3 Things: Roving Vending Machines, Customer Marketing SaaS, App Roll-ups

Happy Sunday and a very warm welcome to all the new subscribers! I’m thrilled and honored to have you as readers and truly appreciate your thoughts and feedback 🙏. Each edition of 3 Things will contain a dive into 3 rabbit holes I’ve found myself going down recently. Subscribe to get each week’s edition straight to your inbox and if you enjoy it, please share (I suck at self-promotion so can use your help)! This past week I’ve been thinking a lot about:

• Roving Vending Machines

• Customer Marketing SaaS

• App Roll-ups

1. Roving Vending Machines

As early at 1615, coin operated machines in taverns in London dispensed tobacco. What we know as the modern vending machines date all the way back to the 1880s in London where machines started popping up at railroad stations and post offices to dispense postcards, envelopes, and notepaper. In 1887, the Sweetmeat Automatic Delivery Company became the first company to install and service vending machines and in 1893, Stollwerck, a German chocolate manufacturer started selling their sweets in vending machines and quickly expanded to sell cigarettes, matches, chewing gum, and soap products. At the same time, the Thomas Adams Gum Co introduced vending machines to the US where they sold Tutti Frutti gum. Over time, vending machines continued to evolve and proliferate, selling all types of consumables and at the same time, we saw the emergence of food trucks which became popularized in the late 1800s and then became mainstream after the introduction of the ice cream truck by Good Humor in the 1920s and the Oscar Meyer Weiner Truck in the 1930s.

With the explosion of e-commerce brands and pop-ups where customers will line up for hours to get access to their favorite brands, the fact that it’s harder and harder to reach customers via ads, and the upcoming “cookiepocalypse”, consumer companies are going to need to get creative to reach customers. For many years food trucks have operated by posting what locations they will be at each day on their Instagram page. Foodies, travelers, and fans will go out of their way to find the trucks and indulge in their offerings. Recently some brands have started operating vending machines like Uniqlo and Kylie Cosmetics selling clothes and makeup in airports and malls. If you combine these concepts, a company could partner with e-comm brands and creators and spin up trucks that act as vending machines for the most popular DTC products or even NFTs. There is already precedence for food trucks and ice cream trucks to rove and park in various places within cities and towns so the regulatory part is solved. Recently, the insanely creative company MSCHF, which does monthly drops of some random and often hilarious concept that they’ve concocted, had an ice cream truck in NYC and LA that was “Eat The Rich” themed with Bill Gates, Mark Zuckerberg, Elon Musk, etc shaped pops. A company that is very skilled in brand and digital marketing could get creative with the concept. In addition to selling physical items, you could partner with popular creators to do NTF drops via a mobile vending machine. You’d have to find the truck, scan a QR code and connect your wallet, and then mint an NFT. Brands could start using these mobile vending machines as easy viral marketing campaigns.

2. Customer Marketing SaaS

The role “Customer Marketing” is a newer but growing title, and if you remember from a previous post, one of my core theses is that new titles = new tools. When new titles emerge or shifts in titles occur within companies, that signals new responsibilities that require specialized products to help them fulfill those duties. We have seen an entire new term “RevOps” materialize to describe the coordination of the revenue generating/touching functions of Marketing, Sales, and Customer Success. With the rise of RevOps, we’ve seen tons of new tools targeting this function as they gain more power and budget. Since these teams directly touch revenue, it is pretty easy to show and measure ROI through increased sales, faster sales cycles, reduction in churn, or increase in activation from free —> paid in companies that have a freemium model and are leveraging product led growth.

The role of Customer Marketing is responsible for building strong relationships with customers to help drive retention and also direct marketing programs using stories and voice of the customer. They will handle items like case studies, testimonials, customer advisory boards, referral programs and customer webinars or events. They are also often responsible for educating customers on new products or features and working directly with customer success and sales to drive expansion and retention. These employees need to very closely track specific individuals within accounts and know every request that has been made of that customer, the latest sales/CS interactions with them, which customers are flagged as churn risks, the use cases for each account and what ROI they are seeing, and much more. Most of this today is done by cobbling together spreadsheets, email threads, and SalesForce. Just as we’ve seen dozens of new companies pop up targeting various personas within sales, marketing, and CX (Customer Experience), a startup could hone in on the needs and day-to-day workflows of Customer Marketing to create an optimized solution. Since this persona has not been the target of vendors historically, they won’t be as jaded or bogged down with sales emails in their inbox and will likely be easier to reach.

3. App Roll-ups

The concept of a roll-up is definitely not new. Private Equity (PE) has been buying up companies in similar markets and combining them for decades to take advantage of economies of scale and shared back-office services which reduces costs. They often purchase complementary companies which allows them to immediately find cross-sell opportunities within the respective customer bases. With the rise of e-commerce and platforms like Amazon, Shopify, Mercado Libre, etc we’ve seen a plethora of FBA (Fulfilled by Amazon) and other e-comm roll-ups like Thrasio, SellerX, Perch, Heyday, and many more. While these companies have raised billions of dollars in venture funding, they’re a grind of a business to operate. You have to deal with small business owners (and all the headache that negotiating an acquisition with them entails), manufactured goods, logistics and return logistics, and numerous brands which all require a ton of work on social media and paid digital channels.

At the end of the day, no matter how much juice you can squeeze by combining numerous e-commerce companies or brick and mortar companies (as is often the case with PE), you can only move margins so much and would be lucky to get around 40%. On the flipside, apps can get 90%+ margins, often have way fewer employees, less logistical complexity, and more overall upside. Whether it’s Chrome Extensions, Shopify Apps, Wordpress Plugins, SalesForce AppExchange apps, or even mobile apps, the expansion of 3rd party developer platforms has given rise to thousands upon thousands of small apps that sell their software through these marketplaces. Companies could pick a platform, identify apps that fit specific criteria (scale, number of customers, type of buyer, revenue, etc) and roll up businesses that are complementary and sell to similar buyers. You could not only share back-office support but also engineering resources, marketing and sales efforts, and start to sell bundles of products that integrate seamlessly which would increase contract values and make the solutions extremely sticky.

That’s all for today! If you have thoughts, comments, or want to get in touch, find me on Twitter at @ezelby and if you enjoyed this, please subscribe and share with a friend or two!

~ Elaine