Latest / 1 to 100 / E15: The Brutal Truth About Shopify Right Now with Sean Frank

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E15: The Brutal Truth About Shopify Right Now with Sean Frank · 1 to 100

0:00
Dude, he doesn't he doesn't need a jet.
0:01
He's going to buy a jet card, right?
0:03
He's going to he'll do. He'll just get like, you know,
0:05
the net jet pass. He's frugal with 75,000,000 and
0:10
only 75,000,000 man, how are you going to take down the entire
0:12
world only 75,000,000 bucks? You guys got to raise more.
0:16
That's what I tell all the investors.
0:20
I'm just like, guys, this is like just permission to play
0:23
totally. Like, I don't, I don't know.
0:25
I don't like, I don't know what you're expecting to help come
0:29
out of 75, right? Yeah.
0:31
Do you expect anyone to know what Format does for only $75
0:34
million? It's like we have to get to the
0:36
billions before people know what you guys do.
0:43
So actually on this topic, I have a question.
0:47
I think it's some of this dude the other day, but we should
0:48
actually talk about it on here. How much free advertising do you
0:52
think you've gotten from people just asking that question
0:55
specifically, Sean and. Dude, Sean has done more good
0:59
for my business than I think he he knows, yeah.
1:04
Yeah, dude, look, I'm, I'm the, I'm the I'm the inventor or
1:07
whatever. Yeah, I think, I think I
1:09
commented like, you know, Congrats on the raise.
1:11
People immediately are like, oh, how much percentage of ferment
1:13
do you own? I'm like, I don't, I've never
1:15
even fucking used the product. I got no idea what's going on.
1:20
Like you guys obviously all know each other.
1:22
I know some of you, but a lot of it's from like PF PS.
1:25
So maybe explain what you guys all do and then what's the role
1:28
here kind of level set for the audience.
1:30
It's your guys's podcast, so maybe they already probably
1:33
know. But as a new listener, what what
1:36
do you guys simply talk about? Generally what we do is we just
1:40
try to lift the hood a little bit on what does it mean to run
1:45
a fast company. Specifically in the E com world?
1:48
We just run our businesses so differently.
1:50
Like Jeremiah's in this PE model, Zach is bootstrapping and
1:55
I'm raising a shit load of money.
1:58
And so you just end up with like businesses that are run very
2:01
differently with very different like sort of plans and like how
2:09
you have to operate the business when you when you are
2:11
capitalized in different ways. Yeah, we're just like talking
2:14
about what does it mean to operate a SAS business.
2:16
That's it. That's the goal.
2:18
We'll do it in true operators fashion.
2:20
I'm glad you guys told the name because you guys are keeping the
2:22
production level exactly the same.
2:24
Some people's videos aren't working.
2:26
Rishab's like apparently in the middle of a coffee shop taking
2:28
this a ton of background noise. Doesn't seem like we got too
2:33
much of an agenda. So you guys fit right into the
2:35
family. Dude.
2:36
I really appreciate you guys being part of the operators
2:38
network. I mean, hey, if you want, if you
2:41
want to adopt us that, that would be cool.
2:45
But we just don't have any sponsors though.
2:48
So if you can find us some sponsors, I mean maybe Ridge
2:51
would like to sponsor, I'm not sure.
2:53
You guys need 40 to 50 sponsors. Just sponsor maxing.
2:56
That's like the new podcast Meta.
2:59
I'm sure you guys all know TBPN. So Jordy worked at Ridge.
3:04
I've known Jordy for 10 years at this point guys.
3:07
Awesome. John friend of the brand and
3:10
what they've done is just like, yeah, we're going to be like
3:13
unabashed as many sponsors as possible, cram it in three hours
3:16
a day just blitzkrieg. And I think every podcast should
3:19
be doing that so just always be plugging before you say whatever
3:23
you're going to say on the podcast.
3:24
Just be like and make sure you use code Sean at checkout.
3:28
Just really, really start milking it.
3:29
But all right, So what do you guys want to talk about we?
3:32
Have a few topics. I mean, like, I, I think the,
3:37
the main contention point right now is, and I kind of don't have
3:41
a good dog in this fight either way, because I think I sit right
3:43
in the middle. Essentially Jeremiah's like
3:46
thoughts on pricing versus Rishab's thoughts on pricing.
3:50
And then you had an Instagram or a LinkedIn post, you know, maybe
3:53
it's a Twitter poll pretty much saying that anything under, what
3:58
is it 100 bucks, it's like a, it's a no brainer.
4:00
Anything over a 2 / 10,000 dollars you consider it and
4:04
anything in between, it's like a hard no.
4:07
So we'd love to like, unpack that a little bit more and then
4:10
get, you know, Jeremiah. Wasn't it?
4:13
Wasn't it the question of like, what's the number where it
4:15
becomes AI have to think about it in depth.
4:19
I think that was what the tweet was about.
4:21
Yeah, So it came. I, I got pitched some or you
4:25
know what, I'm helping. There's a guy, Craig, he has
4:28
like an AI consulting thing, right?
4:30
So his whole thing is like he'll come into your business and
4:32
he'll just like make sure all of your employees know how to use
4:35
ChatGPT, right? Which like sounds simple, but
4:39
you have to think about if you're a 400 person company and
4:41
you have 7 people in accounts receivable or whatever, like
4:45
what are the odds all those people know what ChatGPT is and
4:47
login every day, right? So Craig will come into your
4:50
organization. He has trainings modules
4:52
tracking the whole thing. He'll like set that up for you.
4:54
And he's like, how much do I charge for it?
4:57
And I'm like, it's one of those things where on like, on like a
5:01
monthly or yearly basis, like there's some number where it's
5:04
like, of course, it just, it, the ROI is so high that I'm, I'm
5:07
never going to say no to it. And I think it depends on the
5:10
size of your business and everything like that.
5:12
But it's something like if someone told me I'd like 1200 to
5:16
$1500 a month, it's like, I'm not even going to think about
5:19
that. I'm just going to buy it, right.
5:21
But the flip side is Rippling is like our, you know, payroll
5:25
software. They quoted me like $45,000 a
5:28
month or a year and they want to raise it.
5:30
So that's like 4 grand. And I'm like somewhere between
5:34
those two numbers, $1500 feels like it's incredibly easy and
5:37
I'll just add on every service possible.
5:39
And then at 4 grand I'm like, what the fuck?
5:41
I'm like all you do is run payroll.
5:43
What what are you talking about? So there's some in between
5:45
there. That's the delta.
5:46
So I'm just trying to get where everyone else's heads at on it.
5:49
So I mean, when you guys got there and priced products, what
5:52
do you think? You want to know the truth, You
5:55
want to know what I do, and this is going to fucking come back
5:58
and kill me, but I'm going to tell you the truth.
6:00
The truth is, you pick a number and then you keep doubling it
6:04
and still people say no. Yeah, it just just just maximum
6:09
value extraction, right. And it obviously like matters
6:13
what you guys do, right? So what, what, what's your
6:16
number at right now? If I were to set up for format,
6:17
jokes aside, I know what it does.
6:19
If I wanted to pay for it, what does it cost me right now?
6:21
Now it actually starts at 500 a month and and then it just
6:25
scales with the usage. So he said he just double s it,
6:27
but he actually cut it by 90% for the entry point.
6:30
Yeah, yeah, yeah, yeah. OK, But like you said, you're
6:33
going to tell the truth. You're not telling the truth
6:35
right now. You're saying, oh, it starts at
6:36
500 bucks a month. I don't think Ridge signs up for
6:39
Fermat and it's 500 bucks a month.
6:40
So like what's the what's the range do you?
6:43
Think I think the most like I think the most likely outcome
6:46
because I think you publicly said you spend what, 7 million a
6:48
month on Meta, right? But I only know your numbers
6:51
based on what you've publicly said so.
6:54
Is it just meta is the most important thing?
6:59
Meta is the place where most people start.
7:01
That's sorry, it's what? I spent $5 million last month
7:03
on. Meta, OK, OK.
7:06
So the reason why I start with there is like and the reason I
7:10
say the start with is the realistic way that our pricing
7:14
works is it just follows how much you use us on Meta because
7:20
our cost scales with how much it gets, how much traffic it gets
7:23
that that is the that is the reason it scales.
7:26
Depending on how Connor likes to test things, it would start, my
7:30
guess is somewhere between 1:00 and $3000 a month.
7:33
And then it depends on how much he decides to scale it from
7:36
there and it would never go past.
7:38
My guess for you guys is even if we did nothing different
7:42
relative to what we do with our other brands, it would not get
7:46
past 10 to 15 a month. But at the point at which you
7:49
are doing that, the amount that you are going to be making is
7:52
going to be like 10X that. Yeah.
7:55
So this usage based based model like that's as soon as everybody
7:59
says that I'm like, oh, I have to think way harder about if I
8:01
want to do it or not, right. And then so, so Jay, how, how
8:05
are you pricing stuff flat? Rate feature pricing.
8:07
So yeah, you can start. I mean we have brands doing 100
8:11
million a year in revenue using our $19.00 a month plan.
8:14
We lose money on those. So that's just the reality.
8:19
But you get you're limited in what you can actually do with
8:22
it, right. So like the way I see it is that
8:24
that that allows you to have three questions a month.
8:26
You can't connect to, you can't use the API, you can't do a
8:30
bunch of other things. And so I look at it as if that's
8:33
all you care about. You're not going to value our
8:36
technology enough to actually pay us for for what we should be
8:39
doing. So yeah, Sean, like you're
8:40
probably a few, I don't know your prices because you guys
8:43
have multiple domains and all that kind of stuff.
8:45
My guess is you're maybe paying us 500 to 1000 bucks a month for
8:49
basically full access to all of our features across multiple
8:51
stores. So.
8:52
Yeah, I'm, I'm trying to check right now and it's one of those
8:55
things where if you're in the app ecosystem, I'm just going to
8:58
try to pay like it's it's, it's a way different sell, right.
9:01
So if if for Matt's selling me, they're going to have to like,
9:04
you know, they're going to have to take me to a sports game,
9:06
They're going to have to like sit down with my CMO, explain it
9:08
or whatever. No, it's just like, hey, it's an
9:11
app, you should just install it or whatever.
9:13
And I I think it is $500 a month is what I pay.
9:16
Right. So I'm about right.
9:17
Like I don't think we have like 1 customer.
9:20
I think that pays us over $1000 a month.
9:23
Well, dude, name them. That's the whale.
9:24
Who's this? Who's this magical customer?
9:27
I'm not going to name them, but they are a whale.
9:31
They're a lot bigger than No, no offense.
9:33
They are a lot bigger than Rich though.
9:35
So the your your Max ACV on a customer right now it's $12,000
9:41
a year. Yeah, I mean, I forget exactly
9:45
what they're at, dude. It's just like, it's a different
9:47
game, right? Like we're playing, we're
9:48
playing a volume game. I'm, I mean, and Sean, I don't
9:51
know if you've seen this, I took over Stamps, which actually
9:55
somebody on your team was evaluating potentially using
9:57
Stamps. So I took over Stamps reviews
9:58
platform and we're going to, we're implementing the same sort
10:01
of pricing strategy there. So it's going to be flat rate
10:04
for reviews. There's also loyalty product,
10:07
there's something called repeats that we acquired as well and
10:11
repeats very much focused on basically helping give the right
10:17
information or it's called the moment.
10:20
So the idea is you put the you contact a person at the right
10:23
moment with the right piece of data.
10:25
So trying to do like a cross sell or an up sell or whatever
10:27
that is via e-mail or SMS typically, and then kind of
10:31
tying all those things together. So what I'm looking at is
10:33
basically like building an ecosystem of data collecting
10:36
tools that really empower some pretty incredible insights.
10:40
And that's my goal. And so I actually do think
10:42
there's a world in which like I would go to you Sean and say,
10:45
hey, we have all of this really interesting data that can really
10:48
change the way that you do business outside of just like
10:51
what you're collecting from surveys.
10:53
And I think that that may be worth call it 50 KA year to you.
10:57
Like that's ultimately what I'm trying to get to.
10:58
Is that kind of a world? Yeah, Yeah.
11:02
So there's usage based pricing. If it's delivering value to some
11:07
sort of customer and you have to quantify that, then there's like
11:10
flat based pricing for features, right?
11:12
If it's going to be collecting surveys or reviews or whatever.
11:16
And then I think, I think what Jeremiah saying is that there's
11:19
a data business to be built on top of that, right?
11:21
There's like, I mean, hedge funds hit me up all the time
11:24
trying to get me to do calls to tell them how good meta ads are
11:27
working that month, right? And like it's the same sort of
11:29
thing. You could build the data
11:30
collection tool there. Zach, how do you price your
11:33
features? I think I pay for your tool as
11:35
well. Yeah.
11:36
You guys, you guys pay. I think you guys are on like a
11:38
old legacy plan. I think you pay us nothing.
11:41
Awesome. I love.
11:42
I love this model. Yeah, no, it's, it's really
11:44
good. So we actually just changed our
11:46
pricing. But so we're we're feature gated
11:49
at tiers and then our main like scaling metric now is like the
11:54
number of ad accounts that you're tracking and then users
11:57
on the platform. But up until a couple months
11:59
ago, we were pretty much just users on the platform.
12:01
So like seat based pricing, right?
12:04
Yeah, so, so your seat plus right now, right.
12:06
So there's, there's usage, there's feature and there's seat
12:10
or seat plus, right, Jack? And I'm actually unfamiliar with
12:13
with with your business. What's your business, man?
12:16
You're on mute. Jack and he like runs this
12:21
podcast when his internet's working.
12:24
I hope Jack is not OnStar link after all the praise we were
12:28
getting star like a couple weeks ago.
12:31
Oh man, yeah, you still can't hear.
12:35
But Sean, I'm actually curious, OK.
12:36
So like on the pricing side, obviously like you have you pay
12:43
for tools that are all the different possible ways of
12:46
pricing, right? What?
12:48
What's your take like? What?
12:50
What do you care about in that context?
12:52
What do I care about? Well, it's, it's really like,
12:54
it's how much do you want to invest in the sale side of your
12:57
business, right. So if you just want to be a
13:02
solar solo builder, right, So I look at like lifetimely what you
13:05
guys did like if you just want to post on Twitter, tell people
13:10
what you're doing, get reviews in the App Store and play that
13:13
game feature based pricing, you'll have very quick adoption
13:16
and probably very low churn. I mean, no offense.
13:19
I've never thought about no commerce.
13:20
It's just on my website. It just works.
13:22
Never think about it. The team use it to collect some
13:24
sort of data and and build some sort of reports.
13:27
And I think it is like $500.00. So it just sits there.
13:30
It's just part of the shop by Bill.
13:31
It's actually really hard for me to find how much I'm paying for
13:34
because I have to go to my Shopify bill and then actually
13:36
pull that out and then see like how it actually bills.
13:38
That's like the advantage of the permissionless ecosystem is that
13:41
with C based pricing, I haven't actually gone through the flow
13:44
to see like how you sign up. But if I could just sign up by
13:46
myself and then invite people like the Figma style, that's
13:49
also like a no brainer. It's like if I'm going to use
13:51
the tool and get value out of it, just the performance
13:54
creative team can do it. It's just when you get into any
13:56
sort of usage based, right? And like, so you put form format
14:02
into this N beam falls into this where it's like like if it's
14:05
going to scale and I'm getting a lot of use out of it, It makes
14:09
sense you want to capture some of that value, but it just
14:11
could. It could be so expensive so fast
14:13
and then I could get punched in the face.
14:14
SMS kind of falls into this, right?
14:16
Yeah, exactly. And e-mail, too.
14:18
Right. Yeah.
14:19
And do my clock, a bill is like 40 or 50 grand 1/4, right.
14:22
So it's like a serious bill that like I have to consider, but I'm
14:25
not going to not send emails, right.
14:27
So if you're trying to be like an e-mail competitor or an SMS
14:29
competitor totally works. The one thing we haven't talked
14:31
about is just very aggressive or very expensive SAS pricing.
14:36
Like an ERP like Fulfill is easily 10 grand a month, right?
14:40
It's like this massive enterprise software that's sold
14:44
all you guys chose to avoid that.
14:45
I mean, the only way you can do that is you have to decide
14:49
you're going to sell to the large enterprises first.
14:53
Like I just don't think you can reasonably grow a business at an
14:57
extremely high price point and not start by selling to the
15:01
largest brands. Like that's an like that's an
15:03
impossible feat, essentially. Yeah, you, you can't go to a $10
15:07
million a year Shopify store and be like you need my $100,000 a
15:10
year software because they don't we all, we all know they don't,
15:13
right. Precisely.
15:15
But it seems like, you know, in the future, like are are you
15:18
guys worried about like AI vibe coders building the no
15:21
commerce's of the world or or whatever else?
15:23
Are you guys worried about like just people flooding the App
15:26
Store with hundreds and hundreds of options?
15:28
And that's one reason to go into the largest enterprise SAS is
15:31
because it's just really hard to go fulfill.
15:33
You have to hook up to a bunch of three PLS.
15:35
It takes like 4 years to get that going.
15:37
And that's one reason to do it. Now the downside is you the, the
15:40
people you're selling into, there's like 500 of them.
15:43
Like it's a it's a way smaller. Yeah, yeah.
15:45
There's yeah, yeah, yeah, yeah. I actually think good pricing or
15:48
let's just call it like affordable pricing or like
15:50
pricing that isn't the main constrictor actually position to
15:54
do the best against sort of like vibe coders, because there is
15:57
like a level of just like product love.
15:59
And it really depends on like what your software does.
16:01
Is like, is your software a thing that you set up and then
16:04
it does a singular thing for your business and you never
16:06
touch it again? Or is your software like
16:09
something that people log into like multiple times a day?
16:11
Because then it also depends on like how often a bug is going to
16:14
come up and then how quickly it can be resolved as well.
16:17
And so like, even if you had, you know, you've got like an
16:21
army of vibe coders like try to replace your entire like Shopify
16:25
app bill. Like the thing that's going to
16:27
happen for like some of the apps is like, oh, it's going to work
16:30
perfectly fine. There's going to be absolutely
16:31
no issues. And then for like a another sort
16:34
of cohort of them, you're like, oh, this is horrific.
16:36
We don't have like the capacity to account for sort of like the
16:42
fragment, like the fragmentation of bugs and like use cases that
16:46
exist even within a single organization and like it'd still
16:49
be useful in a day-to-day process.
16:51
I I honestly think in a lot of ways, like a lot of the
16:55
businesses that would have been disrupted from these types of
16:59
things would have already been disrupted from like Zapier or
17:04
Make. I I don't think that like
17:07
putting a wrapper around some of these like very specific like
17:10
logic type things like makes an inherent like larger threat.
17:15
Yeah, Sean, I guess I'm curious how you think about this given
17:19
like for better or for worse, you publicly like went off of
17:22
Clavio and went back on, right. And and there is like a team
17:28
that built that other software and that is like the equivalent
17:32
probably actually better than the vibe coded equivalent that
17:35
would happen in the future. And like I think that that set
17:39
of trades and I mean like you have, you've actually
17:42
experienced this direct, like I've actually never experienced
17:45
it, but I'm curious how you think about that.
17:47
Yeah, look, and let's talk about that.
17:50
So Clavio has gotten better as terms of like pricing and
17:55
people, but like going into the IPO, they were horrible to deal
17:59
with, right? So kudos to the team to like
18:02
fixing it. But like they, they had a face.
18:05
And this is going to the second point of the podcast is
18:07
ecommerce shrinking or not, right?
18:08
So that's the second point of podcast.
18:09
But imagine if you're Clavio, you raise all this fucking
18:12
money, you're going to IPO, you totally missed SMS. Like for
18:16
some reason they were two 2-3 years behind SMS. They were just
18:19
like, we're just getting a really good at e-mail.
18:21
And how I understand e-mail is that they're actually just built
18:23
on Twilio, like or Sendgrid or whatever, like they're on
18:26
somebody else and they're just kind of like a interface and
18:29
like best best practices on top of that.
18:32
And you've hit peak saturation. I mean, like the, the numbers
18:36
are outstanding. They have like 90% of Shopify
18:38
plus merchants or something, right?
18:39
Like they have this massive, like they've totally eaten up
18:42
the Tam and they're going to IPO.
18:44
And then if you IPO, you have to show that you can grow, right?
18:47
So the way they're going to grow is they're going to start
18:48
charging people more money. And they were just, I mean, they
18:50
were cancelling discounts. They were like, my bill was
18:53
going to set to like go up 50% or whatever.
18:55
And this is probably me hoping the technology was more advanced
18:58
than it was trying to go to other competitors in the space.
19:00
I'm like, how come there isn't a 500 or $1000 a month solution on
19:05
top of this? And so I, I was probably just
19:07
more excited than I should have been.
19:09
I should have taken more carefully, but I was like, how
19:11
can you fuck up e-mail? We've been sending emails for 30
19:13
years. It's like, how could it be so
19:14
bad? That's who I went to was not
19:17
ready for the light of day. I had to migrate there, then
19:20
migrate back. And I'm totally will.
19:22
I, I'll eat as much crow as possible.
19:23
I've done this a bunch of times with a bunch of shit.
19:25
I tried to leave Shopify once, right?
19:27
So Cargo took me back. They've gotten way better at
19:30
pricing. I think they figured out that
19:31
they can they can cross sell merchants in SMSI think they're
19:34
finding success with like the restaurant segment or whatever.
19:37
But it looked really dark there for a second.
19:39
Like they had an IPO that like was getting crushed like
19:43
2022-2023. And yeah, and they they only
19:46
solution was to raise prices. So anyway, maybe in the future
19:50
of AI, it'll be easier to vibe code, but that's why I go back
19:54
to that enterprise thing because if you're selling AP is and and
19:57
connections, it's just like, it's just it's that's the mode,
20:00
right? Like if you're go ahead, Jay.
20:03
I would say I think brand matters too, right?
20:05
Because the other piece of this is, is the like having experts
20:09
who know what they're doing helping you like a vibe coder or
20:12
even just like hiring a software engineer to be like, hey, come
20:16
in, build these features for me. They're not going to be an
20:18
expert that's going to give you that's going to help level you
20:21
up and how to use those things. You actually have to then have
20:24
that expertise in your team And AI helps with that a little bit.
20:26
But you're always going to be, as long as the price makes
20:29
sense, you're actually always going to be better off working
20:32
with people that are experts on these things who are constantly
20:35
leveling themselves up as opposed to trying to do that on
20:38
your own. Like we all outsource things,
20:39
right? Because it's hard to be the
20:41
expert at everything. I, I, I do worry about like
20:45
whether ECOM is going through like ECOM itself and sass of
20:50
ecom is going through consolidation, which basically
20:53
means that time is shrinking, which is bad for everybody,
20:56
right? And especially bad given the
20:59
amount that I've raised, right? Just to say the words out loud,
21:01
like I don't just for everybody just to be very clear about my
21:05
view. I'm worried about it and it is
21:07
not in my interest for this to be true.
21:10
OK, I want to be super clear so this doesn't get mistaken.
21:13
You, you like basically got this thing to have a lot of attention
21:17
and get people to chime in, right.
21:19
So like you're trying to get people to share data to
21:21
understand what's true about the market.
21:23
I guess I'm curious on 2 fronts. 1 is what makes you curious.
21:26
And then the second is what, what is your read not only from
21:30
what people publicly shared, but from like the private groups
21:32
that you're in? Yeah.
21:33
Well, only the paranoid survive. So you should definitely stay
21:37
paranoid about what's happening in your market.
21:39
And there is a solution to this, but it's not in their best
21:44
interest to share it, right? And that is Shopify to share
21:46
same store year over year sales growth.
21:49
They will never share that because they're a public company
21:52
and they want to make it seem like they're growing and they're
21:54
strong, right? So talk about like not acting in
21:57
your best interest. It's like, yeah, dude, Shopify,
21:59
Shopify could just put an end to this.
22:01
We could stop speculating. They could just be like, no,
22:03
stores are stores are doing fine.
22:04
Here's the data. They do report on GMV growth and
22:07
they report on, you know, the number of new merchants they've
22:12
added, or at least they they highlight the biggest ones.
22:14
And it's one of those things where it's like, how much do you
22:18
believe in Shopify's sales engine to convert legacy
22:20
businesses over to Shopify? I think they do a pretty fucking
22:22
good job of it, right? There's still a lot of the
22:24
websites that are not built on Shopify that they're taking
22:27
over. And without a doubt, we went
22:30
through an e-commerce recession. There's just data that shows
22:32
that like e-commerce penetration grew from whatever 12% to 15% to
22:38
17% and then it went back down to like 15 and then it's like
22:42
slowly going back up, change those percentages to be
22:44
accurate. But like we could take a
22:45
screenshot. the Fed releases this data like e-commerce
22:48
penetration of percentage of retail.
22:49
So we can debate if there was a like recession in terms of like
22:55
how it's measured on like the global GDP or national GDP
22:58
level. But inside of our sector, there
23:00
definitely was that like less transactions were happening.
23:03
Nobody can convince me otherwise.
23:04
Now, that doesn't mean that you're destined to lose, right?
23:07
Like Rich has grown every single year since we've started this
23:10
business, right? And I know people who can start
23:12
a business last year doing $20 million this year.
23:15
Like there's all the success stories.
23:17
But if you look at like in aggregate, there's, there was
23:20
less transactions happening. That brings us to today and the,
23:26
the, the main point in contention was, hey, here's the
23:31
built, built with data showing tops, top stores in the top
23:34
whatever 10,000 that are built on Shopify and it's lower than
23:37
it has been, right. So then the debate is like, is
23:40
the data wrong or what's happening?
23:42
There's, there's this whole other vector.
23:44
We're not going to talk about that.
23:44
It's like, is the open web shrinking?
23:46
I used to, I spent $1,000,000 on an open web website that had
23:49
like affiliate links and SEO. I gave that away earlier this
23:53
year because I think the open web is actually dead.
23:56
But we're not going to talk about that.
23:58
What we're talking about is e-commerce.
24:01
Look, I think the read is it's been the hardest five years of
24:05
e-commerce ever. Like if you could go back to
24:07
2009 and 2009 and 2019, easy, nothing happened.
24:12
You know what I mean? Like more people got iPhones and
24:15
they bought stuff on the Internet like and then you think
24:18
COVID to euphoria in 2021 to a war in Ukraine to like the whole
24:25
depression from 2022 to 2023 to iOS 14 was in there to all of
24:30
these fucking things happen. What what we've seen is that
24:32
every year there's less people showing up to e-commerce events,
24:35
but basically peaks of 2021. Every year there's less people.
24:38
Every year there's less new merchants.
24:39
Every year there's less more like there's less people talking
24:43
on social. There's less people want to join
24:44
groups more and more people kind of go and consolidate or belly
24:48
up. Look, we didn't even talk about
24:49
like Thrasio was a thing. You know, they raised billions
24:51
of dollars and now they're not a thing anymore.
24:53
Like it was, it is silly to say that like, oh, everything's
24:58
fine. Obviously it it hasn't been.
25:00
We can look at all this, all of these things.
25:01
It's like we have such short term memory that all these
25:03
things, all these things happened.
25:04
Anyway to end the monologue, your question was how are the
25:08
vibes? I would say that people I talk
25:09
to right now are pretty resilient and they're pretty
25:11
stoked that like, look, if you, we're recording this in July
25:15
2025. So you've survived the election
25:18
of Donald Trump, you survived the tariffs, you survived
25:21
everything that came before and everything that came after.
25:24
Wars in Gaza, war in Ukraine, whatever you're looking right
25:26
now, you're like, yeah, it looks pretty good.
25:28
Timo got killed, right? Timo's aren't on ads anymore.
25:30
Like we're all through pretty excited.
25:31
So I would say that we are at the to to take it back to the
25:36
tech bubble. We're probably in 2002 of the
25:40
tech bubble. So we're we're post peak and
25:42
we're in the rebuilding stage. That's what I think.
25:44
OK. I was just going to ask like you
25:46
guys in specific, one of the things that I'm noticing you're
25:51
due and this is outside looking at, I have no idea.
25:52
But outside looking in it looks like you're adding products at
25:58
like a faster clip than you ever have been.
26:00
And what that as an outside looking in person, what that
26:05
makes me think is like, OK, the merchants are also like
26:09
consolidating product spaces. So like as a merchant, it is
26:13
better for me to be getting more categories to be bought from me
26:18
because, and this goes to your like 15/17/19, like whatever the
26:23
numbers are, it's not going to be 100, right?
26:27
Like we can kind of agree that retail e-commerce is never going
26:30
to be 100% of retail. And so then there's like this,
26:33
this consumer Tam question of like as a merchant, what is the
26:37
way to do this? Would it be a fair thing to say
26:40
that like there is consolidation happening on the product
26:44
category level if you're an E com merchant because you and,
26:47
and, and that is part of why you're seeing people expand into
26:49
new product categories and competing across product,
26:52
product categories. It's happening in SAS just to
26:54
say it out loud, right? Yeah, and I talked to Jacques
26:58
from Raindrop today. So love Raindrop.
27:01
They make great videos. They work, they work with Doctor
27:03
Squatch and Native. And then they had to make the
27:05
choice to only work with Native. And that's because when they
27:08
started, did Jacques said this, he's like, Doctor Squash was
27:11
just doing bar soap and Native was just doing deodorant.
27:14
But then over the past 10 years, they each try to take up more
27:17
and more of the aisle. And then Native tries to go
27:19
after men and Doctor Squash has to go after women.
27:21
And then they are just, instead of rubbing elbows, they're just
27:24
fist fighting for space and target, right.
27:26
And yeah, that's, that's the natural path of a brand.
27:30
It's like we're all going to keep expanding, expanding,
27:31
expanding. Dude, you have to SAS all the
27:33
time. I, I was talking to one of my
27:35
SAS merchants and they're getting into returns and it's in
27:38
a category. You never think they, they would
27:40
get into returns, right? But I'm like, yeah, because Loop
27:43
built a great business with a premium price.
27:45
If I was doing SAS, I would do returns too.
27:47
Like that's the first thing I'd go after, right?
27:51
But also I don't like how expensive they are.
27:53
But then yeah, going back to it, Ridge has been able to grow
27:55
because of our expansion of new product categories.
27:57
If I was trying to sell more wallets every year, like I, my
28:01
wallet business is flat year over year, but my ring business
28:04
has done 8 figures in the first half of the year.
28:06
And it's like that's the future of I think more brands having
28:09
stand alone product categories that you can run different ads
28:11
around and just take up more of that land share.
28:13
So it's definitely, the room is pretty big.
28:18
I don't think it's getting much bigger.
28:20
So you have to kind of just make your own space in it.
28:22
One, one thing that's really interesting going back to your
28:25
point, Sean about, you know, 2020 to present basically on the
28:29
challenge there. If you look at Internet adoption
28:32
in the US, it really hasn't changed since 2020.
28:35
I actually think that's a big piece of this.
28:36
So in terms of like the Tam expanding, we had, you know, the
28:40
from 2, the year 2000 to 2020, there's a massive growth in
28:44
Internet usage from 2010 to 2020, there's a massive growth
28:48
and smartphone usage. And even I was looking at one
28:51
number that was saying total time spent online is only 2%
28:55
higher now than it was in 2020. And who knows, like that may
28:59
even go down like per person time spent online that may even
29:02
go down over time. And so then I think you look at
29:04
that paired with e-commerce sales being pulled forward so
29:08
much from COVID, I think that, that could explain a lot of the
29:12
bumpiness that we've seen here, right?
29:13
Where it's like you're really not seeing expansion of of
29:18
people using the Internet. And also like we really pulled
29:21
forward a lot of what you would expect that the e-commerce kind
29:24
of growth trend to be. And and probably that trend
29:27
can't continue at the same rate that it was in terms of like
29:30
e-commerce driving percentage of of sales without like some
29:33
pretty meaningful innovation, which AI may may actually help
29:35
with that. But I do think that's probably a
29:38
big piece of what we're seeing over the last five years.
29:40
Totally. I mean, Amazon doesn't really
29:41
grow e-commerce sales anymore, right?
29:44
Like they're in the value extraction point of view,
29:46
they're going to, they make all of their profit from their ads.
29:49
Look at their S1 or the quarterly filings.
29:52
Their profit number is exactly how much they charge in ads.
29:55
Like those things are like one and one, right?
29:57
Everything else is just break even to make AWS work or
29:59
whatever else. And then people point to China,
30:01
China's that probably triple the e-commerce penetration rate is
30:04
US. But they didn't get there
30:07
without a lot of bloodshed, right?
30:09
Like they have malls too, and they have a very large, you
30:16
know, real estate bubble. We're like, they have commercial
30:19
real estate that needs to have people coming in and shopping.
30:21
And that was a knife fight. And a lot of times like, like,
30:25
like in America, we think of China as like being like one
30:28
party, one system moving in One Direction.
30:30
But no, there's people in there with different competing
30:32
priorities. It's just like every fucking out
30:34
thing else, right? So one, people like shopping in
30:36
malls. Like I mean, the Century City
30:39
mall in LA is packed every single day with people hanging
30:41
out outside, right? The third thing is there's a lot
30:44
of constituencies that want to protect retail stores, right?
30:50
The closing of de minimis, We talked about how great it is for
30:54
American econ merchants. You know who wants that?
30:56
It's Gap because like Gap, Old Navy, they're paying duties to
31:00
bring their shit in and team who isn't right.
31:02
So this is like the other thing to think about is like there's
31:04
some sort of protectionary nature of retail employees, you
31:07
know, commercial real estate, the whole thing.
31:09
So we're never going to get to 50% e-commerce penetration.
31:12
We probably get to 20, right? And it probably gets there by
31:15
the of the decade. That's like, that's the reality
31:17
what we're talking about. Yeah, exactly.
31:20
Like it just is not going to grow at the rate that it did
31:22
previously. And yeah, so there will be some
31:25
expansion. But yeah, if you want to grow
31:27
50% year over year, probably the only way you're going to do that
31:31
is by selling different products than what you've been selling in
31:33
the past. Well, isn't part of this also
31:35
just the probably median age of an e-commerce native business,
31:39
right? Like Sean, like you guys didn't
31:40
start selling wallets. At least I, I don't think you
31:43
didn't start selling wallets like out this back of your
31:44
truck. And then you're like, oh, we're
31:46
going to take this thing online, but you started it online,
31:49
meaning you started as like a single product.
31:51
And I think a lot of let's call it like the people that rode the
31:54
wave of e-commerce were, you know, people who are building
31:58
businesses like online 1st. And so like as those businesses
32:04
age, like you said, like there's only so much so many wallets
32:06
that you can sell. And so is it, is it not just
32:09
like your business is aging in the same way that like if it was
32:12
like 35 years ago and like you first started selling wallets
32:15
and then you started selling backpacks or like whatever it
32:17
was? I think like every business does
32:19
this. Like it's not an e-commerce
32:20
specific thing that you go to like multi product.
32:22
It's like the difference between being a brand versus being like
32:24
a widget or like a utility type product.
32:27
Totally. And you know we have this debate
32:29
it original the time. So we have 10 million customers
32:32
in our Shopify account, right. So like I mean depending on who
32:36
you guys are, that's either sounds like a lot or sounds like
32:38
a little, but 10 million customers have bought from us
32:41
through Shopify. What we talk about internally is
32:42
like, OK, what percentage of Facebook active users that are
32:48
guys that are between 18 and 40, is that 10 million?
32:53
And then where do they fall into like a, you know, economic
32:57
brackets, right? Like what's their income?
32:59
Whatever you start looking at it, you're like, oh shit, do we
33:01
have half of all people who buy on Facebook like it?
33:06
Just like the Tam of wallets on earth is $10 billion a year or
33:10
something. And we do like $100 million a
33:11
year just in wallet sales, right?
33:13
So we have 1% of that global wallet market.
33:15
Now in America, we probably have two or three percent of the
33:17
global wallet market or the national wallet market.
33:20
And it's like how much bigger can I have of a wallet market,
33:23
right? In consumer goods, goods
33:26
monopolies have to be below 20%, right?
33:28
Coca-Cola, the best selling drink of all time has 20% of the
33:31
soft drink market. We're not Google, we're not
33:34
going to have 90% of search or Uber, 90% of rideshare.
33:37
So you're totally right. It's just like you reach a
33:39
saturation point and our solution is to launch new
33:41
products because I have, I also have 2% of the the men's wedding
33:45
ring market. So I crushed that market too.
33:47
Then I move on to tech products or whatever else.
33:49
I'm just trying to keep getting more of these, you know, 1 to 2%
33:51
mini monopolies. But but to the original thesis,
33:54
yes, a lot of brands have matured and reached a, a
33:56
solid-state, right? You put us in there, you put
33:59
Hexclad in there, right? These are brands that are worth
34:01
hundreds of millions of dollars doing tons of fucking revenue
34:03
and profit. You would expect growth to slow
34:06
down to some point unless they have a reason to keep growing,
34:08
which is new product expansion that is great.
34:11
Like we pass whatever Great Filter.
34:13
I think the Great Filter is $50 million a year.
34:15
There's a lot of people who started maybe 2018-2019 or in
34:18
COVID and have not been able to reach escape velocity.
34:22
And then every new thing kind of just takes a little bit more
34:25
people off. It's not like we haven't seen,
34:27
it's not like a meteor hit e-commerce, right?
34:29
Like all the dinosaurs didn't die in one day.
34:32
But it's like every year, like the temperature gets a little
34:34
bit higher in the ocean and just a couple more things die.
34:37
I've got a lot of nods. I'll let you guys talk for a
34:39
bit. I think like my at least what
34:43
we're seeing in our data, which I did not publicly share on on
34:46
Twitter, is that it is a tale of two cities.
34:49
Like there's the have and the have nots, which is actually
34:52
directly reflective of this operating behavior.
34:57
There's a bunch of people who are shrinking and there's a
34:59
bunch of people who are growing, which is not surprising like
35:03
that. That is what happens at the as
35:07
you get to maturity of any given industry.
35:11
You can't have everyone growing like it is.
35:13
It is, yeah. Like the physics doesn't work.
35:16
The physics of business does not work that way.
35:18
I think what's interesting right now is I think that there is
35:21
more consolidation at a higher rate than one would expect
35:25
because I think that the haves have so much more leverage than
35:28
the have nots. And I think that that leverage
35:31
is getting even higher over over time.
35:35
Like, I guess, I guess I'm curious from your standpoint,
35:37
Sean, like when you talk to other merchants who are, who are
35:41
less, who are not as big, so let's say $30 million brands,
35:45
like relative to the leverage you have, whether it's supply
35:51
like vendor negotiations, whether it's distribution
35:54
negotiations, like literally in every way, don't you think that
35:59
that leverage has increased like as time has gone on?
36:03
Totally. And look, it could be unfair
36:07
because I also happen to like tweet on the Internet.
36:09
So sometimes people want to do more additional favors for me
36:12
because of that. So like even discounting that,
36:14
like the, it, it goes from like really subtle things like meta.
36:19
If I have a problem, I can talk to the highest level people at
36:23
meta. Like I'm talking like I could
36:25
talk to the guy who reports into the like the, the C-Suite,
36:29
right? I could bug that guy with an
36:30
idea I have, right. And then they'll actually get
36:32
that done. And and partly that could be
36:34
because of like Internet influence or partly it's like,
36:37
oh shit, we want to make sure these people are spending more
36:39
money with us, right? But then there's also just like,
36:41
yeah, I get cheaper USPS rates than you guys, right?
36:44
Because I have way more package volume, right?
36:48
I can, you know, negotiate with, you know, payment processing
36:52
rates or, or whatever, right? Like I can get better clavier
36:55
contracts because I whatever, right?
36:58
So there is more leverage happening there.
37:00
The other thing is just the leverage of having a customer
37:03
base, right? Like we can sell things into our
37:07
customer base. It just makes, it's like, it's
37:10
like our like it's just a little more juiced.
37:12
Everything we do is a little bit more juiced, right?
37:13
So if you're $30 million, here's typically when I talk to someone
37:16
who has $30 million business, they're like, Oh my God, I'm
37:19
running out of money. That's, that's most $30 million
37:22
businesses I talk to, right? There's something that's like,
37:25
you know, a broken their system or like there's just a lot of
37:28
land mines that happen, right? It's like, oh, hey, I, I, I bet
37:31
the farm on this product launch and it didn't go the way I
37:33
expected, right? We see that happen all the time,
37:35
right, right. Or I was really counting on XY
37:37
or Z thing to happen. It didn't happen and like or I
37:40
have this big bill come out of nowhere.
37:42
I'm getting sued. Like if you're when you're $30
37:44
million, you feel rich because you have 30 million UC Shopify
37:47
every single day, but you're actually only making maybe like
37:50
600 KA year. That is like the reality.
37:52
If you own a 3300 and $30 million a year e-commerce
37:55
business, there's nothing wrong with making 600 grand a year.
37:57
That's fucking awesome. But there's actually when you
37:59
could get sued and it could cost you $2,000,000.
38:02
It's like it could fuck everything up.
38:03
So anyway, typically it's like a $30 million year merchants,
38:06
they're basically running out of money and they're like trying to
38:09
figure out ways to fix that. And that's also probably a
38:12
secondary effect here is there's less brand startups.
38:16
There's actually, I'm going to explain the data real quick.
38:20
There's a big pull down in the number of top sites unbuilt with
38:25
that are built on Shopify. What I actually think is
38:27
happening is we're seeing the same drop off we always do.
38:31
Every year, 1% of people go bankrupt, right?
38:33
Or fold up shop. But traditionally 1.5 people
38:37
were getting VC funding and filling in the gap.
38:40
So there's more new entrants and like, so you get an artificial
38:43
growth curve, right? Like we have more people coming
38:46
in, we have churn and it's going like this, but now there's no
38:49
new people coming in. Like your acquisition falls off
38:51
a Cliff and that makes this sudden drop where it's like, Oh,
38:54
no, like we're seeing normal shrinkage rates probably maybe
38:58
it's accelerated, but there's nobody coming in.
39:01
So that's what I think is happening, guys.
39:02
Zach, go to you. I mean, anecdotally, I used to,
39:07
if someone used to come to me and say I'm thinking about
39:10
starting a Shopify business, let's call it like 36 or like 48
39:14
months ago, I'm like, Oh yeah, like you definitely should.
39:17
I would say like, I don't give that advice as much anymore.
39:20
Or I'm not as excite, like I'm not as blindly like, oh, like
39:23
just go and try it as I, as I once was.
39:26
Especially if someone's like, I'm going to bootstrap this
39:28
thing or I have like this like idea for a product and also like
39:34
being someone who is like pretty green, let's say.
39:37
And so like, I think, I think you're a conversant, right?
39:39
Like I, I, I've stopped saying to people that like, have an
39:42
idea, be like, well, I don't know, like maybe do something
39:44
else because like, I don't think that you're cut out for this.
39:47
Like it, it used to be the business where like if you
39:50
weren't cut out for something super hard, you could go and do
39:52
it. Totally, dude, I was stupid.
39:55
I remember when I first started running meta ads, like it was
39:59
literally like putting a dollar in and like taking two or three
40:02
out like it and it would work. And it was just like, it didn't
40:05
stop working and it was like, great, like that doesn't exist
40:07
anymore. So like, yeah, I do think that
40:10
some of the. I don't think that the
40:14
opportunity is as it is as wide as it once was for as many
40:18
people. Yeah.
40:20
And do we see this happen in every single industry, right.
40:22
I'm sure people in like 2004 were like, I'm going to before
40:25
Vibe could. And they're like, yeah, I'm just
40:26
going to work with a little widget.
40:28
And then that widget gets bought for millions of dollars, right?
40:30
Like specialized knowledge starts to win very much in
40:33
e-commerce. Like if someone's like, oh, I'm
40:35
thinking of making a product, I'd be like, well, here's what
40:37
you got to do. Go work at an agency business
40:39
and have them teach you everything for two years.
40:41
Then go work at a brand, have them teach you everything for
40:44
two years. Then talk to me about launching
40:46
your thing. Right.
40:47
It's like you just, it requires a level of specialty knowledge.
40:52
And anyway, yeah, we'll go to Jay.
40:55
What's up, Jay? I'm just thinking the, the
40:57
interesting piece too. I know like some people don't
40:59
like to talk about CPMS and ads, but like I actually got just a
41:02
massive piece of this is, I mean, meta in 2012 was dirt
41:07
cheap to get somebody to, to look at an ad and click on the
41:10
ad and then some percentage of people are going to buy after
41:12
they click. That's just how it works.
41:15
And now it's just like the cost of failure is so high compared
41:18
to what it was in the past. Like it takes more money to
41:21
figure out how to optimize it. Like for you, Sean, you're at a
41:23
point where you've been doing this for so long, you're, it's
41:26
clearly a well oiled machine to be able to spend $5,000,000 a
41:29
month in meta. But for somebody just starting
41:31
out, like even if you're good at it, you don't necessarily know
41:34
what value props are going to resonate.
41:35
You don't know which creative is going to be good.
41:38
Like there's so many factors that are so expensive to try to
41:41
solve for versus what it would have cost you 10 years ago.
41:46
Totally. I brought this up years ago.
41:48
I'm like, look, Mark Zuckerberg is not God like Facebook isn't
41:51
God like, it's it's a publicly traded company that has to show
41:54
revenue increasing every single year, right?
41:57
And they've added every human on earth to their platform.
42:00
So what are they going to do, right?
42:02
Like you can increase ad load, you can increase screen time,
42:05
you can increase users. Like if you can't do those
42:08
things, you can increase price. That is the only way to get more
42:11
revenue out of this business. And dude, hats off to them.
42:14
They've actually done a great job increasing screen time,
42:16
increasing ad load, like increasing users right?
42:20
Like I think they have WhatsApp apps now.
42:22
Threads is a brand new thing. Like they've been able to do
42:24
that. They have the best ads engine on
42:25
earth. They will increase prices over
42:27
time going back to like there's just too much at stake.
42:30
Do people try to like compete head to head with Ridge all the
42:32
time? The first thing I tell them is
42:34
don't sell wallets. It's like I'm I'm not trying to
42:36
protect my own game here. It's a horrible business.
42:39
Dude. Doctor squash gets bought for
42:40
1.5 billion. Grunes is worth $500 million.
42:43
It's like sell something that people use everyday that runs
42:47
out. That's the best advice to
42:49
anybody getting into this space. And then if you do want to
42:52
compete with me, going back to Zach's point about specialty
42:54
knowledge, I spent $150,000 yesterday at a 2X Mer, right?
42:58
So it's just like every single day I'm going to run really low
43:01
to the ground. I still talk to founders who are
43:04
like, I'm going to spend, you know, I want to spend $100,000
43:07
and make $1,000,000 in sales. I'm like, me too, dude.
43:10
Like that sounds like the lottery brother.
43:12
Like I'd love to play that game. And then last point about the
43:16
capital being taken out of the system.
43:19
I talked to a founder yesterday. She's really nice.
43:21
She raised a bunch of money. They it's a shoe company she
43:28
got. She reaches out, she goes, let's
43:30
talk about meta ads. And I'm like, cool, well, how
43:32
are your meta ads going? She's like, look, we can't spend
43:34
any money. I'm like, well, what's your
43:35
budget? She's like $50,000 a month and
43:37
I'm like, she's like every agency I go to says they can do
43:40
it, but then it just, you know, they can only spend 20,000 on my
43:42
CAC targets. And my advice to her, and this
43:46
is advice to everybody listening is I'm like, do your own ads.
43:49
I'm like $50,000 a month. I'm like, I could run that
43:51
account. I'm like, ads are easy now.
43:53
I'm like, I could, I could spend $1,000,000 a month, right?
43:57
It's like you're paying someone to to give you horrible
44:00
performance on the most important thing about your
44:02
business, which is distribution right now, right?
44:04
It's like be used to think it was product, you think it was
44:07
brand. You think of all these things
44:08
and like it is just getting distribution.
44:10
I don't care if it's you're an influencer who posts or you have
44:12
to run ads or you're fucking going door to door.
44:15
It's just about distribution, right?
44:18
So anyway, that's that's kind of together.
44:20
There's no money now. And those people are the ones
44:22
that are kind of, you know, drying up if they never actually
44:24
learned ads or learn that stuff. I think like on the no money
44:28
point, for what it's worth, I think Taylor has a really good
44:32
point about this. Like Jeremiah and I were talking
44:34
to him yesterday and like the cost of capital for everybody
44:37
has gone up over the last three years between both debt and
44:41
equity. And when the cost of capital
44:43
goes up, like every, everything about how you need to think
44:46
about running your business has to change by definition.
44:49
And the only thing you can hope for is that the cost of capital
44:52
goes down next year, which there's like reasons to believe
44:54
that that'll happen. But I I, yeah, like people.
44:58
People are often not fully baking in the cost of capital
45:03
for running the business. Right.
45:05
And you know, we have a bunch of tech nerds listening who
45:07
probably did not specialize in finance.
45:09
But like there's the risk free rate of return, which is what
45:14
the government gives you for your money, right?
45:16
And in 20/21, it was 0%. So if I wanted to buy government
45:19
treasuries, I got no money back, right?
45:21
I think the actual rate was 0. If you look at today, the
45:25
government gives me 5%. I could open up a Robin Hood
45:28
account and get 5% free money every year.
45:30
So the investment portfolio has to change.
45:33
Either your valuation has to come down right or your outcome
45:36
has to be so much better, right that you can overcome the risk
45:39
free rate Because what was a good investment in 2021 has to
45:43
be a good investment plus a minimum of 5%, right?
45:46
Which is just really, really fucking hard to do right?
45:48
And nobody wants to low with their valuations because I'm
45:50
telling you right now, if you want to raise at you know, point
45:54
5X revenue, there's somebody out there to give you money, right?
45:56
But if you want to raise the 3X revenue, nobody's going to give
45:59
you money. And it's because of that cost of
46:01
capital piece. Yeah.
46:04
And because of that, there's less, there's less money going
46:07
to the ecosystem. Everything's been really
46:09
expensive. I don't think a lot of people
46:10
are trying to boost your up e-commerce brands now, like
46:12
we're post COVID, nobody's thinking about doing that.
46:14
So I think that explains a big, the, the big dive in e-commerce
46:18
stores. But go back to you guys.
46:21
You have to service us, right? Like you guys make all your
46:23
money talking to e-commerce version.
46:25
So how how are you dealing with less of us being around?
46:30
It's the same thing ultimately, right?
46:31
Like less customers, less money to be made, more hard decisions
46:36
to be made. I don't know.
46:37
It's like, yeah, it's just a cycle.
46:39
And then I'm sure, you know, things might turn around in a
46:41
year and then we all start spending too much money again
46:45
and just end up in the same place five years from now.
46:47
My. #1 focus of 2025 is to is to like, not focus on e-commerce
46:52
customers. I love the e-commerce community.
46:54
You guys are the worst customers in the entire world.
46:58
Yeah, true. Like 100% in, but you're really
47:03
good to start with cuz like you guys all try everything once and
47:09
you don't ask many questions, but like over like a time, like
47:13
any sort of time horizon. Yeah, it's, it's a pretty brutal
47:16
industry to like have as your core customer.
47:21
Yeah. Well, and let's let's unpack
47:22
that. Like people to decision maker in
47:25
e-commerce, you can directly talk to the CEO, right?
47:28
Like that is that like someone with a budget of $100 million a
47:32
year? We'll talk to you immediately.
47:34
Like they'll be the first people to respond, right?
47:36
And it's because it's urgency. It's typically found around like
47:39
that's why they're so quick to adopt it and so, so quick to
47:41
try. So it's the absolute best to
47:44
launch a new product into because you'll get very fast
47:46
adoption, very fast signal. Try emailing anyone at LVMH, OK,
47:52
Like another, it's in consumer. They have ads, like they have
47:56
tech products, the whole thing trying to get a response.
47:59
You will end up getting like the junior, junior junior assistant
48:03
to the VP of blank, right? And like getting a meeting is
48:07
going to take you 6 months. So it's like selling into those
48:09
enterprise accounts that are non, you know, founder LED or
48:11
whatever. Just incredibly hard.
48:13
Try to sell SAS to Google. It's like you're going to have
48:16
four meetings about the meeting you're about to have, right?
48:19
And I love Meta. Like we did a podcast at a
48:22
meta's event. There was no joke for meetings
48:25
about doing the podcast. And it's like, we're just going
48:28
to show up with you the podcast, right?
48:30
But like try to sell SAS into them, right?
48:32
It's it's exact same thing. So we are horrible customers.
48:34
We're incredibly cheap. We're fast to churn.
48:37
And if and if we feel slightly wronged in any way, we
48:40
immediately tell all of our friends about it, right?
48:42
Like it's the, it's a very gossipy group of people.
48:45
So Zach, I think you're super smart trying to go after anybody
48:47
else. What pockets of the industry of
48:49
the world are you looking at? So like my biggest focus is
48:52
right now are apps and gaming, like mobile apps and gaming.
48:56
Those are actually like some of the best customers.
48:58
They're probably some of the most like willing to test and
49:01
like really intelligent people. The last election cycle we had
49:05
like a lot of success with political advertisers and like
49:07
agencies running like a lot of political spend.
49:09
And so like I want to like ramp that up like once primaries
49:12
start a little bit more and just get like more penetration there.
49:16
And then like the other focus for me right now is like we
49:19
started as I mean, we started because I wanted a Pinterest for
49:23
ads, like I just wanted for myself built with like a little
49:25
Chrome extension. We've kind of like now
49:27
transitioned to a platform company.
49:29
I think over the next like 12 to 24 months, like a lot of my
49:32
personal focus will becoming becoming like a data company.
49:35
And so I'm looking at like a lot of really interesting things
49:38
that we can start doing with our data and like the technology
49:40
that we use to collect the data that we collect and like other
49:43
areas of data that we can start collecting.
49:45
Like an example is like counterfeit product type stuff
49:49
and being able to detect counterfeit products and things
49:52
like that. And so yeah, that's like, kind
49:56
of like my focus. I mean, I still like building
50:01
our products, but I think the business focus, like it's weird.
50:04
It's like, it's almost like we have this like product that's
50:06
going to create a bunch of sawdust and I need to keep
50:08
sharpening the blades so we can keep cutting boards so we have
50:11
more sawdust and like, but I'm really, really focused on the
50:14
sawdust. Yeah, that's interesting
50:18
bringing up apps, gaming. Those people are psychopaths.
50:21
Like they come from the affiliate space.
50:23
Yeah, they are. They are like the quant of the
50:25
industry they look for like, you know, point like 1.1 O 1X row as
50:31
and they just spend like crazy. Like they just, they really have
50:34
that shit figured out so well. And they don't.
50:36
They don't have the constraints of e-commerce businesses, right?
50:40
They don't have to worry about their warehouse being empty or a
50:42
shipment on a boat. And so it's like when you have
50:45
all that excess like mindspace, you can just like autistically
50:51
obsess about like ads, performance and growth.
50:54
Yeah, it's, it's the digital products and and before I move
50:57
off of you, Zach, you brought up detecting counterfeits.
51:00
I assume what you're doing is because you have all these
51:01
different ad accounts you can see like ad accounts that might
51:04
launch like counterfeit goods across them.
51:08
Maybe that's what you're talking about.
51:09
Dude. We know what you should do.
51:11
Hook up to a bunch of different ad accounts and then sell ad
51:13
account insurance like $10 a month.
51:15
And it's like, hey, if your ad account gets hacked or like
51:17
people launch fake ads or whatever, like we will make sure
51:20
you get your money back from Meta.
51:21
That's a great, that's a great SAS product pitching you right
51:24
now. Think about it.
51:26
All right, Jay, how are you going to fix it?
51:28
We're dealing with e-commerce merchants dying.
51:31
What are you gonna? Do I'm going all in, doubling
51:35
down on supporting e-commerce merchants, so low pricing, flat
51:41
rates, trying to leverage data to build industry and site, all
51:46
that kind of stuff. So yeah, that's my approach.
51:48
I'm gonna die with the merchant if necessary.
51:53
Dude, Jeremiah, pure of heart, bro.
51:55
I appreciate that. All right, Rishab, you you got
51:57
the biggest balance sheet here. What the hell are you going to
51:59
do? I'll.
52:00
Be, I'll be honest, I my view is like Shopify and Clavio did not
52:07
become big because companies like Ridge existed and and
52:13
there's something underneath that they became big when Ridge
52:17
became big, like with you, right?
52:20
And I think there are lots of lessons in, in that, in that
52:24
story instead of like looking at today, looking at what was true
52:28
when they were trying to grow super fast.
52:30
That's the, that's the hard thing is like, like Shopify,
52:34
Shopify did not like start by saying like, Oh, I'm going to go
52:37
after like demand, where's business, right?
52:39
Like they didn't do that. Like in fact, they're only doing
52:42
that now. Like you don't get big outcomes
52:44
necessarily by like, by like sort of couldn't quote like
52:49
starting at the top all the time.
52:51
And I think this is like a dynamic enough industry where
52:55
you you want to just like create systems that when something
53:00
starts to grow, like your system captures it.
53:03
I don't have like a great direct answer.
53:05
But like Intel didn't become big because they like, we're like,
53:10
Oh yeah, we're selling memory and like, this is a great
53:12
business. They had like a factory that was
53:13
responsive. Have you read Only the Paranoid
53:15
Survive? That is how I think about
53:17
running the business, which is like they had a factory that was
53:20
responsive to the fact that like memory sales were going down,
53:23
but CPO sales were going up. And then in the they they saw
53:26
this in the 80s and then that made the like Intel inside
53:30
movement and like made the business become like very big.
53:33
I am thinking more about like how do I put up engines for our
53:36
company that like can respond to those types of things in like a
53:42
fast enough pace that we can like find these inflection
53:45
points to, to, to to grow the business.
53:47
So. Yeah, I think like if I could
53:51
mirror back what you're saying, Shopify did not go after demand
53:55
wear. They they wanted to have a
53:57
monopoly on mom and pop e-commerce merchants, right,
54:00
which was a very small bit like nobody cared, like nobody was
54:02
going to service these people, right.
54:04
But they actually built a monopoly and then they were able
54:06
to grow that monopoly as that market grew, right?
54:11
And I think a lot of times people think about having a big
54:14
idea is the way to win. Like I'm have the biggest idea,
54:17
like I'm going to do something crazy, raise a ton of money and
54:19
go up to this giant idea. Or they're like, I'm going to do
54:21
exactly what they're doing. And then I'm trying to copy
54:23
that, right? You can win doing both of those
54:25
things. But I think having trying to be
54:29
a monopoly in an incredibly small market, actually it's
54:31
incredibly underrated. Like I'm just going to be the
54:33
number one blank, right? The smallest idea you could
54:36
possibly think of, but actually 100% market share, because then
54:39
you can take that loyalty and then either the market grows or
54:42
you move with other things, right?
54:43
I think Clavio benefit from that shallow head benefit from that
54:46
dude, Tesla had a monopoly on electric vehicles when nobody
54:49
wanted one. You know what I mean?
54:51
Like they're they're the only name in town.
54:53
Eventually people wanted them, right?
54:55
And they were able to actually build a great thing.
54:57
So all right, guys, it was, it was, it was a good, it was a
55:00
good pod. Anything else you guys want to
55:03
hit on? I appreciate you coming on.
55:04
It's been fun. No, this was amazing, dude, this
55:06
was super fun. Yeah, thanks for doing it of.
55:09
Course look, I appreciate it, Jack.
55:10
Sorry we weren't able to talk. I, I hope you're still there.
55:13
And then who do I send the invoice to?
55:14
So it's $100,000 per appearance. So do you guys just split that
55:17
send? That to Jack.
55:19
Oh yeah, exactly. All right, guys, appreciate.
55:24
You man. Bye.
55:25
Have a good one. Bye.