Episode 119: How to Scale with Intimacy

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skewcast is the official podcast of Common Skew.

Why customer-centric companies win. Nike versus Adidas as an example. It's like Nike redefined the value for their customers in the sports shoe market. They built a powerful, like, cohesive business system, and then they raised their customer expectations beyond Adidas' reach.

Are you competing on innovation or are you competing on copying ideas in the marketplace and then scaling them? If so, does this practice diminish your brand? How does this impact your customers' expectations? And how can large brands continue to innovate and small brands continue to explore? Hi friends, I'm Bobby LeHew, the Chief Content Officer at Comiskey. In today's episode, we're tackling the topic of how to scale with intimacy, and Mark Graham and I are joined by Kate Macewicz, Comiskey's Marketing Director. Kate is one of the most proficient creatives I know. You've experienced Kate's work through every touchpoint of our brand and our events, Her opinion on this topic is a direct result of working tirelessly to build emotional connections with customers. Quick note, SKUCon will open up for registration very soon. SKUCon is the conference for innovators, explorers, and dreamers in the promotional products industry. SKUCon is sold out every year, so if you want to make sure you reserve your ticket, head on over to skucon.com and sign up to be notified when registration opens. This episode is brought to you by CommonSKU, the platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. Begin your free trial now at commonskew.com. Here's my conversation with Kate and Mark.

There are many ways to grow a business, but what we see a lot in the marketplace, that, that you can scale your business with intimacy, or you can scale your business by copying, or you can scale your business with mass marketing approaches. We're here today, Mark, because this conversation was sparked by something you saw in the market, and it's something we discuss internally at Common Skew a lot, and that is about how to scale our business with intimacy. And how to scale our business with intimacy— can you describe the trigger point that, that brought us here to have this conversation and the example that, that we were kicking around?

So I was on Twitter just a couple of days ago, and there was this BlogTO link. BlogTO is, um, What's Happening About Town kind of blog on— that talks about Toronto music and restaurants and the like. And it was a feature story about how Tim Hortons— now if you're in Canada, of course you're going to know Tim Hortons well. If you're in the US, probably not as much, right? But, uh, why don't we say Tim Hortons/Dunkin' Donuts, same kind of idea, right? Um, the Tim Hortons had come out with this new bespoke indie-looking premium cafe that served everything from like nitro coffee to fancy lattes, as well as donuts with all sorts of eclectic toppings on them. So what was interesting about it is that I was conflicted. On the one hand, it looked really interesting. I was kind of curious to, to go check it out. Of course, I've been to Tim Hortons many times. I wouldn't describe myself as a raving fan, but it's like good sort of average coffee and donuts. When you need them. So I was on one hand, I was impressed because it was an example of how ubiquitous brand continues to innovate and it certainly was innovative. The other side of me felt upset by it because it looked like the big nerdy brand that was aping the small innovative players that had kind of more brought some of these innovative drinks and donuts to the market. And I think you see this not only in Toronto, but I think you see this in really any community where you've got your small independent coffee shops compared to the big mass market chains. And so what it really set off for me was this struggle internally as to when you grow, and I think as business, we're all focused on growth. We want to grow, we want to make sure that we can continue to grow in responsible ways. But I think it triggered in me this question as to whether you're growing with intimacy or you're growing by simply copying other people. And that's what brought this about.

Kate, what was your thought when you read that? You saw the same story.

I thought it was pretty interesting. It's really a tale of two donuts. So you have the larger chain and a smaller chain if you're comparing what Tim Hortons was trying to do and the audience that they were trying to capture, I didn't necessarily think it translated well. On one hand, you've got people— because Tim Hortons is such an admired brand, it's more with like the older generation of people and maybe more of a, a common, a common brand that you would go to and visit versus like a smaller donut chain that you would go to to get these more specialty donuts. So I think If one of these larger brands are trying to go and replicate that, it doesn't translate as well because it's a little confusing. So their current customers who like the brand as is are confused by all these fancy donut toppings when they just want a chocolate dip.

Right.

And then the potential new customers that they're trying to attract don't necessarily associate trendy donuts with Tim Hortons. So they just think that they're being copycats, you know, or they're— they don't have enough affinity to the brand to begin with to say like, oh wow, Tim Hortons is cool now.

Yeah. And this is a matter of larger organizations or just folks in general hopping onto a late trend? Is this just a matter of capitalizing on a trend? You could argue that they're just going to capture a percentage of that market share. What's wrong with that? Why can't we— it's clear that folks are going to buy an experience like this, and they might decide that this might be a premium-type product that they can inject into their every common-day fare. It's hopping onto a late trend. But one of the interesting things that happened, I think I saw from the brand's perspective, people's response was it just, like you just said, Kate, sort of gave everybody whiplash a little bit. Was it, was it that far off the mark?

I think so. And, and on one hand, they certainly got people talking about them, um, whether that's good or bad, that argument can be made. Some people just think, you know, they're still on that mindset of like no press is bad press. But I would actually disagree with that. I don't think that that— if it doesn't make sense when you're doing something from your brand, if it doesn't fit in with your overall brand, then yeah, you could be totally missing the mark.

Yeah. There was a time in Howard Schultz's book called Onward, there was a time in Starbucks history where they were innovating in so many different directions. They were trying to do so many different things, and some of it was hopping on some other trends, which is not like Starbucks, that they had to reel it back in. And you kind of wonder if that isn't what they will end up doing after something like that.

I think what's interesting here is that you have a big company with this huge amount of saturation in the market. Tim Hortons is a massive brand in Canada. They've got footprints all over the place. They're in urban markets, they're in suburban markets, and they're also in country markets, I suppose I'd say. And from their perspective, if you've achieved market saturation, how do you continue to grow? And if there are growth pockets in the quote-unquote like bespoke indie coffee scene in terms of the drinks and, and the donuts, and there could be growth and it could also be margin opportunities, then from their perspective, why not go after it? Um, it would be a little bit like McDonald's several years ago getting into the coffee market. That was an area that they hadn't tapped and they chose to, to get into it. And I think that to go back to one of Kate's points, I think that there's nothing necessarily wrong with a brand that does this. Um, I think that I'm, I, I have maybe a knee-jerk reaction when it feels like it's either blatant copying or, when it's a case when you get this brand whiplash where you're like, well, hang on a second here, are you just doing this because it's a lazy way to grow?

Yeah.

I think if, if we go and we think about our industry for a second, um, and I won't mention names here, but imagine if you're a big apparel producer, you're loved and well known for being a, a big, big supplier of apparel, and then all of a sudden selling USB drives the next day. You launch this exciting launch, USB drives, custom USB drives are the latest craze, that becomes part of your line. And I think you actually see that a fair amount on the supplier side where then all of a sudden the supplier value proposition becomes watered down, but they're doing this because it's in the service of growth. And I think that in some ways, um, there's a way to do it elegantly. And I think in other ways, It just doesn't come across as right.

And then what happens then with those small, smaller innovative suppliers? Then, you know, you kind of wonder what happens in the minds of those folks that then do get copied. So you have two topics there. You have the one is, you know, we saw this happen. You actually saw a little bit of a backlash with distributors when you saw suppliers going into divergent directions. They really felt like that the supplier would lose their, their essence, their, as you say, Mark, je ne sais quoi, their purpose by watering down the brand. Brand and their business when they're just going after a little bit more market share. But in the mind of some of those small suppliers, what I think is actually happening is they're already on to other things as well. They're sort of far ahead in terms of their product innovation and what they're doing. And there's— you guys know I'm going to quote somebody, but there's a quote in the book, a book on creativity, that says vigorous creative minds are often inclined to drop a project when the less inventive begin to swarm up on it and they go on to something fresh. And this happened in, in Walt Disney's life. In his biography, he had this pattern. As he discovered each new unexplored medium, sort of his interest dwindled in the one that he had previously conquered. So he was constantly moving. There's this pace of innovation, I think, that the smaller, nimble supplier has that sort of keeps them moving once— especially when the less inventive begin to swarm upon it.

I definitely think that there is value in inspiration and being innovative and definitely like making sure you're staying innovative. Yeah, but I think that there's a difference between being innovative and creating something new and latching on to a concept and just remaking it a slightly different way that kind of lacks that creativity and, you know, keeps, keeps you from pushing brands forward. I think a great example of that is like Nike versus Adidas as an example. Between two brands, like, you know, why customer-centric companies win. So like Nike, for example, redefined the value for their customers in the sports shoe market. They built a powerful, like, cohesive business system that delivered more of that value than Adidas. And then they raised their customer expectations beyond Adidas' reach. They changed based on what their customers valued and then how it was delivered. And then they were able to boost their sales tool level based on their customers.

You, you had a very important phrase in there, raised their customer expectation beyond Adidas's reach. That's a, that's a profound statement. I think that's a big part of it.

You're giving an example, Kate, of two athletics companies that are competing with each other, uh, neck and neck, but are doing it in a way where they're competing on innovation as opposed to competing on copy. And I would largely say that's the case with Adidas and Nike. I mean, if you had them on this podcast, maybe they would disagree, but it is interesting to see that. And I think that for me, I inherently have more respect for a brand or a company that is able to grow when creativity and innovation is at the core of their business model in terms of new product releases, as opposed to being a fast follower or a copier. And I wonder whether this allows us to have this conversation as to what this looks like in the promotional products industry.

I also think what we're talking about here with Kate's— back to Kate's comment on raising customer expectations beyond someone else's reach, back to using this language of scaling with intimacy versus scaling with, say, a mass market approach or scaling by copying. This is about developing an intimate sort of affinity with a brand. So when you come back to the industry example or industry experience. We have found this transition happening in the industry as distributors. Mass marketing has began to lose its appeal, or you could say has lost its appeal. And distributors are actually in a great position to scale with intimacy because many of them are working with key accounts. The large, you know, 80% of their business is driven by a certain percentage of their revenue. Even distributors fall for a mass marketing approach. I think I told you guys we hopped on here that I was— I recently advised a distributor on their marketing strategy, and I actually, when I was finished with it, I thought, you know what, actually I think I'm wrong. I think that's the wrong direction. So, Mark, to get back to what you're suggesting here, industry relevance is that a distributor has sort of two ways to go. They can grow in a mass market approach in a way which to me becomes more commoditized and more price-driven, more about cost, as opposed to growing with intimacy. So for example, a term we don't even talk about a lot in this business is account-based marketing. So that marketing strategy that sort of concentrates on a set of target accounts, it uses personalized campaigns designed to engage each account and basing the marketing message on the specific attributes and needs of that account. And if that— distributors are in a great place to take advantage of that because even we sort of get— I wouldn't call it lazy, we're just busy— to where we lean back on mass marketing tactics as opposed to going through a much more intimate process. And Mark, you'll know this from your right sleeve days that when you got into doing Customized approach with your marketing. Spec samples for clients is a great— just a small tactic. But when you string that together with a large series of tactics like, like going over a customer's calendar and the events they have come up, that's all very intimate. And you can actually scale a customer far faster and more profitably with higher margins through that, that intimate scaling as opposed to, say, mass marketing. Mass marketing feels better because we're reaching— might be reaching 1,000 people with our message, but the return is so small. Did that touch a little bit on what you were thinking, Mark, on the, on the industry example?

I think I would take it from two approaches. So I think that you're absolutely right on the distributor side, that the distributor that takes that more bespoke hands-on approach with their customer always has the opportunity to stay one step ahead of the competition. I think that if you look at a distributor that is doing things that are largely very easy, so, hey, I can go and mass market this flyer that has been created for me by a supplier. And go and click send and send this out to 2,000 people. That is what I would describe as kind of scaling in a non-intimate way, right? Whereas if you're taking that time to better understand that client strategy, understand their client's events, understand their design objectives and marketing objectives, that's something that never goes out of style and is, is much harder to copy. And so I think that that would be the example I would give there from a distributor side. I think on the supplier side, what you often see is a small entrepreneurial innovative supplier will come to Expo or an ASI show and they'll kind of come out of nowhere. And all of a sudden their booth is the it booth. They've got this little 10 by 10 booth and there's lots of energy there and they're doing, they're innovating or iterating on some new product in the market.

Yeah.

And then you see in 3 months that insert mega supplier name here has introduced the same product for 30% less, um, because they've simply gone to their factories offshore and they've said, hey, this is a new product that people are talking about. They're expert sourcers, a lot of these huge suppliers, and they'll then bring it into the market, undercut the innovative supplier, and in some cases may put them out of business. Um, in other cases, they'll just water the category down. And, and I'm really of two minds when it comes to that. I think the creative, innovative side of me gets upset with that because I feel like it is a race to the bottom. The other, more realistic side of me says, well, that's business, and that's how this industry operates. That's how any industry operates. And if you're that new entrepreneurial creative supplier, my advice to you is I hope that you've got an innovative roadmap that allows you to anticipate being copied so that way you can move on to the next product category, or you've built some kind of defensible moat around your business such that big supplier who has taken some shortcuts in introducing a copycat product to yours in the marketplace, it doesn't allow them to get the same traction that you'd think. And so I think at the end of the You know, we're all grownups. This industry will continue to have that, that copying. It's happened for as long as I've been in the industry. But I think the truly best suppliers, the ones that can anticipate that, can move on to the next product or idea fairly quickly.

I think that's how you, you stay customer-centric, right? Like you're always thinking about the customer in the end, and that's why you'll win over whether you're a large a large supplier or a smaller supplier, it's because you're, you're developing products that stick because you understand your customers so intimately. You can anticipate their pains, needs, and desires. And then you're also innovating faster than other companies. So, you're breaking and staying above the noise. And as long as you make sure to do those two things, then I think that's how you'll stay on top and you'll, you know, maintain authenticity while doing it.

Yeah. Kate, you just said something I think is really important for this discussion, and that is earlier when you said raising customer expectations. They're experts at their clients.. And that's something that these suppliers do figure out when they break through the industry in some innovative product line. They actually tap into their clients more and they understand their needs a little bit better or faster. And the same thing with the distributors. If you could, you could, you could argue that distributors are not experts at product at all. Distributors are experts at their clients and their clients' needs. And no one knows their clients' needs quite like they do. Which is why they can grow in an intimate way as opposed— and should grow in an intimate way as opposed to a mass marketing approach.

I have just a quick comment that came to mind and where this sort of thing isn't necessarily such a bad thing. So if you're an innovative player in a market, so you're the indie coffee shop in Toronto or Oklahoma City, and now all of a sudden you've got Dunkin' Donuts and Tim Hortons that is copied your expensive donut and latte. Yes, you can look at that and say, well, that's a bad thing for business. But I think in another case, what that also does is it valid— it sometimes can validate a product and validate a market by bringing in a huge amount of mainstream interest into the category. And so, good point. If you just— there's, there's one mini coffee chain in Toronto called Sam James. I think, Bobby, you've, you've probably trialed some of their coffee in the past. Haven't finished it, I bet, because you don't finish any cups of coffee. You just like, you know, go ahead of half-drunk coffee. But anyways, that's the subject of another podcast. But what's interesting about that is that the Tim Hortons or Dunkin' customer, broadly speaking, is likely never to buy their coffee at a place like Sam James. Why? Because A, it may not be in a convenient part of town for them. B, it may be too expensive. Expensive for them, or they're— what they perceive it to be. Maybe C, they don't identify with the tribe that that particular brand has created. And whether you're a small company or a large company, there is a tribe and a community that surrounds itself with that brand. So maybe you think that it's— it— you don't identify necessarily with those brand values. And so what I think is interesting is that in some cases, this allows that smaller company to continue to grow as the larger company has validated that market and that product. I think if your business, if you don't run your business on strong foundational principles, then yes, you can go out of business. But it's really interesting as to, I mean, I'll give one interesting example. This happened many, many years ago in downtown Toronto. So I've shopped for many, many years at a weekend market called the St. Lawrence Market. Every major urban center has got something similar to it. Like, old-school farmers markets been around for a long, long time. And that Loblaws, which is our large grocery chain here in Canada, kind of like a Safeway in the US, opened up probably like 2 blocks away from the St. Lawrence Market, maybe about 20 years ago. And I remember thinking like, oh gosh, here's this like big boring corporation that has just opened up right beside this beloved part of the city, it's going to put all these quaint farmers out of business. Yeah. And it did exactly the opposite. What it did is that Loblaws was able to create a thriving business in that, in that area, but then it also brought more and more attention and validated the St. Lawrence Market. And so now the market is even busier than it ever has been. And so I think that's really interesting to see a case where both sides win by, by coming into a market.

Why is it harmful though? Why is it— we've talked about some positives around it. Let's get back to why is it harmful for a brand to sort of hop onto late trends?

Yeah, I think in the case of— there's a lot of bigger brands. Urban Outfitters is notorious for this. They copy brands and smaller designers from Etsy, so they'll go on and they'll just plagiarize And that's where it becomes harmful when you're taking someone's, you know, creative or intellectual property and you're just copying it without reinventing it or making it your own at all.

Yeah, great point. So in the end, what you're saying though is that marketing online has become far more social and intimate and word gets around and people know that that's exactly what's happening and it affects their brand in a general sense.

Absolutely. Which is also a plus side of having social media is that people call out these larger brands when they do something like that.

Yeah, let's defend this a little bit. Copying an idea or hopping onto a bandwagon. I mean, what's wrong with hopping onto a trend? So let's get practical. If I'm a distributor and I see an incredibly creative campaign, say the idea of an anniversary campaign has been around forever, am I being derivative? Am I just latching on to a great concept? And really the question I have is sort of a segue into something the three of us know about because we attempt to do this with our brands, particularly our events. And that is we see something in the marketplace. How do we see something out there that's innovative, that's cool? And we could— we can see how we could appropriate that for our brand, but how do we make that ours so that it's then done in a way that's respected through the lens of the brand and matches our voice as opposed to just a derivative concept?

I think you just touched on that. Like, you have to evaluate it, evaluate the idea through the lens of your brand first to determine whether or not it makes sense, because not every idea is going to fit in with your brand, but if it does, then I think you have to brainstorm, see how you can translate it. Yeah. And that's why we have brand guidelines and language and all of that, which is so important. But I think with taking an idea, especially when that's not particularly new, like for us at SKUCon and SKU Camp, we give away a swag bag. We didn't start doing that first. That's not a new thing that we've done. But I think with us, with creating the merch, setting up our little shop that we have at our events, and then also offering it as a collection online through Common Skew allows us to spin it in our own way, right? So we give our attendees this, this gift, but we showcase that through working with the suppliers that are sponsors of our event. We've collaborated with them. They help us think of ways that we can create the most unique and exciting products. Then we display it in a creative way and then tie it in afterwards so that the distributors that attend can easily add the products and to their presentations and whatnot. So I think taking it and spinning it on that and seeing how that will fit into how you deliver your overall message is— that's what, that's what helps solidify the idea.

Yeah. And back to your earlier point, Kate, on this merchandise, it's a great example for distributors too. We know our community, our tribe, and we're translating that to an effective medium and usage because we know them so well and we're creating an intimate connection with them. So it's, it's not just slap logo and give it to folks. It's, it's creating experience because we know the customer fairly well.

And I think in the case of a Tim Hortons, you know, my knee-jerk reaction is that it looks like it's copying and it's a brand disconnect. So off the top, and listen, I'm no Tim Hortons expert, but I'm just giving my knee-jerk reaction as a consumer. I feel like that's where you can run into trouble because then the market rejects that and says, you know, we're not interested in that, or that, that, that is the product of someone of another brand or another company. Where I think that works is, and, you know, maybe I'm not giving Tim's as much credit as they may deserve in this case, that, you know, in some cases, if you're, if you're a brand and you're looking to break into a new market, a new demographic, and it's all around this like bespoke coffee experience in funky downtown neighborhoods, then maybe there's the opportunity for them to be alongside some of these other more indie brands. Maybe it works. I don't know. It doesn't feel like it works, but if it does, then, you know, maybe I'm wrong. And as I say, there's always this, I think, is interesting balance that happens where where these larger brands are introducing a product into the market to customers that would've never shopped at those indie coffee shops in the first place. So as they say, maybe it's expanding the pie and I'm getting more worried about it than I should.

Yeah.

I, I think you had touched on it earlier, Mark, when you gave the example of McDonald's. So basically Tim Hortons, they're just trying to introduce a new product. It sounds like at the end of the day, but what McDonald's did when they started offering coffee was they just added it to their brand, added it to their offering, like product offering, and it was a success. Like suddenly McDonald's had better coffee. You were already going there for breakfast, so now you're having better coffee. What I think is different about what Tim Hortons is doing is instead of just offering a new donut flavor and maybe adding another coffee to their menu, is they're trying to appeal unnaturally to a client, to a client base that's not theirs. And so suddenly overnight you can't just be like, yes, of course, I love this brand, I'm go, like, drink coffee there all the time because you have no previous affinity for them, right?

None of us thought for a moment this was going to be a SCU Camp pitch, but Jay Kunzo speaking at SCU Camp on this very topic called Break the Wheel. And I think this is what folks mean by when they say cultural disfluency. And taking this example of not thinking for yourselves, Jay's whole premise is that thinking for yourself is the most practical, successful thing that you can do. And he said if you only spend half as much time investigating your context as you do searching for best practices. And his context meant knowing your clients, knowing your uniqueness about your business and how you're shaped touches on what you were just saying there. And then appreciating what that is, your aspirational anchor, your unfair advantage, your true believers who are your tribe, all of those things can guide you. So if you see an idea out there, instead of being derivative and copying, you can actually transform that into the right experience for your customers if you actually spend more time mining that information and uncovering those needs. Just like you said, Nike in your example was, you know, they understand their customers extremely well, so much so that they continue to raise their customer expectations around that experience.

That's absolutely what you need to do, right? You need to— sure, you can have your own aspirations for your business, but you have to listen to your customers and what they want. And that's what's gonna help you shape these decisions, whether you're introducing a new product line or, or what have you. Because, you know, at, at its core, customer intimacy is a measure of brand awareness. Yeah. Awareness. And, and an understanding of the customer's needs and values.

Right. How do you guys, so I'd be curious in either or both of your perspective on this, that, you know, how do, how do big companies innovate? We've given the example of Nike, but I'm curious about whether there's examples or just you speak more broadly about this within the industry that all companies, I think, go through a life cycle. So here's maybe a little— I'll take a half step back with my question, give some context. All businesses go through inevitable life cycle if they're mature and they start off small startup-y challenger brand. They have this initial group of customers that they appeal to. And then all of a sudden they get a little bit more mainstream. They start to expand their offering. They build infrastructure. They build systems, people, and processes to, to scale and grow that business and offer a reliable customer experience. And then before they know it, they're now a big company with systems and potentially investors and constituents outside the business that are expecting it to continue to grow. There's, there's a lot more external pressure than there might be if it's just like two guys in a garage. And so accepting that that is the somewhat inevitable chain of events that describe how a business grows, if you are a big brand, how do you stay innovative? How do you introduce new products into the market where you won't be ridiculed like we are right now of Tim Hortons when they tried this thing? Like maybe their executives are like, what are you talking about? We're, we're doing something new and cool here. Um, where's that disconnect? And then What advice would we have for larger brands that are looking to do things in a unique and interesting way?

Yeah, I think a great example of this happening was with Snapchat last year. So, what Snapchat did was in August of 2018, they redesigned, they pushed a redesign for the app, and they lost 3 million users in the 3 months following the redesign because their customers that were using it hated it. And instead of reverting back, um, right away and taking that feedback. They doubled down, they held their ground, and as a result, their brand suffered because they didn't listen to their customers and they didn't listen to their users, which again, at this core, I think is what we keep coming back to, is that relationship between intimacy has to deal with your customer, your understanding of your customer base.

Yeah, absolutely. And Kate, what you just said there too is this— when a large organization seizes upon an idea that's been in the market for a while, I think what we're tying together is that here, because of us see ideas, how do we improve upon that? That should be our first question, right? You— we talked about that with the merchandise, and there's a great example from, from the book Measure What Matters. Um, Google was the 18th search engine to arrive on the web. So, Mark, you ask how do large companies innovate? 18th search engine to arrive on the web, and yet we now know web search as synonymous with Google. In the book Measure What Matters, he tells the story I'll quote this. Earlier that year, when the two of them came into my office to pitch me— we're talking about Larry and Sergey come to pitch this investor— their PowerPoint deck had just 17 slides with only 2 numbers. They added 3 cartoons just to flesh out the deck. Though they made a deal, small deal, with the Washington Post, Google had yet to unlock the value of keyword-targeted ads. As the 18th search engine to arrive on the web, the company was way late to the party. Seeding competition such a long head start was normally fatal, but none of that stopped Larry from lecturing me on the poor quality of search in the market, how it could be improved, and how much bigger it would be tomorrow. He and Sergey had no doubt they would break through, never mind their lack of a business plan. Their page— and I think this is the key— their PageRank algorithm was that much better than the competition, even in beta. And he asked them, how big do you think this can be? I think it's a funny part of the story we need to add. And he already made his private calculation. If everything broke, Google might reach a market cap of $1 billion. But he wanted to sort of gauge their dreams. And Larry responded, $10 billion, just to be sure. I said, you mean market cap, right? Larry shot back and said, no, I don't mean market cap, I mean revenue. I was floored. He said, assuming a normal growth rate for a profitable tech firm, $10 billion revenue would imply $100 billion market capitalization. That was the province of Microsoft and IBM. That was a creature rarer than a unicorn. So, so we, we ask, how do we see an idea? And how do— if we, we invest our time and energy on how we can improve that and make it a much better experience. And that's, I think, where that conviction comes from, that innovation comes from, and that energy comes from, that even though we've tapped into a common idea, we're going to own it, make it ours, and make it better.

Totally. Yeah. Hey, Bobby, I would say, you know, just as a side note for our listeners, we all know that you love to quote things, and I think that may be the most profound quote that you have come up with. It really struck home. So, I mean, I think that my, you know, my last thought in all of this is that You know, that Google example is so wonderful because it's clear they were coming into a market that was already crowded. You said they were number 18. 18. Are you kidding me? Web search, like, that's Ask Jeeves, AltaVista, GeoCities, all the Yahoo, so on and so forth. And what's interesting there is that they, they didn't create a better mousetrap. They completely redefined the mousetrap within in the context of web search. And as a result, consumers then glommed onto that because the web results were, A, really fast, and B, so much better than the other, uh, 17 search engines. And I think that can apply to our industry, whether you're on the distributor side or the supplier side, is like, what is that thing about your brand that is truly exceptional? I think that on the supplier side, because we've given some examples of how bigger suppliers will, will be known to copy some of the smaller suppliers. It's asking yourself, are we in the product business or are we in some other kind of business? Are we in the customer service business? Are we in the making sure this always ships out, always has inventory business? I'm reminded a bit of Zappos in that Zappos, of course, not in our industry, but there are some commonalities in that they are a fulfillment and warehousing business. So in that respect, they're no different than an Alpha Broader or a SanMar in our space. And what's interesting about the Zappos story is that there were lots and lots of people who had lots of things you could sell online, but the business they really got into was in the customer service business. And I know that sounds cliché and it's like, okay, that sounds sexy. And you can talk about that at a TED Talk, stock. But I think that that was really clear that was the business they wanted to be in. And the backend of selling shoes and apparel and all that other stuff was a side point. You could even look at Amazon. The Amazon brand is really not about buying books or buying anything you want online. It's really around that consistent, incredible customer experience where you know you're going to get what you order always, always, always. And I think that that to me, I think is really the next frontier in our industry in terms of innovation. It's working on that thing that is beyond the product that makes your business so incredibly strong as opposed to, oh, well, I can go off to the Canton Fair and I can go and source a cheaper version of some sexy product that I saw 3 months ago at Expo. I don't think that that's necessarily where the future of our supply chain goes. And I think for the sake of our industry, when it comes to innovation. I hope that we, we see less of that and more of doubling down on the core part of your business that really makes you unique.

Big brands can have an emotional connection, can be, can tie to something bigger than a commoditized product. And I'm going to always draw reference to Starbucks because I've always just been amazed at their growth and amazed at their business. But, you know, Howard Schultz has this profound statement in his biography And he said that emotion, you know, what is our true value proposition? Our true value proposition is emotional connection. That's shocking to folks who realize, no, you're in the business of selling coffee. And I'd like to remind folks and ask them, why do you go there? Why do you shop there? What's the reason you walk into that Starbucks every day and pay 10 times the market price for a cup of coffee, whatever it is, when you could just make that at home? And he said that this emotional connection is such an important concept that it's so important, and far more important than even the cynics, to really appreciate. So, as we grow and innovate, we cannot lose that emotional connection back to the customer.

I think whether you're small, whether you're a small brand or a large brand, the underlining theme here is you need to create that connection with your customers. Whether you're a 5-person company or a 500-person company, scaling with intimacy is going to look a little bit different. It's a natural gap, but I think it can certainly be done, and I think you just have to be aware of that, and as you're evolving, just continue to be innovating and staying fresh and but staying connected to your customers.

All right, guys. Well, always love grappling with topics because some of our own breakthroughs have come through this very sort of around the table with coffee, thinking through a process better or an idea better. Mark, I know we went through this with the engagement commerce as well. Final thoughts, Mark?

I think that as I think about this, I'm reminded by the fact that this is like this idea of bigger companies that take ideas from other parts of the market is just how big companies operate. And I'm going to say that without positive or negative judgment. I think that's just a reality. I'm going to butcher it, but didn't Picasso say that good artists— what was it like? Good artists are inspired by others, but great artists steal, right? I know I got the latter part of that.

Yeah.

And so I'm going to say that without judgment. So when Tim Hortons comes into the marketplace and they create a shiny lookalike of the indie coffee donut shop, I look at that not necessarily negatively or positively. I just look at that as reality. Okay. Do I think Tim Hortons has gone about it the right way? No, because I think that there's a demographic mismatch with who it is that they serve. And so I imagine that they'll likely not see a lot of traction with this because the people that they're targeting with their, with their products aren't the kinds of people that like to buy coffee and donuts like that. Again, I could be totally wrong, and this podcast will be a time capsule of that. Um, but I think that there's a mismatch there. What I really believe is important is that regardless of whether you're a small company or a large company, I think that innovation is important to bake into the core of what you're doing because being copied is inevitable. You can't complain about it or whine about it. It's inevitable. And I think the best among us in this, in, in any business have got a strong roadmap and they've also created this strong defensible moat around their business because just because you're a a little creative indie coffee shop doesn't necessarily give you some right to have a monopoly over cool cornflake-dusted donuts and lattes with a smiley face on them. Absolutely not. You have to work each and every day just like that bigger company to innovate and not rest on your laurels. I think that's really, really important. And so my last comment here is, as we tie this back into the industry, is that I think that we see continual cycle in our industry that is similar to this Tim Hortons analogy outside the industry, where you've got small innovative suppliers that come in and in many cases provide inspiration for new product innovation. A lot of that, those ideas are copied and made less expensive by the bigger suppliers in the industry, thus establishing bigger market, uh, sorry, bigger distribution for that particular product. But I think the best suppliers in this business, the ones, the smaller ones are the ones that are able to be 2 steps ahead in in terms of their roadmap so that they can always be a couple of steps ahead away from the bigger person. So comes down to innovation, comes to how you understand your customer. And I think that you have to be really, really worried. The only way you're going to get growth is if you're just randomly copying other people in the hopes that it's going to unlock, you know, small pockets of growth, because I don't think that's going to happen.

Great point. Kate, here's what folks don't know. You're such an integral part of our team that I didn't even think to welcome you to the Skewcast. This is your— not your first, you've been on before, Right, you know, this is my very first podcast. I thought you'd recorded one a couple years ago, but I didn't even think to introduce you as your first time on, on SkuCast because you've been so deeply involved in the brand. I don't think of you disconnected from SkuCast at all, but so glad you joined us today, and we need to have you on here more often. All right guys, thanks for hopping on today.

Thanks so much for tuning in to this episode of SkuCast. Be sure to keep up with our latest content by subscribing to SKU Cast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.