Monday Read Demandware to Breckenridge: Harvey Bierman on TCO, Shopify & The Agency Squeeze

I'm not super enthused right now, um, right? So I think there are way too many brands that got in it because they could buy content, they could buy manufacturing, they could buy design, they could buy all these things, right? From cold plunge tubs to knee sleeves to, you know, massage guns to makeup and activewear, right? Like, a brand isn't what it used to be. A brand is a person with an idea who then goes those farms out, everything about that brand to bring it to market. So they're really shallow. And so—

Welcome to the Struggle Bus of eSpot Show, home of the e-com nerdy news. I'm your host Vinny O Brien, or as my friends like to call me, hey you in the bushes. As an aged journeyman in e-commerce, I wanted to create the Struggle Bus, have a space for us long-suffering career veterans who have seen it all, and then we go quietly back to our desks just to get our jobs done. With me today is someone many of you will already know, Harvey Biermann. I'm going to let Harvey say hello in a minute, but he has recently swapped boardrooms for black diamonds, at least for now, come back to his roots. After decades of steering some of the biggest names in retail and commerce, he's on the well-earned pause exploring the mountains around his new home in Breckenridge, Colorado. His photos are a sight to behold. Most recently, he had the CEO role in Redbound, where I first met Harvey, and we met together in NRF last year, a dual-platform agency straddling Shopify and Salesforce. Force. And before that, he was Chief Digital Officer at Christie Sports. Many in the industry first met Harvey back in the Demandware days when he was known for building not solutions but relationships. That's a starting point, I think, for the conversation, Harvey. You posted on LinkedIn the other day, and maybe when you're saying hello to people, you put up this picture of all the roles that you were hiring for in Demandware, I think in 2014. Take us back maybe a little bit there and give us that moment in time. Where were you? What were you doing? What was the health of the industry like?

You know, that was a really interesting time. I think it was actually February of 2010. And that to me was really the birth of Demandware. While we, you know, started the company in 2005, it really was that time period in 2010 when the construct of what so many people came to know as SiteGenesis was created, where we went from early adopters to that next phase of technology embracement, where true enterprises with risk on the table put their trust in Demandware. I was flying between Burlington, Vermont, which is where Burton Snowboards was, Portland, Oregon, which was where Columbia Sportswear was, Flagstaff, Arizona, which is where Deckers Corp was, or UGG Footwear, and Boulder, Colorado, which was where Crocs was. It's really interesting if you think about those 4 cities. They all have pretty big institutions in place. They're college towns. They're pretty progressive towns. They're innovative towns with incredible brands. And I had the just absolute privilege of connecting these brands to this technology that was enabling the global transformation of commerce in a way that nothing had done prior. And to this day, the relationships I formed at those 4 brands shape almost everything in my life, from where I live to the opportunities I have had and probably will have in the future, to who I have drinks and dinner with when I go to networking and industry events, to people I call friends. It's pretty incredible.

The brands that emerge from those places as well are pretty unique and very hard to replicate. I think the 4 cities that you mentioned have a unique type of personality when it comes to their place in North America. Tell us a little bit just about the culture so people maybe aren't familiar, get to know a little bit about them. And I think in particular what it meant for the brands and their ability or their openness to adopting technology solutions.

You know, it's funny, I didn't think about the connection between the willingness to adopt technology, especially relatively early on. I mean, in 2010, SaaS was still not an established preference by IT organizations and entrenched leaders for technology solutions. E-commerce was a business that few brands leaned into heavily. And finding people to both make decisions and drive innovation, you know, we as the e-commerce industry, which there are so many of us now in 2010, you know, there weren't as many of us, right? There weren't as many retail operators or new graduates or, you know, kind of converts from other parts of the business that adopted this technology. And when you think about the overlay of the Demandware and the SaaS trajectories and that time in the market with those 4 cities, what you find is they're relatively young cities. As I said earlier, they're relatively progressive cities. Each 3 of the 4 of them I think have had the same civil engineer that have closed a main street and turned it into a pedestrian walkway, which for our European friends probably is like, well, it's about freaking time the US did that, right? But in 2010, it was still pretty innovative. And all of them have universities, pretty significant university presence, right? And those things probably played a pretty big role in that trend, right? You know, you noticed I didn't talk about Dallas or Chicago or to be honest with you, even Boston where we were based, right? That's not where these brands, these customers, these partners that we had signed very early in the Demandware days came from. And if you look at where those brands are today, I mean, all of them are in a significantly different position. I think Crocs was a sub-billion-dollar business at the time, and they're now, I don't know, $4 or $5 billion, right? Uggs and Deckers is, you know, a juggernaut beyond belief. And so, and Burton Snowboards is this, you know, core year-round multi-brand business as well. So really cool. And then the people too, right? The people at these orgs that were there in 2010 have all gone on and been, you know, CEOs of companies, CDOs of companies. I mean, I'll mention a couple, right? Chris Ladd, Paul Zengel, Jeff Lord. I mean, these are guys that have been around and people know.

There's so much in that that I'd like to just kind of get to first before we fast forward a little bit. But the first thing is about the people. In your experience, have you seen it better to have a generalist lead an organization, or are you of the belief that we need like an accounting-style leader in the organization? Someone who can traverse all those different hats that you got to wear, particularly back in 2010.

So let's go through phases, right? In 2010, it was people willing to break shit, and pardon my French there, but I think that was a really, really critical attribute of successful leaders in these spaces at that time. There were folks that were willing to be wrong, that were folks that knew that if they made a mistake, they had the ability to correct it and to drive. Were okay being accountable for the successes and the failures. So true, you know, innovative types. Now, I'll say in all of those businesses today, there's much more risk on the table for those brands. And decision-making probably needs to be a bit more pragmatic, right? Change probably needs to be a little bit slower because there's, in some cases, probably hundreds of people in these digital orgs now that the change impacts. Back in the day, if John Kalinic at Deckers said, "Hey, we're going to sign this Demandware thing and we're going to go put in XYZ." He looks around the room, he talks to 7 people, and that's the entirety of what it is, right? For the team running Deckers today, you've got brands all over, you've got teams in different cities, you've got decision-making that's much more distributed. It's much more— I'll use the word political, but really, it's pragmatic is probably the right word. So, it changes over time.

I just want to paint a picture for people. Back at that time, because I was decided upon working in the UK market at the time. But the difference in now and then, I remember going out with my customers because I worked at eBay at the time. We would go for a beer after work. You would carry your laptop in a bag and you would have a text message alert coming from Pingdom to tell you if the site was down. If the site went down, someone was going to call you and say, what the fuck is going on? And you could be sitting in the pub with your laptop out trying to figure out what the hell had happened. It's an incredible place that we came from, but it just gave you a different sense of responsibility and shared ownership, I think, that doesn't really exist today, or maybe in a different way.

Yeah, it's funny. You think about the Shopify ecosystem, which is where a lot of the brands are today, right? And the— what— where the focus and concern is on the brand owners or the business owners in Shopify. You know, I'll use an analogy. When we brought Demandware, we used to talk about Demandware as a utility of commerce, right? We wanted to make it so that you turn the light switch on and you didn't worry about the power, you didn't worry about the wiring, you didn't worry about the grid, the light went on. And if your light bulb went out, you'd change the light bulb, but you didn't have to worry about anything behind the light bulb, right? And while we delivered that pretty well, it was still the early days of SaaS, right? There were still problems. And with the Demandware infrastructure, you still had all your custom code on top of it. You still had all your third-party integrations. You know, in Shopify, They've changed the game, right? I mean, for the most part, it's a utility. You don't think about not only the application, but for the most part, the integrations, especially if you're, you know, you're choosing the integrations with 5,000 reviews and well documented, right? Like these things work and all you're worrying about is your Google spend, your fulfillment, your inventory. But that infrastructure layer is so abstracted and so much outside of anyone's daily concern. Um, it's, it's a different business. It's just a different business.

So has that low bar to entry made the industry more fragile? Because we, we talked a little bit about, you know, the way that agencies have to start finding white space or in revenue into the future. We've talked about the, the metric that is total cost of ownership, which is complete it's nonsensical, really. And I want to kind of move forward a little bit. But the fact Shopify have done so much to— God, it's going to kill me to say this, but to democratize technology, we should just shut down the podcast right now because I said that. But the fact they've actually gone and done that, the lowering the barrier to entry is my point. Have they made a more fragile industry for us?

Back in the day, I love that. There, you can shut it down because I said back in the day, right? Back in the day, there were table stakes. There was a Mason-Dixon line, whatever you want to call it, about what it took to be in a business, right? You had to have a certain amount of expertise and competency and a certain amount of capital. Those things don't exist anymore. So, there's a lot more businesses now. And a lot less scale now. And so it makes finding partners, betting on businesses a lot harder.

Pause for a second.

Because you really don't know if this expertise or the value prop is going to scale to a great return to a big business or is just going to flutter out because it's a guy or a gal and a vision and no ability to execute, right? So it's just, it's a, it's a lot bigger of a gamble, I think, today. But as you said, a lot more people can play in the game. And if they create the right partnerships, find the right rocket ship, you know, they might succeed in a world where they couldn't have in the past because they didn't have the capital to get started.

I just lost you there for a sec.

They might succeed in a world where they might succeed today in a way they wouldn't have in the past because they never would have had the table stakes, as I said, to get started.

There's something else in there as well, though, that everyone who wants to can start a brand tomorrow. And you look at all the D2C brands that emerge from coastal regions and North America and everywhere else in between, they don't have the same heart or the same values that coming from a location that's a little bit different. It's something that has become an emerging trend on this particular podcast. I take the very first guest I had on, she worked for an Irish brand, they're 130 years old. They were set up in a convent by a set of nuns who needed warm blankets 130 years ago just to keep themselves warm. They said, okay, we're in the local community. Can we provide jobs for people and can we provide a thing to do during the day for people? So this is how the brand started. And 130 years on, she as a brand owner has got to maintain some of that burden of responsibility is what I say, because that's where it started and that's where it's going to continue to be. But she's got to apply all these modern techniques to it. And she's in a team of 3 people, which is kind of in part why she's on the struggle bus. But I don't think we have that same sense of brand for everybody. And the barrier to entry being so low means that an exit is possible in everybody's head because that's what hits the headlines. It's never about, you want to build a 20-year company? No, I fucking don't. Nope.

Yeah, it's interesting times.

Those values are lost. So to kind of bring that on and talk about the thing I mentioned a few minutes ago, total cost of ownership. We spoke about this as being something that has eroded value in the industry completely. I'd love to hear your kind of, your raw feelings on that right now, considering that you've had a few, a bit of time off to think this through and to figure out where your head's at with it all.

And it's funny too, and I've taken some time over the last couple of weeks actually to test a couple of theories and it seems to be out there, right? So this construct of total cost of ownership, and I'm talking specifically in the platform space right now, but it's analogous probably to lots of other things, has been a really big talking point. And there was a time when, let's just call it, you know, the two Goliaths in the room, right? Shopify and Salesforce for now. And you know, you can throw Magento in here for sure. But that the Salesforce or Demandware cost structure was materially different than the platform for Shopify, right? Um, and but the platforms are tremendously different. And what's happened is ultimately is the Shopify platform has gotten better and the Salesforce costs have gotten lower for the platform. And then you take in the cost of the platform with the cost of payment processing and you add those two things together and you look at how Shopify works best when you bundle the platform with the payment processing, which is charged at a premium versus other platforms for payment processing, you start to recognize that from a platform perspective, this total cost of ownership thing is a, is a zero-sum game, right? It's, it's a wash. So this value proposition that both Salesforce and Shopify, and I'm sure Magento, are championing about, you know, we're the winner of total cost of ownership, we drive costs down, we are a smaller part of the P&L, is not coming from the technology that these guys enable, but it's the squeeze they've been able to put on both ISVs and probably more importantly, the agency partners and SIs that make all this crap work to succeed, right? Shopify does it by making projects incredibly small. Right? Like there's just not a lot of cost involved in these implementations, which is great for the brand, but really hard for the hundreds, if not thousands of agencies out there that have helped Shopify become referenceable in the enterprise space or have built these incredible user experiences, right? And in the Salesforce space, right, the cost structure got out of whack because the talent pool was so small and the cost of talent went so high. Now that the talent pool is greater than the demand, the cost structure is dropping significantly. But at the same time, you now have all these boards and all these executive leaders going, hey team, where's my savings for AI? How come we're adding more headcount? Let's reduce headcount. Let's do things more efficiently. So this whole concept of total cost of ownership is really, in my opinion, coming from the businesses around these platforms. And as they put that squeeze in, it's going to affect in my opinion, innovation, right? It's going to affect the talent. It's going to affect the experience or the quality of work when so much squeeze is being put on the people around these platforms that make them what they are.

So just to drill in on that a little bit, the one thing that's kind of glaringly obvious here is that innovation loss that you said. It doesn't come through in any cost at all. And in many cases, the brands don't have that capability or that thought leadership within their own brand themselves. So they're completely reliant on agencies to deliver innovation or ingenuity around technology. That's a huge hidden cost, a value loss within the value chain that's out there right now. If you're on the agency side again and you're thinking, how do we rebuild this for ourselves? One, is it possible? And two, how do you do it?

So, I mean, it is possible, right? I think there was a tremendous amount of agency business that was in the past paid for through nuts and bolts or, you know, operational processes, right? From running keyword campaigns to managing integrations to building even things like functional specification documents or business requirements documents, right? These are things that AI are helping, I think, probably simplify. And what it means is that agencies that are succeed— the agencies that are going to succeed are probably ones that go upstream in the value chain to things like strategy, right? Agentic commerce channel, you know, revenue generation, innovative user experiences and design, you know, really pushing the boundaries of what can happen on a website with video and interactive experiences. And then as, you know, as Agentic Commerce or agents or whatever you want to call it evolves, right? Making sure that the businesses that they partner with are getting the benefit of something they wouldn't get if they didn't have that partnership, right? So they're paying fractionally for the innovation, not fully for the innovation, right? There are, you and I know, there are tons of brands who have put headcount into place, have spent, put money in vendors and made these big promises about returns on Agentic. And then they sit there at board presentations and it's like, we've spent all this money and you know, our comps are down, right? Like, like, that's about the worst thing in the world. So the ones that are, you know, being more pragmatic and testing and learning, you know, allocating small, small funds and then using fractional resources through agencies to help get access to it, I think are the ones that are going to lead. So, you know, that's where I think, you know, it's, it's, it's the same story over and over again, right? The higher you go in the value chain, the more likely you're to succeed. And, and be a leader in the next version of whatever it is you're in.

There's something that's consistent in everything you say, and I go back to your 2010 story. It's culture. Everything that you've referenced, to me at least, sounds like there's a cultural heartbeat that determines all this, even down to how you think about agentic has got to be a cultural manifestation within an organization. It's something you sit down and say, right, we're going to make the best of it. And I've been interviewing people for the last 3 weeks around this particular topic. And I'm kind of skeptical on it, but what I'm always met with is no one ever asked for the mobile phone. No one ever asked for a cell phone, a smartphone. No one ever asked for the car. All these things that have become phenomenal change agents in our lives. Agentica, I guess, is going to be that way, but it's contingent on our industry being smart enough and curious enough to do something useful with it. That's kind of my take.

Yeah, mine's a— I don't know if it's different, but it's maybe more nuanced. So no one asked for Amazon or Walmart or Shop App or, right, or Zalando or, you know, Go, you know, Tmall. Um, and it became another way to engage with brands, right? I think agentic commerce is just another way to engage with brands. But agentic commerce in and of itself on its own is useless. It doesn't exist. It's like, it is nothing. It is a blank. It is 4 walls, right? So, I think the real challenge to me is not, is what brands are going to learn how to use this tool? Like, just like what brands learned how to use Zalando, what brands learned how to use 1P versus 3P on Amazon. And then the real issue is those, those those disintermediaries, Amazon, eBay, Walmart, you know, go around wherever, whatever market you're in. What are they going to do? Because that's, to me, what's at risk here. The brands aren't at risk in and of them, or the concept of brands aren't at risk in and of themselves. It's the disintermediaries that sit between the brand and the consumer that are at risk. Obviously, brands that sit on the sidelines and don't recognize that there's a shift happening are at risk. But yeah, I mean, it's that disintermediation, as it always is.

Interesting. We're coming up on time because I tried to keep this to 18 to 25 minutes. I've got 2 key questions I'm going to ask at the end. But before I do, how different or not do you feel about the industry having taken a step back? Do you feel energized by what's in front of us? Do you feel Do you feel kind of inhibited by it, or do you feel like you've just got a new point of view?

I'm not super enthused right now.

Okay.

Right. So I think there are way too many brands that got in it because they could buy content, they could buy manufacturing, they could buy design, they could buy all these things, right, from cold plunge tubs to knee sleeves to, you know, massage guns to makeup and activewear, right? Like, a brand isn't what it used to be. A brand is a person with an idea who then goes farms out everything about that brand to bring it to market. So, they're really shallow. And so, that's what's got me disillusioned. You know, there used to— Brands like Timberland were created by a family of cobblers who wanted to, you know, do shoes the the right way. And like, so it was a cobbler that created a brand, not a brand that found a cobbler.

Yeah.

Um, so I would love to see, you know, this creator economy boom more about people bringing something innovative to market and learning how to be a brand instead of, you know, knowing how to be a brand and then using— listen, literally white labeling everything that is the brand.

You go to so many conferences and hear, oh, how'd the brand start? Well, I was on TikTok or on Instagram and I saw my followers love this, so I decided— oh yeah, I don't hear that again. So the final 2 questions for you. One, if your career was a song right now, what would it be?

Well, it's like, that's a good question. You didn't ask me that question in advance.

No, I didn't.

So the immediate one that comes to mind is a song that means a lot to me for a lot of reasons, but it's Crazy by Seal because the song, if you're never going to, you're never going to survive unless you get a little bit crazy.

Amazing. That's gone on the playlist and it will be hitting my speakers tonight. Final question, Harvey. Why should we let you on the struggle bus? Why do you deserve to get that seat?

That's not for me to decide. But I will tell you that generally what I have found over the course of my career is that my story resonates with people. The experiences I've had both as a, you know, starting in the '80s as a retail merchandiser, retail buyer, salesperson on a floor, getting a chance to work for Michael Rubin and Global Sports Interactive way back in the day, seeing the birth of e-commerce as a services industry. Ironically, by chance, luckily getting the opportunity to work at Demandware. And partnering with all these amazing brands, creating these relationships with so many industry icons, and then leaving Demandware, going back client side, you know, and being accountable for the bullshit I probably spewed for 7 years while at Demandware. And then finally, in the last couple of years, right, being on the agency side, like I've been on the product side, I've been on the brand side, I've been on the agency side. There's not a P&L that I haven't seen or been responsible for with all three parties always being in the other person's P&L. And, you know, I think it's a pretty unique perspective. People tell me they like to hear what I have to say. And, you know, I don't wear a suit when I show up.

I feel privileged to have got some of your time today. I genuinely mean that. There's so much culture in everything you say. There's so much humanity. And I remember when I first spoke with Kristen last year before we Got to work with you guys briefly at NRF. It was one thing that she was a pain to tell me was what a great people person that you were. And everyone that I've spoken to about you since and heard you speaking have all leveled up to that as well. But I'm genuinely grateful for you taking time out today and for the pre-calls that I missed and the ones you actually made as well. So thank you so much, Harvey. Where can people find you? What's the best place to connect?

Probably best place is LinkedIn. It's where I'm the most active. Pretty open, pretty honest. Love to connect with you.

Amazing. And hopefully we'll see you on the Watson Weekend or our Big Brother podcast later on this year too. But thanks so much for taking time out, Harvey. Much appreciated and welcome to the struggle bus.

Thanks, man.

See you later. I'm just going to stop this now. Give me one sec.