Earlier this week VaynerX announced the launched of a new company. Dubbed VaynerCommerce, the launch follows the acquisition of e-commerce company Lucid Fusion and will combine the company's "deep e-commerce knowledge with VaynerX's unique approach to growing brands in order to help companies build sustainable e-commerce businesses".
But, in reality, the roots of VaynerCommerce are much deeper than that. One of the people heading up the business is Robbie Deeks, who will serve as chief commercial officer. While employed at Shopify+, where he served two years, Robbie was seeing wave after wave of e-commerce business hell bent on acquisition-heavy growth with little attention to customer retention and growth. He had a vision for a new type of e-commerce business and marked Gary Vaynerchuk, the chairman of VaynerX, as the man and business that could have the vision and resources to bring it to life.
He was hired four minutes into that meeting, eventually joining the VaynerX business in January 2018. The past two years have been spent building and learning what it takes to back up Robbie and Gary's vision.
With it now out in the world - and during a time of e-commerce explosion during Covid-19 - LBB's Addison Capper caught up with Robbie.
LBB> Tell me a bit about yourself - you started dabbling with e-commerce projects in college right? What got you into that?
Robbie> I guess I probably wasn’t the best student. I actually spent most of my university years reading a lot of books, working on different projects or trying to start different companies. There was a startup incubator environment where I would work out of and spend most of my days, and one of the things I worked on was building websites for other businesses. Originally it was a means for just having cash during university.
Then in the Summer before the year that I dropped out, I actually got a job working for a bunch of startups in an incubator where around four or five of them were e-commerce companies. They were all using this platform called Shopify. The semester following that I took an e-commerce course and was slowly getting more and more familiar with e-commerce in university. The cofounder of Shopify came to one of my classes and said a lot of things that resonated with me, and they were just launching a new company called Shopify+. That was in October 2015, I dropped out in December after having an interview. I didn’t actually have the job yet - I was confident! Christmas break came and I didn’t get a response - I was at home with the family, dropped out, no job. But then they got back to me in January and I got the job - I was around employee number 50 at that time.
It was important timing because Shopify+ just took off like a rocket ship. As it took off I became the top revenue guy in the company and got to launch a new team called New Markets. That allowed me to explore things like private equity, working with different consultants and industries, and also work with Shopify’s growth team. I quickly got a lot of exposure in a short period of time, and a lot of insights that I think other people in the market weren’t in a position to get. That led me to identifying the opportunity of VaynerCommerce.
LBB> Tell me more about that opportunity - what were you seeing at the time?
Robbie> I was in a lot of meetings with investors or brands themselves and realised that everyone was doing the same thing. Everyone had the same marketing strategy, the same technology strategy, and everyone was basically selling their services but I didn’t really see anyone innovating. Everyone was selling what they had - a technology company selling their technology, a media company selling media. But no one was coming in and saying, here’s how you properly do a D2C business and here’s how everything connects together.
VaynerMedia was a company that I’d had exposure to for two years at Shopify. I would have a good pulse on what they were doing e-commerce but they weren’t taking advantage of what I thought they could be, which was building a modern day commerce firm. So I got a meeting with Gary - a 10-minute long meeting.
That was in September 2017. I pitched to him that I was seeing brands grow on the back of venture capitalist dollars, and that everyone was implementing the same solutions. I said that there was going to become a point of diminishing returns for all of this, and there’s no partner right now sitting on the other side helping companies navigate growth properly. I thought that Gary with his personality and the scale of VaynerMedia, and the resources they would have, could make the investment in building a new type of company that would actually be able to build the solution that I felt brands could utilise.
Gary hired me four minutes into that meeting. He’s trying to build a modern day empire, and e-commerce was the missing piece of the puzzle that had been sitting on his mind. I just happened to show up at a good time. The rest of the meeting was just talking about how we wanted to build this next wave e-commerce firm as part of his empire. I left that meeting, did the rest of my time at Shopify and joined at the start of January 2018 to launch VaynerCommerce with Gary.
LBB> The VaynerCommerce launch press release references "acquisition-heavy growth strategies" of previous DTC companies. Firstly, can you tell me about the issues of that business model? And then how does your sustainable approach offer a better alternative?
Robbie> When I was still at Shopify I was involved in a lot of conversations with brands who were scaling into the tens of millions and then seeing diminishing growth returns. They were getting stuck. I started to piece together that the root of the problem was that they’d basically just built paid media acquisition machines and they didn't actually build any capabilities around how to grow a customer over its lifestyle. They were trying to scale to hit top line revenue targets so they could raise their next round of venture capital. There were a lot of bad behaviours and bad incentives. The infrastructure of what people focused on and where to put their resources didn’t line up to what would produce a healthy customer base.
Why did this whole thing take two years to build? It started out as a hypothesis. I had exposure and had a thesis, and Gary was aligned with that. People needed to care about not only acquiring a customer but also growing it over a lifetime. But we didn’t want to only have that thinking, we wanted to know how to actually do that properly.
The sustainability part was figured out over time. There are only a finite number of customers that a business will have, and in order to scale sustainability as a direct-to-consumer company you need to hold on to and grow that customer base over time. Brands were basically just churning through customers and growing on the back of acquiring new ones but eventually you run out of customers. Then there’s no one left to sell to so you can’t really scale after that point. We’re allowing businesses to not just acquire good customers but retain and grow them over time. To do that you need to have a different set of systems in place to be able to do that properly - things like email marketing, product development and overall attention to those customers once you’ve acquired them. Businesses in the D2C world haven’t really been doing that.
LBB> This funnelled approach - does it feed into the rest of the VaynerX empire too?
Robbie> They play a big role. Vayner has been buying media for years now but we wanted to take the best of that world and adapt it for the pure purpose of driving customer growth and lifetime value. With the acquisition of Lucid Fusion it’s the same thing. They’re heavily focused on technology and digital products, but we wanted to take that and adapt it again in the lines of customer growth. Then we built a data science team inside of VaynerX and adapted that towards this. We’ve taken parts from VaynerX, built parts from scratch within VaynerCommerce, and we’ve made acquisitions like Lucid Fusion, and weaved them all into one solution which is VaynerCommerce.
Vayner can do what it has always done in terms of media and brand awareness, but now when it comes to direct-to-consumer and driving customer growth there is a different approach and it’s much more integrated. I think that’s important because everyone else in the market is still just buying media. They buy media and drive traffic towards a site. They’re doing that on certain KPIs or metrics, but they have access to nothing else so the rest of the experience is a black box. That disconnected experience is where a lot of things go wrong for brands and customers.
LBB> What are your general thoughts on the Covid-19 crisis and e-commerce businesses? What trends are you seeing with regards to growth and types of products being purchased?
Robbie> We’ve observed a huge shift in consumer behaviour and I think a lot of those behaviours are going to stay in a post-Covid world. People will realise that there are much more convenient shopping experiences. An example of this is even being able to pick up an item outside a store after buying online. A lot of companies in the past just haven’t done that and Covid has pretty much knocked down those barriers. The one thing that we think isn’t going to change is the map around a lot of things. There’s still going to be a cost to customer acquisition and logistics so it’s important that everyone who is entering this space now has to get very familiar with how to do it profitably.
For most brands this is an opportune time for a ton of innovation, it’s really just about reducing friction. Things like SMS commerce and pick-up in-store, I think that’s going to become the expectation of the customer after this. That’s great for the consumer because all of these other companies are going to have to meet that expectation or they’re going to be at risk of losing customers post-Covid.
LBB> Post-Covid is something I wanted to ask you about - it’s one thing to deal with now but it’s another to prepare for the future, especially when we don’t really know when the future will come.
Robbie> This is actually proving an assumption that brands have made. They’ve lived on the assumption that retail serves as a better purpose than e-commerce does. But a customer always has a job to be done. You and I don’t care how we get that job done. Let’s say that we want to buy fitness equipment to work out during Covid. We really don’t care about buying that in-store or online. We’re just trying to get that job done. The assumption in the past is that that job is only for retail. What we’re learning through Covid is that that just isn’t true.
Some businesses have assumed they should only be done in retail and they shouldn’t have an online component. Actually the customer can better enjoy the fact that they can transact online and then just pick it up or get it delivered. I think that consumer behaviour is here to stay in that sense. The important part for the brand is to understand what the job that is being done actually is. Did they go to retail before because they could get it quicker by driving to the store versus waiting days to get it shipped? Did they go to retail because they wanted to get educated? Maybe now you can better educate them through your dotcom online? Those are the types of questions that brands need to ask. They need to ask if it’s possible to deliver that experience digitally instead of having to depend on retail and traditional distribution.
Starting from there is how you de-risk a lot of investments. A lot of brands will realise that they just haven’t been creating the right engagement online. They’ve actually been creating a lot more friction than anything so customers are going to retail just because there’s less friction in it. But if you can reduce that friction online then customers will actually shift. It’s about giving the right experience and understanding what jobs are to be done.
LBB> Looking to the year ahead, or the next 12 months, what would you like to achieve with VaynerCommerce?
Robbie> It’s obviously a super interesting time to launch a company but I think that there was already a need in the e-commerce market for what we’re building. Now that’s only accelerated. I want to get our thinking and thought leadership into the market because there is a level of education to shift from this acquisition heavy environment to an organisational mindset of sustainable growth, and the capabilities you need to support that growth.
The reality is that the majority of businesses aren’t going to be able to switch overnight. Where VaynerCommerce plays a role is not only in the thinking and thought leadership but also playing the partner, stopgap solution to help brands plug any talent or solution gaps that help them make that transition.
In the long term I’m hoping that a lot of top talent - the next wave of e-commerce heads and CMOs - comes out of VaynerCommerce as we produce more talent that gets exposure to this type of thinking. We’re looking at ourselves as trying to push the market forward towards a sustainability solution. Then we’re going to be the partner helping guide them through that, whether that’s with them hiring us as VaynerCommerce or eventually us producing more talent for the market and creating a next generation of growth leaders.