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E16: The Pricing Playbook · 1 to 100

0:00
One of the things that I like to just play around with a little
0:03
bit is looking at year over year trends on sale moments.
0:09
And I think Prime Day is really not a great one for obvious
0:14
reasons. When we're looking at D to C
0:16
data, it's actually about sales on Amazon more than it is about
0:19
D to C, but it is still kind of fun to see like year over year
0:22
comps for things. So the like for, for example,
0:27
actually the reason I started digging into this is I saw
0:29
somebody post something about how, you know, Amazon was down
0:33
41%, but it was Shopify's biggest day ever.
0:35
And I was like, well, that's highly unlikely.
0:38
And so I went and then looked and and it was not, it's nowhere
0:42
close to like a Black Friday or Cyber Monday sort of sales.
0:45
And in fact, Prime Day from what I'm seeing is actually lower
0:48
than like last week's 4th of July sales, which I think also
0:52
makes sense. Like people are going literally
0:54
to Amazon.com to buy as opposed to purchasing on site.
0:58
So, but I still think it's interesting.
1:00
What's what I thought was really interesting is that with the
1:02
elongated 4 day period instead of it being 2, the year over
1:06
year sales are were not very. There was not much of an
1:10
increase for day one and day 2. So I think it was like plus 12%
1:13
year over year for Day 1 + 6% year over year for day 2.
1:18
Why this is meaningful in my opinion is that, you know, year
1:21
over year, the cohort we're looking at for the month of June
1:25
was up like 30%. And so if it's only plus 6% Day
1:29
1 + 12% day 2, we're actually up plus 18% day over day from last
1:34
year. But the point is like Prime Day
1:37
sales and whatever impact that's having on DTC sites is, is lower
1:41
than I would expect. I would expect that to be you
1:43
know 30% plus year over year, maybe not on a same day basis
1:49
because it's four days now instead of two.
1:50
But regardless then like for day three now yesterday there were
1:56
no Prime Day sales and 2024 on that day.
2:01
And so we're only up 18%. I would expect that to be
2:03
higher. So I just think it's interesting
2:05
that there's not a whole lot of yeah, not a not a whole lot of
2:10
activity. And I think just in general,
2:11
we're seeing, you know, going back to our conversation last
2:14
week, I guess we're shot that was you and I that were out with
2:17
Taylor and some other folks. But yeah, it we're just
2:22
generally seeing like a softer year.
2:25
So that's I think the the the lesson here in the story.
2:28
You're saying you're seeing a softer year across the board on
2:31
like e-commerce, including Amazon, or you're saying that
2:35
Amazon Prime Day is a really good leading indicator for other
2:37
data that you're seeing? I think it's AI think it's a
2:40
good leading indicator. The fact that Amazon Prime
2:43
doesn't look good year over year and also D to C sales don't look
2:46
good year over year, I think is meaningful.
2:49
So I mean, it's still up, right? It's still positive.
2:51
But the, the trend that we're kind of that I, I think it's
2:56
like a pretty clear trend at this point is like the, it's not
2:59
that growth in e-commerce doesn't exist, it's that it's
3:02
slower now than it used to be. We're not saying it.
3:04
Well, we're probably never get, I shouldn't say never, but
3:07
unlikely to ever see like 2021 numbers again, but in 2020.
3:12
But yeah, regardless like the the growth trend is slower.
3:18
Yeah. Do you want to, you want to know
3:20
what makes me extremely nervous? I wonder how much of that is
3:25
pull forwards or saving quarters.
3:29
And so in fact, even the slight increase is really bad when you
3:33
comp it to your on your trends of the days before and the days
3:38
after. So like if you were to do area
3:40
under curve over a longer period of time, then you end up with
3:48
actually depression. Because people like basically if
3:51
I'm a retailer or I'm a brand, and I'm really hoping the answer
3:55
to this is like, no, that's not what happened.
3:58
So like, I want to be clear that I'm hoping the answer is no.
4:01
But I wonder if you look at the sales data for the two weeks
4:05
leading up to it, did Prime Day at least make up for it?
4:10
Because if the answer is no, then that's a really bad sign.
4:12
Because what it means is that people did a lot of, like, work
4:16
to try to get sales, and it didn't lift enough.
4:21
Yeah, now I don't. Now I wish I didn't ask the
4:24
question. You know, I was wondering if
4:27
there was a really simple answer to this, like rates up, spending
4:30
down, but rates are down here and yeah, so I.
4:35
Guess it's a little bit more complicated.
4:37
I mean, there's also like a time delay on these types of things
4:40
too, right? Like it's not like every,
4:44
everything that a, that the, you know, every lever that's pulled
4:48
actually has like a, an immediate impact on the economy.
4:51
So there is, there is like a time delay to things too.
4:56
So and, and like consumer sense and all that place into a fact.
5:01
Like it's interesting to see stock market has been doing
5:04
really well over the last couple of quarters, well last quarter
5:07
at least, but then it's not necessarily being translated to
5:13
consumer spending. I mean, I'll say completely
5:16
useless anecdotal thing, which like, I'm an avid consumer and I
5:20
used to like really, really get excited for Prime Day.
5:23
And for what other reason? This year when I got the e-mail,
5:26
I was like, like I used to think when Prime Day came around, I
5:29
was like, what do I need to buy? And like, I don't know.
5:32
Again, this is completely anecdotal, but this year when I
5:34
got the e-mail, I don't know if it's that they're doing Prime
5:36
Day too often cuz like what they, they do it like fucking 3
5:39
* a year now or something. So it's not even Prime Day.
5:42
And so that's a weird confusion thing.
5:44
Like, I don't know, like I think maybe they've just like juiced
5:46
Prime Day for all that. And, and like also the deals on
5:50
Prime Day used to be really, really good.
5:51
Like going to the the explorer page, I would easily find 10
5:56
things that I after seeing them, I thought I needed them versus I
6:01
think the last prime day I was like struggling to spend money.
6:04
I was like, I want to get shit and I whatever the stuff that's
6:08
being displayed to me, I either don't need it or like the
6:11
discount wasn't at a rate in which made it so like as
6:16
impulsive as it once was. But like, that's just like me
6:18
shopping. Like, I don't know, whatever,
6:20
but. Man I had the same exact
6:22
experience the last couple of times there was a prime day.
6:24
I went looking for deals and I didn't find anything
6:26
interesting. I haven't even been to the site.
6:28
Like yeah, this is day four of Prime Day and I have not visited
6:33
Amazon.com yet or logged into, I guess I don't even have the app,
6:36
but if I did, I have not logged into the app or anything.
6:39
So like I've literally not looked at a single Amazon Prime
6:42
deal and I don't think I will. So anyway.
6:45
Oh, I was just going to say, I've literally been to the
6:47
Amazon site a bunch and completely ignored the Prime Day
6:51
sales because I just because like we're hosting my kids
6:55
birthday tomorrow and so I've been on during the sale and I've
7:00
ignored it entirely. So you're you're buying the
7:03
things you actually want slash need and are not even looking at
7:06
the deals that are there. Like I almost think like this is
7:10
the complete this complete speculation, but in a way, like
7:13
I think Amazon as a brand might have like matured in a way in
7:18
which I purely look at it as like a utility and not as much
7:23
as like a shopping experience. You know, like I know when I go
7:26
to Amazon Prime, I'm going to get something quick and I'm very
7:28
confident in their shipping times, but I'm not really
7:32
looking at them as like a product discovery type sort of
7:37
thing as I maybe once did or I don't know.
7:41
But I do have like a different feeling like my I think my
7:44
personal spending on Amazon feels like it used is different
7:46
than what it used to be. You know, I would almost like go
7:48
there looking for solutions to my problems, whereas like now I
7:53
almost like know what I want and I check if it's on Amazon
7:55
because like I know it will be a better buying experience.
7:59
That's that's actually interesting.
8:00
OK. Do you think AI has been part of
8:03
that shift for you or I don't think?
8:06
I've I don't think I bought any physical products from AII.
8:08
Bought a SaaS today from AI. But physical product no.
8:12
I mean, I think most of my physical products spending comes
8:14
from Instagram ads almost exclusively.
8:19
And like the only other one is like I go on this random blog
8:23
called Uncrate, which is just like the most random stuff that
8:29
guys would want. And like the price ranges range
8:33
from like $13 to like $480,000. But but they're just like, this
8:38
is a cool thing. I would say that's yeah.
8:42
For me it's like Instagram ads and uncrate.
8:44
Wow. I do, I, I, I, I worry that what
8:52
that means actually is that they just didn't spend as much
8:58
advertising it this year. And I worry that that's actually
9:02
even worse because they thought to themselves, it's not even
9:05
worth it. Let's just do the thing.
9:09
Let's just see what happens. But like investing the capital,
9:12
the consumer is not spending enough for it to be worth it for
9:15
us to like spend a bunch of capital like advertising the
9:18
event because like usually you like the reason you are like
9:22
thinking about it ahead of it, just like everything in life is
9:25
because you see a bunch of ads leading up to it.
9:28
Like, I mean like this is like the world thankfully is like
9:31
simple in this way, like, you know, ads lead to awareness and
9:35
therefore you, you, you think about it.
9:37
And now that I think about it, I, I, I like cannot think of any
9:41
Prime Day ads that I saw. Same.
9:43
Yeah, the only reason I even knew when it was was because I'm
9:47
in this space and people were posting about how next.
9:52
That's literally the only reason I had it.
9:54
I would have known that it was Prime Day.
9:56
Wonder how many consumers are thinking about it similar to how
9:58
Zach's thinking about it. Like, I go here to solve a
10:00
problem. Amazon is a utility for me.
10:03
I'm not sure about you guys, but separate from Kindle, I don't
10:06
think Amazon is innovating that much, right?
10:12
It's like a coffee machine. How frequently do you buy a
10:15
coffee machine? You probably already solved that
10:16
problem for yourself, right? On to the next problem.
10:19
And maybe Amazon have done an incredible job of creating
10:23
abundance in solving the common problems and brands are doing a
10:27
really good job of consolidating the spend for luxuries.
10:30
Oh my God dude that's the most bullish take I've heard in my
10:33
life. I love that I'm a sucker for
10:36
optimism. That's such a good take.
10:38
But if you think. About like when we were talking
10:40
to Sean, right, he's he's seen growth, but the whole
10:43
conversation was about how Shopify is struggling, right?
10:46
So it not Shopify but Shopify stores right?
10:51
I think Sean is like an exception.
10:54
Like it's so hard for me to believe that what Sean is
10:57
experiencing like other people are.
11:00
And I think he said, I think he said that, right?
11:02
Or do you feel like I misheard him?
11:04
No, I couldn't agree more. You know, I think it's getting
11:07
tighter and tighter. The brands that are succeeding
11:10
are getting a lion's share of consumer spend.
11:13
I mean, I think this is one thing I wanted to actually
11:15
mention last week on the podcast with with Sean because he was
11:18
talking about tariffs and all that kind of stuff.
11:20
But I think what's happening, and I think that this happens
11:23
with like any mature industry, is that when an industry
11:25
matures, like your barrier to entry is like so much higher.
11:29
And but the issue, but like once you get over that barrier, it's
11:31
almost like you're just like swimming in a pool of money.
11:34
The barrier this year was was tariffs.
11:36
There's a bunch of people that probably like panicked and all
11:38
that kind of stuff. There's a bunch of people that
11:40
waited for it to subside and they then they just like absorb
11:43
their new Net margin or they restructure their team.
11:46
We have one customer who I had a call with and we were trying to
11:49
get on a call for like months and just, he was like in the
11:53
weeds. And then we finally got on the
11:55
call and he's like, dude, sorry. Like, you know, the last four
11:58
months we've completely rebuilt our entire business because of
12:01
the tariff issue. And on the other side of them
12:05
rebuilding their entire business because of the tariff issue,
12:09
like they're growing like wildfire.
12:11
And it's everything from like where they're sourcing products
12:14
to like their intro offer, their hero offer and like one specific
12:19
thing. This is like maybe like a
12:21
interesting tidbit for like anybody running e-commerce.
12:25
He was the most impactful thing for them in unlocking growth in
12:29
like the new era was not looking at average order value, but
12:33
looking at median order value. And so a lot of their like CAC
12:36
calculate calculations up until that day was always based around
12:40
average order value. The issue that they found was
12:43
that they were acquiring a ton of customers in which were a net
12:47
loss because they're looking at average order value and not
12:50
median order value. They instantly changed their
12:52
offer so that their CAC would be aligned with their median order
12:56
value. And like now they're back and
12:58
they have like better payment terms of the supplier, better
13:00
like all this type of stuff. And so it's like, I think the,
13:04
you know, the lion sort of like operator that's able to like
13:07
weather dish, like shift. I do think there's like a lot of
13:10
abundance on the other side of it, but I think we're going to
13:12
see a lot of like kittens kind of like get slaughtered.
13:17
How long, how long do you think it lasts?
13:21
It like by the way, this is like this is like materially
13:24
impacting. I'm like, I can't believe I'm
13:26
like live broadcasting how I'm going to think about operating
13:29
my company for the next 6 months.
13:31
But how you answer this is going to do that.
13:35
But which is like a here at like here you're seeing the operation
13:40
happen. How long do you think that's
13:43
going to last? How long do you think what's
13:44
going to last this new era of that business specifically?
13:48
The ship, the ship, Yeah, the shift because the the answer to
13:51
that question should determine what you're willing to spend on
13:55
acquiring what types of customers, right, as a as a SAS
13:59
company. Sorry, this isn't a SAS company,
14:01
this is AD to C brand. No, no, I know that.
14:03
But we, we are SAS, we acquire D to C brands as our customer,
14:07
right. And so if you think that this is
14:09
going to happen for a while in a particular type of segment, it
14:12
should impact how much you're willing to spend on acquiring
14:14
customers in that segment, right, If you think that they're
14:18
going to get washed out. I think so.
14:21
I think our business models are a little bit differently, a
14:24
little bit different. And so I don't think it would be
14:27
as impactful for like our customer base because we're so
14:31
heavily on the agency side rather than direct brand.
14:36
And I don't think any brand looks at our pricing right now
14:38
as like a cost center or like an optimization, if I'm being
14:41
honest, like the subset of customers in which I'm, I'm
14:46
talking about getting wiped out, which is like the ones in which
14:48
are not able to adapt in like a ever changing environment.
14:53
I don't think that those customers would have been ILTV
14:56
customers anyway, just based around like the people that I'm
15:00
talking to like the winners win for a very long time.
15:06
And I don't think that like I, this is an interesting idea, but
15:10
like, I think that the market doesn't determine whether you
15:14
win or not. It just determines how long you
15:17
win for Like in any market, there's like an opportunity for
15:20
a bunch of idiots and like they can win for a certain period of
15:23
time. But like the lasting companies
15:25
are the ones that like they survive irregardless of markets.
15:29
And like, I think that those are just like they're winners.
15:31
And like when these other companies get wiped out, that
15:34
doesn't, I don't necessarily think that like I think that
15:37
creates a bit of a vacuum as well of opportunity for like the
15:40
next phase. Well, that.
15:41
That is one thing that that's interesting when you talk about
15:43
like ads, for example, it's prices very much tied to
15:46
inventory and demand. And so like if you did end up in
15:50
a world where everybody's pulling back ad spend, it has
15:52
some impact on like Rashad, what you're doing, obviously.
15:55
But then eventually there's a realignment of that and
15:59
somebody's going to be able to come in and take advantage of
16:01
that, which can still be a customer for you in that
16:03
context. And then you can still make more
16:04
money off of the winners even though there are losers in that
16:08
context. Yeah, like unless you have flat
16:11
rate pricing like me. In this in this case, like I'm
16:14
definitely not betting against meta ads long term in terms of
16:22
like let's just call it like a public investment, right?
16:24
So. Yeah, I, I in fact, if anything,
16:27
I would say like in My Portfolio like I'm like I'm ridiculously
16:33
long beta. Yeah, I I think it's like a new
16:37
phase of company in the, in the same way that like the first
16:43
Shopify apps, like some of them became unicorns and some of them
16:46
kind of fizzled out. And then there was like this new
16:49
sort of like resurgence of Shopify apps, which like a lot
16:51
of them are raising VC funding now.
16:53
They're like really well built teams and they're talk, they're
16:55
like SAS companies. They're not widget companies.
16:58
Like I think that could happen with e-commerce where it's just
17:00
like you're not just kind of like fly by night selling shit
17:04
online. It's like, no, we have to build
17:05
companies. This is just distribution.
17:07
Like like Shopify is not a business model, you know, like
17:10
like e-commerce is, which is just like getting products to
17:13
people on the Internet. Rashab, you asked how long do
17:16
you think this keeps going? And I think competition just
17:19
keeps climbing and slaughtering the mediocre.
17:22
And like Zach said, there's space for, you know, everyone
17:26
who finds a bit of arbitrage for some amount of time.
17:28
But the great brands survive. I think we saw something similar
17:31
to this on social. I had my brand back when content
17:35
was distributed on social chronologically, so we just
17:38
posted a lot to get a lot of real estate on timelines.
17:41
But as soon as content distribution moved from
17:43
chronological to merit based, a huge amount of competition came
17:46
a bit into play and you had to make great content.
17:50
So brands started advertising to generate demand.
17:53
They found arbitrage there because you could get a huge
17:56
amount of distribution and it was fairly uncompetitive.
17:58
But then ads got competitive and the dorky static from your lame
18:01
competitor doesn't win because you have competitors, great
18:04
businesses that know how to operate.
18:06
So I think that it just continues to squeeze out the
18:09
mediocre, right, those people who aren't providing supply for
18:12
emerging market demands. Yeah, I one thing that's really
18:15
interesting, I, I know we like to stock pricing.
18:18
So Rishab on the, you know, for me, like by doing flat rate
18:22
pricing, I am essentially setting an artificial ceiling on
18:25
the ability on, on my company's revenue potential, right.
18:29
But in doing so, I'm also tackling like a really
18:33
interesting angle and a really compelling angle that merchants
18:35
buy into. So what I'm saying is I believe
18:38
that there's a big enough market that will buy into what I am
18:42
selling here in a way that I, I actually will be good with the
18:46
results of that and I will feel good about that ceiling being in
18:50
place. And I, I think it's what I, what
18:52
I'm essentially saying is that I think companies to be successful
18:54
need to have some sort of something that they stand for
18:57
some sort of viewpoint. And if you can, if you can
18:59
really sell that thing, then there's always opportunity for
19:03
you. It may not be that your
19:04
opportunity is to be the biggest company, or it may not be that
19:07
your opportunity is to become a Unicorn in this context or
19:10
whatever that looks like, especially consumer.
19:11
It's very different, right? But I, I do think that's really
19:14
important. It's like what one thing on
19:16
this, I think it's really interesting.
19:18
It's Southwest recently changed their business model to be just
19:21
like everybody else. And that makes no sense to me
19:23
because like I, I don't, the only reason I would, I would fly
19:28
Southwest in the past was the fact that I have kids.
19:32
And so you get the free bags and you get the ability to board
19:36
early with open seats. And I was like, OK with, because
19:40
we're a family with young kids, we choose to fly Southwest.
19:42
And it was like, not that this is like the, the right.
19:46
I understand why Southwest maybe doesn't actually want that
19:48
behavior long term, but it was like a, a reason why I would
19:51
consider flying Southwest. And even by myself, I would
19:53
consider flying Southwest because then I could earn points
19:56
to then use for my family travel later, right?
19:59
It was a very strong viewpoint. It was easy to buy into, and it
20:02
was differentiated in a way that I understood.
20:04
Now I look at Southwest, I'm like, I have 0 understanding of
20:07
how this is any different than anything else.
20:08
And so my incentive to fly Southwest is much lower than it
20:12
was six months ago when they had a different business model.
20:15
And so I do think like that's a really important piece of any
20:18
sort of business. And so even the more competition
20:21
there is, the more important I think it is to have like a very
20:24
strong viewpoint on something that people can buy into and
20:27
understand. I mean one one small hack
20:30
Jeremiah, is that you just need one doctor note to always board
20:32
1st. So yeah, is that the I'll?
20:36
Just throw that egg and then always keep your priority
20:39
baggage tags. All right, cool.
20:44
Oh my God. OK.
20:45
The the the thing I was going to say about flat pricing Jeremiah
20:50
that I don't think you have encountered because of the
20:54
actual number associated with the flat price.
20:56
But I was talking with some, I cannot name the company or the
21:00
person, but I was talking to someone yesterday who Sir, like
21:04
they serve this market a lot and then they serve other sort of
21:07
similar markets and they sell as a flat price, but it's a high
21:10
flat price and it's a one product company, OK.
21:16
And they're introducing a second product, right.
21:18
What is happening is that that flat price is now a ceiling and
21:24
it is a negotiable flat price. OK, So like, let's just take
21:28
like simple numbers. So let's just, these are not the
21:31
actual numbers, but I'm obfuscating intentionally, but
21:34
let's just say it's $1000 a month, OK?
21:36
The problem with a flat price in this context is that that's
21:40
actually the ceiling price now. And so now when renewals are
21:44
happening or like even like when something like the tariff hits,
21:49
the first thing that happens is people pick up the phone and
21:52
they say, I can't do one. There's other companies offering
21:57
it for 300 a month. Where can you land?
22:02
And then they'll say, OK, 500 and when they try to introduce a
22:06
second product and Jason Lemkin talks about this a lot.
22:08
I don't know if you guys listen to his his stuff.
22:11
I wonder if he would be willing to come on at some point.
22:13
That would be pretty cool. Yeah, we should try to we should
22:16
try to get him on because he also invested in gorgeous.
22:21
So he might actually be interested in in talking ECOM
22:24
SAS and in specific. But anyway, the one of his
22:28
things that he talks about a lot, which over the past year is
22:34
that when companies introduce new products, the biggest issue
22:37
that can often happen, which this company I'm talking about
22:42
is like starting to see, I think is you end up having to use that
22:49
just to save the deal as opposed to it being an upsell lever.
22:54
And so now there's like entire SAS business model doesn't work
22:57
anymore because SAS works on NRR and so you flat price means you
23:03
have no NRR, which means the business model is like
23:07
fundamentally different. Yeah.
23:09
How do you treat net dollar retention in Jeremiah?
23:12
Yeah. It's interesting because that's
23:15
so for no, I mean it's worth five years on in that context.
23:23
It's it's plans with feature gating.
23:25
So it's a little bit different than just like a single flat
23:28
price. OK.
23:30
So you don't see. So this is the thing though, so
23:32
you're not actually thought price, you're feature gated
23:34
well, which is what Zach is. So, yeah, yeah.
23:36
So there's there's feature gating on no stamped.
23:39
The new stamp that we're working on is going to be flat price.
23:41
However, there will be additional things that you can
23:44
upgrade into essentially. So yeah, it is not like 100%
23:47
flat price, but it is a your price doesn't change sort of
23:51
approach. So like on the no side, we've
23:53
never raised somebody's price, just like clicked a button and
23:56
made everybody's price go up by 10%.
23:58
The way that you pay us more is by opting into a higher tier
24:02
plan. And that's been the entire
24:03
approach and it actually has worked.
24:05
I've got a bunch of brands who start out on, we don't offer
24:08
free version anymore, but back in the day offered a free
24:09
version. There's, you know, some of the
24:11
biggest brands in the space started on the free version and
24:14
as they grew, they've grown into where they pay us, you know, 500
24:17
to $1000 a month. And it's a gradual sort of
24:19
thing. It starts with, you know, zero,
24:21
then 50, then 100, then 300 and you just kind of keep going up
24:25
like that. So in that context, that has
24:28
worked well because we can add new things and, and increase the
24:31
price. But I do agree with you.
24:32
Like if you have, you have to have something additional.
24:36
And I, I do understand what you're saying too in terms of
24:39
like, you know, sometimes that does have to be a lever that the
24:42
new thing is a lever just to retain.
24:44
That is true. Like we, we literally just
24:46
yesterday increased the feature set in one of our plans because
24:52
like we just weren't able to get people to opt into the higher
24:55
tier plan with that feature essentially.
24:57
So we, we took a feature that was on our top 2 tiers and added
25:01
it to the the next tier down. So yeah, it's like is that you
25:04
were essentially just like constantly adding more for the
25:07
same price. That's ultimately what ends up
25:09
happening in that context. Yeah, which, which is the right
25:13
outcome of competition, right? Like I'm ultimately like, no
25:16
matter what, I'm a lover of competition and a lover of free
25:18
markets, right. So like this, this, this is like
25:21
good, because it's creating a lot of surplus, right?
25:23
And like we should have to like earn all the surplus that we are
25:29
creating. Like I, I'm, I would never
25:32
oppose that. I'm simply suggesting that a lot
25:36
of the assumptions that one makes going into a type of
25:39
business like this one that I'm talking about, like the entire
25:44
assumption set is, is, is wrong. And if you're not clear eyed
25:51
about your assumption set about the physics of your business,
25:55
you could end up in a really a really tough spot.
26:01
Like a really tough spot, yeah. Yeah, totally.
26:04
Like, like basically, I mean, there's, there's, there's this
26:07
other question. I'm curious how you guys think
26:09
about this question. It's also somewhat related.
26:13
If someone comes to you and says like, we're not going to renew,
26:18
do I mean, at your price points, it's like not maybe this doesn't
26:21
actually happen, but like if they say like, hey, like we're
26:24
not going to renew. Do you offer a lower price in
26:27
order to save the gross logo or is it better to save the ACV and
26:33
just allow them to leave? We do, and then they can decide
26:36
to come back later. We do that like through
26:38
self-serve cancellation. It's very rare that we'll offer
26:42
a lower price forever, but we'll offer a lower price for a time
26:45
base horizon. And we also tried to take
26:48
feedback as well so that we can actually put what they're
26:50
missing into the product. Oh, that's good.
26:55
So you don't actually take the hit on long term ACV because
26:58
it's time bound? Yeah.
27:01
That's yeah, same for us, like for the, you know, we had people
27:04
come to us during with tariff complaints and say, hey, I'm
27:08
starting with tariffs right now and say, and we'd say cool,
27:10
we'll give you a discount for the next 90 days while we kind
27:12
of figure out how things are going.
27:14
But we don't charge enough to, I don't know.
27:16
It's like if you're not willing to pay $300 a month for like the
27:20
full set of our features or, you know, 500 if you're on like our
27:23
enterprise plan, which is literally like what that looks
27:26
like. And then there's some, some very
27:28
variation for like logo count and stuff or like, you know,
27:31
number of domains or rather like, if you're not willing to
27:34
pay that, it's just kind of like, OK, like I don't know,
27:39
like we, we, we can only go so low and actually service you
27:42
well in that context, right. And so that's kind of the, the
27:44
approach that that we've taken. So yeah, like we might give you
27:46
a temporary discount, but it's not going to be permanent. 11
27:50
product that made it very easy for us to do this is actually a
27:53
product called turnkey. Like that's what we use for all
27:55
of our cancellation flows and it's like a really fucking good
27:58
product for like anyone running SAS.
28:00
It just like links up with Stripe.
28:02
You can like build out essentially think about building
28:04
like an e-mail flow or something like that.
28:07
And like you can like split test different offers at like
28:09
different segments, ask for feedback at different segments.
28:14
I mean we'd even have a cancel button for like 2 years.
28:17
Yeah. Hey, if we need a sponsor, maybe
28:20
we should talk to these guys, you know, since we don't have
28:22
any sponsors over here or. They'll just give us turnkey for
28:25
free for all of us. But honestly it's, yeah, it's
28:28
honestly like a really good product.
28:31
And they, they just actually added, I, I actually read an
28:33
e-mail from them today because like there's all these like
28:35
stupid laws now in the US about like one click cancellation and
28:38
stuff. And so you can like, chew.
28:40
It just got it just got abolished.
28:41
But they're still state by state individual ones like they're,
28:45
they do have a button as well. That's like just make me
28:48
compliant. Here's my dream flow.
28:52
But like, if, if you want to be 100% complying in like every
28:55
state, every jurisdiction, all that kind of stuff, they have a
28:57
button for it, which is like super like building that
29:00
yourself. Like that's an example of like a
29:01
thing where he's like, I don't want my engineering team
29:03
building this like that. That's like silly.
29:06
Yeah, it's a really good product.
29:08
I love how we're watching Rashad in real time.
29:10
Messages team. Check out chat.
29:12
Yeah, how did you know? Wait.
29:16
A second use my affiliate code use my.
29:18
Affiliate Oh yeah, yeah. Drop it of the, drop it of the
29:21
chat. Oh wait, I'm actually curious.
29:24
I was, this is I was like of all of the episodes to live stream
29:27
where like literally watching me operate the I mean, I feel, I
29:32
feel kind of silly actually. What's your affiliate code?
29:34
I don't know whatever, I can't. All right, all right, Zach 20.
29:40
Hey, Churn Key, send Zach his affiliate Commish.
29:44
I put in Zach, 20. On a, I'm actually curious
29:49
though, do you have, do you have hard numbers in terms of what
29:51
that looked like, like percentage of revenue retained
29:55
or something like that, like? I can bring it up right now, OK.
30:00
Because I I always see this stuff, I never trust that it's
30:02
true. So.
30:03
Yeah, I mean the the published numbers are never what they
30:07
actually will be. It'd be incredible if there
30:10
were. Yeah, yeah.
30:12
OK. So total customers saved was
30:14
roughly 553 in the last six months.
30:18
If I look at the sort of like waterfall, so total retained,
30:25
which means they either paused their account for up to three
30:28
months, they accepted a discount, they were redirected
30:32
somewhere else like a support flow or they abandoned
30:35
completely was 25% of total churn starts potentially
30:41
reduction of churn by 25%. But that's not a, that's not
30:46
saving 25% of your revenue in that context, it's probably.
30:50
Context, the best discount we offer is 50% off for three
30:54
months. And then a pause for three
30:56
months. So you could have, yeah.
30:59
Pause for three months is a very specific segment based on
31:04
subscription length, like how long they've been with us, most
31:06
people. OK.
31:07
Yeah, yeah. So, so you're essentially in
31:11
that context, if you're saving somebody, you're basically
31:14
you're retaining 15% of that revenue probably or sorry.
31:19
By assuming that, assuming that that doesn't rebuild after three
31:23
months like it goes back to the normal price after three months.
31:26
Yep, Yep, that's true. It's only a three month
31:29
discount, Yeah. So anyway, that's actually
31:31
pretty good. That's really good.
31:34
Honestly, it's really good, especially for getting the
31:36
feedback in the meet. Like you're the Rep like,
31:39
because what's happening is they're telling you why they're
31:42
willing to give you another shot.
31:45
Yeah. Like that's the, that's the like
31:48
positive, like upward cycle, right?
31:50
Other otherwise what happens is like, yeah, anyway, I don't want
31:55
to over over rotate on the yesterday's convo, but like
31:58
yesterday's convo felt to me like what was happening is like
32:01
the size of the market was shrinking in front of this
32:03
person's eyes. That's like a really bad
32:05
outcome. Like, yeah, I don't, I don't.
32:10
I hope this person doesn't watch this.
32:12
They probably will, but and then I'll get a text.
32:16
That's OK. I have no idea who you're
32:18
talking about, so it's all good. OK, All right, person.
32:22
I have sufficiently, like, made it clear that it's impossible to
32:26
tell who you are. But yeah, like what?
32:27
Like the way it was, the way, the way, the way it was
32:29
happening for this particular person.
32:31
It's like, yeah, it was just, it was just shrinking in front of
32:34
their eyes. But because, like, for you guys,
32:36
you're being told like, hey, what you can, what can you do
32:38
to, like, make me successful again, which is not the same
32:41
thing. And so that's why I'm like, so
32:43
attracted to, to this mechanism. Yeah.
32:48
I think what we're talking about what when we're talking about
32:51
price ceilings and discounts is opportunity cost that trade off
32:55
at acquisition, getting new customers and and retaining
32:57
them. I think from.
32:59
Our customers perspective an e-commerce brand that's
33:01
transacting with 10s, maybe hundreds, but probably 10s of
33:06
different SAS products. I think in customer wants to
33:08
understand the benefits and the costs.
33:12
I think Matthew from the operator's podcast has talked
33:15
about this a fair bit, like what does it do?
33:17
What's it going to cost me? What's the offer?
33:19
And if I don't get it, do I have to invest hours of my time
33:21
trying to understand what it is that you guys do and how much
33:24
it's going to cost me? I think what's incredible about
33:26
Stamped is that as a consumer, I know that I'm getting
33:30
comprehensive solution to a real problem in my business.
33:32
The benefit is not just that the problem is solved.
33:36
The cost is simple. I'm not getting lost in
33:38
understanding the costs. And, you know, if I think about
33:42
the opportunity cost, could I go with four different providers,
33:44
sacrifice simplicity, pray that they're all compatible and just
33:48
as comprehensive as stamped and lose time trying to hack this
33:51
solution together? Yeah, I think that that's a
33:54
incredible solution for our customer.
33:55
But I also think that there's something in the having exposure
33:59
to North Side. I went into a Harley-Davidson
34:01
store the other day and I used to live in Bali and they had
34:04
this Deus Ex Machina custom motorcycle store and it was
34:08
mostly for apparel, but they had some custom motorbikes that they
34:10
could sell and in this Harley-Davidson store they had
34:13
nothing. It was a beautiful vintage
34:15
Harley-Davidson store that just been turned into a clothing
34:17
store. They just offered one custom
34:19
Harley bike they would have Northside but they didn't.
34:23
All right. Wait, sorry, can we talk about
34:26
why you're going to the Harley-Davidson stores?
34:29
I'm like so distracted right now.
34:31
That's a good point. First you've pushed post all
34:33
these like thirst traps on your socials and then now you're
34:36
talking about Harley David. Like I don't even know what's
34:38
happening. Anymore, Jack's going to go
34:40
right around shirtless on a Harley.
34:42
That's his new plan. I'm on a family holiday, a very
34:46
wholesome family holiday. I'm currently in Louisiana,
34:50
actually. New Orleans.
34:52
Yeah. What?
34:55
Does that have to do with a Harley?
34:56
Like I don't go with my kids to a Harley store.
35:00
You, Jeremiah. My little brother wanted to buy
35:02
a shirt, and that's all he could buy there, right?
35:05
Like in the case that he was in the market for an actual Harley,
35:08
he couldn't buy one, right? And this was a converter.
35:10
It used to be a Harley-Davidson store that was, you know,
35:13
vintage and beautiful. And they sold bikes, right?
35:15
People could buy a bike. They had one custom Harley
35:18
motorbike in there. They could sell that
35:19
potentially, but they only had clothing, right?
35:22
Yeah. Yeah, that's interesting.
35:24
I'm very deep on my issues with Harley-Davidson as a brand
35:27
because I think it's actually one of these brands that like I,
35:29
I love motorcycles, like my favorite thing in the entire
35:32
world. And I think that Harley-Davidson
35:34
is like a a lost brand that like 100% could be like flourishing
35:42
right now as like an American like amazing company.
35:46
And they're losing to like a bunch of really, really great
35:49
British companies. Like the company I think like
35:52
specifically does this like very, very well, which is like
35:54
lifestyle and like vehicle is like Triumph, which is a British
35:58
company and like, they crush it. But yeah, Harley Davidson's
36:02
like, I don't know who's like at the helm of like leading that
36:06
company, but for something that has so much brand recognition
36:09
and customer love, I think they're absolutely dropping the
36:11
ball. Yeah, I couldn't agree more.
36:13
I I, I spent a lot of time thinking about brands that are
36:15
doing this to themselves. I think Levi's is another
36:17
example. They basically, they didn't, but
36:19
they basically invented jeans and they're just so diluted now.
36:23
It's like H&M, Buffer jeans, Jaguar, the the car company.
36:27
It's, it's sad seeing these beautiful brands that that means
36:30
something. Just stop meaning anything.
36:33
And do you think it's because because of this idea like they
36:36
don't have a strong enough viewpoint anymore, There's not
36:38
like they're not speaking to their core customer base the
36:41
right way or they're just not loud enough or what do you think
36:44
the issue is? Well, Jaguar was by far did not
36:49
speak to the customer base, right?
36:50
Like there's probably about 100 million Twitter threads on that.
36:53
And like the car sale, I don't know if you guys saw the recent
36:56
numbers, but it's like something crazy.
36:58
Like it seems like a meme. Like it doesn't even.
36:59
Seem. I think it was 500.
37:00
Yeah, I think it was like less than 500 cars.
37:02
It was insane for like Harley-Davidson.
37:04
I can't speak to it, but I just think that they don't have the
37:06
right like brand recognition at like the helm of that company.
37:11
Like I am a I'm a patriotic non American who really wants to buy
37:15
a Harley-Davidson, but they don't build the bikes that like
37:19
the next generation of like riders want to buy.
37:21
In contrast, like Triumph 100% like builds the next bike that
37:27
like everybody wants to buy. And I just think it really is
37:30
like almost like a creative director positioning leadership
37:34
thing that's like missing. I have this idea of like me and
37:37
my one really, really good friend.
37:40
We both have this like idea that nostalg Steven who was on the
37:42
podcast is that nostalgia is probably like the strongest
37:45
feeling and it's probably the most like, it's probably the
37:48
feeling that you can like not the most impulsive buys, but
37:54
like the most radical or excessive buys I think come from
37:57
feelings of nostalgia. And so we had this idea like a
38:00
couple of years ago and we still want to do it.
38:02
Like whenever, if we both exit or something is to like start a
38:05
private equity firm where all we do is buy nostalgic brands and
38:09
then try to like resurge them. And the one we really, really
38:14
wanted to buy was Harley or sorry Heelys 'cause we're like
38:19
Heelys were the coolest thing. And they're honestly
38:21
utilitarian. Someone bought Heelys the like,
38:25
I think it was 2019 for like $3,000,000, which like I got AI
38:30
got a quote for foreplay.com for $3,000,000.
38:34
And like to buy the amount of brand equity that exists in
38:39
Heelys and the amount of nostalgia, the amount of like
38:41
all of my friends who are having kids now and like would 100% buy
38:45
their kids Heelys. I was like, wow, this is the
38:47
steal of the century. But I really want to start like
38:49
AP firm where like the only investment thesis is, is
38:54
nostalgia on like a specific market segment, which would be
38:59
like late 20s to early 40s in like where the nostalgia hits
39:04
the most and like try to like rebuild some of these brands.
39:06
That's so good. Can I comment and I want I want
39:10
to ask a question about PE to Jeremiah before I forgot.
39:15
I suspect, I don't know, but I suspect that the reason
39:18
nostalgia works so well in the luxury segment, it's like the
39:21
older you get, the more willing you are to buy time and
39:25
everything in nostalgia territory feels like you're
39:27
buying time. And so like you're exactly
39:30
addressing like people as they have higher income, they're on
39:34
average older and therefore or higher wealth on average hold
39:38
older and therefore more willing to buy time through nostalgic
39:42
goods basically. I I also just think it's like so
39:47
deeply, like some of those things are so deeply rooted and
39:50
like your and sense of self too. So it's just like there's a
39:56
yeah, yeah. What one of our my wife and I
39:58
have a good friend we've been in friends with since college.
40:01
The first car she bought, new car she bought was a Mazda
40:06
because of the Mazda ad she saw as a kid.
40:09
And there was something about them that just like really spoke
40:11
to her. And so that was.
40:13
You know, 10-15 years later, whatever that was, was when she
40:17
bought that car. And it was because of that
40:19
experience. Like she could actually recall
40:20
those, that nostalgic thing in her in her mind, and that made
40:25
her want to buy a Mazda. So yeah, it's it is interesting
40:28
to see how that plays out. Can I ask you a quick question?
40:31
So I don't know why this thought occurred to me where it's like
40:37
there's going to be a bunch of SAS companies next year that are
40:42
some like call it in the 50 to $80 million run rate range or
40:49
sorry, 20 to 8. Yeah, 20 to $80 million run rate
40:52
range that are not growing. Where a big part of the revenue
40:56
was actually services because like they, they not like, you
41:01
know, they started the company. You have to do a lot of service
41:03
in the beginning of a lot of different types, especially
41:05
sales, direct SAS companies versus PLG ones.
41:09
And so like, why aren't there PE funds that are just going in and
41:15
ripping those and replacing it with AI and AI agents?
41:19
And like, why isn't Tiny one of those companies?
41:22
I don't know why they're not. I also agree that that's a good
41:25
idea. So I can't answer that.
41:27
Maybe it's just like a that model isn't proven yet.
41:33
I do think there is something that happens with PE where
41:35
you're kind of like looking for like I haven't seen anybody do
41:39
that yet. I feel very compelling, like as
41:41
soon as one PE firm did that and it was successful, you probably
41:45
see a ton of others do it. I actually.
41:48
Isn't that where the alpha is? Is like when nobody.
41:51
Else yeah, I agree. I'll I should.
41:53
I mean, I feel like Andrew Wilkinson, who's, you know,
41:57
founder tiny and stuff. I haven't actually based on what
42:01
I know of his engagement with AII feel like he's probably
42:03
thinking about that. So there's also just like the
42:07
reality is a lot of I think when it comes to services or just in
42:13
general when it, when it comes to a company of that size that
42:16
is expensive to acquire a company like that.
42:18
And it depending on how long you've been running a business
42:21
like that and your profits and all that kind of stuff, you're,
42:24
you're going to want a pretty good exit on that.
42:26
And then there's the question of like, is it actually worth it?
42:28
Or could you just maybe build those things with AI from
42:32
scratch? I don't know.
42:33
I I haven't actually like looked at the deal like that So I have
42:35
no idea but. Dude, I think I think that the
42:37
likelihood that you can you can buy it mostly with debt cash
42:42
flow meaningfully by switching workflows from service based to
42:46
agent based. So then you service the debt
42:49
with the cash flow change and then you you turn the company
42:53
around and increase equity. I mean like literally like a
42:55
standard LBO, OK, like I think that except instead of betting
43:00
only on operational changes, you bet on operational and AII just
43:04
don't see why you wouldn't. Like I don't see why someone
43:09
cannot raise money to do that. Basically like, what am I?
43:11
What am I missing? I don't know.
43:13
I mean, I feel like, I feel like PE funds are thinking about
43:16
that. I just don't, I haven't seen it
43:17
executed yet, but I it's got to be something that people are
43:20
thinking about. Zach, would you do that?
43:23
Or do you love nostalgia too much?
43:26
Like my dream would be 4 plays by last software company and
43:33
then I can just go and like fiddle around with brands like
43:37
Heely's, slush puppies and Harley-Davidson.
43:42
That would be like a very good future for me personally.
43:49
I I when I think about PE, like I don't think I'd ever want to
43:54
buy like a software company PE that doesn't tickle me at all
43:57
like, but like the idea that I could own Heelys, I just think
44:02
is like the craziest flex ever. Yeah, no, like I, I mean, I have
44:10
a list of these companies like in in my notes folder and of
44:13
like and I think you could do it like so well, like so well.
44:18
I understand what Zach's saying though, like the, you know the
44:20
software versus like a, you know, the software play, would
44:24
it be all about optimization in that context?
44:26
Whereas like the the play for buying a consumer brands, it's
44:32
more of an emotional thing like more sling you can actually
44:35
connect with, you can get excited about potentially
44:36
growing all of that. Whereas like the software is
44:38
just really like how do we optimize this thing?
44:40
Also like 30-30 years or my my 30 year high school reunion.
44:47
I don't want to own Panda Dock like I want to own fucking
44:51
Harley-Davidson or Heely's. Or like.
44:55
That just would be so fucking cool.
44:59
Yeah, that's fair. You are a brand, I think knocked
45:03
out of the park. Crocs.
45:05
Crocs. Yeah, Crocs.
45:07
Which is an example of like execution that like in like
45:10
rebranding something with a ton of nostalgia.
45:12
It's like literally the ugliest shoes in the entire world.
45:15
And for some reason people like them and then Yeezy copies them
45:18
with like an even uglier version.
45:21
Like that is like, that is like power up this project like that,
45:25
that existing as an example, should completely.
45:28
I'm going to send this podcast to just like a bunch of people
45:32
and like, I'm going to raise the $500 million to do this.
45:37
Yeah. Dude, what happened to what's
45:41
the what's the old camera company that nobody?
45:43
Kodak here's the I this is I would like I've been on this
45:49
train for a while. One of my e-commerce brands.
45:51
I the first e-commerce brand I started was a company called
45:53
capture Cam. And the whole idea was that it
45:56
was disposable cameras, but with like custom designs and like now
45:59
a bunch of like brands are doing it.
46:00
And I was like, not, I was way too green to make it work, but
46:04
like it did kind of work at the at the beginning.
46:07
Like, I do think, like the thesis of nostalgia as being
46:11
like the primary, like, selling point or like leverage point.
46:16
I mean, yeah, I could bet like a lot of money on it.
46:18
Like for consumer. Yeah, I don't think anyone wants
46:24
nostalgic software. I don't know man, Windows ME
46:32
could come back is Hey guys, this was super fun.
46:37
Buzz, guys. All right, talk to you later.
46:40
I catch up I guess.