S17 E8: What Every DTC Brand Should Know Before Q4 (with Shopify's Harley Finkelstein)

side of e-commerce, digital marketing, and building consumer brands. I'm your host Nick Sharma, I've spent the last nine years building, scaling, and investing in brands, and through this show in my weekly newsletter at nip.co/email, I'm here to share everything I've learned. The wins, the losses, the experiments, the tactics, and the insights, also you can unlock

your next $100,000 in revenue. Today's episode is a good one, but before we dive in, let me tell you about our chosen sponsor for this week's episode. If you're using AI to plan your ad spend triple whales mobile, can make the budget changes for you in your connected ad accounts with your approval.

Brands like Kitch use Triple Whale, book a demo at triplewhale.com/limitedSupply. That's TRIP LEWHALE.com/limitedSupply. Welcome back to another episode of Limited Supply. I'm your host Nick Sharma, and today, today we're going to do a little throwback Thursday

“action, but on a Wednesday, but just a, I believe a year or two ago, I talked with Harley”

about Q4 and the thing about Q4 is it's pretty much always relatively similar.

It's always bigger. There's always a few new tactics here and there, but the 75% majority, the thick of it, it's always relatively the same. So today's episode's going to be a throwback and we're just going to go through it because a lot of that stuff still heavily applies to this year's upcoming Q4.

So check it out. It's with myself and with Harley, the Shopify president, give it a listen and stay tuned for something special at the end. All right guys, how the fuck are we feeling? I don't know.

Come on, how the fuck are we feeling? Do you see where we are? Yeah, that's right. We're in the greatest city in the world, the center of e-commerce, the center of innovation, the center of advertising, and I can be more excited to be here today with none other than

Harley. Harley, thank you so much. Wait a second. Ladies and gentlemen, Nick Fuck and Sharma, I feel like the, the curse word concentration saturation of this whole event is going to be super high.

So as, as some of you don't know this story, I know you got to hold this questions, but I get the microphone. Every week's ago, Nick texted me at like 11 o'clock and I said, hey, we're to throw together this event. Q4 Summit, can you, can you speak there?

I think within 30 seconds, I asked, well, first I said, who's going to be there? And he said, chopped five partners, just to be merchants, entrepreneurs, retail people, and I was like, I'm in this thing that they put together in three weeks is nothing short of amazing. The fact there's a packed room right now, this people that you got to speak here, not, you

know, like not me, but other people that that are flew here from all over the country,

“is, is incredible, but the theme, I think, that you should take away here is that we don't,”

you know, entrepreneurship is, is, is lonely, it is, it is, it is, unfortunately, a lonely sport.

There's incredible things about entrepreneurship, but being a founder of a building companies,

but it is lonely, people don't understand what you do, you go to these family dinners, and they're like, what do you do? And you're like, I mean, like, search engine optimization, or I mean, like, funnel conversion, and they're like, what, what is that? What makes this so interesting is that we've created this community around what we all do when

we do it together, and we help each other when someone calls and says, and you should do something, we default to yes. So it is, this is, you're my people, and I'm really grateful to be here. Thank you. Thank you, Harley.

It's, it is awesome to know that you are one of us truly, I believe that you're a true hustler. All right, Harley, I want to start with some data, some e-commerce specific data, and what you're seeing, you know, you got this empire with Shopify, you see so many stores, you see so much activity.

I want to know major trends you're seeing in consumer spending, internet adoption, e-commerce penetration, you know, shape your world view on where you think e-commerce is going here. So a couple of things, the reason I've been iPad on stage is you don't ever bring notes with me, but we actually just took a survey of 18,000 consumers and asked them what they are feeling, doing, contemplating for the holiday season.

“So I'm actually to share some stats with all of you for the first time, I think this will be”

very valuable to all your business. I'll do it in just a moment.

The second thing I want to say is this yesterday, I got a chance to spend some time in

an hour with the chief economist for Mastercard. And I asked her basically, you know, layout for me what Mastercard is seeing from spending perspective, from buying preference perspective. And she said that the one thing that has changed in the last 10 years, if you sort of extrapolate the last 50 years of data collection of credit for companies and you look

at what's happening right now, and specifically this is the pandemic, she said the major change that there's now a bifurcation of things. So historically, you would say, how is consumer spending and it would be a binary answer,

dramatically changed during the pandemic, for example, if you were in hospitality, you were having a terrible time.

If you were in furniture during the pandemic or house goods, you were having an amazing

time. We actually believe that will continue to be the case that you will not have a one-size-fits-all when describing consumer trends. The second thing is that is obvious to a lot of you already, but just to make the point here is that if you sort of go back to how consumers used to purchase in the past, it

was all about the retailer dictated to consumer had to purchase. That is over. I mean, we should talk about David and then what you're doing with with your new business that you launched a couple of weeks ago, a month ago, so much that David, sorry, David, through our team, through through MCO, four weeks ago, so much that two weeks ago, what you

“were seeing is that now you have to sort of read the room of what the consumer wants to”

buy, how they want to buy, and then effectively create a funnel and a strategy to get in front of them. That doesn't necessarily mean online only, doesn't mean offline only. We announced a couple of weeks ago, a partnership with Roblox, and the, you know, when I did a bunch of media around Shopify building commerce and the Roblox and the first question

I got was, why, and I was like, well, they're 80 million act like weekly actives, 80 million

weekly actives inside a Roblox, so it's double the population of Canada that are there, not all of them are going to be consumers of product, but some of them will be consumers of it. So this idea of being channel-agnostic is not just a cool sort of term or a fat, channel-agnostic is absolutely the way you have to operate.

Let me give you some new stats. Again, I wanted to make this as calorie-rich as possible, because all of you have very busy lives.

“So 18,000 consumers, we surveyed, here are a couple of things that I think are worth noting.”

First is, younger shoppers are unequivocally the most likely to increase spending. From a delta perspective of last year to this year, the highest spending group will be 18 to 24 year olds will actually increase their spending and buy what they were referred to as treating themselves. First, second thing is, brand engagement, heaks around 35 to 44 years old, 85% of shoppers

in the 35 to 44 year old category know what brands they like, and when you solidify the connectivity between your brand and them, you ultimately will end up with having the customers for life. My best friend in my co-founder of firebellities in the room somewhere, where's David Sewell, David's in the room somewhere here, there's David.

That's exactly what we're trying to do with firebelly. We believe that we can convert people into firebelly customers now when they're in that age group, as they get older, they will continue to be very loyal to firebelly T. Is that something I think I want you to think about? Couple of other things.

This is for holiday shopping, 60% of US shoppers want to buy small things online, but they will more consider going in store for larger purchases and in store discovery was reported to be the most valued among younger demographics in the US. So even the 20 somethings will still go into a physical retail store to discover something, but will then continue to buying online indefinitely.

That's the first thing. Second thing, I want to bring up priority for BFCM from product categories, threefold, fashion, electronics and food and drinks a third. Food and drink has made a map. I mean,

I know you guys have a bunch of incredible, I saw a breast here and at the bunch of other

great brands. So fashion, fashion is 37%, electronics, 31%, food and drink 25%. This is really interesting to hop loyalty drivers across all 18,000 people that we surveyed. The number one loyalty driver, super surprising is discounting. Number two is free shipping, free shipping came out at 41%.

“The reason I mentioned that is because I think all of us know that free shipping does increase”

conversion, but 41% that's a dramatic increase. And so whether that's a softer economy or people are a little bit more have more trepidation of where they're buying, that is a big deal. Last that, younger shoppers in the US are shopping way earlier, 55% of US of younger US shoppers are likely to finish all holiday shopping by the end of November.

So we talk with BFCM being just a weekend and then being a week and then being a month and now sort of a season, but historically even five years ago, holiday shopping went until around the 18th of December and then all of us saw sort of the drop off anywhere in the room at that owns a brand will see this. It is actually happening much faster now.

So if you're not starting holiday shopping now, you absolutely should. And then last but not least, one in five holiday shoppers start planning shopping lists before the end of the June. That is dramatic before the end of June, effectively before the summer actually starts, they're already contemplating what they want to purchase for the next six months.

So hope that's helpful. That's literally fresh off the presses, but now you have them.

Thank you for sharing that. And that's not comfortable. So Harley, oh, I don't know who said that. So Harley, so one thing you mentioned that's interesting is consumers are buying what they want, when they want, how they want, whether that's in Roblox, whether that's on, you know,

you through shop pay, whether it's through a marketplace. How do you feel about all of the other macro trends going on, the rising pack, the

“buy now pay later, you know, being overflowed, the rising credit card debt among consumers?”

How does that shape your thinking about e-commerce and the future of e-commerce? I mean, we all talk about how big e-commerce is. Most of us in the room, I mean, just show of hand, just I want to be clear. How many of you self-identifies being in the e-commerce industry in the room, show of hands? Pretty much everybody.

Okay. So we're all in e-commerce. That's my entire life. It's my life's work. It is my craft.

Nick is yours as well. Let's remember something. In Canada, e-commerce as a percentage of total retail is 15 percent, one five in the U.S. It's floating around 18 to 20 percent. The UK, excluding China is the highest 25 percent.

I mean, we are still in, like we're not even in the early innings of e-commerce. We are still at the hotel getting dressed for the game. So I'm incredibly bullish on it. I see the trend in order to rise. I think what's happening is as older consumers sort of leave the market and new earlier

consumers, like get their first credit cards. They're going to be native e-commerce, shoppersing consumers immediately.

Now, whether it's, by now, pay later or it's rising pack, we've always had challenges

there in the stream. In my first online store, I was one of the first stores on Shopify, some of you know, that was 2006. I mean, it wasn't as if where were you selling? I was selling t-shirts.

Wow. Smots of business. It was called Smoofer. And I was selling licensed t-shirts. I was one of the first merchants to use the product.

He'll be with a friend. He was just, he stopped selling snowboards and began to realize that the software behind the store business would be more valuable. It should become Shopify. It wasn't easy than either.

“So, I think currently, you know, the cat to LTV ratio or, you know, return ads spend going”

down. These are a new challenge we all have. I don't think there's, it's ever, we're ever going to be to a place where everything is just easy for any of us.

It's always to be challenging.

I do think, however, though, that there are new tools available. I mean, the show has, how many of you have used shoplight audiences for any of your brands or businesses, a few of you. I mean, shoplight audiences, this isn't a pitch for Shopify, I don't like doing that. But I will say that this idea of running your ad through an algorithm that sees, that

a single rich trillion dollars of spend online through Shopify. And then getting a look like audience that allows you to place more targeted ads. That's a very good idea. They didn't exist two years ago. So, my feeling is as the challenges melt around e-commerce, whether it's cat or it's

by now palator challenges or consumer debt, there's always new tools available to mitigate those things. The key for all of us and certainly for Nick and I is we, you got to say ahead of this stuff. You got to come to like, this is the pitch for Q4 Summit either, but you got to come

to these sort of summits and be in the industry. There's sort of this theme now of founder, if founder mode, of course, which frankly, like

if you're running a great company, you've already always been in founder mode.

“But you've got to be in founder mode, I mean, you have to be so close into the weeds of”

the business to actually understand what is going on. If you were not, and you're doing a sort of set-in for credit for setting, forget it on Google ads, or in a meta ads, or using some sort of TikTok shopping tool, and it doesn't work. You're going to wake up when morning and wonder, why did, like, what has changed

our last three months, everything has changed our last three months? That's why we're all in this industry, because it's really exciting. So I'm as bullish as I've ever been on our industry, I'm as bullish as I've ever been on the consumer, and I told you back stage, I just spent the last 24 hours with the heads of Aloe skims, universal music to COVID, the brands that are beloved by consumers are killing

it. The brands that are not beloved by consumers are not. Whether or not you have rising cost of customer acquisition or not, if you're beloved, you have a great product, you're creating great value, you're going to keep winning. It's so interesting.

You say that. One of the things that I often realize when we work with brands is that exact thing. It's like, if your brand is not relevant, if your brand is not being talked about, if your brand is not something that's being loved on social and talked about or shared or you know, you're not sending your mom to link or it's not ending up in a group chat, these brands

have no chance at just relying on performance marketing. And especially when you think about other channels, whether it's the TikTok shops or YouTube shops or the roadblocks, you know, for somebody to just turn on a channel and expect sales, it's not going to come unless you have that brand behind it. Lazy, right?

That's the reason why I bring up this whole fatter is what I think, because I think for a long time, you would be like, oh, TikTok shops is now available, or I'm going to use, we just announce a partnership with YouTube, YouTube affiliates. So now if you're selling, if you're hex-clad and you want to be able to, and there's all these people doing cooking videos on YouTube, you now can have them sort of sell hex-clad

in your behalf. That's really cool. It also does it through what's called concurrent commerce, so the video doesn't stop.

That is very cool. But you can just turn it on.

“You have to turn it on, and if you look at it and study it, you have to do like data now,”

also on it. I don't know the things that are working, you have to be in the weeds of these things, when I'm not to pick on David, but he's in the room, and again, I can say whatever I want about him because I have a mic, he doesn't, David built David's T, one of the largest

T companies on the planet, billion dollar T company, took a public and the NASDAQ not

too far from here. When David and I decided to start firebelly T, he was the T guy, and we had a tough chat, and I was like, you also have to become the e-commerce guy. You cannot simply be the T guy anymore, just being the T guy is not sufficient to build a multi-million dollar successful brand and company in 2024.

We all have to be good at every aspect of our business.

“Now, he doesn't mean you have to be a jack-a-ball trace master of none, but you have to have”

the self-awareness to say, I'm really good at these things, and I'm going to hire really good people for these other things. I'm curious, as you see businesses of large sizes, you know, alo tecoba skims, but also brands of really small sizes, I've, I've, I've actually believed that like, if you're at the top of an industry. You kind of see all the arbitrage opportunities, right? What are some of the arbitrage opportunities that you see that you think brands don't take advantage of, you know, Shopify audiences, I was shocked. Only a few people had raised their eyes.

That's a good tool. Again, I'm not trying to petrify it, but it's a gimmick. Like, you should not be placing ads without having, like, we can, we can give you a symmetric information and that is that creates an unfair advantage for those that are part of this sort of ecosystem. One is exactly what you said, which is that people are not taking advantage of it. The second is everyone likes to talk about, you know, building in public and experimentation. Most people actually are faking it. They're making videos about building in public. Building in public means you're actually in you do this better. Maybe to anyone Nick in our entire industry. You show your wins and boy, you show your losses too, right? You will literally post a screenshot of an ad campaign that completely failed. Why is it valuable or won?

You get feedback from it, so it's super valuable, but also it gives other people the permission to do the same thing. Building in public if not just making a quick video and saying, I killed at this month. We had a promotion and look out, you know, look how great we've done.

Building in public means you're showing both the wins and the losses and I don't think they are taking up chances. The second thing is.

The cool part about building a business in a brand right now, because we have the, because of the, the dissemination and the universality of the internet is that. If you take something like skateboards and you take something like technology and you combine those, the vendor diagram overlap is a one wheel. Twenty years ago, one wheel would never really have been able to sell properly. They probably would be found in a sharper image or something like that or an airport, you know, Brookstone type store, but because the internet allows it has democratized distribution.

It means that what one wheel can do today is they can say, I'm going to find all the people online that love skateboards and all the people online love technology and I'm only going to target that little segment. If you were to walk around the corner to Blackstone or L. Catarchan or any of the big private equity firms and you were to pitch this idea, they would say markets too small, I'm not going to back this.

It may be too small for Blackstone, it's not too small for an entrepreneur who wants to build a hundred million dollar year business selling one wheels.

And I think that is, I love these braces because they're coming to go, I'm Cohen, they make these really beautiful bracelets, there are a couple hundred bucks, which frankly is too expensive, but I like them, I don't really wear much jewelry, so they're kind of cool. Cohen is a very successful company that no one's ever heard of, but when you talk to the folks, Pyman Cohen, they're thrilled because 10,000 people are buying their bracelets every single year and they don't actually care if it's a hundred thousand, those 10,000 people will really give a shit about what they do.

So we talked about products that are trending, right, during holiday season, you mentioned electronics, food and beef and a pair of antiparel. Now, we're also talking about brands that are launching and have this amazing brand voice, right, one brand that often comes to mind in situations like this is jolly the shower head, right, they're selling a product that should be in an aisle of home depot.

“But they've turned the conversation into beauty and changed the positioning, do you think that there's a, like, do you think that is the secret sauce for brands to cut through the noise today?”

I think products where consumers are purchasing indiscriminately and it felt like a commodity and no one ever goes to work or goes to, you know, breakfast with their friends and says, man, I got the greatest shower head ever. You can find products like that that is a great place to innovate, I think, and I mean, I just bought something called ex bloom. I like pour over coffee, but like I'm not going to sit there and go like this for 30 minutes, I think it's insane.

The Venn diagram over a lot of technology which I care about and having a good cup of coffee first thing in the morning, that is me and so whether it's shower heads or something as basic as.

a tool that effectively like it's it's it's like an air tag, but it's just like it's it's much thinner so you can put it in much like you can put it in a backpack or an a wallet, for example. I'm sure there's been countless meetings and consulting firms that said we can deal with air tags, no, we can't apples doing it really well. Well, no apples are doing it really well because there are some people who don't want, you know, a quarter inch, they want a very thin air tags, they can put in their wall and never lose their wallet again.

If things that are not necessarily sexy or do well in social media, you can actually build very large companies around it. I think if you do it really well, you innovate and what's happening, you can make boring products fascinating. Yeah, I couldn't agree more. You can spend an hour working through your ad budget with AI and still have to make every change yourself.

“You can do well as mobile uses your business data to recommend exactly what changes you should make and then can go and make those changes for you with your approval. You can plan before any money moves.”

Book a demo at triple whale dot com slash limited supply that's TRI PLE WHA L E dot com slash limited supply. I want to make sure we touch on Q for the theme of today. Yeah, what are okay. So, you know, I think the first thing that comes to mind for Q for is what's everybody's black Friday promotion. I'm curious from your point of view, what are the most successful patterns or formats or strategies around black Friday to drive, you know, the maximum amount of sales.

I think novelty is still the most powerful marketing tactic on the planet. It's true. Like you can you can you can tell me.

I mean, you can show me data. I don't believe it. I believe novelty is unequivocally the most powerful marketing tactic. It's better than any ad. It's better than any promotion or discount. A couple of years ago, some of you may remember this, but Jim Shark, this amazing thing where they turned off their site for black Friday, cyber Monday. And remember talking to Noel Mac and then from Jim Shark and saying, I mean, I just proportionate of your sales revenue. You're going to come from these four days.

You guys really going to turn off your site. No, like, yeah, we're going to we're going to do it because we think it's so unique. It's so interesting. And we think we can actually make more money for open the Wednesday before the Thursday and the Tuesday after the cyber Monday. I don't actually have the numbers. I don't know how they did, but considering that they've, you know, they've continued to do things like that in the past and in the future.

“Since then, I think that worked out really well. I think the key to it is to really understand who your customer customer is.”

You know, Dave and I for fire value were just reviewing some of our promotions and discounting for for fireability for holiday season. In the past, we just kind of did this like blanket discount and and across, you know, for black Friday's our Monday and and it kind of worked, but it just it was boring. It wasn't it wasn't novel. It wasn't interesting. And now we're beginning to think about like, okay, do we want to clear inventory? Well, maybe that's the stuff we should discount. Do we actually believe that if they if it's a new consumer to tea purchases this product, we know for certain they will buy a second product of full price later on.

Now we're beginning to think a lot more thoughtfully about this stuff too. By the way, I think we're able to get everyone to discount on firebilly right Dave. What's the discount code? Q 4 15 if you want to go to firebilly, see best team in the world. Q 4 15. That's real hustle by the way. Yeah, it's really good tea. Yeah, Q 4 15 is the coupon code 50% off. I think the key though is not to just blanket the discount. That's first. The second thing is starting earlier. We already talked about that. If you're not, if you like you should be starting, if you haven't started already, you should start today on on your black Friday.

It's our money promotion too. Third is figure out what your hook is. So you know, gifting is not new. Gifting is has been around for a long time. Seth Goden, who's a mentor has been talking about gifting as a way to create sort of this like this flywheel effect of commerce and distribution. I buy something and it gifted to somebody else and then they buy something.

Think of someone else. You create this incredible funnel and distribution channel.

I still think it works really, really well. So I think balancing things that people haven't seen before like shutting off your say for black friends.

“I'm going to give that's what you think your your customer wants and also discounting not everything.”

But the right things and figuring out how those things going to interoperate together that really works. And then, you know, I mentioned, you know, the two major drivers, at least across his 18,000 consumers that we surveyed. First was discounting and the second was was free shipping. This idea that you actually create some scarcity and you say we're going to get free shipping now.

That creates a that creates a new incentive to for them to purchase immediately and not wait to opt to the holidays. Beyond that, you know, we talked to Roblox, you mentioned TikTok shops.

Just going back to this, I, you know, everyone always expects me to say the person shop by like the future of retail is online only.

It's not the future of retail is is absolutely everywhere. The reason you see us announcing deals with YouTube and Roblox and TikTok and Spotify and all these random marketplaces, a random seemingly random. Is that for every one of your brands or rebranding this on Shopify, one of those channels might be the most important channel. It may be the online store, it may be the offline store, but there's a very good chance. Some of you in the room, your biggest channel is a channeled, you have not actually been to get it could be the Roblox channel or it could be we've a partnership with Target where you effectively through Shopify, you can put your products on target.com.

That may be your biggest channel and we're trying to make it easier so that when you are on the shop by admin, you can simply click new channel, you can experiment.

“And if you, and, and I, I think I'll come back here in 10 years and you can hold me accountable to this, but I think in 10 years from now on this stage.”

If now the average number of channels is three online offline one more, maybe social media, I believe we'll be on the stage in 10 years and the average channel probably closer to 10. AR may be a channel VR in the back of ubers may be a channel, you know, like, you guys probably saw the announcement yesterday from from Rayden and meta, maybe that's a new channel. I think that's the way to sort of think about the future of selling business. And a couple last tips, I want to try to squeeze out of you here, but you talked to so many of the biggest brands and they do such a phenomenal job building that awareness and that engagement, that intent, that excitement to what I call like flush the toilet and cue for right you've got this build up.

How have you, I never heard that term, I made it up.

Wow. I feel the tank flush it. That assumes something's. It's the dollars that are pouring it. How have you seen some of the best forms of top of funnel for smaller brands or or anything you can highlight that you've seen work so well for brands that are either, you know, smaller creator brands or smaller founder lead brands or more bootstrapped teams of three that are launched something into the world.

“Do things that the larger brands cannot do, I mean, I mentioned a lot of big brands on stage here and.”

You're not going to compete with age you want, you're not going to compete with with, you know, with skims you're not going to compete with these massive companies if you're selling if you're in the boot business. Competing with, you know, to COVID is going to be really hard. They have more money than you can outspend them. What you can do is you can do things that do not scale. You can do things that are incredibly personal. The fact that there are brand that M Cohen sends me a handwritten card from M Cohen ever to my buy a five dollar bracelet makes me feel like I didn't get screwed as I probably did in terms of rising.

It makes me feel like they actually give a shit and that makes me feel like I actually give a shit is something that no large brands can really do at scale. Even a shop if I mean, Shopify is we've been in founder mode from day one, like, you know, we're a large yellow company 8000 people we have millions of stores. Toby and I still, you know, lead the company like it's our baby like it's our little startup because we really give a shit. But even for us, we, the people that, you know, can create a deeper connection or people that simply have less constituencies to connect with.

And if you're a small brand and you see someone who just made a big order for the first time.

And you have their phone number or you have their email address send them a note and say thank you and say, look, this is like this is helping me validate that I actually have a business. This is helping me actually think about, I, I may, I'm going to quit my job at that, you know, at the late, which I really don't love. You're helping me decide to actually go, go all in on that. When that consumer receives that, when that consumer receives a special thing on your on their birthday because somehow they think, you know, you put your birthday in for something.

That means something. No big brand can compete. That's first.

“The second thing I think is the light is really incredible.”

I mean, the equation for delight. I think in the world, but specifically in commerce and retail is expectation minus reality. So a lot of people are building businesses online offline, every in every area of the world where they just give a bad experience. And so what they've done generally in the same way that Amazon is sort of reset consumer expectation. Everyone now wants really fast or free shipping faster or free usually it's not both, but pick one.

Most big retailers. You can see, thank you in a way that feels personal and authentic.

Great incredible to light. That person will tell more people about that. There are no big companies that can compete with the people in this room that are running small businesses.

I love that. I fully agree. I have two last questions. One kind of reminded me as you were talking, but we're kind of matching we're in the same shoes. Same shoes black t-shirt kind of have similar wash on. I almost said my look don't copy my style. I don't want to just try to be like you. I go with bad. Okay. So as you were talking, you mentioned, you mentioned just aligning this journey more closely to consumers from your vantage point today.

With what you see when it comes to commerce, advertising, how consumers need to be segmented so deeply and AI. I'm curious how you see the future of personalization leveraging AI and all of the data inputs that we have, whether it's a Shopify API, whether it's a meta API, where we can get more information on, you know, what emails they've opened.

“Where do you see the future of AI and consumer shopping and personalization?”

So we really want Shopify not to be hand-awaited, but AI. If you listen to earnings calls, you hear a lot of like, look at all the stuff we're doing around AI. We've tried to take a very different approach, which is practicality. And the way we look at this is twofold. One way is inside the company. So our support organization, for example, when you call Shopify, support or your talk to Shopify, support on chat. There are low quality conversations and high quality conversations.

And low quality conversations are configure my scene, or I have a new domain name that I need to have configured. Or I forgot my username and password or I'm locked out of my shop by admin, low quality conversations. A high quality conversation is, I want to know where I should be spending more add dollars, which is like, it's almost business coaching.

“AI is really, really good for low quality conversations.”

And human beings assist with AI are really, really good for high quality conversations. In all of your companies are things that you and your team are doing that are low quality work that should be supplemented with AI. So that's on sort of the how you run your company side. In terms of the consumer side or the the merchant side to the consumer. I have a chance to spend some time David and I this podcast called big shot, we're creating this archive of the world's greatest Jewish entrepreneurs of the last 50 years.

We've interviewed people like Bobby Brown and people like David Rubenstein and Larry Silverstein, who's the real estate king of of New York. These are people, by the way, that grew up very poor that built empires when we were curious about their stories. We ended up sitting now with a guy, this episode comes out next week with his and his Mickey Drexler, you know, Mickey, of course.

I am amazing guy, Mickey was the CEO of the gap for 20 years. He effectively built both old Navy and J crew.

Mickey talks about that they got really, really good at merchandising inside of both the gap, but also J crew. They knew what product to show you is the consumer when how to dress up the mannequins. The team was massive though. It was a huge team. Now they really believe that was very valuable to have a huge merchandising team. Here's the crazy part today. If Mickey was building, I don't know if he'd admit this, but I'm going to say it. If he was building the gap or J crew, or old Navy, he wouldn't need a team that size.

Because if he was able to put in to 12 or 50 or 5,000 data points into into an AI using like, you know, a very customized large language model based on the information he has on his customers, he would suggest this subject line in the email. It would suggest how to take product photography. It would suggest product description. It would suggest marketing language. That is exactly what I think levels the playing field do. The question you asked before, which is a fantastic question is how to small brands could be with the largest brands.

Part of it is going to be authentic, going deep in being personalizing it. Some of the big brands can't do. And the second thing is using leveraging technology. So again, we mentioned full circle back to audiences. Audiences means that you effectively have the Mickey version of a marketing team that you have all these data analysts sitting at your company on your payroll.

“Figuring out, based on all these things that you know about your products and your demographics, this is the audience you should target.”

And it's 24 in the Midwest with people that also like supreme. That's what those teams are doing. Now with things like audiences powered by AI, you actually get that for free. And I think that's the reason why, you know, forget headway V about AI and market caps and all that crap. That doesn't matter why it matters is because we actually are for the first time maybe ever. And this is the last 10 or 15 years we're really leveling the playing field to the extent that small businesses can compete and beat larger companies.

It's the reason why you see companies that were built only eight years ago, 10 years ago, that are now multi billion are companies.

If you think about the history of retail, John want to make her created want to make her's department store in 1876 in Philadelphia, first department store in America, first time a bunch of brands were under one roof.

And the last 10 years you and I talk this all the time, Nick, things are getting exciting and why is it exciting because technology is actually allowing entrepreneurs founders like all of you like us to compete with scale that is incredible. So we can be personalized on authentic, but we also have ridiculous superpowers available to us. That's the reason why, I mean, you know, and this has had a DTC state of the Union, the state of Union is fucking strong because of us being super focus being in founder mode,

but also because we have the best tech we've ever had at our fingertips and that big companies don't have that advantage anymore there's an arbitrage.

There's three really interesting takeaways here one is there's a lot of technology that comes out that is extremely powerful.

That may be tested by a brand and they say, you know what that didn't work for me and that that shatter gets around and you know 97% of the other people don't try it out because of that. That's right. And I think that's a huge thing that is fully wrong and I think today every brand needs to test everything on their own. You can't rely on another brand's data. The second thing was novelty, which I don't know if you guys picked up, but novelty for me, new variants, new colors, new bundle names, new partnerships, new co-branded products, these are easy to launch things.

And the third thing you mentioned was around founder mode stuff doing the things that don't scale to out compete those who are already at scale. For the last tip, what is your final one once and for all Q4 tip that you would give to an audience of people here and everybody watching live. Final tip only get one.

You can get two if you want.

“I think you should all lean more on this community more.”

I know that sounds kind of cheesy. It's not, I mean that, you know, you and David Seagull have coffee all the time. We don't actually do business with shower brands. We just exchange stories. You and I do this all the time. I actually think the smartest people that you can actually find in our industry are sitting in this room right now. I think sometimes we assume that they don't want to necessarily spend time with us or they don't know more than we do or we don't really have anything to change. I started this conversation by saying entrepreneurship is lonely and what makes it a little bit less lonely is, is this community.

I think that smartest people you can find to help you grow your business are in this room. They're people that are in this community. They're people that are, you know, DTC Twitter. I know we sort of, or DTC ex I guess what is called now. I know we sort of all laugh in ourselves about it because it's sort of cheesy. And like we all sort of, it's like the Obama meme or Obama gives Obama an award. That's sort of like the best, you know, physical, like visual manifestation of DTC Twitter. We're also proud of ourselves.

“But actually there is something about that that I think is really important.”

Historically business was competitive. If you were a retailer on Broadway and in Soho and you went next door to your new neighbor who just moved in and they said, hey, what are you doing for marketing? You wouldn't say what you did for marketing. Why? Because your total address will market your tam was limited geographic scope. It's not the case anymore. We actually like this is positive some land right now. This is not zero some land.

The total address will market for all of our products is effectively the world. It's global. There are no geographic limitations of who we're trying to sell for. Therefore, telling someone this work for me, even though, you know, my two favorite hat companies see dad gang in right here.

“It's at gang and I think Laura Piano makes amazing hats. You would think that what the hell does dad gang and Laura Piano have to do together? Well, they're both selling hats.”

And they're not really competitive because I assume most people that are worried dad gang hats are not wearing Laura Piano hats. Maybe the end diagram is me, but other than me, those are people that should talk about what's working and what's not how do you ship hats so that the crown doesn't fold. That's something they're both thinking about. How do you think about how many times does someone have to wear hat before the elastic band on the lower planet hats gets worn out and you actually send them a new one.

That's something that both companies are thinking about. I don't think enough people are leveraging that because I think we still are a little bit in this zero some thinking it's it's bullshit. We absolutely, they didn't talk to companies all the time and we collaborate with different things. We're going after a particular demographic and it's a global audience and they're going after a different one.

All right, thank you for taking some time away from a hundred billion dollar company to come share some insights with us. Thank you.

Susan, September 24th in New York City, I'm hosting the third Q4 summit. Okay, it's free to attend. It's going to be about 500ish brands in the room. We're going to have programming all day. We're going to have breakout sessions. It's going to be a very special room. You can attend for free. Okay, just go to ecomfounders.com/Q4 fill out the form for a ticket. My team will review it and we'll make sure you get a ticket and you're in the room. But September 24th, I want to see you there. If you have any questions, shoot me a DM on Twitter. Otherwise, I'll see you there.

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