Don't Call it a Pivot

Phillip: [00:00:14] Hello and welcome to Future Commerce. I'm Phillip Jackson. And with me today, Brian.

Brian: [00:02:16] I'm also here. Brian Lange. {laughter}

Phillip: [00:02:19] I have no idea what I'm doing anymore.

Brian: [00:02:20] And with us both, we have a repeat guest. Welcome back. Emmett Shine, Co-Founder and Chief Creative Officer at Pattern.

Emmett: [00:02:28] I'm really happy to be here, Brian and Phillip, and I've already had the best time ever, so let's keep rocking out.

Brian: [00:02:33] Yes.

Phillip: [00:02:34] Ten minutes. We've just been jamming. We had Boosted Commerce on the show this last week. Rollups and Holdcos are the new thing. Apparently today the news broke that Brandless has raised more money to be a Holdco,

Emmett: [00:02:53] Oh yeah I saw that.

Phillip: [00:02:53] I think with 110 million they've raised. So the brand that's not a brand is now the owner of brands that you know. Patten had a similar shift, incubating brands and now acquiring at least one that I know of. Just give us the 411. What's new in your world, Emmett, since the last time you were on the show?

Emmett: [00:03:15] Yeah, I guess like two ways to kind of think about it. One is like the specific to us way and one is kind of like uninvited into a college lecture hall professor. It's like, "Oh are you a professor?" Like, "No, I stayed at a Holiday Inn last night," of a contemporary feedback on, like, what is going on. At a macro level, this is like pseudo know what I'm talking about, so take it with like a box of Morton salt. You have like in business and markets, lots of ebb and flows and pendulum swings. And I think there is an oscillation between fragmentation and consolidation that goes on. Clay Christensen, Innovator's Dilemma, disrupt as a word coming from disrupting incumbent industries that are consolidated. And I think the world of eCommerce in the world of the Internet has, as we were talking on earlier, it has and it continues to democratize access for people to access and put forth information and information can be a business. And so the software tools that are in place now and have continued to be in place have made it continuously easier for people to spin up businesses that do commerce on the Internet. So eCommerce. And some of those really work by nature, like with the laws of energy. [00:04:48] It's like they're taking away some of the sales or some of what people would purchase from "legacy" or incumbent brands and businesses. What then kind of happens and has happened it's like a little bit like death by a thousand paper cuts. You know, there's so many small businesses, but they're also kind of like redundant. You can look at the stratification of what they do that's unique. It's like the product that they have and how they got there may be unique, but the tools and software and means of distribution are not unique. [00:05:22]

Phillip: [00:05:22] Right.

Emmett: [00:05:22] They're consistent. I'm moving my hand. It's like an audio podcast, whatever, like horizontally across all these vertical businesses. So you can imagine there's two kind of independent merchants, major US ecosystems for eCommerce. And you guys are smart. And most people listening to this know that. There's Amazon and the world of essentially Shopify. There's other businesses and not to discount them that offer eCommerce solutions, but there is a little bit of like a Kleenex, proper noun, gross simplification for vendor led businesses versus the consumer led ecosystem, which is Amazon. So that's the world that we kind of play in. And the FBA, which is fulfilled by Amazon space, very similarly, people have seen kind of like the Jenga blocks where you can kind of poke and there's some stuff that can slide off pretty easy. Hey, there's a lot of efficiencies that could be gained by purchasing a lot of these vertical businesses that use nine out of ten things that are offered to a customer are essentially the same. There is review and SEO optimization and they're doing this fulfillment. And so if you can find a team that really understands that and can optimize that and you can purchase that from someone who came up with an idea, came up with the product and you call them up and say, "Hey, I'd like to purchase this business from you for a million bucks, two million bucks, three million bucks, four a million bucks," you know, in a fair way a lot of them are like, "Hey, I've worked pretty hard on this and I don't know where necessarily I'm going to take it. I've been doing this year over year. Maybe I could pay myself a little bit more. I'm pretty happy and proud of it." A lot of people say no, but some people say, "OK, sure, the price is right and sounds cool to me." And so then this business can take that and put it next to other similar businesses and then again the nine out of ten which are using the same software and services and stack. There are efficiencies that they can gain that don't diminish anything to the customer. If anything, maybe they could potentially keep the prices where they're at or lower them, which is kind of Amazon 101. So that world of, and again, just for anyone prefacing this, I'm like art school dropout design guy. I'm just trying to pay attention to the industries I work within. So it's like trying to like the idiot guides to stuff of this is people have been pouring a lot of money into this space because there's been so much fragmentation, meaning there's so many individual merchants in the Amazon ecosystem. And so by nature of how things work, which kind of gets to some of our prior conversations on like what is the nature of humanity, you know, like humans are animals. It's biology. It's like a second album. It was written, you know, like it's already foretold. And so I think there's efficiencies to be found in all the fragmentation. And so there's so much money being poured into the Amazon space. That's not the space we exist in. We're in the Shopify world, which is the difference is that like it's more brand centric, it's more brand led, the brands are more the narratives. You go to a Shopify website, there's always like an about page. You know, there's always Founder photographs, an origin story. There's always links to social. Like really is a millennial led proposition, which you can talk on Gen Z and other stuff or whatever, but it's from kind of millennial eCommerce culture, which is like, "Hey, this is who we are. We stand behind what we're doing. Here's our story. Here's how we stumbled into this. We were frustrated one day..." "Here's our social. Here's a charity we donate to or cause we care about." And so by nature, it's a little bit more personal of a business than some of the more like widget based businesses that you'd find on Amazon, where it's more of a value proposition. "I need a bicycle pump." "I need a screwdriver." "I need a spatula." Like everyone can complain about Jeff Bezos all they want. They still go on Amazon and they purchase a lot of those items for Prime membership, like two day delivery. Shopify is where you kind of like try to vote with your wallet. [00:09:39] If you're not going to big box retailers in your town, you kind of go online and you're trying to support businesses that you feel an affinity to who you are and what your values are. Some of those can take off really big, like a Warby Parker or a Toms or a Glossier. But for every one of those, there's a million smaller ones that just find a niche audience. And people really like these. It's almost like a professionalized version of Etsy. [00:10:04] You know, it's like, yeah, dissimilarly there hasn't been as much like consolidation, money and energy in the Shopify space because the businesses are like their children versus like a revenue stream. It's very personal to them because they've put forth themselves and their stories into it and the way that they're set up. For example, Shopify, there's a cottage industry around it of integrations, but it isn't as vertically homogenous as a business on the Amazon marketplace. It's like, oh, you're using this service, using Klaviyo, you're using...

Phillip: [00:10:39] Correct.

Emmett: [00:10:39] There's all different things that like you can't one to one turn the switches on. So that's just kind of like a holistic overview. But the Amazon space is going to continue to see a lot of money being put into it. I don't think it's overheated. I don't think it's saturated. You could look at how big the market is to how much money has been put in to what the opportunity is. And then you look at Shopify, there's no money that's been put into it. So I try to have these conversations less as like me, smart guy, and more as like observer of what's going on first. And I think there's going to be a lot of consolidation. And there's a lot of people, if you've raise money, whether you know what you're doing or not, people weirdly trust you to raise more money. It's just, again, human nature. And so I think like a Brandless, for example, I don't know anyone there. I'm not saying anything good or I'm not saying anything bad. But even for some of the shortcomings that maybe we could say they have observationally have had, they still to some extent seem to know from high level business perspective what they're doing. They probably have a high level overview of the market. And sometimes your second or third kind of swing is the one that really kind of connects. And they are just looking at the tea leaves, reading the tea leaves, just like other people who are working the space aren't saying, "Oh, wow, there's a more efficient way to create a significant and scalable business through consolidation." So taking a step back for Pattern, when we started at Pattern, I think we had kind of a similar but different approach, which was I was doing Gin Lane for so many years and seeing again for every Harrys or Hims that we worked with, there was a lot of really great brands and entrepreneurs that came across our desk, some that we worked with, some that we don't that were like, "Ok, wow, these guys really have an awesome idea. They could build a business that does 10, 20, 30 million dollars a year." But the expectations based on the VC model, the VC model that we know it is as West Coast based, Silicon Valley, it's from a software perspective. You're looking to do ten investments and get one or two really outsized returns because, you know, it's winner takes all network effect. These are all West Coast engineering software led concepts and terms. When you go to East Coast and you get into consumer goods, these are not software businesses. They don't have winner take all network kind of returns. That's what the money being put into them was kind of expecting, which was a bummer, because they could never necessarily be architected to be a stroller business that does one hundred million dollars in revenue a year within three years profitably. Or Unilever says, "Oh, my God, I'm going to buy this for a billion dollars."

Phillip: [00:13:30] Right.

Emmett: [00:13:30] For every Dollar Shave Club that happens, there's, I don't know, five thousand non alternate universes where it doesn't happen. And so I think for us, we're like, "Ok, well, if you can eCommerce make businesses online, that can do two, five, 10, maybe more million a year in revenue normally... Concentric circles of like America, three hundred and thirty million people, millennials as this large emerging class, they're buying these type of items. You got algorithms for the duopoly of Facebook and Google. You can cost effectively get to a certain amount. But then when you have to advertise outside of it, that's some of the challenges that like famously a Casper and others saw. You can still be a multimillion dollar profitable business if you don't Icarus try to fly too close to the sun. And so we're like, "Why don't we put together and build," this is in 2017/2018 where we're thinking it through. A number of home good businesses... Home was under penetrated for eCommerce. We were going from our 20s into our 30s, "Hey, this is personal to us. It's under penetrated. Let's try to architect a Holdco, a house of brands, where any one business is depressurized. We put them together. And maybe that's something that could be significant if they all do five, 10, 15, 20 million after five years profitable. And so that's what we set out to do. COVID changed everything. The 20th century, right? You don't as much think about like 1910, you 1918, and similarly, not only World War One, but the Spanish Flu. Really, I think is like that is kind of like the Roaring Twenties, I think it's also awkward to be like, what do you call the single digits? What do you call the teens? You know, so it's like 20s, 30s, 40s, you know. But it literally is like a one hundred year repeat. I've always felt like the twenty first century hasn't really kicked in where I'm like, oh, I still feel like it's the fucking 90s, you know. If it's like that 2012. But I think COVID is like, OK, this is 21st century shit like culturally moving forward.

Phillip: [00:15:49] We were so close to precedented times, you guys. Like we were so close. We were right there. And now here we are in unprecedented times. It's you know, it is you're right. It's culture defining on a different scale. I feel like there could be a time after this. You know, I will out myself as like a pretty deeply spiritual person. I grew up, you know, as a kid in the Baptist Church. But as I've, you know, as my family is kind of grown up I've watched our small faith communities sort of dwindle over the years. And there's a part of me that, you know, doesn't believe that the human condition and the need for human connection is going to be lost forever. I think faith communities have a bit of an ebb and flow. And I have this idea there will be a moment where I believe that people need to come back together and coalesce together. Whether that's around faith or something, I don't know. But I have the sense that there's a deep ingrained need for our in physical, personal connection to gather over something that unites us that's, you know, something bigger than consumer behavior. And I love digital communities, but I've got, you know, 35 Discords and 150 Slack's now. And they all give me anxiety. And you know where to find solace? Listening to antiphonal singing once a week for a couple of hours. {laughter} You know, I don't know. That's not everybody's bag. But I think there's a future where people are going to try to find some way to silence the digital noise. And hey, maybe that's the place where it happens. I don't know.

Emmett: [00:17:34] What's the phrase? Paleolithic minds, medieval structures, you know, God like technology or whatever, or medieval governments. You know, like we're fucking humans. Like, our brains are not evolved from, you know, tens of thousands of years or so. What is a Discord server to, you know, a ten thousand year old brain when it comes to the multiple senses beyond the standard ones? You know, like you want to connect with people in a more human way.

Phillip: [00:18:02] Yeah.

Emmett: [00:18:02] I think that is just a fundamental.

Phillip: [00:18:05] You guys set the stage for it and we always do this. We just kind of jump into stuff. Welcome to Future Commerce. But there's, you know, it's like you guys set the stage for a couple of years ago with Equal Parts. It was like, "Hey, we can gather together over things." Like people gather. That's what they do. Right? And maybe we break bread around the table. I've never broken bread with people in person more in my local community than I have in the last year and a half. It's like there's a return to people coming into my home and me entertaining them because I'm not out in the world, you know, entertaining others at Carbone. So I do think it's an interesting phenomena that my all of this expanse of digital community is actually collapsed down to the things that really matters, like the people that live within a six mile radius of me. But let's see if that holds true in the next year. I don't know.

Brian: [00:19:03] I'm not sure we're quite there yet. We'll see.

Phillip: [00:19:07] You don't have people come over and have dinner, Brian?

Brian: [00:19:09] Yeah, I do, of course.

Phillip: [00:19:11] Has that happened? Is it more since the pandemic?

Brian: [00:19:15] No.

Phillip: [00:19:15] So it's definitely put a damper on it for you.

Brian: [00:19:18] No.

Phillip: [00:19:19] Just the same. {laughter}

Brian: [00:19:20] I'm just the same.

Phillip: [00:19:21] Nothing's changed in Washington.

Brian: [00:19:23] I'm the same as I was. No, that's not true.

Phillip: [00:19:27] Ok.

Brian: [00:19:28] That's interesting. That is interesting. Phillip, I can't help but agree that there will be a coming back together. And I feel like it's kind of starting. You know, we are planning to be at a conference in our industry coming.

Phillip: [00:19:41] It's happening.

Brian: [00:19:43] And that's I mean, that's a huge change. I'm just I'm curious to see how people feel and react and interact. And, you know, Emmett, how about you? What have you started to see as we kind of come back together a little bit?

Emmett: [00:20:00] I think people love people. I think we are social creatures. Like I don't think that changes. I think the wonders of the Internet and digital technology to access any and all information and connect with anyone at any time. I think it's interesting to try to take like nuance takes, you know, I think there's a lot of positives from it. I think the democratization of access is like... I don't know, I think that's pretty positive, but I don't think it replaces ain't nothing like the real thing, baby, you know? Like when you call that organized religion, you call it spirituality, you call it community, you call it tribal. Like whatever the framing and phrasing is, [00:20:53] I think we're social creatures and we need human contact. I think we need human touch and being in person. And, you know, it sounds funny, but like if you get past the funniness, I think you need to, like, smell and feel other people, you know, like you need that energy transference when you sit and get coffee or go for a walk or you're with a loved one or a family member. And I think you can have all the connections in the world, all the followers in the world. But, you know, it doesn't replace being at like a nice dinner with people you love or people that you're inspired by. So the world can do whatever it does, but I don't think it changes the foundations of our biology. [00:21:34]

Phillip: [00:21:35] Well, smelling and touching other people is what got us into this mess. So here we are.

Emmett: [00:21:39] Oh, well, that's not what got us into the mess. It is our encroaching on natural habitats and not paying attention to the ways of the world around us. And then, you know, parts of the digital stuff that have negative effects of like combating science and listening to truth.

Phillip: [00:21:58] It's so funny because so much of this show has been about origin stories the last couple of years. You know, we get people on and we, like, have these. Interviews where we talk about the origins of things, I feel like that's not how normal humans have conversations. That's the other thing that's like evolved is the way that audio media has shifted over the last couple of years. Creating this show is easier than ever. Anybody can make one of these. Right? And I think it takes like it's the big concept swings that are the things that are I think are the risky bets. They're the ones that seem most interesting to me now, or it's the ones where you feel like people are having a very, very real conversation and one that you would want to participate in. People just like orating their oral history of where they came from and like where they're going is just not interesting to me anymore.

Phillip: [00:26:22] Just going back to this prior point that you had around the Shopify set of merchants and who they are as people and these brand creators, operators, founders, stories... These are aspirational, you know, these are folks living the American dream to some degree. There's this idea that they are creating something from nothing. And this is one of the challenges that I have and what I'm excited about for Patten and others to try to consolidate is that I think for all of the joy that we have of watching people fulfill their dreams, it also has brought about a couple of challenges in the space. One is very honestly, it's hard to be critical of Shopify brands in general just across the board, because to be critical of the brand is to be critical of the Founder. To be critical of the product is to level criticism against the person who's putting their blood, sweat and tears. No one wants to punch down.

Emmett: [00:29:03] It's like dissing someone's child at the playground.

Phillip: [00:29:06] Right. And immediately,  [00:29:08]if I come out and I say, "This ramen tastes like crap." It's like, "Do you know the amount of work this person put into it?" Yeah, like, yeah, I do. But we've sort of perpetuated in this era an emperor's new clothes sort of community mindset, which is like who's going to be the first one to call this out of something being good or not good, because nobody wants to punch down and level criticism against someone who's put their heart and soul and tons of money probably into trying to build something. And what I think that a coalescence of all of these brands and certainly more successful ones could do is bring a) better product, so that the criticism doesn't have to be so sharp. And b) help maybe create larger organizations, so that the criticism is more evenly spread and more diffuse and not so sharp against one particular person or brand and thereby like souring everybody on what I guess is what Ben Schott would have called like the Bland Movement. I find myself to be an observer, a participant in the direct to consumer movement, because it's hard to have critical analysis. That's what I find. [00:30:19]

Brian: [00:30:19] To swing that back around. So to go where I think you about to head, Emmett, actually. So when you started Pattern, you started with this idea of being one of those creators. Right? You were building your own products. You were creating your own brands. And now as you've kind of evolved the vision of Pattern, and I'll let you determine if you want to use the word pivot or not, it seems like you're moving away from that to sort of like finding creators and then bringing them to market. My question is, did you see an opportunity? Because I think you talked about the Shopify opportunity and there's not a lot of money going into opportunity. Is it some combination of the two or was it something completely different altogether?

Emmett: [00:31:02] Yeah. So like, let's have fun. Like, so you guys sent some of these questions before and like people from my team were like, oh, they sent over like non softball questions. And I was like, throw it at me.

Phillip: [00:31:13] Sorry. {laughter}

Brian: [00:31:13] {laughter}

Emmett: [00:31:13] No, no, no. It's good. The way I think about this stuff is like, I hope when people are listening they can just learn. Like the way that I look at it, I got to do what I got to do whatever anyone thinks. I got to show up and I got to do what I gotta do.

Brian: [00:31:28] Yeah.

Emmett: [00:31:28] So I don't really care what people think to some extent. But like, I think it's really valuable to have degrees of honest vulnerability because we all... You know, you guys have built something really successful, and I'm sure behind the scenes there's challenges every day, especially as we were talking on COVID stuff. It's personal, and it's professional. And you've got to show up and put your best foot forward. I'm no different, and I don't think anyone listening is any different, and I think that that humanizing part is important to hear. Because sometimes when you're doing something, you forget what it could look like. And so I try to sometimes third party be like, oh, these guys, you know, they're coming from Gin Lane, they are fortunate enough to be part of a lot of really good brands. They've raised a good amount of money. It seems like it all is making sense. And I'm like, dude, it's a shit show 24/7 behind the scenes of trying to figure this stuff out. And, you know, and I am a really passionate person about what I do. And I try to think of myself as coming from an art and design background. But I don't know. Above all, I'm a survivor. I want to make things work. And so the term pivot or whatever, it's not unfair. I just think of it as an evolution, you know, kind of like trying to always figure out what makes sense. And so, like, I guess an anecdote is like, so I'm thirty seven. I'm about to be thirty eight soon. My first... It's not my first. I had a company called Lola. I got tattooed on my body is with my childhood friends with a t shirt skateboarding brand. And we were cool at that time. Supreme and The Hundreds and Crooks and Castles and all stupid street wear, you know, whatever, selling pot and making T-shirts and like it took off and we didn't know what to do. You know, I was 18, 19, 20, 21. And, you know, we made over a million dollars in a short amount of time and had no idea what to do and whatever. Freelancing, building stuff on my own, dropped out of college and started Gin Lane, and started Gin Lane to try to make stuff legitimate. And in 2007 it took off a little bit and then 2008 hit and it was Great Recession everything, everything I put my money in and built it, it went to shit and I begged, borrowed and stole to get through it and to not pay employees to ask them to defer payment. I had to go to people we are working with and say, "I can't get this done. Can you wait? I have no money, I'm screwed. I don't know what to do. I lost everything." No one paid me. People left. You know, it sucked. It was really tough. But we made it through and people said, "Ok, on the strength of who you are and you give me your word, I'll give you a chance," and I paid every dollar back and built every website and, you know, just tried to be a man of my word and get through that. And I think that taught me a lot of lessons of like what doesn't kill you makes you stronger. So fast forward to 2019 starting Pattern, going into 2020, just got our teeth kicked in with COVID. It was feast or famine. The best of times. The worst of times. Where we're really fortunate to be in the home good space. That's a eCom home goods like couldn't have gotten more spin the bottle kind of lucky for an industry to choose going into this, but us not knowing what we're doing, we're a branding shop. We're not supply chain experts. We started two businesses, Equal Parts and Open Spaces. And our plan was to spend 12 to 18 months taking our time and learning slow and steady the global supply chain and setting it up and inbound and distribution. We didn't have that luxury because everything changed overnight. And it just got Richter scale crazy in terms of trying to get raw materials and trying to get access to factories being pushed out of factories by a larger cookware brand or a larger home good brand. We're trying to place a fifty thousand dollar purchase order or five hundred thousand dollar purchase order if we can get our money together to try to buy something to keep in the good factory we're working with. And then someone comes through with the five million dollar purchase order or plus like where is the priority going to go? And we're not the only people facing this. It's what a lot of people faced. And so basically what would happen and again, I think it's why this is like more historical or interesting than just Pattern. We're just a person caught in a squall is like, you know, we chose the home good space for eCommerce because we looked at it and said, "Ok, this is under Penetrated. It'll take ten years to get to a place of like real maturity because millennials are taking their time of buying homes and doing larger and more discretionary purchases that you could do in person or spend more time online." That changed in ten weeks. Right? Ten years in ten weeks. And so COVID {snap} that changed like that. And user behavior doesn't go backwards. Once it switches over, it keeps going forward. And so we said, Ok, global supply chains. Like we can't... It's like trying to get into like, you know, it's like that Steffon skit from SNL. It's like the hottest nightclub in New York City is {noise}. So it's like the hottest nightclub in New York City is is manufacturers and in factories in terms of like wherever it is in the world. It could be Portugal for ceramics. It could be, you know, raw materials and denim in North Carolina. It could be steel out of Pittsburgh or China or wherever these little zones that are the best. Everyone was trying to get access to them. And so if you weren't grandfathered in, you know, you're shit out of luck to just be a startup and say, "Hey, man, like, I want to do a purchase order of testing out this prototype, are you down? Like, yo, maybe we could kind of place more with you if you like it." They're like, "Dude, get lost, loser." {laughter} Like so at the same time that we're trying to figure out supply chain as the market is just ripped 10 years into the future, in 10 weeks, we had a number of businesses hit us up and say from their side of the equation, challenges that they were dealing with, which was these mom and pop Shopify based businesses, super entrepreneurial, the American dream are doing it, but they were doing, let's say, like fifty to one hundred thousand dollars a month selling, you know, linens, selling bathroom accessories. And all of a sudden the demand was pushing them to two or three hundred thousand a month plus. That's not what they wanted. So these are kind of like, I wouldn't call them lifestyle businesses because that almost discredits it, but there are functional businesses that mom and pop operators could run, and now they're getting to a place where they have one kid or two kids. They were working 40 hours a week. Now they got to hire five or six people. They had to work 60 plus hours a week. They got to put a mortgage on their home, go to the local bank or call Clear Bank or call someone and try to get access to capital just to meet the demands that are put on the business. And we had a number of these organically hit us up and say, "We rock out with you guys. We think you're cool. We like your values. We can't handle this. Would you buy us?" And we're like, ok, we hadn't even thought about that. And so we're like, ok, that's pretty interesting. We can get access to your mature supply chain, your products that are really good. And there's a lot of upside in terms of like what we're truly world class at, which is brand marketing, acquisition marketing, creative. By no means would anyone say that, you know, we started this because we're a supply chain, operational experts at stuff that we've hired some really awesome people to oversee and do. But the DNA of us is always going to be you are who you are when you got here style. And so we said, OK, that's kind of interesting. And we just last summer just explored it. And I think that's just to me, [00:39:46] call what you want, it's just trying to be open to what makes sense as a business model. And then also ultimately, what can to a customer make the most sense. And so to Brian's question, like, I don't think some of the North Star has changed at all. I think it's how we go about it that I'm like, I'll do anything. I'll try anything just to make the overall mission work, which is, you know, enjoy daily life through responsibly made, high quality, design centric products for the home that are tactile and analog and make you a little bit hopefully focus on a moment. And so if it's the home organization, it's cooking, it's baking, it's playing with your kids, it's taking care of pets or plants, like these are all like non work, non screen time activity. And to me that's the mission. How we get there, I'm just trying to read the winds and navigate through a storm that my sailboat didn't anticipate. [00:40:34]

Phillip: [00:40:34] I don't even... I'm dumbfounded. Thank you for your transparency and your honestly. I think that what we've come to expect from you, but to hear you unpack it in that way is really actually quite moving. And I think a lot of folks needed to hear it because, you know, you have a lot of folks that admire your journey. And I think that there's, you know, having that vulnerability that you just shared there about, you know, it's been tough and you're adapting. And that's totally, like that should be commended. And not derided.

Brian: [00:41:05] Yeah. And something that I that I heard you say that I really, really liked, which was basically the North Star hasn't really changed how you're getting there, like you beg, borrow, steal, whatever it takes, obviously within the bounds of integrity.

Emmett: [00:41:21] Yeah.

Brian: [00:41:21] But I think what I really like about this is you saw an opportunity to accelerate your vision, which was I think one of the biggest challenges. And Phillip and I and our creative director, Jesse, have been chatting a lot about DTC and like how a lot of marketers have come to build products and like there's a lot of stuff about building products that marketers just don't understand. They're not product managers. Right?

Emmett: [00:41:50] Yeah.

Brian: [00:41:50] And so what you're saying is, at least what I hear you saying is, beyond supply chain, beyond like just the challenges you kind of face during COVID, you actually recognized an opportunity to sort of access talent. And like also it's almost like a trade more than an acquisition, because in many ways you're saying, "I have this one thing in spades. It's called marketing. I'm very good at taking something and showing people what it actually is and helping them understand the value."

Phillip: [00:42:26] The story.

Brian: [00:42:26] The story, the value, how it works, what it's about. And then you've got a whole host of new creators that have come up, like you said, through Etsy and up into like professional Etsy, Shopify. Right? And they're hitting these walls themselves like, "I'm really good at making products, but there's a lot about being a business that I don't understand. And honestly, I could probably take this way bigger if I knew how to market it. And I had money and I had a way to do this." And so what you're doing is you're actually finding a match, I think, between like a competitive advantage to be together as opposed to a part. And that's sort of what I took away from that was North Star hasn't changed at all. [00:43:09] This is not actually a pivot. It's a tactic. This is a tactic to get where you need to go. And it's a really smart one because you're bringing in people who know their industries. Imagine trying to create all those products from scratch in the industries that you wanted to get into or that the spaces you want to get into. You're not an expert in every single like home good. But the community, there's people who are passionate about it that love it. They care about it then and even to get back to like that, "I bumped into a problem and I figured out how to solve it." They're product people and they know how to do it. And you're tapping that level of talent. And I think you can take that in and scale it. [00:43:50]

Phillip: [00:43:50] A pivot, Brian, would have been, I guess, now thinking about it, a pivot would have been Pattern is now, you know, Schmattern, and they make headless software for eCommerce. So I guess things could have been very different. You could be making headless eCommerce software right now, Emmett. I'd love for you to to validate our reaction to you.

Emmett: [00:44:17] I think Brian hit the nail on the head with the really, really good point. And I try not to give too much nerdy advice, but something I kind of think is like funny whimsically kind of true. It's like, back to biology and human stuff. It's like [00:44:34] in interpersonal relationships, I find it's good to work on your weaknesses, but I feel like in startups it's good to lean into your strengths and you have not a lot of time and there's a lot of pressure. And if you're really good at something, you have an advantage. [00:44:51] And so I think, Brian, you're right. You know, in a weird way, it's kind of full circle. Like I think from the Gin Lane days, we were great at... To me always the thing that we did really well for Gin Lane was we just spotted people who are really good at what they did and were open to working with others. So it was easy for us to market with great entrepreneurs that were making great products. And so kind of in a weird way, COVID has like brought us back to what we spent a decade doing, which is like spotting entrepreneurs who make great products and are open to collaborate with others. And so. Ultimately, to some extent, that more benefits the customer than, to be honest, than us trying to sit here and spin up 10 supply chains and make ten products and give people 10 gen 1s with great marketing. These are really mature products that are really, really a lot of love and care has been put into him. And they are kind of Shopify About Page started for reasons of like passion. And a lot of these Founders I mean, look, man has been kind of fun for my job and who knows where this kind of goes in terms of like streamlining or automation. But, man, I'm manually calling up myself and our partners... Like me personally, I've spoken to like three hundred entrepreneurs across America in the past nine months. And I forget a lot of times I'm calling them up of like, I guess trying to buy their business. You know, I'll just start talking to them. And then all of a sudden I'm like, shit, the phone call, I got to get off the line. Like, I don't even know or talk about or talk to you later. I developed friendships. I've met people in person.

Phillip: [00:46:30] Wow.

Emmett: [00:46:30] People have asked me questions that like we're trying to help, and people have said, I've told people, don't sell to us, don't sell to anyone, go do this. And then other people have helped us with questions we have because like, oh, man, you guys are idiots. You don't know about this? {laughter} And so I like this just network of independent... I want to more get out of the New York Ivory Tower VC World, which we're kind of you know, you make your bed, you sleep in it. But like, I can still prance around outside of it into the meadows where just calling these mom and pop ripper operators, St. Louis, you know, like Boulder, Salt Lake City, fucking ripping, you know?

Phillip: [00:47:07] Yeah.

Emmett: [00:47:07] Like they're doing, you know, all these multi-million dollar businesses that they're just organically starting up, you know, and they haven't taken money from anyone. They're just like, they're just ripping, so spending time with them and building an affinity to them, every once in a while there's someone that says, "Hey, you know what, I want this brand that we've been working on to reach more people. I think you guys could actually do that. And you know what? I want to spend more time with my kids," or "I have had this idea for another business that I want to do. So I would really like..." And I they trust us because of the Gin Lane credentialism. So I don't mind being super open about this because there isn't seventy five other competitors in the Shopify space. I think we have a unique kind of Lane, and I want more people to do this because we can give people exits that I think are smaller than Unilever.

Brian: [00:48:00] Right.

Phillip: [00:48:00] We're giving people five million dollars, six million dollars, seven million dollars. Like who in America doesn't want that? That's good.

Phillip: [00:48:06] Yeah, you're right.

Brian: [00:48:06] I also write something that's happened, and actually back to the Ben Schott blanding sort of terminology, is actually the DTC brands that have made it have actually been all very like generic because broad market and things that play well to people are naturally going to scale to a Unilever exit. So what I love about this and I'm actually literally writing an article about this right now is like things are about to get more interesting in eCommerce because the broad market stuff has kind of had its day in the sun. There's going to be like very smart, very targeted, smaller exits that results in professional grade, like industry or I'm sorry, community specific products.

Emmett: [00:49:02] Yup.

Brian: [00:49:02] And I think what we're going to see is that, like you mentioned, Etsy, we're going to see a graduation of a whole set of brands from Etsy to being Shopify plus worthy.

Emmett: [00:49:16] Which is a big deal.

Brian: [00:49:16] Right. It's a huge deal.

Emmett: [00:49:18] It's not cheap.

Brian: [00:49:18] No, it's not cheap. It's a big investment. It takes time and money and knowledge. And so we're going to see a huge graduation and the world of, "DTC," which is a term that I think everyone's kind of tired of is going to become a world of diverse products that are being offered in a very quality way to specific communities. And that's the next, that's DTC 4.0 or whatever we want to call it. {laughter}

Emmett: [00:49:45] Yeah, well, just to add one thing that I agree. And what, again, trying to make it larger than just Pattern because just talking about ourselves, who cares? But like, what is it part of a larger narrative? Like, I do think it's cool if there are more businesses that are doing consolidations because it provides more exit opportunities to more smaller niche businesses. And so what do you do if you...

Brian: [00:50:11] Yes. Yes.

Emmett: [00:50:11] We faced this problem when we did Gin Lane. What the fuck am I going to do with this business? We built a no investment multimillion dollar agency. I didn't want to sell, and it didn't make sense to a WPP or an omnicon or whatever the hell they're called. There's nowhere for us to go. Who would buy... Our last year we did like six and a half million in revenue or something like that, profitable everything, but like I'm not going to... It's so small, you know? Like what do you do with that? So I think what's kind of cool for this is like I hope a lot of people in the Amazon space, I hope people don't dis it and see that all the people that are selling their businesses, they're getting five hundred thousand, a million, two million, three million bucks for something that they just had an idea and started. You never could sell that to a Big Bike Co. or Fisher Price or Johnson & Johnson.

Brian: [00:51:03] Yup. Yup. Right.

Emmett: [00:51:03] They don't buy at prices that are that small. It doesn't make sense. In the Shopify space, no one is buying anything... If you get bought for under 50 million, they don't say the price because it's embarrassing.

Brian: [00:51:15] {laughter}

Phillip: [00:51:15] {laughter}

Emmett: [00:51:15] You know what I'm saying? But why is that wrong? Who didn't grow up in a small town and you sell a business for fifty million dollars like you're the fucking man. But it is not discussed like that. So sell something profitable that you build that is responsible one, two, three, four or five, whatever, a million like. I hope more people do that because it's more exits for starting small businesses that you can't go anywhere except keep running endlessly forever.

Phillip: [00:51:39] And this is amazing. I love the energy too. You know, it's funny that we the... I talk a lot about skeuomorphism...

Emmett: [00:51:51] Love it.

Phillip: [00:51:51] And the way that we do things online, having to have an analog to the real world and you know that we've reached digital nativity when you can drop the barriers of skeuomorphism. And it's so funny because the Walmart and Target and, you know, big box retailification of the way that commerce is realized in the world came after a bunch of consolidation, a bunch of small mom and pops being displaced by these giant large multinational conglomerates. When we started eCommerce originally, it played out exactly the same way. We now have very large players that have a tremendous amount of market share. They are the talent, the commerce, they are the virtual malls. What I think is happening in this moment is we don't have to participate that way because we don't have the physical constraints. It used to be that you had to buy a bunch of servers and you have to have sysadmins and you have to have dev ops and you had to have engineers and you don't need any of that stuff anymore. And so the throwing off of skeuomorphism in the last few years has been any creator could bring an idea to life. What I believe this access to capital is going to allow us to do is to create the Unilever's of the future that don't have to be as prolific to have some sort of meaning in the culture and deliver value to the customer. The problem right now is to bring a product to market is so expensive in these small sku brands, to bring a product to market is so expensive it has this effect of having to skew towards luxury type goods and luxury pricing. And hopefully I think it's equitable for everybody to be able to participate in eCommerce. I think it's important for us to be able to get to a point where anybody could buy anything online and have the same sort of an experience, regardless of their economic stature. And so it's good that we have nine dollar underwear. It would be even better if we had four dollars under. So I think that was what the promise of the Harrys and Dollar Shave Club were supposed to be, is this democratized access to better quality goods. I'm hoping that DTC 4.0 or whatever you called it, Brian, actually fulfills the promise. I don't even know what that means. Like I couldn't even tell you on a timeline what the heck like that even means. Anyway, we're coming up on time. Emmett, we'll give you the last word, as always. And thank you for just giving us, you know, giving it to us straight. We always can depend on you for that.

Emmett: [00:54:56] Yeah, no, look, I'm appreciative for, I don't know, just the opportunity to talk and to have a platform, and I appreciate also like for the listeners of the show, like the questions. Some people don't even send over questions. Sometimes you don't know what they're going to say, but they sent over the questions. But they were very like, you know, investigative journalist, the good, hard, hard hitting, which is good. Right? But like, I appreciate that. Because I think for the listeners, hopefully, I'm only just trying to think like this is valuable for other people. I don't care about myself in this sense. I think it's like just Robin Hood style. Like I feel like privy to a lot of information. I don't know what I'm doing. I don't know if Pattern will work out. I hope it does. Like, I care a lot about our employees, our customers, our people who have believed in us. But this stuff is not like a given. It's really hard. Early stage startup stuff is hard. So I think just saying that narrative over and over and over for probably a lot of the listeners that work in eCommerce and early stage kind of businesses and startups, like it's not easy over here. Stuff looks good on the outside. It's really challenging. And the last, 2020 was a bitch. Like it was not easy, you know, but I don't know, we made it through 2008. Right? Like made it through that. And that taught me resilience and taught me to some extent when you talk about, Phillip, like faith and spirituality in yourself, you know, and the people around you. And that's how I kind of looked at last year. And I'm really appreciative to be in 2021 and trying to put together something that is sustainable in a different way. Like I want Pattern to keep existing. And if we're going to try to go out and, you know, buy other businesses, I don't want them to go to the wayside. I want them to really live on. But to think about a business that it's hard to think about that in our space. What does five years look like? What does ten years look like? You know, so I think you need to try to be profitable. You need to try to be sustainable Icarus style. Don't try to fly too close to the sun, you know? So I don't know. I just say to anyone listening, like, yo, if you think people things are looking good, it's hard for them too. And I think that vulnerability and that honesty is important for the community, because at the end of day, like a rising tide raises all boats. And so just sharing information and trying to help each other out and even people we compete with, you know, like I'm just like, dude, rock out, whatever, like let's go, you know, like there's a lot of money out there, like, let's get it. I'm not trying to take money off anyone else's plate. So I think that's important too is I like when you watch sports and they play a hard fought game, then they hug it out after the game right?

Phillip: [00:57:37] Yeah.

Brian: [00:57:37] Yeah.

Phillip: [00:57:38] We need more of that. That's what I said. We if we hugged as much in eCommerce as we're seeing in beach volleyball, I think we all be better for it.

Emmett: [00:57:45] {laughter} Yeah.

Phillip: [00:57:45] I love it. Thank you so much, Emmett. Hey, thanks for listening to Future Commerce. We want to hear what you have to say. Did we hit the hard hitting investigative journalist questions? I'm sure we did. Drop us a line at Hello@FutureCommerce.fm and let us know. Thanks for listening to Future Commerce.

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