Aggregator 2022 Trends: Tech, Talent, and Turbulence ⎜ Perch ⎜ EP 208

Ryan Cramer: What's up everyone. Welcome to my corner of the internet. I'm your host, Ryan Cramer, and this is Crossover Commerce presented by PingPong Payments, the leading global payments provider helping sellers keep more of their hard-earned money. Hey everyone. Welcome back to another episode of Crossover Commerce. I'm your host, Ryan Cramer, and this is Crossover Commerce presented by PingPong Payments. This is my corner of the internet where I bring the best and brightest in the Amazon and eCommerce industry. We touch on all topics, anything from sourcing, logistics, marketing, advertising, business operations. You name it, we probably touch on it in this podcast. This is episode 208. If you've been here before, if you've never heard an episode, thanks for joining in today, for watching on LinkedIn, Facebook, YouTube, and Twitter live. What does that mean, live? Well, you can actually interact with our podcast by asking your questions in the comment section. Just go ahead and shout out where you're listening from, what questions you might have, anything of the sort, or just comments you might have about the podcast or for our guests as always. But if you're new to the show, this podcast is presented by PingPong Payments. Who's PingPong Payments? Well, it's helping more sellers and entrepreneurs save more of their money. Put more money back to that bottom line and make themselves more profitable. What's that look like? Whether it's sending or receiving funds internationally with your suppliers, your sourcing experts, your VAs if you are working with multiple VAs internationally, help them save some money and their bottom line and don't pay fees for banks or any other sort of third party software. Sign up for free with PingPong Payments. Just go to usa. pingpongx. com/ podcast in order to check out past episodes of our podcast, but also to sign up for free today. You won't regret it. Go ahead and check out PingPong Payments and let them know Crossover Commerce sent you. That being said again, episode 208. We're trucking along through this week. I've called it D week. A D week because all of our guests before today started with D. But we're going to go ahead and pivot a little bit back to one of the newsworthy, I'm going to call it, businesses that keep flashing great headlines in the Amazon and eCommerce space, and that is the company Perch. Who's Perch? That is a company and one of the biggest fundraising aggregators in this space, acquiring now over 100 brands to date that they're operating and managing, not just in the United States or North America, but worldwide. Many great things that are coming out of them. One of the favorite topics I love discussing is taking those businesses and elevating them to the next level and how they're doing that. As you saw in the episode, we're going to be calling this one, Aggregator 2022 trends, tech talent and turbulence. What do each of those mean? Well, we're going to be going through that today. We want to bring back again, I call him a friend of the show already... He made his first appearance on our 200th episode. Without getting his first standalone episode, I wanted to go back and just make sure that we were able to sit one on one and discuss all things Perch with him directly. I want to bring on a friend of the show, but now he can get his full episode in with me, Nathan Sieminski of Perch. Nathan, thanks for coming on Crossover Commerce.

Nathan Sieminski: Hey. Yeah, thanks for having me, Ryan. This is a pleasure. It was great being on episode 200 and the standalone should be fun.

Ryan Cramer: Well, now you get a full hour to talk and not have to worry about talking and sharing your turn with other people. I'm appreciative of that you said yes. You have a sweet studio. I already know where you're talking from, but for people who know Perch located in Boston, but that is not where you are. Correct? Where are you talking from today?

Nathan Sieminski: Yeah. Without getting as specific as a city, I'm kind of being a digital nomad right now, but I am in Op Art Studios here. Which is a music studio that a friend and I launched about a year and a half, two years ago. We've not lived together in a while, but I'm visiting him here in Op Art Studios. This is kind of mirroring what you've got going on here in the background.

Ryan Cramer: I was going to say, great minds think alike. I swear this is the thing that people ask about is the background first and foremost, when they hop on here. It's simply just foam padding or I should say a little felt padding. You can buy it on Amazon. It's a third party seller, so I'm supporting the small business owners out there. Making sure that again, it's a super great product. It gives a lot of design dimension and actually functionality. Because I'm in a corner, everything vibrates surround here so I had to get something in here to help with that. But Hey, thanks for jumping around. I know you're traveling around. That's the beauty of being in the business we are today, is you get to travel and work at the same time no matter where you are. We haven't gone into your background yet, Nathan. You were one of the first couple of employees to join at Perch, but kind of give me your background to where we are today.

Nathan Sieminski: Yeah. I was employed 38 at Perch. I joined in kind of March of 2020, which was early days. It was before the big SoftBank 775 million Series A. At that time, I wasn't sure what the trajectory was. I knew that we were going up, but I didn't realize that it would be so quick. We ramped up to 200 and nearly 260 people since I joined. It's been like a whirlwind. But my background is, I kind of took a long and winding road into eCommerce. Originally out of college, I wanted to be an ambassador really badly and so I joined the state department through this thing called the Fulbright Program. Which is a cool kind of opportunity to go abroad and kind of be a cultural ambassador essentially in another country. I lived in Korea for almost two years and my family has many connections to Korea going back to my grandfather who fought in the Korean War. Both my parents are in the military and were stationed in Korea briefly. Then we hosted an exchange student from Korea for 10 years. It was an exchange program, but I hadn't actually done the exchange on my end to Korea. So it felt like it was my job to go to Korea. I lived there, I taught English and I did a few other cool kind of projects, cultural ambassadorship type of projects while I was there. Then I came home kind of unexpectedly due to a family issue. I was looking for the next thing and fell into kind of PR and marketing with a kind of boutique agency called Indicate Media who just had some really amazing clients all over kind of the tech world. Anywhere from kind of big data analytic companies, publicly traded Indian companies, US companies, down to kind of even a VC. One of our VC clients was Volition Capital, which is a Boston based VC fund that was somewhat famously the first investor in chewy. com. Through that, they have bonafides in the eCommerce world because Chewy was such a success story and was turned down by over 100 different VCs before they ended up with Volition. That is now a publicly traded company and is one of the biggest kind of pet food eCommerce platforms. I kind of got to be a fly on the wall in conversations with Ryan Cohen and the lead investor, Larry Cheng, and just absorb a lot. I was fascinated with the eCommerce world. Anyways, I was exposed to the aggregator model as a result of my work with Volition Capital. I saw an investment thesis and my job was literally to turn it into a blog post. I saw an investment thesis looking at this model and I was so fascinated by it. I was like," I have to find a way into this industry." Into the aggregator industry. Which for people who don't know in your audience, I think most should, but eCommerce aggregators like Perch are essentially private equity for Amazon businesses. We acquire Amazon businesses, we roll them up kind of at scale and try to look for ways to use economies of scale and greater marketing dollars and things like that to really grow those brands and take them to the next level. Typically these eCommerce entrepreneurs on Amazon are a husband and wife couple or kind of a small bootstrap team essentially. You hit that threshold when you're successful on Amazon where you just don't know how to scale it. You either have to build a team or you can sell it. That's what Perch does, is kind of give them liquidity where they can ride off in the sunset and do the next thing. Then Perch can kind of get the economies of scale going and optimize the brands at scale. I saw the general model and was fascinated and put feelers out and ended up at Perch. I'm really glad that that worked out because Perch has proved to be a really awesome company. I'm very happy to be here.

Ryan Cramer: Well, I'm sure they're glad to have you here. Obviously there too. What's such a crazy thing is you joined actually really early 2020 when a lot of the news hadn't broke, like you had mentioned too. Which is really fascinating as a person of eCommerce. You came in and you pervaded really quickly. What has it been like now coming and jumping into it and kind of immersing yourself almost a full year of, Hey, I know eCommerce? I can see what Amazon people go through and the ups and downs of it all. You probably hit probably one of the craziest, I guess, two years or so of eCommerce in Amazon in terms of lockdown. The here at PingPong. I joined in April of 2020 here and just kind of have seen everything through the lens of both pandemic, but sourcing, logistics, all the kind of ups and downs I was going through on. What's it been like to kind of look through it as a not normal times employee there?

Nathan Sieminski: Yeah. Well I mean, I think the pandemic really spurred a lot of the early investment into the space. It got a lot of people thinking about," Man, and maybe eCommerce." Because there was this huge COVID pop that happened in the early days and really through the end of 2021. It kind of dropped off in the summer. Well, where people had gotten the vaccine and were going out and shopping in stores, but eCommerce has been on this long run and so the industry exploded and it was fascinating. But eCommerce has been growing extraordinarily fast for a long time. Though there was this crazy pop and kind of maybe a normalization that's happened, it will continue to grow. I think we're around at 13% of all kind of retail sales are eCommerce today, which is still early in it. You know what I mean? In the COVID pop, I think it went up to 16% and it's now back around 13 or something like that, but it's going to creep up year over year. The last decade or so has been this crazy explosion with new marketplaces and Amazon. I'm just excited to be part of it. It's just been fascinating.

Ryan Cramer: Absolutely. The number of you're referencing is definitely on point, and obviously it fluctuates quarter to quarter depending on seasonality and whatnot. That's the thing to mention. When we say retail sales, for everyone listening to this, retail sales can be anything of you buy in a grocery store, a brick and mortar store across the board all around the world. eCommerce makes up, you said, roughly and that's correct again, 13 to 16%, depending on seasonality. Of that 16 or 13%, 40 to again, maybe 50 now percent is Amazon sales. Maybe that's the curiosity of why this is so small and minute. In comparison to the people outside of Amazon and the space that live in and breathe in it, there's still so much opportunity for growth and expansion and just making an impact in the space. That's what I think Perch and companies like you guys are doing. That being said, what's kind of the vision that you kind of see Perch going high level in 2022? Maybe let's start with that and how you're going to continue to evolve? We have 100 brands in our portfolio. Is it going to continue to be agnostic, going to different channels? What is that in your high level view do you think?

Nathan Sieminski: Yeah. Well, going into Cyber 5, we were so focused on organic growth and we still are because it's really about accelerating the brands. This model works if you accelerate the brands, and we want to be really focused on that. This last month looking back, I think we were kind of really reflective on performance and things. I'm just so excited because we crossed a bunch of really interesting thresholds, 100 brands. Really, you run into the scale issue. You're at 100 brands, there are so much complexity that you're managing. For us, I think that the vision has been and will continue to be being tech first and tech enabled. Because you can't manage these brands and the complexity that comes with them, their supply chains and getting visibility into all of kind of the performance metrics without having a tech platform that kind of just unifies everything for you. I think all aggregators are realizing you acquire a brand that maybe has 70 to 90% of its sales on Amazon, but today eCommerce is not eCommerce. It's moving towards just commerce. That means that a lot of the brands that you're going to acquire are going to be selling into other marketplaces at a smaller scale, but they'll be there. That if it's a pet product, it's going to be on Chewy for instance, and it's going to be on kind of Walmart. com and it's going to be having a Shopify site and looking into brick and mortar and things like that. Very quickly, if you don't know how to just get visibility of everything that's going on, the supply chain for all of those marketplaces and platforms and channels... The what does your ad spend look like on each of them? Are you running ads profitably or not? Do you have dynamic pricing on these brands such that you're not running unprofitable ads and things like that? Can your brand managers just see everything and make informed intelligent decisions day to day? That's the first challenge, and I think that was what we were really focused on in 2021. I think that the visibility is now there, and now I think 2022, what's exciting is the true optimization. How can we automate a lot of these things for brand managers? How can we have algorithms that are running on our platform that have all of our data? Not just some of it. And can truly have dynamic pricing truly. Because with dynamic pricing, there's this dance you have to play. Because if you're running into an out of stock position, typically a pricing person would say," Okay, raise price so you don't go out of stock and limit sale velocity." But Amazon will really, really tank your organic rank if you do that. There is a perfect medium that you have to arrive at. I think for the last year, we've been testing and seeing what is that perfect medium? I think we have an answer now and we can deploy that at scale across the brand, and that's really exciting.

Ryan Cramer: Well, and you guys just announced a lot of help coming from the inside Amazon itself. I kind of wanted to just put in the comment section for everyone who's listening and watching live and will link out to it in the show notes if you're listening to this, you guys made a pretty serious hire recently within the ranks of Amazon itself. Not a low level employee. A pretty high level employee. Why don't you tell me about that help and kind of that vision that's now shared with somebody who's seen it on the inside of the machine, if you will.

Nathan Sieminski: Yeah, absolutely. We hired as our new chief revenue officer Kristiana Helmick, who was previously at Amazon. She's a 13 year Amazon exec. She wore a lot of hats while she was there, a lot of different projects. But most recently, she was a director of consumer, but she has been all over the place. I really think that she has this tech centered kind of view in every single position that she's held. She was the director of the consumer more recently, but then she was chief product officer at Amazon Home. She was a category leader for Amazon's fast growing kind of pet supplies division. Then also, she joined Amazon coming from kind of the world of publishing and totally disrupted it going to Amazon with the Kindle Newsstand. She was part of those early kind of Kindle Fire launches and really saw how kind of tech first disruption can totally upend industries. I think that what she's told us and told me is, she's just excited to join Perch because she was part of kind of tech first disruption going from publishing into Amazon. Then at Amazon, she kind of saw the evolution of eCommerce and she really thinks the evolution of eCommerce, kind of like I said before, is from eCommerce to just commerce. You have to be omnichannel. You have to be able to manage brands wherever the customer is. I think she is excited about Perch because there's this opportunity to grab a brand that has that social proof, it has 20,000 reviews on Amazon and we know consumers like it. The reviews are right there. It's there for everyone to see. Where can we take it? Where can we scale it? To do so in a tech centered way is, I think, what excites her. Just talking to her, I get so hyped up because I'm like," You know what? There's progress here. Everyone can talk about technology, but when you talk with someone that has done amazing things with it in the past and really gets it and understands it, for them to then also get really excited is infectious. I'm excited for 2022 to see what cool algorithms I can shout out on LinkedIn in the future?

Ryan Cramer: No, that's amazing. Well, I think that's a really cool... Again, the vision is always going to be key and making sure that always aligns. But when you have people who've done it, walked the walk and if they talk to the talk, that's also really exciting too. I'm sure congratulations on that hire to everyone at the Perch team too. Nathan, if it's cool with you, we're just going to pause real quick because a couple people on LinkedIn who are listening are super excited to ask you questions. I think I'd make it flow with you if that works. But before we say that again, everyone, if you do have questions, feel free to shout this out. If you're listening at a different time, we'll make sure Nathan gets tagged in this and he'll be following this post on LinkedIn and all of our social channels on YouTube, Facebook as well. But if you have questions, go ahead and shout this out too and we'll make sure we try to get to as many of them as possible. The first one I think was with Trey. Trey said," What platform or method are you using to aggregate all of your operational data sets for your portfolio of brands?" It's a pretty good question. Thanks, Trey.

Nathan Sieminski: It's a great question. I don't want to sound out of my depth because it's definitely, I'm not on the product management side of crosstalk-

Ryan Cramer: I was going to say, there's probably other people that are operating and using this kind of crosstalk-

Nathan Sieminski: Yeah. But I'll do my best to answer it. We have kind of what we formally termed the extranet. It has now been rebranded, and I'm excited to kind of announce that a little bit more down the road, we were calling it the Andy's platform. It's an in- house platform that we built from scratch kind of starting in the early days. We knew that we knew needed to have this tech focus from day one really, and so our team has fluctuated from 20 to 30% of our team kind of engineers essentially from day one. In terms of what platforms are kind of underneath that and making that thing run, I couldn't tell you exactly. I've heard things like Cloudflare. I heard things along that line, but I can't tell you exactly. But I can tell you what's exciting is, I think we had looked into Cloudflare, which is what is kind of centralizing all of the data, I guess, and there are now over a billion data points within that platform that we're using on all of these different things. From dynamic pricing to add prices to even just getting visibility of your supply chain and kind of the carrier nodes and things like that. I hope that answers your question, but I definitely am not the most qualified person to talk about it.

Ryan Cramer: No, good question. I think this is what I've noticed too where people for companies at scale, again, economies of scale are going to use a lot of the tools and resources, but then also in- house too. Building and making sure that everything that is internalized too, you're going to need to keep those operational proficiencies intact, so that takes, like you said, 30% of your business to be engineers and whatnot to make sure everyone's talking to each other. Inventory levels, things like that, it's all going to have to be done in- house. You're not relying on outside components as much anymore too. There was a couple other things. I'm going to start with the second one that we came in from Ravi here on LinkedIn. Ravi asked on LinkedIn," Hey Nathan, what category does Perch prefer when acquiring a brand and what categories would not want to focus on?" That's a pretty, I'm sure, the standard question for anyone in the aggregator space. But Nathan, is there a single category or category that you guys like to focus on or shy away from even?

Nathan Sieminski: Yeah. Well, Hey, Ravi, we've connected on LinkedIn a bunch of times, so I'm really excited to interact in this way, but-

Ryan Cramer: Ravi's a fan.

Nathan Sieminski: Yeah. Thanks for your question. No, we're pretty category agnostic. If you look at our portfolio, we're everywhere. I think that home and kitchen is a really great one on Amazon, so we have a lot of products in that portfolio. We have kind of patio products. We have toys and games. Recently we've acquired a bunch of great ones. One is a Gutter Games. Shout out to Gutter Games, a UK brand that I really love and just a really fun creative game that you can play with your whole family. It's kind of like... What do you call that... Cards Against Humanity, but in a slightly different and fun irreverent way. But the ones that we'll avoid, I guess, are ones that you would typically say," Yeah, we're not going to acquire that type of brand." Either brands that don't have much defensibility. It's just something you could grab on Alibaba and it's really easy for a competitor to start fighting you on price and get into price wars. We don't like categories that are dangerous like weapons and things like that, of course. But if you're a great brand that's growing and customers love you, then we're absolutely interested and we'll review it. Typically, I guess we say our minimum kind of revenue threshold is about a million dollars in revenue or 200, 000 in kind of profit or SDE, Seller's Discretionary Earnings. Which is a term I can unpack down the line. But I mean those-

Ryan Cramer: 250 is the minimum?

Nathan Sieminski: Well, 200 to 250. I suppose it's been creeping up, but we'll take a look for sure if it's around 200 and I can't guarantee if we'll acquire everything. If it's complex at a lower number, really hard to kind of... If you have a really complex supply chain, hundreds of skews, it might be more difficult to make that acquisition. But we've acquired some of the largest and most complex brands out there, but they just happen to be large as well. It just kind of depends.

Ryan Cramer: Sorry. I'm muted myself there. That's what happens too. I can't press the hot button quick enough. That's an interesting point too, Nathan. In your mind too, not everyone I would say is, if they give it to you're going to say yes to. I think there's a capacity of which you have to be responsible enough of, Hey, which ones is there opportunity for growth, but then also, which ones are worth the time, money and effort? Does that make sense? You're not only doing your fiduciary duty to investors, but also too where you can actually see growth. Not just category wise, but is there something where a percentage of which maybe brands do exit with you? Is that something that you guys share externally? I'm just curious. Is that a notion or a statistic that you guys like to use externally or internally?

Nathan Sieminski: When you say percentage, in what ways do you crosstalk-

Ryan Cramer: If I said 100 brands come to you with their business, and you can't go specific because each of them are different, of that, if you're looking at your whole model of, this is how many we had come to us, we are now 100 plus brands, is that a percentage that's or high or super low in your thought that you might be closing on?

Nathan Sieminski: Yeah. I think we've become more selective over time, for sure. Also in that same time, we've now become well known and I think we're getting a decent amount of inbound every week. Over crosstalk-

Ryan Cramer: You and I have talked about this too inaudible too. It's like, it's almost not a bad thing too, but I'm almost curious too, is that, that gives you guys a little bit more power, for a lack of better term, to say," Hey, we can be a little bit pickier now when people decide to exit the business. It's not just whatever comes in our inbox we're going to acquire." Now it's, Hey, we went a little bit cleaner. We can be a little bit more picky in that regards. Probably a positive for you guys, right?

Nathan Sieminski: Yeah, I think so. I couldn't give you a percentage to be honest. I'd have to look through it.

Ryan Cramer: Yeah. I mean-

Nathan Sieminski: It's not what-

Ryan Cramer: ...I don't want any trade secrets or anything to be shared on the podcast. Don't worry. Now, I'm curious if you think that's a trend too. We call this a little bit more trends wise. In the past, do you feel like in the past it was like, any brand who wanted to exit, it was almost without looking at numbers or just throwing money at people? That was more of the norm instead of now where people are trying to be smart, strategic, be not agnostic focused, but more category focused. Let's call it, what's the 20222 trend going to be coming from aggregators like a Perch or a smaller one we might not have heard of, or a new one that might enter the market this year?

Nathan Sieminski: Yeah. Well, I mean, 2021 was this crazy year because when I joined Perch about$ 1 billion had been raised in the space, including Thrasio, who's kind of the largest player, and Perch. Really it was Perch and Thrasio kind of at the top. We then raise nearly a billion dollars ourselves to kind of double the figure in early 2021. Then, bam, things have popped off and now there's about 7 billion that's been raised across, I think last we looked around 66 aggregators kind of globally. There are awesome aggregators in India, in Argentina, Brazil. I mean, it's everywhere now. Perch is still one of the largest ones, but there's competition everywhere. I think everyone kind of made their first early acquisitions now and they're dealing with the complexity of things. I think that it's going to be interesting. I mean, the simple, easy to acquire brands that customers love, have never been in more demand and they will continue to be that way. But I think that we're also going to start to see the aggregators be challenged by a supply chain that was hard in 2021 and might also be really hard in 2022. It's actually troubling signs with, I think, supply chain with Omicron because it's like ports are closing down in China because of the way that they deal with supply chain issues. It's going to be fascinating to see what happens exactly. I don't know exactly what in terms of the approach aggregators take. I think that generally, the more mature ones, if you look at kind of what they're thinking about, it's, let's just acquire the best. Let's acquire the brands that we're okay having long conversations with them. Really getting our heads around the business and then let's make this acquisition. One little thing that I can tell you we love to see is branded search, which is atypical on Amazon. It's very rare for people to make kind of a brand specific search in the keywords. If you see a brand that does have branded search, it kind of shows you that there's something to it. Customers know who they are, they like the brand and they're looking for it on Amazon. Typically, they might have a slightly higher D- to- C presence. The example that I use for this is, we have a brand called Baby Merlin. That is a little straitjacket for babies essentially. It looks like a straitjacket, but it's this great sleep suit that helps babies fall asleep. Really is it's called Baby Merlin because it works wonders. It's truly magical and kids will fall asleep. Then it also prevents them from rolling and kind of having issues in the crib. It's one of those brands that I was visiting my sister and I was actually trying to order a Baby Merlin after the acquisition because I was going to a trade show and I wanted some of our best brands to be there. I was talking about how I was going to order this product, and my sister was like," Whoa, Baby Merlin." She runs into her kid's room and comes back with a Baby Merlin sleep suit. It's just one of those brands that if you had a kid in the last five to 10 years, you probably have come across or at least heard of Baby Merlin. Great kind of social presence. Great kind of influencer outreach. As a result, there's a lot of traffic on Amazon that shows in the keywords a high Baby Merlin search velocity. Brands that can do that are going to command a premium and the Perch's of the world, the Thrasio of world, they're going to want to pay a premium for them. Because that is absolutely one of those acquisitions that I'm so proud of and just love being able to share the story of the entrepreneur and just play a small role in a brand that has helped people truly, and at least given parents sanity. Anyway, that was long winded way to answer.

Ryan Cramer: Well, that's a fascinating insight and I want to kind of piggyback off of that. You said brand and search is a really important functionality of Perch and what you guys look for. For a lot of brands out there who kind of want to make sure that they have all these things in line, is there a commonality of which they don't have that in- house or that in- house in line? Whether it be a branded search or they don't have a D- to- C channel. Or what are those really important top five factors that have to be had in order to be considered for acquisition that you think? We've talked about money kind of minimums, but is there other kind of components of which maybe I should start looking at them if I'm a seller that if I want to be acquired in the next 12 months or so?

Nathan Sieminski: Yeah. Well, what I would tell you is, if you're not on D-to-C now, and you're saying," I want to exit. Maybe it would help me if I went onto the D- to- C channel, and then I have a broad array of different things. Maybe I launch on Walmart. com." I would say, do what you do really well. It's better to go deep on Amazon and leave open the possibility for a Perch to pull a growth lever for you that you might not have pulled than to do something and spread yourself thin and maybe not do as well on Amazon. That's the first thing I would say. It's interesting. Some of our best brands like Web Deals Direct is this kind of one of our largest acquisitions, over 30 brands were part of that acquisition. It was almost like acquiring a mini aggregator in terms of just the size of the brands and the crosstalk-

Ryan Cramer: The deal was$ 100 million. It came with warehouses and you said 10 plus deals. I read my pre early releases, man. That was a very big company. Again, like you said, almost like a mini aggregator, but they built all these series of brands. But they had so many nuances of their own delivery warehousing and so many different categories that they touched in. It was really cool.

Nathan Sieminski: Yeah. They were so fascinating because they had all this complexity, but if you look at their brands on Amazon, Adam, the founder, he has a background in SEO and so he's just great at making listings that are just optimized. The merchandising was beautiful, the packaging was beautiful. His four biggest brand, there's a Zap It!, which is kind of like a tennis racket that's electrified and can zap flies. Which, by the way, I came to this apartment with my buddy and I saw a Zap It! on the counter and I was like," You're a Perch man, I see." But Zap It!. Spacesaver is like a vacuum sealed kind of bag that can kind of compress stuff. Grillman, and I'm blanking on the last one. Flexi Hose. These four brands are optimized. They're great. What's interesting is, we want great products, but we also want room to grow them beyond where they are. Typically, the opportunity for most brands is, we can take you to new geographies. We can launch you in different countries. Adam had done that already. He'd already done that. The listings were great, so we didn't need to optimize the listings. Kind of the high level things that Perch can do right away that quick kind of flip of the switch that can typically grow most brands, Adam had done a lot of those things. What's exciting for Web Deals Direct and those brands is that I think there's long- term growth potential, but it's not going to be an overnight thing because the entrepreneur did great. I guess the takeaway for other brands is, you don't have to kill yourself for a year going into an acquisition. Yes, get your revenue up, but you don't have to perfect the brand and wait longer. This is actually a great time to exit because you still have the competition of other aggregators right now. Which may or may not exist for the next two, three years. If you get to a certain threshold and you don't want to optimize beyond that, that's great. Because then we see growth levers and you'll see aggregators bid against each other for a great brand and a great product and whatever. It's surprising and it's counterintuitive, but don't over- optimize. Get your revenue as high as possible, but your multiple might be higher even though your revenue might be slightly smaller. It kind of evens out a little bit. But I would say, be clear about what you think the growth levers are. That's huge. When a brand owner can tell me," This is what we've done, this is what we know works. Here's what we want to do. Here's our vision and here's how we think you could do it." That's so awesome and it creates kind of a path for us an easy way. We'll have our own point of view on that stuff as well, but having that kind of laid out and aligned from the very beginning is really helpful. There are a bunch of other things I should talk about, but I kind of went on a long and winding path on that. Maybe I'll pull up there.

Ryan Cramer: That's what happens when we go in our dark hole, that is this podcast. It's, I suck people in and we don't get to everything. I think that's an important thing. A lot of people, when they hear the podcast or that you hear about the importance, Amazon's even trending that way of what's important. Now it's branding in what that looks like in the eye of the beholder. It's always important if I'm a listener to understand I need to have these in line in order to be considered in that priority of, if I do exit my business or if I do become important in the eyes of Amazon, or if I eventually just want to continue to play with the game that is Amazon, what does that look like? I think a lot of people are trying to figure that out that way and what that brand looks like. It's not just a series of products that person is smart. That a lot of people want to buy and using that data to kind of fit in those markets. It's now a story, it's kind of that look and feel, it's in those different locals. Again, not stretching yourself too thin, but also optimizing to the point where if they do want to exit, they probably have maxed out their capacity. Whether it's by themselves or their team and kind of looking for other people at scale. Again, the aggregating model of rolling it up into a different portfolio. Which is really cool.

Nathan Sieminski: That's-

Ryan Cramer: Is there... Yeah. Go ahead.

Nathan Sieminski: Sorry, just to jump off what you're saying, are you a brand or are you a collection of products? Because I think Amazon is so fascinating for people that are not in the world of Amazon. The way most people start is you have a tool maybe Helium 10 or a Jungle Scout, a tool that gives you, or even Amazon now gives you this data, where you can see the keyword velocity for terms. You look at the number of monthly searches for a term that could be related to a product, and you get an idea for the market size or the size of whatever that niche is, and then you create a product that essentially fits that. You have these entrepreneurs who are essentially keyword arbitraging products into existence. They see a need, they create a product, and then they start optimizing for that keyword so that they can get a share of that percentage of those searches. Some entrepreneurs have these hilarious catalogs of products that have really no connection to each other, and they're great products, and they're filling a need, obviously, but it's not cohesive. It's all over the place. That kind of increases complexity and it makes it more difficult for an aggregator to acquire a brand that is spread really, really thin or kind of doesn't have a cohesive story that they're telling. Creating a brand that has a look and a feel that is distinctive, that people understand, you can see it, and it's not just an anonymous Amazon product, but it's truly a brand, is differentiated, we love to see it. You're totally on board when you were saying that.

Ryan Cramer: Here's my, let's look inward moment. At what point does an aggregator do that same philosophy of, let's not be a collection of a bunch of great products online? When do we start to streamline, this is who we are? I think a couple people are starting to do that in terms of, we're going to be really great at health and beauty or overall wellness or stuff like that. Not to say Perch does this. I think a lot of people have to start to look at when you have 100 products and they're all over the place of this company or this category, when do you start to build out that brand story of, this is what we do best and we start to optimize there?

Nathan Sieminski: Yeah. Well, I think it's smart strategy and the aggregators that are doing that, I think that's great because it's really helpful to have all of your brand managers kind of just generally have a shared experience and an understanding of kind of a similar market. Because when you have a lot of different products, what you have is, some of your portfolios, really seasonal. Like the toys category going into Cyber 5, it's going to be a haul for you. Where a vast majority of your sales are going to take place in that kind of month lead up to, or now these days, several month lead up to Christmas. Then some of your products are going to just be very steady throughout the year. It is nice to have everyone kind of knowing what that's going to look like across the whole portfolio in one category. I think it's a smart strategy. I think for Perch, what that future looks like, I'm not quite certain. I think we'll stay agnostic kind of long- term. I mean, we're trying to essentially be a tech first next generation CPG company, like a Procter& Gamble. Which does have consolidated areas of products, but definitely is a shotgun approach to products. They're highly acquisitive too. They acquire a lot of brands and that's key to their growth over time. Is they continue to acquire brands pretty consistently. But it doesn't necessarily have to be in one area, they've done really, really well. I think that we'll just keep acquiring great brands that we think because customers love and have long- term potential.

Ryan Cramer: Absolutely. Well, with acquisition, I know that's the basic model of an aggregator. I'm always curious to think, is Perch ever put on the radar of, and a lot of people might think this too if they're sellers, of why not just look in- house? This goes along with our talent discussion, what we talked about at the top of the podcast. Is, what if we just looked in- house and we just developed it ourselves? Is there a component of which there's this brand growth within the company itself, as we are Perch products, this is organically grown Perch product? Not by, we're buying it from a farmer down the road. Again, very terrible metaphors. I'm known for those. If you ask anyone, I'm terrible at metaphors. I never have the same one. Instead of buying it from a person down the road, what if we just grew it ourselves? Is that component on the radar? Will it ever be on the radar? Can you say anything about that? Or is that just-

Nathan Sieminski: 100%.

Ryan Cramer: ...something that's been thrown around internally?

Nathan Sieminski: Yeah. No, it's on the roadmap and it has to be. Every aggregator, I think, has to think about your own product innovation. We have a team on product innovation that I think first looked at our portfolio and said," How can we innovate that will create kind of scale portfolio cost savings, first and foremost?" They joined right around when I joined. Looking at the portfolio and saying," This product actually, if we change the packaging just a little bit, we'll go from this class of packaging to this one that's slightly smaller and slightly less and we'll save a dollar per unit on FBA fees essentially." Which is actually awesome. That's where you need to start with product innovation, is thinking portfolio innovation that can create cost savings across the whole portfolio. Once that's optimized... Which you'd be surprised that how often that there are savings there that just the entrepreneur didn't have time to think about it and isn't really a packaging design person. They can design great products, they love the product, but they're not thinking about how can I get into that smaller class of whatever. Starting there. But I think that we've evolved the thinking in the year or so since we kind of built out that function to really be looking for... We have a review velocity tracker for our brands so that everyone can just see, okay, across the whole portfolio, when are reviews going up? When are they stagnating? When are they going down? Then that can kind of lead them to think," Okay. Well, I need to investigate reviews here and why." It creates this really cool data driven, customers really want... The example that I always think of is, we have Prestee, which is a plastic champagne flute. Customers want a little bit more heavy duty version of this. It's a plastic champagne flute, let's get a heavy duty one kind of for those people that are going hard for their picnics or whatever and don't want to break the plastic or whatever. We have introduced that product as a heavy duty thing. Then there's product innovation within a brand family that's just kind of a variation, I guess. Then I think the future of it and where we're headed is to truly be launching totally new differentiated products under a brand name. Creating opportunities for cross and kind of upselling within kind of brand accounts. That's what I'm excited about. And I wish I knew more about it, because I think that's the lifeblood of the Amazon FBI community, is being able to think creatively. The entrepreneurs, in most cases, the people that created the brand are the best at that and so we love getting to just pick their brains because we've been working with the best of the best as they've transitioned their businesses over to us. I think that institutional knowledge is here now, and let's go. Let's launch products because that's the future. It's much cheaper than in some cases acquiring a brand. We'll still acquire, but-

Ryan Cramer: Yeah. I was going to say, it makes sense too because obviously it makes natural sense to grow within that own portfolio. But the incubation component of it is, you have the talent, you have the people who see the data, you're in it, you have the systems that place at scale. That's where a lot of people I'm thinking are, when does that flip on? I think maybe that was 2022 all along and we've just been waiting for it forever for people like you and me who are just in it every single day. But I think that actually goes to a question that just came in on again, LinkedIn, from Ruben. Again, thank you Ruben for submitting your questions. He says," Hi Nathan. How much are you focusing on growing your skew count or complimentary products of a specific brand after acquisition as a means of growing brand portfolio?" Similar in that. Is there anything to iterate or kind of add onto that, Ruben, or from Ruben?

Nathan Sieminski: Yeah. Well, thanks for the question, Ruben. I think it's a good one. I would say it's not the first growth levers that we're going to look at. They're kind of base level growth levers that we're going to go to from day one. Can we take it to a new geography? Can we expand into the UK, the EU? Can we take it into different marketplaces? Can we optimize the SEO? Can we optimize the merchandising? Will this fit well into our affiliate marketing program? Get it featured by awesome articles, People magazine, and things like that. All of those growth levers will be kind of that first layer of growth. Then from there, I think a long- term we do look, where are the complimentary product opportunities? We have that kind of product innovation team very early in with the brand as we're, in some cases in the diligence process, I believe, but certainly after we've acquired the brand. They're in there with the entrepreneur talking through," Where is your vision for launching complimentary products?" Oftentimes, the seller knew they wanted to sell, but they had a vision as well beyond that sale date for new product launches and things like that. It's understanding what that vision is and then kind of creating our own vision together with what we think is possible. At this point, I think we work with over 250 manufacturers. Another really exciting thing for me is, we now have kind of an upstream logistics team that is looking to consolidate manufacturers, looking to kind of really now start increasing order volume at specific ones so that those scale savings are there. I think that we're working really closely with manufacturers now, so that those relationships exist. That if we want to do a new run, it's really cheap to do it and there's not much risk. Because an entrepreneur, a new run of a new product, getting that inventory with the way the supply chain is, it could just cost more than it used to. You're taking more risk by launching new products. I think that we can kind of spread that risk out across a whole portfolio and with a lot more money to be safe if things don't work out.

Ryan Cramer: Right. Financially, money gets tied up into a product and if it's on the water and it gets stuck there, that's very difficult to know that it's not in a warehouse or ability to be sold. I think a lot of people are looking at option B and C and D as viable options, and now they become option A instead because of that one thing of time, money, effort. Continuously going back to say," Maybe we can do this in Latin America or Mexico, or a little bit closer in that capacity." Or even shipping from a different country of Europe. Again, coming through the east coast instead of the west coast. Always again, nothing wrong with sourcing logistics from Asia. Just, it's a nature of business at scale, it's hard to kind of operate. Nathan, in the last 10 minutes I got with you before we have to run, what do you think is the one thing that Perch is maybe the most critical of themselves off? Like," We aren't doing this great. We're not maybe where we should be or we have envisioned." What's the thing that you feel is most critical of like, man, we really stink in this avenue, venue or whatever that might look like?

Nathan Sieminski: Yeah. Good question. Man, I think-

Ryan Cramer: Again, this is not reflective for your boss or anything like that. It's a public forum, he's not listening or anything like that. This is just honest feedback of where do you think their most opportunity is for growth? I would probably put it that way.

Nathan Sieminski: Yeah. Well, I wish I was on the brand growth side, so I saw it more day to day than I do because I'm kind of on the corporate comms, like and M& A side of things. I wish I had more perspective on kind of the growth questions, but from a organizational perspective, man, we acquired a lot of businesses in 2021 and it was hard. It was so hard and we had to hire over 200 people in the space of a year. I think organizationally, I sometimes think of us as almost like a bit of an anaconda or a big snake that just swallowed a little baby hippo and is digesting it, but needs a second to digest it. I think that we ran so hard, we acquired some of the biggest Amazon businesses in the world really. I mean, I think for top 100 Amazon sellers, maybe in some cases, top 50. I'm not sure. We grew really fast, really hard, and so I think everyone has been frantic for a full year. Now we're in a position where things are not as frantic. I'm just excited to have caught a breath, have pulled the organic growth playbook off by the skin of our teeth through sheer determination, honestly. Q4 was a really great Q4 in terms of organic growth and really proud of the team. But I know that everyone's so exhausted. I think we'll continue to hire and kind of grow out the team. I think we built everything, the structures now, and now it's like time, time to go out and get it again. I just hope that we don't stretch ourselves as thin as before because I think brand managers are tired and Christmas came and we were like," Whoa." That's one answer. I wish I could give you something specific about growth that would be, man, if we only did merchandising better or whatever... Sorry. No disrespect to our merchandising, I think we've done great. Maybe one other answer is, working or finding a way to kind of work with vendors in sorting through. Because there's some great vendors in the space and sorting through and understanding should it be done in- house today or should it be done via a vendor today with the long- term vision of in- house? I think we've had a bias towards doing stuff in- house and just making it hurt worse now, but with long- term payoff. But I think there's some great vendors, technology vendors, service vendors that I just know personally from being in kind of the partnership marketing world where I'm like," Man, I'd love to work with that person." But there are so many and it's tough to sort through and probably no one better than Ryan Cramer to help you sort through that group actually.

Ryan Cramer: Stop. That's great. I mean, I won't say that you're wrong, but I don't need the flattery in my own podcast, Nathan. Though it's okay. No, I appreciate that. There's a lot of things to look at that and I think it's kind of funny the way, like we were talking pre- show, of the education realm of everything changes at an instance. Everyone is on the same footing. Whether it be someone who's operating 100 brands or someone who's operating just their own, everyone's playing by the same rules in theory on Amazon. Then also at scale, economies of scale, no one's fault, but there's always so much more you can do, but that comes with it a lot more time and people power. Again, we talked about talent, we talked about tech. There's a lot of different people that help people get to where they have that vision. Is it kind of self- gratifying to know that if people walk away and they're saying," I'm leaving my brand in good hands. I know they can do something that maybe I wasn't able to and capable to." On that journey? Or what is that emotion? Have you sat down when an acquisition is happening? What is that like for a brand acquiring, but also watching the brand owner kind of sign the dotted line and virtually hand it over, if you will?

Nathan Sieminski: Yeah. Well, I think I count it as one of the greatest pleasures of my career, to see entrepreneurs go through that process. Because I mean, Amazon is a stress inducing environment, because anything could happen. You could have black hat tactics going into an acquisition. We've had some brands where some of the brands got taken down as they're being acquired and it just sucks for everyone. What I like is when that they finally sign, they no longer have that stress. In some respects, they do. They might have an earn- out or something, a performance based incentive for the brand over time. But typically it's taking the risk off the table for them. It's about seeing the vision for their brand. Oh my gosh, I can tell you, there's nothing more gratifying than talking to a seller who sees their product at Target. They go into Target and they see the product. Oh my gosh, isn't that awesome? Baby Merlin the other day, I have lived in New York up until recently and we're going to get that product into Saks Fifth Avenue and I'm just up from Saks Fifth. I went to Saks Fifth and just looked at where it was and I was like," Oh my gosh." I was texting, who essentially I believe is a co- founder of that brand. She's not, but she was there from the very early days and she stayed on with Perch to kind of continue managing that brand. I was just texting her. I was like," This is so exciting, isn't it?" She just went off. She was so happy. That's the most gratifying thing to see. I think that, the sellers are excited to see their brand in brick and mortar and see it gain more visibility and have their baby grow up. Their babies in a lot of ways have grown up, so I don't want to infantalize them. But to see them grow further is really exciting. I just love being a fly on the wall. I'm not operating these brands, but I get to see them really intimately. Thankfully, like I have a bunch of friends who just happen to be the most successful Amazon entrepreneurs of all time. That's just an absolute pleasure. Being able to text Adam Feinberg from time to time and just talk and then just get to listen about what he's been doing with his brand is such a pleasure. I don't know if that answers your question, but yeah.

Ryan Cramer: No, it does. I think that that is something that, again, a lot of people find gratification in. I have myself on gratification when you can help people achieve their goals. I think that's part of the service mentality of making sure you can take people. They don't know how to get there, and then you're kind of finding them to get to that goal. Ultimately push over the line, that last mile, if you will. Get them there, coach them through it and kind of hand them off, if you will. I think that's super cool for companies like Perch and that's why I'm excited for the space as it evolves. Again, just like Amazon, super young eCommerce. We talked about very young in the market still of, even if you're not in it, you're not on a day to day basis. Again, this industry ages you. I feel like I grew a beard because of this darn industry. No. Stuff like that. But it's super cool to see businesses kind of take that on. Again, I know there's a lot of ways here and there of which the industry will continue to grow and evolve. I guess in the last five minutes, actually it was part of a question, Ruben asked again. I won't throw it up there because it's a little long. I don't want to take up the entire screen. But how do we see in 2022? Is this something that you think might happen to, as we said, 60 plus aggregators out there. There's always a consolidation. Is there brands that are sold to one maybe resold in the capacity of which maybe they bit off more than they can chew. Is that something that Perch plays in that world or is that something that you guys are looking to acquire more? How does that work?

Nathan Sieminski: That's a good question. The only example that I can think of that fits that bill for us would have been Web Deals Direct in which Adam and his team acquired a few brands. They mostly grew their portfolio of 30 brands. But a handful of them had been acquisitions and so essentially were resold. That worked out really well for them, I think. In terms of individual brands, I'm struggling to think of an example of it. Not because-

Ryan Cramer: Maybe instead of an example, is that something you see down the line of maybe that there is this handoff, if you will, of someone... I won't say a name because I haven't heard about it and I'm sure you haven't either. Someone comes knocking at your door like," We just don't have the capacity." Or," We want to really slim down and we want to really refocus. We have a pet food company. We want to focus on health and beauty. Here it is. We want to pass it over." Some sort of acquisition between aggregators or businesses like that, is that viable, feasible?

Nathan Sieminski: Yeah. Definitely for aggregators, I see consolidation happening down the line. You can't be paying three, four, five, in some cases, six or seven X for a business for a long period of time, unless you're really tremendously growing them. I think with the supply chain hurdles that everyone's faced and then now are realizing are going to continue well into 2022, unless you have an excellent operations team that is getting you really cheap containers, the costs are only going to go up for you. You might have acquired a brand thinking," Well, things are going to maintain where they've been." Sales are going to stay high, operational challenges will go down and maybe they haven't. Definitely there's a future in which brands are going to get sold. On an individual level, yeah, for sure. Then definitely with aggregators, I think for sure as well. We'll take the calls for sure. We're expecting them, I think.

Ryan Cramer: You're open for business. No, that makes sense. Hey, Nathan, I hate to cut you off. I would talk forever with you. I know you probably have to go and you're busy today, but where people can learn about you or Perch or any of the other information we talked about today, what's the best way to get in touch with you?

Nathan Sieminski: Yeah. Go to www. perchhq. com. There are two H's in there. Then find me on LinkedIn, Nathan Sieminski.

Ryan Cramer: Awesome.

Nathan Sieminski: Again, a pleasure, man. Thanks for hosting.

Ryan Cramer: Yeah, no problem whatsoever. Thank you so much for hopping on again. You are already friends of the ship and now you have your own episode so you can stand alone on it and share with people. Hey, we'll have you on again in the future. I know great things are coming around for Perch. Thanks again for hopping on today from your music studio.

Nathan Sieminski: Cool man. Yeah. Bye.

Ryan Cramer: Awesome. Thanks, Nathan. Again. Thank you everyone for hopping on Crossover Commerce today. This is episode 207 or 208. I'm going to say it right one of these days. 208. Thanks for hopping on. Make sure you subscribe to our channels on LinkedIn, Facebook, YouTube, and Twitter, and make sure that you get notified of feature episodes. Again, we'll go live tomorrow just to throw up the banner of whom is coming on tomorrow. We're going to be talking about Omniconvert with Valentin Radu. We're talking about customer life on value and eCommerce so that'll be super exciting to make sure you come back. Re- listen, re- watch on your favorite or podcast or social media platforms live or after the fact. I'm Ryan Cramer. This is Crossover Commerce. Thank you so much, Nathan and Perch for coming on today. We'll catch you guys next time. Take care.