Predicting the future of commerce| #058 | 53:38
Today we are once again joined by Ethan Choi, growth investor at Accel. We are going to be speaking about e-commerce trends, predictions, and all things in between.
Let's dig in!
Ethan Choi joined Accel in 2018 and invests in SaaS companies that are redefining workflow and collaboration, enterprise automation, and e-commerce infrastructure. He also focuses on consumer internet companies and online marketplaces.
He represents Accel on the boards of 1Password, Klaviyo, Nuvemshop, Shogun and Invoca, and helped lead Accel’s investment in Bird.
Prior to Accel, Ethan worked at Spectrum Equity, where he led investments in and served in board roles at Lucid Software and PicMonkey. He also worked on investments in Headspace, Jimdo, and Prezi, and was actively involved with lynda.com. Ethan also spent time at Domo Technologies and Dell EMC, focusing on product development and strategy.
Ethan is from Sydney, Australia and graduated from Brigham Young University.
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- [3:00] Who is Ethan Choi?
- [4:59] What have you been up to since we last saw you?
- [6:26] What are your takes from Unite?
- [23:46] You and David Waltcher wrote an awesome article on June 3 let's talk a little about that
- [24:19] Will digitally native players make digital plays?
- [31:21] Let's talk data privacy changes
- [39:22] You talk about the Path to 50% Penetration. When do you think we will get there?
- [51:09] Where can we find you on the internet?
- Accel ecommerce enablement
- Takeaways from Ecomm Connect
- Shopify Unite episode
- Shogun Frontend
- Ethan on Twitter
- Misbehaving: The Making of Behavioral Economics by Richard H. Thaler
- Ride of a Lifetime by Bob Iger
- No Rules Rules by Reed Hastings and Erin Meyer
Today we are once again joined by Ethan toy growth investor at Excel. We are going to be talking about ecommerce trends, predictions and all things in between. Let's dig in.
Welcome to Commerce Tea, a podcast to help you succeed on Shopify.
I'm Ryan. And I'm Kelly. Grab a mug and join us as we talk about all things commerce.
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I'm good. It's great to Great to see you guys again. And I love following you guys on Twitter and you guys hanging out and doing you know lots of fun things are working on your super secret of startup so I can't wait to hear more.
I'm so excited. We're almost there. We're in the we're in the endgame now in the homestretch. Yeah, yeah.
Yeah, that's a good place to be so very, very excited about it.
Very excited. And for those of the folks listening who are like, who is Ethan toy, because I haven't listened to you the first time you were on? Who are you? What do you do? Tell us a little bit more. I
am a partner at Excel and work on growth and growth stage investments and spend a lot of time in e commerce. So I lead a lot of our work at edexcel on the DTC ecommerce enablement space. And so investors in cleveo Shogun the Shopify of Latin America code mythemeshop. We're investors in algolia, as well as Navarre and Braintree, and, you know, Etsy and lots of other e commerce companies and I also invest in other b2b software companies as well. And data three, and puppy dad to a great golden doodle named blue and live in the Bay Area. So
this sounds like you have your hands full
hands full. My wife is a champ, but you know, I try and I always call myself run off dad of the year to to my three kids. Great absentee Dad, dad.
I bet you're awesome. We actually just got to me Ethan's one of Ethan's daughters and she is wonderful. So I it's so much fun. I this is one of the best parts. Like if we can find a there's many silver linings to COVID. And that that has been one of them is I've met so many of my friends kids, and they're always and they're always super pumped to be on camera. They're always like I am here on camera in a grown up meeting. Or they're really tiny and then they're there. They're just kind of like there that's been kind of the two that I've seen and it always makes me smile. I finally
met a rain starter and every now and then random will text me being like, my daughter wants me to tell you blah blah blah blah blah. We're friends now. We hype each other up.
Yeah, I shouldn't distinct point of view. Now she's a junior. So here's that. So, okay, so what have you been doing? Because the last time that we saw you chatted with you, Ethan.
Oh, gosh. So we through that conference that spoke was such a great speakers. So thank you for doing that. So that excels he can connect with through that. And I've been working on it for six months. It's a job on top of a job for anyone who started conference. So really busy, but it was great. We had you know, more than 2000 people sign up and more than 1000 people listen on the day of and some great speakers, 41 speakers. And, you know, just I think great contents, if anyone is interested, go to the Excel website, you can see it. And after that I basically tried to go into hibernation, but as it was, you know, funding environment is crazy. So we've been so busy here at Excel. Our companies are raising money, we're investing in new, new businesses. And I try to get a little bit of time off. We're in Utah, my family and I celebrated a 12 year anniversary and
congratulations. Thank you.
That's so exciting. It's nice to take some time off. I'm gonna be trying to do that next week. I'll keep you posted. If I'm successful.
I'm gonna hold you to it.
I hope so. I
like Kelly, we're recording podcast this week. Because next week, I am going to take the week off, hopefully, good. Since we last spoke, a certain events took place from Shopify that we so lovingly call Shopify unite. If you missed the recap, we do have an episode that we recap what happened on Shopify unite, but even I would love your take on all of the announcements that took place that unite.
Yeah, you know, it's it's interesting. I think there are a couple of takeaways for me, one is, you know, obviously that massive change around the Shopify, I guess, commission from global partners, and I know we were just talking about it, Ron. And I mean, what a brilliant move from Shopify. Oh, yeah. I mean, I think if you think about Shopify as true moat, it is this incredible ecosystem of app developers, you know, today, I think, numbers close to 5000, that are building, you know, incredible applications like Ben Tav and caveum, Shogun and, and others. And to just kind of supercharge that ecosystem by giving them more money to go back and develop more dollars back into their investment into their products, and go to market. It's just a brilliant move. And, you know, I'm close to Mater Leary who heads up the app ecosystem is very involved in that. And I think they were they kept it, you know, I think a pretty nice secret, but I was hearing rumblings about it. And so I think I think, you know, brilliant move, kudos to Shopify, great thing for app developers. And hopefully, I think we see just, you know, all these products get better and better and more products come come to fruition. You know, the other takeaway for me is Shopify is getting really serious about, you know, Shopify plus and enterprises. And I think, you know, spending so much time in the ecosystem. You know, a lot of a lot of what I hear is hearsay, but you know, I try and piece it all together as an investor, right. And I hear multiple things, and you hear something enough in your triangle and investigate. And one of the things I think, you know, I've heard and I think has been interesting to hear about is kind of this struggle at Shopify, between what was Toby's vision, which has always been to serve the very upset entrepreneur, like just starting out, you know, Shopify core is where, you know, as as folks known ecosystem, versus what drives a lot of the business and revenue for Shopify, which is Shopify plus, which today, I think, numbers more than 15,000 merchants and growing really quickly. And so if you think about stripe as a business model, and why it's been so successful, it's analogous to stripe, which is another incredible business. We had another, you know, payments business with Braintree where you basically bought a product that captures all the upsides at the beginning. And then you grow with the best ones over time and the breakouts, news, they drive most of your revenue at scale. And so sometimes, like in the case of stripe, and Braintree and these other business models where you capture folks early and then you grow with volume, you sometimes get revenue concentration of you know, the top, you know, five single digit percentage drive like 6070 80% of your GMB and I think for Shopify, you know, I don't know folks know the exact numbers but you know, my guess is it's somewhere in that range and So, you know, for Shopify internally do we build for the core? Do we build for the plus? Can we do both? While at the same time, I think there was this internal struggle. But you can see, I think, in some of the announcements on the headless side with hydrogen, oxygen, and some of the tooling that's now you know, becoming more sophisticated for merchants, some dev focused tools to allow more sophisticated merchants to customize the platform to their own needs. I think all of that is a response to the fact that, you know, there are some really large businesses growing on Shopify, and they, they are demanding more from the platform. And Shopify doesn't want to lose them to a big commerce or or Salesforce commerce cloud or SAP hybris. And so I think that's generally a really smart move and Shopify ice pod, and I think, you know, it's this really delicate balance between between being developer focused and being motion focused that they're gonna have to strike. But I think it's generally in the right, right moves. And so
I'm really excited to see, I want to get in on the beta as soon as I possibly can for hydrogen, because as a developer, of course, I want to see how it's built. I want to tear it apart and see building headless on Shopify, you know, we've built a number of headless stores, and it's what you lose, like the most important part you lose is the theme customizer, which makes it a lot easier for merchants to go in and move things around and update content. So you're having to use a third party, CMS for it content management system. And then you have to integrate that they have to learn another tool on top of how their new site updates and to see a neat, like native support, like native headless support built into Shopify already using shopwise tooling. I'm just I'm so excited to see how it all plays out.
Me too. And, you know, I'm on the board of Shogun and Finbar Nick there, they've got a product called front end, which is a fully productized front end solutions as front end as a service. It's basically jam stack or progressive web app, you know, to deliver lightning fast websites, and it plugs directly into Shopify, you don't have to like piece together, you know, all the different pieces of a really performant front end. And so I think, I think you're right, like, in some ways, my hope is, I guess, selfishly, that Shopify will will see some of this stuff to the ecosystem and just go live polling. But I do think to your point, Kelly, like, merchants, a lot of them, you know, I think I say this all the time. A lot of people think these, like DTC merchants have like big tech teams, a super tech phone. The truth is, they're busy with a primary job, which is creating whatever product that inshore tech. That's right. And so they usually don't have a big tech team. And they they rely on, you know, great services, like, you know, the Kelly and other great agencies and companies provide So yeah, I think, I think we're gonna have to see who steps up and fills that void. But, you know, I'm sure Shopify is gonna also increase usability. And I'm sure there's many improvements along the way, too.
All we need are some API's. So I'm asking for
not asking for much. Just some API's
just an API is.
I think, I think both y'all are spot on, though, regarding headless, I'm fascinated as to what's next. Because to your point, Ethan, as it pertains to Shogun, it's like merchants need an easy a turnkey solution. Because often, I've had conversation with some very, very large merchants who have come to me and said, Brian, we're thinking about doing had less, and we're thinking about going totally custom. And they're telling me, they're showing me this scope, and I'm like, y'all, that's like a $1.52 million build. And they're like, what I'm like, that is a that's gonna take like a year to build.
once you've paid for it, you're gonna have to then support it, because you don't have the technical team. That's gonna be like 50 to 100 grand on itself. And then their face looks like I just smack them in the face. Like, oh, my word, why are you speaking of and I say, I'm not making this up. I'm telling you the truth.
So so it's so funny. I mean, to go on the headless tangent, maybe just for a couple of minutes, like this headless word has been in e commerce, like people have been talking about this, literally. I mean, you guys will know better than most. Yeah. Five to six years, right?
It's been a while and it's the most it's the terrible word.
terrible word. No. And there's so much confusion. What does it mean? And I think the truth is, if you actually look into this, so let me just define it for those who are listening that may know for me what it means. What it means is you separate you separate the front end and the back end. And just to explain that Shopify is initially started out as a back end. So before Shopify, you had to cobble together five different pieces of software payments, gateway, inventory management, order management system, shipping logistics, and and Before Shopify, you had to kind of go find five different vendors, stitch them all together. And so Shopify productize, that made it so it's comes out of the box ready to go, they had a lightweight front end, and then you can get going in, like 20 minutes. Beautiful. Yeah, you know, and that's sort of the back end. The front end piece, though, is, you know, incredibly, most merchants have really slow websites. Because to be honest, Shopify wasn't built to for site speed, it wasn't built for this new age when everything's mobile first. And, and so this is new way of building you know, friend websites, which is really fast. I won't get too into a jam sec, pw a those who understand, but you have to stitch together five or six pieces of software. Yeah, and so like, someone needs to come in and just combine it all together, and make it as easy as Shopify to get up and running. That's why I invested in Shogun because like, after talking to hundreds of merchants over the last, you know, three, four years, the biggest pain point that merchants talking about was site speed, they said, even if you can find me the thing that gets me site speed, one to two seconds makes 10 to 20%, conversion, lift impact, I will buy that thing yesterday. So when I met him, I was like, I gotta I gotta invest. And so that's, that's um, that's, that's probably headless. If you really go look at the market, there's a there's like less than 100 merchants that have gone headless. So we're still like way, way early. Very,
very, that is very, very early. I remember in the olden days of plus, when there was sub 1000 plus users, and I don't even think we called them plus, we were just like, their big users. There were like developing the team. We were figuring things out. Oh, the glory is tech is so funny, because you're like, oh, in the olden days, eight years ago, it's really not that long in most industries, but in our industry, it's that could be 80 years. True. It's true. So much has changed.
Yeah, I think a lot of people also didn't realize some of these brands like figs could go get that big, right? And IPO on the New York Stock Exchange. And it's gonna be really fun to watch, because I think a lot of the apps in the ecosystem for Shopify started out with this SMB mentality. But even like cleveo, for example, we're now getting into customers that are massive. And so we're having to build integrations and tooling that we never expected. But I think that's all a positive thing in the ecosystem is becoming more sophisticated, bigger clients, you know, realizing they need to own their own destiny and hundreds fully, it's really fun to watch,
yeah, recharged at the same thing, because you know, they got that huge round. And a lot of that is going into building our infrastructure to support these enterprise level businesses that are interested in using recharge, that can't work with Shopify, for whatever reason. And so this is the we're seeing all these businesses that started like focusing entirely on supporting small business on Shopify, or being a small business on Shopify, just exploding. And it's so fun to watch this, especially, you know, a lot of us have been in here from the early days, when they were just getting started. And they don't they're well past what I'm currently doing now. But it it's, it's cool to see that that potential, that potential growth, that every business
is super, super secret, and you guys are building, I just know, it's gonna be a decade cool. And like, as soon as you launch it, boom.
We're hoping so I was just telling Reagan today that I want to upgrade one of our flights for going to the UK in December to delta one, I was like, all right, we have to hit a certain number of users to be like, Alright, I'm celebrating with
this growth in unicorn businesses or unicorn companies out of the ecosystem has been one of the most magical things I've ever watched, because I don't think if you would have asked me eight years ago, could you have a unicorn business based primarily on Shopify? Or primarily based on e commerce? If you're not like one of the core players, right like that? You know, the Shopify, the big commerce at sea, I would be like, you're gonna have like a $10 million business. You know, I was wrong. I will admit you're wrong. I was very incorrect. And we got billion dollar companies.
Yeah, if you look at it, the list is long. It's you know, Clay vo recharge your po. Yeah, you know, I think some of these categories like when I were so I don't know if we talked about this last time, but when I joined Excel, I had been looking for these investments. And I realized, you know, when Shopify would have been an investable for me as an investor, I think I was in college or high school. I was an investor. Yeah, it was a long time ago. I wish I was old enough to have done that deal.
retired and not talking to us. I think Right, yeah.
Just hitch my wagon to a train, that would be great. Well, you know, I knew I think we talked about this last I knew the wave was big enough. And you know, I got some initial pushback, which was like, Hey, you can't go to massive business on platforms and this platform risk. But I think there's like five big areas that have corollaries in the public markets in this short fight the system that I just knew were going to be massive. So website, Shogun marketing, automation, cleveo, you know, subscription billing recharge, and, you know, you got your opponent review side, and I think, I think it's gonna be interesting to see, because there's new new niches that I think that folks, folks ask me all the time, but hey, Ethan, we're, we're also they'd like opportunities, and I say, there's so many. There's new ways we're going to show. And so I think, you know, some of the things I'm seeing is like, you know, some of the if you just look at Amazon and what Amazon delivers personalized AI based recommendations, there are companies tackling that. I think if you think about automation for merchants, like zappia for the ecosystem, this is that and so I think every permutation of non ecommerce software, you will see some reflection of that in the e commerce stack. And so we are feverishly hunting like where do we think, you know, these these issues? Where can they build a data workflow? integration over the long term is how we think about it at Excel.
I'm so fascinated by investing. I know that's a whole other conversation. I'm so I'm so obsessed with something I don't really do. A very small Angel check. But our casual investors, but yeah,
smaller, smaller. You're not as deep I have very, like, you know, like women's jeans, they tend to have very small pocket.
This the whole part of the women, the pockets, movements. I mean, they really drill and wife is constantly looking for a phone and I'm like, why? And she's like, I don't have pockets. So
yeah, yeah, it's a real thing. I need a big pocket. You know what I mean? Oh, my it's really the only way we're gonna fix that we got to fix that
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Check out gorgeous by visiting Commerce tea.com Ford slash gorgeous and try gorgeous for free for two months. Again, that's Commerce tea.com Ford slash GORG. I A S. Okay, so I've got a question for you about an article you wrote on June 3. I know that was a little while ago, but everything in it is still really spot on it in my opinion.
So, like a month and a half ago?
Wasn't that years ago? Yes. Do I remember writing?
you and David Walter wrote this article June 3, I want to talk a little bit about that you hit on some key points and I kind of synthesized some of them. So Okay, so here's here's a question I have because this is a hot topic in the DTC and CPG space and recently I've been hanging out in those spaces well non digitally native players make digital place so like if you you know what I mean? So like and for those of you who are like what is digitally native to like if so the opposite of all birds all birds like a Nike
you know, what's what's fascinating so like actually at the conference, so he can connect we had you know, the Chief Digital Officers for some luxury brands like really old school story brands like Gucci and you know, potato Veneta. So carrying brands and then we had it for you know, coach and Kate Spade and and then you know also with friends at Katya and so those brands. I think for them, they are trying to make the most progress in terms of moving digital because so much of their experiences, you come into a beautiful store, you know, those people were, you know, wearing suits Reading you they serve and champagne, and it's just a very luxurious experience. So how do they, they've been a little slower to adopt, like digital experiences, and how do we create a luxury experience online and on your phone. And so, you know, they've hired these, you know, Chief Digital Officers to bring them, you know, closer to the DEA to see brands that were born native. So I think at this point, my assumption, and I think my perspective is, every single offline brand has some digital presence. It's the sophistication level, and how well they've integrated the offline and online experience where there's vast differences. And so I think, you know, the hope is, over the next two to three years, you will see some of these more traditional brands realize, like, hey, look, you can still create luxurious experiences offline. Online, you've got to somehow tied to offline experiences, whether you're sending, you know, like an experience where they open up a package. But you know, we all know where things are headed. econ penetration is only going up. And I think even the, you know, the brands that rely so heavily on offline experiences. If they're not waking up to it now, they will wake up in 10 years realizing that that is going to be the the primary way people buy stuff.
I have an opinion on this.
What's your idea? no
big surprise, I have an opinion. And Kelly starts off a sentence like that. So we have a lot of these more historical, non digitally native brands that have always existed in offline mode, retail mode, like that is what they do, like a lot of these luxury brands. And I think there's this push for them to get online, which makes absolute sense. But they're trying to adopt a DTC model, which will not work for their brand. They're historically not that way, they should not try to fit themselves and morph themselves to become a direct to consumer brand, because that's not who they are. Deep down. That's not who they are. And I feel like you know, we talk a lot about like blending, and how everything ends up flowing, trying and like looks the same functions the same. I feel like a lot of these these, you know, non digitally native luxury brands, in particular, are in such a unique position here to redefine what it means to sell online. Instead of try to be like every other direct consumer brand.
I have set an antidotal two antidotal stories regarding this one is last year, maybe I acquired too much Gucci on the internet, maybe allegedly that maybe,
maybe, maybe my husband bought it for me because I was like I really want and that person who's like, I really want this, but I don't wanna spend the money. Oh, weird. I got it. Okay, so that. So I acquired a few Gucci pieces. And then we started getting mail from Gucci, but not just like, random mail, like handwritten letters. And at the holidays, we got a gift. And it was a it was from the same person. So we are we have a relationship manager at Gucci. And I thought, that's really special. And then I have a friend who works at car Tia, and she works in customer service. And her whole job is helping people nav give that concierge level experience via the phone while showing them the website. So like really walking them through. So these are two examples of those legacy brands, which I think are doing a really good job, but they're not doing it to your point Kelly, like a DTC brands doing it. They're like, let me really, really show you is that is that champagne moment, right? Okay, I can't give you the champagne in real life, I'm gonna send you this thing for absolutely free, because you spent X amount of money, and they never even had that conversation. Let me show you what it feels like to be a part of Gucci to be a part of cartea. And, at least and again, this is antidotal with my friend at car TA, she has clients now. And I were I used to work old school, Ruth, you know, IRL retail, where you would have a book of business and you would call your you know, you'd have the credit card on file and you call them you say, hey, guess what I got in Okay. And then he would and then he would do it. And she now has a book of business exactly like that on car TA and she met them all through cartier.com. And I just think that that's really cool that car T and Gucci group are carrying his carry great. Yeah, yeah, was able to flip because a lot of other luxury brands. You can't even buy stuff online. Still, you know,
it's so funny because they talk about it too. I mean, I hope I'm not speaking for them, but they talk about the culturally like a lot of their job as chief Chief Digital Officers. This is just to create the cultural change. You realize you've got to go make that leap. And so yeah, it's fascinating to see I mean, like one example is in you know, people still love the experience of like, kind of walking through a real life store. And so, a lot of these brands they they basically connected zoom or some other video conferencing and the associate with just walk around and showing the goods and turn it around and kind of like a live shopping experience, but really personalized. And so I think it's gonna be fascinating to see, like live shopping we talked about last time is just massive here in the US. It's a beautiful combination of like really engaging, you know, like selling of the product because it's live. And you can ask, they can ask questions, but it's one too many for the brands. So instead of like a store where it stores a store associate is one on one and you don't get the leverage. Live shopping is going to give these brands and ability to do one to many, but make it feel pretty personalized. And so that's gonna be really powerful here.
I love that. Like, during the pandemic, obviously, I'm trying to find ways to do fun things with my team, we're already a remote company. So we were kind of going to have to find some something to do virtually, but being able to do like an escape room virtually over zoom. Like being able to take that that in person experience and bring it online to some capacity while still interacting. I thought that was the coolest thing and I want to see more brands definitely doing this. Yeah,
yeah, it's it is for sure the future I can't wait to see where where the the enterprise and legacy companies go. And then also where the DTC companies go to try to outmaneuver them on the way. Okay, I also want to talk about data privacy changes slash cookie, pocalypse cookie get in whatever we want to call it
sounds like such a friendly way to die cookie, Paul, closing the lid on the cookie jar.
pelted with cookies. I mean,
this could be like an hour conversation, I've spent so much time in on this topic. So I have a few thoughts that I can share might be relevant. You know, everyone saw this coming for a long time people have talked about third party is going away. And for the audience. Third Party cookies are these like little pixels, they embed them into, into display ads, and they track users from site to site. And it's a short snippet of code that gets embedded in the browser. And without typically users knowing it's tracking them all their activity as they go, you know, from site to site. And that's how, you know, all that data gets used by third parties where when when you go back on Facebook, you're getting a Nordstrom ad that says hey, you're looking at this black shoe. And you're like that is super creepy is because of these third party cookies. And so the whole ad industry has been moving away from the simplygo case, because it's it is an invasion of privacy, if we're all honest. And it's kind of the way things have worked. But it doesn't mean it's the way things should work going forward. And so, you know, along with that Apple has decided to change the way, you know, developers used to have to track all the apps and where you're going on your phone, which apps you were using, and use that data to try and go to profile on you too. And so now Apple has changed that. And so you're getting into a situation where the only reliable data that you're going to have going forward is the data that you collect yourself as a brand, or merchants. And so we call that first party data. There's also another version of the data called zero party data where instead, because first party data, you embed a cookie, but the user knows it, and they're letting you zero party data is another form that people talk about, which is where the users actually give you data because you're doing a quiz or you give them some discount, and, and the user provides information that you can use it and personalize the services. And I think in the end, if we step back, you know, business movement towards zero party and first party data because of privacy reasons. And and I think the fundamental question is do users want to personalize experience? And who do they want that personalized experience for all? I think what we're going to see is going forward, users do want to personalize experience. Like we don't want to get just, you know, random ads for stuff we didn't care about. But we want to from the brands that we've given, we've established a relationship with and we've given them permission to track us. For example, our investment in cleveo was largely based on thesis that all the data that Clearview collects is first party data. And with these cookie changes and privacy changes, all that first party data becomes more and more valuable over time, because you can build profiles of people and personalize offerings based on that data. Because they've given that to you or they're giving you permission to track it. All the third party data it used to get aggregated by these data brokers. And they would then just try and use algorithms to match you. And they're just all that data becomes stale over time. And so you're seeing this big shift in the industry where actually,
for better for worse, the large advertising players to do get access to First party data, Google, Facebook, apple, a lot of the power is going to get consolidated into those guys and the rest of the ad industry that collects third party data, they are freaking out and trying to figure out what to do. Yes, they are. Because essentially, the oil that they've got, it's coming out of the ground is is, is it's going to get basically moved, you know, routed towards other people. So it's a massive shift. What one sorry, one more thing I might say is for merchants, what does it mean for like the average ecommerce merchant, it means that if you can't, if you don't have third party data, as taught me if this is getting too complex, if you have questions, but for merchants, for them to go to traditional Facebook advertising, or Google ad spend, they did rely on third party data, right? So you get these cookies, and you say, hey, like anyone that's gone on Nordstrom store, I want to be able to retarget them on Facebook. And and so you, you know, you spend that money, feeling confident that you can get the right kind of attribution. But now that third party cookie goes away, I think merchants are realizing I do why if the dollars that I spent on Facebook will like be able to target the right people. And, and that's that's something that merchants should be thinking about. But ultimately, the best way to protect themselves in the long run, despite all these changes, is to collect email addresses, phone numbers, and other ways where you can communicate directly just like you, you got that free different grucci. Find ways to communicate directly and own that relationship with your customer. So sorry about the ramble. But that's a quick synopsis of what's going on.
Oh, no, I mean, I am obsessed with this. This happened. as it pertains to my vertical, right, my core vertical, which is SEO, because in my mind, if this is the moment that you should really be double triple, quadrupling down on SEO, because that's you can own that, that's on your site, versus your And granted, there's the paid paid SEO. So that's buying ads. But what you can really, really control is your content, and your meta content and your keywords and all of that stuff. And yet I still see people. And I get it right? Because you want the easy when you want to ask because it is too easy. When it's too easy traffic, I understand it does in the short term, boost you up in search rankings, like I understand it. And also, it's really boring to do SEO, and I'm the first one a really long time. Like there, you're like oh my gosh, my brain is just melting. But this I think this is the moment where if people really don't step back and think how am I going to make sure that my store has longevity in six months, a year, two years, because as you mentioned, the apple change has happened and and is continuing to happen with emails. And we did a podcast about that a couple weeks ago. But when chrome rolls it out, right, and chrome pushed it back by a couple of years, which I was like Thank you. Thanks, Google. Because we were getting ready. We are over here over ventev we're like let's buckle up. We've been doing all this comms around it. But anyways, I digress. I'm very fascinated by what's to come in this and it's a topic I could talk about for out our word. I. Yeah. Anyway, I digress.
Today's topic. No, it is fascinating. I think a lot of people are worried that like advertising goes away, it does not go away. It actually just consult like, if you look at Facebook and Google's revenue growth this quarter, it exploded because like I talked about how power consolidates to the platforms that collect first party data. And that's what they have. And so you've seen them accelerate. So it will be interesting to watch.
Okay, so one of the last questions for you. Because again, this is the challenge speaking to Ethan is we just can chat about Same thing for a really long time. And then I don't get to all the questions that I want to ask
you. And then we have a 14 hour episode. Now
we have a 14 hour episode, and we're just sitting here nerding out about cookies and and also concierge service. But I could also talk about for hours. So anyways, I wanted to in your article, you talk about the path of 50% penetration as it pertains to e commerce. Talk to me about it. What do you think, when are we going to get there? Yeah.
So I make a prediction. I didn't specify the news because if I do, I'm going to be wrong but
no worse. Yeah.
But I say like in the very near future, and I do really believe it. We're at 17% in the us today as at the end of 2020. And so I'm primarily talking about the US because the rest of the You know that tamps down close to 5%, recon penetration, Southeast Asia is about 5%. You know, as I talked about in the article, China and Korea are actually the leaders and they're 25%. And so we have, you know, basically what 33% to catch up to get to that 50%? What's that pace going to look like? So for me, last year, during the pandemic, we jumped 5% that was about 10 times more than any penetration we've ever had, like three years where the steady like half with half a percent or 1% every year. And so one year, we jumped from 12 to 17. So if you think about part of it is, you know, these marketplaces like Amazon continue to make progress and drive a lot of gmv. That's, that's a big part of the story to get to 50% econ penetration. But as I talked about in the article, etc, I believe it's going to drive, you know, a very, very large portion of it. Because, you know, if you, if you think about what's happened with merchants finally have the tools to sell online, Shopify, bigcommerce, mythemeshop, all these companies have democratized it. So you don't need developers anymore, you can actually go do it yourself. And then you can use it as smart ins like Kevin Kelly is to really help you dial it in and, and make it just incredible, right. And so, you know, that's a big part of the story, these platforms are going to continue to grow. And Shopify today, unbelievably trades at just under $200 billion in market cap. Now, prior to the pandemic that was about that was that was close to 40 billion. So it's next in about 18 months. And I personally believe I'm not giving stock advice to let me just put the caveat out there, but I personally believe testing to get to a trillion market cap, like they're making all the right moves. And they're at 1.7 3 million merchants as at the end of 2020. I said same my article, it's undoubted that they're going to get to 5 million plus merchants at some point. And so if you just think about all the gmv that will be driven at that point, that's a lot of gmv. And that'll make up a big portion of this continued penetration or shift towards ecommerce spent. And I just think, you know, as as a lot about experiences, you know, offline shopping, we just realize, you know, life shopping is a more fun experience, and we get more details and we can buy it faster, get it into our house quicker. All these all these new ways of shopping are going to also accelerate their trend. And so, you know, it might be within the next 10 years. You know, don't come back maybe hopefully this this podcast, we maybe have a 10 year anniversary episode and I'm right. econ penetration dancing and
so forth, but
dancing was good but Okay, that's fine. That's fine.
Let me let me be clear, but um, you know, and the The other thing I talked about in the article is a lot of non ecommerce players are making big acquisitions in e commerce so stripe, which is a payment gateway, which is an e commerce but they went in a quiet tax jar, which is like avalara tax software you saw into it into a quiet tradegecko which is inventory management MailChimp acquired. Lemon sandwich is like a Shopify platform, wicks across acquired, right raised AI. So like, all these tools that like people need to sell online, there's just more and more options. And so this CVC thing, as people know, it's real and, and it'll be interesting to see where I guess the key thing to watch out for is like, how much is going to be Amazon Marketplace driven? And how much will be data see driven, and my hope is, it's it's largely DC driven. And merchants really on their own destiny and own their relationships with the customers.
Okay, so I'm going to ask, I was going to say we're going to I'm going to ask you the last question before we get there. Store shout outs are fun, but I want to do book shadows today. And so how about we shout out a book that we're reading? We did. We're gonna do it again.
I do. Cheese. Okay. Actually, you know what? The ride of a lifetime, Robert Iger, which is the story of Disney. And, you know, like we see today what Disney looks like, which is like this massive conglomerate of ESPN plus Disney. Plus, I think it's ABC networks. Plus the, you know, the theme parks, but it's so really fascinating story into like, how this amazing consumer brand and conglomerate kind of evolved over time and adapted to changes, you know, so it goes into them making these big acquisitions and how they pull them off. And the personalities and the backgrounds of the people like Robert Iger he worked at, he was he was a TV producer. And so he kind of understood what folks needed. And then as he came in, he realized, like, power comes in leveraging distribution, but having all the content. And so he went on this m&a strategy to go by ESPN or these other brands. But it talks a lot about the Disney plus streaming initiative and how they thought about it. And realizing the changes that were happening from cinemas no longer being like the primary method of launching, premieres, to Hey, we got to figure out this digital in home strategy. And they're going to make this acquisition of this streaming platform and then brought up Disney plus, and this massive launch but it's it's to a point around like, how do these like old school offline brands, how do they adapt to this new digital world? It's a really great story in case study of a big company doing that, and the complications, the politics, the infighting, the, the way they kind of work through it become like business today, which is a really impressive, modern brand that has a bit has been able to adapt. So it's kind of there's no I mean, loss. I love talking about some of this, the areas that I'm passionate about, but this is like just a great corporate evolution story, I guess. So.
I love a corporate evolution story. One of my friends used to work with Bob Iger. And I was fortunate enough to work in a leadership capacity with her for a while and watching her because she had learned a lot about leadership from Bob, I still do like I call him by his first name. I'm like, Oh, you know, me, we go back, we go back, watching her leadership style, which is very different than mine. And then I spoke to her later, she's like, well, I learned a lot from watching Bob. And so it's just it's kind of cool. When we're in these environments, where we meet all these different people who come from different corporate backgrounds, SMB backgrounds, and watching them lead, and their thoughts on things and how each person how someone like Bob Iger can then influence her who that influences me and how many other people with did he influence in corporate strategy and leadership strategy is just so cool.
And this is very cool. Yeah, I mean, I think one of the things stood out to me was he really understood his people and what motivates them, but like, motivate how to tie that into the logical, because as he's acquiring these companies, you know, you're dealing with CEOs who are used to running the show. And so how do you get them on board and aligned to the broader vision? So I think all of us whether it's like us, as CEO of our own companies, me as an investor working with modern, my own team or with founders, just learning the art of persuasion, but you know, aligning objectives and aligning spiritually, I think it's a really, really great case study and a great, great leader there to learn from.
That's great. I'm gonna check that out. For sure.
Yeah, I'll leave that on my list.
What what's your What is your book that is not atomic habits.
I went back to make sure this wasn't the same book that I shouted out, um, no rules, rules. By Reed Hastings and Aaron Meyer. It is the Netflix book. Again, targeting you know, about reading leadership styles from other companies. I definitely can't say I agree with everything that they're that they do. But I feel like it's cool to see the insight into a company like Netflix that just boomed during the blockbuster era. And just watching the change and how people were consuming content and how they adapted as well, because they still offer the DVDs, as well, if you want DVDs. is a really, really great book. I highly, highly recommend. It's an easy read as well.
It is easy read. I like it. I enjoyed that book. What about you? So I got this book in the mail randomly? Well, I thought it was random, but apparently my so my grandfather's 95. And he's, he's brilliant. He's a professor emeritus of statistical engineering. Okay, so that that needs to be said, Because normally if you just get a book about behavioral economics in the mail, you're like, why am I getting a book about behavioral economics? and Kelly? Just arrived at my house with no note, like, I was just like, this book. Anyways. Like two weeks later, he emails me. He's like, did you get the book? I was like,
that's who this is from. This makes so much sense. Anyways, the book is called misbehaving the making of behavioral economics by Richard H. Fowler. It's very, very cool. It It doesn't sound that cool unless you're an economist, which I am not. But one of the principles in it is that Typically, economists assume rational thought and rational actors. And that's not actually what happens in society. And so that's that's the premise of the book. I, I do really recommend it, it is fairly interesting. I would say it's not like with no rules, rules, you can just like sit down and read that in one day. I will say misbehaving will take you a couple of weeks, because you're like, it's a little chewy. You know, it's a good grad school book where you're like, Okay, I'm thinking about it. Like a lot of fun. Yeah. I'm really selling it to everybody. I think also, it also won a Nobel Prize in Economics. And you know, the cool thing about that is, that is definitely going to be a little bit boring, because that's always what happens if a book out wins
a Nobel Prize. I do find that so fascinating. Like, trying to try to make sense of how irrational human beings are is a fascinating topic. Yeah.
Yeah. So that's what this whole book is about. And then and then how to sell to them how economic behaviors bend to them. Anyways, check it out. Love it. I think you'll like it. And yeah, oh.
Okay. actual final question for you. Last one ended on last time, where can we find you on the internet?
I am at you can look excel.com is, you know, you can see kind of what Excel does and some of our thought pieces. I am also on Twitter at Ethan Troy ch o II seven such material handle I'm on LinkedIn. So look me up. And you know, I love to help ecommerce startups and merchants and anyone trying to build great software companies. So I'm happy to help.
I don't think we're connected on LinkedIn. I just discovered today that a way messages can be set on LinkedIn if you're paying for premium and so I updated my away message to be for the next three months, which is the maximum amount of time saying thanks for reaching out. I don't monitor my DMS on LinkedIn email me instead. I also don't want to outsource work and I don't want demand or lead generation health. Well, I just added you so now we LinkedIn. So he messaged me. You can see my witness.
Except you she'll accept you. Yes,
yeah. Always, of course. Even thank you so much for joining us again. This is always such a great time. Anytime you guys such a joy. And thanks for tuning in. And thanks again to our sponsors for supporting this episode. We have a YouTube channel you can visit email@example.com slash Commerce Tea. If you like our podcast please leave us a review on Apple podcasts. Reviews make us happy if they are positive reviews if they are not positive. Like to text each other. complaining about be salty. You can subscribe to Commerce Tea on your favorite podcasting service. We post new episodes every Wednesday. So grab your mug and join us then we'll see you next week by
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