The Future of Buying Software?

Phillip: [00:00:04] Hello, and welcome to Future Commerce, a podcast at the intersection of culture and commerce. I'm Phillip.

Brian: [00:01:48] I'm Brian.

Phillip: [00:01:50] And this podcast might be illegal in the state of California very soon. I mean, that is if we're using any AI actors, which we don't.

Brian: [00:02:00] Are you AI, Phillip? Maybe you are. Maybe we're actually both AI.

Phillip: [00:02:04] For the right price.

Brian: [00:02:05] We always have been. No. We haven't always been. We've just sort of morphed over to our AI. We've just kind of let go control to our digital twins, and no one notices the difference. How much do you see variation in our movement on the video watching on if you're watching on YouTube?

Phillip: [00:02:23] Look how fluid I look. I'm so realistic.

Brian: [00:02:27] Yes. Can an AI dance?

Phillip: [00:02:30] Could an AI ever be that random?

Brian: [00:02:31] No. Could they ever make weird hand gestures?

Phillip: [00:02:36] This is what they mean by just get right into the content. No preamble. That's what the algorithm wants today. I've told you. Right? The way that podcast discovery works nowadays depends on autoplay at the end of other podcasts. Have I told you about this thing?

Brian: [00:02:53] Yeah.

Phillip: [00:02:53] Yeah. We know.

Brian: [00:02:53] Yeah. Yeah. Yeah. I think we talked about this on the podcast. I think.

Phillip: [00:02:56] I think it was an After Dark.

Brian: [00:02:58] Probably an After Dark. I'm losing track of everything. We would talk so much into a microphone...

Phillip: [00:03:04] All of your channels are kind of bleeding together. It's funny. That is such a content creator problem is not remembering which channel you talked about something in because it's not all harmonious. It's like, "Did we talk about that in our newsletter, on a podcast, on a YouTube short, or in an essay, or where did we write it? I don't know." Anyway...

Brian: [00:03:29] Or just not record it. That's the other thing.

Phillip: [00:03:33] We've talked about it. We had a weird thing happen the other week. So I don't know if you know this, but some big wig hire at Shopify recently, their CTO, their new CTO is like a literal laser scientist, particle physicist, did a stint at...

Brian: [00:03:58] {laughter}

Phillip: [00:03:58] I'm not kidding.

Brian: [00:03:59] I know. I know. {laughter}

Phillip: [00:04:02] Did a stint at Microsoft by way of Yandex. Brian, are you familiar with Yandex?

Brian: [00:04:08] No. I don't know what Yandex is.

Phillip: [00:04:10] I'll tell you how I'm familiar with Yandex.

Brian: [00:04:15] This sounds like a boomer thing. This feels like a boomer thing.

Phillip: [00:04:19] It is. If you are a Russian boomer, you know what Yandex is.

Brian: [00:04:24] {laughter} A Russian boomer.

Phillip: [00:04:25] It was like the Alta Vista of Russia.

Brian: [00:04:28] Oh, man.

Phillip: [00:04:29] It might have been...

Brian: [00:04:32] But how do you know about this?

Phillip: [00:04:34] So I know about this because freaking Yandex used to crawl the website of Native Remedies dot com, which was an early startup that I worked at in the early aughts that sold supplements. Let's call it supplements. I've definitely called it snake oil.

Brian: [00:04:53] To be fair, pretty much everything that's sold now that's been rebranded as a supplement or, I don't know, a nootropic or whatever...

Phillip: [00:05:07] Nootropic. Say less.

Brian: [00:05:10] Yeah. Exactly.

Phillip: [00:05:13] The first two letters in the... It's like, "No." Just no to nootropics.

Brian: [00:05:18] Yeah. Yeah. No. But snake oil back in the day. We just called it snake oil back then.

Phillip: [00:05:24] I mean, Yandex was the number one cause of snake oil not being able to be sold. We would be on a Good Morning America segment as an herbal or homeopathic remedy for ADHD, you know, in 2007 or something. And the site would go down not from all the purchases. No. No. No. No. It's because Yandex was crawling the snot out of our website at the time. I had a block list of 100 of IPs from Yandex. Anyway, so it just so happens that somebody who has extensive crawler experience {laughter} did a stint at Microsoft's AI division for large language model training and is now the CTO of Shopify.

Brian: [00:06:08] You know, I really do want to know where the lasers are going to come in, because is it going to be to transmit information, or is it going to be to burn holes through things? I'm not entirely sure.

Phillip: [00:06:20] I could be both. We could burn holes through space and time. There's a very young listener to Future Commerce out there who has asked in the past if we have a perspective on lasers and whether or not things can be lasered into or out of existence, and we now have someone we can ask. We can literally ask the laser scientist that works for Shopify.

Brian: [00:06:49] Into and out of existence. We're pushing the After Dark content right now.

Phillip: [00:06:55] I love that. But speaking of the so the reason I brought that up was, Tuesday of last week, we had a weird crawl issue where somebody somewhere, three somebodies somewhere at 7 PM on the 21st of September downloaded every single podcast that we've ever made in triplicate from three locations. So the crawling is happening. The large language model building,

Brian: [00:07:26] That sounds sketchy.

Phillip: [00:07:27] The disembodiment and AI virtual influencerification of Phillip and Brian has begun.

Brian: [00:07:35] Yeah. I wouldn't be surprised. We have so much audio content. I mean, I'm sure at this point, my voice could get mimicked perfectly. Our voices could be mimicked perfectly. Although, I feel like there's a lot of variation in my voice, {laughter} so it'll be tough. Can you get into the quiet, Brian, that's muffled?

Phillip: [00:07:55] I was going to say you have modes.

Brian: [00:07:56] You have modes. Yeah. It'd be tough.

Phillip: [00:08:00] You've got alot of different ones.

Brian: [00:08:02] Yep.

Phillip: [00:08:02] Loud Lange.

Brian: [00:08:03] Good luck with that, AI. {laughter} You might be able to get one mode, but everyone will know that Brian doesn't stay in one mode.

Phillip: [00:08:10] Yeah. I do think that just like YouTube face sort of emerged as a way to it's sort of clickbait. The way that you can prove in the future that you're not a virtual influencer, I think might be to be as random as possible. I'm serious.

Brian: [00:08:31] Yeah. This is like...

Phillip: [00:08:31] If you never know what to expect from a person, the new aesthetic will be constant evolution and changing of your online persona.

Brian: [00:08:39] Yep.

Phillip: [00:08:40] And because one, you have to be above the algorithm, in the words of our friend, Michael.

Brian: [00:08:45] You have to change your identity to protect it.

Phillip: [00:08:48] I like that. Oh, this is good content. This is great because this is more than what you paid for today on Future Commerce. If they do, Brian, somehow successfully clone us into some metaverse or some AI or large language model out there somewhere, it would be illegal in the state of California as of right now.

Brian: [00:09:11] Would it be legal for us to use our AI?

Phillip: [00:09:15] No. No. Because this is all about consent.

Brian: [00:09:17] Consent.

Phillip: [00:09:17] It's all about consent.

Brian: [00:09:19] This I'm all in on. This makes sense.

Phillip: [00:09:22] This is all about consent. So I'll give you a quick rundown. There are two recently signed California laws. Two recently signed California laws. They're Bill 1836 and Bill 2602, both of which address the use of AI-generated digital replicas of performers. And in those two bills, California governor Gavin Newsome basically made law the protections that SAG AFTRA and a bunch of the strikes in the collective bargaining agreements between studios and Screen Actors Guild and directors were fighting for.

Brian: [00:10:07] They already had that in place. Yeah.

Phillip: [00:10:07] Well, it was collective bargaining with studios. This is making it law in the state of California. So a couple things to think about in this though is that it's not clear yet to me. I've done a little bit of digging, and I will do a little more, but it doesn't look like it's necessarily retroactive. It looks like these laws are prospective, meaning that they only apply to actions that occur after the law has taken effect.

Brian: [00:10:35] So get out there and get copying as fast as possible. {laughter}

Phillip: [00:10:39] {laughter} No. Okay. Wish that you have done all the copying and publication prior to Friday last week.

Brian: [00:10:48] Wait. No. Is the law in effect already? Or is there an effective date?

Phillip: [00:10:52] They were well, that's a good question too. I believe that they went into effect at the signing, immediately upon signing. And one of those issues, one of the issues here and I think this might be worth the conversation. Then the back half of this episode today will be a conversation around another topic around AI, how AI might change the way that we buy software, but we'll save that for the back part of this episode, and we'll tee that up when it's time. But I do think it's interesting because it prohibits the use... I'll read this to you. Bill 1836 prohibits the use of a deceased person's voice or likeness in digital replicas without the prior consent of their estate. So the estate can grant access. Now if you've seen recently, Brian, there's been a lot of estates of posthumous actors. We'd written about this in 2020.

Brian: [00:11:50] Extensively.

Phillip: [00:11:51] We wrote about this quite a bit about virtual influencers, and how we've already been through the dead celeb or the debt deleb discourse around how posthumous usages and brand licenses that are granted for actors and their likeness by their estates are often sold to big corporations for use in managing that license in perpetuity. Things like John Wayne or Marilyn Monroe might be owned by Authentic Brands Group or something like that.

Brian: [00:12:24] John Barrymore.

Phillip: [00:12:26] Sure. Why not? One could only hope in the future, Drew Barrymore...

Brian: [00:12:34] Could interact with your father in a movie.

Phillip: [00:12:38] That would be something. You know, that's the only way that I think Drew could get me to part with money on her behalf. So that's a total aside. But the other one prohibits the contractual provisions that would allow for the release of a digital replica of an individual's voice or likeness in place of their actual services. So this is kinda where we are is as California goes from a legal perspective around, you know, commerce and especially things like advertisement, I think so goes the nation. I think this paves the way for more virtual influencers that aren't based off of real people.

Brian: [00:13:17] Yep. Back to your article again. It makes more sense to create your own influencer than try to resurrect one.

Phillip: [00:13:27] I don't know. I think people are at least for this generation, there's a lot of affinity to real people whether they're, you know, it goes back to your familiarity and nostalgic relationship to that person. James Earl Jones being a good example of this. James Earl Jones, the late James Earl Jones, may he rest in peace, just passed away. He was 93 years old. That's a person whose voice in particular will be used for all of time in Disney properties like Star Wars and Lion King. He's synonymous with those properties. Right? That's a contractual arrangement that I'm sure he and his estate have set up well before his passing, but that may not be the case for everybody.

Brian: [00:14:12] And actually, in many ways, I mean, I understand why this law was passed, and I'm actually pro.

Phillip: [00:14:20] Oh, for sure. Yeah. Obviously. I don't want anyone to do that for me in the future.

Brian: [00:14:24] In many ways, but I guess there must be cases where this wasn't protected before. You could use someone's AI likeness without their consent? Which just kinda blows my mind. You'd think, I guess, it's tough because AI-generated content is actually not copyrightable. Is that possibly part of this? I should probably go look into the law a little bit further. But, anyway, this does play directly into what we've been talking about for a long time. And, actually, in your article, you basically predicted we would see the rise of digital, basically, digital characters instead of usage of dead celebrities who have histories that may be uncovered and canceled.

Phillip: [00:15:19] Between the two bills, one covers, you know, the use of deceased person's voice or likeness and another prohibits the use of anyone's actual likeness in place of their service. It kinda covers anyone living or dead. It doesn't say celebrity. It says nothing about that. It kind of covers every person.

Brian: [00:15:40] Which is good.

Phillip: [00:15:42] This might be one of the more modern examples of law that would cover a modern use case where things like fraud could be only prosecuted under the grounds of things like wire fraud or, you know, old legacy telecommunications legislation. This seems quite modern.

Brian: [00:16:11] Yeah. Definitely. Yeah. And I think this actually will give people the opportunity to maybe start to think about what their likeness can do for them. This is another thing that I think that even though this law shouldn't be the fit catalyst, it might cement in people's minds, "Oh, wait. My AI digital likeness is worth something and has value, and I will need to be able to start to leverage that at some point," whether it's just for personal use or for distribution.

Phillip: [00:16:51] So on that note, both personal use and distribution, I think that also applies to software. That's a hard left.

Brian: [00:16:58] Transition.

Phillip: [00:16:59] Oh, wow. What a segue. You could tell we've been podcasting for a decade. We're going to jump into it here today. We actually, Brian, we went to New York, and we attended one of the more unique events in the ecommerce ecosystem that I've ever been part of. It was called Shoptoberfest, which I'm jealous of. That's a name I should have come up with a long time ago.

Brian: [00:17:21] It was really fun. It was a good time. It was yeah.

Phillip: [00:17:27] I ate pretzels.

Brian: [00:17:29] It was fun.

Phillip: [00:17:29] Yeah. I had more pretzels. I had a lot of pretzels. It was very, very cool. Excellently hosted by, many folks in the ecosystem, put together by the folks at Shopware in Brooklyn. And it was such a rad neighborhood too.

Brian: [00:17:46] It was.

Phillip: [00:17:47] I had a blast. Hundreds of people came out to have a community event that was a not your typical ecommerce sort of, I don't know. How do you say circle jerk in German?

Brian: [00:18:03] {laughter}

Phillip: [00:18:03] {laughter} I don't know.

Brian: [00:18:04] It would be very much one word.

Phillip: [00:18:06] It's a very long word. Yeah. Circlejerkin. So, anyway, it was a lot of fun, and we met some rad people there. Maybe they'll be making appearances at some future date on the show. Actually, in just one minute's time, they will.

Brian: [00:18:22] Here we go. They're here.

Phillip: [00:18:24] We got to record with them to talk about our newest piece of research. Brian, have you looked at it? This research, it's wild.

Brian: [00:18:31] Yeah. It's, like, one of the coolest pieces of research we've ever done. It's a topic that's near and dear to, I think, both of our hearts having been on the side of trying to deal with this many, many, many times. It's about RFPs, and we call it The Honest Truth. And it's all about uncovering the realities of what it's like to engage with an RFP and potentially some better ways forward. And it's not just about RFPs. It's about making software decisions or purchasing decisions and actually being able to sort through the data that's available because I think there's a lot of just templates out there or copy-paste or various calming ways that people try to save time and money and also brainpower to make a decision. And in the end, it can come back and bite them very hard.

Phillip: [00:19:31] And worse than that, what I think often happens is there's distrust in the process between the people who implement software, the people who buy this software implementation, and then the software sell seller, the creator of the software themselves. They all three have commercial motives, and that's not wrong or bad, but they all believe that everyone is working towards a common goal, not often the case. And we found a lot of that.

Brian: [00:20:02] It's very Machiavellian political landscape. We gotta work The Prince in here at some point. We should have probably done that with the report.

Phillip: [00:20:11] I would really like that. Alright. Well, without any further ado, Brian, we're going to my conversation, I think, first. We're talking to Philipp Krueger over at Pimcore, who heads up marketing for Pimcore, an amazing platform that helps solve, you know, product information management solutions in the world for brands of all sizes, and particularly focused in this report on the mid market. And joining Philipp, I love myself a Philipp. Great guy. Great name. Well done. Also, Krueger

Brian: [00:20:43] No matter how you spell it.

Phillip: [00:20:44] My wife's South African. Krueger, that's a South African name. So Philipp Krueger is joining us on the podcast along with Jason Nyhus, longtime fan of Future Commerce, friend of the pod, and I believe he's the GM. Right? GM of Americas at Shopware.

Brian: [00:21:00] I think President of Shopware Americas.

Phillip: [00:21:03] Okay. The Grand Chancellor Supreme of America's Shopware. {laughter}

Brian: [00:21:08] The CCCCEO. {laughter}

Phillip: [00:21:11] Oh, we're not getting trouble for this one at all. Jason, longtime friend of the pod, since years and years and years ago, when we had him on for a Step By Step, I think it was maybe four or five years ago. But when we first sat down to talk about this, you'll hear it here, I had a very specific idea for the kind of content I wanted to co-create, and they loved it. We were all in on it. He was just chasing it up, making it even better, and I'm really glad that we got to, hey, tell the honest truth together. So without any further ado, Brian, last words before we go?

Brian: [00:21:46] No. Let's go.

Phillip: [00:21:47] Don't touch that dial. Head on over, in two seconds. We're going to get our buddies on the pod. We'll talk about The Honest Truth in software buying. Jason, Philipp, welcome to the show. Thanks for having us here to this beautiful location. We're in like a German beer hall in Brooklyn.

Philipp Krueger: [00:22:16] In Brooklyn. Yes.

Philipp Krueger: [00:22:18] I was running through Brooklyn in lederhosen today.

Phillip: [00:22:20] So Philipp, how close is this to the feeling of home?

Philipp Krueger: [00:22:27] To be honest, not at all because I'm living in Western Germany. We're not wearing lederhosen.

Phillip: [00:22:31] Right.

Philipp Krueger: [00:22:32] So, yeah, I just have to do that for the picture of the Americans, basically.

Phillip: [00:22:36] I love that. Yeah. You're conforming to the ideal.

Philipp Krueger: [00:22:38] I conform to the ideal. I like that. That's a great way to phrase it.

Phillip: [00:22:41] Yeah. Jason, what are you looking forward to today for Shoptoberfest?

Jason Nyhus: [00:22:45] Yeah. So first of all, thank you to Future Commerce and our partner Pimcore. We're hosting this event in Brooklyn, New York in the largest beer hall in New York, and it's called Shoptoberfest. And this event, I couldn't be more excited. It's a community based event. It's not a commercial for Pimcore or Shopware. It's about bringing all the great people of the community of commerce together to really kind of steal German culture and have a great time and pretend like we're working a little bit.

Philipp Krueger: [00:23:13] Is that cultural appropriation?

Jason Nyhus: [00:23:15] Yes. 100%.

Phillip: [00:23:16] He said steel, s t e e l. It's like we're going to...

Philipp Krueger: [00:23:19] I'm not sure if I need to be offended. I just want to check.

Jason Nyhus: [00:23:22] No. It's nothing more American than basically borrowing other people's culture and making it our own. That's what we are.

Phillip: [00:23:27] I love that. And there's a lot to talk about. We caught up, Jason, you, me, and Brian, about three or four months ago. Maybe you're going back to the spring now. So six months ago?

Jason Nyhus: [00:23:39] Yep.

Phillip: [00:23:41] And I had been working on an idea, and you sort of broke the silence on it. It was I have wanted to write for the longest time a report called Lies, Damned Lies, and RFPs. Based on my 10 years of agency side experience, first as an architect and then as a strategist, and then in leadership and helping build a new capability, bring in new partners, and build on new platforms. And I found that most of my experience was that the expectation on both sides of an RFP was misaligned, and everybody knew that we were talking shop up above the table, but below the table bowling balls are crushing our toes. So I was really excited when Shopware and Pimcore said, "We're really interested in this idea." You had already been thinking of a concept that was very similar, Jason. So I want to talk a little bit about how we got to what we wanted to go to research with, what we came out the other side with, we can talk about as well, and then sort of what we're hoping to gain from doing this type of content together.

Jason Nyhus: [00:24:47] Yeah. Well, first of all, we love working with Future Commerce because you guys are so fluid and natural and you love to brainstorm around what people should care about. And you really have, almost as a mission, to say the things that nobody is talking about. And RFPs is a really good example. I remember so 2023 was a little bit of a tough year for commerce platforms as it relates to replatforming. And then, therefore, it was tough for agencies. And so what we saw is a bunch of unnatural behaviors when RFPs were issued in that a lot of people weren't being the best version of themselves in these RFPs. They were kinda stretching the truth and they were trying to be too aggressive and basically trying to serve customers who are not their ideal customer profile. And it was really kind of that conversation that we said, there's probably a lot going on in the RFP world, and the way that people are trying to make ecommerce platform decisions and pim decisions that we should probably get underneath. And let's try to understand the psychology of really what's going on with how people are doing, big technology projects to transform their business. And from that really came the honest truth project, and I couldn't be more excited about the details that came out in the program.

Philipp Krueger: [00:26:04] And I think to add to that, when Jason approached us, when Shopware approached us, basically, and asked us, do you want to do a report with us? There's only the old title with the lies. I was reading that, and I'm coming from the agency side as well working consultancy for, like, 20 years. And it was just like, yeah, that's just hitting the nail. Right? Everybody knows that, and I was just super excited to get on board on that bandwagon, basically, because I thought, well, yeah, it makes sense. It is something that actually provides value to shed some light on that. You know, this is this weird mating dance that everybody does. We are so used to that in the industry, and nobody likes it. Nobody. So I was sitting on the agency side. We didn't like to work for RFPs because, you know, you have tons of work. Nobody's paying for it. Yeah. So the qualification criteria aren't transparent. You don't know what's going on. You're not allowed to contact the customer, stuff like that. From an agency perspective, it's a complete disaster. From the software vendor perspective, again, it's a complete disaster because all of a sudden you're reduced to feature lists. Right? And you just tick off boxes, you know, ticking off can we do that? Can we do that? Can we do that? And, of course, then you have to kind of you know, you're always looking at that and, technically, you could do that with us. Yes. Right? Yeah. You could. Right? And that kind of thing is, I guess, and everybody knows that. And from a customer side as well, so I was working in, you know, on the other side of the table as well in my career. And from the other side, it's the same thing. And they don't like it as well because everybody knows that the whole ritual behind it is flawed to the bone, basically. And nobody's talking about it. So I was really, really thrilled when the idea came up and I was just like, "Yeah, we're buying into that. Definitely."

Phillip: [00:27:45] I think we're all aligned in understanding that, maybe... So we actually retitled it, you know, Damn Lies in RFPs... Unfortunately, I do think that there is something really core to the new title, which is The Honest Truth. In talking to hundreds of merchants and operators that are in software buying positions, and talking to dozens and dozens of software implementers, people, agency, technology implementer side, what we found is everybody is telling the truth. They're telling the honest truth. You can do it this way. But what we found is that RFP can also stand for really effing painful, because the way that you might prefer to utilize a software is to go to its ecosystem. And each of these things, as you're making decisions around feature fitness, kinda comes down to a series of compromises, trade offs. And a lot of those compromises and trade offs come around more complexity, more software choice, greater contracting higher monthly costs, and all of this comes at some expense, which is usually time line and budget. So when we met with you and Pimcore, and we thought, okay, there's a way to do this altogether. We can even zoom out of the platform conversation that's just centric on the ecommerce conversation. It's like, how is software being bought right now? Because software buying needs to change, and the too long didn't read I think AI is going to completely revolutionize the way that we capture requirements, the way that we qualify what's being said in an RFP, and how we do agency and software selection. But that's toward the end of the report. What's your thinking on this? Software buying at its core is ready to change?

Jason Nyhus: [00:30:19] Well, let me start off with almost nothing we do in business today dates back to the 19th century. RFP processes, I think they started in the late 19th century, 1880 if I remember correctly. So today, we're still running this antiquated process of trying to figure out what vendors can we work with, which is hundreds of years old. And so I love your point around AI as maybe this is the moment that changes it.

Philipp Krueger: [00:30:47] I'm not sure if AI will change it because the AI selection process follows the RFP side. I'm not entirely sure if that works. But, yeah, I think...

Jason Nyhus: [00:30:54] Yeah. Fair. Yeah.

Philipp Krueger: [00:30:55] The point there is, I think you're making a very good point. This process in itself, there are so many different players in it. And as you said, everybody's telling the truth. Right? From their respective perspective. Right? So there is from a vendor's perspective, of course, you want to be the one that ticks the most boxes at the end of the day. From an agency perspective, you want to be the one that is the most trusted adviser, the most senior partner of a given software solution, stuff like that. On the other hand, what we see is now that we have I think it was... So after the establishing of the process in the late 1880s, as we just learned, I think in the early 1900s there was the invention of the RFP agency. So when all of a sudden, there were consultants coming in writing that RFP for you. And what they did was they actually made it worse just from my perspective of working on either side. They made it worse because what they did was they just took like a template of requirements that you need to have as a brand, as a retailer, as a wholesaler, as a manufacturer, whatever it is that you're doing, and they just forced that into each and every organization that they work with regardless if it actually makes sense. And then you have a requirements document that had nothing to do with what the customer actually does. And then you have that moment where all of that comes together in a huge RFP presentation. Vendor is there. The agency is there. The customer is there. The consultant is there, and everybody's getting into the same room. You have 40 people. Everybody's pumped, like, four hours pitches. Right? The stuff that we all love. But then they're over there, and then it's the first time that actually everything comes together, and there is such a clash of reality on that. Because all of a sudden, the customer realizes that the consultant didn't really understand him. The agency realized that the vendor briefed them wrong, and the vendors actually realized that, oh, we are not the right product at all. Right? That kind of thing.

Phillip: [00:32:56] Yeah.

Jason Nyhus: [00:32:56] And I really enjoy some of the elements that kinda came out in the research around the realities of the RFP process. You know, today, all of the parties rely heavily on the RFP. The agency relies on running the process. The platform relies on it to win business, and the vendor relies on it to get honest answers to take care of the business. So there's inherently a whole bunch of stakeholders who really needed to go well. And some of the data that you kind of turned up through the process were really, really insightful.

Phillip: [00:33:28] Yeah. We can go through the whole kit and caboodle. I suggest people should just go and download, check out the report for themselves. FutureCommerce.com/HonestTruth. But here's what it comes down to. If we had to distill it down to do a handful of talking points, I think the first is that about 8 out of 10, 82% of merchants that we talked to who make these software buying decisions, expect, they have come to expect that the implementation will differ from what they have agreed upon during the RFP and selection process. So that seems very misaligned. Now one of the not top level talking points that we go into depth in the report is that they expect things like budget overruns. They expect things like scope creep because of the bad hygiene of their worst experiences of the agency and implement or ecosystem are kind of tainting the way that they approach the process altogether. And I think that that on its own is already problematic because it sets everybody up for distrust right at the outset.

Jason Nyhus: [00:34:33] And it also ignores a lot of the dynamic natures of the businesses who are trying to evolve and grow and take share. And, you know, you write an RFP process, you do your vendor selection, you get through the process. A lot of time goes by and your business needs change. And so there's a there's a little bit of a moving target here that I think kinda is reflected in your answer of 8 out of 10 merchants expect the implementation to differ drastically from the sales process because they have to.

Philipp Krueger: [00:37:25] It's another side of metal to that answer. I was also shocked. I mean, of course, everybody kind of knows that. Right? But 8 of 10 is really a lot. Right? Yeah. But what I mean, there's another side of things as well, which is interesting when you talk about the number is that, obviously, that also implies that because these RFP processes also used for the initial cost estimation on the SI side. Right?

Phillip: [00:37:48] Correct.

Philipp Krueger: [00:37:48] It's also used for us from a vendor perspective depending on what kind of license model you have, you know, maybe some information on the RFP is, you know, relevant for your pricing structure. So, you know, if that is wrong, then everybody is setting off on the wrong foot. Right? And there is, of course, always that, as we said, the blurriness of those questions on those feature sets. If I say, you know, I want to sell stuff online, that's a requirement, obviously, but what does that even mean? Right? Do I need to integrate your ERP system? What kind of ERP system do you have? And all that kind of stuff that comes behind that. And then if if the requirements are wrong, the cost estimate is wrong, the time estimate is wrong, so you are over budget. You are out of time. You know, all that stuff happens because the problem cascades down basically from the RFP process.

Phillip: [00:38:38] I'll riff through a couple data points that hold this up for you, Philipp. The biggest red flags when evaluating a proposal according to merchants in our survey...  63% say that claiming out-of-the-box functionality will meet all of your needs is a huge red flag. I think we can all agree to some of that. 59% say that a red flag is offering unrealistic or inflated turnaround times. So, basically, finding the sweet spot is really difficult, especially in a blind RFP. So everybody wants everything fast and customized. The challenge there is if you wind up towards one end of the spectrum in a proposal, you're automatically red-flagged. And then 1 out of 2, so 51% or so, say that if you're not forthcoming with client references in the process, that's also kind of a deal breaker. I would agree with all of those as being reasonable.

Philipp Krueger: [00:39:35] I think the last one is particularly interesting because the last one actually sheds light on the problem itself. Right? Because why is that such a deal breaker? Because everybody knows that the answers in this kind of convoluted RFP process are probably not right. So you want to talk to people that have actually experienced that. They've actually gone through that process with the vendor, with an SI, you know, and you want to see, okay, what did actually happen after you signed that contract. Yeah. After you've signed the contract and before the vendor or the SI published a great success case study. What happened in those, like, you know, 6, 8, 10, 12 month, however the project goes. What happened exactly in that time? That again, it just emphasize on how flawed it is in North West. Right? Because you want to talk to people that have experienced something similar. And you know that you are not getting that by just asking, "Are you able to integrate a payment service provider?" Because the answer will always be yes. The answer will always be yes. The answer will always be yes. Yeah. But, you know, what does that mean? You know, in case of, you know, you are selling, I don't know, subscriptions, recurring business, whatever, you know. Tons of stuff, tons of details, Tons of stuff, tons of details that are falling out of that that are not considered in the process.

Jason Nyhus: [00:40:42] Yeah. I think one of the things that I'm most interested in, Phillip, that you kinda commented on, was there's almost a bias towards everybody looking the same. And it almost like in our world every RFP wants you to look a little bit like Shopify. They want it to be a multi tenant SaaS. They might want a revenue share. They might want you know, all of these different things. Well, if everybody looks the same...

Phillip: [00:41:13] Oh, yeah.

Jason Nyhus: [00:41:14] Then that's not a great outcome either. And so how do you you know, you don't want to have an RFP process that forces everybody to the middle. You want an RFP process that allows brands to actually separate themselves from their competition by trying to say, "This is what makes us special, is the way that we do this pricing or this promotion or the way that we've got these workflows. And that's special, but everything else can be kind of standard in the box. But this 20% is what makes our brand different from our competition." How do we make that the point of the RFP versus the 80% of all PIMs and commerce platforms that are the same? So part of the answers I saw is that everything kinda led everybody to the same middle, and I don't think that's a really healthy outcome.

Phillip: [00:42:00] Oh, not at all. And I think that's where a few other of the data points that I think are really important is this idea of customization versus speed. I used to call this when I spent my decade in agency service. I called this the spider face because we "cut off our nose to spider face." The issue with the customization versus speed is that we're trading our uniqueness in service of opportunity. So we're making a calculated cost as a merchant when we're making this decision that a long term investment can somehow deliver on short term opportunity. And I think that it doesn't often work out that way. If the calculus is always looking for something that's most customizable so that we can accomplish all of these long plans we have in the future, if you're not willing to put in that work upfront, you often aren't willing to put in that work over the long term either. And I think that that comes out in the data here. In our study, 81% of merchants said they prioritize speeds to market, but 86% said that they think that customization is of the highest importance. I think those two things are almost at odds with each other today because businesses are more unique than ever, especially those that have some complexity of the type that would be looking to two of you to service them.

Jason Nyhus: [00:43:25] Yeah. Absolutely.

Philipp Krueger: [00:43:27] Yeah. Go ahead, Jason.

Jason Nyhus: [00:43:28] Well, that's okay. So it's so interesting to me how one of my favorite things about serving the mid market is taking the tours of the warehouses and how these guys ship products and all the different rules that they apply. And in the mid market, it is fiercely competitive. Margins are tight. Every dollar is really thoughtfully spent. And there's not a lot of frills, and I love it. It's kind of back to the roots. I'm from small town Iowa. It's kind of the people I come from. And what's really interesting about it is when you talk to them about their business and the ruler of the business, there are things that they do that really separate them from their competition. And the reason that I'm in the room with my team and my company Shopware is because we have the ability to take those things that make them special, and preserve them, and build workflows and processes around, and use our rule builder and our flow builder to adapt to their needs so that they can continue to leverage them. Far too often, agencies or other people go in and say, "Yeah, well, this is how the box works. If you can change your business processes to fit in that, it can be cheaper and faster, and you can go and do all these things." That's true in a lot of cases. In a lot of scenarios, that's right. But you're giving up. What separates you from everybody else? And you're just another t-shirt shop if that's what you want to become. So, you know, Adobe did an amazing job talking about brand experience, and they kinda took the mountain on that. I think there's something too around business processes and some of those elements that brands must preserve as well so they can continue to differentiate, which is what the survey really says. 86% of our businesses need to evolve and customize over time.

Philipp Krueger: [00:45:12] We are actually tapping right into that in our sales documents. Right? So we have in all of our sales because we have a pinpoint. Yeah. A pinpoint, obviously. We have a provoking question in that and I think it's on the second or the third slide. It's "Is being standard actually your business model?"

Phillip: [00:45:29] Oh, yeah.

Philipp Krueger: [00:45:30] Because probably the answer to that is no.

Phillip: [00:45:31] Right? Absolutely.

Philipp Krueger: [00:45:32] And what happened and I think that is an industry flaw that we have, and we as Pimcore and you guys at Shopware, I think we are one of the few companies that actually understood that, to be perfectly honest. I do not want to trash talk anyone, but just to take a look at what we are doing and how we're approaching that, I think there is a flawed premise at the ground of that coming from the industry. Right? Because what we all learned in the last 20 years is, you know, go fully standard because standard will be faster, and then you will get time to market. And what happened in reality is that people try to get standard software into their businesses. They realize that this doesn't work, so they spend tons and tons and tons of money and time in customizing standard processes and making them according to their needs, which is a way, way harder undertaking than just saying, you know, we have a rule engine. We have a data engine. We have workflow engine. Shopware and Pimcore from a technical perspective, they work quite similarly. We're doing something different, but we are working from the inner workings IT side of things. Right? It's pretty similar. Because we believe that, you know, we do not have to roll out the 150 best retail processes in the world. That's not our business. Our business is to give the customer the canvas to actually build their business with us. Right? So that's the core central promise that we have at Pimcore. So you know, guys, build what actually makes you unique. That is where the beauty is. Then you spend the time in actually innovative stuff that actually differentiates you instead of, you know, customizing the 100th time how APSP is integrated or how you do any of the integration or all that stuff that is just so boring as hell and it's always so painful to get.

Phillip: [00:47:19] Let me give you a couple qualitative insights from the open ends on our study which a lot of it is included in the report. Again, FutureCommerce.com/HonestTruth. It was often said that the larger an RFP grows, the more interested folks need to be at an agency in order to answer it. Timelines are always short. Right? Trying to field multiple responses, and you want to do it in a timely manner. So what we found is and this hasn't ever been talked about, I don't think, but I think it's true. The divide and conquer nature of answering an RFP often leads to misinterpretation on behalf of the blind RFP sender. So if you have multiple people contributing multiple points of view on how to solve one holistic problem, you're already at a disadvantage in trying to find one partner who can complete an entire vision. Because you may answer an RFP in 7 to 10 days, but you don't build it in 7 to 10 days. And I think that those are really interesting insights into the way that the industry isn't set up for success. To your point, Philipp, the building over time requires enduring lots of pain over lots of period of time, and most of us are in a hurry to revolutionize our business right now.

Philipp Krueger: [00:48:47] What is interesting is I just want to tie into that. What is interesting is that you said the divide and conquer in answering an RFP and a vendor side or the SI side. Right? It's interesting that you put it that way, and it shows that you're actually coming from the agency side. But what I think where it actually starts to derail already is that you have a divide and conquer in stating the questions in the first place. Right? And get collecting the requirements on the vendors or the merchant side. Right? That is also totally divided.

Phillip: [00:49:17] Oh, a hundred percent.

Philipp Krueger: [00:49:17] And so there's this one department that does UX. There's this one department that's the marketplace. There's one department that's just direct channel. There's the wholesale channel. There's, you know, all that stuff. And they're all just, you know  putting in their requirements out of their department's perspective, which is never a kind of holistic solution that comes out of that. And so what's the answer? If you're if you're receiving it on the agency side, and I've done my fair share of RFPs over the time. You have a few X experts, you have technology experts, you have solution architects, you have those subject matter experts for the different solution sets. You have those all of that. So many people that have to take a look at it. And all of those people, depending on what you answered, at the end of the day, which is always the kind of death march piece of it. It's always over the weekend. You know, you're receiving on Monday, you're receiving the RFP, gathering the answers over the week. Friday night, you have basically assembled all of the data that you need. And over the weekend, the death march begins where you have to do the cost estimation out of that. Right?

Phillip: [00:50:17] Yes.

Philipp Krueger: [00:50:18] Which is so so utterly painful. And then you hand in something on Monday. And you think, well, we did it. And again, circling back to the beginning of the that we have, you have given your honest truth under those circumstances which are flawed to be with.

Phillip: [00:50:38] So to wrap us up, thank you guys for your time. Thank you so much for partnering with us on this thing I've been wanting to do for ages. I hope we did it justice. I feel like we captured something that hasn't been said.

Philipp Krueger: [00:50:47] You should read it on FutureCommerce.com/HonestTruth.

Phillip: [00:50:48] That's right. Exactly. Thank you so much. Hey, you've got a job. Actually two Phillips would be tough. {laughter}.

Philipp Krueger: [00:50:59] Doesn't matter. I could rebrand.

Phillip: [00:51:02] I'll take that. I'll take that. I think that the subtitle of the report actually is important to me, mostly because I love visual illusion. But I think that there's unmasking the software selection charade or charade depending on who you're talking to. I think that it comes down to you have something in your head and you're trying to communicate it to me through the least efficient means possible. It's a game. It's a game. It's a game. And we need to cut that out and we need to find ways to surface the, get closer to actual communication.

Jason Nyhus: [00:51:37] Yeah.

Phillip: [00:51:38] Last word, Jason.

Jason Nyhus: [00:51:38] If I could just... It doesn't have to be last, but, there's a data point in your report that I think is really, really insightful that said 77% of merchants trust their agency partners, but only 1 in 5 leverage their agency account person in the evaluation process. So to me, listen, there's never been more important time for the role of agencies as it relates to selecting commerce platforms, PIMs, or any other tech. I would tell you that you've gotta find, the first thing you should do is find an agency and vet them really hard and make sure you trust them and they know your business, and let them help you pick your tech. And the other thing that is really important is make sure that agency that you choose has multiple horses in the stable. They're not all in on one. Because those agencies, they have a hammer and everything looks like a nail. So make sure they understand that there are three or four choices across the PIM, a commerce platform, a webcam content management and that they can apply your business problems to the solution that best meets your needs. I don't think you should rely on a classic RFP process because all vendors will give you their "honest truth."

Phillip: [00:52:44] {laughter} I love it. Great place to leave it. Thank you, Philipp. Thank you, Jason. Thanks to Pimcore and Shopware, and I really appreciate it. FutureCommerce.com/HonestTruth.

Intro/Outro Music: [00:52:55] [outro music: "The Future" by Bo Burnham]