Ep. 73- Fermat Commerce with Guest, Rishabh Jain

JULY 1, 2022

Dr. James Richardson:

Welcome to Episode 73 of Startup Confidential. This time I have with me, Rishabh Jain, who is the Co-founder and CEO of Fermat Commerce, a brand-new startup distributed commerce platform, built to enable creators to embed brand-direct shopping experiences on their own sites. Welcome to the show, Rishabh.

Rishabh Jain:

Thanks for having me. Yeah, I’m excited to be here.

Dr. James Richardson:

I think my listeners want to know, explain brand-direct shopping experiences.

Rishabh Jain:

Yeah, sure. So I think that the way that we think about brand-direct is specifically not retail or some other third party intermediated. So we’re seeking to answer the question, how do we get you as a brand to have a truly first-party, not just the words first party, a truly first-party interaction, the consumer, that is facilitated via your creator partners.

Dr. James Richardson:

Okay.

Rishabh Jain:

So direct to us means actually direct, yeah.

Dr. James Richardson:

So just to be clear, we could sub in the word influencer for creator, or did you have an even broader definition?

Rishabh Jain:

Actually, today, the types of creators we happen to be working with are influencers.

Dr. James Richardson:

Okay.

Rishabh Jain:

But we think about it as any sort of content creator.

Dr. James Richardson:

Right.

Rishabh Jain:

A food company is actually an excellent example because we saw this happen. So there are many people who actually follow on Instagram or on their blog or whatever it may be. I mean, I do it, my wife does it, and they share recipes and ideas for what do you make, and then within that, they share who actually applies the specific types of foods that can make that recipe really rich. So we had a real example where somebody was working with this ethical foods company. Basically, she had a pulled pork nacho recipe. And so this pork, in particular, was very good for this recipe, and it drove a ton of transactions. Basically, the actual goal for the consumer is, “Hey, I want to make this amazing nacho recipe.” Right? Where you want to end up, and as a food company, is like, hey, you want to end up in a place where the person is like having this amazing eating experience.

Dr. James Richardson:

Right.

Rishabh Jain:

And so the way you get there is, “Hey, I am the centerpiece of why this dish is so good.”

Dr. James Richardson:

So I’m sitting here thinking, right now, with influencers, I pay someone, I pray they have influence. That’s always the first problem I guess, is do they even have influence? But I assume they do, they seem to have an audience, I pay for some posts, and then I cross my fingers that they read the post, I get some engagement report, there we go, from the influencer, who says, “Hey, here’s what happened.” And then I wonder, “Did I just pour it down the toilet?”

Rishabh Jain:

Yeah. So,

Dr. James Richardson:

I mean, that’s the problem I’m hearing from my clients.

Rishabh Jain:

No, no, no. So this is exactly right. So what I just described is like, “Oh, that works great in theory. How the heck do I find that person who’s actually good at driving transactions?

Dr. James Richardson:

Right.

Rishabh Jain:

All you did was cherry-pick the example, which is, I mean, every salesperson on the planet, this is the job of salesperson. But you’re exactly right. And so I think that the layer underneath that is where what, at least what we’re trying to build, actually shines because the real problem is incentive alignment. The real problem is I, as the creator, don’t actually know how many transactions I drive because, in today’s model, that happens on the brand’s website, even if I wanted to. Let’s just say, I partner with one food company, okay? And then another food company comes to me and says, “Are you actually good at driving transactions?” I don’t have the ability to answer that question because that data now lives in a silo with the brand. And it’s up to the brand as to whether or not they want to share that information back to me.

Dr. James Richardson:

I just had an insight. It sounds like you’re talking about allowing influencers to actually become retailers, retailers always have the transaction data.

Rishabh Jain:

I view it more as the mall.

Dr. James Richardson:

Okay.

Rishabh Jain:

So I think like we’re not the Macy’s, we’re the Westfield.

Dr. James Richardson:

Ah, there we go. All right.

Rishabh Jain:

So we enabled you to stand up a direct shopping experience, meaning you still own your store, but because the creator is the mall, they know that you went into the store and then you walked out with a good. Now, if I move that to the digital world, what does that mean? That means I, as the creator, allow you, as the brand, to surface your shopping experience in my content, which means that I actually know the transaction happened. Now, all of a sudden, incentives are aligned.

Dr. James Richardson:

If I sign up with Fermat, then you’re going to share data on potential creators, so I can know that whether they actually move product or not.

Rishabh Jain:

That’s exactly it, that’s exactly it.

Dr. James Richardson:

Yeah, that’s great because otherwise it just becomes a different business model with the influencer running to show.

Rishabh Jain:

So you know how in today’s world you would see an image with the person actually cooking the meal.

Dr. James Richardson:

Yes.

Rishabh Jain:

As you read this recipe? That image can live inside of our widget, essentially.

Dr. James Richardson:

Okay.

Rishabh Jain:

Such that it becomes super clear, “Hey, you have the choice to buy this product right here.” And it doesn’t take up extra real estate on the creator page because that image would’ve existed anyway, it’s now just existing inside of this container that when I click on it, it actually then pulls up a commerce experience. So I don’t have to increase inventory space, so I don’t have to create new spaces for ads.

Dr. James Richardson:

Right.

Rishabh Jain:

I can just read the recipe and not get bothered by hundreds of ads because we make the content itself immersive. So I save space, I save time for the consumer and for the creator. And for the brand, I remove all of the friction by saying, “You just enable the person to check out while they’re reading about this recipe,” which is like, “When’s the worst time to go grocery shopping? When you’re hungry.” This is excellent as a brand. You want that experience, you don’t want to remove the person from looking at the mouthwatering nachos.

Dr. James Richardson:

You have to have at least a third party for – in a Shopify account, but you don’t have to have a direct-to-C website essentially run?

Rishabh Jain:

Interestingly, you do not.

Dr. James Richardson:

Well, it’s a food issue, man. It’s a food industry issue. A lot of people don’t sell food direct because you can’t make money.

Rishabh Jain:

Yeah, so this is actually something that I had never thought about where, like, “Hey, do you actually have your own website?” Because we operate by creating the actual shopping experience. So in theory, you could just have only your Shopify backend, and the ability to fulfill, and not have your own website, and then transact with whomever, entirely on a third-party partner base.

Dr. James Richardson:

Why, Rishabh? I mean, influencer sites are nice and the Instagram feed mention, yada yada, yada. Some of these folks have a massive amount of attention, I understand that. But there’s actually the broadest reach, creators are actually giant publishing conglomerates. So if I have my operations up and running, I have commercially viable product. I know how to make a million units a year, and so I’m ready now to respond to national PR, on the order of a Shark Tank appearance, which reliably creates these massive order spikes. Isn’t the real potential for something like Fermat to appear in the digital edition of Saveur.

Rishabh Jain:

Yeah. This is going back to your original question of what is a creator?

Dr. James Richardson:

And a creator with real reach.

Rishabh Jain:

Anybody who produces content, right?

Dr. James Richardson:

Right.

Rishabh Jain:

And so the way we think about it is that there is a sliding scale of creators. I mean there’s individuals that have unbelievable audience sizes.

Dr. James Richardson:

That’s true.

Rishabh Jain:

The reason why like the largest D2C brands right now are the ones that are affiliated with what we would call influencers, is because their reach is unbelievable. The Rock sold 100 million dollars of tequila in a year. Or Kardashian with Skims, it’s a quarter billion dollars of [inaudible 00:08:27]. So these are obviously high scale off of individuals. I think, for us, content is content and creation is creation. And so it’s either you’re somebody with 100,000 followers, highly red block, or you’re all the way at the enterprise level, like a Hearst. And you’re sending hundreds of thousands of people to your site every day.

Dr. James Richardson:

Is that longer term for you guys? Or do you consider it off the tape? I’m just curious.

Rishabh Jain:

Oh, for us, we are 100% interested in working with larger media conglomerates.

Dr. James Richardson:

Okay. It’s just going to take time because this thing just got up and running. When I finally figured out what you guys were doing, I was like, “Oh, wait a minute.” My mind went immediately to the Atlantic Monthly, which I read constantly. And they have a really open affiliate relationship with Amazon. And anytime you click on a book, it takes you right there and they get a cut. Now, they only sell books right now. Well, the media industry is already so desperate for cash that they’ve got to be open to this.

Rishabh Jain:

Yeah, yeah. I mean, I think that the simplest way of realizing that the media industry has to go in this direction is that all of the social media platforms have already gone in this direction.

Dr. James Richardson:

Right.

Rishabh Jain:

Right? I think at this point, I think it’s not controversial to say that the media companies must follow in the footsteps of the social media companies in order to retain audience engagement. So this is the nice thing, it’s all about incentive alignment. The consumer came for the content, keep them in the content. The content company or the content creator wants to keep the consumer on the content.

Dr. James Richardson:

Yes.

Rishabh Jain:

Keep them in, content and the brand just wants to create the sale. So great, just create a sale. But just do the three things that the three people want.

Dr. James Richardson:

I think you’re right because I think the challenge with pop-up eCommerce to date is that it is disrespectful to the content consumption occasion. And the human is there because they want to read about -, whatever the issue is. They’re being tempted to be sent to this other place, and they don’t really want to go there, they don’t really want to know. This is often a bitter pill for my clients too, because if you think about a manufacturer they’re obsessed with their brand, they’re obsessed with everything, it’s their whole life. They don’t understand that the shopping occasion is one where your brand is a least important thing. They are shopping for products. And this is brought just about the subtlest way, I think, to tease people with a new product try that I’ve ever encountered. As opposed to the obnoxious pop-up in my fricking feed on Facebook. And by the way, mine are all for $1,000 plus items for shopping, I don’t appreciate it.

Rishabh Jain:

Well, that’s because of the segment that you belong to – .

Dr. James Richardson:

I clearly have fallen for it.

Rishabh Jain:

Exactly. This has now nothing to do with the algorithm or the products.

Dr. James Richardson:

This is about my personal problem.

Rishabh Jain:

It’s like, “Hey, I know what James wants. He wants a 1000-pack of Spindrift. And therefore, the minimum price of Spindrift that we will send him is a $2,000 crate of Spindrift.”

Dr. James Richardson:

I’ve emailed them about can I get a half a truckload at a time? That’s how much I consume in Arizona. So all right, on that charming note, thank you Rishabh, for telling us more about your startup. It sounds very intriguing. I hope it goes well for you.

Rishabh Jain:

Thank you. Yeah, it was awesome being here.

Dr. James Richardson:

All right, take care.