Issue No. 278: How Digital Industries Intersect

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– Michelangelo

Simply put, a polymath is a person who is devoted to learning a lot about a broad range of subjects. In other words, a person of great and varied learning. For readers of this letter, the curated and editorialized subjects have been both broad and useful.

This project kicked off with letter No. 1 to polymaths (2PM). It was delivered in the afternoon of March 22, 2016. Nearly two and a half years and 300 letters later (278 Issues, 22 Member Briefs), this publication has amassed a readership of operators across a host of trades: publishing, eCommerce, branding, software development, manufacturing, data science, commercial real estate, advertising, logistics, creation, and retail. They look for actionable information and 2PM is often their source.

2PM is my go-to source every day for the most relevant and timely developments in brand side eCommerce along with understanding adjacent industries and how they all interact. Whether it is unique insight into DNVB’s, analysis on the latest moves by industry giants, or the latest changes in traditional or digital advertising, 2PM covers it.

Kevin Lavelle, Founder and CEO of Mizzen + Main

Over the last 300 letters, 2PM tracked momentum and deceleration across several industries. The goal: collect enough data to formulate worthwhile and actionable insights.

One common thread that 2PM’s loyal subscribers share: understanding that there is much to gain by learning from others. By studying a group of industries, you’ll begin to recognize previously unseen interconnectedness. It was Tim Ferriss who once quipped, “it’s the big-picture generalists who will predict, innovate, and rise to power.”

Modern capitalism has historically rewarded specialists. Our economy does not run without some degree of specialization. But when you consider the developments of late, it’s easy to understand the value of learning from adjacent industries. As industries interact and converge, being able to understand the big picture is table stakes. Being able to execute on a cross-section of knowledge is a pre-requisite for thriving in today’s digital economy.

It’s the stupidest thing I’ve ever heard. I think you can be a jack-of-all-trades and a mistress-of-all-trades. If you study it, and you put reasonable intelligence and reasonable energy, reasonable electricity to it, you can do that. You may not become Max Roach on the drums. But you can learn the drums.

Maya Angelou

In every letter, eCommerce is the primary focus. And there is tremendous amount of care placed into every letter that we publish. Every article is vetted to assure objectivity or reasonable opinion. Articles written by self-promoters or network contributors are often set aside for reads that have greater value. They’re collected by way of our own search processes and from sources that are both free and paid. From start to finish, you’re on the receiving end of about ten hours of work per letter.

And for good reason. These industries are affecting most every aspect of our global economy. Nearly every industry is being impacted by principles of traditional online retail adoption. Here are a handful of events, trends, or industry shifts that have occurred in the last two years:

  • Publishing. Many digital publishers are hiring a director of eCommerce and staffing up to grow direct-to consumer retail as a core competency.
  • eCommerce brands. Traditional eCommerce companies set aside traditional advertising to seek partnerships with highly visible creators or influencers. These two groups often mimic the demand generation effects of organic press mentions.
  • Retail real estate. Urban commercial real estate vacancies continue to rise as eCommerce brands and marketplaces gain influence.
  • Retail real estate. WeWork move has begun to experiment with physical retail. And dozens of startups have begun building businesses by subleasing short-term spaces to emerging vertical brands.
  • Media. The most viable major publishers have the highest commerce influence (New York Times, Washington Post, Wall Street Journal, Economist). It’s no longer “eyes” that publishers want, it’s the ability to influence the sale that moves the needle for them. Look no further than the NYT’s acquisition of Wirecutter.
  • Media. Subscription-driven publishers spend as much time as traditional retailers focusing on conversion rate optimization (CRO), customer acquisition cost (CAC), and lifetime value (LTV).
  • eCommerce. For better or for worse, the most talked about car company in America does the majority of its business online.
  • Media. Facebook and Google advertising efficacy continues to drop for brands, as CAC continues to rise. Logistics companies step in to develop new forms of advertising (data-driven direct mail).
  • Media. Youtube Creators drive business to platforms like Patreon (eCommerce) or develop merchandising operations that can often amass eight figures in top line revenue.
  • eCommerce. Heritage retail brands like Nike have forgone traditional, physical retail to focus on data-driven direct to consumer retail.
  • Retail real estate. As eCommerce has gained footing in American cities, middle class malls have begun to shutter, negatively affecting housing prices in nearby areas.
  • eCommerce. Amazon has become more than an eCommerce marketplace, it’s an entire economy affecting everything from: logistics, entertainment, healthcare, grocery shopping, fashion, brick and mortar retail, and data center expansion.
  • eCommerce. Walmart has continued to move up market after several acquisitions and a refocused effort on millennial moms.
  • logistics. Urban apartment and condominiums are leaning on Amazon to address the influx shipments.

We encourage you to search the archives by clicking the most mentioned companies (right side of the screen). You’ll be taken to a page that has the link to the archived email at the bottom of the page. There you’ll find the story that pertains to the company that you’re studying.  Or search the editorial library with the search bar, over 300,000 words have been written across several industries. And in the near future, we are looking at smart ways for the industry leaders who read 2PM to connect in meaningful ways. Until then, we’ll keep rising above the noise.

Read the rest of the issue here.

By Web Smith and Meghan Terwilliger | About 2PM

Issue No. 277: The Power of the 100

Atoms will compete with the likes of Allbirds and older incumbents

Amended. We were on a bike ride from one end of the island to the other, just a few weeks back. It was the four of us on our way back from lunch by a small airfield: my wife, two great friends, and me. This wasn’t the joyous kind of ride where you’d find yourself looking at the sights and soaking up beautiful architecture (at least not for me). This ride had one purpose: travel a nine mile trail in an efficient manner.

Just this past week, I realized a glaring error in my thinking on that ride home. And this nine mile, 34 minute trek perfectly demonstrated it. It was actually my wife who helped me to understand what I could have done better in that moment. I asked her for permission to use her criticism of me for this post, she quickly obliged.

Every great business is built around a secret that’s hidden from the outside. A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator.

Zero to One

I’m impatient. I seek speed and efficiency to a fault. About a mile into our ride home, I noticed an unconventional path. Frankly, I just wanted to get back to our rented home in Oak Bluffs. I wanted to move on to more exciting plans. Path “A” was conventional and well worn, it’s how we got there. Path “B” was new and improved; let’s call it product xProduct x was riskier, faster, and more picturesque. As we cycled home at 9-10 mph, I looked back at the crew and pointed to product x. In a moment, I tried to sell it but they didn’t immediately see the value in it. They leaned towards the incumbent product, path “A”. I observed their hesitance, I scoffed, and I took off on my own. The path allowed for higher speeds, less traffic, and fewer gusts of ocean wind.

In short, I didn’t sell them; I didn’t win them over. And because of this, they didn’t join me on the journey. But more importantly, they weren’t able to tell others about the picturesque, faster, newer product x. Founders who launch products in media, software, or commerce often run into the same conundrum. A product that doesn’t sell on its own, isn’t a good product. But to move a product into the “sells on its own” category, you need to earn that slow and grueling first 100.

If you don’t land the first and loyal 100, your brand is less likely to earn the early adopters who look like the first 100. Without early adopters, you will not achieve the attention of the masses. The first 100 are the foundation. Without the support of the 100, the masses will not adopt. Made famous by Simon Sinek, heed the diffusion of innovation theory: the early majority will not try something until someone else tries it first. Brands are judged by this early majority.

Jason Lemkin is a widely known investor and tactician in the SaaS space. He has his understanding of SaaS growth down to a science. He knows how to evaluate products based upon their customer acquisition efficiency and revenue trajectory. I loosely apply some of his beliefs to retail because the core message is essentially the same.

Jason M. Lemkin 🦄 on Twitter

You’ll have brand equity probably as early as $1m in ARR. As soon as you have 100 happy customers or so. Protect it zealously. In the end, it’s how most non-early adopters choose which apps to use and buy.

The Law of the 100 is everything, whether you’re building a service or a retail brand. Without the strength of an audience, brands are left to the devices of phase two or three tactics throughout the phase zero period of growth.

  • Phase zero: collect interest
  • Phase one: build word of mouth influence
  • Phase two: utilize paid channels
  • Phase three: consider paid endorsers; tip into the mainstream

Another quote from Zero to One stands out when I consider brand equity discussions: If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution. So how do we overcome this hurdle while short on time, cash, and temper?

Consider something that you’ll read throughout 2PM. If you’ve built a great product, you’ll need an audience. And if you’ve built a captive audience, you’ll need a great product. The most efficient way to build the audience is before you launch the product. But that luxury doesn’t always exist. For product marketing veterans, harnessing brand evangelism is a part of the post-launch process. Word of mouth influence is what drives growth as long as consumers observe authenticity in the message.

By building a community of impassioned believers, they spread brand messages without you ever spending a dime on Instagram, Facebook, or Google. This means that relationships are often 1:1 in the beginning. Brands often try to sell one single member of the potential 100 at a time. Whereas marketing is typically seen as a funnel, building the first 100 looks more like a handshake line.

From Issue No. 268: The Billions Effect

Last week, Brooklyn’s Greats Brand released an ultra-limited edition Axelrod shoe; 100 pairs of the premium Italian-suede shoes sold out in under 17 minutes.

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Greats x Billions

To achieve this type of sales velocity, brands must be trusted. But they also have to take demand generation and word of mouth marketing very seriously. The Greats Brand did a great job of this with their recent product release:

  1. Secured a popular niche media collaboration.
  2. Barely tweaked an existing product to appeal to a established audience.
  3. Earned media placements after the collaboration announcement.
  4. Surveyed established audience, just 48 hours before the product hit their online store.
  5. Collected thousands of phone numbers for hyper-efficient, targeted text marketing. This is 1:1 communication at scale.
  6. Texted numbers. Counted a short wave of product page conversions.

A barely-tweaked product garnered over $200,000 in earned media for Greats Brand and the product sold out in 17 minutes. Successful commerce companies and vertical brands generate an authentic happiness and sense of community with their customers. A common retail error occurs when product founders focus on the validity of their products-alone.

A product is a journey. An early customer is not just a buyer, they are part of that journey. In Zero to One, the author communicates: an early customer is a secret holder in your product’s conspiracy to change the world. Remember the cycling allegory? The critical failure occurred when I assumed that the product alone (the new path, speed) was more important than the friends and family who were with me (the happy 100 customers). I was impatient and to me, product-alone was more valuable than the collective.


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The Atoms x Product Hunt integration

When No. 118 DNVB popped up my radar in January 2018, it became very clear that Atoms understood thee power of 100 principles for vertical brands. The D2C shoe brand (still in pre-launch) initially kicked off with the help of Product Hunt. Through a short survey, Atoms places you into a queue of now more than 9,400 potential buyers. In the first month, if even 1/3 of the waitlisted buyers purchase the shoes upon their release, Atoms will gross $500,000. Their current upside potential? Close to $2 million in revenue on day one.

Atoms now has the opportunity to convert these early adopters (who are paying full price) into evangelists who will find the young company their next 10,000 believers. And all of this on just $560,000 in seed funding.

Will Atoms outlast the early hype cycle? Potentially, they do have their detractors. But few physical product brands are as well positioned to generate critical early revenue.

For products primed to grow without paid channels, speed must take a back seat to a type of validity that is only gained by amassing a passionate, vocal, and protective 100. The best brand managers would have done what I did not, in that moment: (1) convince the cyclists to join the journey of product x, (2) let them lead the ride, and then (3) watch as the collective attracts more to the team.

Read more of Issue No. 277 here.

By Web Smith and Meghan Terwilliger | About 2PM


Issue No. 276: Wish Granted

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Founded in 2011 by ex-Google employees Danny Zhang and Peter Szulczewski, Wish has been a rocket ship of an eCommerce startup. And in certain circles, you’ll hear them referred to as an Amazon competitor – a moniker that often welcomes jeers from industry insiders. I mean, who can overcome the lead that Jeff Bezos has built? If not Alibaba or Walmart, the answer is probably no one.

This being the case, no other commerce company has scaled GMV (gross merchandise volume) faster that the San Francisco based giant. They are playing for keeps. And through an act of savvy partnership development and Magic Johnson’s wizardry, Wish is in position to take advantage of a sizable shift in brand fortune.

The company is now seven years into their journey. In 2016, Wish reportedly turned down a $10 billion all-cash offer from Amazon on “single-digit billions” in revenue after just three years. How? Wish sells very costly goods for rock bottom prices. But the majority of the products sold in the app are cheap goods sold for even cheaper prices. It’s a strategy that seems to be working for the company that’s now worth north of$8 billion.

The company is reportedly relatively light on infrastructure and since most vendors are sellers based in Asia, the app’s 400 million users don’t anticipate Amazon’s style of quick shipping. One of the leaders in mCommerce, the app is often the number one shopping app in 42 countries.

Wish is among just a handful of e-commerce upstarts that are positioned to offer serious competition to Amazon, which dominates online shopping in the US. raised a boatload of funding and invited a ton of hype, but was soon sold to Walmart for $3.3 billion. Now it’s up to companies such as Wish, sports-focused Fanatics, wholesaler Boxed and a few others to offer new online alternatives.

Wish targets its wares toward lower-income shoppers, providing them an entry point to join the e-commerce trend, albeit without the speedy deliveries or top-shelf selection of Amazon. There’s growing competition for that market, though, with Walmart expanding its online presence and Amazon creating more services for people receiving government aid.

Ben Fox Rubin, CNET

The company’s good fortune has not come for free. Thanks to hundreds of millions raised in venture capital, Zhang and Szulczewski have been able to market like titans. One of those early backers is GGV Capital, a firm that has its pulse on new retail. GGV also seems to be one of the few that operate with the understanding that Asia has a leg up on the American eCommerce industry. Online retail adoption is higher in Asia (20%+ vs. our 9%). In countries like China, their nation’s poor view eCommerce as their first commerce option rather than their last. This is a sharp contrast to America where Amazon’s Target and Amazon Prime users are more than likely upper middle class.

Wish is addressing this disparity in their own way. And the contrast in customer service, product quality, and logistics efficiency can be jarring to American consumers who’ve only experienced the luxuries of higher end eCommerce service. To combat these perceptions, Wish advertises quite a bit. And their history of advertising his been of legend in the eCommerce startup space.

The highest profile of these efforts have been the deal between Wish and the Los Angeles Lakers. Wish placed a lofty bet on the future of a then-below average organization.

First, the Wish shopping app made a splash by spending $100 million a year on Facebook ads. Then it sponsored the high-profile Mayweather-McGregor boxing match. Now, Wish is betting big on the return of the Showtime era to the Los Angeles Lakers. The startup, which has quickly built one of the most popular shopping apps in the world, has signed a deal to place its logo on Los Angeles Lakers jerseys.

Wish is spending between $12 million and $14 million a year on the deal, according to the Sports Business Journal, which also gives it some sponsorship rights inside the Staples Center and the Lakers’ new training facility.

Jason Del Rey, Recode (September 2017)

Fast forward, nearly a year later, and it seems that the eCommerce giant has had a wish granted. The cofounders bet that the Lakers organization could return to previous glory, generating multiples of return on their $12-14 million commitment per year in exchange for the logo placement. In year one of Wish’s agreement, the company paid an estimated $7-9 million over the value that the company received from its sponsorship media value. I anticipate that in year two, Wish will receive a 2-3x ROA. Just how much of an impact does James have on sponsorship jersey rights? We’ve broken down the economics below.

Rightsholder / MarketSponsor Media Value 2017-2018 Record Predicted (18-19)
Golden State (Oakland)$18,068,6647.9458-242
Los Angeles$5,203,128.4235-471
New York $2,488,719.1129-536
Salt Lake City $1,612,048.1148-347
New Orleans$1,175,175.3548-3411

With Lebron’s recent signing, the new face of the organization will move the Los Angeles Lakers from number five to number one overall in jersey sponsorship value. The anticipated $25 million in advertising value that Wish is set to generate in 2018-2019, on top of other advertising efforts, may finally push Wish into a mainstream media conversation dominated by few.

Wish could finally become ubiquitous in an America that sees Target, Walmart, and Amazon as the only cost effective online retail options. “Like any young global brand, we are looking to build legitimacy and trust,” says Sam Jones (Managing Director of Partnerships). “We felt using leading sport stars and placing products from our platform into the narrative…was a good way to start telling that story globally.”

The timing couldn’t be better for Wish. The San Francisco company is working towards an improved company culture and a highly anticipated IPO.

Read more of the issue here.

By Web Smith | About 2PM