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Creating a New Business Model For Fashion, with Omer Kulka, CMO of Kornit Digital

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Kornit Digital has always marketed itself as a developer of technology, which, in today’s world is pretty much what everyone says. In 2021, it seems like every company is either a tech company or a media company. So what is it that makes Kornit different from all the rest? Well, it starts with the fact that Kornit is creating technology that is more than just an app or a gadget: it’s developing tech to enable sustainable fashion production, which could have quite an effect on a $3 trillion industry. To achieve this end, though, means that brands have to start thinking and acting differently. Instead of supply and demand, it’s going to be all about demand then supply. 

Currently, 30% of fashion inventory is going unused and unsold. That negatively affects not just a company’s bottom line, the resources wasted in producing and then eliminating those items has a massive negative impact on the environment. On this episode of Up Next in Commerce, Omer Kulka, the CMO of Kornit, explained to me all the ways the company is working to bring new technology, a new business model, and a whole new way of thinking to the industry to start turning those negatives into something better.  And the change is coming sooner than you think, so if you want to be prepared, you’ll definitely want to pay close attention to this convo. Enjoy!

Main Takeaways:

  • Monetizing Trends: Everywhere you look, something or someone is going viral. For too long, it’s been next to impossible to monetize those trends, but that’s changing. By shifting to a demand and supply model, brands can create a system that allows them to meet the moment and deliver goods to customer that they want in the moment and then still be ready to deliver again when the next trend comes along.
  • Culture Eats Strategy For Breakfast: These days, if you’re not innovating and disrupting yourself, you’ll be out of business in the blink of an eye. The best companies in the world are always shifting gears and changing their skin to meet new demands. This takes a lot of strategy and preparation, but more importantly, it take great people and a culture where your employees are not afraid of change, they lean into it. 
  • The mash-up between physical and virtual worlds: Virtual fashion is fashion that doesn’t exist in real life — think video and computer games or even in the future on Instagram— and it is an exciting new opportunity for on-demand, sustainable fashion.

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

Key Quotes:

 

“If you look at our vision right now, our vision right now is, really, to shift the fashion industry to sustainable on demand manufacturing. And, we are working diligently on developing more and more solutions to actually enable that. So, if we started from the world of hardware, software and consumables, a lot of chemistry and printing and finishing of textiles in general. Now, we’re actually expanding more into areas that were not originally in our product offering. A lot of them, for example, are software related, more than anything else, really allowing to connect demand and supply in the new world of fashion, consumers and manufacturing.”

“In the last few years, what we’ve seen is that there’s a huge shift in the retail model of apparel fashion, specifically. And, that shift has created a demand for on demand manufacturing and on demand supply from a completely different place, not really from the design side of things. As I said before, if you want something unique, a one off, it has to be digitally made for you. So, it wasn’t from the design side and it wasn’t from the business model side, it was mainly from the need to reduce the risks of inventory to know how to, actually, monetize on trends.”

“We started, really, to shift and to change our role in the industry, I would say, and, really, instead of being a technology company from the outside that solves one little problem that may be very painful but is one problem, to really understanding the workings of the entire ecosystem of the industry and really to understand how we can enable a transition that is an industry-wide transition that is so necessary.”

“We’re a different animal every three years and, I will say, when you’re a different animal every three years, you need to actually reinvent yourself every two years and need to think about it every year.”

“When you buy online, you behave completely differently and your purchasing decisions are being affected by completely different things than when you go to a brick-and-mortar store or when you flip a magazine. So, for example, about 74% of purchasing decisions online are influenced by social media. So, suddenly, social media is actually calling the shots in what the trends are. And, what happened in the last few years is that the trend setting actually shifted away from the brands and the retailers to, I call it the power to the people. It’s more fashionistas, bloggers. And, if 2 or 3 years ago, it was still manageable because it was the really huge mega influencers that were making the trends, it’s not the case anymore. It’s out there.Then, what happens when you don’t control the trend anymore then, suddenly, it doesn’t work. I really don’t know what you’re going to buy. And, if we see what happened in the last few years, trends are getting a lot shorter and the number of adopters is getting smaller as well.”

“Companies right now actually over produce about 30% just in order to make sure that they don’t miss out too much, that they don’t run out of bestsellers and that they don’t get stuck with too many inventory items everywhere. Now, that 30% is a killer. It is a killer economically and it’s a killer environmentally. And, I think, this is where most of the problem lies right now and, I think, this is where the change is really required. So, If I said before that in the past, the people that went to on demand were really driven by a different business model, a unique design that is required. Right now, it’s more about the fact that the business model right now is not sustainable.”

“If you think about fashion not as what it is in the physical term of things, but what is the function that it plays in our life, what is the role that it plays. And it’s about self-expression and self-identity, then virtual fashion can do that for you in the virtual world where a lot of our existence is, actually, taking place.”

“We believe in infinite virtual possibilities but, physically, we make only what we desire. We don’t make anything else. And I think that this is where the exclusivity comes from. So, think about it? You just look at infinite possibilities, but they’re just out there in the virtual world, they’re not physically available in other places. It actually creates more exclusivity than what you think.”

“The DNA of us as inventors and disruptors is the same, but the scale and the places that we’re taking it are completely different than before. And, that is super exciting because, at the end, I think that … For me, it’s all about just how much impact you can make and how far you can reach with your impact. And I think that what we see right now is our impact is becoming more evident and clear to a lot more people and I think that we can actually manage to touch more and more people and affect more people’s lives.”

Mentions:

 

Bio

Omer Kulka is the Chief Marketing Officer of Kornit Digital, market leader in digital textile printing technology and the only solution enabling truly on-demand sustainable fashion production. Having held the position since July 2017, Omer is responsible for leading the marketing direction of Kornit’s on-demand digital textile printing solutions. Omer joined Kornit in 2011 with years of extensive experience in the semiconductor industry, holding positions spanning R&D to Marketing and Business Management. Omer holds a BSc in Computer Science, a BA in Philosophy and an MA in History and Philosophy of Sciences and Ideas from Tel Aviv University.


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Transcript:

Stephanie:

Hello and welcome back to Up Next In Commerce. I’m your host, Stephanie Postles, CEO at mission.org. Today on the show, we have Omer Kulka, who serves as the CMO at Kornit Digital. Omer, welcome to the show.

Omer:

Thank you. Thank you for having me.

Stephanie:

I’m very excited to have you on. We have been having a lot of fashion companies on over the past six months, so I think this will be a really nice conversation to hear where the industry is headed, what’s going on. So, yeah, maybe that’s a great place to start. Tell me a bit about Kornit Digital. Who are you guys and what do you do?

Omer:

Okay. So, at Kornit, what we do is, we’re developers of technology. We started with developing technology for digital printing on textile. That was always our forte. However, we’re actually expanding our offering to just enable on demand sustainable fashion production. So, if you look at our vision right now, our vision right now is, really, to shift the fashion industry to sustainable on demand manufacturing. And, we are working diligently on developing more and more solutions to actually enable that. So, if we started from the world of hardware, software and consumables, a lot of chemistry and printing and finishing of textiles in general. Now, we’re actually expanding more into areas that were not originally in our product offering. A lot of them, for example, are software related, more than anything else, really allowing to connect demand and supply in the new world of fashion, consumers and manufacturing.

Stephanie:

So, when was this shift made into focusing on fashion?

Omer:

So, I think it’s a transition, so it takes you a while. So, if we saw 10 years ago, I would say, if you look at who were our biggest customers, they were very big customers, very successful in each segments of fashion. And, most of them we’re not really in fashion but more apparel and most of them, actually, were built on unique business models. So, a lot of ecomm companies or a lot of apparel companies that went ecomm, in the business model, what was driving the need to do things differently and to use our technology. So, it means that if you want to personalize garments, for example, so you wanted to upload an image of some sort and then you wanted that, that cannot be made any way in a traditional way of making apparel.

Omer:

So, this is where our technology was really the best at. In the last few years, what we’ve seen is that there’s a huge shift in the retail model of apparel fashion, specifically. And, that shift has created a demand for on demand manufacturing and on demand supply from a completely different place, not really from the design side of things. As I said before, if you want something unique, a one off, it has to be digitally made for you. So, it wasn’t from the design side and it wasn’t from the business model side, it was mainly from the need to reduce the risks of inventory to know how to, actually, monetize on trends. And then, we saw that need for on demand manufacturing shifting from those unique, I would say, on demand ecomm niches to actually the mainstream fashion brands and retailers.

Omer:

So, that, I would say, started about 3 to 4 years ago. Apparently, when COVID came, things accelerated very, very heavily-

Stephanie:

Yes.

Omer:

… in the same segments and in other segments as well that saw that this is an immediate thing. So, I think that this is a shift that we started making in about 2017 is where we really started making that shift. But I think that in the second half of last year is where we really said we really need to to change the way we do things, the way we think and our position in the market. So, if before COVID, it was all about shifting a segment of the industry into on demand and if we thought that our role was, let’s position ourselves in the best way to enjoy the trends that we actually identify in the market. I think that at the second half of 2020, we actually identified that the market is changing and shifting so fast that we need to actually have a different role in it.

Omer:

So, instead of just positioning ourselves in the best way possible to enjoy the trend, I would say, we understand that it’s not only an opportunity for us, but also, I would say, an imperative for us to actually help the industry as a whole to transition.

Stephanie:

Yeah.

Omer:

And this is where we started, really, to shift and to change our role in the industry, I would say, and, really, instead of being a technology company from the outside that solves one little problem that may be very painful but is one problem, to really understanding the workings of the entire ecosystem of the industry and really to understand how we can enable a transition that is an industry-wide transition that is so necessary.

Stephanie:

Yeah. What’s so amazing about your guy’s company is, you’re not a small company, I think you have what? Over 500 employees at this point or maybe even-

Omer:

Over 800 employees.

Stephanie:

800? Okay. Over 800 employees thinking about this big, massive company that had always been doing one thing and then completely disrupting yourself and saying, “Not only am I just a tech company now, we are part of the fashion industry,” and making yourselves a leader in that industry and being seen as that now. What has it been like taking your entire org and shifting the mindset around who we are and what is the culture about and what are our goals? Because to me, they’re so different than what they were maybe five years ago.

Omer:

Yeah, that’s an excellent question. I don’t think it has been, it still is. Yeah, it’s a major transition. Again, in some ways, it was very, very difficult and it still is. In some ways, it’s not as difficult for us. In a sense, we’re disruptors, but we’re from a technology perspective. It’s true. And sometimes, as a developer and R&D and technology, you look at things really narrow and you try to solve problems one at a time.

Omer:

So, when COVID hit and everybody was taken aback and it’s like, “Okay, what’s happening here?”, and we’re sitting and we were devising plan A, B, C, D, E, F, G and they became irrelevant even faster than they were from when we’re actually managing to define them, it was a scary moment there. But then we said, “You know what? Hey, let’s breath deep for a second. We’re disruptors. We feel comfortable in this environment. This is an environment of disruption and, actually, we’re happy in it. So, we’re good.”

Omer:

So, I think that need for a change and that capability to change was in our DNA to begin with, even from the numbers. We’ve been growing the last 8 or 9 years for about 24% CAGR top line. That means that we double our revenue every three years.

Stephanie:

Yeah.

Omer:

We’re a different animal every three years and, I will say, when you’re a different animal every three years, you need to actually reinvent yourself every two years and need to think about it every year. So, it’s what we do all the time, but, yes, the change that we started last year is a much bigger change than it was before and we’re a lot bigger now than we were. So, yes, it is a lot more challenging but it’s a lot more exciting than that as well. And I think that the excitement and the belief in the vision that we have, I think, this is what makes the transition possible in a company like ours.

Omer:

We believe in it, we truly do. And, it’s not only a management team, really, it’s a vision that we live by and we actually do things to make it happen. And I think that is really the force behind it. There’s this phrase, I’ll probably get wrong, but it’s like culture eats strategy for breakfast or something like that-

Stephanie:

Yeah, yeah.

Omer:

… and it’s true. So, we have the strategy and it takes courage to change a strategy and take a full company going in a different direction, but it’s about the culture behind it. If you don’t have it, it doesn’t work. And I think that, really, it’s about the values behind it. We really believe that we’re making an impact for the better. We really believe that we’re making things better and I think this is what’s driving people and allows us to drive this change.

Stephanie:

Yeah, yeah. Really cool. So, when thinking about the supply and demand model, I want to highlight the problems and what the industry has looked like up until now. I know you’ve, in the past, mentioned that it used to be, you would have inventory, you would have supply and you’d have to spark up demand and it’d be really long lead times. Maybe when a customer would actually get something from when they would, maybe, see it on the runway. So, I want to highlight a bit more of what did the industry look like and where is it headed now with you guys? What will the world look like right now?

Omer:

Yeah. So, I would say the classic model of fashion is, basically, supply and demand. So, what you do is, you design something and then you make it. But it takes a very, very, very long time till it hits the street and the stores. And, there’s no way that I will be able to know what you want to buy a year from now. Now, just so you’ll understand, average time is month, year, a year, 6 to 18 months. It really depends on who you are. Of course, fast fashion is faster but, as a general flow of things, it’s 6, 9, 12 months. So, I actually design something, but you will be able to buy it in a year’s time.

Omer:

Now, there’s no way I will know what you’re going to buy. So, the only way for me to make that model work is to create the demand when my items actually are getting closer to the store. And that was how it worked, basically. It still does, by the way, in most areas of the business right now. So, what happens is that, suddenly, flowers, purple flowers, for example, is the hit of the season, right? So, I make the trend, I do marketing and you see it in all the magazines and the celebrities and the models and everything. And it looks really, really hot and hip now but, actually, those purple flowers were designed a year ago. But I make the trend now and then everybody buys it.

Omer:

Now, what happened in the last few years is that people started buying online. And, when you buy online, you behave completely differently and your purchasing decisions are being affected by completely different things than when you go to a brick-and-mortar store or when you flip a magazine. So, for example, about 74% of purchasing decisions online are influenced by social media. So, suddenly, social media is actually calling the shots in what the trends are. And, what happened in the last few years is that the trend setting actually shifted away from the brands and the retailers to, I call it the power to the people. It’s more fashionistas, bloggers. And, if 2 or 3 years ago, it was still manageable because it was the really huge mega influencers that were making the trends, it’s not the case anymore. It’s out there.

Omer:

Then, what happens when you don’t control the trend anymore then, suddenly, it doesn’t work. I really don’t know what you’re going to buy. And, if we see what happened in the last few years, trends are getting a lot shorter and the number of adopters is getting smaller as well. So-

Stephanie:

Yeah, it’s like micro trends popping up. Yeah.

Omer:

Exactly. And they pop up and they disappear and, geographically, they’re completely dispersed. Although, for example, sometimes if you look at the digital sphere, they’re very closely located. Because if you and I follow the same trend, then, hey, we both want it, right?

Stephanie:

Yeah, we’re watching the same videos-

Omer:

Right now.

Stephanie:

… even though you’re in Tel Aviv and I’m in Austin.

Omer:

I’m in Tel Aviv, you’re in Austin-

Stephanie:

Yeah.

Omer:

… and if I’m a brand and I want to monetize on that, because we’re going to move on and in a week’s time-

Stephanie:

Yeah.

Omer:

… then we have to make sure that you get in on Austin and I get in to Tel Aviv in the timeframe that we have to do that. That is impossible for the existing model to actually operate. In order, actually, to overcome that, there is about 30%, 30, 30% of overproduction that is embedded within the model, right?

Stephanie:

Mm-hmm (affirmative).

Omer:

So, companies right now actually over produce about 30% just in order to make sure that they don’t miss out too much, that they don’t run out on bestsellers and that they don’t get stuck with too many inventory items everywhere.

Omer:

Now, that 30% is a killer. It is a killer economically and it’s a killer environmentally. And, I think, this is where most of the problem lies right now and, I think, this is where the change is really required. So, If I said before that in the past, the people that went to on demand were really driven by a different business model, a unique design that is required. Right now, it’s more about the fact that the business model right now is not sustainable. Okay? Just to give you a very simple example, this shirt right now, a cotton T-shirt, in order to make this shirt, you need to use about 2.5 tons of water.

Stephanie:

Wow, that’s a lot of water.

Omer:

Yeah, yeah.

Stephanie:

Especially if you have 33% more than you actually need.

Omer:

So, every shirt that was made in order to try and balance things out, this 30% overproduction just creates this huge pollution. So, I use all these resources to get things into the market that nobody needs and it fuels that cycle of overproduction, over demand and the cost is just humongous. Economically as well, right? People get stuck with unsold inventories which is what actually created the, not less than a collapse, I would say, of the retail model and the retailers in the last three years or so. So, it’s unsold inventory and it’s excess production. It is really killing our planet as well. So, this is where the major problem lies.

Omer:

Now, if we look at how can we do things differently, this is where the on demand comes into play. What we’re advocating for is, we’re advocating for on demand sustainable manufacturing. Which means that instead of supply and demand, you actually shift the model to demand and supply. So, what you do is, instead of trying to sell what you already manufactured, you’re actually manufacturing what you already sold.

Stephanie:

Yup.

Omer:

Now, that works when you completely change the production model behind it. Because right now, the way things are produced, they’re produced in hubs, in places very, very far away. By the way, the reason why they are there are not very good reasons. In the past, we’ve-

Stephanie:

Is it just because of cost, maybe? I’m in Austin, but I’m going to outsource to China and then the order is going to come in, it will be in China, it’ll maybe end up in, I don’t know, Florida and maybe get back to Austin eventually.

Omer:

Exactly. May be two reasons, cost of labor and, in the past, now it’s running out of steam, that working assumption, it was also because of sustainability standards and regulations. It was easier to do it there because it’s very polluting. And, in California, nobody’s going to allow you to pollute any water, so you can’t do it there.

Stephanie:

Wow.

Omer:

So, it was pushed to the farther corners of the earth. It’s going to be manufactured there and shipped here. What we’re doing right now is we’re advocating something completely different. Instead of manufacturing where it’s easier or cheaper to manufacture, instead of creating a supply chain, let’s create an on-demand supply matrix. So, let’s produce where the consumers are. And, we all think that this is impossible because consumers are everywhere. It’s true, but in about 20 cities around the globe, you actually cover about 80% of the demand. And, what we’re advocating for is, actually, shifting forward the production creating, obviously, sustainable production mechanisms because it has to be.

Omer:

And, instead of having this huge hubs of overproduction and then shipping it over and trying to sell it, we actually create a matrix of sustainable on demand production closer to consumers. So, when you actually go online and choose something, you instigate an order that will be manufactured and produced for you specifically and will be shipped to you.

Stephanie:

And is Kornit the one that’s having all these hubs? Or, it seems like, also, a brand can come in and buy one of your guys’ big printers, I guess, if they can afford it. Or, maybe there’s hubs set up, too, or how does it actually work?

Omer:

So, this is a part of our transition as well. So, in the past, for us, it was all about selling our technology and our equipment because this is how we made money.

Stephanie:

Yup, yup.

Omer:

We developed technology and then we sold it and that was our business model. But right now, as I said, we’re really trying to make that more of a viable solution for many other people. And, that change, we actually created a completely different business offering and product offering. And, what we’re trying to establish right now is we’re establishing a global fulfillment network of our customers. So, we’re actually creating an overlay of a network that connects demand and supply. We have our own customers and we actually create the demand and we pull this demand and we route it smartly. We have smart routing, again, based on who you are as a consumer where it’s best to be produced and this what we’re doing right now.

Omer:

So, in a sense, we’re moving the model from fast fashion to fast fashion. I call it fashion as a service.

Stephanie:

Yup, yup.

Omer:

And I think that that is a very appealing model, also, for brands. So, most brands are not vertical and, as much as the concept and the model is actually very alluring to them, they will not start investing in production mechanisms. It’s not what they do. They know how to design, they know how to market, they know how to sell. So, we’re actually creating an infrastructure of a global fulfillment network that will be able to provide that as a service. Again, that also means that you actually lowered the entry barrier for designers. So, you have to also-

Stephanie:

Yeah, anyone can now enter the game and be able to print out a few things and not have to actually own a big piece of tech that, maybe, they’d have to be fully into a business to even be able to afford that back in the day.

Omer:

Exactly, exactly. Right now, if you want to produce your own line of clothing, think about you it, you have to actually create everything and then try to sell it. So, you have to put a lot of risk in the game and if you’re not really sure with it, you can lose everything. And, right now, what you do is actually risk free. So, all that you need to have is your inspiration and your creativity and then you can start rolling your own business.

Omer:

In a sense, and this is a parallel that I really like actually. We talked about the problem that the retail model in apparel and fashion is facing in the last few years. So, a very interesting statistic is this. In the last few years, the speed in which we saw apparel items moving from brick-and-mortar to online, is only paralleled by two similar phenomena that we’ve seen the past. So, one was in the mid ’90s with Amazon and books. And, the other one was in the mid 2000s with music and iTunes. And, I think that music and iTunes is probably a very, very good parallel. Because what happens with music and iTunes, it created a full digital transformation of the music industry. And not only did it change the business model, right?

Omer:

So, think about recording companies, it completely changed their business model. One is like the full album based on two hits, then it was just every song was 99 cents and now it’s streaming. So, it’s a completely different shift. But to connect to what we just talked about, it’s not only about that, it completely democratized music. Because it completely changed the rules of what is a hit, who decides what is a hit, who is going to be a published artist? It’s not someone in an office somewhere that decides that. No, I can decide it for myself. If I think that can be a published artist, I publish. And, if the public likes it, then it’s out there and it’s great.

Omer:

So, I think that this is the shift that we’re going to see in the fashion industry as well, which is going to completely change, I would say, the landscape of fashion, I think. The players. Who’s going to be a player in the fashion industry and what is going to be the definition of that.

Stephanie:

Yeah. Well, just, I mean, super exciting when you think about all the boutiques and stuff who have really amazing fashion and trends there that you wouldn’t find anywhere else. I mean, they have that everywhere here in Austin where you walk into stores and you’re like, “Wow, how do more people not know about you?” It definitely is giving an opportunity to a lot of people.

Stephanie:

I’m sure you guys see a ton of stuff behind the scenes of people coming online and selling their things. What are some, maybe, newer trends that you’re seeing pop up over the last six months with some brands or creators? I know you also work with Amazon and they’re an investor and you guys. Tell me a bit about what you see changing right now that’s a bit of a surprise to you, maybe, or just exciting to watch.

Omer:

So, for me, I always like the place where things can mesh up, in a sense. Well, in our industry, no pun intended, but it’s in the seams, right? It’s where the most interesting things, I think, take shape and happen. And, probably one of the most interesting trends that I see right now is that mesh up between physical and virtual and to see where virtual fashion is going and how it is going to connect to the physical world. I have to say it was something that was a little difficult for me to grasp at the beginning. At first, it was like, “Okay, what’s going on? What does it mean that virtual fashion?”

Omer:

So, everybody’s talking about virtual and digital and, many times, this means that I bought something online. But I don’t mean that. I mean that virtual fashion is actually fashion that doesn’t really exist in real life. And, we’re starting to see these collaboration between design houses and gaming developers. So, you start to see fashion in games, in video games, computer games and it’s a very interesting concept. So, again, at first, I was like, “I’m not sure where, how, why.”, but then clicked and I really understand it. And when I think about on demand, sustainable manufacturing, it’s on demand sustainable manufacturing. This is on demand sustainable fashion.

Stephanie:

Because you never get it, there’s nothing there.

Omer:

It is there. It’s fine, you know? Think about it-

Stephanie:

To look at but, I mean-

Omer:

No, think about the following application. So, a lot of us are remote anyway and we all like to post pictures of ourselves. And, let’s say, you want to post a beautiful picture of yourself wearing this most amazing dress.

Stephanie:

Okay. I’m-

Omer:

[inaudible] that dress.

Stephanie:

Yeah.

Omer:

I don’t think so.

Stephanie:

Okay, I actually see that now. Because a lot of people are like, “Oh, I just want to look good in this picture and it is-

Omer:

And then, I’m [crosstalk] something-

Stephanie:

… a very heavy Instagram world right now.

Omer:

… specifically for you and it’s going to be an amazing-looking dress, and you’re going to look amazing in the picture and that’s it. And it’s a completely virtual world, you’re real, you’re physical, the dress is virtual. So, I think this is a very, very interesting place. It’s going to be very interesting for me to see where it goes. Because I think, again, we always think about retail as omnichannel, but it’s not about retail, it’s about us. We’re omnichannel right now, right?

Stephanie:

Mm-hmm (affirmative), yeah.

Omer:

So, we’re speaking right now, you don’t know if I have legs, for example, I do.

Stephanie:

Thank you for clarifying. I was wondering this whole time.

Omer:

Yeah. But it’s completely virtual.

Stephanie:

Yeah.

Omer:

So, there is a layer there. And, if you think about fashion not as what it is in the physical term of things, but what is the function that it plays in our life, what is the role that it plays. And it’s about self-expression and self-identity, then virtual fashion can do that for you in the virtual world where a lot of our existence is, actually, taking place.

Stephanie:

Yeah.

Omer:

So, for me, that’s probably one of the most interesting trends that I see right now and it can take different shapes and different ways. There are other trends, of course. Just seeing, it’s a forced marriage, I would say, brands and marketplaces, they were never good friends. Now, they have to be good friends. So, I think there are a lot of things that are changing and I think they’re changing for the better because I think that they change for different reasons that will have to make people work better and do things better. I think that sustainability and the need for transparency, this was a big shift that took place in during COVID.

Omer:

So, suddenly, everybody is like, “Okay, there’s a crisis here and I want to know what’s behind it.”

Stephanie:

Yup.

Omer:

And I think that the demand of consumers right now for transparency and traceability of what they wear is probably, again, one of the most important things out there as well. And, again, it’s that combination between sustainability and the fashion that I’m wearing. And I think that is also a huge trend that will, probably, change the industry very, very dramatically. Again, a parallel that is interesting to me in that sense is probably the food industry about 20 years ago. That, suddenly, people wanted to know what’s in it and they start to look at the ingredients and what happened to the ingredients. From the back end of whatever it was in very, very small font, it became at the front, large fonts. And, I don’t think about what you can buy at McDonald’s right now. So, it’s fast fashion, but it’s not … Fast fashion. Fast fashion and fast food, by the way, actually has some parallels with [crosstalk].

Stephanie:

Very similar.

Omer:

Yeah. So, fast food but not necessarily junk food, you can get salad. So, that shift, again, I think it’s going to change the industry as well. So, I think, yes, there are some very interesting trends that we see right now that are definitely going to change fashion. And fashion is not an industry that is just out there, it’s something that touches everybody.

Stephanie:

Yeah, yeah.

Omer:

[inaudible]

Stephanie:

What’s exciting about the time that we’re in now, too, is that you can actually see all the data into the supply chain. We had on an executive from Avery Dennison a couple episodes back, and he was talking about how they can add a digital ID to every part of the entire supply chain-

Omer:

Yeah, yeah.

Stephanie:

… down to the smallest piece of that item. And, people actually want that now. They want to understand like, “Hey, what’s happening to my Adidas shoes after the fact? Where is it going? Is it actually getting reused? Is it in a new pair of shoes?” And, being able to actually show that from a data perspective seems like, now, we have access to things that we just didn’t have a decade ago. And so, it’s even improving people’s excitement. Now they can see it and they want to see more of it and know what’s happening with their items, which is really cool.

Omer:

Yeah, absolutely. And that obviously opens up the whole concept of circular economy which is, also, I think, a big thing that fashion will have to just start playing in. Because a lot of the stuff that we wear is very short lived and that’s it, and then it’s gone.

Stephanie:

Yeah.

Omer:

And I think that we have to rethink how we do that as well. So, again, this infrastructure of technologies that allow us to monitor, to identify, to get the data is crucial to actually make that work as well. Yeah, absolutely.

Stephanie:

Yeah, I agree. So, the other thing I want to touch on was we talked a bit earlier about you guys shifting to become part of the fashion industry and I want to hear more about how you guys did that. Earlier, before we were recording, you were talking about fashion shows and being a part of that. And I just wanted you to touch a bit on that because I thought it was very interesting seeing how you guys are playing in the industry now and becoming a leader and actually having events. So, if you could talk a bit more about that, that’d be cool.

Omer:

Yeah, yeah. I would gladly talk about that because it’s a super exciting transition that we’re taking right now. So, yeah, it started, actually, at the beginning of this year when we actually joined forces with the producer of the Tel Aviv Fashion Week. And, it was a very interesting conversation at first. So, at first, actually, we came at it from a completely technological perspective and we said, “Listen, we have some very, very new exciting products that came out this year. And these products can actually produce a lot of different applications that were not out there before.” And, we were thinking, “Okay, what can we do with it?” And we said, “Let’s start joining forces with designers. They’ll don’t know what to do with it. We’ll just create the tools and they’ll play with it.”

Omer:

I said, “Okay, let’s try and do that.” And one thing led to another and we said, “Okay, we need to have more designers around us.” And we started getting closer to the designer community but, again, from that perspective of let’s get our technology really enable creativity more than anything else. But then, we had the conversation about Tel Aviv Fashion Week and, Motty Reif, who is a producer of Tel Aviv Fashion Week, he’s a known fashion persona here in Israel. And, when I first met him, he told me something and this when it clicked.

Omer:

He told me, “Listen, I’ve been in fashion for, I don’t know, for 30 years. But fashion is not about nice clothes, it’s not about that at all. It’s about a platform that reaches every each and one of us in very, very intimate places. And, this is why it’s a platform that can really convey a message.” And through that, this is where we clicked and we understood that there is a platform here that we can actually convey a message and then we can actually communicate values that are important to us that we think are important to other people as well.

Omer:

Now, Tel Aviv Fashion Week is actually the first place where they started breaking the concept of the model of beauty. So, there are models of different genders, ages, sizes and it has been that way for the past 5 or 7 years already. So, this is when we said, “Okay, listen. Let’s do it together. Let’s make this year’s Tel Aviv Fashion Week all about sustainability from the social side of things but, also, from the environmental side of things.” And, that’s when we started to do it and we created full collections for the fashion show in something like 2 to 3 weeks, which usually takes about 5 to 6 months.

Stephanie:

Yeah.

Omer:

And, that was possible, again, because of the unique capability that our technology enables to produce fashion really on demand sustainable. So, you can do it close, you don’t need any other processes outside of it, so it’s completely standalone and you can do it. And it started there, which was a big success, and it was a huge transition for us. Think about it, we develop systems. We actually make ink, we have an ink plant and, suddenly, we’re on the runway. It was a mind-blowing transition to all of us.

Stephanie:

To think about it, usually you would see people on a runway and you’d be like, “Oh, wow. When can I actually buy that?” And it’s a year later and I’m like, “Oh, am I still even interested in that? I remember that from a long time ago and now it’s just starting to come to market. The only person who was wearing it was a Kardashian because they knew the designer.”

Omer:

Yeah, and now-

Stephanie:

So, it’s time to change that mindset now.

Omer:

Exactly. And what happened there is we said, “Okay, what do we take?” So, we take the long cycle and we shorten it. Not only the production to the show, but from show to store is going to take you days. So, instead of the year, you see it on the runway, you can buy it next day. Online, on demand, you can buy it, it will be made especially for you and sent over. And, that is the concept behind it. We joined forces with a design group called threeASFOUR in the New York Fashion Week that took place about three weeks ago.

Omer:

So, again, they are very, very creative and for them it’s all about stretching the technology to the limits and see how fashion and technology can meet in very unique and inspiring places and there as well. So, there was a full collection on the runway made in a matter of weeks. And then, on that we build a unique collection that is going to be available on demand only. So, you see it on the runway, we translate it to on demand collection that you can buy online and that’s it. So, that was the second step and the next one is we have a huge event that we are actually having in LA in the first week of November. It’s going to be the Kornit Fashion Week. We’re going to debut that in LA. The concept behind it is to create an alternative fashion week that is going to be based on values of sustainability from the social side of things and from the environmental side of things.

Omer:

So, things are going to be made sustainably from the environmental side of things, they’re going to be made locally and they’re going to be available from runway to commercialized goods that can be sold, again, in a matter of days instead of you see it on the runway and then you meet it at the store in the next year. So, it’s going to be a big debut, it’s going to be the first week of November in LA and it’s going to be an amazing event. And, again, the idea behind it is how we can really create an impact that is much larger than ourselves and can really help an entire industry really transition into a place where it needs to go and needs to be.

Stephanie:

Cool.

Stephanie:

So, that’s amazing. I want to hear a little bit, too, around … There’s a big movement around exclusivity, you see that with scarcity and NFTs popping up being really big. And I want to hear how you guys are thinking about that around this industry where, now, you’re able to print things quickly, have them when you want. It seems like, now, anyone can access this technology, any brand and it actually takes away from that exclusivity and scarcity method that many have relied on. So, how are you viewing this trend right now that, maybe, isn’t totally associated with fashion but I feel like you guys are looking outside your industry for other trends and maybe you’re thinking about it?

Omer:

Yeah. Well, first of all, I would like to differentiate between scarcity and exclusivity because it’s not really the same thing. Well, there is derivative there. First of all, what we believe in, we believe it’s a big difference between physical and virtual here. So, we believe in infinite virtual possibilities but, physically, we make only what we desire. We don’t make anything else. And I think that this is where the exclusivity comes from. So, think about it? You just look at infinite possibilities, but they’re just out there in the virtual world, they’re not physically available in other places. It actually creates more exclusivity than what you think.

Omer:

So, first of all, it actually enables complete exclusivity because you can actually customize or personalize whatever you want. Okay? So, co-creation, the entire concept of co-creation that me, as an end consumer, can co-create my unique apparel is something that is embedded within this model, actually. Actually, most of our customers do personalization and customization. So, that actually allows for hyper-exclusivity. You can make your own thing and it will be made for you.

Omer:

But I think that it actually opens up a place for more exclusivity as well, because when we buy at the same store and there are only 10 items there, the chances of us actually getting the same item are pretty high. When you go to a store, a high street store, it’s trendy and you buy the trendy stuff and then we end up at the party wearing the same thing.

Stephanie:

Yup.

Omer:

If I actually choose from an infinite, theoretically, an infinite menu of virtual items, those chances are getting very, very slim.

Stephanie:

Got it, okay.

Omer:

So-

Stephanie:

So, instead of being at an H&M where you’re looking at something that there’s only five left but you’re like, “Well, there’s always H&Ms around. Other people are definitely buying this T-shirt.” You’re saying, now, there’s just way more items that you can still have a small amount of quantity, so then everyone is actually wearing their own thing and you’re never going to run into someone with the same T-shirt.

Omer:

Yeah, yeah. And, again, you can always run the exclusivity as you want.

Stephanie:

Yeah.

Omer:

So, you can always create a limited edition. The fact that I can actually manufacture it again doesn’t mean that I have to. So, think about it. It’s always one by one. When you want it, somebody will produce it for you. When I want it, somebody will produce it for me. So, again, it doesn’t conflict in any way. In a sense, it actually gives you more opportunities for exclusivity in creating unique and different collections.

Stephanie:

Cool, yeah. I love that you’re able to control what you want to do with it and lean into that trend or not if you don’t want to. That’s great. All right. So, the last piece I want to hear is what are you most excited about around Kornit Digital? Where are you guys headed over the next 1 to 3 years that you’re excited to see come true?

Omer:

So, it’s definitely that transition that we’re talking about. So, we’re completely changing who we are as a company. So, I think that the DNA of us as inventors and disruptors is the same, but the scale and the places that we’re taking it are completely different than before. And, that is super exciting because, at the end, I think that … For me, it’s all about just how much impact you can make and how far you can reach with your impact. And I think that what we see right now is our impact is becoming more evident and clear to a lot more people and I think that we can actually manage to touch more and more people and affect more people’s lives.

Omer:

Again, it’s all about the core values and I truly believe that we’re transitioning an industry to a better place. And to see that taking shape and to see that real categories of everyday life that people like us are actually enjoying and using are changing for the better, that, for me is the most exciting thing. And it’s a journey, it’s not an easy task. And, again, it’s always easier said than done. Even with the technology and the capabilities and everything is out there, it’s not that fast that that entire industry is moving in a different place and a different direction. But I think that, for me, that’s the most exciting because I actually see it right now and it’s been a long journey.

Omer:

And then, you said, it’s been years. For years, we actually advocated for that change. But seeing, right now, the acceleration and how things are shifting, for me, super exciting. And, it’s funny, I had this conversation a few weeks ago with one of our board members, actually, and he asked me, “Listen, Omer, do you really that you guys can actually change the supply chain? Do you think that the supply chain of this entire industry is going to change?” And I told him, “Yes, absolutely. Why not?”

Omer:

And, I told him a story about a conversation I had with a gentleman that was the COO of one of the biggest house of brands in the fashion industry, a multibillion-dollar company. And, he told me a story about his biggest project when he joined the company and that big project was in the ’90s. And, that project was to shift production from the US to China. And he told me, “Listen, it was a nightmare. There was nothing there. There was nowhere to produce, no skilled labor, there were no raw materials. There was nothing there. We couldn’t do anything.” And, that was in the ’90s. So, yes, it’s a long time ago but not that long time ago. And I was like, “If, in the ’90s, when somebody tried to manufacture fashion in China, it was a nightmare for them because there was nothing there. Then, yes, hell yes, we can change the supply chain because things are moving a lot faster these days than-“

Stephanie:

If they can do that-

Omer:

… “in the ’90s.”

Stephanie:

… you all can do anything.

Omer:

Yeah. So, if back then, they can actually shift and, right now, for us, everything is made in China. So, it’s clear that it was always there and always has been, but it’s not.

Stephanie:

Yeah.

Omer:

So, yes, I definitely think that in 5, 10, 15 years from now, if you look a little further, not 2, 3 years. That 2, 3 years you can shift things around, but not an entire industry. But yes, I definitely think that 5, 10, 15 years from now, we’re going to see a completely different model of manufacturing, how fashion is made and how fashion is serving us as end consumers and how it serves us as citizens of the planet differently. And, for me, that’s the most exciting thing about it. It is that really be a part of something that is a lot bigger than us and making a change for the better.

Stephanie:

Yeah, I love that. That’s a perfect spot to wrap it up. Omer, thank you so much for hopping on here and hanging out. Hopefully, I’ll see you at the fashion show in LA-

Omer:

Yeah.

Stephanie:

… but if not, where can people find out more about you and Kornit Digital?

Omer:

Yeah, look us up on the internet. Kornit Fashion Week is where you will find our platform. [inaudible] platform for fashion weeks that starts in LA. That’s it.

Stephanie:

That sounds good. Thanks so much, Omer.

Omer:

Thank you, Stephanie.

 

Episode 153