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The Jason & Scot Show - E-Commerce And Retail News

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: March, 2021
Mar 31, 2021

EP258 - Retailer Owned Brands and Other News 

CPG’s and other traditional houses of brands, have not had a lot of recent success launching new brands. Challenger brands get a lot of buzz, but they are struggling to scale. Meanwhile, retailers are quietly launching new “owned brands” every year that sell over $1B.

In this episode we cover the latest owned brand news from Amazon, Target, and Bed Bath & Beyond.

Episode 258 of the Jason & Scot show was recorded live on Monday March 29, 2021.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 258 being recorded on Monday March 29th 2021 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:40] Hey Jason and welcome back Jason Scott show listeners Jason hope you're having a good week and you have no blockages like the Suez Canal.

Jason:
[0:48] I know this was a bad week to plan a vacation in the canal.

Scot:
[0:51] Do you do you often vacation in the count.

Jason:
[0:56] I haven't yet but you know I was thinking about it there was a super funny tweet I saw on Twitter though that some some someone wrote everyone's anti Godzilla and told there's a twenty two hundred thousand ton boat that can't be moved.

Scot:
[1:09] Yeah and then I saw I think they got it kind of dislodge today and then the wind blew it back into it's original position I
I can't tell what's the truth anymore like parody has become so close to reality but I saw that as if it was new so I think he is still jammed is that your understanding or do you think.

Jason:
[1:27] I don't have an understanding but that would make sense because I would say that recent news reports were conflicting about whether it was still blocked or not so that maybe,
that's the story maybe it got unblocked and then re blocked,
it is I have clients that are pretty bummed though because it's a it's a pretty big deal our as you know our supply chain is super,
just in time and so when a major thoroughfare like that gets blocked like it has an impact on product availability over here.

Scot:
[1:57] Yeah yeah it's yeah the the pictures that show the boats waiting it's just amazing how many how many cargo-carrying boats are just jammed up because of this one single point of failure worse popped.

Jason:
[2:07] Yeah and the plan B is not ideal it's a so long way around.

Scot:
[2:14] Yeah yeah it's amazing to then you can see a lot of the boats aren't doing that now because they kind of have to.

Jason:
[2:19] Yeah I know you're a better investor than me but I've actually been buying into a lot of pirate stocks because I think this actually puts a lot of that cargo.
In Pirate territory yeah.

Scot:
[2:31] I didn't know you could buy a pirate ATF that's so smart.

Jason:
[2:35] I'm lying but I wish I was that cool.

Scot:
[2:38] Cool well tonight's episode we wanted to keep it kind of light and fluffy and just catch everyone up on some news because it's been a while since we have done a news episode.
And of course it wouldn't be a Jason Scott show without some Amazon so here's some.

Jason:
[2:59] News your margin is their opportunity.

Scot:
[3:08] Jason I'm usually our Amazon Fanboy here but this one I really wanted to kick over to you for your perspective you've been tracking
the entrance of Walmart into the healthcare space and Amazon
his announced recently that they are going to expand the what they call quote-unquote Amazon care you know to not only all their employees but employees at other companies what do you make of that.

Jason:
[3:34] Yeah it's it it's a pretty big expansion so.
For the very few people that haven't listened to every single episode The the Reader's Digest version of Amazon's Health they've leaned heavily in a pharmacy they bought pillpack they rolled out a national Pharmacy Amazon Pharmacy,
um they partnered with,
Goldman Sachs and Berkshire Hathaway on this health initiative called haven to kind of reinvent Healthcare and then they pulled out of Haven this year or late last year.
In the rumor was that it was because Haven was too slow and they felt they could go faster on their own and what they were going faster on is this thing that they call Amazon care so they piloted this in the Pacific Northwest with all their seattle-based employees,
and it's,
it's a telemedicine based Healthcare System where all Amazon employees can get a doctor on a video conference in under 60 seconds and kind of avoid a lot of in Office visits,
and so the big news is they've announced that they're expanding Amazon care to all 1.3 million of their employees so that's a.

[4:41] Very substantial expansion of the pilot and they're also offering the pilot to other companies I'm not sure if they've,
announced that they have any takers on that yet but but it seems like they're their efforts in healthcare rapidly expanding and you know they did invest in,
telemedicine and even buy some,
some companies in that space kind of before covid and then you know covid has really you know accelerated the adoption of telemedicine so it seems like annoyingly,
that's another good investment that seems like it's starting to pay off.

Scot:
[5:17] Yeah and Josiah Cairn reminds me what as you're describing it reminds me of that made me a feature that candles used to come with her I don't know if they still do or not we get like just press a button and some would be like hi Jason are you having problem opening a book,
is that Zack kind of how it works.

Jason:
[5:33] That's my understanding I say I don't think they still offer mayday,
I know kind of sad that for a while that was the differentiating feature on that platform but I think it went away but yeah I.
I haven't had a chance to kind of get a first-hand tour of have the Amazon health system works but.

[5:55] You know pre-pandemic there was a lot of.
Challenges around HIPAA laws and stuff and so people were really going slow and cautiously on telemedicine and there was generally a lot of friction.
Um and you know nobody wanted to like store anything information in their platform and all these things and,
um I would say a lot of healthcare providers like suddenly discovered out of necessity that there are plenty of HIPAA compliant ways to do telemedicine and Amazon has both.
That that sort of visual video interface and you know it's it's on on a HIPAA compliant version of AWS which they have a lot of HIPAA compliance services on AWS now.
But they also bought like an artificial intelligence symptom diagnostic tool so kind of like a,
machine Learning System for you know converting your WebMD queries into a diagnosis so,
um I think that's part of this system and yeah I don't know I'll be I'd love to hear from some Amazon employees that have tested.

Scot:
[7:05] Yeah covid-19 really helpful here because there was all these rules around you had to be licensed in this state to do telemedicine in the state and they wave to those so it makes it a lot easier to do telemedicine when you don't have to,
have a doctor in the same state as Where You Are.
Which never made sense to me anyway I don't think medicines that difference between that hopefully it's not that different between North Carolina and Chicago.

Jason:
[7:27] Yeah and then I mean we just have so much so many challenges on friction in the healthcare system that we should like we shouldn't be like fragmenting supply and demand with all these arbitrary virtual borders I guess.
Easy for me to say two e-commerce guys talking about health care what could go wrong.

Scot:
[7:48] Add to cart that's not my own.

Jason:
[7:51] Exact exactly just buy more Advil any other Amazon news you saw this week's hot.

Scot:
[7:57] Yeah so Wells Fargo one of their analysts at was out and this was like a combo between their internet and their retail folks,
and they have officially proclaimed Amazon to be the largest seller of apparel.
And this one is fun because I think we actually cover this we've been at this podcasting gig for quite a while I think we've been at commerce cumulatively between the two of us for.
Akash 50-60 years there's one but we're even podcasting in 2016 and I remember one tarry longer than the CEO of Macy's said.
And I'm going to quote here the Amazon threat is overstated Macy's nearly 800 stores offer a huge advantage over Amazon.
Given how Shoppers tend to buy the same item in multiple sizes when they order online,
Macy's can use it stores to handle returns which lowers the shipping cost and offers a chance to win some sales while those customers are in there are stores.
So he kind of was pounding his chest and bring on Amazon this is there's no way they're going to catch up with the mighty Macy's,
and you know I have been at this long enough to know that the biggest career limiter is to say that you are safe from Amazon that did not end up being true for mr. Lundgren,
um he left me sees a while ago and they've had a series of other folks roll through their I don't think they have 800 stores anymore you where they down to like.

[9:22] Six hundred four hundred I don't have to let's have one of our research team looking into that,
so yeah so I thought that was really interesting that you know the a lot of people think they are not threatened by Amazon and they are and I've seen the drugstores kind of take a similar stance to Amazon coming into Healthcare and I think,
it would be wise to be careful there because Amazon is really good at taking care of your customers if you don't that's what they did to Macy's.

Jason:
[9:54] For sure In fairness to tarry longer and I would say two things he said that he said he probably sounded way more distinguished when he said it then you did.

Scot:
[10:03] That was my distinguished.

Jason:
[10:05] I know that was your decision.

Scot:
[10:06] He has way better hair than you and I together times a hundred he has good hair he's got CEO here.

Jason:
[10:11] He definitely has CEO hair and then I feel like one of the fun things about doing this podcast for five years is in the e-commerce space if you can do it for five years you are going to get a lot of I told you so's.

Scot:
[10:24] Yeah exactly.

Jason:
[10:25] And so we definitely get one so I want to say that there are currently like 430 Mainline Macy's stores.

Scot:
[10:36] I won't let that that's feels a lot smaller than 800.

Jason:
[10:39] It probably feels that way because it is that way and for for sure Amazon.
Caught and dramatically surpassed them in a Peril I want to say from that Wells data,
Macy's was it like 16 billion in apparel sales and Amazon was estimated to be at 41 billion so almost 3x,
but / Wells Fargo TJ Maxx and Walmart also passed Macy's so there there was a point when most people felt like Macy's was the largest apparel retailer and,
in the US and now / this analysis their fourth.

Scot:
[11:16] Yeah I think I think Amazon is three to four times the size of a season wow ouch,
wasn't there isn't this also a double win because didn't Scott Galloway kind of famously think that Macy's what is going to crush Amazon wasn't any kind of on that that,
that that should have been we should know it was over the second he said that because he's you've got a really bad Trekker.

Jason:
[11:40] Exactly I feel like Everyone likes to make fun of his anti Tesla picks but to me by far his,
his my favorite thing was his his prediction that the future of Commerce isn't Amazon its Macy's and omni-channel,
and like there's if you if you look at the Macy's stock from the day he said that to today it's basically a straight line and you can imagine what direction it's going in.

Scot:
[12:07] Wow ouch all right any other news you want to cover Jason.

Jason:
[12:13] Yeah there's all kinds of stuff going on.
There was an article that made me think of you because we talked about this at least once a year New York Times ran a big piece about,
Google aims to be the anti Amazon of e-commerce it has a long way to go that was the subtitle of the article I kind of felt like you wrote the subtitle.

Scot:
[12:36] That is a that is a journalist that has done some research.

Jason:
[12:43] Yeah yeah and so I mean I don't think there wouldn't be anything.
New in the premise of this article to our listeners I mean the the just was you know they talked about Bill ready coming in to take over commerce for for Google and opening up,
um the Google shopping ads and making them free and you know essentially becoming a Marketplace offering this integration with Shopify to make it easy for Shopify sellers to,
to list their products on Google and Google is for all intensive purposes becomes a Marketplace what was.
Surprising to me and maybe it shouldn't have been was in the article they profile this this small business owner that I think sells roller skates,
and they talked about how she happened to be sitting on a lot of roller skates at the beginning of the pandemic which became a desirable item during the pandemic,
um and she started experimenting with with Google's kind of artificial intelligence ad format this it's called the smart shopping app and so essentially.
You don't have to pick your target or anything you just kind of give Google a budget in Google figures out the best place to put your ads so she put 1800 dollars into these Google smart shopping ads,
um and that generated 3.6 million impressions and what do a quarter of a million dollars in sales for her so.

Scot:
[14:09] I'm not in the ad Biz like your it was that a good Roi.

Jason:
[14:12] Yeah yeah except in the ad Biz we call it row as.

Scot:
[14:15] Is that a good bro ass.

Jason:
[14:16] That is a good row as the.
The the smart question to follow up to that would be how much of that was incremental how many of those roller skates were she going to sell without Google but we'll put that cynical question aside for a minute,
what was interesting to me in the article was after having that initial success.
Google flagged her account because they via some crawling bot that they had decided that she was listing her roller skates in the Google ads at a higher price than she was selling them Direct in,
Shopify which is apparently against the terms and conditions of these Google of these free Google shopping ads.

[15:03] Many marketplaces have that that Clause Amazon famously has that cause I wasn't aware.
It's not I'm not surprised but I wasn't aware that Google had that cause or that they were trying to enforce it so they essentially put her in the Penalty Box and don't allow her to whist.
Her Shopify products in Google,
and this is not going to come as a great surprise to you neither Shopify in or Google have remotely effective customer service to remediate this problem right so she's calling Shopify and they're saying hey talk to Google it's not our fault,
and you know there's no one to talk to a Google to get out of this Penalty Box and kind of have a fair dispute resolution so this woman had some initial success on the Google platform and then got locked out.

Scot:
[15:48] Yeah that's a little scary because you know Google puts all these things these to have separate little centers for all these different products and now they've Consolidated all into one,
you're kind of part of their ad Centre or whatever they call it now and I imagine you can't just get locked out of one part of it I bet she's locked out of I bet she can't even buy keywords or anything now so that's.
That's pretty terrible.

Jason:
[16:09] Yeah and I mean it's a big reminder like all these platforms have traffic that can be valuable for you and there's a lot of.
Like favorable Roi to some of the customer acquisition things but,
but you should remember like you don't own any of these platforms like no one should be building a business exclusively based on the customers they can rent from Google or Facebook or Amazon because.
You know there are going to be winners and losers in the ground is going to shift under UI in favor of those platforms.

Scot:
[16:41] One of my favorite up into Google like 50 times and you're always sitting in the lobby of like a building whose name is something wacky like pie or moles constant or something or C the speed of light and you wait there for the person to come and get you,
and so I've probably collectively spent 40 hours in the lobbies of different Google things just waiting on people,
and invariably the phone is like ringing off the hook at these lobbies and it's someone like this poor lady trying to get a human and they somehow rattle into the building you know,
the the building Lobby and the people there are actually temps and you know you hear them this side of the conversation we like.
Man I don't I don't know how to get your listing into Google no ma'am I don't I don't know how to solve that,
have you tried our website this is like crazy sitting there listening to the conversations that go on.

Jason:
[17:34] Yeah although I'm thinking you're doing it wrong because you're not supposed to be listening to the receptionist you're supposed to be eating all the delicious free snacks and all those lobbies.

Scot:
[17:42] Where they don't put a lot of snacks in lobbies.

Jason:
[17:45] You're going to some different buildings than me I only go to the snack friendly buildings.

Scot:
[17:50] You have to get in the back room where all the good stuff is the snack snack stations.
Based on our episode last week where we dug deep into the IDF a and by the way I got a lot of good feedback on that apparently you're pretty good at explaining this stuff so so kudos to.
The I saw an article that face book shops announced they have over a million active Sellers and 250 million people interacting on,
the Facebook shop so you are my.
Theory I've seen a lot that I kind of buy into but I want to see it play out is Shopify could be in a crunch and I thought it was really interesting that Facebook was kind of,
pounding their chests about how many people are using their shops,
today I know they're they're not super useful it's just kind of a presence but I do think because Facebook is going to want more first-party data because the third-party stuff's going to get cut off,
be it on the app side or the cookie side / website I think they're going to pull in the checkout and the discoverability and it's going to be an interesting day when that happens.

Jason:
[18:57] Yeah no I totally agree I think they're going to lean into that check out but I wouldn't be surprised we may never know.
It wouldn't surprise me if the cumulative gmv from all that Facebook stuff is already bigger than people imagine right because.
I don't think there's a lot of high-volume sellers that are hitting really big numbers yet but there is a very active long tail and I just think that's,
like unless Facebook chooses to disclose the DMV like it's harder to count like you know of those million active sellers if they're you know.
Why teach selling a hundred dollars that's a hundred million dollars in GMB.
The you know I don't know I don't think there's any billion-dollar sellers on that platform so we don't hear about it as much but I think like Shopify the bulk of it is this quite small volume High churn long tail seller.

Scot:
[19:51] Yeah and then so you've got these little shops you've got Facebook groups that have kind of,
we've got these groups that are very active and some of them are around neighborhoods and categories and so there's a lot of activity there and then this interesting have you seen this one startup that's called.

[20:08] Comment counter something like that which is kind of amazing to me that it still exists but you know people,
people there's a lot of comment Commerce that goes on where where people will post a picture of something on either like Instagram or something and I know these guys have their own checkouts but there's still this weird thing where,
these people will run these little boutiques,
and then you can say something like you'll say bye to and then you'll do some other little code and then this bot will come in and send you a DM to check out.
I saw this startup in that space raised like considerable amount of money and a lot of gmv which I thought was really interesting because it's like.
Feels like 1985 that some check out bot is messaging you to enter your information but there's still a lot of Commerce that happens that way and then the Facebook Marketplace has a ton of Commerce and if if I'm Facebook you know they're thinking about how do you roll that up into one.
Kind of a it doesn't have to be a seamless experience but one Mega Commerce area that,
it kind of reminds me of Ali Baba where you have this family of pockets of Commerce going on and then you can provide some interesting gateways into that like
if you search for Star Wars you to see shops
groups and then the marketplace and you know is there an interesting way to coalesce those listings across those three properties and have an interesting experience.

Jason:
[21:29] Yeah yeah no I think there's a lot of that going on it's funny in my I'm as old as dirt in this space I remember like one of the First Commerce activities on Twitter was like,
Pizza Hut wants to Pizza bot and you could basically send a tweet to the pizza bot to order a pizza and that was like.
The future of Commerce briefly and I want to say a year after that like Starbucks did a.
Tweet a coffee which was my favorite feature you know I'd like a moment of silence for the loss of that feature.

[22:00] Yeah a lot of other news though so I do want to move on I saw one that I thought was kind of funny because I know we talked a lot about omni-channel attribution,
so for those that don't know retail leases in malls are really complicated it's not as simple as.
You know you pay X dollars a square foot a lot of those those leases have all sorts of,
rev-share Clauses so you know depending on how much revenue they generate in the store they owe some Vig to the landlord they're all kinds of services that their stores have to buy from the landlord is all the all these sort of.
Different Clauses but with all these distress retailers there's a ton of renegotiation of Lisa's right now the retailers have a lot of Leverage because the mall owners don't want to move out,
and one of the ways that mall owners are trying to preserve some upside is they're doing drastic.
Rent reductions but they're asking for a bigger rev-share and what has emerged as the biggest point of contention is that the landlord's want their rev-share,
on all of the Retailer's Revenue whether it's in that store or online.

Scot:
[23:19] Mmm Yeah like curbside you know the malls going to want a piece of that.

Jason:
[23:25] Exactly and so the malls are arguing that like hey that store creates a bunch of visibility which is driving those online sales and so the landlord should be credited with those sales and so it's like if you look at it superficially.
It's it's pretty funny that the the old model is like asking for a commission on the model that's kind of replacing.

Scot:
[23:49] It makes logical sense the store operators themselves one credit for that stuff too.

Jason:
[23:55] But it just so you know no to retailers count that the same and so now you know it's coming up as a problem.
In in all of these kinds of leases because you know the you're asking for some Claws and a lease that isn't have that that brand does its accounting.

Scot:
[24:12] Aren't the malls going to in all the stories anyway so I guess it's a mute point.

Jason:
[24:15] Only the bad ones as they get done kid distressed in the malls have to have to buy them yeah,
um so jumping over the pond this is super interesting to me and I don't know how close you've been following pin duo duo but pin duo duo is a e-commerce site in China,
and they're heavily focused on gamification so I kind of think of them is the wish of China which is ironic because wishes.

Scot:
[24:44] Wishes the wish Upton.

Jason:
[24:45] Exactly,
um but soap into a Duo is like hey get a bunch of your friends to go in on this deal with you and it makes the deal well or if you get enough people to buy with you you get these special deals it's kind of gamification of deals and it's mostly.
Like inexpensive,
stuff but they they are a public company in China and they in their their earnings,
they announced that they had 780 8.4 million users at the end of 2020,
and the reason that that is interesting is because,
Ali Baba has 779 million which means pin duo duo has more users in China than Alibaba has in China.

Scot:
[25:35] Everything in China is always like so big to which is fun.

Jason:
[25:38] Yeah so.
Along those lines China has 983 million internet users this year and so they're likely going to pass a billion internet users next year's and all these numbers are huge,
I would note that aov on Alibaba is way higher than the arv on pin duo duo so they're gmv is going to be way higher.
It's interesting that these kind of you know inexpensive gamification sites are getting so much traction at all obviously wish has by all all apparent measures done pretty well here so.
Coming back to the US I get asked a ton right now about video Commerce and maybe we'll do a,
kind of an updated social commerce or video Commerce show in the future but a feature I thought was pretty interesting as Google kind of did there,
their new feature launched this month and one of the features they have is they're using computer vision to recognize products in YouTube videos,
and so they are now doing automated product ads,
besides these videos so it's kind of interesting that they're taking all this video that already exists and didn't have any metadata about products for sale and they're literally recognizing the products in the video and trying this out.

Scot:
[27:08] Neat has maybe seen that workers it.

Jason:
[27:11] I have and I mean I'm I'm curious how effective it is right now the the computer vision stuff is is pretty darn good but there,
so many like super similar variance of products that I would imagine it's still pretty imperfect but I'd love to be wrong.

Scot:
[27:32] Feels like a would go through a tagging phase where I would say hey I think I see these things that you would pick it like a human would be in the middle somehow but we'll see.

Jason:
[27:40] Yeah yeah so that's going to be fun to watch I did also see a super interesting article from Channel advisor and I was hoping you could explain it to me.

Scot:
[27:51] Yeah yeah so the the topic they're so first of all Channel advisor,
it's a company I founded 2001 still on the board so this is all public information and
they have a ton of data and one of the things I miss most about not being the day-to-day operations is having my hands on that data because it was like seeing the future
but they were kind enough CEO Dave Spitz and head of marketing Mike shocker put together a really nice blog post.
And the topic was really kind of the two different stimulus bumps are stimuli bumps I don't know bumps from stimulus is,
bumps from stimuli I don't know the right conjugation of that.

Jason:
[28:33] Stimulated bumps.

Scot:
[28:34] Stimulated bumps thank you all right we just had to put the explicit on there alright and,
the so if you recall and Jason you're more political than I am there was like two thousand dollars sometime in 2022 April May,
and then we just recently had another little six hundred dollars and then a $1,400 so this tracks what a lot of people call stimmy 2.0,
which is the fourteen hundred dollars from the Biden Administration that came out in this March and it's really interesting to see,
what's happening there and,
you know I think the the way I would kind of summarize the broad Strokes here is the first stimulus was really towards like that critical stuff you know like.

[29:25] Food and toilet paper and then this set of stimulus was was a different set of items so one of the biggest differences was clothing shoes an apparel did really well in 2021,
versus 20/20 didn't see much bump at all joy and watches so people are buying a lot of you know,
more I guess not essential items with their stimulus dollars,
um Auto Parts people are keeping their cars longer there's a shortage of new cars due to a chip shortage and it's kind of funny people are calling it chip again what's that was was kind of hilarious given that we did ship again.

Jason:
[30:06] I wonder how many of those chips are on boats in the Suez Canal.

Scot:
[30:09] Yeah it's only going to get worse this is.

Jason:
[30:11] The shipper chip again.

Scot:
[30:13] Yeah and I was funny because spits was.
Hit our chatting about this data and he's like well the good news is you know we don't have a toilet paper shortage and then the next day I saw the Suez Canal its lock clogged and I was like I wonder how much toilet paper is on those then sure enough the article started to talk about we're gonna have another TP shortage of that doesn't come through.
Those are categories that over indexed they did better in the more recent stimulus checks than the previous the opposite side of that would be the.
Um the categories Health and Beauty so that had a really big bump and not so much now and then computers so I think everyone's kind of,
saturated with those items I guess in the new stimulus dollars didn't really win and then the third quadrant would be they got kind of assumed ulis bump in both time categories and that would be home and garden Business Industrial and pet supplies.
People just spend a lot of money on that I've also seen you know Wall Street seems to be doing really well and,
the cryptocurrencies and in FTS so it seems like people are a lot of those dollars are spilling into really interesting categories in the economy that I don't think we would call Essential like that first round of stimulus.

Jason:
[31:26] Yeah I mean my biggest takeaway which I have very consistently seen from all of these stimulus things is,
that that money gets spent as soon as it hits bank accounts,
um and the I mean that was like clearly evident in the channel advisor data I you know I have tons of clients where you can literally see how fast the mail is delivered like in the,
in the metrics as you watch the spike like wave across the country,
and I point that out because there were a number of analysts that were like oh you know what savings rates are so high right now and Americans are so flushed that,
they're not going to spend this money that they're going to invest this money and like we like to make fun of Scott Galloway on the show,
he liked retweeted a study where like the the top line of the study was,
Millennials say they're going to invest the stimulus check on more than 50 percent of the Millennials say they're going to invest their stimulus check on Robin Hood.

[32:28] Which did not happen side note I dug it's-- got about this and he kind of acknowledge that but I dug into the study and it was a survey of,
Millennial Robin Hood customers and listen there was a survey of like 2,000 of them like 300 of which responded,
so I teased him I followed up by said in a fall on study teenager said they don't care about money in a survey of Bill Gates three kids one of which.
You thought that was funny.

[33:01] Yeah so but that was super interesting and then it is very interesting to see which categories are getting kind of sticky bumps versus got these,
tertiary bumps and a lot of the categories that really got creamed last year,
it does feel like they're making a partial come back if you look at them by historical levels they're still down but things like shoes and apparel and,
things that were way down are definitely starting to re-emerge in you know the leading products in each of those categories,
are starting to do pretty well.

Scot:
[33:37] Freckle,
nothing I've been watching really close is the IPO Market is white hot if you haven't been tracking that so so see Joanne's went out a couple weeks ago so that was interesting,
that one had a mediocre reception by Wall Street I would say I think it had to price down from its expectations.
And I watch you and II think you've adopted this hobby of mine where you watch the roaches,
and that one was pretty under under the quality bar is pretty high on these things now they have a pretty high production value and that one was kind of a.
Guy calling in from a payphone got a kind of a thing so that one that one did not land very well,
the one that was really interesting was thredup so those guys went public this week and last year they did a hundred eighty-six million,
growing fourteen fifteen percent so you know pretty good but you know.

[34:36] Not a barn burner by any means and then their IPO has been on fire so they have a three billion dollar market cap so we look at last year's kind of Revenue because we don't know what this year's will be and they don't they don't when you're going public you don't put out a.
Projection until you have your first public quarter so you know let's say.
Let's say they grow twenty percent this year to be aggressive which may be are.
That was an acceleration year due to covid but anyway let's say they grow twenty percent so let's see that would be 636 Rosso call it to 20 this year just to kind of put a number out let's say 250 just to be super generous.
Devil three billion dollar market cap so that's you know you know way more than like 15 times,
most e-commerce companies are in the three to 125 time,
so you know they have got a real outsized performance from their IPO,
so it's been interesting to see you know how that stock performs it was just trading up another 50% which I did
got them that three billion dollar market cap down feels a little frothy to me but we did have the CEO on the show it's a great company and I think what they're doing is really interesting just interesting to see that you got such a strong,
yeah I think I think they're worth.

[35:57] So Joanne's has like two to three billion and they're worth and Joanne's is worth like 500.
Million so they're worth like six Joanne's but they're like you know a fraction of the size so just shows you what the market the market likes growth and more Pure Play e-commerce than the omni-channel stuff.

Jason:
[36:16] Yeah yeah In fairness there model is slightly different than a wholesale retail or so their cost of goods is probably a lot lower because they are.

Scot:
[36:25] Oh yeah they have way better margins and stuff.

Jason:
[36:27] So it's not perfectly apples-to-apples but it's still awesome I would assume I haven't heard him say this out loud but I would assume Anthony Marino the,
the CEO thredup would would credit most of his IPO success to his appearance on episode 170 of the Jason and Scot show.

Scot:
[36:44] Absolutely it's a seminal work and really really is if you look at the curve it's where the elbow is in the curve when they're on the show.

Jason:
[36:52] Yeah I will just Echo another point you made it is shocking the variance in quality of those Road Show videos.
Wag their sometimes there's like a dude with a PowerPoint presentation and a bad one and other times there's like amazing production value and it's like it's there's drama and humor and entertainment it's a I don't know.
How the quality of that correlates to their IPO success but but.
It's very obvious like who's investing in those things and who is it.

Scot:
[37:28] And then some of them goes over the top they're like a Silicon Valley skit where they're kind of like you know we're going to change the world with compression.

Jason:
[37:37] Yeah I saw this was not one of those Road shows but there was a like,
in earnings call from Intel and you know Intel has had kind of a bad run lately in so that you know the CEOs kind of owning a lot of there.
They're missteps and talking about their turnaround plan and I was he's a super smart guy he was really articulate he had a lot of interesting points,
but his gestures we're like so aggressive and over-the-top for every single sentence he uttered like I couldn't even concentrate on his words.

Scot:
[38:11] One of the favorite topics in the news these days is private labels and there's been some interesting news here and this is really under the microscope because
Amazon is doing their private labels the one that everyone knows is Amazon Basics and,
there's a lot of antitrust focus on this area and it's funny you and I laugh because you know if you read the headlines it makes it seem like Amazon invented this whole idea but it's been around,
I think I saw a Benedict even say it's been around since like the 18 hundreds or something like there's he found some retailer and London that it's been doing this for.
Since like 17,
25 or something anyway some interesting news there before we jump into that though maybe remind people you have a really kind of nice nuanced way of talking about this maybe walk people through that before we jump in.

Jason:
[39:02] Yeah so there's a lot of freezes in in this space the most common one is called private labels,
and what was happening a lot right now is not what I would call private label there definitely is some private labeling,
but the bulk of the interesting stuff right now is what I'm calling owned Brands and there's no standard definitions here but my distinction between private label and owned brands,
is how those products are marketed in position,
so private label products tend to be knockoffs of popular National products.
And the so the value prop is exactly the same as the national brand and very often it literally says that on the box compare this while bupropion to Advil right and a hundred percent of the marketing for that wall be profilin is,
that it's on the Shelf next to Advil right like there's no Walgreens isn't running ads for wall bupropion they're not doing Billboards or TV commercials or you know there's no wall bupropion Twitter account or anything like that.

[40:11] The it's a private label product that's sitting on the shelf next to Advil.
A lot of the products that successful retailers are launching right now and that I'm particularly interested in and are you know they tend to be like.

[40:24] One of the three big strategies that almost every retailer has to compete with Amazon as to sell stuff that Amazon doesn't have in to invent these new owned brands.
To me the big distinction in the own Brands is they usually are not the same formulation as a national brand there they usually are a unique product that has some differentiated feature,
very often because the retailer used their customer data to identify a gap in the marketplace they might have used there,
there are no results found searches on target or you know non converting glances on product tiles and all these different things to kind of find a gap,
make a product where one didn't exist and then most of the retailers that are building these successful own brands are marketing the heck out of them so the extreme example that I always like to use is is you know the as I.

[41:20] Click mute the for saying this the Amazon Alexa is not a private label Sony Bluetooth speaker right it's a unique product that Amazon invented that has,
features that no products prior had in the market and by the way Amazon's hired Anthony Hopkins Ellen DeGeneres.
Harrison Ford and others to advertise this product on the Super Bowl so that's kind of what,
owned brands are and there was a lot of own Brands progress in the news this week.

Scot:
[41:57] So Ross do there.

Jason:
[42:00] Yeah so the two so I'll start with Target because I reference them and and Target really is to me,
um the most successful retailer in this space like arguably by Dollar volume you could talk about something like Kirkland and Costco is being even more successful,
but target has really leaned into this we're going to sell stuff that no one else has and we're going to Market those products,
for a long time and earlier this month they announced that a product they launched less than a year ago called All In Motion which is their athleisure brand that kind of competes with Lululemon,
um had surpassed a billion dollars in sales and the that's that's relevant for a bunch of reasons,
it's they watched an athleisure brand right before the pandemic kicked into full gear which is phenomenal timing that was the only apparel people were wearing,
um the it had inclusive sizes which historically will eliminate in particular was not good at you know they were an attractive Target price points,
and they target announce that this all In Motion billion-dollar brand was targets 10th.

[43:14] Owned brand to surpass a billion dollars of sales in one year and,
if you look at the list of all the digitally native vertical brands that have surpassed a billion dollars in a year the answer is none,
and if you look at all the cpgs that have launched new billion dollar brands,
um in the last five years the answer is none like only retailers are launching new products that sell a billion dollars a year and Target uniquely has launched.
10 of them so that's phenomenal success almost every retailer I work with is like looking jealously at Target and trying to figure out their version of that model.

[43:53] To double down on that Target launched a new brand in the Craft Space you've touched on this a couple times but crafts was one of the retail categories that blossomed in the pandemic and so they want,
Moto AMA which is like 400 skus of arts and crafts items to compete with Michaels and Jo-Ann's,
I just like any product with the llama in the name by the way.
And so that you know is going to be interesting to follow the more relevant to me they watched an indulgent dessert brand called favorite day,
and so I like to eat the the favorite day snacks on days that end in a why.
But you can make your own rules so that's another food brand targets had a lot of very good.

Scot:
[44:41] We call that podcast research.

Jason:
[44:43] Exactly exactly.

Scot:
[44:44] Listeners appreciate.

Jason:
[44:45] They're 700 excuse to try so a lot of good stuff there and then a close cousin of the owned brands are exclusive brand Partnerships,
and so target has his has been famous for these as well and they launched a new one this month with Levi's so they have,
unique Denim and again like Target leaned into these inclusive sizes which are doing really well despite the fact that a lot of the specialty retailers haven't done well with with inclusive sizing and kind of,
Levi's branded products with with cool unique denim designs at a surprising Target price point so,
so two new owned Brands and exclusive partnership on top of the 10 brands that have already sold a billion dollars in the last few years,
um and a lot of those Brands were the.

[45:40] The product of the former Chief Merchant at Target who is this guy Mark Triton,
and Mark is not at Target anymore because he was hired as the CEO at Bed Bath & Beyond to sort of try to turn around Bed Bath & Beyond,
um and so and shockingly and famously Bed Bath and Beyond was horrible at own Brands and private label and in fact like less than ten percent of their sales are our own brand or private label products,
so they bring in Mark Triton and they announced this quarter that they've launched their first exclusive products at Bed Bath & Beyond so they launched a new bed and bath line called Nest well,
they have a second spa bath line called haven and they're getting ready to launch their like,
entry price point items across all other categories that will be called simply Essentials so those of us in the industry are really curious to see if Mark can.

[46:40] Um kind of recreate the same magic that he had a Target at Bed Bath and Beyond those are his first three brands and then I also noticed this week that he was able to kind of,
cherry pick a couple senior execs from Wayfair and Walmart and the wafer exact is Jill Pavlich who was responsible for all the exclusive brands at Wayfarer so,
um they're they're building quite a high-powered own brand Team at Bed Bath & Beyond so that's going to be really interesting to follow.

Scot:
[47:13] Now did they have a long history of of owned brands or these are brand-new to the.

Jason:
[47:19] No these are almost all brand new there are very few own brands at Bed Bath and Beyond and I would argue that like where they were it doesn't even count like Furniture is kind of a weird category where.
They're just.
There are very few Brands the majority of furniture retailers are reselling these kind of pseudo private label Furniture products and so the the.
Most of the private label sales have been Bath & Beyond were in these Furniture categories where they were basically just doing what everyone else was doing.
So they really hadn't made a good effort in like trying to launch their own Brands and the old leadership team had kind of,
announce a couple of initiatives but none of them ever finished so you know we all assumed when they brought him our tried to in that that was going to become a much more.
Serious effort at Bed Bath and Beyond and now we're seeing the first indication that that's exactly what's happening there so it's.
I'm not sure I would call it a win yet and you know there's a lot of headwinds facing Bed Bath and Beyond but that's going to be interesting to follow and I certainly think.
They have some people there that you wouldn't necessarily bet against so it's gonna I hope their success.

Scot:
[48:34] Yeah if I had a good Yoda voice I would send you a gun the private label Wars have.

Jason:
[48:39] Yeah I mean the bigger picture and we could do a whole show on this is so that's a top-three strategy for every retailer is they're trying to become a brand,
and spoiler alert guess what every brand is doing in response to that they're all trying to learn how to become a retailer and meet their own customers and sell direct and collect their own data.
I call it the epic battle between Brands and retailers is they all try to gain each other skills.

Scot:
[49:05] Yeah it's going to be really interesting to see how that plays out.

Jason:
[49:09] Um but that's probably going to be a good place to leave it for today we have stayed within our allotted time which I want to take the win,
so if this was valuable to you I hope you'll jump on iTunes and finally give us that five star review,
if you have any questions or comments about any of the things we've discussed we love to hear from you on Twitter or Facebook page or I'll put Scott's personal cell phone in the show notes.

Scot:
[49:34] Sounds good thanks everybody.

Jason:
[49:36] Until next time happy e-commerce saying.

Mar 18, 2021

EP257 - Cookies, IDFA, and Commerce Deep Dive

Changes in mobile tracking (IDFA), and browser tracking (third party cookies) are likely to disrupt digital commerce. Here is everything you need to know.

Background

Privacy Law Changes

  • California Consumer Privacy Act of 2020 (CPRA)
  • California Consumer Privacy Act of 2018 (CCPA)
  • EU General Data Protection Regulation (GDPR)

Third Party Cookies

  • Safari (19% share) 3P cookies blocked as of March 2020
  • Firefox (4% share) 3P blocked as of Sept 2019
  • Chrome (64% share) will block 3P January 2022

Mobile Tracking (Digital License Plates for Mobile Users)

  • Apple Identifier for Advertisers (IDFA) – Goes from Opt Out to Opt In  Q1 2021
  • Google Play Services ID for Android (GPS ADID) – Still Opt Out

Use Cases that are impacted by IDFA/3P changes

  • Audience Activation and Retargeting
  • Frequency Capping and Suppression
  • Media Attribution
  • Audience Insights and Segmentation
  • Personalization

Alternative Solutions

  • 1P Walled Gardens (Facebook, Google, Amazon)
  • Real ID Systems (Trade Desk, Liveramp, Epsilon)
  • Clean Rooms
  • Cohorts – Google Privacy Sandbox: FloC (Federated Learning of Cohorts)

Impacted Businesses

  • Google – Biggest winner, built a business based on relaxed privacy standards, now pulling the ladder up behind them
  • Apple – See Google, but with a smaller share of browser market
  • Facebook – Lose ground to Google/Apple but gain on everyone else
  • Amazon – Winner. Forcing more ad dollars to Amazon walled garden
  • Shopify – Loser. Forcing Facebook to capture more commerce instead of referring to Shopify sites.
  • Publishers – Loser. Harder to make ad model work
  • Other Retailers – Loser for customer acquisition, slight benefit for retail media networks

Conclusion

Advertising rates go down which depreciates ad based business models (content sites and games). More businesses pivot from ad based to paywalls. Greater focus on Customer Lifetime Value (via subscription and platform approaches), more cleanrooms. Much harder for new businesses to challenge incumbent walled gardens.

Episode 257 of the Jason & Scot show was recorded live on Wednesday March 17, 2021.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 257 being recorded on Wednesday March 17th 2021 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host
Scot Wingo.

Scot:
[0:41] Hey Jason and welcome back Jason Scott show listeners.
Jason has you know when we look at our analytics and based on feedback we get from listeners some of our most popular shows over the years are where we get super-dee-duper geeky and we go really deep on one topic.
We call those with what I think is a genius of marketing we call those deep Dives.

Jason:
[1:05] Jason and Scot show Deep dive.

Scot:
[1:18] So we have been I’ve been reading a ton about a big change coming to the overall ecosystem of advertising and it’s initiated by Apple and it’s called idfa.
And as you know I read a lot of Wall Street stuff and some of the Wall Street folks are freaking out because they’re basically saying this is going to be big and the world’s not paying enough attention.
And you know in my mind I’m kind of that sad world that doesn’t really impact e-commerce but then I started to see it getting really noisy around the impact to folks on the converse side too.
So I looked around and called everyone I know and none of them were experts on the so I last ditch effort I said maybe my podcast co-host knows a little bit about this,
seeing as he works for one of the world’s largest ad agencies and lo and behold I was right you do you are a Ninja on this.
So I know enough about this topic to have a lot of questions but I have no answers so,
we’re going to kind of flip it a little bit here and I’m going to interview you on this topic how does that feel how does it feel to be in the chair.

Jason:
[2:28] I’m terrified I like being the one to ask the questions and know the questions in advance so I feel like that the I should have come to rehearsal.

Scot:
[2:38] Yeah put some curveballs in here and we’ll see how it goes so.
Let’s start at the top the maybe a little bit of background on this issue kind of starts with cookies so if we if we
do the Wayback machine let’s start at cookies and I think a lot of us know the basics of cookies but just to kind of make sure,
because a lot of some people in e-commerce start really worried about this just because it works right you don’t really have to worry about it per se but you know,
I’m pretty familiar with first-party and third-party cookies but maybe maybe start at the beginning and why do cookies exist what’s the difference between first and third party cookies and then we’ll go from there.

Jason:
[3:19] Yeah awesome and let me be one precursor I you’ve are vastly oversold me I definitely don’t want to claim to be an expert in this stuff the.

Scot:
[3:30] You’re the chief digital retail cookie tracking idfa officer.

Jason:
[3:37] You would so one would think therefore that I was at Tech Guru but let me just say this stuff is super complicated.
It’s an alphabet soup by the way anyone that’s an expert in the space is apparently not by contract not allowed to use any full words they can only use acronyms for everything which is super complicated.
And it’s been my experience like I’ve been in the room with CMOS that spend a fortune on all these digital ad products and programmatic products,
and the more you talk to them you start to realize oh my God they don’t understand these ad products either so I would just say like,
no one should feel bad that doesn’t completely grasp this topic because it is really complicated and you and I will do our best to simplify that and so what so great Point let’s start with cookies.

Scot:
[4:28] I’ll also give you a pass because this thing the idfa we’re going to talk about isn’t even out yet so
so we’re anticipating a lot of stuff and it’s sure to be I think will be closed and there’s enough to know kind of the general topic but some of the specific details may change once it’s released.

Jason:
[4:45] Yeah a lot of changes still in flight for sure.
So cookies cookies are just a simple little text file that sits on your computer that stores data from your browser and so the.
Kind of fundamental first use case is.
You like to read The Wall Street Journal every day and you have an account with the Wall Street Journal and you don’t have to type your username in every single time you go to the Wall Street Journal so you check that little boxing remember me.
Um so the way the Wall Street Journal remembers you is they get to write a little text file on on your hard drive,
that says I’m the Wall Street Journal cookie and username equals Scot Wingo,
um so it’s a way for websites to store data on your computer that they can use in future visits.

Scot:
[5:34] Side note Wall Street Journal is the worst example because they apparently ignore my cookie but go ahead I know that’s the intent but they’re like the absolute worst.

Jason:
[5:42] So so that I mean but the original intent of what are called first-party cookies is for a website to store data about their user that could be used to improve,
their experience in subsequent visits right and it was originally about user experiences but pretty quickly.
Evil advertisers figured out that it was a valuable tool to improve and Target advertising.
And to facilitate that the browsers were extended to support a new kind of cookie called a third-party cookie.
So a first-party cookie is the Wall Street Journal storing your username on the Wall Street Journal.
And and literally the I want to say the name of that cookie file on your computer is like is the Wall Street Journal URL,
and so that websites allowed to open that cookie,
what third party cookies are is a way for one website to write a piece of information that then can be read by another website.

[6:45] So by default the New York Times can’t read The Wall Street Journal cookie so it can’t like steal your username from The Wall Street Journal.
But now websites could write these third-party cookies that became really useful for advertising so for example.
You could be shopping for some skis on Backcountry.com and they could write a third party cookie that says you have a ski,
in the cart that you didn’t buy and then when you go to read The Wall Street Journal,
you could see an ad for those skis because the Wall Street Journal is allowed to read Backcountry dot-coms third-party cookie and then run a retargeting ad for you.
So those third-party cookies are super useful for tracking you across the web and spamming you with ads from each others.
Websites.
And that is one of the things that is being phased out in the Privacy world is the use of third-party cookies.

[7:53] Just getting one thing so a ton of people call this the Cookie list future and that’s kind of a misnomer because no one’s doing anything to first-party cookies like so there,
they’re not going away third party cookies have been turned off by two of the big browser so Safari are ready.
Has third party cookies off by default you can opt in the turn them back on and Facebook blocks third-party cookies and so that the only browser that still supports.
For third-party cookies is the browser that’s owned by the largest advertising Network in the world which is Google.
And they have now announced that they’re going to be eliminating third party cookies in early 2022.

Scot:
[8:41] How about Microsoft with ie or Edge I think is the official new name of their browser are they have they already.

Jason:
[8:49] Here’s what I’m getting into a slightly gray area there are two flavors of edge there’s kind of Microsoft’s old browsers and the modern versions of edge are based on chromium.
And I believe but I’m not certain that the that third-party cookies are not.
Have not been depreciated in any Chromium browser as of yet but I could be I could be mistaken.

Scot:
[9:21] Okay and then give us an idea of the scale of this like if third party cookies all went away.
How many users are being tracked with them and you know what are some of the you mentioned what’s classically called retargeting that seems to be like squarely in the cross hairs here but what are some of the other things that would be
if I if I do a Google CPC at is that going to be impacted by this.

Jason:
[9:47] Yeah so.

[9:50] So scale wise as we sit here today in this moves around a little bit but as far as about 19 percent of the worldwide browser share so third party cookies already don’t work there,
Firefox is like 4% third-party cookies don’t work and chrome is about 64 percent so it’s it’s.
Third party cookies have been going away for a couple of years I think this started in 2017 that Safari started turning off some third-party cookies and.
When Chrome turns them off like they will essentially be dead,
the turnoff has been very graceful so far because like Safari didn’t even just say all third-party cookies are off what they said is third party cookies are going to have a very short life span so maybe they used to live forever,
now they automatically get deleted every two weeks and then they automatically get deleted every week so we’ve kind of had this,
slow gradual erosion of third-party cookies but once Chrome turns them off.
The expectation is that nobody’s going to bother to use them because even if there’s some Niche browsers that still leave them on or a few people opt-in for them they’re just not going to be.

[10:58] Ubiquitous enough to be very useful for advertisers and so so yeah when you think about the use cases for those third-party cookies,
one very definite one is the retargeting add that we just talked about that you’ve got something in your cart and you didn’t buy and now I as a merchant can buy ads on other websites you go to to advertise that item right so that’s a highly personalized 121.

[11:22] The what you may not notice is there’s a much more mild version of that that’s happening to you a lot more right so.

[11:32] Lexus wants to sell sell you a car and so they want to show you Lexus car ads right well,
one of the best places Alexis could buy a car at would be on Car and Driver webs.com right because.
By default the majority of people on car driver.com are car enthusiasts there they’re more likely to be in market for a new vehicle and so you know the.
One of the most affected places I could place an a car ad would be on a car Enthusiast website.
That’s also the most expensive place to buy a car ad right and so maybe.
Dubai some car ads on that site or maybe I can’t afford any car ads on that site but I’d like to advertise to car enthusiasts even though I can’t afford the the car and driver ad rate right,
so what third party cookies let me do is say I would like to buy an add-on cnet.com.

[12:31] For people that have previously visited car and driver.com right so it’s not a personalized ad it’s not a unique add to Scot Wingo,
but it’s an add to a cohort of car Enthusiast and I probably don’t specifically say I want to buy,
visitors from Carmen driver.com I probably say I want to buy ads from anyone that has visited anyone of a bundle of car enthusiasts websites.
So so there’s a ton of ads you see on the the the web that are lightly targeted.
Based on your previous browsing Behavior.

Scot:
[13:09] Right and the so they’re kind of like these real-time options right so someone’s going to see net and CNET says hey
I’ve got a pageview coming up here from this this cohort you know that we’re going to call car buyers who wants who wants to pay for this person and there’s like a little mini auction that goes on that’s kind of how the Ed ad networks work right.

Jason:
[13:28] Exactly and so they’re highly efficient they get the maximum amount of money they can’t that the market will bear for all of those ads and by the way.
Well advertising people love these and AD Network to have sewing these ads like it’s it’s debatable how effective they are because in my hypothetical example you’re never going to buy a Lexus.
Like I like I know you’re a Tesla guy the fact that you go to turn car and driver doesn’t actually mean you have a greater affinity for buying a Lexus if you see a net.

[14:00] But that’s the supposition and in all of these ads so they’re more likely to be more more buyers in that pool so that they like their clearly has some efficacy but sometimes people go overboard and thinking about how effective they are.
Um but third-party cookies are useful for a couple other use cases as well,
um so so one that I suspect we’ll talk about a lot later is our friends at Facebook right and Facebook invented one of the most evilly genius things on the web,
they invented this like button and so you know when you’re on Facebook you see these these like buttons you can click for various content to say you like it and they’re a bunch of reasons that useful for Facebook.

[14:40] Facebook conda bunch of other websites in also having a like button on their website right and almost every time you see an article there’s probably a like button that you could click on that article.
And guess what that’s doing like that’s putting data in a third-party cookie that Facebook can read.
And so it actually gives Facebook a ton of insight about how Facebook users behave.
All across the web and so Facebook absorbs all that data and they can use it in two ways they can actually sell ads on.
Properties other than their own and both Facebook and Google do this so they sell ads off of their their endemic properties and Those ads are highly targeted just like on their endemic properties,
and they’re targeted using this third-party cookie metaphor.
But then also Facebook is collecting a bunch of data that they put into their machine learning models and learn more,
how customers behave and what their propensity to buy and do certain things is so one of Facebook’s most popular.
Add products is this thing called a look-alike audience and so essentially you go to Facebook and you say.
I’ve got a thousand customers it gets Biffy that are my most valuable customers.

[15:58] And I would like to buy ads that get shown to people that are exactly like those customers.
And Facebook says great give me their email addresses and they look at the you you hand them your email addresses for your thousand favorite customers and they use a.
Super secret Black Box algorithm of machine learning that they run that through they find those users which they likely already know those users to through all of these these various Network touch points.
And then they say what similarities do they have with the other billion users we have on Facebook and they.
They find you a gentleman we 50,000 more customers that are probably pretty similar to your thousand best customers and then they run a really expensive auction to get you to buy.
Ads targeting those those customers and so even if that ad shows up on Facebook and they didn’t need a third party ad to show that a third-party cookie to show that ad.
They relied on a lot of data they collected from third-party cookies in order to build that look-alike audience in the first place.

Scot:
[17:05] Got it
so when I say give me a look like audience they’re not just saying okay it’s you know females that are 22 to 40 their the demographic they’re saying and they also go to these websites and they also you know,
login to so there that 3p data the third party cookie the first party stuff they know already like what you’re doing on Facebook but they’re also tracking all that off Facebook activity and that helps them build a better profile.

Jason:
[17:32] Exactly so like like a dumb or programmatic at is to just Target the ad based on the demographic or psychographic I want to.
Buy ads for people that live within you know in a geography where gets biffy’s offered right I don’t want to waste money running ads and geographies in the few geographies where there’s not a good spiffy yet,
so that that makes sense as an ad that super simple it’s just a kind of a hard rule show that in these zip codes not in these zip codes,
um but maybe you know people in a certain age range or certain gender have a better propensity or or even a certain income bracket or something like that you know you can,
you can Target based on all these apps are Buttes and and most of these at networks offer hundreds of demographic and psychographic attributes,
but the look-alike audience is even fancier than that they they won’t tell you what goes into the look like audience.
It’s more likely to yield customers,
that behave the same way as the customers you give them then just a demographic or psychographic profile would get you.

Scot:
[18:37] Got it.
Okay so that’s good setup so third-party cookies are under assault and we have you talked about idfa it so Along Comes This idfa and this is kind of like step I don’t know six to ten somewhere in there of a multi-step
Journey where you know more and more privacy issues or initiatives are limiting,
not only cookies but any tracking so maybe give us a little background on these these these other things that have kind of led to idfa.

Jason:
[19:09] So so again I’m trying to avoid the acronym soup idfa is a.
Is an acronym from Apple and it’s called the Apple identifier for advertisers.
And the this is something that’s specific to mobile apps in the way to think of this is It’s a,
a unique serial number for every mobile device that has Apple.
Apple’s operating system so some people like to call this like a nice metaphor for this is It’s a digital license plate so that see you know people can identify.
Your car uniquely when it when it drives drives through the mobile echo system,
um the of course your device has a unique number on the modem called the MAC address which is the actual leg serial number of your modem and you have a unique number from the wireless carrier,
um so but those numbers it’s been illegal for for.
App developers to use for a while like the because of privacy concerns and so and so the idfa was invented so the Apple would have a unique number for every user the advertisers could use and marketers could use.
But that a user could change or delete or opt out of if they wanted to write like you can’t delete your your modem serial number which is why I advertised are not allowed to use that but you can and have been able to for a long time.

[20:37] Opt out of having your idfa be public so by default your idea phase public everyone can see it you can in fact opt-out and and,
allegedly about 30 percent of Apple users opt out of idfa so so today about 30% of users already have turned this off,
um but they had to know how to dig into the Apple settings and turn it off,
it said the big change that Apple’s talking about is instead of making idfa opt-out they’re going to make it opt-in which means everyone that wants to use the idfa in their mobile apps is going to have to,
explicitly as your permission before they do that and I know you have some questions but side note.
There’s a an exact equivalent that Google offers for the Android operating system.
And it’s called Google Play service ID for Android which you’ll hear This Acronym way last but it’s it’s GPS a d ID so.
Apple and Google each have a yeah digital license plate and Apple has some time last year Apple announced that,
sometime this year and probably March or April is the the latest date they’re going to Pivot to from opt out of that digital license plate to opt-in for that digital license plate.

Scot:
[22:06] So that means on my so they recently did a change on my iPhone where you know I would,
the default was you would share your your your location for example the GPS and then it got like.
Now for example it will very occasionally pop up and say hey this apps tracking where you are do you want to allow that never
just while it’s running or always so is that going to be what the user experience is down the road I’m going to some I’ll be using an app and it will say hey this app is tracking you do you want to allow it or not is
is that kind of what.

Jason:
[22:44] So if you were starting in in iOS from scratch you buy the new device you and you install that you know from scratch,
every time you installed an app that wanted access to your your digital license plate your idfa,
um a a requester would come up saying this app intends to do x y and z.
Do you allow tracking or not allow tracking and there’s some controversy over that language so we could talk about that later if you want,
um so that’s how it would work on a go-forward basis but as you pointed out,
you likely already have a phone that has hundreds of apps installed on it and you’re likely going to upgrade to this new variant of Apple’s IOS 14 when it comes out,
and and you have a bunch of apps where you by default already opted into idfa so the way Apple handles that is over some short grace period,
every time you try to use one of those apps,
it’s going to reconfirm that you’re still okay with idfa being turned on by popping up this requester and saying,
Facebook has been tracking you across all the mobile apps you use on the website do you want to continue to allow them to track or do you want to disallow it.

Scot:
[23:59] Got it okay so just to reorient a lot of the cookie stuff is really kind of browser-based a lot of this this idfa and these
these little digital license plate you things they’re more app-based but they’re both under pressure and the idfa is essentially the same as getting rid of third-party cookies but.
Way abstract use that is that a.

Jason:
[24:21] For iOS yes.

Scot:
[24:22] Fireless got it and this is this is material because you know we see these stats all the time that you know over half of e-commerce you know
transactions now I guess our mobile and more than 60 70 percent of traffic is mobile and then you know iOS is something like
60 70 % of e-commerce for some reason it over index is even though you know there that’s about I think,
Android has higher market share iOS has higher e-commerce share is that.

Jason:
[24:54] In general worldwide shares about 50/50,
between Android and Apple but Apple users 10 in a variety of ways to spend more money so from a consumer standpoint they’re more valuable.

Scot:
[25:10] Got it and then I think you said it in there but this is going to come out in Spring of 2021 it’s going to be a part of a new 14 iOS 14 release,
I heard today someone say end of March so maybe that’s maybe it’s coming pretty soon.

Jason:
[25:26] Yeah it’s the beta is out
so this Behavior like developers and even if you’re not a developer I think you can now install there’s an open version of this beta so it’s just a matter of when they push it and they haven’t announced the exact push date but it’s you know given that,
that it’s in open Beta right now it can’t it’s not going to be too long.

Scot:
[25:48] Yes so our listeners are out there and hopefully they’ve stuck through this and so they’re kind of thinking what’s this mean for me.
So number one third party cookies a lot of them rely on that but then number two a lot of us in the e-commerce ecosystem and.
Full disclosure this is true it’s Biffy.
You know it seems like the Google type of AD spend will still work pretty well because you got your keyword and all that stuff’s pretty linear if you will.
But it seems like this could really break Facebook because Facebook so you know,
Facebook’s largest shares through the app there’s some bazillion people logged into that app all the time every day doing a lot of activity and when I say Facebook I’m including Instagram in the whole family there and you know so now.
Now either Facebook won’t be able to track,
totally or there they will be hobbled because they’re no longer able to use a bunch of other data so seems like this will decrease the efficacy of e-commerce people that are using Facebook as a channel is that,
is that kind of how it all ties together.

Jason:
[26:56] Potentially I think it’s definitely fair to say that Facebook is kind of that odd man out in all these games right because essentially we haven’t really.
Explicitly said this but there’s there’s this interesting conflict between two popular Trends right right,
there’s a there’s a popular privacy Trend in the world where users are saying we should have more privacy and big corporations shouldn’t be allowed to do a bunch of stuff with our data and monetize us without our permission right so there’s kind of you know
a lot of laws that have been passed in California and Europe that you know kind of impact how we all do business on the web that are more privacy Centric and so you,
um and Google Apple and Facebook have all been sued,
um for violations of these privacy laws right and and some of the things they’ve explicitly been sued for are these mechanisms like third-party cookies and idfa advertising,
and so one way to avoid getting sued is to,
make these more privacy Centric changes right and so you know if you asked them if you ask Google and and apple why they’re making these changes it’s because.
Because users want privacy and we don’t think that you know these things are the right thing to do would be there kind of.
Like not completely credible self-serving.

Scot:
[28:17] Yeah they want to know legislations coming and they’ve kind of want to get in front of it like you can either you can be legislated or you can solve.

Jason:
[28:24] And that is for sure the talking point and that it has the added advantage of being at least partially true right,
but the the second huge Trend in the world the I know is your favorite topic of all times is antitrust right and,
like are there certain companies that have this monopolistic power and they’re so powerful that they can do things that aren’t in a,
in a consumers best interest and there are a lot of people that accuse.

[28:52] Apple and Google of using their their alleged Monopoly power,
in in this privacy dispute right right because for example,
Google the main Google ad product is buying ads that show up in search results on Google right and those are not impacted by any of the changes we just talked about right if you type Lexus into a search term,
Google can show you a Lexus ad and they make a fortune.

[29:24] Doing that right and so they’re they’re collecting unique information about Scott searches and.
Selling ads to advertisers based on your search Behavior,
um what they’re what they’re saying is other people shouldn’t be allowed to do that using web browsing behavior in the same way we do it for search Behavior right and,
um a lot of people would say Google built this huge business they that business enabled them to get a ton of traffic and now that they have a ton of traffic and users are locked into their echo system,
now they’re making it way harder for anyone else to come behind them and do what they did right.
Apple equally like one of the kind of Nefarious things and all this is Apple,
sells ads you can buy an ad in the App Store.
Shows up in search to try to entice users to install your mobile app that you then make money on right and,
the number one place you’re competing with for that ad is an ad on Facebook to get you to install an,
and so what is Apple doing they’re making it way harder for Facebook to sell an ad to get you to install an app but it’s exactly.

[30:39] Equal I mean it’s exactly as easy as it’s always been for Apple to sell you that ad and so,
the there’s this weird conflict between antitrust and privacy and apple and.
Google are both rapping their themselves in the flags of privacy and potentially getting a little more smelly an antitrust,
and Facebook is the odd man out here right because,
privacy is controlled by the echo system the browser echo system in the mobile app ecosystem right so Google is the big winner because they have a mobile app and a browser the biggest browser,
um Apple has the most valuable mobile ecosystem Facebook has neither right so they’ve been a huge beneficiary of,
of programmatic ads and tracking consumers to create better add products and monetizing their customer base and now they’re their Destiny is the least in their own hands because,
all of that data you know is is going through these these doors that are controlled by.
By their there sometimes Rivals Apple and Google and so you know one way I like to talk about this.
These companies built these huge businesses and they’re trying to make it harder for people to follow in their footsteps it’s kind of like they climbed up a really tall ladder and now that they’re the top of the hill they’re pulling up the ladder behind them so that no one can follow them.

Scot:
[32:07] Yes so Apple and Google or winners in this because they just control so much and then Facebook is going to be under pressure but there.
Ginormous so they’ll be fine but it’s you know
there’s an argument to be made it will stifle innovation in this this whole world because you know it’s going to get it almost impossible for another ecosystem to be born at this point because the new rules favor the the existing folks.

Jason:
[32:33] Yeah so the way they think of that is definitely Facebook is a loser compared to Apple and Google in these changes but the only compared to those two compared to anyone else,
Facebook has this huge Advantage because they have a ton of their own users and they still get to collect first-party data about their own users when they’re on.
Facebook great so so a way bigger loser would be Conde Nast like someone that produces content and tries to monetize that content through ads,
the doesn’t have near the user base that Facebook has right so all of these content publishers.
Get more hurt by this than Facebook does and who gets more hurt than any of them is,
some new startup content Venture that that you know is going to be born tomorrow and it’s going to be much harder for them to build their business than it was the incumbents.

Scot:
[33:23] Because the Publishers are almost all getting the optimization of their ads through either an app kind of a thing like we’ve talked about or through third-party cookies so they’re getting kind of the effectively ad-supported content is going to be under a ton of pressure.

Jason:
[33:38] Exactly and and that’s particularly where yeah the third party cookies come in is the.
A lot of the ads you see on all those Publishers are placed by Google or Facebook using these look like audiences and and the third party cookies so that’s one of the.
The services that gets be diminished,
as third party cookies are less popular and increasingly people are consuming a lot of content and news through mobile apps,
so they would use the idfa to do those same services and and so the all of those things are breaking if if you were a mobile app.
Um that that monetized yourself by selling ads in your mobile app as many games for example do.
It’s the ads you can sell are going to be way less valuable after idfa is opt-in than they are today and so like yeah.

Scot:
[34:33] Yeah how about user behavior let’s say I’m Best Buy and I have an app out there and I’ve got all this cool tracking where you know.
Maybe log in and out who you are but maybe you don’t log in and I try to do some personalization or something or even I have a little ad Network inside of there what’s going to broke break in the Best Buy app if someone
this idfa thing goes into effect I get that question and the way they’re working the question it’s essentially like you know do you want to sell your soul to the devil yes or no so so I assume a lot of people are going to say no do you have a point of view on how many people will say yes or no.

Jason:
[35:07] Yeah so it’s all speculation and in the beta the the language has changed a bunch of times and so how,
the language matters a lot in the likelihood of opting in,
um so for example like same question it’s the same idfa question if I say this website uses your behavior across the web to improve your customer experience can I continue,
um

[35:34] A lot of people will say sure but if the if the question says this website tracks you across a bunch of other websites and uses that to sell ads to you.
Um Can can they continue to track the way you’re going to say no it’s.
So so the vernacular matters a lot it started out in these betas more friendly and it’s getting more overt.
I don’t think that that we’ve landed on the final language I actually do believe that in the release the Publishers going to be able to make a case for why you should opt in so I think they’re going to be able to provide some of the language,
but the text on the button they don’t get to control and the text on the button right now is pretty negative it says.
Wow to track it doesn’t say like enable experience or anything like that it says like allowed attract and viscerally people don’t want to get trapped,
so today the estimates are that about seventy percent of people have idfa turned on because you,
it’s opt out you’d have to opt out to not do it the.

[36:49] The speculation is that only 10 or 15 percent of users will click allow to track now.
Some of that is Chicken Little saying the the sky is falling right like Facebook is saying no one’s going to opt into that,
because they’re arguing in favor of changing it and not doing it right and so they’re trying to paint the most dire version of this for now I don’t know if they really believe that diversion or not but that that that’s kind of the order of magnitude we could go from.
Fifteen percent of the mobile apps having users that are identified or 70% having apps that are identifiable to 10.

Scot:
[37:28] Got it okay back to my Best by example sorry so so now I’m Best Buy I’ve spent billions of dollars in this awesome app and
yeah I pop up this thing that says hey we’re going to try to offer you a custom experience and then the button says allow tracking then you know most people say no
what’s going to happen to my Best Buy up like what’s you know what am I going to lose as the retailer.

Jason:
[37:51] Yeah so the in the app a couple of things like you.
You there maybe retargeting app ads in some mobile apps right so maybe you read The Wall Street Journal in a mobile app.
Maybe you read it through Apple news feed or you read it through Google news or some other app,
um their best by may have popped up a retargeting add-on that in that mobile app when it sees that you had a Sony PlayStation 5 in your box and they finally got them back in stock.
Hypothetical because I know they don’t have any the.
So the their ability to do those retargeting ads in other apps goes away the,
but the bigger deal I would argue for retailers and their mobile apps is,
the the amount of insight they get about their users goes away right so at the moment when your opted in and you’ve installed the Best Buy app on your phone Best Buy can use that idfa to see what other apps you run,
and so they can build.

[39:04] Profiles of you that they put in their customer database what they would call their CDP their customer data profile,
that you know say hey Scott is a Best Buy Rewards member he has the Best Buy Mobile app installed and we also know that he spends an awful lot of time in Pokemon.

[39:23] And so that they may find other hypothetically speaking of course,
and so they may find that like oh there are other other people in Scotts age bracket that are also rewards members and and spend a lot of time in Pokemon do this and so.
They could use that in a whole variety of ways so it gives them,
less visibility about their users I would argue that the third-party cookie changes more material for a wholesale retailer like Best Buy than the idfa changes because just to be honest.
Outside of a few retailers it’s a very small percentage of a Retailer’s traffic comes through a mobile app retailers haven’t been super successful at getting.
Getting their mobile app used but if you’re a publisher and particularly if you’re a gain in the game industry,
um the or if you’re in advertising and particularly if you’re advertising for installation and mobile apps those are all the.
The segments that are likely to get most wall up by idfa.

Scot:
[40:29] Cool that is a good segue because it wouldn’t be a Jason Scott show if we didn’t talk about Amazon.
So Amazon is the one retailer you know you and I are we get a lot of the data and when you look at the comps core data
their app is kind of in the pole position it’s always the highest use retail app they’ve said,
think publicly that you know over half of their volume comes from the Apple app or the Amazon App what’s the impact to Amazon on both the app side and then also if they lose this third-party cookie thing what happens to Amazon.

Jason:
[41:06] So there are negatives for Amazon in both,
so again because they have way more mobile app users then than others they get to they’ll lose some insight that they’re gaining right now about a big chunk of their customer base,
um they do run a bunch of ads all over the Internet and so they’ll have a little less visibility about how those customers are behaving on on third-party sites but,
all of that is outweighed by the fact that.
It actually makes buying an ad from Amazon way more valuable right so when when.
The idfa and the third party cookies are really about.
Um using behavior on one property to Target a user on another property,
and fundamentally when that practice goes away then the best advertisers are going to be the ones that have the most eyeballs on their own properties,
and the the cust the companies that know the most about those users about those eyeballs right and so you think about.

Scot:
[42:22] And they have ads inside their property to it.

Jason:
[42:24] Exactly and exactly so those those are called first-party ads and like they’re not affected by any of these changes so Amazon can still use.
Every browsing behavior and purchase Behavior you’ve ever done in the Amazon Echo System on their website or their app too.

[42:43] Run their own ads to you when you’re on an Amazon property or run any other advertiser’s ads for you while they’re on their own property right and so what happens is,
when the the open internet becomes harder to advertise on because of all these changes.
Um you’re more likely to want to buy ads in a Walled Garden where the ad network has a bunch of data about their users so you’re more likely to buy an ad that shows up on Facebook.
For Facebook users you’re more likely to buy a search ad on Google in their first party echo system and you’re way more likely to buy an ad on Amazon,
because you’re your ability to do cross-site advertising on Conde Nast content sites gets diminished so.
I would I would argue that well there’s some I’m sure there’s some negatives for an Amazon and some annoyances net-net,
it’s going to dry consolidate more advertising on to Amazon and and help them more to a lesser extent,
it actually makes it more appealing for other very large retailers to lean into their own advertising networks for that same reason so I would also argue,
Walmart for example is a beneficiary,
of this trend and you and we’ve seen them in the last year making huge investments in selling selling their ads they’re not as successful as Amazon.

[44:07] Their upside is actually as big or bigger than Amazon because they can also sell ads and now do,
two customers that walk in a Walmart store they show ads on the self-service checkout and they show ads on the TV wall and you can buy programmatic ads and all of those things through Walmart connect which is kind of their version of,
Amazon marketing.

Scot:
[44:31] Publisher thing was interesting because it almost made me think well if I’m Amazon I go to Conde Nast and say Let me let me host your content and I can actually,
monetize it for you and you know I know Google and you know to some extent Facebook do that through that that accelerator you thing what does that three letter acronym for it where they do it because they claim it’s faster right.
But I wonder if you think you think that’s going to be part of what this does is it starts.

Jason:
[45:00] It does it gives them leverage to keep more users on their echo system and it potentially Force other people to,
Syndicate experiences and content to them that otherwise might not want to do that right and so,
for sure like Amazon is a significant Publishers you know like they have their own you know the wildly popular TV channel and am in Prime video,
and now they’re doing live streaming video and they’re doing all these these and twitch that they already are a publisher so it’s it’ll be Supernatural for them too,
to leverage this endemic Advantage the another Super interesting impact along those same lines is,
today Facebook was perfectly happy to run an ad on its Network and then send you to a Shopify site to buy something.

[45:51] Right because they using third-party cookies they could actually know that you bought that thing on on the Shopify site and tell that Advertiser that they had worked,
um and and they had a nice little Echo System well with third-party cookies going away it’s actually way better for Facebook to say you know what we should be selling stuff on Facebook and so in in my mind.
Increases the priority on Facebook to capture the Commerce activity,
on their platform because otherwise they look at Amazon catch nipping at their heels and saying oh my God
Amazon’s running a lot more about their their consumers in their Walled Garden and we are in our Walled Garden and we’re going to keep leaking advertisers from Facebook to Amazon and so I think.
Facebook had already figured this out but I think this like really accelerates Facebook’s need to win endemic Commerce and I would argue in the long run,
that’s that’s not super favorable to Shopify because there’s a ton of the D to see companies that,
that have been most successful on Shopify like their primary source of traffic is buying ads on Facebook and increasingly Facebook is going to want to say hey let’s close those sales on Facebook.

Scot:
[47:04] Yes one of the reasons I really want to talk about this because I started to read some articles that are.
And I can’t tell how Chicken Little they are but they’re essentially saying you know look a big chunk of the Shopify world is going to
be the attacked so supervised getting attacked from Amazon we’ve talked generally you know we’ve talked about this and you and I have different opinions of how,
how that’s going to happen but I think I think we all agree that Amazon has Shopify in their sights but now you have effectively Facebook’s been a good partner for Shopify,
but this change caused by Apple has a domino effect that if I’m now Facebook I want to cut Shopify out of that because I want to own the checkout so that’s another side and then
you know.
Some large percentage of Shopify sales are driven through these DMV bees and these brands that are by influencers that are really living off of either the third-party cookie to track that stuff,
or the you know the idfa changes it’s an app it’s going to change pretty dramatically is there a way to.
First of all do you agree with that and then second you know is this a 2% thing is this like half of half of Shopify I know they don’t disclose it but I’m just kind of wondering.

Jason:
[48:21] Yeah I don’t think there’s any way.

Scot:
[48:22] Scale of them packed.

Jason:
[48:23] For really know and and again like this I think the.
The force behavioral changes are going to be pretty significant,
whether that Force Behavior change like really Wallop Shopify or not I think is even harder to predict and like again at the moment like everybody’s crying pop or right and it’s a little bit like,
everybody who’s under antitrust investigation you know says oh my gosh if we’re forced to split up like it’s going to be the worst outcome for consumers ever,
um and internally they may or may not really believe that but they want to paint the most dire picture so that you know they can mitigate what happens to them,
a lot of that’s happening right now right so I you know Facebook is saying hey an individual advertisers ad Effectiveness might go down by 50% because of this change.
So

Scot:
[49:16] But it’s Amplified because they’re trying to make the same worsens.

Jason:
[49:19] Yeah but they’re they are painting the worst-case pit picture and what they really mean is,
a Facebook ad that’s not on Facebook right which is like seven percent of Facebook sad so,
so seven percent of their ads might go down by 50% and but the as they’re on Facebook might be a little less effective because Facebook gets a little less data but it’s probably not as bad so.
I think it’s hard.
Um quantify these things but I do think it’s it’s potentially in a hate to use this word but like I think it potentially is a paradigm shift for some of these things and just just.

Scot:
[49:57] A paradigm shift we need an audio for paradigm shift.

Jason:
[50:00] Yeah we’ll have to get one of those but I do I think fundamentally like you have this open web and there’s this like notion of,
of interoperability between multiple sites and experiences across multiple sites and and as these privacy changes get locked down essentially what it does is it says.
The best most effective experiences are going to be,
for users inside of a Walled Garden and an inside of a large well-established wild garden the got built before these changes were implemented so it’s really favorable to the incumbents,
it’s really favorable to the the kind of fang.
Um guys of you will and I and you know they were already winning but I do think this this makes it harder to imagine.
You know some some new version of Instagram emerging and growing really big really fast or Tick Tock you know or you know monetizing as quickly or any of those kinds of things so.
It’s.

Scot:
[51:00] Do you think it’ll be like a severe enough that like it’s interesting you mentioned Fang because the in and Fang is Netflix and you know they have a massive amount of first-party data right so you know are they going to add like some publisher e kinds of things because they have all this data.

Jason:
[51:15] I bet you they are all all of the good walled Gardens are right now saying hey some of that money that’s getting broken that was out in the rest of the internet like how do I get you know it’s more than my fair share of that.

Scot:
[51:27] Right so we got some good stock picks from Jason straight away here.

Jason:
[51:33] Yeah yeah side side out yeah I’m the world’s worst stock picker.

Scot:
[51:39] Don’t take Financial advice from a chief digital retail idfa officer.

Jason:
[51:44] Yeah you probably shouldn’t even take like digital Commerce advice from you for sure should not take stock advice.

Scot:
[51:50] But here you are listening this show okay.

Jason:
[51:52] I put all my money and get spiffy franchises.

Scot:
[51:55] Awesome summer okay where do we go from here so I think that’s all interesting but let’s project forward a little bit you know cookies they’re kind of on their deathbed mobile app tracking is all this.
Open internet going to more clothes internet what were some of the Alternatives that are people and then I saw Google also just announced not only at the Chrome level but just generally they’re going to get rid of.
Tracking old school tracking.
But then they talked about this new thing which is kind of like some machine learning thing will just kind of assign you it was even keep your like because the machine will just decide.

Jason:
[52:28] Yeah it has an awesome acronym but I’ll wait to unveil it for a.

Scot:
[52:31] Okay alright where do we go from here and be sure to highlight all the awesome acronyms.

Jason:
[52:36] Yeah so there’s a couple of alternatives to cookies right like so what.
The fundamentally the cookie got processed in a server and so what Google is saying is we think I’m more privacy Centric way is,
to keep all the personal data on the on the browser and never send it to the server so so a lot of these ships are too kind of move from server based solutions to browser-based Solutions,
um
the and I’ll come back to Google specific alternative in a minute as we already talked about like what this does a ton is push people onto walled Gardens for all of these highly targeted advertising networks because they get to all.
Um work with their first party data and nothing really changes.

[53:21] There are a bunch of third parties that have what I like to call real ID systems and so.
Side note cookies always suck they were they were highly imperfect we treated them like they were a person but they weren’t they were a,
a specific browser and a lot of people ran three browsers on their laptop and then they also had a different browser on their mobile device,
and oh by the way they may have set cookies to get deleted every two weeks or whatever like so cookies were pretty broken before and could only track you on the web,
so the big evil marketing Geniuses would say,
hey let’s make our own serial number for Scot wingo and let’s collect a ton of data about him,
um across all of his devices and let’s by data from the Publishers about how he behaves on the publisher site and let’s buy data from the credit card companies about how he spends money and we can build this huge.
Um database about Scot Wingo not some random cookie but about Scot wingo and then we can use that data to Target Scott so,
said the big evil ad tech companies have have these real ID systems and so.

[54:33] There’s a company called trade desk that has the unified ID they’re partnering with Walmart now live ramp is a big data provider and they have this authenticated traffic solution,
and my evil corporate overlords own a huge data provider called Epsilon and we have a product called core ID so so a lot of us are saying hey we have a better idea system then,
then idfa or third-party cookies anyway and and side note Google,
published a letter last week saying we think like we’re not going to ban those approaches but we don’t think those approaches are very customer privacy Centric and we don’t like them,
so there now is a dispute about the future of those but that you can buy those services from from any of these marketing agencies.
In the short run they’re certainly going to benefit from the these more popular options going away.

[55:31] A lot of people used to do what’s called browser fingerprinting which is they used a lot of signals from your browser to identify you without your cookies that’s mostly been banned by privacy laws so we won’t see a lot of that.
Um there’s increasingly this thing called clean rooms where a publisher and an advertising Network might bring their their uniquely personally identifiable data together too,
too kind of a,
a safe room that’s not on the internet and temporarily merge their data to build a targeting cohort or to build some some cross-channel analytics take the insight and then both take their data and leave so that they never kind of.
Give the other party a chance to see your steal their data but they get to marry their data temporarily so so there’s a lot of products kind of,
that are leveraging these clean rooms to do kind of batch processing now that we can’t do this real-time third party cookies and then the.
The the Google approach is to do what we what I would generally call cohorts so instead of saying hey we’re going to advertise uniquely to Scot Wingo because we know he’s a car Enthusiast and we’re going to show him Alexis.

[56:42] Google is going to build a cohort of people that it thinks are in the cars.
And it’s not gonna put that cohort on a server it’s going to put a store your membership in that cohort on your browser,
so an ad can pop up for Scott that’s a car ad in the car company can buy an ad for just people that have a high affinity for cars.

[57:05] The.
No personally identifiable information about Scott ever get sent to a server only Scott’s browser knows to show him that ad and so Google calls this kind of browser-based cohort,
um
a Federated learning of cohorts and they’re using machine learning to build them and so that the that F loc is an acronym flock f f loc and so Google’s,
official replacement for third-party cookies is the advertisers can buy,
ads based on on these these machine learning Black Box generated machine learning cohorts called flock.

Scot:
[57:50] Okay Federated learning of coal that just rolls right up I like Flock better than Federated learning of many.

Jason:
[57:58] The idea is just that like hey there’s going to be some taxonomy on your browser and there’s going to be a checkbox next to things that your browser thinks you’re interested in,
and then those are the things that you know they’re going to be like ads that only trigger when when your browser has one of those boxes.

Scot:
[58:17] Got it okay awesome,
so as is our custom at the Jason Scott show we’re kind of getting past time but and you’ve talked about a lot of implications but it’s probably a good
kind of summary to kind of walk through all right you know so listeners out there they are they’re loving the Deep dive
what’s this mean for e-commerce world and then also the larger add world and the internet.

Jason:
[58:42] Well so I think it is likely that a lot of digital ads a lot of programmatic digital ads are likely to be.
Either a little or a lot less effective than they were before and so the net impact of that is the amount that an Advertiser should be willing to pay for one of those ads should go down so the.
So CPM rates for advertisers will go down and in general what that means is if you built your business based on selling ads you gave away your game for free but you show Dads in the,
in that game you gave away your content for free on your new site but you sold ads in that content.

[59:21] That ad based business model is less attractive than it used to be so I suspect,
that one impact we’re going to see is a lot of people are going to Pivot from ad based business models to Alternatives right so that meat might mean.

[59:36] Some newspapers that were on the fence about ad-based or pay walls are more likely to move to pay walls because,
the ad model Works glass it means a lot of people that use Dad’s to find you and sell you one thing I’m more likely to focus on.
Customer lifetime value they’re more likely to want to sell you a subscription they’re more likely to want to lock you into a platform because all of these kind of,
one-time ad-based sales are just more expensive less effective than they used to be so I think those are kind of some of the,
the key changes I do think this cleanroom thing you know continues to grow and overall the big winners are the people that have the most first-party data have the most traffic to their own property so the walled Gardens the the big retailers,
ten to win.
You know I think this privacy versus antitrust thing is gonna you know get really ugly and play out in terms in all kinds of governmental actions and legislative actions and things and who knows how any of that,
that plays out.
And I doubt Facebook gets creamed by any of this but they you know they do probably slightly lose to Apple and Google and all these changes.

Scot:
[1:00:56] Well it is happened again we’ve used up all our allotted time
for listeners that are with us and and enjoying these deep Dives we would love to get your review,
you know the the best place to review this is over on iOS in the Apple podcast listener so even if you listen somewhere else head over there leave us a review we would really appreciate that if you like this kind of content
that’s what keeps us going Jason appreciate having you on the show
this week if people want to track you on the internet or learn more about this this idfa topic work in the where would you send them.

Jason:
[1:01:34] Yeah well they should listen to the Jason and Scott Show podcast first and foremost but you know you can also always find me on Twitter under under retailgeek and,
just a quick disclaimer the Jason Scott showed doesn’t track you or know you in any way and never will so.
Exactly so we but we sure do appreciate you listening and until next time happy Commercing.

Mar 4, 2021

EP256 - Colin Bryar former Amazon Chief of Staff and author of Working Backwards

Happy episode 256, our penultimate 8-bit episode! (we’re going to have to migrate to 16-bit for next week).

Colin Bryar is author of “Working Backwards: Insights, Stories, and Secrets from Inside Amazon” (affiliate link). This is the definitive book about the unique processes, programs, and culture implemented at Amazon which have enabled its remarkable track record of speed and innovation. Colin had a 12 year career at Amazon and served as Jeff Bezos technical advisor (chief of staff) shadowing Jeff in all meetings for a year. His co-author, Bill Carr ran Amazon Prime Video and sat on Amazon’s S-Team. These two had a front row seat to many of the most seminal moments in Amazon’s history.

If you work with Amazon, need to compete against them, or just want to duplicate their success in another field, you owe it to yourself to listen to the episode and then read Colins book.

Episode 256 of the Jason & Scot show was recorded live on Wednesday February 24, 2021.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 256 being recorded on Wednesday February 24th 2021.
I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot:
[0:41] Hey Jason and welcome back Jason and Scot show listeners
Jason as you know one of our favorite topics here on the Jason Scott show is Amazon their culture and different business strategies tonight on the show we are really thrilled and excited to welcome Colin Breyer he’s an ex Amazonian and co-author of the brand spanking new book working backwards
welcome to the show call.

Colin:
[1:03] Thanks for having me on the show happy to be here.

Jason:
[1:07] We’re excited to have you Scott in particular as a huge Amazon Fanboy so this is a he’s trying to be cool but this is a thrill for him.
Um
And so Colin Scot introduced you as an ex Amazonian but maybe you could tell us a little bit about your background and how you came to Amazon and what you did there and then you know what you’re doing now.

Colin:
[1:29] Sure I moved out to Seattle and 1990 and worked at Oracle for about five years I was
so consultant red wire and after 5 years I realized I didn’t even know what Seattle look like so I left Seattle and started a company with.
With two other folks Charlie Bell and Kevin Millar and what we were doing at the time so this is in 95 were helping companies
take all of their internal data and help them expose it on what was then the nascent world wide web and most companies you know
we’re struggling to do that and we worked with a bunch of larger companies out here in Seattle Microsoft Boeing and then some companies are like tear W outside of Seattle.
And one of the small companies we work with was called amazon.com
and we realized that there was a really special place so from the moment we stepped in through the door and so we decided to join Amazon and that was so I joined Amazon in March of 1998
and Amazon was only a Bookseller
just based in the US and there were probably about a hundred people in the corporate department and 500 people and total and customer service in the Fulfillment centers
so it was a.

[2:51] You know very special place in you could tell that something something was going on and it wasn’t sure if it was going to work yet but things are moving fast and customers were validating what we were doing and
the press and pundits sometimes agreed and a lot of times they didn’t but it was fun to see Emma’s on transform from they did.
147 million dollars in Revenue when I started to and now this last quarter was a hundred and twenty five billion dollars in Revenue so it’s been fun to be part of that transformation.

Jason:
[3:21] Yeah they’ve had to stretch the the cells on the Excel spreadsheet a little bit since you started and a hundred employees so I’m trying to think would you have gotten a desk that was made out of a door or or did you have actual furniture by then.

Colin:
[3:35] No I had a door desk and you know he’s still get to our desks and I was lucky enough to my the email address was just Callin to so it was a pretty small place then.

Jason:
[3:46] That’s that’s very cool and then.
You did a couple different roles in Amazon but one of them in particular is a pretty cool role and you might have if I am going to pretend like I didn’t read your book but I did you were the second person in the in that role right.

Colin:
[4:03] Yes so I started out in the software group and worked there for about five years and then I was Jeff Bezos is
the internally the roll is called the Shadow or technical assistant and externally it’s more akin to a chief of staff and so I got to spit was very very fortunate to spend.
10 hours a day with with Jeff participating in the meetings and you know seeing how.
He thought in and was planning on on building a very large organization to be what he termed Earth’s most customer Centric company.
And it wasn’t just technical issues I got to experience everything from the Fulfillment centers legal PR
the commercial group the retail groups and also she has some pretty deep dive technical issues too.
So I was very fortunate to have done that and then I spent after that I went to IMDb The Internet Movie Database is their CEO which is a wholly owned subsidiary of Amazon.

Jason:
[5:02] Yeah and as I understand it the the the technical adviser primarily entails training up Jeff in tennis to get him ready for celebrity tennis tournaments is that.

Colin:
[5:13] No that was a very small part of my job was less than a day yeah.
So yeah that that was an interesting Adventure but really that what the job entailed was two things you know when Jeff he asked if I wanted to be this next technical advisor and
you know I did rather than jump at the opportunity I said can I take the weekend to think about it but first can you please tell me what
um success looks like in this role because it’s too important of a role and I’m to take if I don’t think I can be successful in this role and he said well the first thing is you know just to help.
Jeff Lewis helped him be a better CEO and you’re making sure that the right issues and teams get in front of Jeff and.
And I could go places in the company that he couldn’t but then the second part is the way he put it is a we want to be able to model how each of us think.
So after this role ends when you go somewhere else in the company
that’s going to have a pretty good idea of his vision and your core tenants and Leadership principles and be able to move into the company so it is a rotating role and I was in that role for about two years.

Jason:
[6:27] That that’s amazing and the present your predecessor in that role was Andy Jesse wasn’t it.

Colin:
[6:32] Yes Andy was the first technical advisor and you know relied on his advice and counsel do you do too
tell me what I was getting into and you can see the phenomenal job and he’s done since then you know there aren’t too many people who get a chance to
to do this role so I realized I am very lucky to have been one of those people and you know one of the reasons bill and I decided to write this book was to talk about some of the principles and processes
that really are you know that secret sauce of what makes Amazon work.

Scot:
[7:10] Cool let’s let’s dig into the book The the book is split into kind of two parts you have
the first section which is being Amazonian and then the second one which is kind of case studies of applying that called invention machine at work
in the Bing Amazonian section you guys go into a lot of my favorite topics and sadly we only have you for an hour I feel like I could
essentially just talk about this forever but you talked about the Amazon leadership principles the six-page note that is the
kind of the Keystone of every meeting the bar raiser program
left I thought it would be appropriate maybe just started the title concept which is working backwards give an overview of what that means and you know maybe an example
don’t use AWS causal ask about that later but as an example maybe a of how that gets used inside of Amazon.

Colin:
[8:07] Sure so working backwards it’s a very specific process used at Amazon
to look at ideas to vet them and decide whether to bring them to Market be it a feature of opening up a new business
and if you have to remember one thing about the working backwards process it’s this it’s that you start with the desired customer experience and then you work backwards from that.
It sounds simple it’s actually pretty hard to do and it’s different from how a lot of organizations make decisions a lot of organizations use What’s called the skills forward approach they look at things and ask questions such as
what are our core competencies we know what are we good at what are our competitors doing.
And how can we nudge into this adjacent Market if we get 10 percent market share what’s that going to look like and you know a SWOT analysis the strengths weaknesses opportunities and threats is a typical analysis that.

[9:01] Companies use to decide what to do next but often a word that doesn’t get mentioned in that analysis at least up front is the word customer.
So Amazon decided to invert that and and say we want to make sure that the customer is front-and-center from the very germ of an idea.
And so Amazon developed this working backwards process.
And the primary tool that Amazon uses for the working backwards process is the pressure release and frequently asked questions document so it’s a type of narrative called the pr FAQ document.

[9:37] So that if anyone has an idea and again this works for something as small as a new feature on the IOS app or if Amazon is deciding to get into a whole new line of business or move into a brand-new geography
the first thing that a the person who has the idea or the team that has the idea does is they write a one-page press release so it has to be one page or less.
If which forces you to really crisply Define the idea and the press release has a couple different components one is a clearly defined what is the customer problem you are trying to solve.
And you know and that also it can take a couple of iterations that in the next part is you have to explain to the customer.
Why they might be interested in using the feature or buying the the product.
And then you go on in that press release you typically you can use a quote from a customer or if it’s a something for a partner the partner talks about why how this actually solve their problem.
And if you and so this is an iterative process once you write your press release.
You read the press release and if you don’t want to go out and buy that product or use that feature the service you stop and you rewrite the press release until you get it right.

[10:52] And then the the next step in the process is the FAQ process and you can break that up into two primary components and external FAQ and an internal FAQ.
And that external FAQ are think questions that you ask an answer that would typically go to customers or if the Press.
How much is this product going to cost.
Why should I use this product versus what’s out there on the market why should I change my behavior and what’s in it for me if I’m going to go through some extra steps to go use this product or service.

[11:25] The internal FAQ is a series of questions and answers about.
What are the tough problems that the company is going to have to solve in and how are they going to organize.

[11:36] To actually get together and solve these problems to bring this idea to Market so if some examples there could be.
Kim can’t how and can we build this product with the bill of materials that’s less than 200 dollars to get out to the market at the desired price.
Taking me technical issues what are some unknown technical problems that we need to solve.
And how are we going to organize and approach and solve these problems Legal Financial issues or
privacy issues or if it’s a sales B2B this requires your Salesforce do we use a direct sales force or we’re going to partner with someone.
And there is this is all an iterative process and a lot of ideas don’t actually make it through the end of the working backwards process.

[12:21] And the ones that do have gone through many many iterations of meetings where people weigh in you’re missing a key.
Fack you know so let’s go ask an answer that and come back next time.
And if this is by Design By the way because it’s meant to one ensure that the customer is not forgotten
but do it saves time because it saves you from moving in the wrong direction you know people talk about speed a lot is important
but velocity I think is is important in velocity is the vector a and the vector of speed and direction so this helps you make sure that you’re moving in the right direction at the beginning and conserving what’s typically
companies bottleneck resources which are Technical Resources.

Scot:
[13:09] The so it seems so then you’ve got this idea Factory right and everyone’s creating these things.
And I imagine they’re all pretty good then at some point someone’s gonna have to decide like there seems like there’s always going to be an abundance of them even the ones that you know even given that some don’t make it through.
So then does does Bezos just essentially say all right here’s the top 100 we’re going to draw here like who’s sorts these things in part eyes as I’m how does that work.

Colin:
[13:37] Looked it’s typically it goes to who’s ever controlling the the set of resources that need.
You know that are needed in order to get this done and for a very large.
Initiative or what Amazon calls a one-way door once you do it you know it’s very expensive and difficult to roll back that will float up much higher in the organization but it could be you know as simple as we want three people to go work on this new feature on the website so whoever controls those whatever the
appropriate management level is that controls those resources that’s where it gets done and you’re right in that very
most people have good ideas it’s just is this idea we’re doing is it big enough and is it in is it worth doing now those are the the types of questions that you have to ask
given the resources and constraints that the company has so for low very large projects that goes up to the.
Esteem The Witches Jeff’s you know.
Direct reports the management team but most of them are smaller than that because Amazon usually works Inseparable teams and so who’s ever controlling those single-threaded separate both teams typically makes that decision.

Scot:
[14:53] Yeah let’s so
Let’s do an example a simple one in this is Jason’s favorite let’s say house plants he always used to use this one to something that Amazon I guess wouldn’t do and now they do so so I have the idea to do houseplants I write a press release
Amazon now ships houseplants and I talked about how we have.
They arrive at your door fresh and you know a selection of thousands and you know but then do I have to tell you like how do you sighs that opportunity versus I don’t know.
You know B2B cogs are widgets and cogs.

Colin:
[15:33] Yeah so
that you first of all have to one of the questions is in the fact you have to address what’s the town that the total addressable market so how big is this idea you know some typical questions would be.
We don’t have life things in our fulfillment center right now how do we handle you know how do we handle that and you know what how long can they stay in the Fulfillment center before they need attention you know Electronics depreciate you know
some of them appreciate 10% a month plants die if you don’t water them I would so you know you’d have to address issues like that how are we going to keep our inventory alive before we get it out to customers and then
but in terms of it’s a great question about how do you balance that with a B to be completely unrelated project and.

[16:24] That that prioritization is really tricky and It’s Tricky for a couple of reasons because.

[16:30] Even out the the pr FAQ stage you don’t know
really how big of an idea this is because you don’t know customer adoption that’s very tricky to predict even if you have a great idea and you don’t know how long it’s going to take to build and deploy the
the technology or that you know the heavy lifting infrastructure to handle plants in this example and so Amazon
a lot of times what they do instead of made it making that prioritization decision they take a step back and make a resource allocation decision for given areas and for this one that would probably have been done in a yearly planning cycle
to say we are going to devote for our B2B efforts we’re going to devote this many people are you know these many organizations or groups are going to
very large now but are going to focus on B2B issues and here’s the
you know new category expansion for the the retail business and if you do that up front and then you have your the teams are at that point separated
then you don’t have to it’s hard to prioritize between apples and oranges
and so Amazon doesn’t want didn’t want to make that prioritization decision because you often get that wrong and so just taking a step back and use a different decision making tool which is resource allocation and you do that you don’t have to do that every project
you can do that once a year or once a quarter and then balance resources as more data comes in.

Scot:
[17:59] Yeah and then and then what’s the so alright I’m in the B2B group and I’ve got my you know is it,
what’s the unit of allocation for resources at people hours is it dollars is it gummy bears you have seen people do all these really weird things where they’re kind of like you know you get this mini you know
seats on a train if it’s engineering how does is there such a thing at Amazon like that.

Colin:
[18:23] Well there are you know there are some constraints and you know setting hard constraints at the beginning of a planning process actually
it typically saves iteration you know if you say hey send me all the any ideas you want your ask is going to be much bigger than you could ever do
and so setting some constraints about here’s the
free cash flow that we anticipate we’re going to have to invest back in the business some of it are just you may want to do something but
you may not be able to hire a hundred software engineers in the in the time you need to hire those people so you could say here’s our staffing and here’s our hiring rate for the year so.
We have what we have at this point in terms of Technical Resources
but it’s a combination of what it’s resource constraints and in some cases it could be dollars and some cases it could be bottleneck resources like software Engineers or data scientists
or it could be you know fulfillment center capacity so you have to know what your bottleneck constraints are and now that would be how you make those types of decisions.

Scot:
[19:28] So in my plan example I’m going to say I need you know I need the retail team to kick in and create a category for me and I’m going to need three developers to add all the attributes for houseplants and I’m going to need
a photographer to take pictures of them and I’m going to need a greenhouse outside every fulfillment center and I’m going to need a I don’t know
what is a.
Plant person to you know an expert is it kind of like that like some of them I’m drawing resources from other teams and others I’m hiring or how does that get expressed in those that process you’re talking about.

Colin:
[20:03] So for for some of them will touch other other teens and
Phantom Zone we talked about Loosely coupled teams not completely separate and independent so there are some shared resources and you know especially for smaller organizations you’re not going to have.
Illegal rep you know that for each of the small groups you’ll kind of share those
those resources across there but you would need to identify here are all the things that we need to get done and you know in terms of Transportation Logistics design and and for this those shared the pools of resources that you are going to have to
get some of those allocated for that period of time but that having been said if the issue if the the idea is big enough
um
you know you you can justify getting those resources on your own and one of the things that when a great frequently Asked question is that’s been asked several times at Amazon is
what things are outside of your control.
Do you wish that you had under your control and how are you going to organize and how would you organize to to bring those things under your control and that’s a continuous process you know if it’s your always short design resources for instance
and you work too.

[21:24] Get design resources on your own team somehow if that’s the right answer or if that Central group you needs to grow or double in size you know there’s not there’s often not one.
Universally right answer for every company but knowing what things that you’re it’s.
Amazon wants people to be control in control of Their Own Destiny and so asking
what things are outside of your control that and because it’s hard to ask people to be accountable when you don’t give them resources to get things done so Amazon tries to make sure that that happens.

Jason:
[22:01] Awesome and calling you’re being like really polite by humoring Scott but the reality is his one-pager would never get off the ground because if the
if the one pager was Amazon now ships plants that’s not very exciting the one-pager should be Amazon just shipped its billionth plan.

Colin:
[22:17] Yes yeah you have to attack it does have to be a big idea to work you know.

Jason:
[22:23] Ink I think that’s increasingly true right as Amazon becomes a bigger Enterprise those those new Ventures have to have to be bigger to be relevant.

Colin:
[22:35] They do have to be bigger to be relevant one thing Amazon is is unique is their patient you can plant seeds so some of these things take years to grow
into something big and you have to.
Yeah Jeff put this in one of his shareholders that you have to have the institutional memory to know what it’s like to go from you know a 1 million
Dollar business to 10 million dollars to fifty million over relatively short period of time that’s not going to move the needle in a hundred and twenty five billion dollar quarterly business but.
Given enough time and if the total addressable Market is big enough.
Then it is worth doing and you do need to be excited about those types of things and pay attention and to them and you know cult
I guess the seed analogy is apparently a proposed since we’re talking about house plants but Amazon is patient and if it’s big enough they’ll wait and work to get it done.

Jason:
[23:39] The so I want to Pivot a little bit the if we didn’t spell it out up front the the book is really a tool to give some insight.
Into how Amazon organizes.

[23:56] It steams and runs its business and and the structures and Frameworks that Amazon has in place to be shockingly Innovative in spite of their.
Now tremendous size and success and you present it in a way to try to help others.
Decide if and how they would Implement some are all of these things in their own organization so it’s sort of a business manual if you will.
And you you kind of go through a bunch of stuff though wieder ship principles which I think there’s 14 leadership principles now the bar razor program Which Scott and I have had several of our razors on the show is guess.
Um which is Amazon’s hiring
process but one of the things that comes up a lot in the book and that you’ve referenced a couple of times already tonight is this concept of single-threaded separable teams and sometimes referred to as though I to Pizza teams for example.
I’m wondering if you could talk a little bit because I think you were there while that sort of before that that philosophy was fully embraced and as it was implemented can you talk a little bit about.
Um how that came to be and how that has served as a Advantage for Amazon.

Colin:
[25:12] Yeah sure sure I can do that and you know the the areas that you mentioned that one of the reasons we wrote the book was because a lot of this work is you know it’s under the tip of the iceberg it’s things that people don’t see but in people ask always ask how many
Echo devices are sold this quarter or how many Prime members are there going to be and.
Well that may be interesting it’s not that helpful to most organizations and we felt that Amazon had made some significant advances in the field of management science.

[25:44] And that’s why we tried to put all of these Concepts together to say here’s how
you can take a small organization and use some of these principles some of them were inspired and you know stood on the shoulders of other companies before us
but so we tried to organize them in a way that’s useful and helpful for the reader and in terms of separable single-threaded leadership
that one was a journey
you know for instance writing narratives you can just say we’re going to switch from slides to narratives and make that change which is what Amazon did you may stumble a little bit and it takes a while to write great narratives
but that’s an easy change figuring out how to get to this single separable single-threaded leaders
was a multi-year journey and you know when I started at Amazon you know I’ve started in the software group and and
Amazon was growing so fast but it was already so large that there weren’t any there were very few commercial software applications that you could buy
to help solve the problems that we are trying to solve we are already well beyond the tolerances of most commercial software so we had to
build and build fast just in order to keep the lights on and this is in addition to opening up a new geographies or internationalizing the code base and.

[27:09] Moving into these different categories which you know they have different attributes so you got it
you have to change how its search looks like with the order pipeline looks like if you want to do a Peril you need to have size variations like size and color you know books don’t have variation so it was very easy but we realized that we’re adding a whole bunch of people
and we weren’t moving all that much faster and even worse we are spending more time coordinating than
actually doing and you know so that ratio is was getting out of sync and one of the things that Jeff is
appraisals is particularly good about is you can take a look at a trend in then project it out when what is this going to look like five years from now is he 7 years from now and
the prognosis was not good we had a tangled.
Code base and you know it was all one executable even at one point for the website was called overdose.
But and so that meant you had a you know.

[28:09] Couple hundred software Engineers working and stepping on each other’s toes someone would change something that you didn’t even know and it would break your stuff for or vice versa and then if you wanted to get something done
you often would have to control another group to say hey can you work on this you on this library and so how can you change some of these things
and we realized that what so we had a huge technical problem
we also had an organizational problem you know those same the same dependencies existed on the organizational side you’d have to go ask for resources from the design team or from the Fulfillment center team and to figure out how to
to get things done and a lot of companies what they would do is they would build.

[28:53] Better processes and we build solutions for collaborating and communicating and Jeff
did said just the opposite he said I would like to have an environment at Amazon where we don’t have to collaborate and communicate.
And we have small separable teams and we started off with the idea of a two Pizza team
and and the reason it was called to Pizza teams as because two pizzas should be to be able to feed the entire team so you couldn’t really have a team more.

Jason:
[29:24] Scot and I would have to be individual teams that.

Colin:
[29:26] Yes.
Yeah that was that exercise those left to the team owner but how much PC would allocate but Engineers don’t like to go on hungry stomachs so and so we tried separating these teams and.
But in order to do that you’ve got to change your technical architecture and you also have to teach people how to be autonomous because in this prior environment you know.
You couldn’t do anything really on your own you had to go ask so many people that it was more top-down here’s the next thing we’re doing and you know so next quarter you’re going to be working on an initiative that you didn’t even know about the quarter before it was kind of disheartening.
And so we had to untangle and the code base build What’s called the services based architecture
a lot of people do that now and you know it sounds easy didn’t really exist at the time so we’re it also inventing a lot on our own on how to build this type of architecture
and then we had to separate the decision-making process for the or two.

[30:28] So some roles in organizations like a chief product officer kind of go away
because you want those product decisions to push them down to these small separable teams you don’t want to have one person or group make all of the
product decisions and you know same thing with that engineering decision so we had to decouple and distribute that
and you know white where said it was a journey that stuff was hard to do we also had these things called Fitness functions which were basically a composite metrics that would a single metric.

[31:01] Which is a composite of individual ones that would measure the progress of a team and we realized we were spending
whole bunch time arguing over you know should it be twenty percent speed of the service and 60 percent revenue and you know and you know 20% something else and it just was a waste of time and we so we
we stopped doing that in the fitness functions and it turned out what was the.

[31:24] I would say the high order bit that made them work as their separable teams but a single-threaded leader
and the best example I can give the this at Amazon is there was a project called
self-service order fulfillment and we don’t have exciting names for some of these internal projects but what that meant is we we knew that we wanted to expose some of our functionality in the warehouse the logistics centers
to third parties and so we wanted to make it self serve where people could fulfill orders and it
was it good idea but it never got done and when I was working with Jeff as as technical advisor we would do we would go in for an update on it
and it would be yeah we have to talk these eight other teams and we’re making some progress the next update six weeks later there’d be a different
person giving the update and your different leader and it was kind of this rotating thing and so finally Jeff said Bezos said to Jeff Wilke who was running the opposite group at the time said you need to assign a senior leader
can’t you do to make this happen and I want that person to work on self service order fulfillment and nothing else but self-service order fulfillment and so Jeff Wilkie chose Tom Taylor who is a VP in the group
Tom had a big job at that time and you know Jeff Wilke went in and said your big job is no longer you’re worried you’re going to work on a project that
is risky it doesn’t generate any revenue and it’s and you’ve got to go figure out how to do this but.

[32:53] I’m woke up every day figuring out how to organize and get this thing done and not you know is it year year-and-a-half later
it launched into what was now called fulfillment by Amazon so very big business and I’m not sure if that would have gotten done it certainly would have gotten done at the time you know.
The time it took to build something that big without Tom and a single-threaded leader so Amazon took that and use that as a model to for how to get other things done.
And Dave Lim who is the senior vice president of devices now at Amazon has a great quote
and he says that the best way to fail at inventing something is by making it someone’s part time job.
So that that is an example of where your Amazon just took a slightly different approach on how to organize around.
Really working on the things that matter and that will drive the needle.

Jason:
[33:43] That I love that and it one of the things that’s fascinating to me about it is it seems like it’s worked bofur.
Technical as a technical solve like it like you guys organized software that way and apis and and the sort of space architecture and all that and you’re organizing.
The human resources that way as well and it seems to apply equally to both I do have one question though.
From what I hear the one thing that doesn’t seem like a jives perfectly with that is it seems like you hear a lot of people talk about the s team and and you know the biggest decisions in the company getting elevated to the s team
in a way that s team sounds like kind of the antithesis of.
Single-threaded readers if there’s you know like at the s team it sounds like the finance guy can critique the software approach or vice versa or those thing am I misunderstanding.
How the s team works.

Colin:
[34:35] The way that that the the operating Cadence at Amazon is there’s a yearly planning cycle where you have some tent poles.

[34:44] About just what are the constraints that the organization has to face.
And you know each team then or group comes in with their it’s called the operating plan one their op1 plan.
About what can they do and they come in with the resource ask and at some point you do have to rationalize.
If the ask is bigger than the individual resources you do have to figure out how you’re going to take a fixed pool.
Of capital so I think you know a comment we get a lot is
well Amazon has unlimited capital and unlimited software Engineers that can just appear magically whenever you need them at the door whenever you need them that’s not the case there and it was actually it was very difficult to get resources allocated to
a project that you are working on so there was some friction there but it was by Design.
But what did not happen is there wasn’t a lot of thrash after that after you make that allocation so here’s our yearly plan and rather than say what the team needs to do and how they’re going to go do that the team would commit
given this set of resources that I now have for the upcoming year.
Here’s what I’m here’s what I’m going to commit to and here are the set of initiatives that I think are going to get me to you know to achieve these goals so you do what what I’ve seen.
Some people go overboard with these separable teams at and just make them totally autonomous
and and I think that you need to come back.

[36:14] You know once a year sometimes even once a quarter just to check to make sure you’re moving in the right direction the right direction and staying true to what you you know sanity check on are we making progress on the goals the company goals that we want.
So there is a true true up. But it’s on a yearly basis for the most part in the operating Cadence of Amazon.

Scot:
[36:37] Well that’s interesting you run on these annual Cycles but let’s say.
I don’t know some earth-shattering new thing happens in the middle of that cycle what’s the process for kind of is there a like in scrum or agile software there’s a way of kind of just saying.
Scrap everything we’re going to reorient it is is that a thing at Amazon or know you stick to these annual cycles and don’t deviate.

Colin:
[37:00] You need to take a look at the data that comes comes in and adjust and in so I.
Don’t know if I’ve ever seen a yearly plan executed a hundred percent exactly if you were good to go back year that everything
happened the way that we thought it would you have to move fast you have to move with
less information than you would like you know about 70 80 percent of the information you have to end to make the decision so you also need to pay attention to what’s going on and to be able to adapt quickly you know there are some times where.
You’re like Amazon Prime for instance is a good example where.
There are exceptions to the rule hey we’re going to go launch Amazon Prime Jeff said this and it would there’s an October and we’re going to launch it by the end of the year it was a
you’re not the biggest project Amazon did that year but it was it was a substantial one and it was a fairly short period of time so there are exceptions to that rule and you do need to
you know to be agile
the group do that has committed to achieving certain goals that STM doesn’t really tell them how they’re going to go with cheve those gold so if something changes the group you know the group.

[38:16] And question adapts and they can say hey I’m no longer going to work on Project a because Project B or does new project that I didn’t even think of you know back in op1 comes in the fall
is now worth doing so I’m going to set these other things aside and you make that exception the planning tools to help you make the right decisions but if more information comes in over the year
to tell you that hey if you stick with this thing you’re going to make the wrong decision you know you change the plan.

Scot:
[38:47] Got it and then says that’s been super helpful to walk us through those different
principles and then second half of the book you kind of think of them as case studies and that’s the invention machine at work.
I was going to ask you about AWS but then it occurred to me I’ll make it your choice so anything you want to talk about what would be a good example for listeners of you know
in your in your memory of how Amazon applied some of these things and any fun stories in there always always welcome.

Colin:
[39:18] Yeah we’re going I’m going to talk about AWS and and so you know Kudos huge kudos to Andy jasion and his team for inventing cloud computing but
a couple things that are I think know too little about the evolution of AWS so Andy you know there were signs before well before
S3 and ec2 and the
queuing service were the first three AWS services that came out well before that there were signs that either something going on here with web services it’s just a better way to build software
and our internal software and you know Engineers were using it we were using it with third-party Sellers and with affiliate program and Andy had put this plan together.
It’s been said you know there may be something that here and we should adopt this you know model and go try it.
And any could have had any job that he wanted.
At the company at this point he had just spent I think it was a year and a half working as Jeff’s technical advisor and he chose to go to a non-existent business that had a.
High level of risk
we also didn’t know where other companies were on the path of inventing cloud computing we were looking at the same data that people.
Microsoft Oracle IBM Google we’re looking at boot go to some developer conferences and see the same Usual Suspects there.

[40:47] So we had no idea what they were doing so what I think one notable thing is that it’s okay at Amazon to go take a risk it’s not a career.
Breaker to go from a big business to a small business or from you know.
Job where you have a lot of head count to go start to build the new idea and invent something and that’s one thing and then two is that.

[41:10] We talked about the working backwards process
especially for something caught the term cloud computing didn’t even exist then and the initial ideas that we had about web services is what we call them in the beginning
we didn’t know what the fundamental units were and you know so ec2 is the elastic compute cloud and that’s
your computer you buy compute units of compute power in the beginning we thought that was really going to be
provisioning which was a problem that we had internally a teams would write their software and then
they wait six weeks for the hardware to arrive and for people to provision the hardware and then push it out there it was also hard to also get the right software on each of the computers that you needed and then if the I didn’t.

[41:57] If the idea didn’t take off reclaiming that Hardware so you could send it to someone else was another big heavy lifting project but so we thought it was going to be provisioning
but there is a journey that we went through and for AWS we basically wrote documents for about a year and a half
and reviewed them it was you know Andy and whoever the if it was the compute team or the the storage team
and Jeff and I would be in a room and we’ll be reviewing documents sometimes we wouldn’t get past the first page because we realize hey there’s an issue here that we don’t really understand or we haven’t gotten to the
you know really to the core of the issue or defined what it is for the customer
and you know they’re in some metaphors just popped up during this time where one very powerful one is that we want to provide the same world-class Computing infrastructure to a college student in a dorm room
then someone who works at a company like Amazon and and that really clarified things and you know the other thing with S3 is,
you how does three fail you know you can either have it fail for an hour a year which is bad if you have.
Hundreds of thousands of businesses relying on it or if it does have to fail you can have it fail gracefully.

[43:14] But just and you know one transaction every you know
couple million transactions a oh go try it again that’s it those are two different failure modes and you have to build something very different.
And we also knew that outgoing once this thing got out the door it was going to be hard it had to get better as it got bigger
so you couldn’t throw this thing over the fence and then decide what to fix because so many people would be relying on it’s a much different relationship that you’d have.
So just the I think in the notable thing about AWS is it was an experiment.
And we felt weird in a land rush we wanted to get out there first it would by no means ensure success but it sure would help.

[43:57] But we stuck true to what we don’t haven’t really defined you know you were using this working backwards process we haven’t really defined what,
what we’re trying to solve and and really identified that the core technical issues and then you know there was also some astounding engineering
work and it advances that the web services team did that went along in the background because we knew sometimes what we wanted to do but we hadn’t figured out how to do it.

[44:23] So just the Journey of getting a brand new idea and you know for a company to be able to say this is not our Core Business.
But it is something that we have we think we can do as good as anyone else on the planet and it’s worth worth trying
there are some Skeptics inside Amazon and even at the board level about you know why
why are you doing this when you’re still trying to get your retail business working and improving on the retail business you know prime it just lunged at that time so be willing to be misunderstood.
For a long period of time if you go back and look at some of the quarterly announcements Jeff would say well we’re working on it was web services and digital and and.
Said that for many many quarters and those turned out to be two very large pillars of the company but they were started out from you know.
Risky ideas most companies had made the transition from physical delivery of goods to be a pure digital player in terms of movies
Books and Music also so that was just another transformation that happened.

[45:32] Happy to go into more detail on it on any of that but I think the notable things are what Andy did and then also just sticking to the working backwards process because ultimately you want to solve customer problems and if you’re in and if you solve customer problems
it will work out in the long run so Jeff firmly believes in he
you know told us all that in in the in the long term the interest of customers are perfectly aligned with the interests of shareholders
and so if you do what’s right for your customer it will work out in the long term and you’ll build a company that he can be proud to tell your grandkids about.

Scot:
[46:07] Got it when did maybe you you left before then or got moved to something else but like when did when did you know or Amazon know that the cloud thing was going to be pretty big.

Colin:
[46:23] We had you know we had a suspicion that it was going to be big and and.

[46:31] I think that it wouldn’t it wasn’t really proven until you when S3 first launched it was.
It wasn’t an overnight success.
But once another service ec2 came with it where you know you weren’t you didn’t use a storage service and then have to move over to your own data centers to handle something
once ec2 and S3 started working in conjunction it was a lot easier to build some pretty cool applications and you know that was another
tenant that we developed during this working backwards process.
Present a single service in itself is it going to be all that useful you need to have you know a critical mass of services that work together in the cloud
in order to really make larger organizations you know to jump on the bandwagon and start using it.
So I would say you know after ec2 and launched and then you’ve got to see what people did with the ec2 and S3.
We knew that that rocket ship was going to take off.

Scot:
[47:34] Yeah this is where the Tam things tricky right because I’m sure the original paper the tan was pretty small and you know now it’s probably like thousands of times bigger than that original tan anticipated.

Colin:
[47:47] You know for success is this large you know you can think big but that’s total addressable Market we did know that there’s going to be a new paradigm on how to build and deploy software.
And if we could do it it’s basically the business-to-business software Market you know that that’s huge.
And answer so we knew that it was a large number you know virtually.
Unconstrained if you want to think of it that way in terms of if you can get it right there’s a lot of work and you know even right now you take a look at the total compute.
Our you know that that’s going on are the software development it’s still there still a lot of Runway ahead of AWS.

Scot:
[48:31] Yeah and another thing I don’t know where this lands in the principles but then there’s this very unique to Amazon think other people are copying it now but this whole idea of you know Walmart would have taken that.
That infrastructure and they would have viewed it as this super proprietary kind of a thing that they would use internally right where does that culture of opening it up.
To external users where does that come from.

Colin:
[48:58] I would say the root of it comes from customer Obsession and I’ll give you an early example of something like this which is where Amazon wasn’t you know owned all of its inventory.
And and so when you went to a detail page a product page on Amazon there was only one seller it was Amazon there’s only one seller on the platform.
And it was a controversial issue to say should we open it up to on the on that product page to third-party sellers we had tried in auctions.

[49:27] Product on a separate tab at the time and if you remember those then there was something called Z shops and turns.
Known went over to that neighborhood because all the cool kids were over on the product page of detail pages of Amazon and in you know the for instance you.
The head of the retail group or the head of the electronics category would say are you kidding me
I’ve done all this work to get my scarce allocation from these vendors you know try to get sharp prices on them and try to keep them in stock and now you’re and and I’ve created this great detail page for this electronica
item and now you’re going to let any third party cell right inside my store now you know how is this does this make my job easier and and how is this good for Amazon
and once you know and it was Jeff who said looked at it and said well
where how big amazon gets it’s still going to be a small part you know percentage of overall retail and and ultimately we’re in the business of allowing customers to make purchase decisions so if we don’t have the product in stock.

[50:38] We want to eat we want that we still want the customer to be able to buy that Earth we don’t have the lowest price we still want them to be able to come to that detail page and conduct a transaction to find out more about this product.
And buy it and if you want to make that product page to be the best place on the web for that particular item you have to have multiple sellers you have to have the best item Authority information about that and yeah by the way you now
is the general manager of the electronics group your job is a little harder but you know it’s it.
Making these things making your job easy isn’t what Amazon is all about you know we’re trying to solve customer problems and this is the best way to solve the customer problem so that you know I think if you look at it from that point of view
then you say oh yeah we have to open up our product pages and create this Marketplace
initiative which is now you know now outsells the owned inventory business on Amazon is as you guys will know.

Jason:
[51:37] Yeah yeah it’s crazy it’s annoying how many stories like that Amazon has of these.
Things that in hindsight are enormous successes like the marketplace but at the time like had to be hugely controversial difficult decisions.
One you know as I was reading the book one of the things that kind of recurring theme was a lot of these business structures and processes.
I feel like they were really invented to help Amazon scale Beyond Jeff right like.
You know to maintain Jeff high standards once he couldn’t meet every employee personally we need a bar razor program for hiring and we need the business principles to sort of indoctrinate everyone in the company.
The big news this quarter is all the Jeff’s are leaving Amazon and so I’m sort of curious like.
Do you believe that all of all of this infrastructure and culture that that you guys all put in place.
Are going to enable Amazon to sort of keep clicking at the same level you know when when Jeff was like a little more involved.
As he sort of disengages and spends more time on Rockets or something or or do you think that’s gonna be an inflection point for Amazon it’s hard to in my mind it’s hard to still be.
Day one company when your your founder retires after 27 years.

Colin:
[53:00] So you know Jeff has he had spent since the time I was working on he devoted a whole lot of time.

[53:08] To try to instrument the company and encode some of the knowledge has and principles that he you know where he wanted to take Amazon
in and make them repeatable processes you’ll it for there’s no one at Amazon who could say let’s turn around and be competitor Focus rather than customer-focused it’s just it’s in Amazon’s DNA
so first of all I think Andy he’s young he’s the right guy for the job if I had to write the Amazon CEO job description it would be someone who is steeped in Amazon’s culture
able to build
you know large multi-billion dollar businesses and work with small teams you know and jump in between the two and bonus points if you built.
Business from zero to ten billion dollars faster than Amazon did and he did all of those you AWS got four to ten billion dollars faster than
you know Amazon the company and so I you know I think it’s the Amazon is in good hands with with Andy but I think if you look at the legacy of.
I’ve what Amazon is in Jeff is going to leave
you’re at the end of the day these hockey pucks and cylinders we have in our kitchen or the two-day and delivery is going to seem laughably primitive
sometime in one day delivery will seem laughing laughs Ali primitive sometime in the near future but what is a lasting thing is really this in the ninja machine and it’s Jeff’s term.

[54:31] That he created at Amazon
and he was always very upfront about it and he would talk about some of these things about long-term thinking about you know you read the shareholder letters about separable teams and you know he’s been up front about the working backwards process so I think that it’s
these are processes where you don’t.
Have to use the stick to get people to use them it is more carrot approach because once you start using them you realize this is just a better way of building a bit and operating a business,
you know you don’t have to Once people start writing narratives if you were to tell them to stop that go dumb it down and use slides to you know
convey a complex idea you they look at you like a deer in headlights no matter who that person was so I think that there’s still a lot of innovation to come from Amazon and
you know whatever company or initiative Jeff Bezos is working on it will be very fortunate to have them but you know there’s there’s.
There’s a lot of people at Amazon who will continue to operate and tweak and improve this invention machine.

Jason:
[55:35] Yeah one of my favorite lines from your book Colin was.
You talk about how many people say oh sure Amazon is successful but you have unlimited resources and Jeff Bezos and and you and Bill pointed out like.
Hey for most of the time we are there we are heavily resource-constrained that’s not not true at all and you know all of these processes can absolutely work without Jeff.
Although if Jeff’s available the work on your project we would both highly recommend him.

Colin:
[56:02] Yeah and that still holds true.

Scot:
[56:07] When the one thing that’s been interesting Colin and you’ve been writing a book so maybe haven’t seen this but Shopify is really kind of ascending and getting a lot of play as kind of a
you know an alternative to Amazon and they talked about arming the rebels and this kind of thing and then there’s also a wedge in there in that
Brands don’t love Amazon because Amazon.
They love they want the brands there but they want to control the price and there’s kind of I’ve had brand say to me it’s a love hate hate hate relationship kind of thing
so it’s going to be this really interesting battle we talked about this on our show a lot and then recently it was in the press that Bezos was getting more involved in the business
to kind of formulate a Shopify strategy that was right before he kicked himself upstairs what you know.
But in listening to you think about the customer it almost seems backwards for someone at Amazon to have an initiative that’s kind of like you know what are we gonna do about this competitor Shopify how would you kind of project what do you think they would do and with.
What’s going on there.

Colin:
[57:08] Well I don’t have any first-hand data or information.
Give you here just to be very clear and if it does get back to really.

[57:20] If something’s worth doing you first of all have to identify the customer problem that you are solving and the customer problem isn’t to go
take over Shopify and you know so it’s it’s how can we serve our customers better be they third-party sellers be they bite you no buyers on the site you know and and and what could how can we organize to solve those problems and so you know
that that’s just the way.
Ideas are developed you know I will say Amazon does occupy a different place in society than it did you know five ten years ago and you know some of these things
are going to be worth putting in the public dialogue and you know that that’s part of being a company that’s you know
at a half a trillion dollars in yearly Revenue but you know I can’t predict what’s going to go on there but but
Amazon whenever there’s tough decisions what people at Amazon do is they fall back onto these 14 principal leadership principles because that’s what they’re there for its they’re there to make the tough calls.

[58:32] And and so while I don’t know what that what Amazon will do I know that after they do it if you read these leadership principles and then you listen you know
listen to yourself to say in the back of your mind that the long-term interests of.
Customers and shareholders are completely aligned it probably will make sense.

Jason:
[58:55] You know we are running up on time but I do have sort of one last last thread for you I know
that the book is obviously intended to help help folks adopt some of these best practices from the Amazon and if I have a right I think you and Bill.
Also consult with some companies and and sort of help them adopt some of these processes.
I’m curious how successful or difficult outside entities fine some of these things I got I’ll give you a personal antidote.
I’ve hired a lot of X amazonians in my life.
And I’m always super excited that I’m going to get these people that you know come in and write these like you know super detailed six-page narratives and stuff and and what ends up happening is no they all do I really crappy PowerPoint because they’re all.
Like tired of reading the neck so I like part of me wonders like is there some Secret Sauce in Amazon like you know obviously we all believe some of these things can be useful in many other companies but.
Is there an endemic in managing Amazon and.
Cohesively doing all of these things together that make them work better than than individual bits and bytes do outside of the Amazon that’s fear.

Colin:
[1:00:13] Well I would say that the first two that you’d have to do if you don’t have them and you know some smaller organizations don’t is defining who you are and the leadership principles you know so the idea is not to copy Amazons and.
You need to come up with your own about who you are and then the second part is that bar razor process the hiring process
is how do you vet new people coming into your organization because you want to use the new people you want coming in you want them to reinforce your culture and if you’re not deliberate about what your culture is and how you decide
is this person going to reinforce my culture or change it
if your culture will change because you’re going to get a culture as your company grows it just is your choice if it’s whether the one you want it to be or whether it will become bait you know whatever will become based on the new people who are coming in if you go from 5 to 20 people and you don’t have a deliberate hiring process with the leadership principles that’s how you get people who say it’s just not like it used to be last year so those two things I would say you have to do when you’re and.

[1:01:17] You know in order to stay true to your roots the other ones you can you I would not recommend doing them all at once I think some of them are easy but sometimes our Journeys so no you don’t have to do them all at once but where we’ve seen
it work in organizations and what I guess will receive a not work as if.
That the head of the organization you know the CEO or if it’s a large company if it’s a you know Division if they’re not on board it’s probably not going to work
you know if someone says hey I’m going to write narratives for the group and then the the.

[1:01:52] PPR the CEO says yeah that’s great but just give me a PowerPoint when when you’re done with your narratives did then we’ll make the decision you know that’s it’s probably not going to work so I think you have to buy into some of these and
principles and processes and they give them a chance to work at the right level.

Jason:
[1:02:11] That makes total sense Colin and that’s going to be a great place to leave it because it’s happened again we’ve used up all our allotted time.
As always if folks have comments or questions they are welcome to follow up with us on our Facebook page or on Twitter.
And as always if you enjoyed this episode we sure would appreciate it if you jump on the iTunes and give us that five star review.

Scot:
[1:02:34] Can we really appreciate you taking time out of your busy schedule to walk us through the book we strongly encourage readers to go not only by the book but read it like Jason I have we both thoroughly enjoyed it you got four thumbs up from us.
Obviously you know Amazon carries the book so that’s the logical place to look and then if folks want to find you online do you pontificate about things or are you big on Twitter or SnapChat or inserting.

Colin:
[1:03:02] We have website working backwards.com so I’ll one word and you know that’s a good place to go to print out from there.

Scot:
[1:03:10] Awesome we really appreciate having having you on the show.

Colin:
[1:03:14] Thanks again for having me.

Jason:
[1:03:16] We really enjoyed it and until next time happy commercing.

Mar 1, 2021

Announcement: Live Clubhouse Chat: Shopify vs Amazon

Wednesday night March 3rd, 9:30pm ET we'll have a live chat on Clubhouse discussing the epic battle between Amazon and Shopify. http://joinclubhouse.com/event/M4knLWBy

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. 

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