A weekly podcast with the latest e-commerce news and events. In episode 266 we interview Marc Hostovsky, CEO of Monoan an innovative new “Native Retail” concept.
Marc Hostovsky, CEO of Monoan an innovative “Native Retail” concept. Monoan makes it easy for consumers to natively purchase products that they have tried and loved during hospitality experiences. Such as buying the bedding used in a boutique hotel room you are staying at. Marc founded Monoan after previous commerce experiences at Jet.com and Walmart. Marc can be reached at [email protected]
Episode 266 of the Jason & Scot show was recorded on Thursday June 11, 2021.
[0:24] Welcome to the Jason and Scot show this is episode 266 being recorded on Thursday June 10th 2021 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:40] Hey Jason and welcome back Jason and Scot show listeners
here at the Jason and Scot show headquarters we are always on the lookout for exciting new startups that are innovating around some of our favorite topics of e-commerce payments.
Drones AV are all that good stuff one of our favorite Trends is Brands going Direct
one startup with a very Innovative approach on this trend is called minoan and we are very excited to have the founder and CEO mark hostovsky on the show Marc welcome to the show.
[1:17] Thanks great to be here it’s nice to hear I’ve heard the intro many times as a listener so cool to hear it as a guest now.
[1:25] We are honored to have you as a guest and Mark
this is not your first rodeo in Commerce so do you want to tell our guests are our listeners a little bit about your e-commerce background and how you.
You came to start at the company.
[1:44] Yeah sure so I was an early employee at jet.com.
Yeah I met basically Scott Hilton and some of the early team at an at a lip Uncle tedium I never know how to say it but the sandwich shop in New York City when I was working actually at a.
Research firm yeah and got sold on sort of the mission of.
Fixing the economics of e-commerce you know specifically like.
Looking at how Amazon had built this entire infrastructure Optimizer I’m getting you one package as quickly as possible which is very consumer friendly but economically challenging,
and so creating this new e-commerce model where you can incentivize.
[2:38] Yeah customers basically to take actions that improve the economics of the order like bundling more items together different for slower shipping and basically after listening to Scott and team talk about jet for like.
30 40 minutes I went back to my old job at the time and was like how could I possibly you know keep selling keep this job of selling research I know there’s this awesome company,
really shaking things up and yeah join the company pre-launch was there.
For the growth from zero to a billion dollar annualized run rate,
ten months got to work really closely with Mark lies on greater leading there and then yeah through the Walmart acquisition took over a pretty large p&l in hard lines which is sort of where.
My interest in this concept of native retail came about.
[3:34] Brickell and then.
I’m always excited to you know when folks go from kind of having a job to starting a business was this something you always want to do to take the entrepreneurial plunge or did you just kind of say
I’ve got this killer idea and I can’t not do it or what led you to entrepreneurship.
[3:54] Yeah I’ve always wanted to start something I’m a big student of Entrepreneurship and I love reading Memoirs of entrepreneurs I did.
Before my now and I did start a company called tail your which was,
pretty much a virtual tailoring which is my first run-in with the entrepreneurial Buzz I think in this case,
like it was always on saying she was like one day I will start a company I didn’t necessarily plan on doing it on a certain timeline but.
It was sort of combination of just being I was just consumed by this idea of like I was really frustrated.
In trying to create really strong product experiences for our customers and so I’d say it was sort of a combination of like I’ve always been interested always wanted to be an entrepreneur but also had one of these problems that was like.
You know as I would think about it for I go to bed and then.
Like an hour or two later I’m still thinking about it and putting those in my phone and so I was like you know what I’m just gonna like go after this and do some research and see if this this you know what eventually became a known could be a real business.
[5:03] Yeah and what’s the good let’s take one step back on jet tell us a little bit more about what you did there where you on marketplaces have a couple sides there’s kind of working with suppliers or Brands to bring kind of
product into the marketplace and then there’s the demand inside which which which pieces did you work on while you were there.
[5:24] That’s funny because I did probably three different things in a very short amount of time just because we were growing.
The pace of growth was just it was unlike anything I had seen and probably will ever,
see you again so when we started I was in more sales role so I was pitching retailers to,
come on to the platform like the Vitamin Shoppe Sports Authorities tncs towards the russes of the world then.
[5:59] Side note every company you just mentioned is no longer in business.
[6:02] Yeah I almost said a little alrighty for
work for they’re either not in business or no longer business or not doing well which is good because you always want to sell the someone who’s doing really really well or really really poorly it’s the people in the middle we don’t really have like an impetus to take action,
basically we were pitching them on like a new model of e-commerce where.
You know it on Amazon your competitiveness is solely dictated by the prices you said and so.
[6:32] That’s tough for these larger you know it’s tougher for these larger companies to compete with,
like smaller sellers who could drop price we’re getting stuff that’s Overstock Etc and so we were sort of pitching this,
model where it’s like hey it on jet yeah of course price is important but also how your inventory is commingled to reduce Le chipping gives you an advantage or infrastructure how many distribution centers you have if you’re closer to more customers and it’s,
less costly to ship to them that gives you an advantage if you’re not competing on price alone which is really compelling for these retailers who are getting crushed on you know they weren’t able to being priced competitively,
in anyway so we pitched we brought on a lot of retailers and then Scott Hilton.
[7:21] The chief Revenue officer also has like okay now that we have all these retailers on board we actually need people to manage,
manage them and manage categories and so the category development team which was going on to this Biz development.
Most of that team then transition to category management sand so I took over the pnl basically for sporting goods.
Arts crafts and music which is why I went near him Jason Retreat talked about anything,
all right before the podcast and I was also managing our third-party integration Partnerships and so Channel advisor Commerce of that’s that’s sort of how I actually got to know you Scott and going to a catalyst and seeing you speak.
[8:03] And then after the jet acquisition took over.
A much larger PL at Walmart hardlines category is about a 400 million-dollar business which was huge for me for Walmart that’s peanuts surprisingly I mean the scale of Walmart is something that I think.
A lot of you in retail people understand that people who are less familiar with retail just like a market caps don’t understand like quite how much money flows through.
[8:30] It’s crazy that 400 million a year is like a starter merchants.
[8:34] Yeah I mean it was like it was peanuts to them they did you over 500 billion a year so yeah so that that was sort of my journey from jet into Walmart.
[8:46] Cool can you tell us a fun Market Lori story that’s appropriate for a family listeners.
[8:52] Yeah yeah yeah I can’t I mean he is.
Relentlessly I think he has a couple superpowers one of them is just Relentless optimism.
It was crazy how fast we were moving how quickly we were changing things and.
He’s just like rock-solid all the time he’s constantly problem solving and so and the other that super power he has I think is just obsessive thought like he really,
sits and thinks about and stews on ideas for a long long long long long long long long time and so the things that he’s doing incredibly well,
thought out and that was sort of My overall impression of him was impressive I think there I don’t know if there are any like fun.
Stories specifically like they’re certainly crazy moments at jet-like on launch tonight,
where we had some technical issues and we had like we like 60 70 person team staying in the office till 4:00 in the morning to manually,
route orders just so you could get all the customer all the orders out and keeping customers happy.
I’m trying to think yeah I don’t know if there are any specific like crazy Mark lawyers towards that.
[10:17] Well I’ll say a couple of new can verify if they’re true or not so I heard that he’s like one of his slogans was the company would either be billions or body bags at.
[10:25] Billions are body bags yeah yeah that was our sort of rallying.
[10:26] Yeah okay all right.
[10:30] Yeah I told some people in there like horrified by that they were like that’s terrible it was like well it’s kind of kind of true.
[10:36] Yeah it’s just it’s real he’s like this model only we are in a scale game e-commerce is a scale game and and there’s big rewards these the billions.
You figure it out and if you can’t get the scale usually use very clear about that like if we can’t get the scale the economics don’t work and so you know those are the body bags maybe a little bit more of it but it got the point across in a way it was exciting for us yeah it’s like a good way to get the team.
Excited and motivated to make sure that it was the billions and up body bags.
[11:06] Yeah it’s a been reading a lot about persuasion and anything that can have a visual whenever I hear that I kind of have the visual of a fork in the road and like a rainbow and a pot of gold on one side and a body bag on the
it’s like it’s like a it’s like really it’s like for some reason that phrase has like a very visual kind of thing that kind of comes to me when people said and then
let’s see what was another one
oh there was like this kind of extreme transparency in the company where everyone could see whatever was making and it was kind of a huge distraction for a while and I guess they either got through that or they turned it off is that were you there for that part.
[11:40] Yeah yeah so that was yeah I mean that so I actually really appreciated that and something I’m bringing some Minoans so there’s and this isn’t you know Ray dalio thoughts about this a lot as well and principles but trust transparency and fairness were the three values and so,
there are a few ways that they put in that in the practice one is that comp was fully transparent even down to like equity,
Grant like dollar Equity Grant so you could understand if you understood someone’s level you knew exactly how much they made and the dollar value.
Of the equity that they received when they joined and so that that started a little bit after I got there like that complete transparency but when I but even when I joined you know the.
Salaries were fixed and there’s like no negotiation I was like listen this is the price this is the salary for this level you get promoted at this level there’s no bands.
And the other thing that’s great is he would go and have his.
Board meetings or investor presentations and then he would come right back and present you know the entire board meeting maybe there’s some things that.
Were removed but you’d present that entire board meeting deck to the entire team which is cool because,
um you really felt like you had ownership of the business like it’s like okay I understand like how he’s presenting this to and for an aspiring entrepreneur like myself I mean I loved it this was like.
[13:05] It was like getting paid to get an MBA you know seeing how he thought about the business how he pitched investors how we thought about strategy and and so it worked I mean yeah I think there were probably circumstances where.
[13:19] The transparency might have irked some you know like people.
Who didn’t want people knowing how much they made stuff like that for the most part we were all on board with it now and we now and when it became Walmart that was you know then it’s a little bit of a different story so that.
Dissipate a little bit.
[13:40] Walmart make you put up the signs they have and all their meeting rooms where it’s like you know return all the pencils to the do the office supply room and only sharpen it if you’re down to the nub.
[13:53] Yeah pretty much there is like.
[13:55] About a culture Clash.
[13:57] Yeah that was interesting I mean there were as some did the biggest change for me was around samples just because when you’re a jet it’s like.
[14:06] It’s really easy to be an e-commerce Merchant and never actually touch or use the products that you’re selling,
and not really know like how the customer is experiencing them and so one thing that’s important to us was like well let’s get a sample that see like okay this is our best in trouble like how is it because it is it good like you know it’s best-selling but,
how does it hold up and it at Walmart.
And then the samples we would just like you know people would like take them home basically and Walmart there’s a very strict like no samples policy or or getting samples but you had to you know people can like take them home because there’s really more tight like a bribery.
Policy which made sense because if you look at the history of.
I mean Walmart was in like the 80s and 90s and these are all like I don’t know if this is folklore true but there are stories of right buyers being offered,
Ferraris to work with specific suppliers or vendors and for that supplier or vendor it is very much worth the money to give them fire a Ferrari if it gets you into stores do they’re just moving so much volume and so
they started cracking down on like bribery and and not even just bribery Billy gift so when we would go and meet with vendors.
If you like we would meet with some of our larger Fitness vendors and they would have a spread or like a bottle of water.
[15:28] And you’d have to if you took a bottle of water you’re supposed to leave some cash behind which we would do but that was like so surprising to me was like but it makes sense like it’s you know it that was the big difference between a small,
company and a big company with.
It’s been around for a longer time and even more rules and I weigh more so it’s not necessarily that like I I understood why these rules are in place but for me it was yeah I was definitely a bit of a culture Clash that’s for sure.
[16:02] Yeah and In fairness to some of the big companies most of those rules are in place because of bad prior incident.
[16:10] Right yeah.
[16:10] And in the case of Walmart there there were execs like in jail in Brazil around corruption right and so.
[16:18] So they were you know somewhat / you know there’s a lot of protecting people from themselves and those rules.
[16:25] Yeah yeah yeah makes sense I mean when you there in a powerful position and it’s easy to be tempted so just like put the rules in place that.
[16:33] It’s funny that I’ve been calling on Walmart for probably 30 years and I distinctly remember like the first time going to a meeting in Bentonville,
sitting down and and the merchants like hey can I offer you a bottle of water and I’m like oh sure that be great and he pops it down he’s like that’ll be 35 cents.
Because there’s no there’s no gratuities going in either direction.
[16:56] Yeah yeah it’s strictly business and those rooms are clearly strictly business.
[17:01] Oh my God yeah back in the it’s updated a little bit but back in those days they were literally like saw horses and plywood tables and like the walls were grid wall.
So that you know people could come in and hang their products.
And it was super annoying because I would come in I would always have to rent a screen like a and I don’t mean like a video screen in those days I mean like a like a projector screen.
And swept it in because Walmart didn’t have one and I’m like they’re they’re trying to send the message that they’re cheap but they’re actually causing me to spend $200 every single time I got.
[17:40] Oh yeah we had we had one of our large Fitness vendors went while I was there and in Bentonville.
We didn’t have room they wanted to come and bring a bunch of products and demo them and you’re like there’s not room like we don’t have room for all this and so they rented a.
Like an RV basically you’re like a huge trailer and put a bunch of them in the back and we went outside and they had this like.
Thing that they had toad over that at all there.
Products in them it was like wow you guys that was the exact response that sort of the head of hard lines that was like you spent all this money just to show us these products when you know we were pushing for lower cost so.
That’s interesting like the yeah you gotta do it you gotta do it again.
[18:31] For sure but listen enough about Walmart let’s pivot to minoan what is the elevator pitch.
[18:37] Minoan is essentially a platform for Native retail.
And Native retail is about using products in the way that they were designed to be used,
and so for a hairdryer you know in Native retail you’re using that hair dryer when your.
When your hair is wet you know you’re coming as shower when your hair is wet you’re using that hair dryer to dry and style your hair which is what the,
you know the product managers and engineers and designers who are creating that product they were designing it to be really really good at exactly that,
as opposed to e-commerce where when you’re interacting with a product it is,
you know abstractly represented on the screen and actually I’m currently sitting in a warehouse somewhere and then when you’re interacting with those products and stores.
Oftentimes they’re deconstructed placed in display cases crammed on shelves that are optimized on dollar per square foot you know not necessarily on,
creating really strong product consumer interactions.
Yeah and so native retails about like getting people to actually use the products and the way they were designed to be used and then if they really really like them making it easy for them to buy through like a frictionless add to cart and checkout process.
[19:58] Nice so I love the concept and I do want to drill down a bit more but maybe just to make it really concrete for listeners let’s talk about like typical customer experience so the one I’ve read about is in hotel rooms.
[20:12] Yes or foothold right now is related to Teague hospitality and so,
we work with a lot of boutique hotels to make their experience or like short-term rentals to make their experiences shoppable to guess so,
example would be like you know if your staying at an Airbnb,
and you’re sleeping on the mattress and hands the best night’s sleep ever gotten what is this thing instead of ripping off the sheets and trying to find the tag
you know in Manoa and you can understand what what the mattress is or what the hair dryer is that you’re using or the speaker system,
but they have offered or the fitness equipment or the appliances the artwork you know the soaps shampoos like any of the products that you’re going to be interacting with during your stay.
That already yours you know for the weekend we tell you a little bit more about them through this digital narrative which is basically like a.
Tailored e-commerce site specifically for the guests and tailored to their environment,
we’re if they really like something they can buy it and it’ll be waiting for them at the time they get home.
[21:17] That’s awesome I’m a big fan of that customer experience.
On a small scale I spent a big chunk of the early part of my career at Best Buy and Target and for for a while my whole role was,
what I called taking products out of product jail like we had all these products that like we literally locked in a,
like a display case like a glass case or in Best Buy’s case of steel cage
and this is not going to be shocking it’s painfully obvious in hindsight but like you take the digital camera out of the steel cage and you let customers touch it in the store
and you sell dramatically more of them.
[21:57] Yeah I mean that’s like it when some one of our investors in advisor Joy.
[22:01] She’s one of the world’s foremost experts in like haptics and proprioception and consumer retail just basically like touch,
I’m and so she’s proven over and over again that first of all individuals have sort of like a need for touch,
like scale and so there are a lot of consumers that have a very high they call it n f t so this is for n FTS meant none fungible tokens and ft men need for touch,
and there’s a ton of research that she’s done that shows that yeah when you get products in people’s hands like willingness to pay goes up and version goes up recall those up like it just memory of that brand and of that product,
[22:41] And then there’s also stories of like even in Toys R Us I spoke to someone who’s a merchant Toys R Us years ago in the earlier days I mean if we’re still in the early days but really in like the ideation phase of the knowing.
And she would say that a lot of Toys R Us stores had this sort of like playbox or like sandbox area where people could use toys and whatever products they put in that environment we’re like their best sellers.
And there’s a lot there’s a lot of like anecdotal pieces of see people saying the same thing like John Foley the founder Peloton I went to go see his how I built this which was done live in New York City.
And Gyros is asking him you know why do you keep investing in stores like why you keep opening more and more stores it seems like you could do pretty well without the stores in that you know most companies going in the opposite direction they’re messing my stores.
[23:34] And he said because I’m telling you when I could get someone on this bike handling listening to the music in the moment it was 50/50.
50/50 on whether or not they’re going to spend 2,800 bucks right then and there and bring this thing home and so this you know what the idea of.
[23:55] Native retail or I mean car rental like renting a car and using it is native we’re not necessarily inventing,
category I think what we’re trying to do is build a platform to make it a little more frictionless and bring it to life in more use cases like.
I really just believe that the best.
Product experiences don’t happen on shelves and they don’t happen on screens they happen in the wild and so creating a platform where spaces that are creating these,
meaningful product experiences can more easily integrate retail and monetize it,
I’m and then making it easier for Brands to access these spaces at scale create meaningful customer moments create a little bit of one on time one-on-one time with between you know gas in these properties and their products or there’s no salesperson over your shoulder there’s no.
Yeah just you and the product and so that’s what we’re very passionate about.
[24:52] No I love it and I get the risk of getting slightly psychology geeky there’s this psychological principle called the endowment effect in.
[25:01] Oh yeah we can geek out if you want I’ve done a ton of and.
We can go there because that’s a huge that’s actually a huge tenant of how we design our experiences with with guests and so would you do we do we go down that.
[25:17] Work at a super high level that the principal is I hand you.
Like the the actual psychology experiment started out with like
coffee mugs but I got hands you any object that that digital camera I’m trying to sell you in Target or that that bespoke coffee maker in the the boutique hotel that you’re selling
and merely by the fact that you receive that product or even if I can just make you imagine I handed it to you by the way as soon as you imagine owning it.
It’s more valuable to you and the decision you now have to make is
am I going to give this back or am I going to keep it right
and giving something back as loss and so then this like powerful psychological trigger of Wasa version kicks in,
and so it’s there so much of selling is about getting someone to physically viscerally imagine that they own that product and then you’ve kind of.
You’ve gotten them over the hump.
[26:21] Yeah exactly it’s really like a tenant of basically psychological ownership which is.
Feeling of ants possessiveness the feeling that something is yours which you know psychological ownership proceeded legal ownership like the reason we have legal ownership is because humans naturally are possessive and.
[26:43] I’m also an evolution geek or anything about just like looking at like humans over time but we were naturally possessive and so we had it we had to create rules so that people wouldn’t like,
you know hurt each other over land or over these things and,
and psychological ownership can be really powerful mean there’s a lot of research that shows its psychological ownership is more powerful than legal ownership and that comes to their done a ton of research around that in like Equity at startups and it’s like,
the feeling that someone owns or is a big part of a company,
typically this correlated with like higher performance or higher success then just legal ownership you know just giving someone,
ownership in the company and you can use legal ownership as a tool to accelerate psychological ownership like you give someone legal ownership then you can more easily get them to feel like a psychological owner but ya know in our context like
hospitality is actually a perfect environment for sales to occur because psychological ownership,
has three antecedents so in order for psychological ownership to occur they’re sort of three things that.
[27:55] If you can do those things you can do one of the three even like you’re more likely to create this you know feeling of the endowment effect and people really wanting to hold on to something,
one is the ability to control they use the term Target so when is the ability to control a Target and so.
[28:14] That would be like if you do like a desk chair example,
being able to like move it around or set it to your settings you know get it in the right lean the right height like controlling it manipulating it to your liking,
the second one is intimate knowledge of a product so,
really understanding like it’s particular settings being comfortable using it understanding its features and then the third one is investment of the self and so spending either money or time on something,
is a third one so if you can do those three things if you can have someone sort of manipulate or control a Target if you can have someone gain intimate knowledge about a Target you can get someone to invest here time or money into a Target,
you have this really powerful effective psychological ownership and then willingness to pay goes up recall goes up conversion goes up and this is the stuff that you learn pack has really studied in retail and so in our environments,
and we see this incoming we have some spaces that in the first quarter we can bring it 25% like one every four people going to one property in particular in my mind I’m thinking of we’re buying something.
[29:28] And so when it’s done well it can be really really,
powerful and interesting and the psychology part of it is something that that’s what I’m most excited about incorporating sort of into these guest experiences,
I’m and we’re still in the very very early did you know we have a lot more optimization to do on that.
[29:50] That’s 25 percent conversion that’s like getting up into the like get spiffy territory that’s crazy talk.
The the other half of your model that’s I think is also super interesting as I talk a lot these days about the unbundling of the shopping experience and and by that what I mean is.
In the olden days like all the phases of buying something out of necessity and convenience had to be bundled together so you you’d go to a store,
and that’s where you discovered products that you then you did your consideration in the aisle then you did your purchase and the store fulfilled those goods for you,
but one of the things that digital and Technology have enabled is kind of the unbundling of that right and so today,
you’re you’re way more likely to discover a product you you have to have on Tik Tok then you are in a shelf right and,
you’re likely to do your consideration like you know while reading Rings or reviews on Amazon and then you do your fulfillment for curbside pickup or whatever the case is and so to me.
The you know it feels like you’re you’re leaning into that that.
Um endowment effect but you’re also kind of leaning into the unbundling that you’re you’re creating awareness and consideration like at the point of views instead of like forcing someone to go to a shopping destination to do it.
[31:13] Yeah not exactly I mean it’s.
E-commerce has its I mean I’m on an e-commerce podcast it’s like I.
[31:23] There’s so many things that I love about e-commerce but the more time I spent in it I just got really frustrated and,
it’s impossible the reality is there’s just a lot of wiring that goes into how we perceive our world around us and e-commerce can only ever really tap into,
visual stimulus in visual representation of a product which to be honest like you can that can take you far and I buy,
like you know 60 70 ton of stuff I buy I buy online,
but they’re also a lot of like gaps there there are lots of sort of gotchas and there’s anyone who has shopped online has experienced this sort of mismatch of like you receive something that wasn’t necessarily what,
you thought it was or was as advertised and the reality is like it’s just a hypothesis you know like it the if we’re thinking about shopping and like sort of the rational linear way of like,
identifying a problem doing your research making a purchase decision and experiencing it.
[32:24] You know like when you identify the problem you see you then start to like Forge a hypothesis so it’s like okay I need a new mattress that’s a problem,
my hypothesis is that Casper is going to be a really good mattress for me and I’m gonna sleep well on it that’s the problem I’m trying to solve and then you do things to strengthen that high,
hypothesis you can read reviews you can watch videos you can read about their hybrid technology but ultimately you don’t really prove,
that hypothesis is not concluded or proven conclusive.
[32:58] It’s in your house and you are sleeping on it you’ve slept on it for a couple nights in a row and they’re just lots of times where the hypothesis can be.
Incorrect despite the amount of information that you can get about products online and I think you have for me it’s that the.
It’s like foolproof you know like you’re using it the way that you would use it in your home so if you like it buy it,
if you don’t like it yeah no problem this one of our back like go on and and go discover other cool products that you might like.
I don’t even know if I I kind of think I took your answer and went on to my own like random tangent which I can do sometimes because I’m from Boston but hopefully hopefully it you get what I’m saying.
[33:46] The founder thing you’re passionate.
[33:48] Yeah the founder thing or just an eccentric thing.
[33:52] Let’s talk to the customer experience so I go to an errand
I’m a go to Airbnb or maybe a you know a resort or something and I walk in and you know is there a wall of QR codes is there a locked box,
that I slide my credit card into how how does this work what’s the what’s the user experience.
[34:16] Yeah so any space that we work with contractually agrees to come marketing and so we think about that in digital touch points and physical touch points and so the guest experience are basically.
In most cases,
when you get your booking confirmation email or in your email that is like leading up to your stay and maybe a day or two before your stay.
[34:40] There will be a little you know notice in that email that says Haley put a tremendous amount of thought into curating each and every product amenity space,
if you want a sneak peek of what’s waiting for you click here and so that’ll take you to this digital basically hentai shop will experience that we built for that property with images of the property,
each room in the property has its own like page basically with the product each brand has its own brand page,
so there’s this this yeah it’s experience that is meant to harmonize with the physical experience of being in that space,
then when you arrive at the property yes they’re usually or always is a physical touch point which is right now we’re doing QR codes are also looking at there’s some there’s some other Technologies you can use to do,
like physical to digital and sometimes that’s like a notecard sometimes it’s booklets,
we’re exploring like this is what’s fun is sort of thinking about any Commerce you think about driving visits and you think about it,
and you know from like channels primarily or different areas for us we think about visits is like okay what are like the moments during this guest experience we’re someone could feel compelled to learn a little bit more about,
the product and so.
Yeah we’re still thinking about where these physical touch points could occur but there will be QR codes on the property and then usually there’s also inclusion in the posting you know where the language is a little more like,
[36:09] Yep found something you like or missing any element of the experience like you can you know bring it home with you and so that’s how we’re sort of integrating the shop ability into the guest experience.
[36:21] So then I go in there and do you you know so you mentioned hair dryer Casper is there going to be like is revision that.
You learn about Jason and then you set up a little podcast thing and he gets super excited because he’s a microphone there or you learn about me and there’s kind of a drone and a cool Star Wars thing or or is it mostly like in context stuff there’s nothing kind of.
That’s been injected into the experience.
[36:49] Yeah it’s in context of so I do have this larger,
vision and there are some hospitality companies that share this around actually being able to tailor specific products to the guests,
before their stay so even like replacing the mattress to a mattress pad they want to try your bringing in things that you know they were like now that’s very labor-intensive and so we’re not even,
I mean we don’t do we’re not doing anything like that now we’re not focused on it right now it’s just contextual Congress really so it’s like you know,
you need to go to sleep here are things that will help you sleep here’s one more information about the Linens the pillows the wedding whatever it may be but certainly in the future I mean we’re thinking about.
We’re thinking about ways you can tailor it to the specific user as well and then just figuring out operationally how you can do that in a way that’s either in line with like with hotels,
they are are already are doing things between yesterday’s and like flipping rooms and cleaning rooms and so like you do things in a way they’re just integrated into that and easy or finding,
you know finding a way to just solve for sort of that operational challenge of changing.
[37:59] Got it and then over so in my mind everything is a Marketplace that’s my role here on the Jason Scott show so you’ve got the that’s the by side and then the sell side you know I think one of the things you guys do that I teased at the top is your working
directly with the Brand’s to get them in there not not like a retailer right so it’s not like there’s a
but Bath and Beyond is sitting in the middle of these things or Home Goods or a retailer your kind of the
they’ve got retailer here the market maker the marketplace that’s bringing these together it kind of reminds me we had on the show Zola which really kind of
turned upside down the wedding registry bye-bye kind of bringing unique Brands Direct in there and it kind of you know.
I think it’s interesting because Brands seemed to really really be leaning into any direct experience so what have you what a do I have that right and then be are you finding brands or like super receptive to this or you have to like really convince them to do it.
[38:56] I know you do definitely right now I have spent a lot of time learning from Folks at Zola and asking people their questions about Sir you know there’s a lot of similarities and sort of how we.
We are operating and its really we’re just trying to help Brands increase their own audience like and that’s what makes us different than.
You know that’s what we have in common with Zola and not in common with like an Amazon do I know you guys talked a lot about how guys like Amazon’s goal is to increase,
lifetime value with the customer and not have the brand increase lifetime value like they want you coming back to Amazon to buy things they don’t want you buying something from.
[39:39] Casper on Amazon and then going and replenishing your buying stuff and Casper.com our model is different our models about Discovery and helping that brand acquire a customer and then build that lifetime value directly,
with the customer and that’s something that yes super attractive to Brands I mean it is tough it is,
there’s a book called some subprime attention crisis which I think is such a great term because it is it is tough,
to get attention and out are right now if your direct consumer brand and there’s more Brands and there than there have ever been you know the barriers to entry and creating a brand drop,
precipitously it’s like easier than ever to Source a manufacturer of season ever to build the website it’s easier than ever to launch to do fulfillment and completely Outsource it and have it be reliable it’s easier than ever to Target consumers and be very targeted,
and so you have a ton of Brands and obviously a ton of money that’s going to Facebook and Google but the attention.
[40:44] It is challenging and so yeah brands are very interested in the idea of having someone in a space over the course of three or four days using their product specifically,
for the job to be done you know using their mattress to sleep on using their cookware to actually prepare a meal using their speaker system to create a mood with music.
And so our hit rate with Brands like our conversion rate Brands is very very high in terms of like sales it’s like.
High very high percentage of the brands that we talked to about the platform do end up joining.
[41:21] Nice and what is the model are you buying goods from them and wholesaling them or are you an actual Marketplace that’s kind of taking a take rate on on helping them sell their own Goods what what.
[41:34] Yeah it’s set up on a commission basis so basically we’ll take a commission on any items sold and then a portion of that commission goes back to the property partner or space partner almost like an affiliate for,
for creating the environment and driving the cell and then there’s also you know there’s marketing,
these for like sharing the data around clicks conversion customer pathing collecting reviews stuff like that.
[42:01] Got to monetize that first party data these days.
[42:04] Yeah yeah.
[42:07] And then,
on the startup side you know the extent you’re comfortable sharing any any metrics on how big you guys are and then that kind of ties into you know are you going to go to the Venture Capital route or you guys going to bootstrap this and where are you on that
always exciting Journey.
[42:25] Yeah yeah we I can’t share any Revenue.
Numbers because we are likely going to be kicking off I guess essentially goes we’re probably going to be doing our we’ve raised an initial round of funding or Boolean arrays,
another round in Q3 because basically we’re.
Waiting to hit a specific threshold to gets before we go out and raise with a number with a number in mind we are doing so the way that I’ve approached it is originally I was.
Bootstrapping the business and I was like you know what I’m just going to like build Shopify stores for like all these properties and,
have a centralized backend and like you know it’s a pretty asset late model actually don’t think I need to raise money and then the more I got into it the more we were building these things I realized that,
Shopify is great and it’s an it’s a fantastic platform.
[43:26] But there were some rigidity in like how that we couldn’t really work around like I basically wanted like a thousand different front ends and one centralized,
back ends to manage everything and Shopify is very very much built around like one front end,
going back end and so we realized that we were going to need some technology built and so we went out and raised a precede which a no institutional money it was only angels and I mean really almost all entrepreneurs,
as who we wanted to raise from,
and so we did that we close that in January we’ve used that to invest in the technology and schedule a bit more and now we’re at the point where,
we’re sort of seeing the true scale.
And potential with the idea of native retail and like we’ve signed up over a hundred 20 brands in a very short amount of time you spend 30 property groups sometimes Property Group should huge you know like large hotels was like 35 hotels.
In the Northeast we work with of on stay they have like 500 600 homes in the US the reading 50 homes every month they just raise a ton of money we work with mint house which is sort of.
This new brand of apartment hotels where.
[44:44] The hotel rooms basically have let you know that the living room full kitchen full bathroom to give the space of an apartment but,
they manage it like a hotel yeah we just seen a ton of interest in the market so now now we’re going to be sea route because like I don’t you know we don’t want to under capitalized the idea it’s a really big vision,
we basically want to be the everywhere store like we want to be powering shoppable experiences anywhere where someone’s natively,
using a product and when you take that really far out there like that does mean car rentals you know and,
when you can like a natively use a card doesn’t mean things like going to ski resorts when you’re using,
boots or gloves or skis fishing charters when you’re using,
rigging gear rods reels staged homes we’ve signed co-working spaces that were starting to launch with Ethan restaurants where we’re making like the olive oil shoppable on the Ceramics and even getting into,
selling wine we’re starting to like test,
which is you have to be really tricky with the sale of alcohol so some technical things were working through luckily one of the co-founders of drizzle he’s actually investor vanilla and so we have some good,
we have some good experience and people we can learn from but like we really want to be everywhere and just be the platform,
that makes it easy to make a physical space shoppable easy to set up products easy to bring those products into your space and easy to facilitate Commerce.
[46:13] And so that’s like a really big vision and so in our next round that we’re going to be going after like we are going to go to the Venture route.
[46:23] Because we want to really get after I mean there’s a big network of that here I like the more spaces you work with the more purchasing power you have more guests are getting in front of.
Yeah and so.
But you know I think it’s got you of a lot more entrepreneurial experience than I do so that’s sort of just the perspective that that we formed as we’ve been going through this,
we can talk again in and a couple of years and I’ll tell you whether or not that was the right decision.
[46:52] Yeah the it’s interesting I Mentor a lot of first-time entrepreneur Zu and I’ve had a lot of sessions and everyone always goes through this kind of similar Journey where I you know
could never take more than five people to build this idea and then suddenly you’re like we’re I think everyone misses it is the go-to market you know so if we kind of think of your Tam just in the hospitality space,
yeah I could see you could put a hundred sales people against this and not even make a huge dent in it
um yeah so you know the go-to-market always is like where I think a lot of first-time folks have a bit of a blind spot unless they’ve been in a
B2B sales company where it just is a big lift to go you know you have this funnel where your every day someone is going to talk to.
20 to 50 people and then they got a conversion rate and then you got a long Pipeline and you know.
[47:43] For us it’s more on the account management and customer success the hide like there’s just so many prop and we want to manage this store as well like these stores need optimization like.
It can really change the economics of the property right like so talking about that property we have this comparing it 25% it’s like,
again one of every guests and one every four guess is buying something there any Commission on that like that changes that totally changes the economics of operating their space,
like you get the point where the commission’s outweigh the are larger than the initial cost you invested in like furnishing.
The environment so we spend a lot of time with property sort of thinking through their amenities thinking through brand Integrations what they should bring in and so it’s really on that like sort of those are things that we don’t want.
To like make self-service or automated because we’re learning a lot so it’s really about eating of that team.
On the business development side we’ve been very fortunate where we just get a lot of referrals like a lot of Our Brands aren’t just in one hotel you know so if you work with like,
ratio coffee make these beautiful coffee machines or work with them in one property and then they’re like wait a minute can you think me shoppable and like these five other properties like we’re also there,
and so then we’ll get a Shirley can you introduce us and so of course we need to staff up.
The the PD side because it’s a calm you know it’s a solution it’s it’s not a commodity so you need like sales people sort of explain that but.
[49:12] For us it’s really kind of like getting I think account like customer success and people can manage all the properties in the retail it’s occurring.
[49:22] It’s another common theme is the go-to-market surprises people and then you kind of get your head around the funnel
then you realize it’s not a funnel it’s an hourglass in it’s kind of like all right we did all this work to get all these properties on and then now know how do we get them from
And every room every room optimize around one every room Optimizer so there’s like this there’s always way more work than these things than any kind of anticipate when you you’re just kind of thing.
[49:49] Yeah you need both you need biddy to go out and service opportunities and then it’s exactly like you’re saying that you can close all these deals but if you know the infrastructure or the right processes to get people actually on board and,
and set up and manage well then yeah that’s good I wish maybe she’ll shamelessly steal that hourglass analogy.
[50:09] Yeah I imagine it’s key to keep that hourglass like somewhat balanced to is the thing you don’t want too much sand pouring in there until you have to the right size vessel to catch it.
[50:22] Right yeah and that’s what we’ve been doing and we’re barely even doing we have a video person but she’s like not reaching out to any new properties because we have her doing.
Basically you like more the customer success,
work right now and so it’s like we’re like yeah and we’re growing we’re going within the Network’s of our existing you know we’re launching more of on stay homes more mint as property stuff.
[50:45] Sounds like you have some opportunity to expand through word-of-mouth from your existing partners.
[50:51] Yeah and that’s part of what I think in that transition going back to how this started like thinking you’re going to bootstrap its anchor I don’t think some money but only Angels you know one institutional money is nothing like okay now I understand why,
institutional money exists it’s like.
Good to pour a little gasoline on something that’s that’s you know working where you understand how it scales and to just get like the people in the right roles to make sure that you can get there.
[51:18] Yeah it’s nice though when you can raise the money when you’ve proven enough value that they know they’re there they are just paying the poured gasoline on and not like.
Prove the model app the so,
kind of thinking forward it seems like you have a lot of runway in Hospitality it seems like obviously there’s the,
all the sort of in-room experiences but you know / the other examples like you’re also renting a car and that on that vacation and you’re doing some like fun activities and it seems like you can expand in all those areas is,
your vision right now to kind of stay in Hospitality or like does this have a play in like.
Wildly different use cases that were not even thinking about yet.
[52:05] It has plays in a variety of use cases but it’s it’s can be very tempting.
And to get distracted yeah like it be very tempting to like get into a bunch of new vertical so we were actually we were approached by like a sports complex that is huge sports complex and like Atlanta,
that has a bunch of like basketball courts and like baseball fields and it’s like a training complex.
Where they wanted to put together programmer it’s like we want people to be able to buy like basketballs they’re using or try different baseball bats and then the one that baseball bat they like they can just order and so on,
and then it I mean every category almost has a different application of native retail like Amazon.
Just opened a salon which is.
[52:57] I are actually booked to fly over to London and get our dues.
[53:00] Oh I would love to I will have to tell have to check in with you after you do that but like that’s native retail in a beauty environment right and so.
[53:08] And I think that’s why they did it like I I think it’s an opportunity to get into that like professional beauty product line more so than they’re trying to monetize the service of cutting hair.
[53:20] Yeah yeah and so there’s a ton of different,
every category has its own of its own native retail use case we’re focused on Hospitality I just believe on.
I just believe in I think focusing is incredibly important and so it’s like let’s conquer one Hill and then move to the next cell and then get onto a bigger Hill and then get to the bigger mountain and then you know go from there and so the short-term is certainly,
Hospitality but there’s there’s there’s lots of applications.
[53:52] Yeah I’ve read about that Focus I’ve never tried it myself but I’ve heard it’s been successful for others.
[53:58] Yeah me too that’s fine.
[54:01] Awesome Mark we could talk about this all night but it has happened again we have used up all of our listeners allotted time,
as always if there’s any questions or comments that folks have their listening this podcast feel free to hit us up on Twitter or Facebook page,
and as always if you enjoyed the show it’s a great time to jump over to iTunes and leave us that five-star review You’ve been meaning to do.
[54:28] Marc we really appreciate you taking time to be on the show and if folks want to find you online what’s a good place for them to look yet.
[54:36] Has been great to be here you could find us at minoan experience.com are you can e-mail [email protected] if you’re interested in learning a little bit more.
[54:51] Awesome we will put both of those in the show notes and until next time happy Commercing.
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