Kiss the ring. The ring's name is Rufus. - The Ostrich Report with Vinny & Hendrik

Welcome to The Ostrich Report. I am your co-host today, Vinny O Brien. With me as always is my good friend in Cape Town who's getting ready for spring rugby season, Hendrik Loubser. Hendrik, say hello to the world.

Uh, Vinny, very nice to see you, my friend. I'm glad to see you because, uh, for the listeners, uh, my dear friend, our Irish friend, has had massive technology issues. I'm I'm just telling you because it needs to be known. But Vinny, I don't know what you did, but you've got somebody on today that I've been trying to get to speak to me like for almost a year. So you clearly have a better connection with this gentleman from Europe. Martin Carsten, how are you, sir?

Hey guys, I'm—

you mean me?

The problem is maybe that Vinny is a little bit closer, right? From a Cape Town perspective, that's maybe the thing. And that's why we made it a little bit earlier, right? So basically, yeah, I'm happy to be here. And Suspenseful Mood, uh, going on here regarding LLMs, AI, and the world.

Well, could you tell people where you are? You, you've traveled so much and even trying to get this organized where you're thinking about time zones and places you're gonna be, but maybe let people know where you are today.

Yeah, I basically today in Singapore and the thing is that I'm heading on to, to, to Europe already this night after the night, a little bit in early morning. And because I have some appointments over there, So I'm basically coming from Mumbai where there's an engagement, actually my most important one, so to say, trying to push things forward, right? And trying to engage as much as possible. Of course, Europe is, you know, like my base and where my family is situated. That's why, yeah, you know, I'm a little bit here and there everywhere and that's my reality and that's feeling quite normal for me, basically.

For the non-egalite amongst you, that means you're in stealth mode, right? I've seen that on your LinkedIn. You're obviously building something. It's dragging you around the world. One of the things that I wanted to just get your opinion on, or maybe you can just enlighten us a little bit, given all this travel, is something I'm calling the continental divide. Myself and Hendrik work a lot in the North American market. I'm coming back into Europe a lot more this year, so is Hendrik. But maybe you can tell us, we're going to talk a little bit, as you said, the world of AI and everything that's going on, but maybe tell us about this continental divide. What is Europe, what is Southeast Asia thinking about LLMs? Is there a point of view that is strong? Are they reluctant, or do you see this as a world of opportunity and you're going to press forward regardless?

I mean, if it's a little bit about noise, right? I mean, or the quality of noise, right? I have to say the noise in North America is the loudest, let's say, if you can say it like this, right? So everything that from an Agentic AI perspective is changing is actually somehow happening, obviously, in North America, right? So everything who's engaging and reacting, and we come to that point maybe later, that's maybe a North American thing. It's maybe driven a little bit by the sentiment, actually, right? I mean, you have those big players over there, they, they need to have that noise, you know, like benefit a little bit from the sentiment, right? Basically, yeah, you've seen that maybe in the news. Europe is more or less in some sort of fear of everything situation, right? All this regulatory stuff and all that, what's going on, what, what is happening. You know, we feel a little bit old and there's the next change. You know, we had that crazy internet coming over us and now there's the next big thing we do not understand. And funny enough, in Southeast Asia, also in China, I would say, we have been recently, totally different. This is like the normal, usual, you know, like the logical next step is simply coming, right? I mean, it's so obvious, it's so clear. I mean, it's also a little bit— the sentiment is maybe a little bit different and more open. Yeah, maybe you can say it like this. Yeah, I mean, if you approach Shanghai actually and you enter a self-driving car or self-driving bus, you know, and then head somewhere It's a different perspective on those things, right? But no one in, for example, Singapore or Indonesia would say, 'It's a crazy thing called agentic AI coming. What is that doing to me?' or something, right? The kind of perspective we're seeing, that's much more open-minded, basically, normally coming next steps, right? One after another.

So you said something interesting. I think it was the first sentence you said, it's the quality of noise. So you, who is in build mode, I don't want to ask you about your idea. I think that would be to, to rude, I want to ask you about how do you distill that quality of noise?

How do you figure out what's worth taking from the US market?

And I, I fully get that. I think the sentiment is linked to the stock market, which is linked to 401 and how people are going to retire. And right now that's in flux. So people are really trying to figure out how do we, how do we do really well in the short term to make the long term a little bit easier to swallow? Um, in Europe, that reluctance, which is probably shared in South Africa as well, Hendrik, I think it's a cultural thing, right? And, and now geopolitics is you know, it's playing into it because there's going to be this standoff. So we've got to find ourselves somewhere in the middle. So how do you, as someone who's getting into build mode, who's saying, despite my age, despite my fear of becoming obsolete in this world, what's it doing for you and how you take quality of noise? And what do you, what do you say is good quality versus not so good? Loads of questions here, not just one.

Yeah, lots of questions. And I mean, like, talked before with Hendrik already, right? I mean, the thing is for me, the perspective is already, you know, like skipping a little bit the actual noisy environment, right? I mean, the things that are actually going on for me are quite, you know, like clear and quite anticipatable. You know, there's nothing about it, right? It's too, too much logic in it that things will change now on the, you know, like short-term, midterm significantly when it comes to the intake of agentic AI. And that's clear, that's coming. So there are different reactions and there's different action actually taking place. But what I'm more interested in is what's coming beyond, what's next after— okay, is everything okay?

Yes.

What I'm interested in is what's next and what's beyond, what's after that actual noisy environment or that actual agentic AI That's what I'm interested in.

I've bookmarked it here.

10 minutes.

So we're good.

And I wanted to say, because what I, you know, like if you take the actual scenario and the actual situation and imagine the different kind of agent AIs are now stepping in and are changing the e-commerce landscape as we know today significantly.

Okay.

Yeah, it's happening. Right. And it will happen to a certain extent. Interesting for me is if that has happened, let's say, then the big uplifts for those agentic AIs, those big advantages that they are representing and causing threat all across the world, let's say actually in the e-commerce world as we know today, if that is equalizing everywhere as agentic AI, if everyone is using agentic AI and that is equalizing totally, I mean, this is too normal then, right? It's like the invention of the internet, the invention of the car, And the first one with the car was driving faster than the ones with the horses in front of their carriages, right? But if everyone is driving a car, that's not the big advantage anymore. So that's why I'm looking a little bit beyond— not skipping the actual step in terms of neglecting it or ignoring it. It's more like, but what's next when everything has become equal and the same and the big advantages are no longer there? That's what's, you know, driving me actually.

What time— just, Hendrik, I know you're keen to jump in, but what time frame do you have in your head for that, Malte? Because everyone you talk to is thinking in terms of weeks and months and dog years. From your perspective— Hendrik loves dogs as well— so from your perspective, what kind of time frame is this equalization where the playing field's been a bit level and you figure that there's this new world that you can operate within? Like, is that 1 year from now? Is it 2 years from now? Are you planning on being a digital nomad and traveling all around the world, and this could be anytime?

Basically, we will definitely see different time frames, um, for, for different regions, a different kind of adoption rate. Yeah. And we will maybe not really recognize that it's common sense already in, in China, right? And because it's much more silent in a way and much more happening without talking too much. And we will definitely recognize when it's happening in the US. And that's maybe also, let's say it like this, it will happen in waves, right? There will be a strong first wave and it will somehow fail.

Yeah.

And then some sort of a pushback and a new, let's say, arranging situation.

Yeah.

The people will say, ah, it's not working, it's too dirty, and it's not really returning what the customer is expecting and blah, blah, blah and something. When I look into the actual status quo, what's already there and what's already silently going on. If you think about Rufus and Amazon, yeah, what is, what is Amelia doing in Amazon already for a long time? And we are still thinking that Amazon is, you know, like manually doing things, right? They are simply not talking too much about it, right? Because they don't need governmental money for it. That's why, um, there's not so much, you know, like noise around it. It's it's simply happening. But I don't know whether you've heard about ShopDirect and Project Starfish and so on. So that means, I mean, this is already happening completely the other way around, outside of Amazon. That's complete agentic AI stuff. So it's happening. So are we concerned about it? Yes, it's not okay and blah, blah, something. But from a technical perspective, we are already there somehow because it does not require too much. Yeah, it's simply find the best stuff according to his KPI set. Yeah, that's basically what it is. So a little bit, you all remember, or I mean, you're all facing when you're using an AI today. Okay.

Yeah.

If your prompt is not right or if something is not really clear, then you are freaking out maybe sometimes because crazy replies are showing up. That might be the case. Yes. But that's not a matter of years, right? That's not a matter now of more than 2 years until we come to a point where we say, yeah, okay, it's no part of everything, it's no part of the story. Main question, we should come to this maybe later. Main question is now, who's benefiting from it the most? Yeah, going forward, how much is Amazon still benefiting it, or platforms? Are still benefiting from the, let's say, order journey or from the e-commerce as such. But we will see in arm's length, we will see some sort of silent inflow, a silent intake, a silent change. And then we come to the point where we ask, okay, it was not that crazy as we thought, but what's next?

Hendrik, I want to bring you in here.

I think what Malte is saying is what I'm seeing, in the sense that for me, the biggest news that no one's going to talk about in the West is Alibaba's Quin basically being downloaded a billion times, and that, that was news 4 days ago in, in the West. I can tell you now, nobody's going to let an eyelid about that because it's from China. I think the one thing that Malte has said, which I think is the biggest, like, for me from a second-order impact situation. For me, the big question is, if you have to put, you know, the continents, you know, together and say, okay, so who's going to be where, I think it's pretty clear that Africa and Latin America are going to be the last adopters of this. And I think what we will see is that the, the giant superpowers, you know, China and the US, this is essentially going to be like the, the Cold War in the sense that This is something that no one wants to lose or win. But I wanted to go back to something that Malte said, which for me is really interesting. What is after agenti.com? Because at a macro level, the one thing that I'm thinking about by myself, and I think we have a security problem. I think we have a ginormous challenge coming to infrastructure for e-commerce because you have all this autonomous situations happening and you're going to need autonomous bots and all those other things to ensure that, you know, infrastructure doesn't get hammered. You know, for me, the one thing that happened that I, that I was thinking about while he was talking was, you know, the article, the big story that Claude said that, you know, they saw for the first time a bot-based attack on, on infrastructure from a hacking situation. The thing is What if I have to summarize what I heard from Malte? It's, for me, it's, it's linear growth that we, that we knew in the last 15 years has gone. That's not going to be seen ever again. You're going to now have these massive platforms that have platform scale advantages growing faster because they have access to data, they have access to capital. And I think the only company that could potentially be like platform is OpenAI. Everybody else just does not have enough money. This is, this is going to benefit the large. It's going to benefit the ones who have the most access to infrastructure and cloud and all that stuff. But for me, is what I'm hearing from somebody that's sitting in Singapore and has seen a bunch of things. I will also just make mention that at almost the end of Jan, I saw in the middle of December the Indian government doing something that no other nation has done, and that he said that You know, let's test, you know, e-commerce in our, in our country with payment, with a payment gateway that we own so that we can see how this works. The thing is, is that you need guardrails, Vinny. And what Marty has explained is that the guardrails are available in certain places.

Hello, Europe.

But in some places, the innovation, the speed of innovation, like China and the US, and I think certain parts of Europe, this is being hampered by regulation. It doesn't make it— it doesn't give it—

it's right or wrong.

I just think it's a fact. And that is the challenge that is going to become a bigger challenge because you're going to have people sitting in other parts of the world wanting access. For me, the best example of what he— what Malte explained is I wanted to see the new open— new ChatGPT go. I basically got a big fat message across my screen that says, this is only available to US customers, please sign up and, you know, we'll let you know when it's arrived. That for me is the code word, it's never getting out of the US, deal with it.

So just to pick up on a couple of points, because I want to bring our guests back in now and kind of talk through some of the other aspects of the topics that we want to get through, but There's an infrastructure layer here being created by Amazon, and they're enjoying the advantage they've created over 20-odd years right now. And you've kind of alluded to that up top, Malte. And the second part of that is I think it's been proven that the US version of e-commerce, that direct-to-consumer, free shipping, next-day delivery, the model that we have all aspired to has not been— it has not allowed global e-commerce to get beyond a certain level ever. What I'm interested in is, can we design country-specific ways to deliver the overall proposition of commerce, speed it up through the agentic layer that's going to be put into all of this? But then you have Amazon on the other side with something like Project Starfish, and they're going to say, we want to control supply chain. And the supply chain is not necessarily the product supply chain, but where data starts and ends. And, you know, all of the news about AI and where the bottlenecks are going to be, everyone is focused on trying to solve that bottleneck. Amazon are using their scale to control that at source. And that is something that you've kind of come in with, something you'd like to talk to us about a little bit more too. Frida Hendrik's dog clearly disagrees with me. Totally. I'd love to just— obviously, I'd love just to hear your take on that. Like, where are Amazon going with Starfish? What is this? Competitive advantage you're trying to gain. We all hear about moats all the time. I'd love to hear where you feel it's landing right now.

I mean, let's go one step back, right? I mean, Amazon, what— Agentic, or let's say even one more step back, um, replying to what you— what Hendrik said, and what, what I think it was about what Hendrik said. Indeed, Agentic AI has stepped in years ago. Let's say it like this. It's a development. The only thing that's new is the noise that OpenAI brought in to collect that tremendous amount of money, right? I mean, that's the only thing that's new. When ChatGPT went live, and I mean, that was a buzz, like, you know, like, I don't know, can't remember, like, like the Beatles, first Beatles album or whatsoever, right? So that is like, from a marketing perspective, that is the only change. Yeah, so many different companies across the globe were already working on something sophisticated, but OpenAI said, okay, let's change the complete perspective on that bloody tech topic no one is interested in, and let's create some buzz, some noise, some fears, some whatsoever. That's the only thing that changed roughly one year ago, November '23 or something. I don't know, '24, November '24 or something, right? Oh, '23. So that was basically the only thing that was significantly changing. The rest is a constant flow of development since, I don't know, the late '90s.

Right.

But okay, let's park that one. Next, regarding Amazon, let's also get one step back. Right. I mean, what did Amazon do last year when this Agentic story came up? What did they say? Okay, robots.txt, block everything that is Agentic. Perplexity out. Google, okay, you know, like it's a different purpose. Yeah, partly allowed. And but blocking off all those few agentic AI, the integrated ones, the pure ones, you know, everything, robots.txt said no, no entry. Everyone was freaking out. How stupid, you know, have you heard of the, you know, like the new cooperation of Shopify and Etsy, you know, like letting The agentics in this is smart and so much more advanced and something. From my perspective, Amazon was simply buying time. They're big enough to, you know, like don't care too much about the 0.2, 0.5, I don't know, percentage of agentics AI checkouts actually that's taking place, right? And realistically, so they were buying time for a simple, clear purpose. And you have maybe heard it, sub-news, not so important news. You know, they have those new fees for the APIs. And, you know, like they are getting effective in April or something, but they dropped it around New Year's Eve. I don't know, can't remember precisely. I had the news already in November, I think. So basically that's the core thing.

Yeah.

You change your API environment, you change the way someone from external can approach big data and in your body, in your core body. It's not about the customer, the one who wants to take a look around in the deals page. It's about big data demand coming from outside in. This is totally changing now. API will cost some bucks for the guys who are using API. But the big thing behind is there's a cost structure, a cost system created for the agentic AI because the agentic AI players like Perplexity, you have heard all that, like fighting and embarks between Amazon and Perplexity. They need some sort of, they need Amazon. Amazon is too big. Imagine you, Hendrik, you are approaching your AI bot saying, give me, search for me, I don't know, give me the best washing machine.

Running shoes.

I don't know, something.

Running shoes.

Running shoes. Climbing shoes, you know, like for all that Cape Town brilliant views walking. Yeah. So you need those ones and then you get results, but there never is Amazon in between. Right. And that's definitely from a North American perspective, from a European perspective, and kind of new also from a South African perspective. That's an issue. Amazon is too big to be, let's say, skipped all the time by Agendiq AI results. Amazon was betting on that one successfully. So now the Agendiq guys are sitting around the table in the Amazon building and trying to negotiate something, right? How much do we have to pay per job? You know, and that needs to be arranged, that needs to be talked about. But Amazon is saying, A, we are limiting the access for the agentic AI. Because in the very beginning, without the robots.txt closing the doors entirely for agentic AI— imagine that nightmare. I had this discussion in Seattle exactly like this. Agentic AI is capable of reading everything inside of Amazon within, I mean, some days at least, 2 weeks max. Everything is out. Reviews, history, sales history, everything would have, you know, like handed over to someone, to all those hijackers. That's why it was totally correct that Amazon was closing all the doors completely and now letting them in through certain dedicated doors with restricted, you know, like behind that door restricted access. Plus the entry points have some sort of some, you know, like cash machines where you have to throw in a coin if you would like to enter that limited space. And right after, you know, like checking— and the funny thing is Amazon is also, um, has found a survival mode, let's say it like this, for its advertising unit because Agentic AI is killing advertising. It makes no sense for you to pay for advertising to get better visibility If the Agentic AI bot does not care about who paid for something, right? I mean, the Agentic AI bot is capable of going through all 50 or 500 pages of the SERP. And that's not, you know, like a human being is only capable of the first page without scrolling, right? So that's why advertising is on the, you know, like somehow it's for me, it was the most important thing. Now, If Amazon is saying, this is the door you have to go through, Perplexity Bot, and after, behind the door, we are presenting you the best shoes. Amazon is presenting the best shoes behind that door. That is my selection. That is what I can offer you. And out of that selection, uh, make your choice, right? This is this limitation thing. So Amazon is still— can still, you know, like, ask the audience, the seller audience, if you would be part of that selection I'm offering to the Agentic AI bot when it's coming, when it's showing up, then you have to pay. That's PPC, right? That's basically— that's like so many different things Amazon had to think about and had to arrange in their heads. And from my perspective, it looks quite, um, quite promising. And it's not really changed by a the big engagement of Walmart that they've, you know, like NRF, where they dropped that engagement regarding Agentic with Google and blah blah and something, and definitely for more to come. For me, as I said to Hendrik before already, this is showing weakness. Yeah, what Etsy did, Shopify did, Walmart now has done, it's showing somehow to me, it's showing weakness. If you're not really negotiating, yeah, end to end and trying to keep as much as possible from that entire, you know, like order flow, order world in the e-commerce environment, keep it on your end, keep it on your side.

Yeah.

Yeah.

And all that. I mean, if you think about Amazon going forward and they are able basically take from the 5 e-commerce steps, they will basically take the intent step, maybe the first one.. But starting from second step, and that's a little blurry, starting from the second step going forward, Amazon is deciding already and is in the, let's say, in the stewardship somehow. In the Walmart example— yeah, okay, Vinny, come on.

No, it's just a question because I have two of the biggest brains surrounding Amazon in front of me. So I want to try and make sure I get all the questions out that I can think of. But is this Amazon sweating an existing asset? Is this AWS AWS flexing its muscle again, or is this going to be classified as new revenue? One of the things in the earnings calls that started happening late last year was all e-commerce GMV was now called Agentic GMV. And it's almost like you're feeling that this is the death of e-commerce as we know it, because it's now just going to be classified as AI revenue. But, but my fundamental question is, is this AWS sweating itself and saying, there's this brilliant flywheel, there's this brilliant ecosystem we already have and we're getting so much revenue out of that, that when we renegotiate on API access and the cost associated with it, it's just flexing that muscle a little bit more. And the ads at the other end of it is going to be that extension. That's kind of my first part to it. And then how has the response been? You've said it's kind of shown weakness. How has the response been in the overall market? I mean, Shopify, they never do anything with Europe. I mean, if you're, if you're a European seller that's reliant on Hendrix, laugh says it all. But they neglect Europe all the time. It just, they pick up revenue just because they can, I guess.

But yeah, they can. So I just want to ask that first question. Is it flexing a muscle they know already works and that they're going to be able to squeeze loads out of it?

So what I heard from Alpi was a few things. So let's start at the top. This is Amazon doing what it's always, always done. And that is they They, they manage supply and demand. What Malte is essentially, what he described is we will pick who we will be making kings and queens in our ecosystem. It's not going to be a third-party bot. Just get that. You're not going to do that. Number 2, and I think this is one of the things that I've learned just by reading and listening to, you know, folks who know this, is that the infrastructure to handle all of this costs a lot of money, Vinny. So if you want the access to the entire ecosystem, you're gonna pay for this. One of the things that I continue to believe that people misunderstood is, and I've watched and followed Amazon for close on 20 years, Amazon is not a first mover. It's never been one. It's a fast follower. What does that mean?

It means exactly what Malte said.

It said, we are going to put a big door in front of our ecosystem, and we are going to tell you, you are going to pay a quarter, a 35 cents or 40 cents per call. It's your call to take it or leave it. It sucks for the sellers, but it also, once again, for me, what Marty communicated to me validates a thought that I've had for almost a year. And that thought is, is that the new flywheel that Amazon has runs on AWS advertising and logistics. Everything else is secondary. Who cares if it works? It works. If it doesn't, it's not the end of the world.

Can I just pause you there?

Because there's just something I want the two of you to answer here. We're talking at a level now that is above barroom chat. Okay. Like this is visionary type stuff. It's an incredible brain dump that you're giving us, Malte. It's incredible to listen to. From a seller perspective, where they get their news is going to dictate the sorts of decisions that they make this year. Who are going to be the net beneficiaries here? Are we going to see the return of the legacy brand? Are they going to start using commerce to their benefit now, or is it going to be nimble Um, nimble, nimble, or direct-to-consumer type brands who have kind of hit a wall for the last while. What way do we see this playing out in the real world for sellers? If we can take it down to trading a merchant right now for a minute, where do you guys see the winners and losers?

So for me, the winners is the, is the legacy brand that have cash, that can literally go to any platform and say, you know, We will give you a million dollars. Please make sure that we get listed and found via whatever AI bot. For me, the best example, what we are talking about now is exactly why PayPal bought Symbio last week. Symbio got bought because they needed access to inventory data. They needed access to things that they didn't have. As a seller, and you know this better than most, Mr. O Brien, I love it when I call him Mr. O Brien, owned and managed by Amazon. It's literally, you can play inside our ecosystem. If you look at Reddit, I do read Reddit every day. And the biggest thing that I can tell you inside the Amazon channel is that everybody and their mother, sister, and father is moaning about the fact that Rufus is being forced on them. So as a brand, what I'm telling you is if you're a small nimble brand or DTC brand or a legacy brand, You are gonna have to kiss the ring and the ring's name is Rufus. Malte, can I have your thoughts, please, sir?

What you are saying is right. Maybe my takeaway is a, is slightly different. Um, and how is that coming together? Um, basically, yes, it's who's been benefiting from the actual situation going forward.

It's the one who has the deepest pockets, whether it's a brand.

I don't know. I mean, going forward, imagine you are, and that's hard to imagine. Let's imagine we three are agentic AI bots. Do you really care about legacy, about that was always good, or my mother already loved Miele or something, you know? Yeah, has some sort of, you know, like, um, has to rely on something, on some, on certain information, but basically does not care too much about the brand. So what we are seeing is you've maybe seen the data, um, not 45%, 2030, not in the US, 275 million customers.

And I can't repeat the number exactly, but it was a little bit less than 50% will be, um, AI, agentic AI, um, checkouts, let's say, right? Or the customers appealing, right?

So, um. That's the one thing. On the other, on the other hand, I've dropped yesterday this post regarding the percentage in the different, in the US, in the different categories. What's still brand search, branded search, and what's non-branded search, right? So, and you've seen, you've seen categories like, was it like baby or something with 97% non-branded or something? If I would be Procter Gamble, I would try to Worry.

So, but it's not, maybe I would, I would not start to worry.

Yeah, definitely. I mean, it's too late to start worrying and this, that it should have happened much earlier. So the thing is still the best selling brands are those ones and that's what's right in the, in the stuff that you said, Henrik, right? It's still the biggest brands who can adopt and arrange and, you know, like have the deepest pockets and can pay for the. Best spots on top, you know, when it comes to advertising and so on and so on. So they can erect, but it's no longer because it's a Procter Gamble brand, the offer. You have to play by the rules of the marketplace. You have to play by the rules of the advertising system to stay on top. And they have hopefully the best guys, otherwise they would do something wrong. Yeah. Best consultancy, best That's basically, but it's no longer about brands. So I think we, we will see an exchange of the brand going forward more by the best players maybe, or something. I don't have the right narrative going forward for the future, but that will significantly change the entire brand perception. Brand and definition perception will definitely change.

I agree.

Amen.

It's long overdue though. I mean, we've been in this false reality for such a long time as to how commerce should work. We have an over-selection problem. Like everywhere you go, there's just too many, too many ways to buy the same thing. And as a result, I could see the, the kind of consolidation of the market. And that has to happen if search is to work and discovery is to work the way that we're told it's going to work because what I call it like the rule of 3%, it's 3% conversion rate for the last 20 years has got us in this shitty position where no one's making any money in commerce. So I think you're going to have consolidation of tech, consolidation of product. And what that results in is a much narrower window for us to have to think and CPG categories are completely get that. In terms then of how we start talking about this better, like this is a conversation I don't think I've heard. In our world, not maybe in Europe, Malta, maybe you hear it. I'd love to figure out how do we distribute this kind of message into operators and how do we get them to pause. As Hendrik was talking there the last time, it feels like we're after meeting a parent who's telling us it's okay to sleep at night and not worry about tomorrow because there's a long way to go in this whole journey and we can just take our time. And that's kind of what I get from listening to you and listening to how Hendrik described it as well, that we can just kind of pause for breath a little bit. So how do we make it easier for people to figure out what's quality noise and what's just noise?

So before Marty answers the question, and I think this is Bimby O, I think as a brand, you need to find the people inside your organization that know where the buck is going to. Uh, Vinny, you and I talk about this often, really good talent. Is mostly in places where there's lots of money. I want to also just add to this. Malte mentioned this, and I think this is an important part. In most markets, not called the US, this thing is going to happen, and it's going to happen on a platform level in a sense that some of these platforms are moving faster than others. And I think that's important, but I think the thing that he, the point that he made right at the beginning is the point that I'm getting. More and more happy with, to just say this is what it is, is that scale isn't going to be communicated to many people. It's going to be literally just, you're going to be told, this is what, if you want to play, this is where you're going to have to be. Otherwise you're going to not be anywhere. And this is the challenge that North America is creating for the rest of the world, because in markets like China, in India, in Africa, and Latin America, This is going to be, in most cases, be run by governments. Let's just face the facts because this goes against demand. But I want to hear what Malte says about, you know, what do brands do? Because I want to know the answer as well, because I think nobody knows, to be honest.

I mean, basically, as you, as you already anticipated, maybe a little bit in the question, right? I mean, agentic AI will simply clean the backyards of all those guys., right? If it's today okay to have 20,000 times the same toothbrush, yeah, as a CPG giant, if this is okay, then going forward they will quickly find out, okay, it doesn't make sense too much because the agentics always pick the same one, the best one with the best reviews, with the best, I don't know, you know, like, uh, legacy whatsoever.

Yeah.

The, the, the beachfront real estate. Will basically always sell. It's not about today. You can, you know, get trick a little bit around, and that's maybe the question that Amazon might play a little bit different preserving this Amazon Advertising world.

Yeah.

But basically if it comes to entire e-commerce environment, I would say for you, it makes totally sense to have this one great item that is definitely picked by those bots, but not like, you know, like, I mean, today it makes sense. You have different items.

Yeah.

You have maybe cheaper Prime costs or whatsoever. And then you play this item up with advertising for a certain deal scenario in Black Friday or something, and you will sell it anyway. So, but it makes long-term makes no sense, but it's still okay.

Yeah.

You buy it a little bit more, you purchase it, but you know, obtain a little bit more, bring it over the containers from China, and you have it in your site and something. But going forward, focusing, focusing on the best items that have a chance to compete, you know, like external, because an OpenAI whatsoever, whether it's ChatGPT or something else, will definitely pick the best ones, the best 5, and then decide for one and then offer this one to the prompter or even buy it for him. Yeah. Um, so that's basically, it's a true demand to, you know, like melt down this over, um, let's say, yeah, this over-selection, let's say it, right? That basically, that, but that's coming automatically. I think this is coming automatically. If you see where it flows, where the river goes, right? That it's basically this one item that's selling all the time. Why should you invest too much engagement into the rest? Yeah, into the long tail definition will change.

Do you know what? I was looking at your post yesterday and for branded and non-branded search, and I just had a glance at it again just now, but something occurred to me looking at the categories. It kind of tells its own picture. If you look at pantry staples and things that you'd expect in your kitchen or in your pantry, pantry or whatever. It's coming out to non-brand, the search, and it's dominating at about 80, 90% in certain cases, which makes sense because people are value shopping right now. Value shopping is on a week-to-week basis. Where am I going to get the best in this category? But the one category I think it can transform is baby, right? And I've thought about this loads because we've— I got 3 kids and I remember each pregnancy being different. And your requirement after having a child is so unique in that experience. You might be getting more pharmaceutical products, or you might need formula because baby's not breastfeeding. And there's all these variables that go in. And typically the mother in that instance will go to friends. She'll talk to her mom or sisters or cousins or aunts, all these different things. And it becomes this really personal experience that is almost impossible to replicate from an e-commerce perspective, which is why I think there's been loads of category killers and lots of money invested in the category. I can see now how a conversation with an LLM becomes part of that discussion. So the products that start surfacing in there and the baby care brands and the post-pregnancy brands that start catering to that, I think it could be transformative in that category to start taking a much larger chunk of the spend that goes into it. And I, when I look through the categories that we put in there, I think it's quite transformative. In its nature. And then the other one, and you've alluded to it again in later posts, was around the change in the nature of luxury. I think we are really looking at some very different days of how luxury is, and there's luxury at the very top level, and then there's aspirational luxury. Aspirational luxury, I think, is that category that's in real threat. I think the layer above that is something that just doesn't exist in the world of commerce the way we think about it. The way I can describe that for people, anyone listening, is you go in to buy a new Porsche and they give you a free holiday to the Seychelles just for buying the new Porsche. Like, sorry, it's a stupid example, but maybe it's a Maserati or something you're buying. But that's the kind of level that you're dealing at in there, the sort of things that are happening. So that's not touchable. But as I look through those categories, I go back to my original point, I do see that there's room for transformation in there. Beverage being another one. You know, it's a more—

Yeah, it's also a little bit counterintuitive, right? I mean, you would say, but that's already what's happening. The, the, the categories that normally you would say require the highest level of trust are the ones that are exposed to non-branded search the most. And it's total counterintuitive, but it's not because I have 3 kids. They don't care about, you know, in the past. It was like, it's a, as you said, it's a, it's a Miele, it's an, it's an, it's an whatsoever. It's a, nah, Porsche is different, but you know, like those commodity stuff.

It's a Miele.

It must be working. It must be brilliant. It must be okay. I don't need to read too much, you know, like stuff, um, uh, reviews or whatsoever. I do like 30 years ago. Yeah.

It's a Miele.

It's okay. Because they build up some brand-level general trust thing.

Mm-hmm.

In Amazon, Amazon is the most important trust layer. It's on Amazon, it's existing, it's buyable, it's, uh, shipped immediately, it's, it's in my hands tomorrow because it's Prime, blah, blah, blah. That's overarching trust layer.

Yeah.

Underneath. For my son, Potter, it does not matter too much how the brand is named. I'm looking like an agentic AI already. I'm looking already for the best thing and reviews already replaced the brand. That's what you said already, Vinny. Reviews already replaced like personal relationship. I would also, you know, like compound into reviews. Yeah. And asking your friends or whatsoever. So the review layer. Within an trust overarching Amazon trust layer, let's say the review layer has become the most important layer and not the brand name. And that's why non-branded search might end up most of the time with P&G products. Okay. Because they're doing a great job, but not because of the P&G narrative on top.

Mm-hmm.

Just because of, yeah, they represented the best enhanced brand content, pictures, videos, explanation. Exactly.

You know, like meeting the customer. You know, where the questions are and blah, blah, blah. You know, they have experience, they have money, they have, you know, like they can do deepest pockets.

And now we are, you know, like closing the circle.

It's all about the deepest pockets.

If you allocate that deep pocket, you know, like content or like ingredients perfectly into right decisions, right? I mean, that's not natural.

Point to bring it all back around because we talked a little bit about talent, not much. It's something that's on my mind loads. The large retailers have been busy bringing talent in-house to make use of how AI is going to benefit them. They're not trying to buy agency talent for this, which, which I think is a bit of a shift. That's kind of like early 2000s mentality, which I think is interesting. And I'll be watching to see who brands benefit there. And I'm also looking at the clock and seeing that we've gone well over 50 minutes, which is incredible. I think we could talk about this for hours and hours. Maybe what we might do is get back together in 3 months or 4 months and just see how this is shifting and see what patterns are emerging because, you know, Amazon has been the narrative for commerce all around the world for over 20 years now. And they've created ecosystems, economies, they've built careers for people.

So I think it's going to be interesting how it plays out.

The other one I'm going to be, I'll ask us to watch is Shopify on the basis of your trust comment. Shopify now has a decision to make, I think, Hendrik, with Shop Pay. And Shop itself as an app. If we're going to be competing on trust, they've got to put their balls on the block and say Shop is going to be this counterpoint to Amazon because we now feel that we can give you something. And we've said before, you're either trading on trust or price, and the days of trading on price are long gone. So now it's going to be trust, and that's where consumers are going to end up. Hendrik, anything you'd like to ask or kind of comment on before we try and bring this to some sort of natural close? This is a brilliant, an unbelievable discussion.

So yes, it's a great discussion. Um, I, I think for me, the, the, one of the comments of the year thus far that Malte mentioned, which I think is a big deal, is I think brands are gonna have to do their homework about how many agents are available in a specific, um, platform. I think the one thing that, that Malte mentioned to me today is, is that Shopify and all these other platforms are partnering with others because they have to, because they don't have the ecosystems. The fact for me remains is that these, you know, these protocols that they are building essentially makes APIs for me almost redundant, which, which is going to scare quite a few people, but The one thing that I'll add is, is that we, we are in the beginning of a massive transformation and there's lots and lots of change coming. I know I'm stating the obvious here, but Marty has just confirmed to me today that I don't think we understand the change that is coming. That for me is the takeaway from today's conversation.

There's one thing I'd love to get you guys to contribute to. Have you ever heard of the Klee Train Manifesto? So there's this kind of like a guide to how to treat the internet when it first came out. And this was when it was meant to be this layer. And there's 95 theses in there of how we should be, how we should treat this new utility for us all. And it was about access and democratizing knowledge and all those kinds of things. It kind of strikes me now that there's, there's an opportunity to write a Q-Train manifesto for the age of agentic commerce right now, because it is fundamentally changing. The internet. I see these things like UCP as being that first step in it. Almost having these protocol layers, which fundamentally define how, how information is transferred and shared right across this, this new ecosystem. And then there's got to be a brand layer as well. And there's also got to be some consumer layers. I'm going to share some information with you guys to see what you think of it, but, but defining some sort of new, it's not a playbook. It's a way of thinking about the world in this new environment. I think would be really useful for anyone who's engaging in this. But look, I just want to say thanks for all that. I know it's late. You're in Southeast Asia now. It's probably cocktail time for you. For me, it's going to be a cup of tea and potatoes. Endrik, probably some fish given it's height of summer for you.

Yes, I'm actually going to go make dinner now right after this because we've spoken for a while. But Vinny, this is a mind-blowing conversation. And, and it, and I think what, for sure, what I particularly like is that Malte brought a global point of view to this, which I don't think there's enough of for this conversation.

I genuinely think, I, I think should go on news channels, and, and you should be putting it out there a little bit more. And as I said midway through the conversation, I think we need to try and bring more access to this kind of information. So that's something we're on a mission to do, bring more of throughout the year on the Ostrich Report. But Malte, cannot thank you enough for giving us your time, your wisdom, and hopefully you'll join us again in a few months and we can continue the conversation. I enjoyed it a lot.

Thank you guys. And it was indeed a global, uh, round here, right? If we take our, uh, positions on the map, actually. So it was great. Very interesting. And yeah, hope to see you again on the same round here.

Sounds good. Thanks for watching the Ostrich Report. Tune in next week and we will have more guests, more information, and more of Hendrik, unfortunately. See ya.

Peace.

Guys, thank you so much for that.

That was amazing.

I'll get the edits done and we'll be releasing this in a few weeks.

We give you the raw footage as well, and I'll give you the edited version as well.

I've noted where we need a few edits. I'll send it on to our production manager and we will take it on from there. But thanks so much for giving your time so freely and Yeah, it was mind-blowing. It was just such a huge wealth of knowledge. Thank you both.

Thank you guys and take care and we talk again, right? Just drop me a message and we talk again.

Bye guys.

Enjoy.

Take care.