Why Ecommerce Is About to Get Even Harder (Here’s How to Survive)

[00:00:00] Richard Gaffin: Hey folks. Welcome to the Ecommerce Playbook Podcast. I'm your host, Richard Gaffin, Director of Digital Product Strategy here at Common Thread Collective. And I'm joined as I always am by Taylor Holiday, our CEO here at CTC. Taylor, what's going on today, man?

[00:00:14] Taylor Holiday: You know, sir, we are just living in a dynamic, ever-changing world

[00:00:20] Richard Gaffin: So true.

[00:00:21] Taylor Holiday: to navigate and do the best that we can know, felt like meta CPA, CPM changes being the worst of it was maybe going to be the story this year, but holy cow, man, it feels like already it's been a roller coaster of excitement and enthusiasm and chaos and, you know, so. a, it's a crazy world we live in.

[00:00:40] Richard Gaffin: It sure is. And and we're going to be talking kind of more about that today specifically through the lens of, of AI and how that's going to start to play a role. Did want to mention up top too, that obviously the thing on everybody's lips by the time this gets published is going to be, The tariffs, but we will have some more thoughts on tariffs.

And I think like just generally our stance on how to build a business that can resist chaos is sort of. Going to be part of that conversation, I think. So tune in for that. Taylor is writing us a blog post, if you can believe it. And we're going to have that. We're going to have that up probably later today or this week.

So, and also chatting about it on Thursday.

[00:01:14] Taylor Holiday: yeah, we're going to have a cool conversation on Thursday with drew from Iris and Leo from final loop to talk about both the sort of present macro financial state of the industry. And then we'll definitely be talking about how tariffs are going to further. And that's going to be, I think a pretty, would make sure you bookmark that one, cause I think it's going to be a little bit of a. An alarm bell sounding. There's some things that are really concerning for me about some of this aggregate financial data I've seen about e commerce. And then you combine that with tariffs. And there's a, there's some real headwinds ahead for our industry. It's not an easy time to be growing an e commerce business for sure. So that's going to be the, like, worrying and a little bit darker, but important conversation. With some really smart folks on Thursday. And today I think actually maybe this is an inverse in one way. This is sort of more of the optimistic solution that may be on the frontier to, to some of these problems.

But it's a, it's a wild time. There's certainly challenges and I know the tariff stuff, and hopefully we'll get more clarity over the next 48 hours as we get ready to have that conversation. So I'm going to publish a blog post today around some of the research I've done on the topic that'll go out Thursday, we're having that conversation.

So. Hopefully this is helpful for all of you.

[00:02:20] Richard Gaffin: Cool. So let's then let's, let's go into that other, the more optimistic conversation, let's say which is kind of the, the context here is you tweeted out on this would have been Saturday, right? On the first. Just kind of, some reflections on how technology maybe has affected labor for us and how that's going to happen generally in the e commerce space.

So why don't you talk through us a little bit about like kind of summarizing this and, and cause this is something you've been thinking about for a while. And so talk to me about how you kind of came to this.

[00:02:49] Taylor Holiday: So, so we're going to get to a conversation here about AI and its implications on e commerce and in agency and our service business first. But there's sort of a journey to it that I think is part of the progression, which is I shared a tweet on Saturday, sort of the journey of CTC talking about how workforce is a fraction of the size.

It was a year and a half ago, just for practical numbers, because I messed up the percentages there. I was inverting them in my tweet, but we've gone from about 200 people to about 70 people while doing more revenue at. higher margin for us as a company substantially and while lowering the cost to the customer.

So that's like the, I call it the sort of the Holy Trinity of business improvement processes, labor efficiency operating income efficiency, and also value to the customer. A lot of times people think about like price and margin increase as a mechanism of just increasing the cost of the customer.

But I ultimately think that you want to be able to Increase the value to your customer as well for your service is that you want to improve the quality of the service and the price at the same time. It's sort of a very Amazonian principle, if you will, of like, whoever can offer the most for the least wins while also still making money in the, along the way, and that's really what I care about trying to do. And so we've been thinking about some of the ways to do that. And some of that has been through just better systems and process and intention. Some of it has been leaning more into technology and our platform statless to sort of, systematize our work. Productize our work more consistently that allows people to to have more capacity to do more. Some of it has been support around building a global workforce for the global accelerator program and being able to access the lower end of the market in ways that we couldn't before while maintaining the same quality of service. And that progression of like institution of technology, variable labor force greater capacity through system and process is like this progression that I think the industry has been on over the last few years when margin innovation is required.

When you have to be more efficient in your work, it tends to draw out of you. These various, evolutions as a business. And I think the next step of that, as we sort of look out, is that there's this very obvious additional component to this related to what AI is going to enable in our work. And so I think I've just been reflecting a lot on that.

We just came off of AI week where Jacob came out to CTC and spent a week with us and a few of our leaders in our departments to start to hone in on where do we think we can deploy this tooling to the max benefit of us as an organization and our customers. And so I've been thinking a lot about it and that's the impetus for this conversation and that.

[00:05:20] Richard Gaffin: Yeah, that makes sense. So maybe let, let's go back a little bit because I, I remember the very first time that we talked about this, you and I, this was, I dunno, a couple of months ago, maybe two, three months ago, and you were driving back from some meeting and you just had sort of this, the flash about what the future of AI and how it relates to particularly like employment labor, that type of thing, what that's going to look like.

And that kind of like rolls out in this tweet a little bit kind of near the end. So maybe talk about like that epiphany or whatever, like that, that very sort of initial

[00:05:51] Taylor Holiday: Yeah.

[00:05:51] Richard Gaffin: of thoughts that you had.

[00:05:53] Taylor Holiday: Yeah, it was. There was sort of two things. One was I've shared before how the global accelerator seems like naturally provided weekend updates to our customers in a way that like wasn't something we were doing at CTC main. And then there was this other conversation with a client where someone was asking for something on a Saturday and their internal team member wrote back like I'm driving back to Santa from Santa Barbara. I'll get it to you when I get home. And that was like, Above and beyond for an employee on a Saturday, right? They have no obligation to respond. But the problem with that is just this idea that our business is 24 seven and the answers to some questions are needed immediately and people aren't readily available 24 seven and needed.

And, so it was this sort of initial light bulb of like, Oh, there is this thing in the form of AI that is always available to you. And when we think about, especially our business, So much of it is customer service. It's being available to interact with clients and their needs and wants and desires that are not always consistent and logical, like entrepreneurs, just like any of us or, or people inside of a business, they'll go down the rabbit trail at various times a day.

And they'll want to know like, Hey, what's with X, Y, and Z at 4 22 PM on a Friday. And like, it's just when they started thinking about it. And so they fire off the question and it would be totally acceptable and normal to say. I received your question. I'll get back to you on Monday when I get a chance to answer it.

And, but the problem is the person on the other side is in that moment looking for answers now. so there's just this reality that omnipresence is an attribute that the AI possesses that we as people do not. And so that becomes a consideration for the kinds of tasks that it might be better set up to, to help with than others.

[00:07:33] Richard Gaffin: Okay, so let's, let's kind of connect back here. So, let me just read out like the 1st kind of part of this tweet and then how it sort of turns, which is so in the last 3 years at CTC, our labor profile has changed dramatically. Our FTE count has decreased 130%. Our average salary per employee has increased 50%.

Our operating margin has increased. 300 percent all while our average cost of the customer has decreased. And I think we have further to go in all of these areas, the Trinity of higher margin for the company, higher salary for the employees and lower cost for the customer is what technology can enable.

I believe this is a microcosm of what AI is going to do to many sectors. The obvious tension is that ultimately this path leads to fewer total people employed. So maybe unpack that a little bit, like how, how, what our situation now is going to sort of translate more largely.

[00:08:22] Taylor Holiday: To do the same amount of work. CTC requires less people than it used to. And I think to do the same amount of work in the future will also require less. I'll give you some, like, really practical examples of the way that we're thinking about this problem and sort of decomposing it into its component parts. Right now, media buyers. Okay, at CTC, they spend. About 20 minutes every morning writing something we call map note. Okay. And we have this centralized workflow at CTC that is called our growth map. of it as just the daily expectation of all of your metrics across all of your spend, et cetera. it's each media buyer's job to wake up, to analyze yesterday's performance, to understand where they're at in context to expectation, and then provide. Recommendations and tasks about what they will do going forward. And they have to do that across three to five customers every morning. Well, if you think about very practically what they're doing, they're opening up a spreadsheet. They're looking at their performance. They're getting an email from statless.

They're looking at the performance to expectation. They're opening up business manager. They're looking at how each campaign performed, where there's a gap to expectation. And they're making a recommendation in light of that, of how they should proceed forward. That takes a long time. So if you take 20 minutes a day, every day for a month you know, you're looking at somewhere between four to six hours of work a month at the average salary employee, you can sort of get to how much time across the organization, across a bunch of media buyers gets invested into this very basic function. Well, what we found is that one, those notes, they, they tend to end up in this place where for the customer, don't actually value it as much as we would like the interaction ends up being a bit tedious and too long and not always formed, it's not necessarily creating. The level of impact we want relative to the effort, but the information is important to exist. And so you look at that and you go, like, wait a second, that entire process. What LLM's have sort of unlocked. Is this a connection between data and language where we can actually take. All of the one map notes that we've ever written, we can give it to chat GPT or to another LLM to understand the contextual communication form factor.

Like how are we speaking? What makes it sound human? What makes it sound thoughtful? And then allow it to combine the data analysis that it can do. So automated with the language and form factor that we want. And all of a sudden we can instantaneously replace that entire word to where we, you know, and we're working on this just a media buyer.

Every

[00:11:12] Richard Gaffin: Mm hmm.

[00:11:16] Taylor Holiday: buyers in every channel have to provide this content. So now you go 20 minutes of work across five team members, across five clients, across the entire organization, and you can see how suddenly this like very comprehensive workflow that's taking tons of time can just suddenly disappear. And in a way that's not even like, technically complex, like the amount of time it will take for us to recreate this. I think we can do it in weeks, like to fully replace it. And you just realize like, oh, you can break out a lot of work like that. And you can start to see how the capacity transforms dramatically of the organization overnight.

[00:11:54] Richard Gaffin: Yeah. So the idea then is that and kind of like the thrust of where you go with this is that like eventually So you use the example of the map notes. That's like a simple sort of tedious task that up until now has required a human's brain to do, but we're sort of moving into an era where that type of task is no longer no longer requires an actual person.

Now, part of like, like I was saying, the thrust of this is that is eventually coming for all of us. I don't know whether you believe that a hundred percent or not, but how do you see that so I think you say here, like, I do think it's really important for every person to honestly assess what parts of the current job are better executed by AI automation or outsourcing. And from there, you can begin to orient your skill development into areas where the replacement timeline is more latent parentheses.

It probably comes for all of us and the immediate value to your company is greatest. 

[00:12:44] Taylor Holiday: Okay. So, so I'm just gonna stick with the example inside of my business because it's the most obvious and then hopefully it can help you to extrapolate into yours. So let's stick with this media buyer example. So the map note is the area where it's like most, like really, obviously you find yourself. Looking into one area typing data that is just an extrapolation of existing information between one person to another. There's no interaction. There's no presence. There's no, it's just, it's a very monotonous task in a lot of ways. Like, that is the kind of thing that if you find yourself participating in a process like that, like, it's a high likelihood that that is not what you're looking for. The high skill work that is going to increase in value over time. And so the other part of this that I think is really important is that CTCs labor profile in terms of the average salary has gone up a ton and I want it to continue. But what that means is that we're constantly consolidating human time into the highest value activities. So if I think about something like I'll just use like an obvious one, like selling in our business to net new customers. Now, this is like a highly relational process. Okay. have to build connection and trust and you have to objections. You have to work through really nuanced edge cases. That process is like highly intensive and human right now. It's not to say that at some point we couldn't recreate and on zoom. AI that would do that and execute that process as well as Peter and Matt do. I don't see that happening anytime soon. It's multimedia, right? So it happens in video in person written email slack.

It happens across all of those. It involves complex business edge cases and nuance and human emotion and like lots of things that are really challenging to replicate. So I look at that and I go, that's going to be really hard to replace. Over time. And it's really high value work. The same thing with like client interaction and presentation.

So, there's the process of like doing the work for the customer, building the ad account, designing the ads, these kinds of things. And then there's the work of getting on with them, explaining why you did it to get their buy in in it, to hear their concerns about it, to work through understanding what's happening on their.

Business side that may not show up obviously in the data, the shipments delayed, this product color has this problem. There's, you know, this human that disappeared from the organization for a couple of days, and now the works backed up like where you have to absorb and translate that into internal workflow.

So anything, human client interaction, I think is really high value. Being an authority that builds trust in our own work, designing our own system, designing systems, designing workflows. These are all activities that I think are going to be more latent to be replaced. I don't, I think there's an They all may be at some point, but for now I would just like, think about production level tasks that doesn't involve human to human interaction as being the kind of thing that probably can be quickly obfuscated away. And so I think you have to think about how much of your work exists in each of those places. And then. The other thing I sort of said in that tweet was like, just go try to replace your work. Like

and think of like, what is somebody asked me in Slack the last two weeks? Like, if I go look at all the questions that are asked of me in my job, then I just, if I just literally copy and pasted that chat GBT, like how comparable would the response be to me?

[00:15:56] Richard Gaffin: Hmm.

[00:15:56] Taylor Holiday: what is unique about the knowledge that I possess that the system would take a long time or doesn't have the context window to get to that is really critical. And if so, then great. I feel like it's going to be harder for the system to get there. But if it's already like, you know, like as an example, the tariff question, right?

Like,

[00:16:12] Richard Gaffin: Hmm.

[00:16:13] Taylor Holiday: should you go to your favorite podcast and expect the answer to the tariff question? Maybe I think you'll get some more. Of the kind of communication you're used to consuming, but in terms of actually being able to analyze the breadth of the internet and concisely summarize and drive insight to you.

Like I think probably deep research is probably going to be better than the podcast at that and more instantaneous. And so I think just in each of these places, there's these questions of like, how much is this thing that I'm doing replicable? In its current form and what form would I need to start moving myself towards to get out of the risk of that?

[00:16:50] Richard Gaffin: Yeah, so the, the, a lot of the, like the thrust of this particular observation in the tweet is around again, like I was saying before the impact on the employee and the ways in which the employees are going to sort of have to rethink their skill set in order to continue to survive in this world. But what's the impact?

So obviously, like you kick it off talking about how we've hit this sort of Holy Trinity of, of you know, whatever, better margins and lower costs to the customer. What, what are, how do you think about the impact on the business owner in like the next year or whatever? Like what, what, how's this going to play out?

What are some potential problems that could come with it?

[00:17:24] Taylor Holiday: Yeah, well, I think all the industries are in a slightly different place. Like, e commerce in particular, if we focus on that with our audience is in a place where like they don't have. Margin expansion happening the way we have in the service business.

I actually think like we are best positioned in many ways to take advantage of this because we deal with a labor, like a revenue profile where like 60 to 70 percent of our revenue is labor.

Like, and so if you have this sudden massive innovation in the efficiency of labor, like that doesn't make the cost of goods cheaper.

[00:17:54] Richard Gaffin: Right.

[00:17:55] Taylor Holiday: product, right? So, commerce in particular is in this unique moment where the actual opposite is happening, right? Like tariffs are an increase to the fundamental cost unit of the business. And so that's margin pressure. And then like marketing expense because of the low barrier to entry, the competition is so immense that like marketing is also under pressure. And so there's this, there's this intense, intense. Environment where trying to figure out every available dollar of margin release is critical.

And so I think that's where, if you think about e commerce businesses have this, having a labor profile of like 10 to 15%, 10 to 20%, maybe in max cases, like there's only so much gain to be had there. And so it's a harder. Realization of value that has to actually move into other forms where you, you have to start to deploy it in like a problem solution way, which is that I've got a marketing efficiency problem.

Help me think about solving it versus like, I've got this production task, just replace it. Like, cool. You replace customer service. Well, Customer service as a line item in e commerce businesses was like, maybe one to 2 percent of revenue. Like how much, how much innovation is there really to be had there? I think that where in each industry, the kinds of solutions that are going to be required you know, Harder or easier, depending on how much of it is just like taking tasks that are repetitive and consistent, but expensive and reducing the cost of them versus do I need to use this thing to actually help me solve my supply chain? Like that's a very different, very different thing.

[00:19:29] Richard Gaffin: Yeah, yeah, makes sense. So, and talk to me about like, so, so let's go back to the, the sort of moment that you had this kind of revelation, right? Driving back or for wherever you were what kind of what I want to know is like, so that that's at least when we talked about it first was sort of like, you felt like it was this kind of like this epiphany, right?

What, what do you feel like the overall impact of this is like, what is, are you worried about something here? Are you like, Does this feel like overall positive, negative, maybe it's just going to introduce a certain amount of chaos, but what is like the thing that you're seeing happening in the next year or two years or whatever that where this could become like a, like a real issue.

[00:20:12] Taylor Holiday: Yeah. Well, there was sort of two thoughts I was having, three thoughts, really. Like there's different perspectives. There's the perspective of my business. There's perspective of e commerce businesses. And then there's. Perspective of sort of the people in the middle of it. It sort of feels different for all of them in my business.

Candidly, it feels really exciting because again,

much of the cost of my business is labor that like, it feels like service businesses are best set up to capitalize on this problem in the short term. Now I sort of talked about the problems on the e commerce side, but I also think that what's the other thing that's really exciting and this overlaps with the people side is that I think. I wrote in that tweet about how I think org charts are going to fundamentally change is that I would not be inside of an e commerce business right now being like, I want to be the director of marketing one day, or I want to move up to be the head of growth. Like, I just think that the whole thing is going to be torn down and reconstructed. And you just take something like I saw Greg Brockman, the CEO of open AI tweet the other day, how their new product that they released called deep research is thing that it's changing the most amongst his internal employees behavior how they do e commerce product searches. Okay.

So let's, let's just take him at his word for that, because I don't know that, that, that is, he has any incentive to, After that issue, but let's say that that's true, that the fundamental medium of discovery for something like a e commerce product shifts out of Google into LLM, like chat, GPT, like that changes sort of everything about how we think about.

Something like SEO, how we think about how LLMs get to answers, like what is best. And so I wanted to play with this because I thought about how could I go after understanding interaction using deep research? So deep research is this newest version of this model where it's like, it's, it goes into, it takes more time to do a longer set of information gathering around a product.

So I, I'm a. I'm getting ready to start like getting back into some training around a goal I have for my birthday related to VO two max. And so, okay. So the, so I thought about this question, I thought, and I was like, I wanted to sort of see how these things were going to be different. So wrote to both Google and chat GPT. This question. Okay. The question is what are the best running shoes for a 40 year old. Okay. Former athlete looking to improve his VO two max, which will involve some long distance running and some sprinting. Okay. So that's like, that's the question. To see like, okay, in both of those scenarios, which returns for me a better answer. Well, when I type that into Google. I'll share a screenshot of both of these because I think it's, it's an interesting sort of question. Well, number one is that Google now is more and more pushing me to an AI overview response to my question. Right. So

[00:23:14] Richard Gaffin: Hmm. Hmm. Hmm.

[00:23:16] Taylor Holiday: breakdown of the answer that leads me to it says for a 44 blah, blah, blah, burst, like the Nike Pegasus or zoom fly series, ASICS, Kayano or Nova blast, or Socony Kinvara, depending on your foot type and preference, considering a carbon plated shoe, blah, blah, blah. And then I've got the Reddit of people who have increased their VO two max. How did you do it? Which is not the question I asked. And then the number one thing I get is runner's world, seven best sprinting shoes in 2024, which is an article that was published in September of 2023. a freaking useless piece of content. And it's the number one result below the Reddit response. And this is where I feel like Google has really. Sort of lost its way as it relates to the future of this question versus chat GPT Who has some contextual knowledge for me follows up with the actual set of questions? He says or it says excuse me

[00:24:14] Richard Gaffin: Hmm. Hmm.

[00:24:19] Taylor Holiday: on road track or trail? Do you have a budget range and do you have a favorite brand? so it's like actually The way a salesman might in a store gathering additional context to provide me a thoughtful answer. It then gives me as, as I answer those questions and then it gives me the reasoning and then the top shoe recommendations.

It gives me one, two, three, four, five, six, seven. And I'm like, oh man, I already feel overwhelmed by that. So I say, can you just simplify this down to a single recommendation and a location to purchase based on the best value current price to benefits you have listed? And it does. It gives me the Saucony ride 17. It's the answer. It gives me an answer to my question. And then it tells me, okay on the official website right now, the ride 17 is listed at a sale price of one Oh four reduced from one 40, which is better than Zappos one 39. But if you go to fleet feet right now, you can get the South County ride 17 with free shipping on orders over 99. So, and then it actually gives me, this is the other crazy part. It says considering both price and convenience purchased directly from Saucony. Additionally, use the code sprint at checkout and you'll get free shipping.

[00:25:42] Richard Gaffin: Wow.

[00:25:42] Taylor Holiday: did it get all like, so, so, so it helped me solve the best available price, gave me a coupon code and gave me a decision on the product based on my needs. And it gives me a little source data, right? Like it gives me little glimpses into what it's using for that. I'll click over here. So it's, it's got a reference from Tom's guide, outdoor gear lab. Doctors of Running, SoulReview. com, com, Runners World the Run Testers store. Like, so it scours tons of these, And so when I think about this, I think about, and we used to talk about this a lot, that like, Winning the search battle around the question, like back at Kayla, we would talk about like the best silicone wedding ring, like the cohesive internet's collective answer to that question becomes really, really important.

So my point of all of this is to say that if I'm inside of an organization right now, okay. And let's imagine I'm looking up at the org chart and I have a belief about the future of this direction, what I would raise my hand and say is, Hey everyone, I want to take over responsibility for LLM SEO functionally, like I want to make our brand appear in these.

Cause I think this thing is going this way. And modern retail has an article right now about how chat GBT is a referral source for traffic is growing. For

[00:27:00] Richard Gaffin: Interesting.

[00:27:02] Taylor Holiday: And so I would say like, I'm going to go solve that problem. And suddenly if you could unlock what is functionally at this point, going to be organic arbitrage traffic, it's not paid at this moment in time. Now you're all of a sudden creating margin expansion at a non paid price. You're gaining individual importance inside of an organization on a thing. That's moving this way. Right. And so I just think about those kinds of opportunities at this moment for both brands, somebody is going to move first on this. Somebody is going to get some level of arbitrage for some period of time. Marketers will always screw it up. It'll get competed down. But in this period, it just feels like there's a bunch of things like this, where it's like, a bunch of people spending tens of thousands of dollars a month on video creative.

If you could figure out how to use AI to do it for less, you have a leverage point as a business. You know, there's, so there's all these ways that in this moment, smart people are going to run out in front. Leverage these tools to create periods of business opportunity that's going to help their brand take market share.

[00:27:59] Richard Gaffin: I mean, so it sounds like in summary, it's like kind of the impact of this on e commerce, maybe something more along the lines of, although yes, it can speed up things like I don't know, the creation of digital assets or certain types of decision making processes on the media buying side. But really what it is, it's like, it's going to, Potentially be transformative to like, what, what is the front page of the internet?

Like when people come to the internet, what are they coming to? And if it's not Google search anymore, because the, the sort of degradation of Google's results over the last couple of years has been really well documented and it becomes something more like a chat GPT, then all of a sudden, like the way that we think about people's entry points into the digital world at all becomes completely different.

And since e commerce lives and dies there, that's the type of sort of thinking that's needed to survive or something like that. Does that Summarize it. Well, you think, I

[00:28:48] Taylor Holiday: I think that change in our behavior is often like organizations are likely to change if their dissatisfaction with their present state combined with the quality of the plan is greater Then the cost of change, right? Like, so, so I think that oftentimes if you try and bring new ideas to an organization, when it's like going well, you'll often be met with like, yeah, maybe, but like probably not necessary. But now I think you're, what you're going to see is people more willing to try. More out of the box ideas than ever, because it's so obvious that the present construct of like, spend a bunch of money on meta to acquire customers, not profitably while paying more for a higher cost of goods product at an expensive labor force, like does not equal profitable business.

Like, so, so like, I think that the underlying construct of the whole thing is up for exploration. And so in that kind of space, I want to be an agent of change because It's survival necessity. And so I think that being, seeing that for yourself and asking, where's my company in this, And so how should that inform the ideas that I bring forward as a person within it that wants to garner develop, and then you can apply that more broadly to the whole industry is when things are going really great, coming in saying like, do this really different thing, the industry is sort of going to reject it, but right now there's such an appetite and desperation that I think there's a big opportunity for, for people.

[00:30:17] Richard Gaffin: think one more quick question, then we'll wrap up, which is like, what is, do you have like a quick sort of mental rubric for determining the extent to which like your business is going to be affected by? By ai, by whatever labor, all that type of thing. Like what, how do you think about that?

[00:30:37] Taylor Holiday: I think that you could. Apply all of the current dynamic variables and say, and do something like, where am I importing my product from? Therefore, what is the change to cost of goods on my business? What is my current medium of acquisition? And what has been the rate of change of that over time? Is it growing or shrinking? And then the third is like, what, how much is payroll as a percentage of revenue? For my business currently, therefore how much of that will have to change in the future. And so basically you just do, I hate to take it back to it, but go to four quarter accounting sort of look at your business over time. this is the thing we're going to talk through Thursday. So I'll use this as a bit of a tease is that median EBITDA right now for eight figure brands is about 8%. Okay. So at an 8 percent EBITDA rate. And I'm going to walk through this math on Thursday. If your business is growing 30 percent annually, you're actually creating negative cashflow.

Your bank account is shrinking. You can't actually sustain it. And so even if you're profitable, want to grow to 30%, you have to change something because, and that's with like a median cash conversion cycle of like 90 days. And so understanding composition of your business financially. Across those vectors. What are my current cost of goods? What's my current marketing as a percentage of revenue? What's my current op ex as a percentage of revenue. And in particular as a subset payroll and EBITDA, how do we, how are we capitalized you know, it's sort of business one on one I've talked a lot about this internally with our people understand how your company makes money, what are the limitations to its ability to produce growing cash, and how could you be an agent for change against that? I think it's a really important skill for people to take a step back in this moment and to just not assume things are great, but to actually look at the company, dive deep and try and find solutions to those problems. And I think you have some tooling right now that's emerging that may equip you to do that better than ever before.

[00:32:34] Richard Gaffin: Mm-hmm . Yeah. So actually, and, and one thing I'll say here is like, we'll link in the show notes to to an article called the Anti-Fragile Scorecard, which is basically like, this is something we did back in, so this is right when Covid was sort of winding down and iOS 14.5 hit. And everybody was, was sort of struggling with a lot of the same things that they're struggling with right now.

And basically it's, it's a rubric, seven metrics by which you can judge the extent to which your business is vulnerable to chaos or vulnerable to change or how well it's going to do in downtimes or potentially the upcoming hard times here. So, we'll link to that. That's definitely like a useful tool to begin thinking about exactly what you're talking about, Taylor, those specific, those basic business metrics that assess basic, how vulnerable you are essentially.

So, anything else that you want to hit on this topic before we go? all right, cool.

[00:33:19] Taylor Holiday: One of those things to be tuned into every day and to continue to find for how you can leverage these tools on your behalf. And it requires like. Play time. It requires some intentionally crafted space to see what's possible and to taste it and feel it. And so I would just continue to encourage people to, to do that and to try different solutions, to interact with people especially if you're in this point, and again, the, the whole sort of setup for my tweet was like, if you're at this point of your career where you're like, I'm kind of dissatisfied with my growth potential, I'd like to like, figure out how could I unlock a skip level, how could I. Double my salary in the next two years. I think that there's this kind of potential for people who want to think like that. And if you're one of them, I want to know you, I want you to come impact my organization. So, that's what I would just sort of say is that this moment's uniquely equipped for that kind of step function change.

[00:34:12] Richard Gaffin: All right. I think that's that's going to do it for us for this particular episode. Tune in later. We're going to be doing in a couple of days, actually, I'm not sure when it will come out, but we'll be doing some tariff talk upcoming. But till then we will see you guys next time. Thanks for listening.

Goodbye.

[00:34:25] Taylor Holiday: Goodbye.