Kevin Hillstrom: MineThatData

This is the 5,602nd post I've written ... about 280 per year for twenty years. More in the early years, fewer in the past decade.

There isn't a single entity who's done what I've done the way I've done it ... writing about what I've written about ... for the past twenty years.

There's nothing about what I've done that would be considered a "Best Practice" by the experts.

And yet, I persist.

Might there be a lesson here for your business?

P.S.: At the time I wrote this, I received a newsletter via Substack (#coincidence). The author told readers that their efforts had to be, to paraphrase, "spectacular", in order to get anybody to notice their content. This is empty thought leader advice. Nobody is going to create anything spectacular. Nobody. You aren't Apple inventing the iPhone. You sell widgets, and nobody cares about widgets. Your job isn't to be "spectacular". Your job is to be interesting to your limited audience of prospects who care about widgets.

• "Interesting" is achievable.
• "Spectacular" is not going to happen.

        

Did you pay any attention to the NASCAR trial a week ago? Probably not, because it does not impact 994 out of 1,000 of you. But for the six that did pay attention, watching The Teardown on DirtyMo Media (click here), it was as riveting as "content" can get. Michael Jordon suing NASCAR, claiming they are a monopoly, squeezing their own racing teams out of money while generating nine figures of revenue for themselves?

Oh my God, the testimony. The text messages. The emails from team owners to NASCAR. The email from Bass Pro Shops to NASCAR. The Judge begging the parties to settle because he knows that if Michael Jordon wins, it means NASCAR is a monopoly that will be broken up and it will cease to exist as it exists today ... and he knows if Michael Jordon loses, it's the end of his teams, they're done.

I mean, NASCAR thought a hokey twelve-car made-for-tv summer racing series was their "competition". They can't even see that FloRacing is their competition ... Flo essentially has their own sprint car series, they just bought their own late model series, they are aggregating regional series and dirt tracks. On a Saturday night in July, a Flo subscriber can watch a dozen or two dozen main events across the country, each race taking about a half-hour of time. NASCAR Executives have to be asleep at the wheel to not see the threat.

Eventually the testimony was so overwhelmingly against NASCAR that NASCAR elected to settle. The terms of the settlement mean that ALL NASCAR racing teams benefit ... would you do that if you went out on a limb even though the teams you compete against were too cowardly to put their necks out there? Would your terms of settlement help teams that wouldn't help you? That's what Michael Jordon did. He helped all the racing teams with his settlement terms.

In the late stages of a business model, those within the business model become so disconnected from modern realities that they miss the "easy things". I see this in my world ... catalog boutique agencies and #papertarians who are so utterly disconnected from modern commerce that they actually believe Gen-Z loves paper. They'll say absurd things like "74% of marketers believe print has the highest ROI of any marketing discipline." Really? If that was true, what would stop marketers from taking advantage of the highest ROI of any marketing discipline? Nothing. Absolutely nothing. They'd employ the discipline immediately.

Of course, they don't have a Judge helping them understand their shortcomings, they're instead subject to the raw realities of capitalism. Saks comes to mind ... suing Nordstrom because a Chief Merchant is leaving to go to Nordstrom. How utterly clueless do you have to be to believe THAT is your problem? You're nearly bankrupt and that's where you'll spend your remaining $$$ ... on lawyers?

As you get older, this stuff gets exhausting. You've seen the patterns repeat for four decades. You realize there isn't anything that can be done to stop the patterns. You simply hope your readers aren't Lemonheads.

        

History is littered with the concept of marketplaces.

"Shared money".

The entire purpose of a marketplace is to capitalize on shared money, to a point where more money comes in then goes out.

Cities performed this function in the old days. Think about "downtown" ... shared money as rural people came into the city and spent money ... more money going in than going out. This model was eventually blown up by interstate highways, which pulled retail out of downtown to the interchange. Downtowns died, eventually being repurposed.

Pre-internet, you had direct-to-consumer brands leveraging the marketplaces of their day ... lists and co-ops. Catalogers were nothing more than participants in a large marketplace that had more money coming in than going out. Ecommerce ended their marketplace.

Ecommerce was nothing more than a large marketplace fueled by an opaque network of shady digital advertisers using Google/Facebook/Display Ads as the hub of their activities. This worked well, because more money came into the system than went out of the system ... money was reallocated from suburban malls into the opaque digital advertising system. Of course, Amazon harmed this marketplace with their own marketplace.

Amazon is a gigantic marketplace fueled by algorithms. This worked well, because more money came into the system than went out of the system ... why wander in the Google/Facebook wilderness when Amazon self-contained the entire shopping experience? Of course, Amazon is now being harmed by the latest flavor of marketplace ... Shopify.

The Lemonhead will scream "AMAZON IS NOT BEING HARMED!!". The Lemonhead always defends the "old" business model (they're still defending department stores ... self-contained marketplaces from the pre-internet days). For a period of time, Shopify will have a money advantage (which is the secret of a marketplace), because more money will go into their world than will flow out of their world. This doesn't mean that Shopify will "win" ... but somebody doing what Shopify is trying to do (marketplaces fueled by AI) will create something interesting ... they will find a solution where they bring in more money than goes out of their ecosystem (likely at the expense of Amazon, Google & Facebook).

• Aside: The entire brief history of social media is more traffic coming in than going out, the subsequent process of losing traffic happens much faster in social than in retail and/or ecommerce ... providing great case studies of when "tipping points" happen.

On the surface, Shopify is a self-contained world for a small-to-medium sized ecommerce brand to sell stuff. Under the covers, Shopify (or somebody who will do Shopify better than Shopify) is a modern marketplace seeking to bring in more money to the ecosystem than leaves the ecosystem.

Losing companies tend to over-focus on two ends of the spectrum ... on the 30,000 foot view of commerce (will ChatGPT supplant Google) or the 3 foot view of commerce (can Buy Now Pay Later grow sales for us). Both are important. Between 3 feet and 30,000 feet is where the Lemonhead does not understanding the Shopify effect on ecommerce ... the goal of every company is to bring more money into their ecosystem than goes out of their ecosystem. Which means, of course, if you are a $70,000,000 ecommerce brand, you have to figure out how to use all of these "ecosystems" to your advantage so you have more money coming in than going out.

        

Or as the pundits say, BNPL.

BNPL is what losing looks like. If you believe that the problem with your business (which means you are already losing, by the way) is that customers can't pay for your merchandise today, the solution isn't to give away product and get paid next year.

BNPL and Credit cause a whole series of interrelated and completely awful outcomes. I know this to be true ... having worked for Eddie Bauer (owned by a credit crazed parent named Spiegel) and Nordstrom, it's a different environment when the credit people enter the room. They don't care about what you sell. They care about 29% interest and capturing data. They want to turn a $400 handbag into a $466 handbag at twelve payments of $38.80 each.

Strong Analytics Hint: Analyze the long-term value of a customer who buys a $400 handbag for $466 spread out over twelve months ... see if that customer behaves differently than a customer who pays $400 for a handbag. This is where a BNPL mouth breather says "yeah but the customer paying $400 for the handbag is paying Visa interest so why shouldn't the brand get the interest instead of Visa?" The reason, dear Lemonhead, is that over five years you slowly build a customer base of credit dependent customers who owe both Visa and you interest, those customers prefer a specific portion of your merchandise assortment which means your merchants slowly cater to credit-dependent buyers instead of those who love your products/merchandise ... your "brand" has been harmed. Take a look at the evolution of the merchandising assortment of credit buyers vs. third party payment (i.e. Visa) buyers ... it's different. Seriously ... do the work.

Losing companies manipulate payments.

Winning companies sell merchandise customers are ready to pay for today.