Podcast / Social Studies



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Social studies is a podcast Deconstructing Commerce & Culture, hosting conversations with brand leaders and thinkers



Hosted by


Social studies is a podcast Deconstructing Commerce & Culture, hosting conversations with brand leaders and thinkers



Hosted by


Social studies is a podcast Deconstructing Commerce & Culture, hosting conversations with brand leaders and thinkers

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Social Studies


Curated Marketplace for Commerce

Curated Marketplace for Commerce

Curated Marketplace for Commerce

Curated Marketplace for Commerce

Bennet Carroccio

Bennet Carroccio

Bennet Carroccio

Drawing from his background in venture capital and e-commerce, Bennet created Canal, a consumer investment firm transforming the way products are sold online. We discuss the impact of higher education on achieving success, understand the significance of a robust network in venture capital and entrepreneurship, and take a closer look at the evolving landscape of commerce. We also dive into Bennett's journey, exploring his experiences and insights in founding Canal.

000.079960 --> 022.077400 (Sam Blumenthal)
So in many ways, community is the closest thing that brands get to creating network effects, and often community unlocks distribution. So in many ways, I would say, if I were an investor right now, it would be a pretty critical part of my thesis when investing in consumer brands in very crowded categories just because I think it's a much better signal for success than than not.

026.274980 --> 056.039160 (Lucas DiPietrantonio)
The topics today, you've been writing a lot about. The sales stack has been great. I think some of the content you've been putting out is awesome, and what I want to focus specifically on today is community. It's been such a buzzword in commerce since I think it's almost like a token for Life Time Value (LTV) and just being a good brand. I think it's relevant for a lot of businesses. So I want to talk about what that means to you, and how you measure it, and then we can go into some of your recent material as far as fashion is concerned.

Let’s start, why did you start writing about community, just in general?

01:02.715820 --> 02:00.874140 (Sam Blumenthal)
Yeah. I think since back in my days on the venture capital side, community was this sort of intangible asset that everybody would speak about. But I didn't necessarily know how to measure, yet it was very real. You could look at a brand and you recognize one that had a real community and how that was creating real enterprise value for the company. But measuring the quality and the goodness of the community I found was pretty under-explored. 

When we think about the sort of evolution of consumer brands from the value chain perspective, it's never been easier to start a brand. Right? It's never been easier to strum up a co-manufacturer with the website on Shopify and acquire customers with Facebook marketing, and the last point of defensibility one last mode is brand equity. It seemed like community was the product for the brand and it was the way that you can create significant defensibility as a consumer brand. In many ways, it seems to be like the direction many brands are trying to head towards is to come for the product and stay for the community.

02:01.913620 --> 02:34.364500 (Lucas DiPietrantonio)

Yeah. Well, a lot of people think that most businesses are scaling right now. They're talking about how they have community, and when you dive into it, it's like, what does that even mean? Or you have certain brands who have been very paid strategy reliant, not have community, and it's like this desirable thing for them. 

You're like, well, what is community? It means something different to each of these businesses, but I think you're right in that just like brand affinity, brand loyalty, and the fact that you're going to come back, consume the content, and ultimately buy more products.

02:35.204090 --> 03:19.849440 (Sam Blumenthal)

Yeah, and like, what is every consumer brand selling? You know, every discretionary purchase consumer brand? They're not selling products. They're selling information. Right? I'm not buying Glossier for the product. I'm buying it for the version of myself that I can become by using Glossier. I want to become more confident. I want to become more comfortable with my skin. I want to become more beautiful, and the ways that people can become that, you know, has historically just been buying the product and hoping that it works. But what a community offers is all these new ways to manifest that journey of transformation. You know, if I want to become more confident and I want to become more comfortable with my skin.

03:20.049330 --> 03:49.751660 (Sam Blumenthal)

Another way I can do that is by responding to somebody's requests in Glossier's community giving them helpful feedback and then being rewarded by the community with a ton of likes. That's making me feel confident in this group of like-minded people who I may not necessarily know on a personal level, but I know that we share similar interests because they also like Glossier, and so that community allows Glossier to increase that LTV surface area of that transformation, if you will, which is really what every brand is trying to do.

03:50.111480 --> 04:24.612980 (Lucas DiPietrantonio)

What do you think about measuring the effectiveness of the community? I was on a panel recently with Kevin from Amy Eats and you know, they're leveraging their community to buy products when they launch a new whole loop and to test new products out. But there's not a lot of structure in the same way that people traditionally think about performance marketing. But to your point earlier, community and this sense of what is driving people to rebuy and want to spend more time interfacing with the brand, which is, I would say, an impactful performance.

04:25.692440 --> 05:10.216860 (Sam Blumenthal)

Yeah. You can use this tricky thing because it has a certain inverse relationship with scale, and brands leverage community from everything from new product development and research to campaign activations to content generation. 

But the best community is our peer-to-peer. If I were to measure the community, I would look at its community product-market fit. It would be some sort of MPS exercise, which would be how do you feel this community no longer existed, or to provide you know, if I want to do some test, do some sort of gated paywall where it costs XX amount of dollars to remain in this community. Now, you can measure the engagement strength of the community with the number of posts, likes, and comments.

05:10.976470 --> 05:27.598140 (Lucas DiPietrantonio)

So to get specific about that, that would be figuring out where the brand has the highest density of community, and that's usually on social networks. Right? Like, Reddit, Facebook, and Instagram, and then determining how much engagement they have?

05:27.957980 --> 06:21.147550 (Sam Blumenthal)

Yes. So now what I've done is I'll I would say the main platforms for the community are Reddit, Facebook, and Discord, and I would just go into these communities and measure the past 200 posts, then measure the number of likes, and comments each of those posts got, and then look at that as a function of the total size of community, and so what is the average and then how many posts were being posted today? 

So, what is the frequency that this community is posting daily? What is the engagement rate as a percentage of the total community size, what is the like rate? You can see how important that community is.

  1. How much they're rewarding each other for providing and sharing information and maintaining sort of that healthy liquidity.

  2. How many people are coming to this community daily because it's providing them with some value?

That would be the first way I would go about it. The second order would be, you know, doing some sort of survey with the members of the community to try to figure out the classic determining product-market fit survey question is now, “How would you feel if you can never use this product again?” And you want to be a sort of, 60% ‘very disappointed’ to show that you have product market fit. 

So I would have some sort of similar exercise with how do you feel if you can ever be part of this community again, and see what point of ‘very disappointed’ the population is. What brands are doing?

06:56.107670 --> 06:57.227080 (Lucas DiPietrantonio)

That's really what we're all about.

06:57.387020 --> 07:48.806430 (Sam Blumenthal)

Yeah. I think Jones Road was a beauty. Is doing community well. So I think there are two sorts of approaches to brands that I've noticed. 

One is sort of being hands-on. So Jones was a beauty. They have a Facebook community that is managed by one admin by their Head of Community CX, who's an employee of Jones Road, and it helps humanize the brand. All of the members of the community feel like they have this personal relationship with this woman who works at Jones Road, and then they have this shared community where they're sharing pictures, you know, you have these women who are dealing with aging, dealing with the loss of confidence, sharing these pictures of themselves, being very vulnerable, and getting that sort of self-esteem and support from strangers because they're part of this mutual sort of community for lack of better word based off of this shared interest in this brand.

07:49.086270 --> 08:34.739100 (Sam Blumenthal)

I think the other end of it is something like Glossier on Reddit where it's not affiliated with the brand at all, and it's a shopper-run community, and there you have similar types of behavior existing. You have really honest conversations about the brand, things they like, things they don't like, and you know, you allow for more of this decentralized ownership of the community. I think the best ones tend to be in the beauty space. I think you see brands like Overnight Oats, which is like a breakfast staple company that has a super-engaged Facebook community. You have a brand like Beauty Pie, which is a beauty cosmetic company. Several brands are doing it quite well, and basically.

08:35.298800 --> 08:43.633400 (Lucas DiPietrantonio)

All these brands, it's because it's like their community is facilitated in the exact ways. It's just a forum where people can discuss and talk about the products.

08:44.592960 --> 09:07.399350 (Sam Blumenthal)

Yeah. I think there are different nuances to each community in terms of the architecture. For the most part, it is essentially an exchange of people sharing experiences and information relating to the brand or unrelated to the brand, but the common overlap everybody has is this mutual interest in the brand.

09:07.879100 --> 09:19.232850 (Lucas DiPietrantonio)

And talk us through so the post that I was specifically referencing on your sub stack what was the general thesis? Which post exactly? The online communities and what makes them tick?

09:20.032500 --> 114.022030 (Sam Blumenthal)

Yeah. I think the general thesis of that post is essentially we're spending more time online. Right? As we're spending more time online, we're also finding less sense of community in these traditional sources that were historically analog, think religious institutions, think alumni networks, think, boys and girls scouts. 

People are yearning for community. They're yearning for a sense of belonging, and you know, brands are filling this new void. I wouldn't say filling it but entering more prominence in this sense of identity. Right? Like, you have the stereotypical finance pro starter pack or a tech bro starter pack. Like, that starter pack is composed of brands. Right?

114.261900 --> 159.415900 (Sam Blumenthal)

You can describe somebody's identity based on what brands they shop for, and so if you think of the Internet and online experience as this sort of just endless territory, where we try to find addresses of people of similar interest to us there are more and more brands. Right? If I'm going to find somebody who’s super into high-intensity interval training, I'll go to 10,000 communities, or if I want to find somebody who's an older woman, you know, trying to upgrade my beauty routine and trying to feel more confident in my life, I'll go into beauty, and so the thesis is recognizing that position brands are taking and then understanding the actual taxonomy of the community and the different use cases people are using for.

159.655760 --> 11:19.814450 (Sam Blumenthal)

It's not just like hey, I got this product and it's not working. A lot of it is sharing these highly social posts, whether it's a selfie or picture of your haul that doesn't have anything to do with a purchasing decision, but gives somebody status and a sense of belonging because they're looking for that online, and they're looking for that in their life.

11:20.254200 --> 11:25.971400 (Lucas DiPietrantonio)

Did you talk about some of the different types of content that people post? What's the general gist in terms of different types?

11:26.839970 --> 12:07.777100 (Sam Blumenthal)

Yeah. I think you could have roughly 6 different types. I think you could look at it on a spectrum from social nature to commercial nature, and the social ones are about sharing, the ones that are commercial nature about questioning, and so are the ones that are highly social nature. For example, I go into Jones Road Beauty and I share a selfie of me, it has nothing to do with Jones Road Beauty. It has nothing to do with my buying of a product, or helping me buy a product, to me, I'm just sharing the social posts with this feed of people that has been filtered in a way that gives me more trust, and what I want in return is likes and comments because that is a form of social capital that makes you feel good about myself.

12:08.216860 --> 12:56.429100 (Sam Blumenthal)

Right? And so, that person, what they're getting value out of is sharing this work, this time, and energy, and getting that social capital in return. On the opposite end, those are the posts when you look at it, get the most likes, and get the most amount of comments. So they're creating a lot of value for the community, and the community recognizes this sort of vernacular that you reward these types of posts with likes.

On the other end, you have these highly commercial posts, which have nothing to do with social capillary status, but it's like, hey, I have dry skin. Should I get the Vitamin C Serum or the exfoliator? There's no sort of status or sense of belonging tied to a person's value creation from requesting information from the community, not sharing information.

12:57.388550 --> 13:14.288940 (Sam Blumenthal)

People will respond with comments. You don't see a lot of likes, and that's requesting work from the community that's helping that's directly helping that purchasing experience, and so I think in between you have sort of a variance of sort of social and commercial nature, But I would say it exists on that spectrum.

13:15.568300 --> 13:40.054300 (Lucas DiPietrantonio)

Is it natural to assume people who come to come into the community, come into it for those transactional posts and are trying to understand what products to buy or if the products are any good, and then the more that they interact with the community they lean towards the other spectrum where it's very social based? Then they're generating some other sort of utility from the community that you would get from a social setting on both.

13:40.294200 --> 14:18.600000 (Sam Blumenthal)

I'm not sure about it when you think of the commercial nature and the value of consuming information. Right, and a lot of people can find information that, you know, I have a question about this product formulation. There's a good chance somebody else had that question and it was already answered, and so all I have to do is just consume that information, and so I'm not sharing anything. 

But on the social side, the values from sharing and producing information, I only get value from sharing a photo of myself or my haul that is unique and tied to my identity. There's no way I can consume somebody else's and get that same value. So I think what you see is people coming into these communities and they're consuming the content. They're gaining more trust. They're breaking down these stigmas that may have existed on other social platforms, and then when you look at the distribution, a lot of these posts are of a much more highly social nature. 

So I think people are coming here for those social types of posts because they only exist here. You know, you can find information that helps with your purchasing decision anywhere, but you can only share those types of social posts in this specific community. That's really where the product market fit for it exists.

14:52.750000 --> 15:00.146300 (Lucas DiPietrantonio)

And so is this just like a natural progression? Like, both Jones Road and Glossier for instance, do they have this same post?

15:01.254900 --> 15:18.173770 (Sam Blumenthal)

Yeah. I think and I analyze this across a handful of communities. I think it's sort of a mutually exclusive, completely exhausted way to look at the different use cases of a community. I think different communities have different distributions. Of those, I found them to be roughly more transactional or more social.

15:20.532600 --> 15:51.653140 (Sam Blumenthal)

But I would say roughly, it's by and large, what I've seen is relatively consistent depending on the community, and I think you look you can measure the health of the community by the portion of social and non-transactional content shared. 

Let's say the most healthy communities are not commercial and transactional, but create trust and the sense of belonging that people feel safe to share vulnerable photos of themselves or vulnerable stories or moments of their lives that are not related to, you know, buying a product.

15:52.252800 --> 16:01.226870 (Lucas DiPietrantonio)

When you as an investor, how critical do you feel a community is to the value of the company, especially now?

16:01.626650 --> 17:02.301200 (Sam Blumenthal)

I would say that when you're investing in a consumer brand, as I mentioned before, it's very hard to find defensibility in great technology companies. Their products necessarily might not be defensible, but their network effects are. So in many ways, community is the closest thing that brands get to creating network effects. And if I am putting myself in the position of acquirer, you know, very rarely are you acquiring a product formulation or any manufacturing supply chain, often you're either acquiring distribution or you're acquiring the community as the asset, and often the community unlocks distribution. So many ways I would say if I were an investor right now would be a pretty critical part of my thesis when investing in consumer brands in very crowded categories just because I think it has a higher it's much better signal for success than than not.

17:02.829960 --> 17:38.299200 (Lucas DiPietrantonio)

A signal for how much of a brand that you have. I think especially when you look at how consumers are just basically switching costs that are near zero right now, especially when you look at marketplaces, for me to switch to another product that competes it's just incredibly easy. The reasons that I buy that product is, you know, psychological, and a lot of it comes down to the the community to at least drive why people repurchase, which is where there's a ton of profit and CLV driven for businesses.

17:38.978900 --> 18:08.621800 (Sam Blumenthal)

Yeah, and if part of it makes sense. Part of the reason I buy Glossier is not just to use and wear the product, but it would be me sharing and using the product with this community, and then there's this alternative brand that has the same product formulation. But I don't have that immunity. It's really difficult for me to switch because I'm not going to be able to share that alternative brand in this community of Glossier. There's not going to be anywhere for me to gain that value that I've come to expect and to value in that set of behaviors.

18:09.381300 --> 18:24.572800 (Lucas DiPietrantonio)

Yeah, and that it's or it's self-reinforcing. Something that you touched on earlier and that I thought was interesting is buying and wearing products as social signaling, and that reinforces the reason why you buy certain products. Can you talk a little bit more about that?

18:24.852700 --> 19:18.722200 (Sam Blumenthal)

Yeah. I think I'll focus on this specifically to help this discussion on fashion. When you think about fashion, fashion is essentially the expression of taste through clothing. Right, and every person wears clothing, right, in the real world. It is a universal behavior, which means that there are zero friction or production costs doing this behavior. It doesn't cost anything for me to wear clothing, and then you have this built-in distribution of me going to work, walking around, showing off what I'm wearing, and so when you think about fashion in the real world, it provides this sense of the status of, hey, I am choosing which clothing I wear because that is an expression of my taste, and a high value, a high-status attribute of somebody's characters to have good taste.

19:19.162000 --> 211.880700 (Sam Blumenthal)

Especially amongst fashionable circles, the real form of wealth is to be esteemed with good taste, and so you have a lot of social signaling when it comes to the clothing you wear, and brands become important because they sort of capture taste. Right?

It is sort of, in my opinion, the low taste of a Gucci belt might be high taste in a different circle. But there's reasons why that's low taste and there's reasons why that allows me to make a judgment of essentially who you are as a person in some facet.

What's interesting is when you think about our behavior online, we don't spend any time wearing clothes, right? We do not have this universal behavior that every single time we open up our digital identity we're including and getting dressed. So when you think of this time spent expressing our taste through clothing in the offline world, we spend very little time digging through the racks of the store and filtering what we like, and then a bit more time buying the products and then the most amount of time wearing the clothing.

It's sort of the inverse online. We spend a ton of time digging across the Internet to figure out what we like. We spend a little bit of time buying the item, and then we spend very little time actually including it online. Maybe we express our clothing through an Instagram post or an Instagram story or by sharing links to friends, and so, you know, there is this very weird dichotomy of how we are gaining status and social capital through our fashion tastes online, and there's sort of this open opportunity to figure out what you're wearing in a digitally legible way.

21:06.018200 --> 21:19.989900 (Lucas DiPietrantonio)

"The way you project that, though, is basically on social channels like Instagram, TikTok. That's how you convey what you're talking about, and judgments are made right now."

21:20.389600 --> 22:02.772800 (Sam Blumenthal)

"Yeah. Right now because those are the places. Like, what's important for you to express your fashion? You need to be seen. Someone needs to know that Sam's wearing that clothing, and you need to be seen by people you care about. So, really, the only places we're seen online are on Instagram, Facebook, and TikTok. Those are the only places where we share photos or videos of ourselves, and due to their distribution and reach, they have a lot of people we care about. But the expression and purpose of those places aren't necessarily about fashion or expressing taste through clothing."

22:03.532500 --> 22:46.695900 (Sam Blumenthal)

"In many ways, it's inverse. People find it cringeworthy to tag a brand or post what you're wearing because it feels contrived, like you're trying to be an influencer, and it doesn't seem candid. So there isn't that same kind of digital or universal behavior. I might post on Instagram once every 3 months and for a story about 3 times a week. We're constantly connected, so the maximum social capital I can get online is significantly lower than what I can get offline. The question is, is there a new type of behavior that allows expressing your taste through clothing?"

22:47.804800 --> 23:39.814700 (Sam Blumenthal)

"Similar to something we all do offline that's universal. Right? Like everybody does it, it has zero production costs, and doesn't take any time or effort that a photo or video does. Many people can't separate what I look like from what I'm wearing on Instagram. Instagram's about presenting the best version of yourself, looking the prettiest, and making your life seem ideal. So I might not post a photo of what I'm wearing because I don't look that good. In the real world, you can't help but see what you look like. Right? You can't fake it. So, is there a way to separate what you're wearing from how you look, reducing production costs, and creating a new digital behavior? A new digital norm that starts to resemble wearing and looking like clothing in the real world."

23:40.174400 --> 24:01.612800 (Lucas DiPietrantonio)

"So, you brought Whatnot into the equation. I'm curious about your view of Whatnot, and also, considering the distribution needs to be pretty large to have that action be as impactful as when you're wearing clothes and interacting in real life. I'm interested in how you're thinking about that."

24:02.252400 --> 24:49.255700 (Sam Blumenthal)

Yeah, so I think when you look at a network or marketplace, there's an automatic value swap or a value exchange, right? It's about what I'm producing. I spend time and energy producing some sort of work that another person finds valuable and rewards me for. With Whatnot, you're observing these sellers spending time and energy producing these live streams, and the reward from Whatnot is financial capital. If I do a really good job producing a live stream of me opening a new trading card pack, people will buy one, and I'll be rewarded with financial capital. On the opposite end, Instagram's reward is social capital. If I produce a compelling Instagram video, I'll get rewarded with likes and follows.

24:49.875000 --> 25:35.520600 (Sam Blumenthal)

So fundamentally, I believe the value exchange is different with Whatnot; it's financial capital in nature and not social capital. It's not a place where you're looking to express taste through clothing or fashion to gain social capital and status. You're not trying to get paid for doing that. What Whatnot has done is establish their distribution mechanisms, which, from what I've seen, are primarily based on an interest graph. It's not showing me content based on my friends who are on it. In many ways, the value proposition is built upon a spectrum that includes speculation and the various facets of online shopping networks.

25:36.919900 --> 26:15.747600 (Sam Blumenthal)

Right? You have that social capital versus financial capital spectrum. You also have this sort of source of, what I call the entertainment unit. It's like, what is the actual entertainment value somebody's getting from consuming that content on that network, and on one end, you have There's got a question, and on the other end, you have taste. So whatnot? I am consuming content and gaining value because I am speculating many times on what the item will be in the price card, and I am, in many ways, gambling, and I'm getting value from the gaming mechanics of that content type. On the other end is, you know, the inner unit treatment unit being tasted where.

26:16.707200 --> 26:45.771200 (Sam Blumenthal)

I'm following somebody on Substack because I value their tastes and like, I want to see what links and clothing picks they're they're getting, and that is the entertainment value. I'm arriving from them. In many ways, the value proposition there is discovery. It's not a sales channel where I'm buying the item. Where the value proposition of when that is that sales channel where I'm getting to speculate and then buy directly in the app the sort of item that I'm speculating on.

26:46.011200 --> 27:02.062400 (Lucas DiPietrantonio)

Yeah. That makes sense to me. So In terms of what you're envisioning, where is the opportunity, and where does it make the most sense for fashion? I feel like it's caused and That's where you're, that's where you're building social capital. Right? The more tasteful you are.

27:02.342300 --> 28:07.516200 (Sam Blumenthal)

Yeah. I appreciate it. Yeah. I think the fundamental issue with fashion and online shopping has to do a lot with discovery, and you know, we have this sort of unstructured disparate flow of information across many sources when we try to shop online. It's highly unorganized. There's a ton of information overload, and at the same time, we don't really have a place where we can express our taste through clothing and gain social capital, and then discover new clothing based on our friends and social graph while also blending in, you know, our preferences and interests. So if you can somehow figure out how to make what you're wearing or where you like to shop digitally legible and create a core behavior where people are expressing that, then you can build around that an ecosystem that is focusing on social capital rewards and connections based off of people expressing their taste and connecting with other people based off their similar tastes.

28:08.295000 --> 28:34.358000 (Sam Blumenthal)

I think you, thereby, can solve the discovery problem. Right? If everybody's showing what they like to wear, where they're shopping, then you have this supply of content that I can show to the next person, be like, hey, these are things I think you would like to shop. Because you and Lucas are friends you and Lucas are very intersimilar and similar to how social media feeds are constructed. I think That is the opportunity space when it comes to clothing in fashion, all night shopping.

28:34.877800 --> 28:42.902500 (Lucas DiPietrantonio)

There have been other attempts though to make shopping more of a social experience. Have you kind of researched these?

28:43.902000 --> 29:51.723100 (Sam Blumenthal)

Yeah. I think their attempts at their startups are incredibly difficult. There are 1,000 points of failure, and so being successful requires tremendous precision, one Balfonos, and luck. I think there have been attempts. I think the attempts have been focusing on the wrong core action. Right? Like, what is that thing that people are using to create value through the network of the platform express their taste, or discover new content? I think there have been failures in the distribution feeds. Like, how are people discovering new things? What is the mechanism that is driving that discovery? I think there have been failures of go to market focusing on the wrong vertical when I look at a lot of the sort of social commerce space today, the value proposition seems to be some sort of more interactive format of content, whether that's live streaming or video, and then relying on creators to then be affiliates to sell you things through these content formats.

29:52.882600 --> 338.704800 (Sam Blumenthal)

The problem with that is it has really low trust because people aren't stupid. They recognize that these are affiliates. These people don't maybe love these products. They want you to care for them more, and it's not personalized in a way that if I am not following or being followed by my friends, I'm not gaining any social capillary status from it. I don't care if any random people are following me, and two, I'm not finding unique things, and I wouldn't be able to find anywhere else. So I think the truth has been valuable. So if the Commerce platforms are just these sorts of marketplaces that are wrapped in new content formats and are just sales channels the value proposition has to be, in my opinion, in discovery.

339.504400 --> 355.486500 (Lucas DiPietrantonio)

Yeah. How do you facilitate those interactions that would and I'm sure this is like a thesis for a platform? Right? That's why we're talking about it. Like, where does that go down in a similar whatnot-type environment? Like, a two-sided marketplace like that?

356.085100 --> 31:35.704300 (Sam Blumenthal)

So when you think of any network or any network, it is a marketplace of content. Like, what is causing me to see the content in my feed, and think of it like, you have this universe of planets. Right, and like, you have this force that causes them to come together. If gravity, is right, that is bringing these plants together, and sometimes networks construct those forces that cause content types to come together based off of your social graph. Which is basically like, here are my friends, and here's who I follow, and this is what the old Instagram was. I will only see content based on the people that I follow. I will only see content in my Facebook feed based on my friends.

31:36.823700 --> 32:13.221600 (Sam Blumenthal)

That does a good approximation of showing you content. They have a high approximation that you'll like. That's the job of any network. It's, hey, I want to show you content that we think you'll like. With the advanced machine learning in AI, you've seen the progression into more interesting graphs, like Tiktok, which is where I can learn a lot about what we think you'll like based on your behavior on our platform of us showing you some random content and then you telling us through your gesture of liking it, not liking it, commenting it, how much time you spent watching it so that we can put you into these personas. Be like, okay, Lucas' persona x.

32:13.970000 --> 32:52.788300 (Sam Blumenthal)

Sam is also pursuing an x. Sam watched this video and liked it. We think Lucas will like it, and so that is that interest graph-based feed, and then you have sort of a chronological feed, which is like we're just going to show you the most recent ship. For fashion, specifically, it needs to be a highly vibrant social and interest graph. You want to show people new fashion items based off of their style graph, Right? I have a specific sense of style. There are other people in the world with my sense of style. There's a good chance that whatever they are wearing, liking, shopping, What have you, I will also like, and I will gain value from discovering.

32:53.947800 --> 33:14.495000 (Sam Blumenthal)

You also want to have that social graph because I want to express my style, and this ancient human behavior of gaining status from what we're wearing and expressing our taste including, that needs to be done within a confine of people that I care about and whose likes and comments I find valuable. Right?

33:14.934700 --> 33:49.893600 (Lucas DiPietrantonio)

Yeah. I think that for me, the challenge has been getting discovery. Right? I think that's what Tiktok does so well. Its discovery has been exceptional, and it's finding the balance between both of those graphs. How do you tie this sort of discovery back to the community, and if this is would this be like an affiliate platform for a brand, or do they actively facilitate, you know, these sort transactions between their consumers in the same way that they're facilitating communities?

33:50.613200 --> 34:00.638200 (Sam Blumenthal)

Yeah. I think so starting with second second part of your question, III think any affiliate model inherently dilutes that value proposition. It hurts trust.

34:00.838100 --> 34:07.074600 (Lucas DiPietrantonio)

Makes it things But that's that scale, though. Like, is it almost inevitable that people are going to take advantage of it?

34:07.474400 --> 34:12.831800 (Sam Blumenthal)

It depends. Discovery. Yeah. I mean, it depends on the sort of culture.

34:13.311500 --> 34:15.670200 (Lucas DiPietrantonio)

The same way that it's happening with Tiktok right now too.

34:17.139600 --> 35:04.720700 (Sam Blumenthal)

Right, and that is a function of the business model of the platform. Right? Like, Tiktok. So to begin with what makes a good discovery? There are a few things. One is you need to have a consistent way through and this is the job of an algorithm to figure out what somebody is most likely going to like. Right? You need to have a feed or an interface that you can show them that thing. So Tiktok's interface in their sort of innovation was their interface and their feet is a single full-size, full-screen inventory of content. That forces that user to engage with that, which is providing information that Tiktok can use to better learn what you may or may not like.

35:05.349900 --> 35:52.142600 (Sam Blumenthal)

Right, and then thirdly, you need an abundance of content that I can then as Tiktok crawl and say, okay, Lucas likes this type of person he will like this video. So you need that abundance to offer great recommendations just like Netflix needs an abundance of movies to offer you great recommendations in Spotify, and the constraint is he scares you of that, and so when it comes to affiliates and if you just focus on affiliates, you're inherently creating scarcity and constraining your supply, because not every brand has an affiliate model, not everybody wants to create affiliate content for things, and so you're limiting the actual ability for you to show people things that they like because there are just fewer things to show, which means that there are fewer things to learn what somebody likes.

35:53.062000 --> 36:42.543200 (Sam Blumenthal)

When you look at TikTok Maybe. Now Tiktok's business model is advertising, and I think this is something Instagram is about right and Tiktok's getting wrong. When you look at Commerce, it's really hard to package Commerce into a, you know, virtual platform on the feed, and brands are not natively creating content that will be discovered in your feed. It's coming from other individuals, and Instagram, what they realized when they rolled out Con Commerce and pulled it back, is they're actually a unit of Commerce that comes at a cost of either a unit of content that is going to create consumer surplus for people or a unit of advertising that is people are willing to engage with because they're getting this other content for free, and then Instagram is making money from that advertisement.

36:43.622800 --> 37:25.399200 (Sam Blumenthal)

So if Instagram wanted to push commerce because nobody was going to the shop tab, it essentially had to advertise commerce in the feed. That means that they're either creating less value for their users or making less money from advertising. So they did the smart thing. They're like, you know what? Let's not do this. Let's focus on the main thing that we think. Let's double down on advertising, driving discovery through organic and paid advertising, and maintaining the integrity of the feed. TikTok has less of a robust advertising network, Right? They are a part of it because they have less surface area than Instagram. Instagram has reels They have the native feed. They have stories.

37:26.159000 --> 37:46.537800 (Sam Blumenthal)

Stories. Sales. Ads and Tiktok instead are trying to focus on creating commerce, and then they're trying to focus on since the algorithm's not pushing brands as much they're pushing creators, an affiliate model to get more points of commerce in my feed by having creators, you know, be these points of distribution, these points of sale.

37:46.777800 --> 37:57.452000 (Lucas DiPietrantonio)

Yeah, and it's just hard to merge those two things organically because people are not going on a TikTok one discover products. They're just going for entertainment and discovery.

37:58.430000 --> 38:39.286000 (Sam Blumenthal)

Knowledge consultant, and when people do discover products, and this is what has caused a lot of issues to Facebook, they're not buying that instance. Right? They're discovering that product. They're not in a point of consumer intent. They're like, oh, that's a cool shirt. Maybe I'll check it out later, and so they're not going back to TikTok to buy that thing, they'll probably go to the brand site. So TikTok is not monetizing that. They could have monetized that if that point of you know, instance was an ad rather than a point of commerce where the monetization becomes based on CPM and reach rather than transaction, it's fundamentally just an issue of business model fit, which I don't think Tiktok has figured out much through their their their dismay, and I think Instagram will easily figure it out.

38:39.595000 --> 38:46.591300 (Lucas DiPietrantonio)

What do you think? What's your take on Tiktok Tiktok shops, you know, that they're rolling out and pushing for a native commerce platform?

38:47.890100 --> 38:58.354700 (Sam Blumenthal)

Yeah. I think all of that surmises. Yeah. Yeah. Yeah. Yeah, or you know, I think they You think they're going to have difficulty with the conclusion from that is when and I read recent articles that there are only 100 active TikTok shops. I think.

38:59.274200 --> 39:23.181200 (Lucas DiPietrantonio)

What TikTok shop They're trying to create, the theory makes sense. They're trying to create more signals through advertising so you can have more direct attribution in these closed-loop ecosystems. But you're saying the premise that people would want to shop at a place where they haven't been trained or are expected to is, you know, inherently going to make a difference. It's getting that right.

39:24.230000 --> 39:29.307400 (Sam Blumenthal)

It makes sense from an ability to map attribution to them.

39:30.466800 --> 39:30.986600 (Lucas DiPietrantonio)

Yeah. Like.

39:31.186500 --> 418.499000 (Sam Blumenthal)

Better information on ROAS and pricing. But I think as we have learned, that's fundamentally not how people shop or engage with shopping but instead one on social media. Which inherently is going to cause the opportunity cost of shopping commerce to be very high, I think the fundamentals lead me to believe that it's not going to be successful and have a similar type of result as you saw with Instagram. I think Instagram, you know, the. Instagram wisely recognized that local Maxima stopped burning all that money on pushing Commerce, Tiktoks, doing the opposite. They're investing Filament, they're investing all these different things, which in many ways, I think is to their long-term detriment.

419.258800 --> 435.970500 (Lucas DiPietrantonio)

And what we're talking about is the premise of the platform needs to be shopping. So if you want to have something that is discovery-based and entertaining, you're going to shop in Transact. Like, that could be something in itself.

436.979700 --> 41:14.767600 (Sam Blumenthal)

A bit. But when you think of all these platforms when you think of Instagram. Right? Instagram is essentially a bundle of different content types. Right? You know, again, using Spectrum, on one end, you are highly social and irritating. That's showing me content from creators I follow or from my friends. Like, creates the most utility for me because I either get to stay in touch with Lucas and see what he's up to, which is what I gained value from Instagram for, or I get to follow this cool, you know, new meme account and they posted a video that I thought was funny. Right, and on the other end, you have highly commercial inventory types, which are like ads.

41:15.487300 --> 41:53.934800 (Sam Blumenthal)

I don't gain any value from seeing ads. It worsens the experience for me. But the aggregate of them is a consumer surplus. We're willing to see these ads and subsidize these ads because I gained a lot of value from the other ones. What has happened with these new algorithm changes is 80 percent off and then in between you had posts from brands you saw, which are these forms of organic marketing where brands post natively in your feed and you see it because you follow them or you have a creator that's trying to sell directly to you, and what you see is 80 percent of your feed is one of those polar contents either from creators you follow, not your friends, creators who have no relationship with you, or it's ads.

41:54.654500 --> 42:40.437700 (Sam Blumenthal)

Right, and so, really, that's the bundled content type where I'm willing to engage with shopping. Because it allows me to see this entertaining stuff for free. Right, and it provides the economics for Instagram to do so. But. I don't know if consumers would just be on Instagram with all shopping content. I don't think that creates that much value for people. I think you need to bundle it with other types of content that people gain a lot of entertainment utility from, and in the aggregate, creates a, you know, pleasant experience where people, their buy can discover new shopping. They buy, and you can sell ads for that attention. But the sort of main thing in the core use case has to be the entertainment of the users.

42:41.117400 --> 42:57.607700 (Lucas DiPietrantonio)

Yeah. Insightful stuff. I want to ask you quickly have you been following Amazon and just kind of the developments with Prime Video and CTV and tying that back to just what they're doing on the branded side to make that just like a powerhouse advertising channel?

42:58.087400 --> 43:48.678200 (Sam Blumenthal)

Yeah. I think the video advertising has been talked about for, you know, almost like a decade now with streamers. I think what you're seeing is more hours of attention going toward streamers like Amazon, like. YouTube TV, like Netflix, and also different types of attention. Right? You're seeing news and sports go to these platforms. Which inherently have more points of disruption because they're sort of baked into those programs. Like, you sell a sports event and it comes with slots for ads, not like a Netflix show per se. So I do think there is a good business there for them to sell brand advertising. I would be way more skeptical of direct-response advertising when it comes from TV.

43:49.797900 --> 44:36.960400 (Sam Blumenthal)

Just because I don't think people are disrupting their, you know, entertainment consumption to go buy a product or tell Alexa to buy a product. I think what you can do is spend more time. Essentially, the goal of Amazon is we want to get more of your attention based on where people show ads. I, e, like sports, TV, and movies, and then we want to get more of your consumption where people buy the things that they discover in ads. So if Amazon could be in a position of showing me an ad for a razor blade while I watch Thursday night football, then I go to Amazon on Friday to buy said razor blade, then they can map their execution. Right? I think that's the goal. The question is, how good are they at showing me things that I like to buy, and then am I going to go to Amazon to buy those things?

44:37.480000 --> 44:48.553500 (Lucas DiPietrantonio)

Yeah. Sam, insightful stuff. Thanks so much for joining the pod, and yeah, it sounds like you're making a bit of a switch and banter that we should discuss too. Excited to hear more about that, but thanks for joining.

44:49.313000 --> 44:57.878700 (Sam Blumenthal)

Yeah. Yeah. We have some really exciting stuff coming down the pipeline that we think you're going to reimagine what you're shopping for.

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