Episode 28
March 11, 2017

Funko and the Future of Digital In-Store and Blockchain

We get with Funko's Director of Digital Innovation Jacob Matson to discuss how digital and blockchain are changing how retailers do business

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Phillip: [00:00:39:28800] Welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Phillip.Brian: [00:00:44:48600] I'm Brian.

Phillip: [00:00:45:26100] And today we have a very special guest from Funko. Mr. Jacob Matson.

Jacob: [00:00:51:12600] Hey, thanks, guys.

Phillip: [00:00:52:27900] Yeah. Good to meet you.

Brian: [00:00:53:5400] Glad to have you.

Phillip: [00:00:53:62100] I know that you and Brian are pretty chummy, but I've only recently met you. Could you introduce yourself to the folks?

Jacob: [00:01:00:45000] Sure. Yeah. So I'm Jacob Matson. I'm the director of Digital Innovation and partnerships at Funko. We are a collectible company. We like to refer to ourselves as purveyors of pop culture. You know, it's kind of tongue in cheek, but really, like, that's what we are. We do a really awesome job at taking something that is distinctively pop culture and distinctively Funko and making it obvious that it's both. That's kind of I think the cool thing that we really have nailed is people can see something and know that, oh, that's Marvel. But that's also Funko, which is a really challenging thing to do with branding. And we're looking to take that into the digital space with my new role at Funko. So very exciting. Actually my background is on the financial side, actually, so I entered into Funko in 2013 it was a much, much smaller company. We've grown about 10x since I started actually. I worked for the CFO. He's now, you know, still doing the CFO things. And I am now on the other side of the pond from him doing innovation and business development, which is really, really exciting. It's interesting. It's an interesting track, honestly. But I think it's interesting... You know, one thing that I will say is like I never thought this was like my dream job, but sometimes you end up like it gets offered to you and you say, wow, that actually that's really cool. I never thought that I would even get the opportunity to do this. And you have to say yes. And so that's how I got here.

Phillip: [00:02:36:39600] That's cool.

Jacob: [00:02:37:37800] Yeah. It's incredible. It's incredible. It's such a rocket ship ride. And I wouldn't change anything about it. It's been great.

Brian: [00:02:46:23400] That's awesome, man. Yeah, I know. We've had some interaction just because of coolblueweb, and we've been with you guys for, what, almost two years now, roughly.

Jacob: [00:02:59:40500] That's about right.

Brian: [00:03:00:29700] Yeah. It's been really exciting to see it going from not many people knowing Funko to seriously seeing Funko everywhere.

Phillip: [00:03:08:83700] Yeah.

Brian: [00:03:09:26100] Everywhere.

Phillip: [00:03:11:6300] Yup.

Brian: [00:03:11:6300] It's everywhere I go, if I'm in an office environment, I see at least 50 percent of people have Funko on their desks, which is just amazing.

Phillip: [00:03:22:87300] Yeah, it's interesting. And if you aren't familiar with Funko, you are, you just don't recognize the name maybe.

Brian: [00:03:29:8100] Yes.

Phillip: [00:03:29:43200] Yeah.

Brian: [00:03:29:81000] Yes.

Phillip: [00:03:30:51300] Yeah. It's interesting, my kids actually got really into collecting the pop Disney characters.

Brian: [00:03:40:8100] Yeah.

Phillip: [00:03:40:8100] So we used to collect the Disney vinyl things like the blind boxes and after like the 16th blind box with the exact same thing in it. I was like, blind boxes aren't so cool. Let's get these other things. And my kids really fell in love with them.

Jacob: [00:03:55:38700] They are really cool.

Phillip: [00:03:57:74700] It's really interesting how I've been having these conversations with merchants on my new podcast... You better go check it out. Podcast at SomethingDigital.com. It's called A Merchant to Merchant. And we've been having these great conversations with merchants. And the thing that retailers care about, it doesn't matter what business they're in, the thing they all care about, that they all share in common is their brand and the recognition of their brand and how their brand is distinct even from the things that you purchase from them. Bob Schwartz... He was President Magento for some time. Also from Seattle area.

Brian: [00:04:33:26100] Yeah, yeah.

Phillip: [00:04:33:82800] Yeah. He was quoted. He has this great talk that he gives, but in his talk he sort of gives this really great crescendo and it hangs on the sentence that the brand is the amusement park and the product is the souvenir. And I think that there is no better company that creates products that are souvenirs like Funko.

Brian: [00:04:57:88200] That's good.

Phillip: [00:04:59:56700] Yeah. Very interesting.

Jacob: [00:05:01:22500] Well, thank you. That's very flattering. I mean, I think, I'm just happy to be a part of such an amazing, amazing group of people. So it's really cool. I do think you're totally right. The brand is so strong in terms of being able to identify it. And that's a great quote from Magento guy. I don't remember his name. See, this is horrible. {laughter}

Phillip: [00:05:23:72000] Yeah, Bob Schwartz.

Brian: [00:05:27:36900] Speaking of Magento.

Phillip: [00:05:28:67500] Yeah. This is our community, our Magento community. And this is how Brian and I know each other and how we've come to know you. This community is really good at collaborating and sharing. And maybe you could tell us a little bit about your experience in digital commerce today and maybe what about that experience made you want to push harder to do things that are beyond that experience.

Jacob: [00:05:55:9000] Sure. I mean, there's just so much in physical products, especially, where there's a lot of waiting. And when we first launched our very first subscription platform, which was Marvel Collector Corps, you launch it and you wait for product. And then it takes a lot of time. What I mean by that is the procurement cycle to even get these things to consumers is long. So the coolest thing that I think that is awesome about digital and Funko and pop culture is that you can now take something that takes months and make it take hours. Right? So, like, I can take a product to market within, you know, a matter of days instead of weeks or months like we do with physical products, which is really cool, especially because a company like Funko is so tied into like the zeitgeist of what pop culture is. So as we really take our platforms digital, which is really exciting, it also opens up markets that weren't available before, especially as it relates to viral content and memes and things like that, where they they exist for a month or two. And then they kind of no one remembers it again. But we can really make a connection to those things and those points in time... Souvenirs. Right? I think that's a great, great word to use. And that's really cool to connect with our customers like that.

Brian: [00:07:28:21600] So true.

Phillip: [00:07:28:21600] And I think you do. You create connections with your customers. I think they're the sorts of products. What's really interesting is the product type is extremely important, as much as some retailers would like to diminish the importance of it. They would like you to remember their brand. But the fact that you create collectibles, these are the things that people keep for years, decades.

Jacob: [00:07:53:72000] Right.

Phillip: [00:07:53:72000] These aren't ephemeral products. But I know that there is a market for that. Maybe you could tell us a little bit about how you guys are pushing the limits in digital products.

Jacob: [00:08:04:89100] Sure. I mean, so we actually have partnered with a platform called Quid to actually launch the first 3D digital collectibles on your phone. There's an IOS app that currently exists, an Android app launching soon. And what that is, it's a marketplace. You buy digital collectibles. It's stickers, cards, and also 3D Funko pops. We have lots of cool content within that. And really that is kind of just the beginning of what you can do with digital. I mean, that's really taking a traditional model that everyone's kind of familiar with in digital and adding on this 3D layer. And there's the community aspect where you can talk with other collectors, but also there's a trading and collection aspect to it, too. And that's really kind of a really cool part about it. You buy them as blind boxes. So speaking of buying blocks aside, sorry, Phil, that's how you have to buy them.

Phillip: [00:09:01:86400] {laughter}

Jacob: [00:09:01:86400] So you play the odds a little bit to get the complete set short or you have to trade. But it's really cool. We've done some really cool stuff. One thing that we did that's actually really cool on digital is we're able to do digital only variants that you really could never do in physical product. For example, we did a limited edition around the holidays for Star Trek. There was literally a candy cane striped Captain Kirk and actually a couple of other characters from Star Trek.

Brian: [00:09:29:50399] Oh what? That's awesome.

Jacob: [00:09:29:50399] Yeah. Yeah, they're super cool. And like, you know, very limited. You can only get them that one time. And they sold out very fast. And people loved them. And it's super cool. We can do stuff like that that we could never do in physical or would be riskier in physical for sure. And people love them. We actually just released Valentine's Day variance as well in a couple of our channels for... What did we launch? We did some Star Trek Valentine's variance. We did some Bob's Burgers Valentine's variance, and we did X Files. The X Files was pretty cool, actually. One of them is an alien making little heart sign with his hands for the X Files. They're pretty awesome.

Brian: [00:10:10:27000] I think of a lot of people that would love that. Man, that's awesome.

Jacob: [00:10:12:43200] Yeah and part of it is interesting. The people who are collecting on this app, you know, a lot of them are new to Funko. They've never collected physical Funko. It's super cool. And especially in the younger generations they're less tied to the physical product. So they don't mind collecting these things digitally, which is really cool. It's just a really cool way for us to continue to deepen our relationship with our customers. You know, for those that are less into the physical and just kind of... It's another way to kind of show off the content you love.

Brian: [00:10:49:13500] Have you guys... Actually, several thoughts on that. But have you guys experimented with stickers at all? Like building out a sticker collection for like a chat.

Jacob: [00:11:00:65700] Glad you asked. Yes. Actually, inside the app, there is a full sticker capability that integrates as a keyboard into IOS. Obviously, the integration into Android will be much tighter just because of the kind of platform restrictions. But Android app is imminent. We don't have a firm date yet, but we're working on it. I have used it and played with it on Android, for example. It's coming along very, very quickly. But yes, you can log in. There is a handful of unlicensed, or sorry, not unlicensed, unstylized, like, you know, standard type of stickers. But also there are licensed Funko stickers. We did a brand called My Emojis and actually we're still producing them, where they are a little like Funko style emojis. And you can buy those for Five Nights at Freddy's, for example.

Phillip: [00:11:48:81900] Oh wow.

Jacob: [00:11:50:00] And that's actually been a really successful brand on the platform as well. Five Nights.

Phillip: [00:11:54:60300] That's how you know you're getting old, because you look at something like that, you're like. Yeah. I just I don't get that. I don't get that at all. {laughter}

Jacob: [00:12:04:21600] I will see the stickers are super cool.

Phillip: [00:12:05:88200] Stickers are cool. Yeah.

Brian: [00:12:05:88200] Of all the stickers in the world, Funko stickers are ones that I would probably absolutely use.

Jacob: [00:12:14:50399] Yeah. So I will say we're constantly working on it. You know, this is really new for us trying to get into the space and it takes a little bit of time with licensing. But absolutely it's high priority for us to create a way for people to continue to interact with the pop culture they love. I mean, I think it's interesting. I think one thing that we kind of we had talked about, like as what Funko is internally is like it's really about empowering customer expression through pop culture. There were a lot of ways that you could always do that before. And they weren't always kind of... They weren't always cool. They were like, "Oh, let me show you my comic book collection."

Phillip: [00:12:51:52200] Yep.

Jacob: [00:12:51:74700] It's like, "OK, nerd. That's great, man."

Brian: [00:12:55:45000] {laughter}

Jacob: [00:12:55:45000] But you go and like someone's house and they have a pop collection. That's so cool. I love that show too. Right. And there's like a connection there that totally seems like transcend whatever preconceived notions people have about each other. And like, that's really cool. That's really cool. But anyways yes, we are doing digital stickers. We have some really, really cool features in store that I can't talk about. But I have seen demos and are amazing. And I can't wait. I can't wait to send you guys stickers.

Brian: [00:13:22:38699] Yes. Oh, my gosh.

Jacob: [00:13:24:20700] They will delight you.

Brian: [00:13:26:85500] We are definitely going to get a follow up interview like six months from now, because I feel like you guys... I mean, I know you're working some really cool stuff that we're not going to be able to talk about.

Phillip: [00:13:35:58500] He says, "I know." He has to drop in that he knows and nobody else knows.

Brian: [00:13:40:86400] {laughter} Oh, I don't even know all of the things. No, I don't. But. Oh, my gosh. Yeah. I'm excited to keep this conversation running. Sticking with this will goods for a little bit longer... Obviously AR and VR... We've talked about this a lot on the show, but digital goods and AR and/or VR just seems amazing to me. Like, I feel like that's when the public is going to really start to embrace the idea of owning something that is digital. It's going to feel so much more tangible to them. What are your thoughts on that? I don't know if you can talk about it all, but... Even like light AR where you've got your phone out and kind of like Pokemon Go, you're looking at things sort of overlaid on the world through your phone.

Jacob: [00:14:28:54900] Sure. No, I think AR and VR are absolutely interesting scenarios. It's pretty early. I'm going to be honest with you. It's pretty early. The monetization isn't quite there yet. I think there's really cool stuff happening in that space, but it's hard for us to kind of know where that is yet. It's just... I think the right product will come. It's just gonna take time. And what that right product is, I hope we make the right product at Funko. I really do. But knowing what that's gonna be or what that's gonna look like is really hard. That being said, with the success of games like Pokémon Go, for example, which I think even as much as it's kind of like, no offense to anyone at Pokémon go, it feels like kind of a half baked Pokemon game.

Brian: [00:15:18:81000] It does.

Phillip: [00:15:18:81000] {laughter}

Jacob: [00:15:18:81000] And by the way, their AR integration is really cool. And like the capturing, it's really a collection app. Right. Like, so that's the part where we see it at Funko like, oh crap. Like why didn't we do this? Like it's collecting things. Like that's what we do.

Brian: [00:15:33:18000] I still don't know why they didn't like do some sort of thing or you like throw the Pokeball out into the street and then your Pokemon fight. I mean, come on. Like classic style.

Jacob: [00:15:43:25200] Yeah. The interaction between players was like it's very... The gym system is strange and I'm sure that, you know, they had very good reasons for doing it the way they did it. And I think since the first time I saw Pokemon is like the thing that immediately goes to my head is this would be the world's coolest MMO. Like, how does that happen? And I think that was like the promise of Pokemon Go to some extent that everyone was kind of hoping for. And regardless, even without that kind of killer feature, which, by the way, Niantic, if you're listening like, please, please, please do this. I will be customer one. It would be amazing.

Phillip: [00:16:25:87300] Interesting that Pokemon Go is even still around. I thought that was just like a thing that happened in August last year and never again.

Brian: [00:16:36:55800] {laughter}

Phillip: [00:16:36:55800] People still play that? That's amazing.

Jacob: [00:16:38:59400] Yeah, it's sticky. It's sticky, and it's funny. There was actually a gym inside of our office. That was really funny.

Phillip: [00:16:45:47700] {laughter} That's something that you have pull with? Do you know the people that you can, like, pull those strings to make stuff like that happen? I feel like that's something that you can do.

Jacob: [00:16:54:61200] You know, I'm not going to say that I have that pull, but what I will say is being as a part of Funko is you can pick up the phone and pretty much call anyone and be like, "I work for this company," and they say, "Yes, we'll talk to you."

Phillip: [00:17:06:61200] Oh that's great.

Jacob: [00:17:06:61200] Which is insane. Again, it's one of those things like once you realize you're there, you're like, "How did this happen? This is amazing." And it really, you know, it means that we get really, really cool partnership opportunities, and we need to make sure that we take advantage of them, and make sure we do the best that we can with kind of what the opportunity that's in front of us. Because I think there is so much cool stuff in collectibles and digital pop culture that has yet to be overturned, and we really want to explore those types of scenarios with partners. And I think that's what we want to do. And that's why I'm driving towards.

Brian: [00:17:49:40500] Nice. One more thing. One more thing. Sort of in a digital goods space or maybe not just limited there, but maybe even something in store. But holograms. Have you thought about a holograms much. I know that's it's so early but it's actually not that early in some ways. Building holograms isn't necessarily that hard.

Jacob: [00:18:09:19800] You know, I think there's really again this all comes down to like, like I sound like a crazy capitalist, but I think your merchants appreciate this. Right? Like, it comes down to monetization. What does it do for you? The coolest thing about the physical products is that you buy it and then other people see it and say, "I like that thing too." Or "Oh, where did you find that? That one is so cool." Right? And I think that like connection, that like togetherness, is super cool. And until you can kind of figure out a way to do that with holograms and AR and VR, to some extent, it's going to be... Like putting on your headset puts you in your own little world. No one else exists except for you in that world. So figuring out how to make it less isolating and more connected, I think is the critical piece on that. And that will take time and technology and it will happen, I am certain. But until that really occurs, I mean, there will be random success, I think, in that space for sure. But, you know, large scale success, I think is really gaited potentially by some crazy, like Dave's X augmentation to AR vision or something.

Phillip: [00:19:24:74700] {laughter}

Brian: [00:19:24:74700] {laughter}

Jacob: [00:19:24:74700] Right? Like think about it. At what point does that reach critical mass? And I think it would have to be something like that. Now, is that possible? Yes. Is it likely? Who knows. I can't say. But would be cool.

Brian: [00:19:40:54000] Totally. Yeah.

Phillip: [00:19:41:52200] That's interesting. No, you made a really good point, which is it does come down to monetization. It absolutely does. That's the whole point.

Jacob: [00:19:51:18000] Right.

Phillip: [00:19:53:63000] That's why I think that there's... Brian and I have a really good balance. Very healthy balance. I think he's always wanting to see what the envelope can be pushed on the customer experience side. And I like to talk about the things that are more on the enablement side. And so I'm curious, is there anything that you see, you know, from a retail enablement point of view? You know, like we were talking in the pre show Blockchain or... Well, we could just talk about Blockchain. But there are more things like the application of AI and machine learning. Those things are interesting from a customer experience point of view. But I think they're way more practical to be monetized from a workforce productivity improvement point of view.

Jacob: [00:20:43:53100] Sure. No, I think you're truly right. I think like. The crazy parts about, like, talk about AI and machine learning, is at some point we will have a good enough model of my behavior that I will think about a beer and it will magically appear. Right? Like that is kind of like, you know, that's like the future state. Right? Is that there's a model of my behavior that's so good that it predicts what I want. And I think that's like the ultimate goal for a company like Amazon. That's on their 15 year road map. "How do we do this? How do we just make sure that the products arrive at people's houses without them even having to order it?" And I think that'll be super cool. And to get there and they've done some really, really cool stuff. Speaking of physical, more tangible innovation at Amazon with their with their Amazon Go experience. But I think yeah, I mean, to answer that about like new technology is kind of disrupting the current like B to B or B to C marketplaces... I mean, the machine learning and AI, to be totally honest, except for like... There's some stuff like happening there that like is probably like pretty dangerous for small companies. I think to be totally honest. And what I mean by that is like the cost of training your AI is so high that there's now this massive barrier to entry that potentially only certain companies can even think about. So it'll be interesting to see if you know what someone like IBM with Watson, you know what they do with that technology. Right? Like, do they make it accessible to companies that don't have, you know, can't write a billion dollar check?

Brian: [00:22:31:48600] That's so interesting. Actually, we've just posted an interview with Amber Armstrong from their Watson commerce team just a few days ago. And we were talking about that. And actually, they are. They are trying to make it more accessible for the entrepreneur. That's actually something that she really emphasized, trying to make it something that people can step into.

Jacob: [00:22:55:54900] Right.

Brian: [00:22:55:79200] Like OK, instead of trying to think about how you could apply AI to your whole business and come up with something insane, let's find one way that you can apply AI that you know you can get an easy win on and start with that. And then sort of build on that and start to, you know, slowly transforming your business step by step in an agile fashion.

Phillip: [00:23:18:66600] One of those things that that I think are concrete that I keep pointing to, and someone's gonna make a business around this if it doesn't exist, but every stock tip I read, every fantasy football recap that I read, they're written by machine learning algorithms that are mimicking human storytelling capabilities. Right?

Jacob: [00:23:41:62100] Sure.

Phillip: [00:23:41:62100] This is not... It's not real. These stock tips that I'm reading, the stock report at the end of the day or the in term stock report when a product moves, it's all algorithmically generated. And we need desperately in the merchant space, especially companies that run very, very large drop ship catalogs, they desperately need that for content generation. And that doesn't take... That is the kind of capability and there are a lot of pre trained, and I think our audience gets into the weeds with us because they like it. But there are a lot of trained, pre trained datasets that you can get and you can purchase or license them, especially around image recognition. But I don't know that those things are so appealing to merchants. But if you can tell a merchant, I don't care how it gets done, but we can generate unique content and avoid duplicate content penalties from Google, I think they'd give you any amount of money.

Jacob: [00:24:42:12600] Sure. Okay. Yeah. You're right. I mean, yes, that's true. I think, you know, it's really interesting to talk about, like how do we apply these things in novel ways, you know? And I think how it remains to be seen how it will be done. But I think potentially the person who cracks that nut, I mean, they're going to have a lot of power and a lot of money. So it'll be interesting to see how that evolves as things go. I like to think, one thing that's really cool, I think, about Funko as we kind of work on this and get into that world is more and more automated, I feel like our product does a really good job of cutting through that. I don't mean that, like, sell it. I really think that there's something really special about, you know, being able to create something that evokes an emotional response. And again, you talk about the souvenir. That's what that is. Right. It reminds you of something. And it'll be interesting to see how AI and machine learning come into that space. I think they're pretty far off, by the way, because it's such a soft skill. Emotion is hard for computers. Right? I heard a really interesting interview the other day, and I really wish I remembered who was with. It was... I'll look it up, and I'll tell you later. But there's a great podcast called Six Pixels of Separation, I believe, by a guy named Mitch Joel in Montreal. He's a marketing guy. He runs a little marketing firm there, but he just had an interview with a guy who kind of talked about the downside of machine learning. And he kind of talked about how everyone's kind of goal, like in Silicon Valley... And I think a little bit this is like being kind of centric to like New York, Montreal, whatever. Like Northeast, like older, Old Money type of an idea... It's like, "They're just trying to take empathy out of it over there in the Silicon Valley," or whatever. And I think to some extent, that is the magic of what will sustain a brand, and not just Funko's brand, but being able to tell your story in a way that connects with people in a way that a machine will not be able to for a very long time, is going to sustain a lot of companies for a very long time. I mean, that is the beauty of the stories that come out constantly out of great studios. You know, I'm thinking like Pixar, for example.

Phillip: [00:27:19:81000] Right.

Brian: [00:27:20:27900] Right.

Jacob: [00:27:20:69300] There's so much humanity to it. And I think really you look at like you know, speaking of things that are semi topical... I don't know when we're gonna put this up, but Oscars are approaching, and I actually just watched the Arrival the other day. And there's this incredible humanity throughout the entire movie. And I think that's like something that's like really special that we really have to, as technology evolves, we have to understand how do we keep the humanity in it?

Phillip: [00:27:51:11700] Yeah.

Jacob: [00:27:51:52200] And being able to do that in your brand successfully will keep you around for a long time.

Brian: [00:28:01:86400] What a time to be alive.

Jacob: [00:28:03:59400] Exactly.

Phillip: [00:28:04:20700] I one hundred percent agree. I think if it comes down to what you started this segment with, which is if we could find a way to monetize humanity, that'd be better.

Brian: [00:28:17:71100] {laughter}

Phillip: [00:28:17:71100] That's the key.

Jacob: [00:28:18:54000] How dare you.

Phillip: [00:28:22:40500] {laughter}

Brian: [00:28:22:40500] Oh man. Actually... So here's an interesting kind of segue. We're talking about sort of keeping humanity in things and the emotion and story and really keeping a grounded in experience. In-store experiences... Now I know you guys are primarily selling through your distributors and online. But I've been in your office, and it's quite an experience. You guys have, like, the craziest, coolest collections and stories to tell, like pinball and all kinds of crazy stuff. And and office is a good example of this. But as we're looking ahead at a real change in in-store... And in fact, IBM recently released a study leading up to NRF about Gen Z and how they're actually not going to abandon in-store. They like in-store. They just expect and desire and need different ways of interacting with brands in-store, connecting with them in a very different way. And so I feel like we've talked about revolutionizing the in-store experience for a long time. But now it seems like technology is starting to mature to the point where we can actually leverage that technology to tell a more compelling story in-store. So I just wanted to get your thoughts on that and just kind of see if you have anything to add to that conversation.

Jacob: [00:30:09:15300] Sure. Absolutely. I think first off, the Funko office is amazing. And we're moving to new location in downtown Everett soonish, which will be awesome. And along with that there will be a retail experience, which is going to be so amazing.

Brian: [00:30:31:85500] So excited.

Jacob: [00:30:31:85500] Yeah, it's so exciting. I think there's some really cool things that we're doing there that I think we'll blow some people's minds. Unfortunately, again, I cannot talk about it, but it will be really cool. Brian, I'll least get you up there. Phil, unfortunately, we can maybe do like a little face time walk through.

Phillip: [00:30:54:1800] {laughter} This is great. I love that I'm constantly being left out of the cool stuff. That's fine.

Brian: [00:31:00:23400] {laughter} Well, you gotta make a trip up. Gotta make a trip up.

Phillip: [00:31:04:19800] We'll make the trip.

Jacob: [00:31:04:81900] Right. On a mysteriously nice day.

Phillip: [00:31:08:10800] Exactly. Precisely.

Brian: [00:32:07:44100] {laughter}

Jacob: [00:32:07:44100] Anyways, so real quick, just to wrap that up. I think it definitely... In-store is not going away, but it is going to change, right? Speaking of other things that Phil is getting left out of, Brian, have you visited the Amazon store in U Village?

Brian: [00:32:24:51300] Oh, the bookstore?

Jacob: [00:32:25:88200] Yeah.

Brian: [00:32:26:63900] Yeah. Absolutely. Fantastic.

Jacob: [00:32:29:2700] Right. So what it is, for those who haven't visited, is it is a super dense, like, tightly curated collection of books. In fact, I would say it's the opposite of what Barnes Noble is, which is a sprawling kind of mega store, as much as a bookstore. There're lots of other things there, too. You know, Amazon really is books plus there, you know, first party kind of electronics is really all that they have there. Maybe some accessories. But it was interesting that they kind of... You could tell that there was... It felt like when you were in the store, there was a lot of thought that was being put into how it was laid out. Which I think was, again, we talk about like a brand being empathetic, right? It didn't feel like, oh, the store was just like planogrammed by robots. Now, as much as it might have actually been, because I'm sure Amazon...

Brian: [00:33:28:13500] {laughter}

Phillip: [00:33:28:13500] {laughter}.

Jacob: [00:33:28:75600] Right.

Brian: [00:33:30:50400] I love how you started as a 20 year goal for their vision. And then you moved it to 15, earlier in the show, because that's how Amazon is. They're like, "Twenty? No fifteen." {laughter}

Jacob: [00:33:42:58500] Yeah. I mean, they're incredible. And it's so great that we are all benefiting from the things that they're doing up here because there's so much talent. There's so many people doing such cool things. And I think that there's really, in as much as like Microsoft is a core piece of the fabric of this area, I think, you know, Amazon is now supplanted them, which is just another kind of way for us to build really cool stuff and really cool experiences. And anyways, to wrap up that store experience... It feels like something different. It feels like a well curated local bookstore in as much as it's being made by this mega corporation, which I think is like really the special piece of it. And what always gets lost, as... I think there's this thing about like going corporate. Like, how do you scale a business but keep the magic?

Brian: [00:34:44:42300] Yeah.

Jacob: [00:34:44:42300] And that's a challenge for sure.

Brian: [00:34:46:9900] Amazon does it.

Jacob: [00:34:46:9900] Right. Yeah, exactly. And I think their engineering folks would probably disagree. But at least the culture externally... That's always been a challenge for every company is how do you keep the human in it when, you know, between your customers and your products are thousands upon thousands of people doing the work? It's hard to do that. It's really hard to do that. And I think that is, again, we talk about like Funko and digital and how do we keep that magic? I think that is a key part to keeping us relevant.

Phillip: [00:35:28:43200] Yeah. And I think that flies in the face of... We've had a constant joke running through here. But this stuff costs money. Right?

Jacob: [00:35:35:36900] Yup.

Phillip: [00:35:35:36900] And somebody asked me the other day at one of our panels for one of the other podcasts that I do, and they said, "Well, how can I be successful in my startup?" And I said, "Well, number one, have money. Number two, don't not have money," because those are the two keys from what I can see. And but I think you've really hit the nail on the head, which is putting an empathetic design, empathetic experience, and putting the customer back into first place. Right? Instead of conversion in first place, which is I think where we are right now. Everything is about basket size, everything is about conversion. And very few companies have enough vision like an Amazon, potentially, to say that the experience also needs to be catered to.

Brian: [00:36:40:69300] Customer experience, baby. That's what I'm all about.

Jacob: [00:36:42:84600] That's right.

Brian: [00:36:44:18900] Year of the customer. {laughter}

Phillip: [00:36:49:6300] {laughter} Year of the customer.

Jacob: [00:36:49:45900] That's every year. Come on.

Phillip: [00:36:50:12600] Yeah. Exactly.

Brian: [00:36:50:74700] Yeah it is. We made fun of this on our last episode. Yeah. So hey... Okay, so we're getting... We've kind of been rolling here. One thing I want to go back to and I don't want to miss, because I know we can talk about this for a long time. And so let's stop and then switch gears here. Blockchain. Let's talk about this for a minute, because I know, Jacob, you're pretty passionate about Blockchain, and we talked about in the pre show. And I think, first of all, we haven't even talked about that much on the show yet. We have been meaning to, since the inception. And so maybe... What do you think, Phillip? Should we do a little explainifying first?

Phillip: [00:37:38:18900] No, I would just say Blockchain is the actual technology that makes alt digital currencies work. You know, the most popular of which that you've heard of is Bitcoin. But it's also the thing that's behind Ethereum and some others that are very popular.

Jacob: [00:37:57:33300] Yeah. Right.

Brian: [00:37:58:51300] And now it's being applied in all kinds of different ways.

Phillip: [00:38:00:76500] And every single massive company has startups and funds that are looking into applying this technology, in particular to accounting and supply chain.

Jacob: [00:38:16:57600] Right.

Brian: [00:38:16:57600] Yeah, yeah.

Jacob: [00:38:18:30600] It's right. Yeah. Now we're talking about the pieces of removing the human element. Right? It's like, how do you make a trust list transaction occur, basically? Or like you think about something like Uber. Right? Like, how crazy is it that there's some company that allows us to connect to people we've never met. And they take us in cars somewhere. That's kind of like the initial the initial idea is like decentralizing... It's not like, oh, I know that's a taxi, so therefore I can take that a car and be safe. It's like, oh, I can just go on this app and connect in with this random person I've never met. And they'll take me somewhere. They'll take me where if I tell them to go and neither of us gets murdered. It's great. So it's really like... So it's that piece. It's kind of...

Phillip: [00:39:12:40500] Airbnb.

Jacob: [00:39:12:40500] Yeah. Yeah. Airbnb is another perfect example. It's all like kind of it's around the same idea, which is if you're calling it the sharing economy, like you're missing the point. It's not the sharing economy. That's what it is today. It's the trust list economy.

Phillip: [00:39:31:78300] Is't the economy, stupid.

Jacob: [00:39:31:78300] Right. Exactly. You couldn't resist.

Phillip: [00:39:35:45900] I'm sorry. Go ahead.

Jacob: [00:39:35:45900] No, it's ok. So how do you... There's kind of like a massive decentralization that almost like, honestly, the Internet started. Suddenly these walls come down. Suddenly I can be on the phone with anyone in the world at the touch of a button through a combination of new and legacy networks, which is super cool the way all that works. And then, you know, now you have something like Blockchain building on top of the shoulders of giants, so to speak. Right? It's really cool. I mean, you know, there's some really cool applications with it, especially when you talk about like the hard part is why do people prefer physical to digital? I mean, there's something about holding it in your hand. There's also something about like no one can ever take that away from you. Right? Like, it's totally decentralized. Amazon is not going to be like, "Sorry, your license expired. You have to give that physical book back." But they might do that with a digital book. And in fact, your buying a digital book is taking a dependance on somebody like Amazon and saying, "Well, I hope they're still around in 50 years or hopefully the government doesn't decide to shut them down," or whatever. There's kind of some dystopian elements kind of lurking within this that writers have been writing about for a very long time. And as soon as they could imagine it, they started writing about it. But it's really how do we kind of decentralize that? I think, you know, the Internet was the first step and the next step really is is Blockchain. And what I mean by that is like, first off, Blockchain... The hardest thing about it is how hard it is to explain.

Phillip: [00:41:18:16200] {laughter}

Jacob: [00:41:18:16200] I think I saw like there was a blog by Fred Wilson, by the way, which is amazing. His website is AVC.com. He loves Blockchain. He invested a ton in Blockchain companies. But he had like 90 people... I want to say it was 90 people write a one page explanation of what Blockchain was, and there were 90 different answers. And some people took like three or four pages. And there were like probably 10 good ones in the little book, also the link posts. So you guys can add that in if you're interested. It was super interesting. But like kind of it's the applications are so like immense. It's like where do you even start? I mean, I think currency is a great place to start. I think it's kind of a, it's like the most classic Internet way to start something, which is to basically be like as disruptive as possible instead of being like, "We can use this to like improve..." You could use it with, say, like email, like quality email. Right? You could use it for spam filtering, for example. As companies transact with each other, they gain trust, and then you send these little tokens along with your emails and they're accepted by the router and then the email gets passed along. If these e-mails come out without these little trust tokens, you would reject them, right?

Brian: [00:42:39:8100] Yeah, and instead... {laughter}

Jacob: [00:42:42:31500] Instead, they say, "Oh, well, what if I were just, like, totally just create a new currency?" And by the way, there's like totally I get why there's a need for that, especially in countries where...

Brian: [00:42:55:74700] The Black Market?

Jacob: [00:42:59:44100] I wouldn't say that necessarily, you know, I mean, we all love the Silk Road, but there's real applications where that stuff matters. I mean, like things like, you know, the Arab Spring don't happen without the Internet and without Twitter.

Phillip: [00:43:12:45900] Right.

Jacob: [00:43:12:78300] Right?

Phillip: [00:43:13:18000] Right.

Jacob: [00:43:13:61200] And certainly... Sorry. Go ahead.

Brian: [00:43:17:18900] Go ahead. I interrupted you.

Jacob: [00:43:18:56700] OK. So and certainly Blockchain has the capability to be that disruptive to the world in a revolutionary type way. It's just I think it's funny that the one we're all familiar with is like the one that like is subjects like the most intense regulatory oversight. And I think everyone is looking for a free lunch, I think. And maybe that's not not fair to Blockchainers and Bitcoin miners. But I think there's some really, really cool applications. One that I'll talk about, since we talked about earlier was there's been talk at big accounting firms around the idea of, you know, Blockchain associate to financial transactions, right? So when I transact with another company we authenticate that through a third party via Blockchain so that by the time my year ends, my financials of every piece of information that rolls into my financials have been vetted by third parties. It's basically my books are audited continuously by the system, which is really cool if you're an accounting nerd like me. So you can literally get, in a perfect system, financials that day at cut off, right? The bell rings, it's midnight. And now we know how we performed that year. And the world knows. A publicly traded company to be able to do this. I think there's some really interesting applications there massively that I think could massively decrease regulatory oversight, or maybe I'm going to say oversight, but regulatory overhead without decreasing oversight, which is really cool, too, because there's so many people who are wasting time on that type of work, which I'm sorry if you work in that in that sector. But I don't mean to insult you, but, like, there's a lot of people that could be doing really, really cool, productive things that are spending time ticking and time things that could be automated. And I think that's the really cool thing that something like Blockchain brings in terms of taking the trust out of it, because it's every transaction is validated by the cloud, the swarm, if you will.

Brian: [00:45:27:71100] Yeah, exactly. I think one of the things that I want to point out here is how far reaching this technology is. This has the ability and we've mentioned a few... Accounting. Supply chain. And others. Currency. But anything that needs to be tracked and verified could potentially be completely revolutionized or disrupted by Blockchain technology and made way more efficient.

Jacob: [00:45:59:68400] Right. Well, here's my favorite scenario. I'll walk you through my favorite scenario. My favorite scenario was the self-driving Uber scenario, which is I buy a car, it takes me to work, and then it works all day. Because every person it's interacting with is verified by using a Blockchain type technology. And I know that it's picking up people that have been very validated by others. It's about kind of the circle of trust. And so once you're inside it, a driverless car will pick you up and take you wherever you're looking to go.

Brian: [00:46:33:83700] In that case no one is even going to own cars. I mean, hardly. Right?

Jacob: [00:46:37:29700] Well. Yeah. I mean, you know, potentially the dystopian would say, well, the ruling class alone cars and no one else will. It will be certainly interesting. It'll be interesting to see what happens. Unless there's like... That is the upside is really cool. And, you know, to some extent, the problem is the downside is if you are outside of the circle, what happens? Are you not part of society? Like society can no longer trust you? Are you in prison? Is that what that means? They go. This is already happening in China, right? I think they're giving each individual person a rating and certain people are not allowed to leave the country because they're too horrible of a person.

Phillip: [00:47:17:55800] I think that was an episode of The Black Mirror, right?

Brian: [00:47:20:54000] That's probably the most terrifying thing. Yeah.

Jacob: [00:47:21:15300] Yeah, it was that was an episode of Black Mirror, but that also did come out. That was a real thing that was at least talked about, was it not? I swear it was.

Phillip: [00:47:30:47700] Interesting.

Jacob: [00:47:31:76500] I would feel like an idiot if it was only Black Mirror, but...

Brian: [00:47:36:69300] The thing is that it's not plausible, though. I mean, in some way, it's like... Here's the other thing that I think I really want to point out. This is not just some sort of like, Oh, yeah, Bitcoin... That may or may not hand out someday. This is being invested in by many major corporations throughout the world and applied in different ways already. Like, for instance, Walmart is applying this in partnership with IBM, who has actually developed a Blockchain technology called Hyper Ledger Fabric.

Phillip: [00:48:11:70200] Wow.

Brian: [00:48:13:54900] They've collaborated with The Bank of Tokyo. And this is a rumor, but I believe most major banks are experimenting with Blockchain right now and are talking with each other about how they can all collaborate to use it. This is not something that's just some random, you know, Oh, I know a guy who traded Bitcoin sort of technology. This is going to be world changing and perhaps the most disruptive technology of our generation. That's quite a bold statement. But it might be.

Jacob: [00:48:47:24300] The crazy part... Here's the crazy part about it. Some of this stuff already exists. We talked about like the nightmare Black Mirror scenario, where you can't leave because you have a bad rating or whatever. Those actually already exist. Right. There's like no fly lists. The FBI has a list. But these other lists that, the potential Blockchain, for better or for worse, is that this list exists like kind of outside of the government. You're just a bunch of kind of servers owned by individuals validating that you're acceptable to do business with or not. That's kind of crazy.

Brian: [00:49:23:49500] That is crazy.

Jacob: [00:49:23:49500] It's at a level higher than government, which is insane. You know, although the banking piece totally makes sense, and I get why they're using it. And I'm actually looking at the Hyper Ledger stuff right now. I'd actually... That's what I was talking about I think earlier about the accounting thing. It's the same idea which is shared ledgers validated via Blockchain, which is I think the way that things will go relatively quickly, at least for Fortune 500 companies. And ironically, again, this is now another wall to doing business as an entrepreneur, which is well if I wanted to business Walmart, I need to be on Blockchain. I need to be on Hyper Ledger. Right?

Brian: [00:49:58:78300] Yeah.

Phillip: [00:49:58:78300] Yeah, well, I mean, that's actually a thing that happens anyway. We just we call it EDI, right?

Jacob: [00:50:04:84600] Yeah, that's right. That's true.

Phillip: [00:50:06:15300] We have that already.

Jacob: [00:50:07:57600] We do.

Phillip: [00:50:08:51300] It's interesting because I don't think people understand those types of technologies, the legacy technologies, that make business work. And this is the next generation and obviously it's an iteration of that. But with trust built in. And I think that that's the interesting portion of it. But I don't know. Yeah. It's gonna be tough for us to... I think this is an enablement technology. It's an enablement technology. Maybe it changes people's lives, but not in a direct way. It's not the iPhone.

Brian: [00:50:44:16200] Not in a direct way. Yeah, that's right. It's going to be very indirect.

Phillip: [00:50:47:24300] I think people are treating it like it's, you know, the second coming of the Flying Spaghetti Monster. But it's actually a more iterative and a 20th century version of us creating like actual I don't know... It's peer to peer data interchange, which is an evolution.

Jacob: [00:51:15:26100] Right.

Phillip: [00:51:16:57600] I think that's really, really interesting and something that definitely fits within the realm of this podcast. I want to mention, though, as we're kind of we're heading into the close. I think we're at 50 minutes. This is phenomenal. Great, great content so far. I do want a mention we have a tendency to sort of veer toward the dark side. We sort of veer toward the, oh, how are these things going to negatively impact us? But can we take a positive spin in and maybe think about how lives could be enriched? Like, is this a journey towards universal basic income potentially?

Jacob: [00:51:57:56700] I mean, the answer is potentially. Now it's hard for me to see, you know, the good without the bad because it's like... I think what we said earlier was like, how do you monetize it? {laughter} So it kind of like yes, but the different... Getting to that state requires, you know, a huge sacrifice somewhere along the way by someone. In as much as like I would love to think that there's kind of an altruistic line behind this... I think there is to some extent, honestly, and I think the currency Bitcoin piece is kind of in that vein, which is like, hey, by the way, we can like that because we can do trust list transactions that enables all these really cool scenarios where people can now interact with each other, who could never interact before.

Phillip: [00:52:50:23400] Yeah.

Jacob: [00:52:50:63900] Right? Because there would be a wall between them, whether it be governmental or the fact that we're far apart distance wise or whatever. I mean, we're all connected, and I think the thing that we that really the positive is about something like the Blockchain tech is really that like everyone becomes more connected.

Brian: [00:53:10:19800] Yes.

Jacob: [00:53:10:19800] And the more connected we are, the less it's like us versus them. And the more that it is like "us." And that's a very powerful feeling. Being able to be like "That person is like me." And especially when you look at like how divisive things can be, if we just look at like the U.S. election, for example. I think how do we make it more "us" and less of me versus you? I think it's super important. And I think if someone can figure out a way to do that well, with Blockchain, I think that is important. And I think that that is a way to really validate. I mean, I think there's potentially some really cool stuff around, just like... I'm just thinking of, like, you know, what what kind of elements of kindness could you reward people for if you had Blockchain in your pocket? Are you guys are familiar with SteamIt?

Phillip: [00:54:16:36900] Yeah. Yeah. They're like Bitcoin rewards social media platform.

Jacob: [00:54:21:57600] Yeah. Right. I mean, like, imagine if you could like... This is like dumb, but if you could upvote what other people were doing. Hey, that person was nice today. Oh, I'm going to upvote this driver in front of me and they get like a dollar or whatever. Or you can, you know, lose money if people downvote you. Like, don't drive so horribly. Whatever. I think there's some really cool stuff you can do because the technology is there because we're so connected and the incentive I think for everyone starts shifting towards kindness is like the most incredible thing that you could do with something like Blockchain. To shift incentives.

Brian: [00:54:58:40500] That's good. That's really good. I never even thought of that. That's a great very, very positive thing to do. I think they also in a very here and now and, again, monetization perspective, this is going to make business is way more efficient. And that's actually, in my opinion, economy boosting, which is wonderful. Also, it's more transparent as well. Like, for instance, Walmart is going to use it for food safety. So we can verify where food is coming from. So I think the open nature of Blockchain is going to allow for people to not get swindled or get something where they don't know where it's coming from. Transparency in general is a good thing. So I think there's a ton of very positive things that will come out of Blockchain. And again, I think Jacob kind of mentioned this. There's a dystopian side. There's also sort of the beneficial side. This isn't necessarily going to be controlled by any one government. And so for people throughout the world who maybe live in oppressive government systems, this might be a way to sort of connect with the outer world. You already talked about this quite a bit, Jacob.

Jacob: [00:56:32:61200] Yeah.

Brian: [00:56:34:78300] But I think it's amazing. Tons of tons of positive potential with this.

Jacob: [00:56:40:51300] Absolutely. I really love this idea. Not to toot my own horn. Like the idea of like changing the incentive with technology like this, I'd never actually had really thought about that. But that is like... If you can figure that out, not only are you going to change the world, but I think your economic benefits will be pretty strong, too.

Brian: [00:57:01:10800] Yeah.

Jacob: [00:57:01:10800] I mean, It's a win win scenario, I think, for everyone. And I would love to be able to be a part of something like that. How do we make that a reality? Maybe that's something to talk about offline. But that is something that would be truly, truly incredible.

Brian: [00:57:22:69300] Now that is a good way to end the show. Although before we go, something we ask just about all of the people we interview. For all of our merchant listeners, what are some pieces of advice you have for them? Kind of in the near term. And then also looking out five years ahead or even like two or three years ahead. What's something that you keep an eye on?

Jacob: [00:57:45:25200] Sure. I mean, I think part of it is know where your disrupters could be. And I think that's part of what building an innovation channel is about, like understanding where your competition is coming from. Easier said than done, by the way. And then the other piece, I would say is like, understand what piece of your business can't be automated and double down on that piece. Because that's the piece that makes sure that you're protected from AI and machine learning as everyone else grows. And everyone will grow. And they have bigger budgets than you. So make sure that you understand what those pieces are, so that you can keep your business around for a long time. You know, I mean, I think that's really the piece that becomes more important every day as we become closer and closer to reality of simple things being automated. And it will mean we have more time to do great things. So let's make sure that we understand what the great things are.

Brian: [00:58:49:45000] That's great advice. Well, Jacob, thank you so much for coming on the show. It was really a delight to talk with you. And I can't wait for that follow up here in six months where we get to talk about even more of what you're already doing. I really am excited for Funko. Very happy to have been a part of your evolution and just generally this has been a really fun, fun time.

Phillip: [00:59:18:48600] Thank you so much.

Jacob: [00:59:20:62100] Yeah.

Phillip: [00:59:21:75600] Yeah. Where can people find you online? Where where can they reach out?

Jacob: [00:59:26:5400] Sure, I'm not the most findable person online. You can find me on Twitter @matsonj. Simple Twitter name. Tweet me. Let's chat. I'd love to engage or also just ping me on LinkedIn, and I would love to talk.

Phillip: [00:59:46:900] Yeah. And Funko.com.

Jacob: [00:59:48:64800] Yep, absolutely. Constantly new stuff coming out on Funko.com. Absolutely.

Phillip: [00:59:55:46800] Yeah. Great. All right. Well, thank you so much. So I'll close us out. Thanks for listening. We need your feedback. We thrive on it. And part of that feedback is for you to go right now, go on iTunes, click the button. Go to Future Commerce Podcast in iTunes. Make sure you hit subscribe. And right after you do, give us a five star. Make sure you leave us a lengthy review. We want to hear about it. And if you have any questions or feedback for Jacob, and you want to maybe give your input on Blockchain or some of the other really awesome topics that we covered today, you can do that on FutureCommerce.fm. Click on the episode title. Go all the way to the bottom of the page. There's a Disqus comment box where you can give us your feedback. We'd love to get that conversation started. So until next time, keep looking toward the future.

Brian: [01:00:46:86400] Thanks.

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