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Episode 107  |  18:12 min

#104: The Shift From Supply To Demand (And How It Will Impact Your Business In 2018)

Episode 107  |  18:12 min  |  12.26.2017

#104: The Shift From Supply To Demand (And How It Will Impact Your Business In 2018)

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This is a podcast episode titled, #104: The Shift From Supply To Demand (And How It Will Impact Your Business In 2018). The summary for this episode is: If you liked this episode, we bet that you’ll love our blog content. blog.drift.com/#subscribe Subscribe to never miss a post & join the 20,000+ other pros committed to getting better every day. ----- Hotels own the supply -- but Airbnb owns the demand. Cabs own supply, but Uber/Lyft own the demand. Because of the Internet, businesses are serving customers 24/7 365 today -- and we can literally order a pair of underwear from our smartphones. But then there's the B2B world. Most B2B companies haven't changed to match the shift -- and that's what we're talking about today on the final episode of Seeking Wisdom for 2017. Come and say hey on Twitter @davegerhardt and @dcancel.
If you liked this episode, we bet that you’ll love our blog content. blog.drift.com/#subscribe Subscribe to never miss a post & join the 20,000+ other pros committed to getting better every day. ----- Hotels own the supply -- but Airbnb owns the demand. Cabs own supply, but Uber/Lyft own the demand. Because of the Internet, businesses are serving customers 24/7 365 today -- and we can literally order a pair of underwear from our smartphones. But then there's the B2B world. Most B2B companies haven't changed to match the shift -- and that's what we're talking about today on the final episode of Seeking Wisdom for 2017. Come and say hey on Twitter @davegerhardt and @dcancel.

Dave: You need to bring the heat.

DC: 6 Rings.

Dave: 6 Rings.

DC: Jordan's thing would be like, every time he won a championship, he wouldn't hold up... He'd hold up, if it was the first championship, two fingers. The second one for the next one. The second time they won, he would have three fingers. Third finger for the next one. He said the fifth time, he held up this.

Dave: He was already onto the next one.

DC: He's like," I'm getting six. I'm getting six."

Dave: That's why when people ask you if you're going to sell Drift, that's why you're like," No, what are you talking about?"

DC: What are we talking about?

Dave: What are you talking about? What are we talking about?

DC: 6 Rings, bro.

Dave: Okay, this is going to be the Seminole podcast of 2018.

DC: This is it. Right here.

Dave: This is it.

DC: We're laying it down.

Dave: You better bring the heat. You better shut that or look away. This is important because this is something that we need to get on paper. This is something that we need-

DC: Including the trades, bro.

Dave: What now?

DC: When you're a cleaner, you keep pushing yourself harder when everyone else has had enough. You get into this zone. You shut out everything else and control the controllable. You know exactly who you are. You have a dark side that refuses to be taught to be good. You're not intimidated by pressure. You thrive on it.

Dave: Damn.

DC: When everyone is hitting In Case of Emergency button, they're all looking for you. You don't compete with anyone. You find your opponent's weakness and you attack.

Dave: That's the realist.

DC: You'd rather be feared than liked. You don't have to love the work but you're addicted to the results.

Dave: No. The process. Yeah.

DC: You trust very few people, and those you trust better never let you down.

Dave: That's the truth. That's the truth.

DC: You don't recognize failure. You know there is more than one way to get what you want. You don't celebrate your achievements because you always want more.

Speaker 3: Oh my God, let's go!

Dave: Is this your bio?

DC: My bio pick right here. More, more, more.

Dave: Love it. This is good, I got you ready.

DC: Let's go. Got my mic. Got my mic ready.

Dave: I got you ready, I got you ready. We're publishing this next week heading into the New Year. This is going to be your top track for this year. This is going to be a fundamental piece for us. It is the shift from supply to demand, and what it means.

DC: They don't want it. They don't want it.

Dave: I have a million notes. This is something we've talked about a lot.

DC: Internally.

Dave: Yeah, we talked about this a lot internally, which is... There's a whole thing. I'll poke holes in it when we've got to talk about it, but this is an idea you've been obsessed with for a while. Almost since the beginning of Drift, which is that customers today have all the power. I think you've talked about it enough where you kind of crystallize it into this thing which, what you call, the shift from supply to demand. That's what we're going to talk about today. I'll tee you up with this analogy, which you talked to us. We had an offsite and you wrote this whole thing up on the whiteboard. It all starts with this, which is if you look at the world today, hotels own the supply, but Airbnb owns the demand. Cabs own the supply, but Uber and Lyft own the demand. That's all because of the internet. Everything is 24/ 7, real- time, global, but imagine if you went to Amazon at 5: 30 PM today, and you logged on the website and it said," Sorry, it's 5: 00 PM. It's after 5: 00 PM. We're shut down."

DC: Can't imagine.

Dave: Right, so that is the tee up for the shift from supply to demand.

DC: Earlier this year, 2017... In 2017 and early 2017, we were talking about one thing a lot, which was this idea that the companies who are closest to the customer are the companies that are going to win. We felt that emotionally, and we had examples. We were looking at who was closest to the customer? Airbnb or Marriott? Uber and Lyft, or taxi companies?

Dave: Netflix, or blockbuster.

DC: Blockbuster, right. We had all these examples that we would go down the line, and whether it was Walmart or Amazon? Who was closest? There was this proximity to the customer that we believed was all the difference. We were seeing all of these companies that own that proximity, being able to innovate, create new products, stay ahead of the competition because of that proximity. Because of that, we thought they were valued more. The market valued them more. As time has gone on and we have unpacked that, what we understand now is that beyond this proximity to the customer, there's this massive shift that is underlying all of that, which is... It's not just the closest to the customer. That is super important, but it is the shift from companies who own the supply, we'll double- click on that, having all the value in the world, to those that own the demand, having all the value in the world. This is good news for all of us as buyers and consumers, because it means in a world where demand is the most valuable thing, we get to dictate to companies how we want to be served, what products we want and what we value. Let's double- click on an example.

Dave: Okay.

DC: In the old world, you had a company, and you all know that one of my favorite books was written. It was called Made In America, Sam Walton. He created Walmart. Whatever you think about Walmart, it was an amazing company that he created to become the richest man in the world. In Walmart, if you unpack Walmart, what they did, that was so amazing that Will Collins here, who runs our business operations, ops, and everything else, loves was that they created this incredible process internally where they controlled not only the data that they were collecting from the stores, but the operations and the fulfillment centers, and the buying and the purchasing, and all this stuff. It was a company that controlled the whole cycle of how to buy products, how to get them in the store, how to ship them from the warehouses to the store, and because of that, because they had that proprietary knowledge, they could control the demand in all of their markets. Meaning all of us would run to Walmart to get what we needed because they were in control.

Dave: We had no choice.

DC: We had no choice. They had all the power and that power was buried within the company. That's very different than today, if you were to double- click on What is Amazon Today. Amazon today, I forgot the percentages, but a large percentage of the goods that you buy on Amazon today are not sold by Amazon. They're sold by third parties and they are fulfilled by Amazon. They don't even hold the inventory from a cost standpoint. They're basically a demand generation capture mechanism. They have all of our relationships. We buy from Amazon, and then it gets fulfilled through them.

Dave: I think it's over 40% of their business is not their own stuff.

DC: No, not their own stuff, and it continues to trend in that way. That's one example. The other example that we double- click into a lot is the example of razor blades. Imagine a world, the most commoditized world, which is creating products. They're called consumer packaged good products, so the products that we buy in the supermarket, largely, aside from food, and a company like Gillette. Boston- based company had for, most of our lifetimes, owned all of the demand in razors. Why? Because they own the design of the razors. They own the fulfillment centers. They own the relationship with Costco, CVS, everywhere you could buy. If you wanted to buy a razor, you had to buy it from Gillette, or you had to buy some knockoff, junky version, so everyone bought from Gillette. What happened a few years ago? A company like Dollar Shave Club emerges out of nowhere, and they're able to transform from zero to a multi- billion dollar company, ultimately purchased. They didn't own the fulfillment center. They didn't own the relationships with CVS and what have you. They sold via subscription directly to the consumer. Why could they do that? They could do that because for the first time ever, they could build on top of platforms like Google, like Facebook, like Instagram, like others who were capturing demand, and they were able to address that demand and build a multi- billion dollar company.

Dave: Here's my question for you. That is complex as hell. The razor blades.

DC: Yes.

Dave: Selling software online, not that complex.

DC: Not that complex.

Dave: We're sitting here on the verge of 2018. We've had a bunch of businesses because of what we're doing here. They have taken the leap and want to transform how they're doing it. The big problem, though, is most businesses still operate in that world, with a Walmart world, where they think they have all of the supply.

DC: Yeah, and it's a crazy idea. Fundamentally, what we're doing at Drift is we're trying to transform the way that businesses buy from other businesses, and the businesses buy through people, so it's how people buy from businesses. We're trying to transform that whole thing and create a whole new buying experience and make it frictionless. You're right. The truth is that companies today still think that they get to dictate how someone is going to buy their service or software.

Dave: I was on a sales call about an hour ago, and-

DC: Why are you doing that, man? You're in marketing.

Dave: It's the only way. It's the only way you get better.

DC: All right.

Dave: I'm on a sales call. Obviously, I had to ask how this guy heard about us because I don't know how you track that. There's attribution.

DC: No, attribution modeling.

Dave: He said," I was thinking about going with one of your competitors, and I just did a Google search to see what else was out there. I found some stuff of yours and I liked it. That's why I'm here." That, to me, is everything. That is everything. We've all been there. You're trying to order. It's like you're trying to go to you... It happens all the time. Trying to go find a spot for lunch. The line is long. What do you do? You pull out your phone, you go to the next place and boom, you go eat there and you're just as happy.

DC: Totally because now your demand... It's no longer a hundred years ago where you had one restaurant in your town. You have infinite supply, and so that is what's underlying this shift. We've moved from a fixed supply in this supplier- dominated world where they get to control the supply, therefore, they can dictate the demand, to a world where the supply of everything is infinite, and therefore the buyer has all the power.

Dave: Tell me about what does this world look like? The world of infinite supply. How do you compete? How do you compete, if you're a business, in a world with infinite supply?

DC: In a world with infinite supply, you have to stand out by being the person who serves your niche of customer the best. That has to come through, we believe, a combination of things. It's never going to be one thing. It's not just going to be," I have the best razor blade in the world," because someone else... Guess what? Someone in China already knocked off that razor blade before you sold it.

Dave: My favorite quote... Well, I have a lot, but it's from Marc Benioff, CEO of Salesforce. Respect.

DC: Respect we're coming for you.

Dave: Said,"Anybody..." Coming for you." Anybody can copy and paste any of your features, but the one thing that they can't copy and paste is your brand."

DC: Exactly, so we say," It's product. It's brand, and it's service." It's the trifecta of those things that is going to let you compete. Why? Because in a world of infinite supply, having the best product is not enough. Why? In a world of infinite supply, developing a brand by itself is not enough, and having great service is not enough. It is the trifecta of those three things that we believe will help companies stand out.

Dave: The premium... It's really this bigger category of customer experience.

DC: Yeah.

Dave: That's why we love the Apple store. That's why we use the Apple store as an example of an amazing customer experience, but then when you tell that story, people say," Yeah, well DC, of course Apple has the best customer experience. They're the most valuable brand in the world."

DC: I say," You're missing the entire point." The fact that the company that has the biggest, one of the best brands in the world, one of the best products in the world, of which many of us are willing to wait in line overnight to get because they want it so bad, in that world, they are still providing this amazing service that we're talking about right now. Means that you who do not have the greatest brand and do not have people lining up to get your insanely unique product-

Dave: Definitely not.

DC: ...have to do a better job than they do in terms of service. You better be standing out in service, and doing a better job than they do in their store, if you don't have those two things that they have.

Dave: What do you think that means? What does that mean from a technology perspective? You can talk a little bit about what we're building at Drift. Will we see the future? What do you think the future is? When you talk about experience, it's not just the colors, and the feeling. You're talking about the actual technology side of this now too.

DC: Absolutely, so then that's how we think about it at Drift. In a world where we think the world is moving towards infinite supply, in a world where we think the buyer, meaning all of us, have all the power, decision- making process, in that world you have to reimagine everything. Not only the product and service that you're selling to them, but how you're selling that, how are you marketing to them. In that world, the power dynamic shifts, so you have to think about how do I find a marketing system? How do I find a sales system that lets me provide the best customer experience possible and lets me operate in a way that our customers are demanding? That's what we're trying to build at Drift. That's the technology. That's very different than the technology that has worked really well, and that most companies are still using pretty well, or very well, to this day that is built around solving a company problem and puts the company ahead of the customer.

Dave: Somebody comes to your website, they want a demo. I know I want a demo. They know they want a demo. Old way would be like," Okay, even though you know you want it, I'm going to need to ask you these 15 questions first."

DC: Exactly, you can't get it.

Dave: New world is like," You want a demo? Sure. Here."

DC: We're here for you.

Dave: On demand.

DC: Exactly. Here you go on your demand, on your terms, when it's convenient to you. Not according to my schedule, the company, but your schedule, the buyer. We think this massive shift is happening, and so we're racing to empower the next generation of companies and get them ready for this massive shift, which is undeniable. We feel it every day. We all see it. When I talk to anybody out there about the shift in the way that people to buy, there's no doubt. There's no question mark.

Dave: DC, I sell to businesses. It's a really long sales cycle. It's really high contract value. I don't know if this applies.

DC: You're right. It is a really long sale cycle because you've made it artificially long using your process. It doesn't have to be long because most of your buyers today are coming in, in a world of infinite supply. Most companies are not the only one in their category, no matter what they say to themselves. They're selling that service or product to that customer. In that world, we're making it artificially long. We need to change that into more of a real- time buying process. People can buy everything from cars to phones the helicopters online right now on their phone. There's no reason that they can't buy your software or service.

Dave: That's what we call the shift from supply to demand.

DC: It's a massive shift that's happening, and we all feel it every day. I think the number one thing we all need to do in 2018 and 2019 is to prepare our businesses for this tidal wave that's coming. We feel it. We all, if you ask anyone you know, inside, outside your company about how they prefer to buy something, it is undeniable that this shift has happened, but we have not woken up as companies yet to be able to change our companies to prepare ourselves for this shift.

Dave: I love it.

DC: Let's get it.

Dave: All right. Look 2018. It's coming.

DC: That's it. You know what we need? We need six- star reviews in 2018.

Dave: The audio now is so crispy that it's-

DC: We have a new editor. Dave didn't know how to do audios.

Dave: No, sorry. 104 episodes of not good audio.

DC: Now we have someone-

Dave: Imagine how many reviews we should get now.

DC: Okay, so leave a six- star review on how much better the sound quality is on the podcast. We're investing there. We're going to be doing a lot more investments this year in the podcast, bringing events, bringing roadshow, bringing new people, new topics. Get ready. It's coming. 2018. It's going to be live.

Dave: We have some crazy stuff planned. If you know anything about DC, you know he's always pushing us here to try new things, crack the new channels, and I'm excited that you're going to see some of the stuff that we got cooking for you in-

DC: Yeah, you know my only regret in 2017-

Dave: Sure, what?

DC: ...was I looked back and I said," Man, we've been doing 2x thinking. 2018 is 10x thinking. We're going 10x next year."

Dave: That's your call to action, right? If you want 2x thinking, you can double your business.

DC: Yeah, keep going.

Dave: Like fine, keep going-

DC: That's good. That'll be fine.

Dave: ...keep making the crosstalk. If you want to 10x your business, think about this shift from supply to demand.

DC: You are not going to 10x your business, doing what you do today. You're going to have to look for high beta investments, and you can look that up. Wikipedia. Dave will look it up after, and then invest in those. That's the only way you're going to get disproportionate returns. 10x thinking. See you in 2018. It's been real. Leave me some six- star reviews.

Dave: Peace.

DC: Peace.

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