The DTC Echo Chamber

Phillip: [00:00:00] Hello and welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Phillip.
Brian: [00:00:04] I'm Brian.

Ingrid: [00:00:05] And I'm Ingrid.

Phillip: [00:00:06] Ingrid!

Ingrid: [00:00:09] Woooo!

Phillip: [00:00:09] We got the band back together for... This is a great. Twice this year already. It's great.

Ingrid: [00:00:14] Yeah. We're on a roll.

Brian: [00:00:15] Yes!

Ingrid: [00:00:15] We're on a slow roll.

Phillip: [00:00:18] {laughter} Like a snowball that will eventually mean doom for everybody below. We are gathering steam.

Brian: [00:00:25] {laughter}

Phillip: [00:00:25] Speaking of doom from below, this is going to be a fun show.

Brian: [00:00:30] We're just going to talk doom and gloom the whole time?

Phillip: [00:00:32] No, I promise we won't.

Ingrid: [00:00:32] No!

Phillip: [00:00:32] No.

Brian: [00:00:34] Let's have some fun on this episode. Like, how often do we just get to talk to each other? It's so good to be just talking with you guys.

Phillip: [00:00:43] Its' true. On a fun note, we are heading into conference season. We'll be at Shoptalk in just a few weeks time. And Ingrid will be there as well. I think you're speaking on a session.

Ingrid: [00:00:57] I am, yes. I'm speaking on technologies within omni channel. And then I'm doing a Future Commerce recording with some gals, of the Future Commerce type.

Brian: [00:01:09] Amazing.

Phillip: [00:01:11] Yeah. We have a crew now. We have a whole crew of really smart women who are gonna be presenting at the show on behalf of Future Commerce. So thank you for doing that. I'm pretty stoked for the show. It's gonna be great.

Ingrid: [00:01:24] Yeah.

Phillip: [00:01:26] Not so great. Ty Haney's out at Outdoor Voices. How do you like that for a segue?

Brian: [00:01:33] Humf.

Phillip: [00:01:33] This is a sad...

Brian: [00:01:34] Poor Ty.

Phillip: [00:01:34] I know that was a whiplash. I feel like we could easily make this a doom and gloom episode. And I like so badly don't want to do that. But there's a lot of funky news that I really want to weigh in.

Ingrid: [00:01:50] Yeah, well, this is like where we're starting to see some of that big word profitability come into play.

Phillip: [00:01:58] Right.

Ingrid: [00:01:58] So I think as much excitement and love and really I think, for me at least, inspiration that the direct to consumer brands have brought into retail. I think we're going to start to see people expecting profits now. And I think the cream is going to have to rise to the top. And this is probably just the first of a bunch that are probably going to come down, but I also don't think it's like spelling the fact that D2C is just not the right thing to do. I think it's just a very natural erosion of the stuff that maybe isn't as big and as hyped up as it sounds like it was.

Phillip: [00:02:39] Brian, if people don't know what we're talking about, what is it specifically we're talking about?

Brian: [00:02:44] So Ty Haney, who was the founder of Outdoor Voices just stepped down from the company because they were losing 2 million dollars a month. And they have done a really good job of getting their brand out there and making themselves kind of, you know, a leader in the athleisure space. But when you lose 2 million dollars a month, there tends to be a lot of scrutiny on what you're doing.

Ingrid: [00:03:14] I know. And it's really... One quick defense that I will give for Ty is that it is really easy to spend right now. The entire industry almost looks at you with a side eye if you're not spending, right? So like at some point that has to then the rubber meets the road there. But she's been spending because that's the environment that has been enthusiastically reinforced for about five years.

Phillip: [00:03:45] And too, the thing that's a little dissonant... Sorry, Brian, you were saying something before I asked you to give context. What was that you were going to say?

Brian: [00:03:53] Oh, no, actually, it's gone. It was a fleeting thought that has gone now. But what I do think, and  now I have another fleeting thought. There are a lot of fleeting thoughts in my head. What I do think about the situation that is really interesting is that I feel like Outdoor Voices did a lot of things right.

Phillip: [00:04:15] I know. Yeah.

Ingrid: [00:04:15] Yeah. Yeah.

Brian: [00:04:16] And I think that what this goes to show is you can do a lot of things right and still have trouble reaching profitability. This is I think one of the big challenges ahead is knowing how much of something to do and when to stop and making sound financial decisions as you grow your business.

Ingrid: [00:04:39] Exactly.

Phillip: [00:04:39] Does it... But the sound financial decisions, like that's fine. And not everybody's Amazon, but Amazon spent 20 years not turning a profit and used that to their advantage. And honestly, I can't think of another example in the whole of existence that could weather that kind of scrutiny. That was always the scrutiny from the public markets was "Amazon's never turned to profit and never will."

Ingrid: [00:05:05] Yeah. Mostly because they don't pay taxes.

Brian: [00:05:06] {laughter}

Phillip: [00:05:06] Well, {laughter} that's a whole other thing. Did anyone happen to catch the Jason Calacanis interview of David Heinemeier Hansson where they talked about Bezos? Anyway it doesn't matter. It wasn't brilliant. Yes, it was. It was it was incredible. Now he's launching rockets to space. Anyway. I feel like Outdoor Voices and a lot of other brands who, by the way, we have been on the hype train of direct to consumer for about a year and before that I don't think that I had any idea what any of these brands were. And just being flat out honest, I love the idea that these companies have spent a lot of time trying to build relationship with customers and to have something deeper and more meaningful than here's the next product to buy and you should buy it. And by the way, here's 20% off. And by the way, have you bought it yet?

Ingrid: [00:06:03] Yeah.

Phillip: [00:06:04] But it makes me really wonder, you know, there was sort of an echo chamber in this founder-led, venture-backed direct to consumer startup, retail based startup space. And this echo chamber said you have to do things like launch content channels and have festivals. And, you know, it makes me really wonder if all of that was just everybody kind of drinking the kool aid and not that it was actually doing anything to, you know, really engage your customer. What a customer really wants is to live their life and your product is somehow in the periphery. It's not the sole focus. And is it just a little bit egocentric to think that your brand is changing the world or your brand is bringing people together? I don't know. Now, I'm questioning it.

Ingrid: [00:07:00] Well, it's funny because I think it's a reasonable question. I think what comes to mind is the concept of luxury and what that meant back in the more traditional luxury time and the aspirational point of view that that gave where it was like if you buy these shoes or this bag or this suit, you are going to be living the lifestyle of your dreams and people are going to admire you.

Phillip: [00:07:30] Right.

Ingrid: [00:07:30] And I think the new luxury is this very aspirational, but very different type of aspirational view where it's we are saving the world. We are thinking differently. We are solving the world's biggest problems. And there's like a bit of delusion that exists in both of those concepts that I think just is a shift. But it's always necessary because you do have to aspire to something. It's just what we aspire to has changed.

Phillip: [00:07:59] We had Audrey McLoghlin, who's the founder of Grayson, which is a new shirting brand. She's the founder of Frank & Eileen, who is a sort of storied luxury dress shirt for women brand. She called herself as part of the 100 club. She owns a hundred percent of her business. She's beholden to no one. And it's not been a fast process. It's like eleven twelve years of building a sustainable business that had a wholesale model component to it that allowed her the flexibility to get things like financing on purchase orders and, you know, run it with a small team and not have to like get massive market share, but just be really good at the one thing you do. It really sounds, if you listen to How I Built This interview with Guy Raz, Ty Haney's story sounded very similar to that. Started in J.Crew. Had a purchase order, went to go get it financed. Did one thing really well, which was the original kit and... Yeah. I don't know, it felt very similary like that story was...

Ingrid: [00:09:08] Definitely.

Brian: [00:09:08] Well there's one really big difference between those stories. And one is, one was in the hundred club and the other one took massive funding.

Phillip: [00:09:18] Right.

Brian: [00:09:18] So I can't help but wonder if, like you said, this culture of spending... There's this undue pressure to grow, grow, grow, grow, grow when you're venture backed and so you feel compelled to grow at an unnecessary rate.

Ingrid: [00:09:39] Yeah.

Brian: [00:09:39] In which case you're gonna spend more because you're going to feel like you have to in order to get to that point, which I'm not saying that you have to. I'm just saying that like there's a lot of pressure to grow. And when you look at Ty, and I believe this is her first business, right?

Phillip: [00:09:57] Yeah. It is.

Brian: [00:09:57] So when you're a first time founder and you step into that kind of environment, how is that going to affect your decision making?

Ingrid: [00:10:05] Well, I think she... Yes. One hundred percent. But I also think that she was definitely part of the environment that created this insane spending.

Phillip: [00:10:17] I believe that, too. Yeah. She was early in it.

Ingrid: [00:10:20] She's not a victim of it. I think it's coconspirator is more what it feels like.

Phillip: [00:10:25] I'm glad you said it. I didn't say it. I didn't say that, everybody.

Ingrid: [00:10:31] Yeah. Sorry. Sorry.

Phillip: [00:10:33] Yeah.

Ingrid: [00:10:33] But the other thing that this also brings to mind is understanding that... When you were just laying it out that way, Brian, and I think it's a very accurate way to say it, it feels a little Bernie Madoff to me.

Brian: [00:10:48] Oomf.

Ingrid: [00:10:48] Not her, not Ty.

Brian: [00:10:49] Yeah.

Ingrid: [00:10:51] But the entire thing where the spending has to keep going and this Ponzi scheme of... Eventually because everyone now, all of our hands are dirty in it.

Phillip: [00:11:04] Yeah. We are, too.

Ingrid: [00:11:04] Google's benefitting from it. Facebook is benefiting from it. Every single thing that is driving the economy is benefiting from this unchecked spending culture.

Phillip: [00:11:16] And the retail industry as a whole, like the whole direct to consumer... I just think about all the media properties that have come out recently around this. We've been doing this for a few years, but the whole punditry and the retail direct to consumer punditry industrial complex around this has benefited as well. We have sponsors, right? And shows get listened, when we talk about stuff like this and that produces ears and eyeballs and all the rest. I'm a coconspirator.

Ingrid: [00:11:53] I think we all are. That's why I'm saying it's not Ty. This is in no means...

Phillip: [00:11:57] I've at least done my part. And I own Outdoor Voices. I'm wearing an Outdoor Voices Merino T-shirt shirt right now, and it's freaking awesome. I just want you to know.

Brian: [00:12:03] {laughter}

Ingrid: [00:12:06] Well here's a question then. When you think of Outdoor Voices, I think the polar opposite in terms of profitability and stock price is Lululemon. So what is it that Lululemon is doing that Outdoor Voices did not or vise versa?

Phillip: [00:12:22] Yeah.

Brian: [00:12:22] That's a really interesting question. Maybe they made wiser financial decisions as they went.

Ingrid: [00:12:32] Yeah.

Brian: [00:12:32] Go ahead, Ingrid.

Ingrid: [00:12:33] No, I was going to say that the example that you gave earlier with Amazon is, you know, they haven't turned a profit and they were originally scrutinized. And now look at them. And I think that what they did do is reinvest in actual infrastructure and things that were going to make them faster, better, stronger in actual like what they were doing, which is providing massive convenience to the end user. Whereas I don't know if that was the way that the hyper spend practices of the current D2C businesses are doing. I think a lot of it is just content, content, content.

Phillip: [00:13:16] Yeah.

Brian: [00:13:17] I think also that it would be interesting to point out that maybe Ty Haney's strategy would have paid off with a longer runway because that I think that, you know, Lululemon... I don't know what their runway looked like, but maybe she did have a long term strategy. But the people that backed her just didn't have the same kind of tolerance that she did. Or maybe they ran out of money.

Phillip: [00:13:45] Well, we're seeing it right at the beginning. Lululemon, for what it's worth, has been around for like 15 years.

Brian: [00:13:51] Yes.

Phillip: [00:13:52] And their entry in IPO in the stock market, you know, didn't go all that great. And they spent four years, fairly three or four years, fighting it out to get any sort of recognition. They've been on a meteoric rise in the last two years. But private equity is what has benefitted the most from Lulu's success. And I think that the story here is that private equity knows how to build businesses...and ruin businesses, but that's a whole other story...and knows how to build businesses that have profitability while still trying to maintain, you know, a growth in scale. And it's not worked out very well for everybody. But the ones that it has worked out well for are the ones who have changed entire industries. And they are the disruptors. They're just not venture backed. So Lululemon, you know, did actually... Lululemon changed and entire industry. They really did.

Brian: [00:14:44] Right.

Ingrid: [00:14:44] Yes.

Phillip: [00:14:45] I'm wearing Lululemon pants right now. Are we just talking about my wardrobe? Is that what we're doing?

Ingrid: [00:14:52] {laughter} I'm guilty. I'm a Lululemon head.

Phillip: [00:14:55] Yeah. {laughter} You're a Lululemon head.

Ingrid: [00:14:58] I'm a Lululemon head.

Brian: [00:14:58] I tried to buy Lululemon the other day, but they were out of what I wanted.

Phillip: [00:15:02] Yeah.

Ingrid: [00:15:03] Brian, when are we going to get you to pronounce it correctly?

Brian: [00:15:07] I don't know. Someday.

Phillip: [00:15:08] {laughter} I don't correct him. I just let it happen.

Brian: [00:15:12] I have a cold.

Phillip: [00:15:12] He mispronounced nephew the other day.

Brian: [00:15:15] I did. I did.

Ingrid: [00:15:16] {laughter}

Phillip: [00:15:16] It was great.

Brian: [00:15:18] It was the most embarrassing moment of my life, I think.

Phillip: [00:15:19] Was it really? Oh, sorry. I'm sorry to bring it up. I didn't realize...

Brian: [00:15:23] No. Oh no. It wasn't. {laughter}

Phillip: [00:15:25] We're definitely not cutting this. This is too good.

Brian: [00:15:29] Well, OK, let's take a step back here.

Phillip: [00:15:32] Yeah. Shift gears.

Brian: [00:15:34] Because there are other things happening. Brandless is now dead.

Phillip: [00:15:38] Yeah.

Brian: [00:15:39] Brandless is dead.

Phillip: [00:15:39] Oh wait. Before you do that, Ty Haney stepping down at Outdoor Voices doesn't mean Outdoor Voices is done or going away.

Ingrid: [00:15:47] Yes.

Brian: [00:15:48] Yeah. That's a really good point, actually. Good point to make before we go on to something that actually is dead.

Phillip: [00:15:53] Brandless is going away. It's gone.

Ingrid: [00:15:55] Yeah. Oh yeah.

Brian: [00:15:58] Oh yeah. And actually, that's a really good point. I think Outdoor Voices has a good model. I think that they do have...

Phillip: [00:16:03] And probably a bright future with, you know, a really adept leader.

Brian: [00:16:07] Correct. Correct. Yes.

Ingrid: [00:16:10] I'm not ready to go off. I'm sorry.

Brian: [00:16:12] OK.

Ingrid: [00:16:12] Do we feel like they are going to get acquired?

Brian: [00:16:16] Yes.

Phillip: [00:16:17] Shouldn't that be the model? I mean, what's the other exit strategy?

Ingrid: [00:16:23] But I mean like right now.

Brian: [00:16:24] No.

Ingrid: [00:16:24] Like, I feel like if they were on my list, I don't know. I feel like there's all this ambiguity...

Phillip: [00:16:29] I don't know, man, maybe.

Ingrid: [00:16:31] And they might be getting in at a better rate right now because they have a lot of work ahead of them to make it better. But I think that now would be the time I might consider acquiring them more than I have before.

Phillip: [00:16:41] If you're going to make a big change, like think about the timing of this and where its positioned next to other announcements that have happened like this. I think Victoria's Secret and L Brands divestiture there. Think about the Brandless that comes on the... We will talk about Brandless. All of those things are kind of happening at the same time. If you're a CFO...

Ingrid: [00:17:07] Yup.

Phillip: [00:17:08] ...aren't you saying like, "Let's just do this now while everybody is saying, 'Oh, just another one.' So we don't talk about it for six weeks. We're just one of many, and it'll be gone next week. Let's just get it over with. And, you know, let's start the search for someone..." You know, no one announced as a CEO stepping down without having done a CEO search for six months.

Ingrid: [00:17:28] Definitely.

Phillip: [00:17:29] Yeah.

Brian: [00:17:30] We'll see. I don't think that people move that quickly, unfortunately, Ingrid. I would agree that it would be a super smart move if you can get it at a discounted price. And like, you know, you can come in and be the hero and rescue it and then make it be what it needs to be financially. That would be incredible. But I don't have that much faith in businesses.

Ingrid: [00:17:52] I know. I know. In my fantasy world that I sometimes live in, the Bloomingdales of the world. or even like Nordstrom, should be chomping at the bit for this brand.

Phillip: [00:18:04] It's funny because you would think that. But in actuality, it's the Westfield's of the world that are gobbling up the H&M's and such. It almost feels like our era of the way that retail is owned, has owned at least fashion and apparel companies, is changing dramatically. And it's hard for us to grok it just based on what we're seeing here. I do think that... Well, a good example of what you just said, Brian, they don't move quick enough. Well, didn't HQ trivia just announced that they were shutting down and then two days later, somehow at the last minute, someone stepped in to acquire them. So I think that it can happen quickly if the timing is right.

Brian: [00:18:48] If you go out of business, usually if someone wants to step in and save your brands.

Phillip: [00:18:53] There was a really interesting... Moiz from Native, who founded Native Deodorant.

Brian: [00:19:01] I love Native.

Phillip: [00:19:01] As they're spamming me on my text messaging, they also do toothpaste now. Moiz had put out into the world, Moiz Ali, that he was like actively seeking how to get in touch with Softbank or Brandless to acquire their properties, which would be really, really intriguing, right?

Brian: [00:19:27] Having a company like Native that's, you know, dominated the natural deodorant space. I don't know what their profitability is, but it feels like they're killing it.

Phillip: [00:19:39] Well, they're owned, I think, by Procter and Gamble now. But prior he used to brag about his million dollars EBITDA, I don't know, four million dollars of revenue. He had a very profitable business that was built for profitability when he sold it, which I think seems to be a recurring theme.

Brian: [00:20:00] Right. Like this is why I don't think Outdoor Voices is going to be acquired so quickly. Business like to acquire profitable businesses. And I think that, let's look back at our predictions report for this year, this is the trend for 2020.

Ingrid: [00:20:19] Yup.

Brian: [00:20:19] Smart growth.

Phillip: [00:20:21] Yeah.

Brian: [00:20:21] Sustainable story, not just sustainable in terms of the environment, but also sustainable in terms of your business metrics and all of your goals.

Phillip: [00:20:33] It's true.

Brian: [00:20:33] Everything has to be sustainable and balanced in order for a business to make it in 2020.

Phillip: [00:20:39] Is anyone sitting around like asking why isn't Lululemon launching another product? Why do we have all these expectations of these smaller companies to innovate and scale category so quickly? I feel like part of this is customer and consumer expectation that's unfair and sort of leveled against a business like this. And maybe taking venture money, you know, sets that expectation and gives the illusion that they're bigger than they really are. I mean, RompHim also went out of business this week. We didn't open the show talking about them.

Brian: [00:21:12] Right.

Ingrid: [00:21:13] Yeah.

Phillip: [00:21:13] You know what I mean?

Ingrid: [00:21:13] But the thing is, we're not asking that of Lululemon because they're actually just doing it.

Phillip: [00:21:19] That's true.

Ingrid: [00:21:21] I mean, we don't have to. They're doing it. And maybe that's something.

Brian: [00:21:26] Although maybe launching certain types of products is an indication that you're on your way out. Because let me tell you, when I saw that Brandless was getting it to CBD, I was like "Uh oh."

Phillip: [00:21:37] Casper? Oh, yeah. I also said that. But everybody was like, "I love it. They're in sleep. They need to do this."

Brian: [00:21:42] Sorry, my cold is coming through here. I said Brandless.

Phillip: [00:21:45] Oh, Brandless.

Brian: [00:21:46] Was getting into CBD.

Phillip: [00:21:48] Oh, I see.

Brian: [00:21:49] Yes.

Phillip: [00:21:51] I got it.

Brian: [00:21:51] No, it was like a good indication that they were in trouble. They were looking for a way to make some quick money on a trend that was clearly a trend.

Phillip: [00:22:01] Right.

Brian: [00:22:01] And so I think that there are indications of like when you launch certain products, that doesn't necessarily mean your business is doing well.

Ingrid: [00:22:10] Yeah.

Brian: [00:22:10] And I think to your point, Phillip, it's a lot to launch a new product, especially when you have a narrow offering like some of these businesses do. Why do you think that Audrey McLoghlin actually stuck to shirts? It makes sense. She was really careful about when she introduced a new brand, Grayson. And so I think that's one of the lessons here. Let's get back to Softbank for a second, because you mentioned their name.

Phillip: [00:22:46] Yeah. I don't know. I don't know anything about Softbank other than everybody hates them right now.

Brian: [00:22:51] It's WeWork, Uber, and Brandless. Those are their investments.

Phillip: [00:22:55] Yeah.

Ingrid: [00:22:56] Ouch.

Phillip: [00:22:56] Well, their vision fund had other investments for sure. But yes, those all have...

Brian: [00:23:05] The automated pizza. The automated pizza trucks. That was the other investment.

Ingrid: [00:23:11] Oh my gosh. I remember those.

Phillip: [00:23:11] But I would love that.

Ingrid: [00:23:12] There was so much promise.

Phillip: [00:23:13] Wouldn't that be so cool? {laughter}

Ingrid: [00:23:16] Yes!

Phillip: [00:23:17] Make me a freaking pizza on the way to my house. That's all I ask.

Brian: [00:23:21] {laughter}

Ingrid: [00:23:23] But again, that would have been like the best Domino's acquisition there could have been.

Phillip: [00:23:27] True. I mean. Well, let's talk about that for a second, because you bring up a stellar point. Yesterday it was announced that Liquid Death Mountain Water secured a nine million dollar investment, which is literally a single SKU brand, single SKU company that has, you know, a clever can and a clever name with which is ostensibly just water that they're selling. So they've got nine million dollars now in theory to play with. I don't think the investment is going to stop because some companies haven't been successful here. But I find it sort of ironic that it happened yesterday amidst all this other conversation. But, you know, what does a company like that do? Well, maybe they get acquired. But what's more likely to happen is Pepsi or Coca-Cola rip them off, and they find their own clever brand. And then they can their own water. And I feel like that's what Target did with Brandless when they launched Smartly.

Ingrid: [00:24:37] Yeah.

Phillip: [00:24:37] This definitely needed to be in the marketplace. Everybody wanted, you know, cheap, basic personal care items. And Brandless was a clever way of, you know, like atheists are also believers in some sort of religion. Their religion is not having one.

Ingrid: [00:24:51] Right.

Phillip: [00:24:51] Brandless was having a brand without having one. And I feel like the sole beneficiary of this direct to consumer era, the greatest beneficiary has been Target because they're experts at sensing culture and then competing directly head on.

Ingrid: [00:25:09] Yes. Yeah, very, very good point. I'm always inspired and just in awe of the way that Target does just that. I think they're brilliant at what they do. And I think the results show.

Phillip: [00:25:23] Yeah, so you can pretty much count on... Brandless hasn't gone away. Right, Brian? Like it goes away, but it's effect in Target will remain forever.

Brian: [00:25:38] I mean, I'll flip this a little bit. Maybe Brandless was actually a rip off of Target. {laughter}

Phillip: [00:25:45] Yeah, I mean, maybe.

Brian: [00:25:47] Because the fact is Target has done this so well. And there's this whole idea on Amazon. There are thousands of brands being out at Amazon all the time. Right? The idea that consumers actually don't care about brand right now. We're too good at copycatting. IP is dead. That's not quite true...

Ingrid: [00:26:11] And brand loyalty is dead alongside it, too.

Phillip: [00:26:14] That's true. That's very true.

Ingrid: [00:26:16] Yeah. Well, one thing that's making me think about this is Amazon... So when you set up businesses within Amazon, there's a fundamental shift in the way that you merchandise that I think is very Amazon, but also maybe a little bit of a precursor to the way that things are going to be in the future. Which is an ordinary... Whether you're in a physical store or an eCommerce store, you have your brand. So you're on the shelf and you have 4 feet or 6 feet or 2 feet or whatever. And then you sock everything and everything is based on your brand. Amazon doesn't function that way. Amazon is entirely individual item focused. So you set up an item, I'm going to sell this toothpaste. And then it basically allows the marketplace to vie for the buy box for that toothpaste. You just because you are the brand that manufactures that toothpaste, or are the biggest seller of that toothpaste in the market, doesn't naturally mean that you're going to win the buy box. There are all these other criteria. And so I think that if we extrapolate that mindset, it does lead you to this like Wild West that is really just specific to the actual product that people want, the information that's available to them about that product and then how quickly they can get that product.

Brian: [00:27:54] There's this whole idea that actually winners are the ones that just get to the consumer's eyes and have that recommendation. It's not just Amazon, but just in general. The brand that wins is the one that's in front of the consumer.

Ingrid: [00:28:12] Exactly.

Phillip: [00:28:12] And you know where consumers are? Target.

Ingrid: [00:28:14] Yup.

Brian: [00:28:17] They're at Target. They're at Walmart. They're on Amazon. And Costco. Don't forget Costco.

Phillip: [00:28:22] The thing that I really loved about this direct to consumer era is that it made our show more interesting. I mean, it's all about me really, at the end of the day.

Brian: [00:28:31] Whoa, whoa, whoa, whoa. You're saying this is dead.

Ingrid: [00:28:31] Yeah wow, you just put an RIP on D2C.

Brian: [00:28:36] Whoa!

Ingrid: [00:28:36] That was the past tense.

Phillip: [00:28:36] No, I'm not saying it's over. I'm just saying I would be so... I don't know. I just don't want to go back to talking about Amazon, Target and Walmart. I was over that.

Ingrid: [00:28:47] I know.

Phillip: [00:28:47] And this is a wonderful time for us to meet new people and have new conversations. And you know what? Individual founders launching new brands.

Brian: [00:28:56] Yeah. I have hope. I have hope.

Phillip: [00:28:57] Yeah. It's not going away. Right?

Brian: [00:28:59] Yeah. We have people that are out there that are doing this well. I think that is clear.

Ingrid: [00:29:05] Yeah.

Brian: [00:29:06] Don't mistake...

Phillip: [00:29:07] Like who? If you, I swear to God, if you say Equal Parts or Pattern Brands...

Brian: [00:29:12] No, no, no, no. Frank & Eileen. This is happening. Like there are people out there in the hundred club that do exist, that are real, that are growing profitable, smart, direct to consumer businesses.

Ingrid: [00:29:30] Yeah. And Casper.

Brian: [00:29:34] {laughter}

Phillip: [00:29:34] They exist. Well... Yeah. I mean they have a brand. They have a brand.

Ingrid: [00:29:38] They do.

Phillip: [00:29:40] I'm concerned about... Yeah. I'm not trying to come off as doom and gloom. I'm just I'm relishing in the like... I don't like the cycle of negativity in the conversation. What I really appreciated was the thing that attracted me to even considering us talking about the direct to consumer space a year ago, which was a long, slow ramp, by the way, because we had a totally different tone of conversation prior to that. But it was the optimism. It was the optimism. You know, everybody was... And I know it was hype to some degree, but there was so much optimism that there's more to it than just making stuff and selling stuff. There is more to it than just consumerism.

Brian: [00:30:27] Yeah.

Ingrid: [00:30:28] Yeah.

Phillip: [00:30:28] And we've made some... Our mission is not just to be a podcast. We want to help brands. I'm going to parrot our mission, by the way, Ingrid. Our mission is to help brands manifest vision and create goals which lead to future altering impacts and not just for their customers, but the world. And I'm like, I'm so into that. But if it's only Target, Walmart, and Amazon who have the platforms to do it, like I'm super not into that,.

Ingrid: [00:30:57] But I think it's cyclical. I think that it's always going to be the new creative, innovative, sort of like silo busting brands are always going to have this like two to three year reign, where then it takes that enough time to either hire those people or learn from what those people are doing at the big guys.

Phillip: [00:31:23] Yeah.

Ingrid: [00:31:24] And it's going to take... They're going to figure it out. They're gonna water it down. There'll be a new need and a gap that isn't being filled by the big guys because they're not as good at just creating from the beginning. And then, I think it's going to be cyclical.

Phillip: [00:31:40] Yeah.

Brian: [00:31:41] I think also, if you look at some of the brands that continue to do well and that have lasting power, these brands are like really old. Like I think we're looking at some really, really, really like big hype cycles that are required for growth right now, unnatural growth. But if I think about the things that I want to spend a little bit of extra money on that I want to invest in and enjoy, I think about like a really nice bottle of scotch. And guess what? Most of the really nice bottles of Scotch, those brands have been around for like 100 plus years or longer. And I think about, you know, other things that I'm investing in my life where I'm spending more money on them. Usually I'm spending on something that's been around for a long time. Building good brands takes time. It really does. And you can't just expect that you're just going to take over the world all the time. Like that's just not how it works.

Ingrid: [00:32:46] Yeah, It's a good point. I think that's the difference between designing your business to be sold versus designing your business to sustain and maybe then acquire other businesses or something like that. I think that's maybe the distinction.

Brian: [00:33:03] Yes. And so from that angle, and I'm not against businesses scaling quickly. I do think that there's a place for that and a lot of innovation happens in that range. But maybe those businesses just literally can't do that profitably. And so we shouldn't expect them to.

Ingrid: [00:33:20] Yeah.

Brian: [00:33:20] Effectively, if the whole goal is to be bought out by someone else and then folded into a larger, more sustainable machine like a Target, then why are we requiring these businesses to be profitable? If that's the only way we can drive innovation, then Ty Haney losing 2 million dollars a month, which by the way, is a drop in the bucket compared to what some of these tech brands that have launched were losing.

Phillip: [00:33:46] Yeah, for sure. But I'll take the 2 million.

Brian: [00:33:48] Uber was losing a billion dollars a quarter or whatever it was. It was something in that range.

Phillip: [00:33:54] Right.

Brian: [00:33:55] That's so much more money than 2 million dollars. Now, don't get me wrong. I get that. It's a totally different business. But yeah. Yeah. Maybe we're not treating them like the same way.

Phillip: [00:34:07] We're not. We're not. And yes, the time frame is somewhat shorter, too. You make a good point. Like some of these brands have are brands, or at least by name in some facet, have been around for a very long time, by comparison. That's why... I listened to this interview yesterday on Modern Retail's podcast with the founder of Studs, which is an ear piercing, direct to consumer ear piercing boutique. And they have one shop in Nolita on Prince Street on DTC alley. And it's interesting. I feel like I've heard about them quite a bit all over the place. The founders like, "Oh, well, we've been open for three months."

Ingrid: [00:34:58] Wow.

Phillip: [00:34:58] Three months. So they've got a lot of buzz, but they're under a bit of a microscope and they're doing a lot of press, but they've been around for three months. And then I look back and I think, well, you know, Pattern Brands hasn't been around a year. Yeah, a lot of these companies that I think we talk a lot about and the echo chamber is, you know, resonating around right now are at the very beginning of their journeys.

Brian: [00:35:26] Yes. Yes. Yes.

Phillip: [00:35:26] The very beginning. And they have a very long path to have to... Like a long hill to climb before they've solved a bunch of issues. And, you know, we should cut them all a lot of slack. But at the same time, you know, I do want to root them on. And anyway, some of them I think also it's like I didn't know Pier 1 was still in business and apparently they filed bankruptcy. It's like Sear's will continue to go out of business.

Ingrid: [00:35:55] Yeah.

Phillip: [00:35:55] Pier 1 apparently is also still in business. And I don't understand it because we finally got back around to where they could be relevant culturally again, because rattan and wicker is everywhere.

Ingrid: [00:36:05] I know.

Phillip: [00:36:06] I don't get it.

Ingrid: [00:36:06] And they missed it. It's the same exact thing as Gap. The environment and the fashion style that they created is now the thing and they are not the benefactor.

Phillip: [00:36:17] They're not here to realize it. Yeah.

Ingrid: [00:36:19] Yeah. Well, the one quick thing about the investment in, or giving DTC brands time to come to fruition and turn a profit, is that we as observers and participants within retail are also not the people who are waiting to make their money back on it.

Phillip: [00:36:43] Amen. It's true.

Ingrid: [00:36:43] And I think those are the people that are not giving them the long enough tail.

Brian: [00:36:48] Right. I think maybe... I totally agree with you. The VCs have to be more patient and not expect the fastest growth. That's what it's coming down to. And of course, they're going to say, "Well, that's our money and we expect these kinds of returns." I think the answer is like, "Well, maybe you should make the investments in things that are a more sustainable."

Ingrid: [00:37:10] Yes. One hundred percent. I think it's like the free wheeling nature of getting funding is also now going to start hitting. We're going to start feeling the impact of that. If they're taking a little bit more time and effort into what they're investing in, I do think that the quality of what they're going to be investing in is going to be better and then you'll probably have less fallout.

Brian: [00:37:37] Well, you know, we're looking at first time founders that are getting invested in as well. There's so much risk investing in a first time founder. So much risk. The problem is finding someone that's already started a business and sold it, or something to that effect, and wants to start another one is actually really hard. I think that's another challenge. There's a lot of money out there right now. There actually is.

Ingrid: [00:38:04] Yeah.

Phillip: [00:38:04] Yeah, yeah. Yeah.

Brian: [00:38:05] And so there's a sort of desperation like, "Oh we actually found a business that might be able to do something? We need to invest in this quickly." But that's the whole strategy though. I think that's one of the things we haven't been considering which is like for every 20 businesses that VC invests right now, their goal is to have one of those be wildly successful.

Ingrid: [00:38:37] Carry the ship, carry the load for the rest.

Phillip: [00:38:40] Yeah, that's what venture capital does. Right?

Brian: [00:38:43] Right.

Phillip: [00:38:46] And maybe there are. Maybe there are some wildly successful ones that are incubating. It's very rare that the ones that you know are the stand out successes, especially since we're so early on. We're right at the beginning of this sort of disruption or a shift of the marketplace. Outdoor voices, for what it's worth, was in the top... Just looking... There was an interesting Reddit thread that was put together by somebody who I believe was doing some research for, I'd mentioned it on an earlier show, doing some research on like a PhD that was centered around retail disruption, eCommerce, and had found a way to quantify the estimated monthly traffic of the top 50 Shopify stores. Outdoor Voices was in the number 72 spot, I believe. So it was in the top 50 of Shopify and 289,000 monthly estimated traffic. Two hundred eighty nine thousand. I mean, you could probably figure out what their revenue is by knowing that. Because if you were to say that they had like a, let's be generous and say they have a 3% conversion rate. That means that's 8,670 conversions a month. You know, 8,670 conversions a month that, you know, $110 AOV... I mean, $95,000?

Ingrid: [00:40:24] No.

Phillip: [00:40:25] More than that. Sorry. Million dollars. Million dollar run rate.

Ingrid: [00:40:29] Yeah.

Phillip: [00:40:29] That's not great considering its top 50. That starts to make me wonder what Shopify's future looks like because Shopify has to keep winning and having bigger and bigger brands. I think if we had to sort of read some tea leaves like the trend for eCommerce platforms is to move upmarket too. And if a top 50 store is only doing, you know, I don't know, I'd have to run the numbers on it. I'm really bad at live...

Brian: [00:40:56] {laughter}

Phillip: [00:40:56] Let's say that they're doing a hundred million or less like there's a lot more opportunity that Shopify could have in it's top 50 that would be doing a lot more, I would assume. But anyway, the toolmakers are the ones who really make out. And Target.

Brian: [00:41:13] {laughter}

Phillip: [00:41:13] Shopify and Target benefit the most.

Brian: [00:41:16] You know, what's really frustrating? In all of this there's even an additional angle, which is the government. We finally have a brand like Harry's that's going to get purchased, and then the FTC blocks the purchase.

Phillip: [00:41:31] Yeah. But for some reason and in a strange twist of fate, they approve the T-Mobile merger. Makes no sense whatsoever.

Ingrid: [00:41:43] I know.

Phillip: [00:41:44] I don't know. It's crazy.

Brian: [00:41:47] But if we don't have enough problems, the FTC is blocking the acquisition... A success story. We finally got a success story and boom, like it's over.

Phillip: [00:41:58] Yeah, I know that the Softbank's vision fund isn't Softbank itself, but Softbank itself, you know, has a 48 million shares of T-Mobile that they have to sell at a great profit now. So Softbank seems to be a recurring theme.

Brian: [00:42:18] Let's go out on something fun because we're running out of time.

Phillip: [00:42:21] Yes.

Brian: [00:42:22] It has been a doom and gloom episode.

Phillip: [00:42:24] It wasn't really. OK. All right. You're right.

Brian: [00:42:29] What's something that... Let's talk about some of these ridiculous collabs that have come out recently.

Phillip: [00:42:34] Collaborations of the ridiculous sort?

Brian: [00:42:37] Of the ridiculous start. Let's just focus on something that will make us laugh for minute in all of this chaos. So let's play a little game. Let's do a little yay or nay on recent collabs that we've seen. Then how about we think of a collab that would be like something really, really fun that we want to see the market someday. Fancy collab.

Ingrid: [00:43:04] I'm in.

Brian: [00:43:04] OK. OK.

Ingrid: [00:43:07] But you have to... These collabs that are in the news this week are literally SNL skits, like let's just be honest. This is Stefan.

Phillip: [00:43:20] {laughter} It is actually. You're right. You're right at 100 percent.

Brian: [00:43:21] {laughter}

Ingrid: [00:43:21] And he's like, "Supreme and Oreo are in a club. And there are midgets on unicycles." Like what?

Phillip: [00:43:29] Yes, exactly.

Ingrid: [00:43:31] But really, that is a thing.

Phillip: [00:43:33] It's true. "This brand has everything."

Ingrid: [00:43:38] Yeah. {laughter}

Brian: [00:43:38] {laughter}

Phillip: [00:43:38] "They even have Supreme Oreos, you guys."

Ingrid: [00:43:41] Yeah. Supreme Oreos. What?

Phillip: [00:43:44] It's true though.

Brian: [00:43:45] And Disney Gucci giveaways.

Phillip: [00:43:48] Oh, my gosh.

Ingrid: [00:43:49] Which I'm half mad at, half really into. I'm in the middle on this.

Brian: [00:43:56] Wait, wait, wait. These are real things. These are real things. No jokes. By the way, the Supreme did collaborate with Oreo.

Phillip: [00:44:03] Yeah.

Brian: [00:44:04] Those Oreos were selling for eight dollars. And now they're going for thousands of dollars on eBay.

Phillip: [00:44:09] Thousands of dollars. See, I was told that the hundreds of dollars on resale the other day was never going to happen.

Brian: [00:44:15] That's not what I said. I said that I expect that they would retail for cheap and that they would go for a lot more on the secondary market.

Phillip: [00:44:24] What was the retail price? Do you know?

Brian: [00:44:25] Like eight bucks.

Phillip: [00:44:27] Oh, that's ridiculous. So eight dollars for Oreos is hilarious, by the way. The Disney Gucci makes so much sense in my mind because it was around Chinese New Year and the luxury market in Asia is ginormous. And the Americana market in Asia is even bigger. And that kind of makes sense to me. KFC Crocs thing I can't even understand.

Ingrid: [00:44:52] No.

Phillip: [00:44:52] Is it me? Does it...? It looks like it has a freaking chicken drumstick...

Brian: [00:44:55] It does.

Phillip: [00:44:55] On the top of it.

Brian: [00:44:59] No, it's real.

Ingrid: [00:45:00] Just the most egregious, hideous thing.

Phillip: [00:45:05] I can't even explain. I tried to explain the Post Malone collab and I wrote a whole piece about it. This can't be explained.

Ingrid: [00:45:13] No. No, it can't. But I'd like to see you try. I think it might be entertaining.

Phillip: [00:45:16] Well, I think there actually is an explanation. I've mentioned it on the show, but we are living in an alternate reality. You guys, I don't think you understand this. There was a... The Large Hadron Collider. I know that I've become the guy who is the only person talking about this, but I'll go to my death. The Large Hadron Collider started up on the 10th of September in 2008. And if you ask me, that's when everything went to crap. That's when the world started getting weird. We're on a different timeline now. They opened a black hole and we're in a different timeline where Trump is president and we have chicken crocs and Supreme makes Oreos and people buy them for thousands of dollars and somehow, you know...

Brian: [00:45:59] Lizard portal.

Phillip: [00:46:00] Yeah. The lizard portal is open.

Ingrid: [00:46:01] Yeah this is like the whole, you know, what was it like the Bernstein Bears?

Phillip: [00:46:05] Yes. That's what I'm talking about.

Ingrid: [00:46:08] Yup. Yup.

Phillip: [00:46:09] We have a collective memory of the time before.

Ingrid: [00:46:11] What was the other one? It was like...

Phillip: [00:46:13] Nelson Mandela was...

Ingrid: [00:46:15] Sinbad was in a movie.

Phillip: [00:46:15] Yeah. Sinbad was in a movie. A Genie movie.

Brian: [00:46:17] Shazaam.

Phillip: [00:46:18] Called Shazaam.

Ingrid: [00:46:19] {laughter} Which I swear I have like a really clear memory of.

Brian: [00:46:22] No.

Phillip: [00:46:22] You're not the only person.

Ingrid: [00:46:23] I know.

Brian: [00:46:26] Kazaam.

Phillip: [00:46:26] Kazaam. Oh, my gosh, you guys, we're living in it. This is it.

Brian: [00:46:32] And, let's see... So here's the kicker. McDonald's has a swag store. {laughter}

Ingrid: [00:46:38] That would be my favorite. That should be a Supreme collab.

Phillip: [00:46:43] Yeah, it could actually be. I believe Supreme has done something with McDonald's in the past.

Brian: [00:46:49] Their golden locket. Their gold flavored locket is sold out.

Ingrid: [00:46:57] Wow.

Brian: [00:46:57] And candles are coming. The candles are coming.

Ingrid: [00:47:02] The candles are coming. I wonder... Yeah. Yeah. No, I'm not going to go there. Never mind.

Phillip: [00:47:09] Guys. There are candles. There are candles. I'm not even kidding. They're mustard scented, ketchup scented...

Brian: [00:47:22] Yes.

Phillip: [00:47:23] I don't know you guys. I don't even understand.

Brian: [00:47:26] It's a wild world that we live in, and you just gotta get your products in front of consumers, and they'll just buy them. Like just put them in front of people.

Phillip: [00:47:34] Remember when like the Rick and Morty thing happened and people were lining up to buy Szechuan source?

Ingrid: [00:47:39] Yes. {laughter}

Brian: [00:47:39] I mean, that's one thing. I kind of get that. Yeah.

Phillip: [00:47:41] Guys, we live in a... Like, I don't know what's happening. The world we live on is broken. It's broken.

Brian: [00:47:47] All right. Since we're on a crazy world. All right. Let's just do one like insane collab that we would love to see at some point.

Phillip: [00:47:58] Ok, I've got one. Do you want me to start?

Brian: [00:48:00] You're first, Phillip.

Phillip: [00:48:01] OK. There was a fake image, or a doctored or Photoshopped image, that came out in 2015 that was on Hype Beast that I still can't forget. And it was a Off-White doing a collab with McDonald's. And it was the coolest looking fastfood design I've ever seen in my life. And I would so be there for that.

Ingrid: [00:48:21] Oh. That's actually just like a really good one.

Phillip: [00:48:23] Yeah. You think that's a good collab? That's not ridiculous. I think it's ridiculous.

Ingrid: [00:48:26] No. I think it's just ridiculous enough to be really good. Right on that border.

Phillip: [00:48:32] It's unbelievable. That's mine.

Ingrid: [00:48:35] Yeah. I'm going to do the thing that I absolutely don't ever want to do, which is talk about Donald Trump, but I think that Donald Trump should do a collab with the Monopoly game.

Phillip: [00:48:50] Oh, my gosh.

Brian: [00:48:51] How is that not a thing? That might be a thing.

Ingrid: [00:48:53] I don't know. But it literally writes itself.

Brian: [00:48:56] Are you sure that's not a thing?

Ingrid: [00:48:56] No. I'm positive. I mean, we would know that. Come on. Donald Trump and the Monopoly game. Boom.

Phillip: [00:49:04] Milton Bradley X Trump.

Ingrid: [00:49:06] Well, it's such a... I mean, because Monopoly came out as like this joke and sort of warning against capitalism, which now has just become like a celebration of capitalism, which if there are less parallels, I don't see them.

Phillip: [00:49:23] It's unbelievable.

Brian: [00:49:25] I feel like he could be the monopoly man.

Phillip: [00:49:28] He already is the monopoly man.

Ingrid: [00:49:29] He is the monopoly man.

Brian: [00:49:29] Yeah, exactly. So just like top hat and...

Phillip: [00:49:33] The monocle.

Brian: [00:49:33] There could be like a lot of different ways to go to jail, though. That would be...

Ingrid: [00:49:38] But they never happen.

Phillip: [00:49:41] Yeah, this is guy never rolls doubles three times. All right. It's just is the truth. All right. Brian, yours. And then we'll shut it down.

Brian: [00:49:50] OK. So this would be the most ridiculous collab that I can think of. Let's go Bono...

Ingrid: [00:50:06] I like it already.

Brian: [00:50:06] {laughter} ...X Corelle, as into the plate brand.

Phillip: [00:50:12] What?

Ingrid: [00:50:12] {laughter}

Brian: [00:50:12] It would be like Bono's homeware brand that's for everyone in the world.

Ingrid: [00:50:21] Like, are they the light kind that I can't break?

Brian: [00:50:26] The really light kind you can't break that last a long time.

Ingrid: [00:50:27] Oh that's good.

Phillip: [00:50:27] Oh, my. Oh, I thought you were gonna be like paper plates, and I'd be like that just doesn't feel like Bono. But now I get out.

Brian: [00:50:32] No, no, no.

Ingrid: [00:50:33] Yeah.

Phillip: [00:50:34] Oh, my gosh, dude. Although I think Bono X Dixie would be pretty funny. Like Dixie cups. Like Bano Dixie cups.

Brian: [00:50:43] {laughter}

Phillip: [00:50:44] I had no idea you were gonna go with tableware and you've blown my mind. Project Red Tableware.

Ingrid: [00:50:50] Brian's brain is a strange place.

Brian: [00:50:51] It is.

Phillip: [00:50:51] It's a scary place.

Brian: [00:50:53] Lots of fleeting thoughts in there.

Phillip: [00:50:54] I love it though. So let's shut it down. This is great place to end. Thanks, Ingrid, for joining us again on the show.

Ingrid: [00:51:00] Of course.

Phillip: [00:51:01] And thanks, everybody for listening. If you want to drop us a line, tell us what your favorite collab is.

Brian: [00:51:06] Please.

Ingrid: [00:51:06] Please. Yes.

Phillip: [00:51:09] Hit us up on Twitter. It's Future Commerce.

Brian: [00:51:11] Or LinkedIn.

Phillip: [00:51:11] LinkedIn actually seems to be the best place that we drive traffic to our website from. Believe it or not, because I don't know. You don't have trolls on LinkedIn. Or at least the ones that you can keep them from shouting you down with them. So let us know. Also, you can drop us a line at hello@FutureCommerce.fm. Yeah. Let's all keep dreaming of a future we can be proud of that, you know. Bano makes tableware.

Brian: [00:51:37] {laughter}

Phillip: [00:51:37] Thanks for listening.

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