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EPISODE 3

Building Touch of Modern, with Co-Founder Jerry Hum

With Jerry Hum, co-founder and the Executive Chairman of Touch of Modern

How do you build a successful eCommerce business that has attracted nearly 5 million visitors in a month? For Jerry Hum, it took a few failures and a couple of stumbles out of the gate with his cofounders before finding the winning combination of users, demand, and products all in one. Jerry is a co-founder and the Executive Chairman of Touch of Modern, a members-only e-commerce website and app focused on selling lifestyle products, fashion, and accessories to men. On this episode of Up Next in Commerce, Jerry takes us through his early struggles and how he found the secret sauce to making his eCommerce platform one of the most popular among male shoppers. Plus he explains what metrics other eCommerce pros should be looking at, and gives some advice to other entrepreneurs.

Key Takeaways:

  • For a multi-brand company, customer retention and lifetime value is the critical metric to look at
  • Build the primary platform where your primary customer prefers to buy
  • Combine marketing engagement and transactional data to prevent high engagement high cost marketing yielding low sales volume

Key Quotes:

“What we learned from that was we need a reason for people to transact. There wasn’t a real business model there. There’s just a ton of engagement…. So we were like, what were we good at and what were we not good at? We were really good at getting people engaged. Really good at the discovery aspect of things. We just needed something more scalable to be the thing that we featured. And we realized that, hey, products… You get scale with products, right? Mass distribution and all that. There’s real margin there because that’s kind of built into the model that already exists.”

“We went to mobile pretty early on …and it was interesting because men tend to be more comfortable buying on mobile. And maybe that influenced part of our strategy, or vice versa. It seems to actually be the more popular platform for us. Both in terms of actual use engagement and revenue as well.”

“In the early days of Facebook it was like the wild, wild west. Big brands weren’t really on it, so it was a great time for companies like us.”

“For us, we are a multi-brand retailer. So what’s important to us is lifetime value and retention. How fast do you break even on the cost to acquire a customer? At the end of the day, that’s the most basic thing for any company in our space. But the products that you’re selling may influence how you look at it. If you’re selling cars or mattresses or something that you just don’t buy very often, then you may think about it very differently because it’s just not feasible to think that the retention rate is going to be nearly what ours is. Or at least not be frequent enough for you to be able to plan your marketing spend around.”

“You can be great but there’s going to be some folks that it’s not for. It’s not like 100 percent of your folks are going to stay with you forever. Even the folks that do, eventually, they may change their taste, or things like that may happen. So in terms of splits, I think that also varies on performance for us. For us we care about a payback on the spend that we’re doing.”

“One of the questions people always ask is how does a company that sells premium products, how does that respond in a recession? For us, we always said we can respond quickly, but it’s never been proven. And now it’s been proven to an extent that we can respond quickly. And we can move to things that are more essential. It’s still essential with a twist…. I think it’s validation that the model can move quickly. The way we thought. And that our brand can extend to the different categories. And address people’s needs as they change.”

“When we first started we were shipping our own products from day one from the house. It was just tons of boxes in the living room. The first day we just piled it in the lobby and our neighbors got really [mad] at us for doing that. So the second day, we knew when the person was coming and we just did like bucket brigade style. Basically we had our four founders there and we would just pass it down, bucket-brigade style, down the stairs as quickly as the guy could load it into the truck.”

Bio:

Jerry Hum is the co-founder and chief executive officer of Touch of Modern, the curated, online shopping destination for men to discover unexpected products, fashion brands and accessories to elevate their lifestyle. Jerry and his three co-founders started the company in 2012 as a place to showcase one-of-a-kind, in-season products from well-known brands and up-and-coming designers that men can’t easily find in mainstream retailers or at better prices. Today, the site is one of the most popular men’s lifestyle destinations, with more than seven million registered customers and $100 million in annual run rate.

Jerry plays a key role in determining which products, brands and designers are featured on Touch of Modern. Trained in architecture and with a strong background in design, Jerry applies a systematic approach to curation, evaluating each proposed item against a strict set of criteria to meet customer demand and brand standards. Jerry is also a self-taught coder and when Touch of Modern launched, he handled all the front-end design and development.

Prior to starting Touch of Modern, Jerry was an architect with Swanke Hayden Connell Architecture. He received his architectural degree at Cornell University, where he focused on how the use of technology influences space and experience. A native of New York, Jerry now resides in San Francisco, where Touch of Modern is headquartered.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

Transcript:

Stephanie:

Hey everyone. This is Stephanie, your host of Up Next In Commerce. Today we have Jerry Hum. The co-founder and executive chairman of Touch Of Modern. Jerry, how’s it going?

Jerry:

Pretty good. How are you? Thanks for-

Stephanie:

[crosstalk] good. Yeah, how’s it going? So you’re in a loft right now, right? In SF, living the quarantine life.

Jerry:

Yeah, in San Francisco.

Stephanie:

Yeah.

Jerry:

Yep.

Stephanie:

How-

Jerry:

[crosstalk] for a little longer than most other folks.

Stephanie:

Yeah. So what’s your day look like with being sheltered in place and… I think San Francisco is even stricter than Palo Alto where you guys [inaudible] allowed to do even more than we are.

Jerry:

Yeah. Well, we actually started preparing for it a little bit earlier actually, just as it was making news headlines and most companies were still up and running. We were planning kind of contingencies and all that planning and seeing how work from home would be like if we had to do it. Luckily we came up with a plan just in time. We actually went into it before even California started making statements about it. So I think we are kind of in a pretty decent groove in terms of keeping the business running smoothly and all that. In terms of a day to day, I’m actually surprised as to maybe how engaged people have remained.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Being that we have to do it all through technology. I actually started thinking about it, why is it that work from home is almost a little bit easier now than it was in the past. And I think it’s because when it’s the only option then you just do it. Right?

Stephanie:

You have to make it work.

Jerry:

Yeah. It’s not like if half the office is doing one thing and then… Or not like half the office. If most of the office is at work and a few people are work from home then it’s actually more difficult because the people in the office are like, “Oh, I’ll just wait for that person to get in or something.” But if this is the only way that every one is communicating then it’s actually fairly smooth. Obviously everything takes a little bit more time and all that.

Stephanie:

Yeah.

Jerry:

[inaudible] day is actually longer than usual.

Stephanie:

Yeah.

Jerry:

All things considered, I think it’s working pretty well.

Stephanie:

Good. Yeah. Hopefully it will all come to a close soon. How have you all handled… I mean has there been any struggles, I’m imagining taking photos of your products and things like that? That’s probably a very in-person type of thing that [inaudible] people have perspectives on and all want to help. How are you handling things like that with your business that seem pretty hard to do virtually?

Jerry:

Yeah. So luckily, some of our folks have set-ups at home.

Stephanie:

Good.

Jerry:

Yeah. Because usually, photographers, this is not just a job. It’s also a passion and a hobby. Right.

Stephanie:

Yeah.

Jerry:

So we’ve been able to make due… Obviously at a reduced capacity. Yeah.

Stephanie:

Yeah. Well, good. So maybe that’s a good point to dive into what is Touch of Modern. If you were to explain it to the listeners and give us some background.

Jerry:

Touch of Modern is the only shopping destination that men visit daily. And we offer a [inaudible] mix of remarkable products across all categories and that you can use everyday.This could be anything from a flame thrower you can strap to your wrist, or the newest exercise gadget, or anything in between.

Stephanie:

Are women allowed? Because I was on there and I was like, “I want to buy some of this stuff.” I would buy… Maybe not a flame thrower but there was some good stuff on there that I’m like, “I want this.”

Jerry:

Of course, women are allowed. It’s just kind of more… A little bit more of our differentiator. Because most E-commerce sights out there are catered toward women.

Stephanie:

Yeah.

Jerry:

[inaudible] we’re not the only one but one of a few that really cater to men.

Stephanie:

Got it. Yeah. It looks awesome. A lot of the products. I was afraid to hit buys right away. How did you come to create the idea of Touch of Modern? And I think I read it was the third… The third times a charm. That you had done three other things, or two other things before that until you got to Touch of Modern. What was that like? What was that journey like?

Jerry:

Yeah. I’ll give you the long story here, maybe.

Stephanie:

Good.

Jerry:

[Four] founders, guys from New York. The business actually was a peer-to-peer experienced market place. And this is kind of similar to what Airbnb has now. Obviously they built that on top of their existing business but we were trying to start from scratch at the time. That was extremely difficult because you’re telling folks to change their lifestyle. Right? If you need to suddenly offer a cooking class, that’s not a easy thing to do if you don’t have the customers for it. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

Or the time for it. And then we’re telling customers to come on this platform and book stuff. But if you don’t have the activities, what is there to book?

Stephanie:

Yeah.

Jerry:

So it becomes this chicken and egg problem.

Stephanie:

Yeah.

Jerry:

It came out of our own need because we were guys from New York, you’re kind of looking for interesting things to do all the time, just in the city. Right? The second business was called Raven. Well, the first one was called [Scarra 00:05:24]. I don’t know if I mentioned that. Second one was called Raven. That was a slight variation on the first. And that was we took out half of the equation because we realized, double sided marketplace, super hard. Right?

Stephanie:

Yep.

Jerry:

We started offering activities that already existed. This could be like hang gliding. This could be sky diving. This could also be day at the spa. Right.

Stephanie:

Mm-hmm (affirmative).

Jerry:

We also layered on a recommendation algorithm where you could like stuff. And based on your activity, we would offer you a daily feed of different activities and things that were new to discover in your area. We got a lot of engagement out of that. People found really cool things. If you look at my feed versus somebody else’s, it would be really different based on what we like. When we looked at it, it was like, oh this is a pretty accurate description of things I’m interested in and my hobbies and such. Right?

Jerry:

And that was difficult because people would then discover stuff but they wouldn’t actually book it with us. They would just call directly [crosstalk 00:06:29].

Stephanie:

Wow.

Jerry:

What we learned from that was, well, we need reason for people to transact. Right? And we need maybe something to make us relevant for right now. So the second generation of that business was actually arranging events where we built a mobile app as the early days of… Not the iPhone but when apps started getting the more complicated… Better than just the kind of beer pouring app.

Stephanie:

Yep.

Jerry:

Those simple things. Right? So we used Geofencing to create this thing where if you went within a certain perimeter of something going on, we would tell you about it. We’ll alert you and be like, “Hey, like… Street fair over here or something over there.” And that was really cool because there wasn’t another app like that. At least that we know of… That we knew of at the time that was doing that. Also at the time, a lot of folks were moving to San Francisco.

Stephanie:

Yep.

Jerry:

Probably even more so than they are today. A ton of messages from people saying, “Wow, you’re really helping me discover the city. Every weekend we pull this out and, you know, see what’s going on.” Especially because San Francisco is the type of city that always has something going on.

Stephanie:

Yeah. Like on the side streets, you’re like, “There’s a whole festival going on right now.”

Jerry:

Yeah. So that was really cool but again, a lot of these things were free. So it wasn’t there wasn’t a real business model there. There’s just a ton of engagement.

Stephanie:

Mm-hmm (affirmative). It seems like you guys are kind of ahead of your time with that. Because even when I’m hearing about that now, I’m like, oh, if you would have kept going with that one, Airbnb probably would have acquired you.

Jerry:

Yeah. Right.

Stephanie:

Oh, if you kept going with the Geofencing thing, Google would acquired you because I worked for Google Maps before this.

Jerry:

Oh, yeah.

Stephanie:

They’re still trying to figure out how to show you where the festivals are, where the farmers markets are based on your location. So maybe you guys are just ahead of your time with everything.

Jerry:

Maybe. That would be the positive view of it. So I think the lesson we learned from that was… Incredibly hard to scale location based things. because you could sell out all the tickets to this one show or a certain percentage of it but there’s unlimited margin and you’re constricted by the location and therefore we couldn’t justify the kind of business mechanics that were necessary to actually make that sustainable. I mean, it raised a ton of money. Right? And so this isn’t going to get like… Where it wasn’t like, hey, we’re going to get to a billion people and then it’s going to work. It’s not like that.

Stephanie:

Yeah.

Jerry:

So we were like, what were we good at and what were we not good at? We were really good at getting people engaged. Really good at discovery aspect of things. We just needed something more scalable to be the thing that we featured. And realized that, hey, products… You get scale with products. Right? Mass distribution and all that. There’s real margin there because that’s kind of built into the modal that [inaudible] already exists.

Jerry:

We had always kind of liked products, just as the people that we were. But we didn’t want to touch it because we didn’t want to deal with real world problems of moving things around, shipping, [crosstalk 00:09:46]-

Stephanie:

Yeah. Logistics.

Jerry:

Yeah. Logistics. Right? After going through the struggles of the first two business, we realized that things are not really… It’s not rocket science. Right? This has been done. We started thinking about what kind of unique angle we could take at it. I remember we were in the living room and we’re talking about speakers for some reason and who made the best speakers. Dennis had his idea. Jon had his idea. And then Steven, who’s real audio files, was like, no, these are the best speakers. He knew all these brands that we didn’t even know about. We knew the mass market brands but not the kind of stuff that he was into.

Stephanie:

Mm-hmm (affirmative).

Jerry:

He had all this knowledge. Okay, you win that debate. Right? And we realized that we have this thing that we geek out on. Right? Jon was really into cooking and he had these really expensive knives that he would keep in this [inaudible] that he would have to take out and show us. Dennis was really into outdoor activities and all the gear that’s associated with that. I use to be an architect when I was in New York so I spent way too much money on furniture. So that was my thing. Right? And so everyone had our own thing. No one out there was catering to this desire or whatever it was that ties all these things together. Right?

Jerry:

So we just started sourcing things that we thought were cool. Hey, if we think it’s cool, other people are going to think it’s cool too. Right? It wasn’t like a men thing. It wasn’t even necessarily a discovery thing. It was just these were the things that we thought were cool.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Through that process, right away it kind of hit in a way that the other two businesses did not hit at all in two years. Right? Where day one we started getting real transactions and kind of buying activity. Right?

Stephanie:

How? How did you get buying on day one? How did people even find your website or know where to go?

Jerry:

We did not even have a website on the very first day. We actually… What happened was Dennis, who ran marketing, would just start running ads and would go to a landing-

Stephanie:

Okay. Facebook?

Jerry:

Yeah.

Stephanie:

Or what kind of ads? Okay.

Jerry:

Facebook. Earlier in the days of Facebook too. I think a lot of what we did, now, can’t be exactly replicated but there’s probably some learnings to take from it.

Stephanie:

Mm-hmm (affirmative).

Jerry:

So we basically just collected emails and say, “Hey, there’s this thing that’s coming soon.” Right? I think [inaudible] probably remember years ago there was tons of these types of things that are just coming soon and you’re like wow [crosstalk 00:12:39].

Stephanie:

Yeah. That was the strategy back then of just like just put up a landing page and see if people want that fake product that you could create. I remember books where they would suggest that and I’m like, that’s a good idea.

Jerry:

[crosstalk] that is more less of a pit. I mean, we were creating it.

Stephanie:

Yeah.

Jerry:

I’m not talking about like, let’s just run ads and see if people like it. We were just building it at the time, that same time we were running ads against it. And basically we had an idea of what that metrics needed to look like in order for a business to work. Right? We just made assumptions down the whole funnel. Right? If we acquire an email for this much, and if this percent of folks convert, and assume a certain order value, and certain repeat rate then this is what our business would look like. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

And no data for anything outside of what it would cost to acquire an email. Basically, we knew the cost of that. Then we started sourcing products and building the website behind it. Then we just went down the funnel and firmed our assumptions. Sometimes they were better and sometimes they were just different. We kind of just proved it out from the top down.

Stephanie:

Got it. That’s really cool. Has it always been a member’s only platform? Has there ever been a time where people could just go to the website, the app, and just see the products without inputting their email?

Jerry:

Yeah. So, we require folks to input the email for the upfront reason that we are talking to… And this is also maybe one of our differentiators, is that we are not a clearance channel per se. We talk to vendors who have products that are new to market. Right? So they may have endeavors to go to traditional retail or something else, and they may not want their prices shown necessarily to everybody.

Stephanie:

Mm-hmm (affirmative).

Jerry:

So that’s one [inaudible] been the case.

Stephanie:

Got it. Okay. Cool. So when I was looking at your catalog and just seeing everything that you have, how do you go about curating something like that? I mean, it sounds easy in the early days of, oh, so and so likes knives so he pulled in his favorite knives. But I saw how many products you have on that page. Maybe it’s like… How many a day do you release?

Jerry:

It’s about 300 a day. It’s quite a bit.

Stephanie:

How do you find 300, even a month, cool products that are so unique like that and keep up the level of quality that’s on there?

Jerry:

We have a team of about 30 or so folks on the sources and buying team and they’re out just looking for what’s cool and unique. And obviously we have our standards and things that we look for and they just go out and try to find things that meet those standards. And they also try to find things that are… that we’ve just never seen or heard of before. Right? Then we bring it back, it goes through an approval process, and then we put it up and run it. It’s fairly simple.

Stephanie:

Does it still go through you to approve of every single product?

Jerry:

Not every single product.

Stephanie:

No.

Jerry:

In the early days it was and now we have a team of folks that can do it.

Stephanie:

Got it. And you also have an app that people can buy from. Is it the same functionality? Does the website mimic the app or how did you think about expanding to mobile?

Jerry:

It’s mostly the same functionality. We expanded to mobile fairly early on. Like I said, our previous companies were… We were already experimenting with mobile back then. I don’t think we had one on Scarra but Raven, we definitely did.

Stephanie:

Mm-hmm (affirmative).

Jerry:

That was a core part of it. So we went to mobile pretty early on and I don’t think we knew this per se, but it was interesting because men tend to be more comfortable buying on mobile too.

Stephanie:

Mm-hmm (affirmative).

Jerry:

And maybe that influenced part of our strategy or vice versa. It seems to actually be the more popular platform for us. Both in terms of actual use engagement and revenue as well.

Stephanie:

Okay. And do you see different customer profiles when it comes to the mobile user versus the website users? And do you cater to them differently based on that? Or personalize things different?

Jerry:

No. The experiences are pretty congruent on both sides. The mobile users tend to have a little bit of a higher value. But that could also be because you kind of have to self select into mobile.

Stephanie:

Mm-hmm (affirmative).

Jerry:

You go on to the website and then you’re all, hey, we’re really into it. And then you go on the app. Right?

Stephanie:

Yep.

Jerry:

It’s kind of hard to say what’s [inaudible 00:17:21].

Stephanie:

Go it. Very cool. So in the early days you were doing Facebook ads. And I think I read that you were doing TV ads as well at a certain point. How has your marketing strategy evolved over… since you started?

Jerry:

Yeah. So in the early days of Facebook it was like a wild, wild west. Right. Big brands weren’t really on it. So it was a great time for companies like us. And this is why I say a lot of it can’t really be replicated today exactly the same way we did it back then. So when a lot of competition started moving in, in order to compete, we kept broadening our category just… I mean, just becoming a stronger business. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

So it would be a lot harder to start with just a handful of products the same way we did. When we started, I think we launched with 12 products and that was it. It was like 12 individual products, not twelve vendors, just 12 [inaudible] things you could buy. Right?

Stephanie:

Yep.

Jerry:

That was enough to make it work. Probably impossible now to do that. As the business grew we could support more channels. We went into Google and then eventually got to the size where we can actually start experimenting with TV. I think also, TV has evolved over time as well because of visual advertising. Because so many brands see the benefits of digital advertising. You can track things and kind of go after a more specific audiences. That TV now kind of has changed to have some of those properties as well. So we use them both kind of together and they enhance each other. You can tell when, if you’re spending too much on TV and not enough on digital, then TV starts to suffer. If you spend too much on digital and not enough on TV then the opposite happens.

Stephanie:

Got it. How do you find that ROI of the campaigns? Then decide, okay let’s scale back on TV and increase mobile ads or something. What metrics are you looking for?

Jerry:

We actually have the exact same metrics on TV as we do on digital. Right? And this is just… cost acquired customer and lifetime value and all that. The way we track it is now you can know exactly when your spot airs and basically we have a baseline of traffic that we know that, hey, if nothing is airing, this is what are organic traffic looks like. Right. So when we air a spot, we can see that spike. We do a [inaudible] analysis to say this much of the traffic following that airing is probably through the TV.

Stephanie:

Got it. Okay. Very cool. So when it comes to metrics, when you think about E-commerce, what metrics do you think are most important to keep track of? Or how do you define success when it comes to E-commerce?

Jerry:

Yeah. There’s a ton of stuff. I mean, it really depends… It depends a lot on what kind of product you’re selling. Right? I’ll give you two extremes. One extreme is like us, and for us we are a multi-brand retailer. Right? You can buy a number of things and also we change our selection everyday. So you can keep coming back to keep buying different things. Right?

Jerry:

So what’s important to us is lifetime value and retention. Right? How fast do you break even on the cost to acquire a customer? At the end of the day, that’s kind of like the most basic thing for any kind of company in our space. But the products that you’re selling may influence how you look at it. Right? If you’re selling cars or mattresses or something that you just don’t buy very often, then you may think about it very differently because it’s just not feasible to thing that the retention rate is going to be nearly what ours is. Right. Or at least not be frequent enough for you to be able to plan your marketing spin around.

Stephanie:

Mm-hmm (affirmative). Go it. How do you keep your customers… How do you retain them and keep them coming back? Versus acquiring new customers. How do you think about that mix?

Jerry:

I mean, you always have to acquire new customers.

Stephanie:

Yeah.

Jerry:

I think [inaudible] is just like a natural part of business. You can’t deny that it’s there.

Stephanie:

Yep.

Jerry:

[inaudible] you can be great but there’s going to be some folks that it’s not for. Right? It’s not like 100 percent of your folks are going to stay with you forever. Even the folks that do eventually they may change taste or things like that may happen. So in terms of splits, I think that also varies on performance for us. For us we care about kind of a payback on the spend that we’re doing and pending on where we see better performances kind of where we’ll weight it. And also kind of seasonally because I would say for retail there’s holiday season and all that, you may want to do one thing versus another. But that’s going to be really specific to the kind of company that you’re running.

Stephanie:

Yeah. So when it comes to changes in spending pattern, what have you seen with everything from COVID-19 going on? Like what kind of differences? I saw you have a… I think a stay-at-home section or something similar like that. Shelter in place, on your website. How have you seen things change since that started?

Jerry:

People’s priorities definitely change very quickly. Luckily for us because we can change our assortment everyday, we were actually able to adapt really quickly. We got that store up from… From when we said we were going to do it to when it was up was a matter of… Like the morning to that afternoon.

Stephanie:

That’s impressive. How did you line up all the vendors? I mean, to me that’s like a long process of picking the vendors and picking out the product and making sure they can ship enough, depending on demand. How did you get all that lined up so quickly?

Jerry:

The thing is… I mean, when this first started happening especially. And we need to agree now still, it seemed as if time had just sped up suddenly.

Stephanie:

Yeah.

Jerry:

Things that would take an entire quarter could happen now in like a day. Right?

Stephanie:

Yeah. It has to.

Jerry:

Everyone was wondering what would be different? All of our vendors, suddenly their retail channels dried up. Right? And they had to move things around. So we just called them up and said, “Hey, this is what we’re doing.” Obviously most of the folks that were on there, day one, were folks we’ve worked with already in the past.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Or coincidentally we were talking to and hey, this fits, kind of thing. Right? It was tapping existing relationships. And parallel, the design and engineering teams were building up the store. We were using some existing infrastructure that we could repurpose and re-skin for the store. It was an amazing feeling. I didn’t think we were going to do it in a day but it happened.

Stephanie:

Yeah. And are you changing that catalog? Like each day or week or…

Jerry:

[crosstalk] as well. Mm-hmm (affirmative).

Stephanie:

Got it. Does it… How do you think now your company is going to change based on now you know how quick things can move if it has to?

Jerry:

Yeah.

Stephanie:

Do you think that your internal policies and all that stuff could change going forward based on how quickly you can see thing go through? And maybe seeing things aren’t a priority or approval for certain things might not be as high priority as you thought they were or… What’s your view on that?

Jerry:

Yeah. I mean, in terms of policies first… I think in more so than anything it was like validation of a lot of policies that we had in place.

Stephanie:

Mm-hmm (affirmative).

Jerry:

It was confirmation that we could move quickly. Because we always thought we could. I think that’s always been our thing. One of the questions people always ask is how does a company that sells premium products, how does that respond in a recession? Right? This isn’t a recession but it’s a time when people’s priorities are going to shift maybe away from things that were… seems more frivolous to things that are now more essential. Right? For us, we always said, well you know, we can respond quickly but it’s never been proven. And now it’s been proven to an extent that we can respond quickly. And we can move to things that are more essential. It’s still essential with a twist. Right?

Stephanie:

Yeah.

Jerry:

It’s still within our brand. And it’s going to bring a bit of uniqueness and delight into people’s lives that are staying at home.

Stephanie:

Mm-hmm (affirmative).

Jerry:

I think it’s validation that the modal can move quickly. The way we thought. And that our brand can extend to the different categories. And address people’s needs as they change.

Stephanie:

Mm-hmm (affirmative). Do you think these buying behaviors are going to last for a while? And if so, are you shifting maybe your thoughts on what Touch of Modern looks like in 2025, 2030? Is it kind of having you re-think things a bit?

Jerry:

I think that people’s buying behaviors will change because I don’t think it’s going to go back to exactly the way it was. You know.

Stephanie:

Mm-hmm (affirmative). I agree.

Jerry:

Yeah. People are going to be much more… And I hope they’re going to be much more health conscience. I hope that this introduces some good habits. Right? I think people take a bit of time to reflect and think about things like self improvement. Maybe they didn’t have the time to do before because I think some people staying home are going to realize like, “Hey, there’s this new hobby that I’ve always been wanting to do that I can do now.” Or, “Maybe I should drink less.” Whatever it is that they discover when they change their lifestyle, that there’s actually parts of this that are good, that they can take away and keep with them.

Stephanie:

Mm-hmm (affirmative). Except for the drinking lessening. I think that one’s going the wrong way.

Jerry:

Wait. I don’t know. I don’t know how some people are-

Stephanie:

Happy hour time keeps getting earlier and earlier. I’m like, I need to set up rules around this house. Oh my gosh. It’s only like two o’clock, what am I doing?

Jerry:

Well, I mean, another silver lining here is that I think people now have actually seen how quickly the environment can actually improve just with… And in a short period of time. Right? Because in the past I think it always seemed like this insurmountable thing to certain folks where it’s like, “Yeah, you know, we can recycle and do this, but we’ve been doing that for a long time and nothing has really changed. It’s actually been getting worse.” Right?

Jerry:

And then suddenly you take a step back and it’s like, hey, things change quickly. Right?

Stephanie:

Yeah.

Jerry:

So maybe it’s not as impossible as we thought. We just have to be deliberate about habits that we have and maybe where we spend our energy.

Stephanie:

Yeah. Yeah, I think sometimes a little shake up like that can be good for people and the economy. And good things could come from it. Even though there’s a lot of bad going on as well. I think, yeah, it depends where you’re looking, I guess. So when… Oh, go ahead.

Jerry:

Yeah, I mean, [inaudible] other wise it’s just all bad. Right?

Stephanie:

Yeah. No, everything can’t be all bad. There has to be something good out there. That’s what I’m hoping for anyways. So when it comes to outside of Touch of Modern, and more of the E-commerce industry as a whole, what destructions do you see are coming? Especially with COVID-19 now. We’re seeing some of that already happening. But what are you betting on in the future… Yeah, coming?

Jerry:

Well, I’m going to bet probably more on E-commerce. Right? I think people are going to build habits from shopping at home that are not going to go away. Right? I think certain things that maybe people use to only buy in person are like, hey, I can buy this at home. It’s actually a pretty decent experience, probably going to keep that habit even after this. And I think people are going to maybe focus a little more on preparedness for things than they have in the past. I think human nature is that you never think that these kind of outlier type of situations can happen, but they do. Be that once… Once in a century, I’d never think about it. But a person lives a long time. Right?

Jerry:

You may see a once in a century thing in your life. That’s probably going to happen for a lot of people. Right? And this is that thing for us.

Stephanie:

Yeah. Agree. It seems like there’s going to be a lot of new people coming online who never were online before. And it brings me to a point I saw on your website that I liked a lot is kind of meeting a consumer where they’re at. There’s two things I saw on your website that I thought would be perfect for a new consumer who doesn’t normally buy online. The first one was you have a toggle button on your homepage that says, “View as.” And you’re about to actually change how you view products on the page, depending on what you prefer.

Stephanie:

So I thought that was genius. Any insight behind that? Or any thoughts when you were creating that? Because I haven’t seen many websites allow you to toggle that view to what you prefer.

Jerry:

Yeah. It’s just like a preference thing. Right? Our experience on the landing page is we just drop you right into our offering. Right? It’s not like a landing page where you then click in and search and do all this other stuff. Mostly E-commerce is catered to search. Right? You just go on the page and automatically thing is you type in what you’re looking for. Right? That’s not really our experience. It’s there but it’s kind of secondary. It’s mostly a browse and kind of meander your way through our offering.

Stephanie:

Mm-hmm (affirmative).

Jerry:

We let people maybe pick the way they want to meander. Right?

Stephanie:

Mm-hmm (affirmative). How do people meander through 300 hundred things? Because I was going through and I wanted to look at all of them but after a little I’m like, oh, this is too many. And I kind of wished maybe like… What did I see? There was this screen that extended your screen. So you have your MacBook or something and you plug in a little cord and you have an extension of your screen, which is awesome.

Jerry:

Yeah.

Stephanie:

I’m like, that should have been shown to me first because I want to buy that right now. Whereas, what was the second thing? It was showing maybe like an expensive bottle of wine, which I’m like, oh, push that down some because I’m not fancy like that. How do you think about helping people get through these products each day?

Jerry:

Well, I think your first time experience is going to ne a little bit different than your second and your third time. About almost half of our users, and I’m not talking about customers but just people that visit, will actually come back at least once a week. And so-

Stephanie:

Wow.

Jerry:

Yeah. And so if you’re doing that and then our most frequent visitors are coming back every single day, then it’s not as hard to browse through everything. Because then you can browse through it and then you’ll hit a point where, okay, now I’m looking at yesterday’s stuff. Right? And so, if you keep up with it everyday then it’s not actually a ton of stuff.

Stephanie:

Mm-hmm (affirmative).

Jerry:

But for your first time, you’re looking at all the days that have accumulated in the past five days. And certain events will also extend beyond that. I think the first time experience is like, wow, this is a ton of stuff. And also because you probably want to click through every single thing. Right?

Stephanie:

Yep.

Jerry:

But after awhile you’re probably just looking for the things that catch your eyes. Or you’re just going to scan and be like, okay, that’s really cool. That’s really cool. But you’re not necessarily going to check out every single thing. Right?

Stephanie:

Yeah. [inaudible]

Jerry:

Also, on the mobile app, the scrolling screen is just much slicker and smoother too.

Stephanie:

Mm-hmm (affirmative).

Jerry:

I think you might just browse there. A lot of folks also will tell us that it’s just something that they peruse through when they’re waiting for something or commercial break or something like that.

Stephanie:

Mm-hmm (affirmative). The second thing I saw that I really liked, which I also haven’t seen… Maybe I’m just not on enough websites. I don’t know. But I was looking through… It was an about shipping section. And it showed a visual of what does your shipping status mean.

Jerry:

Yeah. Yeah.

Stephanie:

And it just… It showed everything from like, we place our PO, and than it goes to the supplier, and here’s what it means if you see… I don’t know the whole… I can’t remember the whole layout. But I thought that was genius showing it in a visual format. And I’m sure that probably brings down a lot of customer support emails. But tell me how you all are thinking about giving that transparency to the customer.

Jerry:

Yeah.

Stephanie:

And hopefully prevent a million a emails of, hey, where’s my product.

Jerry:

This is another product of our business modal. Or kind of what differentiates us a bit. We sell across all categories. Right? Meaning that we have to be able to accommodate all the categories. So it’s not like, a company that just sells furniture ships one way. A company that just sells clothing ships another way. Right? And so their customers go there expecting a certain experience. A company that sells everything needs to ship all the different ways. Right? So a customer might not know exactly what this shipping process is going to look like when you buy something because they may not realize… I mean it’s obvious now when I talk about it but if your company goes on a site, you’re going to expect shipping experience to be generally consistent. But for us it’s like, we’re going to ship furniture differently, then we’re going to ship clothing differently, and then we’re going to ship, you know, this cup, right?

Stephanie:

Yep.

Jerry:

And so for us it’s just more like informing the customer, this is what’s going to happen. This is what it’s going to look like. And this is what the different steps mean. For us, we found that more so than anything, they just want to know what’s going on. That it’s moving and… like internal. Yeah.

 

Stephanie:

How about when it comes to relaying the value of the product? How do you convince someone that something is really good? Because I don’t think I saw reviews on the website. Unless I missed them.

 

How do you… That’s usually the first thing I look for. Is it five stars? You know, I want to see if someone has the same kind of experience that I’m looking for. How do you tell someone something’s valuable without that?

Jerry:

Yeah. I mean, a lot of what we do is educating the customer. Right? Because a lot of these things they never heard of, they didn’t know it exist. I wish we could say we do an awesome job at it and we provide all these reviewed stuff but… And we vet the product. We’ll go and look at the reviews and we’ll test the product and all that. But it does take a leap of faith in the first purchase and maybe you get a learned trust after some time, that like we’ve done the research.

Jerry:

Because if you go and research these products you’re going to find that they’re pretty highly regarded.

Stephanie:

Yep. Which I think actually might be the modal that it’s headed is just show me one or two people at your company that I trust to review product, and I trust them. Because a lot of reviews, I mean, at least on other places… Marketplaces and things like that. They’re paid reviews. And so you go through and you’re like, well, I can’t trust 90 percent of these anyways. So I think it is kind of shifting towards just give me the one person that I can trust. Or the one company that I can trust to curate something for me. And I know if it’s coming from them, it’s going to be quality and good.

Stephanie:

Are there any big transformations that are going to be on your plate after the environment kind calms down? Or any big projects that you plan on starting or changing within your strategy?

Jerry:

Yeah. We’re working on shipping things a lot quicker. The reason being that a lot of our products do take a little bit longer because we have these various modals that we work with. And we found that when we can ship things more quickly people are generally way more happy and more likely to come back and purchase.

Stephanie:

Got it. How can you speed up the shipping for… when it’s a bunch of different, I’m guessing, retailers who all their own different practices? How can you kind of know that you can speed that up and make it all pretty uniform?

Jerry:

Consign the product. Right? So they will house it in our warehouse and we essentially act as their distribution center.

Stephanie:

Oh. Okay, cool. Tell me a little bit about that. Do you have to buy warehouses in different parts of California? Or how is that modal set up?

Jerry:

Right now our warehouse actually has a good amount of space. And we’ve actually developed our distribution system to fit with our model, right, which is that we run things in these short spurts. Right? And what’s cool about that is that things come in and they go out really quickly so we’re not sitting on mountains of inventory. I mean, we’re nearly inventory-less. We’re very inventory light. We don’t actually require that much space to run a lot of products.

Stephanie:

Mm-hmm (affirmative).

Jerry:

So right now, for the foreseeable future, it’s to keep it within our distribution center. It’s a long winded way of saying…

Stephanie:

Okay. Got it. How did you learn to do that? When I even think about shipping products to a warehouse and making sure everything goes well, how did you learn best practices around… Yeah, around all that?

Jerry:

Yeah. This is interesting because when we first started we were shipping our own products from day one. And so-

Stephanie:

From your house? Or from where?

Jerry:

From the house. [inaudible 00:41:45].

Stephanie:

That’s awesome.

Jerry:

… of just tons of boxes in the living room. And then when the FedEx guy came we would… The first day we just piled it in the lobby and our neighbors got really pissed at us for doing that.

Stephanie:

I can imagine.

Jerry:

So the second day, we knew when the person was coming and we just did like bucket brigade style where we just passed packages from our living room down to the… Basically we had our four founders there. And we would just pass it down, bucket brigade style, down the stairs as quickly as the guy could load it into the truck.

Stephanie:

Oh my gosh.

Jerry:

And then the first day we finally opened the office, we set aside half of it for fulfillment. And the reason why we did that was because we realized our model is just very different than a traditional pick and pack modal, which is what most 3PLs… What’s called a third party logistics provider. At least back then, they were mostly doing pick and pack type operations. And it didn’t really fit our modal and we realized that at a certain scale we’d have to bring it in house. It’s better to learn it now than to try to take it in when it’s already at scale and have huge disruptions in customer experience. So basically, we just started doing it at a really small scale and built our operations all custom to that. So our, kind of, back office technology is all custom. Right? So everything ties together and it suits us in a way that… If you went with a just a third party provider, it probably wouldn’t work as well.

Stephanie:

Very cool. Well, definitely have to get that picture from you so you can post it somewhere to show people because that’s… Yeah, a really fun story of starting out.

Jerry:

Yeah.

Stephanie:

What do you see for new people starting out, building their stores and all that? What is some advise that you give them? Or best practices or things that you did that you’re like, don’t do that, that actually worked out really bad.

Jerry:

So this probably goes back to your first question about the two businesses that we had before. We made some classic mistakes. Right? Which is, I think the big one is you build the whole thing and you spend like a year building it and then you think that one day you’re going to open and people are just going to come in. Right?

Stephanie:

Yep.

Jerry:

Then you start thinking, hey, maybe we just keep tweaking the product and eventually people will come. Right? Really all you’re doing is staying busy.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Because if the demand is not there, it’s not going to suddenly show up, almost like the world changes, right? And you would be at the right place at the right time. So it’s prove out the demand first. And then when the demand is there, you can take your time with the product. Right? It’s like, you don’t want to be in a place where you’re convincing yourself that the reason you’re not succeeding is because the product is not quite right.

Stephanie:

Mm-hmm (affirmative).

Jerry:

If there’s a real need for it you can come out with something that’s pretty minimal and just addresses the core need. And it doesn’t even have to run perfectly and be totally ironed out. And that will give you enough signal that there’s something there that people want. And then you can find it down the road and keep expanding your market to… [inaudible] but this is now more mass market. And so on and so forth. Right? Because the early folks, they want your service, whatever it is, so much that they’re going to put up a little bit with you in the early days of like not having it all totally together.

Stephanie:

Mm-hmm (affirmative). [crosstalk]

Jerry:

And so… Yeah. Yeah. You got to prove out the demand first before you totally refine the product.

Stephanie:

Cool. And what about when it comes to technology? How do you think about… It sounds like you guys did a lot of just in-house… everything. In-house logistics. In-house website stuff. What would you tell someone right now? Should they try and build things in-house? Or… Yeah, what are your thoughts on that?

Jerry:

It’s easier now to build anything in-house than it use to be. Right? Back then it was actually a little more difficult because a lot of the frameworks that are being used today were really fresh back then. Right? So people weren’t learning it in school. They had to teach themselves. There weren’t the coding bootcamps back then either. So engineers were still a little bit hard to come by. Now, resources are there and everything.

Jerry:

We were lucky because we did our own coding in the first versions of the site. It was me and Steven, our CTO. More him than me but we built the early versions of that and didn’t hire engineers for a long time. Maybe longer than… we probably should have hired engineers a little bit earlier than we did. But we got by with just two folks building stuff. Right? But you also learn a lot. You are kind of like more intimate with the product, even today, just because we have that history with it.

Stephanie:

Yep.

Jerry:

And I think one of the things that’s really important to us early on was the data ownership. Right? We don’t want to have all these different things talking to each other and not have a clear picture of what’s going on. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

We don’t want any black boxes. There’s things that if we don’t have access to all the data then we’re just going to cut that service and we’re going to build it ourselves.

Stephanie:

Got it. Very cool. Yeah. Great advice. So with a couple minutes left, we’re going to move on to… it’s called the lightning round. Brought to you by [Sales Force Commerce Cloud 00:47:37]. Sales Force Commerce Cloud. This is when I shoot a question over your way and you have a minute or less to say the first answer that comes to mind.

Jerry:

Mm-hmm (affirmative).

Stephanie:

Are you ready?

Jerry:

Okay.

Stephanie:

Dun, dun, dun, dun. We’ll start with the easy ones first and then we’ll end with the harder one. Sound good?

Jerry:

Yeah.

Stephanie:

All right. What’s up next for dinner?

Jerry:

Left-over Chinese food. Some more.

Stephanie:

Yep. What’s up next that you’re buying from Touch of Modern?

Jerry:

What am I buying next? Well, I’ll have to see what comes up next. It changes everyday so I don’t know yet.

Stephanie:

All right. Well, what did you just buy recently? Or what’s your most recent purchase?

Jerry:

My most recent purchase was, funny enough, it is a cast-iron rice pot from [Le Creuset 00:48:22].

Stephanie:

Okay. Have you tried it out yet?

Jerry:

No, it hasn’t gotten here yet. It was very recent. This was probably… couple days ago.

Stephanie:

Cool. What’s up next on Netflix or Hulu queue?

Jerry:

I actually don’t have either. I don’t even own [inaudible] TV. I don’t watch a whole lot of stuff, actually.

Stephanie:

Okay. Hey, that’s an answer. What’s up next in your travel destinations after the environment calms down a bit?

Jerry:

I think an easy one from California would be Hawaii. I like to go there to relax and it’s a relatively short trip. So I like to go there [inaudible 00:49:05]. Yeah.

Stephanie:

What’s your favorite island there? Have you been?

Jerry:

Yeah. I go to Oahu fairly frequently. I really like Kauai, I’ve been there once to do a hike.

Stephanie:

Yeah. That’s my favorite island with all the waterfalls there and the crazy hikes that-

Jerry:

[crosstalk] been to the weeping walls?

Stephanie:

Yeah. Yeah.

Jerry:

Yeah.

Stephanie:

Yep. Oh, yeah. I want to go back though. We were only there for a couple days and I feel like there’s so many different hikes and waterfalls and just things to see there. I mean, it’s… Yeah, like a jungle. It’s awesome. On to the hard question. What’s up next for E-commerce pros?

Jerry:

E-commerce pros. Hmm. Man. What’s next for the pros? I think, I mean, it’s going to be adapting to the changes in customer behavior that are coming out of this. Whatever that is. I don’t have a crystal ball for that one.

Stephanie:

Got it. Hey, that’s an answer. All right, Jerry. Well, this has been a fun interview. For everyone who hasn’t gone and checked out Touch of Modern, you should. It has really fun products on there. And yeah, thanks for coming on the show.

Jerry:

Thanks for having me.

 

 

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