Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me is Paul Palmieri. He is someone who’s, who’s done it. He had a company built it up, sold it, sold the tit AOL, took it public to Paul. Do you remember the day that you went public
Paul: absolutely,
March 28, 2012.
Andrew: March 28, 2012. Tell me what the experience was like. What stands out for you from the day that you took your company public?
Paul: the breakfast in the morning, which was incredible at the New York stock exchange, having your family there. I had gotten some advice from Jeff Wiener, uh, who had just taken LinkedIn public and Jeff Jordan. We’ve just take an open table public. And they had recommended NYC over NASDAQ to me.
And one of the things they said was, Hey, that day is just incredible day. They put on a great breakfast. Bring your family, bring your mom. Uh, it’s such a special, special moment. And boy, uh, boy was it for millennials? A great, great day.
Andrew: Millennial media. How would you describe what that company did?
Paul: millennial media, um, brought advertising to mobile devices and, uh, enabled an entire generation of developers. To have a business model for building free apps. Uh, we started the company as an economic platform for developers in the very early days where they really only could charge for their apps, but apps really needed to be free a year or two later along comes the iPhone and along comes the app store.
And, we were positioned incredibly well, uh, in that moment. we were able to then. Grow the company over seven or eight years, uh, take it public, uh, NYC. And it was, uh, it was a fantastic, build of a company in a team that has gone on now, members of our team are either the CEO or the founder of 40 different companies.
And I’m just so proud, uh, of the entire experience there.
Andrew: Many ways you are. So ahead of your time, when, when it came to advertising to mobile, you also did a bunch of acquisitions. Then of course you sold the company. You are now here as the founder of trade swell. And the interesting thing for me right now is 2020. Just made e-commerce explode. I see it in my interviews.
What I didn’t see until I started talking to you is all these companies are selling on multiple platforms because they have to, and. You helped me understand that they then have to keep track of how much inventory they have, how much they sold on each platform what’s selling well, and not just keep track of inventory, not just keep track of what’s selling, but also keep track of what they’re advertising so that they’re not promoting a product that actually got sold out because of, I don’t know a sale because of a sale where on their Shopify store or on Amazon or something else.
Right.
Paul: That’s right.
Andrew: And that is the big, hairy, audacious challenge that you’ve taken on for yourself. What traits while you want to take the whole, I guess the whole marketing ecosystem for this business on.
Paul: Yeah, I think, you know, for us, we did, we looked at this problem and exactly similar to this developer problem. We solved four years ago. We saw a market in e-commerce with hundreds of thousands of brands that are out there, uh, selling their products on various marketplaces. And those brands have very little economic power.
All of the economic power is held by the platforms because the brands themselves have a very difficult time. Bringing together, the information that they need to be able to grow their business. So we, we applied a solution that admittedly comes from our understanding of ad tech, but really added in the e-commerce retail side of the house and added in the logistics side of the house in terms of an awareness of data with which to then reveal and make great decisions.
Andrew: All right. I’m going to find out about both these businesses in a little bit in between. Thanks to two phenomenal sponsors. The first do you, do you still read your own email, Paul? You do? I do too, but I’ve had my assistant for years go through my email first to just clear it out. I saw your eyes do something.
Is that like a shocking thing for you? Is
Paul: No, I, uh, uh, I, it sounds good to me, actually. It sounds great.
Andrew: it was. And then I found SaneBox and SaneBox just automatically will do the things that she did, you know, clear out the stuff that’s jog. Tell me what’s important, make sure that I see the things that I need to see in it and not the things that I don’t anyway, they’re making it available to people to try right now, if you’re listening to me, you can go to sanebox.com/mixergy.
They’ll let you try it for free. And, uh, the second sponsor is HostGator where they’ll host your website. Like they host mine. Let me see if I understand where this idea came from now, you were, you were working a grit partners, having conversations as an investor. And what, what people talking to you about that led you to found traits?
Well,
Paul: Yeah. So, um, really we saw a whole bunch of deals that, uh, Greek capital partners and. Many of the direct to consumer plays that we saw that we passed on because the margins were either Finn, uh, or unknown, uh, to the, uh, brand or didn’t really improve at scale. And so after initially investing in a few members of the trades well team, uh, to work on a project, I really saw a massive opportunity opportunity here to join the team
Andrew: wait. So you’re a VC. You are seeing these ideas come in and you said, Hey, how about you? People build this. And then when it was going, you joined them. Is that right?
Paul: something like that, but I would say, these few members of the team I had worked with in the past at millennial media. And so. I had initially invested, in their project and as the project began to have steam, I thought about all of these pitches I was seeing where the economics didn’t just didn’t really make sense because e-commerce, wasn’t really figured out.
And here’s this team trying to figure out it out and apply technology and artificial intelligence to this data. And gosh, I thought it was an incredible problem to go solve. And so I joined the team as co-founder and CEO to help direct to consumer brands take advantage of this booming e-commerce market that here to four has been dominated by the e-commerce giants.
Andrew: Give me a sense of what you were hearing. Do you have without obviously mentioning the name of the company? What’s an example of someone who came to you. You that illustrates the problem that you’re now solving.
Paul: an example was a product company that, that came to us and they were completely unsure. Of whether they could be profitable. So, uh, of course that wasn’t their first pitch, but as we dug in with questions about their product oriented, direct to consumer business,
Andrew: What type of product are we talking about? Toothpaste, something like that.
Paul: this is the grocery product.
Andrew: product. Okay. So they were selling some kind of grocery product online on multiple platforms like I described earlier.
Paul: Multiple platforms and really didn’t have an understanding of their profitability because one channel required them to have one logistics scenario
Andrew: What are the different logistics scenarios that we’re talking about? One of them I’m assuming would be Amazon, where they want to store their products and that they could do next day delivery. Right.
Paul: That’s
Andrew: Okay. And then the other one, what else was available?
Paul: The other one was a third party logistics, uh, uh, solution. But again, if I look today, I looked at their channels. And it looked to me like whether it’s Amazon, Amazon seller and vendor at Walmart and those couple of relationships you can have there and target and, uh, Shopify and others. Each of those requires a different scheme for fulfillment.
For marketing and for the assortment. And so we looked at this and we said, gosh, how is this problem being solved? And as we looked more deeply into, it realized it’s being solved often by agencies and consultants that are high priced and taking a large percentage of the GMV. In addition to all of that fragmentation being generally more costly.
Andrew: they would hire one agency and say, we’ve got our stuff at Walmart. We’ve got our stuff on our Shopify store. We’ve got our stuff in Amazon, help us sell more. And the agency I’m imagining then would buy ads and then report back on the number of sales that they got from each ad. But nothing more than that.
Am I right?
Paul: That’s exactly. That’s exactly right. And as a matter of fact, uh, I’ll give you a great story of a skew. Uh, that we saw from this fall, the advertiser spent, and the brand spent $4,000 and drove, $25,000 worth of ad attributed sales.
And their agency was going back to them saying, Hey, we’ve gotten a $5 return on ad spend. In fact, what we see in our platform that we showed the client was actually that if you then look through to cost of goods sold, which we are also pulling in from the clients, if you look into cost of goods, sold Amazon prep for, uh, fulfillment fees, seller fees, storage fees, you look all the way down.
They were actually losing 38 cents per unit. Before they spent the $4,000. So on one hand, this brand is being told by an agency, Hey, we’ve returned $5 for every dollar that you’ve spent. When in fact the net situation is negative $5,500 or something along those lines on, on an overall business of, you know, $40,000 for this one skew.
Andrew: Oh, I talked to e-commerce people fairly often. They’re so on top of their numbers, but they don’t even put this stuff into a spreadsheet. They’re not keeping track of all these expenses on there. Not because it’s
Paul: again, again, I think you have, you have a world that is somewhat bifurcated on the one hand you have traditional brands and they generally have less visibility into their costs. And so they have. Economic issues having to do with transparency. On the other side, you have direct to consumer brands who potentially are funded by VCs.
And so the C’s are telling them, you must know your unit economics and they know their unit economics, but they’re really not sure exactly how to scale, perhaps they’re on their own website and they’re utilizing Shopify and they are. Scared to move into the other channels because they don’t really want to do business any less profitably, but the economic picture that can be made more clear to them is one that, yes, it might be three times less profitable on Ms.
SKU, uh, to sell your goods on Amazon, but you might do 17 times the sales. And so, uh, uh, and so the platform that we’ve built helps them to understand that.
Andrew: Aren’t even doing this in a chaotic way, in a, in a time sucking time, wasting way in spreadsheets, they just weren’t getting this level of depth. And as a result, they were staying away from selling in certain places because they knew that they couldn’t get enough, uh, data on right.
Paul: That’s exactly right. A lot of assumptions, a lot of great efforts in, uh, Excel, a lot of great, you know, early sort of Looker instances to try and figure out these, these, uh, Type of problems, but, uh, uh, never really with the full picture, let alone a platform that allows them to not only reveal what the next optimal, the next most optimal action is, but one that will take that action as well.
Andrew: All right. And then that helps me understand why you wanted to do so much, that it does make sense to TA for a period there. I said, why is Paul getting into logistics? Who cares? He’s the, he’s the advertising guy. Just tell them what they’re selling, tell them how much they’re making on it, and then let them sell more of it.
But you do need logistics because. Well, you helped me understand that further out to me.
Paul: Well, I think again, um, you know, and, and we had trades, well, we’ll never physically touch a box, so we’re not in logistics from that perspective, but it’s the knowledge and the communication of what’s happening. Within logistics and within, uh, the operation side of a business is incredibly important for us.
And it’s incredibly important because you want to be, you want to make sure that you’re selling the right thing. You want to make sure you’re optimizing the right thing. And gosh, we arrived on the scene less than a year ago in a market where. There were a lot of hands in the cookie jar, frankly, that in 2020, there were elbows in the cookie jar.
And you can think about agencies that, that, you know, are charging on a percent of ad spend, uh, who, you know, don’t want to stop spending. Uh, but you can also think about logistics companies who are pushing multi-packs. Right. So you have 20 skews and the logistics company wants to do 10 multi-packs. Well, what happens at the end of the month, you have 10 half pallets full of product that are all generating storage fees.
And interestingly logistics companies make money from storage fees
in
Andrew: they’re pushing, I didn’t know this. They’re pushing their clients, the ones who are storing product with a logistics company and then paying the logistics company to ship it out. Whenever there’s a sale, these logistic companies are saying, why don’t you create bundles of your products and we’ll help you sell those.
I didn’t realize it would pushing that. Okay. And I thought that also, one of the reasons why you want to do logistics is to just know what’s available when you’re selling on all these different platforms. I’m on your site right now. And there’s target, there’s WooCommerce, there’s shop. Obviously people aren’t picking both Shopify and WooCommerce, but we’re seeing more and more places where, where we can sell.
Right.
Paul: Yeah, I think, and in general, you know what, you’re, what you’re seeing, you know, quite a bit, uh, or what we’re seeing quite a bit is brands that we’ll be selling via the vendor channel for Amazon. There’ll be in the seller channel for Amazon and they’ll have either a blue or a, or a Shopify or something along those lines.
And then they will have. Other, uh, other channels where they’re in the seller mode and the, the trick is to bring all of that data together so that they can see one holistic view of their business and generate a dynamic P and L so they can see how the business is growing, taking into account, you know, everything from, um, again, the assortment that they’re putting it out, out there on a skew by skew level.
Sales data, marketing data, and then, um, uh, the logistics data and all of that also allows us to help them to forecast as well.
Andrew: All right. I’d like to go back a little bit to, when was it? 2006 is when you created millennial media. Let’s talk a little bit about that company. Where did the idea come from?
Paul: Well, 2006. So I had just come off a good run, um, working with a team of people to build about a, at the time, about a four and a half billion dollar business at Verizon in mobile data. Um, we launched, uh, the first app downloads, uh, in 2002 and by 2006, when I left there and started millennial. We had this, you know, very, very large business.
And again still was a year, a year prior to the iPhone. Um, so again, we looked at this problem. We knew there was going to be a big market for ads on mobile devices, but we also knew that it didn’t really have to do with the browser that it really had to do with the apps. And it had to do with the economic opportunity and economic power.
That the smallest developer had.
Andrew: How did you know what, what apps were, what, what apps existed in the early two thousands before the iPhone revolutionized things?
Paul: So in 2002, we launched a service called get it now, which was downloadable apps to the first was a Motorola seven 20, uh, smartphone. And, uh, we did a hundred million downloads that year, uh, 2002. Uh, amazing. Uh, the bowling, the JAMDAT bowling app was the number one app for sure. And that actually almost 10% of the devices we sold were so had an app where it had that app or, or subsequently downloaded that app.
So it was casual games, it was some ringtones, uh, and, uh, uh, some kind of puzzles and things along those
Andrew: And the bill for that when somebody bought one of those games would go on the phone bill and then the phone company would send the money to the money to JAMDAT or
Paul: Yeah, that’s right. That’s right. And so our big innovation at the time was, uh, in Japan, there was one mobile carrier. That was sending the lion’s share of that revenue back to the developer. We decided to be the first one to do that in the U S. And so we created a, a 70, 30 rev share, frankly. I think it’s the same 30% that Apple is, uh, that people are complaining about with Apple today, uh, as the, then prevailing
Andrew: So Verizon created at first.
Paul: that’s right.
Andrew: Okay. I didn’t realize that. All right.
Paul: Um, we did. And, um, so again, it was these games, ringtones and things along those lines. And along the way, uh, we were charging, I dunno, three 99, four 99 for a game. And, uh, uh, we even had some subscription models that were there in the early days. But really, I always thought there would be an advertising model that would, that would really need to drive it.
And that’s where in 2006, my co-founder and I founded millennial media, uh, with an idea that we would enable a mobile advertising market. But that really what we were doing was building an economic opportunity for the developers and for the apps.
Andrew: I’m S I’m sorry to interrupt, but I want to understand advertising back then would have meant an ad in the, uh, in the game or in the app. Leading to I’m assuming something that then Verizon would bill for, that was the original version, like a ringtone that Verizon would then bill for and
Paul: Well, it could, it also, there was interaction even in those days between the apps and the browser. So you could, uh, re recall our first few advertisers were. Uh, electronic arts, um, uh, DiGiorno pizza. I remember doing an, a very early campaign with us and they had nowhere to send people. So we built a mobile site, uh, for them in the browser.
So it would kick them through, over to a browser. Uh, and they were an early customer. I would say the theatrical, uh, Hollywood theatrical category was very big in the early days as well.
Andrew: Yup. Okay. All right. So then you came up with this, I’m assuming you partnered with Verizon or did you
Paul: No. Um, we, um, uh, okay, so now it’s 2006. We partnered with developers, uh, or sorry, publishers, uh, Major league baseball. Um, certainly jammed that because we knew, uh, knew those folks as well. Um, uh, anyone who was really building an app for a mobile phone and also running a mobile website and we would use display ads, whether they were banners or expandable banners or something along those lines over time, what we really realized is we needed to build software development kits for the developers.
To be able to put them inside their apps and that there’s software development kits sometime really had to be robust because. Electronic arts at the time was considering putting that, putting this into their games and you really can’t get that wrong if you’re EA and you’re trying to launch Madden football day and date with your console, launch your mobile, your mobile game.
Um, it really had to be Bulletproof, but we became known as, as great builders of these software development kits, where we would do things like pre-cash video. Uh, and things along those lines. So we put out the SDKs and then we built a world-class advertising, Salesforce, uh, you all over the world, uh, as we grew and, um, You know, it was, it was just fantastic.
And of course, mobile had the other dynamic of location targeting. And so we built a 340 million cross screen profiles, um, that were informed by location and created, uh, audience segments. Uh, and I would say in the middle, middle years of a millennial, I would say, you know, 2009. To 2012, that was an incredibly large, uh, part of, uh, the business.
And then of course, things began to, uh, go into programmatic and we, uh, we did some acquisitions. We made, we made that transition as well. And, um,
Andrew: How did you transition into, into the iPhone age? did that go for you internally?
Paul: Yeah. So is it fun, funny story? Uh, you know, we, we go to our, uh, June, I want to say, uh, June, 2007. Um, uh, maybe, I don’t know, we went to a board meeting and we had a board member say, well, what about the iPhone? And it was, you know, usage wise. It was the 40th. You know, best usage that we’ve seen. And, uh, we had, uh, one, uh, uh, more junior member of our team speak up and say, Hey, it’s the, like the.
Eighth largest, you know, whatever, whatever. And it was like, no, no, no, no. The iPhone is different. It’s going to change things. And, um, you know, I would say within a couple of quarters of it launching, and particularly when the app store launched, I think it was very, very quick where the iPhone usage, uh, it became clear that that’s where consumers.
Would begin to have an insatiable desire to go beyond voice on these cell phones and, uh, uh, that our model, uh, brought through the developers would be compelling.
Andrew: Any, so it took you a little while to understand that you needed to go there. You did go into there. Did you do it? Did you, were you, um, when the app store launched, were you in the apps that were in the app store?
Paul: We were in, um, a few of them. Um, I want to say, uh, Pandora, angry birds, um, a few others, but I, you know, we were in of the top. At a point of the top hundred apps, we were in 60 or so of the apps and of the ad age, top 100 advertisers. We were doing business with 90 of those at a point.
Andrew: You raise what? 60, $65 million somewhere around there.
Paul: Yeah, I think it was 69 million over of about four rounds of venture funding. Um, we raised, uh, we did the IPO, um, raised, uh, probably another 150 million in that primary there. Um, they never talked about secondaries, but we had, uh, we had fantastic, uh, success, uh, in that area as well. And, um, you know, it was good.
Andrew: And then you sold for $238 million.
Paul: So actually we took the company public in 2012, in early 2014 after delivering $109 million revenue quarter, um, I stepped out and went into the venture area and at that time, I did, you know, the, what, the, what the best practices, the Jack Welch best practice, which is if you’re a popular, you know, CEO stepping down, don’t hang around the board.
And so I stepped down in early 2014, uh, end of January. Uh, and, uh, we hired Michael Barrett to come in and, and, uh, uh, uh, BR head coach. And, uh, uh, he then, uh, uh, continued to grow the company and, uh, the company again was acquired in, uh, the following late the following year, I think, October of 2015, but I wasn’t involved with the company at that time.
Andrew: Is it inappropriate to ask if you divested yourself at that point of the, of the business?
Paul: Uh, at the time I left,
Andrew: Yeah.
Paul: no, definitely not. It’s
Andrew: were still an investor
Paul: It was my baby as my team. I’m still at the time of the, uh, at the time of the, um, uh, acquisition. I was still the largest individual shareholder.
Andrew: Oh, wow. So then considering how much money this is, this is getting inappropriate. I don’t know you well enough, but considering how much money you’d raised and in the sale price, it doesn’t seem like it was as strong as you would have expected. Right.
Paul: Oh, no, no, no, no, no, no, no, no. We actually, because our enterprise valuation at IPO where we sold into the IPO was 1.6 billion. And, um, in the secondary, which again, nobody talks about these things was over two.
Andrew: And, but then, but then did you sell for less than that for less than a quarter million dollars? Or am I misreading this? Maybe I’m misreading the articles.
Paul: Yeah, no, the company, the company was acquired for substantially less than the valuation, uh, in, in the year or two after we went public. That’s
Andrew: Why what happened?
Paul: Well, I, I, uh, I think that’s a good, that’s a good question for the, uh, for the management team that, uh, that, that was there, but what I, but the honest truth is on the quarter that I stepped down, that we were just reporting the fourth quarter of 2013 Facebook’s ad revenue in mobile was zero. And. Almost day in day date. When I stepped down, they went hard after mobile advertising. And so I think it was a pretty tough thing to be a mobile advertising company in 2014 and 2015, because Facebook was definitely taking a bunch of air out of the room. No question. And they executed very well, frankly, as did the team at millennial media.
Um, but, um, but you know, the reality is in that period of time, you saw Google and you saw Facebook beginning to get the kind of advertising primacy that they enjoyed for at least three or four years before Amazon began to really get deeply involved in the advertising space.
Andrew: Okay. All right. How’d you like? That was your next thing.
Paul: Uh, it was great. I think it was, I think it was hard to make that transition. Um, I make everybody who’s an operator thinks they’d be a great investor. Because you, because you’ve seen a lot and you kind of feel like you’re going to understand things like exits and deal momentum and things along those lines.
And that is true, but there’s a lot of nuance in the investing area as well. And so, you know, I, you know, I learned, I got lucky on a bunch of stuff and I got, I, I learned tough lessons on a bunch of stuff. You know, alert definitely learned the value of investing in the people over the idea. Um, and, uh, you know, definitely have, uh, you know, a couple of, couple of nice size, uh, scars for mat, which is great.
Andrew: What’d you learn about investing in the wrong people. What makes somebody the wrong person in your
Paul: well, not necessarily the wrong people, but, but I guess my point is that the idea can’t be stronger than the people.
Andrew: Uh, so the wrong people for the idea.
Paul: yeah, well, no,
Andrew: me what you mean. Help me understand.
Paul: I mean, if you have this great idea, that’s like potentially a world beating idea. And the person who has that idea is, has a difficult time raising money. It’s not going to be successful no matter what they do.
Andrew: If it’s a great idea, why would the person not do well raising money? What is it about the person in your experience that keeps them from raising money?
Paul: Uh, probably S probably insular thinking, small thinking things along those lines, but I would say, um, you know, I could, I could, I could name, I could name names, but I’m not going to, but you know, what I’ll say is, uh, you know, there was, there was one where I still think it could have been a world beating idea.
And it still hangs around as a zombie today where every nine months the, the, you know, the team raises another 500 K to kind of keep it going. And that’s been going on for seven or eight years or something along those lines. So anyway, I learned
Andrew: think that they could do? What do you think that someone could do better in that situation? Or just give up if it’s, if it’s a zombie at that point, just move on and start something else.
Paul: Well, I think that’s right. I think, I think knowing when to quit is, is really important. Um, I also think it’s, I also think it’s, it’s incredibly important when you’re making an investment to make sure that the people you’re investing in are going to be incredibly compelling. As CEOs, because a lot of decision-making that investors will have downstream of you as a seed investor, will, will do that calculus and say, you know, at, at FDA, uh, we used to have, uh, uh, discussions about, you know, is this in any a CEO, you know, is this the kind of CEO that can get a check from us?
Andrew: I didn’t know you were at NEA. This that’s the biggest VC firm. Isn’t it.
Paul: Yeah. So when I left millennial media, I went to NDA for, um, um, about, uh, about two years as a venture advisor. Um, and, uh, and then started my own and did some of my own side investing as well in which I learned this lesson I was referring to and then started my own firm, uh, Greek capital partners with one partner, uh, Mike Flannery in New York city.
And that fund has done phenomenally well, so glad I learned the lessons I learned, uh, early on in that, uh, investing run because grit capital’s done incredibly well. And, um, we’re actually, uh, uh, beginning to raise our second fund, uh, as we speak.
Andrew: Why’d you name it? Grit. I feel like that says something about you.
Paul: Um, I believe that, uh, Passion and perseverance, uh, really trumps a lot of things in life. And, uh, it does say a lot about me. I’m a kid from Jersey living in Baltimore and loving it. And, uh, so you know, to me, I think, you know, it’s all about grit. It’s all about what are you willing to do? To be able to be successful.
And that’s whether you were, um, uh, whether you’re, um, running a youth group at a church, or whether you’re an entrepreneur building a company, or whether you’re an accountant in a big, in a big accounting firm and are, you know, going about your day. You know, if you, if you put your shoulder in and you’re determined, Uh, you have a much better chance of succeeding than somebody who had the right smarts, the right education, the right, this and the right
Andrew: Do you have an example of when you did that, when you, when you showed grit, one story that kind of sticks out for you about your life.
Paul: Well, um, I would say, um, I would say this investing piece, I think, you know, just to be honest, uh, I, I, um, I lead millennial media. I’m a wealthy person. And, uh, I decided, Hey, well, doesn’t everybody get into the venture capital area. And, uh, uh, and in fact, you know, you, you invest, you, you learn difficult lessons and you know, it, it, it takes a while to sort of grind.
You know, frankly, uh, you know, if it were 20 years earlier and I was a, um, uh, zero to public CEO where everybody made money, uh, I would have been, you know, picked up as a, as a full-time GP in a heartbeat. Um, I didn’t get many of those offers though. Um, and so I ended up starting my own firm. And so, you know, that’s, it, it’s just like grit and determination.
I’m going to learn this. I’m not only going to learn how to invest, but I’m going to learn how to run a fund. I’m going to learn how to raise my own money, uh, as a fund. And I’m going to learn how to do the reporting and hit the numbers and hit the marks and, uh, you know, be value. Add. Uh, to the, uh, to the companies we invested in.
And, uh, and that’s,
Andrew: a shot with NEA. If it’s two years at NEA, didn’t you get a shot at NEA? If it was two years there.
Paul: So again at NEA, I was, I was a venture advisor, so it was kind of like venture partner. So it’s kind of like, come and go as you please sit in on the meetings, uh, help, help companies here and there. If you really, you know, if you really wanted to join the firm, I think I probably could have leaned in, but I was in kind of the mode of coming off of millennial and I was probably enjoying time a little time.
Uh, uh, less busy at the time, but really, you know, you know, figuring all of that out and finding out that really the answer for me was start your own, which is much more of an entrepreneurial journey. Um, was, was an area where I kind of used grit to get myself from one place to another.
Andrew: All right. Let’s talk about traits. Well, but first I want to say that my first, my, my big sponsor for this interview is a company called top, uh, top tail HostGator. Paul you do, you know, you have a presence about you. I don’t know what it is, but the reason partially that we’re stumbling over each other is there’s a little bit of a lag, but I also have to say there’s something very intimidating and very boss about you.
Right, right from the start. I don’t do you always have that? I used to do that to, to my friends. I would be even as like a seven-year-old I would have this, this book in my eyes, like, what are you even talking about? And I would intimidate them through that. And I didn’t mean to, did you always have this?
I’m the boss type of attitude type of personality.
Paul: I don’t know. Um, I’m not sure. And, uh,
Andrew: You’re likable person. I could see it. Your smile makes you likable. There’s a there’s stuff that we’ve talked about even before we got started, making me feel comfortable with you, but there’s still a, Hey, I’m the boss. We’re not screwing around here. We’re getting to work attitude.
Paul: I definitely, I definitely have a, uh, all business side of me. So that’s, you know, I don’t, I don’t know what I can say.
Andrew: All right. So HostGator, they will hold it. Skater will host websites, uh, on the WordPress platform with WooCommerce. Let me ask you this, Paul, you’ve seen a lot of, uh, e-commerce company come around. Imagine someone’s listening to us and says, you know what I got to get in on this e-commerce thing. I’m going to go to HostGator.
I’ll set up a WordPress site. I’ll add WooCommerce. I’ll be up and running with a store. Do you have any ideas for what they should be selling? What’s what’s something they could start right now. To offer online. What’s a good, what, what have you seen do well?
Paul: Well, it’s hard. It’s hard to say what hasn’t really done. Well, Pandemic. I mean, it’s, it’s, it’s very, very broad based, but I would say, um, relative to, uh, things that do well in e-commerce, I mean, grocery is hot health and beauty is hot. Grooming is incredibly hot, uh, right now. Uh, so those spaces I would say are, are incredibly strong.
Andrew: Groceries is in, like, you could imagine somebody selling, well, this one guy who, who I’ve been chatting with online, he sells nothing but onions. I think he owns a, I forget the name. I think onions.com even as one of his domains. Yeah. He’s a, he’s totally into onions now and, uh, ranch life. But you’re saying even something like that, like a grocery item like that, that specialty to them, they could sell it, ship it.
That’s hot now.
Paul: That’s right. And, and then the other just kind of like inside baseball, one is you want, uh, you want a low weight, low cube. Okay. So cube is the dimension. So you can imagine that a big brick of toilet paper is heavy. And the dimensions also drive the shipping price. So something like a silicone ring that you then put into an envelope and ship it.
Uh, if I were advising, uh, uh, this person, I would say, find something that is low cube, low weight and
Andrew: about he sells? Like, if you’re thinking about groceries, not potatoes, but Zafran
Paul: That’s
Andrew: the speed of spice rack of the internet, the specialty we go direct to the farmer, we grow it ourselves type of thing.
Paul: That could be, that could be very
Andrew: You smiled. As I said that I got one of the biggest smiles from you. Have you seen someone do well with that?
Or did we just hit on a really great idea?
Paul: Uh, no, I think it’s, I think it’s actually, you’re hitting on a great idea.
Andrew: Um, all right. So if you’ve come up with that idea or anything else or steal my idea, or want to partner with me on an idea, go host it. Right. And hostgator.com will take great care of you. If you go to hostgator.com/mixergy, throw that your, that slash Mixergy at the end, they’ll give you their absolute lowest price and they’ll take great care of you.
Cause they’ll know that you came from me. hostgator.com/mixergy. Um, Did you have conversations with potential customers before you launched or created the first version
Paul: Yes, absolutely.
Andrew: How, what were the conversations like? What did you learn that you didn’t know considering how much experience you’re already bringing in?
Paul: Well, I have a lot of, I have a number of co-founders that have incredible experience in specifically in the e-commerce space. And so frankly, it was them doing the questioning of, uh, of, of people they knew who were. You know, looking for much more liquid access to their data, much more of a real-time view of what was going on, and also really understood this interplay between, uh, uh, what’s happening in marketing and what’s happening in logistics and how that affects the assortment.
If you have a $5 box of pancake mix and. Amazon’s going to charge you $6 on prime day to ship it. We want to take that off the market. On prime day, we want to put the $20 box, a pancake mix, you know, on it. And so it’s like, it’s it’s insights like this, even before we built the, uh, the platform. That really, uh, that really have informed our thinking around why this problem really needs to be solved as a holistic map.
Andrew: So it is holistic. It goes from beginning to end. How long did it take you to create this first version to the point where you can actually give it to a retailer and say this or two, excuse me, two to an online creator and an online creator to a, what is it to S to, to a store, to an online it’s not a store it’s that they’re makers and sellers.
Paul: Yeah, that’s right. So grant, I would say, you know, we, we kind of say brands and our core is digital first marketplace brands. Now we have, we kind of think about it. And, um, so what I would say is we got a, we got a minimum viable product, first platform up very quickly, and we very quickly got, uh, paying customers on it that began, uh, the began to use it.
And
Andrew: in that first version? What was in that MVP?
Paul: Uh, well, uh, definitely the, uh, uh, data visualization across, uh, various channels, um, and definitely the first version of the algorithms around, uh, shopper marketing.
Andrew: The first version of what does that mean? The first versions of the algorithm around shopper marketing.
Paul: So, um, the first versions of the algorithms that would drive the ad spend.
Andrew: Uh, I understand what should be sold based on existing sales, based on performance of the ad.
Paul: And also like what should the bid prices be and what is the impact of that on net margins, et cetera.
Andrew: So do you work with agencies first or how’d you get your first clients?
Paul: No. Um, we worked with, uh, so a couple of our co-founders have been, um, in, uh, CPG for a long, long time. So, uh, uh, one in particular, uh, Ron poochy. Uh, he was with, uh, uh, Pepsi-Co, uh, in e-commerce, uh, for, for, for while, and then, uh, led e-commerce at McCormick spice as well. And, uh, back to the, uh, back to the spice, uh, uh, uh, thing, which is probably probably why the, uh, the, uh, the wink and the nod.
So, yeah. Good. So actually McCormick was one of our first customers.
Andrew: Yeah, I see it up on your site right now.
Paul: what’s that.
Andrew: I see it on your site right now. McCormick.
Paul: So solving this for, for, uh, solving, you know, uh, the, some of these e-commerce challenges and, you know, McCormick, I think in the, in the very early days was looking for a very specific, uh, you know, kind of a very specific thing that, that we solved for them.
But, um, uh, Again, we got this minimum viable product up and, uh, and very quickly thereafter, you know, began to bring customers onto the platform. Again, I think we have a, we have a team that has credibility both in the ad tech space, but also in the e-commerce space. And so I think people are generally willing to give us a shot, especially the things we did at millennial around building.
Uh, connecting data sources and appending data to ad impressions and appending audience members to various other audiences. Uh, and, um, I think that that really helps what we’re doing here.
Andrew: What’s working now for getting customers. What’s your number one channel?
Paul: number one channel I would say is our, uh, our SDR effort is, uh, is incredibly strong. So, um, uh, so we’re, we’re using a set of SDRs that we’ve hired internally and, uh, working with a consulting firm to kind of help us, uh, sort of, uh, get up and running with that. And, um,
Andrew: Our sales development reps. These are the people who identify potential customers start warming them up. And then when there’s an interest in talking to one of your, one of your salespeople, they schedule it and then the salesperson does nothing. But talk to customers. Doesn’t do any of the canvassing.
Paul: That’s exactly right. And sorry for the acronym soup, but yes, definitely this sales development rep path is a great path and it’s, uh, it’s one where there can be a little bit of, uh, um, uh, low risk communication back and forth with a customer, super comfortable for customers as well. And again, we’re, you know, we’re doing something here with software and software is supposed to.
Is supposed to make things less expensive and we’re also, you know, we’re adding, adding that value as well, too. So it’s good.
Andrew: Okay. Right. So if we let’s close it out with this, if we look back five years from now, what, what do you hope to see? What do you think traits while we’ll be doing.
Paul: I mean, I think, I think we want, what we want people to have said about us is that we’ve democratized some of the intelligence. So that brands have the tools that they need to sell on any platform and accelerate their, their growth across multiple different platforms. Um, I think we’d also, uh, we’d also like people to look at it and say, Hey, once upon a time, people worry, we’re worrying about will Amazon make enough money to keep my skew alive?
And they transitioned over time into thinking about themselves. And am I making enough money on all of the channels that, uh,
Andrew: Instead of hoping that Amazon will keep their e-commerce business going. It’s them getting to do it by putting it in lots of different places. What’s, what’s the most interesting marketplace right now that you’re seeing. And what do you see as one of the most promising marketplaces?
Paul: Well, I think, I think, uh, uh, it depends on the category, but, um, I certainly think, uh, Walmart is moving very quickly. Um, uh, they had, uh, uh, an announcement on Walmart connect. Uh, this past week. They are moving very quickly. Um, uh, target round Dell that is moving very quickly. And, uh, and then I would look at, you know, sort of some of the niche areas that are out there Ulta even, uh, Wayfair.
Um, um, and that’s interesting. And then the last thing is, uh, the piece around, do I order it online and pick up in store? And, uh, and, and so some of the online marketplaces are setting themselves up to really not care either way, whether it gets shipped to you or whether it gets picked up in store. And I think those are interesting dynamics too.
And we see that from home Depot, uh, and others.
Andrew: Be an all-in-one solution. Do you think we’ll be able to set up a shop completely on, on Instagram?
Paul: Oh, I, I think so. I think so. You know, Shopify is number of Shopify. Uh, merchants has gone, you know, in a very short period of time from 700 K to. Upwards of 1.2 million, I believe. And, uh, I think that’s, uh, that’s due in large part to some of the, uh, partnerships that they’ve done, whether that’s Walmart, whether that’s Facebook, but absolutely.
I think social is, uh, is a great opportunity.
Andrew: All right. The website is trades well.com for anyone who wants to go check it out. I’d love it. If people in my audience starts sign up and gave me some feedback on it, I’d love to hear about it. Everyone. My email address is andrew@mixergy.com. I want to know about EV everything and I know I can handle it well because I’ve got a, SaneBox managing my inbox so that if it does get spam, SaneBox will take care of it.
I do want to hear from you, let me know how this interview went. Let me know about, um, Trades Wells doing for you@andrewatmixergy.com. Thank you. Thanks Paul.
Paul: Wonderful. Thank you
Andrew: Thanks. Bye everyone.
