[00:00:00] Brian: Hey. We're live.

[00:00:01] Phillip: Welcome to Future Commerce, the podcast at the intersection of culture and commerce and cigar smoke. I'm Phillip.

[00:00:05] Brian: I'm Brian.

[00:00:07] Phillip: And today, we have an amazing conversation for you. We're gonna talk a little bit about tariffs. That's what we've been talking about for a year on this show. We're gonna talk a little bit about Iran. We're talking about AI. It's like the same topics over and over and over again. So it's Groundhog Day forever here on Future Commerce. But before we get to any of that, we're gonna invite you to our next event. We are closing out event season. Well, nearly closing out event season. We're going to be kicking off the first day of Shoptalk Spring with an after party. Join us on Tuesday night, the twenty fourth of March at Skyfall Lounge with us and the rest of the Future Commerce community as we launch our newest book. It's called Strata. It's the next zine in a series of zines and possibly a brand new type of a book from us. You'll never see anything... you've never seen anything like this from us. It's completely new.

[00:01:11] Brian: Do we ever think the same?

[00:01:13] Phillip: I... I know. I'm really proud of this new format. It's gonna be really powerful. If you like the multiplayer brand and you like print from Future Commerce, this is gonna blow you away. It's our brand new book launch. It's gonna be only at Shoptalk Spring. It's the first place and only place you'll be able to get it here in Q1. And so we want you to come to our launch party, and it's brought to you in collaboration with our friends over at Feedonomics and Commerce. And so we want you to come join us, and hundreds of our other friends here in the Future Commerce community, Skyfall Lounge, on the twenty fourth, and that's an after party. So you can go do all the things at Shoptalk that you normally go... go do the thing. Let Salesforce take you to the Sphere. Go have dinner. Go do... go whatever, and then join us afterwards. Futurecommerce.com/events and go register for that event. We'll give priority to merchants, brands, retailers, and folks that are signed up for Future Commerce Plus. If you are a member of Future Commerce Plus, you'll get priority to cut the line, and that is our premium membership where you get access to data and education and training and access to things like field notes where we give you insights on what physical retail and experiential look like today. You get access to things like discounts on our merchant print and access to rope drop at our events at trade industry events like this. So don't miss it. Futurecommerce.com/events. See you at Shoptalk Spring, and we'll be activating there on the show floor as well. Strata, it's our new, new book from Future Commerce. Can't wait to unveil it to the world. Can't wait to unveil it to you, and we'll see you there. Okay.

[00:02:55] Brian: Limited space. Limited space.

[00:02:57] Phillip: Well, yeah. I mean, there's only so many people you can fit in that spot. Yep. So, I've... this is a lot like the spot we went to last year. Right? It's got quite the view?

[00:03:08] Brian: Yeah. Oh, yeah. Skyfall. It's, like, 63rd, 64th floor.

[00:03:12] Phillip: Speaking of Strata, I mean, the Strata baby. Are there clouds in Vegas? Alright. Let's... Sometimes.

[00:03:22] Brian: Rarely. There's more like...

[00:03:23] Phillip: Let us.

[00:03:24] Brian: Some clouds of smoke.

[00:03:26] Phillip: Okay. We... I wanna talk a little bit... I think we have a whole thread to pull this week because you and I haven't done a you-and-me show on the main feed in a long time.

[00:03:36] Brian: Yeah. It's true. It's been all After Darks. So if you wanna hear us more, go sign up for After Dark.

[00:03:42] Phillip: Yeah. That's... Or Future Commerce Plus is how you get the After Darks, that's, you know, a... yeah. It's our sort of like monthly installment of Brian and I just kind of wrapping. But I recently... so we sell our books and our merchant print over at futurecommerce.com, and you can click on shop. We run that on Shopify. Gotta love us some Shopify. Recently, in I think Shopify Winter Editions, they announced that there is a new capability of Shopify's AI, the Sidekick. And Sidekick for a long time has just been, you know, Q&A capability. They recently gave it a couple more features in sort of the agentic mode. You can create flows in Shopify Sidekick now. You can also apparently create apps with Shopify Sidekick now too. So recently, we partnered with a global leadership forum called Kindred for their annual conference, which took place in Austin in the month of February. And we... in our partnership with them, we set up, you know, hundreds of books for us to send to all of their attendees. Right? And I wanted to set up a special, you know, gift with purchase sort of a situation. In any other time, I'm pretty sure I've seen this in the past. Sidekick might have... I would have asked it, give me a recommendation of an app to install. And it might have given me a recommendation of an app in the App Store to install. Not anymore. So, Brian, just a week and a half ago, I asked it, what should I install for it to do a, you know, gift with purchase or a free shipping option? What's the optimal app that I should be using? And instead, since Shopify Winter Editions, it's now saying, hey, I can build that for you. And it built me a one-off, one-of-one just for me app to install in Future Commerce store, the Shopify store. And all I had...

[00:05:50] Brian: To do was sort of like crazy.

[00:05:52] Phillip: Accept its terms of use. I had to accept it, you know, that this is, you know, experimental feature. Also, it gave me the warning that this is just for a limited time. It will be a paid feature pretty soon that they're just trialing it for now. And, you know, they make no guarantees, blah blah blah blah blah. At the end of the day, I didn't actually wind up using that particular feature. It's also something I probably could have built in Claude Code with a lot more control and a little less, you know, frustration back and forth. But it portends the future of where I think Shopify and, you know, most of the future of that industry is going to go, which is why do we need third party SaaS ecosystems? I think this is the discourse happening right now. Why do we need third parties much at all? And this is why we see right now, if you look at the state of the stock market and you look at where the, you know, the future valuations and what the, you know, what the valuations and the price-to-earnings ratio is of a lot of these, you know, SaaS organizations are looking like right now. Investors also are wondering what the future of these businesses are going to look like. You know, maybe it's the Salesforces of the world today, but any of these companies now, I think, are starting to look a little less attractive. And maybe you're not building out full-on CRMs, but you're definitely building out little features here and there. Yeah. Shopify, I think, is ahead of the curve on this. But it definitely opened my eyes to the fact that there is a certain marketplace on Shopify that's thriving and makes money today that Shopify is certainly able to encroach on even if it's just with prompts in their Sidekick. So, anyway, that's... Unfortunately, what it does...

[00:07:35] Brian: Is it kinda kills a little app developer. Right? And, like, those little independent app developers are sort of the dev farm system for the future oftentimes. Someone who's like, hey. I, you know, I'm running a store or, like, I know somebody running a store, and I'm a developer and they need this thing and I built this little app and then I sold it on the Shopify platform and, like, you know, it creates community and it creates like excitement, technical excitement around the platform. And so, I mean, this happened... I mean, we... the funny thing is, over the years, platforms eat their ecosystems. We know this to be true in general. Yeah. But what this does is this sort of eats the small part of the eco... or like the smaller players in the ecosystem. It's not gonna eat tax. You're not gonna use this to run tax. You know? It's not gonna eat CRM, like you said, or like your ERP. Like, there are big pieces of software that you're still gonna have to run. It just makes it harder to build like a little, you know, app or whatever back in the day. You could build a piece of software that was honestly probably more of a feature than a platform, and you could make money on it.

[00:08:56] Brian: And now features are just Sidekick. And like, one thing, I heard, and I may have said this on our eTail podcast, so apologies for the double talk here if I already said this, but like, I talked to a technology company at eTail who said that their feature development roadmap sort of plan that they are actively doing is hearing feedback from a customer saying, hey, how come I can't do this? Recording that conversation, using that recording and conversation in Claude, then Claude Code, swinging it around through QA, and then pushing it back into the platform, and the process took about a week. I mean, talk about, like, customer-led. I think that's what this is gonna come down to for a lot of these platforms. You're gonna have to get used to coming back around and handling things for your customers, or they're just gonna take care of themselves. Like... Yep. I think that's the... it's like you're gonna have to make a call. You could say to your customer, when a customer says, hey. Can't I do this in the platform, you can be like, hey. Use the AI to handle it, or, oh, that's a great idea. We're gonna run that for everybody, and then you use the AI to handle it. One of the two.

[00:10:23] Phillip: So that's, I think, where we're heading. So just to be clear. Right? And this is observing my own behavior because I am this customer. This is not a long term need that I would have had. This would have been probably classified as sampling behavior.

[00:10:39] Brian: Mhmm.

[00:10:40] Phillip: But I had a short term need for this app that I would have installed, happily would have paid for for a month or two for this short term need, then probably would have uninstalled as well. And I know that that is a behavior that lots of Shopify stores have. And so I'm not sure how much compute I consumed. I don't know if it was $9 to $10 of compute. So I don't know how much money I cost Shopify. You know, did my LTV of Shopify... of my loyalty to Shopify as a platform increase by $9 to $12 more because I have that capability within the platform? I don't know either. I do know that... but I do know that there is a, you know, there is the nature of trialing and sampling behavior that happens in the app ecosystem where people install an app, they give it a go, they decide they like it or they don't like it and then they uninstall it and that's that, right? So, and because of the way that Shopify works, that's a... I don't wanna call it a rampant behavior, but it happens quite a bit and app developers deal with this all the time. I think this curbs some of it because the basis to use cases is that people are adopting entire platforms for one feature as it is to your point, Brian. So when people decide perhaps that they want something more fully capable that they're not willing to put the time investment into to build something more fully featured, and they just want something that's worked, that's trialed, tested, and not just tested by themselves, but tested by an entire ecosystem and foolproof, it's been proven, then they know that they're gonna be more highly vetted and they'll go and buy something.

[00:12:20] Phillip: In fact, I spent a lot of time yesterday speaking to Jay over at Bold Commerce and they're talking... he was talking to me about the like post-subscription economy and, you know, what is the... they've, you've been doing subscriptions at Bold since 2012. Right? And there's a real need for a different type of a solution in the subscription space. And, you know, they're trialing a new solution that they're gonna bring to market pretty soon. He showed me what they're working on. And, you know, it takes running something like that for like a year, year and a half and getting feedback from 50 customers live and in the wild before you have something that's foolproof. I don't think even if you're developing using AI to develop the software, you need 50 stores with millions and millions and millions of revenue flowing through the platform before you get a lot of qualified feedback before the software is ready for prime time. So, you know, the vibe coding on your own can only go so far.

[00:13:19] Brian: That's true. Yeah. But think about this. This is actually really exciting for an industry that's, like, not traditionally been prone to adopt technology simply because there are so many one-offs, which is B2B. I think there's a huge opportunity for B2B with AI to address all of those little use cases that, you know, in the past may have caused them hesitation to adopt a platform. Because the platform would force them to not... be able to address those little use cases. Yep. And so I think that actually AI is gonna open up transformation in the B2B commerce world, which is super interesting to me. I... it's been a long road and everyone keeps talking about it, but I think now is the time.

[00:14:17] Phillip: Well, alright. So none of this will work at all because we had a global AI Claude outage yesterday. Probably because of the...

[00:14:28] Brian: It win everything. I mean, that was the... Anthropic was on such a tear. Like, everything... oh, we're owning. They were on the path to own everything.

[00:14:36] Phillip: Well, I think that they hit number one in the App Store.

[00:14:40] Brian: Yep.

[00:14:41] Phillip: That was following, you know, their loss of the contract with the Department of War. Yep. The artist formerly known as Department of Defense. Thank you.

[00:14:52] Brian: I mean, it's very clear.

[00:14:53] Phillip: It's actually Pete Hegseth's prince, by the way, which...

[00:14:56] Brian: Is something that I...

[00:14:57] Phillip: Really need to see.

[00:14:59] Brian: We properly renamed the department. Let's be honest. Yeah.

[00:15:02] Phillip: Do you think... do you think that Pete... did you see that video of Pete Hegseth benching, like, three fifteen? Did you see that?

[00:15:09] Brian: No. I didn't see that.

[00:15:11] Phillip: Bro, that's crazy town, by the way. And his...

[00:15:16] Brian: Like Arnold Schwarzenegger as governor. You know?

[00:15:19] Phillip: Yeah. But, no, for real, like, I think that video is real, and that kind of... that freaked me out a little bit. I think that's for real. I don't think that that was a doctored video, and that gave me a little more respect. American man. That wild... Dude, to...

[00:15:35] Brian: You can bench three fifteen?

[00:15:37] Phillip: Yes. It's... He should be...

[00:15:39] Brian: In charge.

[00:15:40] Phillip: No, I don't... yeah. That's right. That's how we do everything now is like, who can win the UFC fight? He should be in charge. Anyway, Macho Camacho.

[00:15:50] Brian: Yeah. So I mean, this has huge implications. I mean, I think that... Well... Especially...

[00:15:58] Phillip: In a world... such a great segue.

[00:16:00] Brian: Oh, segue in. Segue in. I... sorry.

[00:16:02] Phillip: Was gonna say none of it makes any difference, though, if you can't hit generate on it because Claude's not working because, you know, Iran is bombing AWS's data centers in the Middle East.

[00:16:13] Brian: Oh, great great segue. Allegedly. Yeah. Attacking the nation of Amazon.

[00:16:20] Phillip: Yeah. The sovereign nation of Amazon.

[00:16:23] Brian: Multiple fronts is what they're doing. Yeah. They're like, hey.

[00:16:26] Phillip: The network state of Amazon.

[00:16:28] Brian: Yeah. Exactly. US, let's go after them. Let's go after our, you know, Israel. Let's go after, like, other countries. Also, let's go after the country of Amazon.

[00:16:40] Phillip: I don't know. So we're, like, we're probably just a little too early, but, you know... apparently, I... this is probably disinformation that's been spread around for all I know because I've not gone too deep on this, but Claude had this massive outage as of our recording on March 2. So this is yesterday. We're recording on March 3. But they had this massive outage, you know, the next day after, you know, this, you know, large joint strike on Iran between Israel and the United States, and after a sustained series of attacks over the weekend by Israel and the United States. And so retaliatory strikes have been happening throughout the region by Iran throughout the weekend, and allegedly, a number of AWS data centers in the region have gone offline due to, quote, power issues. And where is Anthropic hosted? Anthropic has data centers that are hosted by AWS, again, allegedly. Those things, I think, you know, again, the whole Department of War hubbub that came about last week was that Anthropic was used and Claude was used in, you know, the extraction and the removal of Nicolás Maduro in... Yep. That operation. And they can still use, I think for the next ninety days or so, they can still use Anthropic while they're switching over to ChatGPT and the Department of War.

[00:18:18] Phillip: So there's this whole discussion right now about the way that the, you know, the entering the next Cold War, especially like an information-based Cold War and an AI-based Cold War, what would that look like? And are there going to be targeted attacks around these data centers in order to take out key infrastructure and our ability to access things like AI and execute things like AI, because this is a new sort of information asymmetry and technological asymmetry that we are utilizing in order to carry out these sorts of missions. And it's the same thing that... which is funny enough to me. I don't know if it's the exact same technology, but I have to believe that it's similar technology. It's the same sort of technology that we're using as we reported, for customers to get one over on customer service and to generate images of fake return packages and, you know, sob stories, you know, for customer service to give you the refund that they said that they wouldn't because it's outside of the return policy. What a time to be alive.

[00:19:22] Brian: But don't you think it's interesting? And I'm sorry for the conspiratorial-minded moment here, but, like, that OpenAI gets $50 billion of funding from Amazon, and then, like, two weeks later, they take out Anthropic for, like, the government contract. Like, that is a very interesting set of events that happened all at one time. Yeah.

[00:19:55] Phillip: I think that's interesting.

[00:19:56] Brian: For sure. Yeah. I don't know if anyone else thought about that, but I noticed... the other thing that I thought... the thing that's interesting is, if indeed Iran is actually attacking data centers, but who knows what they actually are. Don't you think this is the opportunity? We talk about the nation state of Amazon, but this... I could see this being a moment if it is in fact true, and it will be true at some point. So if it's not true now, at some point, it will be true.

[00:20:24] Phillip: Mhmm.

[00:20:25] Brian: Where private corporations have to hire private armies. Like, when I say private armies, I don't mean actually private armies, but it will be, like, actual security forces capable of defending their worldwide assets.

[00:20:43] Phillip: Like... You know, we're kind of there already because we have NORAD that has to defend private... like, we've sort of privatized monopolies around, like, nuclear power generation. Right? So power generation is, like, privatized infrastructure.

[00:20:58] Brian: Yep.

[00:20:59] Phillip: And we need... like, we have government-level missile defense to protect our infrastructure for things like that. That's critical infrastructure. So why is AI at some point in the future not critical infrastructure that's also privatized? And, you know, I could see us getting to the point, Brian, where that's... if this is just a pretext...

[00:21:21] Brian: It is.

[00:21:21] Phillip: ...of the future is right now, we're saying, oh, Iran can't get a nuclear weapon. There's a future wherein we say, you know, adversarial states can't have, you know, artificial general intelligence. We're not allowing them, right? Data centers. That's where we're... we're not allowing them to have data centers either. Oh, they're trying to develop, right, this weights and models in this AI lab. So we're gonna take out that AI lab because there's only certain countries on Earth, you know, that are member states that are allowed to have AI at that level and capability. Like, that's...

[00:21:57] Brian: The thing that's Cold War. Already, like, with China, we were like, can't have GPUs. Like, there was a... remember that whole hubbub?

[00:22:03] Phillip: For sure. Yeah. We were already there. Right.

[00:22:05] Brian: Sure. Yeah. It's basically, like, that is state secret level. Mhmm. It's too powerful. We're gonna use it. Yeah. You know what's crazy as well? And I'll just... I mean, we don't have to get too far down this rabbit hole, but just... I don't know if you saw the thing about how actually Claude, or Anthropic, was totally fine with the US using the... using Claude and using Anthropic software. As long as there was a human in the loop. As long as there was a human in the loop, that was actually the thing that, like, broke the whole contract. Human in the loop. Like, I... so what we're saying is OpenAI was comfortable saying human out of the loop is okay. Like, we're coming up rapidly on Skynet. Like, it... and I don't mean that, like, Skynet is anytime that a system with no human in the loop makes a decision about who lives and who dies. To me, that's kinda like...

[00:23:28] Phillip: Well, that... oh, yeah. I think this has been covered. Right? That was... Yeah. Yeah. What was the... a machine cannot be held responsible. Remember this? The IBM training manual was like, a machine, a computer can never be held responsible or accountable, so therefore a computer cannot make a management decision.

[00:23:49] Brian: Right.

[00:23:52] Phillip: And to me, I had this conversation at eTail a number of times with people in the hallway who were really concerned about AI displacing agency work.

[00:24:02] Brian: Mhmm.

[00:24:02] Phillip: Right? It's like agency work is going to be done by AI. And I said, yeah, by agencies. And they're like, wait. What? And I said, yeah. We might go through a period where people say, oh, I don't need to use agencies because I have AI. But then we'll come back to a period where we want to employ someone else. Why? Because never discount the fact that somebody needs to take accountability. Correct. Because you can't sue an AI for making the wrong call. We want to have the... an indemnity or... Yes. Like, we don't want to take responsibility in a... We want the ability to be able to say we hold another party accountable or responsible for their poor judgment, and we don't want to hold the responsibility for it. And that's why, you know, when we...

[00:24:52] Brian: It's Cognizant or whatever. It's the... who was it that was in charge of the, like, review policy for Facebook of, like, objectionable content? And they had those, like, horrible, like, farms of people that had to watch horrible videos all...

[00:25:07] Phillip: Day long. I... yeah. I remember. I don't... I don't remember who, but it's effectively that. We are... it's the era in which somebody must be accountable and responsible for the decision that's being made. Right? Somebody has to pass the buck. And so that... while it might be an agentic type of decision that can be made... Right. There will still be a human that's going to have to absorb the responsibility because only humans can be held accountable.

[00:25:41] Brian: Or a company. Like, I think, you know... Yeah.

[00:25:43] Phillip: Corporation. But a corporation... Yep. Is going to, like, just absorb any and all risk without any human involvement and any human judgment. Right? Like, there's... I can't foresee a future where there's enough upside without any human involvement that you just let agents autopilot and make decisions. Anyway... okay. Well, anyway...

[00:26:10] Brian: The... I mean, I think that there's a flood-the-zone thing here too where it's like, those companies will have a massive amount of insurance and lawyers and AI lawyers. And, like, this is another thing I think is gonna go crazy is, like, we talked about returns departments and, you know, customer complaint being flooded by AI, people using AI to try and navigate return systems. Like, that's gonna happen at scale. There was an article in Financial Times about HR departments being flooded by complaints that were AI generated. We have given the people... we have democratized flooding the zone. We are... and I think this is gonna cause all kinds of problems as people start to understand how to use agents more and more. In fact, that could become one of the biggest issues ahead is, like, how people use agents when purchasing and engaging with brands and corporations in general. Like, people love hacks. People love ways through. People love to try to use technology to get their way. And so if we're putting this kind of power in the hands of the people, it could actually slow productivity down like crazy. It's gonna be a whole set of jobs just built around, like, discerning what needs to be done. I could actually see a point at which if you have a serious problem or you have something where you send, you know, so many emails, there will be policies that say, if this is that important to you, you have to talk to us in person. Like, I think there will be policies put in place by brands and retailers that say, you must come talk to one of our people to finish this request.

[00:28:10] Phillip: There's a... let's tie that into a particular set of announcements that have been done recently. Right? Anthropic, I think, on a three-week or four-week tear that had been roiling the markets. Right? So there was an announcement, I think, there was, like, Anthropic for Law that had come a few weeks ago. February 24, there was an article on Reuters: Anthropic touts new AI tool weeks after legal plugin spurred market rout. And so there were companies like LexisNexis that, you know, basically are giant document databases and historical case law that you can search, you know, if you're a legal professional.

[00:29:01] Brian: Right.

[00:29:02] Phillip: So Anthropic basically went after that vertical, and now Anthropic is now touting plugins and tools specifically for engineering design, private equity. In that sense, some other stocks tumbling. Right? You've got entire sectors basically that are... Any... looking like they're getting...

[00:29:27] Brian: Open data about how to use the system. Anyone that has open data about how to use the system, like, which you need to have in certain cases, like legal. If you... you have to have case law available to the public.

[00:29:42] Phillip: Right. So, I think how long before we're looking at these... you know, all of our platforms that we're partnered with, all these platforms that we're working in right now have these vertical solutions. I think we talked about this with Jason Murray. Right? This age of verticalized AI. It looks like the infrastructure layer is trying to verticalize in, you know, in certain industries. Right? It's coming for certain industry specialization, legal, right, accounting... Mhmm. Document management. Right? So I really wonder... you know, there's certain industries that I think a lot of data is behind, like, closed doors, if you will. It's hidden away. It's in private vaults. It's in your ERP. It's stuff that maybe is not so easily just... it's not RAG that you... it's RAG that you would need to plug into. It's not necessarily stuff that can just be digested by an LLM. So I think maybe that's some ways away. But I do think that there's business process management that we're not so far away from... that's why people are, I think, going to try for at least some time to try to disintermediate a lot of their... Yep. Their agencies for some time, and then I think we'll swing right back around. I do wanna talk about this. I do wanna talk about... because we're experiencing a lot of weird aberrations right now. There are, like, one or two stories that I think are also interesting shifts of, oh, these things are funny. They're just funny examples of, like, we're going through a strange shift right now in ecommerce. True. That are happening at this exact same time because I don't know that these are... like, they are both signs of maturity in the space. Right? But it's also a sign of the change in the times. It's also a sign of... we just... like when we had to go through... you remember back in, like, 2018 when sales tax came to... was it like Wayfair versus, South Dakota?

[00:31:56] Brian: Oh, yeah.

[00:31:57] Phillip: It was like, oh, no. Ecommerce just got legitimate and everybody had to start charging sales tax. So, this is another... for consumers. This is another one of those next hurdles where, if you are a direct-to-consumer brand and you've been buying, you know, millions of dollars of ads on Facebook or Meta for the last ten to twelve years, maybe longer, you have been enjoying cashback rewards or maybe credit card points for the whole of that time. The party's now over as of April 1. Meta is requiring all of you to move over to invoicing. So you will have to wire the money or pay it through ACH and...

[00:32:43] Brian: Or check.

[00:32:44] Phillip: And that is that. So the days of, you know, traveling on credit card rewards and earning beaucoup rewards and then spending them on personal travel...

[00:32:55] Brian: This is gonna be a... I mean, it will kill certain agencies.

[00:33:00] Phillip: Well, it's gonna change a bunch of lifestyle businesses. That's for sure.

[00:33:03] Brian: Yes. Correct.

[00:33:05] Phillip: Right.

[00:33:05] Brian: And it's bad for the independent operator yet again. Like, the independent operators are, you know, counting on this in many ways as, like, the way that they really have been able to stay making, like, good money. Now they can't make good money. Now they can just make, you know, the margin of their sale. So that...

[00:33:32] Phillip: Well, yeah. I don't... interest-free 3%, you know, back loan. Like, that's what this has been for the longest time. And those days are coming to an end.

[00:33:42] Brian: So companies have gotta be... do you think they're... do you think they're happy about this?

[00:33:48] Phillip: I've seen a lot of different takes on this, and I don't know that I have enough data to give you a perspective. But I do know that this is a large amount of transaction volume that's gonna go away. Mhmm. And the fees can't be insignificant. Right? This is a large amount of volume and a large amount of transaction fees that are not going to be processed.

[00:34:11] Brian: Yeah. I think they're mad about it is what I think.

[00:34:13] Phillip: Gotta be mad about it. Right? They have to be. But the party has been, you know, slowly winding down for people on the credit card rewards side for a long time anyway. I think we've... True. Been seeing the rates... the annual rates for the highest tier reward cards have been going up. They've almost doubled in the last three years for most of the cards at the highest tier, like the Platinum Card for Amex and the Sapphire, you know, card, on their own. Both of those cards, I think, have almost doubled in their annual rates. And while they're introducing new features, they're also taking most of the higher tier features away. Many of the people that have been longtime loyalists of those cards are also finding them just not worth it anymore. At the same time, merchants who have accepted those cards under merchant agreements are starting to realize that they pay... the fees for those top tier cards are often double what the other cards are on those same networks. So if it's just a normal everyday Amex card, right, an Amex Gold or, you know, what's the green Amex card? What's that one?

[00:35:29] Brian: Oh, I forget. I don't know.

[00:35:31] Phillip: Yeah. Just the normal green... Yeah. Right. Yeah. Those have a much lower transaction gateway fee. But the Platinum Card in particular has a premium that the merchant has to pay on top of it. And all of these rewards cards come with a... you basically have to pay the vig, and you are paying out of your pocket as a merchant to have these... you're paying for the rewards that your customer is enjoying. And so I'm starting to see online discourse around not accepting these cards in particular... Right. At smaller merchants. And you'll see that more and more often around the smaller merchants, you know, those who use Toast or those who use Square for their checkouts.

[00:36:24] Brian: Especially like at local businesses. Yeah. It's not that... online ones, they're paying whatever fees their platform... it's usually they're selling through platforms, and so it's not gonna hit them as hard. But the local merchants, like my local coffee drive-through, like, they're all charging for credit card transactions now, which is so funny. That's how it used to be, and then it kinda felt like those little fees went away, and now they're coming back. Yep. You know, which card actually recently got better is actually Costco's. They increased rewards on gas spend from 4% to 5%. And the...

[00:37:09] Phillip: Wow. Yeah.

[00:37:10] Brian: Huge. I mean, actually, that's a big deal. That changes the calculus on the Costco versus Sam's Club membership, you know, engagement. I saw there was an article in TheStreet that was talking about this. I'm like, you can... it maxes out at some point, but, like, I feel like there are retail-specific cards. This is where, like, having a house card can be really, really beneficial. Mhmm. As people look at, you know, mounting fees for their personal cards that are not tied to a specific brand, like, using a card that's getting better is gonna make a really big difference. And also it's gonna make a difference to that retailer because as these fees continue to, like, get more intense, you know, having a house card with, you know, rates you can count on and so on is gonna be more appealing. And so I think that the house card, the embedded card, is gonna become a bigger and bigger deal for large merchants.

[00:38:28] Phillip: There's a... and then we've seen that time and time again. Yes. You know, where it's the end of the cycle for the maturity as you're finding more incrementality in your business. I think that's toward the end of the cycle as you're finding newer and, I'd say, you know, more loyalty-driving ways to drive incrementality into the business. I think that's definitely a late-stage business tactic around loyalty, and usually one that's reserved for larger enterprises. But not always. I think we've definitely seen in this era where you can sort of co-brand a card underneath, you know, larger operators. Those are definitely things that, I think, some companies are doing even at the smaller DTC sizes. I do wanna talk about this TikTok thing before... and MrBeast before we...

[00:39:19] Brian: Yeah. Well, MrBeast... there's a little bit of an outflow as well. If YouTube ever moves to this model of invoicing, MrBeast is...

[00:39:27] Phillip: How's he...

[00:39:28] Brian: Gonna pay...

[00:39:28] Phillip: For it?

[00:39:28] Brian: Not gonna get his credit card rewards anymore because... apparently, he's been accused of having to increase, like, his view count through buying spots on YouTube. And that paid promotion, that paid boost is the way that he is able to maintain the veneer of his dominance, which, you know, I mean, I don't wanna say that it doesn't actually help. I do believe that paid promotion of videos does really, really have a huge effect on those videos. Mhmm. But I think that this just goes to show my prediction about MrBeast this year. This is the first crack, the first chink in the world of Beast. And I think it's gonna get worse. I think, you know, MrBeast is... he's already lost the hearts and the minds of the youth, and I think this is an example. Like, it's just gonna trend down from here. And the thing about someone like MrBeast is that I think stuff like this can flip fast. Like, when you're a creator type, if you lose your cache, it takes a lot to get it back. It will take maybe even some nostalgia, and, like, I don't think we're quite to the nostalgia. We're in a downward slope. Nostalgia will be in, like, three years.

[00:41:05] Phillip: I do think that he's in a different era. So I'm no MrBeast... I'm no Jimmy apologist, so let me temper it there. But he has leapt over to a new platform. He is... you know, Beast Games is in season two on Amazon. I do think that that has its own new cultural foothold. People are talking about that in the culture. Normal everyday people are watching that. It is a sticky show. Yep. People binge it and get all the way through it. I know that for a fact because I hear normal people talking about it in, you know, the coffee shop. Right? Now, they're often talking about it not in exactly the way that they talk about MrBeast in real life as to like, I can't believe people do this.

[00:41:51] Brian: Totally.

[00:41:52] Phillip: Right? I can't believe people are doing this for money, like, and they do have that conversation around, is this good for us? Right? I do think that they still get that same factor of, is this, you know, why are we watching this? So... Yep. That conversation is still being had and still being said. What Rosanna Pansino, who is the person who, leveled the accusation against him on X has said is that he has apparently run both his long form and short form videos as ads 428 times in the last year alone, and long form videos are down about 50% from last year despite having bought views. And this is a... if you consider who it's coming from, Rosanna is a YouTuber. Mhmm. She was on MrBeast's show, on a $1 million influencer tournament. And she became critical of him after she was one of the people who had alleged against him in 2021 that he created an unsafe work environment. Do you remember the, like, basically all those people that said he, like, made them stand around in the heat? So she was one of the people that started the vocal criticism of him and she's continued that criticism, and this is the most recent installment of that criticism. But the actual research here is pretty thorough. So there's a longer form article, which we will link to here, that shows that, you know, MrBeast definitely dominated last year.

[00:43:48] Brian: Mhmm.

[00:43:48] Phillip: But paid was a big portion of the user aggregation and the user subscription. And even so, there's just a different algorithm today on YouTube than there was years ago. Yeah. And I think I mentioned this too, is that subscribers and channel subscriptions matter a lot less today than they used to, and it's interest-based content now. And it's much harder to have interest-based content when you're doing these sort of long form stunt-based videos because that was one era of YouTube. And now your interests might be aligned, especially around short form content, to much more things that are highly identifiable, like creative pursuits, or athletic pursuits. And so you'll see MrBeast dialing more into things like anime now. He's definitely more skewed towards things that are interest-based. He's basically trying to play into this new change of the algorithm...

[00:44:52] Brian: Right.

[00:44:53] Phillip: Which is meant to get people out of the rut of just having subscriber-based content and getting people into interest-based content. And he, like everybody else, is going to have to change and adapt. And yeah. So I don't think you can measure the efficacy of MrBeast purely on YouTube alone. He's also in all these other channels where it's opaque. His...

[00:45:13] Brian: No question. I agree with that, but I do think the narrative around him has switched, and I think that he's gonna either have to evolve, which actually, you know, Jimmy is a pretty intense guy. Yeah. Uh-huh.

[00:45:26] Phillip: He has to be for what he does. Yeah.

[00:45:28] Brian: So there's a chance that he'll be able to evolve, but this year, his former way of, like, entertaining people is... I think it's on a downward trend, and his brand is on a downward trend as a result. And so I think... well, I do think we'll see him evolve and probably come back at some point.

[00:45:54] Phillip: Okay. Can I ask you a question? Yeah. Whose brand do you think his brand is on a downward trend faster than... whose brand is on a downward trend faster than the McDonald's CEO's brand is on a downward trend? Whose brand is on...

[00:46:07] Brian: Interesting about the McDonald's CEO is that I think that guy... like, I think that's just his personality. Like, I think that CEOs are often extremely boring. Like, they're often, especially of those larger corporations. I was talking to someone the other day about how thought police of, like, dictatorships of... you know, is very similar to the thought police of a corporation. You can't say certain words. They're pretty much identical, actually. Like, the level of, like, review that goes into what Putin says, like, the prebaked questions that they have in the press conferences and the... like, all of the things that are required for a, like, authoritarian regime to say things publicly are required by corporations. In fact, it's almost worse.

[00:47:21] Phillip: You're just describing comms?

[00:47:23] Brian: I am. I'm describing comms. And so CEOs by nature are, like, these very, like, contained and careful people. And so I actually think his personality came through perfectly in that video, which is, like, he's gonna be very measured about how he eats a burger. He's gonna take a medium-sized bite. He's like, how do I even bite this? It's like...

[00:47:51] Phillip: Yeah. That was my favorite part about this whole thing is how dorky it was.

[00:47:55] Brian: It's so dorky.

[00:47:59] Phillip: This is...

[00:48:00] Brian: It's only good for McDonald's, though, actually.

[00:48:03] Phillip: It kind of is.

[00:48:05] Brian: Yeah. But this is not like outrage. It's like, your CEO's... your CEO's a dork. Like, it's...

[00:48:15] Phillip: Kinda fun. Right? Like... Yeah. What they must be high-fiving themselves about though is an absolutely free video... Yeah. Is getting mega mega viral distribution with... A 100%. With zero planning. Right?

[00:48:36] Brian: This is what McDonald's is really good at. I mean, think about it. Think about, you know, the...

[00:48:41] Phillip: There's no way they planned...

[00:48:41] Brian: Shake. No.

[00:48:42] Phillip: Yeah. But there's no way they planned this.

[00:48:44] Brian: There's no way they... Well, I don't know, man. I don't know. I'm so cynical at this point. Like, putting their CEO on camera alone was actually a risk. They knew who this guy was or is, and they put him on... why did they put him on camera? Like, think about that. CEOs don't do things like this for a reason. You get other people to do it for you. The hype... No. The hype... the hype people. Like, think about it. Like, they let this video go out. They let it go out. I bet you he looked back and he laughed at himself. I'm sure he laughed at himself.

[00:49:33] Phillip: I don't know, man. I don't know. I feel like there's too many people in a room who are afraid to say that was not good, they're just like, nobody's gonna say anything about this, and they just let it go. And, you know, do you know how much content like this goes out in a given year that nobody looks at and it never gets seen?

[00:49:52] Brian: Of the CEO of one of the biggest...

[00:49:54] Phillip: Companies in the world. Yeah. Absolutely. Stuff like this happens all the time.

[00:49:58] Brian: I have not seen a CEO try a product on camera and see, like...

[00:50:03] Phillip: A product. I love that. This is a great product, man. He got hosed for that. That was so great.

[00:50:09] Brian: It's so funny.

[00:50:11] Phillip: Alright. Well, anyway, I predicted on February 23 that this was going to be a mega product and mega mega viral.

[00:50:20] Brian: You knew. I didn't know...

[00:50:21] Phillip: How it was gonna happen. I had no idea how it was gonna happen, but I knew it was gonna go big.

[00:50:26] Brian: Oh my gosh.

[00:50:28] Phillip: I would just like to say, I love taking my flowers on...

[00:50:32] Brian: You should. We should always take our flowers. We've got lots of flowers. I think... oh my gosh. You know what's so fun? He might as well have eaten the thing with a knife and fork. That's what they should have had him do.

[00:50:44] Phillip: They should have. That would have been so great.

[00:50:46] Brian: Oh, I would have eaten that up. They would have been like, look at this.

[00:50:54] Phillip: Unreal.

[00:50:54] Brian: Lean into the cringe. That's what this goes to show. There's a whole article in the Wall Street Journal about how you should lean into your bad reviews that happened simultaneously with this video coming out. And, like, I don't know, man. It's the perfect video to do that with because, obviously, the CEO's never gonna be like, yeah. Don't like that burger. Like, there's not a risk here, in my opinion. It's like...

[00:51:25] Phillip: Somebody in comms is like, this was a bad look.

[00:51:28] Brian: Oh, for sure. Right. Oh, comms... of course comms. But social teams like, oh my gosh. This is the best thing since the Grimace Shake. Like...

[00:51:40] Phillip: Yeah. All attention's good attention. But, well, here, culturally, McDonald's has had a, like, stranglehold for maybe five years longer. They've been able to do almost anything, right, and everything.

[00:51:58] Brian: It's incredible.

[00:51:59] Phillip: They're, like, just hit after hit after hit after hit. I do think that it's time for the pendulum to swing back a bit. But...

[00:52:06] Brian: To Wendy's? Wendy's is closed doors.

[00:52:09] Phillip: Wendy's is closed doors. No. It's gotta be something else. But McDonald's just can't be cool. Like, it's time for something else to be cool. And McDonald's has really... they dove for maybe five plus years now into... they did the drop model. Right? They did nostalgia. They've really exercised a lot of... they've, like, gone deep into the archive. Like, deep, deep, deep into the archive. What's left? How much is left? Bro, I'm serious.

[00:52:43] Brian: Content, baby. Like...

[00:52:45] Phillip: I know. But at what point do people get sick of it? Right? And remember I said about A24, it's like one day people decide that they see something they don't like, and then they are all like, yeah. We've had enough of that. Right? And they look at this and they're like, yeah. He...

[00:53:04] Brian: The difference between McDonald's and, you know, MrBeast and, like, A24 is that they have products that people have daily...

[00:53:17] Phillip: Products.

[00:53:18] Brian: Engagement with. Yeah. Products. Exactly.

[00:53:21] Phillip: Someone was... my favorite comment on that whole affair was someone... they might as well have called it a SKU. Might as well have called it a SKU.

[00:53:29] Brian: I would have loved it if he called this a SKU. This SKU is delicious. It was so good.

[00:53:39] Phillip: I love it so much.

[00:53:40] Brian: Losing it. Give me more content like this content. You know, again, I actually...

[00:53:46] Phillip: Ah, we didn't...

[00:53:47] Brian: Get authentic. Damn.

[00:53:49] Phillip: Dude, we didn't get to the thing I wanted to say about the MrBeast buying views, which...

[00:53:52] Brian: Is... Go back. Go back. We own this podcast. We could do whatever we want.

[00:53:58] Phillip: It's... and we're at the end here. Okay. Well, if you got to the end now and I'm going backwards in the conversation, which is... if you look at the new media landscape around all of this and sort of the rise of all this new media, which, you know, if you subscribe to such a concept, I guess Future Commerce was at the forefront of the new media landscape. But now you have, what, I guess, how long gone is sort of the geriatric millennial version of that. And...

[00:54:26] Brian: Yeah.

[00:54:26] Phillip: And so...

[00:54:27] Brian: Not great views on YouTube, by the way.

[00:54:29] Phillip: No. And that's what I was gonna say is that you look at how long gone... or you look at Jordi Hays over at... and the guys over at TBPN. TBPN. Right? Look at some of the, I'd say, the elder statesmen of this new media empire building. And they have one standout channel, but none of those channels really perform very well on YouTube in particular. They don't do well on YouTube. And they almost all say that they have stellar audiences or they all claim to have stellar audiences on live. So they do these live streams or they all do numbers on podcasts, which are all sort of asynchronous. And, like, lots of people are swayed by their opinions and they are important people. Generally, they are well respected and everybody knows who they are. Acquired is another example. Right?

[00:55:34] Brian: Mhmm.

[00:55:34] Phillip: Acquired can draw, you know, tens of thousands of people out to an arena. So I think they're the outliner.

[00:55:40] Brian: Yeah.

[00:55:41] Phillip: They're the outlier, so I don't wanna be on a... you know, they're probably not... they're the exception that proves the rule. But when you're looking at the totality of the landscape, you're looking at hundreds, maybe single digit thousands of views on YouTube. Mhmm. These are people who aren't going on YouTube and getting hundreds of thousands of views. Meanwhile, the direct-to-consumer video podcasters all have 150,000, 300,000 views... Yep. On a poorly edited video with no thumbnail, right, with five sponsors on it, five SaaS sponsors on it, of them talking for an hour and a half on cost caps. Yep. Make that make sense. Okay? To me...

[00:56:34] Brian: That... that's... make sense.

[00:56:36] Phillip: No. Because it doesn't make sense. And therein lies the rub where there is a genuine strategy and I think an importance to both organic distribution and paid distribution that every media operator... it's incumbent on every media operator to understand how to get distribution to your audience and to understand the boundaries of the channel and understand when the organic boundaries have met their limits and when to exercise your paid channel so that you can meet the obligations that you have to your partners. Okay. And then there's the other side of the equation, which is at what point are you spending purely for distribution as a means to drive views so that you can...

[00:57:28] Brian: Claim... That's exactly right.

[00:57:29] Phillip: Claim an audience that otherwise isn't valuable or transactable.

[00:57:34] Brian: Well, and it just goes to show that buyers of media... to me, I mean, this is gonna sound really mean, but they're kinda stupid. Like, I...

[00:57:43] Phillip: They're uninformed.

[00:57:45] Brian: They're uninformed. Yeah. Uninformed, but that's like the lack of curiosity driven by specific KPIs. Like, the KPI for the media buyer is off because it is driven by these CPMs, and the CPMs are all acquired. Like, the people are acquiring... like, the views and the touches and the mentions and whatever through non-real traffic to meet media buyer contracts. And that is not good for the companies. I think companies need to review media buying strategies and be like, so when they say they can achieve these things, how are they getting there?

[00:58:37] Phillip: Yeah.

[00:58:37] Brian: And there's so much hand-waving going on in the background. Just invest in good content. Like, I think this is the thing that... it makes me sad. But I don't think anyone has standards. Nobody knows what's real. I actually wrote about this recently. Nobody actually knows what's real anymore. We have lost all sense of propriety. This is my big thing. If you actually wanna be good at your job, you have to recover your sense of propriety, which is doing the best thing... by understanding what's actually real, and then you can understand the contextual thing you could do in every moment because you've engaged with things that are real. And media buyers are not engaging with things that are real.

[00:59:26] Phillip: I think there's actually a chasm there. I wanna call out that there's an agency-based media buyer who's working on behalf of a larger, more complex organization who understands what the job is. And they have a very specific set of KPIs that they're looking to try to meet, and they know what they want, and they're looking for you to give it to them. And it's sort of a binary decision. Either you can hit that KPI or you can't. And that's... Exactly. That is just that. And, like, there's no emotion in that decision. But that's one type of a buyer. The other type of buyer in this particular ecosystem, and now we're just talking about the business and media, by the way... there's another type of buyer in this ecosystem that is just uninformed of how to use media as a partner in order to leverage it as a growth channel. And that media buyer needs to be educated by us on how to partner with other media... with us and other media brands. And they see us as a sales channel lever or as an affiliate channel or they see us as a... Yeah. Right? As a pay-to-play, like, media channel, or there's, like, lots of ways that they see us that is not the best way to employ our partnership.

[01:00:43] Brian: A 100%.

[01:00:44] Phillip: And the only reason we exist is because of the trust that we have built up with our audience, because we have a point of view, because we accurately report their point of view, because we built a lot of, you know, goodwill and trust, and we... right.

[01:01:01] Brian: This gets back to what you talked about, SOCOM. Like, culture is first, then, you know, then comes commerce. Right? And so culture is trust in many ways. Trust in a set of things... you know, excitement around those things. Things that people really actually enjoy. Real things that people actually enjoy. And or learn from or whatever it is. You know? And so... you say we're talking about our business. We're just talking about the business now, but I actually think we're talking about so much more than that because this is consumer media. It's B2B media. It's all the media that anyone is looking to sponsor or like try to drive money out of. And I think that the ability to identify good talent not based off of, like, paid numbers is something that's a skill that is a loss because we're lost in spreadsheets, in concepts, and things that don't touch real people.

[01:02:05] Phillip: Yeah.

[01:02:06] Brian: And that's a problem. That's a problem.

[01:02:10] Phillip: I really like where we ended up here. Alright. Let's leave it there. I like this. Why don't we continue the conversation at Shoptalk? Shoptalk Spring, March 2026, Las Vegas, Nevada. Join us in our After Dark. We have the Skyfall Lounge. It's the twenty fourth at, well, I think 8:39 PM. We'll be there till late. Join us. Love you to come and talk Strata with us. That's our newest book that we are launching.

[01:02:40] Brian: Yeah.

[01:02:40] Phillip: At Shoptalk Spring, we'll also have a booth there in the expo. Come say hi to us. We are doing interviews. Go visit futurecommerce.com/shoptalk. And that'll be your place to be able to get all the information where you can find where we're gonna be activating, what we're looking forward to, schedule of events, and where you can register... futurecommerce.com/events for all of the event information. Register to get on the list. Community's always coming out in a really big way at events like this. Last year, we had hundreds and hundreds and hundreds of people. We definitely are gonna hit a wait list. We are giving priority access in this event to merchants, retailers, brands, and brand operators, and people who are members of Future Commerce Plus. So if you want to skip the line, join Future Commerce Plus. We'd love to have you, and that is a premier access way for you to get data insights, regular member briefs, get After Darks, discounts on print and merch, priority access to events like this, and for one low price a month. And also, hey, you get that on-demand training from Future Commerce Learning. I don't see any better way for you to get the best out of Future Commerce. Code... futurecommerce.com/+ if you wanna get in on it, and we'll see you at Shoptalk. Thanks for joining us. Remember, commerce shapes the future because commerce is culture. We'll see you next time.