Up Next In Commerce

You never know when inspiration will strike. For Jordan Nathan, the idea for his company came after an unfortunate incident. Jordan got Teflon poisoning after burning one of his pans while cooking. After researching the dangers of Teflon, which is one of the most prevalent materials in all of cookware, Jordan knew there was a chance to carve a niche for himself in the market with a non-toxic and eco-friendly product. Thus, Caraway Home was born and it launched with a waiting list of more than 150,000 customers. Jordan has been building on that initial buzz by focusing on his Ecommerce platform and selling a vision of a company that can go far beyond just non-toxic pots and pans. On this episode of Up Next in Commerce, Jordan explains how he builds a pipeline to drive customer reviews, which he uses to organically grow the business. Plus, he reveals the growth strategy for Caraway Home and why he believes that if you want to truly take on the big brands in an industry, you need to use an omnichannel approach to take market share and shelf space away from them in all areas.  3 Takeaways: Reviews are key to showing the value of a product when you are selling online. Building and maintaining a review pipeline is critical and means following up and offering products to everyone from influencers, to editors to ordinary people Taking a data-driven approach to product development allows you to lean into introducing products that have a strong chance of flourishing online In order to achieve true saturation of the market, you need to have an omnichannel approach. It’s smart to build up your Ecommerce platform and product offerings at the start, but to compete with the bigger brands, you need to eventually replace them on the shelves of brick and mortar stores 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 everyone to Up Next in Commerce. This is your host, Stephanie Postles from Mission.org, and today, we have Jordan Nathan on the show, the founder and CEO at Caraway Home. Jordan, thanks for coming on. Jordan: Yeah, thanks for having me. Stephanie: I feel like we have to start with the story of you poisoning yourself which brought you to your company. Can you please tell me about that because I read that in the notes and I'm like, I didn't know you could poison yourself from pans, like pots and pans, so I wanted to start the episode that way if that's okay. A great way to start, on a high note. Jordan: Definitely. Yeah, back in, I think it was late 2017, I was cooking just like any other night and unfortunately left a fry pan on my burner for about 45 minutes. I think I ended up getting a call right when I was starting to cook and forgot the pan was there. Call ended, ended up feeling kind of nauseous and light headed and the apartment was feeling super fumy and soon realized that I had forgot the fry pan on the burner. Yeah, ended up getting sick. I was nervous based on having inhaled a bunch of fumes, live in a really small couple hundred square feet apartment in New York City and ended up calling poison control. They basically had told me that I was likely exposed to Teflon poisoning which occurs either from overheating a fry pan with Teflon in it or scratching it and it getting into your food, and really just was really surprised that something that I was cooking off of and touching my food could potentially get you sick. Also, further research showed that there were definitely some longer-term consequences that have been proven through a number of studies related to Teflon and felt there was a big opportunity to build a brand in the kitchen space around launching non-toxic products and eco-friendly products in the category. Stephanie: That is a very good reason to launch non-toxic products. Before deciding that you wanted to start Caraway Home and build non-toxic pots and pans and things like that, let's hear a little bit about your background and what brought you to moving to the world of Ecommerce. Jordan: Sure. Well, grew up in New Jersey, went to school at Colby College, up in Maine. Studied consumer psychology there. I tried launching my first startup out of school, which was a Ecommerce marketplace built for direct to consumer brands. This was back in 2015. Really got it as far as I could, but unfortunately, really struggled with that fundraising process and coming right out of school, didn't have much experience, but it was really a great kind of launchpad to testing and learning and trying to do my own thing. Jordan: I then joined a company in New York in early 2016 called Mohawk Group. They're a consumer product holding company owning about four brands and I joined them to lead Vremi, which was their kitchen brand and ended up basically working there for about two and a half years. Launched close to 200 different kitchen products. The brand itself was really focused on a post-college consumer. Average price point was $10 to $20, so definitely someone looking for something that was lower cost, colorful, and was my kind of first really great experience at obviously working in the kitchen category launching a number of products and really fortunate to have done more or less the exact same thing prior to Caraway. Stephanie: That's awesome. What were some of the lessons you learned, especially at Vremi when you were launching all of these products that you brought into Caraway? Jordan: Yeah, I think biggest lesson was don't launch 200 products in 18 months. Stephanie: Sounds intense, but why? Why not? Jordan: Yeah. Well, it's definitely a lot of fun and learned about a lot of different materials and categories, but definitely caused a lot of issues with inventory forecasting and quality. I think through that experience really got to see the power of selling through digital mediums. At Vremi, we really did focus on Amazon, which is quite different than what we're doing at Caraway, but a lot of the same kind of growth principles that carry over that we now implement at Caraway. It's really a good opportunity to leverage data, use that to inform product decisions and the beauty of online, obviously, is the ability to test. Really taking a lot of those same principles into what we're building at Caraway. Stephanie: That's great. Were you any bit nervous when you were moving from a large company that had resources and infrastructure and more funding and all that, to then start your own company where you had to do everything on your own? Jordan: Definitely. I think when you take that first leap, it's super scary and you leave a comfortable job. You end up initially pitching investors and getting rejected a lot, you're not getting paid anything, and really, you are the only person in the world who actually believes in what you're building. It's definitely scary, but I had enough conviction in Caraway and having sold all these products before and had experience, felt really there was no better person to go do this. The supply chain and the manufacturing were really easy for me just because I had done a lot of this. It was more of the fundraising that was kind of a challenging and new process for me. Stephanie: You had some recent success around fundraising. Right? Jordan: Yes, that's correct. Stephanie: It was a seed round? Jordan: Yes. We just closed and announced a $5.3 million seed round. Stephanie: That is awesome. How did that feel closing that when I think earlier on you said it was a bit of struggle trying to attract the investors. How did you find the right investors and get them to believe in your vision? Jordan: Yeah. Well, we're really excited. It's a big step in our journey and I think validation for what we're building. We took a little bit of a different route than most brands and I think something that's maybe becoming a little bit more common in consumer, but we raised from over a hundred investors in the round, a lot of founders and execs a number of funds and a lot of consumer-focused investors and really took the approach to building a large network, which we felt would be much more valuable in the long-term. As you can imagine, getting a hundred investors means I probably pitched a thousand investors and it took a long time, but I think in the long run it will net out much better because we're more or less one introduction away from any company, given the large pool of investors we have. Stephanie: Were some of the key differentiators that either excited the investors or that they saw about your company? Jordan: I think there have been a lot of news and some companies out there over the past number of years who've really focused on growth at all costs and really prioritizing top-line growth and thinking about things like profitability at a much later stage. Coming out of my prior experience, I had a really great grasp on economics and how to manage cashflow. I think since day one, our pitch has always been really growing a sustainable business in a category that's super-exciting and stale and hasn't seen much innovation. As a brand, we call ourselves Caraway Home for a reason in that cookware is our hero product, it's where we've launched and felt there was the biggest opportunity, but we really see taking those same product principles and applying it across the whole home. I think what's really exciting, that investors have really been attracted to is basically the breadth of how big the home is and how many products there are within the general category. Really, an opportunity to build a lot of products and a pretty large brand across a variety of categories. Stephanie: Got it. Yeah, that's great. When it comes to organic and non-toxic cookware and things like that, how do you convey those type of unique differences on your website because when I was looking at it, it's like, I wouldn't automatically maybe know that Teflon can poison you. I mean, I kind of have heard it before, but it's not something I think about every day, maybe when I grab out my pans. Especially if I'm on a Ecommerce site where I'm looking and shopping, how do you show people this is why we're better than all the other brands out there? Jordan: Yeah. I think for us, storytelling's a really big piece of DNA. Most places where people are coming to from the site, whether it's press or a Facebook ad or Google, we do our best to tell that non-toxic story through those mediums, so they're coming into the site with an idea. We're not here to use any scare tactics; we're here to educate consumers. We try not to push it too hard on our site. We've got sections on materials that you can go deeper, we have a lot of blog posts, so we really provide those educational resources in case you're interested to read more and educate yourself on the subject, but the site's really meant to emphasize all the points of differentiation, whether it's design or color or the storage components that come with our sets. We really want people to get the full picture there, but in those kind of advertising mediums and press, the nontoxic is really who we are and what we stand for. Hopefully, before coming to the site, you get some type of idea of that product feature. Stephanie: Got it. The one thing that I liked when I was browsing through your site was it had this very risk-free feeling to it because it has that free returns and 30-day trial and it had a ton of reviews. I mean, all over the page and it had a whole tab, like a tab for just reviews. Was this something you did from the start or is this a more recent implementation? Jordan: Reviews have been a really big piece of the brand since we first launched and this was a big learning from my prior experience, especially on Amazon, which is so driven by reviews. It's one thing to just show a product on a website, but you can't touch and feel it and reviews are really the only way to create validation for the quality. Really, since day one, we've been focused on our review funnels, we also want to get feedback to improve our products. Yeah, we continue to improve that pipeline, but we're excited to really continue building that out. As a brand, again, with no brick and mortar presence at the moment, it's really the best place customers can go, especially for a brand that's six, seven months old and they've never heard it before. Stephanie: Mm-hmm (affirmative). How did you go about getting those reviews because that, to me, seems like one of the hardest things to do, especially with a new product or podcast? For anyone that hasn't reviewed this podcast yet, please help us and share the word and review it. How did you go about getting those reviews because some of the places that you were getting them from where pretty big media brands? What was the strategy there to bring people in to actually review the product? Jordan: Yeah. I mean, on the site, we've run post-purchase email funnels, SMS funnels, we hit each customer with it a number of times to get their feedback and then, when it comes to press, we did a lot of gifting at the early stages and really tried to create a culture amongst editors of getting the products into their homes and actually using them at home. Not really pushing them to write stories on us, but getting them to experience the product and if they love it, have them come back and write their honest opinion. Stephanie: Mm-hmm (affirmative). That's great, yeah. I think if you get something in someone's house, even if they didn't originally maybe even ask for it, you kind of feel obligated to give a review. I know on Amazon, I left a two-star review on something for a baby product, and they sent me a new and different product just saying like, "Hey, we're sorry that the first product didn't work out, but if you could please reconsider your review because here's three new things we're sending you to try out." Even though I didn't ask for it, and I didn't expect it, I kind of felt obligated to get on there and test out the product and re-review it if I did end up liking it. I think that's good to get it in their house to get people to start thinking about it. Jordan: Definitely. We see the same things with influencers as well. We want to be working with people who organically love the brand and product. We're very confident in the product that we've created and the quality. We've seen just a lot of success of once we can get it into people's hands and they cook with it a few times, it's really a great bridge to starting a bigger partnership conversation. Stephanie: Yeah, that's great. The one thing that I saw that was interesting was, it was on a blog post where you mentioned that when you were launching, you had a wait list of I think it said 150,000 people who joined pre-launch to get the product when it was ready to go. Is that the right number and, if so, how did you garner that excitement for people to get on a wait list? Jordan: Yeah. That is the right number and that wait list was a really incredible kind of launch platform for us. I think early days, it really started with me pitching just a lot of investors and talking to as many people as possible. Created a lot of word of mouth, which drove to our landing page and then, prelaunch, one of the things we did was partner with other brands on things like sweepstakes and giveaways and start building our brand rep through a lot of those partnership campaigns. Then, towards the end of the funnel, we started building, not dissimilar from what Harry's did to build their prelaunch, I think hundred-thousand wait list, ended up doing a referral campaign within that existing list we built and that referral was super-successful. We got a lot of word-of-mouth and people sharing out of it. By the time we launched, we had a nice grouping of customers who were really excited to test and be our early adopters. Stephanie: That's really fun. How do you keep them coming back and engaged because I think of cookware, I mean, I got mine, I think, at my wedding and I haven't really thought about it unless it breaks, which has happened a few times when we've dropped it and it's gotten all bent up. It's not something that comes top of mind or would bring me back maybe to a site easily. How do you keep those customers, especially the really engaged and excited ones, coming back to the site and checking out your new products? Jordan: Yeah, it's really through content. We're pretty active and it becoming building a much stronger content platform, both on the site and social. For us, we obviously want people to buy the product, but we also want to provide education outside the physical pots and pans, so we see a lot of activity from consumers coming to us. Actually, less about food and cooking and recipes, but more about design and colors and seeing Caraway kind of inspired them to redo their whole kitchen or rethink the products that they have in their homes, so whether it's our blog or social or writing in through chat or email, we work to really provide these pieces of education to the consumers. Jordan: As we grow, we have aspirations to build a pretty large portfolio of products, so what's fantastic about cookware is it's a larger purchase item, we're not waiting for revenue to come in through a subscription. We get that first purchase and then, really have opportunities as we launch more products to focus on those for upselling and reengaging customers. Stephanie: That's great. How are you thinking about retail locations or like your omnichannel strategy? Jordan: Yeah. Right now, we are solely focused on our website, we are on a few marketplaces like Zola and Goop and Huckberry and a few others. Omnichannel is super exciting to us. I think going back to our mission, if our goal is to really get non-toxic cookware into as many people's houses as possible instead of Teflon, really the only way to truly embrace that and do that is to replace the products that are on shelves and currently saturate the market. Online right now is really our main focus, but we see big opportunities with partnerships in retail, with our own brick and mortar. Still, today, we're a young brand, so we're focused online, but have some exciting new plans coming up in the next 18 to 24 months. Stephanie: Fun. What's the experience been like selling on marketplaces versus just if you just CBA your website? Jordan: Yeah. I think for us, we see it as opportunities to reach different demographics than what we've... are currently seeing on our site. We've gone into it with a really open approach and have seen a lot of success. Obviously, being in the kitchen and home category, a lot of these items are purchased through a registry process, so that's always been really important to us at the beginning, but also someone like Huckberry, who we're working with, it's an all men's marketplace, they do a really amazing job with curating and they really know how to talk to their customers. It's one of those marketplaces where we've just seen great success. It's a totally different demographic from what we see on the site. It's really a good opportunity to just test and reach new markets that otherwise we'd have no access to. Stephanie: That's great about the registry idea. I mean, it seems obvious when you say it now, but making sure that you're in on all the websites, I don't even know how they link up because I think when I built my registry, they were already linked to different marketplaces already set up. Do you have to go to the marketplace to get that relationship or is it a brand who controls the marketplaces all in one place? How does that work? Jordan: Well, most of them are marketplace controlled, but they're all standard kind of retail relationships and a lot of the major registry players are all digitally driven. Some of them allow you to add any product from any site onto their platforms. They're all a little bit different, but we want to be at the top of every registry platform and also, encourage users who come to our site, who are getting married, to go to those platforms as well to add us. Stephanie: Yeah. I think just your colors and I saw some of your videos, that should be enticing enough for people to want to add it to a cart because it does look very different than the typical black or light gray items and I haven't really seen many videos of cooking where I'm like, "That's a nice pot or pan or whatever it is," and I'm not even looking at the food. I'm looking at how they're cooking in this nice, colorful, bright product. Jordan: Yeah. Color's a big part of our brand and this was actually a big learning from my prior experience, but there's just a big lack of color in the category and the colors that do exist are typically like bright reds or really de-saturated baby blues and I think there's definitely a place for those. Also, we just saw a big, kind of wide-open space of colors like navies and sages and creams that exist in the rest of your home, but for some reason don't exist in the kitchen. I wanted the brand to have a little bit of playfulness, yet sophistication through colors and also give people the opportunity where you can really create a kitchen that I think represents your personality in the rest of your home. Stephanie: Yeah, that's really fun. Why weren't there colors before? Is there something about creating that that makes it harder to incorporate colors? Jordan: The creation of colors certainly is challenging. It's a lot of back and forth, a lot of sampling. For larger brands, who I think are cranking out products and not really investing the time into innovation, it's much easier to just choose something like black or stainless steel. Quite frankly, that's been what's popular on the market for decades, so Le Creuset is really one of the first players to come in and introduce colors. KitchenAid has done and awesome job, but I think a lot of the legacy brands who dominate the category, they've been selling neutrals for such a long time that for them to even test colors, could actually potentially cannibalize their existing business. It kind of opens that door for us to try something new. Stephanie: Yeah. That is good. How do you go about creating new products? Is there a data element that you use to maybe get like customer input to know what they're looking for or what new products you're going to be exploring? Jordan: A lot of our product process is super data driven. There's definitely an element of asking consumers what they want and what's bothering them across certain product categories and what they like. We do that qualitative research, but a lot of how we think about products is looking at things like Google Trends, Google AdWords, what's trending on social. We have a number of internal tools that we used to model out what we find to be interesting. Obviously, there are things like market size and competitor mix, so we really like to take a data-driven approach and we were the same way at my prior company as well and where I learned this. Yeah, I think we would really like to lean into products where we've got a strong conviction that will sell well online. We typically like to avoid things that purely exist for potentially a brand marketing reason, which I think a lot of companies get caught up into in many cases. Stephanie: Yep. What metrics do you think are most important when it comes to, like you said, you take a very data-driven approach, which ones have been the most important and how should a company think about implementing that type of data and research into their product development? Jordan: I think it really comes from the channels that you're in and kind of working backwards from the core metrics that you track as a business. If you're on Facebook and Google, really understanding if there might be an opportunity at the micro level across the category, but you really want to make sure that where you're going to be spending your marketing dollars and efforts, there's an opportunity as well. I think that's even the more important piece is we found niches in certain places where we feel even at the macro level, it's very competitive and saturated, but we feel there's a big opportunity within the digital landscape. I think it's really focusing on where your marketing dollars are. Stephanie: Got it. Are there any website metrics that you pay most attention to like how many tests are you doing every single day to see what helps with conversions or what helps with your customer acquisition strategies? Anything that you look at there on a weekly basis or a day to day? Jordan: I think for us a lot of the focus right now is definitely on top line growth, but working back from that conversion rate, return on ad spend is incredibly important. We place a big emphasis as a brand on being first purchase profitable and making sure that we're growing sustainably and not burning cash on each purchase. A lot of the emphasis is really on that. As we grow, things like LTV and repeat purchase rate will become much more important. Within each specific ad platform, we've certainly got different goals and metrics we try to hit, but as a brand, the focus at the moment is really on metrics that lead to top line growth. Stephanie: Yep. Are there any platforms that you're finding your most success in or new platforms you're exploring right now? Jordan: Sure. We, similar to most D2C brands, focus a lot on Facebook and Google, but I think one thing we've really put a big focus on since the beginning is growing our influence or ambassador network. We currently work with a group of a hundred to 200 influencers and this is a group that's growing really fast, too. Similar to what we were chatting with before, we've gifted, they've experienced the product, there's really an organic relationship there built and really working with fantastic creators who I think are the best voices for the brand and they've got trusted communities who watch them every day and listen to them. Having those groups really tell the story for us has been tremendously success. As a brand, we've actually avoided the food and recipe market, which I think a lot of this category goes after, and focused a lot more on things like wellness and design and tried some new categories that I don't think kitchenware has really entered into until point. Stephanie: Well, that's smart. I'm thinking of utilizing Pinterest and places like that where people are, like you said, designing their kitchens or their homes- Jordan: Definitely. Stephanie: ... and just thinking about things differently. That definitely seems like your kind of ideal customer. Jordan: Definitely, and we see Caraway as almost... and we hear this from a lot of consumers, that almost being that first kind of inspiration or purchase that they make, that then kind of put them on a path to redoing their full kitchen or wanting to create a safer and healthier home. We love being in platforms and working with creators who kind of align with that strategy. Stephanie: I think it's really important that you're moving in that other aspect of the home because that reminds me, when I got a... it was like a pastel green tea kettle, it was super cute and I liked it a lot and I put it in my kitchen. Then, I'm looking around and I'm like, "Oh, man. I don't have anything else that matches this tea kettle." I started trying to go around and search for that color and I couldn't find a match. Yeah, it did start making me rethink about how to redesign my kitchen and then, incorporate into my living room because they're so close. I think having multiple products, kind of help create that experience all throughout the house and that nice design principles could be very beneficial. Jordan: Definitely. Pulling that back to new products as well and color, it creates a really exciting opportunity where you make that first navy or sage or cream and having a bigger portfolio of products to really seed that throughout the rest of the home is really where we want to get to. Stephanie: Mm-hmm (affirmative). Do you pick colors that can't really be matched with other brands? Jordan: That's certainly part of it. All of our colors are custom made. A lot of brands typically lean towards choosing a Pantone color. Colors are very difficult to replicate. Just going through the experience, they do take a lot of time to get right. There's definitely some data that we look at when it comes to what people are looking for and searching. It's asking customers, but at the end of the day, we wanted to create something that was uniquely different in this category. I think in the initial research stages was really surprised that something as simple as navy, which you're wearing in your clothes every day and is such a prominent color in people's homes just didn't exist in the category. As a young brand, it's fun to have a website and be able to test into colors that just don't exist today. Stephanie: Yeah. Have you tested anything that you didn't actually have on-hand yet? Jordan: Nothing publicly, but we certainly do some stuff privately or in small tests across Facebook or Google. Stephanie: Mm-hmm (affirmative). Got it. Is there any time data's led you down the wrong path where I'm over here googling fluorescent pink pan and, then you make a product? You're like, "Eww, a lot of people were googling that or searching for that keyword and it was because of this and we probably shouldn't have made maybe a product around that or no one's actually buying that color." Any time when data's led you down the wrong path? Jordan: Yeah. Nothing specifically with Caraway, but my prior role with Mohawk Group and Vremi, we launched a lot of products, there were many that we had strong conviction on based off data. Sometimes, it doesn't work for whatever reason. It could be the product design, it could be the colors, it could be the price point. There are so many variables to it, but I think understanding all the variables that can impact the success of a product is super important and as long as you're really trying to make something different and really try to make it a compelling offer, I think, across all the categories you have a pretty good chance of success. Jordan: Really, I think this is a universal truth, but the product quality needs to be there. It can look pretty and the price could be great, but as long as that product's a really great product and people love it, that in and of itself should generate its own word of mouth. Stephanie: Mm-hmm (affirmative). Is there any way that you encourage that word of mouth with your customers? Jordan: Definitely. I mean, we encourage consumers to continually post on social showing us what the pans look like in their home, showing us how they organize their kitchens with the pan racks that we sent over, showing us what they cooked. As we roll out new products and expand the brands, I think there's definitely some areas we can improve in, in word of mouth, but so far, it does make up a large percentage of our sales and having reviews built into the brands I believe also encourages that. Stephanie: How are you measuring the organic growth right now? Like you said, referrals make up a large part of the sales. If you don't have a referral program yet, how are you tracking that to see where the customers are coming from. Jordan: It's definitely tough. We run a post-purchase survey after people purchase. Obviously, not everyone fills it out, but we get a lot of data through there in terms of asking consumers where they came from. That's really the best indication, but we're also very... in a position where we really understand how many sales are coming from Facebook and Google and a lot of other channels, so we're able to kind of parse out between those two methods what we think the word of mouth effect is. Stephanie: Got it, got it. It seems like it would be kind of hard to keep people, not only just customers, but also even like the influencers engaged because I think about when someone sends you something or you buy something new, you're really excited for maybe a week and then you're kind of, like a lot of people, at least myself, maybe not everyone else, it's on to the next thing and excited about the new thing. How do you keep, not only your customers, but also those influencers that you were sending products to, engaged for the long haul? Jordan: I think a big, important piece of our influencer program is that most of these relationships are tremendously organic and we work with people who truly love the product. Just like anything, there's always more excitement at the beginning when something's new, but we like to work with people who are sharing content around cooking and sharing content around storage and design and our products are always in those content pieces. It's really been a pretty organic relationship and we haven't seen a massive drop-off in sharing amongst that group. In terms of customers, we put a lot of emphasis into email and SMS and new blog posts and social and really try to get people into those funnels and onto the social page, so they're staying up to date with everything that's going on with the brand. Stephanie: Mm-hmm (affirmative). Do you have any events or things like that where you bring together your influencers or maybe even customers to build that camaraderie feeling? Something that I think back to, when I was at Google, we had this local guides' program and they would do big events where all the local guides could come and meet and get some swag and really feel like a community. Is there anything like that that you guys are planning for in the future? Jordan: Definitely. I think community is tremendously important. We, obviously, really focus on that with our consumers, but for our ambassador base, it's still really early days and early stages. Looking at companies like Glossier and I think they've done such a great job at creating that community amongst ambassadors and the people they work with are tremendously proud to represent Glossier. Events and dinners and opportunities to gather are certainly among top interests for us. With COVID going on, it creates some more challenges, but- Stephanie: Yeah. A Zoom happy hour. Jordan: Yep. Yeah, we're looking to roll out a community base whether it's on Slack or Facebook groups in the coming months for all of our influencers to connect. It's also a good opportunity for them to share best tips on what's working for them and what's not on their social posts or maximizing engagement. Stephanie: Mm-hmm (affirmative). Yeah, that definitely seems like it could be really beneficial because you have this group of people working for you behind the scenes, teaching each other best practices, that you're not having to employ- Jordan: Exactly. Stephanie: ... which is great. Circling back a little bit to your background, I saw or I think you mentioned that you studied consumer psychology. Is that right? Jordan: Correct. Stephanie: Okay, cool. How did that background help you with building your company, if it did, or what kind of principles did you take away or remember from your studies? Jordan: Yeah. Back in school, I was really interested in understanding why people chose the products that they did, why they align with certain brands, and I think at Caraway, we take a pretty granular focus when it comes to that. A lot of that's reflected through the messaging that we put out. We're, at any given point, running dozens and dozens of tests across our ads and our website and there's obviously demographic information on people, which we try to segment based on, in terms of our consumer, but there's also personality traits and more of a psychology of further breakdowns of certain demographic categories. We do our best to collect this information from consumers to really understand who the customer is, what they're thinking about, who they are as people and that, in turn, really informs the macro messaging, what's on the website, and branching out to the brand principles. Stephanie: Mm-hmm (affirmative). Yeah, very cool. Is there any element of personalization right now when you come to Caraway based on the data that you just mentioned, whether it's demographics or anything else? Jordan: At the moment, not onsite. We're really focused, and this was highly intentional at the beginning of launching the brand that is we really want to create a product and brand that are really accessible to the most people possible and also, kind of narrow down the decision making that they have to do. Stephanie: Yeah, super important. Jordan: Right now, we've got one set, it's really simple, really the core decision is the color that you have to choose. As we grow and we start launching more products, I think that's where we'll start to see a lot more personalization and trying to help people, once you buy the cookware set or you buy another product, like what's that next piece that you should add into your kitchen and why do you need that product. I think that really comes with expanding the brand into those new categories and then creating sub-segments based on what their initial purchases were, where they come from, who they are as people, and how we can help them better merchandise and support them in their home. Stephanie: Mm-hmm (affirmative). Very cool. You've been in the world of Ecommerce for a while. What's one thing that you wish online sellers would either start doing or stop doing? Jordan: Great question. I think for me there's become this really big mentality of consumer products of growth at all costs. I think a lot of venture-backed companies have really, really pushed into achieving most of their sales through buying ads and buying customers. That's certainly a piece of growth, but I'd also encourage to really, especially in your early days, like growth's not that challenging to come by, you're starting with a smaller number and really putting the emphasis on word of mouth and expanding your return on ad spend. I think it's easy to get caught up in high growth, but you want to make sure those founding principles are there from day one. Jordan: I think generally as a piece of advice, that's one thing I think we've done well at Caraway and I learned from my prior experience. I just see a lot of sellers and vendors I think focusing on top-line growth a little too much in sacrificing something that's going to be more beneficial in the long-term. Stephanie: Mm-hmm (affirmative). Yeah, that does seem like something that a lot of companies, especially over the last couple years, have lost sight of. Because, like you said, I mean, when you have these VCs who are telling you that you need to hit these crazy growth numbers, it is kind of like, well, we just have to do whatever it takes to do it and to hit those numbers. It seems like in the process, a business wasn't actually built behind the scenes. Kind of like a fake business where there's only ads, buying customers, but then not having a good product and I think we're seeing a lot of the problems from that right now. Jordan: Absolutely. I think a big piece of it, too, is it's really building that mentality internal with your team and building a culture where it's just as much exciting to lower the cost on something as it is to increase growth or launch a new, fun marketing initiative. For me, I'd love to see more founders and teams focusing on that sustainable growth. Stephanie: Mm-hmm (affirmative), completely agree. Is there anything top of mind that we missed in this interview before we jump into a quick lightening round? Jordan: Nothing off the top of my head. Stephanie: All right. The lightening round, which is brought to you by our amazing sponsors, Salesforce Commerce Cloud, is where I send a question your way, Jordan, and you have a minute or less to answer or 30 seconds, whatever you want to do. Jordan: Perfect. Stephanie: Are you ready? Jordan: I am ready. Stephanie: All right. What's up next on your Netflix or Hulu queue? Jordan: Oh, tough question. I'm excited to watch Ozark, season three, have yet to get to it, but I've heard it's a good one, so that's been at the top of my list to get to. Stephanie: Nice. Yeah, that is definitely a good series. If you were to have a podcast, who would your first guest be or what would the podcast be about? Jordan: Would love to focus a podcast on brands that really focus on doing good for the world and, whether it's non-toxic products or eco-friendly products, really hear more about their journeys to creating those items and hearing about the larger impact that they have on the world. Stephanie: Oh, that's a good one. If there's any sponsors out there, hit Jordan up. We can help you out with that. All right. A slightly more difficult one where you might have to think for a bit. What's one thing that will have the biggest impact on Ecommerce the next year? Jordan: I think the short answer to this and tying it into, obviously, what's going on in the world is I think people staying more in their homes and what that means in terms of general macro online sales, brick and mortar. I think we'll come out of this with really a different world and excited to see how the retail landscapes starts merging with the digital landscape. Stephanie: That is a great answer. All right, Jordan, it's been such a fun interview. Thanks for coming on the show. Where can people find out more about you and Caraway? Jordan: You can check us out at www.CarawayHome.com and thanks for having me. This was super fun. Stephanie: Yeah. See you next time.  

Chad Ledford likes to say that his Ecommerce journey started with a van and a fax machine. And it’s true. Chad has gone from selling socks out of a van to building one of the first and only online sock-sellers in the early 2000s, to his gig now, as the co-founder of AddShoppers, a company that was named one of the fastest-growing startups in Charlotte for two consecutive years, and an application installed on thousands of eCommerce websites  There were obviously many twists and turns on his journey, and he explains them all on this episode of Up Next in Commerce. But the main idea that drove Chad throughout his winding road was the idea of diversification. Long-lasting success only comes through diversifying marketing platforms, acquisition tactics, and communication channels where you can build those coveted one-to-one relationships with customers. He explains it all here.  3 Takeaways:    Anything that allows you to build a one-to-one relationship should be valued above others. Be willing to experiment here to maintain customer relationships  Be open to new and emerging channels and be ready to quickly experiment with those platforms so that you can be a first-mover and gain market share More and more publishers will soon invest in creating their own platforms, thus lessening the reliance of major consumer channels like Facebook and Google   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 Stephanie Postles, your host, and today we have Chad Ledford, co-founder of AddShoppers. Chad, welcome to the show. Chad: Thanks for having me. Stephanie: I would love to dive into your background a bit, because it seems like you've had a really interesting background, and getting into ecommerce, I want to hear all the stories around that, and how you got to where you are today, if possible? Chad: Yeah, you got it. I like to say that it started with a van and a fax machine. So, to give you a little background, my grandfather who raised me has been in the hosiery industry for the past 25 years, so he kind of introduced me to just entrepreneurship in general, but whenever I turned 16 I took one of his vans and loaded it up with socks and went door-to-door to small businesses to sell the socks. So, I did that pretty much throughout high school, saved up enough for college, and then whenever I went to college, my freshman year I didn't do a whole lot, played probably too many video games, but it really introduced me to the internet. Chad: So, my sophomore year I started to get the itch around trying to make money again, and that's when I basically took the socks that my grandfather had, and then put up my first ecommerce store. It was built on Microsoft's ecommerce platform, I don't even remember what it's called today, but it was back in the early 2000s. We just put up a couple SKU's, I gave my grandfather a fax machine, put a fax machine in my dorm room, and then as I would get orders I would fax it over to him, and it would print the labels off for it. Stephanie: Oh, my gosh, that's amazing. So, what kind of socks were they to be selling like hotcakes like that? Chad: Yeah, it was pretty much every type of sock. So, I think Bombas has probably made it cool, but at the time we didn't really have a brand, it was just socks. It was like ankle socks, or crew socks, but nobody else was selling them online at the time, so we got really good at the search marketing side of it. If you bought socks in the early 2000s, you probably bought them from us, because we were number one on Google for the keyword socks, and- Stephanie: Wow. Chad: Yeah, it was kind of a fun adventure at the time. Stephanie: So, was your grandfather any bit hesitant to go online, or work with his grandson? What was that like working together? That sounds, yeah, just really fun. Chad: Yeah, he was really supportive early on until it got to be too many orders that he didn't want to do it anymore. So, he basically said, "We have to find someone else.", and then that's when we got introduced to the idea of dropshipping. We basically just needed to find somebody that wanted to handle the capacity, and then that's when we learned about dropshipping, and how that fits in ecommerce. Stephanie: Wow, so you've definitely seen it all from the very start. What are some of the biggest shifts that you remember where you're like, "Man, dropshipping used to be like this.", or building up a website I remember silly things that would be super hard. What were some of the things that you remember from back in the day that just kind of look silly now looking back on the processes that you were doing, or the things that you were undertaking? Chad: Yeah, I think whenever we started doing it we were just thinking about it more from like a tactical execution standpoint. But what I mean by that is we could basically put up a site, put some products on it, and then we could rank for it pretty quickly. We weren't really focused on creating a brand, we weren't really focused on lifetime value, or how do we kind of cross-pollinate between multiple brands and things like that, it was really just how do we rank number one for this thing, and then push as many orders through it as we can? So, I think part of that is just being young and figuring out what business actually means, and how to maximize lifetime value. Chad: But at the same time, just the shifts that we saw, search was starting to gain more momentum, and more people were going online to start to look for things, and that's when we started to see the shift from retail dollars going a little bit more online, obviously that's accelerated a lot recently. But yeah, it's just kind of interesting, at the time we just saw it as a way to make money, but now kind of in hindsight it was a bigger shift that was happening with people, and people wanting to get more convenience, and better deals, and things like that. Stephanie: So then what brought you to co-founding AddShoppers? At what point were you like, "This is something I want to do."? And could you give us a little background on what AddShoppers is? Chad: Yeah so, that first business, 3tailer, was really built around Facebook. Whenever Facebook made a change to their algorithm we had to react as fast as we could to try to keep up. So, whenever we started AddShoppers ... we tried to be a little bit ahead of the market when it came to social media. Again, this was before everybody had a Facebook profile, and Pinterest was just sort of coming online, but we saw that a lot of people were spending time there, and a lot of people were engaging there. Chad: So, the first version of AddShoppers was to try to figure out what was happening inside of social, and is it driving sales for people? So, it was mostly an analytics product that a brand could plug in and it would tell them if a social channel was driving sales, and if so kind of break that down and tell you how and why that was happening. But the thing that we were trying to solve is diversification of revenue. We had the 3tailer business, which was really built on SEO, but we saw social kind of up and coming, so we wanted to figure out how to monetize that and drive sales for our own business. Stephanie: Wow, that's great. It seems like you guys were definitely very ahead when it came to spotting these trends, and seeing something that could get big, and starting to offer solutions around it to give deeper data insights for that. How did you realize that was a problem for companies back then, when I doubt a lot of companies were like, "We need access to the data, we need to do more with it."? I mean, now it seems obvious, but back then were you getting customers who were looking for help around that? Chad: Not really, it's just what we felt through our business, we had felt the revenue impact. We didn't have a wholesale channel set up or a physical in-store, so whenever something changed online we had to be on top of it to figure out what was going to happen next, and as social was kind of coming online we saw it as an opportunity. So, it wasn't a stroke of genius, it was we had to to survive, and that was the main reason that we focused so intently on it. Stephanie: Very cool. So, what does AddShoppers look like today? How has it evolved? Chad: Yeah so, similar to the early days of search marketing, Google kind of won the market, and then same thing happened with Facebook, Facebook won the market. At the time when we started it there were probably about 20 different social networks that we were kind of tracking, and figuring out how to drive influence on, but once Facebook became the clear winner it was obvious that the same things were going to start happening, Facebook was going to make changes, that was going to impact people the same way that search did for our business. So, we decided to look into other channels, and more specifically we wanted to looking into channels that don't change often. Chad: The ones that don't change often are usually kind of the baseline architecture of the internet, it's the open protocols, basically email, or SNTP, being able to send a message to someone has been around since the internet started, and as much as people have tried to kill it, it's still one of the top channels, and it's one of the few things that a brand can really own and be able to have that direct communication with a client without having to ... or with a customer without having to pay some sort of an ad tax, or CPM to really get in front of those people. So, today our solutions are really focused on creating ways for brands to tap into those open protocols a little more of like email, and being able to message a customer directly without having to go through the big guys. Stephanie: Got it. So, how do you get those emails? Is it something that a brand could already access, or what does that look like? What problems or pain points do the brands have when they come to you? Chad: Yeah so, most digital commerce brands realize the value of email today, especially whenever it comes to retention and lifetime value. So, the conversations are a little bit easier now because they understand that it is a really strong channel, and it's one that they have to defend, but most brands can only tap into what's considered first party data. So, first party data is data that the brand captured themselves. So, a lot of people build up emails from popups, or they capture it during the checkout process or things like that, but that usually ends up being anywhere from like three to 5% of their traffic that they've spent a lot of money to get to their site that they're actually able to capture, and be able to continue creating that relationship with them. So, the problem that we help solve today is tapping into that other 95% of people that are on the website, people that haven't given them their email address yet, but they're still showing a lot of engagement, and they probably still want to try to get those people to be their customers. Stephanie: Got it, so the people who are just casually browsing, or maybe added something to the cart and then left, the people like that who didn't directly give the brand their email, but maybe seemed kind of interested. Chad: Yep, exactly. Stephanie: Very cool. So, one thing I've read a bit about is that you said brands have been over-reliant on Facebook and Google when it comes to customer acquisition. How do you envision sellers getting around those two giants? If that's a main channel like you mentioned, like they're dominating the market, how should a brand find customers if they're not going to rely on those two areas? Chad: Yeah, I don't think they should neglect those. I think they need to figure out how they can push as much volume on those as possible profitably, but as a lot of D-to-C companies have seen more recently, as everyone starts to do that, it gets more expensive for everyone, because it's an option. So, it's more about creating diversity in the revenue streams, and it's more about just creating a closer relationship to the customer, and the ways to do that is through one-to-one channels, or really any kind of open protocol. So, if email is an example, another example is SMS, push notifications, direct mail, really anything that can kind of get you one-to-one with that customer and really build the relationship. Those are the things that should be valued a little bit more. There's ways to do it where it's not scary, and you can track the revenue quite easily. So yeah, I would say that diversification of the revenue is really the big thing, it's not just about avoiding working with the big guys, but only using them as much as you need to. Stephanie: Got it, that makes sense. So, what are some maybe, not a case study, but an example of a brand who came to you and diversified their channels to start maybe using ... texting is one thing that a lot of people have come on here saying they're thinking about or they are experimenting with sending texts to customers or potential customers, but they're not always really sure how to check that or how to measure the results. What are some maybe examples where you've seen that work well, or other channels that have worked well that maybe a brand normally wouldn't have explored? Chad: Yeah, I think the one that comes to mind it's a pretty big omnichannel retailer, they have about 50 locations and they sell sporting goods. I don't know if I can share the name, but basically- Stephanie: That's all right. Chad: ... they did a lot with the traditional advertising, so they ran local TV commercials, they ran local radio ads, and then they did a bit on Facebook and Google mostly around retargeting. They didn't really see those things as kind of top of the funnel activities, and because of that they basically relied on it for retargeting for the most part. So, they were basically spending on these offline channels, and then they were using digital as a way to retarget and try to convert those people, because it was the only way they could tie together the conversion of, "Hey, this person is on the website, and they just bought something.", and they could pretty much always get like a 10 to one return on ad spend. Chad: So, for them, they were kind of stuck in this omnichannel box where they couldn't do additional things for branding or impressions, because they didn't have a great way to track it, so whenever they started working with us, we helped them expand out into these other channels where they were still able to get a guaranteed 10 to one return on ad spend, because we were using things where we didn't have to buy media, like email and some onsite personalization things that we did for them. Today we don't have an SMS product, it is on the roadmap, along with push and a few other products, but really the email is still one of the biggest revenue drivers that we found for clients. Stephanie: Very cool, and do you help with looking into the data after you start these campaigns for the different brands and whatnot, because I know before we were recording you mentioned that you're really big into data and you love diving into that, so how do you incorporate that into the product, and with your clients? Chad: Yeah so, for us, there's two kind of chunks of data. There's the first party data, which you'll see in like Google Analytics, or if they have a CDP they can kind of analyze what their specific customer base is doing. The data that gets us really excited is network data, what's happening across a huge chunk of people. Our network sees about 200 million people each month, and kind of what they do throughout that purchase cycle, and then what they're actually responding to. So, whenever we think about data it's more about the overall trends and how you can change a visitor's behavior by creating a nudge, or creating some sort of incentive or offer to actually get the person to come back and convert. Stephanie: Got it, how do you have that big of a network, and how are you able to kind of see what people are doing? Chad: Yeah, so there's kind of two data sources that we have. One is a blind co-op, which I would say half of our clients are participating in that, and the blind co-op is the brands submitting data into it in exchange for being able to use the data that comes out of it to activate the campaigns. We don't sync data, we don't actually put data into another system, it's all self-contained within our system, but about half of the volume that we see comes from that co-op of data. And then the other half comes from publisher relationships that we have where we license the data, and again, we don't sell data, or we don't push data out of it so that users can still control all their data, but it gives us additional scale so that we can start to match who these people are. Stephanie: That's awesome. Was there any hesitancy with the brands sharing their data initially, or is it a little bit easier once they heard that other brands you were working with were already doing that? Chad: Yeah, we offer both. If they want access to the co-op data, they have to be part of it, so they have to submit to get access to it, that's basically what makes it the co-op. So, they can still work with us, and they can still tap into that publisher data, and a lot of the enterprise brands that we work with will never submit any data to any other system including us, and it's just off the table, it's not going to get through legal. We can still work with those brands, we just do it through our licensed publisher data. But the thing that gets us really excited is that idea of the co-op, and the brands being able to work together to do more together. Stephanie: Yeah, that's really cool. What's some of the most interesting things that brands have seen when they utilize the co-op data where they're like, "Oh, I never realized this or that."? Have you heard any underlying themes from these brands where they're getting access to something that maybe they never even knew to look into before, or had enough data to see that trend? Chad: Yeah so, we're still pretty early on the insight side of this and being able to open up things that they haven't been able to learn on their own. I would say we're a lot further along on the activation side of the data, so being able to actually perform a campaign that drives incremental results. So, just as an example, whenever we send out browse abandon or cart abandon emails, we end up sending about five to 10 times more emails than they're able to send internally. So, if a brand is sending out like 10 cart abandon emails a day right now, we'll probably send 50 to 100 of those by leveraging the data that we're tapped into, and then the benefit of that is revenue and less cart abandonment. Stephanie: Yeah, that's really cool. How do you guys identify shoppers that maybe were unknown before? Like if a brand couldn't identify them before, how are you all able to identify that shopper more easily? Chad: Yeah, so the core technology that this is built on is called deterministic identity resolution. It's a little bit of a mouthful, but Facebook has the biggest identity graph which uses deterministic identity resolution, and the way that it works is pretty simple. You, as a user, you've signed into Facebook on your phone, tablet, laptop, all of these various sources, and as you've done that, Facebook has given you an identifier, your Facebook ID, and then it's linked that to the different devices that you've done it on. So, our system works the same way, if you go to a publishers site, and you use an email address, our system encrypts the email and hashes it, and then we link that to the device that you do it on. Chad: As you do that across a network of devices and different publishers, that's how we're able to link an individual, or a hashed email, back to the actual devices that belong to that person. Once you have that link, then you're able to perform different types of marketing campaigns. So, what we're doing is actually no different than what Facebook and Google are already doing, except we activate the campaigns differently. Those guys, you can only get access to that identifier if you buy media through them and if you show an ad on Facebook, or across Google's display network. Ours lets you do the same thing, but we're doing it across open protocols like email, and SMS, and other channels. Stephanie: Ah, got it, and are you able to create like a shopper profile once you have all that data to then know how to maybe personalize your messaging to them, or really cater to that buyer who left? Chad: Yeah so, we don't append a lot of data to the actual identifier currently, mostly it's just the actual product that someone looked at, just so that we can dynamically include that product inside of the email, or anywhere else that we want to kind of push that product data to. So, we don't include anything like gender data, or demographic data, anything like that, right now it's just the email to the identifier. But as we continue to grow the dataset then that starts to get more interesting, and that's what's going to enable opening up insights and things like that. But today, we're really just heavily focused on the use case of kind of winning back those lost people using this unique dataset, and then from there we can start to append additional data to it as we go. Stephanie: Got it. It seems like there'd be a lot of new customers coming to you with this new D-to-C movement and a lot of people getting online really quickly now, especially with everything with the pandemic going on, have you seen a surge of customers coming to you and saying like, "Chad, help me. We have a bunch of people now visiting our site, and we actually don't know where they're coming from, and how to bring them back."? Chad: Yeah, most of our business is still driven through word of mouth, or through our agency partnerships. So, it's definitely been an influx this year, we're growing probably 20 to 30% month over month right now, just given- Stephanie: Wow, nice. Chad: ... everything that's been going on. So, it's a pretty exciting time, and it's awesome to see people looking outside of just Facebook and Google to figure out other ways to monetize. Stephanie: Yeah, that's awesome, congrats, that's great numbers, of course. When these brands are coming to you, are there any blind spots that you're like, "You obviously are missing this.", that a lot of larger brands just haven't looked into before? Chad: So, larger brands have a harder time kind of doing the up and coming things. Obviously they have a lot more things like infosec and legal that they have to go through. So, my only criticism of big brands is just that they don't test enough or fast enough, it's more about just speed of iteration. The space that we're in, digital commerce, it changes so fast, and by the time you're doing something that everyone else is doing you have to pay a premium for it. If the bigger brands could just get a little bit earlier in the adoption cycles of things, then they would be able to capture more market share and more of a customer base, and not have to worry so much about the D-to-C guys. Chad: But that's really the biggest difference between the big brands and why D-to-C's continue to capture more market shares, because they iterate so much faster and they test so much faster. So, my only feedback to big brands would be to figure out how to do it faster given all the internal constraints, and if you can figure that out it's not about finding one silver bullet, it's just getting through those iterations a lot faster. Stephanie: Yep, yeah, I definitely have seen that in practice before with having to go through a million approvals just to get one website, or one bug fix, or whatever the case may be. I'm thinking though right now might be a great time where brands have kind of broken down some of those barriers, because they had to move fast because of everything with the pandemic going on, they had to quickly stop campaigns, start different ones. I mean, so much has gone on over the past couple months, have you seen that on your end where it's shifting needs, and shifting a pace that maybe they weren't ever acting at before? Chad: Yeah, there's really kind of three camps that we're seeing play out. One is sort of the travel camp, which is at a halt, nothing's going on, and then at the other end of that is food delivery services, or really any kind of online education, which is just exploding, 400 to 600% over what they were before, and they're just getting hit so hard that they can't take on any additional projects for lack of resources, they're just trying to keep up with what they have. But then there's kind of this sweet spot in the middle of brands that are growing, maybe they're growing like 20 to 100% over where they were last year, and they're starting to hit kind of those Black Friday levels that they were at in Q4. They weren't really ready for it, but after the first couple months of this, I think people have started to realize this is probably going to maintain, and those are the brands that are really kind of what I see is capturing a bulk of the D-to-C movement right now. Chad: The guys at the other end of the spectrum where they're just getting hit so hard, yeah, they're winners but all the other competitors are also winners. So, we don't really know who the winner is out of all the winners yet, but in kind of that middle range, those guys that are competing in the middle, and still getting pretty reasonable growth rates, the ones that are getting another 10 or another 50% growth because they are able to iterate a little faster, those are the ones that are going to come out the big winners in their categories. Stephanie: Yep, yeah, completely agree. It'll definitely be very interesting to see who sticks around, because it seems like a lot of these trends, and I know it's been debated for the past maybe month of like what's going to stick, what's not going to, I think the data's coming in now that quite a bit of it seems like it's going to be here for the longterm. Do you have any thoughts on what's going to last trends wise, and what's going to maybe revert back to how it was a few months ago? Chad: Yeah, I think the ... we've just been kind of playing it out month to month. I think we're assuming that half of all the growth is probably going to stick. So, if you were doing $100 last month, and you're at $200 this month, then your new normal's probably 150. Maybe that's conservative or completely wrong, but I don't know how else you'd model out in this world. I think it's definitely inflated right now, but I don't think it's going to go back to where it was, so we just kind of picked the middle of the road there, and assume that half of it's probably going to stick. Stephanie: Yeah, no, that's probably a good initial methodology to use. I think one thing that's always interesting is looking at what's happening in China. I think I was reading about the Starbucks app how maybe it went to 85% usage from maybe 10% or something like that, and then it dropped back to, I think, like 33%. So, it showed that, like you said, it was inflated at a certain point, but now it was a huge channel shift to more people never probably going back to waiting in line, and ordering at the kiosk, or whatever it may be. Same with Philz here, I ordered online, or through the app a few times, and I'm like, "Why have I never done this before? Why do I walk up and stand in line?" It feels silly now. So yeah, I agree, that's probably still a bit inflated, but there would be quite a bit of a large shift that maybe not everyone's anticipating. Chad: Yeah, and the lifetime value approach to this, or figuring out how to get retention right is really going to determine the winners out of it. I think a lot of people are doing it now because they have to, so they're getting exposed to different things like an app, or they're buying something online for the first time, but if the experience is better than what they did before, they're going to keep doing it and then you can create the new behavior. But if the experience is worse, then they're going to sour on it, and then if it's not any better than what they were doing, they're going to go back to it. Chad: So, part of the onus is on the brand to really own that, and this is definitely a window of opportunity for every brand to get in front of more customers, and to acquire a customer for a little bit less, but the more that they can just focus on creating that great experience the easier it's going to be. A perfect example, we ordered a couch from Costco, like some outdoor furniture, and they shipped the complete wrong set to us, and it's still in our driveway after three weeks, and they haven't replied yet- Stephanie: Oh, my gosh. Chad: ... so it doesn't make me want to buy from Costco online- Stephanie: Oh, no. Chad: ... instead of just going to Costco. But yeah, any time that those kind of scenarios play out to the customer, they sour to that experience from that brand. Stephanie: Yeah, I'm trying to think of ways of how brands can rise above the noise, because I think through all the push notifications I'm getting right now, and some of them are helpful to keep them top of mind, I think it's like Uber Eats, and DoorDash, they're sending me coupons, and I'm always seeing notifications pop up that kind of remind me like, "Hey, you did this once, don't forget about us." But then a few other brands it seems like they're silent, and they haven't thought about maybe how to actually keep me engaged and retain me after all this dies down. How do you think about keeping a customer who maybe wasn't on that channel before retained to come back for the long haul? Chad: Yeah, I think it comes down to trying to create that personal experience and letting them know that you're always going to have their best interest at heart. I think that's probably where most people are under-investing right now, they're over-investing in supply chain or logistics because they have to have those things, but if they really go above and beyond on the customer support side and try to find those ways to have a conversation, it doesn't always have to be phone, it can be chat, it can just be a really responsive email team, but that's really where you can separate is ... most people kind of understand right now that things are going to be a little bit delayed, and shipments might take a little bit longer, but if you can't get back to a person in time, and if you're not letting them know that you're going to bust down walls to do what's best for them, then you're risking losing that person. And I think that's been proven with Zappos, Amazon, pretty much any one-to-one ecommerce, Chewy, it's all about the customer experience, and customer support is really what drives lifetime value. Stephanie: Yeah, completely agree. It seems like right now is a really good time too where you have the customer is a little empathetic to, like you said, things being delayed. I know I ordered something off Etsy, and it's like three weeks delayed. However, the person who is selling it has been constantly keeping me updated of like, "Here it's in San Francisco, here it's ... I see it on the map, I'm so sorry it's delayed." But I feel actually okay with it being delayed because she's been so open about where it is and why it's delayed and all of that. I think that's a good point of if a brand gives a good customer experience, even if something's not going well, that customer could still walk away with feeling good about it and having a good relationship with the brand just because they knew what was happening throughout the whole process. Stephanie: So, you've been in the world of ecommerce for a really long time, so I feel like it's good to kind of make sure you answer some high level ecommerce questions since you seem to be a good expert to ask. What's one thing that you wish online sellers would either start or stop doing? Chad: Yeah, I think starting's probably going go back to just iterations and testing faster. I think it's ... Most ecommerce teams, and the VP of ecommerce and CMOs, they'll usually set a KPI of like, "Let's hit 200,000 next month in sales.", or whatever it is. What they don't really set is tests, how many tests are we going to run next month, and whether those tests are successful or unsuccessful, being able to really emphasize that, and get through those cycles faster, that's the fastest way to really kind of have a process that lasts a long time in this space, because everything else is going to change. The channels are going to change, the way we market is going to change. Chad: So, the thing I would say do less of is kind of trying to squeeze a little more out of the lemons that you've already squeezed. So, if you've already done a lot through Google shopping, and you kind of optimized AdWords, then yes, there's always room for improvement, but if you try to get in front of that next thing that happens, it's going to pay dividends down the road. So, I would say do more testing and more iterations, and a little bit less optimization on all the things that have already worked once you're comfortable with those. Stephanie: Ooh, I like that, that's a good answer. It seems like brands right now are pretty hesitant to either do a lot of iterations just because of everything going on, or market in general. Have you also noticed that trend? Chad: Yeah, I think that's starting to loosen up a little bit now. I think a lot of brands just didn't know what to think early on, and for better or worse it was a great reason for them to go back and renegotiate a lot of things with a lot of people. So, I think they've kind of gone through that, probably cut some costs, and now they're realizing, "Oh, we might not have had to do that, but that was good to do. So now what are we going to do with all this extra stuff that we have?" So, I think people are starting to be a little more open to it now. Marketing budgets, any time there's a downturn, is always a thing that gets hit pretty hard. But ecommerce is definitely kind of in its own bubble, in its own world right now, so I think it's going to get a lot more attention that it didn't get before, and I think it's going to get a lot more emphasis on growth than it did before. Stephanie: Yeah, yeah, I completely agree. Is there anyone that you watch in the field ... not in the field, but I guess in the industry that you're like, "This is a good brand to watch.", where they stay ahead of trends, they're always kind of one step ahead of everyone else? Chad: I think wish.com is one that probably doesn't get talked about a whole lot- Stephanie: No. Chad: ... but they do a lot of really interesting things. I think when people think about D-to-C they end up leaning more towards the actual brands like Allbirds and those guys, which do a great job, but I think it's really interesting to watch the guys like wish.com, and even some of the stuff that Pinterest is doing right now is starting to get pretty interesting, more of kind of the marketplace approach. So, if I'm a D-to-C brand and I'm selling shirts, those are the guys that I'm trying to work with a little bit more. Stephanie: Got it. So, what is Wish doing, because I haven't kept up with them. I downloaded the app back in the day, and it wasn't the type of things that I would want to maybe buy quality wise, but I heard it has gotten better, so what kind of things are they doing, or Pinterest, that you got your eye on? Chad: think they're realizing that discovery is becoming more of a thing, especially on mobile devices and mobile apps. So, Wish does a lot with kind of endgame ads, and driving media buys directly from publishers. They don't do a whole lot on Facebook and Google, because it just gets too expensive, but they've gotten really good at running kind of the remnant ads, and driving downloads, which they can kind of funnel all the way through to a conversion. Chad: So, their conversion path is a little more complicated than just like, "Here's a Facebook ad, and did they buy a shirt?" But the way that they're able to monetize that is because they're focused on a little bit higher funnel conversions like an app download, and they know if they can get the app download, let's just say half the people are going to end up buying something for $1, because most of the stuff on Wish is $1, and then after that maybe they'll start to buy more expensive things on there. Chad: It kind of goes back to the ... there's a psychology study about a guy that was running as a candidate, and he wanted to get people to put these big signs in front of their yards. So, he went to half the houses and gave them a huge sign and said, "Will you put this in your yard?", and then he went to the other half of houses and asked them if they would put a small sign, but then he went back a week later and said, "Can I replace that small sign with a big sign?" Stephanie: That's good. Chad: Half the people would let him upgrade to the big sign after they got the small sign in place instead of asking for the big thing upfront. So, I think the brands that are really doing a good job right now are focusing more on those type of tactics where you have a small ask for the consumer, and then you sort of build on that over time instead of just asking them to buy a $1,000 mattress. Stephanie: Yeah, I like that story about the signs, I'm going to have to use that one in future episodes. Do you think it's ... Is there any reason to be nervous around relying on marketplaces like Wish, or Pinterest, or even Amazon? Chad: When they get too much market share that's when it becomes a problem, because then they can kind of control the ocean. It's best if there's a lot of players, usually five plus players, because then you've got options and you, as a brand, have a little more negotiating ability, and you've got some more leverage. So, this is what happens in the world, everything kind of gets consolidated, and then it starts to break apart again, or it gets unbundled. So, I think we just kind of keep going through those cycles, and then as you can, as a brand, capitalize on those cycles and try to do enough testing where you can figure out what that next shift is going to be, that's when you really start to hit your strides. Chad: A lot of the D-to-C brands that we look at today, and we're like, "Hey, these guys are awesome.", it was because they were early on Facebook Ads, and then they diversified outside of that. So, they really got their momentum by finding that market opportunity where there wasn't a lot of competition, and then capitalizing on it as fast and as hard as they could until it became too competitive, and then they expended it out, now they run TV, and they're basically a traditional brand like everyone else. So, if you want to be a successful D-to-C brand you have to find one of those market opportunities where you think that a wave is going to happen, and then you just ride the wave as long as you can. Stephanie: I like it. So, are there any platforms that you're paying attention to right now, or that you've heard some of your brands are looking into that are maybe more early? Chad: TikTok's probably the biggest one [crosstalk 00:38:46]- Stephanie: Yep. A lot of people have brought that up. Chad: Yeah. Stephanie: But tell me your thoughts on TikTok. Chad: So, they still have a lot to figure out with TikTok's ad platform, but this is always how it happens, they have a huge group of customers, and they're getting a ton of impressions, but they don't necessarily have all the data that they need to be able to get the highest CPMs for those impressions. So, right now it's sort of a ... they're just kind of running brands one-off, and you can get CPMs for pennies and just hope that it does something. TikTok doesn't have a very robust attribution system as far as like, "When they saw this did they actually convert?" Chad: But that's always how it works. If you can find something that really resonates then it's going to ... you can just maximize it, you can just push it as far as it'll go, and as far as your supply chain can handle it. So, there's no clear, "Do this on TikTok and you get this.", and that's what makes it appealing. If you can get into a platform like that, run a ton of experiments, and figure it out before the next guy figures it out, then you get the cheapest CPMs, and you get a huge growth rate from it. Stephanie: Got it, yeah, that's really interesting. It's funny how many people are starting to look into that, but no one's fully explained it how you did about why you want to find a platform, like you said, that it's not a, "Do this, and then you will get this result.", because if it's like that it's probably everyone already knows how to do it, and there's a lot of competition, and it's expensive. Chad: Yeah, I think Gary Vee probably said it best, but marketers kill everything. Once you figure out something works, then every other marketer's going to do it, and then it's going to stop working. Stephanie: Oh, he is heavy on TikTok, so he's- Chad: Yep. Stephanie: Yeah, I've gone on there a couple times and seen him all over the place on there. Are there any other platforms like that that you're looking into? Chad: I've heard retargeting on Snapchat's pretty good depending on the audience that you have, if they're under about age 40 then you can usually get pretty good results on there, who knows what that's going to keep growing into. There are some D-to-C companies that get pretty good traction on Twitter. I don't know if either one of those are really kind of growth channels anymore, they're more like optimization channels either for retargeting, or just figuring out how to get a little bit lower CPM, maybe it's half the rate of Facebook, but it could still work pretty well. Chad: I think what's going to happen next is that a lot of the publishers are going to start creating their own ad systems for this stuff. I think a lot of the publishers are sitting on a lot of data, and being able to target that data with them directly is going to be enabled by CDPs, or customer data platforms. So, a lot of these guys are starting to build those out now so that they're less reliant on Facebook and Google's ad systems for all the ad buys. So, I think that's where the unbundling is probably going to happen, it's probably going to happen with the publishers as they start to pull inventory from those guys, and start to figure out their own ad system. And if they can start to figure out lookalike models that work on the publishers sites, then you can cut out some of the middle guys, and then drive down the rates, which makes it more appealing to the D-to-C guys. Stephanie: Yeah, ooh, that's interesting. That'll definitely be fun to watch, because yeah, I've seen a lot of posts right now around people going to the more expensive platforms, maybe like LinkedIn where everyone's like, "It is not efficient budget wise to try and run ads on maybe LinkedIn.", but if you run a small subset on there, and then you retarget on Snapchat, that is way cheaper. That's how a lot of companies seem to be trying to get around the more expensive platforms right now. So, it'll be fun if more open up that aren't like that, or you don't have to go through that many steps to actually find your audience. Chad: Yeah, definitely, and I think another one is Tabula, if you haven't tried Tabula, you probably should, they've got lookalike models now and some retargeting, and the CPMs are still pretty low, so they're definitely one to keep an eye on. Stephanie: Oh, I haven't heard over time that, I'll have to check that out. So, is there anything that you want to share before I move into the lightning round where I ask a couple questions, and you have to have a quick question answer? Anything around ecommerce, or AddShoppers that's top of mind that we missed? Chad: So, we deal a lot in customer data, so sort of the elephant in the room with us is always upcoming regulations, and how do customers actually want to use their data, or how do we create an environment where we can have trust in the marketing world without violating someone's personal data. So, we as a company, we launched a brand called SafeOpt, it's S-A-F-E-O-P-T.com, and SafeOpt is basically the endpoint for shoppers so that they can tap into our data. A lot of companies have created things for CCPA, and GDPR that are limited to just California or just Europe, but we've created the SafeOpt brand to be exposed worldwide to anybody that ever wants to get access to their data, and I think that's how we, as marketers, build trust with consumers is by making everything transparent. Chad: I know like my grandparents and in-laws and things like that, they sometimes think if they're near an Alexa and they say something, Alexa's picking up on it, and all of a sudden they're going to start to see ads for those things. As a marketing technologist I know that the amount of data they would have to ingest to do that is pretty much near impossible, and that they're probably not going to do that. But it's little things like that, that create this perception of marketing being a bad thing, or marketing being a thing that is like this black box of it knows everything about me. So, I think that we, as marketers, have to continue to push towards versions that create transparency, and versions that give control to people that want control. Stephanie: Yeah, that's great. So, for the brands that are just optimizing for the California or European rules, what could you see happening for people who aren't thinking more holistically? Could they lose access to ... maybe if they had a whole customer subset dataset where maybe if they didn't do things correctly from like a privacy protection area, would they lose that whole entire dataset and couldn't use it in the future, or what do you see happening if they don't get ahead of this? Chad: I think a lot of it's more hyped up than what customers actually want to do. We get very few CCPA requests, or GDPR requests. Most people are just curious, they want to know what's in there. They don't necessarily want it to go away as long as there's some sort of benefit for them. Some people do, and you want to purge those people as easily as you can, because you don't want to violate their trust either. If they want to be completely anonymous that's up to them, but I would say that's probably less than one to 5% of all people, and it's probably the group of people that isn't the highest lifetime value. But yeah, I would say just focus on creating a ... It's one thing to just do what the regulation requires you to do, and it's a completely nother thing to do something that creates a good customer experience while accommodating the regulation. Stephanie: Yep, yeah, I love that. Cool, all right. Well, with the last couple minutes I was going to move into the lightening round, brought to you by Salesforce Commerce Cloud, are you ready, Chad? Chad: Let's do it. Stephanie: All right. What's up next on your podcast list? Chad: Ooh, I like Joe Rogan. Stephanie: Yep. Chad: I think he's pretty much just constant. Stephanie: But now you got to go to Spotify for him, right? Chad: Yeah, pretty much. Stephanie: Yeah, I like him, too. What's up next on your reading list? Chad: I'm reading Great by Choice from Jim Collins right now. Stephanie: Mm-hmm (affirmative), awesome. You'll have to go to our Mission Daily podcast, we are having Jim Collins ... we had him on the show, but we haven't published his episode yet, so I think it's coming out in a couple weeks. Chad: That's awesome. Stephanie: So, you'll have to go over there afterwards. What's up next on your Netflix queue? Chad: I've got a eight-year-old and a four-year-old, so I don't really get a Netflix queue right now. By the time nighttime comes around I'm ready to go to sleep, so I've got nothing. Stephanie: All right, I like it. What's up next on your travel destinations when you can travel again? Chad: Yeah, we go to Maine every year, this is going to be the first year we missed it in probably like 14 years- Stephanie: Oh, no. Chad: ... so we want to get back to the Maine beach as fast as we can. Stephanie: Oh, that sounds fun. Yeah, Maine seems really pretty, I need to check that out. All right, and the last, slightly harder question, what's one thing that will have the biggest impact on ecommerce in the next year? Chad: All right, that's a trick question. One thing with the biggest impact ... I think it's probably going to be the unbundling of Facebook. Stephanie: Tell me more. Chad: I think that ... So, Facebook is ... I would guess that they've hit their prime, and that micro-networks are going to start to grab users away from Facebook and push them over to their platforms, and all the various iterations that that's going to happen in. Mark's done a great job of kind of buying all the scale and everything that Facebook has now, but I think that without them continuing to innovate there, and with all the things that are happening inside of Facebook right now, I think they kind of hit their peak. I could be totally wrong, people said the same thing about Microsoft and a lot of other brands, but I think that's probably what's going to happen next. And then that's going to drive, for ecommerce, new opportunities like we were just talking about where if you're early enough on those you're going to be able to drive huge brand awareness and a lot of sales. Stephanie: Cool. Yeah, that's a great answer. All right, Chad, well this has been a blast, where can people find out more about you and AddShoppers? Chad: Yeah, so AddShoppers is A-D-D Shoppers.com, and I'm on Twitter @ChadLedford. Stephanie: Awesome. Well, thanks for coming on the show, and we'll see you next time. Chad: All right, thanks, Stephanie.  

Making the switch to online shopping has been easier in some cases than others. Buying laundry detergent online, sight unseen doesn’t feel quite as high-risk as a larger purchase like say a car or a house. It makes sense, then, that certain industries have been slower to fully embrace the Ecommerce experience. Bridal is one of those industries, but Leslie Voorhees Means thinks that it’s time to shake things up. Leslie is the co-founder and CEO of Anomalie, an online-only custom wedding dress company, and on this episode of Up Next in Commerce, Leslie explains why she thinks her model is going to be the one to disrupt the market. Thanks to a blend of tech and human stylists all focused on customization and personalization as well as taking control of the supply chain, Leslie says that Anomalie has found a way to solve many of the pain points brides run into during a traditional wedding dress shopping experience. Thousands of customers agree so far, and as growth continues, Leslie has her eyes set on new technologies that she believes will lead to a sea of change in the entire Ecommerce world. 3 Takeaways: Understanding and owning your supply chain is becoming more of a focus for D2C brands and it will be a differentiator moving forward. Building a strong supply chain presence allows you to have more flexibility, agility, and ability to scale Transparency and communication is a business advantage when competing against bigger brands When tailoring custom unique experiences, tech can’t completely replace a human element 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 Stephanie Postles, your host. And today we have Leslie Vorhees on the show, co-founder and CEO at Anomalie. Leslie, thanks for coming on. Leslie: Thanks for having me. Happy to be here. Stephanie: Yeah, we're really excited. So, where are you located at right now? What are you up to? Leslie: We are in San Francisco. So, the company was founded and is headquartered here, but we have a couple offices around the U.S and the world. We've got our customer service stylist operations in Scottsdale, Arizona. And then we've got a team that manages our supply chain operations in Hong Kong. Stephanie: Oh, very cool. Hong Kong sounds awesome. So, I'd love to hear a little bit about Anomalie then. We're jumping into it quick, but yeah, talking about offices in Hong Kong, it sounds like it's expanded quickly and grown from where you started. So, I'd love to hear a little bit of the background there and what brought you to Anomalie. Leslie: Yeah, for sure. So, I never actually expected to be founding a company and was not expecting to be in bridal. This idea for the company came about through my own frustration when I got engaged and shopped around for my perfect wedding dress and had a really, really hard time finding, I had this picture of a dress that I really wanted and couldn't find it in boutiques and was pretty horrified by the prices. Leslie: My background is in mechanical engineering and manufacturing. I've always worked for big companies. Started my career at Nike and fell in love with the factory environment and product development and being able to create real physical products. And was working at Apple at the time that I got engaged and was working on the launch of the Apple Watch and was in China quite a bit. Did a little bit of research because I knew co-workers of mine had custom clothing made, mostly men's shirts and suits and things. Leslie: And ended up finding Suzhou, China, which is outside of Shanghai, which makes most of the world's wedding dresses. 80% of the world's wedding dresses are made in and around this amazing supply chain hub of expertise and craft. And worked directly with one of the workshops there when I was out in China for work and was just absolutely floored by the price but also the quality and the levels of customization. Leslie: I could pick out everything from the lace to have it be custom-tailored to my body. And mentioned it to a couple of friends and almost immediately started getting requests for orders before this was even really a company and realized pretty quickly that other women felt the same frustrations that I was feeling around not quite finding what they want for, arguably, the most important garment that you're ever going to wear. Leslie: And then another interesting insight besides just the virality of those original orders was the first couple dozen requests were coming from women that said they wanted something really special, and really different, and really unique. And in reality, the dresses looked very, very similar. People were like almost ordering the same dress because wedding dresses are uniquely low variable. It's white, it's ivory, has lace or no lace, there's limited silhouettes, there's limited styles, has a longer product life cycle than a lot of garments and fashion. Leslie: And so, there were the seeds of this idea for mass customization that was really exciting to me as an engineer to think about how we could scale this to give tons and tons of options to brides, but on the operations side be really efficient and be able to have the benefits of scale by thinking about these modules that can be customized. So, the skirt, or the neckline, or the straps, or the sleeves, et cetera. Leslie: So, we've thought about that a lot as we've grown in the past. So, that was about three years ago, a little over three years ago that we started and since then have grown to serve thousands and thousands of brides. And are building, from the technology side, a way to be able to visualize the dress in an easy and fun way, given that we don't have brick and mortar shops. Stephanie: That's amazing. Yeah. It's very interesting hearing the story of your background of being like, "I need a wedding dress," and actually going to the district in China where they're made. I can't think of many people who would solve their own problem like that. Was there any surprises when you were going and meeting these companies there and just thinking through, "Hey, this could actually be a business," or any findings when you went there that you weren't expecting? Leslie: Yeah. I think one thing that was really stark that I noticed right away was I was the only foreigner in this area. It was very apparent that Chinese women knew that this is where you can get really high quality, almost like haute couture type of like custom garments. But I was the only foreigner, the only white person walking around getting a lot of stares. Leslie: I think that was really representative that there was a secret that was being uncovered. That was how I was thinking of it was, this is something that can be untapped. And just given my conversations with friends, and then friends of friends, and then friends of friends of friends, as the idea started growing was, women really want to be able to tap into that but need a trusted source. Leslie: There's a lot of direct from China websites and horror stories about women ordering a dress and then when it actually shows up it's low quality or not what they were expecting at all. And given, again, this is a very emotional important purchase. Having someone that you know and trust on the ground, I thought was something that was going to be really important and that has remained important the entire history of the company. Leslie: And then I think the other thing that was surprising was just the breadth of quality in Suzhou. It was, you could get everything from a very, very, very inexpensive cheap wedding dress for a couple of bucks all the way up to dresses that were almost as much as it would cost in America and wide ranges of quality. Leslie: I remember I vetted probably a hundred or so factories when we were first starting up and it was pretty apparent the ones that didn't take quality as seriously. There was one factory that I remember where everyone in the factory was smoking cigarettes- Stephanie: Oh my God. Leslie: ... which is not something that you would want in a high quality [crosstalk 00:07:03]. Stephanie: What's their reviews on Amazon? People are like, "Hey, it smells smoky. I wonder why. Now we know." Leslie: Yeah, exactly. So, that one was an easy one to cross off the list. But then on the flip side, there were a lot of really, really sophisticated entrepreneurial factories that we met with that I think could feel the shift that's happening in bridal, which is that it's one of the, I think, last verticals that hasn't really been disrupted by an online presence. Wedding dresses are still 95% brick and mortar in the U.S. Leslie: And a couple of years ago, it would have been crazy to say that you're buying your eyeglasses, or mattresses, or TVs, or books, or whatever on online. And it's still a little bit crazy to say that with wedding dresses, but I think that's exactly why I was so interested in it because it felt new and different. I think that that's the making of a really good startup, a good, crazy idea. Stephanie: Yep. Yeah. I completely agree. It seems like there could be a lot of D2C opportunities that go directly to the source like you did. Because a lot of them, people are coming online. They want not go through someone else to sell right now. Is there any other areas that you can see going direct to actually help with the business model, or maybe friends, or mentors in the industry where they realize, hey, there's a lot of opportunity if you go directly to the factories and see how they make it and develop your own relationship, instead of always relying on a wholesaler, or drop-shipping, or whatever it may be? Leslie: Yeah. I have to credit my internship when I was in business school. I was really, really lucky enough to be a part of the core founding team of M.Gemi, which is direct to consumer high, high quality Italian footwear. And I was able to go with the founder over to Italy that summer- Stephanie: Wow. Leslie: ... which was the coolest internship ever. Much more glamorous than some of the factories in China. Stephanie: Wow. I want that internship now. Leslie: Yeah, exactly. Stephanie: Can I sign up for that? Leslie: It might be the coolest job I've ever had. But it was really, really interesting because they had set up relationships with these Italian craftsmen that make shoes for, I mean, the factories we saw were for Yves Saint Laurent, and Prada, and Valentino. And the same hands that were making those shoes had extra capacity to make high quality shoes that didn't have the designer label and then designer price tag. Leslie: And tapping into that direct to the workshop and direct to the craft idea was something that I got to see that M.Gemi was doing and is apparent all over e-commerce with, I know Away luggage, I think, started with making partnerships directly with the workshops and, I'm trying to think of another. Oh, the mattress, a lot of the mattress companies are... There are these pockets of expertise and by being able to sell direct to consumer, it cuts out the middlemen and obviously cuts out a lot of the costs. Leslie: And then also for us, especially being able to centralize stylist operations, and tech, and our finances, and all of that allows us to scale nationwide without having those costly retail footprints. And then also we can scale the experience from a customer experience side. Stephanie: Very cool. So, if you're looking back now on picking factories and workshops to work with directly, what were some of the lessons that you took away from it where you were like, "I would do this over again," or, "I did it this way and it worked out really well," if someone were to try and start this process from scratch? Leslie: Yeah. Well, I'd say definitely no cigarettes present in the factory. Stephanie: Step one. Leslie: Yep, step one. Stephanie: All right everyone, that's all you need to know. Leslie: That's the secret. No, I think also the appetite for international partnerships. And we were lucky because we started really small with just a few orders. And a lot of partners, especially in China, require minimum order quantities to be able to produce with them. And we found partners that were aligned with our vision of entrepreneurship and scale, but we really had to sell the vision probably similar to fundraising and selling the ideas to venture capitalists to get funding. Leslie: We had to sell the idea to the workshop managers as well to buy into this idea because we did not have massive amounts of orders at beginning. And so, definitely alignment on a strategy of customization and a strategy around scaling through tech and having technology-enabled operations to be able to get bigger and better. That helped a lot to be able to find some partners that were really, really aligned with that vision. Stephanie: Yeah. That definitely makes sense. It's like when you're looking for a contracting job or something like that, the people who apply maybe aren't the ones you always want versus going out and actually sourcing the exact person that you want to work on your project, or employee, or whatever it may be. Leslie: Exactly. Stephanie: Always seems to work a little bit better. Leslie: Yeah. Stephanie: So, for Anomalie, when I was thinking about, I've had a wedding before, I've bought dresses, and I was thinking, "Oh man, that seems like it could be pretty hard to do direct to consumer online because of the measurements, and making sure it fits, and wanting to feel the fabric and all that. How can technology replace that kind of experience that makes the consumer more comfortable with buying something so important online? Leslie: Yeah, it's a great question and a great call out. It is hard. It is a hard hurdle. We have a really, really high bar of trust. This is a really, really important garment. I think what's really exciting to us is that a digital experience solves a lot of the pain points for brides' shopping experience in brick and mortar boutiques by offering, one, a much better price. Leslie: So, high quality brick and mortar boutiques you wouldn't balk at a price tag from, the average is in the two to $5,000 ranges where the bulk of the dollars are in the market. And designer dresses can cost $10,000 or more. And by being able to cut out the cost of the shop and then also having a stylist we're able to offer a much better price. So, our average dress right now is right around 1700, which is- Stephanie: That's really good for custom. Leslie: ... [crosstalk] in industry standard. Yeah, we think so too. And then another pain point that we hear over and over from brides is around inclusive sizing. So, the average American bridal boutique doesn't carry the average American woman's size, which is a bridal size 14, normal size 12. Leslie: And the inventory is expensive and boutiques have a limited set of gowns. And that gets even smaller when you think about sizes that can include plus size women. And so, by making our dresses made to order, made to measure, we're able to make the pattern to fit the woman's body, regardless of whether you're a sample size or up to a size, I think it was made up for a size 32 before. Leslie: So, that I think addressing the inclusive sizing has been a big unlock for us. And then I think the biggest advantage we have is we can offer dramatic advantages with customization of the design because we can bring together any element that a woman wants. So, more often than not, we hear a bride say, "I tried on dresses, I have a Pinterest board with all my dream wedding dresses, and I love this element of this dress and this element of this dress. I love this skirt and I love this top and I wish I could make it long sleeves." Leslie: Or, "I wish I could swap out the lace." And so, from a supply chain perspective, that's exactly how we're thinking about building every single dress is with those modular components to be customized. And because we don't have to hold inventory, we can offer literally billions of permutations of designs to bring together all of the parts of different dresses that brides want. Leslie: And so, we're really empowering brides to discover and then also create the exact product that they want. And then that tech is supplemented by a human component, which is still really important to have a stylist on the other side of the phone to bounce ideas off of, talk about pros and cons of different design elements, and really reaffirm the decisions. Yeah, because it is hard, because she's not trying it on in a store. Leslie: But the question is always the same, which is, I want this dress to fit, I want this dress to look beautiful and flattering on me. And that is a problem that we can solve with tech and with data. We're collecting hundreds of thousands of custom measurements right now, and developing IP around pattern making, and fit, and have a fit guarantee that you're not going to have any more than $499 of alterations. And if so, we'll cover the costs. That's something that we just launched last month. Leslie: And so, we feel confident that we can tackle the challenges with not having an in store experience, but actually offer much, much more value through better price and sizing and fit. And then also that customization element. Stephanie: Very cool. So, when it comes to entering in data for sizing, do you have the user do that? Do you have the stylist work with them? Because that seems like it could be a process where it could be painful if you're measuring your wrist, measure your shoulder area. I mean, it seems like there's a lot of spots that you'd have to measure to know how to get an exact fit. So how do you work with customers on that to where they don't bail? Like 50% of the way in they're like, "Ooh, there's a lot of work. I'm out." Leslie: Yeah. We benefit because women are really committed to getting this garment right. Stephanie: Got it. Leslie: So, it's shows up in lots of different areas. For example, we have a really long, intense survey and we have a crazy, crazy high completion rate. If it ever drops below 95% completion, we're thinking something's wrong with the website, because this isn't just purchasing a pair of pants or a pair of earrings or something online, this is your wedding dress. So, women are really, really okay with sharing a lot of data. Leslie: So, that shows up with measurements too. So, process-wise, we send a little fit box, which includes physical swatches of our fabric, because that's something that we've found is really hard to digitize, the color, and then also being able to touch and feel the quality and what the fabric feels like. Leslie: And that includes measuring tape. And then we've got pretty in-depth instructions on how to have someone take your measurements, whether that's your fiance or a friend. We also have a connection with local tailors. So, if women want to go in and get measured by an expert, we cover the cost of that. But what we've seen over time now is actually, we have hundreds and hundreds of thousands of these points of measurement. And so, our system can algorithmically flag if something looks off too. Leslie: So, oftentimes, we'll come back to a bride and say, "Hey, this measurement doesn't quite look right and it's a typo that we were able to catch." And so, by just having that back and forth, and then also this foundation of data to ensure that the measurements are accurate helps a lot. And then, in the future, I mean, we've seen a lot of technology pop up around digital measurements. I'm hoping someone else can solve that problem. And then we can fold in the technology through our process because it is for sure a challenge. Leslie: What we're thinking more about is once we have measurements that we feel really, really good about, how does that translate to the pattern making and being able to create a 3D physical garment that will fit a 3D object, which is a woman's body? Which is hard, but that's something that I think, in particular, our investors are really excited about. Because once we figure out that part of the problem, that can be applied to other things besides wedding dresses. That can be applied to garments just overall for women. So, thinking a little bit longer term about how we can build some really cool IP around women's fit. Stephanie: Yeah, that's awesome. I was just thinking about how nice it would be to have someone take a quick video of you doing a spin, where then it has all your measurements there, so then you can actually virtually try on the dresses and see how they look, because that seems like it'd be hard to know how something would look on your body without actually seeing it on the computer screen or something like that. Stephanie: At what point did you realize, like, "Hey, we're getting a bunch of data." We probably should incorporate machine learning or build an algorithm that helps with either recommending styles or like you said, checking the fits or the measurements that the potential bride was putting into the tool? At what point were you like, "This is a lot of data, we need to actually implement some type of technology," and how did you go about that? Leslie: Yeah. It's funny. I would say it's probably the way we figure out anything else with the company and probably other startups will empathize with this as well. It's like, once things start breaking, that's where you're like, "Oh, okay, we got to fix this." It's like the leaky faucet or the balancing plate's analogy. It's once things really start to wobble, it's like that's where time and attention and resources need to be applied. Leslie: But another part of this is that I've always really, really admired startups and D2C startups in particular that have this differentiation with tech, or data, or supply chain, or operations. So in particular, I really, really admire Stitch Fix and Rent the Runway, which Stitch Fix famously has said they employ more data scientists and engineers than they do merchandisers, and they're a fashion company. Leslie: I think they recognized really early how much leaning into that data strategy can help them scale and get really, really good at what their core value proposition is, which is similar to ours in terms of personalization. And so, we've always tried to follow after their ways because they've been so successful. And so, that's been on my mind since day one as like, this is going to be an important part of how we can scale successfully. Stephanie: Yeah. Stitch Fix is definitely a good example. It's amazing how much data they use and how they are working to perfect every single fit of clothing and using all the feedback they get every single second to make it better and better. Leslie: Yeah. What I love is it's not data just for data's sake or tech just for tech's sake. It's like really core to how they're delivering personalization to their customers. And they see it as a big competitive advantage, which I think is why they've been one of the few successful e-commerce exits. You haven't seen that many in B2C, I think, because it is really hard, but that seems to be a really, really smart way to differentiate your company and your brand. Stephanie: Yeah. I completely agree. Do you have a model that you're looking at right now where you're like, "We're going to spend this amount of time thinking through the tech and the future of where our industry is headed to get ahead of it, and then this percent is spent on the product right now?" Or how do you think about balancing those two initiatives? Leslie: Yeah, I wish it was that organized. We're probably not quite there strategically yet, but it's always been these three core pillars of our business, which is the tech and the visualization really around solving these frustrations around visualization, and measurements, and fit, and developing a really amazing digital experience through our tech. And then second is our human part of the customer experience. So, our stylists team that is just really smart, and empathetic, and helpful and, I think, necessary to make this big decision, this big purchase online. Leslie: And then third is our supply chain operations and being really on the cusp of vertical integration and being super, super involved in our workshops on the ground to make sure that we're maintaining a really high level of quality and that we're covering all the areas of ambiguity that comes from making custom garments. Stephanie: Yeah. Awesome. So, right now when I think of the wedding industry, I think of the big brands, the major players. How do you think about building a bigger share of the market or getting a bigger piece of the pie when you're competing with companies like that? Leslie: Yeah, it's something that we've thought about since day one. And because bridal is so unique, I think we're really uniquely suited to disrupt the market. So, as I said earlier, bridal is still 95 plus percent in brick and mortar. And then the other funny thing is that it's really fragmented. So, the biggest player in the market is David's Bridal, which is a third of the market. And then the rest, there's no one with more than a 1% market share. Leslie: So, it's just super fragmented, independent, usually mom-and-pop boutiques. And the crazy thing about David's Bridal is they're failing, they filed for chapter 11 in November of 2018 and have been repackaged and sold off to a number of different private equity firms and just continues to be- Stephanie: That's not good. Leslie: Yeah, really I think struggling because of the costs of their retail. They have over 300 stores in the U.S, and salespeople, and I think it's a model that's not going to work long-term. And so, we have our sights set on taking that big of a share of the market similar to David's Bridal. And we think we're really well set up to do that because we're doing it in a direct to consumer way. We're not burdened by the cost of having a retail presence. Stephanie: Yeah. Yeah. I read a really interesting report about the David Bridal's of the world, where once retail locations are bought by PE firms, that there's a very high correlation of them going bankrupt because of just how- Leslie: It's not a good sign. Stephanie: Yeah. Yeah. I think Toys "R" Us was the same way and there was a whole list of them. Leslie: That was actually the, I think it was Oak Tree or Oak Hill that took Toys "R" Us into liquidation. And they were the same ones that just purchased David's Bridal in [inaudible 00:27:54]. Yeah, it's not looking great for them, but it's wild that there's still one in every three wedding dresses in America and no one else is really stepping in to take them on. Leslie: And we're going big here. The answer I think is not to just open up another boutique or another online boutique, I think the answer to unlocking a big portion of the bridal market is around price, and customization, and fit, which is why we're spending a lot of time and a lot of dollars on building tech to support that. Which is hard and our investors understand that, but I think it's also why we're a great venture opportunity is because there's a lot yet to be discovered, which is what we're working really hard to build right now. Stephanie: Yeah. I completely agree. When it comes to your marketing efforts and getting that market share and growing bigger, what kind of tactics do you use right now to either convince the buyer who's maybe very skeptical of buying online to come and try you guys out and making it a easy process for them just to get involved versus the people who you can tell are like, they're in it, they're ready, they've already paid the stylist fee, they're here? How do you think about advertising those two different types of audiences to make sure they convert to hopefully customers? Leslie: Yeah. For us, it comes down to transparency, which is very authentically Anomalie, especially in the early days when we were first starting out. It's not trying to make us bigger than what we were, it's acknowledging, "Hey, we're a young upstart, but we're going to work really hard to make your wedding dress perfect." And being really upfront about the challenges and being upfront about the questions that are in bride's minds. Leslie: It doesn't help to gloss over the fact that you're not going to be trying on the dress until it arrives, but having an honest conversation with our customers around that has always helped. And what also helps is that we've got a lot going for us in terms of, again, the price and being able to bring together all these design elements that you could never find in a store. Leslie: So, yeah, it's addressing concerns around what customers might be thinking of, and then also just education around this new experience. And what's cool is I think our authenticity really shines through our social. So, we have really, really great word-of-mouth viral growth, but more and more finding new customers through Instagram and Facebook. Which we have a pretty cool way of reaching our customers because oftentimes if women become engaged, they change their relationship status on Facebook, and so they're easy to find. Leslie: Also, especially newly engaged women love content. They want to read all of the wedding blogs and browse Pinterest for hours. And so, we're working a lot on how we can make our digital experience really fun and easy to browse tons and tons of potential dresses and then also real dresses. Leslie: So, our Instagram account is just chock-full of women, real women, not models on the happiest day of their life with our product being the centerpiece on the bride. It's a really cool evergreen content machine too, because every day we get dozens of new wedding photos from women who have professional hair, and professional makeup, and professional photography on this very happy day. And it's just really easy to- Stephanie: Perfect. Leslie: ... feed that back to potential customers to show the breadth and depth of our customers and customer types and body types, and also design. And I think it's a really cool way to communicate our value proposition to potential brides. Stephanie: Yeah. That definitely makes it much easier. How do you think about encouraging the brides to share that, not only with you, but also in their socials? Because I could see some people being hesitant to show where they got their dress from, because then everyone knows about it and it's not as special and fancy. I've just seen this hesitancy in brides to tell you like, "Hey, I got this bracelet from here and this dress from here. And here's where I got my veil from." It seems like it's an industry or, at least, a group of people that sometimes don't always want to share that. Have you experienced that? Leslie: Yeah, it's funny. And this is another funny thing with bridal. I mean, we've never developed an influencer strategy. We've never had to work hard or twist a bride's arm to post pictures because it's almost always a really, really happy customer experience. Brides are shouting it from the rooftops, especially brides that had frustrations finding a dress that they wanted and then discovered us. They want to tell their friends about it. They want to help future brides know about us, which is just super cool. Leslie: And I think it's something that we've worked really hard to develop because, again, this idea of having a lot of trust, but we've earned that by going above and beyond to make sure our original customers were advocates for our brand by delivering a really, really amazing experience and a really, really beautiful, perfect dress. Leslie: And so, it still amazes me how much brides love to share about their experience. It's funny also because oftentimes the wedding dress is a secret, especially to the fiance. So, women will go as far as posting on their Instagram stories their sketch for their custom dress, but then we'll scribble out so you can't quite see what the dress looks like, but they still want to post the fact that they are so excited about getting their sketch, even though you can't even see it. It's pretty amazing. Stephanie: That's great. Yeah, that's really awesome. I'm sure also having that relationship with them, I mean, by the time they get to the very end, I'm sure they feel very connected with you, and the stylist, and your team, so it probably makes that better. Leslie: Oh, we've had stylists invited to so many weddings. It definitely is a relationship that is, I think, pretty unique. I think other companies would kill for this type of loyalty we have. Our stylists, we joke, get presents all the time, cupcakes and flowers and things delivered to the office because the bride was just so delighted with our experience, which is so cool. Leslie: It's really empowering, I think, to know that you've had a difference in what should be the most fun, enjoyable time in a woman's life and unfortunately oftentimes it's super stressful. So, I think just having an ally through that and then really wowing her with the delivery of the dress is the experience that we want to deliver every time. Stephanie: Yeah. I think a lot of brands would kill for that kind of relationship. And it's just a really good reminder of how important it is as a lot of companies are either coming online or moving more to direct to consumer that keeping those relationships, even if they're virtual, is super important to get that trust and to make sure it's, even after the sale, you have champions who are talking about your brand and wanting to send more people your way. Because, like you said, word of mouth is key. Leslie: Absolutely. And that becomes something very defensible as well, more so than a cool brand or, potentially even those tech and operational differentiators. Having customers that are singing your praises and having that community of advocates is something that we really, really want to keep building. Stephanie: Are there any digital e-commerce trends or patterns that you're really excited about or that you see coming down the pike? Leslie: Yeah, and I'm biased, of course, but I think the idea of personalization and customization is so, so key. And I love other brands that are tackling that as well, like Stitch Fix. I also think the idea of vertical integration and being really involved in your supply chain has popped up. And I'm a supply chain nerd, so I always appreciate other companies taking action there as well. Leslie: So some of the razor companies, [inaudible] of them purchased an actual razor factory in Germany. And I was just talking with the founder of Haus, which is a new liquor brand direct to consumer [crosstalk 00:37:29]. Stephanie: We just had them on the show. Leslie: Oh, amazing. Stephanie: Yeah, Helena. Yeah, she came on. Leslie: Helena is awesome. And I think there is a lot of innovation happening right now in terms of the front end, which the customer's experience, how you're interacting with brands in a digital way versus in a physical store. But I think the innovation from a supply chain side will also be really, really important for brands to differentiate, especially if they're making things in a new way. So, I'm feeling good about our investment in time and resources with developing a really strong supply chain presence. And I'm hoping it'll benefit us long-term. Stephanie: That's great. Are there any channels, like digital channels that you guys are looking into to expand to? Whether it's, I know a couple of brands we've talked to have talked about TikTok, which people laugh when I say that. But I mean, they've said that they've had great success on there. Is there any areas where you're seeing success that maybe others aren't trying out right now? Leslie: Yeah. It's funny you bring up TikTok, because months ago I would not have even really known what that was. TikTok is going to be very important for brands. We had a woman post just a quick little video around like, "Hey guys, if you are bored in quarantine, check out this website, you can visualize your own dress. I'm not even engaged, but it's pretty cool." It was something literally that simple. Her post went viral. We had over 200,000 people sign up in one day last week. Stephanie: Oh my gosh. Leslie: Or about a week and a half ago, crashed our website, our engineers were working until four in the morning trying to get our capacity back to where we could actually serve our customers, just bombarded with TikTok traffic. So, it was half the team trying to fix the website issues, and then half the team just trying to figure out what tikTok was. And quickly getting up [crosstalk 00:39:36]. Stephanie: What is the source? Leslie: Yeah. So, it's, I just saw a stat this week that they were the fastest social media company to get to a billion users. It's just amazing what they've built and the speed at which they've built it. And I think it's something for sure that leaders of brands will need to keep an eye on just given how viral it is. Stephanie: Yeah. Yeah. I mean, I know people are still questioning how many of the users are real versus not, but I brought this up in a team meeting with my team. I'm like, "We should try out TikTok. One, it looks fun. And two, I've actually heard of quite a few brands saying that it's working well." And my entire team laughed at me and said, "No," so. Leslie: Well, they will be eating their words now, I think you were ahead [crosstalk 00:40:23]. Stephanie: I agree. I agree. So, 200,000 signups, crashed your website, that's a great segue into building platforms for e-commerce. How are you thinking now about, I mean, it sounds like you could be at a place where you're maybe outgrowing the platform or you're experiencing some friction because you guys are growing and you're going to have large spikes in volume coming your way. How are you thinking about developing a platform that fits you where you are now and where you're headed? Leslie: Yeah, I mean, it's a balance of building a robust tech foundation and serving up an experience that customers really want. It has to be a balance of both of those for us... Leslie: (Silence). Leslie: About six months ago. And being able to tie any possible design element and having logic built into it to not show a sketch to a customer of a dress that can't be created. We worked really, really hard to do that. That being said, it's a big load on our tech. And so, we're thinking about ways to, from a technology perspective, how do we continue to have a really cool mind reading type of experience, but also be able to potentially surge to have sketches available for hundreds of thousands of people in one day? Leslie: And one thing that we're building right now is, you mentioned earlier, there are a number of different types of brides that come. So, some brides come in and are like me, and they have an idea of exactly what they want and having a very mind reading survey experience works really well for that type of customer. But where we're moving to right now, and the team's building a brand new browsing experience that should be online just hopefully within the next couple of weeks is this idea of being able to filter down based on a couple of different elements and being able to view lots and lots of designs side by side. Stephanie: That's great. Leslie: Other Ecommerce companies have the same type of experience in terms of filtering down based on different price ranges, or colors, or sizes. And we're thinking a lot about that. And then also building that in a way now with the TikTok viral event fresh in our minds with a way that we can access our amazing data and logic that we've worked really hard to build, but also be able to have an easy load on our servers to be able to show this to hundreds of thousands of people at the same time. Stephanie: Yeah, that's great. I was actually just thinking when thinking through your business model of like, I'm probably the consumer that wants to... I don't know what I want until I see it. So, I would probably instead want to come in and be able to see different designs maybe on models that look like me so then I can choose it that way. Yeah, if someone were to say, "Hey Stephanie, design your own wedding dress." I'd be like, "Ah, it's white. It's all I got." Leslie: Such a big task. Yeah, for sure. We just created this algorithm within the last couple of months called... it's called a similar dresses algorithm, which takes all of these, I think we have millions of photos now at this point of real women, real weddings, real dresses, real Anomalie dresses. And based on the sketch that you get served up, you can see what that dress would look like on women that look similar to you. Leslie: If you've used Rent the Runway, which I'm a big consumer of Rent the Runway, you can see what does this look like on a woman that looks like me, which I think is really helpful in terms of addressing that question around the visualization and like, what is this actually going to look like? Stephanie: Yeah. Yeah. That's great. I'm excited to hear how that goes. How are you thinking about measuring performance when you have these two different types of models now? How do you think through, is our website working? Is it converting well? Yeah, what's your process around that? Leslie: Yeah. Well, our conversion tank, as you can imagine, just within the last couple of days, it was really exciting to see the site traffic and just the number of sketches being generated and just, I think overall excitement. Which isn't quantitative, but just the qualitative excitement and virality around the promise of what we're building was really, really exciting. Leslie: As far as like our KPIs, it's really just around growth. It's like we have a lot of interests. We need to make sure we're converting that interest into real purchases and real dresses being made with Anomalie. So, that takes a little bit more time than that initial visit to our site to get a sketch. And what we really look is the conversion of interactions with stylists. Our process right now is that you pay a small design deposit, so $29 to be able to connect with a stylist, and talk through the design, and talk about pros and cons, and iterate the sketch to be absolutely perfect. Leslie: And then the decision to move forward with Anomalie is after that call. And so, that's what we're really, really focused on is just making sure that we're converting the interest from our cool tech and our cool website experience to actual dresses. And that's where we're growing a lot right now, too, which is exciting. The conversion is not looking good right now- Stephanie: Temporary. Leslie: ... in terms of all the TikTokers, but that's where the rubber hits the road in terms of dresses actually going to the factory. Stephanie: That's awesome. Have you seen any hesitancy with paying that $29 fee? Have you seen traffic come there and hover a bit and be like, "I'm not so sure." And then people bounce because they don't want to pay something right upfront? And have you thought about maybe a quick freemium model where maybe they have a stylist for a couple minutes or would that ruin the business model of making it super personal and the relationship? Leslie: Yeah. We've thought about this a lot. And this actually is something that we're talking about as a team quite a bit right now is, is $29 too high? Is it too low? I think having a posture of confidence in our process that this is a good value is really important and we've adjusted the price and also if it's refundable or not, and then also having the calls be completely free or not it's something that we're looking at really closely and just continue to listen to what our customers like. Leslie: And we've got enough of a growth team set up now where we can measure that quantitatively rather than just viewing it qualitatively. So, yeah, it's a great question and something that we're thinking about a lot. What we want to communicate is, speaking with a stylist is important and absolutely necessary before you purchase the dress. This is not a typical e-commerce experience where you drop something into your cart and purchase it. This is your wedding dress. And so, making sure that we're delivering a really positive high quality customer experience and making sure brides are feeling good before they make that final decision is important. Leslie: And the exact makeup has changed a little bit over time and probably will continue to change over time, especially as we add more and more features to our website. But yeah, it's an exciting challenge that we're working on every day. Stephanie: Yeah. Yeah. I liked the idea too of sticking with your guns to keep that quality high. I know when I was looking through your website and you were mentioning transparency earlier, but you have a whole section where it says, can I get my wedding dress in six months and I still want a custom? And at one point you're like, "No, you can't do this, this, and this. If it's seven months, yes, we can do it for you. Eight months, here's what we can do for you." Stephanie: And I thought that was really smart to just show like, "Here's our boundaries and here's what we can and can't do." So, let's just set expectations up front and same with that stylist fee. It's like, "Here's how we work." If you go, "Well, this is the process where we see works best right now." Leslie: Yeah. And what's great is we've got a couple years under our belt now and have made thousands and thousands of dresses, so we know what's best. Which in the early days, I think we're a little apologetic and wanted to be super flexible, but now we have a lot of confidence in our process as it stands right now. Another place that shows up is the pricing of the actual dress. Leslie: A lot of brides come to us with a tight budget for their wedding, rightfully so. Weddings are really expensive. And so, being able to talk through with the stylist, what are the big price drivers of a dress? So, for us it's, there's hand beading. That takes a really long time and it's really expensive and adds a lot of costs to the dress. And so, being able to talk to a stylist about how to bring in elements of sparkle with less expensive elements is, I think, something that really appeals to brides. Stephanie: Yeah, that's great. So, we have a couple minutes left. And I want to jump into the lightning round, brought to you by Salesforce Commerce Cloud. It's where I ask you a quick question and you have a minute or less to answer. Are you ready, Leslie? Leslie: I am. Stephanie: All right. What is up next for your travel destinations? Any factories you're visiting? Where are you headed? Leslie: Yeah. Well, right now everything is still locked down for quarantine, so it is really hard to think too far in the future. I mean, in 2017, when we were starting this company, I was in China pretty much half the year. I think it was like every month I was out there. So, thankfully we've got an amazing team on the ground, so I'm not having to travel out there as much. And it'll be more traveling to our Scottsdale, Arizona office to chat with our stylists and customer experience. So, that's taking much more of my time now versus to China in the old days. Stephanie: Yeah, very cool. What kind of hobbies do you have or ones that you have on the map that you want to try out? Leslie: Almost none, I would say, which I don't know if- Stephanie: Work. Work. Work. Leslie: ... this is the most healthy answer, but starting a company and building a company is all consuming, which I love. That was exactly what I wanted. And that's what I'm dedicating my life to right now. My husband also is my co-founder, which is crazy. Stephanie: Sounds similar. Leslie: So, we don't have a personal life, but that's what we want right now. And we love what we're building and it still remains exciting, and cool, and our biggest hobby for sure. Stephanie: Yep. Completely agree on this side too. What's up next on your reading list or podcast list? Leslie: Oh, I'm just finishing a book called The Upside of Stress, which is super fascinating. It's a Stanford PhD researcher. She had done a ton of research on how stress can impact people's health in a negative way. But what she started uncovering is that it was believing that stress is bad for your health is what was making people unhealthy. Leslie: And so, the book is all around how you can... stress isn't going to go away, especially in meaningful lives or meaningful parts of your life that stress represents that you care about something and something is important. So, she has really practical tips for how to hone and manage stress in a way that helps. Which is focus, and energy, and care in what you're stressed about, which I'm really, really enjoying reading that and would highly recommend it. Stephanie: That sounds like a good one. I'd love to check that out too. All right. And the last, a little bit harder of a question, what's one thing that will have the biggest impact on e-commerce in the next year? Leslie: Oh, I mean, I have to say right now COVID is going to really, really append retail. With retail essentially being completely shut down in the U.S right now, I wonder about if there are decisions being made at both startup companies and large companies about what value they're getting out of their stores. And they are a lot of really expensive components of having a physical presence and we're benefiting from the value of having a digital experience in terms of the data, and the personalization, and delivering value to our customers. Leslie: And I wonder if we're just going to see a lot fewer stores. It's probably a pendulum and we'll swing another way in the future. But yeah, I just have to imagine that a lot of stores are going to be closed once the economy opens up and once quarantine is over. That's what I'm thinking about. Stephanie: Yeah. That's a great answer. Well Leslie, it's been a blast having you on the show. Yeah. Good luck with everything and we'll see you next time. Leslie: Thank you so much for having me.

Sometimes an opportunity comes along that’s too good to pass up. For Matt Hulett, that happened when a friend approached him about a job at Rosetta Stone. The famous language-learning company was stuck in the analog world and they wanted Matt to be the guy to bring them into the digital future. It was no small feat, but Rosetta Stone has made progress on the digital transformation and Ecommerce journey, including introducing a subscription model and overhauling its tech stack and app. On this episode of Up Next in Commerce, Matt discusses the challenges of transforming a world-famous brand, including how he chose a free-trial subscription model over going freemium, what it was like to achieve buy-in from investors, and the future of Ecommerce and why he thinks social selling still hasn’t reached its full potential.   3 Takeaways: Even the most well-known brands need to earn their stripes when entering a new space. When a previously offline product starts playing in the digital world, it has to prove to customers that their investment in this new space is worth it AR and VR are tools that Ecommerce platforms will be exploring more in the coming years. If you can provide a more immersive experience, you differentiate yourself from the competition and create more value to your customers Stay true to the brand and don’t try to compete on business models that don’t fit 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 Stephanie Postles, co-founder of Mission.org and your host. Today, we're going on a digital transformation journey. Matt, how's it going? Matt: Oh, really good. A little cooped up here like we all are, but I'm hanging in there. How are you doing? Stephanie: I'm doing well. Yeah, same hot, very hot. It's 92 here and the places in Silicon Valley usually don't have air conditioning so just a little sweaty in the studio. Stephanie: So I must admit, I have not checked in on Rosetta Stone in a while and when I started browsing through you guys' website, I was like, "Whoa, you all have come a long way from CD-ROMs and everything that I was used to when I was growing up and thought of Rosetta Stone." So I'd love to hear a little bit about what brought you to Rosetta Stone and your background before you joined. Matt: Yeah. It's interesting, just before I dive in, it's rare to join a company where everyone knows your brand and your product like just about everyone in the United States does Rosetta Stone. Matt: And so actually, it's an interesting story because there's not many ed tech companies that are a public companies, you could count them on your hand and the company has been a public company for over 10 years. Matt: It's been around for 27 years and it's a really interesting backstory on how the company was founded and so some of that came into play with what got me attracted to the business. Matt: So a friend of mine who's a recruiter talked to me about this opportunity and I typically do restarts, pivots as they are [crosstalk] for startups. Matt: And even the startups that I join are typically pivots. So there's kind of this pivot transformation story that typically is a draw for me for whatever weird reason why I attracted to these things and when he said, "Oh, it's Rosetta Stone." Matt: I was like, "Oh, the CD-ROM company, the yellow box." I was like, "Yeah, but they're trying to be digital." I'm like, "They're not digital yet?" Matt: And so the draw for me was typically, I take on jobs and assignments that are very difficult where I have to either completely change the strategy or get new financing on a new idea. Matt: There's generally something really, really wrong and Rosetta Stone was so intriguing to me on the surface for the intellectual reasons why they brand the product, people love it. Matt: It's not one of those iconic brands that people are afraid of. It's not like saying, "Matt, do you want to restart Myspace? I was like, "Oh my God, it's Rosetta Stone, of course." Stephanie: That's your next project. Myspace. Matt: Yeah. Stephanie: Just bring it back. Matt: Making it great again. Too soon. But what personally drew me, that's kind of the intellectual business level, what personally drew me into the company was and is the fact that I'm dyslexic, and a third of the revenue for Rosetta Stone is actually one of the fastest growing. Matt: We sell software into K-12 schools primarily in United States that help kids learn how to read, better learn how to read which is a problem. I've seen my own youngest son struggle with his dyslexia as well. Matt: And so on a personal level, it's very emotional when you can kind of tie that emotional tie to a company to its mission and vision. It's really intriguing. So it's been one of the best career decisions I've ever made. Stephanie: Yeah, that's great. Were there any universal truth that you discovered as you are kind of pivoting from different companies and trying out different roles and turning them around? Was there anything like yeah, universal truths that you saw while doing that? Matt: Well, that's a great question. Yeah, a couple things. One is it's so crazy to me, when I step into a company how basically from week one, maybe day one, no one really understands how the business works, like truly understands it. Matt: The key insight, what makes the business special, what can you do to apply capital or a time or attention to improve your strategy or your outcomes? It's just so, it's so weird when you go to a business that's operating, and maybe these are the only businesses I look at where it's not quite tight inside around the strategy and what makes the kind of the economic engine run. I think that's the biggest one that I see off the top of my head. Stephanie: Yeah, that's interesting. I can definitely see a lot of companies struggling there especially as they grow bigger and they have many business units and everyone's kind of chasing a different path, I can see people losing sight of what's important and what's actually driving this business like you're talking about and making it profitable or maybe it's not, but it's the lost leader, something that we still need. So yeah, that's really interesting. Stephanie: So when you joined Rosetta Stone, it hadn't been digital. I mean, only a few years, right? I think it stopped, maybe it didn't stop doing CDs, but it went online. Wasn't it in 2013? Matt: Yeah, I would say it was like half digital. What that means is we were selling one of the most expensive products in the App Store at the time and we didn't really have the concept of really effective sales funnels, a well thought out pricing and packaging strategy based on the type of customers that we're going after. Matt: We didn't have a lot of mobile native features and capability. So I would say it was kind of a port of the CD product in the mobile environment and that was kind of the approach. Matt: And also the approach was really not to focus on the consumer business. So not only did we make this kind of business model and digital transformation move, but also when I came into the business, the big focus was for the language side of the business was to focus on enterprise customers. Stephanie: Mm-hmm (affirmative). Matt: I thought that was actually the wrong move because enterprise is difficult, it's a smaller market, yet consumers where everyone knows Rosetta Stone, everyone likes the product. They actually remember the CD products in many cases and want to use them again, but they want to use them on your phone. Matt: So I thought, "Well heck, everyone knows who I am from a brand awareness perspective, I'll have an easier time deploying less capital against the consumer space and enterprise space." So there was not only just a business model shift, but also a strategy shift. Stephanie: Did you end up sticking with that business model shift to focus on enterprises or did you kind of make it a mix of 50/50? Matt: Oh, good question. So it is about 50/50 today, although consumers now are growing fast. I mean, we're a public company so I can only speak to our public company numbers, but in Q4 of last year, we grew the consumer business about 20% year over year and this is from a business step was growing at single digit. Matt: And then our last reporting earnings quarter, we grew the consumer business around 40% year to year and the enterprise business has struggled more primarily because of the C-19 impacts this year because obviously, we're in a never before seen macro economic headwind, but generally, it's the right decision to make and I view the enterprise business as more of an extension of what we want to do for all adult learners versus creating as a separate entity. Matt: That's a long answer to say consumer turned out to be the right move. It was not clear when I joined the company that even joining Rosetta Stone was a smart move. Matt: I had a lot of folks that I know, acquaintances more so than friends say, "Good luck. There's a lot of error in this company." And I just think it's just a really exciting problem and it's a ... Sorry to keep going because I've had maybe 80 cups of coffee today and just, I don't know. Stephanie: No, keep it up. Matt: It's like the two big verticals that are the most expensive that increased their prices to consumers over the last 50 years are healthcare and education and they have the lowest penetration of digital, and like, "Well, those are hard problems to solve. Why wouldn't you want to be involved?" So anyways, I think it's really fun. Stephanie: Yeah, that's fascinating. So when you came in, what were expectations for your role? What did people want you to do? Did you have a 90-day plan? How did that look? Matt: Oh yeah, if anyone thinks these are scripted questions, these are not scripted questions. These are very good questions. So during the interview process and I'm sure you've had this experience before, when you meet with somebody in a company, you're like, "I'm going to do whatever it takes to get this job." Stephanie: Yup. Matt: And I had one of those experiences with Rosetta Stone. I knew I wanted this job and so I came into maybe the first or second interview with a 90-day plan before I even started, this is the first or second interview. Matt: And the 90-day plan did change slightly because then I knew a little something, but I've done enough of these transformation projects, these pivots where I knew there's these basic building blocks in a format, I have a toolbox of things that I do that really didn't change. Matt: The inevitable strategy didn't know before I started, I didn't know the team members, were they the right fit or not, I didn't know any of that, but the basic building blocks I definitely put together. Stephanie: Got it. So what was on your roadmap, did you have to think about how to re-platform to support your commerce journey and shifting into enterprise and then consumer? What was on that plan that you laid out? Matt: Yeah, and I kind of learned some of this years ago when I was ... Sometimes I think my best work, I can't speak for you or anybody else, but my best work is when I'm completely ignorant of the challenges in front of me and so when I was younger, I worked for ... Well, actually, we sold our company to Macromedia and they had a division called Shockwave. Matt: And Macromedia at that point was not bought by Adobe, and this is Web 1.0 bubble, so I'm dating myself which is not legal in Washington State and these jokes have all jail time. Stephanie: [crosstalk] get us in trouble. Matt: I know. And so we step back through that experience and I learned a lot from the Macromedia Adobe kind of M&A folks about how to approach a problem. And that plus some other work experience over time really got me to the point of thinking through things from I call it the insight, the math in the heart. Matt: And no one framed it that way to me, but that's kind of how I framed it and so when I think about the insight, I think about the addressable market, the position that we are in the marketplace, so supplier's demand competitors. Matt: Then I think about what value we're driving to consumers, what value are you driving to your suppliers if you have them. And then what are the decisions you're going to make based on the strategy that you're laying out for the best outcome? Matt: So you want to grow market share, you want to grow revenue share. Do you not have enough capital? Do you actually need to raise capital and buy companies in order to get size and scale that's the outcome? Matt: So it's kind of a process that I've done over time and I want you to figure all that out, and it takes a while, maybe 90 days, maybe a little bit more, then it's really like how do you put a process together and dashboard is a little trite, but how do you actually run the business so you understand what things are working, the unit economics, what key layers of the business are you looking at, and then figure out an organization to support that and then you find the right team. Matt: And it sounds kind of exhaustive in terms of an answer, but I think too many people come in situations and they say, "Okay, I started this job, I got to restart it. What's my team look like?" Matt: And it's always I think the tail wagging the proverbial pivot dog and I typically, you can find startup people that are good at startups and sometimes, you find startup people that are good at later stage. Matt: You can find every dynamic possible, but until you do the work on, "I need this type of person for this type of growth stage, it's the right person the right time." Matt: If you don't do the work upfront, then you end up having a team that isn't the right team for the outcome that you want. Stephanie: Yup. Yeah, I've heard ... I forgot who said that startup advice where a lot of startups especially around here, are looking to hire that VIP level person, you have to pay a bunch of money to and someone was making the point of like, "Well, will they help you right now where you're at?" Stephanie: And it's okay to kind of grow out of people, but it's not okay to hire someone who's way above that actually can't get their hands dirty and do the work of what needs to be done right now. Matt: That's right. There's lots of people that have different approaches. I actually like to be pretty data driven in terms of how I think about people so I use like employee satisfaction studies and I use different personality profile tests. Matt: Obviously, you're not trying to like ... Hopefully, no one is like applying an AI filter looking at my reactions on this live video, but you can go overboard with data, but I do feel like you need to get the right alchemy talent for your team. Matt: And I've made mistakes where you have that senior person that doesn't want to get their hands dirty when you're like, "Look, I'm in build mode, I'm painting the fence, and I'm the CEO and I'm painting the fence and then I'm talking to the neighbors and driving Uber ..." Matt: The alchemy of that is hard to do, but that's a long winded answer to say there's there's a process and I think it's figuring out what's special about your company, how do you improve it, how do you run it? How did the inputs become the outputs and then what team is required for that? Stephanie: Yeah, very cool. So with the company having to shift as they did to go online and create mobile experiences, what kind of challenges did you see come up when you guys were going through that shift? Matt: Yeah, so there's multiple. So I always think about kind of the four constituents in most businesses, its investors, its customers, it's your internal employees and society. Matt: Not in that order. The order depends on lots of different things and so when I kind of checked down all those boxes, I think the big one, the first one I pick is investors because you're having to explain a model where the CD is purchased up front, it's very expensive versus you don't get all the revenue upfront, you amateurize that revenue and recognize it over 12, 24 whatever terms of the span of the subscription. Matt: So it's a change in terms of how you're reporting revenue, explain it in a consistent way, explaining the new metrics of subscription is challenged one I think from an investor perspective explaining why we have a language business, the Lexia business that I mentioned that focused on literacy is a 20 to 25% growth business, it's growing pretty nicely and language was declining. Matt: So then explaining to investors why do you still have this business and why are you changing the direction from enterprise to consumer, I think for employees. Matt: I always like to think through the employee piece, get the employee piece right, you can do anything and so getting the employees reason to believe, I was the first president to actually run the language business. Matt: It had multiple owners of the P&L and I was the first person probably since the CEO, we had one CEO that that started Rosetta Stone and took it public 20 plus years ago. Matt: I was the first single leader to ... I also tried creating a reason to believe a compelling vision, mission and culture and then when I think through kind of the customer piece, it wasn't as hard to be honest because there was so much brand equity that was good brand equity that doing little bit of things in a way that was kind of planful and data driven actually generated a lot of great outpouring of support. Matt: So the customer side of what we were doing wasn't as difficult as I would have thought and we also had an enterprise business that had already integrated things like digital tutoring with the software and demanding Fortune 500 companies. Matt: So there was some DNA in the company where we knew, "Boy, you can earn every interaction with every interaction." So that was that piece and then later, I started building more hooks into society as part of that and so I kind of view it as a self-fulfilling positive effect of you take care of your employees, they take care of your customers, the investors get great outcomes, and society benefits and you keep kind of turning this crank and you start getting much more reflective about it. Matt: And it does have, it does pay off. It takes I think, in general, I think people brag about how fast they can turn around companies. I don't know why people brag about that. Matt: I don't know, my experience is two years and taking a business from bad to like growing, at least, believing in itself is very hard and so I look at those four factors and I think the society piece is one that's super important that a lot of companies pay lip service to and there's a lot of discussion especially in Silicon Valley about some large companies that are controversial there. Matt: But I'll give you a for instance why if you can tie together the vision, mission, culture values to society, how that's self-reinforcing, we had a obviously horrible global pandemic that we're still pulling ourselves out of and everyone's kind of living through this experience at the same time. Matt: And we basically took just two days to decide that we're going to give away our software for free for three months for students. And we run a current business and selling software to enterprises and adults and we said, "You know what? We know that parents are actually going through hell because there's kind of a make your own adventure right now and schooling." Matt: [crosstalk] and I can feel it myself and we are like, "Oh my God, this is so stressful and the anxiety I heard from our own employees about it was overwhelming and I'm asking them to work harder." Matt: And so we said, "You know what? We're going to give away three months subscription and we're going to just do it and you just have to ... The parents have to put their email address in the school and that's it." Stephanie: Mm-hmm (affirmative). That's awesome. Matt: And we're not a free ... We're a paid subscription product. We're not, there are other competitors that have a freemium model and as you know, changing models or mixed models generally don't have a long history of working and we said, "You know what? We're just going to do it." Matt: And so the team decided to do it, I just said, "Yeah, let's do something." They said, "Here's exactly what we're going to do." And it was live, and then the amount of positive benefits, we got that from pure impressions. Matt: It actually helped our adult business to ... Adult language learning business. That's just one quick example of when those things all start working together. Matt: It's transparent, it's engaged and it's consistent. It becomes kind of operating leverage as well. So it's fun. It's fun to see how that work. Stephanie: Yeah, that's great. It's definitely a good reminder of do good things and good things will come back to you. Did you have any struggles with maybe like surges and people logging in and trying to get on the platform that maybe you hadn't experienced in the past? Because it was maybe a bit more predictable since it wasn't free? Matt: That's a really good question. Not on the system, the system's basis, but certainly from a support basis because we had a lot of, we outsource most of our customer support, and we debated for a while whether we we're going to continue phone support, we still do and I still debate that one, but a lot of our service providers were in outside United States and they all of a sudden had to work from home and then some facilities shut down and so we are just constantly playing whack-a-mole with our support organizations. Matt: And then also, I would say to our frontline heroes were our tutors and we employ a lot of highly educated tutors that have degrees in language learning and they all work from home primarily, they're part-time employees. Matt: And they turn out to be like our heroes because they took some support calls in addition to one-on-one digital tutoring. And so there was unique ways in which we had to adapt with the demand, but I would say more on the demand side regarding the support elements and we definitely saw a surge do the work from home trend as well, but that didn't impact kind of service levels and general software. Stephanie: Okay, cool. And I could see it being a bit tricky to develop and maintain a platform that has so many different layers to the business. I'm thinking about the enterprises who are going on there and buying seats for employees, and I'm thinking about the school is going on there for students, and then the individual consumer like me who's maybe like, "Hey, I'm going to Italy and I want to learn Italian." Stephanie: I don't know, but like it seems like it would be pretty tricky creating a platform that does all of that. How do you think about creating that so everyone gets a good experience and also being able to monitor and measure it in a successful way? Matt: Yeah, I've never seen the complexity Rosetta Stone before at the smallest scale, but what I mean by that is we have three businesses and we're a small cap public company. So that's unusual and the business was run on the language side ... Well, let me step back. Matt: So the literacy business is a business that was acquired seven, eight years ago and that's a 30-year-old company that was acquired, it's called Lexia and it works as a distinct operating unit from my business and is run by an awesome gentleman. Matt: And I use that word loosely and if he's listening, sorry Nick, he's a great guy and so passionate and his team is so good and it's ... I've never seen before a product that's built with like academic research combined with awesome data product engineering that gets results. Matt: It's just, I've never seen anything like it and they had the time to build this product over these many years, it was always digital first and so they're run separately. Matt: My language business was run on two different tech stacks. Actually, it was like five and when I started, I was like, "Well, wait a minute, why is this product that looks the same running off this underlying architecture? Why don't we move everything to react?" Matt: As I kind of went through this morass of tech stacks, it was a lot of M&A that generate a lot of complexity and a lot of tech debt. And so I would say majority of our innovation was not innovation, it was just keeping these old tech stacks up. Matt: So from an R&D perspective, in addition to all the other complexities we just talked about in this interview, I was trying to grow the consumer business, trying to change the business model, swapping out new team members for more growth orientation and doing a huge tech migration. Matt: And the complexity around that is mind boggling. We finished that late last year like de-flashing like old weird services, moving to a services architecture. All that stuff we end up doing and inevitably, the goal is to have one learner experience, just like you use Google, Google Mail for your enterprise, or personal. Matt: There were some admin privileges and other things that are associated in the back end, but in general, the product kind of looks and feels the same and that's, the inevitable goal which we're very close to execute on. Stephanie: Got it. Were there any pitfalls that you experienced when going through all those different pieces to the business or anything where you're like, "When we implemented this, or we move to this type of tech stack, this is when we saw a lot of improvements with conversions or anything around the consumer or enterprise business." Matt: Yeah, just on conversions, yeah, one thing on that is interesting is the amount of improvement we saw just with like putting different team members with specific goals and this is going to sound kind of crazy because everyone is going to like, "Yeah, he's talking about agile." Matt: Just getting very specific about areas in the funnel to improve and how to adjust the trial experience at certain times, and experiencing and showing customers different things at different times. Matt: That had like a crazy amount of upside for us. And I would say less architecturally that we see an improvement other than we had just less stuff that wasn't moving the innovation forward, but just these small things have big impacts and get and I must say like if any one of my team members is listening to this and say, "You haven't solved all that yet is." Matt: It's very difficult to take a business that is so complex, and then all sudden kind of say, "Look, we're going to reduce all the complexity, networks are innovating again." I think there's still a challenge of like, faster, smaller teams, we use a safe framework which is kind of scrum like. Matt: I don't think we figured all that out yet, but it's way different than when I came in and felt very waterfally to me. We're going to issue a press release, what this release is going to look like in one year and we're going to work back from that, I'm like, "Yeah, that's very Amazon." Stephanie: Yeah, yup. Matt: I'm like, "Well, how do you even know this is the right thing if you don't have any customer?" So there was there's a whole evolution of trying things, validating them, making sure that you're deploying enough capital against that makes sure it gets a fair shake, but not too much where you're, you're in over your head and we've had some public black eyes on some of our tests, and I don't care. Matt: We were trying some things internationally with tutoring, it didn't work out, it didn't have the capital honestly to support some of it and I kind of feel like those are good experiences to understand whether you're going to invest more in something or not. Matt: And so I think the fact that we can start doing those things now because we simplified the platform or if possible. Yeah, I think it's hard to say no to things and yes to things. And some of that discipline is easier when you're a startup because you just don't have people to outsource to. Stephanie: Yup. There's always an excuse. Nope, no one else can help us with that. Can't do it. Matt: Yeah. There's never like I'm a product manager by training and I've used every product manager tool under the sun and now I've kind of just resulted in my using Google Sheets again and what I'm trying to triage like epics and themes and stories, and I still like to play around with those types of planning elements, I just always look at all these people in these points available. I'm like, "You guys have no idea the luxury we have." Stephanie: I'm sure they like hearing that. Matt: Yeah, there's nothing more pure than a startup and it's like five people, five engineers and like a product manager that codes and the seat goes, doing UI, UX and it's ... Stephanie: Yeah, that's really fun. So you mentioned earlier a free trial which I actually went on Rosetta's website and I ended up going through the entire trial of learning Spanish. How did you all think about creating that free trial and actually convincing people to do it? Stephanie: Because a lot of times, I think I would see something like that and I'd be like, "Oh, that's too much time and I don't want to start that process right now." Stephanie: And I eagerly jumped in and started doing the lesson plan because it was engaging and fun, and it kind of felt like the real world with the person walking around and you're stopping and talking to them. How did you think about creating that? So it actually converted users into paying customers? Matt: Oh, thanks for saying that. Yeah, I think we have a long ways to go. I think in terms of what we could be doing is we're just, I just feel like we're sprinting to the start line because of the late start, but I think the core piece is for most companies and they think about like what business do you want to be in a lot of people will default to like whatever their venture capitalists said they should do from their other companies they manage or whether they read on TechCrunch or whatever, or listen to on this program is I think you have to be very specific once you figure it out the approach to the product that you're going after. Matt: Are you going to be freemium? Are you going to be paid trial? Or are you going to be for lack of a better term I call it force-trial or upfront trial and there's elements of this that change, there's kind of nuances. Because that's more of a nuanced discussion is the freemium players in the language space for instance would be Duolingo. Matt: How do you get the most amount of MAUs, Monthly Active Users and get enough of them to convert? Or the Spotify example, and you're using basically cap ex as cap, you're using your R&D to drive user and usage and that's kind of Slack-like. Matt: Slack is slightly different obviously. Then the paid trial is, "Well, I have enough of something that's good that I want a lot of people to use it, but I want the conversion to be pretty good." Matt: And so for the first one with freemium, you have to say, "Okay, it's going to be so fun and compelling and I'm going to actually invest in growth that isn't there yet because I think I have scale effects —I can crowd out everyone else." Matt: The second one is I actually have a pretty good product, I need enough people to use it and then feel like I use it enough to want to use more of it. And that's what I decided to do and I'll explain why. Matt: And then on the upfront paid thing is typical like for low ACV, Annual Contract Value SaaS companies you'd see, please just call my ... Just call us and we'll walk you through it with one of my sales reps. Matt: And we'll do a guided tour through the demo or whatever and the decision why we did the second one was it was a good decision and is people knew enough about what the Rosetta Stone brand was like that we knew people would want to try it and that for people that remember what it was like, they definitely would want to use it again and we felt like the pinch was more compelling if we gave everyone a little taste of that. Stephanie: Mm-hmm (affirmative). Matt: We could have said, "Please pay up front." And we're the gold standard and giddy up, but we felt like we needed to earn our stripes a little bit into proving to people that we weren't just like a port of a CD product. Matt: And so that's why we decided to do that and we've played along different roads before. We've never done full freemium and I would argue at this point in the market, we would not be better served to do that because Duolingo has done a really good job of growing their monthly active users and have built some advantages there and we're not trying to play that game. Matt: I'm trying to play the game of being a really good, effective language learning product and I'm trying to set the tone in the trial experience that when you're using the product, it's not going to be like a game. Matt: It's not going to be like Clash of Clans. I guess Clash of Clans is a bad example, or the jewel or like Candy Crush I guess is what I was thinking of. Matt: Every day, I collect coins and I'm collecting coins to benefit my gameplay. It's kind of how I think about Duolingo a little bit and it's ... I think they're masterful of what they do, but I think they're designed to do something different than what I'm trying to do. Matt: And if you're serious about learning a language, and you stick to what I'm doing and you do a couple tutor sessions that we offer, you're going to get there. Matt: And so the business model and what we're trying to do in terms of posture, not market share, but revenue share really drove kind of the philosophy on the trial experience. Stephanie: Yeah, it definitely, it felt more serious especially where you could speak in the language and it would tell you I guess if the tonality was right, and if you were saying it correctly, and it would keep kind of advising you on it, once I saw it had that feature, that to me was when I was like, "Whoa, this is really serious, and I better be ready to learn this language because it's not like a game, it's not just saying random words." Stephanie: You're actually kind of conversating and having to hear yourself which I think is really important. That seems like a big first step to getting people to try it. Matt: It's an interesting observation because we are very oral first in our pedagogy. We want people to engage with the product and speaking is actually just in general a really good way to learn and then the key outcome of speaking well is not sounding stupid. Matt: And so if you're trying to learn a language, you want to sound somewhat authentic. So for Rosetta Stone, I would say, for anyone that really wants to learn a language, we'll get you there, but if you're just kind of trying to build like, it's like counting your calories kind of. Matt: If you wanted to do something like that, then I would say, pick a freemium product over ours and yeah, it's not like super intense scary, but it's like, "Yeah, you better do your lessons before you do your group tutoring session." Stephanie: Yeah. No, that's, I mean, that's great to incentivize people like you're paying for this, you might as well get the best out of it. Is there, so one thing I was thinking when I was interacting with the free trial was, "Wow, this would be really cool if there was like a virtual world where you could be walking around and talking to other students who are learning." Stephanie: Are you all thinking about any technologies like that to implement or is there anything on your radar where you're like, "We're moving in this direction or planning on trying this tech out or this digital platform out?" Matt: Yeah, we've played with VR in the past. I've been kind of like bearish every time someone says, "Let's go into VR." I'm like, "This is [crosstalk 00:39:27]." Stephanie: It's a hot word for a while. VR everything, it doesn't matter to the problem. Matt: Yeah, I know and I have a lot of friends. One really good friend of ours, she has a pretty successful, his definition of success and I think it is honestly successful VR games company, but like I have a lot of other friends that went into VR that gaming or especially verticals that just had a hell of a time just because there's not enough handsets that are available. Matt: Well, we have dabbled in in terms of immersive experience. I think what you're saying is is there a way to since we're immersive, use technology to make it even more immersive and what I really want to do is enable more AR in our experience. Matt: And we have like a little feature called seek and speak where you can ... It's like an almost a sample app where you can use your phone, we use ARKit to do a treasure hunt for things around your house like fruits, objects around your house and incorporate that in your speech practice. Matt: And I always thought that was like a really cool thing for us to expand into and if we ever get the Apple visor, some AR HoloLens or whatever, it'd be cool to start interacting with your world around you, not just with translation, but also to see if you can actually interact with folks that are kind of ambient around that experience. Matt: I personally and maybe this we're going too deep here, but I always thought it'd be cool if like I can visit another country and just decide how much of the spoken language am I going to generate myself, how much am I going to have my device do it because I'm not going to spend the time. Matt: And then how can I phone a friend? How could I have my tutor or my guide integrated experience where I'm going to sound really authentic if I do this or here's an experience that I could do here. Matt: I think the goal for language learning inevitably is different based on where you are in the world, but if you're from the United States or one of ... Maybe some European countries like the UK, it's kind of like this is a cool way to get engaged with a culture. Matt: If you're not in those countries, learning English primarily is a necessity and so I think some of these AR ideas that you just mentioned would be really good and speaking more frequently to other folks that are even not native speakers, but just trying to generate language is a very good way to teach. Matt: We have a product coming out called Rosetta Stone English this summer, literally like a couple months and it is a version of Rosetta Stone for EL kids or English Learners K through six. Matt: And this product is an oral first product and this blew me away. The stat if you're trying to teach a kid English primarily from lots of different countries is written communication. Matt: It's like 20% spoken and so our product is like 70, 80% spoken because this ... And so it's just really interesting. What could you do that's more immersive using AR or VR? Matt: I think there's, I'm with you. I think there's a lot of cool things you could do and I think you could enhance the travel experience quite a bit. I think you could enhance the young learner experience quite a bit. I think there's so many cool things you could do. Stephanie: Yeah, I completely agree and there seems like a lot of opportunities there. So what kind of disruptions do you see coming to the world of ecommerce and online learning? Matt: Yeah, it's a weird market and it's weird because like depending on what we're talking about in terms of overall commerce, it's like a $6 trillion education market, 6 trillion. Matt: Consumer is probably the largest out of that and then obviously, there's higher ed, there's middle school, high school, there's elementary, and then there's adult education and then where it's coming from, is the consumer paying, is the government paying. Matt: And so take all this aside, less than 10% is digital right now and I think there's going to be this massive realization and awakening because of the C-19 pandemic of everything that I do has to be digital. Matt: And it's not that we're replacing teachers, it's how do we integrate digital curriculum and conductivity between the teacher and the student, how do I build a data layer that personalized that experience. Matt: I think that can happen between, language learning, it can happen in lots of different curriculum like reading and writing. And not having a digital enabled kind of curriculum I think is going to be like if you don't have a solution for that, if you're an education system, if you're a college, if you're whatever, and if you don't offer these types of products in the future, you're going to go the way the dodo bird. Matt: I think higher education has a wake up call. J.Crew, I like J.Crew, they're in bankruptcy now. Hertz, I used Hertz. They're in bankruptcy now and I think there's this massive pull forward right now that's happening because the product that we've been using in education hasn't changed in like 40, 50 years. Stephanie: Yup. Matt: It's the same problem. If I time warp myself from 50 years ago into most classrooms, it would look the same. Stephanie: Yup. Yeah, I've always kind of thought that a disruption was definitely coming around higher education, but this seems to have moved everything forward by many years and especially around K through 12 where that felt like it would be much harder to change. Stephanie: For colleges, it's like, "Okay, now it's changing pretty quickly with all the boot camps coming out and company's not really always requiring degrees, at least in this area." Stephanie: But K through 12 felt hard to change and it feels like this is going to be an interesting forcing function now that like you said, a lot of kids are home and parents are figuring out how to be a part of their education more in the online learning process. Stephanie: It just seems like there's going to be a lot of opportunities that come up because of this. Matt: Yeah, I agree. And I also think that now I'm sounding like the tech utilitarian, but I would say that ed tech and I'm not from the ed tech space, but I am in it now. Matt: I would say that the ed tech providers that ... We're now entering the third wave I guess is how I think about it. The second wave which is typical of most other businesses that you and I have seen before, like ecommerce or sales ops tools, now you can talk about those and go, "Remember Omniture and it was badass?" Matt: Yes, it's now part of Adobe Cloud Matt is when you talk about these generational shifts in how we think about things, I think a lot of the ed tech players, people who are selling software to schools or directly to the parents or kids or whomever, they've definitely oversold or oversold the efficacy of some of those products. Matt: And when I talk about digital transformation, I'm not talking about the ability to do things self serve, and have the teacher look at some flat experience. Matt: Right now and this is not against teachers. Teachers, they're like little mini MacGyvers to me. I mean, they're like doing amazing things streaming together curriculum on the fly. Stephanie: Yeah, both my sister and my mom are teachers and I do not know how they're doing it and how they had to pivot so quickly to being in the classroom and my sister is actually a ESL, English as a Second Language teacher. Yeah. Matt: Oh my gosh, okay. Stephanie: Yup, because I have a twin sister and she always tells me about the difficulties that she's experiencing right now trying to bring her students online and develop curriculums online and a lot of them don't have internet access and it's just very interesting seeing how they kind of develop workarounds to make it work for their students. Matt: Yeah, my criticism of education isn't the teacher clearly, a lot of it is kind of the cost basis in the bureaucracy and when I talk about ed tech, it's like I think it comes down to and this is not a Matt Hulett Rosetta Stone specific thing is educating a group of young individuals or even old individuals, it doesn't matter the same way at the same time makes zero sense. Matt: And so building in the ability for the student to do some things themselves, having a data layer so that a teacher understands the areas in which that student is struggling, and so that the instruction becomes very personalized. Matt: It is generally what I'm talking about and it's right now, I think we have a billion and a half young kids around the world that don't have access to computers. Matt: And if they do have access to computers, they're scanning in their Math homework and sending it to a teacher. Well, who knows if I struggle for five minutes on this problem versus long division versus multiplication? The teacher doesn't know. Matt: And so I think the ed tech software that I'm more in favor of what I'm speaking about is how do you build curriculum-based, efficacy-based software, not unlike what your mom and your sister think about because they have degrees and know how to actually educate someone, they're not software [inaudible 00:49:10]. Matt: And if they're wanting to provide very explicit instruction, my guess is they're really swamped. They've got other things they need to do, they're probably paying for materials that are [crosstalk 00:49:22]. Stephanie: Yup. Matt: And so I think about all these stresses and we're asking them to provide excellent education, it's just, it's too much. And so I really feel like this third wave of technology, and I think it's going to happen is it's going to integrate this we call AI and HI, how do you integrate the best of what software can do and integrate that into the lesson planning of the teacher versus let's try to create AI for the sake of AI and disintermediate teachers which I think is ridiculous is and that's what I'm talking about. Matt: Because I see a lot of tech companies playing the game of ed tech versus education companies that are actually trying to be technology companies. Matt: I think the latter will be the software and the providers that will end up actually being the most successful and the most adopted, but obviously, I'm passionate about this because I've seen this with our Lexia software. Matt: And we have like 16 plus academic studies that show that the software works and I'm like, "How is this possible that two-thirds of kids still today by the time they're a third grade or reading below their grade level that continues through eighth grade?" Matt: Two-thirds are reading below level. How is this possible? And I'm not here to tell my own software. I'm just like, "Why is this possible?" Well, it turns out we don't train teachers to teach kids how to read. Matt: There's an approach to it, and we don't do real time assessments of kids struggling, the teachers swamped, they don't know what's going on. Matt: Anyways, I could talk about this for hours, but I do think there's this world where at some point, the $6 trillion business of educating all these kids and adults and young adults will be digitized. Matt: And I think that will be an interesting space. Ed tech is that one space where most VCs wouldn't want to touch. Stephanie: Yup. Yeah, I know. It's a hard ... I mean, health care and education. It's a hard space. So yeah, I completely agree. I know we're running into time and I want to make sure we can jump into the lightning round. Matt: Okay. Stephanie: Is there any other high level thoughts that you want to share before we jump into that? Matt: Nope. I think I hit the verbose button when I answered that question, but I didn't realize you have some familiar background on education which got me going so I [crosstalk] Stephanie: Yeah, no, yeah. Matt: I will be [crosstalk] lightning round. Stephanie: Yeah, we need a whole other podcasts where we can just talk education stuff and I can have my family be the call-ins and they can give us a little advice and ideas. Stephanie: All right, so the lightning round brought to you by our friends at Salesforce Commerce Cloud is where I ask a few questions and you have one minute or less Matt to answer. Are you ready? Matt: I'm ready. Stephanie: All right. What's up next on your reading list? Matt: Words that matter. I don't know the author. Stephanie: Cool. What's up next on your podcast list? Matt: This podcast of course. Stephanie: Hey, good. That's the right answer. Matt: And then Masters of Scale. There's a new podcast actually with one of my competitors from Duolingo. Stephanie: Oh-oh. Very cool. Yeah, that's a good one. What's up next on your Netflix queue? Matt: God, it is embarrassing. Do I have to say it? Stephanie: Yes you do. Matt: Too Hot to Handle. Stephanie: Oh my gosh. I can't believe you're watching that. I'm judging a little bit, but I've also seen a few episodes. So if you were to choose a company right now to turn around, not Rosetta Stone, some brand new company, not a brand new one, but maybe one that's in the industry right now where you're like, "I could jump in and help." What company would you choose? Matt: That's a great question. WeWork. Stephanie: Woo, that would be an interesting one to try and turn around. Matt: Yeah. Stephanie: All right, next one. What app are you using on your phone right now that's most helpful? Matt: I listen to a lot of podcast, I love Overcast. I don't know if anyone ever mentions that. I just love it because I listen to things 2x. Stephanie: Yup, yeah, I know. I agree. I like that app as well. What language are you or your family working on right now to learn? Matt: Well, it's funny. I'm kind of barely competent in Spanish. My 16-year-old is actually I would say pretty intermediate level Spanish and my 10-year-old is oddly learning Japanese. Stephanie: Oh, go. Go him. A boy, right? Yeah, that's great. All right and our last, a little bit more difficult question. What's up next for ecommerce professionals? Matt: Oh boy, ecommerce professionals. I think to me it's a lot of the same topics in ecommerce have been discussed for so many years and I think that the interesting one is how do we actually make social commerce really good. Matt: And I think I spend a lot of time just, I'm not serious with it, but playing with like, TikTok and Twitch, and I think there's some elements to the social selling piece that I think are super interesting that no one's really figured out and I buy actually a lot of products off Instagram, and it's still too much friction and it's not quite working right for me. Matt: So I think there's some ... How do you integrate ecomm and then TikTok in a way that's native to that audience? I think there's some things there. Stephanie: Oh, that's a good answer. Well, Matt, this has been yeah, such a fun interview. Where can people find out more about you and Rosetta Stone? Matt: Rosettastone.com for the company and I'm matt_hulett on Twitter and it was a pleasure to talk to you today. Stephanie: All right, thanks so much. Matt: Thank you.  

If you think back to just a few years ago, when someone asked you to name a company that delivered food, you’d probably only be able to name a few pizza joints or the local Chinese food place. But today, the world has shifted and online food delivery is a booming business. Last year alone, Grubhub sold $6 billion worth of food, and the company delivers more than 500,000 meals per day. So how did Grubhub enable this massive shift to digital meal purchasing? On this episode of Up Next in Commerce, we welcomed Alex Weinstein, the SVP of Growth at Grubhub, and he explained to us exactly how the company has been able to become a market mover. From the initial education process to then focusing on customer retention, Alex and his team have been deep in the weeds of it all, and they have built a culture of experimentation, data analytics and a focus on ROI to stay ahead of the curve. Alex explains it all here.    3 Takeaways: Measurement and incrementality are important. You have to understand whether or not where you’re putting your dollars is making a difference, and sometimes the answer will surprise you True experimentation is necessary to create new methods of measurement, marketing strategies and growth opportunities. So the question you have to ask as a leader is how can you create incentives to allow people to take risks and learn? The time is now to learn about the newly-online customers that have trickled into your business due to COVID-19. In understanding their needs, you will be able to ensure retention and set yourself up for the new reality we live in 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 to Up Next in Commerce. I'm your host, Stephanie Postles, co-founder of mission.org. Today, my stomach is rumbling, because we're talking all things Grubhub. Alex, welcome. Alex: Thank you for having me. Stephanie: Yeah, thanks so much for coming on the show. I just pulled up the app earlier to be like, "What should I have for lunch today?" Because it's 12:00, and it's time to order something. Alex: What did you end up ordering? Stephanie: I'm looking at pad Thai right now, we have a really good Thai place down the street. That's usually my go-to, but I started to get influenced by sushi, so if you have any advice, let me know. Alex: I don't know the restaurants in the area, but look for those that are well-rated, and look for deals. We have a ton of deals going on right now. Stephanie: Ooh, nice, that's perfect. You are the SVP of Growth at Grubhub, correct? Alex: That's right. Stephanie: I'd love to hear a little bit about your role there, and what brought you to Grubhub. Alex: Sure, sure, thank you. I've been at Grubhub for a little bit over three years. My responsibility is for the consumer business. That is, how do we get more new customers to try us out for the first time, and how do we get existing ones to order with us a little more often? And hopefully they'll return. Alex: This spans all aspects of marketing. We do a whole bunch of stuff in-house. I'd love to explore that a little bit later. But it also involves a lot of work cross-functionally, across the product. When I say product, I don't just mean our apps, but the totality of the experience that the customer has, from our apps to the delivery, to customer care, if that's ever necessary. Stephanie: Very cool. Previously, were you at, I think I saw Microsoft and eBay, or what did your past life before Grubhub look like? Alex: That's right, that's right. I actually am a very strange Head of Marketing. I'm a software engineer by training. Stephanie: Oh, interesting. Alex: I've written a bunch of code. I switched over to product management, and then darkness had me, and I somehow ended up in marketing. I indeed was at eBay before this, also for around about three years. Similar role, maybe a slightly more narrow role, focused on customer retention, marketing technologies. Stephanie: Very cool. I'm sure that was great help working at a marketplace, albeit not maybe a three-sided one, but still maybe a really helpful to transition to Grubhub with as your background? Alex: It very much was. I have to admit, I thought I knew marketplaces after eBay, then when I started Grubhub, I discovered so much complexity. Our business, exactly as you said, is a three side marketplace. Restaurants, food delivery drivers, and consumers. It is a hyper local business. People who live in Palo Alto whole heartedly don't care how many restaurants we have in San Jose, and how good our delivery network is in San Francisco, right? Alex: It has to be block by block, and we have to make sure that we have good restaurant selection there, good demand, and good supply of drivers. Otherwise, if the three sides aren't in alignment, bad things happen. Stephanie: Yeah, that seems like it would be really tricky to keep all that balanced. How have you found success keeping everything balanced? Like you said, it's so hyper local, I'm thinking there could be a driver over in Sunnyvale, and they're definitely not going to go to my local Thai place to pick up the order that I'm looking at. Alex: Yeah, this is where a lot of fun in this business comes from, and a lot of complexity in this business comes from. We have to be really good at predicting things, and predicting demand. And we have to be really good at engaging all sides of our marketplace so that drivers actually want to be online at the time when we want them to be online. Alex: Consumers end up placing additional orders if perhaps we have a little bit too much supply. Restaurateurs want to create deals. Basically, being able to influence three sides of the marketplace in a automated, personalized, hyper local way, is really the only way we can survive, right? This, to me, is super joyful, and super complicated, and where a lot of learning, personally, for me, has come from. Stephanie: Yeah, I'm sure every day it's adjusting a little bit more, and you keep have to kind of changing things up and experimenting a bit. How do I think about where Grubhub is at right now? To me, it seems like it's the market leader. How many meals are being delivered? How much is that in dollar-wise of food that's being sold? How do I think about that? Alex: We're a public company, all of those numbers are public. Quick summary for you. We deliver more than half a million meals a day. Last year, we delivered more than six billion dollars worth of food. Of course, with the arrival of the pandemic, the demand for food delivery has also increased. The expectation of all of our constituents, and of our community, all of us, have risen tremendously. Because, from something that restaurateurs really on for a portion of their revenue, they now rely on delivery as the majority of it. Alex: For consumers, where they would perhaps order delivery occasionally, now is the only way for them to order restaurant food. A lot of expectations on us have increased throughout these past couple of months, even though we already started from being quite a large company with high expectations. Stephanie: Yeah, have you had to adjust quickly with everything going on with COVID-19? What have you seen, other than increasing orders, and how have you had to pivot to meet the customers and meet the drivers in where they're at today? Alex: Yeah, absolutely. Well, most definitely, yes. First and foremost, we began by focusing on safety of all the participants of our marketplace, right? This began with our work on personal protective equipment for our drivers. We distributed hundreds of thousands of PPE sets for free for our drivers. We invested a bunch of work into enabling contactless delivery within our apps. Which, of course, is something that makes the entirety of the marketplace safer. Alex: We basically have to take our product roadmap, and, in many ways, revisit it fully, and focus on things our community demanded of us in that moment. Similarly, we had to do something like that with marketing, as well, because we had a certain strategy. You of course know that a lot of our effort is in making sure that consumers can get the best value on Grubhub. If you spend money on food delivery, your dollars will go the furthest on Grubhub. This really is our brand positioning. Alex: When COVID came, we had to take a pause, because this rewards positioning, or this value positioning, really had to take a step back, because consumer's interest... Sure, they were looking for deals, but they were looking to be safe, first and foremost. Secondly, they were looking to support their community. So we had to reposition a lot of our marketing work to make it so. Stephanie: Yeah, that makes sense. I'm thinking that could be a trend that stays around, even after everything's over, keeping that contactless delivery at least as an option, and thinking about how to actually prove you have the safety measures implemented, and you're tracking that every month. Are you all thinking about how to scale that and keep that for the long term, or is it more just a short term play until the pandemic's over? Alex: Couple thoughts for you. One is, I don't think that we're going to be looking at a pandemic being over and everything coming back to normal. I think we need to get used to the new normal, at least until the vaccine is here. Which means that people's lifestyles, their habits, will be fully adjusted by then. Alex: As such, it's not like we were developing a set of patches for three months, and then after that, we just turned those patches off. But also, there's meaningful, positives coming from this change, right? Like any crisis, it is both a danger and an opportunity. What we've discovered is this contactless delivery, for example, besides making everyone safe, it is actually making our network a tiny bit more efficient. The delivery driver does not need to engage with the consumer in-person. They can just drop it off, take a photo, and keep going, and keep working. Which shaves off a small amount, but in the grand scheme of more than half a million deliveries a day, this starts adding up. It helps our drivers earn more, and it helps our overall network be more efficient, which means food comes to consumers faster. Stephanie: Yep, yeah, that's definitely a good change. There's a lot of food delivery players in the market right now. How do you create an experience that's completely unique to Grubhub? Where people, they're like, "That's where I want to order through." Alex: All of this, in our minds, has to do with differentiation. And you're exactly right, maybe two or three years ago, where consumers didn't really know much about the food delivery category. A lot of what we had to do was to educate them about our existence, which is why a lot of our marketing, a lot of our product, was geared towards a first-time experience of someone who's never gotten anything delivered other than a pizza. Because really, that was the state of the world, right? You would ask an average consumer on the street, "Name a couple companies that deliver food," and they would name pizza brands. Stephanie: That would've been me a couple years ago, too. Alex: Totally. Stephanie: I'd be like, "Domino's." Alex: Yeah, yeah, absolutely. Maybe Chinese food, if you've ever tried it. An average consumer didn't know that there's hundreds of restaurants that deliver to them, and that they can find them on Grubhub. So that was the focus of our messaging. Alex: Three months ago, even before COVID, if you asked an average consumer to name food delivery brands, they would name us, and maybe a handful of our competitors. In that environment, I'm prompted, right? This is unaided awareness. Not, "Have you ever heard of Grubhub?" But, "Name a food delivery brand." Alex: Our work switched from creating awareness to driving consideration. Helping consumers understand, what is it that they get if they buy from us versus perhaps one of our competitors? Last year, a lot of our focus has been on stating this extremely clearly and delivering on that experience quite precisely. As I mentioned a little bit earlier, it is all about value for us. Alex: Now that we're entering a bit of a new normal with COVID-19, we're beginning to come back to some of this foundational brand positioning. Talking about rewards and value. We have a TV spot that's actually launching today and tomorrow on national TV. We're one of the biggest spenders on TV in both the category. Stephanie: Oh, interesting. Alex: Generally we're one of top 200 brands advertising on U.S. television that talks about rewards and value. You might be scratching your head and wondering, "Why in the hell is a digital first brand spending so much money on TV?" Stephanie: Yes, I was wondering. Tell me. Alex: It actually is kind of counterintuitive. We, maybe about three years back, we started scratching our heads and thinking, "Okay, if an average consumer doesn't really know what food delivery options are out there, how do we create that awareness? And how do we do that in a way that can confidently map the efficacy of our spend?" Because creation of awareness, let's face it, is the most expensive thing a company can do. Stephanie: Yep. Everyone wants it, but then actually implementing it, tracking it, and seeing how it did, seems a little tricky. Alex: It is so very tricky. Most mechanisms for doing this are actually kind of arcane, right? You do media consumption patterns, which, frankly is a large-scale survey that perhaps an agency would run and say, "Okay, New Yorkers, they absolutely do not watch any TV. They spend a bunch of time in the subway, true. And then they're all very much on digital." Alex: So, a brand that's trying to advertise in New York then would say, "Okay, television in New York, totally worthless. And our consumers are probably just like the average consumer in New York." That's kind of how the line of thinking typically goes. We, despite having a general applicability product, right? Everybody wants food delivery, right? Everybody from 18 to my mom, most definitely could benefit from food delivery. Alex: And yet, what we discover, is that the media consumption patterns of an average New Yorker are not the average media consumption patterns of our consumer. Moreover, what we discovered three years back was even though our intuition was that someone who orders food delivery online is most likely an early adopter of technology, and most likely a cord cutter, right? I mean, if you're about to order food online, you of course are ordering your socks from Amazon. You of course are watching shows on Hulu Plus without any commercials, as opposed to on cable TV, right? Stephanie: Yeah. Alex: Of course that intuitively made sense, which is why we've been spending a lot of money through digital video channels. That intuitively made sense. We stumbled upon a set of techniques that allowed us to, with confidence, compare the efficacy of our awareness spent between digital video and the digital awareness darlings of Hulu and YouTube and Facebook for some of the dimensions, here. What we've discovered is that the bull drought of digital first is actually not as efficient, not at all as efficient per dollar spent, comparing to the- Stephanie: Oh, interesting. Alex: ... boring, stodgy, nobody watches it, cable television. Stephanie: Is it because of the audience that's there, where the digital, like you were talking about, advertising to them, they may already know about you and it's an easier conversion, whereas the people who are keeping the TV running in the background all day, maybe actually need the ad right then and there where it can put a little inception on them and they can hear about it a couple times while they have the news on? Alex: Yeah, I think that's one of the reasons. Other reasons are that, just on a per impression basis, your digital video is dramatically more expensive. Even though I'm a nerd of machine learning, and I love personalization, I don't believe that personalization can cover a five X price difference. It can make something 50% better, but not five steps better. Stephanie: So how do you think about creating that culture of experimentation like you're talking about, where most companies right now are probably not focusing on TV campaigns? How do you think about putting a budget behind that and actually empowering a team to do that, where when I think about teams who are running with marketing budgets, or just budgets in general, it's very scary to not show a great ROI, because you either aren't going to get that budget again. It's a use it or lose it type of culture, it seems like every company operates that way. Maybe Grubhub doesn't, but how do you think about creating good incentives and a culture of experimentation to come up with some of those projects? Alex: I think a culture where you ask for confidence in measurement for your spend is a good culture. Where you ask for feedback loops is a helpful culture. Now, you can take this too far, and you can start trying to map everything to revenue or [inaudible 00:16:56], and that doesn't particularly help with upper funnel marketing campaigns. But, the other extreme isn't particularly better. I see a lot of marketing organizations end up in that spot, where we say, "We demand perfect measurement," from what they call performance marketing. Alex: And the brand marketing side, the one where vast majority of dollars actually have to be spent to create awareness, is not working to the same level of rigor, and the same level of intellectual honesty with measurement. To your question about how to actually create those frameworks for the team, a couple things come to mind. Alex: The first one is, trying to pursue incentive alignment. If people on your team genuinely believe that learning and optimality of investment for the entire team is how they get promoted, is what the company actually values, they will pursue exactly that. Let me give you- Stephanie: Let me hear an example. Alex: Yeah, let me give you a counter example. A counter example is what happens if you hire an agency to manage your Facebook spend. Have you ever heard an agency that managers Facebook spend come back to you and say, "Your Facebook spend is terribly inefficient. You should spend less on Facebook." Stephanie: Definitely never. Alex: Right? That's what their incentives are, they get a portion of your Facebook spend. The same exact thing happens for your TV agency. The same exact thing happens for someone who's managing your Google spend, right? If you have a bunch of outsourced agencies, each of which is responsible for one of your channels, their survival, their ability to feed their children, depends on you being able to spend more money on the channel that they're managing for you. Alex: Of course, they don't have an incentive to try to tell you, "Hey, take money from Google and put it into Facebook." They will personally suffer. A setup like this creates a true misalignment of incentives. Let me contrast that with, let's say, an in-source structure, or perhaps a structure where you have a larger performance agency that is able to reallocate dollars between Google and Facebook without personalty suffering. Alex: In a structure where you in-source, which is how we operate, you're able to create a shared destiny, and you're able to say, "Hey, person running Facebook. Your incentives are all about learning." So if you have a current level of performance, which is a certain level of incremental CAC, and a certain level of incremental LTV. Your goal is to improve that by this percentage over the course of next quarter. Alex: Find some way to do so through whatever experiments that you're able to run. One of the potential outcomes is an improvement in efficiency by reduction in spend. They're able to raise their hand and say, "Hey, I actually want to spend your dollars. Take away some of my budget, and reallocate it over to TV, because they can spend it better. I hear they have a way to spend at a lower incremental CAC than I can." Stephanie: Have you seen that in your culture so far, of people actually being like, "Hey, you can have this budget, move it over here"? It seems like a lot of times, people are personally tied to their budgets, and whoever has the bigger budget is the more powerful one, and I haven't often, at least in my previous days at other companies, I haven't seen people say, "Hey, you can have this budget and move it here." Alex: You are exactly right. A lot of our, I guess, legacy from many of our previous jobs, associates the size of the budget with the influence in the organization, most definitely. This is where the job of a leader really is to create the right incentives and to catch people doing something right. Alex: If you hire somebody off of a company that had that culture, of course, their initial inclination will not be to raise their hand and say, "Hey, my area isn't working so hot." You need to indoctrinate them, if that makes any sense, into a world where it's okay to raise their hand and do it. The way you do it is by upholding folks who do this, and pointing at them and saying, "This person is doing it right," and celebrating their successes. And celebrating their experiments, where, perhaps, they didn't see the immediate success, but they learned something. Alex: So, as a leader, I think you have a lot of power to create these incentives. As such, structure what your team actually holds as valuable versus not. If you point to enough examples like this, you'll actually end up transforming the culture, even for someone who comes in from an organization that wasn't like that. Stephanie: Yeah, it seems like it would also allow someone to wear multiple hats, and kind of become a polymath when it's like, "I don't just focus on Facebook ads, or I don't just focus on this kind of marketing." They get to experiment with a bunch of different areas. Have you seen that happen in your organization? Alex: Oh, most definitely. My paid social folks, just like everyone's, they were super focused on Facebook. What we discovered is them raising their hands and being very creative, and being some of the first folks who ever tried TikTok, for example. This was a little while back now, but we were one of the first handful of brands to invest a lot of money into TikTok, and do large scale experimentation with them. What we've discovered is if you're one of the first ones, there's very meaningful... Effectively, arbitrages to be had, where you're able to not only get a great deal, but shape the product to your liking. As such, get a temporary advantage over the rest of the market. Stephanie: That's fun. How did you think about creating your first campaign on TikTok? When your team presented this idea to you, were you like, "Yeah, let's do it," or were you a little hesitant? What was the first campaign you had go out there, versus what does that look like today? Are you still utilizing it? Alex: Oh my God, this is quite a story, to be honest with you. The team came to me and said, "So, we're thinking about doing TikTok." My reaction at the time was, "TikWhat?" They explained this to me and I read up a little bit about it. My immediate reaction is, "Okay, you are attempting to sell a luxury product." Let's face it, ordering delivery, you're still buying food from restaurants. It is a luxury product in many of the cases, right? To, "You're trying to sell that to people who have no disposable income of their own. The average customer of TikTok at the time just could not have their own credit card." Stephanie: Yeah, they have allowances, maybe. Alex: Right? Exactly. "Why in the world could this possibly work, you guys? Our average consumer is fairly affluent, and you're now trying to go into a different demo. How is that even remotely possible?" But, luckily, at that point, I had already observed that my team knows better than me, and that they have much, much better ideas than I do. Essentially, we just did a test. We did a small test, and we experimented in earnest. Surprise, surprise, they came back and they showed me the numbers, and they were meaningfully better than Facebook at the time. Stephanie: Wow. Alex: We ended up investing more. That was genuine, true learning. Not just for the organization, but frankly, for me. There's multiple possible explanations for why it ended up being so efficient, and I can go into some of them, but the thing that matters to me most is that the crew felt inspired to pursue something new. They felt passionate enough about it to structure a test when there was no framework, really, out there. And they were unafraid enough to basically tell me that I'm wrong, and that my intuition is off. Alex: That made me feel like the culture is actually right. The culture is exactly what I want it to be. The opposite of that, where you're going with the highest paid person's opinion, if that makes sense. Stephanie: Doesn't work. Alex: It doesn't work, because all of our intuitions, no matter how successful we've been previously, we are sometimes wrong. Why hire smart people if you don't trust them to try things? Stephanie: I think there's a good mix between trust your gut, but also don't trust it, because you could be wrong. Yeah, go with other people's ideas, as well. How do you think about those efficiencies that you're mentioning when you're exploring new channels like TikTok? Alex: Sure. To me, it's indeed about being open-minded and experimenting with new types of media, and being unafraid to try things that aren't immediately, obviously, going to work. A similar type of experiment happened with Snapchat a little bit earlier, where I also was convinced that this can't possibly work for the same reason. Luckily, I, again, was wrong. Alex: I guess a pattern of learning is what inspired me to basically create this incentive structure for the team, where they're unafraid to raise their hand and say, "Hey, the way we've been doing this before is really off." If you want, I'll tell you a story of a channel that's not really a channel that I guess formed my opinion on that topic. Stephanie: Yeah, let's hear it. Alex: This is a story of a couple marketers that were attempting to turn a specific city around. Alex: As we talked a little bit earlier, we can be doing super well in one city, and not well at all in another city, or in a corner of a city. A lot of what we do has to do with how do we turn a specific city or neighborhood around? This couple folks, their job was to turn a specific city around, and I was expecting them to come to me and say, "Hey, I'm going to take the budget that you've given me, and I'm going to buy some Google ads, and I'm going to buy some billboards, and maybe I'm going to buy some Facebook ads." Alex: What they did instead, these were two marketers. What they did instead was actually really curious. They experienced the product for themselves. They placed a couple of food delivery orders, and they came to me and they said, "Hey, I don't want to buy any ads," they said. "Instead, whenever I was placing the order for food, there really weren't enough food photos. I was ordering from restaurants that I hadn't ordered from before, and I don't really know if their pad thai looks good. I don't really know if their sushi is something that I want to try." Alex: They were in your position. They said, "Screw it, I'm not going to buy any ads. I'm instead going to hire some photographers to come into those restaurants and take the photos. Then after that, I'm going to measure the incremental impact of the added photography, and see if the efficacy of that is actually comparable or high enough, comparing to the efficacy of ad spend." Effectively saying, "I'm going to open a brand new marketing channel, and that marketing channel is going to be photos." Stephanie: Photography. Alex: I'm like, "Okay, let's just do it." Stephanie: A whole brand new, the vision, of Grubhub, just photography. Alex: Exactly, exactly. These two folks get on the phones, start calling photographers, start calling restaurant owners and scheduling appointments to have the photographers come in there. That becomes basically their job for the next two months. Alex: Then they organize a really [inaudible] visitors for these specific menu pages see the photos, and others don't. They do some serious math to try to say, "Hey, here's the incrementality in here, and here's the efficacy of the spend comparing to what Google ads would be, or Facebook ads would be." They discover that those photos are actually a better way to spend marketing dollars, than any actual marketing. Stephanie: Yeah. Alex: I, at that point, am kind of floored. I come to them, I'm like, "Okay, you guys are on fire, this is amazing. Let's take your thing and give it to operations and scale up this thing." They say, "No, no, you don't understand, you don't understand. This whole project sucked. We spent our entire days on the phone with restaurant owners, trying to schedule appointments. We are going to make it better." Alex: I'm like, "Wait, what's going on?" They say, "No, no, instead of scheduling appointments with the restaurant owners to take photos, we are going to rent Airbnbs and photo studios around town, then order food from the restaurants, bring it to those Airbnbs. Our food stylist is going to make it look good, and we're going to take photos." Stephanie: Oh my gosh. Alex: I'm like, "Wait, wait, what? What?" Stephanie: That's another level. Alex: Yeah. My immediate reaction from this is, "Have you ever seen delivered food? It does not look good." They obviously told me to go pound sand, as they should have, and they showed me the first photos from these experiments. Oh my God, those first photos look much better than anything taken in a restaurant, because food stylists are really good at their jobs. If you were able to control the lighting, you're able to take much better pictures. Alex: When they actually tried it, they discovered that instead of doing two photo shoots a day, the photographer, who's the most scarce and expensive part of the whole operation, is able to do 20 photos shoot a day. Stephanie: Wow, that's efficient, that's amazing. Alex: As you can imagine, at that point, my mind was completely blown. We indeed operationalized this with folks whose day job was operations, as opposed to marketing. This was the example of really learning what learning means. Stephanie: Mm-hmm (affirmative). You kind of picked the markets to do that in, or you kind of see a market not doing so well, and those are the ones that you focus on getting the good imagery for, versus allowing that... UGC content to work well in other markets, or how do you think approaching that? Because it seems like something that would be really hard to scale, ordering a bunch of things all the time from every market in the U.S. How do you think about creating those campaigns? Alex: Yeah, yeah, yeah. With hundreds of thousands of restaurants on the platform, we indeed have constrained resources to do these photo shoots when we can. We can't do all of them next month. We had to be somewhat thoughtful on prioritizing things. A few things came to mind for being able to select the right restaurants to do this in sort of the right markets. Alex: First is, conversion. If consumers land on the menu, and end up buying stuff anyway. Well, that's cool, I guess they don't need the photos. If on the other hand, conversion isn't amazing, but the number of visitors to the menu page is super high, hey, this might be an opportunity to actually add some photos and improve that conversion. Alex: By digging into the data, and looking at where the majority of the incremental impact can be, we develop this framework for allocating this constrained resource, which ended up effectively being an investment of marketing dollars into a channel that's sort of marketing, but sort of not. Is it product? Is it operations? I have no idea. Stephanie: It's something, all the above. Alex: Right? Stephanie: How do you think about, you mentioned incrementality quite a bit. How do you think about that throughout your organization, when developing these experiments and seeing what works and what doesn't work? Alex: Sure. First, if you don't mind, allow me to define it as- Stephanie: Yes, please. Alex: Because I think that's super important. Incrementality, to me, is what would have happened anyway? If you didn't do your glorious marketing campaign, or this amazing product improvement that you just rolled out. This is a difficult question, because it's really attempting to attribute the entirety of this success, or entirety of what's happening during a campaign, to the campaign. Alex: Let me give you some intuition behind this, right? Let's say you go to, I don't know, gap.com or something like that. You see a banner in there that says, "10% off." Well, obvious, a lot of people are going to click that banner, and a lot of people are going to use that coupon to get 10% off of their transaction. The key question, though, is, what portion of those people would have transacted anyway? Stephanie: Yeah, they went there directly. They probably would have. Alex: Exactly, it's clearly not zero, because before you launched that awesome 10% off coupon, some people were buying jeans yesterday. Being able to, with confidence, judge what that incremental behavior is, and what is the incremental CAC, and incremental LTV, is super important. Simple back of the napkin as to how you judge this is, let's say yesterday, a hundred people bought those jeans. Today, 110 people bought those jeans. It's not a real AB test, obviously. But all 110 people used your 10% off coupon. You can wrongly suggest that all 110 converted because of your coupon, or you can look at the truth in the eye and realized 110 used the coupon, but 10 really only needed it. Stephanie: Do you think a lot of brands are missing this when they offer these discounts, and maybe unintended consequences that could come from it? I could see a lot of consumers, if they get used to you always having discounts, then they just wait. They're like, "I'm going to wait for that next 10% off coupon," then they don't have a buyer at all. Alex: Yeah, it is super dangerous. I do think that in some industries, there's exactly that happening, right? We know of the right times during the year to buy a TV, so we don't buy a TV until then. We know when the right time of the year to buy home improvement equipment, and we don't buy it until then. Exactly what you're describing is a real danger. Alex: It's not just a danger of delaying the purchase, it's a danger of create a permanently less profitable business. Imagine is, every Friday, Grubhub was to, let's say, give all our consumers three or five dollars off. Not only are Thursday orders going to be delayed, because our consumers are going to be like, "Hey, I don't really care when I get takeout. I'll cook one night and I'll get takeout the other night." They'll delay it until Friday, but those Friday orders are going to be less profitable. Alex: So we permanently teach our consumer base, if we take that route, to not only delay their orders, but to make them less profitable. That is a real issue and something you got to be super careful with, which is why you must measure incrementality. Stephanie: Yeah, especially right now. You see so many people discounting everything, it's kind of scary to think. How are you going to come back when your entire, everything on your store online, is 80% off? How do you come back from that? Alex: Most definitely. Now, if you have physical inventory, the opportunity cost is not zero. Right? Let's say if you're selling digital goods, for example, right? Let's say you're selling access to, let's say a song, or a book, right? Your fixed costs in that situation, your cost of an action, is terribly low, right? As opposed to if you have goods in the warehouse, and you aren't able to sell them, there's very meaningful fixed costs for you that you need to deal with. Alex: It might be, actually, quite reasonable to be running these high promotions, but if you are, you better be running it as a real AB test. You better be able to confidently say that this is the true incrementality of this 80% off coupon, and that's the true value that I'm getting out of it from both not needing to keep these products in the warehouse, but also from just sheer revenue from the consumer. Stephanie: Yeah, that makes sense. Do you have a good platform or way that you've set up metrics and things like that to measure that incrementality in a way that's not really manual, and then you can just kind of see how the campaigns and what they're doing is performing against each other? Alex: Yeah. In lower funnel channels, it is actually fairly easy to set up a platform for this, and we have. There are tools that you can use for it, right? Google Optimize, for example, or Optimizely, right? We have a combination of in-house and these third party tools to do product experimentation, for example. Alex: For things like CRM, couponing in the apps, or issuing emails with coupons, or push notifications, really good experimentation platforms don't exist off the shelf. We had to do some math ourselves. Some of that math turned out to be fairly fine tuned to Grubhub's needs. Here's what I mean by this. We're an LTV business. It's not just about the immediate transaction, it's about what happens after that transaction. Stephanie: Yep. Alex: For example, if a consumer ends up converting at a higher rate, and then afterwards has a poor experience and doesn't come back, that actually is terrible, terrible, terrible. Your typical, immediate conversion optimization tool, would just look at the first part of this. Oh my God, they converted at a better rate, great, awesome, keep it. Stephanie: Yay. Yep. Alex: We had to build tools specifically designed to capture these long-term effects. We typically look at the results of these long-term activities over the context of a month, right? So we need to see what happens to consumers for a meaningful amount of time to have high confidence that it indeed is net beneficial or not. Alex: Of course, we're able to look at things fairly early, and if something's a terrible idea, we're able to kill it early. But, in order to be able to confidently say what is the impact on the LTVs, we had to build tools. These in-house tools for many CRM things that we do today. Stephanie: Got it. Alex: Even then, it's just for lower funnel. It's just for CRM and product. How do you judge the incrementality of TV versus billboards? That is a whole other, super complicated story. Stephanie: How do you think about the intersection between your CRM and your content management system and your actual commerce platform? How do you create a good environment where they all interact together, and people can see a holistic view of everything that's going on? Alex: Great question. I don't think I have a perfect answer for you, other than enabling as many work streams for experimentation as are possible. That is, allowing the CRM team to run experiments on their own, without involving a bunch of product people, without involving a bunch of finance and analytics people. Similarly, allowing the front end or pricing optimization team to run experiments on their own, and do very specific price optimization experiments just by themselves. Alex: The more work streams like this you have running in parallel, the more you're going to be able to learn, as an organization, per unit of time. Stephanie: That seems like a great answer to me. It also seems like you would get a lot of, you could have a customer with a negative experience, but it would be because of maybe the restaurant. It seems like you guys would have a lot of insights into maybe how to help restaurants improve, where it's like, hey, every time someone orders this thing of sushi, you always forget the wasabi, and man is that making people upset. Do you ever send that data back to restaurants to improve the products as in their food, or the customer experience, or anything like that? Alex: Most definitely, you hit the nail on the head. We are in a really unique position of knowing not just who the people were, or when they placed the orders at your restaurant, but knowing exactly what they ordered. We can see exactly that pattern, right? We can tell you that on Tuesday night, the reviews for people ordering sushi, are actually worse than on any other night. We can help you see that, so that you can train the person that's working on Tuesday night. Stephanie: [crosstalk 00:43:21]. Alex: These kind of insights... Yeah, totally. These kind of insights are exactly what we believe is what is something that we can uniquely provide to our restaurant partners, besides demand. Of course they come to us because they're interested in demand, particularly now. But we can do more, and we've been building a lot of systems specifically about that, that are effectively... you can think of this as recommendation systems in the grand scheme of the word of giving recommendations to the restaurants about how they can lend the totality of their business more efficiently. For example- Stephanie: It seems like that could be a whole different business for you guys to also operate. Alex: It's quite synergistic in our minds, right? If we're able to make our restaurants more successful, it actually makes us more successful, in turn. Because, those consumers who are placing orders and are not getting any wasabi with their sushi, they are ultimately not happy with Grubhub. We want them to have an amazing experience. Alex: Whether the restaurant wins just on Grubhub, or throughout the totality of their experience, because, let's face it, that restaurant might be serving other delivery platforms, and soon enough, hopefully, dine-in, as well. That retraining is going to help the restaurant across the board. We actually very much welcome that. That means that we're able to create the value not just for our platform, but for the restaurant, and increase the chance that this restaurant will, ultimately, be successful. Stephanie: Mm-hmm (affirmative). I think that's a really good point, especially as a lot of brands right now are shifting quickly to the world of Ecommerce and trying to figure out how to sell online. There's going to be a lot of new touch points that they maybe aren't anticipating that could actually hurt the consumer experience. If you've got the UPS guy throwing your box over the fence, and it's getting crush, there's a lot of things that actually, you maybe wouldn't even think of, as a brand, of, "That's not my job," when really, everything form start to finish to delivery and afterwards, and the follow-up, all of that's your job. And how do you think about controlling that experience with so many touch points? Alex: You are so right. The totality of this is their job. From the first ads that they see on TV, to what shows up when they look on SEM or on paid social and discover your brand there, too. The first purchase experience to the interaction with the UPS guy, to the interaction with customer service. All of that, in totality, is what the brand relationship really is, what the product really is. Alex: As marketers, we can't just care about that ads. As product people, we can't just care about the bits installed on the phone. They, in their separation, they don't particularly matter. As you saw from my story with the photos, that really was quite profound to me, right? We kept looking for a solve to get more customers and more sales through marketing, and that solve wasn't there at all. The most efficient solve was far outside. Stephanie: Mm-hmm (affirmative), yeah, such a good reminder for all brands to think about that, like you said, totality of the process. Because you have a software engineering background, I feel like I'm allowed to ask you tech questions. I saw on your, you guys have a blog on Medium, or your engineering staff does. They were talking about how they were creating discount codes using crypto. It made me wonder, what other kind of technologies are y'all experimenting with, or seeing success, or how did you think about running the platform that Grubhub's built on now? Alex: Sure. A few things are super important. One is having a scalable platform that can withstand demand, and that can withstand massive spikes in demand. As luck would have it, most people in Chicago, want to get dinner approximately at the same time. Stephanie: Yes, who knew? Alex: Right. What a pain in the butt. We've been trying to convince them to maybe come a different... No. Stephanie: Come on, 3:00's your time, come on. Alex: Exactly, exactly. Your dinner delivery window. Which, of course, creates formidable demand. Not just on the services in the backend of our systems, but a formidable demand on our logistics network. A lot of our work goes into being able to spike in response to customer demand. Let me give you one intuitive example of this. Outside of COVID, before COVID, when rain would start during dinner hours, demand would massively spike. Alex: At that moment, we're supposed to magically materialize a lot of drivers on the road doing deliveries. Being able to do so, technically, and when I say magically materialize, I'm of course referring to creating incentives and creating appropriate communication channels with our drivers so that they actually want to get on the road. A lot of our engineering work has to do with how we were talking about in the beginning, balancing the three sites of the network, and being able to respond to either a massive spike in demand, or response to a set of orders that were placed in the specific part of the city on the logistics side. Alex: Or, respond to an onboarding of an enormous partner, like Shake Shack, or Sweet Green, or Taco Bell, with their own unique needs. Remember, we work with such a variety of restaurants, right? We do point of sale integrations with a variety of our enterprise customers, which of course means that we have to have nimble systems that are able to onboard those same customers. They have to be resilient, as well. So, a lot of our work has to do with both scale and being able to deal with these spikes. Stephanie: Got it. Any favorite pieces of tech that you guys are implementing or trying out right now to help with those large spikes in demand? Or where you guys think the future is headed that you're kind of preparing for? Alex: Favorite pieces of tech. Huh. Huh. I'm going to think marketing tech. Braze has been an outstanding tool for our marketing teams. What we've discovered is it effectively enabled a whole work stream of experimentation for our CRM teams. They're able to run pretty sophisticated experiments completely independently from engineering, which increase our velocity of experimentation. Stephanie: Hmm, that's awesome. I'll have to check that out. Cool. So to zoom out a little bit, 30,000 foot level, what kind of disruptions do you see coming in the world of Ecommerce? What's on your radar right now? It doesn't have to be for Grubhub, it can just be in general. Alex: I think that the disruption is already here, where over these past couple of months, we've seen the portion of online transactions, and portion of consumers who have tried buying things online just catapult through the roof. All of those new consumers, let's face it, my 90 year old grandmother is using Zoom now. All of those consumers are a new opportunity. They have very different expectations. They don't yet know much about your brand. Alex: Being able to understand this newly online wave, and heightened expectations of the consumers that already happen online, but perhaps not as active with your service, right? Those, I think, are super important. This to me takes us back to velocity of experimentation, being more important now than ever. That is, truly learning from your customers. Observing them, creating experiments, measuring, and getting a feedback loop from them, so that you're able to focus and find the one thing that you can improve to make the whole story better. Maybe photos. Maybe it's something else. Stephanie: Yep. Yeah, I love that. It definitely seems like with these new people coming online, you have to have a bunch of different tactics to meet them wherever they are. The ones that have been working for the past year, might only work for a subset of the people because you have 50% more people that you need to market to, or develop a platform for, and it's going to be very different with how you approach those new consumers than what you've been used to. Alex: Exactly. Stephanie: All right, so, we're about to jump into the lightning round. Any higher level thoughts, Alex, that you want to share before we do so? Alex: If you're able to structure your organizational incentives to focus on learning and feedback loops, I think now you're going to see an even bigger reward for it in the form of market share, in the form of growth, in the form of being able to adapt to the world around you and leapfrogging the competition. Stephanie: Yeah, completely agree. All right, so the lightning round, brought to you by our friends at Sales Force Commerce Cloud. It's a fun and easy, quick round of questions where you have a minute or less to answer. Are you excited and ready, Alex? Alex: Very scared. Stephanie: Dun dun. All right, first one. If you are starting a podcast, what would it be about, and who would be your first guest? Alex: Whoa, what a fascinating question. What a fascinating question. I am obsessed with all things culture, and how do you actually create the right incentives for a technology/marketing organization? I love Simon Sinek. He is outright amazing. I learned a ton from reading him. I would probably to get him and if I can't, I'd get one of my former mentors in there, as a consolation prize. Stephanie: Oh, that sounds good. I would listen. I would be your first listener, and I would give you a five start review. Alex: Oh my gosh, thank you. Stephanie: You got me at least. What's up next on your reading list? Alex: Hmm, next on my reading list? I am reading Russian sci-fi novels these days, as a means of escaping from a tiny, one bedroom apartment. Stephanie: Any good ones that we should check out? Alex: I'm actually reading them in Russian, so I don't know- Stephanie: I was going to say, unless they're in Russian, then I don't know if I'll be able to read Russian quick enough to read it. Alex: Oopsie, oopsie, I do have a few people at my work who've been reading Tolstoy before the whole COVID situation started. I don't know if I'd recommend it now, Tolstoy does darkness extremely well. We have enough darkness around us now. Stephanie: That is true. Yeah, maybe not. Alright, well, what thing do you normally buy at a store that now you're just going to buy online after everything with COVID? Alex: What a great question. Only online now. Hmm. Stephanie: Tricky, tricky. Alex: I used to, actually a lot of my electronics. I used to come to the store and look at them and experiment with them. I have a feeling that I'm never doing that again. I used to come to a Best Buy and just try to look at different mice and monitors and all that. I got a new laptop and a new mouse online. I really like them, and I really like the experience. I was unafraid of returning them. That's it, online I go. Stephanie: Yeah, completely agree, especially as a lot of these companies are making the return experience a lot more seamless. Yeah, I could completely see the same thing happening. Buy things, test it out, and send it back if you don't like it. Alex: I was just chatting with a colleague about this exact same thing with returns around fashion. I think there's a lot of innovation to be had with moving the fear in fashion through that. Stephanie: Yep, completely agree, except I could see them having to now to figure out a way to resell those items in a way that proves that they've been quarantined, disinfected, and yeah. I was just thinking about that the other day. Man, that's tricky, especially for second hand market places to try and prove to the customer that these items are clean and good to go, and you can buy them. Alex: I agree. Solvable, I think, but I agree. Stephanie: It is solvable. All right, so the last final question. What's up next for Ecommerce professionals? Alex: I think we're going through a time when from being on the early adopter, early majority demand for most of the brands. We've become the critical source of revenue for every single brand. If you think that your company was going through a digital transformation, and is now trying to make digital just a better channel, hold on to your seats, because it's not the only channel, and the majority channel. So, the demand for expertise in our area is increasing very rapidly, and the demand for learning in our area is also increasing rapidly. I think this is a wonderful time to be in Ecommerce. I think this is a wonderful time to be learning and doubling down on Ecommerce. I'm excited for all of us to be right at the center of this transformation. Stephanie: I love that, love the positivity, and yeah, it's definitely an exciting time to be alive and experiment and try new things. This has been a blast Alex, thanks so much for coming on the show. This is your second appearance on a Mission podcast, so yeah, we're so thankful that you came back and joined us again. Alex: Stephanie, thank you very much for inviting me. Stephanie: All right, talk to you later. Alex: Cheers.  

When Christiane Lemieux was looking to sell her first company, she knew she wanted to find a buyer that understood that the future revolved around Ecommerce. She found that buyer in Wayfair and for the next few years, she worked with the company to cultivate as much knowledge about the eComm space as possible before venturing out on her own once more. Today. Christiane is the founder of The Inside and the author of numerous books, including her newest called Frictionless. The idea of her new company and the book revolves around the concept that in order to have success in the world of Ecommerce, you need to give your customers an experience that is so easy and efficient, that they never have a reason not to buy. On this episode of Up Next in Commerce, Christiane explains why that frictionless experience is so important, and how to make it a reality. Key Takeaways: Thanks to innovators like Bezos and Jobs, the world shops in a different need-it-now way. As a result, the biggest challenge Ecommerce platforms face is creating a frictionless experience By leveraging the design community to be consultants, The Inside is targeting customers who can buy with more frequency and create predictable, repeatable conversions Getting online quickly and the businesses who have a digital-first strategy are successful 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: Christiane, welcome to the show. How's it going? Christiane: Hey. It's going really well, Stephanie. How are you doing? Stephanie: Doing great. So, for all of our listeners, I want you to pronounce your own name since I did not do it this time. Christiane: My name is Christiane Lemieux. It's very French and a huge mouthful, so I completely give you a pass on that. Stephanie: Thank you for doing that, so I did not have to. So, you are the founder and CEO of The Inside, a direct-to-consumer home furnishing brand. I love to hear a little bit about that and how you started it? Christiane: Well, this is my second foray into the world of home furnishings. I started my first company, it was called DwellStudio, out of college. I went to university at Parsons School of Design here in New York. And I started a home furnishings brand from my New York apartment. 13 years later, I sold it to Wayfair. And speaking of what's up next in commerce and the digital landscape, part of the reason that I did that was that... Oh, you know what, I should cut my nail Hold on. Sorry. Let me just cut this so it doesn't ding on you. Stephanie: Okay. Christiane: Sorry, I'll go back to Wayfair. So, I sold my first company to Wayfair, and part of the reason that I did that was that I got to be entrepreneurial fork in the road where I had never really raised money before. And I realized that if I was going to continue down, the growth trajectory that I was on, it would involve me opening more than the one store I had in New York. It would involve me raising money for the first time, substantial amounts of money for the first time, to roll out stores. Christiane: And at the end of the day, I sat and thought for a very long time about the business model that I was on, that was growing, that I had started, and I realized that it didn't feel right to me. I really believed that all businesses were going to, at some point, in the near term or distant future, transition to eCommerce. And what I wanted to figure out was, who could I either partner with or sell to that would understand that idea and philosophy? Christiane: And so, I hired an investment bank in New York and they actually had me meet with a whole bunch of home furnishings companies, most of them, you would probably know. But when I walked into Wayfair's office in Boston with 1,800 people and 800 engineers, I realized that we were really aligned from a conceptual point of view in terms of what the future of DTC look like, direct-to-consumer look like. And so, it wasn't the best offer financially but, to me, it was the best offer intellectually and philosophically. So, I sold my business to Wayfair in 2013. Christiane: And then, I went on their executive committee. I mean to say that it was a learning would be doing a disservice. It was like a full immersion into eCommerce with one of the best teams in the country, and by far, the best team in my particular category. And so, I learned so much from them. Christiane: And as I was sitting there, I was like, "What would make me start another business? What in the world after building one from the ground up and selling it, what would I do?" And so, I realized that if I could take my first business, which is really design-first and brand-first, and then merge that into what I had learned at Wayfair from a digital commerce-first perspective, that I might be crazy enough to do it again. And that's what I did. Stephanie: Yeah, that's amazing. So, what were the key learnings that you took away from Wayfair, and maybe the pitfalls that you saw where you're like, "Oh, I should avoid that."? Because when I was looking into Wayfair, I think they're still very unprofitable. And so, did you see things like that and you're like, "Oh, if you just adjusted this part of the model or this part of logistics, I wouldn't have to worry about that."? Or what kind of things do you take away from that experience? Christiane: So, I would say there's almost nothing wrong with Wayfair. And I'm saying that, I mean that honestly. First of all, Niraj, their CEO is one of the smartest digital executives in the country, if not the world. I think that he's very much following the taking market share approach pioneered by Bezos, of course. And so, I think we're just very much on the same path. He will own the furniture category online and he will very quickly, if not even now. I mean, the last quarter was insane for them because now we're all sheltering at home and [inaudible] in a very different way than we did maybe nine weeks ago. But he'll take market share and he will be very profitable, and he'll own furnishings online. Christiane: There are other companies that have pursued that line of growth that weren't necessarily as equipped as he is. And he's equipped to do that. So, as relevant as that is in the post-WeWork discussion, I think in his particular case, he's already got the groundwork done to be able to do that and do it fairly flawlessly. I think for me- Stephanie: I mean, definitely still... The first company that comes to mind when I do think about buying furniture or looking for anything, even above Amazon and Walmart... I mean, they're the first ones I would go to so I agree. Christiane: Also, because they've got the best selection and they've also got the back-end figured out. And so, they taught me things like overpack centers. I was like, "What is an overpack center?" And so, they take- Christiane: They have overpack centers where they take in the goods from the manufacturers and they overpack them, so they don't break. And by diminishing the chance of something being damaged, not only do they make the customer experience better, which is really necessary in this day and age, but they also ensure that their margins don't get completely depleted by goods that arrive damaged. And so, it's not a crazy thing to do, but at the end of the day, it's totally crucial. Christiane: So, I mean, they taught me so much about, first of all, UX, customer experience, and then the logistics and the profound necessity to really think about delivery in a way that is beyond just parcel delivery or white glove delivery. They really think about it from a 360 perspective all the way from margin protection to a really flawless customer experience. Some of the things that you don't necessarily learn when you're building a design brand, I learned at Wayfair, so I'm forever thankful. Christiane: The difference is that they're like Amazon, they're a marketplace. And so largely, they don't design and produce their own SKUs or their own products. And they don't need to because their value prop is that in COVID-19 when every single person in the country, all of a sudden, needed some kind of a home office and/or home school. I mean, you went right to Wayfair and you ordered a desk and they came to you perfectly, right? Christiane: I wanted to take the ideas of brand and design but apply the Wayfair rigor of digital thought around how I executed this next brand, some of the things like having no inventory, having exclusive product, having a 3D studio to do the photography, dropship, largely dropship the product. So, instead of sending it through a more expensive white glove delivery, have it lightly assembled so that UPS or FedEx could do the delivery. And so, all of these things add up to really beautiful customer service, exclusive custom product to the customer, and then margin improvements around delivery, around no inventory, around a decreased cost in photo assets. Christiane: So, what I wanted to do is I challenged myself to think of all of the substantial problems with a home furnishings business, solve them first, and then start the business. And so, that's how I did it this time. Stephanie: That's super smart. So, how long has The Inside been operating and how's it doing today with everything going on? Christiane: So, I left Wayfair in 2016 and I called up my favorite supplier. She went into business with me on a B2B beta way. And so, we did that for close to two years. And then, I met the extraordinary, Kirsten Green of Forerunner, and she said to me, "This is really interesting, Christiane. Why don't I write you a pre-seat check and you go figure it out." Christiane: And so, we came out of beta in July of 18th. We're a year and a half in, and it's going very well. It's going very well. In this pandemic, I did not have the category breath that Wayfair has which made this a very interesting business time for them, but enough of a product breath that I think that we're helping people improve their homes on a daily basis right now, which is what we set out to do. Christiane: And listen, I feel extraordinarily lucky that it's a digital-first company. I don't have stores, I have a very lean staff. We were working from a work kosher, which we closed down at the end of April. So, we are going to be dispersed until, at least, the beginning of 2021, so we won't have an office. We can do all of this virtually. We hold no inventory, so we have no warehouses. Essentially, we had to let go two people just to preserve the business. But we've come through this, I think, as well as you can. My whole MO right now is making sure that nobody loses a job, really, because that's the scariest part of all of this is the unemployment numbers. I mean, that just keeps me up at night. Stephanie: I know. Yeah, seeing how high they're trending is definitely that's scary. Was there any big digital pivots you had to make or that you made quickly when COVID-19 started, or right now? Christiane: Well, I think that what we did... Apparently, from my digital marketing, either cohort or people that we work with, there are three DTC areas that have done very well in this particular pandemic, I mean, the Starling pandemic, so this pandemic, but it's athleisure, home, and alcohol. So, those three things had extraordinary growth. We happen to be in one of those categories. Christiane: I think one of the things that we did, which I think, anybody in a growth category in this particular time, we stayed the course with marketing. So, a lot of people caught their marketing. And what we're seeing is customer acquisition costs have come down, the cost for all of these paid marketing initiatives across all the platforms have come down. And so, we really leaned into that. Christiane: The other interesting thing that's sort of trend that's come out of this is not the digital marketing, I don't know if you've noticed this, but a lot of people are doing direct mail. Direct mail a huge resurgence obviously, depending on the category you're in, but people are home, and they're reading their direct mail. Stephanie: You shifted into that space of it? Christiane: We're looking into it now. Stephanie: Cool. Yeah, that's great. When you were first building The Inside, were there certain key technologies that you leaned on to build up the website, or are there any favorites that you utilize? I mean, I saw you have quizzes on the website, which seemed amazing. Is there anything specific where you're like, "This is my favorite piece of tech we use or a plug-in how we build our website." Any details around that? Christiane: Well, it's funny, this is our third iteration of our website. Christiane: So, we actually had to build our site from the ground up, which has its challenges. Christiane: One of the things that happened to us is we were on a really new version of Java, and Google couldn't index our site in the beginning so we had to do all kinds of back-end hacks to fix that. But for like three weeks, we're like, "Why is our traffic so bad?" And then, we realized that we weren't showing up at all. Stephanie: That's not great. Christiane: No, it's so horrible. So, just all these learnings along the way have been really interesting. So, because of the customizable aspect of our business, we had to build our own site from the bottom up, and that's given us the ability to keep growing our SKU count and keep allowing people to customize each and every one of the pieces. Christiane: I think that there's plug-ins. Everybody loves the Affirm or any kind of extended payment plan. There are things that are so unbelievable like Apple Pay and Amazon Wallet and all these things. If you don't have them, I mean, you're putting yourself at a huge disadvantage. I mean, they're not necessarily plug-ins, they're more payment tools. Christiane: I think the name of the game now is, it goes right to the core of my book, is making the experience frictionless. I mean, this is philosophical, but I think if frictionless extends even beyond that digital aspect of our lives, people are used to getting what they want, when they want, at the price they want, with the look they want, because of... Christiane: And I would say that Bezos might be the grandfather or the father of the frictionless experience. I mean, he changed the way we consume, and buying, shopping, whatever, fundamentally, in the same way that Steve Jobs changed the way we think about media. I mean, Bezos changed the way we shop, and he made it frictionless for us, and he keeps going beyond. Because if you think about Amazon Prime, he made everything accessible to us in two days. I mean, not necessarily right now, but generally speaking, and that just removes the friction from everything. Christiane: And philosophically, it's given us time back in our lives, right? Especially, let's think about others, me as a mom, I never have to take two hours of my day to go to the toy store to get the Lego for my son, William's friend, Gray's birthday party ever. It gets delivered to my house and it takes me no time. And that time that I get back, I mean, pre-COVID, I think the digital generation looks at time in a completely different way and the generation that preceded that, right? Stephanie: I absolutely agree. Christiane: Yeah, because there is all of this found time, and I think the digital generation also understands that it is the only non-renewable resource, right? If you have money, you can throw it on almost anything, right? I mean, you can have a jab for a trainer or whatever, or if you're clever and you have to be resourceful like me, you can find, I don't know, a meal delivery service or the stretch class on Mindbody, or whatever it is you're looking for. There's ways to hack almost anything. The only thing we can't hack is time. Christiane: And so, the more frictionless your experiences are across every single thing you need to do every day from like your healthcare all the way down to your grocery shopping, the more of this found time essentially you get back or digital time. Christiane: Pre-COVID, the people were applying that to travel, experience, I don't know, wellness, self-care, working out, all these things. Because it's the first generation that doesn't have to wait in line to get their license renewed at the DMV. Stephanie: Yeah. I mean, that's definitely a very different generation now who knows nonsense and they're not going to put up with the old way of doing things. How did you think about designing your website and your customer journey to create that frictionless experience? I mean, like I said earlier, I love seeing the quiz. I actually took it to see what kind of bedframe I should buy. How did you think about designing things to make it easy for people to buy? Especially furniture, that's kind of tricky. People are usually used to testing it out. Christiane: They're used to testing it out. So, my caveat is the following, that is definitely a work in progress. We look at this every day in every way, I don't think we've made it frictionless yet but we're trying to. And I think that for home furnishings, in some ways, we have to act as your decorating friend, as well as your place to buy the product. And so, to the extent, we can make your choices easier, so the quiz or you can text us or email us or set up an appointment for a design consultation with us. If we can help you be your trusted friend and design advisor, that I think is one of the tools to a frictionless experience. Christiane: Like every other eCommerce site, there's table stakes things like, "If you don't like it, you can return it," and you have 30 days to return it. Because you know what, that's just the name of the game today. And also, we have to ship it to you for free because that's also the name of the game today. Christiane: So, there are things that have been institutionalized, I'd say, by Amazon first and then adopted by everybody else that are just table stakes. And so, we started out with those and that was, I think, like 1.0 of frictionlessness online. And then the companies that are really forward thinking are the ones that could build on that on a near constant basis. So, yeah, that's very much where we are philosophically and trying to make the UX better every day. Stephanie: Got it. What kind of metrics are you focusing on when you're making all these iterations and trying to make the experience even better? Are there certain things you pay attention to or that you sync up with your team every week and go over? Christiane: A lot of it is Google Analytics and then we look at the Facebook metrics for the paid marketing, all of these things. But some of the things we look at are, obviously, like the really basic ones like bounce rate. One of the things that people are looking at now is, they call it dwell time, how long people spend on each page and how in-depth they go. So, we look at that. Christiane: We look at who designs a piece of furniture, and then transacts, and then who abandons the cart and why. And so, we're trying to finesse the experience all the time so that people feel they're not stuck with paralysis of choice. Because I think the thing about customizing is that, especially if there's 16,000 different iterations you can possibly make, you might get paralyzed by choice. Christiane: So, the quiz is very helpful there because you may have learned that you like coastal mid-century, your favorite color is blue, here are three patterns that you like that are foolproof for you. And then, you can go from there. You can iterate from there. So, you can choose a brass leg or wood leg or whatever that works for the rest of your interior. But at least you've narrowed down to the extent you can, algorithmically what you like. And so I think that, I mean, all of those things are super important. Stephanie: And I think less choices is definitely key. Especially I've seen a model where they're populating an entire room for you of like, "Here's the whole entire bundle, so you don't even have to think about it. You can swap things in." And like you said, having someone that you can text is so super important, where you feel like you have a friend where you're like, "How would this look? What do you think about this? Show me something that's similar." I think all of those are really strategic. Stephanie: But when it comes to some of those metrics, how do you... For dwell time, for instance, I think any of these might lead you down the wrong path based on what's happening right now with the current environment where I heard that, well, times are up, but then conversions aren't maybe up at the same rate. Is there any metrics where you're like, "Oh, they might be reading into that the wrong way, and we shouldn't maybe take a quick action based on that right now." Christiane: I think that's right. I think people are... Because we have so much time, and content looks different from one person to the other, the content they like. So, if you're in the middle of decorating your house, you might be on all these sites, and because you have, all of a sudden, more disposable time at your fingertips than you have in the past. So, I think dwell time is important, but add-to-cart is really the thing you want to see, and then the final conversion. Christiane: So, we look at where people are hanging out from a GA perspective and then look at the add-to-cart and then look at the conversion on that add-to-cart. Of course, for us, the metrics that we want to focus on are getting from add-to-carts to conversion to the extent we can, and so trying to make the PDP and the the checkout page as flawless as and as inviting as possible to really get people to transact. Christiane: I mean, in front of that is as much inspiration as we can possibly allow people to consume, whether it's through Instagram or through Facebook Ads or through whatever means to get them inspired. But really, our job, especially on a site level, is to make it so easy that why wouldn't you buy it? And to the extent we can quell your paralysis of choice. That's really where we're focused right now, is really helping you design the space of your dreams digitally. Stephanie: Very cool. So, you just mentioned Instagram. I saw that you launched an Instagram Live series called Go Inside. Can you speak a bit about how you're utilizing that to potentially drive sales and the strategy behind that, and ROI that you've seen on that content or how you measure that? Christiane: Well, I think, for us, part of this... The interesting thing about the home furnishings business is that there are two distinct consumers, there is the DTCs, so the consumer you think about who wants to buy an upholstered headboard and goes on and chooses their fabric, and executes on that, but there's also the trade. Christiane: And so, our particular category has interior designers, and many of them who, at the end of the day, are a very big part of this business, and a very, very important customer to anybody in the home furnishings business because they are buying on behalf of multiple people. And if you make the whole experience frictionless for them, it's not just one bed every five years, it could be five beds every month. Christiane: And so, I think part of our Instagram strategy is really letting the rest of our community meet the interior designers that really work with our product, not only so that they can see what this community does, but also, at the end of the day, we would love our interior designers to get business and to really think about this, not only as a home furnishing company, but as a community that we're growing for people who love design and who want to, as we call it, live beyond the beige. And for us, that's really people who want to personalize their spaces, and think about their spaces as something that is theirs and that is customizable, in a way that's frictionless. And so, by going live with our interior designers, we're introducing the world to this great community of people who can service that. Christiane: A little early for ROI right now, but if we circle back in a little bit of time, I can let you know, because data has to have like a decent subset, right? So, we just launched a home design 30-minute consultation, and that's really helpful in terms of conversion. Because if people get you on the on the line and walking through their spaces and really helping them, chances are it's the kind of help that they're looking for. So, we find that useful. Stephanie: Well, how do you think about scalability when it comes to having those one-on-one interactions with the customer and consulting them on the products and whatnot? Christiane: Well, that's where these two things dovetail together, right? And so, if we build a really beautiful, robust design community that is local... Because every different area has a different design philosophy. In California, you can live indoor or outdoor, in New York, a lot less. And so, if I can introduce you to a design in your area via Instagram Live, and he or she is showing off some of the projects they've done, there's a good chance that you will then reach out to them and let them know that you were introduced to their work on The Inside. Christiane: And the rest, I think, is just great for everybody involved. I mean, that's my business philosophy. I love a win-win-win, so the customer wins there, the designer wins there, and we win there not just because of a sale, but because we've made somebody's home and life better. Stephanie: Yeah, that's a really good strategy. And this thought that you are partnering with the designers and having them do the consultation, that's super smart, where you don't really have to worry too much about hiring a bunch of people and customer support to do it who don't really have good design principles probably. Christiane: Yup. That's how we'll scale. So, we're just at the inception of this, but you get it, right? So, they can meet Maureen Stevens on Thursday night or tomorrow night, and if she's in New Orleans and if they love her design, they can call her up. And when she finds out that they were sent to her via The Inside, then she'll most likely, I mean, hopefully, use one of our upholstered beds in her next project. But even if she doesn't, if somebody gets a better interior because of something we did along the way, then I feel pretty good about that. Stephanie: These micro-influencers and designers who are helping with these consultations, are they starting to request metrics and wanting to see data and things that your team will have to start supporting eventually? Christiane: I hope so, but not yet. I hope that... Listen, that's part of that frictionless post-COVID change. I think everybody is going to need data, digitally-driven data, so that they understand exactly what the reach is beyond this traditional business models that they've had prior to all this. Stephanie: Yup. I think that because of COVID, a lot of people are definitely putting on their entrepreneurial hats and they're going to want to see those metrics. And I think it'd be really interesting to have some type of leaderboard that would show which designer is doing the best and who's helping customers, and just gamify it a bit. Christiane: That'd be so much fun. It's almost like you're at, whatever it is, flywheel and who's biking the fastest. Stephanie: Yeah, I know. Just implement that tomorrow. Easy. So, are you- Christiane: Stephanie, I'm going to take a note right here and actually do that. That's pretty interesting. Stephanie: Yeah. I think that's where a lot of the world is going when it comes to gamifying certain purchases and making it more fun. Well, when it comes to gamifying, are there any pieces of tech that you're thinking about? I was just playing around with IKEA's app where they have AR that you can put the product in your room, which was really fun to play with. I was just putting full-on dressers on top of the bed and just being silly with it. But have you thought about doing that since your products are so unique, it seems like it would be really good to get them in the room where people are trying to design it? Christiane: Absolutely, yes. And in fact, we were talking to a company in Palo Alto, who was on the forefront of this, probably right around the corner from you. Stephanie: Oh, we're neighbors. Christiane: Yeah. And they are pioneering this incredible drag and drop. So essentially, you can take a picture of your room, and then you can drag and drop furniture into it. It's so well done. It's so well done that they can tell where your window is and they can have a shadow underneath the furniture so that it looks perfectly real. Interestingly, a lot of the technology that people use for gaming is really applicable here. So, it can create a really unique and kind of true-to-life experience. Christiane: So, yes, we're looking to this all the time. I think that as a brand spanking new startup, we're trying to make sure the fundamentals are frictionless before we add all kinds of layers of complexity to the customer experience. So, we want to make sure that it's really easy for you right now to go in and say like, "I love the modern platform bed and I like it in polka dot. I'm going to transact," versus... Because I think that we got to make sure the customers where we are in terms of technology, too. So, I think we're taking baby steps there, but the answer is absolutely yes. And all of that technology is fascinating to me. Stephanie: Yeah, completely agree. I'm definitely watching that market closely and it seems like people are leaning heavily in, but agree that until you understand how you want the customer journey to work and the product to work and everything, I think... Stephanie: We were just talking with someone from Lenovo who's saying that after years of being in business, you have to just start killing a bunch of things because too many things build up and it starts worsening the customer experience. So, it's probably good to figure everything out first before pulling in a bunch of new trendy tools. Christiane: Yeah. We need to have a really beautiful conversion rate indicating to us that the customer journey is frictionless before we can start throwing pretty complex essentially gaming ideas at them. Stephanie: Yup. And it would seem like you would need a pretty large catalog as well if you're going to develop an entire AR app for your company. I mean, people probably slip through placing furniture. I mean, at least that's what I was doing. I was like, bang, bang, bang, bang. I was putting in front of everywhere. It seems like I would need a pretty large catalog for that, too. Christiane: I think that's right. I think that's absolutely right. And so, somebody like IKEA touches every part of your house. I mean, we're too young to have that kind of SKU count. It has to be in every single category, right? You can't just have the dining room chairs, you have to have the dining room table too. So, we'll get there. We're not there today. And so, I think that you're right. That's a very good point. And so, IKEA is a layup for them. It's a layup for Wayfair as well. Stephanie: Yeah. Are there any specific follow ups you do with your customers to keep them coming back, or ways that you're acquiring new customers that is maybe unique? Christiane: What's great about our category is that design is a process, right? I mean, even if you hire an interior designer, it usually takes quite a while. And also, people are thinking about their homes in a different way than they used to. It's all these things where it's done, you live in it, and that's it. I think people are constantly upgrading or adding in seasonal elements. And so, once we know you, Stephanie, are coastal mid-century from your quiz, we can keep sending you design ideas that- Stephanie: Did you just see my quiz? Christiane: No. Is that- Stephanie: That's what I was. I'm like, "Did you see me?" Christiane: But I have a feeling. Well, first of all, I can see your personal file from our Zoom earlier today, so I- Stephanie: You mean, hoodie and sweatshirt? Just kidding. Christiane: I also know where you are. I know how old you are. I know where you went to school. But this is all I do all day long, so I can pretty much- Stephanie: You're good. Christiane: ... figure it out. So, since you are coastal mid-century, I would know what to send you as a follow-up. I don't know if you have outdoor space or not, but I might send you some really cool outdoor furniture that would work with the bed you had. I will try and assist you in decorating your space, getting the home of your dreams pretty subtly until one day, you pick up the phone and say, "Hey, Christiane, will you just call me back because I want to do my entire living room?" And I will say, "Of course," and I will call you back and you'll FaceTime me through your living room and we'll decorate it. Christiane: But until then, I'm going to show you all the beautiful things you can have at very reasonable prices to make your space exactly the mid-century coastal dream you want it to be. Stephanie: That's great. It's a good process. So, to pivot a little bit, you've written a couple books and I'd love to dive into them because they're all around everything eCommerce, it seems. And so, if you want to maybe start with your most recent one or your first one, whatever one you want, I would love to hear about them. Christiane: Well, so I've written three books and I'm working on two other ones right now. But the first book I wrote was called Undecorate and it was really, for me, that watershed moment in design when I realized that the way people approach their interiors was no longer going to be like, "I design it. I live in it for 25 years. My kids take a few things when I die and that's the end of it." I realized that people were approaching their interiors the way they were approaching fashion. And that was largely because for the first time ever, things like Pinterest, that was right after Instagram launched... But all these things, all of a sudden, we were surrounded by content and media in a completely different way. So, you didn't have to buy a magazine to look at a beautiful interior, you got to see it all day long on your phone. Christiane: And so, what that did was, I believe, it raised the design IQ, not only of our audience in the United States, but globally. And so, all of a sudden, people are interested in interiors, they're interested in design history. They're interested in all these things that they weren't before and they think about their spaces in a less static way. So, I wrote that book. Christiane: And then, I followed it up with a book called The Finer Things, which was my first Instagram-generation encyclopedia of the decorative arts on the same day, and I'm writing right now the Instagram-generation encyclopedia of important furniture. This one's take me a long time, I think, four years to write. It's a big project. [inaudible] is the one I'm writing about furniture right now. Will probably take me between two and a half and three. Christiane: And then, I wrote Frictionless, which is really my first business book. Because I realized that I had started a business out of college in 2000. I grew it organically for 13 years. And if I hadn't written a book at the end of that journey, it would have been useless. It would have been fire-starting kindling at this point, because everything had changed, every single thing. Stephanie: It makes you wonder if you can rely on books these days anymore because, I mean, especially around eCommerce, everything's new and so quick. It's like what sources should I even look at to stay up to date with things? It's definitely probably not a book. Christiane: Yeah. I mean, I sat and thought what is the underlying differentiator? What makes something win or something lose here, right, if I look at all the incumbents in my industry. But just generally, what is it? What's the winner or loser? And what I realized was that it was the frictionless experience that allowed somebody to get into a, it could be a crowded category. Christiane: But if you can do in the least invasive way, you will win because all people want is as few clicks as possible to get exactly what they want with the commerce table stakes and have it delivered to their home and they don't want somebody calling them up with a delivery time. They don't want 37 phone calls. They don't want a helpline where nobody helps them. When you get into those scenarios, you're like, "I'm not doing this. I'm never coming back." Stephanie: Whenever someone wants to call me, I'm like, "Oh, can we not? And don't leave me a voicemail. Can you just text me, please?" Christiane: Yeah, just text me. Or my favorite thing is Slack. Just Slack me. Christiane: Slack is frictionless. I mean, it's beautiful. Christiane: And so, experiences like that, I don't know, equal parts art and science, I think is the big differentiator. We, as human people, now that we've experienced it, that's what we want. We want the Slack experience in every single facet of our life. And if it's not- Stephanie: No one's going back after that. Christiane: No, no. And if it's not that, then you're like, "Why does this suck so badly?" And then, you find the experience in that, I don't know, that milieu that you need, and you can find it. I mean, if you can't find it today, you'll be able to find it soon. And that's what every business should go after. Christiane: Because all the rest of it is table stakes, right, like fast and free delivery, great design. You can do those things, but to do it in a frictionless way is what's going to change your business or give you the competitive advantage you need to take market share. I mean, that's what Wayfair taught me. And when I sold to them and I understood how far ahead of the commerce game they were, it was amazing to me. Stephanie: Yeah, that's such a good experience. When you were doing your research for Frictionless, was there any surprises that you found or companies that you're following that were doing something surprising that you hadn't thought of? Or just a good process that you were like, "Oh, that's really neat. I can see why it works for them."? Christiane: There's so many nuggets in this book. I mean, I find just talking to the founder of Ixcela, she does a gut biome. You send in your... I'm obsessed with that. You send in your blood sample through the mail. I mean, the idea that we can have MIT science level help digitally is amazing to me. I mean, all of these... That is going to be the outcome of this particular pandemic because what we're realizing is that all of the things we thought we needed to do like endless in-person meetings, we just don't need to. I mean, I will never take 60 subways in a day in New York again to go to in-person meetings unless they're absolutely necessary. Christiane: So, I'm thinking about my life through the lens of frictionless experience. Those things, that's a lot of friction, like running around, being late, being stressed, when we don't need to do it. I mean, Zoom has also changed our lives, all of these platforms. Christiane: And the interesting thing is that I believe the entire world, regardless of what generation you are, just got schooled in technology, right? We all just got fully immersed in what it means to be a digital citizen. Christiane: Even my 75-year-old mom in Ottawa, Canada knows how to use Zoom now and thinks it's the greatest thing ever, and I'm like, "Mom, I told you so." But sometimes it takes being forced into something to realize how extraordinary it is. And now she realizes she can have all of her grandkids all over the world on one Zoom call and everybody can talk to each other. How amazing is that? Stephanie: That sounds very similar to my parents as well. They were teaching me how to put backgrounds on Zoom. I'm like, "Mom, I got it. But thank you." Actually, she did send me a pretty funny article that showed how to loop a video on Zoom so it looked like you were moving around and paying attention in a meeting, which I guess her... She's a teacher, so I think some of her students were doing that. They were looping themselves just moving around a few times, and it looked like they were really on board with the whole lesson. Christiane: Oh, my God. That is hilarious. Stephanie: I'm like, "That's good. Thank you for sharing that wisdom." Christiane: One of the partners that we're working with at The Inside, it's a very big home furnishings company and they are pretty sophisticated digitally, and all of them have a constant Zoom competition of who has the coolest background. Apparently, somebody had something like a 1980s workout video. That was fantastic last week. These guys are thinking about this on a near constant basis like your Zoom background now is a reflection of who you are and how creative you are, how digitally savvy you are. I think it's hilarious. Stephanie: So to zoom out a little bit, what do you think the future of online commerce looks like after the pandemic's over? Do you think things are going to shift back a bit to how they were? What kind of disruptions do you see coming down the pipe? Christiane: People would think "we're going back to normal," I think normal has changed. And I firmly believe that the companies that weren't thinking digitally are thinking digitally very seriously now. Christiane: Because as I told you, here I am in SoHo, New York and it turns out when there's a pandemic, nobody lives here. At 7:00 at night is when we all cheer. I mean, there's now six of us on my block who I see every night, and everyone else is gone. And there is one coffee shop that's open, and that coffee shop very early on had a contactless app. So, you could order your coffee in advance and then go and pick it up. Nobody touched anybody with gloves and a face mask on. I've gone there every single morning for the last nine weeks because I want to get out of my apartment and I want to see some of the world, and they have really good coffee. Christiane: And across the street from them is the fanciest coffee place in New York that people are die hard lovers of, and you know what, the doors are closed and they never came up with a contactless app and they never figured out how to digitally bring themselves into this particular pandemic and keep their business going. And I think that that's only like a neighborhood version of what the rest of commerce is going to look like, and not only commerce, just like service as well. I think that people are going to have to think about how to pivot their particular businesses digitally as quickly as possible. Stephanie: I don't think this will be the first event where businesses have to come online quickly and figure it out. And we'll definitely see the people who did do that this time and the ones who didn't. Christiane: Yeah, especially some of the ones that didn't and who are waiting for things to go back to normal might not make it through this. And that breaks my heart because there are fairly... You could probably scrappily do something fairly quickly, but you have to want to. And I think that people that didn't have their head in the sand... Is that what the ostrich does? Stick their head in the ground? Stephanie: I think so. Christiane: If your head wasn't in the sand, and you were iterating, or at least pivoting during this, it's going to serve you really well on the other side. Stephanie: Mm-hmm (affirmative). Yeah, it seems like it'll be, well, it is an environment right now where people have to learn quickly, but they'll probably look back and be like, "Glad I did that." We learned and we moved at the pace that normally would have taken us maybe on a five-year roadmap, we were able to get it done in a week or two weeks. We got pushed into that, but I'm sure they'll look back and be happy they did. Christiane: But also, look at the very fast category options. I look at the home furnishings category where, I don't know, it'd be those between 20% and 25% of consumers were willing to buy the category online. I think, in the last ten weeks, it went up to 60% or 70%. I mean, that is massive, world class adoption in a very short period of time. And I would imagine that that is universal across some of these categories. So, it'll be really interesting to see what happens post the pandemic. Christiane: But the people that are listening to the CDC won't be rushing out and shopping and going to the beach as quickly as... Some people will and some people want. So, I think that digital adoption is going to be extended, at least for 18 to 24 months, if not, forever. Stephanie: Yeah, I completely agree. So, before we move into the lightning round, which I'll explain, is there any other thoughts or ideas you have that you want to share? Christiane: No, I think we've covered up everything. I mean, I could go off... You and I are philosophically aligned that this is the way of the future. I mean, I could talk about this for days, but we need a whole Round 2. Stephanie: Yeah. It'll be really interesting to see what the landscape looks like in 8 to 10 months, if not, and then again in 24. Because I think you're right, I think that the people that are thinking on their feet and iterating constantly and really pivoting their businesses to be digital-first in whatever, incumbent-second are the people that are going to win here. It'll be a really fun way to look back. Stephanie: All right, then the lightning round, which is brought to you by our friends at Salesforce Commerce Cloud, who sponsored this podcast, of course. Christiane: Excellent. Stephanie: This is where I... Yes, they are great. They're amazing. Christiane: They are. Stephanie: This is where I ask you a question and you have a minute or less to answer. Does that sound good? Christiane: Sure. Stephanie: All right, what's up next on your reading list? Christiane: What's up next on my reading list? Oh, I have a really good friend in New York City who just wrote a book, Lauren Sandler, and I'm going to read her book next and it is called Christiane: Her new book is called This Is All I Got, and it's A New Mother's Search for Home. She is an investigative journalist. She writes for The New Yorker and New York Times. And she actually followed a single mother through the shelter system in New York. But I've just started it, it's pretty amazing. Stephanie: I'm going to check that out. Christiane: Yeah, it's pretty amazing. I'm trying to think what else? What am I reading that's like business-related? What is it? Harder Things? I just started it. Stephanie: The Hard Thing About Hard Things? Christiane: The Hard Thing About Hard Things is the business book that I'm reading right now. My editor at Harper who did Frictionless, also was the editor on Ben Horowitz' book. Stephanie: Oh, cool. I got to read that. Christiane: Yeah. I highly recommend that one. Stephanie: Highly recommend? Christiane: Yeah. I think that there are probably universal truths. And also, we're going through hard things right now. And I think it's people that are accepting and fluid in the hard things that end up being okay. Stephanie: Yeah, I completely agree. What's up next on your podcast list? Christiane: On my podcast list? Oh, my God, there's so many on my podcast list, but I'm stuck on the daily right now, if I'm honest, because, first of all, the news is so completely crazy and riveting. And also, I'm obsessed with all the COVID data. You know, I just had the test because my son was exhibiting some symptoms, and all three of us are negative. Stephanie: That's good. Christiane: Yeah, it's really good. But as a parent, the whole Kawasaki manifestation of this is very scary. Because the first bill of goods we got sold was that, "Oh, if your kids are under 20, you're fine." I was like, "Great." I don't care if I get it, I'll figure it out. But if my kids get it, I don't know what I'm going to do. And now, that's not the truth at all. So, that's generally where you'll find me. It's hard to take your ears away from the news right now. Stephanie: I know. Yeah. I have to, every once in a while, take a break because I have three kids under two and a half. Christiane: Wow. You're like me. My kids are 21 months apart. Stephanie: So, who do you follow in the industry or any newsletters or sources that you go to to stay up-to-date on all things eCommerce? Christiane: Wow. I mean, everything, like Crunchbase and TechCrunch. Oh, and I've been watching some of the podcasts, some of the live stuff on Extra Crunch. I'm trying to think eCommerce. I mean, there's just so much of it. I don't know, where else do I follow? Stephanie: Or if nothing comes to mind, we can also skip this one. Christiane: Okay. I mean, all of the above. And also, all the inbound newsletters and things like that. But just generally, the newspaper. Stephanie: Oh, newspaper. Okay. The last harder question is what's up next for eCommerce professionals? Christiane: What's up next for eCommerce professionals? Wow. Stephanie: Big shift. Christiane: Well, I think that everyone is going to have to become somewhat of an eCommerce professional first of all. I don't think digital and analog are going to be two separate things anymore after this particular pandemic, and I think that everybody out there is understanding that in a pretty profound way. I think that digital immersion is not only necessary, I mean, I think it's the only way to actually stay relevant and push your career forward. Christiane: Part of the reason that I wrote the book was also to try and understand being the parent of two children, what the future would look like for my kids and what does that mean for college and all these things? Because I wanted to understand 72% of people want to be entrepreneurs, and what does that mean? And so, I think that if they think about that from a digital perspective, it's actually a pretty great place to be, right? It means you're immersing yourself in the digital aspect of things. I think that it's not just eCommerce professionals, it's going to be every single professional. Christiane: I do think when I look at the landscape, that the content part of this is really important, right? Because even when I was at Wayfair, I mean, we did content but it wasn't merged the same way. So, your AR question I think is really important. I think that we're going to shift online for a lot of the things that we did in analog ways before this. Christiane: So, if I'm an interior designer, I'm not thinking about what my career looks like when I come into your house, I'm thinking about what can I learn online so that I can do it for you from a distance, right? And I would apply that to every single aspect of every single job out there. If I have an analog job, how can I digitize that? And I think everybody's going to have to think about that. Christiane: I mean, look at doctors are doing it through telemedicine and designers are doing it through FaceTime. You can go down every single career. I mean, pharmacists are doing it through telemedicine as well. One of the people that I profiled in the book is Eric Kinariwala from Capsule in New York. And I mean, that's a genius business because he's delivering everything from the drugstore, all of your pharmaceutical needs, anything that your doctor has prescribed, you can get delivered to your home. I'm talking to him next week, but I think he probably crushed it in this particular scenario. Christiane: So, I think there's no... You're not on one side of the fence or the other, like this silo in the company does eCommerce and this one does regular commerce. I mean, I think that the two now are going to be forever conjoined. Stephanie: Yeah, that's such a good point. Completely agree. Well, this has been such a fun interview. We definitely need to be back for Round 2. Where can people find out more about you and The Inside and your upcoming book? Christiane: Well, my upcoming book is at frictionless.pub, and you can get a copy of it there. It links to Amazon and Barnes and Noble and every other great book place to buy books. The Inside is theinside.com. And the rest, there's an endless breadth of information on Google. Stephanie: Yup. Awesome. Yeah. Thanks so much for coming on the show. It's been such a blast. Christiane: Thank you. Thanks, Stephanie.  

There is an evolutionary process for every business, and Beardbrand is no different. When Eric Bandholz co-founded Beardbrand back in 2012, all he had was a Tumblr blog with a modest amount of followers and an Ecommerce shop selling other people’s beard products. Today, Beardbrand is a seven-figure business with multiple high selling products of its own and an entire catalog of content that customers gobble up with each new release. On this episode of Up Next in Commerce, Eric tells us how he fortified his brand, and how success in the digital world is all about going beyond offering just a product in a box — it’s about delivering value and the best possible experience to your customers Key Takeaways: Move away from the strict focus on simply selling as much as you can and instead aim to find the ways you can add value to your customers’ lives. That will lead to more loyalty and, in turn, more lifetime sales When you're cash-strapped, you must think of creative ways to grow the business without capital. One way to do that is word-of-mouth — you can't incentivize word-of-mouth. You have to just focus on creating an amazing experience that your customers want to talk about Site speed is more important than other features. Achieving that  means cutting out pop-up ads and other third-party plugins, which data shows often do not provide consistent or meaningful ROI 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. I'm your host, Stephanie Postles. Today, we have Eric Bandholz on the show, founder of Beardbrand. Eric, welcome. Eric: What is going on, Stephanie? Stephanie: Hey, hey. Thanks for hopping on here. Eric: Yeah. I'm excited for our conversation. It's going to be a lot of fun. Stephanie: Me, too. You are a true brand. You're rocking an awesome beard. Just what I expected when I was hoping to see you on video. I'm like, "He better have an epic beard, or this conversation won't go well." Eric: Well, it was funny because, actually, I shaved it all off in December, the beginning of December, of last year. That was kind of a big deal for us. That was the first time I shaved my beard completely off. Stephanie: Oh, man. Eric: She's like, "[crosstalk 00:00:44] your beard," or something like that. Stephanie: How many customers did you lose when you did that? Eric: Well, I'd like to think that we actually added a lot of customers, because Beardbrand is not about the beard. It's about the man behind the beard. We kind of support a guy's right to grow his beard as much as his right to shave it off. I really wanted to make that point, especially today, with a lot of our competitors challenging people's masculinity by not having facial hair. We want to kind of say facial hair doesn't matter at all. It's just a style. Stephanie: Cool. Eric: We did some YouTube ads on it as well, which was a lot of fun to do. Stephanie: Awesome. I'd love to dive into the background of how you started Beard Brand and the story behind that. Eric: We're in business, I think it's got to be, eight years now we launched. Stephanie: Wow, congrats. Eric: We launched in 2012 after I had grown a beard out for about a year. What happened is, at that time, I was trying to do this graphic design business or design business, and I would go to networking events and everyone would call me Duck Dynasty or ZZ Top or Grizzly Adams. Those are super cool dudes. They've got epic stories as well. As an individual, I don't identify as those kind of guys. I've got the softest hands you could ever imagine. I never touched an axe. I ended up attending this event where I met other dudes like me who are other entrepreneurs and designers and doctors and lawyers and dads. I realized there's this whole community of guys that do not fit the traditional stereotype of a bearded guy. That was the inspiration to kind of call myself an urban beardsman. Stephanie: I like it. Eric: Beardbrand was going to be the community to unite urban beardsmen and give them the tools they needed to feel confident about rocking a beard. To us, the tools don't mean just the grooming products. They mean, videos. They mean blog posts. They mean style inspiration. They mean community. Over the past eight years, we've been rolling all that out. We've gotten an epic blog and a YouTube channel with over a million and a half subscribers. We've got a private community where we connect with people. We've put on conferences for our customers to be able to connect in person. We've really worked hard to support our audiences, support our customers. I've got two business partners. We're completely bootstrapped. We have no debt. We have no outside funding. We've been able to grow to a nice size seven-figure business. Stephanie: That's amazing. Congrats on all those YouTube followers. How do you think about utilizing your content to sell your products? Was that an idea and a strategy from the beginning, or was it more organic, where you started on YouTube, and then you're like, "Well, now, we have all these followers, we should launch a product as well?" Eric: Yeah, if we'll hop in our time machine a little bit more. We launched 2012 as a blog, a Tumblr page, which I don't think anyone's ever heard the word, "Tumblr," five years [crosstalk 00:03:53]. Stephanie: Long time. Eric: We had a Tumblr page. Then, we also had our YouTube channel. This time, it was just me, as kind of a side project. I'll make a couple of posts on the blog. Then, I would just re-blog some things on Tumblr to make it look active. I think I did six videos on YouTube. It's not like, in that first year, we really built this thriving community. I think we had 300 subscribers on YouTube and just a couple of thousand visitors to our blog. It was enough that a reporter from the New York Times saw the blog and kind of quoted me as an expert. Stephanie: That's awesome. Eric: We utilized that opportunity. I convinced two of my friends to go into business with me, and said, "Hey, why don't we turn this blog into an e-commerce store?" We found a product. We started reselling it. We literally launched the website a day before the New York Times article went live- Stephanie: Wow, perfect timing. Eric: [crosstalk] a couple of days. That was kind of the spark to the business to really give us the energy to continue. Then, I had the vision that Beardbrand, the Urban Beardsman, is going to be like how Lululemon is to people for yoga or Vans shoes is to skaters. Beardbrand and the Urban Beardsman was we're going to serve these urban beardsmen. I always visualize that as apparel or accessories or clothes. I really didn't have the industry knowledge to be able to do that, and the margins are so tight on there, and some seasonality that we found grooming products was going to be that product that united the community. Eric: After, I guess, a year or two of failure after failure after failure of trying to get apparel up and accessories up, we finally admitted that we're a grooming company. For us, the content that we've created was more of not to drive sales. The products we have allow us to share our word more. We sell products as a way to kind of expand our voice and to grow our content, not as a way to create content to sell products. I think we're one of the companies that kind of view it a little bit differently. Stephanie: Got it. How do you utilize newsletters and reaching your subscribers once you have them or engaging with buyers or prospective buyers? I think I've read about some newsletter strategy that you have from day one, everyone kind of starts out in the same place to go on the journey with you. Is that still accurate? Eric: Yeah. We utilize Klaviyo to, I think they call it flows, where you have these series of emails that you send out when people join your email list. We've launched that, I think, in 2015. That's been really good. When you think about building a business, as much as you can automate and build systems and processes, then the more you're going to be able to scale your business and the more traction you're going to be able to gain. Eric: This series that we opened up with is really like an education series. I think it's a 5 or 10-part series where we teach them how to care for their beards, teach them how to care for their hair. A lot of guys still don't know how to shampoo and condition your hair. Basics like that where, honestly, they've been doing it wrong, but there's opportunity for them to improve their techniques and, ultimately, get better outcome through their journey. That's been big for us. Then, at the end of the flow, we give them a little thank you product, or free shipping, or something like that for taking the time to invest in themselves. Stephanie: Got it? Are there any best practices you would recommend other e-commerce sites when it comes to utilizing that newsletter or where you're like, "Conversions were high when we did this," or, "They were lower when we did this," or, "That thank you product really does help drive future sales," any insights around that? Eric: Yeah. A couple of things that we've found that work over the years is we have a product that is not available on our navigation. It's kind of a hidden kit that is only available to people who join our newsletter. Stephanie: Interesting. Eric: The retail value of that kit is $50. We give them a pretty aggressive price point to be able to get on board. It's kind of like a tester kit, sample kit, so they get exposure to a lot of our products. We found that that works really well because we can say, "Hey, get this tester kit, try all of our products, use these products as you're learning about the things that we're telling you, then, in two weeks or a month or whenever, when you go through the products and look to re-up them." We found that that works really well at getting people into the ecosystem and trying our products. Stephanie: Very cool. Eric: What other best practices do I have? For us, it's so much about content. I think a lot of people really err towards sales and discounts and buy from us and chest thumping. That's really not our style. I would challenge people out there to think about how you can bring value to your audience's lives. Then, if you bring enough value to their lives, then, kind of the whole Buddhism karma thing, it will come back to you. People will end up buying from you. We kind of have that outlook on the world, that if you do good things, good things will come back to you. Stephanie: Love that. How do you think about your buyer experience and making that personalized and unique to all your customers as they come in? Eric: We've invested a fair amount into our packaging to our products. The unboxing experience is nice. We use nicer primary packaging, which is going to be your bottles and your labels and your caps and all that. Then, we use nicer secondary packaging as well. When they actually get the boxes and they open it, it's pretty nice. In addition to that, we're working with our own 3PL or a third-party logistics, our own fulfillment center. We make sure that we work really closely with them that they wrap it kind of to our specifications. There's a nice little unboxing experience, a little bit of tissue paper, and a Beardbrand sticker. Then, we have what's called a thank you kit. Within this thank you kit, we have a little booklet. The booklet usually changes every quarter. For instance, one quarter, it was a book of reminders, which are kind of my nine reminders that I tell myself in life as I face adversity. Stephanie: That's great. Eric: Daily planning. It's all tied around our core message or our tagline, which is keep on growing. We're trying to, again, bring more value. You buy from us and, not only did you get great products, but we brought you a little more value outside of what the products can do. Hopefully, by delivering this experience, we can grow through word-of-mouth and loyalty and customers who want to stick around, rather than kind of going on to the next hot thing. Stephanie: I was just going to say I could see that adding to that viral experience by giving people those little presents that are really fun to share, then, just engaging with more customers because of that. It's really interesting to hear about. Eric: I'll tell you this. If you're trying to build a bootstrap company, the reality is you've got more time than money. When you're cash-strapped, you've got to think of creative ways to be able to grow the business without capital. One way to do that is word-of-mouth. You can't incentivize word-of-mouth. You have to really just truly focus on such an amazing experience that your customers want to talk about it. When you have that mentality, not only is it healthy for your business, but it's going to be healthy for your growth. It's just kind of a win-win, and the world's a better place because you're bringing that much value to the customers. Stephanie: I completely agree. Are there any success stories or big failures that you've had come from trying to generate that word-of-mouth and getting people to spread the word? Any advice around that? Eric: It's actually not a metric that we really track or keep an eye on. It's just more of a philosophy internally of just being customer first. I think, to a certain degree, you do have to integrate data. We used to include a little sample of products for people. We found that those samples weren't driving any additional sales of those products in a significant way. When you look at that, you're like, "Well, are you actually bringing value to customers if you're giving them something for free that, maybe, they didn't want or they didn't want need? Stephanie: How do you track that, or how did you know that people weren't really using it or that wasn't helping drive sales? Eric: We would send a beard wash, a little sample, a one-ounce container. Then, we would look at if there's any increase in sales of beard wash. Your data is always going to be muddy, especially when you're a company that's our size and really small. We fundamentally can't get the data. You do have to go off of a certain gap. You have to also look at, "Well, every sample is costing us," let's say, it's $1. Every order is going out, five orders is $5,000 a month. Then, if we're not seeing a boost of really $10,000 in sales to justify the cost of that, then the margin and the future order, then, you're not building a sustainable practice. Again, as a bootstrap company, you do have to think about your marketing efforts being sustainable and being able to exist on their own for a long time. Stephanie: How do you think about creating these marketing campaigns, whether it's YouTube videos? How much do you guys put out per day or per week? To me, that feels like it could be not sustainable if you don't have the right team in place, the right video crew. Especially right now, I'm thinking everything with COVID-19. Has it been hard to keep that content going out and recording the videos and launching them on YouTube and everything? Is it still pretty good, because it's a remote team doing that? Eric: It's been a really long, hard journey. To the listeners out there who are hearing our story now, eight years in is like we've had eight years to build these processes and systems and relationships. You're not going to be able to do all the things that we've done on day one. We're still cranking out about six videos a week. We've been able to do that by leveraging multiple personalities, just like you guys have multiple shows. We're kind of the same thing. It's not all on my shoulders, and worrying about me getting burnt out. Eric: We have four different regulars on our smaller channel called the Beardbrand Alliance. Then, we have, probably, maybe 4 to 10 barbers who will hit on to do these kind of barbershops style videos. We've been able to really spread the burden of the YouTube channel. Then, we have an in-house video editor who is constantly video editing. He's a machine. Then, in addition to creating these YouTube videos, we do a fair amount of advertising in the video form as well. We do have video editing handled by our ad person as well, our advertising coordinator. She'll be cranking out content that way as well. Video is great, man. I would highly suggest anyone listening that if you invest in video, you could have a pretty good competitive advantage in the marketplace. Stephanie: I completely agree. Video is where it's at. How do you make sure that your videos and your content is found? A lot of people create some really awesome stuff and then be like, "Now what? I've only had one view on it," or, "I don't know how to get people to view this video, and then take the action that I want afterwards, which is, probably, buying one of the products that I'm highlighting?" Eric: There's two answers to that. One answer is you pay for it. Really expensive, but if the content is truly remarkable, for instance, when I shaved my beard off, we filmed it. We created a 45-second ad on YouTube. To get exposure on YouTube through their advertising system, if the video is engaging, it's extremely cheap. I think we're paying a third of a penny per view. Stephanie: Yeah, that's cheap. Eric: A million impressions was, I don't have the calculator in front of me, what does that look like? Stephanie: Something great. Eric: Yeah. It's astronomically inexpensive. At the same time, you may not be targeting the right people. Now, organically, I think YouTube is going to be the platform to go, because of how they recommend videos. It's a little more evergreen than Facebook. There's certainly opportunity on Facebook and Instagram, but I'm not as strong on how to perform there. It comes down to, in the early days, the reality is no one's going to watch your content. You think that sucks, but the reality is it's awesome. Maybe, you'll have one person or two people or 10 people watch it. Then, you'll get a couple of comments. Well, you'll use those comments to get your content better and better and better. Then, by the time you've built a larger audience, you've kind of figured a lot of these things out, so you're not really damaging your audience. You think what you create is great, but the reality is it's not. Stephanie: I agree. Eric: [crosstalk] will be shared. By creating and by doing, you get the hang of it, you get more natural in front of the camera, or you get more natural on the editing process and telling the story. As you learn, it compounds on itself. If you're thinking about getting into organic video on YouTube, then plan on having, really, 20 or 50 videos that you want to produce before you really even see any kind of traction. I think it took us three years before we got 10,000 subscribers. Then, again, it compounds and you learn and create more content. You create more content faster that's more in line with what people want. Then, all of a sudden, we're able to grow to daily content and getting 10,000 subscribers a month. It takes time and it takes learning. There's a lot of insights in YouTube that you'll need to learn as well. Stephanie: I think it's really good as a reminder to kind of detach yourself from the content, because when you put something out there, it's like, "It's my baby. That was my best one yet." I remember when we were starting our company, the first couple of episodes we did on Mission Daily, Chad and myself, it didn't get any downloads. It's a brand new podcast. No one had heard about it. We didn't know how to grow the podcast at that point. I remember thinking, "That was my best episode yet. I'll never be able to do something that good again." Now, I look back on it. I'm like, "I'm very glad no one was listening to those episodes because they were not good and the audio wasn't great." It's just a really good reminder to put stuff out there more in the learning phase. Then, eventually, you can move into the really trying to find those subscribers and followers, once you get to the point where you're a bit more experienced and you've tried a bunch of things out. I love that. Eric: Yeah. So much of it is just the process, for a podcast, making sure you can line up those guests and you can post it early. That's hard work. It's easy to get the first one done, or maybe, the first couple and queue it up, but to also record and organize and plan is a very big challenge. Those are the things that you'll be solving when your audience is small. Then, as you solve those, that allows you to grow your audience. Stephanie: I agree. When it comes to solving problems when you're small, when you got the visibility from, I think, you said New York Times, and I think I read Shark Tank, when you got that visibility, were you ready? Was your website ready, your product ready, your fulfillment strategy ready? How did that go when you got those bumps in visitors? Eric: New York Times drove about $900 of sales. Stephanie: That's huge, just kidding. Eric: It actually is. I think we had $100 worth of product. It was nine times our inventory. Fortunately, we were able to solve all that. You have a lot of growing pains, I think. This is my first successful business. I had no relationships. We didn't know where to get our wooden boxes made. We always dealt with supply chain issues. Really, the first two years, as we were growing rapidly, it was just always like a fire was being put out. Then, eventually, we moved to quarterly planning, which has helped significantly in managing our inventory. Stephanie: What was the Shark Tank experience like? I haven't talked to anyone who's been on there yet. Eric: Oh, no. I'm your first breaking your show. Stephanie: Yeah, you're my first. Eric: That's virginity. This was 2014, I believe. Yeah, it's got to be 2014. Halloween 2014 is when the episode aired. A lot of things may have changed since that time. I know Shark Tank was really popular at that time. A lot of people were watching it. It's a very stressful process, because during the whole campaign, not only 80% of the people who go through the whole process are going to end up on the show. You could end up investing a lot of energy, a lot of time. You could pay a lot of money to build out this fancy display case. You could fly out there, step away from the operational needs of your business in a time where your business really needs this stuff. Then, do all that and not make it there. Eric: We always knew there is a good chance that we didn't make it there. Subsequently, we didn't put too many resources into Shark Tank. We kept our display stand, I think, we paid $300 to rent some furniture. Then, we put out some products there. It's just me going on show. It wasn't my business partners, so they could kind of focus on building the business and I just kind of focused on the Shark Tank pitch and stuff like that. Then, you get up there and it's stressful, not just because of pitching to the Sharks, which is how they make the show seem, but also knowing that whatever you do is recorded in front of seven million people. If you make a mistake, you're like, "Seven million people want to know about that." Stephanie: It's replayed over and over again, and reruns. Eric: Yeah. And, fortunately for us, I feel like Shark Tank, they did a pretty accurate representation of how I felt the conversation was. They're cutting down 45 minutes to seven minutes. They're trying to craft a story in seven minutes. Then, the hard part is all five of those sharks, they talk to you all at once and you don't know that on the show coming in. They all ask you a question right at the same time. When you see the people pitching and they're looking all over the place, it's just because five people are talking at once and they're just trying to figure out who to talk to. Stephanie: Wow. Sounds very intimidating. I do love Shark Tank, though. I hope to try and find your episode and see if I can watch it. Eric: Yeah, do it. It was a fun experience. It was like how your heart can race and go on through a roller coaster. It was really that. The whole time, it's just like the adrenaline is pumping. I'm not very good with words. I'm kind of dyslexic. I'm just hoping I'm not saying anything too stupid. I think it was a great experience all over. I think what they're doing for entrepreneurs is great, too. Stephanie: I completely agree. In early days, were you completely selling on your website? How much of it was selling direct to consumer versus wholesale, versus, maybe, utilizing Amazon would your sales strategy look with your brand? Eric: We've done a little bit of everything. We started off direct to consumer. We actually started off, as I said, as a simply an e-commerce retailer. Another people's products in the early days, until we're able to develop our own products. As we were able to get traction, we had passively, companies like barber shops and salons and pharmacists who would want to sell our products. We would kind of sell to these smaller retailers. It was never a core focus of us to bring on wholesale retailers. Eric: Then, we would get on the Amazon. This was the early days of Amazon. Hindsight is 2020. We probably missed a fair amount of opportunity on there. We really always focused on selling on Beardbrand.com. Amazon was never more than 10% of our sales. After a couple of years, we ended up pulling off of Amazon completely. You can't get our products on Amazon now. That's been a great decision for us. Then, we also brought in Target as one of our wholesalers. That happened 2018. Today, we're about half the retail and half direct on Amazon, and on any other market. Stephanie: Very cool. How do you think about separating yourself from your competitors? Not that I watched the beard space often. I don't have a beard that I know of, but I have seen a lot of beard oils coming on the market and just things focused around that. How do you separate yourself from the competitors, especially since you're an e-commerce site and you don't have a bunch of retail locations or not in a ton of places? How do you show that value on how it's different from other products? Eric: The reality is, you're always going to have a competition. If you have no competitors, then your competition is ignorance. We've kind of always embraced competitors and knowing that we're going to have competition in the sense that it's going to force us to elevate our game and provide such an amazing experience to our customers, that they'll have no option other than to go with us because we are the best. With that mentality, we've also come to terms with certain things, like we're not going to be the low price product on the marketplace. If that's the game you want, then we're not going to be a good fit for you. Eric: We try to be really clear about the value that we bring and the things that, maybe, we're not great at. There's always going to be trade off. To us, I think we do a great job because we bring all that value to our customers. Like we talked about earlier in the show, the content marketing, the education, the blog articles, the email flows, the YouTube videos, the customer service experience, the unboxing experience, I think, all of those things are what makes Beardbrand a different company and why someone would want to buy from us. If they're just some dude who doesn't really care and they just want whatever's cheap, then Beardbrand probably isn't going to be the best product for them. Stephanie: I like that idea of being upfront with, "Here's what we sell. If you don't want quality, then, maybe, go somewhere else to find something different." Do you market differently based on that? Eric: To be fair, there's other quality products out there as well. I don't think there's quality products out there that also do the education, that also do the packaging, that also do the customer experience. There's so much more to a business than what's in the package or what's in the box? I think a lot of companies get so focused on their product. Anyone can rip off your product. They can exactly copy your product. They can come down to an exact tee. Then, if that's all you're standing on, what do you have there? Then, it becomes a race to the bottom for the price. Eric: When you build a business, you have to think beyond your product. You have to think about, "How can I really bring value to my customers that is beyond the product?" The product alone is not going to do it. Stephanie: Got it. I love that. How do you think about building better business models for other e-commerce companies? I was looking at, I think, on Twitter, you had an experience with West Elm. I guess they had marked down a table. You kind of went through how e-commerce companies need to figure out how to develop better business models. What is your advice around that? Maybe, you can highlight that experience a bit, because I didn't read the whole thread. Eric: Yeah. A little background story. I bought that table, that table I'm actually using for my podcast studio. 25 days later, they put on a sale where I could get the exact same table, but it cost me 75 days, or excuse me, $75 less. As a consumer, that's kind of frustrating, because you kind of feel like an idiot for not waiting out. I would have waited 25 days to save 75 bucks. Personally, I don't think that's a good experience. I recognize they're doing sales, they're doing weekly sales, and some sales are better than others. To me, I feel like, have some kind of policy in place where, within a certain time frame, whatever you feel is appropriate: two weeks, a month, two months, whatever, that you can guarantee the offer that you're giving to them. Eric: It doesn't even have to be a money back guarantee. It could be a store credit guarantee. Then, I think that's going to encourage a lot more confidence in the consumers. Also, consumers will be more likely to buy from them again, because if you have the alternative where you're just like, "I know you screwed; you missed out on this one; you already bought it," then, it's like, "Well, next time, I'm just really going to wait. I'm just going to wait until I know there's an incredible deal," or, "I'm just not going to buy at all because I don't want to feel like I want to be made a fool again." Eric: You run the risk if you're running sales all the time and they're not the exact same sale. Not everyone will feel this, but some people will subconsciously be feeling this. There's quick and easy ways to really just guarantee the experience about it. I don't want to tell people how to run their business and their policy. I'm not mad at them. I'm just kind of calling them out that I think they could do better. Then, to be fair, West Elm reached out to me on Twitter and they offered me store credit. Stephanie: That's nice. Eric: You don't want to have to really fight and argue for that. You just want them to make it right. Stephanie: I think that's a good point, though. Also, that big brands are looking to smaller companies and the individual consumer to kind of learn from. That's a really good point of making the consumer feel good after a purchase and not having buyer's remorse. I've definitely had that experience before of buying something and then seeing a discount afterwards, and then waiting the next time, and then there's no more inventory. Then, I just never go back again. Those little moments definitely matter. Eric: Well, then you think about, the whole West Elm experience for me is, I couldn't do a live chat or email them about it. I had to call them. Then, I called them and I was on hold for 25 minutes. Then, after 25 minutes, they pretty much told me I could ship the thing back and then buy a new one, but shipping would not be reimbursed. Financially, it wasn't going to make sense. It's like, "Okay, this is how you're going to do it." Then, as a small company, you think that these large companies have all the advantages because they can buy in bulk and get better prices. Well, a lot of people don't buy based on products. They buy because they want to be able to reach out to you and talk with real person, not be on hold for 25 minutes. Those are the things that I want you to think about as you build your business, how you can compete with Amazon and how you can compete with West Elm and Walmart and these giant companies out there. Stephanie: I love that. What's one thing that you wish online sellers would start and stop doing? I'm asking you this question because I see you're big in the e-commerce community, always talking and highlighting different e-commerce stores. You've probably seen a lot of best practices that sellers do, and some things are like, "You should just stop. That's not good." Eric: Going back, I don't want to tell anyone how to run their business. There's a lot of ways to build a business. It kind of comes down to who your audience is and what they're okay with. A couple of things that we've always avoided is we don't want to do pop-ups. There's no pop-ups. There's no tricks. There's no immediate discounts. One of the things that is a pet peeve of mine is, "Here's a pop-up. Do you want to save 10% on your next order?" Then, they click x or, "Close out of this if you don't want to save money," something kind of condescending like that; or, with the little spin wheel. I think a lot of these has become a little hokey. Eric: The people selling those software as a service thing always claim that they work. We've actually cut a significant amount of our third party plugins, just because it made our websites so bloated. Stephanie: I was reading about that, how quick were you able to get your website down? I think I saw four seconds. Eric: Oh, my god. We were doing a speed test on our old website. The homepage on the desktop, I think it would have been in the 40 range score. Then, I think the mobile side would have been in the 20 to 25 range, the score [crosstalk 00:34:34]. Then, we essentially rolled out a new website template, a new website theme, killed all the third-party plugins. The new speed is now around 77 for the desktop and around 40 or 45 for the mobile. Stephanie: That's great. Eric: I don't know what that is in actual load times, but in terms of data, according to Google, it's a significant increase. Some of our blog posts would take 10 seconds to load. We really just went and found the stuff. It wasn't just the theme, too. We had some images that we uploaded, which were two megabytes in size, something ridiculous like that. It's just kind of like eight years into having a business and a lot of people putting their hands into the business, it gets a little you lose sight of things. It's always good to circle back every once in a while. Stephanie: I think doing that audit is really important, because like you said, after many years, people are implementing their own things without thinking about the long-term strategy of it and how it might impact things. I think, web chat is one thing where a lot of websites have the digital chat, but that increases the website's load time by a ton. Maybe, people don't even fully utilize it. They would rather call or send an email. It's good to just do that audit, I'd say, at least yearly. Eric: We had one of those live chats. I think it presented some issues because, sometimes, a little pop-up would block information or block the "Add to Cart" button. Stephanie: Oh, man. They're like, "I'm just trying to buy and you're not letting me." Eric: Exactly. It's just like as templates get uploaded or themes get updated, things get reverted. We killed it. We no longer have that JavaScript burden of loading. Those chat bots are fundamentally the things that slow down your page load speed the most, I've seen. We haven't seen any drop in conversion rates or sales. Then, in addition to that, the alternative, what we did is we just moved to a phone number that people can text. I think what we're getting is people who are more serious about needing advice rather than just kind of casual looky-loos who see a little pop-up and they're like, "Oh, yeah, da-da-da-da-da." Stephanie: I that, looky-loos. Eric: That's what my mom calls them. Stephanie: That's good. What metrics are you paying attention to most? You've mentioned conversion rates. Now, we've talked about website speed. Are there a certain set of metrics that you pay the most attention to? Eric: Yeah. I'm like your typical A.D.D. entrepreneur. Being in the details on a daily basis is really hard for me. Everything I do is kind of on an ad hoc basis. When it comes to YouTube, the things that we really look at are our watch time and our click through rate. They're going to be the big indications if a video is going to be successful or not. Then, on our website, really, I'm the top level kind of guy, so I'm looking at revenue. I'm looking at orders. Then, on the ad hoc level, I look at how our blog is converting, then, how our traffic outside of our blog, two of our stores is converting. Then, our page speed has been something that's been a pretty big metric for me, lately. Then, there's so many other more metrics that I should be looking into that I'm fortunate that we have team members who are looking for [crosstalk 00:38:09]- Stephanie: Do that for you. Eric: ... email performance and how those are doing. Stephanie: Is there any themes around either video content that you put out or blog content that you've seen, certain types of videos? Maybe, funny ones convert better or more how-to blog content converts better. Any best practices around releasing content in a strategic way that will actually create a future buyer? Eric: Our strategy is to leverage YouTube's organic growth. To do that, you need to have the viewers want to watch more of your content and stay on YouTube. The strategy isn't really so much of, "Hey, buy this," or, "Be aware of this." It's more of get awareness of the brand. We try to integrate a lot of branding on our videos. We put our taglines on every video, to keep on growing and change the way society views beardsmen. All those call outs in the lower thirds. Then, we try to integrate product placements in our videos as well. It's just bringing awareness to it and not driving people off the YouTube. Eric: Subsequently, when you do that, you're less concerned with any kind of direct sales that you're getting from videos. One great plugin tool that we've used on our Shopify store is called Grapevine. Grapevine allows you to have a simple one-question survey that you put at the end of after they've purchased. We use that to say, "Hey, how did you first hear about us?" We have about 20 different options, from Shark Tank to our YouTube channel to various YouTube personalities. We found that 40% of our customers have first found out about us from YouTube. Eric: Being able to attribute that any particular video, we can kind of segment it a little bit. 18% of it is from our barbershop videos, which was a fair amount. Beyond that, you just kind of have to trust the process. Stephanie: Got it? Do you find influencers in the space? When you're talking about having these barbers do these videos, do you find someone who already has a following? Do you kind of create that following organically through under your brand? Maybe, it's someone that no one would have ever known about, but you just know that they're a great personality to do the video? Eric: A little of both, I would say. One of our most or one of our longest tenured relations, well, we've got a couple of long tenured relationships with influencers, Carlos Costa. We reached out to him back in 2013. He's been with us kind of since then as an influencer for the brand. Then, he's grown to make videos for us. Then, he reached out to Greg Berzinsky, who at that time, I think he had, maybe, 20,000 or 30,000 followers on Instagram. He's a big believer in the brand. Eric: We try to find people who really love your brand, who love the products, who love what we're doing. It's just easier for them to be excited about it. We also try to work with smaller influencers, those who are, maybe, still getting established, or who have a following because they're not influencers. Tobias van Schneider is another one. He's another business owner. He's got other businesses. He's not making money from promoting products. He's more likely to talk about our products and not ask for compensation, which is something that you need as a bootstrap company, to be able to make your dollars go far. Eric: It's been a little bit of that. Then, we have had employees at Beardbrand who are like, "Hey, man. Get on camera. Talk about this. You've got a great beard." They've done that. We've done a little both and have had success and challenges and both processes as well. Stephanie: That's very cool to experiment with all those different types of models. I like the idea of having the employees be the influencer. I know that a lot of companies in Asia are doing this. I haven't seen a lot of companies in the US fully utilizing that model of creating micro-influencers within the company, and then developing their own followings. That's just a nice organic way to do it. Having someone who is an actual expert on the product without being too salesy, because they're not a salesperson. Eric: We try it, too. If you look at our Instagram account, the Beardbrand account is replying to comments, you'll always see Sylvester. He's replying to him. He'll sign his name, or whoever's replying to a comment. On YouTube, they'll sign their name. We're totally in favor of get to know our people, get to know our copywriter, Mike, and get to know our growth marketer, James. Eric: Again, we talked about how you compete with Amazon. Amazon doesn't have a James. They don't have a Mike. They don't have a Lindsey. They don't have a Jordan. They don't have Chandler. But, we have those people. The more we can help them get to know the team. Then, the risk is if you just work with one person within your company, then, that person could hold you hostage or quit or leave or getting a DUI or do something like that. If you have 10 or 20 different people on the regular who you integrate into your content, then, in the natural course of business, as people move on and things change, then, you'll still be able to move forward. Stephanie: In a world where everything is becoming automated and you always know you're talking to bots, I think it's actually nice how certain business models are kind of flipping that. You're mentioning about developing a relationship with the person at the company where you are used to seeing the same name and you kind of are developing an Internet relationship with someone at the company that you trust and grow to love. I like how that model is kind of reversing a bit over the past year. Eric: Sylvester, who I mentioned, that's his full time job, is he runs a community. His responsibility is to build those relationships. He's heading up our private forums. He's putting on these events. He's interacting with people on Twitter and Instagram. As they chat on Twitter, and as they chat on YouTube, and they see the same name over and over again. They start to learn about him. Eric: In our emails, we'll have a photograph of him. We'll talk about him. We'll talk about the style. People will start to trust his input because, obviously, me as the founder, a lot of videos or a lot of views to those videos, a lot of people want to come and talk to me, but I can't interact with 40 people a day and still run the company and have sanity, really. Well, to scale up what I bring, and not only that, Sylvester's got way more incredible style than me. He's a lot more empathetic than me. He's able to really provide these people great advice in a way that I cannot. It brings a lot of joy to me to be able to offer that to our audience, and also, that Sylvester is able to do what he loves. Stephanie: That's really fun. To zoom out a bit, go a little bit higher level, what kind of digital commerce trends are you most excited about that are coming down the pike right now? Eric: Probably, the thing I don't follow too much is the trends. I feel like we just kind of fall into them. SMS is something that a lot of people are talking about, and something that we've actually been doing for a good half a year now. We do it in a way that, I think, most people aren't doing it. Most people see SMS as just another channel to market and throw sales and discounts. That drives consumers crazy. If I see someone marketing to me on SMS, I'm just like, "You're dead to me." How we're using it is as style consulting. You text us, send us a photo. Stephanie: That's good. Eric: SMS is perfect for that because you got your phone there, take a selfie, send it to us, we can tell you where you're trimming your beard, how your neckline is coming in, what your hairline looks like, and what kind of hairstyle will work for you. I think that's an excellent way to use SMS. It's funny. Once we started using SMS that way, the company we work with, Emotive, they actually changed their whole marketing position to be more about style consultants and beauty consultants, and things like that. Stephanie: That's funny. Eric: I want to take full credit for that, but I would like to say we had a little bit of influence in the way that they're selling us on this. I think that's better for the consumer as well to be able to connect with them on a one-to-one kind of consultant basis, rather. Stephanie: How do you make sure they stick with your brand? I can see them, maybe, not having the expertise, like you're talking about, how you're trimming your beard wrong, or what kind of product you need, because of whatever they see in the photo, how do you make sure that they stick with your brand guidelines and make sure they're speaking in the way that you want and they're recommending things correctly and not giving bad advice? Eric: This goes back to our core values, which are freedom, honor, and trust. Part of the hiring process is making sure that we hire people who align with these core values. Then, it's not blind faith with trust, but through experience and interactions. I know Sylvester. I know his style. I see him show up every day in the office and what he's wearing and how he's behaving and how he communicates. It's like, "Dude, man. Go at it. Be yourself." Our brand standard is communicate to our customers in a way that you communicate to your friends. Those no corporate speak, nothing. Eric: If you're a goofy guy, talk goofy. If you're a serious guy, talk serious. Be yourself. You are going to have different experiences. Interacting with Sylvester is going to be different than interacting with Matt. They're two different people. That's totally okay. Stephanie: That's great. Are there any other channels that you're utilizing or looking to utilize over the next couple of years? Eric: For us, our goal has been, again, going back to me being an A.D.D. entrepreneur, you try a little bit of everything. The past two years has been fixing all of my A.D.D. new channels that we've been in. We killed Amazon. We killed selling in the Europe. We've cut marketing channels. It's really how do we get better at the channels we're in? How do we get better at Facebook marketing? How do we get better at Instagram marketing? How do we get better YouTube content? Eric: Like I said, we have a newer, smaller YouTube channel that we're trying to grow and build that awareness. In terms of just completely introducing anything that we've never done before, like TV advertising or radio advertising or podcast advertising, we're going to be staying away from that until we feel like we've completely capitalized on the opportunities of the channels we're currently in. Stephanie: That makes sense. I think killing projects and platforms is a good first step to making sure that you can focus on what's actually working to, then, move into a new channel around the tryout. It sounds like a good strategy to me. Eric: I'll tell you, it sucks, though, when you kill something and then you don't get better at the thing you're supposed to get better at. Stephanie: Yeah, that's a big bummer. Eric: We've done that. Stephanie: That happened a few times? Eric: Yeah. When we pulled out of Europe, Europe was about 20% of our business. We did this March 31st of last year. It was about 20% of our business. The intent was with the new focus of not having to deal with multiple fulfillment centers and different time zones and multiple stores and things like that, that we could get really good at serving our customers. Subsequently, 2019 was a terrible year for us. We weren't able to capture the lost sales that I thought we'd be able to by having more focus. We've had to really analyze. It wasn't so much selling into Europe. That was the thing. I think it was more of the internal structure of our team and kind of red tape that got put in place after seven years of business and systems and processes that kind of built up on itself. We should have taken an axe to all of that, rather than, maybe, potentially taking an axe to the UK channel. Stephanie: Got it. Is there any big initiatives that you undertook that you were like, you talked about internal processes and structures, is there any one thing that led to kind of riding the business back to where you wanted to go after the whole shutting down Europe? Eric: Yeah. Transparently, we had the worst fourth quarter we've ever had. It was a bloodbath. We were just losing a significant amount of cash and just burning through cash. We just had to make hard decisions about the business. When you're hemorrhaging money, you're not profitable, we had to scale back to 15. A leaner team means, "Hey, we're no longer going to have people proofing your work anymore. You're going to have to be responsible for your own work-end. You're no longer going to have someone who's kind of being the quarterback of the marketing team. You have to kind of interact directly with your audience, or your coworkers." By scaling back the team, you were almost, by necessity, forced to cut a lot of that red tape and focus on getting stuff done. Stephanie: Super important. All right. At the end of the interview, we'd like to do a lightning round, which is where I ask you a question and you have under a minute to quickly answer whatever comes to mind. Are you ready, Eric? Eric: I am electrified. Stephanie: Woo-hoo. All right. What's up next on new product launches coming to Beardbrand, if any? Eric: Our big thing is killing scent confusion or ending scent confusion. We want to provide head to toe fragrance and matching products. We don't have anything in your midsection. That's a little hint of a product that will be coming. Stephanie: Fun. I'll have to stay tuned for that. What's up next content or video-wise that you're excited about producing or creating next? Eric: We want to systematize our barbershop and winding in five different barbers and record over the course of a week, which would be a new way for us to perform. I can't wait to do that, but, this whole quarantine has got to end first. Stephanie: That sounds really fun. What's up next on your reading list? Eric: I hate reading. Stephanie: Podcasts, audible, anything? Eric: I hate reading. I'll tell you I just finished the book called Rocket Fuel which talks about integrators and visionaries. It was the one book that I've read over the past year. I'm just going to piggyback off of that one. Stephanie: I don't like it. What's up next on your Netflix queue? Eric: Again, man, I just had a baby five weeks ago. Stephanie: Congrats. Me, too. Eric: Oh, no way. Stephanie: Yeah. I had twins eight weeks ago. Eric: Oh, poor you. Stephanie: Poor us. Eric: It's got to be crazy, right? We're in the quarantine. Stephanie: Yeah. No Netflix for us then, huh? I don't know. I watch Tiger Kings in my off time when they're sleeping. Eric: My answer is a lot of primitive survival type of videos on YouTube. That's my go-to content that I consume. Stephanie: That's great. All right. A little harder one, what's up next for e-commerce pros? Eric: I think there's going to be a move away from Amazon from both a consumer perspective and a seller perspective. I think Amazon is really kind of twisting the screw in a lot of people. There's going to be a little bit of blowback from that. Stephanie: Completely agree, especially with everything going on right now where Amazon's picking what products are essential. I think they just said that they are going to be optimizing for its margins. Instead of showing people, maybe, what they want to find, they're going to be showing people products that have higher margins. I can see that also happening. Eric: They're also neutering a lot of people in the affiliate space where they just literally cut their commissions in half. Stephanie: That's not good. Eric: [crosstalk 00:54:51]. Stephanie: Well, it sounds a good prediction, then. Eric: Yeah. Less people will be pointing links to Amazon, I think. Stephanie: All right. Any final words of advice or wisdom, Eric, that you want to share before we hop off? Eric: The big thing I always like to tell people is, in life you always have doubts and questions about what you need to do. The reality is you need to just go out there, execute, and do it. Action, a lot of times, is better than no action. Just go out there. You know what you need to do. Go and get it done. Stephanie: Yes, do it. All right. Thanks so much for coming on the show, Eric. It was a blast. See you soon. Eric: My pleasure.  

The alcohol industry is worth more than $250 billion in the United States, but the bulk of that money is being raked in by the biggest corporations and distributors with very little room for independents to break in. But Haus has found a way to be a disruptor. On this episode of Up Next in Commerce, Haus founder Helena Price Hambrecht hopped into her recording studio (AKA her car outside the Haus warehouse) to explain how her small aperitif company has taken advantage of deep industry knowledge, organic growth, and the complete ownership of the supply chain to build an Ecommerce-based alcohol experience that the younger generation is embracing.  3 Takeaways: Adding educational elements to every touchpoint is key to helping customers get the most out of products  Now is the time to invest heavily in the product because it is only with a good product that you can have truly excellent organic growth There are risks involved with being a fully vertical company, but the reward is the ability to be nimble, have a laser-focus on product development, and allow the ability to adjust to supply chain curveballs with ease 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 --- Stephanie: Welcome everyone to another episode of Up Next in Commerce. This is Stephanie Postles. And today we're joined by Helena Price Hambrecht founder at Haus. Helena, should we call this a happy hour episode even though it's only 11:00 AM. Helena: Every hour it can be a happy hour. Stephanie: I think so too. So tell us a little bit about Haus. I was looking into it and it looks like a really fun brand and it already was getting me excited with some of the new products you were launching. I think one of them was called Lemon Lavender that, like I said, I was ready to order at 11:00 AM. So I'd love for you to detail a bit about your company, and your background, and how you started it. Helena: Yeah, so Haus is an alcohol company. We launched with me and my husband. We co-founded it together. His name's Woody. We live on a farm in Sonoma County and we joke that it's very much the product of a techie marrying a wine maker. And our goal is to create the next portfolio of alcohol products that reflect how our generation drinks and what they care about in food and beverage. Stephanie: Very cool. And how is Haus different from other spirits brands or liquor brands or wine? Helena: Oh God, where do I begin? I think it's interesting because most people don't realize that alcohol can be better than it is. Right? I think alcohol has gotten a pass for a long time because it's a vice. And I think people can just assume, "Well, it's bad for me. So doesn't ultimately matter what's in it because it's just bad." And corporate alcohol has kind of run with that for a long time. So a lot of the products that you're drinking are worse than you think. You're feeling bad, you're feeling hung over when you drink and you think it's just because it's alcohol, but alcohol is only a tiny piece of that puzzle. Helena: In reality, corporate alcohol is made with things that you just wouldn't believe, take wine for instance. You can intervene in your wine production with milk, and eggs, and clay, and fish bladders, and artificial flavors, and tubs of processed sugar. You can engineer it to taste good, but it's going to make you feel horrible. It can be made with grapes that are full of pesticides. Your favorite whiskey might be full of petroleum-based, caramel coloring. It's kind of a racket. And we're a generation that's cared about where our food comes from, where our beauty products come from, is it organic? Is it locally processed? Is it responsibly made? For some reason, alcohol has gotten a pass and we wanted to raise the bar. So we approach things very, very differently. Stephanie: Very cool. So it seems it'd be very difficult getting into the alcohol industry. I was reading a little bit about the three tier system where distributors and bartenders are the gatekeepers and they tell you what to drink. How did you have the courage to get into that industry? And then how were you actually able to become the only direct consumer spirits brand? Helena: Yeah, so I mean, it's really Woody, right? I used to work in alcohol industry, but as a bartender. I wasn't really deep in the production side of it until I met Woody. And Woody is a great farmer. He's been running the family's grape farm for the last decade and he also makes wine, and was making aperitifs when I met him before Haus. And he was doing everything right as a independent wine and spirits guy. His products were in the best bars and restaurants in America. They were in the best cocktails in America. Helena: But because of the three tier system, which is pretty much controlled by corporations, you don't have a lot of leverage as an independent brand. So you don't really have control over how your product is used and Woody would just find that he was a little sprinkle in a fancy 10 ingredient cocktail. So while he could name drop his full accounts, he wasn't moving any product, the drinker had no idea who he was. I was observing this and thinking, "Man, this is not a great way to build an independent brand." And the more and more I got to know the industry, the more I got to know the three tier system, which it's a hundred year old prohibition era laws. Helena: For those who don't know the tiers, which I would assume you don't, it's just distributors, producers, and retailers. So if you're a producer, you have to go through a distributor to get your product into bars and restaurants. And then bars, and restaurants, and retailers then sell to the drinker. Unfortunately, the way the laws have been designed, it's actually allowed corporations to just be in cahoots with distributors. So corporations ultimately decide what you're drinking and it's why you're still drinking Jack Daniels, and Gregger's, and Absolut and you've not really heard of any other brands that are playing in the liquor space. Helena: So for us, we didn't know that there was a way to go around the system. And I started doing research because I was curious about just how our generation was drinking, what were we looking for out of alcohol? Because I was certainly looking for a better alcohol experience. And I saw a huge opportunity. Like I said earlier, millennials are looking for better made products. They care about their health, and their image, and authenticity, and transparency, and convenience. And when you looked at what alcohol was doing, it was almost nothing. So I was really complaining to Woody about this, saying, "Gosh, what a shame that you can't build independent brand, like a Glossier or an Everlane of alcohol because of the three tier system and you have to go through the distributors." And that's when I said, "Actually, there's a loophole that I never thought about until this moment." Stephanie: Dun, dun, dnn. Helena: Yeah. If you're an aperitif, you're typically in the liquor category. You're federally regulated like a liquor. You can't sell direct to consumer. You can't go online, but if you're under 24% alcohol and you're made mostly of grapes, which is a loophole you would only know about if you're a great farmer who makes great base aperitifs, you can go around the loss, you can go direct to consumer, you can sell online. And it just had never occurred to anyone to use that loophole to build a direct to consumer alcohol company. Stephanie: So no one else in the industry found that out until you guys did and you're the first ones to actually be able to sell to consumers directly because you leveraged that loophole? Helena: Yeah. And you know what? We thought that we'd stumbled upon a treasure and that, "Oh my gosh, when other people find out about this loophole, we're going to have competition, which would be fine." But when we were pitching it to folks in the alcohol industry, they thought it was a stupid idea. They could not understand why we would want to go direct and why we would sell online. People are so used to doing things the way that they've been done forever and they just couldn't process that we thought that we could just go on the internet and create a brand and sell something to the drinker because it had never been done before. Over and over and over again people were just like, "Why would you do that? That's stupid." Stephanie: Yeah. That's awesome. And this loophole also lets you guys have a brick and mortar store, right? Whereas you would never see a Jack Daniels store on the streets of New York. But you all could open one if you wanted it to, correct? Helena: Exactly. Yeah. We could open two different brick and mortars in California today. It's state by state. Every state has different laws and it's still kind of a nightmare to navigate. But yeah, we can do so many things that other brands and liquor space can't do. We can be sold without a liquor license. We can sell online, we can do a wine club style subscription service. There's just this whole world that opens up to us. And we were the only people that decided to try it. Stephanie: That's amazing. So what was the first steps looking like when you started Haus and you were thinking about building the website and the experience, like the buyer experience? How do you think through designing that process for consumers who have never done that before? Helena: Yeah, and that was the challenge, right? It's like as a brand, one thing we had going for us was we weren't just two people in class who had an idea and had to create a backstory. The backstory was there, right? We were people trying to solve our own problem and a problem that everyone we knew was having and that was great. And we live on the farm and we make it ourselves, and all of that's hopeful as a brand. But the real challenge that we had was how do we take this type of liquor aperitifs, which has been in Europe for over a century ... it's a style of drinking that's very common in other parts of the world, but is relatively unknown in America. How do we take this type of liquor and make it mainstream? Without having to pitch people in person just through the internet, how do we very quickly educate people on what this is, the problem it's solving, convince them to buy it, get them to get their friends together and drink it together? So that was a challenge. Helena: But for us, our goal was to just approach it as education, right? And bake education into as many touch points as possible, not just through copy on the website, but through photography, through editorial, through different touch points post-purchase, in the packaging. It was really about how can we make the most of every single touch point that this customer has with our product so that by the time that they receive it, they deeply understand it and where it lives in their life. Stephanie: Yeah. I could definitely see the difference from your photography versus a lot of other e-commerce companies. I could see that you were teaching the buyer how to enjoy Haus. I think one thing I saw was as you went from page to page, you had a couple images flash showing how it's being enjoyed at the table, sitting on the table with a bunch of friends. It was very different than the typical product images with the white background and no one really having a good time with it. How did you know to utilize that imagery to encourage that buyer behavior to then hopefully spread the word about Haus? Helena: Yeah, that was a very conscious decision. So my background's in brand. Before Haus, I had a production company that did everything from visual brand strategy to producing commercial campaigns including photography. So when we thought about photography for Haus, first things first, I didn't want to do what every other direct to consumer company at the time was doing, which was product on a plain colored backdrop, very simple, very polished, very digital looking. It didn't feel right for us because there was no context, right? Haus isn't supposed to live on a seamless backdrop in a photo studio, Haus is supposed to live at your dinner table. And it just felt like a missed opportunity to show the customer where Haus belongs. Helena: And that type of photography of the product on a plain backdrop, that exists for a reason, right? It performs well in paid. It's very straightforward. People can physically see what they're buying. And, in an era prior to now where paid drove most direct to consumer growth, it makes sense that people use what performs well. But for us wanting to grow organically as much as possible, we didn't care so much about that sort of metric and for us the priority was way more about how can we use this opportunity to just show people exactly what they should be doing with the product. And that's really how we approached it. Stephanie: That's awesome. And are there certain metrics or data and analytics that you look at to see what's performing well and what's not or how do you think about success when it comes to utilizing a different kind of buyer experience? Helena: Yeah, I mean, in the beginning up until December we were 100% growth. And that's hard to measure, right? There's no real way to examine where those customers are coming from. There's not a whole lot you can do with that data, which makes it very daunting for most companies to pursue. Right? Stephanie: And you said a 100% organic growth, right? You cut out there for a second. Helena: Yes. Stephanie: Okay. Got it. Helena: And now we're experimenting with paid and now about 20% of our customers come from paid. But for us, we're still a primarily organic company. So I think for us it was more of a philosophy and some hypothesis around our product and how it could spread, right? Our product is something that is inherently shared, right? If you're having a drink, you're very likely having it with another person, you may be having it with a group of people and that's certainly the customer that we were going before. So for us, we wanted to make sure that the product and the customer experience was so stellar, which sounds common sense, but it's not necessarily, especially when you have limited resources that you have to put into certain buckets. We put everything into product and everything in the customer experience so that when people received that product, they gathered their friends together, they shared it with their friends, they all had an amazing experience together, and then all of those friends went to buy a Haus. So that was this organic flywheel that started taking off. And our growth was through word of mouth. Helena: We also prioritized press quite a bit. My first career was in PR, running comms for startups. So I'm a big fan of working with press to tell your story because, you can tell people what to do all day, but people are going to really listen when someone else tells them to go buy your product and that it's great. And press is also hard to quantify, right? A lot of press doesn't actually tie to purchases. It's more of a long game of having this validation and the customer being able to come to your website and see that the New York Times, or GQ, or Vogue said that you were good. So it's one of those things where a lot of what we pursued in the beginning birthwise was really hard to quantify and it was also kind of long game. So I think it rests outside of the comfort zone of a lot of founders and a lot of growth managers because of that. But it worked so well for us and it continues to work well for us. Stephanie: Yeah, it definitely sounds like it. How do you think about leveraging press? Because when I think about that, it seems like there's a lot of agencies and companies who are ready to do a PR release and tell you that they're going to get you press. But then afterwards you're like, "Oh, what did it really get me?" And a lot of people maybe can't get on the Vogues and the bigger name brand sites like that. How did you pick out strategic places to be seen and found? And how did you even get those relationships to get that press? Helena: Yeah, I mean, it takes time, right? There's plenty of people that I wish were writing about us and they still haven't. But for us, my philosophy since my early '20s when I was doing comms is like you can't expect anything from anybody immediately, right? Because even if the person writes about your beat, even if it's obvious that they would find your product interesting. You just don't know what they're going to be writing about for the next year. And maybe they're not going to be writing about anything where you're particularly relevant and maybe they don't break news, maybe they're writing trend pieces. A lot of the media relationship building that I've done over the last decade and that we continue to do with Haus is about just getting on people's radar and not wanting anything upfront, not being so transactional about it, and just saying hello, sending them some information about Haus or your company, sending them samples of it, any new products as you release them. Helena: There's a lot of parallels I think between media relations, and fundraising for those who have fundraised where building relationships with investors is similar, where a lot of times it's just reaching out over and over, being like, "Hey, hope you're well, remember that thing that we said we were going to do, we did it. Check it out. It's pretty cool." And not expecting anyone to immediately do something about it, whether it's write you a check or write a piece about you. If you have news to share, you can always pitch it and formally ask if they're interested in writing about it. Helena: But I think approaching it more casually and again, really thinking about the long game, helps forge a more authentic relationship as well, where they are people and if they're interested in your space, you probably actually have a lot in common, you could probably be friends. And if you just treat them as a person who's interested in a space that's similar to you, then it's just going to be a much healthier relationship versus only reaching out last minute when you want them to write about you right now. It's just not going to happen. Stephanie: Yeah, that's such great advice. Be persistent, but don't be annoying. So how do you think about selling something on a website that a lot of people want to experience? I know you just mentioned samples. Do you see samples working well to get people to come back and buy? Because I've heard mixed experiences with that from a few of the guests we've had on the show. Some people completely took samples away because it wasn't working. Other people said it worked well. What's your experience with having the buyer be able to try before they go too deep into the buying experience? Helena: Yeah, well, we don't actually do samples for our customers. We have a starter kit that are two smaller bottles of two of our flavors that people can buy. And that's definitely a popular first purchase. I think for us there was a risk to selling smaller form factors direct to consumer, right? Like the margin is lower, it's just not a productive purchase from a business standpoint. But we released those smaller sizes because we saw a behavior where when people would buy even one larger bottle of Haus, they would come back and they'd buy more. Their next purchase would be two bottles or six bottles. So for us, there was that confidence because we had the data that showed that people that bought that first smaller size, they would come back and they would buy something bigger. So that's worked for us. I think if we were losing money on it, we wouldn't do it. But we still make a decent margin on our small sizes. So for us, really the challenge was how can we give people the best idea of what they're going to experience? Helena: And part of that was us being really thorough on the site, just explaining the kind of flavor components, what they can expect, showing the ingredient list, showing the nutrition facts. And then reviews have also been really useful for us where we work with Yoko. And for that it's been great for someone who's on the fence to go and read from 50 people who tried the product and liked it and talk a little bit about their experience. But ultimately, it's still a challenge for us. We're exclusively an online company. This is kind of a great problem to have. It's a problem that most companies want. But when we last looked at our newsletter, 70% of our newsletter subscribers who open our emails, and read our emails, and love the brand, they haven't bought yet a Haus yet. So it's an interesting phenomenon where people like the brand, and they're interested in it, and they're thinking about trying it one day, but they just haven't pulled the trigger. Though what we've seen with COVID, a lot of those people are starting to pull the trigger. Stephanie: Got it. And what are you including in your newsletter because that's unheard of to have a newsletter for a brand where people love the newsletter, but maybe haven't tried it yet. What kind of content are you putting out there that's pulling people in so much and how are you thinking about converting them in the future? Helena: Yeah, I mean, it's nothing crazy, right? It's not like we've built some robust editorial platform. But we share recipes, we share behind the scenes, we share occasionally elaborations that we do with other brands or people in the food and beverage space. It's nothing that's too robust. We haven't put a ton of resources into the editorial side of our business yet, but we are very careful to not be too promotional or too self serving and really make it something that people are going to enjoy looking at and enjoy reading even if they aren't actually drinking Haus right now. Stephanie: Got it. That's awesome. Are there other brands in the e-commerce space that you look to, to either learn from? I know I read that you've described Haus like the Warby Parker of booze, so are there people that you are inspired by, that you test out maybe different website models or AB tests or what are your content that you're releasing that helps iterate that? Helena: Yeah. Oh my gosh, it's so many, right? Like the Warby Parker analogy came from Luxottica outright who Warby ultimately disrupted and Luxottica feels very similar structurally to what you see in the alcohol industry. I mean, Away is one of the kind of OG brand branded did such an incredible job of building a movement and building a community around something that wasn't considered very sexy prior to Away. And they did such a great job with curating content and working with their community on photography and they did such an incredible job. Glossier does an incredible job. I love that they started editorial first and they really focused on building a community that was very, very different than what you saw in the beauty community. And they utilize channels in a very different way than other beauty brands did. And that really came to help them. I think the bottom line is really focusing on creating content that serves the customer and makes them really excited to participate with your brand. And for every brand, that's different. But it's finding that thing that gets your customers really, really energized and engaged. Stephanie: Yeah, I completely agree. Are you focused on a certain demographic or are you trying to pull maybe a demographic who's always been used to going after the name brands, are you trying to also pull them away and try something new? Helena: Yeah, I mean, our initial demographic was a hunch based on us, on our own personal use case and how we came up with Haus. We made it for people who drink quite a bit, and they're out and about, and they're building their careers, and they're networking, and they're at events, and they're catching up with friends, and they're going on dates, and they're around alcohol a lot. Right? Like we're not going for the kiddo person. We're not going for the super, super health nut, we're not going for sugar-free people, we're not going for people who are trying to get sober. We're going for people who love to drink, but they have certain values that they apply to other industries like food, and beauty, and their clothes and they just didn't know that they could have those same standards for alcohol. Right? Helena: And those people, our hunch was that they lived in urban areas, large and midsize cities, they were career focused, they were probably millennial though the age range extends beyond that. Gen Z also exhibits the same kind of behavioral demographics and they're starting to turn 21, definitely early adopter types have some sort of aesthetic sensibility. And we had a hunch that there would be overlaps between us and other direct to consumer brands. And so far that seems to be correct. Stephanie: Yeah, completely agree. So something else that's really interesting about your company is that you guys are a fully vertical company, so you own everything from the production to the distribution. Can you speak a little bit towards how that gives you an advantage when it comes to launching new products and how you even came about thinking like, "I'm going to do everything." Instead of going with a more traditional model of sourcing things. And I mean, you said stuff came from your farm, like the ingredients and whatnot. That's insane from thinking about how other alcohol companies do things. So I'd love to hear a little bit about that. Helena: Yeah. It's not normal for alcohol and it's not normal for direct to consumer, right? Take Warby Parker for instance, who's like the OG in the direct to consumer space. I mean, take most direct to consumer companies. The advantage to being direct to consumer in the beginning was not owning your supply chain and being able to go and work with vendors that you own the brand experience and the purchasing experience and you're able to take a brand and make it a thing. And, and so for us, we wanted to take a very different approach for the most part because we knew how to do it, right? Like we're good at it. We make aperitifs already, we have the warehouse, we have the farm, we have the infrastructure. So we didn't want to outsource that to anybody else. Helena: But we also had a hunch that being fully vertical would give us a huge advantage from a product development standpoint. We could super nimble, we could iterate every day if we wanted to based on customer feedback. We could launch new products quickly, we can kill them quickly. We had a lot of abilities that other companies wouldn't have. And then we would also be prepared for any sort of supply chain curveball that comes our way. Right? The only thing that we don't personally own is making physical bottles. So we always have to make sure that we're prepared and have inventory for an inflection point. But everything else we do ourselves, right? We make it, we bottle it, we ship it. Helena: And so for us, we of course never expected a pandemic sized curve ball, but it was the ultimate test, right? And we're one of the few companies that haven't been impacted at all by the pandemic and we were even able to release a ton of new products during the pandemic. So it's one of these moments where we made some philosophical bets early and we didn't know how exactly it would benefit us, but we had a feeling that it would longterm and it's benefited us in a massive way now. Stephanie: Yeah, that's great. It seems like it's very opposite from what a lot of brands and companies and e-commerce companies are doing right now where everything's about outsource that and only take care of the front end part of it. So it's really nice hearing about someone jumping in and doing the whole process. Are there any learnings, or best practices, or failures you've experienced when setting that up? Helena: Yeah, for sure. I mean we've definitely made some mistakes on the production side, but the beauty of it is if you accidentally leave a hose open and the product pours out all over the floor, you just start over and you make it again. I think for us, the biggest learning curve was the one part of our supply chain that we didn't own, which was bottles. And again, this industry has its own politics. It's pay-to-play, it helps to be owned by a corporation. And so it took us some effort to be taken seriously by a bottle vendor because we were a new brand. We didn't have the backing of Diageo or Pernod. What were they to expect us to do? Right? Even if we were like, "We're going to be big." How are they supposed to believe us? Helena: So we were sold out for most of the first two months of our existence because we just couldn't get bottles. They just wouldn't take us that seriously. And it got to a point where we had to say, "How big of a check do we have to write for you to believe us?" So the downside of that is you have to buy more bottles upfront than you may have wanted to. But again, in a time like this, during a pandemic, we're really happy to have made that. Stephanie: That's great. So when it comes to the pandemic, I saw that you were able to quickly shift where I think your profits were going. Do you want to speak a bit about the initiative that you have going on and how you were able to quickly pivot because you own the entire process and supply chain? Helena: Yeah, the pandemic has been a roller coaster for everybody, us included. In February, we saw that it was calming and potentially already here, which it was. So we had to do worst case scenario planning, right? Like, "Okay, what if the economy bottoms out? What if nobody's buying anything? What if like every direct to consumer company burns to the ground?" So we did a deep dive in our P&L and we cut a lot of costs that kind of felt more like nice to have versus must haves. We luckily didn't have to fire anybody, but we wanted to just make our business very core, very nimble and that ended up being a good decision regardless. Helena: But pretty soon after, our business started growing and that's due in a large part to e-commerce growing, it's due in a large part to alcohol growing. We happened to be the one alcohol company that directly delivers to your door and the press started writing about us because of that. So there were a lot of domino effects from being in this space. And we were also starting to see a lot of efficiencies around paid, so we were putting more money into that. There are a lot of things factoring in, but long story short, we were growing, like our business right now it's up more than 500% than it was in January. Stephanie: Congratulations. It's amazing. Helena: It's crazy. And so for us, obviously that was a huge relief knowing that we didn't have to let anybody go. We could continue building the business. But there was definitely a question of this pandemic is way bigger than us, right? It's something that we're all going through as a society and it feels a little strange to be wholly focused on yourself, especially if you're doing well. And so for us it was really thinking about the rest of our industry, right? We're in food and beverage and not everybody is faring as well. Restaurants in particular, they are in huge trouble. They're a very low margin business. They're a labor of love. They are a beautiful industry, but largely they're traditional, right? And they don't have alternative revenue streams. They're serving only local walk-in patrons, so they're in huge trouble. Helena: And we took a step back to really think about like, "Okay, we could just launch a campaign or something like that." But that didn't feel right. There was too many of those already out in the world and it just felt overwhelming. So we thought like, "We have infrastructure, we have a warehouse, we have a production facility, we have resources, physical resources. How could we use the tools that we have to help others in our industry?" And pretty quickly we realized if we ... obviously we had to test it with them and see if they were into it, but if we made a product for restaurants, like if we made booze with these restaurants, use the chef's vision, the chef could direct it because that's very important to a restaurant. They don't want to promote someone else's group product. Helena: We could make and ship booze for them that's their recipe and we could donate the profits to the restaurant, which is a healthy margin. We could make a significant impact on their business. So we tried it and we got signed on from a bunch of the best chefs in the country, partially because of our connections and connections of our investors and our friends. And now we're making 13 new products this month. And we're sending a lot of money to restaurants. I think at this point, we've probably sent like $80,000 to restaurants and we're still in the preorder phase. So it feels good. Stephanie: That's great. Is this the first time that you've had someone help influence the ingredients to create a new product? Like you're mentioning how the chefs are creating their own. Is this the first time you're trying out this model or have you always had help from the industry when it comes to new products? Helena: No, Woody's done everything himself. So what is this magical man who is such an artist and he has a vision and he's really, really good at making wine and aperitifs. So all the products were his vision and then this is still very much a collaboration, right? It's like these chefs don't have experience making alcohol, so they talk to Woody, they share their vision, right? Like what they would love for it to taste like and ingredients that they would like to feature. It's a very similar collaboration between a chef and their kitchen, right? They give the vision, the kitchen executes it, and it's similar here where Woody can take that vision and then he can play around with the recipe and different combinations of ingredients to get somewhere that he thinks is up to par. Then he sends those samples to the chefs, the chefs give some feedback, whether that's like, "Oh, it could use some more acid." Or, "Maybe a little sweeter." Or, "I'd like to taste more of this particular fruit." And then and then it's done. Stephanie: That's great. Do you see that kind of partnership continuing even after the pandemics done? Because it seems like a really nice way to have like UGC content or alcohol created for you and then creating those partnerships could only help scale all the different products that you have with the help of other people who have a specific idea in mind. And then you have a buyer from the start. Helena: Oh yeah. It's a win-win for everybody, right? It's like these restaurants have a new form of revenue, which is great. It allows them to monetize their audience, which is for the most part national or international. They're just collect revenue from a much, much bigger group than they could four. And we've made these products, they're so good. These are incredible aperitifs. It feels like a new frontier for alcohol in America. It's really exciting. And so for us it's great that we can collaborate with these chefs to make these really unique recipes. So I wouldn't be surprised if we added most of them to our permanent store after the project is over because they're just awesome and this makes sense. It's a win-win. Stephanie: That's really fun. So to zoom out a little bit, go a little higher level, what kind of trends do you see coming to the e-commerce industry or what are you most excited about right now? Helena: Yeah, I mean, I have a feeling that there's going to be a new level of scrutiny applied to direct to consumer, right? This is a real moment of reckoning for a lot of companies where if you can't do business for a month, you have to shut down or you have to lay off a majority of your workforce. It's probably not great that supply chain is so fragmented right now. And I think there's also at the same time a bit of brand fatigue that was already happening prior to the pandemic where there's so many direct to consumer companies being made right now where the founders don't actually have much expertise in the space. Right? They just had the idea, they were able to get venture capital because they're connected in that world, and they were able to launch a company. And they can put all that money into pay it, and they can acquire a bunch of customers. Helena: But the problem with not knowing your space is that you're not able to iterate quickly. And it seems like we're about to enter a world where we just don't know what curve balls we're going to see. Right? Like international trade is a bit testy right now. We may see people become a little bit more nationalistic in terms of supply chain. We don't know. So I think at the very least we're going to see more money going to founder teams that have at least one founder with deep, deep industry experience, whether that's a generational family heritage or whether it's a decade plus of experience in the industry because you at the very least need the connections on that side of things to have leverage, right? You may not have to own it all yourself, but if you don't have any real leverage in that world, then you're toast. So I think that's going to impact a lot of what brands, not just survive right now, but what brands get funded in the future. Stephanie: Yeah, completely agree. It definitely feels like we have been in an environment where it's like just try and create a quick MVP and see if it works and if not, go on to the next one and keep trying until you find one that maybe works. And I think that's a really great point of you should probably have some kind of deep expertise in whatever you're going into. Because one, you have to love it for a long time if you're going to actually follow through with it and being good at something probably means you're going to have a good business as well. Helena: Totally. Yeah. I mean, it's like, of course it goes good when it's good, right? But at the end of the day, it's not just about product market fit. If you don't have real control over your life business and how your product is made, then as soon as a curve ball hits, you realize you're just as fragile as any other business. Stephanie: Got it. Yeah, completely agree. When it comes to someone either launching a new product or building a whole new business, what's one thing that you would suggest for them to try out based on the success that you've had from your store? Helena: I mean, again, it sounds like obvious, but it's not, I would put so much more effort into product than you may feel comfortable with. It's riskier. It takes more resources. But in consumer, I just don't think that MVP is going to cut it anymore. So in a time where paid right now is performing well, but ultimately we're in a postpaid world. We're in a post soft bank high growth venture capital world. People have to start taking organic growth more seriously. And the easiest way to do that is to have a product that's good, and tastes good, and feels good, and looks good. It's one of those things where it feels easy to cut corners up front, but you really only have one chance to make a first impression. And those first impressions, they carry the weight of viral growth. So I would really put more resources into that than you're comfortable with and it'll pay off. Stephanie: Yeah, completely agree. And I saw you all doing that in your unboxing experience. Do you want to talk a little bit about that buying experience and how you thought about creating something that would ... you would make something that would be socially shared potentially, like a pretty box, a pretty bottle? I think you were putting different pamphlets and stuff inside that people actually wanted to share. How did you think about creating an experience that would go viral like that? Helena: Yeah, I mean, it's pretty amazing to watch how much the bottle and the box is shared because we haven't asked anyone to share it ever, and it just keeps getting shared. But again, I think for us it was about like, "Okay, all of these touch points are important to the person." Right? Like they're not just buying an aperitif, they're buying an experience. They're buying even a good website experience. They're buying a good post purchase flow. They're buying a good unboxing experience. They're buying a good bottle. All of those things are just as important in direct to consumer as the actual liquid in the bottle. So for us, we put a lot of effort into the glass bottle. We wanted it to look beautiful in your home. We wanted it to feel good. We wanted it to look really tight. Helena: And we wanted the same with the box, right? Woody has a great relationship with a box maker from his many years in the industry. And we were able to do custom boxes really easily with him. And we just wanted to make something that was very simple that fit into as many homes as possible. And just the point where it was looking beautiful, right? The point wasn't to sell the product because they already bought the product, [inaudible] doesn't need to do that. It really was about looking good and making the customer feel good. Helena: And then with every package there's an editorial that comes in and that's more of that educational component that I was talking about where that's another opportunity. Yes, it costs money to make an editorial pamphlet, but in that pamphlet, the customer can learn about me and Woody, they can learn about the farm, they can learn about what appetites are, the history of them, where they belong in the world, why they exist, they can learn a few ways to make a cocktail with Haus. It's this kind of deep wham bam education right in their face. They didn't have to pursue it. It's just there for them. And by the time that they're done reading it, they have a deep understanding of how to use the product and they feel like they know me and Woody, they feel like they deeply understand where it comes from, and we didn't have to do anything. Right? We just did all the work upfront. Stephanie: Yep. Do you personalize that experience after the first time they buy they might get one type of editorial and then when they come back, do you send a different one and do you keep track of how they're doing like how each editorial or unboxing is performing? Helena: Well, we've started only sending editorials with the first order that people make. But we've found that actually people like, "Oh wait, no, I was going to give this as a gift. I want the editorial." So we're still trying to figure that out. Because there's so many people that gift Haus to other people that we've realized that the first order or the second word doesn't necessarily mean that it's that person's second bottle. It might be someone else's first bottle. Stephanie: Yeah. That's a really good point not to make assumptions like that and also just really great developing that relationship. I mean, if I were to see a picture of you and Woody, and the whole background and history, I would feel like I have a personal connection with you where I would want to come back and buy from you all instead of going to a liquor store to buy something from someone that I don't know. So yeah, that all sounds really smart. Helena: Yeah. I mean, it's me and Woody like Haus is me and Woody and it's a competitive advantage, right? There's very few companies where the founders are physically making the product. So we want you to know us because this is our life's work and we're really proud of what we made. And we want you to know where it comes from because that's important to us, so it works out. Stephanie: Completely agree. All right, and these last few minutes, we do something called a lightning round where you answer the question in a minute or less. Let me know if you're ready and I will start firing them off. Helena: Ready. All right. Stephanie: What's up next for the next product that you're going to be enjoying from Haus? Helena: A summer flavor that was around last year and it's coming back for this year. Stephanie: Ooh. Any hints to the ingredients or what that could be? Helena: It's Rose Rosé. People know. Stephanie: Yeah. I didn't know that sounds delicious. Helena: It's amazing. Stephanie: All right. What's up next on your Netflix queue? Helena: Ooh, probably more cooking documentaries. I can't watch a lot of TV. It stresses me out, but I love cooking shows. Stephanie: Yeah, those are very relaxing. What's up next on your Workday? We heard Woody outside your recording studio, AKA your car that's outside the warehouse. So what's he doing today? Why was he trying to get you to move your car? Helena: Woody is trying to move a bunch of pallets of product. They're making a new batch of Ginger Yuzu right now and they're finishing up some prototypes for the restaurant project. I am going to get off this podcast, answer like a hundred more emails and write a bunch of gift cards for people gifting Haus, and then I'm going to do another interview this afternoon. Stephanie: Very cool. All right. In a slightly harder one, what's up next for e-commerce pros? Helena: Ooh. I think it's taking a big step back and reflecting. That is the most important thing you can do right now. Stephanie: Completely agree. All right, Helena this has been a blast. I can't wait to try Haus. Where can we find you and buy some of your amazing beverages? Helena: You can buy them online at drink.haus. And you can follow along with us on the internet @drinkhaus on Twitter and Instagram. And yeah, we hope to send you some booze soon. It's great for breastfeeding, by the way. Stephanie: Yum, I will have to indulge in that. It sounds perfect for me right now. Helena: Yep. Stephanie: All right. Thanks so much for coming on the show. It's been a blast. Helena: Thank you again. Talk soon.

There are more than eight million dynamic pages that run on Lenovo.com, where the majority of shoppers go to buy their products. It is a massive Ecommerce platform that has to work for more than one billion website visitors per year. Ajit Sivadasan is the Vice President and General Manager of Lenovo, and even though managing those pages is part of his job, what he’s more interested in is making sure that those pages are offering relevant content and an efficient experience to a new generation driving Ecommerce growth. On this episode of Up Next in Commerce, Ajit explains why figuring out what content is relevant to Gen Z will be the driving factor in how successful your Ecommerce platform will be. 3 Takeaways: There is a massive demographic shift happening in the consumer market, so rather than focusing on producing more and more content, companies need to focus on producing content that is relevant to this new audience of digitally-native consumers Customer irritants are data points that matter and constantly change. Constantly addressing those irritants – from delivery time to language on the credit card processing screen – has an impact on consumer satisfaction and your NPS Behavioral economics states that humans are predictable and predictably irrational. Therefore, you have to take this behavior into account in everything from website design to offering comparisons of products as a counterbalance for the fact that humans will deviate to the path of least resistance more often than not 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 --- Stephanie: Hey everyone. This is Stephanie Postles, your host of Up Next In Commerce. Ajit, how's it going? Ajit: Good. Thank you for getting me on the show, Stephanie. Stephanie: Yeah, I'm excited to have you on. So I'd love to hear a little bit about your background at Lenovo. You've been there 15 years, right? Ajit: Close to, yeah. This is my 15th year. Stephanie: So I'm sure a lot has changed since you joined the company back then. Ajit: Yeah. I joined Lenovo in 2006, and came to Lenovo to build a consumer brand online. And obviously, when I joined, we didn't have much of a infrastructure or even sales. We were in a very limited set of countries. We were actually in four countries and we probably had a very small amount of revenue. Since then, obviously, we have scaled the business about 10X on revenues, and profits have grown about 10X. And we have scaled from four countries to 35 countries. And in the process, we have seen several acquisitions. We acquired the Motorola brand. We acquired the System X brand. So we have had to integrate all of those businesses. So Lenovo has gone from a company that's sold PCs, to being a company that basically is trying to drive intelligent transformation for its enterprise customers, and for its consumers around the world. Obviously, we have a footprint in more than 165 countries. So it's exciting. Ajit: When I joined the company, we were number six in the world. Obviously, we've been number one for a number of years now, and have a significant market share in the PC space, and we continue to make progress in the data center space, which we acquired from IBM. And the Motorola phones, you might have seen some of the latest phones that we introduced. We were the first ones with the foldable phone, that was a take on the Razr phone, the iconic Razr phone. So, yeah, it's been very exciting. We have obviously enjoyed our ride. I'm very excited because we get to interact with a number of customers on Lenovo.com and really bring the technology to life, and the brand to life, using the platform we have. So yeah, it's been a good ride. Stephanie: That's awesome. And what does your day-to-day look like at Lenovo? Ajit: I manage the platform for Lenovo, which is basically Lenovo.com. And since it serves all of our stakeholders, we have the Lenovo.com footprint in more than 90 countries. So I have to manage both the sales side, which is primarily a combination of B2C and SMB. And then I have to manage the enterprise side of the customer. So mostly B2B customers that buy from us using a procurement type of strategy, where we actually service them one-on-one. So I have the sales part, which is basically running the whole end-to-end business, all the way from marketing, CRM, UX/UI design, sales and marketing, phone sales, to really even trying to help with the supply chain piece, working closely with our supply chain organization. Ajit: But then the other side is really trying to figure out how to position Lenovo.com to become a brand voice, and figure out how we bring to life all of the innovation, and the products, and the enterprise strategy we have, for the stakeholders that come to Lenovo.com around the world. We get over a billion people coming to the website any given year. So it is a pretty substantial property. And so we have a ton of work that we need to do to manage all of those aspects that take care of basically all of the customer needs we have. Stephanie: Wow. What are some of the key learnings when it comes to moving globally? So it started out, I think in 1985, and it was just a reseller in China, right? And then, now it's a global company. What has that transition been like, and what have you learned in the process as you open up new countries and start selling there? Ajit: When I joined, obviously, my journey beyond Lenovo, was at Gateway. I was at Gateway for five years. So I've been in the PC space for about 20 years. And what you have to really understand is, all the transitions that have happened in the business model. When I started, internet was relatively new, and people used it as a very siloed organization that was doing just the phone and the web. So it was very limited. But today, as you know, 70% of the traffic that comes to the website is mobile traffic. The patterns have shifted quite a bit. So the business model transformation that has happened over the last 15 years has been interesting. Ajit: And what you see is, initially when we started, a lot of our colleagues around the world were maybe a little apprehensive. They were worried about things like conflict. They were worried about issues like pricing and things like that. And what you notice as things have evolved is, what you find is that, that is a very complimentary system. A number of our customers that are very sophisticated, technology-focused, innovation-focused, want to buy online. They want to be able to customize their products, they want a full breadth of products. And then there is a bunch of customers who would like to go to retail stores, look at our products, touch, understand it a little bit better before they actually make a purchase. So what we have found out is, thought we had a lot of skepticism, maybe even like six, seven years ago, that has changed into, people now trying to figure out how to leverage the business models, including connecting retail and the offline presence we have. How do we get our enterprise customers the best experience possible? How do we make sure the supply chain is responsive? How do we get them more capabilities that love them to buy products on credit, allow them to buy using a subscription type of service, give customized services that add them for SMB customers. Ajit: So, if you really think about it, the evolution has been quite interesting. And look, day-to-day, there's tons of things that you need to do because it's a fast-pace, technology-driven, very innovation-focused space. And people like Amazon and others, they're really driving the paradigm as far as online commerce is concerned. So it's not sufficient for us to just look at our traditional competitors. We also have to understand that the customers are getting sophisticated, and their expectations are much, much higher than what they used to be. So in many ways, the decision to go into a country now, is much more driven by the customers, than it is even proven by our direct stakeholders. And when I say stakeholders, internal folks, because customers really demand that you actually have an online presence. And they really want to transact with you online. So the transition has been interesting, but I think it's accelerating and the business models getting very complex. And our ability to actually react to them fast is going to be critical, as we move to the future. Stephanie: Yeah. I completely agree. So I heard that you have eight million dynamic and other pages, on lenovo.com. Maybe it's more at this point, compared to when I heard that stat'. How do you keep up with all the pages that you have, behind the scenes, being custom, depending on who's coming, depending on what country they're coming from? How do you make sure that it doesn't turn into a black box? like an algorithm when it starts getting too much stuff in it, you're like, "I don't even know what's happening behind the scenes anymore." How do you keep up with the pace? Ajit: A lot of this is automated. If you really think of our bulk of the products... I'll give you an example. So we sell thousands and thousands of third party products, accessories. Whether it is hard drives, whether it is even headphones and monitors and lots of things that are serviced and provided by other companies. And those are all managed automatically. So it's in a database. It's a data-driven process. So you don't have to worry about it. But if you multiply those into the number of countries, suddenly the numbers look staggeringly big. Now, having said that, it still is a pretty big number of pages. And clearly, there is a process for us to manage level one, level two, level three type of page, home page, right? If we look at the efficacy that is periodic checks on usage of the pages, there's teams basically managing content across the site, across the countries. Obviously, there is a strategy for how many layers of product pages we want to have. We look at data to understand who is using it, how often are they using it, and things that are not being used. Obviously they get [inaudible] as time goes by. Ajit: But more and more, it is clear to us that we need a very cohesive data strategy for formality content. So the formats customers prefer for content is changing. A lot more focused on videos, a lot more focused on how to do things, through a short-form video. Even content that you provide in terms of words are very succinct, and to the point. So you let customers pull the data, pull the content, as opposed to publishing everything and letting the customer go through stuff. Clearly it takes a lot of time and effort. And the key is to make sure that your systems, from the product management, all the way to what the customer actually sees on the glass, all managed in a way that makes sense. And that clearly is a challenge, because you've got a lot of legacy systems. And what somebody puts in as they're designing a product, may be marketed different from the marketing content that somebody needs to see in order to make a decision on a sale. Ajit: So you really have to figure out the process, streamline it. You need to make sure, periodically, you look for paradigm shifts. You need to understand demographics. 70% of the population that's going to be in the workforce is going to be millennials. And I can tell you that they are not really interested in reading a lot of stuff. They prefer much short-form formats, and they like videos and things like that. So if you're not connecting with them, and your engagement is not right, I think you're going to have a problem in the long run. So, I think the page count is less of a problem, than relevance. And I think that what we really are trying to do is to figure out how to be relevant, and drive content that truly drives engagement with our audiences. Stephanie: That completely makes sense. Are there certain trends that you see coming that Lenovo is preparing for, when it comes to, like you said, videos, preparing for millennials? What things are on your radar right now that you're preparing for the future? Ajit: So I'd say a couple of things on that. We are definitely seeing a pretty significant shift in demographics. Though we see a bimodal distribution. And by that, we see a lot more older people, and we see a lot more younger people. And the number of people in between actually is very low. So you would see very young people. 60%-70% of the population will be in the 20-30 age group, going forward. Which means that, these are native millennials. These are generation Z, Gen Zs, who basically are native digitally. And therefore, their expectations and how they consume data, and how they consume information is very, very different. So we have to really worry. I think everybody needs to worry, if you're online, as to how they are going to be part of your community, how you're going to get engaged with them, how are you going to keep their interest in the products that you have? Ajit: Part of the challenge is that they are so sophisticated, and are pretty much, in my mind, no nonsense, in terms of technology, that it's highly unlikely that they are going to support anything that is cumbersome, or verbose, or anything that basically takes away from efficiency, in terms of how they deal with online content. And so, I think the big challenge is for companies to truly make that shift of saying, "Look, this was the audience in the past. They had a very different predisposition to how they looked at data, and how they analyzed things. And then there's this new generation that truly is looking at content differently." Ajit: Now, the key points will be when they start truly having money in their pockets, and they're going to be in positions where they're going to be making decisions for companies, in terms of purchasing, technology decisions. And many of them already are making those decisions. And then if you are not able to engage with them appropriately, I think that you have a challenge. So truly trying to figure out how to build that relationship with the gen Z, millennial audience, I think is key. We are definitely looking at a couple of segments where we believe that that's an area that we need to really get good at, which is, gamers who are basically a big part of the online ecosystem. They are very sophisticated. They know exactly what they want. They are very community-driven. They're very content-driven. Ajit: And so, the proxy for us, at least in my mind is, "Look, you now have to figure it out how to engage these people online." Because you will learn from that set of experiences, that if you are, as a brand, not able to work that in your favor, it becomes increasingly challenging, I think, for the brand to have relevance in the future. And so, we are really focused on gamers. We believe that we have to cater to them end-to-end. From content, from products, online experiences, capabilities, giving them access to a broader set of products and portfolio, game titles, being able to give them subscription services and other things. Ajit: And the second audience that's really, really important are students. So a big part of students are going to be online, and quite frankly, this Covid crisis brings out the issue much more readily, where you see high schoolers, pretty much all schoolers, including colleges, basically offering courses online. And everybody's online study. I can tell you that it looked like a big deal when it happened, but we have been thinking about this thing for several years now. And this crisis obviously has accelerated that thinking even more. But the reality is that this is going to be the new norm. And, what is interesting is that a lot of people that aren't online students, because of the fact that for 1,000 years we have always told students that they need to go to a school, and be an apprentice, and study and learn because they can find a job. Ajit: And now, companies have come out and said, "Look, you don't really need a college degree to get a job. All you need is knowledge. And if you're good at something, then we'll figure out a way to test you, and you'll be fine. You don't need a formal degree." And we think that that trend will accelerate in the coming years. And I think that universities and colleges and institutions will figure out how to deal with it. And then at the same time, people like us, brands, we'll have to figure out how to engage this audience. Because, they're looking for information, they're looking for technology, they're looking for solutions. And the question is, "Can we provide them solutions and technologies that make learning online easier for students?" So that is the audience. Obviously, we make PCs, and we make phones, and we made monitors and all these things that really are part of the technology solution that enables people to learn online. And therefore, we believe that we should figure out how to engage with this audience who are basically online, and in a direct way, so that we understand their needs much more concretely. So those are two segments that are key. Stephanie, you had a question? Stephanie: Yeah, that makes sense. When it comes to thinking about this new generation, and they're, like you said, no nonsense. They want things quick. The website better be super quick. They better be able to buy fast. They have, I'd say, a higher risk tolerance when it comes to ordering online, as long as there's a good return policy. They're probably okay with just buying right away and hoping for the best. How are you thinking about your retail strategy? Because like you said, a lot of people in the past have been used to going into stores, and trying things out. Do you see that being something in the future? Especially with Covid, it seems like a good forcing function, where it's pushing more people online, and to just try it instead of having to experience it in person. Are you all shifting your thoughts around that area? Ajit: Well, I think Covid clearly will be an outlier. It will accelerate the digital transformation. But I still think that retail will have a pretty important place and role to play in the long run, but it will get redefined. And for our part, we are doing a couple of things. We are trying to figure out how to help our resellers, how to help our retail partners, and quite frankly trying to connect offline and online in a meaningful way. So where we own stores like in China and India and other places, we are trying to figure out how to connect the online experience with the offline experience, so that people can buy products online. They can go to the shop and order it online there. So really trying to figure out how to manage the customer experience a little bit more readily. Ajit: Now, having said that, I think the interesting transformation that's happening is really trying to connect the social, the retail, and online together. And if we can, at some point, get the mobile piece to work, then it becomes a very, very interesting value proposition for the customer because you truly have the customer for the whole cycle. So if they are outside, we know where they are, and therefore we can give them recommendations if they're interested in looking at our product. If they're online, obviously they can do things online. But if they do stuff on their phone, we can actually translate some of those things meaningfully to their desktop, and therefore we make it very, very easy, experientially for them to experience a good a brand experience. So we don't have to act surprised when the same person is in two different places, or as two different ways they connect to the brand. We just need to figure out how we connect those pieces. Ajit: And I think that these are the types of business model shifts that we will see accelerated as we go through this crisis and beyond. I think that people are finally trying to figure it out, "How are we going to connect this?" Look, Amazon has already done some of this with what they have done with Whole Foods and the Prime. So they've figured out how to connect the store to Prime users, and the online stuff. So the blueprint is there, and I think that most companies are doing some stuff. But I think that you're right. It's going to get accelerated as this crisis progresses. Stephanie: Yeah. I think connecting those platforms is key to making sure you understand the customers and can deliver value to them wherever they're at. Are there any technologies that you guys are experimenting with, to try and connect that online, to offline, to social, and mobile? Ajit: Yeah. It depends from place to place, and it depends on the companies footprint, right? In China, obviously, I think we are the most progressed in terms of the technology piece. We have a substantial online, merged with offline footprint, which connects WeChat, and online cloud, and our application layers, which allows our customers to actually be connected fully with the brand. And it actually connects all the retailers also to the brand in a very, very meaningful way. So that is, I think, the aspirational model for everybody. We have a very different model in Japan, as an example, where we are connected in kiosks, in the retail store, that's connected to the online world. In Taiwan as an example, we have an offline store that we are connected to. In India, it's the same thing. It's an offline-online model. Ajit: So yeah, the business model is different from different country to country. But it also depends on who is innovating more, and what's the landscape look like in the country? So it's not one size fits all. And I would be remiss if I didn't mention that privacy, as an example, is a key consideration in some countries, and some countries they're more relaxed. So it just depends, also, on some of the privacy laws that enable customers to share information more freely versus some others where you can't. Ajit: But my sense is that depending on the country, and depending on the business, you will see hybrid models emerge. They already are emerging. And some will have much more traction than others. But I would see a lot of partnerships being formed between online companies and offline retailers, to really manage the customer experience to be much smoother, and much more productive, going forward. Stephanie: Got it. And I saw that Lenovo is leaning more into focusing on the consumer and their needs, and becoming a more consumer-first company. Is there certain data points that you all are using to meet your consumer better than you were before? Or were in that end-to-end consumer journey do you see the most room for growth or improvement? Ajit: Yeah. Lenovo's history and its heritage has always been a product company. We have some of the best brands in the world, whether it's Thinkpad, Yoga, Moto, System x, these are all brands that are at the top of their game when it comes to their specific categories. Stephanie: I used a ThinkPad at Google. I love my ThinkPad. Ajit: There you go. And nine out of 10 people that I speak to in the business will tell me the same thing. I used to use a ThinkPad before I worked for Lenovo long, long time ago, as well as a consultant for Deloitte. And there's plenty of people who actually use ThinkPad because it's an iconic brand. So we always have been a company of engineers, historically. But as we move into the internet era, and as digital becomes more mainstay, it is absolutely critical for us to really understand what our end users look like, what they are doing with our products, how do we collect feedback that's more direct? And truly, really understand and have a pulse on what the customer sentiment is for our brands. Ajit: It becomes extremely difficult for us to get feedback more directly, as from an indirect channel, because of the fact that we don't really talk to the customer directly. We have to remain and collect information in an indirect fashion. And depending on the privacy laws and other things, it becomes very, very complicated for us to collect information. Having said that, three or four years ago, as a company, we decided that it was such an existential reason for us to really start thinking customers first, and truly trying to figure out how to connect with them, and drive digital transformation, that we decided to start measuring all of our customer segments, whether it's direct or indirect, in either use proxies or direct measures. But mostly, the entire company has been on a Net Promoter Score basis, and trying to understand how customers value our products and our services, and what they actually think about the brand. Ajit: So our employees and our executives get paid based on a customer satisfaction metric. At one point, it was actually imperative, in terms of how they got paid. So we take this very, very seriously. And the transformation is clearly much more evolved than what it was three years ago. And now, pretty much every group in the company has a customer-focused metric. Whether it's product development and supply chain, eCommerce, or our global accounts customers. So everybody is measured on a customer-centric metric, which allows us to then drive the focus that's stated. And it's one of the top priorities for our COO, our CEO, my boss who basically runs all of the PC plus the IDC group. It's a key focus for him. So clearly, it's something that we take very, very seriously, and we are all trying to evolve with this one metric that we can look at and say, "Are we making absolute progress as a company, or not?" Stephanie: Got it. So a lot of times, metrics can actually have unintended consequences where maybe someone's trying to meet that metric and they're not doing the best thing to meet that. Did you see that when you guys were thinking about creating that customer metric? Did you see anything go wrong where you're like, "Oh, that's actually not a good one to rely on?" Any learnings throughout that process? Ajit: Yeah, look, e-commerce, we have been measuring customer satisfaction for the last, I don't know, 13 years or so. So as soon as I joined the company, two years into it, I figured out that, "Look, we need some form of getting feedback from our customers." So we have a very robust and mature process for eCommerce that we've been collecting roughly 20,000 customer feedback from a survey that we do online. So we have had a model for a long time, that uses the feedback. The biggest challenge, always, I think, is trying to figure out correlation of what factors will drive it. I think that's been the big controversy. So is it delivery metrics? Is it quality metrics? Is it product design? Is it the call center experience? So, I think there is a ton of data, and we have requested data to find out the top factors. And those factors keep changing. So- Stephanie: What are the top factors right now, that you see? Ajit: So what we see is product quality is undeniably the number one thing that the customers actually value. Hybrid customers truly value delivery. So delivery times and making sure that you're keeping your commitment in terms of products. They definitely value help in the call center as a metric. So there's probably a list of about 20, that we track. And the big ones really are product quality, delivery, out-of-the-box experience, those kinds of things. Service, as an example, right? We do surveys of customers on their service. That's a pretty important part of their feedback. But the purchase survey that we do is more around the purchasing experience. And customers are not shy, and they give you exactly you know what is important to them. And the one thing that we find is that some of the metrics that are difficult to move. Like product quality, as an example, Lenovo's product quality is very high. So it's always in the 90% range. And for us to move a percentage point on product quality is very, very difficult. Ajit: But there are several others where, like delivery and other metrics that float a lot more in this, there's ability for us to go change that, if you are focused on trying to drive certain changes. So the key for us is to say, "Which are the metrics that we can influence, that the team can actually take actions? Whether it's on the website, whether it's on trying to do training, or whether it's really trying to figure out how we message things to the customer differently, do proactive phone calls." One of the things that we do. But the key is to really identify those things that truly can be moved meaningfully, and we can put energy behind it, and then keep going. Ajit: Last year, we moved our CSAT score, or our NPS score by almost 35%. So that's a pretty substantially good jump, in terms of effectiveness. And that's because we identified a few things that we thought compelling. We had a business management system around it, we made IT changes. So all those things configured into us focusing and moving things in a certain direction. So I think that's the key. When it comes to customer-centricity, the challenge is that the customers are not standing still. Their expectations are going up every single day. So you have to do a lot more, to make meaningful progress. So you can't just stop. You have to continually change and continually improve the processes. Ajit: And that's always tricky because you have to really be at it, and you've got to use data to really understand what's changed, what's moving, what's the new irritant? You have to do social listening, you have to really start scanning your data that you get from your customers to figure out what's the new irritant, and how are you going to manage them. So it is certainly not an easy process. It's a very challenging process. But it is also something, I think, that is very, very important, if you, as a brand, need to keep your customers happy. Stephanie: Yeah, I completely agree. If you were to point to, the larger theme of being able to improve your customer satisfaction score, what was the largest thing that you changed, or adjusted, that made it so you could improve that score, by, I think you said 35%? Ajit: Yeah. So the one big thing that we changed was, we always had a very high amount of customization on the website. So ThinkPads, as you know, can be customized. And obviously, a customized product takes a longer time than if you had something in stare. So we have traditionally had a lot of our ThinkPads customized. And we made a conscious choice to really figure out how to keep stock of some of our high-flying products, or the fast-selling products. And so, that is a pretty significant shift, because when you have to ship something centrally from one warehouse, versus, you have to ship products from a warehouse or a manufacturing facility to a distribution center, and manage inventory, it obviously is not as efficient as trying to run something directly from the factory. Ajit: But we made the choice to move some other products to local distribution, to speed up delivery of our products. And that definitely helped. And we had some issues with supply. We're having some industry-wide constraints on some of the supply. And therefore, this whole process of managing inventory locally really helped us manage customer expectations a little bit better than what we're used to. So that is one example of what we did, that really helped. Ajit: Now, we also made a number of changes on the website, from messaging, whether it's a credit card processing screen, or whether it's a product page, or whether it's a configurator design. Any number of things that we feel are irritating customers, we have it list of maybe 500 items that we work through at any given time. And everybody is going through those things and fixing it. And then that incrementally adds a little bit of help. But the big ticket items are always around supply, product quality, call center management, pricing, promotion challenges. Some customers see discounts that are different, and I.e. managing those correctly... So it really is those big buckets that we want to make sure that we are focused on, we're fixing. And ultimately, the customer feels like we are being responsive to their needs. Stephanie: That's really fun, haring how you're able to drill in on a few of those things, and shift customer perception and happiness so much. Are there certain metrics that you use when it comes to, like you said, looking at what's irritating the customers, or where the website is maybe failing in certain areas? Is there a set of metrics that you look at, maybe bi-weekly or weekly with your team, to see how things are doing? And if so, what are those metrics? Ajit: Yeah. So when you talk about metrics, we have a website, a technical side of looking at metrics for the website, which is the IT organization that basically looks at all the technology stuff. It is, "What does the response time look like? What is your mobile performance? What's the page performance? 404 errors, page not found, the timeout errors on your checkout page, blah, blah, blah, blah. So there's probably like 100 things that somebody looks at every single day and then we manage those by exception. So we know what the numbers are. There's somebody constantly looking at those. Ajit: Then that is the website feedback mechanism, which is, when a customer comes online, something like our opinion lab, or a survey mechanism that basically allows customers to give you a feedback. So we randomly select customers that are on the website. We actually give them the opportunity to respond to the experience. We collect experience on their research process, their buying process, the website complexity, blah, blah, blah. So we get a ton of feedback from our customers on that particular thing. And then like I mentioned to you, we have this thing called the online ordering experience, and the purchase experience. So we get 20,000 or so responses every two weeks from all these countries, which we analyze. Ajit: Then, we obviously have social listening, where we actually listen to what the customers say. And then that is a common section where customers give us comments, and we use some form of AI stuff, to actually binge through all that stuff, to really get the sentiment analysis, and big ticket items that are coming back. And we take all of these things into a composite score that then allows us to go look at and say, "Where are we falling short? What are the benchmarks? What's the threshold? What's the competitive benchmark that we should be looking at for each of these categories? Best in class." And then we benchmark ourselves and figure out what actions we need to take, based on why this mentions the regression analysis to say, "Okay, these things actually have a meaningful impact through the customer experience. And therefore, we got to go figure out how to remove people who are giving us ones twos and threes. How do we increase our nines and tens? And then everybody in between, how do we move them up," to basically minimize the customer irritations that we have in the system. Ajit: So it's a very systematic process. There is a team that basically looks at it. There's a supply chain element that's very real. There is a services element. There is a phone sales element. There is a chat sales element. So it's a very complex set of metrics that basically transcends all of the functional groups that have a small stake in that experience, as the customer goes from the website research, to buying the product, getting it serviced, talking to a customer rep'. So we take the end-to-end customer with journey and figure out all the points, if they touch something, and figure out how to measure them, so that we have an accurate understanding of where the irritant is, and what we need to do to make it better. Stephanie: Got it. So I know when it comes to getting feedback, I go on websites all the time and it's asking me to do a survey, give feedback, and at least for me, I don't normally do it. I just X-off, and I try and find what I want. How are you incentivizing these potential buyers or buyers to give you the feedback, and take these surveys, and get them to do what you want? Ajit: It's tricky. You have to do it in a way that doesn't bias the sample. And that's what I'm most worried about, is that I don't want to incite people to do the wrong thing. So what we do is, we have a... What I've noticed is that the core customers, they are actually always very vocal, especially if they are a brand loyalist. So we get a steady stream of feedback on brands loyals, which is great because I think they are finicky, and they are brand zealots, and they really take pride in making sure that they're providing feedback on things that they like and things that don't like. And quite frankly, it shapes perception and product strategy in many ways because it's a big group of customers. Ajit: The tricky part is the random customer, or the customer that truly hasn't built a relationship with us but just bought something. Those folks, we have to figure out how to drive the subscription into the process a little bit more meaningfully. We periodically a 5% off coupon. We periodically send out emails to people who have bought product. We always send out emails to people buy products for us, saying, "Give us feedback. Tell us what is it that we have done well, and what are the things that we haven't done well." On the phone, obviously, we have more success because we get a chance to talk to people. But it's a combination of things. In the past, I remember like five, six years ago we would run contest that basically gave prizes for people to actually participate. And then we reduce that a little bit, because it may tend to bias the sample a little bit. Ajit: Look, online reviews is the other one. We have a very robust online review process that we have on the website. So we get a ton of online reviews of our particular products also. So we use that, sometimes, to also incent people to give us more feedback. So there isn't a one size fits all answer for others. It just depends. Again, in some countries we get local feedback, and some others... And so, countries where we don't get as much feedback, we try to figure out what's the right way? Can we leverage our community? Can we leverage our brand? And other things. Can we gamify it? So there's lots of strategies depending on which country and which part of the world you're in, to incentivize the customer to actually engage more readily. In some countries it's a challenge. Just because it is challenging in countries like Europe, where trying to get around some of the privacy laws can be tricky. So it's a balance. But we have tried discounts, newsletters, contests, reviews, and rating, promoting them. Ajit: Having said all that, I do believe that building a community and trying to nurture that community is probably the easiest way for us to get more and more feedback, which is what we are trying to do, is to try and figure out how to engage these customers more meaningfully over a longer period of time, beyond the purchasing. But we're connecting them with the brand. And then, I think that that solves some of the feedback issues, because I think we can get a much higher response rate when that happens. Stephanie: Yeah. I've heard a lot of brands leaning towards that community aspect, at least from the people that we've had on the show. What are some of the initiatives that you guys are doing, to create that community? Ajit: Well, I won't give away all the secrets, but- Stephanie: Just give us a couple. Come on. Ajit: So the big communities that we are focused on, obviously one is SMB. SMB, we fundamentally believe are underserved. And I think that there's going to be a lot more SMBs in the workplace, going forward. Because I think a lot of them are millennials and Gen-Zs are very entrepreneurial. With the advent of technology progressing the way it's progressing, and digital technologies becoming more ubiquitous, but with the online space, I do believe that we will see a lot of internet businesses springing up. It's no longer really difficult for somebody to actually open a business or start a business if they have a good idea. So you will see a significant number of people actually coming online in the SMB space. And we are obviously very aware that we need to provide them an experience, a community, and a set of resources that make them productive and useful. Useful in the sense that, we give them something that is useful for them to be more productive. Ajit: So part of our challenge is to try figure out what is really important for them. So we definitely think community is important. But the work, I think, is very, very important. And the question is, "How do we drive relevance? What is really important for the SMB customer as they are online, beyond the products that they buy from us? How do we get them more out of technology? How do we get the more out of their work, their productivity, and how do we make sure that they are ultimately successful as they are part of our ecosystem?" Ajit: So I'll give you an example. Maybe they can hear from other SMB customers who are probably struggling with similar challenges. Maybe the ability to belong to a community that has other people doing similar things, or at least dealing with broad themes that they're dealing with, money, resources, training, those things become important. So the question is, "Can we provide some of those things to our SMB customers that make their lives a little bit easier, and therefore their affinity for our brand a little bit higher?" So that's one thing that we are definitely doing for SMBs. A lot of work to be done. We are just at the very, very early stages. But we do believe that a well thought out, longterm strategy will definitely help our ecosystem and our customers. Likewise, we will be thinking about students and gamers, and trying to figure out what we can do meaningfully to nurture the relationship we have with them. Stephanie: Got it. Have you shifted your strategy around online learning, students, gamers, since Covid started? Did you guys have to go into a quick pivot mode to start doing something different or planning for a different future than what you were maybe planning for six months ago? Ajit: Well, we started this strategy two years ago. Haven't changed much. So therefore, we do have a leg up because we have been thinking this for a little while. Covid just made it a little bit more easier to sell, and get traction. But the strategy we are on has basically been in place for a while, because we have been building IT capabilities and some of those things that we need to service our customers. This is not something you can just spin up in a day. These take much, much more longer-term. And there's plenty of partnerships and relationships that are [inaudible 00:42:24]. So it's not, certainly, something that you can just copy, or you can just do. It is capital-intensive. You need to put money into it. You need to do a lot of development. Do you need to really start thinking about the strategy much more clearly? So it's certainly not something that's the thought about yesterday. But I think that there's a lot more that we need to do to be relevant and to drive this to a scale. Stephanie: Cool. So I've heard that you like behavioral economics. I was wondering- Ajit: Yes. Stephanie: Yeah. I watched a few videos. I'm like, "Oh, me too." What principles have been useful, or how have they shaped the digital experiences that you build at Lenovo? Ajit: Yeah. Look, pretty much everything that you do on a website, or you do on business lends itself to some of the principles from behavioral economics. And some of them that are really interesting... I became a fan of behavioral economics with Dan Ariely, who basically is local here at Duke. And we had Dan come to campus and speak to our people a couple of times. This was like maybe seven, eight years ago. So I've been a big follower of it. And clearly, what I understand from it is that people are predictable, and they can be predictably irrational in how they make decisions. So sometimes, common sense is probably overrated, believe it or not, when it comes to some of the design principles and some of the things that we do from a merchandising and marketing standpoint. Ajit: So big couple of things for me is, look, people want to compare things, right? And they freeze when they're not able to compare things that are similar. If you give them these similar things and ask them to compare it, they always rationalize it to something that is a common denominator. So as an example, you don't have to bet an apple to an orange. Obviously, they are very different fruits. And to ask them to really say which one you like more becomes a preference issue, more than a rational exercise. And so, if you're truly asked them to assign value to it, more likely, they are going to say an apple cost $1 and an orange costs 50 cents. So maybe the apple is 2X better than the orange. That would be the natural way of thinking. Ajit: Now, when you tell them to compare a PC of one kind to a PC of a completely different kind, they are likely to be completely lost because they just are not able to understand the fundamental differences between them. Or, it would take them an inordinate amount of time for them to actually compare the products, disparate products. And so what they do is they start thinking about price. And price is not necessarily the best way to make a decision on something that basically is going to be your technology partner for a few years, and going to make you productive in the kinds of things that you need to do. Ajit: So I've realized that look, you have to really enable a comparison of products in a much more meaningful way. So make sure that the customers don't have to really go out of their way to think about how to compare products. And obviously, it's challenging when we have so many products coming out at this breakneck speed, that some of the technology cannot keep up. But to me, comparing things is an important paradigm, in my opinion. Stephanie: It brings back the memories when I used to open up a bunch of tabs to compare products before the company started shifting to that comparison model. But I do still think there's a long way to go when it comes to, especially comparing tech. Because when I'm looking at a computer and it's saying, "Here's all the specs of this computer." A lot of those things, I don't even know, why would I want to upgrade? Whereas if it said, "Well this means that you'll be able to store this many pictures versus this." Or, "You'll have a much faster internet speed," or, "Remember how your computer's working really slowly when you try and open up Photoshop? It won't do that anymore." It would be nice to start seeing a more consumer perspective of, "What does this do for me?" Instead of just being like, "It's this many terabytes," and all the technical specs to it. Are you all thinking about that kind of shift, or how are you incorporating them? Ajit: Definitely, comparison of products is a big thing. Search, how you do search comparison is a big thing. So we are absolutely focused on it. And to make things worse, the mobile form factor doesn't facilitate very readily, comparison of complex things. So we have to figure out more elegant and meaningful ways in which we can have people compare products on a small form factor like a phone. So yeah, clearly very, very important, on top of our list. Always challenging, always evolving. So yeah, we have to go figure out how to do that. Ajit: One other thing that I would tell you when it comes to behavioral economics and behavioral science is, bias, the role of bias. And I think that this is a big one because I think people will generally, when they're making decisions, executives like me included, we make decisions based on anecdotal evidence, based on what we have done. And we take that size, and of one, and we try to generalize, hypothesize our theory based on a bad experience or a good experience. And we extrapolate that to the population and end up driving everybody crazy and not looking at numbers the right way, and ignoring numbers, and making decisions that are suboptimal. Ajit: So, the work by Kahneman and some of the work that the Israelis have done, especially because it seems like that's where all of the cool stuff is coming from on behavioral economics, from the Hebrew University, the work is really, really telling us not to be biased, and to suspend judgment, and to really focus on what the data tells us, and to pay attention to not fall into the trap of the bias. So, it takes a while, and it takes a lot of effort, but I think it's a good reminder for us to really focus on managing and minimizing our biases, so that we can make optimal decisions that affect our customers in a very positive way. Stephanie: Completely agree. Do you all do trainings at Lenovo? Whether it's for the executives, or the employees, when it comes to how to create surveys and look at the data in a non-biased way, and collect data from certain people, where it's not biased. Do you do anything around that to teach those principles? Ajit: I also teach, sometimes. So I have been pushing this very heavy and hard with my teams. And obviously, a lot of the executives read these books, so it's not lost on them. But look, because we have such a huge direct customer-facing interface, the focus on the online space has to be much inordinately higher, because I think the impact is much, much higher on the direct interface. So we are definitely driving this. A lot of our people are classically trained. They all go to classic UX/UI trading. But more and more, I also have started relying on quantitative data at scale, for making decisions, rather than opinion. So I am not, and my team hates me for this. But I'm not a big fan of qualitative information. I would much rather not ask people anything and just look at the data and interpret the data and start making decisions. Ajit: Because people say one thing, and they do another. And it's not a new notion. I think a lot of people know this. And at scale, when you're talking about tens of millions of records, I think the data doesn't lie. In fact, if the data says that, then that's what we should do because it services a majority of our customers positively. So that's the other principle that I use is, "Don't ask, just look at the data and try and make decisions based on the data. Try to understand the data, and then design your tests and your experiments based on what you see, rather than asking a bunch of people in a panel, and they'll tell you some stuff." And I'm sure it goes in some places, but I am always skeptical when that happens because I'm worried about bias. Stephanie: Do you think, from your experience, a lot of companies are still focusing on that qualitative data and it's actually leading them down the wrong path, or they're creating either new products or new website experiences that are probably going to fail because they're using that qualitative data? Ajit: I am sure people are. But I think people also... They all read these same things. But I think there is probably enough anecdotal evidence that suggests that there's lot of people who still use those principles. So I don't know the exact number, and any guess that I would venture would be wrong, so I would not venture it. But my sense is that yeah, it requires activism, like for some of the people and the executives, to actually read the books, get interested, get excited, and then drive everybody to get to follow it and understand it. It's a field that's still evolving. So it takes effort. Right? And then the infrastructure that's needed to do at-scale testing, and A/B testing, they're not cheap. It's expensive. Ajit: So, I think the question is, how many people are driving digital transformation? How many people are digitally savvy? How many companies are? And my sense is that that's a very small number. I think everybody's talking about digital transformation now, because of all the issues that are around them. But I can tell you that the number of companies that are digitally savvy after you take out some of the tech companies and the internet companies, is very small companies. There are a few who companies have a pretty big gap. So my sense is that they're not, probably, using it as much. Stephanie: Yeah. I completely agree. So, zoom out a bit for the last couple of minutes. In the world of e-commerce, are there any big disruptions you see coming or what do you see in the future, that you guys are planning for? Ajit: Well, I think this whole transformation, this whole crisis actually points to the fact that the digital transition will be much faster. I think that people have realized a couple of things. One, travel, may be overrated. People have realized that education, going to school, sitting in classrooms, may be overrated. People are going to realize that working from home is not such a big deal. And so, I think the workforce productivity, the online education, travel as a paradigm, and how companies operate, all of that will, I think, become ripe for disruption. So you will see, increasingly, technology solutions practices that's going to upend a lot of the work practices, and the educational practices. So that's happening. That's going to happen, and it's going to accelerate. Ajit: Clearly, I think that this will also boost some of the technology things like AR, VR, IOT, both from home and from work. I think it'll accelerate some of those things because it'll be a natural extension of some of the things that people are doing. I think the move to cloud is going to get accelerated, because I think everybody wants access to everything. As 5G comes, I think a lot of these things that are laborious today might experience a complete revival, and complete transformation when it comes to speed, and feel, and what's possible. So I think that the time is right for us to get much more digitally-connected. Ajit: The last one is mobile, in terms of what's going on with mobile and how mobile is going to get a face, or as 5G comes on. So it'll be interesting to see how retail, how millennials and gen-Zs, how SMBs, all of these groups of people that make up a pretty significant part of the population... I think students, gamers and SMB is probably at about 40% of the world's population. So you'll see that there's going to be a significant shift, quite rapidly, in the next three to five years. And there's going to be a considerable amount of disruption that'll happen as a result of this. Ajit: You will see winners and losers. This will be probably a long list of people we're going to go out of business if they're not able to adapt quickly to some of the changes that are happening. The companies that get it naturally will have much bigger gains, which will make them much more competitive, and difficult to beat. So you will see a lot of winners and losers emerging out of this whole crisis, and as the digital evolution continues in a significant way. Stephanie: Yeah. I love that answer. So before we move on to the lightning round, which is where we ask a question and you have one minute or less to answer, are there any other high-level thoughts or words of wisdom that you want to drop in the podcast? Ajit: No. Well, I just tell the people who are in this space, the eCommerce space, that their time has come, finally. So they should just buckle up and help their companies and see where the ride goes. Stephanie: I love that. All right. So the lightning round, like I said, brought to you by Salesforce Commerce Cloud, is where I will ask a question and you have one minute or less to answer it. Are you ready Ajit? Ajit: Okay. Stephanie: All right. What's up next in your travel destinations, after we're allowed to travel? Ajit: I would like to go to Cuba because I'm running very low on my cigars. Stephanie: Wow, that sounds cool. All right. What's up next on your Netflix queue? Ajit: I just finished Ozark. And I'm trying to figure it out how to watch The Last Dance. But it's not on Netflix, unfortunately. Stephanie: Maybe Hulu? Ajit: I've been watching Heist. So maybe I'll keep watching that. Stephanie: Cool. What's up next for... Is it lunchtime there? I guess a little bit past lunch. What's that next for dinner? Ajit: Dinner, I had cooked on the weekend, some lamb curry and some roti. So I'm going to just reheat that and eat it. Stephanie: Yum. What's up next on your podcast list or your reading list? Ajit: Ah, reading. I'm reading The Billion Dollar Whale. Stephanie: What's that one about? Ajit: It's about this dude, Wall Streeter, who basically flees a billion dollars right under the nose of Wall Street and big finance people and everybody else in the world. So it's like DiCaprio movie. Stephanie: Oh, which one is that? The Wolf of Wall Street? Ajit: The Wolf of Wall Street. So it's loosely a character like that. So I'm just a quarter into it. It's unbelievably engaging and interesting. Stephanie: I have to look into that. Ajit: Yeah, you should. It's pretty cool. Stephanie: You have a few, you said? A few more books that you're working on? Ajit: I still haven't finished Homo Sapiens, and some of the books that he had written. So I'm still trying to figure it out when I can finish those, with things slow. Stephanie: All right. What's your favorite tool or technology that you're either learning right now or you're thinking about implementing in the future? Or it could be a skill? Ajit: I don't know about skill. I don't know very many skills. Technology. We are constantly thinking about technology. And the big technology that we are thinking about is how to drive the subscriptions business. So it really is trying to figure out how to give customers the convenience of buying something as they pay-for-use concept. Because I think it's becoming very, very clear that the reason why people like Netflix and Adobe and some of our other customers and clients are successful, is because people are able to pay. And in [inaudible 00:58:45], I think that business model is very appropriate. People don't want to spend a lot of money upfront. So trying to figure out how to make their lives a little easier. Stephanie: Awesome. Yeah, I definitely- Ajit: Hello. Stephanie: Subscription business. All right, the last big one. So it sounds like you guys are doing a great job of staying ahead of expectation, and your competition. So in your opinion, what's up next for e-commerce professionals? Ajit: Well, I think it will become a key priority for most organizations. I think the digital transformation plus e-commerce, if they are in a business that does e-commerce, will become a major priority. The key will be to try and figure out how to build out that strategy in a meaningful way. If they are global, I think they have to figure out how to make it more global. If they are not global, they have to figure out how to get more local. Either way, you really have to figure out what that business model will look like. And it's not going to be easy because you have to deal with legacy systems, and you have to deal with legacy operating processes, and you have to deal with the legacy sales force and the legacy set of go-to-market strategies. So trying to figure out how to meaningfully make sense of it. There's a bunch of companies that are doing well. But there's going to be a bunch of companies that will have to figure this thing out. So they will be busy, and they will be in demand. Stephanie: Awesome. Love it. Any final plugs before we hop off the podcast? Ajit: No. I just want to say that if you have good people that work for you, you should try and figure out how to hold on to them, because it's going to get a mad rush to get to good people. Stephanie: Oh yeah. I completely agree with that one. All right. Ajit, it's been a blast. Thanks so much for coming on the show. Ajit: Thank you so much, Stephanie. I enjoyed our conversation.  

After working for some of the biggest tech companies in the world, Nate Bucholz was ready to leave his Google and Facebook roots behind for something smaller and an opportunity to experiment and move fast. He found that opportunity at Cardlytics, where he serves as the Vice President, eCommerce Partnerships. In this role, Nate and his team are working in new and exciting ways on a platform for an industry that isn’t typically considered new or exciting. Cardlytics works exclusively with banks to build their digital and eCommerce platforms, connect with customers and create rewards programs that lead to mutually beneficial relationships between customer and company. And to do all this, Nate and his team are analyzing troves of data and using technology in unique ways to truly perfect the digital experience for all involved. On this episode of Up Next in Commerce, Nate explains it all, including what data is the most telling and how to utilize said data in the best ways possible while also building and maintaining trust among all parties involved. Key Takeaways: Forget metrics about who and how many people are on your platform and really hone in on where they are laying out their money. Then use that data to decide where your marketing dollars should be spent Using anonymized data, you should isolate data sets and analyze specific behaviors to predict who might leave your platform or service, then create an action that will make them stick around The ROI from purchase behavior insights comes when you change your targeting practices based on the data you collect 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 another episode of Up Next In Commerce. This is your host Stephanie Postles, and today I'm joined by Nate Bucholz. Nate, thanks for coming on the show. Nate: I'm happy to be here. Thanks for having me. Stephanie: Yeah, and where are you in the world today? Nate: I am sitting in my office/guest bedroom in Alameda, California. Stephanie: Yeah, keeping all the kids out as best you can. Right? Nate: The door knob rattles, but it is locked so we should be safe, I hope. Stephanie: We'll see. Yeah, once all this is over, it'll be nice to be able to bring people back to our studio and not have to do bedroom meetings anymore, but for now we'll make it work. Nate: Sounds very scandalous, but yes. Stephanie: It is a little scandalous. So I'd love to hear a little bit about, actually, I want to go back, back background on you. I want to start in the early days because I saw where it led up to, of working at Google, and Facebook, and where you're at now at Cardlytics, and I actually was wondering, I'm like, what is Nate's first job he had because everything else looks amazing. Was he working out on a firm when he was little? What was your first job? Nate: I was a dishwasher at a local restaurant in Lake Oswego, Oregon where I grew up. Stephanie: Oh, that's awesome. Nate: Worked my way up to busboy and waiter at some point. Stephanie: Very cool. Yeah, I think a lot of us started out in those kind of, I was a silverware roller, and so I would just roll silverware for eight hours a day. And I asked to be a hostess and they were like, "No, you can't be a hostess yet. I mean, you're not that senior." Nate: You've got to earn that. Stephanie: Yeah. It was good times. So you went to University of Oregon, right? Nate: I did, yeah. I did my undergrad there and then went on to work in public relations for a little bit. I had the, not so enviable job of getting good press coverage about Windows in Millennium Edition which is quite old now, but it was pretty the bad operating system and that was my first time- Stephanie: Oh, man. Nate: ... post college job. Stephanie: I'm sure you learned how to be pretty scrappy in that job though, don't you think? Nate: Yeah. I mean, there's always something good I think that you can find or an audience for a product if you can find the right one. After that I was in the Peace Corps for a couple of years in Ukraine doing business development and volunteer work. And then I came back for graduate school here in the Bay Area at the hospice and school at UC Berkeley. Stephanie: That's Cool. And then did you head right to Google after that or was there something between? Nate: I did, yeah, there was a brief internship, but after getting my MBA I went on to Google, in a travel vertical, or their travel vertical, I should say, up in the Seattle office. Nate: I was going to say that I was with Google for quite a long time, almost 11 years, and got to move around in a good way quite a bit. So I started out in Seattle and travel, then moved over to our London office for four years where I led a sales team there and so I oversaw the advertising sales for airlines and car rental. And then my wife and I had a son while we were in London and it kind of changed the lifestyle a little bit. We decided to get back to the US, moved back to the Bay Area, in retail-focused industry, mostly e-commerce, for about a year and a half, and then, actually, the last intake Google was in Malaysia where I was in the office in Kuala Lumpur looking after the branding and YouTube partnerships. Stephanie: Oh, wow. Very cool. What was that experience like? Nate: It was great overall, personally, it was amazing. We had this amazing expat lifestyle where our son was in this wonderful private school, we had lots of travel and so forth. Professionally, it was a real challenge, there were some of my, I'd say professional strengths that kind of turned into weaknesses in a different environment. Being quite loud and outspoken, and non deferential, didn't apply necessarily so well in some of the situations over there. But I mean, it was great. It was a good learning. Nate: At the same time my whole career had been and is now, once again, focused on more direct response marketing. And I had jumped not only into a new geography but also into the more brand forward environment working with Johnson & Johnson and Procter & Gamble and kind of the sort of traditional marketing that would have been on TV before, and online now is more about reach and frequency rather than getting people to buy things immediately. So that was also a new world. Stephanie: Got it. So then you quickly decided to head back to your e-commerce marketing type roots and go to Facebook afterwards? Nate: I did. So it was a finite assignment over in Malaysia and when I came back with Google I kind of felt like I was coming back to the same thing that I had left and I wanted to do something different. Facebook offered me a role, very similar but leading the team that that worked with one of their very largest advertisers. And that was more of a product heavy role in terms of working with the product teams to build things that would allow the largest, most sophisticated advertisers to grow their spend more. Nate: It was interesting, there were a couple of things that prompted me to leave. Which one was, it was very similar to Google, which is a wonderful thing, but you're part of a giant machine and it's hard to feel like you have a real big impact. And at the time, though they've changed this and allowed people to work from their San Francisco offices as well. I was commuting down to Silicon Valley from Alameda, which is about an hour and a half each way. So- Stephanie: Yeah. No, thank you. Nate: ... it's kind of brutal. And actually a colleague at Facebook connected me to someone they knew at this company I had never heard of, Cardlytics. It's a ad platform, much like Google and Facebook, except it operates entirely on banking channels. So if you log into Bank of America or Chase, Wells Fargo, one of many, many banks, you'll see offers from different companies for some sort of incentive to purchase like a cashback rewards or something like this. And that's where we operate. Nate: And it's a much smaller company for one so I enjoy feeling like I have a bigger impact, but the common thread through these three companies that they all sit on an amazing trove of data. So Cardlytics can analyze the purchase behavior of about half of the credit and debit card swipes in the US and we're in the UK as well. Stephanie: Wow. That's a lot. Nate: It is. It's amazing. And so I've learned from Facebook and Google that when you've got an amazing first-party data set, then you can kind of get a seat at the big kind of table and so it's a lot of fun to analyze that and see how it can apply to marketing. Stephanie: That's cool. Were there any learnings that you had from Google and Facebook that you kind of brought with you or best practices when working with large brands or a large e-commerce like store owners that you saw where you're like, Oh, a lot of people were doing this and we noticed that was actually the wrong move, or here's some best practices we learned from the top brands that smaller brands could apply, that you maybe brought with you to Cardlytics? Nate: Yeah, I mean, the first thing that I tried to do with my team when I came into Cardlytics was change the mindset about what is big and the impact that we could have. So we'd gone from this really small company to now, there's about 400 employees, and we've been public for about a year and a half, but it's still pretty early, pretty young. And I think a lot of the Cardlytics employees had viewed the going public as, Hey, we've reached the big time and we've made it. And I kind of tried to share this viewpoint of the ad budgets, the marketing budgets that are out there, the potential for growth that I saw at Facebook and Google to really kind of pay them big I would say. Nate: And I also saw that because Cardlytics is a different sort of advertising platform, but a lot of the language was language that we spoke internally and we have kind of impressed that upon the marketing teams and so there was a lot lost in translation. So I think one thing, Facebook and Google have almost been able to use their own language because they're so large, but it's become industry standard and we need to conform to that to make it easy for marketers to make apples to apples comparisons when they're thinking about their budgets and how they spend it. But there's been an evolution. So I started Google in 2007 and at that time it was all about search and it was all about clicks and- Stephanie: And still is. Nate: Well, it is, it got more sophisticated though, you know what I mean? Stephanie: No, no. I mean, I just left, let's see, two years ago from Google and I still feel like they're so heavy on search. Nate: This is true but it was the greatest sales job in the world. I'd go in, I'd say, well, you got a hundred clicks, but your competitive group got 200 clicks so let's go ahead and double your clicks. Here's the budget that'll do that for you. But it evolved, it went to measuring the money that was spent off of each click for example, looking at your conversion rates and getting into the mobile experience, trying to get marketers to catch up to consumers in terms of the fact that everybody was shopping on their phones or a good enough amount of people to warrant some serious attention. Nate: And then moving on over to Facebook, because Google had that first mover advantage of everything being based off of what you see from the click, it was trying to open up people's eyes that there's more than just last click when you look at an attribution model, that there's a lot of influence that happens prior to that. And Facebook always, we always said internally they figured they were undervalued by like 30% because of all this view through attribution that they're losing. Nate: And then ironically getting people to stop targeting so granularly, even though it's possible to let the machine do its work and start doing machine learning, based targeting so that Facebook could open up its inventory more. And I think that the evolution, and I'm definitely biased obviously, these are the moves that I've made in my career, but part of the reason I've made these moves is I see the next stage of marketing getting more and more rigorous about what is actually bringing an impact. This is why it was so hard when I was doing branding work in Malaysia. It was not so much a return that was required, but a reach and frequency, and it didn't really matter how that was gained. Nate: It was just, let's hit a lot of eyeballs a lot of times, and Cardlytics is on a totally other end of the spectrum where it's not even about your interests online. It's just, where do you lay down the money, on what sort of categories, what have you done in the past, what's the basket size and the frequency, and these sorts of things. I think that's a natural evolution of marketing as you get better data, you're able to cut out the waste more and more and get more efficient. At least that's the idea. Stephanie: Yeah. How do you see marketing spend evolving over the next couple of years when it comes to measurement and ROI? Do you think it'll change how people think about things? Like you said, they used to just think about clicks and maybe impressions and then they started niching down a bit and wanting to actually target maybe who their customer is, and where do you see that heading over the next five years? Nate: Five years is a long time to make- Stephanie: I was going to say 10. Nate: Oh, my gosh but yeah. It'll be implanted in my retina somehow in my screen. I think, obviously I'm talking to you now from my guest bedroom and there's this whole pandemic going on. These kinds of catalyst events are what I think make large vector changes in things that would happen slowly over time anyway, right? There's a shift to digital over time. If all of a sudden everyone's TVs had exploded, there would have been a faster shift. And I think that the fact that a lot of marketers have either pulled back their spend or just paused all spend entirely, means that there's going to be a whole new shift when they go back to whatever the new normal is because you're going to look at every channel from a totally fresh perspective. Nate: And obviously things have shifted online more and I have some interesting stats that I can share about that as well. There's been this online shift of people who maybe had never purchased groceries online or maybe they were happy just with their broadband cable and now they're doing all sorts of streaming services, whatever it may be. So I think online is going to benefit a lot as people see that they didn't have such a huge downswing or maybe they didn't notice a big change when they canceled some channels and not others. Nate: But I also think over time, and we were really good selling with data at Facebook and Google to explain why more and more money should be shifted through those channels. And they weren't bad decisions but there are a lot of other marketing channels out there. Obviously, Cardlytics is one on my mind but there are several that have the scale and have the data to challenge some parts of the marketing budgets that have just almost, not mindlessly, but I don't know if they've followed the trends to shift to Facebook and Google. Nate: And so both of those channels have diminishing returns. Like your first audience that you target on Facebook will have amazing ROI and pretty soon you're going to get a look alike audience and pretty soon you're going to just kind of expand it out and the ROI falls as you do that because it's a less rich pool of potential consumers. And it's the same thing with Google, if you think about the keywords and for some reason I use running shoes as an analogy a lot, but that first keyword that says, I want to purchase running shoes today, will have an amazing return if you bid on that. Nate: But there's only so many and if you want to grow, pretty soon you're bidding on tips for healthy lifestyle or something like that. You're still trying to sell some shoes, but it takes a lot more clicks to get those shoes sold. And so one of two main points that we try to make when we speak to marketers is, Hey, listen, you'll be fired if you don't advertise this on Facebook and Google because they're amazing channels and you should use them. But there's a point where just because it's easy doesn't mean you pump more money into those. You need to take the lowest performing set of your marketing spend and see where else you can put it. So that's a lot of the conversations that I'm having these days. Stephanie: So you said you have access or, Cardlytics has access to lots of data and I think right now is a perfect time to wonder what kind of spending habits are happening in this COVID environment? What are the changes occurring? What are people spending on? What kind of info do you have to share around that if any? Nate: I have some interesting info. So we have a great marketing team but what I meant to say was, also we have a great analytics team and no more than a week into this stay at home lock down that most of us are experiencing, they built this dashboard where we're looking at quite granular categories and how the spend is changing year on year, updating every week, looking at all the different DMAs in the United States, and so we can see what happened. And right around the beginning of March, all spend everywhere just plummeted, as you'd expect, online as well. And if you look it's quite a depressing heat map. It's just a red United States with various shades of red. Stephanie: Yeah. As expected I guess, but still sad. Nate: It was sad, it was sad. However, we've seen some interesting shifts and there's some that are pretty obvious, like people shifted to online grocery for example. There are others that are coming in that I think are kind of interesting and you saw where it was quite depressed in the home improvement category for example. And now online for home improvement has gone up like 64% last I saw, and you'd see where there's this trough of people not doing anything and hunkering down and then all of a sudden they start spending on their homes. What happened- Stephanie: Oh yeah. Getting all handy at home. I can- Nate: Exactly. Stephanie: I started looking at things being like, could I fix that? No. But it's a good idea. Nate: Following home improvement was when parents I think started to lose it a little bit and so the online toy purchases and kids' products have gone up significantly. We just bought a small kitty pool to put in the backyard as we realized we can't go anywhere else. Stephanie: Yeah, I bought into that as well. I bought a, let's see, a scooter for my two year old, a lawn mower bubble machine. I'm like, anything that helps, here just take it. Nate: Absolutely. Exactly. So health and beauty has gone up a lot and pet goods up a hundred percent. A lot of that is shifting from offline to online, but that's one that happened almost right away. And so you see, and I guess these aren't surprising, it's following what you'd think of in human behavior, but make sure the kids are occupied and, Oh my God, what if we run out of pet food? And so that's gone up quite a lot. Nate: But I think the bit about online versus offline was a little bit surprising to me, but I suppose makes sense. And lends itself to how I think marketing is going to change, is how it's changed geographically over the United States. So if you look at online spend year on year, it's gone up across the United States, but on the coasts, especially if you think of DMAs like San Francisco and New York, it hasn't gone up as much because I would hypothesize there's not as much change in behavior that's really needed. People are already buying largely online. Nate: If you look at the smaller DMAs, especially the more in the middle of the United States and just smaller city areas, they've spiked a lot more. And so their year on year changes are more toward the high, not high, but mid double digits increases in online spend. So that's one of those catalysts like I mentioned where maybe people were just fine doing their brick and mortar shopping because that's what they were used to and their peers and people around them in their communities were kind of doing the same thing. This has really changed the behavior specifically in these smaller DMAs. And that's where I think after this whole thing is over, you'll see a level rise in e-commerce. Some people will go back to their old behaviors, but I think a lot of them will stick. Nate: And I was reading an article of some, there was a financial article and this guy was, I think he managed a hedge fund or something like this, and he was writing about how shocked he was at how easy online banking was, which is like, well, I've been doing that for a long time, but there's some people that were just stuck in their old ways. And once people realized that it's quite easy to get your groceries delivered online or to do whatever shopping it is online, online banking, we've seen an increase, which has obviously helped Cardlytics since that's our whole platform, is online banking. Nate: But I think those customers, some of them will stick around and the challenge for marketers that we're starting to talk about now is, Hey, if you are lucky enough to see an increase in your category, as soon as things start going back to normal and businesses start opening up in reality, like brick and mortar, how do you retain those customers? And I think that'll be a big challenge for marketers just to hold onto as much as they can of whatever they've gotten from this if they're online already. Stephanie: Is there any advice during that transition of like, here's some ideas of what you could do to kind of keep that clientele? Because I could see you're saying the more urban areas who maybe were not online before, having to use different messaging for them to convince them, this is still the way, which it probably is. Like online banking, whenever my parents were like, I'm headed to the bank to cash a check, I'm like, Duh, why? And they're like, I'm not doing that on the phone they might take my data. And I'm like, okay, go ahead. You drive 15 minutes to go cash your check mom. But is there any different advice that you would give for those kinds of communities who maybe weren't online for certain things before versus other ones that didn't really change as much? Nate: Yeah. I mean, it's going to be, a loyalty marketers are going to be in their sweet spot where that'd assist building that, but there's a lot of companies that we work with that are all focused on customer acquisition, and they're loath I think to spend advertising dollars on existing customers because they already have their access to these customers, whether it's a mailing list or whatever it might be. But the reality is a lot of those emails aren't opened or bounce or for whatever reason. I mean, even Amazon advertises quite a bit with us and just because you have people shopping in one business area doesn't mean that it's easy to get them to shift to another business area. Right? Nate: So what we've been saying is, before these people leave let's anticipate who's likely to leave and we're looking into models for propensity to churn, for example. So we can look at who stops using a certain service or stop subscribing, and then look back at six months and when I say who, this is all anonymized data. By no means do I know you and your bank account. I would know bank account, 5632 or whatever it might be and a whole group of them, but what is the change in purchase behavior that happens leading up to this and then who can we identify that hasn't yet churned but is starting to exemplify that sort of behavior. And so you can start isolating groups that maybe haven't reached this type of loyalty that means they're going to stick around. Nate: And it could be as simple as just analyzing your own data as a marketer and seeing what's the average frequency of purchasing or the spend amount of those who have stuck around for a long time. And then those who are, we call them one and done, right? They try the service because they have some offer and then they're gone. And the people that are still beneath that threshold, whatever it is that you designate, are the ones that you need to invest in and hit up with a message before they go away. Stephanie: Got it. What are your views on how e-commerce is going to change after all this is done? I know that certain people will be doing more things online, some of them might drift back to their old methods. Is there any other things that you see happening or changing for good or are new things coming about over the next year or two after this kind of calms down? Nate: Speaking as just a consumer one thing that's been convenient I would say is, I'd like the ability to go into a store of course, but those that are open, that do curbside pickup and things like this, they all want payment beforehand online, right? So there's no contact between two people. I think I could see a mesh of online and offline happening a lot more frequently where you've already selected whatever it is that you want, maybe you've already made your payments, whatever it is. So that when you go into the store, it's more like an Amazon store almost where you go in and you get your goods and you just leave. Right? Nate: So using technology even in the brick and mortar environment to make a more seamless process and it can allow for maybe fewer lines, better customer service, that sort of thing. I think on the marketing side, e-commerce is nothing new, but I think this shift is going to mean even those that had topical knowledge of things like measuring incrementality or looking at the analytics of their marketing programs, they're going to be forced to dig in even more because it's just going to have a shift in importance and you can no longer be on the surface and do your marketing. I think there's going to be a requirement to dig in a little bit deeper on the numbers and know the impact of your marketing. Which I guess is a natural trend anyway, but as I said I think this will accelerate that. Stephanie: Yeah, completely agree. So you said you have 50% of insight into the spend in the US with people moving to more banking online. Where do you guys project yourselves to be within a couple of months? Do you think you'll have 60%, 70%? What are you thinking? Nate: Well, the percentages is derived from the banks that we have partnerships with. I'd love to say they're nimble and quick to form these agreements, but it takes a long time. But Cardlytics, when I joined, or I guess for most of its history it was this long tail of credit unions, there is something around 2000 financial institutions in our network, but it's a really, really, really long tail. The anchor partnership that we had was Bank of America, and then early last year we brought Chase on as a partner, and then Wells Fargo and later this year will be US Bank. So it will grow but it happens slowly over time. The shift online just means that there's going to be more people who are, hopefully, interacting with these offers and looking a little more closely at their finances and hopefully, using our ad network kind of more regularly I suppose. Stephanie: Got it. How does that partnership work? Because I was reading through that you guys partner with the banks and you run their rewards programs, right? And in turn you have access to the data and all that. Can you explain that a little bit more because it's a super intriguing model, but it also sounds very complicated where I'm like, wait, who's doing what? And so you guys are running rewards programs, and you're doing marketing stuff. How well does all that work? Nate: Yes. So we kind of think of it as three groups that that can benefit. So you've got Cardlytics and we take in advertising revenue, which is wonderful and we like that. You've got the bank and the reason the banks are motivated to do this with us is because they get to offer something to their customers that's a value add. So we call them offers rather than ads, which they are. And so a logo that'll allow you to have say, 10% back if you go and purchase with a certain company. Nate: And from the bank's perspective, they're differentiating themselves from some of their peers who might not offer this. And a customer comes on and says, Oh, well, because I'm a customer of Chase, look what they're offering me, this 10% back or $5 back or whatever it may be. And in fact, when you do get your money placed back into your account, the money comes from the bank. So this is why the average consumer hasn't heard of Cardlytics, because Cardlytics is simply the, I guess the technology behind the platform and the Salesforce to bring on these brands. Nate: And so we will share some of the revenue that we bring in with the banks, but a large portion of what we share goes to the customers. So I think we've rewarded something more than $500 million in these rewards over the course of when the company's been doing this, which is great. And then we retain a portion as well. Stephanie: Okay. Got it. And then how do you take that data that you have access to? What do you do with that afterwards? Nate: Right, so the data, it all remains behind the bank firewall and when we analyze it at all, as I said, is anonymous as far as who it is. But we can look down to spend at a zip code level and we look at category spend and all this. The way we do it is in a couple of ways, primarily it's to target. So we might say, Hey, we know people that like to buy pet food but they've never bought pet food with your company, and we'll show an ad. We can get quite granular with that. We might say someone who did buy from your company six months ago but then hasn't bought since is a lapsed customer so let's target them. Nate: At the end of the campaign a big differentiator is that we'll actually look at the incremental impact of the ad.So we'll do a holdout group, and it's just a test versus control, which is not totally uncommon in marketing, but the difference is we know who's spending the money and who's not spending the money. And so we'll take this holdout group, we'll make sure that the way that they spend is the same as the test group by and large over the past year or so. And then we'll just look at the lift in spend between those who saw the ad and those who didn't, and the idea is that it would take into account anything you're doing on TV, on Facebook, on Google. So at the end of it you can actually say, well, what was the incremental gain that I got for the money that I spent? Nate: And incrementality is tossed around a little bit, but at an analytical level, at a 95% statistical confidence, you can actually see what the impact is of the ad spend, which is kind of the- Stephanie: The goal? Nate: The end goal. Right. And so that's quite interesting, and then I would say the targeting and the measurement are the primary ways that we use the data but we'll also work with some of our advertising partners to show a different business insights. And we can look at where the, if you shifted spend to you, where did it come from and how did that change over time or we can look even at, for brick and mortar companies, we've helped them decide where to open businesses based on where they have low market share and where there's increases in demand and things like that. Nate: I mean, it's almost endless, the possibilities, as long as we are careful about observing our, we don't want to give too much data that anyone would be able to make market decisions or certainly not reveal anything personal about a customer, which we don't have access to any way, the banks scrubbed that before we get that information. Stephanie: Yeah. They know better. So is there any themes that your partners come and ask you guys for help with, like you said some of them asking for where to open a brick and mortar location. Is there a couple of questions where you're like, Damn, we get this a lot, them coming and asking us for help around this or that? Nate: I think a lot of them are curious if their perceptions of market share are real and whether they really are strong or weak in certain areas and we can confirm that for them and help sustain it or change it depending on the situation. I think that's kind of the most common but I'd say also, as far as spend categories, people are curious about who their competition is. And by that I mean it might not be the same type of service. Nate: So if you think about audio streaming, is that a competition for book purchases or is it competition for music streaming? Is it books on audio or is it podcasts or is it music or is it something entirely different? Is it, I don't know, travel or sporting goods or something like that, and so we can actually look at, in a campaign, if you bring over customers, where does their spend decline in other areas? Nate: So for example, on podcasts and books, the competition is share of ear, if you will. So they might decline in how many books that they're purchasing, but actually they'll be more correlated to maybe fewer premium subscriptions for music, as an example. Which makes sense I guess, like there's only so much time you can put something in your ear and go about your business and listen to it whether it's a spoken word or it's music, really makes no difference to the customer. Stephanie: That's great. And how do you guys, you were talking about there's a lot of privacy efforts that you guys make sure when it comes to the bank data or your data, what are some big things you're doing to make sure that data is protected and similar there'll be one question everyone's like, Oh my gosh, Cardlytics has all this data. What are you guys doing to make sure it's protected and used and not abused? Nate: Sure. We take it very seriously obviously, it's something, I remember a same question would come up to me at Facebook and Google. It might be about the customer or it might even be, Hey, you're also working with my competitor. Right? And the first thing I would say then, and I'd say now as well is, look, if we messed up here and did anything wrong, the whole model comes falling down, nobody would trust you, nobody who does business with you. The bank certainly wouldn't partner with us if we weren't responsible. Right? And the banking industry is one of the most regulated that we have in the US, and so there are a lot of safeguards, for one, before we see any data from the banks, the banks are stripping out anything that we could see that would actually tie to us that person. Right? So we don't even get that. Nate: Second, we have to operate behind the firewall so any data that we see about market spend and so forth at a raw level doesn't leave our servers. So we don't actually give that to the marketers. So by the time it gets to the marketer we'll definitely share specific insights, but it'll be trends that are grouped together in terms of people or companies. And so we've got quite explicit guidelines on our data practices that we follow. There's a few different checks and balances I suppose. Stephanie: Got it. That makes everyone feel better I'm sure. But yeah, like you said, Google and the Facebook Store, when you see how much data they have, any other company's no match to that. How do you think about, when it comes to acquiring new customers in your, like to me all the customers you're working with sound much harder than some of the other guests we've had on the show. You know, acquiring normal consumers, you're having to acquire banks and big brands. How do you all go about creating those partnerships and keeping them and keeping those clients happy because I could see banks being hard to keep happy because they're just kind of, some of them anyways are in a different era it feels like, at least some of the banks I work with. Nate: There is a spectrum of the banks that are more or less progressive or more or less digitally savvy. I work on the advertiser side, but we have a great bank team which partners with these guys, our founders, our CEO, they came from the banking environment as well so we kind of speak that language. And I think what we offer is one, there's this reassurance that on the, for example, the privacy side and the data protection that we do well with it. We take it seriously and we haven't breached that trust with any partner before. And then every bank wants to please their customers and retain their customers and you might not always see that in practice, but that's what they want and they're all competing with each other. Nate: So if we can offer a great customer experience where the customer can get some cash back from some different brands and make some money from it. Some banks are more concerned with the revenue share and some would rather plow that revenue share back into the customer rewards, just kind of depends on their approach, but it's a way to help their customers and retain their customers. But it takes a long time to form those partnerships and it's a lot of technical integration as you can imagine. And so once they're formed they tend to stick with it for a while because there's a lot of investing on both sides. Nate: On the advertiser side, I mean, once we get to the point where we've really explained everything, typically they want to advertise with us, but the challenge is one, they've maybe never heard of us so we have to start from zero. Two, we have to explain how we're different than something else, like an affiliate marketing channel or something like that. And then to really figure out if we're worthwhile, you have to dig into the incremental return, which is why I touched on that because we are behind the bank firewall, we're not going to share all the impression data and who your campaign reached exactly on a one to one basis. And so if we don't plug nicely into whatever you formed when you're marketing with Facebook and Google, it's a bit of extra effort and there's a lot of work getting our data scientists together to kind of verify, what we say we do is what we actually do and so there's this rigor that's needed. Nate: Which is why, going back to what I said about the shift that e-commerce and marketing experts having to get more under the hood with what they're doing will benefit us because if you're willing to spend the time on looking at the numbers, we usually benefit. But people are busy and they don't always have the time to do that. Stephanie: Yeah. Do you spend a lot of time training them on, here's some metrics you maybe should look at or here's things that are important that you never considered before, and if so, what kind of things should they be looking at that maybe a lot of them aren't right now? Nate: Sure. Stephanie: Or what data do you give them where they're like, "Ooh, that's good I've never seen that." And you're like, "You should have seen this before." Nate: Yeah, we've kind of got two sets of advertising partners. There's those who don't really want to be bothered with those details, and it's a little frustrating because I feel like there's this wealth of data that they could analyze. They just want to know that they're getting a customer for 20 bucks a pop or whatever it is and they're good. And then there's others who dig in more and tend to eventually become our larger partners and they really want as much data as we'll give them. Nate: And the things that we educate them on, it might be like what their expectations should be on marketing incrementality, like how much bang do you really get for your buck? And when you do bring a customer on, like I said, where is that share coming from? Where are they declining in spend? Because it's rare that somebody just spends more money. Sometimes they do, but not on a frequent ongoing basis, and so where's the money coming from and is your competitive set what you actually thought it was or is it something a little bit different? Nate: And then looking at why people stopped using a product so I mentioned this propensity to churn, which is kind of predicting the future of what somebody is going to do, but you can statistically do this in a lot of cases by analyzing large groups of people who have had this behavioral change in the past and then seeing who else fits that model, has it quite reached the point of stopping their spend. That's something that I think is kind of surprising to some as well. Nate: And we've got a kind of an intro slide that we use where we say, you see these three data points from your customers, once they're on your platform you know what they're doing, but we know everywhere that they're spending their money. And that sheds a lot of light on to the type of person that they are. And the analogy I use in, University of Oregon wouldn't really like this, but I love Oregon Sports and Facebook would look at me and say that I'm a huge sporting fan, specifically Oregon Sports, but I almost never spend any money on it. Right? I do a lot- Stephanie: You're the worst kind of customer. Nate: I'm the worst kind of customer and so there's this discrepancy between kind of your behavior and so a marketer would say, Ooh, let's target him for a lot of jerseys or whatever. Cardlytics would say, no, this guy, he's a cheapskate. He's not going to go and buy- Stephanie: Stay away. Nate: ... anything. Let's get the person who, whatever they do online, they're plunking down their credit card for certain products and so I think that's kind of a different mindset as well. Looking a little differently about how you form your ideal audiences for targeting. Stephanie: Yeah, that makes sense. Do you give them dashboards that they can actually play with or do you kind of give them customer reports based on what they want, and if so, how do you manage those different types of clients. It sounds like a lot of different clients to manage how do you keep track of it all? Nate: Yeah, so it kind of depends on how big the partnership is with us. Right? We haven't really built out our long tail so most of it is pretty white glove service, but by and large, a smaller advertiser will get certainly access to their ad spend, how many clicks, impressions, conversions and all that. And then we'll make agreements as part of a partnership. Certainly if someone makes a commitment to be with us for a year and to be advertising over time, we'll agree to it. Certain analytical, custom analytics is what we call them, and that's jointly determined by our, was really designated by the client themselves, but our analyst team will come in and talk about what we can do and we'll figure out what the problem statement is and what they want to figure out and we'll deliver a customer report. Nate: And then we're starting to develop a dashboard as well which some advertisers have access to. And there you can look at the competitors and the competitor category that you'd like your information on, geographic areas. And then that data is updated periodically and it's limited set of data but it kind of answers on an ongoing basis what the customer analytics might do on a one off basis. So we're moving in that direction, providing more and more insights into the business or we're trying to. There's always a challenge of you've got a lot of data, but making sense of that is another matter altogether so we really try to figure out what the business problem is rather than, it would be interesting to see, and then throwing out a lot of requests. Stephanie: Yeah. Got it. But therefore the other- Nate: But it is pretty interesting. Stephanie: That sounds really insightful to be able to provide that information to them and see how they actually utilize it to change their marketing strategies or product strategy or any of that so yeah, that sounds really cool. All right, so we only have a couple minutes left. At the end of each interview we do something called the Lightning Round, brought to you by Salesforce Commerce Cloud. It's where you quickly answer a question, whatever answer comes top of mind, and you have one minute to provide an answer. Nate: Okay. Stephanie: Let me know if you're ready, and I'll start with the easy ones first. Nate: I'm worried but ready. Stephanie: All right. What's up next on your reading list or audible or podcast? Nate: Yeah. I want to sound a lot more intellectual here, but I've been into C.J. Box as an author and it's like this super fictional reading about this game warden in Wyoming and it's kind of an escapist. Stephanie: Hey, I like those kind of books I feel like I have to read it right now. All right, what's up next on Netflix or Hulu queue? Nate: Netflix. I would like to watch Extraction. Stephanie: Okay. Nate: Yeah. But typically we're watching a lot of cooking shows, we've gotten into that a lot. Stephanie: Any good recipes recommended, [inaudible 00:45:02]? Nate: Mostly they've been focused on restaurants that I can't go to, which is really frustrating. Stephanie: Oh man. Yeah, that's sad. All right, what's up next on your shopping list? Doesn't have to be groceries, it can be anything that you want to buy next. Nate: I've heard about the therapeutic values of pressure washing. I want a pressure washer. We'd go out there and just clean the house. It's part of that home improvement upswing. Stephanie: Yeah. You're that person. We're going to walk by and be like, Nate, take it away from him. He's been doing it for eight hours. All right. The next hard question. So your job is to stay ahead of expectations and your competition. What do you think is up next for e-commerce pros? Nate: I think within the marketing budgets that you're spending, up next is slicing those more and more granularly, and by slicing, I mean looking at the impact of each portion of your marketing, even within the same channel, and figuring out if that can be better employed elsewhere. Stephanie: Great answer. All right, well, this has been a really fun interview. Thanks for coming on the show and see you next time. Nate: It was a pleasure. Thank you very much.