Feb 8, 2019
PJ Bruno sits down with Enterprise AE Patrick Forquer and VP of Growth Spencer Burke to discuss online grocery shopping, Reddit raising a huge Series D round with a near $3 billion valuation, and Warby Parker's new augmented reality shopping tool.
P.J: Hi everyone and welcome to Braze for Impact. Your weekly tech industry discuss digest. So this is a place where we get together each week and just talk about what's happening in tech. This week I'm lucky to have with me my pal Patrick Forquer who is on the sales organization here at Braze. Next week we'll hear from someone from a different department, probably Customer Success, something like that and then the following week maybe someone from product and then so on and so forth. So we can get multiple different angles at what's happening in the tech industry. Like I said today, I'm lucky to have Patrick Forquer and also Spencer Burke. I'll have them introduce themselves.
Patrick: Hey, I'm Patrick [inaudible]. I'm a strategic account exec here at Braze.
Spencer: Thanks PJ. I'm Spencer Burke, the VP of growth.
P.J: How are you guys doing? How's the week trucking on?
Patrick: It's going okay. No, it's going great. It's great to be here with you P.J. Looking great in your Heather Gray shirt and as always.
P.J: It's a good color. Spence, how are we doing?
Spencer: Going well. Got a ski trip planned for this weekend driving up to Vermont, so can't complain.
P.J: Always at the skiing Spencer Burke.
Spencer: It's a winter. I got to get it in.
P.J: Got to get it in guys. You know what, without further ado, why don't we jump on to what's happening this week? This first article, 'Why people still don't buy groceries online'. This is a very interesting thing to me. Actually, let me set up the story because I think they did a really good way of setting this up in the article. Nearly 30 years ago when just 15% of Americans had a computer and even fewer had Internet access, Thomas Parkinson set up a rack of modems on a crate and barrel wine rack and started accepting orders for the Internet's first grocery delivery company, Peapod, which he founded with his brother Andrew. Back then, ordering groceries online was complicated. Most customers had dial-up still and Peapod's web graphics were so rudimentary that customers couldn't even see image of what images of what they were buying. Delivery was complicated too. So the Parkinson's drove to grocery stores in the Chicago area. They actually did this and bought what customers had ordered and then delivered the goods from the backseat of their beat up Honda Civic. When people wanted to stock up on certain goods, strawberry yogurt or bottles of diet coke, the Parkinson's would deplete whole sections of grocery stores. This is, this is wild. I mean it's interesting because we were all constantly talking about convenience and delivery of all sorts of things. Why not groceries? What's the deal?
Patrick: Yeah. So when I was reading this article, the first thing that came to mind was if, if we rewind 10 years from today and we took a poll of everyone at braise about, which would be more successful grocery delivery or an app on your phone where you tap on one button and a stranger in a Honda Civic pulls up and drives you somewhere. I think we all would have bet on the grocery delivery piece of that. Right?
Spencer: Every time.
Patrick: So it is crazy to me and the numbers are super low. I mean 3% of people getting grocery delivery. Spencer, what was your initial take?
Spencer: I'm curious, have you guys used the grocery delivery service?
Patrick: So I have, I had a really bad experience actually, so I haven't done it since. And I think that's part of the challenge in this article where-
Spencer: Can you get into that bad experience or is that...
Patrick: So we tried to use the grocery ordering off of Amazon Alexa and my wife ordered paper towels and-
Spencer: Just paper towels?
Patrick: Yes. And a couple of other things, but I kid you not, they delivered us what must have been the majority of the warehouses paper towels to the point where-
Patrick: ...for two and a half years, we were using paper towels off of that one order. So obviously that's an outlier. But yeah.
P.J: It seems like it's also, apparently America is really not adopting it as much as other countries like it seems like in Europe. Also in Asia it's like up to 20% or something like that of consumers are using online and it's only 3% here in America. Does that speak to anything that we're doing or what do you guys think?
Spencer: Well, I mean I think part of it is most people... Most people have cars. Most people live in an area where they have some kind of large grocery store chain and so if you're driving to work, stopping at the grocery store on the way home, it's not changing the convenience kind of function for everyone in the same way that like Lyft or Postmates or Seamless might for your average consumer. Personally, I've tried it here in New York. I recently moved to somewhere that just doesn't have as many large stores as close to me. I just thought, sure, why not? Let's try Amazon Prime. Amazon just bought whole foods recently and let's see how it goes. I think there's a lot of challenges with it. You don't see exactly what you're getting. If something's out of stock, you're relying on them making replacement or not providing it at all. So, if you're planning on using one of these services to plan a dinner you might not actually be able to cook what you intended to or you might not be able to put that meal together because the delivery service wasn't 100% versus if you're in the store, you can kind of course correct as you go.
P.J: Right. I feel like a lot of us order all sorts of things through the Internet. I'm sure that list goes on, but as far as grocery shopping something that...it's ordering Seamless as one thing, right? It's prepared and sent right over to you as opposed to groceries. People probably a little concerned like you want to feel your fruit, you want to see your meat, you got all these things. I feel like there's a little fear around that probably. For me anyways.
Patrick: Well definitely. And then you know, they talk about the challenges that these companies have. It's a lot more complex and it would look to me that on the surface with things like some items you have to keep warm. Some items you have to keep cool, you have to do it all really quickly. And so the people put, you know, preparing the packaging, have to know where everything is and then there's delivery and it's mostly in urban areas. So then there's parking challenges and all these things that I didn't necessarily.
P.J: There's tons of complications that go along with it. Apparently surveys have shown that shoppers are still concerned that they're being charged higher prices when it comes to online delivery and also complain about delivery drivers being late. Those are the two biggest complaints apparently.
Patrick: Yeah. And the last thing I noticed was in the second article that we were looking at on grocery delivery, there's the casual drop of Google in partnership with Bain, with Bain commissioned a research study, which as we know working in tech means that Google paid Bain to run this survey for them likely with a hypothesis that grocery delivery was about to explode.
P.J: I feel like they had an a hypothesis in mind. Yes. Something tells me, yeah.
Spencer: So I don't know if this was entirely altruistic on behalf of a like, yeah, let's do it. Let's go for it. We'd like you guys.
Patrick: And you know, I noticed Walmart recently pulled their products from Google Express, which is Google's grocery delivery service. So I think there's increasing competition around this for an incredibly small market at the moment. And I guess we'll see where it goes.
Spencer: Yeah. Before we move on. I, despite our skepticism, I think there clearly is something here and you know, whether it's Instacart or Postmates or Amazon or anything Walmart or Jet tries to do, there's clearly value to having a hall. You're grocery shopping, just show up at your door essentially. And I think like a lot of things on the Internet, whether it was a couple of years ago when everyone's like no one's going to put their credit card into their phone to buy something online. It's like there's all these articles about how many people abandon their carts because it's on mobile and they need to go back to their desktop. No one talks about that anymore. You just do it. I think we're not that far from whole foods being a warehouse of food for Amazon delivery rather than a grocery store. Right.
Patrick: Delivered by robots.
Spencer: Yeah, exactly.
P.J: And that's what the future looks like. Groceries delivered by robots.
Spencer: You heard it here first.
P.J: Yeah, we'll leave it to you guys. Next article of the day. Reddit is raising a huge round near $3 billion valuation. So Reddit is raising one. Sorry, $150 million to $300 million to keep the front page of the Internet running. Multiple sources tell TechCrunch. The forthcoming series D round is said to be led by Chinese tech giant, Tencent at a $2.7 billion pre-money valuation. And now depending on how much follow on cash Reddit drums up from Silicon Valley investors and beyond, it's post money valuation could reach an epic $3 billion. Yikes. And now my first concern that comes up immediately for this, and I feel like maybe you guys felt the same way. Censorship, right? I mean, maybe it doesn't matter, but Reddit remains a relatively safe space for trailers and conspiracy theorists alike. The currently banned apps and websites in China though, like massive lists just to shortlist as Google, Netflix, Facebook, Twitter, Snap, Insta, Youtube, flickr, Tinder, and Reddit of course. And that doesn't even include news publications, cloud storage products and email. So I don't know, there's something feels weird about this, right? Also like Tencent is also one of the most important architects of the great firewall of China. This is serious. There's a lot going on. There's a lot of meat here.
Spencer: It's like this is a different than I expected.
P.J: Oh really? It just seems like there's strange things at play.
Patrick: Spencer, I know you had some hot takes on this.
Spencer: No, go ahead.
Patrick: Well, yeah, I think it's interesting that Reddit has had a lot of challenges over the past couple of years. And PJ, you alluded to some of that where they've had some really bad homophobic, misogynistic, racist, threads that have propagated conspiracy theories and hate speech and they've dealt with it in different ways. Some of the ways that they've dealt with it has been good. Some of it's been not so good. I know their CEO was editing comments and specific threads to make them look a certain way. And then he got caught doing that and had to apologize. If they had been a bigger company, can you imagine if Facebook did something like that? He'd be hauled in front of Congress immediately. So, and I was thinking about the valuation piece of this too, where if you took all the bad stuff out, and you're looking at their monetization model, it's through ads, right? Like most companies. They're like most social companies but they've really only recently started monetizing through ads and their real strength has been a very supportive and loyal community of Reddit users. I don't use Reddit, but I know people who do and the people that use Reddit, love Reddit. They love it. They're like in the community, they're posting and commenting and all that stuff. And the challenge as we know scaling a business model where ads are the primary revenue driver is that you can lose some of that early days, communal feel when you start layering in promoted posts and different types of advertisements and it kind of loses its initial bespoke early day feeling those.
Spencer: Yeah. I think the flip side of the darker elements of Reddit is that Reddit, can be a place for really specific groups of people and that can be people in a city, someone with a certain medical condition, people who play a sport. Like recently I've been looking and there's a subreddit for woodworking and it's like, oh, this is maybe a hobby that I'd be interested in. And there's just a ton of resources and people who are helpful. So for everyone who's out there trying to make a joke, well, if there's a lot more of these people, but for everyone out there who's, who's kind of trolling and you're trying to be a little bit silly, there's a lot of people who are just passionate about something and go to Reddit to share it. And I think it's kind of inspiring actually, that those communities exist on the Internet in a place that it's not just a website for those people. It's a website that can serve any community and it happens to be Reddit for a lot of people.
Patrick: Right? Do you think that this changes anything for Reddit potentially down the road?
Spencer: Well, they stay in business for a little bit longer. I don't think so. I think you're probably reading too much into the the Chinese[crosstalk]
Patrick: have you been spending some time on Reddit recently PJ?
P.J: Actually, I've only been on Reddit maybe once in my whole life. I'm not a big ... My roommate is like obsessed. Anytime we're doing anything like watching a movie, he just is looking at his phone the whole time and he's in Reddit constantly living in the comments. Right?
Patrick: Nba Reddit as a really good, yeah. Community. Right. Community.
Spencer: I feel singled out now because I actually do spend a decent amount of time on Reddit
Patrick: That's all we need to hear from somebody.
Spencer: Don't use Facebook, don't use Twitter. Casually though love reading Reddit. The comments can be hilarious. But like I said, just moved recently. So looking for cool areas, restaurants, bars in my neighborhood and there's a subreddit for it. So just reading through it on a couple of times a week can pick out spots, find somewhere to go check out, and it's actually really interesting to see and it's like having a good neighbor or a friend recommend some places to you. You just there and it's a different feel than just going on Yelp and looking at aggregate and total summation.
Patrick: Are you getting into woodworking? Is that what this is?
P.J: Yeah. What do you, tell me more about that.
Spencer: I won't go down the rabbit hole of the hobbies that Reddit has inspired or there's some really, I'll just ... There's some really specifics. I'll read it. That's all. That's all I'll say.
Patrick: I mean, but what you're describing though, Spencer, is the kind of dual nature of all of these social media sites. On one hand, they can connect people who feel lonely or who are passionate about a certain topic that maybe others around them aren't passionate about and find that community that they'd been looking for. On the other hand, there's Jonses with hate speech and things like that and who knows, maybe Reddit Will start handling this really well and it'd be a success story, so I'll be interested to what they do with all this capital and it's a huge inflection point for their business and kind of their all or nothing shot I feel like so.
Spencer: Just as an example, they're on the weeds podcast of ox podcasts. They're talking about a study of where they paid people to give up Facebook who are on the platform. They weren't planning to give it up. And those people who are basically just happier, they socialize more, they watch a little more TV, which is maybe the one question one thing.
Patrick: And they have some money now, which is nice.
Spencer: But they were less politically divisive. They were a little less informed on some things, but just like genuinely happier. I think one of the interesting things that happens in Reddit versus Facebook, that the communities are moderated by people from the community. So there are subreddits to help people quit smoking, to quit drinking. And when those people will talk about their success, there's so much positive in encouragement and positive feedback and the negative elements of that. Unlike Facebook where anyone from high school that you don't really know anymore can come in and comment and make you feel pretty bad about something or give you that kind of fomo feeling. There's a community of people supporting you trying to do whatever it is. Whether it's something you know, trying to get rid of some addiction or learn some new hobby, which I think so that moderating the fact is it makes it a little bit different than other types of social networks.
P.J: A little more like true democracy going on over there.
Spencer: Or a benevolent dictatorship. In the case of moderation.
Patrick: If Reddit is the front page of the Internet, does that make Facebook like the national enquirer? Who's to say, hi,
P.J: Let's move on. We got a little of time left. Last article of the day. Warby Parker's new shopping tool lets you try on and buy glasses virtually using your iPhone's camera. So now this article is Warby Parker announced new shopping tool and it's more convenient for iPhone owners, Virtual Try-on. The tool, which lives inside the glasses by mail companies app is available on February 4th. So this Monday it just launched. The caveat is you'll need an iPhone X, iPhone XR or iPhone XS to take advantage. So not just for iPhone users. If you have an old school iPhone, you're not going to be able to use this thing either. Spencer, you wear glasses sometimes, right?
Spencer: Yep. You got me.
P.J: You guys can't see. But sometimes he wears glasses. Do you have feelings on this? Do you get ex ... Does this get you excited?
Spencer: [inaudible]radio? Yeah. Not really. I'm pretty straight forward. When I went to go buy my most recent pair of glasses, went to a store in New York, asked the guy for some help. He picked out two pairs, tried them on, chose one, locked out. And I might be an anomaly there, but I think from-
P.J: Boom! I love that.
Spencer: But I think this is really interesting to me because it sort of solves two problems. One is it's helping people try glasses. It's lowering friction to make a purchase. The second is it's giving people a better sense of what they're going to look like without going in the store. So it's going to reduce the likelihood that they need to go in and make a return or [inaudible] me back in, which of course has a cost to Warby. So hopefully for for them the business outcome is it's increasing revenue, making the purchase easier and they're reducing their operating costs by reducing the number of returns.
Patrick: Yeah. To me, reading the article and there was a lot of buzz about this. This story appeared multiple of the new sources that I read on a regular basis and while it's cool and definitely the benefits that Spencer's talking about are real. I also didn't understand necessarily the getting as much buzz as it did because to me it just feels like they took Snapchat filters and turn them into [crosstalk] Whoa, we can do now what Snapchat could do two years ago and it's just Warby Parker glasses instead of like Elton John glasses. I mean it's cool, but I want the Elton John one.
Patrick: So it's just definitely cool and I think there's obviously a business case to be made from a technology perspective. It wasn't super exciting. I think there's other use cases for AR for things like the way that Wayfair and other furniture stores are doing it where you can see, you can overlay a couch in a living room type of thing that would be more valuable than, productize smart Snapchat filter.
Spencer: So you don't wear glasses do you?
Patrick: I do not.
P.J: 20-20 vision. I honestly just don't trust that augmented reality fit. I don't think it'll necessarily match real life. And I guess it's for two reasons. One, I just don't trust that just looking at yourself with this augmented pair of glasses on will necessarily look the way to look in real life. Also, we're not even considering the feel. the feel of a pair of glasses has to feel right. You know, so until they have augmented feeling technology out, I'm not buying.
Patrick: Well, the other thing I was thinking about too, along those lines, PJ is 97% of Americans won't freaking order groceries, but there's going to be some huge wave of people putting something on their face every day that they saw on an app.
P.J: That's what I'm talking about.
Patrick: Hot tech Spencer. I don't know.
P.J: There it is. It's called augmented reality. It's inherently different. It's like if you think about catching a charter as art in Pokemon go is so different from trying to catch on in real life. Have you ever tried, it's entirely different. Wait, one more question for you guys. What I want to hear, what's an augmented reality app that you're just hankering for that you just really want? And I'll give you a second to think. Well, I'll tell you mine and you know, growing up I was very into a Tamagotchi if you guys remember those little pet on your key chain, but just like a cool little Tamagotchi that only I can see my pet. No one can see them. I look around where is he? Okay. There he is on the ground. You've got to feed them. You got to take care of them. And then you know when it comes to having to really take care of him, like you just close the app, close the phone. I don't need to worry about buying pet food or any of that stuff. Something that makes me feel like I have a little buddy.
Patrick: So an AR Tamagotchi
P.J: An AR Tamagotchi you heard it here first.
Patrick: Wow. Here's all my money. [inaudible]
Spencer: You don't use Reddit. You don't order groceries online, you don't think that trying glasses on with your phone is a good idea. But they are Tamagotchi.
P.J: I am on Facebook so you can find just about out of time here. You guys, thanks so much for being on here with me. This is PJ Bruno.
Patrick: Patrick [inaudible]
Spencer: And Spencer Burke.
P.J: signing off. You guys take care.