EP174 - Web Smith of 2PM
Web Smith (@web) is the Founder and Editor-in-chief of 2pm, a curated, subscription-based media company. We cover a wide variety of topics around digitally native vertical brands, including the recent Harry's acquisition, and Away investment.
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Episode 174 of the Jason & Scot show was recorded on Wednesday, May 16th, 2019.
Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
Jason: [0:24] Welcome to the Jason and Scott show this is episode 174 being recorded on Wednesday May 15th 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott window. Scot: [0:38] Hey Jason and welcome back Jason Scott show listeners Jason one of our favorite topics on the podcast is the Mega Trend that has several names that that we talked about our favorite is DMV because it just rolls off the tongue but there's Brands going direct to Consumer and I'm sure there's others in there and tonight we're excited to have on the show one of the top experts on this Trends both from being in the trenches but also the Strategic level we have with us tonight web Smith web is founder of 2PM DTC e-commerce newsletter that is published at wait for it to p.m. everyday full disclosure for listeners both Jason and I are fans of the letter end of the executive membership enjoy reading. And prior to starting to peel web was a senior executive investor founder and many well-known DTC Brands and he also as part of his whole portfolio what he does he advises and invest in lots of these Brands as well welcome to the show web. Web: [1:44] It's my honor guys for having me. Scot: [1:48] Call someone one kind of fun topical thing I just saw that the luggage company had no idea they call themselves a travel lifestyle company but I think of them as luggage company away, just raised over $109 and I think they're in the the definitely the Unicorn club which is valuation over a billion dollars but I think they're closing in on a billion dollars and I hear you have a fun away store. Web: [2:13] Oh yes well you know I know that, one of you guys is a fan of Jen Rubio and she certainly on my good side a long story short I think it was maybe for 4 weeks ago for 5 weeks ago and I was joking about wanting to go to the Masters and everyone wants to go to the Masters but, but I don't have a joke that I would want to go one day but I also want to be able to afford my kids college education. [2:36] DaVinci respond she says you know do you want my tickets and I'm like well. Yes yes of course I want your tickets she's like to meet up in you get to Georgia I confirm that I can get to Georgia and in the next, 3 hours is a really interesting sequence of events happens she responded she has one ticket it's a very special ticket, but in that time I told my dad who's always wanted to go that I was going to take him, buying two regular price ticket regular price tickets for the Masters for Sunday with Tiger In Contention cost $2,400 per, okay so I buy these tickets which is a huge sacrifice and long story short. My dad fly so maybe go to Augusta, and I end up selling those tickets aside all together because Jen got me two of those special tickets, so I can honestly say that that time gesture is responsible for probably a top 15 or 20 day of my life with my dad it was a bucket list item for him, and we got to see you know the Masters and style. Scot: [3:50] Yep and tiger sounds like you're a tiger fan is really awesome to watch him kind of make a comeback I thought it was a pretty interesting moment. Web: [3:57] On that day every everybody was a tiger fan that was really spectacular to watch. Scot: [4:02] Awesome, Aiken South Carolina and the guy that runs all the concessions at the Masters lives in my neighborhood I don't live there anymore but my old neighborhood and we all would get jobs at the concession so I worked at the Masters for 6 years. Web: [4:17] How many elements are cheese sandwiches have you sold. Scot: [4:20] A lot. The with Aaron Works their way up to the Beer tent because a back 10 beers were like a dollar 75 or something like that and then all these quarters would fight with her so I get tips which is exciting and second of all are there so many quarters swing around it that you could help make an extra like 5 or 10 bucks from falling quarters. Jason: [4:43] I just wanted to an awesome fact about stuff that I didn't know that. Spence I don't where you able to liquidate the the general admission tickets to you invest in in. Web: [4:54] So I did not and that was very painful that was a lot of money for me but again it was my dad and he's no 63 and he's always wanted to go so I did it, at the end of the day I still ended up net positive I got two of the most special, tickets in all sports and I got to watch Tiger In Contention on Sunday and obviously ended up winning for the first time in 14 years so. I got over that expense for the sake of how wonderful of the time it was my dad. Scot: [5:25] If it happens again don't forget your favorite podcasters. Web: [5:29] I will never forget you guys. Jason: [5:33] Yeah that is awesome and I'm pretty confident on your hundredth birthday one of the things you're not going to regret is is your investment in going to that Masters. Web: [5:42] I agree with you I'm a piece of it. Jason: [5:46] So speaking of things you might regret one of the things we offer to do on the show is is get kind of the, brief background bio of Our Guest so that was nurse can kind of understand for the how you came into your your current role and knowledge base can you can you come, walk us through your high level of career progression. Web: [6:08] Sure long story short I would say that I got my my first big boy job my real beginning e-commerce back at Rogue, Rogue is a sporting goods and Equipment Company manufacturer and a consumer brand here in Columbus Ohio I was responsible for auditing and, running paid search and so on and so forth or time there I learned a lot about you know frankly high tension, advertising company was still growing at that time it was it was maybe a hundred people if it's now it's six hundred people, it's one of the most underrated e-commerce companies in America my opinion. [6:52] I think it's actually run so I learned a lot from a group shortly after that, I cook pounded missing the name of Kevin Lavelle that company's doing really really well now it's Consolidated in Dallas and the team is strong, having to step down as CEO himself and a gentleman from Stitch fix is now running the show, from there I sort of switch gears and went on the publishing side so, I was at unpaid for a little bit I was there director of gear Patrol director of e-commerce or e-commerce platform on top of the existing publishing structure first, real ghost experiences are my first real contact Commerce or what I like to call them to your Commerce operations understanding how, audience & N Supply meet in the middle. [7:48] I consulted for a little bit and finally I decided to go all-in on 2 p.m. and it's been almost almost three and a half more years now, and I'm loving every minute of it. Jason: [8:01] That's awesome and for listeners who might not be familiar with, the 2 p.m. news that are let's let's break that down a little bit so this is a email newsletter is a freemium model right like you have a free subscription and you have some premium content, that you can pay for do I have that right. Web: [8:19] Yes yes so you know I started the letter, because I wanted a place to go where we could just focus on her industry without any distractions keep in mind this letter came about when every publication Under the Sun found a way to talk about politics, whether it's National or recode or whatever they found a way to talk about champagne I just wanted a place to go or like you only focused on. On the issue at hand how to understand the industry that we are in and how to be able to better operate on that on that intelligence it's always started for group of a couple dozen Allegiant obviously it expanded and, but the letter itself fully monetizing the beginning of 2018 and it's it's been no looking back ever since it's, the structure that business is 3 folds we have, pay subscription we have a Consulting arm and then we invest in direct to Consumer brands with some of our cash flows. Jason: [9:27] Yada interesting and the primary Topic in the newsletter is all things direct-to-consumer native brand is that. Web: [9:36] Well I would say it's a little broader than that it's it's e-commerce in general but it's a combination of, digital publishing data branding and and traditional Commerce my belief is that you won't understand one vertical, unless you understand how they all interact together. And the executives to understand how all of these articles are interacting with one another are the best computer to operate in this ever-evolving space. Jason: [10:05] Awesome in in so like what's the profile of the ideal subscriber. Web: [10:10] Shirk so here's a great test that I I do maybe once every 6-8 weeks I opened the list to come to my event we I host a dinner it's fully paid for by my myself and Dory, sponsor partner. And I first come first serve we usually hosts 24 people at a round table an amazing dinner always amazing always an amazing time everyone that shows up is always director VP level and above. So I don't dig through to figure out how many Executives I have in the executive membership what I'm finding is that it's heavily skews in that direction, these are people that are actually making the decisions actually implementing the products and the positioning. And I like that that's where the focus is and I'm hoping to never have to expand beyond that. Jason: [11:09] Got it got it and Scott mentioned that both he and I are executive members in so short of mine ocean for the kind of content you publish in this will be a good test you can tell me about, I'm wildly off-base are by have it is is you really have sort of three kinds of content that I've found useful, you do these memories which I kind of news curation and I think you know they say that in the coming couple times a week, you write a bunch of original content in your own sort of povs which are these sort of weekly reports and then you also have this executive Library which are these really useful, list like the the jewel need a vertical Brand Power with sore with small that investors in the space or agencies in the space stuff like that Dua, do I have the sort of content types roughly right. Web: [12:02] You do and one of the last, inside added in the last several weeks is a member research Series where I will pick two companies against one of them and expect and explain its excuse me explain how these companies are which company is better positioned to take the market, so the first one was stockx vs goat. That that research document actually influence a and upcoming investment round that's all I'll say about that. And the most recent one was Peloton versus tunnel. Pelton's obviously be on demand cycling Hardware / platform, and tunnel is the functional fitness, mirror / digital weight apparatus that you that you attach to your wall so I explained, based on both empirical data and some anecdotal evidence which which company I feel like to take the majority of the marker moving forward nothing that's been really interesting for my executive member. Jason: [13:12] Awesome and then if I have it right here last. Weekly report the topic was direct-to-consumer Playbook is a trap maybe you could tell us a little bit about what with your POV was there. Web: [13:31] Yes so one of the one of the most frequent questions that I did is from investors at asked me to help build a Playbook. Or direct to Consumer Brands what to do in the situation which agencies to go with. Choose a copywriter you know key terms that you want for SEO depending on the industry what song is this, the notion of that of that particular report is that any company that's been successful in the DTC space space whether that achieving unicorn status or below or right below it or are you asking me got there. By being antitetico to what was written before then. So instead of following what someone else is what another business is doing right write your own path if that's really what you want if the debt exit is really what you want to achieve That's the basis of the record. Jason: [14:34] Yeah that's so like I sent you a you like there is no point buck or at least there there's not one Playbook that works for multiple play brands. Web: [14:45] Correct everything that Harry's did. Was Waze was antithetical to what was going on in the Market at that time if you remember them going to Target with soft, you know I thought we saw that you were supposed to be a direct consumer brand why are you giving up why are you giving up Margin for wholesale. Or were they open their pop-up shop in New York there their Barbershop why would you go into retail that's a that's a poor investing why not just invested ads. So on and so forth are five examples that I mentioned in that document and one thing is clear they they achieve a unique outcome because they were a unique company that was well run by there to Founders. Scot: [15:32] So so it sounds like the Playbook is rip up the Playbook. Web: [15:37] That's that's that's exactly right. Scot: [15:38] If you can be a disruptor Fila disruptor you can't follow Playbook. Web: [15:43] Correct correct I'm going to ask you to put someone on the spot there's a quote. There's a quote in the actual lab report and it says embarrassed it's hard only the disruptors will survive I will survive, and it says Anonymous founder that was actually a quote by Kevin LaBelle who co-founded business name with me, and he made a good point the whole Spirit of the document itself was to remind Founders that they have to continue disrupting if they want to succeed they can't follow what everyone else is doing and expect that unique outcome. Scot: [16:17] Brickell let some so it's that's good let's take out of it this thirty thousand foot level you're the timing of the show here is really good because you mention Harry's and they just required for 4 is a record for one of these to join in Africa brands at 1.4 billion by folks that operate shit and then we just talked to her about even since I've I kind of put our little strip together we had the away investment do you feel like, taking the Playbook piece of side you feel like we're kind of super early in this space or is like this 1.4 billion dollar sale almost like a sign that work on towards the end game. Web: [16:56] Oh I definitely think they were early you know I was talking to Alex at Lightspeed earlier today and one thing that he added was that that you know there will be more there will be more stories like what we've seen from Harry's in a way, it's just a matter of time and companies are finding out what it takes and they're they're finding their stride and they're moving towards profitability a lot earlier and omni-channel operation. Omni-channel operational success earlier and it sits and dividends. Scot: [17:29] It seems like invest yet these exits typically actually get more and more investors calling in this is that kind of what you're saying is the investor interest is still on the rise. Web: [17:40] Stoner eyes. However I tend to be biased I believe that companies should take as little money as possible. So hopefully these companies are being Savvy about who you know they invite to their capital. Scot: [18:01] Yeah but if some is the ones that are scaling up or having to do omni-channel and break the Playbook and you mentioned like opening a barber shop that's all that just kind of feels like. The need to raise more Capital daddy how you reconcile those two things. Web: [18:19] That's your question I mean listen going back to our days at missing mizzen is in over 700 stores right now I'm not even including the Nordstrom deal so that's 700 + independent retailers around the country. We did that because we were hoping for more cash flow and it worked out well. The team bear did a successful job well beyond my time they're digging into that model and really developing strong relationships with these retailers, sometimes these operations are less capital-intensive than you would think it will all depend on the demand for the product. In the hope that the products the sell of the product will pay off. That's that's what I'm saying from a lot of the companies I mean from all reports Harry's was profitable. And I'm hearing that that away was profitable or very very close. Scot: [19:20] Yep this is kind of an aside but it kind of came to me that you probably got a really nice portfolio of these things have you ever thought of starting an angel list for people could invest alongside of you. Web: [19:34] No I haven't listened I'm still figuring out. How to build a strong Media company in 2 p.m. And until I understand the ins-and-outs of of consistency over time II can't go all in on the investment side like I would want to. What is an interesting idea the problem is the more the more opinions that you have at that stage of growth. From investors the more viewpoints on it so forth I think the more convoluted you're going to be as a founder. Nice guys rescue much but one of them one of the more bullheaded Founders that I know is it's been what he have a recessed you can't tell that kid anything, it really believes what he believes and it's paying dividends for him so my fear was getting a lot of investors involved early on is that the goal often for early-stage investors is to, I guess in for some influence on the strategy or the model and you know I tend to believe that you're supposed to listen to your gut and do your own thing and then and operate with a few strings as possible, so I would actually say that we strapping to a certain point and then seeking investment what you have some social life. Traction would be your social proof rather would be would be the play. Scot: [21:03] Cope with assignment Jason with sign up for mini mini Millions if you heated Angeles thinks I'll just put him on Spotify. Jason: [21:12] You talk about Annoying opinions that investors don't want mine would go right at the top of that list. Scot: [21:19] I was searching on Google for shoe and you did not come up. Web: [21:24] Yes please. Jason: [21:26] Why are you here yet exactly yeah I'm actually at the other end of of, that that chain like I'm always getting the call because my client you know just got some goofy request from their investor so. Yeah I feel like I have great great empathy for the, the management team in that regards but the interesting thing is, you mentioned what kind of in the first Inning on the DMV bees it does feel like they've done a lot of Buzz and they get a lot of mind sharing our space and a lot of people are talking about, it seems like the number of entrances really balloon it wasn't that long ago that you know there was a you know you could name all of the these digitally native brands in or you know, probably less than 10 minutes I mentioned you you have a, Visa executive databases on your site your your power ranking for digital native brand has a 316 companies on it, is like what's your what's your POV like in the market support 360 companies and can they all have a great exit and is it going to jump to thousands or you know is there going to be a reckoning. Web: [22:51] There will certainly be a reckoning it clear I'm not a fanboy I'm actually quite bears. I'm very bullish on the companies that have it figured out. So I agree with you that the volume will go up I personally think that the volume is ridiculous but it's really easy to raise 3.5 million dollars out of the gate right now no to specially if you went to Wharton, or one of those schools and you just have like that that direct-to-consumer sort of prestige that those schools offer at this point. It's too easy and I don't think that the companies that have raised money easily are the ones that are most likely to succeed. So yes there will be a reckoning and it will be sad but I do think that building a direct-to-consumer brand a digitally native brand is the best way to launch a company that is it in this day. Jason: [23:51] Interesting yeah I want to drill down a little bit more but I do think it's funny like you mentioned earlier that like, companies that are looking for a Playbook to Simply follow or probably wrong and I can agree with you I get the moment there's like this, this specific Buzz that does have a. Seemingly A playbook attached to it and in it you know we haven't seen a lot of phenomenal exits from that play book yet but that's the whole like, Warden student hires red antler raises 3.5 million dollars spends it on a branding kit, invest in some huge huge cock and like it does seem like there's this sort of. Traditional play that that you know you're you're starting to see a bunch of of Brands follow and it is interesting cuz there's not necessarily a lot of evidence that. That there's a strong exit at the end of that tunnel. Web: [24:52] I can't agree with you more if so it's frustrating for me partly because we have such a hard time raising money ourselves, I don't think that you did Russell retire match of the time or that type of growth Capital but that's not bad for the side. You know whenever there is ease and a low barrier-to-entry you're going to have hundreds if not thousands of competitors I think those competitors or false the Wayside especially as, Facebook continues the whole tight they're their inventory of as the bill self. That means that cost is going to continue rising and it's going to wash my to be friends out it's unfortunate but it's true. Jason: [25:36] Yeah so you bring up the Facebook CAC tactics and it's funny you know you significant number of the well-known DMV bees have now shown up on Shark Tank, and I I miss having a fascination with a show we've had a bunch of gas on the on the show that that are are DMV bees, that had a shark tank experience, and they're all there's a number of wisdom's that the Shark Tank investor share some of which I like wildly disagree with but one when it comes up a bunch on that show is there really negative on companies who like, have primarily grown through Facebook marketing and you know there's a there's like a strong perception that there's, there's not like that that customer acquisition through Facebook isn't Portugal a scalable for these brands that there's a small amount of, audience that you can buy really cost-effective way that it starts getting really expensive really fast and I do tend to agree with that so it is, it is funny to see some of these brands with a over-dependence on on a couple of these digital marketing Tech. Web: [26:44] Absolutely into that point you know I hear the other way I believe that the brands have the best organic audiences are the ones that have the best, long-term opportunity to succeed. It's at that point ironic and I said this had a recent speech in San Francisco the companies that are the most likely to have successful direct-to-consumer operations are existing Media Company. Jason: [27:14] Interesting for example. Web: [27:17] The best example right now with some is an example that that will probably be scoffed at but Arsenal sports or so we'll probably do 40 million in e-commerce in 2019. That would put them in the top 2004 online retailers. Scot: [27:35] Glenda what is Barstool song I'm not from Earth that is it just it kind of pulled in some affiliate sporting good stuff or is it private label stuff. Web: [27:44] No this is I mean they they have in their store they have something along the lines of 1700 1800 skus. Apparel knick knacks so on and so forth, in addition they have Behr Premium media subscription that I want to say this something like. 15 million since March and November 2018 so baby are moving in a recent article with biggie day. Your CEO Erika nardini. Mentioned by two digit is editor-in-chief she believes that there is there going to be a 150 million dollar beer company. A lot of that is Commerce and and commerce except for Commerce feeds into successful advertising but that point to side, I've noticed that it's easier for companies like that to ramp up without that's where I can just jump off exorbitant customer acquisition cost any news to companies that are purely there to sell a product to a consumer. Scot: [28:51] Yep cuz I already have the audience it's just kind of kind of matching the products already to the pre-established cap that they stay. Web: [28:58] Correct they already have the audience so when you so in that context, the reason why I carries a successful or an away is successful or a glossy a successful is because they already have the audience in their own way away is done a great job of tree sticks with them, company to launch a new product they have tens of thousands of people in the CRM to sell to. Agua CA she's a referral traffic is from into the Boston is dead they just recently went on to buy Facebook ads in the last 2 or 3 months. There are nine figure annual revenue company this morning so that's the common thread and I I'm surprised that more. Drive to Consumer brands on understand that. Scot: [29:44] Yeah yeah there's some of the media companies have tried this stuff and kind of failed miserably to kind of the big guys don't seem to get right. Web: [29:52] What's what's up with the top one in your mind because I I feel like Community first and then I'll give Mike solution. Scot: [30:00] So they're worse the guys that rebranded to the terrible brand Tribune company and then like in there they tried to do some e-commerce stuff and it got lost, steel I get AMC anyone that kind of has newspapers inside of there has just been kind of challenging. Web: [30:20] I think it's always thrown out is probably in your throat list and jackthreads. I actually think that Jack threads was succeeding. It was exceeding Jason Ross is a Columbus guy used to advise me early on with Ms in, when do we need salt to throw away I actually think that it was it did it that the company can be complementary I think that that that that girl Weston that ordered that media organization want to. Raise capital on a media valuation on the timer salutation obviously there's a premium on being in the evaluation and that affected that relationship. But, she's doing really well under that system it's a shame that they shut it down and made it seem that that Thomas was not exceeding. Scot: [31:13] Cool we'll be watching that closely let's give it a little bit it wouldn't be a Jason Scott show if we didn't talk a little bit about Amazon and what what do you make of Amazon just generally and are they this Unstoppable Force I would love to hear yours a rock with you that I'd love to kind of feather and how you think some of these brands should think about Amazon are they they friend or frenemy. Web: [31:39] That's a lot of questions yes they are an Unstoppable Force they cannot be broken up. I'm going to Weis you want but that's my that's my summary, they are both friend and foe to Brandon's I think that brands have to be extraordinary really Savvy when they decide to partner with Amazon. Otherwise they won't end up getting burnt but as you saw this week with the recent development Amazon is partnering with Adobe. It's one of those Magento Strikes Back situation where that partnership will allow consumer Brands early-stage direct consumer Brands to build stores. On top of Amazon's logistic structure instead of having to you build a store. Pasta market and recruited 3pl issued to move the product. Yes I feed the Amazons continuing to find ways to show me entire ecosystem and as long as they make consumers happy and they are. Scot: [32:49] Gold and then you kind of hinted that you know you have to be kind of prudent this are you talking about Amazon you are kind of taking a bunch of data and coming out with a competing products I've noticed they're they're being very aggressive and the mattress base review. Web: [33:04] Yes that's exactly what I mean there's always a chance that if you have a product that can that can be easily knocked off your you're going to pay for your participation. Scot: [33:15] Yes it's a how do you know when someone comes to you for advice on that is the answer if it's easily knocked off don't sell on Amazon or is it you know a more nuanced kind of thing or how do you advise books on it. Web: [33:29] It's the 41 stye eye tend to say that you should you should have a category of product that you're comfortable selling on Amazon whether it's your your your shell products or or maybe like you're cheaper. Your cheaper skews beings that do not cannibalize your existing audience and your own platform. Jason: [33:53] Yeah that makes sense and I think we've heard from some of the some of the brands that are both direct-to-consumer and having a successful presents on Amazon like a tuft and needle that there's, sort of a product delineation strategy what are there you know there's a arrangers use that they'll only sell direct to Consumers and then there's the rain just use, the doll maker available on Amazon and now there's even Amazon exclusive. Web: [34:22] Correct I think that's the way to do it. Jason: [34:25] Yeah I know that's seems like that makes a lot of sense of night they at least make that strategy what pretty, pretty robust I want to touch on one thing you mentioned cuz we haven't covered in on the show yet and will probably do a little deeper dive in a in an upcoming new show but you you reference, announcement that I think was yesterday that, Magento which is not owned by Adobe is launching a new partnership with Amazon where I sent you a you can run a, your own URL Magento sites, that it's pre-integrated to all the Amazon infrastructure so you can leverage fulfillment by Amazon and Amazon payment and it is essentially a way to have your own destination on the web, I'm for sellers that are primarily been using using Amazon and it's for real Old-Timers like Scott and I don't want to our age, Amazon actually offered a product like that themselves called Amazon webstore that they discontinued in 2015 so this is a interesting play to see. [35:29] Adobe facilitating that now, you know cuz one thing is if they also announced that sitting on Amazon web services and you know that if that ends up being the the hosting strategy for Magento in the cloud, that that's going to be an interesting conundrum you know there are a lot of retailers that are going to want to operate their their e-commerce site on Adobe web services the more I agree with you I found that to be an interesting, news this week. Scot: [36:01] What will the floods concerned about you know these Brands seeing just your Amazon sales presumably now Amazon can see everything your shipping and I don't think they would look inside of your AWS pull and see what's going on inside their but they'll definitely you know they can see wow you sold you know, 80 widgets a day on Amazon and worshipping 300 seems like there's a pretty big Direct business here so you don't have to run your whole infrastructure, how many people adopt. Web: [36:38] I'm anxious to see myself it's going to be a test for a lot of companies especially if they hope to streamline speed and availability from the logistics tampon. Scot: [36:48] Yep and it feels like they're shooting it's a fire shot over shopify's bad because shopify's been mopping up Webbie be done any research of like the platforms are these companies choose it just anecdotally it feels like Shopify is got like 80% or something. Web: [37:04] Without a doubt I just it's one pole vault I've worked with several of these companies, I I've consulted Bigcommerce I'm very close to photoshop 5 have a lot of fix my inner circle. Love what a Dobies hoping to do with Magento whole body issue. I want to say was 6 weeks ago. I said. If you are directing superbrand today which platform do you use to launch on Shopify webflow eCommerce a big Commerce or Magento it was 96% shop. With over 400 boat. Jason: [37:49] Yeah that I hadn't seen that, that skewed by that that's early Echoes my own antidotal impression is it just it feels like Shopify is totally one that face so it makes sense that, Magento Adobe had to do something big to try to disrupt that that pattern, on a side note you know Walmart has now lot like they've acquired some did you need a Brands but they'd actually launched a couple of their own he wants to abetting brand Caldwell House when I'm home but this week they wants to another one that's a premium bicycle brand called by Athens, and what would I find fascinating about those two Brands you can't buy either of them on Walmart.com you can only buy them on their own websites and these two, Brands websites that are owned by Walmart and invented by Walmart are hosted on Shopify Plus so you. [38:42] Despite the fact that Walmart owns you know their own proprietary you know multibillion-dollar e-commerce platform they that they also are turning the Shopify for these, these sort of a Nation brand self to watch on a, slightly Gigi note the Adobe announcement seemed to imply that these stores could do everedge fulfillment by Amazon and map was particular interesting to me I'm eager to learn more because, it wasn't Euro in Amazon was encouraging you to use them for all your fulfillment whether it was sold on Amazon or not but in the in recent times it feels like, they're Amazon's capacity has been so constrained that they really like curtailed your ability to to ship goods from fulfillment by Amazon for orders that weren't collected on the platform so so it's going to be interesting to see whether, whether this is a pivot back or not but. [39:41] Putting them on the shelf or second and turning back to the the broad direct-to-consumer topic one of the things that's frustrating to me as a consultant is, that the DTC companies have so much Buzz that I I frequently like go to these digital days and you know all these sort of, multi consultant events and I share a lot of my counterparts, sort of talking about deceiving the future and then one has to move Daddy to see you and that's going to be the model that winds, and you mentioned that you're sure a little barishan on a lot of these companies I'm equally bearish and the thing that I keep noticing is, me and you talked about the incumbent then in particular you'd like the cpg space like the Procter & Gamble in the universe and there's a scary stabbed that none of them have invented, any, no billion dollar brands in the last 10 years I know three, companies and you know she hear all these people talking about how it's all these Challenger Brands brands that are eating the, the incumbents lunch. [40:51] But none of these DLC brands have hit 3, as yet either you know for your point they've all raised a ton of money from investors that that need them to hit three commas, in order to have a successful exit so they're in this weird space where where do they have to get to a billion dollars and sales at least, and embrace you of any have ever achieve that, and I've noticed there's a third category that seems wildly more successful than either of the other two and this is what I'm curious about your thoughts. [41:24] It's these new brands that are being launched by the retailer Target in the last 5 years has watch five brands that have sold over a billion dollars. And you know Kroger has some of the most successful brands in the world that they've created themselves that's it's some of the interesting like the DTC brands are, are having a lean into whole wholesale distribution for Tech but the guys are really winning are these retailers that are kind of falling, some of the the components of the DDC Playbook but they're but they're leveraging the the huge audience that they already have in terms of Shoppers that are coming in their store if you. You think I'm wrong there if you seen that as what. Web: [42:03] I don't think that you're wrong at all I think it just goes back to the conversation you're having earlier but you're having great success with these private label Brands because they have an audience. Allow these directions to Consumer brands have underestimated how difficult it is to develop an audience that you're not paying. And that's where the advantage shifts The Leverage ships back to the incumbent. Jason: [42:33] Yeah no for sure and then I eat I do think when your return you have a portfolio of ways to monetize that same audience it's a huge advantage and in that way I think some of these DDC native companies that are a category like glossy a that you know is doing really well in the entire category seems like they have an intrinsic advantage over, a lot of these d2c companies that still feel like single Product Company. Web: [43:00] I would agree wholeheartedly one of my most one of my recent post was about the importance of these direct to Consumer brands that are essentially products companies. Converting or or I guess graduating to becoming category Brands the only way that you'll succeed is if you are a category brands. Can you name can you name one of these to record one of these directions to my brands that stayed in one lane sold one product all the way through you can't. Bonobo started his pants I mean that's not the best example because they simply sold for life. Every word they raised through in a million + 8/330. So I never use bonobos as an example but but there are others even even the Dollar Shave Club became of a category brand before they before they, before the accident carries category they owned half of half of the target. Away becoming a category brand obviously glossy the category brand allbirds is Shifting in that direction Evelyn is Shifting in that direction it's only a matter of time in the company that aren't prepared to do that are going to be left behind. Scot: [44:12] Let some, it's coming up soon to kind of play the chessboard out and when you do you what do you think happens to to kind of retailers and then we're super barishon malls here on the Jason and Scott show so where do you see balls also in the hole by Future. Web: [44:32] Yeah I haven't I got a nuanced answer you want the answer to that I'm not barisan almost embarrassed on the middle class. Embarrassing the middle class in general. I believe that that subset of America consumer is struggling the most to maintain their to their place in society. And you're seeing it reflected in every every retail marker malls the malls in a middle-class are struggling. I've been to some wonderful cheer animals in Columbus you have Easton. You know obviously Hudson yards will have to be exactly does New York needed to be a success in Miami you have Bal Harbour. Not like there are numerous examples of of malls that cater to the upper middle class and higher that better almost invulnerable. Obviously there are the numerous Bargain Bin sellers that are appealing to you know economy buyers, what is the middle class in all of those retailers are getting eaten up at warp speed, that's where you're bullish this comes from or saw your tears just comes from with respect balls that's, yes there are stores closing because they're closing after after months and years of dwindling demand from The Middle. Jason: [46:01] Yeah know and we've actually kind of hit that topic several times on the show, Casey will MBA from Deloitte talks a lot about this and a great consumer bifurcation in that you don't essentially is is the same thing that you know there's, increasingly affluent consumers on there's a you know a lot of successful businesses that cater to them and there's importunately. Increasingly financially distressed consumers and there's there's businesses unit value based businesses that are doing really well catering to them but it's the. [46:33] People stuck in the uncomfortable middle that you know don't seem to have a great future. [46:39] I did have one other like start a question about how some of these days you'll need to Brands Play In traditional retail mall or otherwise we started off the show talking about Harry's and some of the, other clever things that they've done and I don't know we mention on the podcast but I know you mentioned that in your report there's a lot of speculation that carries with predominantly, sold the retail so I think between J.Crew and Target like you know the the number is I've heard or like 80% of their revenue came from those, does retail stores versus their their direct consumer e-commerce presents and there's a, like from customer acquisition standpoint you you could totally understand that like you know obviously that if they're selling those razors at wholesale to Target and J.Crew that would be you Julie margin iroso, but the the interesting thing I have heard and I'm curious if you've heard the same thing is that because Harry's built a really desirable premium. [47:40] Brand before they went to these retailers and they didn't use these retailers to build a brand that use these retailers to amplify the brand that they already built. The dude actually able to negotiate terms with the retailers that were not traditional wholesale economic terms. And so I've been led to believe that that Harry's was much more profitable for Harry's in Target than a nutritional consumer goods at Target with cell. Web: [48:09] Target benefited greatly from cherries from Harry's involvement, what are the what are the prime directors of Target management over the last 10 years just to get more Millennia since the store, need more younger Millennials to buy more products in Target and it's certain jump-started. Stop Target 2.0 with respect to their their continued Revenue growth. So yes Harry's probably had some leverage that other companies didn't but when it comes down to it Harry's get exactly what they're supposed to do baby, that they can compete in traditional retail boundaries are within traditional retail boundaries against the incumbent, the brand was strong enough to do that in over that time they they threw the guy was that that was the case there were there have been a few companies I won't name them unless you want me to that I have gone into Target and not succeeded, so so Harry's. Yo it should have been an early marker for a lot of analysts see that because they were succeeding there eventually they were going to exit in some way shape or form. Scot: [49:23] Has been a great discussion and kind of your very topical with current time and I know we're up against time so it would love for you to whip out your crystal ball and look 10 years into the future it's 2030 time frame what's what do you think retail and e-commerce look like it at that. Web: [49:46] Remind me of the Year again 20:30. Scot: [49:48] Its 2029 but I added one cuz it sounds more futuristic. Web: [49:54] Are you not have a pretty positive person but may I may I just get dark for a second. Scot: [50:04] Let's go dark. Web: [50:06] Okay I think that as the years progressed the middle class will continue to pleading. So a lot of the products and services that we see for through Amazon to Target and Walmart are all appealing to higher consumer I hire a consumer. Those products and services and retailers both digital and physical will continue to thrive over the next 10 years. But I don't think that retail in general will Thrive with it and I do think that that that we're going to see a retail induced recession in the next five seven years it will probably stagger into that from your mother. But that's that's turning the future that I'm prepared. Scot: [50:58] Go to the counter argument was we need to kind of solve the middle class problem to have a prosperous view of the world in 10 years is kind of your underlying thesis. Web: [51:05] 100% And is it very clear that no one cares about that right now. Scot: [51:10] I think we do. Web: [51:14] I I care about it. Scot: [51:14] 3 out of 300 million Americans. Web: [51:17] Sure I guess what I'm saying is that the people that have the ability to make changes now don't seem to care enough about making changes now. Scot: [51:27] Those guys yep you're right. Jason: [51:29] It is as if you look at the big history if you can and get out of our kind of Iran and look at the all spectrum of human existence so I get every time this happens it eventually gets off like you just have a revolution you Lop off the heads of all the rich guys and and you know you start to develop a middle-class again for a little while so. Web: [51:47] Problem with this is a problem with this iteration of that story is by the time that can happen either we're going to be on another planet or the rich guys are going to be another planet, material are harder to Lop off an Intergalactic head. Jason: [52:05] Yeah you are going dark you are a happier follow-up question in 20-30 has Tiger surpass Jack Nicholson Nicholas remastered. Web: [52:14] Gosh me and you're putting me on the spot listen I've never read against tiger I will root against them now the kids, he said his mind when he was 7 years old that he was going to be Batman you have to believe that he's going to fall. Jason: [52:32] Yeah I I for one I hope he does it I didn't even watch the web we are really pressing up on time so if folks want to contact you what's what's the best way to find you online. Web: [52:46] Just WEP web on Twitter or you can email me at web web at the number to p.m. l.com. Jason: [52:56] Awesome I appreciate it and it is obviously happen again we've used up all our allotted time so if folks have further questions or comments about today show we encourage you to jump on our Facebook page or hit us up on Twitter. Scot: [53:10] And what we really appreciate you taking time out of your super busy schedule doing a 8000 things you make us look like Slackers is actually pretty easy to do so we really appreciate you have being on the show. Web: [53:23] It's my other guys thank you for having me. Jason: [53:26] Until next time happy commercing.