We caught up with Daniel Gulati (@DanielGulati) at ShopTalk 2018. Daniel is a partner at Comcast Ventures a venture capital firm that focuses on early-stage consumer internet investing. Comcast Ventures was an early investor in Away, MealPal, and recently invested in Zola (hear Zola founder Shan Lyn in episode 98).
We spoke with Daniel about his background, his book, Passion and Purpose: Stories from the Best and Brightest Young Business Leaders, his portfolio companies, the direct to consumer market, competing with Amazon, and the future of retail.
New beta feature, Google Transcription:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Tuesday March 20th 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your Scott Wingo.
[0:38] Hey Jason and welcome back Jason and Scott show listeners we are live here from the shop talk show in Sunny Las Vegas and excited to have on the show Daniel Galati
[0:48] Daniel is a partner at Comcast Ventures and has Ed Stinson retail with BCG fab.com fashion Steak & More.
His current portfolio companies include away mealpal Pancho shine and athletic welcome to the show Daniel.
[1:02] Hey guys great speaker.
[1:05] So before we even get into it I know you you I had a little experience with Fab is my name bringing.
[1:13] I had to do a double-take but I would say it was it was a roller coaster ride at 5 but that old good memories now so I think we’re good.
[1:23] That is the beauty of.
[1:24] Yeah that is video time.
[1:26] Daniel one of the things we always like to do early in the show is get get a little flavor for sort of how you you came to this industry and.
[1:35] What your tournament regulation was.
[1:37] Totally my matriculation well.
[1:41] Paid extra for using big words I’m not quite the sesquipedalian.
[1:46] I like it I just woke up.
[1:46] I just write that down so I guess I kind of made a winding road kind of photo ID Road into BC so started my career straight out of undergrad at a company called Boston Consulting Group B C J.
Management consulting firm and really a BCG focused on actually read retail clients so like very large retailers.
And you know at that time this car 2006-2007 a lot of those retailers were really thinking about just starting to think just starting to think about technology kind of customer facing.
So I think historically they had to wait till. Kind of court and Court it is kind of his back office efficiency box that they had to check.
And kind of with the growth of Amazon and and and some of the some of the other early e-commerce players Rita’s or technology is a customer-facing vectors of strategic tools.
Really starting to shift to the to the full front so a lot of my time there was cutting my teeth on filming digital strategy technology is big is Big retailers.
[3:06] I figured out that I had a passion for technology for early stage of embryonic Technologies and wanted to kind of double down there.
So you’re off to a few the BCG few great use a BCG went to Business School.
And started my first real company called fashion sacred Marketplace for independent fashion kind of vertical eyes that see.
I was at a time where the fashion industry specifically was kind of opening up so.
You know it’s going to sound really Antiquated but this is 2009-2010 where you at Young blogger is coming to New York Fashion Week to the first time I don’t like posting these like.
Amazing photos of all the stuff that was going on.
That’s one of democratization of the industry of never really happened before I think fashion was always cuz it’s closed.
Closed-loop industry and so what you had was you had these new wave of consumer demand that was Unleashed in consumers were really.
Trying to go beyond the traditional luxury brands.
And an answer to the aperture so different types of fashion from different types of designers.
Was increasing and we will try to hook into that so we we.
Rent in your eyes Venture Capital group the team ran the business for a few years.
[4:42] And a little company in New York called fab.com was just getting started in 2012.
And at the time it was basically the fastest growing e-commerce company you’re definitely here in the US.
And and maybe even be on that and you’re sad was really for those that don’t know if that was really a.
Highly curated design Centric e-commerce destination.
[5:14] Dynastar was kind of a flash sale and then kind of built kind of more going to carry that stuff around.
[5:18] Did will actually start a bit actually.
[5:20] Hook up yet.
[5:21] So was it what we had was kind of it was a hook-up site and then it became so to be a social media site.
For the gay population that was Jason Bradford’s stick and I had a big following and so have been pivoted to these comments destination.
And so they did amazing numbers Haven today the number is kind of throw out there you know you’re over a million dollars a month in the first 25 days and to the popping up from there.
And I really built their business off of Home Goods actually like Home Goods in and.
Home Furnishings in and fashion was always something that they almost needed to get into because of how big it was but just didn’t have the right and DNA and and you know we’re doing 20 other things that they around the core business.
We ended up joining forces in January of 2012.
And a whole team went over night I ran the fashion vertical essentially in fashion when did not hear from you know nothing to Fab’s biggest vertical softwoods the palace Pacific rated men’s and women’s wear.
Fab’s biggest business.
He was a bit of a sign of the times I think you’ll group and some of the other companies had had popularized kind of online shopping fit for Apparel in a way that.
[6:53] I’m didn’t exist before end and also from imagine spective it was it was actually really attractive so.
Had a great time there for let’s roll let’s pros and cons didn’t want to get back into the early stage well.
I’m sorry you’re ended up joining Comcast Ventures entrepreneur-in-residence and I’ve been there since you know 2014.
[7:20] Temples in New York right so they knew the Jew what did you move out to SFO.
[7:24] So I move to San Francisco in January of last year.
So I spend a lot of time in this photo New York e-commerce saying which is like a pretty new singing group in 2007 and and.
[7:39] It’s all double click people a lot of it is.
[7:41] What a double quick people.
[7:42] Double click Mafia that doesn’t get talked about as much as I like the PayPal Mafia but there’s an East Coast double-click Mafia that’s behind most of the companies are.
[7:49] Totally light where R investors in a lot like really happy messaging in a company called Zoeller and Shannon was obviously a joke group and.
[7:58] She’s been on the show.
[7:59] Stream the show and and and and that. Sort of an issue Cadre that 2007 2008 cohort is kind of old gone in and done really great things in in your bed.
To that it was pretty small community now it’s a really big Community with all the d2c brands.
The time they went that many that many folks in and he come over there and so you want to jump over the VC had the.
So have those relationships and had the privilege of some pretty red boss daily deal fudge.
It was not hard to kind of bear hug the the sector and come and get to know everyone and then and then you know as I start breastfeeding Comcast Ventures.
Your San Francisco is West Coast is kind of too much too big to ignore and so I moved over here and and and try to call the New York from here as well.
[8:58] Brief side note one of the founders of half.com Jason Goldberg and I share the same name and he’s somewhat of a polarizing figure so I get.
[9:08] I used to get like a ton of funny emails intended for him and so we would talk to him I do want all these and he’s like only if they’re really.
[9:17] I guess I’m not know my experience.
You’re reporting directly to him was I’ve not seen many people that kind of rally troops the way he can rally troops right like internally as well as accidentally with investors in touch I think it’s no.
It’s not anyone who’s ever met him into those environments I don’t think would be shocked.
So the amount of capital he’s able to continually raise I think he’s a great he’s a great Storyteller and and a great salesperson in into the best.
That’s why I think there’s a lot of things that Fab didn’t do right I think Jason also has a lot of a lot of strength.
[10:03] In fact he’s just starting a new gig which is in the.
[10:08] So he found that follow that and start getting that email the you also we talked a lot about Amazon being a friend of me they for sure for you because you have a book that’s for sale on Amazon.
[10:21] I dare I do so passion and purpose. This is going back to 2011 when it was published.
The book was really your kind of written at a time when.
The economy was talking like this was post financial crisis you know recession was in the air and more importantly.
So the ins the core institutions of business were being very much attacked right so I.
Why do people pee in the cross the sun on the banking system I think that’s a fair characterization.
I think large companies are big corporations kind of the Fortune 100 with being.
[11:12] Torn down in the in the media and dosage kind of General anti-business anti-capitalist kind of climate right.
I really didn’t drive with what we were seeing you know it business school and end with some of the folks.
[11:27] The icons in under which was.
[11:28] But I come tonight which was folks that we using business and they’re in their own start a company specifically to kind of be a force for good.
And so the book was really a bad hey how did how can we eliminate the stories these kind of green shoes.
Folks that are your whether it was in sustainability whether it was in cleantech whether it was in your more traditional kind of Industries trying to.
Generate profits but not disregard their obligations to other stakeholders.
And so sent you the book is about those people in those stories and trying to provide some inspiration to.
The folks in an engender more trust in kind of market economies and and capitalist system is more generally.
So I would say Amazon in that do not census is a friend because you know we pretty much know all about all that product for Amazon. Books fit on the Cowboys.
[12:37] Brickell let’s dig into to Comcast Center so,
every VC that I know has kind of really good kind of a synopsis of what the firm’s sweet spot is you guys are interesting cuz you have that Comcast word in there so I would love to hear and understand how that brings the weight of a large corporation to two potential startups,
and then would love to hear kind of a Lil Bit about some portfolio highlights of the company’s you’ve invested in while you’re there.
[13:01] Absolutely so yes the way I think about it it’s kind of VC Plus.
Right so at Comcast Ventures we are first and foremost financially motivated.
So it’s a it’s a completely separate your full of capital all of the partners around the table are.
Compensated based on the performance about investing right which is I think.
Fundamentally different from a lot of kind of quote-unquote strategic funds out there right so first and foremost was looking for.
Great companies Great teams in promising sectors and yoga with the with the goal of generating Roi on this.
[13:49] Plus part of it is really around a relation. Kind of special relationship with a soil P which is come to you.
Comcast NBC you when you when you can I think about it between the Coca-Cola video Business Wireless bsmd side of the business.
Your media side of the business the theme parks out of the visit you want to go on and on and on.
It’s kind of rare the startup company Weatherby you consume a company or Enterprise company that doesn’t have something to gain from a relationship with compass and BECU.
So where possible and kind of time these things right.
Auntie on both sides we try to we try to broker relationships between between both sides and so really good example of that is showing aggression.
So your NBC has your original programming.
And and your TV can be really great customer acquisition tool and so y’all better pull for a company shine wear.
We really tried to look for opportunities to integrate the shine message in the shine product in the shine story.
Into core Embassy you don’t listen to the NBC slight that’s a really really it’s one example of many of how.
[15:21] Play a tool not every VC can bring to the table.
[15:26] Is one of these things when nothing is again you have to kind of time these things right nothing is promised and lots of stuff but it’s something that I think I find at least it helps me differentiate in the Moc.
[15:38] Yeah must be nice to because you could you let say your shoptalk you see this interesting marketing technology from assassin der you can go to you know imagine there’s like a.
Yo of Pride the best marketing people in the world you can go to and say Hey how do you feel about this cool new email thing or because you know cuz you guys are doing it at a scale that so you know top 20 kind of a scale and they may say wow that’s pretty interesting or,
oh I’ve been doing that for 8 years and after that. Must be nice on your side to go and be able to get some real verification from.
From practitioners that are doing the stuff on a daily basis.
[16:12] It is that’s all true I think the other point to make is.
[16:18] You think about kind of I think I’ll give you his financial returns almost proceed strategic value.
I feel like there two ways you can look at it one is hey let me just take what Comcast NBC you can currently interested in.
And go in investing of sectors by that’s one lens and that’s a lot of strategic funds corporate funds if the other lands like let me go out and find the best companies.
And yeah I think we take that approach because we feel like those companies.
Future I will actually be most beneficial to someone who come cost me see you right so that’s one kind of premise which is kind of financial value per seeds.
[17:03] Eventually eventually create strategic value not the other way around necessarily.
I think secondly if you actually look at the data and I was going through this the other day it’s kind of like the the hottest sectors of today.
[17:19] Accurately predict the best returns of tomorrow I took you look at.
[17:26] You’re so old I threw that the different life cycles attack you know.
[17:33] If it can be the case that.
[17:33] Can be the case that you’re a hot sector today generates in a great great returns but in general we see that your prices got bit off you get a lot of me to competition to protect I’m sorry.
What we really try to focus on his Less on.
Sir sector-wide bats but he only the only stage and more and like the individual.
Companies in the individual teams and we feel like they’re building something kind of unique and interesting I think we we definitely take the point of view that.
[18:06] Have to be you have to be contrarian rights to make money right.
[18:12] Go to the you are just some of the normal DC kind of parameters is there a guy’s is a certain stage we like series ABC seed and then is there a certain kind of investment amount that you’re looking for,
what’s nice about strategic books is a lot of times I have a lot more flexibility than you know like certain BC will go to their limited partners and go get it.
Pretty boxed in LW you know we are a you know,
we’re looking for series B and their company has to have 5 million in revenue and Scooby consumer internet and and really very specific are you guys where do you find that special.
[18:45] I would say historically we would have more specific and today we’re very.
When much more General ride sir historically and I think this is the driving Factor he was kind of around the table would just kind of mole latest stage in their orientation right so we used to.
Your before I joined sent me focused on I didn’t say post-series be investing.
And probably more heavily on the Enterprise so I’ve been consumed inside.
Your ad tax ass even infrastructure was kind of more of the focus I would say since then I’ve lost you in five or so years.
Your appetite for early-stage investing has kind of dramatically increase the man we still we still do a lot of growth growth investing and was still.
We got a grave to the Enterprise to be practiced by.
Your what we saw was your mormal companies getting through locked up by deep-pocketed BC pretty early on in their in their life cycle.
And you’re the facts about it was just like we weren’t getting a shot if we went already in those companies and so.
Increasingly we you know I focus on Seton series I investing almost exclusively and my colleagues and so.
You’re when you still have put it all together we are a.
[20:16] Relatively sector agnostic your and now stage agnostic I think there is some there is some markets that you going to where you kind of say.
You know we want to let this play out a little bit and come in a little bit later and and right Bigga checks later.
What weekend are we now it’s too pretty big effort equipped off this year.
And your we’ve been tracking the space for a number of years and for a variety of different reasons felt like now was a time so come in and.
And we’re focusing on early stage investing in in in that area and there’s some other markets where.
Call Madison’s is one example of that where.
We feel like we can be really competitive at the light stage as well as the early stage and we’re happy to sometimes let things play out before kind of jumping in with an investment so it’s highly.
Secta dependent the teal point I think we’ve got the flexibility to too so to enter it at most points in the in the business cycle.
[21:22] So give us some so I went through some of the portfolio companies maybe give us like a little kind of summary of some of the ones that would be most appropriate for like the shop talk kind of obvious.
[21:32] Yeah so just a couple that I’ve invested in your one of them is a company called a way which is a direct-to-consumer travel brand.
So I invested in that company in July 2015 was was when the seed round but Don.
And really the the thesis around the investment was you’ve gone.
[21:57] You’ve got these pretty big incumbents in in Stamps not into me that don’t actually generate a ton of.
Excitement with consumers and yet at the same time your luggage is a 9 billion dollar category domestically in.
Yeah it it’s a it’s a it’s a huge Market opportunity the same time those play as one.
Digital natives right and so.
You know you could see the opportunity from pretty dramatic shift if someone came in you know applied the DDC model to that industry.
And instead of Market themselves is so it is aspirational travel ranches what why is Don and I think.
I think it’s going a lot faster than than even to the.
Investigative have would have predicted and I think that growth is being pretty astounding.
They I think you’ve successfully created like one of the things that I would think about is what makes a great DC brand right like why does away succeed when others even in the category of failed.
And I think the thing that makes a really good day to see if I think that away what is white has done really well is created This Woman’s aspirational World for the consumer the kind of stepping right so it was never about.
Nickel specifications of the suitcase it was never a. Even the suitcase it was about the story around this lighting of the travel the global traveler last all that these millennials.
[23:38] I think really took too early.
And the fact that matter is when you create that aspirational lifestyle that kind of gives you the license to sell a lot of things to the consumer right like starting with luggage but today they announced.
Front pocket you know last week they announced your aluminum luggage a lot of other really interesting things in the pot.
But you could have you could have only done that if you had first kind of laid that brand Foundation nothing that’s where in the DDC will receive the bifurcation where you know.
You would have glossy or away or Casper you guys done such a great job selling the lifestyle to the consumer.
And I mean the ones that we see the less successful and just kind of pushing product and playing the same kind of LTD cat game is everyone else in and you got feels a lot more on Sanibel to us.
Yeah I think of ways been a really exciting company for us and I think.
To give you an example of as more of a Marketplace investment led the series a round in a company called mealpal.
Which is a subscription service for meals that you pick up.
[24:54] Meals that you take off.
[24:57] So that the.
[24:59] This is made by individuals kind of so like I’m a cook I have some extra capacity I want to join the marketplace.
[25:05] Restaurant meals so existing existing restaurant in the thesis there was really.
The market for a $15 cheeseburger delivered to you for an $8 delivery fees pretty tiny Market I think we got.
[25:23] You’re looking at that Mark.
[25:24] It’s a it’s a you know.
The top 1% top of top of Market that you kind of solving for that and it’s a pretty.
It’s a pretty crowded Market actually if you think about all the different plays at it there in that space it’s a mealpal was really coming out of it What attracted me to point of view which is.
Instead of charging for delivery we going to contact cost out of the chain I’m going to I’m going to give value to the to the consumer and so they’re actually going for.
You’re essentially the most affordable restaurant lunch you can get right into the.
The The Innovation there is such kind of the pricing model Innovation there is really to these restaurants in the thousands of restaurants on the on the platform there in 13 series you’re going really quick way.
The Innovation there was really supply-side innovation.
There their deals with with the restaurants and kind of how they get the restaurants to the Albright profitably is being I think pretty unique.
I did exactly the business actually has to Marshall a lot of really.
Interesting elements right around data around to the operational aspects of the business around you know managing me.
Whole Fleet of restaurants in are there a lot of things I have to kind of come together to have this. Lee seamless consumer experience and I think.
[27:01] It’s one of those it’s one of those like complex coordination businesses where you know if you get a ride to Canby it can be really powerful and I think you know the end of the day the market for a $6 restaurant launches.
Channel more times bigger than the market for a $19 cheeseburger delivered to you so that’s why we got excited about that one.
[27:22] Can you go to these restaurants now and I got his one Chinese on today they really have 10 devices lined up and they’ve gotten enough to Uber Eats tablet the GrubHub tablet there’s usually like to local ones like,
in North Carolina we have order up and something else and it some point you’re like this is not sustainable.
[27:39] The last thing we wanted to do was just be another kind of delivery player right we wanted to really crave I for these restaurants.
[27:47] What is interesting to me about that space though is that.
[27:51] For a long time we had these are the traditional segmentations of these.
[27:54] Segmentations of these bites.
[27:56] Different ways that consumer saw their eating problem like groceries versus Ready-to-Eat versus USR versus fast casual in life.
[28:04] The digital disruption of all of those businesses if it feels right at the moment like all bets are off and they all are potentially competing with each other for the consumer use cases.
[28:17] I think that’s definitely true I think we in the food space generally speaking have.
I think what stopped in the in in the food space.
Is that you’re trying to combine you know Logistics which is essentially a very low margin tough complex business with.
Your food prep which is a food supply chains which is like a really low mileage and top business with delivery which is a really let you know like it.
I think we’re a lot of these players have really Fallen is is impetigo somebody’s restaurant today.
Maple is a pretty good example where they’re just really really low margin complex businesses that done a lot of cash you know I think we could companies it’s one where.
Retention is is is Yokai the issue there any kind of what happens if you just kind of Chun through your early adopters in your Cactus and it goes off popping up and and kind of Hit the ceiling on.
Basement running through your audience so I think we theoretically agree that you know that.
Grocery stores selling full movies online in a way that it hasn’t in the in the past but I think that will be the domain of the logic.
Players so like I just walked into my local Whole Foods on the weekend like the whole front portion of the whole foods with the Amazon 2-hour delivery Prime Bridge.
[29:54] And I think that like when you have that scale when you have that physical full praying you’re you’re really well position to.
Century like execute on an omni-channel play right which is order online and they speaking store your kind of leveraging both your online and offline assets.
I think for a company starting today.
[30:21] It’s kind of subscale I think we feel like the the the ones that are going to win have to have a pretty big balance sheets.
[30:32] I’m wearing dresses in a company in instacart which is a company that space where they have a really big balance sheet and they are doing really well but.
Your takes it takes awhile to get there not every company and get the.
[30:47] Yeah it was interesting I moderated a panel on the future of grocery at the show yesterday in one of the the That’s My Pan was the founder of Chef.
[30:56] And he is so there I mean okay company in his POV was very much.
[31:02] The future of me on kids is on demand Not subscription because of the fatigue issues you mentioned and that it’s most likely store pickup versus direct-to-consumer which feels like the sort of your bed mealpal as well.
[31:14] Yeah and I think again that’s one where.
[31:18] Tren can always favors the incumbents little bit more than the disruptors.
And so yeah we never want to throw the baby out with the bathwater when when making Investments why we we try not to redline categories we try to really focus on the individual companies that will be the winners.
But I think that one is at your pretty capital-intensive one.
[31:45] Switching topics right away cuz you you mention to instacart and it suddenly dawned on me.
[31:53] You you must have some relationship with Unilever because I know you’re both investors in instacart and you have a really famous exhibit in our in our space that use Ulta Unilever.
[32:05] Yeah so your Dollar Shave Club was an investment that one of my partner is Rick Ross co-lead you know that.
Business I mean from the get-go was pretty early stories about every business is a roller coaster and nothing goes up and to the right I think that’s one where.
We pretty much went up into the ride.
Time you’re right from the get-go right from the video all the way through the 2 to the exit I mean with a few exceptions but for the most part was a very very healthy business kind of early on and so stay that way.
You know I think increasingly.
For a lot of these big e-commerce Acquisitions you know whether it’s in jet whether it’s a Dollar Shave Club where there’s a chewy.
[32:54] It always becomes if you’re obviously the fundamentals are important I think.
[33:00] Critical to to Taconic stop the conversation.
I think a lot of the times these companies and now thinking about how quickly e-commerce is happening and.
The fact that if they don’t move quickly they’re kind of going to get left in the dust and so they’re almost thinking about these Acquisitions as.
[33:22] Extent of market cap.
[33:23] Percent of market cap when was like an insurance play and I think that’s what’s driving a lot of these kind of strategic multiples I think Dollar Shave Club could have definitely been Justified on fundamentals.
But I think that was that was as much a fundamental kind of lead m&a story is it was a strategic Ma.
[33:47] Yeah I think I read some stories and I don’t know any of the numbers but I think they were putting some pressure on like Gillette and they’re like starting to feel it at the cash register.
So I was more than insurance policy is really on to something and eating our lunch.
Totally and I think it was that was more of like a P&G story but I think the Unilever was a great opportunity to kind of get a shot at running the the male bathroom right so like it was a story around raises but I think.
Other ancillary products.
[34:21] Scot some interesting knock on effects there’s an activist very active and P&G right now and his whole thesis as you should have bought Dollar Shave Club and you’re not doing enough to go to racton,
and it’s really interesting to see these these really big brand get shaken up from the top down because they day or not interesting enough and direct consumer in France.
[34:41] Totally and I think you know this way cuz you have to give the Toys R Us and use your that’s one where.
[34:47] I just feel like that company is being really slow doing today you know it’s it’s they you’re in this huge category.
[34:55] Huge category.
[34:57] You’ve got the biggest physical footprint you know in the world in the category you’ve got almost ubiquitous awareness amongst consumer and and and Muldrow.
And so why it’s not.
[35:13] I think I could have done a lot to Sriracha themselves into this new era and I kind of didn’t see the result on the retail side what we see is almost.
Application of like retail so I think it’s fashionable to come out and say and Retail his dad these retail apocalypse whatever.
I think what we’re really seeing is there pockets of retail that actually make a lot of sense in that a growing really quickly like off price is really good example of.
Actor value segment of retail is growing really fast.
And I’ll pry specifically are you okay to Ross you work at a TJ you look at a Nordstrom Rack you’ll get a Saks OFF Fifth like all of the growth in in in the causes businesses are from the off-price channel.
Increasingly Seymour Mo Supply made for channel made for a price you know I think on the other end of the spectrum you got a lot of growth in luxury I think it was as you see the premium ization of also different categories in.
The rich getting richer and I think the growth in the luxury segment kind of place to that I think where we see a lot of.
Issues a kind of the middle ground right so where you know you know the value play to the consumer you know the luxury play.
You kind of a middle play which I think is increasingly kind of nothing play because I think that’s where.
[36:45] A piece is that where e-commerce your kids you the hottest that’s where I was on hit you really hard and I think that’s where you saying a lot of these bankruptcies in and what not wear.
There’s no basis for differentiation in the consumers mind and you just never going to win on price and selection and so that’s where they’re all failing.
[37:04] Yeah but if you’re if you’re neither value or convenient then you’re toast like Toys R Us isn’t like a convenient place to go and it said we not value Macy’s allow these guys are closing stores are kind of stuck in that.
The Death Valley in the middle there we had books from the light on and they have a really good report about this when they called the retail bifurcation and it got really good data around that that that’s a definitely something that that all brands and retailer should have in mind I think.
I’m going to think about who they’re going after,
you kind of brought it up so it was big into it and it wouldn’t be a Jason Scott show we did talk a little bit about Amazon how much does that factor into your investment decisions you know what kind of,
you know what used to be like when I started mine when I first companies I was like oh my gosh what do you know about Google and then it was you know,
there’s always some company that that’s kind of top of mine with investors seems like Amazon’s definitely least in the Public Market Chino they they open up pharmacy license in you have some little part of Florida in like all the,
all the drug stores are down 30% is that when you guys go in is that like one of the main things you think about.
[38:02] For sure yeah I think it’s really hot if you know if you have latest at our soul was Amazon is taking like 60% of every new e-commerce tall are coming on stream.
And that piss and his actually.
Going off of velocity is so I think he’s got a tumble is a couple years ago that number was 50% now 60% and so they’re actually increasing their share of new e-commerce dollars which is.
Kind of scary at the same time like.
[38:35] You’re speaking to a Avicii friend of mine, talking about shop talk is always become like how to play defense against Amazon.
[38:45] There’s some retailers again that’s that’s probably the right you know it’s probably a gender item number one.
[38:51] But I don’t think that.
[38:51] I don’t think that it is a given that I’m as on will you know when across all categories all geographies or.
Your consumer segments is that right I think there was a time where you could serve.
Draw boundaries around what Amazon would do ride like they would never get into it supposedly never getting to Fresh That was supposed to be never be able to do high-end fashion like boundaries and now being kind of broken down as Amazon.
And needs to be in the biggest markets and will be in the biggest markets at the same time you know I think you.
As investors we really think about what are the stop with the consumer. What are the vectors on which consumers make their buying decisions.
Price convenience selection experience all the way down to the list and I think you are seeing like I think the data C.
The revolution is coming. Because you’ve got proprietary product not available on Amazon you got right brand stories and you’ve got your value for money.
[39:57] And I think.
[40:00] I think you’re you’re seeing the success of these Brands I think.
In a world where I’m is on his is actually you’re gaining share I think you’re both things can be true but I think you can have vibrant.
Lifestyle brands that are worth your billions and billions of dollars and you can also have at the same time I was on kind of growing and you know I don’t think those two things are mutually exclusive.
You know I think that they’re they’re all the pockets right like I’ve been feeling a lot of time in.
Sir cross-border near the international weather it is retail is based of the Seas or.
Trying to play the geographical Arbitrage between for the east and west and kind of like what wishes done before are the categories and we’ve seen some great companies in the space that are really trying to.
Reinvent the value equation for consumers like I think they did it say brands are really educated consumers that.
Traditional Brands can be a riff off right and I think.
You look at businesses like Hoshi look at businesses like wish either either going to be really really want me we shorty is a really really big business.
In part because it is a value play but also because it’s fun right it’s fun to shop wish like we’re investors in a company hold holler it.
[41:27] That the vector those guys are competing on one of the back doors is a shopping experience.
[41:32] And so.
[41:33] And so that’s another thing that we’re looking at here which is.
I love this company shop shops which is kind of live streaming platform where influences can kind of come on in and talk about the products that they’re excited about it and eventually have continued transact like.
That’s something shopping as entertainment feels like something that I’m is on.
Ward get too early.
And so you know. Yes roundabout way of answering question like yeah we definitely think about Amazon same time and we try to be full full. Where I’m is on would be weak.
And make investments accordingly the other datapoint is like it when you talk about Fanatics or chewy or like these are all.
Your horizontal multi-brand retailers right.
Arguably competing head-to-head with Amazon so like some of the biggest outcomes that we say some of these companies alike actually.
Directly competing with Amazon and so I don’t think it’s a given I don’t fall in the camp that like your multi-brand retail was Dad and it’s kind of Amazon forever and ever.
I think that you know.
[42:49] For those companies I think the main.
Echo by which a computer customer service and so you really trying to get the customer to shop you for a particular category ride for cherry wood.
[43:03] Yeah I think Pat’s I think my pad I think Cherry Fest and I think if you can do that you can’t really compete against against I was adding takes a lot of things really hard to do that increasingly difficult to do that like a job is to really try to find the.
[43:19] We we hear that a lot though the shoppertainment component being a potential differentiator the sort of.
[43:27] Discovery X-Type experiences nothing Amazon strengths but you put all those things together in the the big winner that we think at the moment is the most defensible against Amazon is branded live marijuana plants.
[43:40] Just as I am.
[43:41] I’m done with Dad.
[43:42] I’m going down I’m doubling down.
[43:43] When I before I move on from the Amazon topic so the one tactical kind of thing that a lot of Brands struggle with and you’re just too kind of pick you up you mentioned a way which is kind of a travel company.
Should they sell on Amazon so you created this this brand if you’re not an Amazon you’re missing like 60% of e-commerce so.
An unbiased on this one cuz you started companies helps people selling Amazon so but it is an interesting dilemma because you know.
The argument against it would be all right now we’re going to educate Amazon in this category were going to show him our best sellers will come out with private label but you’re kind of like you know damned if you do damned if you don’t so.
[44:22] Yeah I think where I coming come down on that is it really depends on the company I think if you are building.
I think the risk with selling on Amazon for direct consumer that brand that’s what we’re talking about is.
You get your scent to get commoditized weed in the Amazon environment I’d still like.
What what happens is you of your number x on a list of products and your the consumer is essentially.
Intent driven enough discovery-driven in and very very very price conscious right and so if you think about a brand that is trying to tell its story.
Amazon the Amazon environment just doesn’t give you much.
Breath to give you much rope to tell your brand story right and they’re going to a discussion earlier then give you any,
way to create this world that consumes kind of step into going back to what makes a great Lifestyle brand.
There are a ton of risks or d2c brands that are trying to tell this all encompassing story.
Deciding to go on Amazon for the volume and find themselves speak commoditized I actually think about it last is like Amazon copy your and I have so much dead already without you being there that like.
Went out investors in older than me if you look at all soon as such old is on Amazon like there are hundreds of CopyCat products already right.
[45:53] Weather old veggies on there or not I think that that activities would have happens.
So it’s I think on the brand side it’s it’s kind of tough to two face. Commoditization.
That’s it I didn’t Amazon I’m actually looking for companies that are leveraging Amazon of the platform right and so like I think that.
[46:15] You know I think that there are really interesting things you can do with Amazon data outside in.
I think they’re really interesting things you can learn from trending products on Amazon.
And I think some at the same time on the supply chain side things are getting a lot quicker than they’ve ever being right to life.
I’d love to see more companies that are actually kind of.
Playing to the strengths of Amazon and really trying to leverage Amazon and you talk about some of the biggest companies in the world like.
A lot of a lot of becoming get started because you have some sort of distribution unlock.
I need to think about gaming space single on Facebook right it is very obvious example where you know.
You kind of unlock this proprietary distribution you can get this guy really quickly.
Amazon could be. Now for for the right types of companies you know.
Types of companies will be aspirational lifestyle Brands but I think there are other types of companies that are more kind of data-driven foston you know companies that you can see being I could built on Amazon and being very successful.
[47:29] If you are you trying to see any like Amazon ad Tech deals yet that seems like I’ve been coming space.
[47:35] Definitely we pray like every off AC haven’t really focus on that Tech recently.
But yeah I think there’s some really interesting I think I think Amazon itself is only starting to get into the potential of the their platform in that in that respect I think.
Name something that we continue to look out for and we’ve seen a couple we haven’t really.
Well I’m really dog and I think to the extent that we will but suddenly interested in that in that space in those opportunities I also think that like.
I think about bonobos is an example on on Facebook you on Facebook open that right rail like one of us was right there and I think they had benefited a lot from those early.
Nordstrom sales perspective but just from an iguana spective like if you were on Facebook you were in their target market at that time like you sold but overhear you sore but other side and I think Amazon.
Add ecosystem is out of similar kind of point in time out where it’s not.
I think in a couple of years it’ll be very very expensive I don’t think it’s quite there yet so there’s this kind of this window of time.
[48:49] Not if it’s going to be interesting to watch I think you know special.
[48:53] It’s becoming important platform for all the brands into your like months earlier contrarian point like I.
[48:59] Probably wouldn’t be very excited about adtec around Google or Facebook at the moment but but Amazon may be an interesting space and we had a couple of interesting guest on the show that I want a pivot the.
[49:10] I want to put it though.
[49:13] One for the last last set of questions before we have to break.
[49:19] All these Trends due to the sort of the traditional notion of a store I know I am in particular you you.
[49:26] Mentioned the way which I think.
[49:30] A way which I think I have a couple stores.
[49:34] . yeah yeah so we spend we spend a lot of time thinking about then you store format right and I think.
[49:43] That probably gives it away right which is like when not we don’t think about it as.
[49:48] This this nice wipe out of physical retail you think about it and he’s probably a pretty consensus of you we think about it as the innovation of the stall format.
And what does that actually mean right so you know you know why is example display the the easiest one to Think Through.
Yeah you going to the store you got to walk to the back of the stores to find a suit,
right like it is it’s it’s a it’s a very intentionally design store.
Around giving the consumer a inspiring the consumer to think about travel and.
And really dig into that you’re the next.
Yeah that actually like it’s funny like in the New York still have got a cafe with all these travel guidebooks a lot of people sit there and read these guide books and.
Yeah it is the stores are intentionally designed to kind of make you think about traveling and have you think about traveling always give you this.
Oasis like in your day to kind of have that space and and.
[50:54] How do you buy into that buy my cell right now.
[50:54] How do you buy into that that last all right and then I serve at the end of that process your hair if you want to buy suitcase we have them to.
That’s a very different it’s a nuanced but very important distinction.
Between your something like that and you’re the physical store as a repository of product.
When you think about the physical stores are product repository that’s kind of dying and I’ll Ghibli.
That death is kind of going to come about foxes in a lot of people think I think it’s one of those things where you kind of declined 2% a year and then you cut a full off a cliff because the operational Leverage is is such the bad happens.
[51:44] If you can and we think a lot of that stores as experiences and what does that mean for the individual brand and not trying to push you Prada.
And I think some of them are tactical parameters that are typically smaller format stores typically less inventory in the store sometimes no inventory in the store.
Typically an online offline sync right whether it be.
The conversion happens online and pickup happens offline or is some data collection online and you know the inventory fulfillment happened I’ll fly out of whatever the parameters are.
Your we talked about small short-term leases only said about Tactical.
[52:35] We really it’s.
[52:36] We really it’s kind of rare the direct-to-consumer brand at scale that won’t have their own stone at work I think that store network will look very different to the incumbent stone at work.
[52:48] I suspect a you may well be right and Daniel that’s going to be a great place to leave it for today because it’s happen again we’ve used.
About a lot of time so folks want to continue the conversation we didn’t charge you to jump on her.
[53:01] Page and leave us some questions if you enjoyed Today Show we would certainly appreciate you jumping on iTunes and giving us that 5-star review.
[53:09] Daniel thanks for doing this today if people want to find you online what’s the best way to find you.
[53:13] You can tweet at me I’m at Daniel Galati Daniel gulati on Twitter.
[53:20] Awesome thanks Ryan coming.
[53:22] Until next time happy commercing.
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