Jaime Schmidt and Chris Cantino | Creating Commerce Opportunities

Hi, everyone. I'm Mike DeBeau, partner at Greylock. Welcome to our podcast, Grey Matter and our mini series on commerce, where we've been exploring different aspects of the quickly evolving e commerce landscape. Today we're here with Jamie Schmidt and Chris Cantino, who previously founded and grew Schmidt's Naturals into an acquisition by Unilever and are now partners at Supermaker and Color Capital, where they focus on the next generation of CPG and E commerce. I was an early admirer of what you both built at Schmidt's prior to the D2C hype and enjoyed following your public thinking and CPG community building in the years since. This is also the first husband wife duo we've had on the podcast, so I'm excited to hear your perspective on multiple fronts. So maybe for brief intros. Jamie, we won't do the full background of Schmidt's justice today, and you've written a book on the topic, but for those listeners who might be unfamiliar with Schmidt's, could you give us some background on the founding story and just evolution of the brand?

Yeah, Well, I was living in Portland, Oregon, the most creative city in the country, potentially in the world. I mean, everybody here is a creator, maker, artist, and I wanted to fit in, right? So I started exploring different opportunities to pursue my sort of creative itch. I was diying everything for a couple of reasons. Not just, you know, that the excitement around building something and creating with my hands, but also we were on a very strict budget. Chris and I were both social workers at the time. That's where we had met, at a job working with kids at a residential facility. And I was also pregnant. And yes, it was Chris's baby. So paying closer attention to the products I was using on my skin. And so all these factors sort of played into the creation of the business. I didn't quite understand the business potential. In the earliest days, I was more just making for the sake of making. But in Portland, there's no shortage of opportunity to get out into the community and sell. So I did that. You know, every weekend I was out at the farmer's markets, I'd pitch my tent. I had my baby with me and a playpen and just was having fun. But when I started talking to customers, I realized, you know, there was an actual real business potential in what I was doing at the time. I'd been making a bunch of different product lines. I had lotions, soaps, deodorant, sunscreens. And in being at the market, you know, the opportunity in deodorant became really clear that was an industry that was in need of something new. Right. It was, it was a stale category. There hadn't been, you know, any innovation. And there were only really a couple natural brands that existed in the market at the time and they had a reputation, frankly, for not working. So I saw an opportunity to one, you know, create a deodorant that worked, that was natural, but then also to do it, you know, differently than it had been done before. So that meant innovation in fragrances, in the packaging, in the way that I was talking about the product. Deodorant was not sexy at the time and I saw an opportunity to change that. And so with that, Schmitz was born.

Awesome. And you had built the brand at this, like really interesting point where when you started, you know, DTC was not like a thing. It wasn't really a channel that was like popular. And you know, in the years since, the pendulum's kind of shifted. And now I know you're both excited about wholesale again, which is kind of becoming more in vogue. So maybe. Chris, I know you were cmo, tell us about the early days of marketing Schmidt's and I guess where, you know, where you felt you were, you were ahead of the curve or what you saw before others did.

Yeah, well, I didn't really join Schmidt's full time until a few years in. But, you know, Jamie starting at Farmer's Markets was kind of like the original dtc and then she went into wholesale because people were asking her to sell in like the markets. But I started buying ads for Schmidt's in 2013. So the ad auctions were pretty cheap back then and there was a lot of green space. There was a lot of fun that we could have with marketing because a lot of the other deodorants on the market were focused just on the functional stuff, like, you know, 24 hour protection, no white marks. But we were focused more on, like Jamie said, the scents and the packaging visuals and all the better for you. Ingredients a little bit more like a natural food brand. Some of the other stuff we did was, you know, go in pretty deep on grassroots cold pitching and cold emailing, sending cold packages to YouTubers, to bloggers, to editors, you know, attention allure, beauty editor, like not knowing anybody and kind of just hoping, you know, that one out of 20 packages would land and get some ROI for us. And, you know, that really worked. As we scaled, we kind of focused a little bit more on the machine learning side and AI to better our retention and improve the ad buying. I think we Were pretty early on that we did a lot of content marketing, more linear commerce. We developed a blog called the natural that had 2 million visitors within a couple months. More of a vertical linear media play. And generally we just spent a lot of time collecting data about the the way our customers saw our products across the different channels, whether they're buying on Schmidt.com or Amazon or in retailers. And I think that really made all the difference when it came to getting acquired and getting the attention of retailers.

As we scaled both of our experiences kind of parallel each other. Where we started buying ads myself, I was kind of started to buy Facebook ads in 2012 around then. And so just very different landscape as far as your ability to find kind of arbitrage by being like a savvy media buyer which the markets become so efficient since also very accessible. But that leads to CACs tending to only go one direction as you scale, which I think kind of behooves you as a founder, as a marketer to kind of seek new ones and seek areas where others are not. And so you have articulated, I think better than most reasons why founders should be think omnichannel and be more bullish on wholesale overall. What has given you such conviction in this idea? And I guess if I'm the CEO of a brand right now, how do I know whether I'm ready for wholesale yet?

Yeah, the marketplaces are just getting so sophisticated. Their scale is offering them like a level of personalization and incentives for customers. They have great rewards programs. They're aggregating products into shipments, making it super convenient. They're just doing the old listings at such a scale that they're very difficult to contend with as a D2C unless you have like some incredible IP, like you're a peloton or something like that. And you can really justify that vertical D2C experience. It's becoming harder and harder, not easier to compete with the marketplaces. There's some great brands that do like Glossier or Lululemon, but if I'm like earlier CPG brand instead of trying to compete with Instacart or Amazon, I'm just going to try to embrace them. The other thing is if you don't, your competitors will and then they're participating in the market and they're demonstrating their value to would be acquirers and other retailers. It doesn't mean like DTC is not important, it's incredibly important. But I think it's more that it's table stakes at this point. And you know, the true contrarian play would be to be like a wholesale brand first before you are a D2C brand. But to know if you're ready for wholesale. I think there's a myth that it's going to be really difficult or it's going to like dilute you. But it's really similar to taking the leap into starting a business, just like starting a D2C. And you learn as you go. If your customers are telling you they want to buy offline, then you should be there. You know, if you have product market fit, it's time to scale, explore other channels and always kind of like stress test the limits of marketplaces that you might venture into. And that's what Jamie did at Schmidt's too, right? Like she started the farmer's markets and then went into the co ops and the national retailers into big box. And we kind of had this omnichannel mix as we went.

Just love to add there that. To be honest, you know, when I started Schmidt's, I wasn't even thinking holistically about like an omnichannel strategy, you know, what my ultimate, the goal was there. All I knew is that I wanted my product to be available to as many people as possible. With that, you know, philosophy sort of leading my every move, it just made sense that I would be, you know, selling across different channels. I really saw it as a fun challenge to bring naturals to the mainstream. Right at this time, there weren't a lot of natural products that, you know, customers were excited about. The couple that did exist, you know, they, they were in mass. You know, you would see like Toms and Main and maybe Jason on some store shelves. But once Schmidt's was really going strong, there were a lot of competitors that were quickly coming up behind me. But they, the one thing that made us different was that they just didn't have this sort of motivation to reach the masses. And so for me, that was like a fun challenge to like bring naturals mainstream. And so I was saying yes to channels that the competition just wanted nothing to do with. Right. So naturals tend to associate themselves with, you know, being sort of a niche offering or more of a luxury product. But I wanted everyday Americans in the middle of the country just to have access to the products that all these niche customers were privy to.

I think one of the reasons why DTC feels powerful and is valuable, in my opinion, for brands to do earlier is you have a much deeper understanding of who the core customer is, both from a qualitative sense and then also now with kind of the advent Of Shopify, you're able to get a good quantitative sense and kind of get the data back as well directly. Which when you're going through another channel, there's kind of varying degrees of like, how much granularity you get. I'm a little bit influenced by this because it's stitch fix. Like our core competency was like quantifying people's fashion and really getting to know them and their taste better than we thought they could do on their own. And also for our brands, we were actually feeding them back really interesting data that they typically weren't getting back through their retail partners. And so how did you think about that trade off?

I mean, I think the cool thing about deodorant is that most people use it. It's one of those products that most people can relate to wanting or needing. And so that opened up a lot of opportunity, you know, not even knowing at the time. I really embraced this philosophy of like, don't make assumptions about who your customer is. Right. You know, it's, it's important to start niche. I think, you know, every brand, you know, is told in the earliest days of their business is, you know, know who your customer is, have a niche and have a, you know, a target that you're always catering to. And I think that's very important. But as the business grows and you've got that really strong core established, then you can start sort of safely looking beyond that. I think what's really key here though, is making sure that you're carrying that niche with you. So as big as you get, the more customers that you're bringing in, if you still have that solid core customer who was there from day one, who really resonated with what you're doing and they're scaling with you. That's where the magic is.

When we talk about wholesale, typically people think offline, getting into physical retail, you know, digital wholesale, that is like embedded third party marketplaces. And now as a brand, you have more options to actually sell through other vertical marketplaces or even other retailer sites. How do you think about that in the stack?

Yeah, for sure. I mean, it all just plays into this omnichannel approach. Right. Like we were saying yes to every opportunity. And so marketplace just made sense, I think back to like some of the earliest retailers of Schmidt's that, for example, we had a food buying club locally where I would literally drive to this person's house every week and drop off these orders. And I just saw the opportunity there for just so much growth in that. And so Chris you mentioned international, too. Like, that was one channel that we were always open to that I think is intimidating for a lot of new brands. And there's a lot of regulations that go with that, a lot of considerations that just aren't at play when you're selling domestically. And so that was another way for us to just really open ourselves up to new channels.

Yeah, International is such an interesting one. Like, I didn't actually realize it was a key part of, like, Schmidt's story. What did you have to do to actually pull off international, like, early?

Yeah, I remember getting the first phone call, you know, from this international retailer and thinking, this isn't even something I had considered. Right. But. But yes, we're going to say yes to this. And so that meant definitely, you know, digging deep into regulations around labeling and what the expectations were for packaging and ingredient disclosure and things. And we, you know, we're always very transparent in our labels, of course, but there were. There was, you know, some standards above and beyond for Europe. In Europe, for example, where you had to list, you know, the percentage of different ingredients on these separate spreadsheets that would accompany the order that you're shipping. And so, so much to learn. There's a regulatory body called a responsible person in Europe, and they were really helpful in kind of, you know, hand holding and letting me know, you know, what exactly was required. And. And every country is different, too. And it's not just in the packaging and the disclosures and things, but also in just the way you're talking about your product and the norms around how you're marketing it. And it can go pretty deep if you allow it to.

I want to shift gears briefly to talk about funding. It seems like today CPG founders outside of venture have such a variety of options with funding sources, I guess. How has the dynamic changed? Would your decision at Bootstrap look any differently today? And now that you're on the other side of the table investing, do you think about that tension any differently?

It's so specific to the founder and their situation, and I try to be cautious about preaching that one way is the right way. My story just happened to play out and that I did bootstrap it. But when I started my business, my roots were so organic that I hadn't given a whole lot of thought to this funding strategy. It just grew from my kitchen. The demand was slow in the beginning, and I just sort of followed it and didn't look too far ahead. And with that, you know, it worked well for me. And when the type of product that I was selling. I don't think it's the right answer for every brand. I think that it's worth considering for most, and I. I think there's ways to support that, you know, whether it's through loans or lines of credit. But, you know, as an investor today, I won't invest in a brand if I think that they could, you know, see more success in bootstrapping. I'll only, you know, take equity if I think that there's, you know, a good reason for them to be giving up that equity.

I think we would have probably crowdfunded at some point, Jamie, don't you?

Yeah. Yeah, I think that would have been a smart place to put our energy. It didn't make sense for us to spend our time, you know, chasing after VCs and putting together fancy decks because we just, frankly, didn't need the capital. And we were, you know, fortunate in that we were able to recycle the funds back into the business. And at the earliest days, I had a couple side jobs to help, you know, act as the seed money. And then, you know, Chris had his jobs that were at home, that were sustaining us on the personal side. But not every founder has that situation. But, yeah, I think crowdfunding makes total sense, and it wasn't as trendy back then. I think it's a great way to incorporate ambassadors for your brand and would have been a really smart play for a brand like Schmidt's, for sure.

Well, this feeds into a topic I wanted to ask you about, which is around acquisitions, and I know it's an area that I know you've brought to color capital, given you sold Schmidt's to Unilever. I'm curious for your take on advice for founders who aren't in the process of scaling brands. What should they keep an eye on when it's time to think about exiting? Acknowledging that it's a very personal decision at the end of the day. But are there indicators when growth is becoming more challenging or less capital efficient?

Yeah, Chris, I know we both have thoughts here, and I think the first thing I would say is just don't start out chasing the acquisition. You have to really stay focused on the vision that you have for your brand. And while it can be lingering in the back of your mind and your ultimate goal, I think thinking about it too much can be distracting. At the same time, you know, in today's industry, you know, every category is just so competitive, and so it is smart to, you know, have a sense of, okay, if I was to be Acquired. What type of acquirer would I, you know, want to. Want to be pursued by? And how would I fit into that family of brands? And so having a little bit of strategy there around the product that you're launching, you know, might actually be beneficial.

Keeping your head down, like you said, is the right way to play it. But then once you get closer, there needs to be some realignment, right? Like, you really want to make sure that your product and your category extensions are totally aligned with the acquirer. Like, if they're divesting this division that you're planning on getting into, you obviously don't want to pitch them on that, right? You're trying to keep all these letters, intent, active. You're trying to drive up the bids. You're trying to make sure that you're pumping enough advertising so that your sales don't plateau or dip, because the last thing anyone wants to see and that month for acquisition is a drop in sales. And then the other thing is when you do get acquired, just keeping in mind that you're not necessarily acquired to keep up this really disruptive behavior that you might have had as a startup, but rather to play nicely alongside a family of brands. So those incentives that worked for you before probably don't work when you're in Unilever, and they also impact Dove and Rexona and Degree and Axe and all these other companies that you're now partnering with. So there's just a lot of implications when the brand is integrated, from the supply chain efficiency to the way that the products are sold across different aisles, to the cost of the integration itself that a lot of founders probably never consider when they're building their brands. That real directional alignment with the strategic is difficult to come by. But I think we definitely had it with Unilever. They definitely understood the strengths of Schmidt's and worked to apply that across their portfolio. And they gave us a lot of independence to grow after the integration, too.

And product roadmaps and, you know, in house manufacturing are pretty major considerations, too. We had interesting timing, actually. Schmidt's was lined up to launch across new categories right around the time that Unilever approached us. And, you know, we were sort of frozen and wondering, like, do we move ahead with this or do we wait? Like, how does Unilever perceive this? And that made it for an interesting, you know, conversation and approach to launching. And then also, you know, one thing that I'm real proud of in building the brand was that I had built out in house manufacturing. Manufacturing, you know, built a factory. And, you Know, there's a lot of advantages to that that were really beneficial to the brand. However, when it came time to acquisition, you know, it complicated things. Right. Unilever didn't love the idea of taking a factory, you know, under their wing and dealing with all the, you know, responsibilities and liabilities that go along with that. And so that's another consideration. You know, fortunately, we had a backup co Packer at the time. We had partnered with somebody once we launched en masse, more as a backup in the case of an emergency or just to fulfill the demand that we couldn't necessarily meet. And so I think that's important to think about, too, is your manufacturing and what that looks like.

Yeah. I can tell you, Jamie always was adamant that we needed a backup for every partner that we had, whether it was manufacturing or if it was like, even in advertising, it was like, well, why don't you diversify what we're buying by 10% by hiring this one agency on the side to at least test and stress test what you're already building?

It's much easier to find those redundancies when you're part of a much bigger, I guess, conglomerate like that. But I'm curious, presumably you went into the acquisition with some assumptions about kind of big cpg. How has it compared to your expectations?

Yeah, I mean, everybody knows that big CPG moves more slowly, so that was something that we were prepared for. In terms of surprises, I think I'd say they're all on the positive side. I've been. We're three and a half years post acquisition now and very happy with the traction of the brand and how it's being managed. But one thing that's been really fun, you know, for me, is just connecting with the siblings, right. The brothers and sisters that have also been acquired by Unilever and just really sharing stories and experiences and bonding on that way and just really thinking about new opportunities to work together, too. So there's a lot of, you know, newfound opportunity in an acquisition and, of course, a little bit of loss and adjustment. But overall, I think it's fair to say that we're happy.

Final point on this acquisition topic, there certainly is a lot of money going into the category, and I'm sure if you were starting Schmidt's right now, you might be approached by some of these sooner rather than later. Maybe some of your portfolio companies are. What are your thoughts on this conceptually, and how might founders be thinking about this?

Well, I think there's a lot of interesting things going on with kind of all These little roll ups starting to look like mini conglomerates, you know, building the blocks for a next gen house of brands. I think that's really compelling. I think there's gonna be a lot of failures but the leaders in those markets I think are only gonna get more funding and get larger and more sophisticated. So I think it's coming. It's just gonna be, you know, a decade of learning. But I think we'll have something that you know, looks a little bit more like a mini Colgate or mini Unilever sooner rather than later.

And you believe the efficiencies you could drive across brands are real in this case. Like I mean I know you've experienced it from the Unilever stand for these kind of holding companies. A role it plays that are a tier down.

Yeah, I think the aggregation of the demand is a place where you see the efficiency and then the marketing. And as long as we're really talking in house efficiencies that makes sense. I think some of the bits overblown. I don't think we're going to see major supply chain or cost of goods reduction buying power wise. But when it comes to add inventory or ad buying, I think that there's clear efficiency there.

Yeah. It feels like the media companies are becoming e commerce ops and brands are launching their own media arms as ways to bolster other marketing efforts. You probably have quite unique perspectives on this I guess as you think about brands or creators who are running the linear commerce play. Well, who comes to mind? Who do you look up to on this front?

I love glossier. They're kind of like the original. Right. They started out as a blog and built it into this totally vertical, you know, super brand and they're phenomenal. I don't think there are a lot of brands that do it well. I think it tends to work better when the narrative, you know, the media side of things is developed before the product side and then you can kind of weave the product in. If you do it backwards, it's a lot harder. Right. It's a lot harder to start with the product then sort of draw people into the media that's around the product.

It couldn't be more aligned with that. And it's one that a lot of people kind of miss. They spent years of not monetizing and really just building a community to build loyalty and eventually convert them to loyal customers. A lot of brands now don't have the luxury of time and they've already raised money and have high expectations and so trying to tack on Community post having like product that you're already spending marketing dollars behind is I think a little bit. I mean it can be pulled off, but it's just much tougher.

Mischief is a brand that does it really well. With mischief, it's like the story, it's the headline that brings people in. It's not necessarily the product. It's not like that people care so much about getting one of the 666 Lil Nas Satan shoes. It's like they really want to participate in this conversation and be a part of this like kind of cultural moment. So I think that's kind of the hack is to, you know, give customers, you know, the incentive to participate on like the cultural side of the moment or you know, even like the financial upside of projects is what we're starting to see as like the emerging use case. But otherwise I think that the creators in general need to be a little bit more content minded. Content first before they are commerce minded.

Yeah, we can't miss Goop. Right. Like, I think that's, that's one of the obvious ones too. And I, I think about just like influencers too. Right? Not necessarily media verticals so much, but even like one of our portfolio brands, Live Tinted, you know, the founder is Deepika Muyala and she's an influencer who had built up this incredible community sharing thought, leadership and content around, you know, this community of women who wanted to feel, you know, inspired and who could identify, you know, with our culture through makeup. And so that was just a beautiful segue into her launching a brand. And she's even been able to, you know, put out merch. Right. With maybe it's a certain slogan or whatever that people associate with that community.

Yeah. Another color brand that does it is a kids book about too where they're literally selling the content like the content is the product. So you know, disrupting publishers and instead of like waiting eight months or nine months to, you know, develop some content, you could actually capitalize on a cultural moment and put out a book in like three months.

Yeah, I think it's just putting purpose behind what you're selling. And I feel like every brand needs like some sort of connection to linear, you know, whether it's, it's an obvious play or just a little more subtle. And I think with COVID like that has really emerged as a, you know, a key strategy in a lot of brands.

The days of that beautiful product shot kind of carrying you all the way to like a D2C exit, those are gone.

Veering off of linear commerce I know you both have been experimenting with different community mechanisms and media outlets, from Clubhouse and Discord to writing books, to various flavors in between shared reels on dispo, I guess. What have you learned along the way?

We just see supermaker and Club CPG as omnichannel brands, like any startup, just trying to learn along the way and test out all these new mediums and see what sticks. Just having that startup mentality. You know, we develop followings at supermaker and Club cpg and then people start asking us for things like a live chat or, you know, private groups. And you can't really do those things on Clubhouse, so it makes sense to test them on a place like Discord. I think that creators will be omnichannel, just like brands will be omnichannel. You know, we're just meeting them where they're at and getting better at. Creating those touch points across the channels has been, you know, challenging and really worthwhile learning for us. It doesn't mean that you have to spread yourself thin, though. It just means you have to create more and more. And sometimes that means, like, investing in other people to help you carry and, you know, moderate and develop the platform.

And I think as a whole, we just need more thought, leadership and community building. And cpg, like tech, you know, there's an abundance, but like, with consumer, we don't. We don't always see that. And that just lines up with, you know, the vision I had for my book, right. When I wrote Super Maker, it was really to empower consumer brands, you know, creators, makers who are looking to turn their passions into a business. And I didn't want to write a playbook, right? Like, here's how you have to do it. This is the only way, and this is what's going to get you success. It's more like this is what I did. And here is an abundance of stories, you know, to help inspire you, to give you new perspective. And so I think that's the goal always in us bringing together these communities is just to have a place that we can all come together, share our experiences, learn from one another without having this, like, super rigid set of rules.

And everything is changing so fast, too, that you kind of feel incentivized at one point to go all in on Twitter, to go all in on Clubhouse and stuff. But then you're really beholden to, like, these platforms and their. Their algorithms and they change so regularly. So I think that we're just making more of an attempt to be vertical and to contain the audience and to kind of eliminate the noise as we go.

Have you thought about doing something like what Web has done and kind of have it all on your own, basically own the channel as well?

Yeah, I think that we would just take it the same way we did Schmidt's and just kind of continue to say yes to all omnichannel things while also building out a vertical offering until something breaks. Jamie was saying there's a real lack of leadership and consumer. And the institutional transfer of knowledge is really lacking there. So that's what we set out to do with Supermaker, to, like, write a book that was really low barrier to access that people could learn from, from, like, the earliest days of starting their company to, you know, selling it. And so that's what we're doing with Club cpg too. And, you know, it's not to say there isn't a benefit to us too, because when we create that content, you know, it's really a magnet for great deal flow and meeting awesome partners and, you know, unearthing all kinds of opportunities to expand the reach of the platform as we go. So right now we're just a little bit more interested in scale and impressions and eyeballs and being everywhere than we are necessarily just trying to optimize for a single channel.

Yeah. And I think one of the key points there is that we're not limited by this necessity to make money. We are fortunate in the fact that we can take on these endeavors without having to turn a profit on them, and that opens up a lot of opportunity for us.

Do you think the way you are managing the set of channels that you are running your communities on, how do you think it parallels what brands should be doing on this front as well? How should they think about balancing the relevant channels and allocating their time?

Yeah, I don't want to see a brand on every one of our channels. I think that if we do, then they're not focused enough on what they're building. In fact, when I was building Schmidt's, I wasn't on Twitter. My Instagram account was devoted strictly to the brand. And times have changed, and I think it would look a little different now, but I think these brands and these founders have to pick and choose which platform speaks to them and really find the time that they can make work and hopefully learn a thing or two.

Yeah. And approaching it in terms of sales channels and exploring all these different channels you might sell in. We like to see brands testing everything. I think that's what we did at Schmidt's is say yes to Amazon Say yes to commercial boutiques. I think we had over 20,000 different retailers at some point. Literally individual accounts are within our system and we're servicing all these different accounts. And you know, it's a very high touch. But to kind of be everywhere was important to us and have that strong retail base for people sauce on shelves all the time. It really works. So we're always just kind of like seeking out whatever new channel it was and seeing where the ROI was. And you know, we weren't afraid to cut things either. But it's just having that mentality of testing, testing, testing is key.

One of the channels I've seen you speak about is you know, live video and social commerce. I think, you know, it's clearly an interesting space right now and there's a lot of people studying what's happened in China and trying to assess like kind of what translates cross borders versus not. Do you think live makes sense as like a standalone network or as an additive engagement layer for existing networks or marketplaces that have pre existing liquidity?

Whether or not live streaming makes sense as a standalone network or if it's more about a layer, I think it's both. Live stream marketplaces, they're going to have their placement ecosystem whether it's panduoduo or if it's pop shop in America because you have to have these aggregators of the smaller merchants that want to have better ways to connect with their audiences. So I wouldn't be surprised if you see Etsy launch one. I think basically all of the e commerce platforms are going to launch it as a way for sellers to communicate better with their brands and grow and manage their audiences on the platform without requiring them to get their information and their lead gen from Instagram and Facebook. So they're going to dip their toes in the water like Shopify. I would really love to see them do live streaming stories directly within the Shopify shop app. I think that would be really cool.

And maybe studying kind of what's happened in China. What do you think translates versus not here.

So a lot's been said about the economics in China that make it work. There's people in rural areas using pinduoduo and that's driving a lot of this live stream shopping growth right as pinduoduo like single handedly. And so you know, shoppers are doing that so that they can earn discounts by group buying. And you know WeChat's like wildly popular of course, it's very commerce driven. So the key is kind of like getting customers to get used to transacting on social media platforms where they previously, you know, haven't been used to doing that, but it's becoming more normal. Right? Like people are tipping on Twitch, you know, people are gifting each other coin on Reddit. TikTok has tips. Instagram's Launching Tips Clubhouse has tips. Right. And you can really have this incentive to participate in the community because you earn these badges and you unlock all these kind of like benefits and the community become like a power user. Like, Discord is killer for this. So I think that's kind of the gateway is those, those microtransactions. You know, the market's definitely growing in U.S. obviously doesn't compare to China, which is like 400 billion a year. It's probably a tenth of that here in the U.S. do you think this.

Becomes a role for brands? Like, if I'm a brand, should I think about hiring someone that has this as a capability?

I love the opportunity for brands to really have the potential to engage with their audience. I think a lot about makers. That's where my roots are and that's the community that I really resonate with. And I think about just this potential to reach an audience where you otherwise don't even know where to start. We can sell D2C, we can engage on social media, we can tap into retailers. But if we're truly connecting with our customer live, you know, through a platform like Pop Shop, for example, it just opens up just a whole new world for the maker in a way, just to, you know, show some of, you know, authenticity behind the brand and some, you know, behind the scenes looks at what, you know, what it means to be a founder and just almost a great way to kind of practice being a founder and to really test your audience and your messaging and get real time feedback.

Yeah, it's smart for brands to invest in having spokespeople on those platforms too, because that just represents an opportunity to kind of punch up against the incumbents. Right.

We've been talking about E commerce at large, but we're also seeing the move to kind of like online and just transformation of the entire supply chain and other verticals as well. Like grocery has been an interesting one and one that I've invested behind. What are you seeing in that space that's interesting?

I love personally like Milk Run is a business that is founded in Portland and they deliver groceries to consumers, to their homes residentially. And you know, that was before COVID but then once Covid hit, like, you know, they just spiked and grew so fast. And I think there's just a lot more there. So basically they partner with local farmers and food makers and to deliver food to consumers homes. And I think, I think that's going to really give a lot of stores kind of a run for their money. A lot of, a lot of grocers, like of course we have Instacart and Amazon prime, right. Delivering our groceries. But I think like some of these more local based organizations are really are going to probably challenge some of these bigger incumbents and we'll see a lot more popping up in that space.

I think Jamie's right. You know, it's, there's going to be a split where a lot of people are just going to see, seek a simple, a return to like a simpler form of food. Right? Like it's the stuff that they can source locally, it's from farmers, it's. They want to support their local economy. And then there's going to be this other side where it's really like tech entering the food space. So, you know, cellular based products, you know, whether it's like perfect day replicating milk proteins or if it's, you know, the new, a new tuna that's made entirely from cell based product or you know, beyond. Beyond is like a machine. You know, they've just been like expanding into retail like no other. I think they're in like over 100,000 retail stores in like you know, 50 countries. And you know that the sight of like tech entering food isn't slowing down. And then there's all this, of course, retail technology that's, you know, changing the way that we shop too. And you know, whether that's contactless, hands free kind of shopping. That's the stuff that I get really excited about is like making retail more easy to shop in and like offering kind of new exciting products that maybe bring new people into the category.

Yeah. Well, Chris, you had tweeted recently you could find more interesting products at farmer's markets than at any grocer in America. And you know, I wanted to push you on that. Like, is that inevitable?

Yeah, I think what I was saying was that, you know, when you buy a product at a farmer's market, you get a more interesting point of sale experience. Right. Like you're literally buying from the person who picked that product or the person who fermented it or like developed this kind of recipe or that was passed on through their family and they'll tell you all about it. So in that way, I guess like, it's really more interesting. But you know, that Product could also make its way onto the shelf in retail. And I think there's incredible ways that people can tell stories in retail now. I think that's getting more and more sophisticated and I think that it's going to be a huge area of exposure expansion over the coming years too. I think that like retail will, will eventually be as interesting as farmers markets and as compelling. And I think the formats are going to look a lot different. You're not going to see, you know, the standard like aisles. Aisles format. I think you're going to see a little bit more of like a luxury environments propping up more just intuitive like you know, things that make feel like a more like a lounge or like an experience or entertainment than they do actually shopping. And so that's, that's my favorite part about going to farmers market is like it's half entertainment and like they've completely solved for discovery. Right. Because every time you go there you're probably going to find some new product. And that's the whole point is literally to discover and like spontaneity. So that's what I value about that ecosystem.

I think as a farmer's market born brand, you know, Schmidt's, I can speak to the experience on both sides. Right. I think what's really opportunistic is creating an experience that your customers can grow with. So I have some customers that I was interacting with at farmers markets back in 2010 who are still users of Schmidt's and they are the most impassioned customers because they were there growing alongside me.

Yeah, I mean the meta point you're making here on like having the space to tell your story in an authentic way and direct to the consumer. In our kind of rush towards efficiency and conversion and all of that, we've kind of lost some of the spirit of that in kind of retail and E commerce. And it does feel like with the growth of mediums like live, perhaps we're actually like realizing the importance of that again and we might see more of that as kind of a last point. Any brands doing novel things that you want to shout out, I'll plug a.

Brand, but it's an old timer. It's Estee Lauder. The fact that they embraced this QVC strategy I think is just super cool and just really telling of the times and right. It just goes back to this live streaming that we talked about. And so I love when a heritage, you know, really old school brand can take a new approach to their distribution. I want to shout out one more brand. It's called Proven Skincare. It's a brand that I'll be working with on the series called Going Public, which will be streamed on Entrepreneur. They have a customized skincare product where basically you take a quiz, there's a set of questions, about 30 questions or so that speak to your lifestyle and your habits and what you consume, and then they recommend a skincare product based on your answers. And I just think there's going to be a trend towards more of these customized products like this. I had a conversation with the founder the other day and what really resonated with me was just when she said, you know, as consumers we're expected to be experts in skincare, for example, right? Every product we buy, we're expected to be an expert in that category. And so it's hard, it's overwhelming. You have so many products and options for, you know, the skincare products that we purchase. And with something like this, you know, it takes all the guesswork out of it. And so I just think there's going to be a lot of potential across different categories for more of these customized offerings.

Well, one that I'm kind of interested in right now is Nugs, you know, and Simulate is their parent company. The package of their chicken nuggets is literally, it's a, by the way, it's a vegan chicken nugget. It's not a real chicken nugget, but they're feeding this vegan chicken nugget to a chicken on the package. Right. And all their other iconography is super minimal, just the symbols and everything they do feel feels very high end tech and slick and sleek as hell. So they're really curious, just strange company. And I'm always like happy to see the kind of innovation in the branding space they've been able to pull off. So they definitely stand out and got my attention. But they did 8 million last year. They're now launching in Walmart, Target, Sam's Club and a bunch more. So I expect they'll probably be starting to get some acquisition offers over the coming months. I think they're an interesting company to watch, especially because, you know, they feel like a tech company, but they also feel like a meme at the same time. I think there's like very few brands that can actually, I don't even know any other brand that can, I guess, besides like Tesla, that sort of feels like they can poke fun at themselves.

Yeah. Well, I agree. Thank you both. It's been a good chat. We've covered a lot of ground and have left a lot uncovered and so looking forward to our next chat. And yeah, thanks both for joining.

Yeah, thanks Mike. Those are thoughtful questions and it was fun.

Thanks Mike.

That concludes this episode of Gray Matter. If you enjoyed listening to this conversation and want to hear others like it, please subscribe to gray matter on SoundCloud, Spotify, or wherever you get your podcasts. You can also find new episodes and blogs on our website greylock.com and of course you can follow us on Twitter reylockvc. Thanks for listening.