's like, "We're actually solving for identity so that you know who someone is and you're not constantly having to ask them to fill in the same details that they filled in 1,000 other times in different places." And once you can figure it out, the identity piece, the customer experience part will be easy to figure out because then you already know who you're talking to, what they're looking for, their payments stuff's all covered, and it becomes very frictionless.Jon:Absolutely. Totally. And I think that that's the future. When you want to reorder from someone, you want to do with one click, you don't want to be like, "You guys definitely know my phone number, but here it is again."Stephanie Postles:All right, Jon. Well, thank you so much for joining us today, where can people find out more about you and your awesome work?Jon:Oh, well Salesforce Commerce Cloud, everything I'm doing is up there. Unfortunately, it's all gated, but check it out. I'll make sure they don't badge you too hard if you do check it out.Stephanie Postles:Yep. Hit Jon up if they do, he's your guy.Jon:Totally.Stephanie Postles:All right. Thanks so much.Jon:Thank you. Have a great day. 

After his first trip down the eCommerce road ended in failure, Jay B. Sauceda swore to never again travel down that path. But life has this funny way of coming full circle and turning your failures into successes. Today, Jay is the founder and CEO of Texas Humor, an eCommerce shop so successful that Jay decided to take the leap and also build Sauceda Industries, which helps manage not only Texas Humor logistics, but the logistics of many other D2C companies.The journey from failure to repeated success was a winding one, and Jay takes us through it all on this episode of Up Next in Commerce. Along the way, he digs into what it takes to build a company from a base of loyal supporters and his advice to marketers, including how to be a trusted friend rather than a bother in a consumer’s life. Plus, he explains why customer expectations around fast shipping don’t always have to apply to the products you offer.  Main Takeaways:Small Now, Not Forever: Many eCommerce shops rightly want to outsource their logistics to a 3PL, but if your company is too small, many of those companies may not even be open to working with you. This is what Jay experienced in his early eCommerce days, and he has some ideas on how to approach this if you keep hearing “no”.A Good House Guest: Think of advertising like being a guest in someone’s home. You don’t want to walk in and overwhelm the conversation with talk of yourself. Your content shouldn’t act that way either. Bring something more to the table.I Want it Now!: Companies with fast shipping — the Amazons of the world — have led to new consumer expectations when it comes to delivery times. That may be true, but this may not be the expectation for every type of transaction. For necessary commodity goods, fast shipping is critical, but for unique items or products that customers are buying from a company they are loyal to, they actually are much more willing to accept a slower delivery timeline as long as there is transparency throughout the process.The COVID Effect: As the COVID-19 vaccines are approved and shipped, more logistical resources will be deployed to achieve that task. Stephanie thought that this could have a big impact on shipping, but Jay doesn’t necessarily agree. Tune in to hear his take!For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone, and welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, we're chatting with Jay B Sauceda, the CEO of Sauceda Industries. Jay, welcome.Jay:Hey, how's it going?Stephanie:I'm really excited to have you on. As we mentioned before the show, I'll be moving to your neck of the woods here in a month or so.Jay:It's a very popular thing to do these days.Stephanie:It is.Stephanie:Yeah. I'm excited to get there. So today I want to talk about two things that feel very dispersed. We are talking about Texas Humor and logistics, but I think the best place to start would be your background so then I can guide the listeners through the story in the way that makes the most sense.Jay:Yeah. I grew up Southeast of Houston in a blue collar town called La Porte, Texas, which is where there's a lot of the chemical plants refineries that most people can picture with the whole oil production industry of Texas. But the really great thing about La Porte that I loved was, it fostered really any kind of career development and adult development that you might want. So if you wanted to go to high school and upper education or undergrad education wasn't your thing, you could still graduate and go make 70, $80,000 working in the chemical plants close by and really support your family and do a really great thing. If you were a creative kid like I was, the high school there was really fantastic about fostering creativity of young people and developing their careers dependent upon what direction they wanted to go.Jay:So it wasn't like one of these small towns that you see in a movie where everybody works at the coal mine and you got generations of people doing the same thing like that. That may be the case for some people, but there was a lot of latitude to figure out what you're going to do and have people who could help you chase some of those dreams. So for me, I was always a creative kid and was really into photography and those types of endeavors. So I was able to exercise and work out those muscles creatively speaking when I was a kid, and then ultimately ended up coming to University of Texas, where originally I thought that I was going to study political science and which I did. But ultimately went down the path of advertising and the creative field.Jay:I spent four years at UT and ultimately just realized that doing the law school and the political science thing wasn't really my GM and ended up in advertising and working for a small ad agency here in Austin, which was the beginning of my creative career and ultimately what led to me ending up in e-commerce some years later.Stephanie:Okay. Cool. When I was doing a bit of research, I saw that the creative agency or advertising agency was only six people. So you were able to hear about the business deals, learn about the business side of things as long as the creative piece as well?Jay:Yeah. It was a great little firm called The Butler Bros. The two principals there, Adam and Marty Butler, both had some really high level well-positioned roles at the big ad agency here in Austin called GSD&M. They had that front row seat to these really large deals that bigger agencies deal with. But eventually went and started their own firm, and yeah, in those first few years there were just a handful of them. So I was able to sit in the room and as this college intern had access to a lot of conversations and things that I don't think that most ad agency interns would typically have access to. As a result, I really think that it propelled my career forward in a way that, when I ended up starting a little design studio with some friends and building out the early years of my career, I felt more prepared to operate ahead of my years because of some of those experiences and the things that you just pick up when you happen to be in the room with the principals of two companies.Stephanie:Yep. So where did you jump to next after the advertising company?Jay:I had done that for a while and then went freelance after working for them. They gave me some really great advice on the tail end of my career there. I was curious whether they were going to hire me to work for them or not. At the time they were indicating that not likely, that I hadn't really had enough of a specialty up until that point to make it worthwhile for me to be somebody who was there full time. So really great as an intern, but not so much as a full flung employee. So for that reason, their advice was to go out and try to specialize in something which ultimately ended up being photography.Jay:So I went and started to focus on photography as a whole and developed a career as a commercial photographer and ultimately did that for about 10 years. But I guess the eventual destination in this story that's worthwhile to your listeners is that, during that period, I started a small ad agency, a little designed firm called Public School with a group of friends. We had this motif that was all based off of the 1960s era of graphic design specifically around school books and textbooks. And so when we started publishing to our blog and publishing about our work, people really gravitated towards the t-shirts and the various pieces of collateral that we had designed for that brand.Jay:So we were really excited because we thought, "Well, why don't we capitalize on this and start an online store?" Which we did, and almost immediately had a ton of sales for t-shirts and various items that we were selling, which was massively exciting. But as with most people who sell things online, it's really funny to see, or it's real fun to see that money and those sales come in. It's not a ton of fun to have to deal with getting all those orders out after the fact. And ultimately that's what we ran into. It was a lot of excitement around making the money, but not a lot of excitement around having to deal with shipments. So the work associated with having to get those packages out the door was so time-consuming and unfun that I, after a while shut [inaudible] and then swore off ever getting back in the e-commerce again. So suffice it to say it's a little bit funny to find myself sitting here about 11 or 12 years later, the CEO of a e-commerce logistics brand shipping the number of packages that we are every day.Stephanie:That's great. So tell me a bit about, what year was the store live and did you shift right into the logistics business or did that come a bit later?Jay:No. I launched our online store in 2013. The social media audience for Texas Humor, I'd developed over a few years before that. Then in 2013, got it off the ground and started trying to get into scale. Initially, we were just shipping the orders out of my home garage, but over time, basically we had decided to try to outsource the work because we had just gotten so sick of dealing with the scale and having a tough time getting out of our own way as business owners. I reached out to some 3PLs and one of the ones here in Austin just had a very snarky and negative approach to telling me that it wasn't really the right time, which ultimately led to us just getting a little bit of a chip on our shoulder about it and decided to just do it ourselves.Stephanie:Mm-hmm (affirmative). What kind of pushback were you getting when you were reaching out to these 3PLs other than them saying that you were too small for what they probably wanted to work with?Jay:Yeah. Really, that sums it up. It's mostly, "You're too small for this to be worthwhile." And look, I don't have a problem with that. I run an organization that has to say that to people as well. The difference though, is that culturally our approach is to say that it's not a no, it's the not right now. And what we'd rather do is try to be a resource for some of these companies to help them understand what would make them qualify to work with the 3PL and/or make it cost effective for both parties to be in a mutually beneficial relationship. A lot of, I think, small merchants just get in this mindset that their business is worthwhile and they're ready to just offload and go. And in my case, I recognized that we were too small at the time. What I was trying to point out to the guy was that, "We're not big enough to be worthwhile today, but let me sit down and show you the marketing plan and all the things that we're going to do that will make us worthwhile in the near future."Jay:And that was just not something he was really willing to listen to. So that was very much an approach that just rubbed me the wrong way and was something that has definitely informed how we coach brands as they come to us and we have to turn them away because of a number of reasons. Sometimes it's just, we're going to be more expensive than it is even worthwhile for you to be working with us. So until you hit a certain level, you can be spending more money than you are making just to facilitate paying us to do the work and that's not a good position to be in for anybody. So let's avoid that and try to find something that's going to be beneficial for everyone. And that might mean not today, but in the near future. So let me help you fast forward by giving you some tips and some other things that can help you get there quicker.Stephanie:Yep. That's great. Before we dive too deep into the logistics piece, I was hoping you could touch a bit on Texas Humor so people know how you created Texas Humor, what it turned into and what you were trying to sell to even start talking to a 3PL.Jay:Yeah. Over my career, I've done a lot of this kind of audience building with our brand at our old studio. And for me personally, as a photographer, audience building has been a big aspect of what I've always done. And Texas Humor was just this idea that was born out of a discussion with one of the partners in the design studio I was in, in which we were just talking through what different audiences could we build and where could we go with that? And so I started from nothing, started just tweeting about Texas as a whole and that's ultimately really like where we developed the idea. There was no specific e-commerce goal in mind. But once we realized that we had a few million followers and this captive audience that we could do something with, that was the point at which we decided, "Why don't we try to make this into a little bit more of a business?" And ultimately where we got the idea to start texashumor.com.Jay:But it wasn't this big strategic thing in which we said, "Hey, we're going to go start this and we're going to build a store and we're going to do X, Y, and Z." It was far more organic than that. But I took the background that I had in marketing and advertising and leveraged that to really scale up what we were doing. Probably much faster than most organizations would, who would be doing something like what we were doing at the time.Stephanie:Yep. So how did you develop that audience and get in front of people? I think I see now that you have over 2 million followers on your social channels, and so, how long did it take to get a big enough audience that then you were like, "Oh, maybe we should try and sell something to them as well." And what did that process look like?Jay:It was a couple of years before we actually did try to actually sell anything to anybody, because at the time we were just so averse to e-commerce and wanting to develop any inventory position or anything like that. So we didn't come out of the gates thinking like, "Oh yeah, we're going to totally go do this thing and have it be focused on e-com." That was very much later on down the road. The goal that we had initially was to just try to make some form of money. But it by no means was, "Let's try to focus on e-commerce." Originally, it was more so of a content advertising play and that's really what drove it in the early years.Stephanie:Yep. Yeah. I saw that you were generating like 40,000 in revenue by the third month of operation with the content piece of it, right?Stephanie:What are some tips around building up that audience? What are some tactics and strategies that maybe you even use to this day to build up an audience?Jay:I'm a big believer that, I don't remember who told me this. Maybe I made it up, I don't know, but I just see content and advertising as like a guest in people's homes. Most people do not want someone who's going to come over to their house for dinner and just spend the entire time talking about themselves. And so as brands or content generation organizations, if the only thing we're doing is going me, me, me, then of course, people are going to be turned off by it. That's the exact definition of bad advertising. So for us, and for how I thought about building Texas Humor initially, it was really trying to think and put myself in the shoes of the people who were our audience and try to say the things that they had on their mind already.Jay:So there's no science to that necessarily, and I think it's why yes, there are probably some, I don't know, formulas for "going viral", but a lot of the things that do ultimately go viral have this weird X factor that people have a hard time wrapping their head around. And in my mind, that X factor is that it comes from the heart and it resonates with people. So if you really wanted to know what is it that we do that's different than everybody else, we're not the only brand or the only feed that talks about taxes, but I do think that we're the only one that tries not to just purely patronize people. And I think that that's really what set us apart early on. We were trying to be unique, we're trying to provide quality and we weren't just doing social media for the sake of doing social media.Jay:The store almost felt like a secondary function of the audience that we had built and not the other way around, which is where I think a lot of brands start. They say, "Well, how do we sell to everybody?" And then they think about everything after the fact, and in my mind, that's really the wrong way to approach it.Stephanie:Yeah. Yeah. I love the idea of building a community first and just focus on making that great. I know we've had someone from Food52 on the show previously, and they had the same experience where they're like, "We're just here to build a good blog, good content, make sure our community likes what they're getting from us and can also engage with each other. And then it was just obvious to start selling products and giving them what they wanted based on the recipes we were showing and the maybe materials we were using and whatnot."Jay:Exactly. Really, the strongest brands are the ones that think about the commerce secondly. It depends upon what it is you're selling. Your brand may be the content, but in our case, it's not. The content is the brand versus the brand being the content, if that makes sense. Really, the difference is we took that tact. Stephanie:So let's talk a little bit about the logistics arm of Sauceda Industries. Tell me why did you, or how did you even decide, "We're going to go into fulfillment and logistics?"Jay:Mostly for the reason I described earlier. We were already doing it for ourselves and it ultimately just was a way to cover the costs that we had as an organization. Most fulfillment operations are cost centered, not really a revenue driver. So those types of things tend to be an area where you're losing money or you're killing your margin. So we saw it as an opportunity to make some money rather than just have people carrying it as dead weight.Stephanie:What kind of mistakes do you see brands making today when they start exploring the path of working with a 3PL?Jay:I think most brands just make the assumption that their time is less valuable than they think it is, or the leaders of the brands tend to think that. And so as a result, they don't farm out the things that they should be. Not having accounting firms from outside handle your books, not working with a logistics company to handle fulfillment. There's this idea that most entrepreneurs have that they can do things for cheaper and faster than most people. And that's probably the case, but in terms of opportunity costs, having a CEO of a online brand handle all of the orders simply to save a little bit of money or to not have an invoice to have to pay for that it's like, that's not really the right way to be thinking about it. So we just really try to coach people on opportunity costs and help them understand those types of things.Stephanie:Yep. Are there any bets right now that you're making in the world of logistics where it's headed? It seems like consumer preferences and demands are definitely increasing around everyone wants one to two day shipping, Amazon's made everyone expect that now. What kind of things are you guys leaning into or investing in right now to keep up with those trends?Jay:Everybody says that, and I actually don't believe that at all. I think that everybody thinks that that's the case because that's, in my opinion, what the major news outlets say are pundits on TV, but I've not found that to be the case. I think if people are buying a toilet paper, yeah, they need that in one to two days. But if they're buying something very specific from your brand, they'll get it when they get it. I actually think that there's more price sensitivity to shipping than most people think. As a result, people know what they're paying for and in the case of Amazon, like sure, if what you sell is available from 75 other people on Amazon, yeah, you better hope that it's prime enabled and it's cheap and all of the above. But if you've built a brand that sells something very specific that only you carry, then if you build the desire, then people, they'll get it when they get it.Jay:But it's not this type of thing where just because they can get toilet paper or Mrs. Meyers baths or a kitchen soap in two days means that they need their Texas Humor shirt in two days too. I'm a pretty adamant person when it comes to that case because I get that question a ton and I think a lot of people say that, but no one has actually really proven to me that that's true. Now, if you ask people their preference, they're all going to tell you two days. But I think that we don't deal, or we don't work in this vacuum in which every single store and shopping experience that happens online is compared equally. I think most customers who are shopping online are doing so with it in mind that like, whatever it is that they're buying is unique to that experience.Jay:And so, so long as the brand is setting their expectations up front about what the experience is going to be for the customer, I really just don't think it's as much of a challenge as most people think it will be to get the orders out the door whenever they're going to get them out the door.Stephanie:Yep. Yeah. I definitely can see that. It definitely depends on what the product is, like you're saying. If it's diapers, yeah, I need that like right now, in an hour. First, because I probably didn't think about it until last minute versus, I just ordered earrings from this one company, Marjorie, I don't know how to say their name, but I don't mind if it comes in a week. That's okay because they're the only ones selling this product that I want and I'm okay with waiting.Jay:Correct. Correct. Yeah.Stephanie:Yeah. I definitely think there's a lot of room for brands to be more transparent around the shipping though. And I would rather have someone under-promise and over-deliver than tell me something where it might actually get delayed where I'm betting on that.Jay:No, and I think that that's absolutely correct. I do believe that there are a lot of brands who do a pretty poor job of being clear about those things. So no, I'm 100% with you on that. But I do think that a lot of people will just make the assumption that everybody's going to care about it more than they actually do. Which is partially why I'm adamant about trying to dispel with that rumor.Stephanie:Yeah. Well, you're doing it here. Yeah. The one thing I was just reading about too, was about delays in shipping and how there's going to be a lot of shake ups in that area, especially if the COVID vaccine gets approved. I don't know if you've read about this a bit, but how, if it starts being something that's going to be shipped everywhere, which is what would happen if it's approved, it's going to delay all the postage everywhere. Have you read any bit about this or thought about things like that, that are a little bit less predictable than other things that would maybe delay shipping [crosstalk 00:27:42]?Jay:Yeah. I've actually spoken with some people on the inside of FedEx and a few other places. There are two major vaccines that are out right now. There's the one by Pfizer and then there's another one by the other organization, I'm trying to blank on. Both of which require cold storage for the transit. The Pfizer vaccine in particular requires cold chain storage that is very, very specific to medical purposes. And so you're not sticking this on a FedEx truck. This is going on a very, very specific type of vehicle. None of which carry any of your packages from my store to your house. The other-Stephanie:The won't be shared, you're saying? Even if there was a cold storage company like a computer company or food, they would never be shared on the same truck anyways, so that it's not like a-Jay:Correct.Stephanie:... same pie that you're pulling from them then is what you're saying?Jay:Correct.Stephanie:Okay.Jay:It is not a similar supply chain, cold chain storage is wildly different or cold chain transit is wildly different than the type of process that we have in place for your regular parcel. So, yes, I would believe that a massive amount of distribution taking place all of a sudden would certainly strange FedEx as a organization but the van delivering packages to you from Amazon or from myStore, or any of the stores that service us is not the van who is going to be carrying these products to the end locations. Even the other vaccine, although it doesn't require the same -20 Celsius or whatever temperature requirement that the Pfizer one does, it does still require refrigerated storage on its way to the end point.Jay:I think it's a lot of people circling the word logistics and saying everything under this is going to be affected, but within logistics, there's so many different styles of shipping or needs around shipping. And for that reason, not everything in a Venn diagram of like who services what, in large part, the cold chain network is not really one that is as easily affected or would affect the networks that you and I typically expect our packages to come through.Stephanie:Got it. Okay. Yeah, that's interesting. I didn't read too much into it, but I'm like, "That's a good black swan event to prepare for, for some brands then if they do do the cold chain shipping."Jay:If you're buying food subscriptions and things like that from your... Like Blue Apron or one of these, yeah, you're more likely to, but you know what, more of that is actually the result of limited supply of dry ice. And that's the result... I can get into all of that, but the dry ice shortage is a result of less driving, which means lower cost of oil, which means less drilling for oil, which means less petroleum byproducts, which means less carbon dioxide, which ultimately means less frozen carbon dioxide, which is dry ice. So yes, there aren't aspects of the industry that will be affected, but the underwear that you're ordering from Amazon should not be affected by a ramp up in cold chain transit volume overall.Stephanie:True, good. I was worried about that. I really need my underwear on time.Jay:Yeah. Exactly.Stephanie:All right. Cool. The one thing I was thinking about too, when it comes to logistics, if I'm a new brand, and I'm thinking about having a 3PL to work with, what are some things that I need to get in order before going that route? Because I can imagine some companies coming to you with it being chaos behind the scenes, and you're like, "I can't work with you until you at least have this, this and this in order for us to plug and play." How should a brand prepare before even reaching out to 3PLs?Jay:I think a lot of brands will never really give things like their skews and the tags that they used and all of that, like a second thought. They're cobbling together a plan, and then you're two or three years in, and you've got a store with three different naming conventions and all that. And clean data is really what makes the world run smoothly in the logistics world. And so if there's not a really strong focus on attention to that, you end up with a pretty significant issue trying to work with the 3PLs, because you have to go back and clean all that up. So most of my suggestion is, look, try to think through that and it's the spring cleaning exercise that I think a lot of brands have or should go through every year looking back and saying, "Are the ways that I structure my data and my reporting the way that will allow me to be really successful at scale?"Jay:And if the answer is no to any of that, then go back to the drawing board and try to make sure that you're adjusting for that because it certainly creates a lot of issues as you try to scale your business up.Stephanie:Yep. That's a good point. Yeah. We've had a couple people on the show talk about making sure that you plan for your data dictionary and have it cleaned up from the very start, if you can, so that you're not trying to fix everything after the fact.Jay:Correct.Stephanie:It sounds like you've definitely been on top of the market or trends or even news, just like we mentioned earlier about the vaccine and stuff. What kind of trends or patterns are you excited about right now over the next couple of years?Jay:I think just in general, there's more attentiveness to better and more targeted marketing that I think people are going to be excited to interact with. So from a just overall perspective, I get excited by the idea that I'm not going to get emails that are just boring and seem to be broadly targeted to everybody. So I think that as more small brands leverage tools like Klaviyo and Shoelace and things like that, I think that just overall marketing as a competitive sport becomes more fun. And as a consumer, it's a lot more fun to watch.Stephanie:Yup. So how are you guys leaning into the targeted marketing a bit more? Jay:I think it's exactly what I said. Just mostly trying to think about, we're not just selling to one person sitting on a couch repeated 3000 times over. We're selling to 3000 different people. So I think if most marketers think that their job is done simply because they came up with a campaign, that's a bummer. I think the more work that gets put in to try to wow people so their brand can connect with them directly, the better. And when it comes to email, the way that we do that is through segmentation and we try to look at all the various segments of behaviors that people who might interact with our brand would be members of, and then trying to evolve the creative that we're developing in a way that seems to speak to them directly. So they feel like when they receive something from us, it's not just this blanket email that says, "Come shop at Texas Humor," it's really touching on the size of clothing that they've purchased in the past or the types of content that they're really into, those types of things.Stephanie:Got it. Okay. So you're looking at types of content or you're maybe showcasing things based on size. What other kinds of behaviors are you segmenting right now to be able to craft your message differently?Jay:The highest or the best way to say it is around recency and frequency. So we look at the various behaviors on a store and try to segment based off of the recency and frequency of them doing whatever that behavior might be. There's a lot more detail than I can probably go into on this show, but I would say that starting with that is a really great way to make sure that you're not just... I think the word email blast or the phrase email blast is a bad phrase because you definitely should not just be blasting people with anything. I think it's really critical that you be more surgical with how you send emails out to your customers. So that way people feel like they're having a conversation with the brands that are emailing them.Stephanie:Yep. Yeah. I think it'd be really great if I were to get an email that said, "Hey, Stephanie, we saw you're moving to Austin. Here's a bumper sticker for your drive or something." Being able to find data like that that connects with me in a different way of like, "Oh, wow, that's cool. I didn't think about a bumper sticker," or whatever it may be, but because you know a little bit about me like that, I'm going to come to your website and explore a bit more.Jay:Yeah, exactly.Stephanie:All right. So let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question and you have a minute or less. Are you ready, Jay?Jay:Yup.Stephanie:All right. What's up next on your reading list?Jay:I will say I haven't read much in the last couple of weeks because I've been so focused on getting everything out the door. But I'll probably actually read The Obstacle Is The Way by Ryan Holiday. I read Stillness Is The Key, which was great, but Obstacle Is The Way's one that a lot of people have been telling me I should read.Stephanie:Yep. Yeah. I read that. It is good. What is one trend or topic or piece of tech that you don't understand that you wish you did?Jay:I wish that I could personally write SQL queries and do more database work and business analysis myself.Stephanie:Yep. That is a good skill to have that I still appreciate to this day. I used to work at Fannie Mae and I'd be all up in SQL all the time, and it comes back even till today where I'm like, "Hey, I at least know what that query is looking for."Jay:Very good.Stephanie:And then the last one, what's up next on your Netflix queue?Jay:I'm eagerly awaiting the next season of The Crown. I know it's like two years away or something like that, but I'm absolutely eagerly awaiting that.Stephanie:Yeah, same. I'm excited about that. All right, Jay. Well, it's been a pleasure talking to you. Thanks so much for coming on here. Where can people find out more about you and Sauceda Industries?Jay:They can find out more about me on my Twitter account, which you can just find my full name, Jay B Sauceda. I'm everywhere on social media on that username. And then obviously our websites, saucedaindustries.com. So if you have any questions about the logistics space and how it relates to e-commerce or you're just curious about tips on how your brand can best work with the 3PL, happy to answer those or connect you with somebody on my team who can. We'd like to be a resource in our community for e-commerce crane owners, because we know that it's a big jungle out there and we have navigated it once or twice. So to the best of our ability, we'd love to help people take the shortcuts when we know where they are.Stephanie:Amazing. Thanks so much, Jay, and I'll see you in Austin.Jay:Sounds good. Thanks so much.

Brands large and small are all fighting the same battle of customer acquisition. How you reach customers, and how much that effort costs, is in constant flux, which is why Nik Sharma is a big fan of constantly running micro experiments. Nik is the CEO of Sharma Brands, a company that remains one of the best-kept secrets among the DTC community and which helps brands scale into the tens of millions. On this episode of Up Next in Commerce, Nik takes us behind the scenes of what that scaling process looks like, including his strategies around customer acquisition. Nik explains how important constant testing is, and he shares some micro-experiments he recommends running regularly. Plus, he tells us why reading every review and every comment associated with your brand is the best leaping-off point for your creative process. Main Takeaways:Please Rate And Review: Reviews really do matter, and you should look at every single one to have a better understanding of what customers are saying, what they see as the value props and what isn’t working. You can then work backward with that information and create content that matches what your customers want. Mo Money, Same Problems: Regardless of how big a company gets, the main problem any brand faces is that of customer acquisition. Bigger brands can throw more money toward getting their message to customers, but ultimately it’s about getting the right content to the right people.The Mom Test: Your website experience needs to be seamless and frictionless that even the most technically challenged, or busy, can make it through without issue. It also needs to deliver the message that you want to send right up front. No one is going to search for the thing you want them to see, so put it front and center.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, we're hanging out with Nik Sharma, the CEO of Sharma Brands. Nik, welcome to the show.Nik:Thank you for having me. I'm excited to be here.Stephanie:Yeah. Me, too. If we had video on, I would be trying to look at your whiteboard that you had on with probably 1,000 notes on it.Nik:All the secrets. It's got all the secrets.Stephanie:Yeah. What kind of secrets are on that board? I was really trying to zoom in like what's going on back there?Nik:It's got all the goals for the week, starting with nine hours of sleep, all the way to-Stephanie:That's a good goal.Nik:... how we plan to combat Facebook and Apple's big fight that's going to start January 15th.Stephanie:Oh, tell me a little bit about the big fight. I'm obviously not up to date on that. What's going on?Nik:Yeah. So basically in the new iOS update, Apple is going to give pretty much everybody multiple opportunities to block tracking. And so it's really going to hurt attribution for a lot of these ad platforms, especially for small business ad platforms like Facebook ads, Snapchat, et cetera. And so we're basically starting to think through how we combat that going into the new year because a lot of the businesses we work with, they're either brands that are just starting. And obviously, those are small businesses, but there's also some mid-sized businesses doing anywhere from 200 to 800 million in revenue, but they're also going to be just as effective. And so we're trying to think through how we go about combating that going into the New Year, basically making sure that there's not a ton of drop-off as it relates to the client.Stephanie:Yeah, I didn't realize this was happening so soon. I was paying attention a bit to the taking away cookies and tracking and all that kind of stuff. I didn't realize the iOS update was happening January 15th. So what are you guys thinking? What's your strategy? What are you advising your brands to do? I know I just jumped right into it, but this is really interesting.Nik:Yeah. Well, as of right now, it's a little bit up in the air. We have a few ideas going of how to combat it. But to be honest, there's not a ton of information out that we have to work with. We're trying to work with multiple different ad tech partners to understand how they view the impact happening. But at the same time, we're trying to think through how do we basically start creating our first party audience ads much faster than running ads when we need them, so whether that's by creating what I would call a prospecting CRM versus just a customer-centric CRM post-purchase, or trying to think through how do we still drive lower funnel conversion and attribute those sales properly, even though they might not be last click purchases. Yeah, it's a big cluster of unknowns right now.Stephanie:Yeah, that's tricky. I also wonder to what extent will a user maybe turn that feature off and then start to realize maybe how helpful that feature was when it comes to showcasing you the information that you want to see, or maybe ads that actually are helpful because I think right now, a lot of times people are like, "Oh, I want privacy and I want this and I want that"? But if you were to turn off a lot of the features that you're talking about, then you wouldn't really get the customized experience that people will do oftentimes appreciate in Google and other places. They wonder what that would look like.Nik:Yeah. Most of the people I've talked to have basically said a similar thing that they like the personalization and whatnot that comes with it. But there is definitely a pretty big group of people who would rather prefer that they never get targeted with an ad. Unfortunately, that's the threat to a lot of the small business advertisers out there.Stephanie:Yep, interesting. Well, when you guys have a little more insight into that, I'll just bring you back in here, how you guys are approaching it and what happens in January 15th.Nik:Yeah, definitely. Definitely.Stephanie:Cool. Give me a little background on Sharma Brands. I was seeing that you guys work with a lot of brands, some of which we've actually had on the show before, which is really cool to see. We've had [inaudible] and I think I saw two others. But tell me a bit about what is Sharma Brands and what do you guys do for the brands that you work with?Nik:Sharma Brands is like the secret of the internet. We don't really talk about it much publicly. But basically, what we do is we work with brands that are either just launching or have just launched. We either guide them through the launch or we pick them up right after launch. We work with brands that are midsize, brands that are doing really well and ideally want to do better, or we work with brands that are pretty big retail businesses that want to get their ecommerce business set up and on track. And so we come in and handle everything from strategy to execution, to implementation. A lot of it is testing, a lot of it is focused on creative and messaging and offer testing merchandising. We also do everything all the way to producing national TV spots, satellite radio, like basically helping brands venture out from the more traditional just Facebook ads or building a website.Stephanie:Got it. What inspired you to create Sharma Brands? I saw you had a lot of roles. You were the head of D2C for a couple of companies. I think you worked at Hint. Is that what led you to creating Sharma Brands, or tell me a little bit about that journey?Nik:Yeah. I've always had a knack for wanting to work on multiple brands, which is probably why Sharma Brands works. But separate from that, I don't know if we are even the perfect solution. I don't think we aren't because we don't really do everything. But there's not really a proper growth partner for a lot of these brands. There are media agencies, there's media companies, there are creative agencies, there are product development agencies, but there's really not many when it comes to true growth and helping them in things like scaling, going from 1 million to 10 million or 10 million to 60 million. And so we created this little niche where we help brands do just that. We try to stay on for no longer than six months per project. Our goal is to basically get in and do just an insane amount of testing so that by the time we leave, that brand knows exactly what's going to scale and what's not going to scale.Stephanie:Interesting. What kind of testing do you mean? What do you do throughout those six months to figure that out?Nik:It can be anything from copy, creative, landing pages, long form content. When I say creative, there's a whole variety of creative. There's the things like... We might test UGC, we might test influencers, we might test studio stuff, we might test just a whole variety of different types of content. We do the same thing when it comes to page experiences, so whether they're landing pages, whether they're listicles, articles, partnerships with companies like Morning Brew.Nik:And then of course, the last piece of it is the merchandising, so everything from offers and pricing to products, to what gets people in the door, what's the best product to sell them after that. And subsequent to that, how do we optimize for brands that are high consumption? How do we focus on subscription? How do we keep customer lifetime value high? How do we bring back repeat purchase rate without having to spend money to reacquire that customer? The goal is to figure an overwhelming majority of those types of things out so that by the time we're done, there's a very clear playbook that they can operate on for the next few months or a few years.Stephanie:Yep. I'm assuming that when you were working at Hint and other places, you started seeing similar things that were working and weren't working. Can you tell me a bit about what it was like working at those companies, or maybe you started uncovering a few universal truths around D2C?Nik:Yeah, working at Hint was great. It was a lot of fun. We grew really fast, which led us to a lot of challenges that we were able to overcome. But it gave me a lot of insight into the challenges that a lot of the brands face. Obviously, I think customer acquisition is one of the biggest things that brands don't necessarily understand or distribution, which is, I think, one thing we're really good at. But then after that, after you get to a point where you're able to acquire 1,000 customers a day sustainably and at reasonable prices, then how do you take those customers and service them further? How do you come up with products that feed those customers after what they've already bought if it's not a high consumption product? How do you think through unique partnerships that attract eyeballs that then give you the opportunity to sell those customers onto your brand? There's so many things. Basically, it all stems down to distribution. Good brands are really good at product and brand building. But then the idea of then getting that in front of other people is where the tough part comes in.Stephanie:And so how do you approach customer acquisition now, where maybe it was different than prior to 2020 because it feels like there's so many new companies in the space? Maybe not all of which will be here in a couple of years. There's a lot of companies. I think more businesses launched in 2020 than in 2019 and prior years. So how do you approach trying to compete and get the eyeballs and find new customers for your brands in a pretty competitive market right now?Nik:To be honest, we don't really take competitive brands into account. What we try to do is just be really innovative with the way that we message and get in front of people. For example, something as simple as like Judy, which is emergency kit you know, being able to really hone in on understanding whether it be by surveys or by looking at what types of messaging has better click through rates and conversion rates, understanding the types of messaging that people are reacting to, and then going really deep on it, all the way to coming up with funky partnership ideas like putting Poo-Pourri and Judy together because both brands service emergency situations.Stephanie:That's a really good partnership.Nik:Yeah, no, it's great. It's really just about like how do we stay ahead of competition? Most brands today probably run a very similar playbook of like, "Let's create some... text some images, put some ads up and run them to our homepage." We put that on steroids. We're testing maybe 17 different versions of creative or testing 7 different versions of landing pages or homepages or sites that they're leading to along with 37 different audiences that we're going after to understand which type of messaging converts better with which audiences.Stephanie:That's great. So how do you think about creating all those different types of messaging? How do you stay creative? I know when I'm thinking through ad copy, even for our company, once I create one or two or three, then I'm like, "That's all I got. I'm out." How do you guys stay creative and create like, what'd you say, 17 different landing pages? I mean, like a lot.Nik:Well, I have a team that's insanely creative, so that helps.Stephanie:That's helpful.Nik:But outside of that, I think one thing we do, which is honestly something anybody can do, is we try to look at every single review. So if we work with a brand, we try to read every single review and we will literally use a whiteboard and make a tally of the different value props and how many times they're mentioned and then use that to basically work backwards and understand messaging. So things like that to things like looking at comments on ads, to customer service emails and messages, to how are other people tweeting about it, how are other people taking press about a brand and then tweeting about the press or talking about that specific article. So we try to take in a variety of things. And then if all else fails, have a little glass of whiskey and take an approach with some fresh eyes.Stephanie:That's good. When it comes to large brands and small brands, we've been going through some of these challenges, but are the challenges the same for both big and small, or do you see completely different challenges depending on the size of the brand?Nik:I think that a lot of the challenges on the macro side are the same, but on the micro... On the macro side, for example, customer acquisition, right? A company that's doing 800 million versus a company that's just launched, both are going to be focused on how do we acquire customers smarter, better, faster, cheaper with higher lifetime value? But on the micro side, it's a little different because a company that's doing even 50 million in revenue has a lot more awareness to play off of. They have a lot more scale to go leverage things like partnerships with other brands, they have budgets to go to places like The Skimm and Morning Brew and other places like that versus a company that's just starting.Nik:They still have the same problem with customer acquisition, but they need to figure out even if they raised a little bit of money or if they did it, they need to figure out, "Okay, what is the fastest way for us to get 100 customers and then 1,000 customers and then 10,000 customers and then 50,000 customers." And obviously every time you hit that milestone, it gets easier and easier, but it's still the same. That's the challenge of how do you get in front of as many eyeballs as possible and also relevant eyeballs. You don't want to get in front of just eyeballs that are not going to convert for you.Stephanie:Yep. Are there any tools that you use to stay on top of maybe trends or what people are searching for, or even staying on top of like different kinds of audiences to reach and how to reach them in new ways, like new things you're doing maybe this year that you weren't utilizing in the past?Nik:One thing that we have started doing a lot more this year versus years in the past is really not taking creative too seriously. So, for example, like running memes as ads insanely outperforms things like really beautiful $30,000 photo shoots, or the way like... Do you use TikTok?Stephanie:Yes, I do. I love TikTok.Nik:I'm addicted to TikTok.Nik:With TikTok, I think if you look at the way TikTok has impacted culture or pop culture, I should say this year, it's pretty fascinating. Like when Instagram was big and there were Instagram models or even you could even say like... yeah, you could probably say even like big YouTubers, they don't really make news or make headlines, nor do they get, for example, flown out to fashion shows internationally to come walk in a runway. But TikTok has just completely taken 2020. And whether it's like TikTok is being flown out to Rome for fashion week or it's the fact that all of Snapchat discovers tabloid garbage is all influencers, there's something about TikTok that resonates really well with the masses.Nik:And so one thing we've been doing is testing, not only just testing TikTok's style videos, but also even the way... If you look in the comments of TikTok, I think the comment section is where the memes of tomorrow, or the memes of next month live. And so we've been [crosstalk] doing a lot of things where we test those. Those have been having really interesting results too. Just really like, again-Stephanie:All right, so give me some examples.Nik:... just a bunch of testing and fun stuff. My favorite is the... For example, if you were like this podcast is the perfect podcast for ecommerce operators, you would put the word operators in between the sparkles emoji, or just like random silly things that you see on TikTok. Yeah. It's hard to explain, but it just works so well.Stephanie:No, yeah, I know what you mean. Yeah. Well, tell me some of the most interesting comments that you've seen on TikTok that you've turned into memes.Nik:Well, the sparkles one is probably the easiest. Let's see. Outside of that, the eye mouth eye I think is hilarious. What else? What else? The concept of like it's the blank for me. There's just so many little inside jokes on TikTok that becomes so... Not only relevant on the outside world, but also people see it and they relate to it because they think they're the only ones that know about it because TikTok is such a one-to-one thing, you know?Stephanie:Yep, yeah. And then when you were talking about creating TikTok style ads, I'm assuming you're saying that you're creating an ad like you would create a video on TikTok and then you're actually putting it on other channels and platforms. Is that what you meant by that?Nik:Yeah.Stephanie:Yep. I was just thinking about that actually a couple of days ago. My head of growth is like, "Oh, can you create some audio ads and video ads and all this to help promote the shows or whatever?" And I was like, "Well, what's the easiest way for me to do that?" Honestly, creating it on TikTok, even if it's an unlisted video-Nik:Oh, 100%.Stephanie:Yeah, so much easier than trying to do anything else.Nik:The best ads in ecommerce are ones that do not look like billboards on the street. That's where a lot of brands go wrong is that when it comes to ads, they try to create this unique experience or this look that doesn't resonate with the common person. It's like no wonder they don't work because they look like if you see an ad, there's no chance you're going to sit there and be like, "Oh, an ad, let me watch this whole ad." All your ads have to feel like they're not ads. They have to feel like content that somebody maybe not wants to watch or needs to watch, but something that's intriguing enough where they're going to watch the first little bit, and then it's your job as the brand to hook them to watch the rest of it.Stephanie:Yep. Yeah, I love that. The other thing, now that we're talking about influencers and spreading things, I heard that your fridge is famous. You tell me a bit more about this because when I heard that, I'm like, "Isn't Nik an influencer? Why is his fridge famous and you're known for your fridge?" So give me the deets on this.Nik:Yeah, the fridge racks up impressions. That's for sure.Stephanie:Why? What is up with your fridge? Is it a fancy one?Nik:I'm just trying to look up real quick how many impressions the last one got. But no, it's funny because obviously I worked at Hint and I've worked with a bunch of different beverage brands. Yeah. So the last tweet about my fridge has 151,000 impressions.Stephanie:Why? What'd you say?Nik:It's nothing special. It's just the fact that a lot of people know me as a beverage marketer or beverage person. I'm just looking at this tweet from September 14th and my fridge has Taika, has Empathy Wines, it has Jock Coffee, it has Dose, which is like a new wellness shot, it has JuneShine, which is hard kombucha, it's got Sanzo, it's got OLIPOP, Red Bull, Orgain protein elements, which is a adaptogens beverage, and then a bunch of Hint Water.Stephanie:Close to D2C fridge. You're stacking it up.Nik:It's basically a D2C fridge. Yeah. And then depending on when you open it, you might see different drinks. There's another picture of the fridge I'm looking at. It's all RISE cold brew. It's got Lemon Perfect and it's got Cha Cha Matcha's ice tea lemonades.Stephanie:Interesting, interesting. And then so how are people engaging with this? How did it even start of you posted this picture and realizing people like to see what you were trying out, or what you were investing in, or what made them excited?Nik:Well, it started because a friend of mine, David Perell, basically posted a picture of my fridge, I want to say when I first moved to New York last year, or I think he might've done it when I lived in San Francisco. But then he posted about it and how like my fridge is basically a vending machine. And then all these beverage companies started responding. And then whenever I tweet about my fridge, I just get a flood of packages over the next 10 days from different beverage brands that want to be included in the next round of the fridge.Stephanie:That's really funny. But I also feel like it's helpful to see how to share things that get shared, that go viral because the best way to advise brands and other people is by doing it yourself.Nik:100%. That's always been the thesis behind any kind of public account that I have. Whether it's my community number, whether it's my email newsletter, whether it's my Twitter account, everything that I try to do is like, "Okay, I'm basically just testing it so that we can hopefully do this on a brand and it makes a big impact because maybe it's something that they haven't done before or just people in general haven't done before."Stephanie:Yep, yeah. That's very, very cool. So when you're working with all these brands, one thing that we've been discussing here at Mission lately is just about all these new users who are now online, a new demographic group is online shopping. They're getting used to it, they're going to be here probably for the long haul now that they have maybe ordered groceries or gone on Amazon for the first time. How are you working with your brands to ensure that their messaging and their interaction and that they may be personalizing things in a way that also connects with this new demographic of shoppers that weren't here prior to 2020?Nik:So basically, how should brands prepare for-Stephanie:Yeah, having like an older generation now who are ready to shop. And I'm sure the messaging or the way that brands are personalizing is usually towards millennials or 18 to 35 or 18 to 40. Everyone seems to focus on that same two generations, but the older generation are the ones that have the money. They're the ones who are ready to spend. They just haven't brought it really online until recently. But it seems like a lot of things have to change for it to also work well with them.Nik:Yeah. I think tactically, there's different things you can do, whether it's the channels that you choose to advertise on. So whether that's shifting budget out of Facebook and onto platforms like TV and satellite radio and connected TV even, or it's... One thing that I've found at a previous brand I worked with was that the creative we would put out that has, let's say, models or talent that looks like they're in their late 20s, early 30s is what resonated best with the audience groups over 45.Stephanie:Oh, interesting.Nik:So it might just even be something as simple as a shift in your creative to reach [crosstalk 00:27:11].Stephanie:Yeah. I wonder why that would be the case.Nik:Everybody aspires to be better looking or younger or smoother skin or whatever it may be. And that might be a reason. I think another way though too is thinking through just the ease of how something as simple like your website functions. How easy is it for somebody to come in and shop? I always send landing pages or websites to my mom. She'll look through it and be like, "This is confusing," or she'll be like, "This is perfect. It was one click and I was in the cart." And so we always go for the ladder as the goal. But the other thing too is like... One thing I always say is you got to treat your customers like Kim Kardashian on the red carpet and you're her assistant, right? The brand is the assistant. So you can't expect your customer, you can't expect them to go browse around your site and learn about your brand and learn why they need your brand, or how your brand is going to make their life better, or the deal that they might be able to get, or the coupon.Nik:There's so many brands that they clearly offer coupons when you Google, for example, like... I don't know. If you Google like... we'll say Jetblack because they're not a business. If you Google Jetblack coupon, there's probably 17 coupon sites that have a 10% or a 20% off coupon. But what you do is you now create an opportunity for somebody to leave the experience of checking out to go find that coupon. There's a good chance to just get distracted and never come back versus something as simple as like... Basically, what I'm trying to say is you want to create everything or you want to put everything in one simple experience so that somebody who has no time, somebody who has no patience, somebody you could assume they don't have the knowledge of how to navigate a site can basically come to your site and get what they need and they know why they're getting it and just create something really easy to use.Stephanie:Yep, yeah. I think frictionless shopping is the way of the future. The one thing about coupons though, I feel like they're just dangerous. Like you said, you leave the site... I know I used to back in the day, go through all these coupon codes and then I'd really get annoyed because none of them are working, all of them were expired. And yeah, it's still feels like there's room even on a website to be like, "You will never find coupons outside of our website. So don't try. Don't go looking around, don't go testing like 1,000 different codes. You'll find nothing. It's only here."Nik:Totally. The other thing too is like then you have companies like Honey, the browser extension, which are basically fraud companies, in my opinion, or scammy companies. And if you don't create something of an offer for let's say you run a... let's just say a beverage brand called Three Stars, and somebody comes to the Three Stars' site and they want to buy a variety pack because they're a new customer and they want to try the flavors. When they get to the checkout and they see, "Oh, there is no discount. Oh, but Honey says..." The Honey thing pops up and you click it because you're hopeful that there's a discount. Even if Honey generates no discount, Honey is going to refresh the page and now that becomes a 10% affiliate cut. The brand is paying the Honey without them even realizing it. The customer is not getting any value out of it. But because you didn't create the opportunity for them to check out without having to use Honey, you're now going to end up paying Honey 10% if they have it installed.Stephanie:Interesting. I hadn't realized that's how it [crosstalk 00:31:03].Nik:Yeah. Honey is a really scammy business. It's really scammy for brands.Stephanie:Oh, geez.Nik:I hate Honey with a passion.Stephanie:Oh my goodness. I actually think we had someone from Honey the long time ago before our commerce show was even live in the world. We had, I think, their COO on one of our other shows, Mission Daily. So if anyone's interested, go check out [inaudible 00:31:24].Nik:Yeah. It's a genius business model for them. Basically without showing the customer or without really showing the brand, they're just ripping 10% off of every purchase. And if you're selling like a $400 emergency kit, that's 40 bucks that they're making for everybody who just has an extension installed, but it's-Stephanie:And the brands can't control that, or they can't say-Nik:No, they can now. When I saw it, I went to them and said, "You guys, you're basically just taking credit for everything you're not driving." And they're like, "Oh, well, it's just the way that Honey works. We drive a lot of traffic." And I'm like, "No, you don't." So then we just shut them off. They just don't get paid now, even though they can still be used.Stephanie:Oh, interesting. So when thinking about outside of coupons, but more ways to connect with different users, what do you think about catalogs? Because we had a good discussion, I think, many episodes ago with one of the execs at Marine Layer, and she was talking about how great catalogs work for them. I haven't heard many people talk about it. So it seems like there's still an opportunity there though with so many people now working from home. I know I get excited about mail that's actually fun to look at and helpful. So how do you advise your brands on connecting with an audience through catalogs or paper mail?Nik:Personally, I'm a fan. I think it's a sign of luxury when I get a catalog, whether it's from a company like Buck Mason or Todd Snyder or [inaudible 00:33:06], like it's definitely a sign of luxury. The catalogs themselves are printed on very nice and chic paper. I think it just adds to the overall experience of being a customer at those brands. At the same time, if you're a brand that's just starting and you don't have the capital means to do it, I think there's ways you can create digital catalogs for fairly cheap and have them be digital experiences.Stephanie:Yep. When you have a catalog, I've heard some brands optimize for experience and fun and more of like a branding play versus others are focused on send them back to the website, get the conversion. How do you think about optimizing a catalog to work well?Nik:Well, I think it's two ways. One, you got to feature products that I think people want. So if your spring collection is 250 pieces of clothing or 250 different SKUs, maybe you feature the 27 that people really want. But then secondly, I think from a messaging standpoint, it's got to really make you salivate when you're going through it. That was [crosstalk 00:34:36].Stephanie:Like Trader Joe's catalog.Nik:Yeah. That was one of my favorite things about... Do you remember SkyMall?Stephanie:Yeah, yup.Nik:SkyMall just made you want to buy everything in that magazine because everything was like, "Oh, a random flashlight for under my desk chair. Sure. That now seems like something I totally need."Stephanie:Yep, yep, I agree. I just saw something in a catalog that I actually ended up buying. It's a... What is it? A candle lighter, but it's not like a big flame thing. It's operated by battery. It has this really long stick on the end and it's intense, it's awesome. Everyone should check it out. We'll link it up in our show notes. But I bought that from a catalog because it was showing it going inside a really deep candle. I was convinced. And it's amazing.Nik:Yeah, no, totally. It's all about like building... You want to build a use case for somebody to go tell their friends why they bought what they bought from you. That's like the best way to market.Stephanie:I think you also have to have good paper quality though.Nik:100%.Stephanie:I hate the catalogs that come with just like icky, thin paper, and it's just 1,000 pages and I'm like, "It doesn't feel curated. Just every thing is here. I don't even know how to look through this in a way that makes sense for me," versus the ones that are just 10 pages. It's what you want to look at, or just the best thing that feels like it's personalized, even though it's probably not. I'm okay with that as long as it feels high quality.Nik:Totally.Stephanie:Let's jump over to a little bit higher level ecommerce question of where do you guys think ecommerce as a whole and D2C is headed over the next couple of years? What are you preparing for right now, or what big thing?Nik:Well, I think that ecommerce, as a whole, is going... There's been a ton of innovation this past year and the year prior, both on the side of operations, things like understanding you can't blow cash on acquiring customers, all the way to understanding how to optimize shipping costs or manufacturing costs or even using tools like Settle, which let you basically hack your cash flow. I think, to be honest, over the next year or two, it's just going to be a lot of growth in the category across many different categories that maybe thought they weren't going to be ecommerce. Everything from sitting at a restaurant and now... Obviously, we see QR codes everywhere, at least in major cities, at restaurants for scanning and getting the menu.Nik:I think we're going to see that you're going to start paying your bill through Apple Pay after you order your meal, all the way to things like better experiences with packaging and unboxing or just how you learn about a brand for the first time after you buy it. But I think there's also going to be a rise in things like marketplaces. There's a company that I just joined called The Fascination. And basically, the entire idea behind The Fascination is to take a lot of these cream of the crop direct to consumer CPG brands that are independently trying to acquire the same customer and basically put them together, create content around it, and create shoppable content.Nik:So, for example, if you have a daughter who's moving to... I don't even know if people are going to be going to college next year. But let's say she's going to college next year, and it's like the ultimate list of things you need for your dorm, it's got your mattress topper, it's got your pillows, your comforter, it's got your desk lamp, it's got organizers. You would be able to basically shop all of this in one page with one checkout through The Fascination. And on the back end, all these brands are getting orders basically pushed into their order queues. The Fascination basically just takes a tiny cut, like an affiliate. But the brands own the customer, they own the relationship with their customers, they have the ability to remarket to those customers. And The Fascination acts as a front of acquiring the customer and now selling maybe eight things at once.Stephanie:Oh, that sounds really cool. I think that's much needed with so many new brands popping up right now too. It just feels like sometimes I don't even know who to trust and who's actually got their back end filled out. Is this just the landing page that they're testing out to see if people actually want a product that they haven't even developed yet? So it seems like it's needed to have a trusting source like that to say, "These are some of the best brands and we've verified them and you've got customer service here and we're reputable and blah, blah, blah."Nik:Yeah. And that's another thing too is there are a lot of sketchy brands that have launched because the barrier to entry is so low. What The Fascination is trying to do is basically the same way you have like a kosher sticker on food items or a gluten-free sticker that's very universally known. I think they're going to basically try to do the same thing, but for four brands.Stephanie:That's awesome. Yeah. I will have to check that company out, maybe bring them on the show. Sounds like [crosstalk 00:42:39].Nik:Yeah, yeah. They would be a great one to bring on.Stephanie:Yep. The other trend I'm excited to watch this next year is last mile and see how that evolves, especially with the food delivery companies and the DoorDash and Grubhubs of the world starting to actually just work with local retailers to fulfill last mile deliveries. And I think that whole industry is about to have a big evolution. So that'll be an interesting one to watch.Nik:Yeah, I couldn't agree more. I mean companies like Ohi or even FastAF, they're doing some pretty awesome things when it comes to last mile delivery.Stephanie:Mm-hmm (affirmative). Yep, yeah. I agree. All right. Well, let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Nik?Nik:I'm ready.Stephanie:All right. What's up next on your reading list?Nik:Ooh, I would say the book Supermaker by Jaime Schmidt.Stephanie:Oh, that's a good one. Yep, sounds good. What is your favorite business book that you refer back to?Nik:Atomic Habits.Stephanie:And you're on it. You're like, "Are you top of mind? I got this great." Sounds great. What topic or trend do you not understand today that you wish you did?Nik:Bitcoin.Stephanie:I've had a couple of people say that. What's the nicest thing anyone's ever done for you.Nik:The nicest thing anybody's ever done for me is-Stephanie:I had to stump you. You were too on it. You were too lightning.Nik:Yeah, that's a good question. Honestly, my favorite is when just people just reach out randomly and say, "Hey, how's your day?"Stephanie:You like that? Sometimes I'm like-Nik:I love it.Stephanie:... "What do you want? Get to the point."Nik:Yeah. Well, sometimes you can tell when people have a reason for asking. But when a genuine friend just texts you out of the blue and just says, "Hey, how's your day going?" It's always nice to know.Stephanie:Yep, yep. Okay, a friend. I thought you meant just like a random Twitter person.Nik:Oh, no, no, no.Stephanie:I'll get messages on Twitter like-Nik:No, no, no, a good friend.Stephanie:... "Hi, how are you?" I'm like, "What? Who are you? Why are you asking me how I am?" That's weird. Ah, 2020. What's up next in your travel destinations when you can travel again? Where do you want to go?Nik:I want to go to Jamaica actually with a friend of mine, Chris Hall, and a few of his friends. He's got a pretty good setup there in Jamaica for quick trips out there. So I'm looking forward to hopefully in February maybe go there for a few days and just unplug from work.Stephanie:Oh, that sounds fun. Chris, bring me out there as well. That'd be great. What's up next on your Netflix queue?Nik:Ooh, actually there was... I forget the name of the comedian, Andrew Schulz maybe. He just launched a stand up. I saw it yesterday and I added it to my list. So that's next up on my queue.Stephanie:Oh, that sounds good. I'll have to check it out. If you like it, I'll check it out. What are you most excited about to add to your fridge next?Nik:Ooh, that's a good question. There's a beverage that we are launching called Barcode in-Stephanie:Barcode.Nik:... Q1 next year. It's with the former head trainer of the New York Knicks, who's also a big celebrity trainer, as well as with Kyle Kuzma, who's a championship Lakers player. It's basically a healthier version of Gatorade and it tastes incredible and it's got everything. It's like everything he would prescribe or give to his athletes, but bottled up in one drink.Stephanie:Oh, that sounds good because I do like Gatorade. But then when I'm drinking, I'm like, "I know this isn't good for me."Nik:It's horrible for you.Stephanie:Yeah, it is delightful though.Nik:It is.Stephanie:All right. And then the last one, if you were to have a podcast, what would it be about and who would your first guest be?Nik:I've actually been thinking about this recently. It would probably be about the struggles of commerce that people go through. So it would only be focused on problems people have had in their business, not the successes and not focused on people who've successfully exited. It is strictly focused on people who have, for example, not figured out how something works or how they're going to get through something. I don't know why, but I always keep thinking my first guest is going to be Paul, who's the founder of Prose, which is a haircare brand.Stephanie:Okay. I think that sounds great. I love stories like that, where people can actually learn something and because there's so many... Any media article is always like, "Oh, here's the end result. And now, they're a billion dollar company. Oh, and they exited, Oh, they got acquired." It's like, well, what actually happened where they failed because I don't want to fail too and I know they have some kind of knowledge of things that I could avoid, that's why I love biographies and stuff because you can read it and essentially accelerate your knowledge through that person's life and hopefully avoid some of the pitfalls they went through.Nik:Totally. And not only that, but also then for all the people listening who might be starting a business, or might be getting themselves into a position where they're not really sure what to do, it almost becomes an encyclopedia where, "Oh, Paul had no clue where to get you pumps at low MOQs for his shampoo bottles. How did he figure out what they were and where he could find them and not get ripped off?"Stephanie:Yep, yep, yeah, or I always love the stories when people are going overseas to find manufacturers and hearing things that they encounter. I forget what brand we were talking to on the show where they... I went into one of the warehouses and they were selling apparel and they were like... and all of the employees were smoking and all the stuff smelled like smoke. It's like I would have never realized that unless I actually went over there and was doing an audit before moving forward with one of them.Nik:Yeah, totally.Stephanie:Very cool. Well, Nik, thanks so much for coming on the show and sharing all your knowledge. Where can people find out more about you and Sharma Brands?Nik:The easiest is my website, which is just nsharma.co, or the second easiest which I read every tweet, every message is my Twitter @mrsharma.Stephanie:Awesome. Yeah, just go to Nik and say, "Hi, how are you?"Nik:Exactly.Stephanie:All right. Thanks so much, Nik.Nik:Thank you.

Access to goods is still an issue for millions of people around the world, but recently, ecommerce has been leveling the playing field. With so many direct-to-consumer operations in business today, the average consumer has more choice and therefore more access than ever before. But there’s one industry that stands out as lagging behind this trend: Coffee. That’s one of the reasons that Pernell Cezar co-founded BLK & Bold Specialty Beverages. Pernell is a long-time coffee lover and saw an opportunity to turn that passion into a business that could also make a big social impact. Historically, coffee has been hyperlocal, but he envisioned a business model that democratized access and brought specialty coffee to everyone. The only problem was that neither Pernell nor his co-founder had any experience in the coffee business other than as consumers. On this episode of Up Next in Commerce, Pernell reveals how they were able to turn BLK & Bold into a nationally-distributed product, including how they turned a mission-driven ecommerce business into a retail one by securing partnerships with places like Whole Foods and Target. Plus, he explains the importance of giving potential customers multiple ways to find your product, and the value of finding mentors to help you fill in your blindspots.Main Takeaways:The Way In: Having multiple ways and messaging for potential customers to find and want to engage with you is a great way to build a base. But when one of those ways is through a social impact mission, you have to also be sure the product quality and experience delivers. Tune in to hear how Pernell thought about striking this balance.Stick To The Plan: Entering retail can be an exciting milestone for your business, but it’s important not to rush the process. You should have a checklist of things you want/need to accomplish in order to set yourself up for success. Whether it’s with your packaging, other partnership, or logistics, be patient and get them done because a failed retail launch is hard to come back from. Share With The Class: When you’re just starting out, be open about what you are doing and on the lookout for anyone who might be able to help or mentor you. Small conversations can lead to critical connections that can propel you further than you’d be able to get on your own. You will have blindspots, and addressing them sooner means saving more time and money in the long run.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Hey everyone, and welcome back. This is Stephanie Postles, and you're listening to Up Next in Commerce. Today on the show we have Pernell Cezar. He's the co-founder and the CEO of BLK & Bold Specialty Beverages. Pernell, welcome.Pernell:Thank you for having me.Stephanie:I'm excited to have you on the show. I actually just saw some of your coffees in a Whole Foods around here. I was like, "Hey, he's joining us." It was perfect timing.Pernell:[crosstalk 00:00:30]. I love it.Stephanie:I'd love to hear a little bit about BLK & Bold, what is it? And let's dive right into your founding story because I know you have a good one.Pernell:Sure thing. BLK & Bold, we are a coffee roastery out of Des Moines, Iowa, founded about two and a half years ago really from the length of conversations that my childhood best friend, who's actually my co-founder, his name is Rod. I'll likely reference him a few times here. Him and I had just in teenagers, talking about whatever to being professionals and being time strapped and wanting to make sure that we were spending our dollars more consciously to support initiatives that we really felt we didn't have a lot of time to put into like we wanted to.Pernell:After so much ideation around our ritualistic beverages and coffee and tea, we really decided to focus on connecting everyday consumers back to their community by way of turning those beverages into vehicles for impact, and in which we launched BLK & Bold with the initiative to tangibly give back to disadvantage youth by way of giving 5% of our profits back to initiatives across the US that service specifically that demographic, but then also making specialty coffee and the delicacy of coffee and tea more accessible in conventional spaces where people shop already and not have it be confined to the independent shops that exist in neighborhoods across the US.Stephanie:Very cool. How did you decide to start with coffee? Because I read you didn't really have a background in that, and I was watching your video where you guys were starting it, I think, in your garage and you were trying to figure out what buttons to press and it was really fun just seeing how you really didn't know what you were doing. How did you land on that idea and decide like, this is the one.Pernell:Professionally, I didn't come from the coffee industry per se. However, as a consumer, I have user experience as a consumer. And going-Stephanie:You're a pro.Pernell:Yeah, exactly. Going across that journey, I always call it the coffee spectrum in the sense of what you like and what you don't like. And that's really where the curiosity book hit us where just traveling so much professionally in one state of my career and I just became immersed with the coffee shop culture. Visiting city A, city B, city C and falling in love with these different shops but they all have different menus. And so you learn to appreciate the different tiers of coffee, especially the specialty coffee, the more premium side of things, and really enjoyed that.Pernell:But again, the accessibility of these different experiences or product experience that we learned was hard to consistently access. And it then became a matter of like, "Okay, well, what is this? And why is this?" And from there, it was a matter of, "Okay, well, let me see if I can make this." And that hints the sample roaster journey back in our garage with me really just wanting to see how is this made, and the complexity of it went down the rabbit hole from there. So I always equate it to people that have heard someone's craft brewing story and starting that journey in their basement with a few tools here and there. It's pretty much the same approach from just a coffee junkie and wanting to learn more about it, but also have access to the different things that I was learning. So just kind of taking in our own hands.Stephanie:I love that. What were some of the biggest surprises when you were trying to find the beans and the equipment and all that? What were some of the biggest surprises you encountered when starting out?Pernell:I would say, the initial shock was just how massive, complex, the coffee manufacturing side is, whether you're talking about the sourcing of beans, which was part of your question, but also literally the manufacturing piece of it. The diversity of equipment needed, the diversity of capabilities, there's just a ton of science that goes into the process of turning a crop, which is coffee coming from the pit of a coffee cherry plant, or a fruit from a coffee cherry plant and turning that into this fine, ground product that you are brewing and drinking. And the nuances in between that to uphold integrity of that is really the really enjoyable part of the science that just, you don't know until you peek behind the curtain, fall down the rabbit hole and the learning process begins from there. So it's not as difficult to fall in love with if you're curious, because of just the many nuances in ways it becomes an art after you get going.Stephanie:That's very cool. And did you guys launch ecommerce first or were you also exploring retail as well? How did you think about that launch?Pernell:Sure thing. Obviously our go-to-market strategies much more cemented in our ideation of building the brand upfront. And so to make more sense out of that, for us, looking at building a brand in coffee in the modern day coffee climate, mind you pre-COVID, for modern day coffee climate where you have independent shops and then you have of course the conventional grocery isles and the lack of accessibility, but you also have ecom continuing to be ingrained in people's lifestyle in purchasing habits every single day. But when you look at part of the reason why coffee hadn't been accessible so much in more conventional spaces, ecoms, is because of how hyper-local the product is, and the hold coffee shop culture has on people's behaviors and what their preference is.Pernell:For us, it was a matter of, well, we are looking to shift the economics of how currency impacts domestic youth. And in order to do that in the commodity category, you have to be able to scale it. And if we go into shops, the margin is much tighter where we it's harder to make a sustainable contribution. But if we manufacture and we wholesale, it gives us more room to make the contribution more sustainable. And by way of that, we need to make more access and scalable environments such as retailer distribution and/or ecom. And so in thinking of that and understanding that, but knowing that, all right, we're going after this with little to no resources self-funded and with our own validation and learning curves to go from that. And so we for sure launched with ecom as our fastest point of entry, but also a place where has to validate the concept.Pernell:And so our ecommerce platform as well as social media, the idea of ... well, there's tons of micro roasters that pop up every day, but to pop up, but also with a very different rhetoric on being this domestic impact model, we needed to find validation that consumers were interested in that as well. And so very long-winded answer to, yes, ecom was the way we started, very much part of our DNA in the sense of being ready to own our message and also provide accessibility for people given that we don't have our own storefront.Stephanie:I love you started with the social impact model to derive results you wanted. How much did that really push you to think bigger and be like, "I'm not just going to go to one of the coffee shops and sell to them. We need big results with our model and to do that, we need the wholesale model. We need retailers, we need ecommerce we need like everything."Pernell:Yeah, for sure. We have to believe upfront, and building a hypothesis for a business that the sediments that resonated with us on there being a void of values and tangible values that were relevant for us, that other people, if that opportunity existed, we'd align to that as well. And I guess because of that, that allowed us to really focus upfront on what channels make the most sense, I guess. And so the shift in consumer behavior and the validation from consumers shifting their behavior, I want to back up and say, not behavior more so than mindset. We want consumers to still consume coffee, consume especially coffee, but we want them to know that brand B versus their brand A actually has a different value proposition that allows you to extend your impact without really changing your behavior. And that allows us to actually become considered a lot earlier than going at it in a more conventional way.Pernell:And so that was very much key for us in the sense of how do we make it easy for people to extend an impact without having to change their behavior, which allows us to then get them on board, allows us to get retailers on board, allows us to get businesses on board, all around shifting the commerce to be able to scale the impact domestically. So it's a little much of a lift for everyday people, but to have a much more relevant tangible sustained impact.Stephanie:Got it. And it seems like that story in that messaging definitely helped put you guys on the radar of a lot of new customers. Was that one of the key ways that you acquire new customers and they found out about you was getting that messaging out there and getting that PR out there for like what you guys stood for to then bring in new clients, or were there other tactics you used to bring in your first customer?Pernell:Yeah, no doubt. There's a fine balance because for us, we look at multiple entry points or propositions for where we can be in someone's consideration set. And then as they enter into understanding our brand and they learn more about what we stand for and ideally one if not all of them, resonate as well. And that strengthens the loyalty of if they have loyalty to the product, if they entered us through the product proposition, and/or from a brand values, and then they also love the product. And so the storyline no doubt allows for accessibility when we are introduced to someone in a non-tangible space. And so we can scale our story to impact this is normal that we're looking to bring in the sense of domestic social impact versus someone is shopping in the coffee aisle and so forth. So it definitely gives us a much more scalable share of voice that people can discover us a lot faster given the sensorial experience that most people usually choose coffee for.Stephanie:Got it. And at what point did you launch on Amazon? Because I saw you guys are listed there. When did you decide it was the right time to sit on Amazon?Pernell:Amazon was always part of our model as well. It was a matter of the prioritization of the learning curve. We launched June 1st of 2018. We had our core coffee items that Q4 of 2018 set up. And it was really a matter of just having them active so we can learn, and kick the wheels and make sure that we're not doing more harm being on Amazon and not for Amazon's sake but for, again, the learning curve. And then again, transitioning into, let's see, throughout 2019, the trial and error of learning that. But then with 2020 and prior ... let's call it, this 2019 was a matter of being digitally native, but ramping up and preparing to launch in brick and mortar.Pernell:And so once we got past that milestone at the beginning of 2020, of course, fast forward COVID, being on Amazon allowed us to pivot more fully into maturing, what that experience, that digital experience on Amazon looked like. And so while we were on Amazon, let's call it about 15 months prior to launching our formal storefront. When we launched our foremost storefront in early April this year, that's where we really were able to drive people to who we were, what we represented in a way that it was much more convertible given that people were ... this shift of coffee and consumerism and accessibility changed completely of course because of COVID.Stephanie:Yep. So essentially you were shifting over to retail and then COVID hit, and then you were like, okay, now back to Amazon, back to our platform and you had to quickly change once the world started changing.Pernell:For sure. I think the benefit was that we were already digitally native and our site being the hero experience, having an extension by way of Amazon and the size of traffic and consumers they have. But no doubt when it became time to diversify our revenue streams, fortunately, we were much further ahead of the Amazon experience look like then more of the, it's called the indie boutique micro roasters that relied on shops and didn't have a digital experience. They had to then began the learning process as well.Stephanie:You were already ahead of the game.Pernell:Fortunately. The case study for us was a matter of, can we accelerate our awareness curve of what we stand for in order to convert enough people at a healthy enough rate that without having a shop, we can convince those consumers to purchase more coffee for home or those that were buying coffee at conventional grocery areas that the quality and the value proposition of a slightly higher price point is still worth it for them at least to get them bought in? And so the shift of COVID and the states closing and all the shops being closed, it's completely changed the necessity of everyday people to have to purchase more for home and we were fortunate on the front end of that just from a digital standpoint. Brick and mortar as well, because of the timing of us launching was just ahead of the pandemic really showing his face, but the digital pieces was definitely huge.Stephanie:Yeah. Before we get into brick and mortar, I want to dive a bit more into how you sell on Amazon. How does it differ when you sell an Amazon or what are you seeing right now versus your customers that maybe buy from your website or customers that even buy from target.com or something? Do you have different messaging or what kind of things are you seeing behind the scenes?Pernell:We offer a singles as well as a bundles, two packs. And just from a sheer economic standpoint one of the old challenges from being a omni-channel brand that also lives on is retail price and the disruption of an everyday price with the retailer versus what he shows up on Amazon. For us, we worked through Amazon's fulfillment centers and allows us to control the price, but from a bundle standpoint, it allows us to ensure that we have the same product proposition, but in no way shape or form any pricing activity would disrupt because they are from a item count standpoint, different experiences. And so that was a core piece of how we stood up our business initially, and some of our bundle items do better than our singles. The ones that don't do better do about just as strong.Pernell:And so seeing people go on Amazon really as a basket builder, it has been huge. And even from an awareness play on the amount of users that Amazon has, we focus specifically our consumer acquisition on Amazon platform. So we don't really focus on driving people to Amazon because there's so much space to play and win within Amazon as we're still early on as well. To the other pieces, as our site continue to build, we have seen pure incrementality from the Amazon platform where we don't see the shift of trading one consumer from one to the other. It's very key to being an awareness play for us, but then just, we have to also come back to the reality of consumer dynamics. And what does the social landscape look like? What does the economical landscape look like that's impacting those consumers? And the focus on supporting small businesses, supporting black-owned businesses, and then the accessibility of specialty coffee.Pernell:People are much more intentional about whether they want to save a dollar for Amazon or shave two days off Amazon versus support individuals that are trying to build their businesses and support them where margin is much more supportive and favorable. And we've seen the incrementality on both sides from consumers that are more mature on Amazon and those that are really looking to put their dollar further into the business to support the businesses during these times.Stephanie:Yep. That's great. Your users on Amazon, do they seem stickier? Because I often think about like, when I'm checking out whether it's through using Whole foods or whatever on Amazon, they always give me the recommendations or they're like, "You'll just buy this again." And I'm very quick to be like, "Okay, sure." And it seems like I'm a very sticky user when it comes to reorders. How does that customer profile from your Amazon customers seem to differ from people who are maybe just going direct to your website because they want to make sure to support the business and the message and they understand that by going there directly, it's probably going to help margins and the story behind it.Pernell:To a certain degree, our engagement is really high on our platform and with our community and our email list as well as on social. And so we get a lot of stickiness from our existing community and bringing them in. And so from an anecdotal read, there's just a significant amount of loyalty, not just to what we're doing, but what we're offering. And our subscription business is really strong on our site. When we do drop new launches, we also see a quick adoption on those as well, and so we have much more flexibility on those. Just launched a limited edition collection just ahead of the holiday season. We're able to fluidly do that where in Amazon, while it's not a brick and mortar, you still have to have much more lead time built into that versus being nimble as a small business.Pernell:And so even in putting something else that adds a little bit more complexity, it's incremental from a experience, from a product standpoint. Our consumers also still highly converted on that even though we have a strong subscription business. The Amazon piece is, what we see is also very sticky, but we still have much more conventional tactics on whether it's a prize promotion here or there or the affiliate programs that come from press that are driving the Amazon. We see those strong conversion pickups as well. But I would say again from an incrementality, we are pleased with the learnings that we have right now from the stickiness of it, but at the end of the day, we still from the recording of today, we are still, in this pandemic and trying to navigate life through it and the loyalty from coffee isn't going away anytime soon. And so I think people, wherever they're most comfortable with shopping are still highly susceptible to converting because they know that they need that fuel.Stephanie:Yeah. I think that's smart as you were mentioning to develop a different kind of experience on your website, not only with subscriptions, but also limited edition drops. So you get early access to and developing that community seems key. How do you go about, not only curating and developing a community, but also keeping them engaged for that longterm?Pernell:Yep. No doubt. I think the most important piece of this is no doubt customer service and experience. What we don't want to be is a one trick pony in the sense of, hey, we can do these two things really well because coffee is very vast. And as I mentioned earlier, the spectrum of coffee is really wide. And so we don't want to be too linear to offering only certain flavor profiles whereas as people either discover new brands or their options of how they safely access their daily fix of coffee or caffeine, that we then follow it lower in the consideration, or we just have to lean on whatever consumer habits that they had in the current, but we'll then be in the past.Pernell:And so for us, it's a matter of continuing to diversify, evolve what the experience and options are on our platform in particular and try to drive our email list and drive as many people to our site, so we can capture and engage with them so we can continue to evolve with them on their coffee journey and make sure that our offering is healthy enough, that we can do that without gridlocking our operations and our other distribution priorities.Stephanie:Let's talk a bit about retail. You're in some good stores. I saw you're in Whole Foods, Target, and I was reading a bit about how you got in front of these retailers. I think you were going to sourcing call events where they had like pop-up events. And I was wondering, how did you get in front of these retailers? How did you peak their interest and what was that process like?Pernell:For sure. A big piece of BLK & Bold and my co-founder and I bringing this to life was our formal background prior to. We launched this in our 30s, our early 30s and Rod's background being in philanthropy and fundraising with higher education healthcare, and mine being in corporate merchandising, brand business development around packaged goods. And so the lens that we took to the white space of coffee was a by-product of what lanes exists within coffee. And the understanding that the accessibility gap was huge when you stepped out of a premium specialty coffee shop that's in neighborhood A somewhere, and trying to carry that across the country. And so, understanding that we know where the opportunity is, which again, ecom retailer shelves, now we have to build something viable enough that allows for them to consider us from whatever the right starting point is and from the way those retailers test or minimally launch.Pernell:And so our journey throughout 2018 and 2019 was operations, learning curve and validation of consumer marketing. We did a ton of road shows, just consumer shows engaging them on the product. And the aha moments for most of them were the 5% for our youth model that we have. It wasn't where they were introduced to us. It was supplementary validation for them. And so continuing to drive that part. But then also just from formal background within retail, understanding that there's different engagement points. We are a certified minority business enterprise, which is a national certification organizations out like that, where they have shows and tons of industries that attend these to meet diverse or minority owned businesses. And fortunately for us, we have visibility to select retailers that attended these as well.Pernell:In addition to digital platforms, there's one called a RangeMe for those that are not familiar, that is a virtual marketplace for all packaged goods brands and merchants, which is hyper dependent in today's climate, where corporate is not allowing people to travel. And so knowing where to start and having something viable was number one. Number two is being a student of those retailers isles. Understanding who was in the competitive space, how long they were there, what a swarm in they were there for so you can understand what their core consumer was, but then what value proposition do we incrementally bring for that merchant? What problem are we solving for that merchant? And so that was a big piece of when we had our opportunity to engage with these different retailers. Target, for an example, we understood what value proposition we were looking to bring to them. The conversation from there became a matter of readiness operationally, organizationally, to be able to launch and sustainably start with intention, of course, sustainably growing.Stephanie:And was there a bit of back and forth with the retailers when they were like, "We're interested, we love your model, the coffee is great." Were they giving you any guidance on, here's what we think will do well on the shelves or here's how to set yourself apart, or was that really all on you guys to do the research, figure it out and present, here's some maybe new packaging that we think will do well at Whole Foods?Pernell:Yup. For sure. It definitely, it can be either way. We had our first, let's call it national launch or a major launch was with Target Corporation, at the beginning of this year on about 300 ... it was 350 stores across the major markets within the US. The conversation and the process of having that launch was about a nine month process from introduction to essentially the product arriving on the shelf. And this was from our social media engagement and fortunately word of mouth being passed on to Target for a show that they were having, we received an invite and we were fortunate to have an introduction with the coffee buyer and allowed us to further the conversation, this is not only our business model, but our case, the consumer that we're looking to capture and the incrementality of that consumer to retail.Pernell:But then, thereby also helped us understand where our strategic priorities were in a sense of how this space is set up and where there may be room to identify the incrementality if it's really there. And so the feedback on just the core consumer that we're going after and aligning on that was very real. And quite honestly, for us, while we had that opportunity to have the connection and the conversation, we knew we weren't ready because where our packaging was, we had a checklist of key things that we wanted to accomplish before we entered onto a shelf, so we can have our best foot forward, and we were halfway through that checklist. And so the merchant said, "Hey, well, when do you think you're ready? Well, here's the key things that we need to accomplish."Pernell:B Corp certification was one, which was, we hadn't got through the finish line on it yet, and the rebrand on packaging and also some of our operational scalability. And so that nine month journey was really with, understand the strategic vision values and knowing that with accomplishing that, we can have a solid start together to go push it through. In January with that launch then gave us the opportunity to credibly approach other merchants with some understanding that we were already vetted and well equipped to enter into their shelves as well if we had the same alignment on the value proposition. So the Whole Foods conversation was a lot more in the sense of, "Hey, we see what you're doing here. Here's some of the assortment that you have that we think will work really well is some feedback on what may not be yet, but let's get started and let's find out together."Pernell:And so it was much more collaborative in the starting point and from my experience, that's exactly what you want. If you're pitching to retailers with the hope that they will take whatever you're pitching, I made the perfect vision, they didn't ask me a question, they're going to take it. Where the risk is that they don't understand enough of where your blind spots may be, and you're all going to find out-Stephanie:Yeah, you want to partner.Pernell:Yeah. You all are going to find out together and that's the last thing, because it's really expensive to back out of distribution. So any who.Stephanie:That's so smart. I love the idea that you had the checklist going into it and you were open with Target, like, here's the things that we need to knock out. Tell me a bit more about what else was on that checklist and why were they important? Like why were you looking to have that B Corp certification and what else was on the checklist on top of that?Pernell:Sure thing. The B Corp I would say is a major one. I have to remember some of the smaller ones, but the B Corp was a major one mainly from being in retail. And once you learn about B Corp, it's hard to unsee it. But it being a ... it's essentially a independent organization that certifies businesses, those that value stakeholders equivalent with shareholders. And so being for-purpose being equally as important as for-profit and you have organizations like Ben & Jerry's, Tom Shoes, Warby Parker, Patagonia, these major organizations that are all at B Corp, they continue to move into improving society while again, building sustainable businesses.Pernell:And for us with, having this domestic social impact focus, the model doesn't exist. It's unfortunate it doesn't, but that's also a core reason of why we decided to go into this space. And knowing that, given that it doesn't exist and at the scale that we have to start at, we want it to be taken serious to our consumers and our stakeholders on the intention of where we're going while we work on getting there. And so with the launch into retail and being on the national stage, we took it various cities to make sure that we have third party validation vetted out already for us, for people that can engage with the brand.Stephanie:I don't know much about court structures. Are there also benefits that come with being a B Corp?Pernell:Yep. There's different tiers of ... you can incorporate it as a B Corp if your state has that as a legal option. And that I think there's definitely a different tax implications for being a legal B Corporation. And then there for states that don't, and this is the way that it was initially set up is that there's a certification and you're certified by, it's called B Labs, which is the umbrella organization. So you're certified by B Labs. And then as they continue to build momentum and further penetrate their models where the states began to allow it to be a legal entity structure.Stephanie:Got it. And then tell me a bit about, so you're getting into these new retail locations and you're working on your packaging and getting certifications. Tell me about how you guys are preparing for the orders. What were you doing behind the scenes with distribution and logistics and setting up partnerships? What did that look like?Pernell:Chaos.Stephanie:Craziness to say the least.Pernell:Yep. Chaos. Again, self-funded bootstrap and never want to put the cart before the horse was really a matter of trusting our forecast and building enough bandwidth to at least get through the initial hump of a national launch. And so then instead of today, we do everything in-house. We source and we work with our importers. They move the goods right with export departments, but we are identifying what origins we want to source through. We're doing all of the testing cupping and validating the integrity of what we're putting into our product. We micro roast in-house, we package in-house and we work we shipping partners to get goods out the door.Pernell:And so at the time, we had graduated from the garage and in to a shared production space with a local brewery. That's where we had our commercial roaster and we essentially had to tighten up our ship, bring onboard a few individuals that had coffee background in roasting and packaging to help us get the Target launch out of the door. And so that was a mad hustle because again, it was, here's what we are, here's the bandwidth we have, we're going a 100% capacity, sometimes a little bit more than that to get the launch out of the door with the intention of sourcing a new location that we can grow into. And so, fast forwarding that story, we had identified a location and we're closing the deal in March. And of course pandemic changed all of that. And so we found ourselves still running idol in that location for a while, but it wasn't with a bevy of orders and things until we started getting further into the summer. And that's when we got flooded in that space with orders go on and so forth.Stephanie:If you were to look back and change anything, what things would you have done different if you were to start again? And it can't be everything. You just got to pick me like, there's this one thing when I was setting up my partners or distribution or with the retailers I would've maybe done this differently.Pernell:It's tough because there's been too many reasons because there's so many learnings and it sounds so cliche, and that's why I was trying to prevent it sounds so cliche, but there are so many learnings that if I didn't learn them then I'm going to have to learn them later and I just don't know it yet. Because we are continuously learning and it's not just about coffee, but it's about, you're in a space where we are looking to win over over the longterm consumers into not only what product was selling, but the impact that we're selling and there's so many curves along the way. And so I am happy to have the learnings that we do have in the bank checked off. I think more so it's a matter of how do we continue to broaden our view to mitigate blind spots?Pernell:What I would say is one of the things that was hugely helpful early on as we were initially launching with literally our hearts on our shoulder was sharing what we were looking to build with some other professionals, just more mentor related people in the network. And as our informal mentors, that fortunately connected in to a formal mentor that was previously executive within the industry and just gave me a history download on how coffee and the industry came to be. And that in itself, just broadened context more so than why you have to, you're crossing Ts and dotting Is and every single step of the process. But to have that broader context of how the industry around you got to its point just fast forwarded that blind spot for sure. I would just try to color it all in.Stephanie:Do you have other mentors right now that you rely on or that help when it comes to guidance or showcasing what else is happening in the industry or ecommerce as a whole that you lean on?Pernell:Yes and no. Informal, for sure. Students of work, without a doubt. I think it's important to have a broad lens on what's working across different industries in digital in particular. And so if you rely on someone that's hyper-focused on a particular industry, then it may mitigate you from having your antennas up to learn about other things that are working elsewhere. But I'd say informal, yes. But tapping into what's working for them and learning from there, it's really hard. This may be a me statement, but I'm sure it may resonate with someone else out there. It's really hard to move at the speed of entrepreneurship and startup, and to have someone that isn't as intimate with your business to give you specific guidance on building the business more so than giving you more visibility to things that work and that exist. So it allows you to be able to align closer and jumping into rabbit holes further that you know may be in the path where you're going. So much work is done offline that having visibility of things allow you to dive into it without having to bottleneck someone else's time and do it.Stephanie:I think that's really good advice. And a mentor might fail to give you a higher ideas or industry level things or maybe connections but I think it's the same thing when it comes to investors, the second someone starts giving you like really nitty-gritty advice on what you should do, you might want to be a little wary of that because you know your business best and you know where you're headed. What's next for BLK & Bold. Where are you guys headed? What are you betting on right now?Pernell:Sure. We're still young and awareness is still important, accessibility is still important. The more traction we get, the more we can further cement our contribution model. Now that we've kept the door open, even minimally in the product assortment that we do exist in, the more immediate is to continue to round out our accessibility, but with our key partners that have strategic alignment with us. And so we have retailers that we're on board with today, Target, Whole Foods, Hy-Vee in the Midwest and we're rounding out a few more that have shown very important strategic alignment with us. But then we're also looking to diversify outside of just retail shelves and moving into food service that allows us to have more B2B contracts that are now consumer adoption, but also businesses to help further the impact which ultimately helps drive consumer awareness as well.Pernell:And so from a ecom standpoint, home base is home base. And so we're going to continue to pour into our website to be more proactive in how we drive engagement, but also acquisition. And also, we're selling a tangible good. And so while that's key and that's great, we also have to look at supply chain, all the efficiencies, but innovation that's out there to allow for us to continue to connect and win with convenience and accessibility from what that means from a D2C space as well. We got some ideas under our belt on some strategic partnerships that can allow us to further that. But without a doubt, continuing to further develop our D2C. And the more important pieces that help our community better be more transparent with how we are building and continue to support from an impact model, but also to build more loyalty for that come in to see it in action.Stephanie:That's awesome. I'm excited to see, especially that B2B piece too. I think that could be such a strong partnership. I used to work at Google and I think about the road shows they would do and having companies come and all the employees would test out the coffees and the chocolate and all that. And that could be huge and very smart partnership to have that B2B angle in there.Pernell:No doubt.Stephanie:All right. We have a couple minutes left. Let's move over to the lightning round, brought to you by Salesforce Commerce Cloud. This is where I'm going to send a question your way and you have a minute or less to answer. Are you ready for now?Pernell:We'll find out. Let's do it.Stephanie:All right. What's up next on your Netflix queue.Pernell:Gosh, I just googled this yesterday. The Undoing. I think that's what it's called. We just ran through all the Schitt's Creek. So TBD on Netflix.Stephanie:All right, there you go. And I've got Hilary in this document say, "It's amazing, and it's on HBO." So that works.Pernell:Love it.Stephanie:All right. What's next on your reading list?Pernell:Oh my gosh. Besides emails?Stephanie:Yes. Besides emails. It doesn't count.Pernell:Oh man. It's a great question. I digest so much content through just online, but if I'm looking at something tangible, it might literally be a roasters magazine.Stephanie:That's great. We have not had anyone say a roasters magazine.Pernell:Yeah. In the anecdotal know of what's going on.Stephanie:That was perfect. If you were to have a podcast, what would it be about, and who would your first guest be?Pernell:Oh, goodness. First guest would be Rod, my partner. What it would be about? I don't know, the random things we come up with throughout a day, which is a plenty, and most people don't get to see or experience. You're building something with a best friend you have for over 20 years. You can only imagine the randomness that comes about within a day.Stephanie:Oh my gosh. I love that. I could see that being really fun. Pernell and Rod's musings.Pernell:Love it. Love it.Stephanie:That's great. What topic or trend or theme do you not understand today that you wish you did?Pernell:That I don't, that I wish. Oh my gosh. This sounds terrible, but Twitter. I tried to figure out my Twitter game early on when everyone else was, and I was just too loyal to Facebook. And now here I am still trying to figure out how to not tweet on the wrong thing or something.Stephanie:Me too. Well, what's your Twitter handle? We'll get you some followers there.Pernell:It's Pernell Cezar. [crosstalk] name.Stephanie:Oh my gosh, you don't even know.Pernell:Yeah, I don't.Stephanie:Well, that's the problem Pernell, you don't even know your handle. I actually don't know if I know mine either. We'll link it up in the show notes. There you go.Pernell:Okay. Appreciate it.Stephanie:All right. Then the last one, what one thing will have the biggest impact on ecommerce in the next year? And it can't be COVID.Pernell:I know that's right. That's a good point. From a good standpoint, I do think supply chain, speed of delivery on native sites and not having to be relying on third party commerce platforms. We know the behemoths, they in-house a lot of that and they have major contracts that do that. But the comeback of boutique independence and owning their future I think really be a by-product of independent supply chain companies doing the same thing. So again, from a packaged goods or a tangible product lens, but I think BLK & Bold can deliver something in a matter of hours and not having to rely on Amazon, that just drives that much more engagement and loyalty for the longterm.Stephanie:That's great. Cool, great answer. All right. Pernell, well, I've had a blast talking to you on here. Where can people try out some BLK & Bold and learn more about you other than Twitter? They shouldn't go there right now.Pernell:Yeah, don't go there. But on social media platforms, BLK & Bold, spelled B-L-K and Bold, and then our website, blkandbold.com.Stephanie:Awesome. Thanks so much Pernell. It was a blast.Pernell:Yeah, same here. Thank you. 

Think about the last ad you saw an ad that had an image of someone’s living room. What color was the throw pillow on the couch? Was there a dog present? How many people were pictured? You might not know the answer to those questions, but the marketers who put that creative together sure do, and you better believe that they thought long and hard about each of those aspects and dove deep into some data to decide exactly what to include in the adThose minuscule details may seem frivolous to the naked eye, but the data proves that every decision you make in your creative process has an impact on the bottom line, and the ecommerce businesses that pay attention to the data while still putting their own spin on the creative aspect are the ones that are rising to the top.R.J. Talyor is the founder and CEO of Pattern89, which uses A.I. and machine learning to analyze advertising and guide marketers toward the performance metrics that matter. On this episode of Up Next in Commerce, R.J. takes us through the most recent trends report that Pattern89 put out, which includes some important information about why businesses should be paying particular attention to copy and hashtags. Plus, R.J. gives tips on how to avoid the trap of following “best practices” and why creativity will always win.Main Takeaways:Big-Time Creative, Small Time Dimensions: Marketing creative is made up of tens of thousands of dimensions, all of which can be measured and distilled into performance metrics. And when those metrics are measured, you can utilize that data to inform the decisions you make about what elements are more beneficial to include in your ads (like an orange pillow versus a blue pillow and a cat versus a dog).#WorthIt?: Including hashtags in your marketing copy is a method to improve performance. The flip side of that argument is that hashtags have a cost, particularly if you overlay a hashtag on an image or video. The Same… But Different: When developing creative, marketers are often looking at the same data, trends and industry reports, and they are following the same “best practices.” The trick is to take the information and make it your own in order to develop creative that stands out rather than just gets lost in the sea of “what works.”For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie:Welcome back to Up Next in Commerce. This is your host, Stephanie Postles. Joining us today is R.J. Talyor, the CEO and Founder at Pattern89. R.J., welcome.R.J.:Hey, thanks for having me. Appreciate it.Stephanie:Yeah, I'm excited to have you on the show. I just downloaded your report, as you saw, right before the interview and I feel like there's some good juicy stuff and the things that you guys are doing and we'll have a lot to talk about today.R.J.:Yeah. Great.Stephanie:So tell me a bit, what is Pattern89 and how did you go about creating that?R.J.:Pattern89, what we do is we predict creative performance with machine learning and AI, and I've worked in digital for almost 20 years now. I worked at ExactTarget and then at Salesforce and then at another social startup, and learned quickly that marketers are spending so much time creating journeys and figuring out who their audience is, but still use a lot of their gut on what creative to put in front of those audiences, or in the places in the journey. While data is being used to figure out what and who, it really is on the creative side, still kind of a gut decision. And so set out about four years ago to help marketers use AI and machine learning, to predict creative performance, and now we're a 25 person strong scale up and serving customers all over the globe.Stephanie:That's awesome. I was reading a bit about your data co-op and how many brands you have that you get to look through all the data, so give me a little bit of like the behind the scenes of what kind of brands do you have in there, if you can share, how many do you actually have, and how do you go about looking at all of their data?R.J.:Well, when we started the business, we knew we needed a giant data set in order for the machines to find patterns and outliers that would actually help creatives, and so we started offering a free scorecard or creative assessment in exchange for joining the co-op. We're almost at 2000 brands who-Stephanie:Wow.R.J.:... have connected their accounts to Pattern89. And our machines, they don't actually look at anything that's identifiable. Instead, they're looking at 49,000 different creative dimensions of a piece of creative and tying it to a performance metric. As an example, it might look at a picture of a living room and say, "All right, there's a couch, plants, window. Is there a human or not? What color is the couch? Is there a blanket on the couch? Is there a dog in the picture?"R.J.:Then associate that with a performance metric, like, did it drive X purchases or Y video views or X views, so then we can understand in aggregate what are the patterns and outliers that we're seeing across massive amounts of data, so that we know living rooms actually perform better when there's an orange throw pillow on the couch, for example, like the one small detail. So massive amounts of brands, massive amounts of data, and really granular creative insights.Stephanie:Very cool. How do you go about, if you're looking at that kind of anonymized data and you see something doing well, how do you know it's doing well? Maybe because it's a Nordstrom where it's like, well, of course they have brand recognition, it's very easy to buy from them, versus a brand new D2C company where maybe one of their ads is doing well, or it's not doing well and it's kind of getting skewed because they don't have that brand recognition.R.J.:Yeah. That is a big question. The first thing to know is that our data science team uses a set of statistical tests to kind of ferret out what is actually driving the performance or not driving the performance, so that we're not chasing after kind of red herrings. The other thing is from an audience perspective, the history of that audience use, so is it a brand new audience or is it a legacy audience? Is it a customer loyalty audience or something else like that? Those are all the components that are also taken into account so that we can distinguish between maybe the brand legacy of a Nordstrom versus an up-and-coming D2C startup and still provide statistical significance at over 95% competence.Stephanie:Got it. What things do you think are going to work in 2021? I mean, I was just going through the report that I mentioned earlier and I mean, it was cool because it's all the way down to "Here's certain emojis and colors and imagery is up, but maybe with multiple people or one person and video's down." So tell me a little bit about what you guys are seeing and predicting to work well when it comes to advertising and copy in 2021.R.J.:Yeah. Well, the first thing that it's important to notice, the creative lifecycle has shrunk and rom a creative life cycle perspective, it's just a lot shorter than it's ever been. In addition to the creative life cycle shortening, what is performance in those creatives is changing as well, so the best advertisers have a 2:1 image to video ratio. While video performs a lot better in general, image to video 2:1 is the best performer for top performers in the dataset, and we're seeing more and more emphasis on video and video performance, but videos tend to be more expensive, so 2:1 is a good framework.R.J.:Then taking a look at what's trending and what's forecasted to be a performant in 2021, we see things like TVs and electronics really improving cost per clicks, also spas and massages, those types of things. And then maybe not surprising, we're seeing a lot of isolated people, so one face in creatives and those people are reading or studying or doing something by themselves, which kind of reflects the world that we're living in, especially as we head into 2021.R.J.:One of the surprising things, and sorry for all the cat lovers out there, is that pets typically do very well, dogs and cats, but we're actually seeing cats driving performance down. So it's more expensive to advertise with cats in 2021, so just keep that in mind as you're here.Stephanie:That's funny. Don't put a cat in your ad.R.J.:Yes, exactly. Yeah. But consistent performers, things like images or videos of those people exercising, phones, images of cities, those types of things are really staying flat. This is all going to change by audience and by brand, but in aggregate, those are the things that we're seeing rise, staying steady, and then underperforming in terms of predictions.R.J.:The other thing that we analyze is color and the importance of color driving performance in 2021. In December, we're really seeing kind of teal colors and blues perform best, but what's trending up in 2021 are, it's kind of this peachy color, and I can give you the exact hex code for the designers out there, but peach and dark green are really trending up and they've been trending up over the last three years, while kind of a pinky and a brown color are really trending down for the last three years and will continue to trend down. It's kind of funny as we think about what background colors or what shirt colors our models should be wearing, or how we should stage a photo shoot, or even what stock photo or image or video to pull, these types of decisions can impact your CPMs, your CPCs, and your click-through rates and ultimately your performance, so it's good to have the data on your side.Stephanie:Yeah, that's great. The one thing a lot of guests have mentioned is that more organic videos, iPhone videos, even iPhone photos have been performing better for them then-R.J.:Yes.Stephanie:I mean, because a lot of them couldn't stage things anymore in their studio, or didn't really want to use the stock photos. Are you seeing the same thing?R.J.:Yes, and especially selfies, really driving performance up. So when influencers take a selfie video, which might've seen sort of not have been as polished as in the past, but selfie videos in the data is actually spiking in performance as well as popularity, so yes is the answer to that.Stephanie:Cool. Any other trends in that report that stood out to you that were maybe a bit surprising and you were like, "Why is that happening" or "Why is the data showing that" where you had to dig in a bit deeper?R.J.:One of the other things that's really surprising when you deep dive into the report is copy and the impact of copy alongside your creative. Oftentimes we spend a lot of time developing what the creative would be, and then maybe we'd just go with a standard message, but the impact of performance when you have copy that's like 5 to 15 characters long, that's what's going to drive the best performance for awareness or top of top of funnel campaigns, whereas body copy needs to have between like 40 and 60 characters and should include a hashtag.R.J.:What's a little bit surprising about hashtags specifically, is that including a hashtag overall improves your performance, but it's going to be a little bit more expensive. And then even further, if you put a hashtag as a text overlay on an image or on a video, you're going to see the costs go up even more. So it's funny how best practices intersect with performance in good and bad ways, and what we're kind of distilling down is how the algorithms at the individual platforms prioritize or deprioritize content, based on supply and demand, like what's popular and what's actually performing.R.J.:If you think about it from the platform perspective, they want creative diversity. They want you to be producing something that creates more thumb scrolling and more content engagement. So they're looking at how much of X do we have, how much of Y do we have, and then prioritizing content that favors newness and differentiation and engagement. Anyway, some of these things are like, need to put a hashtag in there because that's actually going to drive your performance up, but it might also drive your cost up so you've got to kind of weigh the pros and the cons of each creative dimension.Stephanie:Cool. I'm thinking about all this data and feedback that you're giving to customers, and how do you make sure that they don't all start doing the same thing where it's becoming like a self-fulfilling prophecy? Because I know a couple of guests prior who've been on the show previously have mentioned, like, "Don't go in the Facebook ad library and try and get inspiration from there, go to the books from the 1960s and check out what was happening back then. Don't just look at what your competitors are doing, because the second you start just doing what they're doing, you lose." So how do you make sure that your clients aren't just all doing the same thing, driving the same trends, driving the rates up or down because they are all hearing like, "Oh, the color green is like the way to go"?R.J.:Yeah. Well, I love what you're saying there because I have really railed against "best practices" as a way of doing marketing, and so much is changing that I think a lot of marketers go to "best practices" and then look at a creative forecast from Pattern89 or some sort of other data source and say, "All right, that's what we should do." The problem is exactly what you're saying, which is that if we all do the same thing, then the advantage goes away. Instead, we need to think about data and creative AI as a recipe. Every chef gets the same... I love watching food TV, like Food Network and all that stuff, and you can give Michelin star chefs the same recipe and they all make something different, even though the recipe components might be the same.R.J.:I think that that's how we have to think about creative. How does our brand interpret these recipes? How do we make it distinctly ours and so our brand message shines through while also honoring those creative elements that the algorithm cares about? A good example is we know that 40 to 60 body copy characters, so we should have a 40 to 60 characters in our body copy, and a hashtag. So don't go copy paste some body copy from a competitor and just change the brand name. Instead, what's the unique message that you want to tell in that? And then what hashtag can you use that actually spells out your brand message? Or if we know that images of people studying or reading books are important, what is the way that we can tell that brand story in a funny way, an engaging way, in a serious way? However it reflects your brand.R.J.:I've used this slide in a presentation where I actually have five different brands, Instagram posts, where they're all advertising athleisure wear, and they literally all look the same. It's all a woman who looks fit, who is exercising in her sort of ethereal-looking inside apartment. It's like literally the same creative and you can't distinguish between those ads, and I think that's where we're seeing kind of the "optimization to best practices" cause problems. Instead, we need to figure out how do we take this creative recipe and put our humanness or human creativity to tell that story in a new way? So be aware of best practices is the summary there, and instead use it as a recipe and create from there.Stephanie:Cool. Are you kind of guiding your clients when you're like, "Okay, we see these emojis are trending, these colors are trending, here's the copy limits that are trending, but here's maybe how to apply this to your brand" or like, "These photos are trending, like you said, but here's a funny spin that you can put on it individually." You're kind of giving like one-to-one advice instead of just like, "Everyone try that and figure it out for yourself." How do you go about guiding your clients?R.J.:Pattern89 is a platform, so we serve as a data service, effectively. When we get on a call with a customer, our creative agency will often say, "Here's what's trending up and here's how your data matches or doesn't match that trend. And then also, here's the counter-trend to it." Some customers are like, "No, we just want to kind of play it safe and go with the trend." Others say, "Hey, what's the counter trend? What's the outlier? What is the opportunity there?"R.J.:It just depends on if the brand likes to play it safe and predictably, or they're willing to take some creative risks, and it actually depends on their level of risk tolerance there, because some people just want the sure thing and, "We can follow the trend or the best practice." But then others say, "Hey, we're willing to take a risk. Our brand is about risk-taking or about X." So it depends based on that. Then sometimes we work through creative agencies and digital agencies and coach them to say, "Hey, here's the risk of going with the trend versus here's the counter trend" or "Here's how your data intersects or conflicts with that."Stephanie:Yeah, very cool. What kind of variables do your models look at to see? I mean, not only the cost behind things, or maybe what's doing well, but how do you know something's doing well? Is it engagement? Is it people clicking through on an ad? What's the success rate in figuring out what a trend is based on? One good example is someone was talking about influencers on the show and they said someone can get like a billion likes on their posts, but that doesn't mean they're an influencer. You need to look in the comments and see are people in there asking like, "Hey, where can I buy that shirt from" and actually consumers who are ready to convert and do what that person's saying. So what things are indicators to you in ads doing well and actually will create a conversion or a new customer?R.J.:Every prediction in Pattern89 or in the platform has two factors. One is who's the audience, and then two, what's the objective? The audience can be net new customers, it could be loyal customers, it can be previous purchasers, whatever the audience makeup is. Then the objective is what the machine understands. Are we trying to drive the lowest CPM? Are we trying to drive app downloads? Are we trying to drive purchases? Are we trying to drive likes and follows? Whatever that overall objective is, so the machine knows, "This is the audience, this is objective, and then this is the candidate set of creatives that we want to drive for one of those objectives for that audience."R.J.:So if the objective is purchase, then we can tell you exactly what's going to drive purchase. We can't predict sentiment of comments. As you're suggesting with influencers, that's just a limitation. But a good point to note that what the AI can do and can't do, so that you can set the engagement up for success.Stephanie:Is there any new advancements in tech data you're looking at to kind of gauge that sentiment? Or anything else where you're like, "We aren't there yet, but we're looking at this because we think it's an important field going forward"? I mean we just had yesterday, the VP of data science at Stitch Fix on, and she was kind of mentioning just that there's a new demographic coming on the market, they speak very differently, and so they need different types of natural language processing to figure out who this person is to then be able to respond to them how they want to be responded to. So is there anything like that that you're watching right now or looking into?R.J.:Well, just on that comment, I need some natural language processing to handle my 12 and 13 year old nieces who I'm like, "I don't... " When we text with them, I don't know really what they're saying and I thought I was cool. So I'm just using that to-Stephanie:Oh yeah, my-R.J.:Yeah.Stephanie:I feel that. My mom sends me screenshots that her students, because they're all doing Zoom calls right now, she's a teacher, and she's like, "These kids just talking, they're like 'NVM,' what's that mean? And then there's a U and then there's a two" and this and that. She's like, "I don't know." And apparently they gave her the acronym for "Pony hair, don't care," but they just put PDC or something and she's like, "What's that mean?" I'm like, "I honestly don't know." I don't think that means anything. And she was like, "I found it out. They were making fun of my ponytail." I'm like [inaudible 00:18:44].R.J.:I imagine Urban Dictionary is getting a lot of site traffic from people like me these days.Stephanie:Yeah. I mean, yes.R.J.:Well, I'll tell you, we've heard a lot of customers ask for sentiment, like you're describing. The other thing that's of particular interest is the multi-touch journey. With Pattern89, we can predict what people are going to do, like a one hop. So I can tell you if they're going to download the app, but I can't tell you if they're going to use it, or I can tell you that they're going to put something in their cart, but maybe not purchase it.R.J.:What marketers really want to understand is how do we actually predict creative against each of the steps of the marketing journey that they're setting up for the customer, versus like a point in time? That's what we are really locked in on, is how do we predict creative performance across that life cycle, versus just, they did one action on a social site or one action on as a result of seeing your ad on Google or something? So it's this multi-touch attribution issue.Stephanie:Where do you see the future of attribution going? Right now I'm interested in it because I was just listening to a bunch of podcasts about attribution with TV and other types of media and how it's very slow to evolve, but it's something that people are going to be very eager to figure out over the next couple of years, about how to like measure things. Is there anything that you guys are looking into in that area or just keeping tabs on?R.J.:Well, I'm keeping tabs on kind of there seem to be two counter trends going. One is that everyone's going to new payment options and new conversion options on their phone, and there just seems to be more and more like mobile payment, fractional payments, mobile wallet, Afterpay, all that type of stuff that I think is going to create even more data that we can understand the ultimate conversion especially in retail.R.J.:The counter-trend is a cookie list future and a highly-private world and GDPR, et cetera. Those seem to be counter trends to me where we could get to a fully anonymized world where you just have no idea what happens, or to whom, I guess. And then the opposite is we can know everything. So I don't know that I have an official prediction, but I'm certainly interested in those paths, diverging and where we end up. Yeah, I think that that's going to be super interesting as it accounts for attribution.Stephanie:Yeah, I'm definitely paying attention to the cookie list future, and I mean I think Facebook's fighting pretty hard at that so it seems like it might be a long process if it were even go through, because a lot of people are against it. That seems like a scary place though if you really can't show what you're doing.R.J.:It is, but I think... I have a creative background, I majored in English, I have a master's in creative writing, and I came into technology kind of thinking creative is the actual differentiation. But so many liberal arts people, so many marketers have been told to act like machines and just make only data backed decisions, and of course that makes a lot of sense, but I think we've kind of over-indexed under the data side and it kind of left creativity out to dry as kind of like, "Those are the crazy creative people over there" or something.R.J.:I think that the cookie-less future and all this, because ultimately we're going to lose some of the sight of the data that we were able to pull before, and instead, creative is going to win. Personally, I believe that as the CEO of Pattern89, creative is going to really matter as we head into the next 5 or 10 years, because we don't want to... To the earlier question about isn't AI or machine learning just optimizing to the same exact thing, well, yes is the answer. How do you diverge from that while you introduce new creative ideas? You differentiate your brand, you tell a different story, and I think that's super exciting. I think we're in this a reemergence of creativity that I nerd out on and I'm optimistic about.Stephanie:Yeah, I'm optimistic. I'm just wondering how would you know it wins? How do you know what does well if you can't even tell what happened?R.J.:That's true.Stephanie:When you can't track it?R.J.:That's true, that's true. That's fair.Stephanie:So as a creative, how do you go about sparking creativity? What does your process look like to maybe not only help you know yourself at your company, but also the brands you work with to try and also get them to think creatively?R.J.:Well, I mean, I guess ironically, it does start with data. We look at trends on a monthly basis and we forecast our monthly trends to understand what is it that's trending up, trending down, and then move that into, how we... I mean in startup land, we're always trying to figure out what is the counter trend? How do we stick out? Because we don't want to say the same things that big, big companies are saying. We want to see something different and something risky.R.J.:So that's what we kind of analyze the trends and then go against them to figure out how can we stand out? I'm a big proponent of running and swimming. I grew up swimming, I swam in college and I still swim, and running, swimming I think that provide that kind of meditative or that space to kind of let your brain sort of turn off, but still be on, you know? And then come back from a run or a swim or after you've looked at some of that data and then new ideas start to emerge, and start pitching them and then figure out if those ideas might work or not.Stephanie:Yep. Do you ever look through historical things, since what's old is always new again, eventually? So you go back to the archives and be like, "Here's something that worked in the 20s, let's try this."R.J.:Oh yeah, yeah, yeah, yeah. We're actually doing some 20s based stuff for 2021 and the kind of Roaring Twenties is coming back. We just did a cool campaign called DonDraiper.com, that was D-O-N D-R-A-I-P-E-R. So like putting the AI in the Don Draiper, and looking at all these 50s campaigns and 60s campaigns to understand what actually would be predicted to win now, and it is kind of amazing to see like copy as well as imagery that was being used at the time and in-color, and how those were resonating using REI to predict whether they would resonate with this audience in today. Yeah, I think that's a definitely a good place for inspiration.Stephanie:That's cool. Do you see some of those more vintage ads and photos and things like that working over the next couple of years?R.J.:Well, I don't know about the next couple of years, to be honest. I think in 2021 alone, we're going to see a lot of nostalgia and I think that that is going to be a big factor because we're all looking for comfort after 2020. I can tell you on 2021, yes, nostalgia I think is going to be a big, big trend.Stephanie:2021 will be nostalgia for 2019. "Ah, the good days. What happened in 2019? Let's bring back those vintage memories."R.J.:That's funny.Stephanie:Are there any new consumer shopping behaviors that you guys are watching right now that you think are going to continue post-COVID?R.J.:I think touchless everything, even in store, is a big one. And the one I mentioned earlier about mobile wallet, I think mobile wallet adoption is just going to spike, and then I think all sorts of augmented reality capabilities are also going to, because going to a showroom for example, to see a couch may or may not be something that an individual is willing to do anymore, to make that separate trip. So, "I want to see it in my space. I don't want to buy it without seeing it and then return it, have a hassle with the return, especially with a large purchase item for a home."R.J.:So I think that mobile wallet is going to explode. It already has, but coming from mobile land in my previous roles, it's amazing to see how that's taken off. Then I think augmented reality apps, they're just going to be driving the future of commerce.Stephanie:Cool. All right, well let's move over to the lightning round. Lightning round is brought to you by Salesforce Commerce Cloud, but this is where I'm going to ask you a question and you have a minute or less to answer.R.J.:Okay.Stephanie:Are you ready, R.J.?R.J.:I'm ready.Stephanie:All right. We'll start with the hard one first. What one thing will have the biggest impact on ecommerce the next year?R.J.:Creativity is going to be my answer, because actually our data shows it. For example, masks in ads, this is an interesting thing. So masks in ads are being more popular, but they don't perform as well because people don't want to see kind of the ugly truth when they're viewing creative. How do we creatively manage and creatively work through a situation that everyone is tired of feeling? I think the breakout brands and the commerce brands that find a way to tell an empathetic but inspiring story creatively are going to win.Stephanie:Yep. I like that. Yeah, that's a good point too, of just because it's happening doesn't mean people want to see it-R.J.:Right.Stephanie:... everywhere they look like. Sometimes people might want to see what the future could look like and inspiration.R.J.:Yes, exactly.Stephanie:What's up next on your Netflix queue?R.J.:Ooh, let's see. Mandalorian. It's not my Netflix queue, it's my Disney queue. I'm just like, eagerly awaiting each episode of Mandalorian, which is interesting because I'm not a big Star Wars fan, but I love that show. It's imaginative, it's creative, it's kind of melancholy. It's-Stephanie:I actually don't know that one. I need to check it out.R.J.:I'd recommend it, and I'm excited about that show.Stephanie:What age group is it for?R.J.:Well, they say that Star Wars fans love it.Stephanie:Okay, I like Star Wars, I guess.R.J.:Yeah. But like my eight year olds' buddy Charlie was like, "Man, that's my favorite show." So it also not only 40 year old men, but eight year olds like it. So it's a family favorite.Stephanie:Big range. Good. So they did well creating a show for all overall.R.J.:Yes, yes.Stephanie:Good. What topic or trend do you not understand today that you wish you did?R.J.:TikTok.Stephanie:Yeah.R.J.:I don't understand TikTok.Stephanie:I've gotten that answer a lot.R.J.:Yeah, I don't understand it. It feels very voyeuristic and it feels... I'm all for fun, but for whatever reason, it just doesn't... I don't understand why you would spend hours rehearsing a dance, for example, and then take a video of yourself doing a sort of ridiculous dance.Stephanie:I feel like your kid is probably listening and it's like, "Dad, anyone who says 'I'm all for fun' is not fun." If you have to start a sentence that way, you might not be all for fun.R.J.:I think you're right.Stephanie:Yeah. But I have had a lot of people say they don't understand TikTok.R.J.:Yeah. I think it's the age group.Stephanie:But that would be an interesting data set to pull in data and see what's engaging from there, because I have also had a lot of people say it converts really well and that there's a lot of [inaudible] that platform.R.J.:Yes. Yeah. We've got customers who use our data on Snapchat, but we've not moved into TikTok just yet, but it is interesting to see what trends might apply there. I think that again, personally why you do that, I feel like that's like a PhD or something that I could do is like, understand the motivation there or something. I don't know.Stephanie:Yeah. Well, you let me know how that research goes. We'll bring you back for your PhD on TikTok. What is a favorite book on business or creativity, or just one that you refer back to quite often?R.J.:Hm. My favorite author is a British author named Julian Barnes, who I love. I often try to not read a bunch of business books. I mean, I find some of them to be really good, but I like to look outside for inspiration, so I'm a big fan of Julian Barnes. His books are really creative and strange and weird, and he's a well-known British author but maybe not known as well in the US.R.J.:Then on the maybe non-fiction side, I read that book Evicted, which is again, not a business book, but just in regards to kind of some of the social issues we're after, I find that Matthew Desmond's book is really, really good as well. But I look to those for inspiration or to kind of take my brain outside of business.Stephanie:Cool. All right, and then the last one, what's up next in your travel destinations when we can travel again? Where are you and your family headed? Or just you if you're like, "Peace, family."R.J.:I don't know that my wife would be okay with that, but we actually had the good fortune, we went out to Idaho for about five weeks this summer and rented an Airbnb and loved it, and we want to go back.Stephanie:Where'd you go? Because I was just looking at Coeur d'Alene, which I think is in Idaho.R.J.:Yes, yes, yes.Stephanie:It's really pretty.R.J.:We were in Driggs, Idaho, which it's on the west side of the Tetons, about an hour from Yellowstone, and it is beautiful. I mean, it was wonderful and we're going to go back. We had all sorts of international travel ideas that my wife and I wanted to do with our kids, but I mean, we just had such a nice time out there that want to head back this summer and spend some time out there exploring the mountains.Stephanie:Oh, that's great. I want to check that out too. Idaho is such an undervalued area. No one talks about it, but when I started looking at the pictures, I'm like, "This place is pretty, come on people."R.J.:It is. It's wonderful. Yeah, it really is.Stephanie:All right R.J., well, it was a pleasure having you on. Where can people find out more about you and Pattern89?R.J.:Sure. Yeah, just Pattern89.com or I'm on Twitter @rjtalyor and would love to hear from you, or come on to Pattern89.com and check us out.Stephanie:Awesome. Thanks so much.R.J.:Thank you.

Style is a very personal part of what makes someone who they are. The way you dress is a reflection of who you are or who you want to be, and what speaks to you may be totally foreign to the next person. Knowing all of that, it’s understandable if you believe that something as personal and experience-driven as style could never be boiled down to data points or plugged into an algorithm. But… you’d be wrong.At Stitch Fix, a combination of human stylists, powerful A.I., and behind-the-scenes technology has created a winning model that delivers a personalized online shopping and styling experience straight to clients’ homes. A powerful data science team is one of the key reasons that Stitch Fix has been able to launch its valuation into the billions. Stephanie Yee is the VP of Data Science at Stitch Fix, and on this episode of Up Next in Commerce, she explains all the ways that data and technology are being put to use to create the best customer experience possible.Stephanie describes how technology like GPT-3 is going to finally make seemingly unimportant data consumable to a consumer audience, and she explains how an event like COVID-19 can impact your backend models and what to do to adapt in that situation. Plus, she gives tips on how any ecommerce operation can go about building a data science team, and the soft skills to focus on when hiring talent. Main Takeaways:Asking the Right Questions: The most important skill a data scientist can have has nothing to do with technical prowess. It’s about having the ability to frame a problem and then ask and answer the right questions. Encourage your team or new candidates to pump the brakes and reevaluate the “why” behind the question they are trying to answer or the problem they are trying to solve. Making The Indecipherable Easily Digestible: With the shifting demographics, and older generations now becoming more comfortable shopping online, tools need to be created to ingest and answer long-form questions in a way the consumer connects with. Technology like GPT-3, which is the most advanced language model to date, has the ability to do just this. Tune in to hear how! The Quick Change: Deploying algorithms and A.I. in conjunction with human resources/industry experts is critical for organizations to be able to adapt to big changes in a market. COVID-19 had a drastic impact on models that were trained on pre-COVID data. Should you scrap your current model and start over? Or build on what you have? Stephanie says a little bit of both.For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.---Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce---Transcript:Stephanie Postles:Welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have Stephanie Yee, the VP of data science at Stitch Fix. Stephanie, welcome.Stephanie Yee:Thank you. I'm excited to be here.Stephanie Postles:Me, too. I know it's going to be a good interview when there's two Stephanies, but I'm slightly worried about how the transcript will look. Like who's saying what? Who sounds smart? I'll just take all your quotes and pretend they're mine.Stephanie Yee:Perfect.Stephanie Postles:So tell me a little bit how long have you been at Stitch Fix for?Stephanie Yee:I've been at Stitch Fix for almost four years. Yeah, four years in January.Stephanie Postles:Well, tell me a little bit what does the role of the VP of data science look like day-to-day?Stephanie Yee:Yeah. If I have to think about it, being the VP of data science, it really comes down to maximizing the value that the data science itself and the team can bring to the company, like how do we really get the full promise of an algorithm's approach to things? I think as you guys probably know, Stitch Fix is really thinking about how do we help people find what they love and how do we use data science and human expertise to do that? So the types of things that I think about in service of that are things like what are new opportunities that we haven't really discovered yet? And that's been pretty exciting over the last four years.Stephanie Yee:I think another area that I think about a lot is like what's the right almost interface between data science and data scientists and the business partners. So this is if we have data scientists working with the design team, or the product team, or the marketing team, or even executives, what's the place where data scientists can contribute the most? And also, just being really intellectually honest, like what's the place where it makes sense for others to take over? And then obviously, the last part of my job is to really create an environment where the team can be motivated and fulfilled in doing things that bring out the best to each of them.Stephanie Postles:That's great. So it would be great to dive a bit more into Stitch Fix. I know what it is because I'm a customer, but I think a lot of people may not know exactly what it is or all the things that go on behind the scenes to get the pretty box on your door. So could you explain what it looks like, what is Stitch Fix from a high level, for anyone who doesn't know, and then what goes on behind the scenes to create the company that it is?Stephanie Yee:Yeah, so Stitch Fix is a personal styling company. And at the core, we use both data science and real stylists and their expertise to help people find what they love. If you think about unpacking that, it's really about understanding... or from a data science perspective, it's really about understanding a client's needs, as well as being able to set the stylist up for success. The core of Stitch Fix, the way that it shows up is in a box of one or more items and clients are able to try it on, they're able to send back what they don't like and really just keep what they really love.Stephanie Postles:Tell me how do you go about making sure that you give the customer the exact outfits they would like or refine that process to where maybe the second or third time you've nailed it? Because for me, at least when I am getting the outfits, I'm like, "The first time, maybe like one thing was off or something," but then after that, it's like, "Okay, now, this stylist knows me, or this algorithm knows me." So how do you refine that behind the scenes?Stephanie Yee:Yeah. I think that that's a great question. I think a lot of it... I mean, as a data scientist, like I always think about the data that we collect and what's available, and this comes both from what clients tell us as well as what we're able to infer, so a really interesting example of this, and this is where you had mentioned like, "Okay, there might be one item off at first and the algorithm really learns over time," we really think about things in terms of the ability to say like, "Okay, what data do we have now?" And with the stylist, the stylist is incredibly important throughout the client's life cycle. With the stylist, like what's the right thing to be sending right now? And in response to feedback like, "Oh, that item that didn't really work out for whatever reason," we're able to respond to that.Stephanie Yee:I think a really interesting example of the approach that Stitch Fix takes, or rather one of the interesting things about Stitch Fix is that we're thinking about this and we're thinking about a purchase experience in terms of soft goods. So if you think about the way that ecommerce really started off, or at least as I recollect it, it was like comparison shopping sites where you were looking at like how many megapixels do you want in your digital camera. And a camera, those are very easy to compare because it's like, "Oh, it is three or it is four." Whereas with what I think of as soft goods, there's so many different variants on like a V-neck top that it's almost a little bit overwhelming.Stephanie Yee:And then on top of that, a lot of the typical searching and filtering is not really going to get people there, just because what might be a great top, even if it's the same aesthetic, what may might be a great top for you might be not as great for me or vice versa, just because it's like, "Oh, you know what? I really need things that are machine washable, or I have very narrow shoulders or something like that." So Stitch Fix is really trying to distill a lot of these things that are ultimately very difficult to categorize into what we would call a latent space, but really to say like, "Okay, we have something like style." Style is not what lunch table did you sit at in high school, it's really a form of self-expression. And because people are so different, we need to be able to use data science to quantify where people are on a spectrum versus what category they're in. To handle this like-Stephanie Postles:How do you even encourage people to get maybe the feedback that matters? Because I'm even thinking like if I were to get a shirt and I'd be like, "Well, it doesn't fit," I know you're probably behind the scenes like, "Well, why? What part doesn't fit? What don't you like?" How do you encourage someone to tell you what you need to know to then send them something better?Stephanie Yee:Yeah. That's a great question. So what we found, I think that the motivation to give us feedback is actually just an inherent part of the service. I think a lot of people they'll like... When I've styled people and maybe I've missed the mark, people will say, "Oh, you know what? You didn't get it right the first time, but here's more what I was looking for." If you think about it as a relationship, it's not a transaction where you walk into the store and you say like, "I'm happy or I'm sad." It's relationships and relationships are predicated on that back and forth. So it's really a phenomenal percentage of clients that leave feedback on a fix. It's something like 85%.Stephanie Postles:Wow, that's great.Stephanie Yee:It's just like an intrinsic part of the relationship just because we do frame it as a relationship.Stephanie Postles:Yeah. I think having that stylist there really is what forms a human connection, where you're like, "Well, this is..." Of course, there's a bunch of machine learning and algorithms behind the scene, but there's a face here, a human who's actually approving this style and making sure it's perfect for me. And you instantly feel that connection and you don't want to let your stylists down [crosstalk] get that feedback.Stephanie Yee:Exactly, exactly. And similarly, the stylist doesn't want to let the client down. So there's that level of trust that gets established. And from there, I think, a lot of the desire to say like, "Hey, this had a fit issue for me because it was too long or something like that." There's just something that's special there inherently. And then on top of that, we obviously do encourage clients to give us feedback, like we'll give them a nudge. But we're certainly not the type of company that has to like... They'll come to us rather than us having to really force the issue, will say.Stephanie Postles:Yep. What are some of these subtle nudges that you give that aren't annoying, but then encourage the person to give you the information you need to help them. I think a lot of brands struggle with that, where they either don't follow up at all sometimes if they want feedback, or they do it too much and you're like, "Whoa, chill." How do you guys get that right blend?Stephanie Yee:I think that there's two parts to that. One is saying like, "What's the right number of times to be asking or to be reminding really because it's less on asking?" It's just more like, "Hey, if you want, you can leave feedback and there's someone on the other end who's going to be really thinking about it and responding to it." I think it's figuring out like what's the right time to tell people, and it's really like when would this be relevant to someone? I think that there's some other aspects where it's like what's the right time of day to reach out to someone? And all of these can be distilled down into data science problem or data science opportunities. I really find that to be really interesting. I think that there's another aspect, which is that the clients do come back to the app and come back to the site, even without looking to transact. Once they're there, then it's possible to be like, "Oh, by the way, did you want to..." Just making it really easy and lowering friction to giving feedback. That's another way that we're able to implicitly encourage it.Stephanie Postles:Yep. So with all this feedback coming in, it's a lot of natural language that you're probably getting, or is there any tech that you're excited about right now to help you categorize it? Are you looking into GPT-3 or anything new this year that could help solve that problem when people are just giving you probably long paragraphs of like, "Here's the things that aren't working for me," and they're just putting in terms that you're like, "Okay, I can actually build any database at this."Stephanie Yee:Yeah. I think it's interesting because I think some of the unstructured texts or data generally that might be, I would say, overwhelming to someone like you or I. Computers are actually quite good at processing it. So I think GPT-3 is really incredible, sort of advanced in the way that we're thinking about the opportunities that come from natural language processing. So I think the team is really actively thinking about like what's the right way to bring that into the client experience? We certainly want our stylists to continue to be proactive and like a central part of that relationship. And we're actually trying to figure out like, "Okay, how can we actually bring the stylist forward even more?" But I think the way that I would look at it is I actually love it when there's a large corpus of data, will say, just because there's quite a bit of things that one can infer or pull out of that that would be otherwise a rather arduous task for a person like you or I.Stephanie Postles:That's great. Earlier, you were saying that the team is looking at how to maybe utilize GPT-3. And it can be for the overall industry, not just Stitch Fix too. Is there anything where you're like, "I could see this really impacting ecommerce in this way," because that's the one area that I've been trying to look into it? I can see all the things that you can do with it, from not having to code things and writing books and stuff. How could it actually impact ecommerce or data science or behind the scenes?Stephanie Yee:Yeah, I think that's a great question. I would say that if you think about... GPT-3 is a really great way to translate information into the format that people are used to absorbing information in, which is text. I think that it's especially important going back to the like you can't take a shirt. The specs of a shirt are not particularly helpful to a shopper. They can be helpful to a computer, but it's like, "Okay, the sleeve is 13 and a half inches, like who cares?" And GPT-3 is able to almost add in a way that would have been incredibly difficult before. It's able to translate some aspects of an item into what that actually means in someone's everyday life. So it's not like, "Hey, we could show you a table of information where it says, 'Here's the sleeve length.'" But it can be more like, "Oh, you know what? This shirt is going to hit your elbow and it's actually going to drape a little bit."Stephanie Yee:And because there's so much clothing out there and it's all slightly different in its own way, even if it's once again, the same aesthetic, same color, everything, we're able to bring that to the fore for a massive amount of inventory. So that, I think, gets me really excited. I think another thing that's really promising about something like GPT-3 is it'll let us... yeah, it'll really let us customize an experience to a client using a format that... and move beyond tables of data into information that might be more relevant or easier to absorb.Stephanie Postles:Oh, that's great. Yeah, that takes it to a whole new level. I think about right now when I'm shopping around and it shows, "Okay, there's this model and she's 5'9 and 135 or whatever it is," I'm like, "Okay, I could see maybe how something would fit if that's like a similar person to me." But that takes it to a whole new level and saying, "All right, Stephanie, this is going to be bad, you get your elbows and it's going to be very short on your waist," and just putting it in a contextual term where I'm like, "Oh, it's fixed. You all know me. Thanks for letting me know."Stephanie Yee:Yeah. And if you think about style and aesthetic, there's almost something... Style is a form of self-expression. And describing style in terms of only numbers is quite limiting. If you look at the way that people will describe clothing, and it's always really interesting to say like, "Okay, fashion week happened. What are they saying about what's being shown?" It almost becomes poetic in that level of abstraction. And I think that that's something that that language is much better at doing, or images even are much better at doing than just numbers and texts.Stephanie Postles:So the thing I was just thinking about... I mean, you guys have all these models running and algorithms behind the scenes and you have really large amount of data. How have your models changed? I'm thinking about like pre-COVID models, [crosstalk] probably around work and work clothes, and I want to look nice and heels. And then now, it seems like all those models probably had a big shake up because now it's, "I want athleisure and I want sweat pants and comfy hoodies." How have you guys models changed and what are you doing to adjust them, or what should brands be thinking about with adjusting their historical models that are probably wrong?Stephanie Yee:Yeah, I think that's a great question. It was funny actually. In April, one of the data scientists posted in Slack and he was like, "Oh my gosh, like all of the experiments that we're running, we're just going to have to start over." I think that there was a lot of stress behind that statement. And obviously, we're not starting over, but we're starting from a place where the data has changed. And the really wonderful thing about an algorithm and about being able to really take advantage of technology is that they can adapt much, much faster than a person. If we only had the styling team, it can take a little bit of time to figure out like how do we... If we're learning something about like COVID trends, how do you train a team of thousands of people to be on top of everything that is there, in addition to letting them style each client individually?Stephanie Yee:So what's really wonderful... and COVID was a fascinating situation because it's like, "Okay, all of the..." There was a tremendous amount of work that had to be done to say like, "Okay, given a pretty big step change in the way that both like the world writ large as well as the way that people are thinking about shopping and shopping online, how do we adapt things to that?" So there was quite a bit of work to do that across the board. And then on top of that, it was easier than it would have been if we hadn't taken a data science approach, just because so much of the models are designed to change. Some of our algorithms they'll be like, "Okay, this is just going to be updated every week just because it needs to be."Stephanie Yee:I would say that in terms of COVID specifically like... And a lot of it, we're sitting there and we're saying like, "What are people like?" We'll have conviction in where we think that the market is going. With COVID, it was like, "Okay, you know what? Everyone can anticipate. If people have to stay at home, then they'll have to work from home and maybe they won't feel a need for as formal closes as they normally would." But what was interesting, and this is just from how things unfolded from a data science perspective, we actually had... One of our data scientists was a former epidemiologist. So when we were trying to figure out like, "Oh gosh, the world has changed, like how much merchandise should we buy a year from now," she was actually able to contextualize a lot of the news.Stephanie Yee:As a company, we were able to come to what ended up being a pretty reasonable, I would say, assumption about the world and then to go forward and say like, "Okay, overall, how much should we buy?" And then within that, it's like, "Okay, how are consumer tastes going to change?" We can lock down that merchandise. I think the merchant team did a really great job responding to that. Within that, we can make sure that the clients who are looking for working from home clothing versus something else they can actually get it. I think in terms of general trends, I think it's like a 10X increase in requests for working from home clothing. Definitely, a shift out of formal work wear and into more like casual and everyday styles.Stephanie Yee:I think athleisure, those purchases have accelerated quite a bit. With Stitch Fix, because we sell actual items, the merchant team had to do a tremendous amount of work to really anticipate that. And then the styling team is able to make sure that those items get to the right people. Because if suddenly we started to only send out leggings, that's not really going to work for many of our clients who just need to make sure that the people who are looking for athleisure can get it.Stephanie Postles:Yeah. That's so smart having someone who understands that industry. I feel like there's more room for brands to partner with industry experts like that to help them build their models. Because oftentimes, it seems like everyone is so focused on just, "This is our company model. Only the executives of the company can figure out what the future looks like." But by tapping into someone who has very different experience, [crosstalk] maybe what's happening, it seems very smart.Stephanie Yee:Yeah. One of the things that I find to be really fascinating and amazing about Stitch Fix is the way that the executives... like for executive decisions are able to take advantage of the data science capabilities that we've built. And you almost get to this like the core question here, and this is almost... it gets existential, like is how do you handle uncertainty? For me, I'm like, "Okay, this is why I want an executive with like 20 or 30 years of prior experience because some of these questions are genuinely hard."Stephanie Yee:I want to arm them. Given the data available, the task of a statistician is to really squeeze out as much information as possible and to say like, "Okay, guys, here's what we can know, here's what we can't know. And the part that we can't know, to the extent that it's incredibly important to have a decision or a point of view on that, that is truly human judgment." So the executive version of that, I find to be really interesting and there's many versions of that throughout the company with the stylist, with the product team, with the marketing team, with the merchandising team, everyone.Stephanie Postles:That's great. So when thinking about updating the models and algorithms, would you suggest that a company rebuild from scratch, or should they update a current model to kind of pivot a bit? Because I guess when I think about updating a current model, I worry that there's so many things built into it after the fact and the algorithm just runs away on its own and people are like, "I don't really know what's driving it anymore," versus starting over again.Stephanie Yee:Yeah, I think that that's a great question. There's a couple of different aspects to it. Generally, we'll think, "Okay when you have a..." because a model is really expertise in how to use data. So if you find a model that seems to fit the world very well, then you will want to continue to improve it. If fundamentally the world responds quite well to a random forest, or we get very good predictions out of a random forest, then there's no need to change it just because, but there's opportunity to improve on that. Now, with that said, as research is continuing on different methods, people are going to try different methods. But I would say that you definitely want a mix of both because it's both the method and the tuning of that. It's both the type of model that people will think about as well as the tuning of that model or adding new variables to the model or something like that that we want to do.Stephanie Yee:So to give you a concrete example, like with COVID, we have a demand forecast. The demand forecast is really modeling client behavior and it's really being able to give the merchandise team and the executives and the operating partners visibility into like, "Okay, what's life going to be like a year from now and how should we plan?" When COVID happened, everyone's like, "Oh my gosh, the world is very different." But what was great was we were able to say, "Okay, here's some assumptions that we have. We can update those assumptions, but we've got several years of work into the capability itself. And the great news is that we don't need to start from scratch because things have been built in a way that can adapt."Stephanie Postles:Yeah, that's very smart. When thinking through your demand forecast, are you guys forecasting that the world will eventually return back to pre-COVID, or do you think it's a new normal and now people are going to continue working at home indefinitely and keeping it adjusted? How are you guys forecasting the future of apparel?Stephanie Yee:Yeah, I think that's a great question. I would say that there are certainly things that are very large shifts and there are other things that are just probably going to stay the same. I would say that it's a blend of the two. I certainly don't think and I certainly hope that we're not going to be working from home forever.Stephanie Postles:Yeah, I hope not.Stephanie Yee:Exactly, exactly. With the vaccine coming out and just how effective the vaccine seems to be, I think that we will be returning to... There's some things that are going to fall back into place. There's some things that frankly have already fallen back into place, and then there are other things that the company is really leaning in to take advantage of, so definitely a mix.Stephanie Postles:Yeah, yep, I agree. Have you seen any different types of consumer buying behaviors around what consumers are expecting now that more people are at home, they have more time to try things on? Have you had to adjust how you interact or work with your consumers during this time that was maybe different than COVID or pre-COVID?Stephanie Yee:Yeah. I think as I mentioned, there's definitely a difference in what it is that people are looking to buy. I think another thing that has been really exciting is that I know quite a few new shoppers, people who have never bought anything online before suddenly they're like, "Oh, shoot, all the stores are closed. I now have to try this new channel." So we're seeing people who aren't even used to a traditional way of shopping buying things. I think that's been really interesting because that behavior, as you can imagine, can be quite different. So it's great that the business is able to respond to that and-Stephanie Postles:Yep. It seems like there's a whole new demographic market that is opening up now that a lot of ecommerce companies are going to be able to have a lot of opportunities with. I'm thinking about Stitch Fix, my mother-in-law, who's almost 70, when they came back and told me she... I had never told her about you guys and I don't think she would actually ever do that. And she's like, "I ordered from this company, they picked things out for me, it fits perfectly." And I'm like, "Are you talking about Stitch Fix?" And I was genuinely surprised, but she found out about it on her own, went forward, bought it, worked with a stylist, and got her box. It just made me think about how many opportunities are opening up with this new group of people who never were probably comfortable with buying online before. But now, they're forced to it and it's now becoming normal for them.Stephanie Yee:Yeah. I love that story. That's wonderful. I think what's interesting too is that folks like your mom or my mom where they're not actually as used to buying online, they're more used to going into a store, so they're actually more used to being able to talk to someone. Whereas like my friends are like, "I don't want to talk to a human being."Stephanie Postles:Yeah, don't call me. Don't look at me.Stephanie Yee:Just text me. Right. Don't leave a voicemail, that doesn't work. Right. But the folks who are trying something online, they're used to a store. And Stitch Fix like the gap between some of these department stores where you do have a person and the department stores online presence is quite uncomfortable. So if you have Stitch Fix, obviously you're not in the store, but you get to try things. You get to work with a person, you get someone who's actually there to help you. I think in some sense, it's actually a more natural entry point, especially if folks aren't used to the current paradigm of shopping.Stephanie Postles:Yeah. How would you advise a company to be able to not only continue to focus on their traditional consumers that they're used to, but also lean into that new group of people because it seems like you would have to have very different messaging? Like you were just mentioning, some people like myself and you are like, "Just text me, do not leave me a voicemail. Don't try and call me, I'll decline it," whereas this group, you have to have a whole different mentality. Your customer service team probably needs to start calling people and doing things very different. How would you advise a company thinking about this, who wants to maybe connect with both of them, their current customers and the new ones who are now coming on the market?Stephanie Yee:Yeah, I think that's a great question. So the way that I would think about this is, first off, you have to come up... Let's take the messaging example. You want to think about what are the different messages that are going to be resonating with consumers? And then the second is how do you get the right message to that consumer? In terms of what will resonate, I firmly believe... There's a very interesting opportunity for interaction between design and data science and user research and things like that. Data science can contribute, but ultimately the messaging strategy is one that is the overall messaging strategy. You can try many different variants, but the overall strategy is one that is a judgment call.Stephanie Yee:And then machine learning is wonderful for being able to say like, "Given this message, or given this client and given a universe of messages, how do I make it so that the client can see the most compelling one and really understand on their terms what it is that we can offer?" I would say this is an area where you definitely need both art and science because messaging is so incredibly important and strategic. So it's working with the marketing team, it's working with the design team, and then the data scientists can really help figure out where should that message be delivered? How should it be delivered? What is the right way to make it land with the client?Stephanie Postles:Oh, that's great. So we're putting together this end of year commerce article about 2021 trends. And this is one thing that we're talking about is how much the over 55 demographics spend. And they spend twice as much as millennials. And I think I saw, let's see, 10,000 baby boomers are going to turn 65 every day until 2030.Stephanie Yee:Oh, wow, okay.Stephanie Postles:And then by 2050, the over 60s will account for 20% of all people globally. So when I started seeing these stats, I'm like, "Whoa, more people need to focus on this demographic." Oh, and then another one, the 50 and older crowd has a lot of spending power. And if you put it in terms of GDP, it would be the third largest in the world.Stephanie Yee:Oh, wow, okay.Stephanie Postles:US is 21 trillion, China's 14 trillion, and then Japan is 5 trillion. And this is where the people they spend 7.6 trillion in 2018. To me, I'm just seeing all these opportunities that are being missed right now. I'm like, "What the people be doing?"Stephanie Yee:Yeah, no, I think this is a wonderful group of folks. Within the tech industry, I would just say especially there does tend to be a focus more on millennials and things like that. I think the great thing about Stitch Fix is that we are... And oftentimes I think some brands they'll sit there and they'll say like, "Oh, our target demographic she is between 25 and 39. And after that, she's not us." I think with Stitch Fix, we're able to say, "You know what? We're not going to categorize you into one group or another, we're going to serve you where you are. And with personalization, we are able to..." I completely agree with the stats or the information that I have on how that generation of clients interact with Stitch Fix is very, very consistent with some of the numbers that you had described. So it's a really wonderful group of people who are thinking about their personal style, and I do agree it's folks who, I think, tend to be served a little bit differently, really at the retail industry's loss.Stephanie Postles:Yep. Yeah, I agree. How would you go about getting the right data to then be able to craft the personal message then? For Stitch Fix, it does feel a little bit easier because you can ask things like age and a bunch of other questions and they're like, "Well, they're styling me." But for a lot of other brands, if you were to ask age, they'd be like, "What?" How would you advise other companies to be able to get enough information to then be able to personalize a message like that?Stephanie Yee:Yeah. I think that there's a couple of different ways to do it. And a lot of it really is around the marketing and design toolkit. Because ultimately, when you're coming up with messaging, you don't want to say like, "Okay, this is the messaging for folks who are 50." I'm an old soul, so maybe I'll just really respond to that myself. A lot of this is just a strategic question. So data science can play some role where it's like, "Okay, based on what we know, people tend to respond to X, Y, and Z." But really, if you want to be looking forward, it's less like what've people responded to in the past?" You definitely want to take that into account, but it's more like where are things going in the future, especially at a time when things are changing so rapidly?Stephanie Postles:Yep, yeah. That's why I'm also excited about being able to ingest the sentences that people are asking the customer service reps or putting in the search bar because I think that alone could tell you who someone is just based on how they say [crosstalk 00:32:09].Stephanie Yee:Oh, absolutely. Absolutely. Yeah, I agree. I think that the notion of being able to have more conversations with people is something that I think is incredibly exciting and it does allow for a level of, I would say, flexibility of expression, especially once computers can really respond to that.Stephanie Postles:Yep. So when thinking about building up a data science team, what are your first steps? How would you tell a brand to think about it to be able to build it up in an efficient manner, where it's answering the right questions, you have the right goals in mind? Because when I think about data science from different companies I've worked at, some people are called data scientists when they're really a BI team [crosstalk] called data scientists. And then you have marketers who are also data scientists. So like how do you [crosstalk 00:33:26]?Stephanie Yee:It's certainly become a loaded term. It's funny because in recruiting, it can be incredibly frustrating like, "Well, this LinkedIn search is not very helpful." Yeah, that's the first thing that I would say is if people are thinking about like I need to build out a data science team, searching on the term data scientist is probably not going to be the most efficient way to get there. I think probably the step one that I would advise people to do is to really think about what role do you want data science to play and where are the areas that you see as high value? And this can be a little bit of a hard question because without... in the same way that I'm not a 100% familiar with a merchant's toolkit or a designer's toolkit.Stephanie Yee:If I, as a data scientist, look at a problem, I can be like, "Oh, this is something that can be very easily solved with the machine learning." It's hard for folks who don't have that background to know that, but really thinking about like what is the strategic problem that people are trying to solve? With data science, I'm very supportive of making it like a core... like figuring out how to have in-house data scientists focused on the core problems of the company. So it's like what are the core problems of the company? What role would you want data scientists to play within that? I think one of the things that's wonderful about Stitch Fix is that data scientists are really expected to take a leadership role. And this can be incredibly exciting for some folks and it can be just not really interesting to others.Stephanie Yee:So figuring out like, "Okay, if you want data scientists to play a strategic role like, A, what's the core of your company, B, can you hire people who are inclined to really step up and to contribute to that strategy, and then C, how do you set them up for success," I think... And when I've talked to companies, some people will say, "You know what? We're really about logistics." And it's like, "Oh, actually, there's a subset of data science," where they're really thinking about operations research, they're really thinking about warehouse efficiency, supply chain and things like that.Stephanie Yee:And if people are really thinking about demand forecasting and logistics and fulfillment, that's a great tack to go for Stitch Fix. A lot of it is around the warehouse and the fulfillment side of things, those folks who are doing wonderful work and it's all in service of a very specific type of client experience or being able to provision a specific type of client experience. So we have folks who are working on the warehouse side of things, but then we also have folks who are really thinking about like, "How do you work with a stylist to help people find what will really help them or what will really bring them joy?"Stephanie Postles:I got it. If a company doesn't really... They know some of their problems and they know their operations, but if they don't know data science, how would they know what they can solve, or how would you recommend, like should they go and talk with the company or a mentor or advisor who understands that area to do just what you just did with me of like, "Oh, of course, you can put it in logistics and you can put it on your website or here"? How would you tell someone to move forward if they don't know what they don't know?Stephanie Yee:Yeah. If you tell me what is most important to your business, then I can help you figure out like what are the data science opportunities there. And sometimes data scientists may not be the most important input to that, at which point then there might be alternative areas to invest.Stephanie Postles:Yep. What kind of skills would you be looking for when you're hiring a data scientist team, or what are some of the emerging skills too that you're like, "We weren't looking for this four years ago, but now it's something that's very much in demand"?Stephanie Yee:Yeah. That's a great question. I would say the skill that seems to be more and more in demand, and this is something that I think from the early days Stitch Fix had good intuition that this was important, is around problem framing. Like a data scientist, we need them to have a good understanding of statistics, oftentimes machine learning, computer programming, sometimes software engineering. But really, the core thing that we think about is like, "Can they frame a problem and can they... How do they think about problem framing?" Because what will often happen, and this is a pattern that I've seen in other places, is people will very valiantly answer the wrong question. And it's not their fault that they're answering the wrong question, it's just the wrong question was asked.Stephanie Yee:So what we really encourage folks to do and what I think the most effective data scientists do when they're empowered to do so is if people pose a problem to solve, it's actually okay to say like, "Okay, let's take a step back. Let's dig into this a little bit and figure out like is this posed in a way that can lend itself to the full suite of potential solutions?"Stephanie Postles:Got it. So if you're interviewing someone, how can you test that when you don't have much time with them? What kind of questions can you ask to see are you able to actually ask the right questions to figure out what the problem is without going down the wrong path right off from the start?Stephanie Yee:Yeah. That's a great question. Oftentimes there's two ways to do that. One is to say like, "Okay, tell me about a time when someone has posed a very vague business problem and how did you think about refining what it was?" I think that that's one angle. And then another angle that I will bring to the table is I'm thinking about this type of problem, how would you help me? How would you think about it? And just really making it into a discussion because what you're really looking to assess is how do people think? And I will say interviews are not... When you only have 45 minutes with someone, or you have six people with 45 minutes each with someone, you don't get nearly as much data as you'd ever want to. So when I think about it, I just want to have a conversation and see how people think and what connections do they make. If something is framed in a way that merits revision, how do they go about figuring out what that revision might be?Stephanie Postles:Great. So in an industry that's changing so quickly, how are you staying on top of new trends and tech? Are you subscribing to a bunch of newsletters? Are you listening to podcasts? What do you do to stay on top of the data science field?Stephanie Yee:I think that that's a great question. I do subscribe to newsletters. There's a couple of blogs that I really like as well. I think Andrew Gelman is a professor, I believe, at Columbia. He has some wonderful work. Susan Athey is actually another researcher at Stanford who I think is absolutely wonderful. She thinks about causality. So this is like what actually causes another thing. And she thinks about machine learning techniques that can... One of the areas of her research is thinking about how machine learning can contribute to that field. I personally like to stay closer to some professors that I particularly admire. And then also the great thing about Stitch Fix is that everyone has a different set of passions and interests, will say, as well as a different background. So when people are coming across a lot of different methods or papers, there's a wealth of different conversations going on. So that's another great way to stay on top of things.Stephanie Postles:Yeah. I found it really helpful when I dive into certain trends. Like every week I'll pick a new piece of tech or a new trend or something just to see what it's about. And then I start to realize how many new things I'm being introduced to and new people on Twitter that I'm following and new ways to solve problems, like at a media company with podcasts, where I'm like, "Whoa, I never thought about using that. But now that I've read about it, I can think of 1,000 ways to maybe implement it, or I have a whole new model in place or a business model idea based on just very things that are not a part of maybe the media industry or something."Stephanie Yee:Exactly, exactly. I love finding metaphors in one area that tend to work in another. Being able to abstract between things is such a source of insight. I agree with that.Stephanie Postles:Yep. So where do you see the future of data science in ecommerce headed? How do you see that experience playing out in the next five years or so? What does it look like, or what does it feel like?Stephanie Yee:Yeah, I think that's a great question. I think that the future of ecommerce is really one where you have a more personalized experience. I think that as we've discussed, data science is an incredibly important input to that in being able to really fulfill on that promise. I think that data science can also help retailers make better decisions. I see a lot of promising growth on that front. I think for retailers who are particularly fulfillment or operationally focused, there's some really wonderful sort of... I think Amazon is really leading the way in the direction that that side of things can go.Stephanie Postles:Mm-hmm (affirmative). I see a lot of companies probably looking to this field, especially after all their models and plans started breaking last year, trying to figure out what can I get ahead of this next time? There's going to be a next time of something and how can I get ahead of that and start seeing the early indicators and maybe be able to be more agile with adjusting forecast and supply chain and all of them.Stephanie Yee:Yeah, absolutely. I think that that level of agility is something that I'm very proud of that Stitch Fix has. And part of it is because we're able to use data science, not only it's like, "Okay, we can update this model relatively quickly compared to others, or we can figure out how to take into account in the past but not too much," but then also in the ability to help executives think through different scenarios. Because ultimately, we can use data to do some things like we need to executive input on other things.Stephanie Postles:I always love a good data story. Are there any stories that come to mind that either the data shows something that was wrong or it was funny, any of your favorite data stories that you think about from time to time?Stephanie Yee:Yeah, I think that's a great question. The one that I find to be quite endearing is... We have this notion of latent style. And this is rather than saying like, "Oh, here's the lunch table I sat at in high school," it's where within the broader realm of style do you sit? And one of the early hypothesis, it was like, "Okay, we have this sense of the types of clothes that people will like, and we can show pictures of them. But we should figure out how to articulate this to a stylist." So there was some work done to say like, "Hey, here's a set of clothes and here's another set of clothes, named them." So you could be like, "Oh, this is casual and preppy, or this is boho and edgy or something like that."Stephanie Yee:We basically ask people to annotate collections of clothing based on how they would describe that aesthetic. What was wonderful in a sense was all of the... There wasn't really that much consistency between what people were saying. I think sometimes people are like, "Oh, this is a problem." I was like, "No, this is great, guys. This is actually great because it proves that there's things that are there that are beyond categorization. I view self-expression and style as of them." Ultimately, when it was like, "Okay, now we need to express a client style to a stylist," a lot of it was just like, "Let's just show examples and pictures because we don't have the words for it."I thought that that was wonderful. In my mind, it really spoke to the value that Stitch Fix's approach brings to ecommerce.Stephanie Postles:That's cool. So that definitely shows that consumers on your side definitely can't be used from a... You do see annotation label or dataset type of aspect because they're all going to come back with, "This is preppy. Oh, no, this is boho. Oh, no, this is athleisure," and it wouldn't really work for you guys.Stephanie Yee:Yeah, yeah. It does become interesting. Because if you have something that is totally fashion-forward and wild, then nobody would certainly say like, "Oh, it's classic." So there might be a cloud around things. But it definitely does speak to like where is it that people can be most effective versus pictures versus something else?Stephanie Postles:Mm-hmm (affirmative). All right, cool. Well, let's move over to the lightning round. Lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question, and you have a minute or less to answer. Are you ready, Stephanie?Stephanie Yee:Sure.Stephanie Postles:All right. First up, what's the nicest thing someone's ever done for you?Stephanie Yee:For me personally?Stephanie Postles:Yep, personally.Stephanie Yee:Oh my goodness, okay, I'm going to need the minute.Stephanie Postles:Yeah, go for it.Stephanie Yee:I guess this is tangential to data science. But there's one point early on in my career. I started my career in management consulting and management consultants are an incredibly impressive bunch, incredibly good at dealing with uncertainty. They also have a very clear view for like what makes you successful management consultant. And there was a talk that one of the partners gave that stayed with me. I think of this as nice because it was quite informative in how I viewed the world and what I can do within it. He said like, "You know what? Every place that you work is going to try to put you into a box. They're going to try to categorize you and nobody really fits into a box."Stephanie Yee:So it's actually okay to say, "You know what? Try to find a job where you fit closely enough into... where all of the strengths that you bring to the table match the strengths that they're looking for." But it's actually okay to say like you have quirks and you're not always going to fit into the box. I think that that was really wonderful because it was like, "Oh, I need to find a job where the way that I think about things maps really well to the thing that the company needs." And then I also need to say like, "What are the things that I bring to the table that people might be like, 'Hmm, okay, that's interesting'"? And decide like, "Is that something that I want to develop about myself, or is that something that I want to say, 'You know what? That's just a strength that I have, or that's just an aspect of myself'"? I would say that that piece of advice was incredibly generous to give as well as something that was very valuable to me.Stephanie Postles:Oh, I love that. I'm really glad I asked that question now. It's a new one. So I always am waiting to hear if someone's like, "Ah, nothing," or something really great like what you just said.Stephanie Yee:Okay, I'm glad that that worked.Stephanie Postles:That was good. What is a trend or piece of tech that you don't understand today that you wish you did?Stephanie Yee:That's a great question. Let's see. A piece of tech that I don't understand today that I wish I did. I think on my list, I've been very interested to get in a little bit more into the weeds and how autonomous vehicles work. I've read at least like what The New York Times will say about Waymo or things like that. But I haven't gotten a chance to really read up on the literature. That's definitely been on my list in part because I think it's just a very interesting problem to solve. And I actually have some friends who are working on that problem, so I can probably just ask them, but also because it's something that is probably going to transform society in the next decade or so.Stephanie Postles:Yeah, I agree. What's your favorite data science book that you refer back to?Stephanie Yee:What's my favorite data science book? The core one that... And this one is not exactly readable, but it's quite nice to reference is elements of statistical learning. I would actually say that it's... Well, for some people, it's readable. For me, it's more of a reference book. But it's this wonderful collection of information put out by some professors at Stanford. I think that it's like a cornerstone of a lot of machine learning and data science classes.Stephanie Postles:What's up next on your Netflix queue?Stephanie Yee:Right now, I'm in the middle of The Crown.Stephanie Postles:Okay. I've had a lot of people say that.Stephanie Yee:Yeah. I hadn't gotten into The Crown actually until shelter at place... I sort of been like a elapsed inactive Netflix customer on and off throughout the years. But I had heard so much about it that I was finally like, "All right, I will sit down and watch it. It's really good.Stephanie Postles:Yeah. I started it and I'm excited to finish it. And I heard the next season's not coming out for like another couple of years or something.Stephanie Yee:I know. I was just like, "Oh, I should have waited to get into it until everything is done." But yeah, I think it's like two years.Stephanie Postles:All right. And then my last question, which is very important, how strictly do you enforce when people are writing up the term data? Do you use it properly, like the data shows, the data show? How strict are you with your team about use the word data properly?Stephanie Yee:I will say-Stephanie Postles:Very important [crosstalk 00:52:14].Stephanie Yee:I notice when people use it. I noticed people's grammar, including that. There are other concepts that I will become more passionate about than grammar necessarily. I think it's incredibly important, but I think the contents, like the true content and making sure that we're precise in certain other words is probably higher priority. I generally try to take a light touch with my team.Stephanie Postles:Okay, you're now stickler about it.Stephanie Yee:I do notice though. I have to filter it, will say.Stephanie Postles:I think you does it right. [inaudible 00:52:56].Stephanie Yee:I do, I do, actually.Stephanie Postles:I love that. All right, Stephanie, well, this has been a really fun interview. Where can people find out more about you and Stitch Fix?Stephanie Yee:That's a great question. The stitchfix.com website is probably the best place to find out more about Stitch Fix. I think in terms of myself, that's a great question. I do have a side project called RTD3.us.Stephanie Postles:I was looking at that. What is that actually? I saw it on your Twitter, but I didn't have enough time to jump into it.Stephanie Yee:It's just a side project. I was at a machine learning and fraud detection company at the time. Oh my goodness, this was probably like six years ago or so, maybe seven years ago when machine learning itself was just starting to like... It wasn't anything that people knew anything about. And a lot of the vendors out there would be like, "Hey, we have this super advanced algorithm, dah, dah, dah, dah, dah, dah." I found it to be a little bit annoying that people would market it as it's too complicated, you can't understand, ours is the best. And at the time, I was quite indignant because we actually had top-notch data scientists and engineers who did actually have something that was the best, but we were still trying to figure out how to market ourselves.Stephanie Yee:So I was like, "Okay, I want to sit down and I want to be able to explain machine learning and some of these more advanced statistical concepts to people who didn't take linear algebra in college." Very, very smart people who just decided to study something different because it doesn't have to be as difficult or as complicated as people make it out to be. There are some things that are incredibly complicated and wonderful and elegant, but you can distill something down to something that is accessible to a broader audience. So I worked with a designer/front end engineer, and we came up with something that really tries to explain some of these core concepts and to make it accessible to people who otherwise like... others are just trying to confuse them.Stephanie Postles:Yep, yeah. That's great. It reminds me... I mean, it's not very similar, but have you heard of Sideways Dictionary?Stephanie Yee:I haven't. I want to go check that out though. That sounds wonderful.Stephanie Postles:That's a dictionary and it uses analogies to explain technical terms. So very different than what you're talking about, but it's helpful because if you look at... Let's see, I'll look at API. The analogy is it's like the connectors on the back of your TV. They let you plug in a device from another manufacturer and both the TV and the device know what to do next. And the connectors are the interface that lets one machine talk to another.Stephanie Yee:Oh my goodness, I love that. This is actually something that I end up doing at work anyway. So I'll have to take a look at that. This is wonderful.Stephanie Postles:Yeah, check it out. I was looking at the about and I saw that it was created by Jigsaw. I don't know if you remember that. It's a group within Google. I think it's just one of their side projects that some of the engineers built. I'm like, "This is actually pretty helpful for me to understand technical engineering type terms."Stephanie Yee:Yeah, yeah, no, I think t's very easy to forget like what it was like to not know something. I think that for folks who can remember that, there's a great deal of empathy there and there's a great deal of desire to help people just understand technology in general. So I will definitely look at that. That's very exciting.Stephanie Postles:Cool. All right, Stephanie, well, thanks so much. Yeah, we'll have to have you back around since I feel like we have a lot of things we could keep talking about, but until next time.Stephanie Yee:All right. Thank you. This was great.