Millennials Think They Invented Everything

Phillip: [00:01:55.22] Hello and welcome to Future Commerce, the podcast about the next generation of commerce. I'm Captain Jean-Luc Picard.

Brian: [00:02:04.41] What does that make me? I'm not enough of a Trekkie to know what that makes me.

Phillip: [00:02:07.44] William T. Riker.

Brian: [00:02:09.15] Riker. That's right.

Phillip: [00:02:10.17] First officer.

Brian: [00:02:12.39] I should have known that. I'm embarrassed.

Phillip: [00:02:16.88] Obviously, Philip and Brian here. We are winging it today. This would have in prior time, would have been probably a bonus episode or an after dark. We've been doing this like once a month thing where as to kind of augment things a bit we record these like super late night podcasts, or super late my time. It's 11:30. I'm a little punchy. It's well past my bed time.

Brian: [00:02:44.26] These are my favorite because at times I am so much better at podcasting at the end of the day than I am at the beginning of the day. And we end up doing a lot of shows like at like 5am my time. And so...

Phillip: [00:02:55.65] I'm so sorry. That stinks.

Brian: [00:02:56.43] I'm like, "Yes." And also you're more fun when you're punchy. So it's like this combination of me being at my peak and you being a little extra loose makes for great content.

Phillip: [00:03:09.81] Can I extend some love right off the bat? Ian Leslie, friend of the show,  former now CMO over Industry West. He's in between gigs right now and I know where he's going. I don't know if everybody knows where he's going. It's not been publicly announced, but his next phase in his career is going to be really awesome. But Ian, in his very last act, not only did he somehow land a Finalist as an Adobe Experience Award mastermind category nomination for Industry West, which is just doing amazing things in this past year and could go on and on about this. But I shan't. Not only did he do that but he has also landed industry West on the 2PM DMVB DTC Hot List.

Brian: [00:04:10.12] Yeah.

Phillip: [00:04:11.29] It only took two years of him shaking the 2PM tree.

Brian: [00:04:17.47] Shaking the Twitter tree really.

Phillip: [00:04:19.93] Yeah. He gave Webb the shake down for a couple of years, but it finally happened. They debut on the list at 286.

Brian: [00:04:29.36] Honestly, in my opinion, that's undervaluing Industry West. They're incredible.

Phillip: [00:04:35.23] I don't think so. I don't know. I mean, it's kind of... Here's the thing. {laughter} Here's the thing. Just below them are the following brands that you may or may not have heard of: Warby Parker at 291: Quip at 295: Glossier at 296. Oh yeah. Shall I keep going? Shall I keep going?

Brian: [00:05:05.44] Glossier is below Quip?

Phillip: [00:05:06.10] Yeah. Rowing Blazer's at 308.

Brian: [00:05:08.53] Maybe I don't understand the Power List. {laughter}

Phillip: [00:05:16.39] {laughter} So Kyle Cosmetics at 329. Tracksmith at 332. Which I would take issue with. All right here's where things are.

Brian: [00:05:27.88] Congrats for Ian, actually. {laughter}

Phillip: [00:05:30.01] Yeah. Congrats actually. Congrats Ian. But also the list is kind of constantly in motion week to week based on what is happening in real time. And there's a number of data points that go into this. Primarily, I think, Charmed.io data, Internet Retailer 1000 data, Alexa data. I'm so sorry if I just triggered a device in your vicinity.

Brian: [00:05:54.52] Not that Alexa, by the way.

Phillip: [00:05:56.48] I know, but it's actually that's where they got the name because it's also an Amazon property.

Brian: [00:06:01.16] It sure is.

Phillip: [00:06:02.84] But the very, well formerly popular ranking engine? Ranks the the popularity of sites based on traffic and sort of frequency and other SEO factors anyway. So this list is constantly in motion, which begs the question... Which begs the question, Brian.

Brian: [00:06:27.69] What's your question, Phillip?

Phillip: [00:06:29.82] How does Industry West place so highly on the list? To have debuted so highly on the list ahead of all of these other brands that you're very familiar with, who apparently through some means or another, are just not having a lot of traction right now. Things go in ebbs and flows. The top 20 spots are owned primarily by a lot of breakout apparel brands right now. How does that happen?

Brian: [00:07:03.47] That's the question I have as well.

Phillip: [00:07:05.03] That's the question. How do you sleep on Industry West for so long that they debut much higher than Warby Parker on the list? Should they have been given a looksie sooner?

Brian: [00:07:19.21] Maybe. Again, maybe this gets back to my lack of understanding. Is it a momentum ranker?

Phillip: [00:07:26.03] Nobody gets removed. Nobody's ever been removed from the list. As far as I understand. I don't know that that's true. I think that's true. There's a lot of brands that you might expect there at the very bottom of the list who are just not either around anymore or defunct.

Brian: [00:07:44.08] Kmart?

Phillip: [00:07:44.08] No. The direct to consumer list, Brian. {laughter}

Brian: [00:07:48.47] I'm just kidding.

Phillip: [00:07:48.47] Kmart's still around.

Brian: [00:07:50.77] I like drove past one the other day and I was like, huh?

Phillip: [00:07:55.49] That a Blue Light Special? You remember that?

Brian: [00:07:57.47] Oh, yeah.

Phillip: [00:07:57.95] The blue light would go off in the store and yo, a blue light going off in a store to me should be panic inducing. It should be that there's something like horrific happening. But no, this is just hey, we're having a flash sale. That's what it is.

Brian: [00:08:18.93] I understand why people didn't follow suit, but also there's something kind of intriguing about it. It's a very clear visual cue. Why don't stories like have like party mode instead of like a blue flashing light? Like the whole store just like goes...

Phillip: [00:08:35.69] Just goes into like black lights and neon and strobes and stuff.

Brian: [00:08:41.30] Yeah, yeah, yeah. I mean, that's really clear what's happening at that point.

Phillip: [00:08:45.14] And yeah. Pandemonium. Pocket picking. Pickpocketing? Is that the word I'm looking for? Pickpocketing. {laughter}

Brian: [00:08:56.60] It's like the dance party sale.

Phillip: [00:09:01.04] So many things have... Just to close the loop on a thing that I've been mulling over. The Blue Light Special is a really good example, and flash sales, a really good example of millennials thinking they invented everything.

Brian: [00:09:17.87] Yeah.

Phillip: [00:09:19.61] Because the Blue Light Special had been around since like the 80s.

Brian: [00:09:23.48] Yeah.

Phillip: [00:09:24.23] As far as I remember. And here comes what I don't know, every flash sale site of the 2000s. I remember oh, shoot, it's going to escape me now. What was the site that I think was acquired by Amazon that did like a...

Brian: [00:09:46.37] Woot.

Phillip: [00:09:46.37] Woot. That's the one.

Brian: [00:09:47.03] Yeah.

Phillip: [00:09:47.84] That did like a daily flash sale of like tech products and other stuff. And ancillary... They had like a whole family of sites that did that.

Brian: [00:09:57.06] They yeah, grew it into a bunch of different categories. And like I think actually I think Woot is still a pretty big channel for Amazon. I think it's still pretty shopped, if you can believe that. They're still bargain hunters on the Web. People are looking for deals.

Phillip: [00:10:16.25] That's so funny. Amazon acquired the deal site for one hundred and ten million dollars.

Brian: [00:10:25.28] Back then we were probably like, my gosh, what?

Phillip: [00:10:28.85] 2012ish maybe. Yeah. It's such an interesting... Wow, so interesting. Anyway, millennials think they invented everything.. Meal delivery I had been again, I told you, I've been mulling this over for a long time. The Schwan truck existed when I was a kid.

Brian: [00:10:46.36] Man, the Schwan truck ran over my wife's dog when she was a kid.

Phillip: [00:10:50.56] Oh, you told me this.

Brian: [00:10:52.57] Yeah. Yeah.

Phillip: [00:10:53.68] Is that for real?

Brian: [00:10:55.36] For real, man. That should have been an early indicator that, like, delivery was going to become hazardous to our roadways.

Phillip: [00:11:05.83] And apparently your pets' well being.

Brian: [00:11:08.03] Yeah.

Phillip: [00:11:08.54] Did the dog make it?

Brian: [00:11:09.82] Yes, the dog made it. That was the good news.

Phillip: [00:11:14.64] For those who I trust that very few people remember the Schwan truck that are podcast listening age. Probably.

Brian: [00:11:25.47] I don't know.

Phillip: [00:11:26.55] The Schwan truck was...

Brian: [00:11:27.90] Doesn't it still exists? It still exists.

Phillip: [00:11:30.33] Oh, I'm sure there's a website that has the Schwan logo on it somewhere, but I've never seen a Schwan truck in 25 years.

Brian: [00:11:36.81] No, I'm pretty sure I've seen a Schwan truck around.

Phillip: [00:11:39.30] No freaking way. So I'm for the third time, I'm going to attempt to explain what it is since everybody's now...

Brian: [00:11:46.44] I feel like we've talked about this on the podcast before.

Phillip: [00:11:48.60] I doubt it. I don't think so.

Brian: [00:11:49.62] This is the problem with having as much content as we have. Like, honestly, there's a lot.

Phillip: [00:11:55.29] If only it were infinitely searchable in every word that we've ever spoken at FutureCommerce.fm, Brian. And it is.

Brian: [00:12:01.08] Oh you should check it. Check it, check it, check it.

Phillip: [00:12:02.91] Look, I'm going. Schwan. Nope. Doesn't exist.

Brian: [00:12:06.45] Oh wow. Wow.

Phillip: [00:12:07.53] We have definitely had this conversation before. We've never mentioned this on the podcast. So please for for the love of Pete for the fourth time. Let me explain. The Schwan food truck was a, I want to seems like a franchise model, but it was a meal delivery, meal kit delivery. It was you ordered from a catalog or someone came to your home, to your door, and would take an order. And then when they came back around on their route next month or next week, they would bring you your order. It was frozen foods or what have you. It was some frozen some, as I remember, refrigerated or perishable. And it was like this big refrigerated truck that drove around the neighborhood and dropped crap off at people's houses. Like, you know, that is not a thing that millennials invented.

Brian: [00:12:55.35] Yeah.

Phillip: [00:12:55.83] That existed.

Brian: [00:12:57.48] It's true.

Phillip: [00:12:58.80] It is true.

Brian: [00:13:00.69] Mobile retail has been around forever as well. I mean, that's kind of what the ice cream man was, right?

Phillip: [00:13:08.64] That's the ice cream truck. In fact, this is so interesting, dairy delivery was the only way to have dairy at some point in time for most Americans. Because dairy delivery could only be accomplished with infrastructure that had cooling chests and ice boxes and ice making machines. That was all very new technology. We didn't have refrigerators. You had daily milk delivery. Or semiweekly milk delivered. Dairy came to your house. What an interesting thing.

Brian: [00:13:42.55] Yeah. In fact, we have something... I don't know if this is national or local, so forgive my ignorance here, but we have something called Smith Brothers Farms, I think, or Smith Farms. And we did milk delivery for a while and we also got eggs and other stuff. And there was actually quite a bit that they could deliver to your house. And it was so cool.

Phillip: [00:14:02.89] Really?

Brian: [00:14:03.22] Yeah. And it was all like local, really high quality stuff. And it was awesome. We didn't do it forever. I don't remember why we discontinued, but yeah, it was cool when we did it.

Phillip: [00:14:16.32] Yeah, and it's funny how easily we can slip into retro commerce in a show called Future Commerce. I do think it's really interesting how much of the world is actually gearing toward... If I had to abstract the idea of online shopping or even grocery delivery as sort of like a tangential offshoot of that, it's really just time shifting. It's doing what your DVR did for, you know, for you watching linear television. It time shifted it to put it on your own schedule. And I no longer have to make the trip and waste the commute and spend the time in the store. I can time shift that now. It's the DVR, but for shopping.

Brian: [00:15:09.45] It's convenience.

Phillip: [00:15:10.26] Well, for sure. I mean, it seems obvious when you say it that way, but that's really what it is. And having read Instacart for CMOs by a friend of the show, Kiri Masters, and she has a coauthor, Jordev, I can't remember his first name, but having read the book, I'm also fascinated that it has become a price elasticity testing channel.

Brian: [00:15:40.92] Right.

Phillip: [00:15:42.54] We are willing to spend more to have something to be more convenient. Which kind of now reorients eCommerce away from the thing that we all have been led to believe that it was, which was it was the cheapest channel. It was the most price competitive channel. This is no longer the case.

Brian: [00:16:00.75] Right. And I also think the timing matched up really well with inflation. And so it was a really good moment to test that out. And because I think that the opportunity was there. So there was a rising cost of goods in general. And so I think that people were like, "If I go out to eat for pizza now, it's like 50 bucks anyway. I might as well just add five dollars. Now it's fifty five dollars."

Phillip: [00:16:37.74] Dude. And how expensive is pizza delivery now. It's like, I don't know, you guys have this thing in Washington that I had never heard of before, which is like take and bake pizza.

Brian: [00:16:49.48] Oh, yeah, it's great.

Phillip: [00:16:51.64] That's a thing out by you guys.

Brian: [00:16:52.03] Yeah, take and bake's pretty awesome. But we do a lot of pizza delivery having four kids. It's a regular occurrence and we definitely, I think Domino's has done a really good job of price differentiation, pretty much all other pizza and maybe Pizza Hut. But we don't eat Pizza Hut has...

Phillip: [00:17:15.25] Nobody out pizzas the Hut, Brian.

Brian: [00:17:16.63] Yeah nobody out pizzas the Hut. We want to go to...

Phillip: [00:17:22.60] Craig Robinson is a national treasure.

Brian: [00:17:24.64] Oh, my goodness.

Phillip: [00:17:25.90] Yeah, go on. Sorry.

Brian: [00:17:27.10] Yeah, if we want to go to any other pizza chain it's significantly gone up. We've actually watched the prices on the menu rise like, like going back two months later. It's like oh wow that's up by another dollar. It's interesting to see when you have a lot of kids that eat a lot of food, it actually does add up quickly. You're like, oh!

Phillip: [00:17:48.91] Wow, that's a lot, and it was just such an interesting... Interesting evolution of sort of where we are. You know, in the news anyway. Talk about interesting. Shopify continues to eat the world. Shopify just had some big news investing in Stripe. Three hundred and fifty million. Is that correct?

Brian: [00:18:13.36] Yeah. Which compared to what the Stripe would be valued at right now if it went public is a drop in the bucket. But I mean, it makes total sense. Like I think on both sides, if I was Shopify, and I had a chance to invest in Stripe, I would do it. And if I was Stripe, and I had a chance to take money from Shopify, I would take it. And so I think it's a great match, but it is just funny. It's just feels so arbitrary, like an arbitrary amount of money that just solidifies their relationship, already existing relationship.

Phillip: [00:18:50.86] It's so interesting because they had already just raised a round of six hundred million, valuing them at ninety five billion back in March. And they got a new pop of capital from Shopify, which now and again this is speculation because I don't think anyone actually knows. But Shopify maybe owns three percent of Stripe to some like, by some one person's estimation. I think this might have come via 2pm. But Stripe owns a bunch of other infrastructure businesses, including Fastly, which powers like not just half the Internet but most of the eCommerce platform competitors.

Brian: [00:19:35.43] It's all a big tangled mess. This is what it is.

Phillip: [00:19:37.74] It is. It is. But there's also another thing to be said about the second and third order effects, which is well, now, you know, Shopify has some vested interest in those businesses succeeding to some degree too. Hey, by the way, Shop Pay is now accepted on Facebook and Google for payments.

Brian: [00:20:07.92] Available for every merchant, if they...

Phillip: [00:20:10.41] For every merchant that may be transacting on the platform. And this is a really interesting play where I'm not really quite sure what the technology is. If if you're out there and you actually understand what this is... Maybe we'll get Kiri on. I'm not sure who could speak to this. Lord knows I'd probably be out of my depth. But, you know, in in performance marketing at least, this seems to be a social commerce is this thing that's been long promised and hasn't really quite arrived yet. I'm not sure how that works. You transact on the platform. Where does the order go? Like, is there an integration? Does that go into an OMS somewhere? Does that integrate with your shopping cart?

Brian: [00:20:49.65] Well, I mean, doesn't that...

Phillip: [00:20:50.65] If it was a Shopify brand, wouldn't it go into your Shopify store's backend? I don't know.

Brian: [00:20:55.86] It really depends on how you're selling through Google. Right? Like some people are selling through an integration with, like you said, with their OMS. Maybe it's directly with very eCom platform.

Phillip: [00:21:08.88] I just don't know. I have no idea.

Brian: [00:21:09.72] I mean, I think it varies by merchant would be my guess.

Phillip: [00:21:13.47] Well, Google shopping is like a feed that you can maintain. This much I know. It's a feed you could maintain, you know, outside of your shopping cart if you really so desired, you could run that out of your PIM if you wanted. There's all kinds of ways that you can produce a feed. I'm guessing that's how you transact is you're publishing a feed to these businesses. Anyway, it's very fascinating to me. Shopify sort of eating the world.

Brian: [00:21:41.67] All this on the heels of Klarna's recent round, which was huge.

Phillip: [00:21:48.57] Yes.

Brian: [00:21:48.93] Value them at what? Forty six billion?

Phillip: [00:21:52.98] I don't know, give or take.

Brian: [00:21:54.09] I think so. Yeah, something like that. But I mean, the payments are just like out of control. And quick aside, back to Fastly. The Internet is held together with spider webs. {laughter}

Phillip: [00:22:10.02] It is a literal web.

Brian: [00:22:11.07] It is a literal web. And it is like if someone's out there with like Sting, you know, cutting through Shelob's lair...

Phillip: [00:22:22.02] Wow.

Brian: [00:22:22.05] Yeah, I know. I just went there. It breaks pretty easily. It feels like sometimes.

Phillip: [00:22:27.05] Deep cut. Deep cut, Brian.

Brian: [00:22:28.17] I know.

Phillip: [00:26:21.25] It is quite easy to break. We've seen that very recently. We saw there was a Cloudflare outage a couple of months ago. We saw Shopify went down globally. Fastly went down globally. Shopify has been down actually a couple of times in the past week and a half. Klarna, by the way, in March of this year, raised one billion, which valued it at thirty one billion at the time and has now raised six hundred and thirty nine million now, just three months later, valuing it at forty five point six billion. Somebody could probably count the number of days between what was it here? It was March. Now I'm not missing it. It was not too many days. How about that? It was not, there's not very many days between sometime in March and sometime in June to have your valuation peak that much. I'll have a whole rant about this probably later in the show when we talk about Paula's Choice and my Insiders' piece.

Brian: [00:27:32.17] Yeah.

Phillip: [00:27:33.29] But I do kind of want to at least touch on it here. I was quoted in Payments Dive, by the way, on Klarna's raise for some research piece that I had been working on, which is it's been very unclear to me so far how the market could withstand so many buy now pay laters. Like and they all seem to be fighting for some consumer brand awareness, right? With the exception of like Bread Financial, which seems to be content to do white labeled, you know, services as a BNPL. Although, by the way, my Soul Cycle, which I bought through Equinox, and that is Bread. It comes through on my credit card statement is Bread Financial. So much for white labeling. I don't know. But aside from Bread, the other three dominant players, and I'm aware of eight, but the three that are top of mind for me are Affirm, Klarna, and Afterpay.

Brian: [00:28:43.17] Correct.

Phillip: [00:28:43.25] And those three all seem to be fighting for consumer awareness. It is now clear to me that they have chosen three distinct camps to sort of fall into. Affirm is sort of the legacy luxury brand. We're going to multi pay a big, big purchase.

Brian: [00:29:03.68] And partner driven as well. So that's the one thing that I think...

Phillip: [00:29:07.70] Let me just lay them out real quick and then you knock this apart.

Brian: [00:29:10.89] All right.

Phillip: [00:29:11.15] Klarna has seemed to choose that, hey, we are a marketplace for everyday purchases to fractionalized, those with an open line of credit and hey, why not spread it around a bunch, a bunch of online purchases? Buy your sneakers, buy your jeans, buy whatever you're going to buy online. We have a marketplace that you can literally go to at Klarna.com and you can see a whole bunch of stuff that you could use your Klarna line of credit on. I know that they all play in each other's backyards. I'm saying that this seems to be where their marketing has like, shifted them to say, like, these are our main value props. Because I know Klarna does in-store too. But Afterpay, you walk into the mall and you'll see Afterpay signs everywhere. Physical retail and Afterpay is actually becoming a thing. And Lush in particular was the one that first made me notice it. But they were pushing it pretty hard of if you have Afterpay on your phone, you can Afterpay anything, any physical purchase, but especially at these retailers. And those are all things that I think are very defining to me as what they're trying to aim to be. They're all the same solution to some degree, but they've kind of chosen where they're going to go. Now, let me tell you what I think the prediction is. [00:30:32.03] The world is reopening, Brian, and the next six months, like today, right now, June 16th, 2021, New York City no longer has any COVID restrictions. Right? San Francisco opened up officially yesterday. The biggest cities are coming out of COVID and physical retail is back. Has been since October for Florida. But that's because it's Wild West here. So I feel like Afterpay is the big winner here in the latter half of the year, if I had to bet the way that people would be using this. Everyone, every channel has to deal with the fact that physical retail is coming back. [00:31:13.55] OK, now you tell me why I'm wrong.

Brian: [00:31:16.25] I think you're on point mostly. I think Afterpay actually... So the strategy you outlined for Klarna is actually how Afterpay entered the US market and it was also thought of in Australia, I think, if I recall correctly. And then they saw the opportunity to expand way past that. And they aggressively went after the strategy that you outlined that they're at now.

Phillip: [00:31:41.65] The market strategy. Is that what you're saying?

Brian: [00:31:43.52] They started with the marketplace strategy. Afterpay did. And they moved into like more aggressive, like payment on people's sites and on in physical retail. So I think you're you're right about Afterpay. But I think the difference is I saw them as similar to what you described as the Klarna strategy when they first entered the US market a few years back. And then Klara, I feel like has really doubled down on consumer focus, like their branding and their commercials have played really like really focused in on on using Klarna everywhere, I think, as well. Although I agree with you, like, I haven't seen them in physical retail yet. And they might be. I just haven't really noticed them. And I agree with you that Afterpay has done a really good job of getting into physical. And then Affirm, I think you're right about like the legacy luxury, but I also think that they've done a really good job of partnering. The announcement with Shopify recently to partner around the multi pay has been really...

Phillip: [00:32:50.72] There's another good example.

Brian: [00:32:53.77] Yeah, yes, it is. Shopify eating the world. {laughter} I think, yeah, Affirm, I think they recognize that like where they were invested and they did a really good job of diversifying because now as a part of Shopify and in line with that strategy, they're going to be going down market very quickly. And so I see that as like their opportunity to expand and really, I think kind of undercut Klarna and Afterpay simply by ease of implementation and accessibility for a broader set of merchants with the Shopify partnership.

Phillip: [00:33:36.43] Mm. I don't know why this is... I love it. I don't know why this is something that just came to me, because let's shift gears a little bit. Do you remember what your very first purchase online was? I think we had this question in in our Future Commerce All-staff.

Brian: [00:34:05.43] Yeah, I honestly, I don't. I do remember ordering things from catalogs as a kid, like being like "Mom, I saved up my money. Here's my money. Can you order this thing from a catalog?" Or even sending in money, putting the stamp on the envelope or whatever we did to do that.

Phillip: [00:34:23.55] Oh my gosh. How cute is tiny Brian Lange like saving his money and going through a catalog and like ripping the page out and like, OK, this is the thing I want.

Brian: [00:34:31.49] Oh yeah.

Phillip: [00:34:32.13] What is the thing that little baby Brian Lange buys from a catalog?

Brian: [00:34:38.52] Oh science kits. I love science kits.

Phillip: [00:34:39.63] No.

Brian: [00:34:39.78] I was all like... Yeah like experiments and crafts and things like that. I was really into it.

Phillip: [00:34:44.88] No way.

Brian: [00:34:46.05] Yeah. I liked outdoor stuff, too.

Phillip: [00:34:48.24] Your kids do a lot of science kids stuff?

Brian: [00:34:49.11] They do. They're really into it. Yeah. My son Peter just had his tenth birthday and we got him a volcano. And also this really cool, like hand-held metal detector that you can like...

Phillip: [00:35:10.32] That's so cool.

Brian: [00:35:10.95] Yeah. He's really into like finding cool rocks and gems and stuff and metals. Yeah.

Phillip: [00:35:17.34] That's awesome. But you don't remember your first eCommerce purchase?

Brian: [00:35:21.39] I'm trying to think about it, so it might have been like tickets to something. I feel like that might have been the case. Maybe books potentially, like textbooks. I feel like I made purchases in high school prior to college, like eCommerce purchases. I'm sure I did, but I don't know. I don't know what it was. I really don't. Probably books.

Phillip: [00:35:49.36] It's interesting, I believe that most people would probably say that,  probably wouldn't recognize it, but I think for a certain generation, most people's first purchase online was likely music from the Apple.

Brian: [00:36:05.17] Oh yeah, we talked about this.

Phillip: [00:36:07.15] Music store.

Brian: [00:36:07.36] Definitely it was iTunes. That was my first. It was a digital product. Yeah, absolutely.

Phillip: [00:36:12.61] Yeah. I think that that's probably likely true for most people. I don't know if I would remember that exactly that way, but it's likely very true. In writing this piece for Insiders this week, I did a ton of research because it was about a brand that I had never heard of called Paula's Choice, which is a skincare brand.

Brian: [00:36:39.31] They're based out here in the Northwest, I think, actually.

Phillip: [00:36:42.85] Really?

Brian: [00:36:43.45] Yeah. I want to say Oregon.

Phillip: [00:36:47.26] Yeah, I don't know. That's one part of my research. I did not cover. {laughter} Where Paula lived. I guess I should probably have source that.

Brian: [00:36:59.02] Seattle. What am I talking about? They are literally in Seattle.

Phillip: [00:37:02.83] So funny. Everything's in Seattle right now.

Brian: [00:37:05.23] Yes.

Phillip: [00:37:07.76] What struck me in the research of this brand, and we'll talk about what I'm talking about the brand, but what struck me in the research is the brand was formed in 1995 as a digitally native brand. They sold exclusively online for nearly 20 years. In 1995. Brian Lange, that is before Amazon. That is before Google. It's before Facebook. It predates everything we know of the modern.

Brian: [00:37:47.11] Quick fact check that Amazon actually was '94. But yes.

Phillip: [00:37:52.37] It predates what we know of...

Brian: [00:37:54.42] What we know. Yes. Yeah. Just so people don't call you out on it later.

Phillip: [00:38:00.32] Is it true? Is it true? Ninety four with Amazon.

Brian: [00:38:03.75] It's true.

Phillip: [00:38:04.69] OK, all right. I'm not me going to go stealth edit my very much live already on the internet blogs. It's so funny because in reading about this, you know, launching in '95, selling online. That was contemporaneous to the two firsts of the [00:38:31.13] whole... How much incredible foresight to adopt the Internet in 1995 do you have to have to sell products online? The first transaction that ever took place on the Internet, the first sale, that first secure eCommerce transaction, was the sale of a Sting album, Ten Summoners Tales. And that happened not eight months before she launches her brand, Paula's Choice, online. [00:38:58.82] Like eight months before was the first secure eCommerce transaction. I used to give this keynote about the the advent of SSL and how the US government had to pass a law to allow common cryptography to be used by normal, everyday people. Like we have secure things nowadays. But that was actually against the law prior to '95 and that law fell to allow common cryptography to come in people. But it was in place since the Cold War that cryptography was really reserved for special purposes and couldn't really be used by common people. It's the thing that allowed us all to transact securely online. The first  secure transaction happens and this woman goes and launches a digitally native vertical brand in 1995.

Brian: [00:39:55.61] It's really impressive.

Phillip: [00:39:56.01] It's completely slept on twenty six years. {laughter}

Brian: [00:39:59.09] Totally. I think you're right. I mean in your article you do a great job of calling out like how slept on and it was.

Phillip: [00:40:07.28] But when you tweet about it then you have three hundred people that pile in and say I've known about this brand for ten years. Like our buddy from the Jason and Scot Show, Jason Goldberg, apparently has been frequenting Paula's Choice as a skin care brand for a decade.

Brian: [00:40:26.76] I wish I had. I mean, I'll say that. I knew who they were. I didn't realize that they were going to go for two billion dollars. I definitely slept on them. I didn't know they were started in 1995, and they're in my back yard. I knew about Julep more than I knew about them. And Julep went through rough times, which is interesting because yeah, it's the strategy was really different for Julep. I feel like it was like really box oriented. I think they had physical stores. And Paula's Choice made really phenomenal products. And they relied on basically like UGC and word of mouth and had a good social strategy and influencer strategy. And you were talking about this earlier, like would you rather have an incredible marketing strategy and brand, but have a weak product? Or have a strong product and a really weak marketing strategy? You put that in your article. That's a really interesting.

Phillip: [00:41:33.85] I don't know. I don't think I touched on that. I forgot about that. That was a great conversation. The thing that really just stood out to me is first of all, the news that sparked this piece was that Unilever has acquired or has agreed to acquire in Q3 Paula's Choice, which is in and of itself, not just the brand or the shop site or distribution or its wholesale business, but there are two ancillary pieces to it which are very content centric, including Beautypedia, which is the de facto online compendium for 12 some years now of the thing that started the Clean Beauty Movement. It was effectively these are products, these are ingredients that are bad for you or these are ingredients that don't do anything, or these are ingredients that have ill effects on the environment or tested on animals. The insight of the Clean Beauty Movement and the transparency around Clean Beauty was started by this woman. Like, you know, Emily Singer had said, I quoted her in the article, that much of the credit that other brands take for or receive for what has happened in beauty over the past 10, 15 years really is owed to Paula's Choice and the work that that brand has done in consumer awareness. And creating Beautypedia is basically a consumer reports of real people's experience with beauty brands and beauty products. Long story short, this acquisition, two billion dollar acquisition by Unilever, just sort of signals to us that there's certainly a bit of an echo chamber that is really fueled at its center by venture capital valuations and the stories of quite young startup companies who we look at as being standard bearers. But in reality, there are startups and and eight percent of them may never actually ever pan out. Very few of them actually succeed in the end. In looking back to a brand like Paula's Choice should be lauded for slow and steady.

Brian: [00:44:04.88] Slow and steady. Yeah. That's where I was headed as well.  [00:44:06.25]I think this is a really great story that should turn a lot of heads for two reasons. It was smart, sustainable growth, focused on good things, like things that are actually valuable to this world. And there was an education content component to it. [00:44:29.53]

Phillip: [00:44:29.56] Yeah.

Brian: [00:44:30.30] And I think that everyone should sort of take note of [00:44:33.52] that. You want a two billion dollar buy out of your DTC brand? You need to be more. You need to be more. You need to be better. You need to actually provide something that is of value and sort of being unselfish about it in many ways. I [00:44:51.52] think Beautypedia, and yes, it does lead back. But is there a straight line there? Sometimes maybe, but a lot of times no. So I think there's an element of this that's like created something of value that a lot of people came to because it was real information that was good for them and it didn't necessarily lead back to a sale.

Phillip: [00:45:17.05] Well, I think the other thing is that by and large private equity doesn't always result in great outcomes for brands and the people that operate them. But when it does, I think it's worthy of some discussion. In this case, private equity was part of the story since at least 2016, as far as I can see. Yeah, I think there's just a lot to be said around, you know, this is not, it's a very long and winding story over twenty six years of building brand. I mean, that's as slow and steady as you can get. And this year in particular, there's a lot of tailwinds around skin care. And, you know, they'd grown sales to 300 million or so. I guess to quote WWD, it was sales on track for 2021 to be three hundred million. And so those are you know, that's incredibly impressive. Like, incredibly impressive. And yeah. And they've done it without massive distribution, really, just in Sephora and Nordstrom and Sephora really only in the last year. So, yeah, I have a piece and the piece is specifically on blindspots and face cancelation. Two things that I think are really interesting concepts to explore and how we possibly could have missed this and how we can not miss it again and how we can find other brands that are worthy of praise even though the rest of the world isn't talking about them. And by the rest of the world, I don't mean customers. I mean pundits and people with podcasts and people with, you know, big paid email newsletters and lists where they rank people. And so how do we do that? You know, the best way to avoid a blind spot is other people can see your blind spots that you can't. So having more people that are content creators specifically and are in our business, in retail trade and eCommerce media, I think would be a good thing for all of us. To take note of things that brands like this are doing, as unremarkable as they may seem on on the surface, you can't argue with the success in the outcome. So that's it. You can get that piece right now over on Future Commerce Insiders at FutureCommerce.fm. And you can be notified whenever a new essay drops or get our exclusive email only newsletter that goes out every Friday called The Senses. Both of those things come to your inbox once a piece each week for a total of two. We promise we won't spam you. Go get it if FutureCommerce.fm/Subscribe.

Brian: [00:48:22.53] Well, thanks for listening.

Phillip: [00:48:24.01] Pregnant pause. Brian's done. He's ready to wrap it.

Brian: [00:48:29.09] I thought you were wrapping. That's what I thought you were doing. I thought that was it. I thought we were out.

Phillip: [00:48:34.35] I don't know that anyone's now going to have made it through the pregnant pause. But you wanted to throw some love to No Best Practices, both of our favorite newsletter.

Brian: [00:48:47.67] Talk about another subscription that you should go check out. Alex Greifeld is incredible. No Best Practices is her email. And I'm really excited because we're collabing with her right now and she is amazing. So I happened to catch one of her first emails that she put out some time ago. It was an article she might not have even put it out via email, might have been just done like a LinkedIn publish or something like that. And she was talking about some flaws she saw in the HENRY paradigm. And I thought she had some incredible thoughts. And I've been following her ever since then and to get a chance to collaborate with her, I'm super excited. She recently wrote an article about sort of understanding your lane and being consistent with it as like understanding who you were as a business. And she outlined four different lanes that I thought was just absolutely spot on and and worth the read.

Phillip: [00:49:53.18] So it's such great analysis. It's it might be considered art. Like truly is. Yeah.

Brian: [00:50:03.10] Yeah. And she's got some really fun hooks to her work as well. The Trash Bear comes to mind. She wrote about the Trash Bear and what the like being hungry as a brand and so on. So it's very, very interesting, very well-written and super insightful. And she's also got a wealth of experience. She's drawing on active experience. I love that she is an operator and she's putting out content at a super furious pace as well. So huge fan. Super excited to work with you, Alex.

Phillip: [00:50:39.68] Oh, so many good things to talk about. We're actually coming into a fun season ourselves, we're gearing up for our next big research piece. We do two of them a year. What we would consider omnibus consumer studies, but we're bringing Nine by Nine back in September. And but in the meantime, I do want to let you know that we have a new piece of research that I'm very hyped on. We released it last month. It's called Service is the New Storefront. And we actually spent a good amount of time researching how you can create better relationships with your customer by having discourse with them and by creating better points of friction. That's right. I said it. There's good friction. And you creating that friction meaningfully so that they encounter human interaction, even in a digital first experience, is the key to long term success. And if you don't believe me, I've got data to prove it. Go check it out at FutureCommerce.fm/ServiceistheNewStorefront, and that'll get you the report for you to download. And it's a bangar of a read if I do say so myself. And yeah, it's a great piece. So yeah. So check that out as well.

Brian: [00:52:04.94] Speaking of Nine by Nine, there's going to be some really fun stuff that we're going to do with Nine by Nine this year. And just to bridge the gap between Service is the New Storefront and Nine by Nine, I think that's actually, Nine by Nine and many other thoughts that led me to do a little bit of meditation on transactional relationships and how, like, pretty much everything that we do is like sort of funneling us towards having transactional relationships both in our personal lives, but also just in general with business and everything across the board. Like everything is becoming more and more transactional and what that means to long term success. And so that data that we uncovered in Service is the New Storefront is what inspired that sonnet that I wrote recently, which was super fun. And I think, thinking ahead to Nine by Nine and what we have ahead with that, and we're going to be involving some really cool minds and people in that. And you and I are going to get super creative. I cannot wait for that.

Phillip: [00:53:14.92] Yeah, I hope you feel titillated and teased because that was the goal here and you only have to wait three plus months, but it'll be worth the wait.

Brian: [00:53:27.08] {laughter} We're hyped about it.

Phillip: [00:53:28.24] OK now we can wrap it.

Brian: [00:53:29.50] Ok, we're wrapping. Now I can have my pregnant pause.

Phillip: [00:53:33.97] Brian, I will see you next week. This is going to be great. Do you think we will do an in-person podcast? Are we going to sit and look each other in the faces like maniacs? Are going to do that next week and record a podcast?

Brian: [00:53:47.61] Only crazy people do that. I mean, why not? I mean, you're going to be in here for a while.

Phillip: [00:53:53.65] We should probably try that. Maybe we could coax Ingrid?

Brian: [00:53:57.63] Paula's choice headquarters. We're going to do a little stop by.

Phillip: [00:54:00.96] Do an on site. We should do, like a retail tour of Seattle.

Brian: [00:54:06.72] We should catch up with Ingrid. That would be fun to get her on the podcast live as well.

Phillip: [00:54:11.43] That's it. This show ended 30 seconds ago. Thanks for listening. And we'll see you next time at Future Commerce.

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