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D, regarding MLS data, I’m not sure it’s really seen as a regret because I think it was inevitable. Originally, Zillow got the data because agents/brokerages circumvented the system and double-posted. So, though Zillow didn’t have direct access, in many geos they had the exact same data. Once they were given direct access, it just made that process faster. Some of Zillow’s competitors (Redfin for example) became brokerages in order to gain access, so in the worst case, I think Zillow would have done that as well. But, in the end, Zillow had already become such an important part of the home buying process before all of this started, that brokerages would almost certainly have lost if they’d failed to reach an agreement with Zillow.

On commissions, your point is interesting because I do think it’s a little surprising that they’re not positioning themselves as a more affordable way to list/buy. My guess here is that because buying a house is such an emotional transaction, it’s not as simple as offering the best rate, and because it’s a one-time purchase consumers aren’t as eager to switch to an unproven model even if it brings some convenience and marginal savings. So, to date, it looks like Zillow is trying to position this as “the same process, but better” in order to gain trust first.

I definitely agree that, short term, alignment with agents makes sense. But, I’m not convinced that long term, once Zillow has had a chance to improve the platform, build some brand recognition in the actual transaction process, and likely infuse the product with AI capabilities, that buyers/sellers will need relationships with agents. My bet is that eventually that relationship will be replaced by concierge type services provided by the platform, and that the vast amount of data Zillow has will actually mean it performs better in terms of finding good matches and negotiating deals than individual agents do.

I bet the shift is still a long way out. All of the articles that I read still had theses along the lines of “real estate can’t be disrupted in the way other industries can” or “do we really want disruption in real estate”? My guess is that once Zillow has a large number of sales under their belt, maybe thousands, they’ll start adding predictive features encouraging buyers to bid in a certain way, helping them compare different houses and rank options depending on their preferences. After showing that algorithms are just as (or more) effective as agents, they’ll probably start introducing low-commission sales via the platform.

This is an interesting overview of the evolution of reading/reading tech. I’d be curious to see how these changes map to changes in other media (decline of broadcasting, rise of Netflix and other streaming services). I wonder if the entire decline of bookstores can be attributed to eBooks/audiobooks, or if there was also just a general shift in terms of what types of media consumers wanted to engage with.

On March 3, 2019, PC commented on Ebay Held at Bay :

I totally agree with your breakdown. To D’s point about whether there was anything eBay could have done to maintain their position, I wonder if they could have partnered with suppliers more closely to enable them to build a real brand on the platform. I think it would have aligned well with their reputation-dependent system, and could have represented a lower cost, faster way for small, but growing shops to stay on the platform. Reading this, I was thinking about a case I studied about NastyGal. The brand originally launched on eBay, but was kicked off the platform relatively quickly once they started listing products on an external, brand specific site and linking their eBay listings to the separate site. I’m sure this was not the only case of a brand starting on eBay, and then migrating to a site of their own as sales took off. If eBay could have instead found a way to help these brands create and manage their own sites (and potentially still cross-list items in their marketplace), I think they’d have had a chance at staying relevant. But, as you mention, their lack of customer-centricity likely prevented them from even evaluating potential solutions like this.

I think it will be interesting to see how regulation in this space plays out. I agree that AirBnB creates a lot of value, but perhaps unintentionally, in many cities AirBnB has led to a reduction in the availability of long-term housing rentals as property managers and investors realize they can extract more value from the booming short-term rental market. In addition to SF and NYC that you mentioned, Boston is currently struggling with this, and some new regulations just came into affect limiting investors’ ability to list on the platform.

While I definitely don’t want AirBnB to go away, HBR put out an interesting article a few years ago called “Spontaneous Deregulation” that discusses Uber & AirBnB’s “beg for forgiveness” v. “ask permission” approach to the legal boundaries they come up against. The article argues that AirBnB is able to provide a lot of the value that it does because it ignores zoning, tax, and safety regulations, and talks about the dangers of private companies that simply decide that laws aren’t necessary and are able to fly under the radar initially because they’re small compared to the overall market. There is an argument to made that certain regulations and precautions are no longer necessary, and that the entire point of innovation if for companies to change the status quo, but I do wonder how approaches to regulation will evolve as these kinds of private companies with transformative business models consume a larger and larger share of their markets.


CN, I definitely see your point. The out-of-the-box messaging can definitely be misleading, but I think it also depends a lot on the stage of business. I think a mom-and-pop shop that an operator runs on the side, out of her house, can definitely use Shopify out of the box, because it’s a step up from all the piecemeal excel sheets that were used before. If you only see 20-30 products, don’t need complex marketing, don’t yet have a customer list, have never accepted cc payments before, Shopify’s base features are sufficient. That storefront won’t be anywhere as sophisticated as the eCom storefront you’re describing, but it would at least allow the business to get goods to customers in a way that’s much easier than the alternative. What’s interesting to me is that larger, more sophisticated companies like the one you described are staying with Shopify even longer, and in some cases they’re actually migrating from more mature eCommerce platforms (Magento, Salesforce Commerce Cloud, Hybris) “down” to Shopify Plus despite ALL of the challenges you mentioned. I think as Shopify continues to build out the Plus offering and address some of the challenges you raised, the out-of-the-box messaging will start to be more accurate even for the larger businesses.

I think vendors are afraid of losing their brand image if they only list their products on Amazon. Shopify makes it easy for vendors to operate their own eComm site where they can entirely control the experience, engage with their customers, run promotions, publish relevant content, etc. Amazon is just a distribution channel for them. And, while that’s definitely important from an audience perspective, it also scares businesses (e.g. X-Fire Paintball).

I don’t think Shopify has an FBA-like program, tho it’s very possible that one is available through their partner network. But, I don’t think they necessarily need it. I think ultimately Shopify’s value prop is very different than Amazon’s, and retailers really need to operate both on their own and in marketplaces like Amazon to be successful. So, given that, I think Shopify has been very smart to align rather than compete with Amazon.

To your last question – I guess to some extent that is already the power of Shopify. Because the platform makes it easy for a brand to tell their own story, market to their customers, etc. It’s not that the Shopify name attracts shoppers to the brand’s site, but that the underlying platform enables the brand to engage with customers in a way that was traditionally only available to much more established, well-funded retailers. One thing that’s interesting though is that Shopify has recently done some work to offer an integrated shopping cart across brands, so if as a consumer I’m shopping across three different brands that are hosted on Shopify, I can checkout in a single step. That’s obviously super convenient for the shopper, and I think as shoppers come to expect more and more convenience, features like that will start to pull even more brands to the platform. So, I think that’s one of the first times that Shopify is really engaging directly with the shoppers rather than just serving up the underlying technology, but I think it has the chance to be a powerful way for them to continue to drive growth.

On February 22, 2019, PC commented on TikTok: A Viral App Among Teenagers :

This sounds like an interesting concept, and I see the appeal for users since anyone’s content has the ability to go viral. One concern I have is whether they’ll be able to withstand the test of time given that the audience is so targeted. Even though there are always more teenagers, it seems like each generation (or really even subsets of generations) take to applications differently, and what was popular for one group becomes instantly unpopular for the next because the younger audience is looking for a new platform where they can make their mark and, to some extent, establish some distance from those who came before them. Do you think there’s anything unique in TikTok’s approach that will allow them to persist across age groups, or is it more likely that this is just a fad that the creators should capitalize on now, but then expect to decline?

On February 21, 2019, PC commented on Cornershop: Disruptive Chilean E-Commerce Grocery :

This is really interesting, and does look like a nice app. I’m curious to see how it plays out in the long-term, especially as they push into new markets. It seems like this is such a challenging industry because there are so many factors the platform needs to balance – freshness, scope, very specific delivery windows. I thought it was interesting that stores pay a commission to lower the price of their goods. While I think Cornershop is betting on the fact that stores will want to protect their reputation and keep prices low, I think customers who see a discrepancy between in store and in app prices will attribute all of that difference to Cornershop rather than the store providing the goods.
So unless the stores actually see a drop in performance, I’m not sure whether they’d be willing to pay. Do you see any differences in the Chile/Mexico markets or in Cornershop’s approach that may make this more successful than similar platforms have been in the US?

That’s a good question. Given the number of standalone shopping cart plug-ins that exist, I don’t think there are strong technical barriers to entry. But I do think that part of Shopify’s secret is that rather than taking the approach of one of their big competitors and building on top of the infinitely customizable WordPress platform, they built their own core, really focused on simplicity and made sure that their mom & pop customers who really just wanted to quickly get their goods online could do it. Now, I think the developer and partner network that’s built up around the core platform would be pretty hard to replicate.

On February 21, 2019, PC commented on Plaid :

In my previous company, we integrated with Yodlee which is a competitor of Plaid’s to display our customers’ bank account balances. I completely agree that the company creates a lot of value – especially for tech companies like mine, where we were working with customers who often had 5+ accounts scattered across many different banks, and struggled to see an overall picture of their accounts at any point in time. Despite the value created though, I think there are a number of challenges.
First, it’s definitely true that one side of the platform is capped since there are a finite number of banks. But, there’s huge discrepancy between the ease of integrating with the top 50 banks and the long tail of community banks and credit unions. I’m not entirely sure how Plaid builds their integrations, but with Yodlee it was a combination of direct access (OFX, other non-standard data feeds, sometimes files) and/or screen-scraping. What we found was that this was super error-prone. Especially in the case of screen-scraping, if the bank changes anything about the way their account screens are built, changes a header name, etc, the connection is broken until an engineer manually fixes. If the connection was broken with a big bank like BoA, that’d likely be fixed quickly because thousands of end customers are affected, but if you bank with one of the long-tail banks and your feed breaks, you’re usually in for a very long wait.
Second, in our case Yodlee advertised 18k connections, but many times those connections under the same umbrella – so BoA might have hundreds of account types across consumer, commercial, private banking. Regardless of whether this is the same way that Plaid reports connections, though there are a finite number of possible connections, that number is still very high and very challenging to maintain once they do exist.
I think there are two good pieces of news for Plaid though. I don’t think a consortium of banks would be successful entering this market. I don’t see how they’d ever be able to handle the long-tail of banks, and I can’t see much value in an app that only connects to the top 10-15 banks. Even if those account for a high % of accounts in the U.S., you’d lose so many potential end users.
Lastly, I actually think switching costs for the API customers are relatively high. Because there is such discrepancy in the data available for each bank, the formats, the timeliness, actually handling the data you get back from the API tends to be pretty complicated and requires custom error-handling on the application side. So even though you could likely switch from Plaid to Yodlee and still serve your BoA, Chase, WF customers without much trouble, it’d take a lot of rework to accommodate all of your long-tail customers. And, it may be a one-time thing, but once you’ve switched services, all of your customers have to re-authenticate to their accounts. Doesn’t sound like a big deal – but our customers HATED this process. And, if they’re slow to reconnect or have issues with the new service for any reason, you’re still paying monthly minimums for the service, while your customers are not receiving any value. Plaid has a reputation for being very developer-friendly, so if they’re able to elegantly handle the long-tail problem, I think they could definitely win this market.