Hello, everyone. Welcome to Recurly subscription sessions. Today's talk, I'm very excited to host, will be about best practices in the ecommerce space.
So we'll get started with a quick round of introductions and then get into the meat of it. So I'll start. My name is Mary Rosberg. I'm the VP of growth evangelism with Recurly. I've been here for coming on twelve years, and I've been in subscriptions even longer.
I'm thrilled to have these two guests who I've known for many years now. I'm gonna have them introduce themselves. Please don't be modest.
Let the world know about your incredible background in ecommerce, in subscriptions, and if you could tell just a little bit about your role at the company as well. Andre, you wanna kick us off?
Sure. And thanks a lot for having me here today. So my name is Andre Rebroff. I spent last twelve years building and scaling Sendbird to more than two hundred million dollars in revenue.
And I recently left to start a new, venture. I because I honestly believe in subscription businesses, and I want to help them to make things better using AI agents. So, working on the company called Finzi right now.
Awesome. Chris?
Yeah. Hi. Thanks for having me. Long time ecommerce and subscription operator, for about ten years. Started and ran a company called Loot Crate, which was doing subscription commerce for the geek gaming pop culture world, scaled that up to about two hundred million revenue, and then scaled it down and went through a whole restructuring process of sale and learned a ton. And so now, have started a a new venture called Retention Brands where we're acquiring, ecommerce brands and, making it more efficient, focusing on profitability, and, and, kinda share best practices.
Awesome.
Well a lot of stuff from Loot Crate in in my house and even behind me.
Oh, yes. Oh, yeah. I I again, with the modesty, you know, it's like, oh, you know, just come down Loot Crate, casual. Like, everyone knows Loot Crate. Probably everybody has something from Loot Crate. I know I do.
Let's talk a little bit, about, subscription plans and how your businesses do subscription plans and subscription models today.
If you could touch on that, and either one of you can kick that off.
Let let me start here. So at Sendbird, the subscription was a way how to change the traditional consumption model of fragrances because usually people were buying full bottles, fifty, hundred milliliters using them for three, five years, not necessarily going through. And, at some point, they didn't like the fragrance. They wanted to try something else.
But again, the price point was pretty high, and it was not enough to just go to your local store or local store around the corner, try it, sniff it for thirty seconds, and then make a hundred dollar decision. And this is how Sunburst started, with an idea of giving you an opportunity to date your fragrance before marinating. So eight milliliters, enough one month, enough to make sure you, like it, you don't like it, you like all the compliments you you get. And not necessarily then, like, canceling your subscription and go buy something big.
But you had an opportunity to keep trying new stuff because currently, every year, there is more than ten thousand fragrances being launched, around the globe. And that's the mission of SemVer to give people opportunity to to drive various things around. So subscription was not a way how to hook people on the same purchase over and over again. It was a way how to change the consumption totally and, make it fun.
Right. Chris?
Yeah. I I think with Loot Crate, it it's kinda it seems strange to remember now, but mar the Marvel Universe and all the, like, kind of adult comic pop culture world, wasn't back in full effect. And so we were seeing a huge opportunity to bring all these epic collectibles from all these great shows that everybody was watching back to life. We all had these things at at home as kids, and then there's really no other than if you were gonna go to New York Comic Con or CDU Comic Con place to go, kinda level up collectibles like Andre has on his on his shelf back there, you know, kinda classy adult collectibles.
And so he said, why don't we go out, hunt those down, and then all the value of a of a subscription membership where you're getting the the a much better price than you'd find otherwise. We have, you know, deep passionate fans doing the curation and merchandising.
And then over time, we evolved it to be able to do storytelling for specific universes and fandoms. And so probably our most popular of that was, like, the Harry Potter quarterly membership. And so we would go deep into some element of the story there and and really, kind of try to tie in narrative and commerce. And so it was it was really kind of experiential and fun and kinda connected you with, what was relevant in the in the fandoms you had.
Yeah. I still have my little time travel thing from the Harry Potter one. Yeah.
Yeah. Yeah. Yeah.
Yeah. Weird alert, but it's true. It's true.
Awesome.
So let's talk about acquiring customers. It's it's become really challenging. At least in our data, we're seeing acquisition continue to be more and more challenging. What are the best strategies that you've seen for customer acquisition, now in your businesses as well as are there any channels that have kind of surprised you in the last couple of years?
I can I can jump on this one? Sure. I would say yeah. So we so retention brands yeah.
We own Birchbox, Altru, and Beachly, which are kind of a different category. But I think this has been a problem across essentially every ecommerce d two c brand is customer acquisition is harder, but it's always been hard. So I don't think it's it's like I think the the name of the game is that, you know, Meta and some of these performance channels are consistent, but it's algorithmic, competitive, and you're basically your margin gets arbed away by competition and by the actual platforms themselves. And so it's really finding going back to, like, first principles on what does my brand do and how do I find ways to partner with other either folks that already have a big funnel but don't have a cool experiential, which is all probably with Semper, you guys are partnering with a lot of these brands, and we did the same thing.
We're like, you know, let's go figure out how to work with Marvel's marketing team, run a new movie coming out. Yes. Like, the largest acquisition channel was Facebook, but that was further down the funnel. Like, you need to find a good top of funnel, almost the a good top of funnel, channel that is not, one of these these major performance, platforms in my opinion.
And for us, I would say the acquisition starts with why. Like, why people want to buy something from us. And because we were selling, other brand fragrances, the number one goal for us was to go and get a partnership with that brand that's everyone is talking about. Like, people want like, we saw an interesting pattern in customer behavior.
Usually, the first two, three fragrances they were trying were something that was super popular at the moment, super trendy, or some classic that usually is expensive, like, two, three hundred, dollars in retail. So for us, it was important to acquire that. Then bring it to the, bring it to where people are. And, it changed for us over time.
Like, when we started, influence marketing was brand new concept. It was still cheap. It was not, like, now more of a brand recognition game. So we started there over time and shifted towards the, paid acquisition in Facebook.
And for us, it is hard to sell fragrance online because you need to like, you kind of need to find a way how to explain what it does. So that's why having video when people talk about it, people talk about experience, people talk about their feeling was important.
So Facebook, Instagram worked really well.
But I would say what she what was a changing thing, was how to get into new channels like meta shops, TikTok shops, uploading in in other, in other social selling, stores because how do you bring subscription in there? So it all ended up being finding, like, this ultimate product that you sell once and then find a way how to convert people into the subscription later.
And I'd say, Mary, the one thing that everyone's question is always, like, where's the best place to acquire customers? What we found is Birchbox, Ultra, some of these businesses got to a massive scale. And then over time, customer acquisition cost relative to Dell TV thrifted. And what what I find is, like, that's a product market fit problem over time where these you need to the best brands probably Scentbird, the model, and from from what you guys are to where you guys are now, very different.
So FabFitFun, all true, like, full customization, a member market, all this other stuff. I think, if you're having trouble finding ways to acquire customers cost effectively, ask yourself what's of which and and you could in the past. If you never could do it, you had a problem. But if you could in the past, it's like, the market's evolving.
You do evolve your product, and then the channels that used to work can start working again. But it it's often a product problem and not a channel problem.
Yeah. I hear you. Really knowing what your customers value, honestly.
I think about there's a a wine club I belong to, and I belong to them for twenty years now. And I spoke with them, and their cohort has changed over time, like, drastically.
And their price point has thus changed over time. And, you know, normally, you'd hear, like, they're lowering their price point to to meet customers and a a higher customer acquisition, but they went the opposite direction. They decided their cohorts were older, had more money, were more luxury minded, so they killed all their lower cost wines and jumped all their cost to seventy dollars a bottle.
And, I mean, I just sat there with the marketing person going, what's the deal there? And she she unpacked the whole thing. I was like, well, actually, there's a reason, and, no, we're never bringing back the thirty five dollar wine. It's all gonna be seventy and higher from now on.
Totally. Yeah.
I have to really revisit whether I stay with them.
It's very good wine, though. It is very good wine. Nice.
Tell me a little bit about discovery and education. So we face this problem as well because we're b two b. You guys are are in the d two c market. But how do you help customers to really discover the value of what you're putting out there, the changing value of what you're putting out there, especially if they're not always in your in your platform or in your app or that sort of thing. In other words, it's more like a push versus pull. Like, how do you get that that value in their face and help them really discover it?
Yeah. Discovery is always was and is a big problem, in fragrance worlds because you first start with the education about fragrance notes. And, like, how do you explain online how does patchouli smells like? So we have to be very good at storytelling, at imagery, describing experience. So where Sembrad starts is with the quiz.
Not what you wanna buy, but how do you wanna feel if you use certain fragrance. Then we go through occasions. Where do you plan to to wear it? Is it some nice, dinner?
Is it a workday, situation? Is it your gym? Is it just going outside? In what season?
So we ask a lot of questions before making some recommendation.
And then I will say, the moment where all or most of the AI recommendation services fail, they recommend you something, but they don't necessarily tell you why. And people want to know, okay. I'm making the decision. I'm making a commitment.
I'm going to pay you. Please tell me why you recommended me this specific fragrance right now, and, like, why should should I invest in this? And this is a part of discovery too, not just giving you on the head. This is what you need to try, but why and what to expect.
And then actually also how to use it because different fragrances might be, it might have a very different strengths. In some cases, you might you just need one spray. In some cases, you might need more. Like, anyway, most of us or maybe even all of us been in a situation when you are in a small elevator, and it feels like someone poured half a bottle on top of them.
This is also part of the vacation, and this is also part of the experience that people have wearing, fragrance.
It's fascinating. You know, we have, a recruiter of ours is a Scentbird fan, and she frequently posts in our Slack channels about the latest scent that she's tried and why she likes it and really explaining that there's there's another world of discovery when it comes to to scents that that people may not be aware of. So your rich storytelling and, like, layering that on is is super interesting to me. What about you, Chris?
Yeah. I think I mean, I think this is one of the big opportunities for subscription commerce is this there's this big editorial gap.
We all, like I I we used to buy magazines when we were kids, and there'd be you know, like, that whole world of, like, filtering through the noise has gotten infinitely harder. And, I think that in these kind of more taste based categories or where, you're kind of a, you know, like a intermediate level expert consumer, it's really fun to have people curate and spend their full time job going to find the best sense or the best Yeah. Exclusive collectibles, like, in going and, like, spending an an outrageous amount of time trying to figure out how to get the best Deadpool box curated. And, and then the word-of-mouth so you you have to have you have to actually be a tastemaker, I think, for then but we always found word-of-mouth is a hundred percent the best way, for discovery and customer communication. So, I mean, you have to use all the language to explain the value, but Yeah.
Your your customers and then I think which is why the power of podcasting and influencers are so strong because those are essentially, like, you know, scaled friends and family word-of-mouth Right. When done right.
And, and so, you know, we we all have a like, in a sense, I have a I have a buddy who, like, lives in this, like, loft who wears a ton of cologne.
He'd be my guy to hit up and figure out what I should pick up for a scent. So the equivalent is when we're all living kinda separately, a lot of times you pick up something like a cent bird and you you have that friend that's the expert, and and then that's you need to get that word-of-mouth cycle going with, with your your existing members.
That makes sense. You guys were talking earlier about the cost of customer acquisition and how it used to be less expensive to get, like, celebrity endorsement or, you know, Kim Kardashian's doing an unboxing of my product and all that, and now that cost has gone up. So I guess it's about finding the next Kim Kardashian before they're expensive.
Like, if you can I believe Kim Kardashian was always expensive?
Exactly. She might have started out expensive, actually. Yeah. Yeah. You're you're you're right. She has.
Yeah. I think it always goes back to, my brother's a YouTube creator, so he makes, like, video game sketch comedy. And his currency is his audience.
Yeah.
So he like, the key thing is, like, what you need to do is build a product that people actually are confident to talk about to their audience, and they aren't doing it for the money. Because that means and the you'll get, one, you'll get much better partners, pricing, all that when it's a fun collab, and they're excited to be a part of it. And so I think, yeah, you need like, again, it it goes back to the word-of-mouth. If you treat them like a like a Facebook ad, you're gonna get like, you're just not gonna get the return versus, thinking about them as, like, a friend that you're collaborating with to get the word out and and and having a product that they can be proud of, promoting.
I like that. That's great.
Let's talk about the other side of acquisition, which is, of course, retention.
We did a state of subscriptions report on last year's data for Recurly, and we found that really acquisition down, retention up. Big, big focus on retention.
Tell me what you see as the most effective strategies for for retention.
And you can take it either way. You can take it either voluntary or involuntary. Voluntary meaning active churn versus involuntary, more payments related asset churn. You'd like to go first.
Andre, you wanna take it? I I'm happy to tell you that. Let me take it.
So more and more often, I hear that retention is new acquisition because exactly of the problem of, constantly rising prices of acquisition. Meta is not going getting cheaper, and, margin is not magically getting higher. We all we all reduce and, like, we all, like and now every company dealing with physical product, you'll have to scramble the way how to keep the margin that where it is potentially without affecting customers. So I would say when you acquire the customer, it is important to know why they came, what do they like about your product, and how to man maintain the relationship.
So there are multiple ways. And one thing that we learned in Sandburg, at some point, we decided to apply the same model to wellness and beauty products. It didn't work out well. So we stayed with the core audience because we we realized that's what we know how to do.
We know how to sell fragrance goods, and that's why later, we started to work on diffusers.
That's why later, December acquired Drift Car Freshner Company Right.
And, like, started to invest in wall plugs and things like that. So you need to know your core audience. You need to know their story, and their relationship with your product. Why do they choose this?
And as Chris mentioned, you have to constantly improve your game because you cannot just see there and expect that people that people will come for the same product over and over and over again. At some point, there is an exhaustion. At some point, people want to try something new. So you need to be ahead of the game, and you need to know what offer to these, like, to these people, what to upsell, when they need to take pause, how to bring them back.
It is a lot of work for discovery for analytics, and you need to make sure you have the right data for this.
Yeah. I I think it's that is all a hundred percent right. I think it's very it's qualitative and quantitative. I had a a good friend who got his PhD in computer science then went to work at IDEO, and this was right when I was around the time I was starting BlueCrate.
And so I went up there, and we ended up meeting with, like, a team that had designed, like, the American Express customer journey map, and it blew my mind. It was like they literally had two hundred and fifty moments throughout the, like, life cycle. And I think there is really, like you need to do a journey map of of your members and understand all the most important touch points for, like, our, like, discovery subscription box. It's the unboxing.
It's when we reveal the theme and what's coming up. It's just there's these moments across there. And so I think understanding those, how to make those there's the, like, how much is too much communication, too little, and then there's a lot of tactical measurement. So we found we had our data science team was, like, the largest predictor of churn was the size of discount at sign up.
The second best predictor of churn was your tenure. So it was an it was an inverse correlation. So the longer so you could go through you can actually get pretty good understanding of these things.
And then we one of our big it was, like, on a you can kinda think of retentions either on a customer basis or on, like, on a revenue basis Right. Or subscription basis and getting smart about all those different types of measurements for retention. So we would when as we start to expand product offerings, we were getting to, like, one point three subscriptions per customer, and you might we would just move you through a life cycle of products. And so you might churn rates might be on an individual subscription might be the same or worse, but our overall, retention on a customer would improve.
That's great. So both of you addressed voluntary churn. Any comments on involuntary churn?
Oh, you just need to constantly look over everything. And, ideally, not just, like, check your dashboard.
You need to have alerting on things not to go wild because if you miss something if you miss some changes done by your payment provider or done by Visa, if you change certain trends going on, I don't know, with fraud, with insufficient funds spiking up, if you react too late Yeah.
You won't be able to recover these people. So you need to, like and you need ideally, you need to pick up not only spikes. You need to see the trends because, like, again, if you react to it, these people will be already gone, and it will be really, really hard to bring them back. So my Yeah.
That's an interesting point about like, always stay on alert and always keep to, like, have someone or something looking over it all, twenty four seven.
It's a super interesting point you bring up about the trend line versus the spikes that you have to be on top of both.
Yeah. That makes sense. Anything to add there, Chris?
I think, you know, it's like if you can bigger businesses have these, you know, really interesting complex solutions, these types of problems. So you look at, like, I think we looked at a bunch of the, care like, Internet carriers. All of them have these revenue assurance teams. They're doing all this crazy.
Like, so I think there's, like, the figuring out the scale of your revenue is, you know, is you guys probably got north of a hundred million, same for us. All of a sudden, we're like, if we actually it's almost worth a full time person to really understand churn better. So do all the basics. Get AVS on.
You know, it's even now with Stripe and everybody else. There's all kinds of other stuff going on in the background. Yeah. Like, make sure make sure, like, you're at least doing the best practices, and then just go out.
There's there's all kinds of things you can do on recovery.
You know, digital only subscriptions. I've heard people reducing pricing over time. Do you know? There's there's Yeah. A million playbooks for this stuff. And so if you're, you know, extra curious about it, it's fun to dig in and see what what folks at scale have done for.
Perfect. Great. Thank you.
Let's talk about consumers. So your treasured customers are becoming very empowered. They want personalization. They want what they want, when they want it, how they want it.
How are you playing around with that in terms of their shifting expectations or increasing demands? Are you doing things like pause or skip or a little bit more personalization?
Sounds like both of you went deep on personalization as as one way to approach that. But are you doing anything in terms of payment flexibility or pausing?
Chris, you wanna start?
Yeah. I can I can start? We allow skips customization.
I mean, a pause, I think of it as as kind of either a skip or a Yeah.
A cancellation.
But, yeah, I think giving customers choice you know, it was like a there was, probably ten years ago, everyone was, like, trying to make cancellation as hard as possible. And then Amazon or Netflix literally just had it right there in big red, like, you can cancel and come back and and people would. So I think the takeaway is, like, give customers choice. Customers are smart. Make it easy for them. Focus on, you know, focus on improving the product, not, you know, making the mechanics of them managing their life more complicated, and you will be successful.
Perfect. Makes sense.
From from my side, it is a very it is like a game, where you, like, if you do if you move too aggressively, you lose or people just start hating you and, like, FTC come off after you and, like, you are under scrutiny.
If you are too, weak, then your customers will take over, your offerings and, like, hello friendly fraud and things like that. So whatever this like, try a lot of tactical solutions there. Not every solution works for every company. Again, it depends on the product because what works for products like, you know, supplements and razors that you can see monthly, not necessarily works for more luxury things like fragrances, wines, and watches. So we need to adjust, to expectation.
The universal measurement here is the LTV. So the ID like, LTV with the Nasdaq because, yes, LTV is what company are striving for, and but you also need to look at the NPS because, like, your LTV might be doing well, well, well. Your NPS might be going down. And then overnight, your LTV just sank.
Yeah.
And it's really hard to recover your reputation. So, like, whenever you address LTV and retention, make sure that customer experience team is on board and is part of the discussion so you don't like the best way to improve your TV, just remove the unsubscribe button from the website and don't let people subscribe and let them call, to your phone from five to, like, from ten to five workdays only.
Your churn will be below. Your NPS will be low as well.
So Exactly.
Be careful. Exactly.
If you if you study if you study the history of, is it I mean, you you guys are probably it was Semper Global.
I know we were global, but, especially in the US, there's no successful retail businesses that don't treat their customers well in the long run and focus on delivering value. So it's like, I think, really being on top of that is the key. Is is making sure that, like, yeah, there's tactical things to do, and you definitely need to there's, you know, the two percent of members who are trying to take advantage of the system that you definitely need to optimize for, with your CS team, and they're they get very good at detecting that. Yeah.
And, but I think the reality is for the most part, like, try to be as pro customer as you can, without, you know, impairing your business. You know?
Yep. That's great.
Let's move on to fun stuff, logistics and fulfillment. Logistics, fulfillment, inventory management. So it's it's obviously really, really complex.
I've worked with a lot of different physical goods and watching how people handle optimization of fulfillment and inventory management has been really interesting.
I'd love to hear what kind of challenges you guys have faced in scaling operations around that and how you've solved for it.
Chris, let's go with you first.
Okay. Perfect.
At Loot Crate, we scaled this up in house.
So what were we, like, you know, two hundred fifty part time, filling folks, and did all of our fulfillment up to about six or seven hundred thousand packages a month out of, our warehouse. We we eventually moved it to a three p l.
I think it's you know, there's a a lot of pros and cons to both. Having that kind of control in a when you're scaling really quickly is great. Gives you flexibility.
You know, I think, there's a lot of incremental cost and complexity. You gotta figure out where your secret sauce is and and where to invest there. I think, you know, we we we've acquired, these businesses in the last two years, and so we just consolidated from four down to one warehouse. And so I think and just moved into a three p l partner from having it in house again.
I think it's really figuring out, you need to it needs to work well. You need to have sub like, find subject matter expertise in that space. Very I think it's actually one of the areas that most teams are initially weak coming in because you usually have either, like, great marketers or technology and product people starting these businesses. And so, you know, talk to a lot of people, figure out it's all it's a unit economics game for the most part, and it's a capabilities process.
It's very easy to, to not to think that's some kind of secondary part of the business. But if, you know, if ops and logistics are broken, like, your entire business is broken. So it it's, get good at it, use good software, track it, and, monitor just like you monitor a funnel on KVIs, all of those all those metrics. And, and then, you know, run run a retro cycle after every whatever your business cycle is and make those operational improvements.
It there are amazing operational frameworks for, like, lean manufacturing and things like that that are that just will make a huge difference if you implement that there in into the business.
Andre?
Yes. I actually have a good story here. So at some point, we switched to our new, three PO provider. And, because we were growing, like, we needed someone who can handle bigger volume. Months one, sixty thousand shipments delayed.
BBB rating going to f minus.
We had to take over. We took over, and I would say that was one of the best decisions Sendbird ever made because subscription fulfillment is, much, in my opinion, is much harder than not much harder. It's much different from ecommerce. Because with with ecommerce, you have more or less constant four o fours.
Yes. The number of SKUs is high, but still, like like, the way how you manage, how you do peaks and packs in in the warehouse, very different. For subscriptions, if you have monthly box, same for everyone, that's great. The only problem, it's the it's not twenty fourteen anymore.
People want personalization.
Totally. So you end up from one to, you know, five different SKU in the box. People have different lengths of their subscriptions, so they're getting different promotional stuff.
And on top of that, you just charge them. You send, I don't know, fifty, hundred thousand orders to the warehouse. Expectation is to ship it as soon as possible. Two, three, four days maybe.
And it's hard to level all to, work in the warehouse. It's hard to do this pick and packs with all the finalization fast enough. You have to make sure there are no errors. People will be upset if they're getting, I don't know, Chardonnay instead of, to task task any wine and so on and so forth. And, like, this is unfortunately, operations team is often under valued, and they they have to deal with legacy systems Mhmm. That are not proactive. Like, you would deal with a system that that are not configurable.
They're not configurable for your business. They don't give you any predictions. You don't know how to optimize your work because one of the biggest strengths of Sandburg is the operations team. Like, they constantly optimize processes in the warehouse.
The only reason why they can optimize process because they have the system that that they can adjust to the new process. That all center to ship almost two hundred thousand orders in under four days. Like, that that's incredible. All these orders are personalized to customer, needs, and they have up to five unique items.
So, like That sounds like a nightmare.
Nightmare.
It is a nightmare.
Yeah. Andre, you're on the top the top of that. I'm sure there's yeah. There's and when you on the way there, like, we had the same thing. There are, like, a a million things going wrong. And, again, if you get if something's off, you can end up shipping, like, two hundred packages to the wrong to the wrong address. Like, there are catastrophic things if it goes wrong.
So it's Exactly.
And because it's a physical world, it's the perfect example of Murphy's Law. Like, something will always go go wrong.
So make sure you take care of your operations team. Give them the best available tools and, like, make sure to invest the right amount of money into them because otherwise, it won't happen.
Your course you are super lucky if your business model allows you to work with three POF activity. If not, and if you're doing it yourselves, again, this is number one place to invest.
And and I think just in especially when you're as you're scaling, there's a time and a place where it, but it allows you to actually change your offering more fluidly. So if you're in, like, an iteration cycle like, there's there's some benefits of the three p l. We did, we moved and moved to Mexico when it looped great when we because there were three two section three two one savings, all set, but there ended up it's never as easy as you think it's gonna be with a third party handling it. It does free up some internal resourcing, but then you lose a lot of control. So it's like I think the key thing is it's it's difficult, important.
And if you bring it in house, you have to be good at it. But, you often can end up saving money and evolve your your product and customer experience a lot more quickly if you do.
I love it. I love the the different approaches. And I I'm thinking about Santa's elves. And, like, if Santa's elves mess up an order, it's it's game over for Christmas. And, like, this Yes. This is much more important than that on many levels.
Cool.
Well, let's look at the future and wrap up this conversation.
I'm thinking about major trends that are gonna shift in terms of ecommerce subscription businesses.
Do either of you have any thoughts on what you think the next trend will be that will shift subscription businesses? Andre, let's start with you.
I I'm the the guy who usually don't, go into the hype mode, unless it's the technological one. So I'm super pumped about what's going on with the AI and specifically with AI agents. In my eyes, it becomes already so commoditized that companies can and should employ very specific AI agents to to tackle very specific problems because for for and, like, I believe that's the case for every company. You have a limited number of employees.
You have limited number of hours and limited number of dollars. And then you need to make decisions fast. They need to make decision hopefully, you make decision right. But if you miss certain things, you probably missed a lot of potential either revenue or savings.
Like, in my eyes with the AI agents, you can go and pursue every single thing, every lead in churn, every lead in the retention, every lead in website optimization, then collect all this data, process it fast, and then you, as a human, as a business operator, you make a decision. Okay, guys. We are working on these top three because they look the most promising. You launch them, and that allows companies to be very lean.
And I believe this has become more and more critical these days.
I couldn't agree more. AI is, like, taking over so many parts of my life and really helping optimize both at work and at home. We just went through college applications, and we sent a lot of questions to AI to say, hey. I'm an ex I'm an admissions officer at Columbia, and I have asked this question of all my applicants.
Here's one student's answer. What do I think of him? And my son was like, you can ask AI that? I said, yeah.
Let's see what he thinks of you. He was just like, mind blown. Right?
Mind blown. Yeah.
Yeah. Totally. How about you, Chris? When you look to the future, any major trend predictions?
You know, I I a hundred percent agree with Andre on on on the AI. But I think there's, like it's gonna affect every every part. Again, every it's basically intelligence on demand, and so every part of your business should get better. And, and especially as these agents I think Andre is building building some of these agents now, like, get get deployed. You know, you basically can have just incredible amounts of focus and, compute focus on things that never got attention before.
And so I think it's gonna make, it should make businesses better. It's gonna take out I mean, I think and it's gotta be this fine line because you still need we're gonna need to figure out like, there's gonna be a whole new organizational structure and operating model with these agents coming into play that's super exciting. And when you figure it out, Andre, I need you to to send a note out to all of us telling us how what we should be doing.
And I think the I for a long time, I was pretty convinced that it was gonna be extremely difficult in a world with shine and a lot of these, Chinese, verticalized, extremely efficient, very AI and machine learning focused, and and and quick, to just have to maintain kind of margins over the long run. I mean, the tariffs are gonna be interesting. I think that's one where retooling supply chains and and really thinking about that, which is something none of us had had to think about for a long time. Like, there was kind of a you know, we've all manufactured in China not just because it was cost effective, because it was better. And so, it it's gonna be interesting to see how you kinda retool a whole supply chain, if if we're moving into a new paradigm there.
Because, yeah, at at least for these physical subscriptions that, you know, we gotta move all these atoms through the world. And it's gonna gonna be interesting.
That's a really good point. Alright. Last question. If you could go back in time, what's that one piece of advice that you would give subscription companies that are looking to scale in twenty twenty five? Like, what's the one thing that they should really invest in as they get ready to scale?
Profitability. Don't use debt to fund unprofitable growth. It's just a bad idea. We're these are not set you have a ton of amazing customers who are who are real SaaS companies with very low annual churn rates. On the physical commerce side, conservatism wins the day and focus on, improving your product to drive efficiency versus burning, capital to do it. That's, I think, I think, key for so many businesses today.
Spoken like a man that's been through a lot. Exactly.
I mean, a very optimistic, piece of advice, but it's the best I can give you.
Yeah.
I like that. Andre?
Yeah. I spend, like, very similar advice. I spent the last three years working very close with the finance team, and I wish I I start hanging out with these guys earlier.
Go They're not so bad.
Right? They're they're kinda nice.
Like, they they hold your financial success. Like, it's your finance is not just the reporting at the end of the month. This is your success. Like, this is what you can afford going forward.
So go learn your p and l. Go learn your budgeting. Make sure you have the proper way to do forecast for the upcoming year so you can know what you can afford, what you cannot. And whenever there's a change in your LTV or OCAC, you can easily update it and see what's coming because when people see surprise, like, see all of a sudden, hey.
I have four months run rate. Something is broken in your finance reporting.
I love it. Great.
Well, thank you both so much. I learned a lot. I hope you guys enjoyed the conversation, and let's all stay in touch. And
