.png)
Jack (00:00)
Every time I talk to somebody who's been through it once or twice, has a few kids, they're always like, not forthrightly recommending it. They're like, you know, are you sure? Be sure before you do it.
Jeremiah (00:00)
Yeah. I think it's fair, like, be sure, be sure you actually want kids, I will say it is great. Like, it's an incredible - It's hard, but it's not like, I think it's totally worth it. So I'll just say that. But Zach, you were in New York. was your favorite part of New York?
Zach Murray (00:30)
I mean, my general favorite part is it's just like, if you leave the office late and you look up at buildings, the buildings are still full of people working. always said that like New York is a bit of a masochistic place to live, but if you're surrounded by a bunch of other people that feel the same way as you, there's like no negative emotion associated with it. ⁓ whereas here, I don't know, like you'll go to a dinner late or something.
You're like, you wouldn't working until now where it's like there, there's none of that. And so in a weird way, which is the way that I kind of like to live my life, it almost like supports it. And so it also doesn't feel as bad or like, I think the worst thing is like you're doing something, you're not sure, certain of if it's the right thing and then someone questions it or something. It's like, that's not helpful at all. so I like that's the thing I like the most about, about New York. and then I also just like how at any given time you can have the best of pretty much anything, whether it's like restaurants or even, I dunno, it was like randomly the one night I like worked pretty late.
And I was like, like, kind of want to get into like sim racing, ⁓ as like, as like a thing. And I looked it up and it was like, yeah, there's a sim racing cafe open at 11 PM. And it was like the best. And it was like, okay, like, it was like three blocks away from me. And it's like, where else in the, in like the world, can you have like a random thought and then have it like at your sort of fingertips and so that I just, yeah, I really, really like.
Jeremiah (01:56)
Yeah. Manhattan is wild. that like, like you're saying, like everything is so close. Like anything you want, you can just walk to. Yeah. ⁓
Zach Murray (02:04)
Like multiple versions of anything you might want to. it's, here, if I want to go grocery shopping, it's like, I have a very specific type of grocery store that I like, and I need to get in my car and like, go there. But there it's like in any neighborhood, there's a really good grocery store and there's a sweet green and there's a, you know, so it's like, it's not even like it has everything. It has everything multiple at a convenient location. So it's like, it's solid, but, yeah.
Jeremiah (02:29)
Yeah, really. Do you know the population?
Jack (02:30)
I feel like cities get a lot of stick. They get a lot of criticism, but no one taps on the abundance piece. is a place of super abundance. Yeah, sure. It can be relatively expensive because the supply of space is low in relationship to how many people want to be there. But there's a reason that so many people want to be there,
Jeremiah (02:50)
Yeah, Zach, do you know how much higher the population density is of New York than Toronto?
Zach Murray (02:54)
Oh, like, don't exactly have no idea, but just like anecdotally, like much
Rishabh (03:01)
Jeremiah, it's so nice to see you. Dude, you got that you got that three kid hair
Jeremiah (03:05)
I know I was just talking about how I need a haircut but I don't have time. So, just gonna roll.
Rishabh (03:10)
Man, that's amazing.
Jack (03:13)
Before you jumped on Rashad, we were talking about how much abundance there is in New York.
Do we want to find out the population of New York versus Toronto?
Zach Murray (03:24)
Okay, well the population density difference between New York City and Toronto. So population density in Toronto is 4,800 people per square kilometer and in New York it's 10,800 per square kilometer. So it's more than double.
Jeremiah (03:38)
Yeah, that makes sense. And that's all of New York City, not just Manhattan. Because Manhattan is not even higher.
Zach Murray (03:45)
It says New York City. So yeah, yeah, I'm happy to be even be more than that.
Jeremiah (03:51)
Totally, Whatever you have access to in Toronto, theoretically have. Like in Manhattan, probably like three or four times as much in the same space.
Zach Murray (04:00)
Yeah, but, also this new thing they have where there's the toll going into Manhattan makes it so that there's absolutely no traffic in the city. It's actually magical. If you get into an Uber, you're zipping around. I took maybe 20 Ubers over the course of a week and I sat in traffic once for maybe five minutes. It was like, wow, like this is incredible.
Jeremiah (04:12)
Really? I wonder if that's having a significant negative impact on the economy in Manhattan or if it's not.
Zach Murray (04:23)
It's entirely possible, but...
Rishabh (04:27)
Dude, it's gotta be positive.
Jeremiah (04:30)
You think so?
Rishabh (04:32)
100 % has got to be positive. Yeah, yeah, yeah. Because what's going to be happening is more people are just going to be riding public transit. The thing is that the replacement in New York City is not nothing. It's actually the mass transit line. Now, if it was a city that didn't have a mass transit alternative, I think it would have hurt the economy. But I actually think it's going to be net positive, because now all of a sudden,
Jeremiah (04:48)
That's true.
Rishabh (04:59)
People are just going to want to do more stuff because it's more pleasant to be in the city and they have the alternatives. The alternatives pre-exist.
Jeremiah (05:07)
Yeah. Yeah. And if you're going to like go out for something, you know, if you're trying to go out on like a nice date or go to a show or something, you're probably willing to pay the toll anyways. Right. So just makes it easier to get there.
Zach Murray (05:15)
Yeah.
Jack (05:19)
Imagine what the opportunity cost on all of the time spent in traffic is from some of the most productive people in the world. There's people who... Yeah, I mean, you you've got to... You think because they're in cars and they're on their laptops and they're on their phones. Yeah.
Jeremiah (05:27)
Yeah.
Rishabh (05:29)
From the most productive people in the world? Zero. Zero.
100%, 100%, 100 % of those people are in an Uber or there's someone else driving the car. Yeah, yeah, there's no productivity loss. Yeah, Now, I think like that's exactly the problem, by the way, right? So like, if you're already up there, then the total amount of leverage you have is like exceptionally high.
Jack (05:45)
Right, right, right. Yeah, you got a point.
Rishabh (05:58)
But if you're not at that point yet, your leverage is actually lower because you can't afford those luxuries on your time. But the first thing people buy with money is time. Their whole thing is like, ⁓ you can never buy time. No, no, Actually, exactly what you can buy is time. And that's exactly what you should use money for.
Zach Murray (06:17)
What would you say is something that you've purchased time or like what's a heavy? What's the most impactful?
Rishabh (06:21)
Everything. Dude, all of my incremental income goes to buying back time. We have a chef, we have like a nanny So I spend like 100k a year literally on on on childcare, not on like the cost of the kid on pure childcare. cars are self driving.
So like the choice of the car has, we have Tesla's, so the choice of the car was literally in order to not have to drive. So that way we could do other things when we're in the car. Whenever I'm in the city and I think I'm going to be in traffic, I always Uber, I never drive. every decision is like buying back time as much as I possibly can. And I think this is, by the way, this is the number one thing if you're in like a high income job and you're younger.
It's like the number one mistake that younger people make is they don't invest in buying back time in order to like spend more time growing their career. and the CEO of the company I used to work at, live around like inculcated into me. And I was like, this is such a good insight. He was like, if you're a young person working in tech, the number one thing you should spend your money on is buying back time, pay someone to do your laundry, pay someone to cook your meals, pay someone to drive you around, pay some like the addition of all of those things put together is going to be under 20k a year.
Jack (07:34)
It's not just the time as well, it's the mental resources, right? It's the energy, right? There's time spent and then there's like, there's physical energy, there's calories that you're burning, I don't know, doing your own laundry, right?
Jeremiah (07:45)
I will say that the flip side of that is depending on how much you have to manage that also has a mental load, right? So like for me, it would be, you know, let's like with small kids, lot of my wife and I like, it's like a, it's nice to be able to do the chores at night, like wash the dishes or whatever after dinner, because then the other person's putting the kids in bed, you get a little bit of a break from that. there's different ways you can go about this, right? If we had a nanny who was helping us at night, that would be a different sort of scenario.
But in the context in which we operate, we don't have that. So it's like you've got the kids getting them to bed, you've got like...whatever we're doing for a meal, like sometimes we cook, sometimes we eat out, sometimes we have, you know, meal prep on the weekends, whatever that is, but we, do that. And then we have, ⁓ the, the bedtime things and kind of the cleanup that happens after dinner. So I actually liked doing the dishes. I'm like, I can sit there and listen to a podcast. can do that. It's relaxing. It's like a totally different.
It's like a way for me to decompress a little bit after the end of a long day there are ways that I could outsource that and get more time back. Right. But like the, there's also like a cost for me mentally, like I have to think about that process. I have to make sure somebody's coming to my house. If they don't show up for some reason, then there's this expectation I had that that was going to be done for me. And now it's not, and I have to do that myself. Right. And so there's just like a bunch of, I do think that the flip side is that there is some mental load that still happens in that context.
And I'd be curious what, like with you having so much help, I'm curious what your thought is on that. Because I think there's yeah, I think there's like a bit of a like there's a positive and negative side to that potentially.
Rishabh (09:29)
So first of all, think all of the chores that are in the category of this is actually Zen, you should just do because I'm in the same boat as you. You know what I mean? Like there's a category of things where it's like, I want to use my hands. I don't want to do a thing that's like mentally tough. I want to do a thing that's like mentally easy and just like uses the fact that I'm a human body. And like, that's like the job. The job is to be a human body that can like operate arms and legs. You know what I mean?
Jeremiah (09:35)
Yeah. Yeah.
Rishabh (09:57)
Like, that's Yes, totally, totally. But that's like not buying back time. Like, that's not time that you want to buy back. I'm just saying for everything that you don't want to do, like dollars are the single best thing to use to subtract those things. So for example, I love cooking, but I will still hire a chef to do meal prep for the whole week.
Jeremiah (09:57)
So you still like doing those kinds of things. Right, yeah, yeah.
Rishabh (10:24)
Precisely because if I want to cook, I'll just cook. The fact that there's food in the fridge is irrelevant to the fact that I want to cook. And so that's sort of how I think about it.
Jeremiah (10:33)
Yep. Yeah. And then you don't have to cook in that context. It's just if you want to, you get to do it.
Zach Murray (10:44)
For me, the managing thing on like cleaners and stuff like that was kind of annoying. And I was always being like, yeah, like, it is, you're only investing a little bit of time versus like the time savings. But the thing that I changed was I now only sort of like work with like external people that will text me and I don't need to schedule things. Meaning like my cleaner, I don't have a schedule because like I travel so much, like often I won't be there for like a week at a time that I want to go and like contact someone to then do a booking.
It's only people that I have direct contact with, can send them a text being like, can you come Tuesday or Wednesday? They say yes. And then it's like done. And like same thing with any sort of physical health services and stuff like that. If someone's like not willing to text me and they send me to like a booking portal or something, I just like don't work with them.
And just having someone that I text is just makes it a huge difference. cause I was like running into that being like, like I get a calendar thing that they're not going to come and I didn't see it. And now my house isn't clean ⁓ but if I have the person text me one-on-one, it's the best. ⁓ so that's how I kind of dealt with that.
Jack (11:47)
I think there's some overlap here between a conversation that I saw you having Rishabh on X with Cody on the death of Sass. I how Sass is going to labor to do this.
No, I really do think there's a lot of overlap here
Rishabh (11:58)
Ha ha ha ha ha!
Yeah, the thread is - you click on Cody's response, it'll open up. Cause like Jeremiah's in this thread. Like the start actually became pretty active. It was pretty good.
Jack (12:11)
Yeah, I thought it was a really interesting topic. So yeah, let's jump into this.
Rishabh (12:24)
Jeremiah, do you want to start? You want me to start.
Jeremiah (12:28)
Yeah, I can start. ⁓ I do think what's, I mean, like at the end of the day, think AI is definitely changing SaaS, right? Like it's not only is it going to happen in the future, but it's happening right now. I don't think it's going to be as fast as people say necessarily because the customers we serve aren't going to change as fast as. ⁓
People think they will. Like that's, that's the reality, especially when you start talking about like bigger, I mean, think about like how long it's taken organizations that are using, you know, archaic tech to move forward. There's, there's companies out there still using windows XP as like their, their main company ⁓ operating system. Right. So it's like things do take time in the world of software for people to say like, Hey, this thing works for me. I'm going to stop doing this thing and go do something else ⁓ so that's, that's one thing I think that's interesting here is like, it's a process. It's not going to happen overnight, but then I think all of it really comes back to this idea of you pay for things that add value in some way. Right.
And so like, is it going to be that you can just talk to a machine and it does everything for you and it's all completely automated. Like there's a world in which that potentially happens and that's the value you're willing to pay for.
But I do think what will happen in the world of software is that is going to give you the ability to have an expert team or person who really understands a specific problem, who's building, who's using the same tools that you have access to, but going deeper with those things, making it easier for you to manage, making it better and more impactful always gonna be additional value that's created there and there's ability to to charge for that generation of that value.
And I think I don't know exactly what that looks like, right? But I think that's to me, that's where we're going is like, I don't think software goes away. I think what Cody was saying is a really good example of this actually, it's gonna be easier for software, however, we wanted to find that to actually replace humans and doing things. And if you are able to replace a hundred thousand dollar a year human with a $10,000 a year piece of software, like actually fully replace them, you're probably going to do that for your business. And so in that context, that software maybe is actually generating way more money than it would have previously ⁓ because it's doing something that's functionally better than just the interaction between you as the business owner and chat, GVT or whatever that ends up looking like. So that's kind of the way that I'm thinking about this longer term.
And think any sort of software, as long as the value that it generates is greater than the cost, it will continue to exist.
Jack (15:00)
Right, and I think the overlap here between this and buying back your time is that as software replaces people, as it replaces labor, and it does the job without individuals needing to be in it and constantly keeping it moving, let's say software that is a tool as opposed to a solution, things just happen. I think about myself and the people that support me, cleaners, chefs.
I don't think about any of them. They don't cost me anything more in organization because it just happens. And I think that's the very big difference between ⁓ putting these things in place to support you and ⁓ messing around with setting them up in the first place. I think the friction here between SaaS or SaaS versus labor, this idea that labor is not going to adopt it. Well, labor doesn't get the choice whether it gets adopted when it's a solution that literally replaces labor, right?
In the case of Shopify and some of these Shopify sites that are built by operators who are making products, like I don't know, Baseball Lifestyle, BL101, right? They use a Dawn site. And maybe they have a couple of devs at some point that have made some upgrades. But they didn't ask the web developer for permission.
Shopify just solved, right?
Rishabh (16:18)
There's two separate things happening in this example, just to untangle this a bit, because I think this is where Jeremiah's point of like the adoption is slower than you think, like becomes very clear, because I agree with Jeremiah, adoption is way slower than you think. I mean, painfully slower than you think, okay?
I'll give you just a good example. I was at this conference two weeks ago that this large private equity group puts on. And so there's like these like very large brands there. And the question got asked, there was like a live survey and a question got asked, where are you on your AI adoption curve? And the responses were like, you could choose between, we have zero, we have thought about it, but we've done nothing.
We have started to implement POCs and fully adopted. Okay. The total amount of people who had done anything at all, meaning the fraction that were either think about it or zero was the majority in the room of these brands and retailers. Okay. Of the people who said we are fully adopted, there were three. I was one of them.
And of the people who are in POCs, was like basically the second, like whatever rank, right? And so, and it was like a hundred people So, so, so to your point around like, does labor have a choice? This is where the rubber meets the road. There is a department for everything at a big company.
And somebody, some department leader is going to view it as their job. And I like we from, have directly experienced this. Okay. Exact situation of a large company that we worked with for a POC that did not convert. The POC did not convert. We found out because we had an exceptional relationship with our direct user who told us this directly that there was a person at that organization believed that it was their responsibility to do the thing that they perceived as Fermat doing instead of them.
That person had six people reporting to them and it took them a year to produce the same outcomes that Fermat delivered in six weeks of the POC. And we were directly told that the person viewed it as a threat and so advocated to their SVP or VP of whatever it is, that they should discontinue the work with Format because they got it covered internally.
This was like, this is exactly how this looks in practice. And why I say like, this idea that labor does not have a voice is exactly untrue. Now, I think the reason is correct, Jack, from how you're saying it is that it always comes from the new generation. So the reason why the Shopify people like didn't have to talk to anyone is actually exactly because they started with people as the businesses were starting and those businesses grew.
And now they are going and doing the replacement sale. But the replacement sale is happening as like, they're not a public company. Like this is like now a much, like a very different process. this is why technology adoption is so painfully difficult. Cause either you have to wait for your customers to grow up or you have to somehow convince them, like you have to somehow navigate this extremely difficult thing to navigate, where someone perceives it as their job and is like, hey, actually, I want to build a fiefdom around this thing that you do, instead of adopting a tool that can do it instead. It's extremely difficult, in my opinion.
Zach Murray (20:10)
Then the other piece is that if something's not broken and there's not pain, whether using a technology solution is better and allows you to get rid of three people or not, if there wasn't pain from having those three people and that business, that side of the business line is doing well at any point in time, there's potentially other fires in the business that need to get put out before the thing that's like working in the way that it's been working and will continue to work.
And I think that's the other thing to figure out is not just are you making a process better, but is there actually even enough pain to where it's like, you know, I mean, in our example for like our company, it's like, if people think a really solid system right now and they're shipping new winning ads every single week and their business is growing to then throw a monkey wrench in and be like, you should do it like in a different way. And maybe you can get rid of two people. It might not even be like enough to justify the switching cost or like to, again, throw a wrench in something that is working. Right. Yeah.
Rishabh (21:06)
Hold up.
Yeah, my, yeah, I mean, my yes. And to that Zach is like, yes. And the pain has to be felt by the same department. Like, like the big kerfuffle here is if pain is felt by one department, but another department thinks there is no pain. This is like the most stereotypical, like business versus engineer, like, you know, like the most common thing on the planet is like, ⁓ like the business wants to move faster, but engineering is like, no, I got it covered.
Like that's the most common reason why SAS adoption is slow. That tension and organizing, like managing that organizational tension is like, is the hardest problem for any SaaS company. Always, And then I think that there's like the SMB segment where it's like, Hey, it's like really just two or three people operating the thing, in which case the pain is always co-located to the execution, which is great. And which is why adoption and SMB is so fast.
Jeremiah (22:07)
I will say like, as somebody who started a company and had, you know, just a couple of us working on something all the way. And I mean, you guys have probably experienced on this too, but you go from like just a couple of people, you can do whatever you want, whenever you want. Right. As long as like, and it's easy to have the conversations to, to convince the other people to say, Hey, I think we need to move in this direction. Right. And then you get into growing to the point where, you know, I have 75 people and you've got, you've got teams and you've got departments and you've got like individual people within these teams and you know, going in and I can go in and say, Hey, I think we need to do this thing.
This thing's really important, but you can't just force something without buy-in. I think like the, know, when you're just starting out as a company, it's really easy to, to get the buy-in because there's just a couple of you, there's maybe one person responsible for a given thing. And now you go into where you have 10 people doing that thing.
And you maybe don't have to get all 10 to buy in, but you have to get enough to buy in, in order to actually make a change. or it's a massive risk, to your point, Zach, like if, if things are going well enough, even if it's just mediocre, sometimes that risk of pushing a major change isn't worth it. Because if you break that, it's going to be worse than having it be mediocre. and so yeah, I.
Zach Murray (23:26)
Also, what is the outcome, right? It's not even like, it's like, is this out? Do we want to spend our time doing things with unlimited upside potential or limited upside potential? So it even depends on, okay, what is the best case scenario? And if the best case scenario isn't like a transformative shift, um, again, in anything that's a medium sized business that you're not optimizing every single aspect yeah, it just doesn't make sense.
Rishabh (23:52)
Guys, also, like, let's just, okay, I'm gonna say something out loud that I am sure is gonna come back to bite me if it gets published publicly, but most people's decision-making is not optimized for what is actually going to get me the best outcome. It is optimized for what is going to get me promoted and or keep my job. Cause most buyers are not the business owner. Like that's just true.
Again, outside of SMB, everything changes when that's the decision difference, right? Even if it is actually like high pain for the business and it could be a big difference. That doesn't mean it gets bought. If there's a risk to either promotion or job maintenance, like that's just like how it actually works in practice, which is why like, for example, like dashboards are so important, right? Like.
The dashboard of your tool is like one of the most important things precisely because it's the tool that the person uses to get promoted because they show the dashboard to their boss and say, Hey, look at this thing. Like it is now the number is up into the right.
Zach Murray (24:43)
Mm.
Jack (24:57)
Yeah, I think there's an interesting comparison here between the type of tool that solves and the type of tool that is a tool for the end user to go and solve. The type of tool that solves, if you have a really good managerial class, you have managers in place that are actually good, that see their path to promotion and survival being using the tools that solve or getting their team to use the tools that solve, then you have great managers.
And maybe the common that is in place is that, unfortunately, a lot of the buyers are not great managers. They are the type that are looking at their survival being, well, I don't want to incorporate tools that replace me. But there's so much opportunity cost in that. There's so much opportunity cost. If you have talented people managing teams, and there's that friction to adopt tools because they think, well, then this completely removes my capacity, then it's a lot of dates. You have a lot of dates.
Jeremiah (25:51)
Yeah.
Rishabh (25:51)
Totally. Can I just make it like, because this is where AI makes life so painful for even the best. Like, let's just say, Jack, like, we're going to pretend that you are the, or any one of us, are like the manager of a team of CX people. Okay. And you're like, great. And you have only the business's best interest in mind. And like CX agents are the most common use case, right? It's like, hey, there's like agents who can do this.
And you currently manage a team of 20 CX agents. Okay. So like we're purposely picking a big number and implement this tool. And you're like, my God, our ticket volume is so low that I reasonably employ more than four.
What does any one of us who is the CX manager in that situation do? I'm genuinely asking, like, I'm actually curious, like, Zach, what would you do if you are the manager of that team and you found this tool? Like, what do you do? Do you fire 16 people? And then how do you manage the remaining four?
Zach Murray (26:48)
You mean from like an emotional perspective?
Rishabh (26:51)
Yeah, I mean, because you still need those four people. Like the outcome of the tool which is the outcome of most CX agents today is like you can, the majority you don't need because it basically takes care of tier one, but the tier two problems are still very, very hard to interact with. And so like I'm giving just like a real life example. It's like, man, I don't have enough work anymore for 20, but I need these four exceptional people and I need to somehow keep them.
Zach Murray (27:03)
Yeah. I think the way I would approach it is only people I was managing, I'd hope I would have a decent understanding of who they were as human beings. I would pick, ⁓ one, the most like high value people from like the higher leverage tickets or people who I think, ⁓ could have been promoted or could replace me in the future. I would choose those people.
And then the secondary criteria would be just like someone who had, as much of like a balanced view on opportunity in life as possible. I would do a discovery and like just like talk with them before about how they would think about certain problems to be like, okay, will this person understand this decision or they'd be emotional about it? And I would optimize for skill and then their emotional reaction to the situation. And then I would frame it as an opportunity for them to start doing more meaningful work with their time.
I would try to convey that their time is great and it's been being wasted and I'm sorry for that, but now we have a solution and it's that you are now going to spend as much time as possible on these higher leverage activities. ⁓ and I would fire the rest
Jeremiah (28:14)
I actually do think like, ⁓ cause I would hate having to do that. Right. think we all would, right? It's not like you want to fire a bunch of people. And I think this is a reason why we should all be thinking about how do we adopt tools as they're expanding? Because as of right now, I don't know of any, at least in the context of my business, I can't implement an AI tool that will let me cut 75 % of headcount. That's just not going to happen. I can implement tools that will make my team 20 % more productive. Right.
And so when you're talking about making it 20 % more productive today, and then maybe 20 % more productive again in a year and you keep going like that, then I can actually find ways to not let those people go and work them into doing other high value tasks within the business.
Now, obviously this may not be true ⁓ for every person, for every company, for all that kind of stuff. But I think for me, this is a reason why I'm really trying to keep up with these things because there will come a day when I can just click a button, not literally, but like literally like flip a switch. There's work that goes into it, but it will probably, the tools will probably be able to take you from, know, if you haven't been optimizing at all from, from zero optimization to that 50, 70, 80 % optimization.
And if you're not planning ahead of that, then you have to make this kind of big drastic decision. So I would say like, for me, I just would like to never get to that point ⁓ and just be ahead of the game so that that's not necessary. And I will say too, when it comes to something like CX, any sort of job where that's actually possible to automate to that level, those are jobs that people are trying to get out of as well, ultimately, right? Like usually if you are starting off and cut, and this may not be true for everybody, but a lot of people that start off in customer support, they're wanting to move into, you know, at our company, we have like customer support where it's inbound customer support.
And then we've got customer success and we have, you know, product people and people are doing more technical support and QA and all of these different roles. And most of those people who are starting off in this type of support that can be automated actually want to move into other roles. And so there's an opportunity, I think if you're really ahead of it to actually make that happen proactively, as opposed to being so reactive to it. So ⁓ that would be my answer is ideally you just never get to that point.
Zach Murray (30:26)
But yeah, but don't, don't you think like even what you had said before, where you're saying if you grow to a certain size and then you're hit with this reality that there's a certain level of buy-in that you need to have to move fast. Is this not also like the biggest opportunity to potentially cut team so that you can get back to being like lean? Like, as I do think that's like one of the largest like leverages is, you know, we might be entering an era where team size can remain small longer and like realistically, your success actually kind of depends on that.
Like if you can keep growth up with team size being as small as possible, it is kind of like a lot of leverage. And so it's like disheartening, but it's also like incredibly exciting at the same time. Like we've stayed incredibly small and it means that we dropped the ball in some stuff of things that we maybe should do. But I feel like I've just been like very cognizant of the load and like the weight that comes with like human beings like there's a lot of businesses right now that, know, with 50 % of the team could potentially be doing better because they could get back to, ⁓ an era of like decision-making at velocity. ⁓ and like not as much like opinions.
Jack (31:34)
I think there's a lot of real world examples of in the past how automation wasn't for the purpose of leaning out teams. That was a byproduct, but it enabled a type of productivity that was unheard of before. don't know, take combine harvester, right? Liberated people, right? But it probably didn't feel that way if you worked on the farm, take factories, industrial revolution, liberated people. But probably didn't feel that way if you were manually manufacturing things ⁓ in with software and with AI. I think that if you were in the market of making MP3 players, well, a mark of your ability to survive is your ability to adapt, right? Leave that market. And I think the same applies to labor. Labor has to use these tools, the right tools or get replaced. A mathematician that refuses to use the calculator ⁓ is probably not going to keep his ⁓ productive utility.
Rishabh (32:31)
Yeah, I totally agree. I just think that the AI software question in particular is complex because is doing a set of things that people are explicitly thinking about in the context of changing their workforce composition.
Right. And that just makes the adoption of it more complicated. Just like factory automation actually is like, is actually like a good analogy, Jack. I totally agree with that. This is that same analogy on a much in the U S on a much broader basis, because most of the people in the U S are in the service economy.
And so like, you know, it ends up having broader impact precisely because of that reason, just given how the US economy in particular happens to be formed today. But I also think that the other question is like on the very small side, which is like the two to three people, like if you were to take e-commerce as an example.
And Jeremiah, this I'm very curious on your opinion. But I think that there is a set of people who will say, hey, I don't want to buy software because I can just like vibe code this thing and it'll work for now. Right. And I think that even if the value is high enough, a lot of like two to three people shops, they view the world entirely through price as opposed to through value. And that's fine. ⁓ and I think it creates an incentive for them to want to like build their own tools, basically.
And I think that that's actually where the X rhetoric comes from is, that belief, right? And, and I do think that people will try that like I genuinely do. ⁓ now I think that eventually what will happen is that you'll realize like somebody has to maintain that code. It'll break for reasons that you don't understand, like all of these things that like people who build software know what the difficulty is of building software.
I think those will eventually happen. But I think in the short term, think that a lot of that will happen. Almost, I feel like that is very high likelihood.
Jeremiah (34:58)
Yeah. I posted this on X, so I started out working in the WooCommerce space. So in 2011, I think, is when WooCommerce started, and Shopify, I think, was 2010. It's right around the same time, right? And WooCommerce exploded. I mean, when I was, I started building for WooCommerce in 2012, and man, I had by 2016, or end of 2015, I had 200,000 stores using software that I built, but it was all open source. So like literally we published code on the WordPress.org directory. People would come to our site to get like a premium version of it.
And it's basically just a code download that you download and upload on your site. we had, because it was open source, other people could redistribute our code for...would like legally could just take it and redistribute it for free charge for it, whatever. And so it was really common for people to come pay us 20 bucks to download the code, go post it on their website for $5. And then somebody would pay them $5 to access it instead of paying us. And so it was just like this world of like, basically the way WooCommerce worked is you go buy a bunch of these different code pieces, you add them to your site, and you try to make them all work together.
And that's what will, believe, like ultimately AI is gonna be the same sort of thing, right? there's gonna be better solutions than chat GBT for this, right? But like ultimately what will happen is if you're gonna do this yourself, you're gonna go and get this snippet for this, this snippet for that, this like custom thing for this thing over here. And the first one you add is not a big deal. The second one you add is not a big deal. The third, the fourth, the fifth, right?
But you get to 20 of these different pieces of code that were built by, AI that maybe doesn't have the full context of your business and you don't understand how it all operates, you're going to start to run out of problems. And so I think when you look at the rise of these platforms, WooCommerce was way bigger than Shopify for a long period of time until, I mean, number of store wise, I think it's still bigger, but like volume of revenue going through WooCommerce was higher for a significant period of time, probably until like 2016 to 2018 and it was because you could just go do this thing at minimal costs and it seemed easy until it wasn't right. ⁓ and, and so I think that's, I think we're probably going to see something similar.
And then the other thing I will say too, on the, paying for paying for things versus building yourself or even paying for a premium version of something versus a cheap version of something. When there's a price associated with, with, ⁓ a service or a good, there's some expectation typically of the response where the responsibility lies when something goes wrong, especially in the world of software.
If I'm paying you $10,000 a month for a piece of software, I have a different expectation of who's responsible for that going wrong. And if I'm $10 a month for a piece of software, and, ⁓ that's just kind of like an implicit thing that we all understand, right? Like if you're getting for something for cheap, you bear more responsibility and making sure that that works.
And so, you know, if you are a sole founder or a co-founder of a business and it's just one or two or three people running this thing, it's not that big of a deal to be responsible for those things, right? Outside of like the head space that it requires to actually make that happen. But to our conversation earlier, when you started talking about middle managers and all this kind of stuff, do you really want to be the one who goes out and gets a piece of software for $15 a month? or $20 a month or vibe code something that then breaks.
It's actually better for you to go get the more premium solution where it's clearly implied that that solution is responsible for what goes wrong in that context if something does happen. And so I think there's also a component of that where it's like, yeah, the small up and coming stores will probably think about this very differently than something that's more established.
And obviously company leadership and culture will have an impact on that too. Like it's not, this is not just like a blanket statement, but I think there's something there where it's like, price actually has an important role and it's not going to go away because of the fact that there's a responsibility aspect here.
Rishabh (39:08)
Dude, this WooCommerce Shopify thing, I can't believe I missed this post of yours. That is such a good take, my God. Yeah, wow.
Jeremiah (39:22)
And just to kind of dive in on that a little bit more, the reason why I don't still build in that ecosystem is because of the fact that I could never progress forward because all I ever did was support code that I'd written years prior because there's no additional revenue coming in. There's not enough revenue coming in to actually invest in R &D. And so that's what happened in that ecosystem. It actually was superior to Shopify in 2012.
It was a superior product because there was so much more being built in the ecosystem, but at a certain point there, what the economics were not set up in such a way that the people that the builders could continue to build. The builders had to turn all of their attention to, support and then you're not innovating anymore. And eventually that, that ecosystem slowly starts to die. And I think that's, that's why we see what we see now. And the same is true with Magento, any sort of open source system. That's the reason why it's gone the way it's gone.
Rishabh (40:19)
Dude, okay, I have a very controversial question to ask. What would be the signal that tells you that Shopify is at risk of doing the same thing to its tech ecosystem and therefore the brands on Shopify will no longer grow?
That's basically what happened to these other ecosystems, right?
Jeremiah (40:38)
Yeah. Well, here's the, there's there, there are different ecosystems, right? But I do think Shopify has that risk too. And I would tell shop. mean, I would tell Harley or Toby or anybody this as well. problem will ultimately be the same at what point does it become not worth it to build in that ecosystem?
And so in the Shopify ecosystem, it's been easy to build because you have brands that are willing to pay more money to access these things. And the way that it's structured, the WooCommerce ecosystem, you download a piece of code and you add it to your website. you actually control your database, you control all of that on WooCommerce. can literally...build, you can literally open up the database and look at the raw data in your store.
You can't do that on Shopify. On Shopify, you have APIs that like that structure actually of, of limiting access and requiring an API and basically like an external third party app to access that information is what allowed, builders on Shopify to charge more and then allows for more innovation in that space because you can, ⁓ you just have to, it's a higher level of service that's required to.
You can't just add the code to your site and make it happen. So I think AI is a bit of a threat to Shopify in this and that like if it becomes easy for people to just vibe code everything, then the builders are going to have less incentive to build because there's less money to be made. I think the other thing that's potentially a threat in that context is that the harder Shopify makes it for people to build, the more restrictions are put in place the less incentive there is to actually invest in that ecosystem.
And there's a trade off there, right? Like I think, like right now Shopify is making a lot of changes that are very painful for the people that are building in that space that I don't think will feel as painful a year from now, two years from now, three years from now.
But if they keep adding more painful things to that experience, you get to a point as a builder where like, like I'm done with this, I'm gonna go build somewhere else. the way I look at it, don't think Shopify is at like a massive risk of that right now, but that is possible in that like if you, if you make it so that the cost of building that ecosystem or the value you can create for your business by building that ecosystem isn't high enough, then at that point, it opens the door for somebody else to come in and say, hey, builders, come here, come build for us. it's a process. Like that's going to take a long time for that shift to happen. But I do think there's a bit of a risk there.
Rishabh (42:58)
Dude, this is like the beautiful thing. I just learned a lot in like the last 15 minutes. I'm like speechless. I don't think anything right now. sorry. All I'm doing is thinking right now. I am not opinionated
Jack (43:07)
Ha ha.
Rishabh (43:11)
I'm trying my best to process out loud, but I'm like not very good at it. But I think that the way that I would interact with this is basically threefold. The first thing that comes to my mind is with these tariffs having negative impact on the customer base that's on effectively the Shopify customer base actually is like the single highest impact.
One of the first things that came to mind to be totally candid is like, the health of that then affects the health of the people who are building to serve that customer base and therefore affects whether or not people are going to invest into that space, which I've already written about publicly. I think that the second order effect of like people's unwillingness to invest is going to make it much harder for merchants on Shopify to continue to be successful. So that's one thing I think so I think that these tariffs are actually an extremely high risk precisely for that reason, because it's the second you reduce investment, the total amount of time it takes to get back is like essentially infinite.
The second thing I think is like, I think that there should, like, I don't know who the person is at Shopify, who is the loud public voice of being the champion of the people who are building in the Shopify ecosystem. So it is very obvious that Harley is the champion of the merchants. And if you look at the very early days, you would have said like, Toby was the champion of the person who was, who was the ecosystem.
Again, I don't know what the current like way they operate is, but I do know that internally it is still true that Toby is the champion of the ecosystem. I know that for sure. I don't know who is the public facing champion of, of, of the ecosystem. That is less obvious to me. And I think that that needs to become more obvious more quickly ⁓ in order to stem potential risk, because it's not obvious to me that the risk is significantly higher. And then the last thing it makes me think is that API interfaces are old, like MCP interfaces or similar are what is going to happen next.
And if that's true, then the way that someone who wanted to compete with Shopify would compete with Shopify is make it significantly more attractive for Vibe coders to build in that new ecosystem by having a very strong MCP interface.
And so in fact, you actually literally do not even bother with the current, like with the me and Jeremiah's of the world. You intentionally attract vibe coders and you build a whole ecosystem that is intentionally there to attract vibe coders and you build the whole ecosystem that way. And I think that you get away with like a sideways coup essentially. Like those are like my very early, like again, not very well thought out thoughts. I think that is like a very like Jeremiah poses like an excellent question.
Zach Murray (46:10)
What's interesting about this, I was just like going back and forth to chat GPT. So maybe some of this data is off. And I think what you're saying about someone needing to be a champion of this is actually incredibly important because of the way that the Shopify app store looks on the balance sheet. And what I mean by that is that if you look at like Shopify's total revenue versus like how much they generate from like merchant services and things like that versus the app store.
You know, if someone's looking at it as like a spreadsheet business, not taking into account the ecosystem, like value that they're not capturing. It seems like almost something that they shouldn't even like care about, right. Um, which is like the highest risk situation to be in, which is that the balance sheet is not indicative of the value that it's creating. And so I think that's like actually an interesting thing in having no face and no champion for it. If you are making decisions from like a balance sheet perspective.
The app store is actually worthless to Shopify, but they are not, there's no way of quantifying on a balance sheet, the ecosystem value of, of, of the like business line.
Jeremiah (47:14)
Well, yeah, and one quick note on this too, I think like if you look at the WooCommerce ecosystem versus a Shopify ecosystem, WooCommerce is actually significantly behind from an innovation standpoint. And I think what happens is when there's enough revenue, so take an example like Klaviyo, right? Like that's a really easy one to look at. They literally built from nothing to a public company worth, you know, six to 10 billion, depending on the month. ⁓off of the back of the Shopify ecosystem. And what happens in a context like this, and actually all of our businesses are like this.
We generate enough revenue, we have enough margin to be able to talk to customers and say, what is your problem? We're going to go figure out how to solve that for you. And in something like the WooCommerce ecosystem, there's not enough revenue there for the builders to be able to do that. Those builders are actually just saying, hey, here's, you tell us the solution to the problem, we'll build it for you.
And I think that's actually a really big distinction. An important thing to think about is like, when you talk about the ecosystem value, part of the value in this ecosystem is there's enough potential for us to capture value that we'll actually go out and think about the problem on behalf of the merchants and go and build innovation. And we'll take risks and bets because we actually can afford to do that in this context. If that goes away, then all of sudden there's a massive lack of innovation that starts to happen as-
Rishabh (48:40)
This is going to be a very interesting next year. Very interesting next year. We'll see. We'll see how it shakes out. We'll see how it shakes out. I'll say is I'm... Yeah, go.
Zach Murray (48:40)
Great, well it takes us to the end. How would we do like a rapid fire tariff update? anybody, has anybody like had like a meaningful conversation that they're like, tariffs are going to not affect that, but like in the context of your business for a month, no foreplay. there been any conversations where you're thinking differently about tariffs than what we had discussed?
Jeremiah (49:09)
I mean, it's having a negative impact on our business in terms of like merchants trying to cut costs or trying to think through like how we can be supportive. But the reality is like, we don't touch cogs. so there's really only one line item that we can have a significant impact on, is the ⁓ ad spend side of things essentially. And so, and just customer acquisition in general, but it's so - I don't know, when somebody says like, we're just cutting costs, it's hard to even engage in a conversation on how to do better with that.
But that is the one thing we're trying to do is figure out how do we actually help you do more? Because also, for us, if we're charging you $100 a month or $300 a month, you're spending $100K a month on ads, if we can help you find just a little bit of marginal increase in impact, that's actually worth way more than whatever savings you're going to get by turning off our tools. So that's kind how we're thinking about it.
Rishabh (49:57)
Yeah, I'm trying to think about the best way to answer this because as you might imagine, it has a non-trivial impact on us, right? Like it is no secret that the format platform is expensive.
I think that the hardest question actually for us is, what is short term versus what is long term? ⁓ Because like, on the one hand, you can say, hey, we have the capacity to endure some short term, like pain along with the merchant. But on the other hand, we should not do that. It would be like bad for us and them if there was no long term way to actually change it for both us and them.
And that's like the massive thing that we are thinking through right now is like, where does that short term versus long term come in? And where is it like actually just a write off in disguise? And that's like a super non-trivial thing that we are having to navigate right now. Like the total sets of things that we...
I mean, my TLDR on this is I think there's a set of merchants where unless the policy changes, this is a long-term thing that it is not clear that it is going to be possible to grow out it is just not possible. And I think how you handle that set is very different than how you handle the other set where there's actually a possible way to outgrow it.
And so the total amount of analysis that you need to do on like segments and like what is true about that business and things like that is, is very non-trivial. It's very non-trivial. I don't know, Zach, what are you guys saying?
Zach Murray (51:52)
Almost nothing. Like I think the, the most that we feel right now is that agents, we have like a very large agency customer base and agencies are losing customers. ⁓ like a lot, ⁓ from what I've kind of seen, ⁓ especially sort of like add on agencies.
Let's say you have a media team in house and you're using a agency for a very specific type of content, or maybe they're running some testing campaigns with some BSLs or like a different funnel or something like that, was, um, additive in growth times. and maybe it was at a negative CAC or something like that.
It seems like those agencies are, are losing customers with like no contest, just being like, listen, we're, we're restructuring the way that we're thinking about CAC and the way that we're spending money right now. So that's been the biggest one for us is that I think agencies, um, that can be cut or being cut.
Jeremiah (52:48)
Yes. Thanks. All right.
Rishabh (52:49)
Alright guys, yeah, alright, see you everyone, this is really fun.
Zach Murray (52:49)
Awesome. This was good, guys.
Head of Marketing
