Sramana Mitra: The part of retail that I find interesting is the niche. Let’s take fashion. I don’t wear big designers as much anymore. I also shop a lot when we’re traveling in esoteric designers that don’t have big footprints. These kinds of things are not accessible.
If there’s a small retailer that assembles and really well merchandises a group of designers and a group of products that are special and interesting, that kind of curation has tremendous value. It’s a small market. This is a very esoteric market.
Daniel Gulati: The value to curation is overlooked and underrated. If done well, it’s a very unique skill. We, at Fab, went through this phase. Fab started off as as tightly curated design stall with 50 SKU at any given time. Some of the issues that you face as an e-commerce retailer is expanding range – more categories and more products in each category.
When you do that, you trade off that sense of customer delight for short-term conversion. It ends up being an everything store. I remember one day, I looked at the site, it looked more like Walmart than anything that we had set out to be.
Sramana Mitra: That heavily curated environment is where a deep user experience can be provided. That’s a very different business. That is not a venture-scale business.
Daniel Gulati: I think we’ve done a lot of these companies a massive disservice by funding them like they are technology companies. I think that there are great e-commerce and great brands being built today. Venture capitalists have a responsibility not to over capitalize these companies and not to think about e-commerce revenue as equivalent to paid content. We need to take a good hard look at some of these companies. I’m speaking for Fab specifically. That would have been a great half a billion dollar company.
Sramana Mitra: Death by overfunding.
Daniel Gulati: Yes. It doesn’t work.
Sramana Mitra: The Nasty Gal fiasco was the same story. It was not structurally possible to get to those kinds of levels. It should have been capitalized much more modestly.
Daniel Gulati: I think we’re in this new era where we recognize that there are some interesting opportunities here, but we want to be thoughtful about moderating capital in. It’s a stewardship that people are aware of now. I do want to go back to this idea of curation because I think it’s an important piece of e-commerce. Curation has been around a buyer and a category and that buyer making decisions on a category basis.
We’re injecting more and more data into those decisions. When I think about curation, it looks like that. Curation tomorrow will potentially look different. When you think about the data that exists and when you look at the fragmentation of brands that are happening, it’s crazy to me that someone at Walmart who’s in charge of the pet category is going out and making the buying decisions based on historical sales and gut feel.
The whole concept of what do I curate or buy for my consumer will radically change in the next five to ten years. A lot of external data will be infused into those decisions. It would be very interesting to spin up a store and have a robot curate.