Dirk & Kelly - A Look Back at 2024, and a Look Ahead at 2025

Speaker A: I'm long enough now since 25 years in this market. I know that if you have good numbers, you share them. And only if you have bad numbers, you don't share them.

Speaker B: All that and more in this episode of the Commerce Tomorrow Podcast.

Speaker A: Hi everybody, and welcome to a new episode of the Commerce Tomorrow podcast. We're at the end of the year 2024, um, and we had an exciting time behind us. Lots, uh, of change, lots of things going on. Um, I'm here today again with my co host Kelly. Hi Kelly.

Speaker B: Hello.

Speaker A: And this is a special episode, right? So because, um, it's at least for this format, uh, the Commerce Trauma Podcast. Um, as for now, the last one, um, that we're recording, there are new things coming in front of us. Maybe we will also launch something new, uh, in 25. Um, let's see what's there. But, um, let's uh, first, uh, yeah, kick this one here off and make this a special episode for everybody who's listening in.

Speaker B: Agreed. Can you believe, Dirk, that we've done this will be our 94th episode over six something years, almost seven years. That's impressive. Most podcasts never make it past five.

Speaker A: Uh, which maybe means that we need, over the next year or two, still find a way to record six. Right? So is it a goal to make it to 100 or can we just stop at 90? 94?

Speaker B: I, uh, really wanted to hit one 100, but it's gonna be, it's gonna be hard to hit 100.

Speaker A: Okay, let's, let's, let's see if we figure this out. Um, but wait, with lots of topics to talk about today, um, where do we start?

Speaker B: Let's look back at 24, 20, 24 and Dirk, maybe you can walk our audience through the milestones at Commerce Tools. It was a very eventful year.

Speaker A: Yeah, definitely. Um, it kicked off pretty intense. I remember that because we had our global sales kickoffs. Um, so there was a lot of travel, um, that all of us had in. Most, uh, of the team had been out for a whole month. Uh, and actually there was NRF, um, 24, uh, uh, I had been surprised because NRF, um, had a little bit of a challenge the years before, um, uh, with attendance and coverage, um, but they came back huge after the years of COVID uh, and I would say made it to the main stage, um, not only of E commerce, but global commerce, retail and innovation. Um, this is also something, um, that I'm looking forward to after New Year's, um, uh, to kick off, uh, the year with NRF25 as we'll have a couple of product launches but don't want to talk about that there. The big thing I would say that comes to my mind next um we had in April um this year because we launched Elevate, uh our global customer and partner conference. Um for those of you had been not following us too closely with many events um globally. Uh we still continue to have many smaller site events hosted by us. Uh but we decided that we wanted to have one big global event where we consolidate a lot of uh the content from Modern Commerce Day, Partner Summit and so on. So that was Elevate, uh we picked Miami uh as a place to be um to host that event, um at least for now going forward, uh which proved to be a good location. Um I think everybody who had been there not only enjoyed the content and the other attendance uh but also um, the overall surrounding. Uh for me of course uh beside meeting many of our customers and partners, um I would say there have been um two highlights. The one had been uh some of our uh customer talks. Uh I think everybody remembers John Lewis here. For those who haven't seen it, uh you can watch it on YouTube. We can put the links in the show. Note they have basically explained everybody how they went from uh, uh one to two updates that they could make on their e commerce website. Uh close to 10,000 roughly um, that they are now running. Um so pretty, pretty impressive. And obviously it was a Dirk and Dirk uh session where it was the

Speaker B: Dirk and Dirk show.

Speaker A: It was a Dirk and Dirk show. Um so uh, with Dirk Nowitzki uh one of the most uh successful famous basketball uh players of all time and definitely uh the most successful German uh basketball player um of all time. So far though we have a pretty a uh couple of good players now uh in the NBA. So um, uh let's see. But that had been cool. Uh also having this paper basket challenge um that we played uh were screwed it up at the beginning. I uh, came back uh uh in the second half but already more or less lost. But that was fun. Uh uh so big props out here to Dirk uh who is hopefully also having a great time with his family now uh in the holidays and can relax a little bit. Um what are your memories aside of that Elevate?

Speaker B: Uh it was just amazing pulling everyone together. I think we're finally big enough as a company where we can credibly put together a company event. Although it wasn't even a company event. It was much more about those at the forefront of innovation. Tech so we had a lot of um, very um, leading customers out there doing crazy things. I remember we had, what was it, Havana nights out on the patio. Topic of discussion was bragging over who gets to release um, more often to production. Our customers were trying to one up each other and I thought that is just such an amazing thing. You know, it wasn't too long ago people were releasing a production quarterly and now they're talking about 20 versus 100 times a day to production. I thought, wow, that's cool.

Speaker A: Yeah, no, um, our customers definitely uh, got innovative and that's great to see. And at the end, uh, uh, all of us as consumers are benefiting from that. Um, so then, uh. Well, it was a year, um, I would say where everybody had to navigate through a lot of macro changes. Um, especially uh, so in software sales when you remember the 2019, 2021 times, uh, where it just got easier and eas easier and easier. Um, markets are cyclic. So therefore now it's. Everything is a little bit harder, harder, harder. So you need to go from a farmer to a hunter model. Uh, in sales, um, don't want to explain too much of that there. I think uh, most of the listeners understand what that means for sales organizations on adjustments. That said, um, we've been uh, growing um, pretty well over the course of the year. Uh, I think one way how everybody could see that externally because we publish the numbers every year had been uh, the Black Friday, uh Cyber Monday, uh APIs that we are sharing, uh, which um, had been growing in the range of 30% and above, uh to the year before. Um, so that had been great. Uh, when we look at the overall gmv, uh that our customers are running through our platform. Last year we had been uh, north of 30 billion, um US dollar, um, that our customers or we had enabled for our customers, uh through the Commerce Tools platform. The year isn't fully done yet, but we're getting to the end. But I expect we'll be somewhere near

Speaker B: uh,

Speaker A: um, 40, 42 billion. Um so uh, kind of gross. Lots of amazing new logos that came uh, on top and also with pretty, I would say, um, fast and oppressive projects. Right. So I am m. Just yesterday or so, um, have been looking into shields.

Speaker B: Right.

Speaker A: So outdoor, outdoor, uh, retailer, uh, I know they became a customer last summer, already went live before Black Friday and Cyber Monday and had an amazing week out there. So it's uh, uh, less than four or five months on full, flexible, composable kind of solution. I want to see one of the monolithic players that Always are blaming composable to be slow. Uh, to be that fast I think they would need to cut their delivery times in half. Um, but that's maybe something for another, another podcast. Any, any customers that come to your mind. Um, when look on 24.

Speaker B: Um, I talked to a lot of our bigger customers uh on a regular basis and it was great. They all said yeah we went through the holidays no problem, let's look forward to 25. And it's just a drama free thing. I was talking to somebody yesterday and he said they pulled together their war room in person for nostalgia reasons because people like going to a war room. But he said he fully admitted this was not a like a real. It was just, it was just role playing.

Speaker A: It was table tennis, ping pong flippers.

Speaker B: Uh

Speaker A: yeah it's fun. During, during the Black Friday Cyber Monday weekend I was calling, I think it was Saturday morning. I called first. Uh, Hauke. Um, so our global customer, um success team leader uh and then Hayo our CTO just for a quick sync. Um because I was going through some dashboards and so on and want to check in with them how they are doing and I was literally the only one who called them over the day. So when I called them on Saturday morning they had been hectic and thought something is going wrong. So what, what is here? What have. What has Dirk seen that we have not seen? I was just saying no guys, I just want to check in after breakfast if you're good. And so it was as said pretty, pretty. Uh commerce is great when it comes to.

Speaker B: It's become boring and that's a good thing. It's a utility now and that's amazing.

Speaker A: I would say yes on, on the platform and scalability to a certain point and that's what it should be right. So let's not not not getting stressed out um to have more customers on your site uh, that are, that are shopping. Um so what else? Uh, we did a couple of uh key hires. Lots of changes, uh, changes also on, on my side. Um so I brought Andrew in uh who started now it's liter now half a year back. It was uh 1st of July that Andrew came on board uh and took over my role um as CEO. It literally just feels like being one or two months because there's so much going on. Um and actually we uh had been pushing hard um through the year on releasing new functionalities, winning more customers. Uh uh did a lot of enhancements across the organization as we brought um ah Matt Tool in as coo. Uh there are Also a couple of other um, new leaders, um, that just recently joined but hadn't been announced. I think this will happen beginning of January so it will not be uh, too fast, uh on that here. But it's great. Right? So we are now starting the next chapter I would say for the growth of commerce tools, uh, where everybody might have seen the um, Gartner magic quadrant where we evolved our leadership position, uh, and now it's a couple of years in a row, um, that uh, we're spotted uh strongly uh, in the leadership quadrant, uh, actually across all analysts, um, which is also because, and that's maybe one more thing to mention. There are always these kind of discussions you buy yourself in, uh, and that's why you get that dot up there. So the amount that we pay to Gartner for their research services um, is really small. I can share that. So we are not buying anything in. I'm pretty sure that some of the big logos um, pay 10 or 20 times of what we pay. And also it does not give you any dots. So it's just on being able to work with the analyst, ah, be able to use their research material. It has nothing to do with any kind of quadrant but it's literally 10 years of work um, that we put in growing the company and the business and in parallel working with the analyst that then reflect that dot. But the position of the dot is because of our strong growth. And here back to the Black Friday Cyber Monday numbers as of my knowledge. And please everybody provide in comments uh, uh, on, on your favorite platform. We're either hearing about this podcast or listening to it. Only Shopify and us have reported Black Friday Cyber Monday numbers. Nobody else did anymore. And there's different room kind for interpretation. I'm long enough now since 25 years in this market. I know that if you have good numbers you share them and only if you have bad numbers you don't share them. There might be other truths and maybe somebody has forgotten to push the publish button on their uh, press website uh, or on LinkedIn. Um, but I would wonder. And already last year we had been the fourth largest platform in the world, uh by gmv, um that we uh, are enabling uh and we're starting to catching up uh to the number one um, which is great. Uh, so um, um yeah I think we did a lot of things uh, right, uh, more to come um here um, but now enough ah about uh my view on 24 uh and what all happened from my side, um, there's also a big change um coming to You, Kelly. Right. Uh, so we made a bit of an announcement. I'm not sure if you can sing the song.

Speaker B: Um,

Speaker A: with a little bit of AI support, I, uh, got created. But tell, um, us more about that.

Speaker B: I like building companies. I like the small early stage. I still Remember in late 2016, um, the office manager in Berlin, she put me in this hotel. Uh, it was a really, really, really bad area of Berlin. And they had a condom dispensing machine in the lobby, in the lobby of the hotel. Multiple flavors, multiple colors and that, to be honest.

Speaker A: Where are we going now? Here in the conversation,

Speaker B: you know, like, those were, those were my favorite times of like figuring out how the hell we're going to make this thing work. Whiteboards, long dinners with you and discussing the plans, the future. Could this work. Budgeting, is this thing going to work or not? And I thrive on that personally. I really do. And Commerce Tools is, as you mentioned, it's a new stage of the company. It's very much a growth, uh, scale, uh, execution phase of the company. And that's great. And folks like Andrew and Matt and others, that's what they do. But I am at heart a series A through series C person. I like building category, creation, uncertainty, um, being scrappy. I like being able to wrap my whole arms around a company and do something quickly. Uh, whether right or wrong, I like it. So I'm going to do that again. I will announce in the new year and I'm very much looking forward to staying in the community. So you will definitely, um, be seeing me at conferences and others. Uh, I will be around. It's a mock alliance member, um, and uh, it's a new chapter for me in what I'll be doing. It's also a new side of commerce that I haven't done yet. So I've always been very focused on commerce platforms directly. And this is something a little adjacent to that, but not quite that. It's a big world. So yeah, I'm really looking forward to,

Speaker A: uh, continue to working with you on that. Right. So as you said, you will stay close, um, part of the community, um, close, close to Commerce Tools. Um, once a Commerce tooler, always a commerce tooler. Right? So you're never far away. Especially like it's eight and a half years. Can you believe that? That's a long time.

Speaker B: It's been a long time.

Speaker A: Remember this wework, uh, place that we had in New York, uh, where everything started? It's kind of.

Speaker B: Oh yeah. So many good memories. I mean really, when I look back on my career. This is, it's very possible. This could be the peak of my career right here.

Speaker A: Who knows? Who knows. No, no, it's uh, I think this will be. You will do amazing. Um, this will be fun. Um building definitely. It's fun. Um, uh putting your arms around everything on commerce tools with over 600 people and the global setup is kind of tricky now. You need pretty long arms to do

Speaker B: so and gone from a leaky rowboat to a cruise ship now it's kind

Speaker A: of, kind of crazy right? So looking, looking back who would have expected that uh eight and a half years ago. But um, that was great. Um I think what we, what we created together. But now let's not get too nostalgic here. Um what we, we did about a year ago. Um, you've wrote an article on LinkedIn, um your 23 predictions um for 24. Uh so 23 predictions from 23 I think uh, was it called ah on LinkedIn? We can put that on the show Notes. How did they age?

Speaker B: Well let's, let's go through um. Why don't you Dirk read them one at a time and I will respond quickly. And let's go through the 23.

Speaker A: Yeah. So um, emergence of direct competitors to commerce tools. Um that was the first trend that you have called out where because so what, I don't want to read everything here that there had not been direct competition. And with direct competition we don't mean that we don't have competitors. Everybody who's providing a commerce platform in some kind uh is a competitor but there was nobody that was really coming close to us from it product kind of perspective and so on. Um, and uh so at that time uh Shopify announced their commerce components tried uh to position into enterprise and um becoming um, ah more closer rival to ours. That's prediction number one. I think that age pretty well. Right?

Speaker B: I do and I, I don't know if we necessarily have a head to head competitor feature for feature in the enterprise segment that we own but I think our competition now is good enough and we're seeing more and more of that. And I think that's partially um, partially because if you look at tech adoption it's a, it's a adopted according to a bell curve and those at the top of that bell curve they care less about the tech. They just want something in a box that, that works for them and those customers are much more satisfied with and in a box good enough, it's okay, it's fine type of solution and that is uh, where we're competing and we outwin on the, on the tech side and on the business case. So I think we just have to continue to go to market as we have been and keep refining our messaging and um, I think we've got a real right to win in the enterprise commerce segment and I think our 2024 results prove that and I think so. Um,

Speaker A: wasn't in the LinkedIn but my prediction long term was that it's at the end Shopify and us here, uh, and um, though they are a pain in the uh sometimes um actually uh, uh, Toby and Harley are doing a good job um, to annoy us a little bit especially on the marketing front. Um, but they do this well and honestly I have to say though this is um, uh strong competition um, that, that we're having against each other. I prefer that much more than the 21 times I cannot count the calls that I got from the market, from analysts, from investors and so on about hey have you heard about XYZ? They raised 40 million, 20 million, whatever in funding. Uh, there's the next uh, commerce unicorn here and so on. So there was so much um, how do you say, smoke and mirrors.

Speaker B: Noise.

Speaker A: Noise. But it's also from my perspective smoke and mirrors. Because there had been companies raising money that never had been a company. Company to me means you have customers, you have a product, you make revenue and uh, where it was clear they most likely will never get there and now they are all disappearing and getting pretty, pretty silent and quiet. Um, so the dust is settling as expected. Uh and it's now clear who's on the main stage uh and has the right to win customers and that's Shopify and us. Yes. There are also a few others that are doing um, I would say okay uh, within specific market segments. Uh, I would say that, that we are also not uh, too much involved and I'm looking forward uh to continue and expand that competition. So uh, Toby, uh, uh, Merry Christmas, Happy New Year, looking forward to continue this uh, going forward. This will be fun. Um, but that definitely um, aged well your prediction. Um, so let's, let's go forward. Uh, auto routing will upset the OMS market prediction number two. Um, your take Kelly.

Speaker B: Starting to see it. So the prediction was there are new vendors out there like patchworks, pipe 17, fulfillment tools, ally Automation and they are breaking apart legacy omss in the same way that we at Commerce Tools broke apart legacy commerce platforms. So they're offering um, the discrete pieces of order related functionality without being an order management system which people Universally dislike that category of software. Um, I am seeing more, more and more um, traction there. Pipe, uh, 17 especially is doing well these days and I think this is an area that's ripe for disruption.

Speaker A: Yeah, no, definitely. Also I can say um, because I have some insights there. Can't tell too much but Fulfillment Tools also is doing well. I think that was their best year um, so far. Um, still young companies right, so, but um, now growing, growing quickly. Uh, I like the next one, um, emergence of the digital experience composition category. And I think you had been um, building that on a quote uh, from Joe Sickman, uh, Forrester analyst who said okay, headless commerce is a pain in the neck. Um, and so everybody following that up where it wasn't about the advantages uh, that it has but about uh, building and composing. Uh, so how do you see that?

Speaker B: Um, I kind of got it right. So for a while there, there were standalone vendors who I shall not name because then they'll uh, get upset with me. Um, but there are standalone vendors offering these, these next for Headless Commerce. And my prediction was more about those vendors. What's happened instead is that functionality um, is required but it's completely moved over to the cmss. The content management systems now all offer this exact functionality And I think this is an example of um, something being a feature, not a standalone category. So I was correct in saying the market needs this and we now have this. But I was incorrect in thinking that it would be a standalone category. It is now just a feature of a cms.

Speaker A: Yep, I agree. Uh, so number four, promotions, PIM and checkout will increasingly be purchased standalone. How do you see that? Especially when you look at 24 and maybe 25 as an outlook.

Speaker B: Um, I think promotions and PIM are definitely being purchased more standalone. Um, but promotions has evolved into Promotions and Loyalty which is more Martech. Pim, um, definitely is being purchased standalone and that's great. A lot of good mock alliance members there check out. I'm not seeing purchased standalone but I am seeing a lot more innovation around single click checkout type products. So think of the Apple pays of the world, reducing that friction. And I'm also seeing checkout just go away as a concept. So a lot of our customers now have, they still do checkout but it's just a product detail page with a buy this thing now button that pops up a mobile wallet and that is, that is different. But I don't, I, I still keep seeing some of these checkout vendors getting funded. I don't think they're going to make it. I, I can't see that that works. I think Bold Commerce has an interesting idea around checkout personalization. I think that's a pretty interesting product. There are a few niches here and there, but the standalone, fast and bold type companies, I don't see that ever happening again.

Speaker A: Yeah, no, no, I, I agree. Um, it's uh, at the moment an interesting environment because on the one hand the demand for flexibility and scalability for your business continues to increase. Uh, on the other end, um, businesses need to bring or create value out of these solutions pretty quickly. Um, they're looking for ways to accelerate it uh, and have uh, these uh, products much more pre integrated um, in many kind of cases. Um, but yeah, so let's, let's see how this plays.

Speaker B: Maybe I can address the next one to you Dirk. Um, number five was a focus on profitability. I said and I love the photo,

Speaker A: I love the photo below. Uh, that's um, one of the I would say poster boys of what's all had been going wrong um at the times of 2020, 21.

Speaker B: And I, I said and I quote I expect to see much more pragmatism and humility among vendors in our space. And that is a welcome change. End quote.

Speaker A: I would say the market has completely shifted.

Speaker B: Right.

Speaker A: Um, and uh, I would say it was a shocking moment for everybody in the industry who did not already experience the years before. I would say 2012, 2013, um, because definitely in 2012, seven, eight with the global financial crisis or even earlier than 2001, 2002 with a dot Ah com bubble burst, um, we've seen the pendulum swinging back um, uh already in other environments. But a good indicator is just look at VC funding rounds. Um, how was the market looking in 21? How was it in 23, 24? It got much harder if you're not having sufficient. So either you had been an AI or you needed to have a sufficient business model, um, provide um, the right numbers, um, and uh, show that you can build a business with a clear control of your cost. Uh, other than that funding would have been a problem and uh, especially also became a problem for everybody who raised at really high multiples in 21. Uh on figuring out how can they restructure their cap table and bring in a new investor on board in 24 uh without squeezing out everybody who came in in the years earlier. It is focus, uh on profitability is one thing. I would say focus on efficiency.

Speaker B: Efficiency is the right word. Yeah, exactly.

Speaker A: It's how not growing but being profitable. Um, for uh, a venture funded, I would say 10 million ARR SaaS company, um, that's a problem. Um, if you're not venture funded and it's a family business and do you do 10, 15, 20 million and are profitable. That's amazing. Um, but uh, when you have external capital in, it is about growth. Uh and this, this actually was the other problem for many that growth slowed down, uh, and growth definitely slowed down for almost everybody but for some more and when they are then losing money, uh, and have no way to stop that, um, and here the tricky part for everybody has been okay, how can we come more efficient uh, on the cash flow basis, but also accelerate growth. So you need to do more with less. Uh, and this hasn't changed. This is also the mantra for 25 um, on, on every company that I'm invested in within E commerce tools, every founder uh, that I'm talking to, it's really okay. No, we are focusing on growth but we want to do that in an, I would say cash flow efficient.

Speaker B: It feels like this is just the new normal forever.

Speaker A: I think if somebody could choose. I know there are these outliers in some markets where you can do even more, but I think where everybody would love to be is like being growing 30 to 35% and being 5 to 10% profitable. I think that's at the moment this kind of golden cut, um, that you would love to be in. Um, and that's hard. But somewhere within these, I would say guardrails, uh, everybody tries to figure out how can they live in there.

Speaker B: Agreed.

Speaker A: So the next one is I would say at least in hindsight, a pretty easy one. Um, ChatGPT takes the world by storm.

Speaker B: Um, I wrote this in January of 23 which was only two months after ChatGPT went live.

Speaker A: It's an almost two years old prediction. Right. Uh, so uh, I think that aged pretty well.

Speaker B: The only thing I messed up is I said it was a once in a decade revolution. It should be once in a lifetime or once in a generation.

Speaker A: Maybe once in a generation. And it's now also not only chatgpt. Right. So there are a um, handful of models um, that are really growing, growing quickly. ChatGPT is still one of the bear big ones but also uh, Google's Gemini, uh, Entropic, uh, Mistral maybe. Um, so there are a couple of, of companies, um, Meta obviously.

Speaker B: Um, now they're all doing pretty well with any technology. There's always um, the Hype cycle from, from Gartner. Right. And you get a Peak of inflated expectations and then the bottom falls out and everybody says oh this technology is terrible. Uh, nobody uses it anymore. And it feels like we're heading towards this trough of disillusionment with AI because there still aren't a ton of real world applications yet. But I don't remember who it was who said we always overestimate the impact of technology in the short run and underestimate it in the long run. And I think that's what's going to happen with AI. I think there's still years more building. We need to figure out how to definitively stop and um, AI from saying things. There was a, an agent that so a kid in high school was uh, using, I won't mention the name because they're a partner of ours, an AI, uh agent out there. And the AI agent started telling him to die, die, die, human die. And it didn't seem like he did any prompt hacking. But you know there are an awful lot of people out there who maliciously get AI to say or do stupid things. Um, you know one, one guy uh, got a car dealership to sell him a Tesla for a dollar. It was a Chevy dealership. But he convinced um, the AI bot that actually they wanted a Tesla and that they should sell it for a dollar. And he was able to. So there need to be guardrails because you know, kind of like with self driving cars it's not enough to be 99.9999% accurate, it has to be 1% hundred because the 0.00001 is screenshotted and thrown on the front page of every um, newspaper in the world. And nobody wants that bad publicity. So there are a lot of still things that are stopping real world adoption. Um, but we will get there.

Speaker A: I think so too. There was an interesting video circulating around from Satya Nadella um, the last few days where he was talking about the impact that it has on um, enterprise software or software as a service, um, specifically, um, where we can also try to put this in the show notes where he was talking about that most systems are basically have crude models. So you create, write, update within a database, um, provide a couple of APIs, but then all of the business logic is happening at the layer above. Uh, and that layer above in the future most likely um, is becoming an AI at least to a certain point. Uh, and what this m mean for SaaS, uh, I haven't commented it. There already had been so many comments on LinkedIn that I said okay, I spare everybody my opinion here. Um, I think he is. And this is also what I would say what we believe and work on commerce tools, then I would share the sentiment. I also know that it's not just all about prompts within a large organization. Some of our customers have 300, 400,000 employees. It's not that just somebody will write a prompt and has the authority to just update their website. I think the AI will also have to work in there with specific guardrails, process management, um, tooling, um, around it, uh, at least as long as the AI is working for us. Right. So there always needs to be some kind of human AI interface and process, um, especially then in regards to large organizations and what we also have seen, and this is maybe m my prediction, um, the, as you said, we underestimate in the long term. I think the long term impact will be big, but it takes time. Uh, not every Oracle, SAP or whatever system will be replaced within the next four or five years just because an AI could do it better. If that would be true, uh, then look at airline booking systems. Um, some of the software, uh, these IBM servers, uh, that are machines that are running there, are running there since 45, 50 years, uh, that are responsible for seat reservations and doing the bookings. Um, there's a lot of things that we can do much better, much faster. Um, but it's also complicated to replace these processes. Cost, um, a lot of time, uh, money, um, obviously, um, uh, and so therefore this is nothing that's happening overnight but gradually. And it's interesting because we used also at commerce tools the example of the frog in the boiling water. So uh, at the beginning, early days, it was an example that sometimes as a retailer you figure out too late, uh, that you need to make a change on modernization. Um, here it's um, maybe the same, right. So it will take time, um, and temperatures going up and at some point, um, a lot of things will have changed and might have been underestimated by, by a couple of companies. Good.

Speaker B: So, um, we have spent 20 minutes on six of these and it's great. But we also have 20 minutes left and we have to cover uh, all 23. So let's do rapid fire here towards the end.

Speaker A: Yeah.

Speaker B: So 7ar will finally become a thing. Um, I was wrong. This was before the Apple Vision Pro was, was mentioned. I um, have an Apple Vision Pro. Thank you, Dirk. Um, it is cool, but it's also absolutely not something you'd ever wear out in public or even at home. And my wife yells and I quote, get that effing thing off your face. When I am with the family and trying to be social and I dive into my virtual reality. My wife uh, who you met is also very sweet as well. So I don't want to give you the wrong impression but um, it is a very isolating thing to have a giant brick of uh, glass over your face that walls you off from the entire world, especially when you're supposed to be spending time with a family.

Speaker A: I believe this still will take time. Um, the uh, prototype glasses that Mark, uh presented recently um, go in the right direction. Um, I think the device that Snap is having, um, basically a ray ban uh, with the camera in, that's a format that would be widely accepted. Um, it looks just as like a lifestyle um, accessory uh, and not like a technical gadget. And there are still a couple of challenges around battery temperature, compute power to getting that on that small format. Until this isn't being solved, um, there, it will take a time. Maybe Apple buys Snap to get access to the technology or maybe that's an opportunity for Meta, um, to get this device from prototype uh level um, to general availability. But let's see, my bet is that in 25 we will not yet see a killer application.

Speaker B: Agreed.

Speaker A: Okay, so let's do some things quickly. Right, so there are a couple of technical terms that we maybe can skip here. Right. So we spoke about platform. The mock alliance is growing. I think that has been growing. Well legacy vendors going. Mark. Yeah, I would say on a marketing level I would agree. Um, there's definitely a lot of effort on modernizing their stack but not really replacing for most of them uh, which makes it um, challenging. Here's an interesting one quickly. Right, so search is increasingly decommoditized um now with the takeover of AI. How do you see that?

Speaker B: Um, yes, I think for a long time we just had um, old school document based search based on Lucene or some open source. And now the vendors are all offering real differentiated products uh, out there and we see tons of Algolia constructor, um, John Andrews who's a friend of the show, um, just got 28 million in funding for an AI commerce search startup. So yes, it is becoming decommoditized. That's a good thing. AI accelerates that.

Speaker A: So let us go to the last one here. There are a couple of in between I think everybody else can go through the list and see um, have a check in of the predictions. Um, the last one I think so you had been right on many I would say on um, prediction 23 given recent events. I Would say the overall market might disagree. Uh, so what is it? Crypto will fade as it lacks real world use cases. I don't argue the real world use cases. But bitcoin at an all time high, maybe also does not. Yeah, put your prediction fully. Yeah, fully come true.

Speaker B: So I have a good friend and I think we all have these friends who are, uh, crypto bros. And I hate to gender it, but it is a gender thing. Thing. Um, you know, he's Mr. Crypto Bro and he bought in at 6,000. And every week we go out for a run. Oh, it's gonna pop. It's gonna pop. You should buy, buy, buy. And me, Mr.

Speaker A: Pregnant, you're still running and he's driving next to you with a Lamborghini.

Speaker B: He runs with me. He runs with me. Um, and forever I've said politely, this is all bs, um, because there's no real world way to spend it because there's no utility. And what it's become is a speculative, um, asset instead. And it crossed a hundred thousand. And I sent him a text and I said, you were 100. Right. I was wrong. I'm sorry. And uh, we're actually gonna go to lunch today, so I'm gonna hear more about it, I'm sure.

Speaker A: Yeah. But let's see how 25 will look like. Right. So there's a change, uh, in the US government coming up, uh, with a lot of people I would say. And close by this government with a high interest, uh, in uh, crypto, uh, becoming even more valuable. So I think there is an interesting time, uh, I still do not own

Speaker B: any, um, will probably be a very late adopter there. Even though I'm usually generally a very.

Speaker A: You buy bitcoin once it's at 500K. Right. So that's. And I, I should not make fun because I'm, I'm sitting in the same shit. Right. So I have a couple of friends who are really big invested, um, that I'm pretty, uh, close to, that I'm constantly talk about. And I, My feeling is I always miss the right window to buy some. And when I think about it then my m, my. So the, the tools, the platforms haven't been sent up. So I'm, I'm at a better state now. I have a little bit. But it's not really, uh, it's. Yeah, really, really, really small portion of my asset management, uh, is there. And that just not to say anymore, I haven't done it. Um, but even if this would grow 5x, that will not make me Much wealthier because it's really not much money that I have in, in crypto.

Speaker B: Well you know the, the old adage uh, about investing is true. You should buy low and sell high. And if you're buying into crypto now you're buying high, um, and probably maybe selling low. Maybe I'll be right one day. Or this is a growth wait long enough or this is a growth asset like an Apple stock and it's going to be you know, a gazillion dollars in 20 years. And that, that's possible too. But I'm just fine in the real economy.

Speaker A: Okay, so let's close it with that.

Speaker B: Um,

Speaker A: let's, let's have a few uh, predictions for 25. Some we have already mentioned. Um, but let's try to keep it short. Um, what do you think that we will see?

Speaker B: I think on the um, vendor side AI is still a shiny object in search of real use cases. I don't know if you've played with Apple intelligence, it is garbage. Um, there are a lot of these uh, AI features that have been done solely to placate boards and to give CEOs something to talk about in earnings calls. There are not a ton of real use cases yet and I think that's because we talked about before. You know there's this whole accuracy hallucination issue has to be 100% but I think we're getting there and I think the wsmo type calls into call centers will soon be answered by AI. Um, and I think it's going to really um, change our lives like our day to day lives. Um, and that's, it's going to be very traumatic for society but I think ultimately it'll all shake out and it'll be just fine. Um, on the client side there's going to be a lot more AI shopping. I know I use AI. One of my main use cases is help me find this thing right. And that's, that's quite challenging to do um, with traditional Google which is over SEO'd. There are too many ads. I basically use chat GPT as a new Google search. Um, I also think there's going to be increasingly a two horse race between Chat Shopify and Commerce tools and we've got a really good um, position in the enterprise segment. We do complexity exceptionally well. We solve a lot of use cases that Shopify cannot. Um, our business model is more aligned with those upper enterprise customers. Um, and I also don't see the legacies doing very well. I see them fading pretty quickly. Um, I don't see any upstarts coming up behind us and what we're doing. So I think this is really going to be a two horse race here between us and Shopify. And look, It's a what, $14 billion TAM market. It's going to be a lot. Um, so there's enough, uh, there's enough food for all of us here. Um, I also think that we're going to be seeing a lot more building and buying. So something that AI has made it easier to do is build microservices, build APIs, build functionality. And historically a lot of folks out there have just bought an entire platform and uploaded their products and slapped a new header on it and said all right we're done. But uh, there's a real line there between what is differentiated truly and what is commoditized functionality. And I think the barrier to building is now going down. It does not make sense to build a platform. Right. Having AI go build a shopping cart is impossible and may forever be just because you'd have to feed it a thousand pages of requirements and that gets very complicated very quickly. But I do think there's a lot of value in organizations going out there and building differentiation, building a loyalty program, building a customized PDP for a product launch, those types of things. So I think that's great. Um, I also see a lot more selling through other channels. Um, so it's, it's ah, marketplaces, it's um, TikTok shops for example. I see a lot of that. It's Google Shopping, um, Bing Shopping Copilot, whatever they're naming it this week. Um, it's going to look more like China I think as a, as a, as a um, shopping motion. Um, I think uh, order management is up for disruption. It's always lagged behind the commerce platform category which has gone through its own disruption in the past decade. Um, so I think that is exciting and one bright spot of a lot of growth. I think the uh, uh, era of do nothing um, in enterprise SaaS is over. So I won't name names but a mock alliance member. I posted the loss data for 2024 to LinkedIn and it was something like 90% of all of the reasons for their lost deals were some form of do nothing or no budget or project postponed or something of that sort. So there's been a lot of pent up demand the past two, two and a half years and I think we're finally going to get past that. I think interest rates are coming down. Um, I think we're in A less regulatory environment at this point, I think we'll see more M A. I think, uh, retailers are feeling more confident coming off record holidays this year. Um, so I think that's all positive. I think we'll continue to see efficiency being the rolling word in SaaS. It's going to be the new normal for a long time. Um, and profitability is really amazing. Um, there's a famous VC named Paul Graham. He, he founded Y Combinator and he has this seminal blog post called Default Alive or Default Dead. And it's all about SAS vendors. If you're profitable, you are Default Alive and you have a lot more options. If you're not profitable, then you could die. Right? If you can't raise that next fundraise, you're done. And that is really challenging for uh, folks. So I think defaulting to alive is uh, back in vogue and I think it's going to stay with us for quite a while. And then finally I think we're going to see a lot more M and a in SaaS. It's been frozen for the past couple years. We've only had a handful of IPOs which actually have gone really well in most cases. Um, but there's been a big logjam. The DFTC in the US has blocked a lot of big acquisitions. You see somebody like Adobe and Figma, that was a big acquisition that should have gone through and that was blocked by the UK regulators. Um, I think for the past couple years a lot of big tech has been very shy about doing acquisitions of any sort and the macro hasn't been there to support it. But I think we're finally getting past that, which I'm excited about. Dirk, what do you think?

Speaker A: Yeah, no, that's a good list. Um, let me try to uh, not be redundant so I create. So we'll see a lot of M and a, um, in 25. Um, a lot of the smaller vendors, uh, will try to find a new home because maybe now they are profitable or close to profitability, but they're also not growing anymore or they figured out that the category that they thought, um, uh, is big enough for them. Standalone, um, isn't really a standalone category. Um, and um, they might uh, work better uh, with somebody in an adjacent category, um, and uh, sell together. IPO window will definitely open up. I think we'll see a lot of IPOs, um, that will be interesting. Um, a couple of good companies already IPO'd. Um, some are prepping up. Um, I think this could be interesting and that might be different. Between U.S. and Europe, um, I believe in the U.S. the IPO window will really be opening up in Europe. It depends on the markets and the countries. Um, there's maybe a bit more instability uh within the government, especially in uh, France, Germany and so on. Uh, with new elections, things changing. Let's see what the impact on economy uh will be there. Um, on the AI side I think we would see a couple of interesting things um in our industry. Definitely uh, implementation times will get faster because of AI. There's um, definitely much less building uh being required uh and much more say prompting configuration, um, and so on. Yes, this still needs to be met with the requirements, um, but it will make things faster and I think that's one of the big areas where AI can provide value uh, to the customers uh, and really help them saving time and money and generate value um, quickly. Uh, we're also doing a lot of interesting things on AI. Uh we started for example um a year back that we have AI generated demos um, and uh, built a solution for that. Which means our BDR and sales teams can have amazing uh, looking customer demos, uh, where you basically take their existing site and environment and say okay now let's have this on on commerce tools, um, uh, but do a couple of improvements and changes and then you can experience it back end, front end, everything all loaded within the data. For us that has been uh, driving efficiency significantly and we believe that this is um, uh expanding to uh, other areas um, of involvement. I also think that there will be a lot of AI use cases, um, I think you already mentioned it and everything that's on, on customer interaction. Um, so no matter if it's B2B with the software vendors like ours on uh, support ticketing, uh, these kind of things, but also call center management, uh, then of course marketing communication, uh, I think 25 will be a little bit challenging here for all of us as consumers because the increase of AI generated content and not only content that we read or where we see videos, but also calls that we're receiving um, from uh, uh, AI enabled or AI only call centers. Um, this will just go up because it's just many more calls, much more personalized and so on. So it will be uh, I think we need features to identify who's really uh, somebody that I want to have on the phone versus where I don't want to be spammed. So the AI spam will uh, definitely I think in 25 uh, become a real thing.

Speaker B: Um, if you want to think of something for a second, the content that We've all collectively, as a species, put online in the past 25 years. That was a very short window of time used to train the AI, and they can't train themselves off of synthetic Data. So those 25 years of, of random Reddit posts and Twitter and, you know, all the stuff we posted online like that will then serve as the basis for all future content going forward. Because now they can't determine if it's real or fake content, and they don't want to train on fake. So we trained our AI, uh, overlords with all the content.

Speaker A: Yeah, I'm not sure if this makes me more happy, knowing that it's trained on many, uh, Reddit rants about specific things where somebody's just frustrated, and then the AI thinks that should be, uh, the standard or normal. But let's see. I think I'm actually impressed every day on what's, uh, being possible and how fast this is moving. Um, so let's, um, see where we get. Um. Okay, so I think, um, that's it for this episode. Uh, almost an hour over. Uh, I think that was, uh, exciting. Uh, had been fun. Um, thanks for staying with me. What have you said, 94 episodes now with this one, right?

Speaker B: Yeah, over six years. Six years. We had John, uh, Panella shout out to John as our first guest. So it's been a great run.

Speaker A: Yeah, this had been fun with many. Also fun, uh, in person podcast recordings. I remember the ones that we had in Las Vegas in the hotels with, uh, external guests as well, um, or New York or in other places. Um, thank you so much. I'm looking forward, uh, to what's coming next. I think everybody will be excited. Kelly, about your, uh, first of January, uh, announcements, uh, that are going out, uh, and then I look forward to continue working with you, uh, and just in a new role.

Speaker B: Yeah, this will be great. But hey, look, thanks for being such a good friend, mentor, coach, um, podcast co host, and, uh, I will see you in New York in a couple weeks. Looking forward to it.

Speaker A: That's great. So, just one last question. When do I finally get a ride on your new snowmobile? This is the thing that's still outstanding and that we haven't done over the last couple of years.

Speaker B: You have an open invitation. You can fire up your jet and come out of over. We'll go around the rim of Lake Superior. It'll be fun.

Speaker A: It's just a Lego jet and doesn't fly that far, but I think I can take a commercial and come over anyway.

Speaker B: You can borrow Bezos's jet. I've heard he's got four, so maybe you can write him politely and ask, since we spend so much money.

Speaker A: I will try. I will try. Thank you so much. Um, Kelly, Merry Christmas. Happy holidays, uh, to you and your family. Um, uh, Merry Christmas and happy holidays to everybody who has been listening to the podcast, uh, and. And had been. Stayed with us over the last six, uh, years, uh, and checked in on over 90 episodes. Um, that had been amazing. Um, give us some feedback and maybe we figure out a format, uh, in a different kind of way. Doing something new. Let's see.

Speaker B: Thanks, everyone. And thanks, Dirk.