Haley Boehning (00:30)
Well, welcome back everyone to the Robin Report, Retail Unwrapped. I’m here with Tarek Mueller, ⁓ who is a founder and CEO of Scale and also about you. ⁓ We have spoken with Tarek a few times in the last few years. I know Deborah got to speak with you at Shop Talk a few years ago, and Robin and Shelley sat down with you way back in 2023. ⁓

So I wonder if maybe for our listeners that have been following along with your story, if we might start by just bringing this up to speed on where you and the business are since the last time we spoke with you. ⁓ Three years is a long time in your world.

Tarek (01:13)
Yeah, definitely. Maybe as a quick recap, assuming not everyone heard the last episodes. So I founded About You together with my two co-founders in 2014. So it’s been 12 years now. It started as an online fashion store in Germany, ⁓ quickly expanded throughout Europe. So now we are in 28 countries. ⁓ We are generating roughly 3 billion in GMV, 2 billion in IFRS net revenue.

So in dollars, would be a little bit more. So three and a half or two and a half billion in dollars and I first had revenue. Mainly with fashion for women, mainly young women, but we also serve men. We also serve older cohorts. And the initial idea was that if we succeed with our own business, that we then productize our technology at some point because

My two co-founders and me, are not fashion people. actually, have an e-commerce and software as a service heritage. So we are more coming from the technological side, developed our own software. And this we have done in 2018 roughly, we have spun out another company called Scale, which is our proprietary software that we are licensing out to brands and retailers. Some of them also sell fashion, but actually also…

Haley Boehning (02:15)
you

Tarek (02:38)
other categories. we have everything from fashion, beauty, baby, car parts, opticians, soccer clubs. So it’s really a wide range of customers selling a wide range of products, but with a special focus on B2C and ⁓ large scale enterprise customers. So customers typically have somewhere around 100 million up to a couple of billion in revenue. And therefore we are operating two businesses today. One business is about you, it’s the online fashion store.

The second business is scale being a software business. ⁓ We have IPO the group ⁓ in 2021, at roughly 5 billion in market cap. So I would say a sizable IPO, a large IPO for European terms and a sizable IPO in kind of global terms, I would say. And ever since we are running these two businesses. I say, especially looking on the last years, it has been an exciting time.

because there was a lot of pressure in the e-commerce market actually. mean, there were a couple of companies that failed like Farfetch for example, former market leader in luxury fashion. At the peak I think they were valued at 20 billion or so, completely wiped out. Also other companies in the e-commerce space had a tough time I would say. lot of companies actually decreased in revenue but we managed to always grow.

We never had a year without growth. And I think this was also due to our ability to react to market circumstances quite ⁓ fast due to our flexible technology. So we pivoted to entry price assortments when there was consumer pressure. We established the marketplace on top to our wholesale business very fast. And by this could leverage basically long tail assortments. We could onboard manufacturers when we saw kind of this whole

Teemu Shian model where they basically shipped directly from manufacturers to consumers. We could adapt that quite fast. We could react on social commerce quite fast. We implemented a lot of inspiration elements and many things more that actually helped us to navigate through this kind of challenging times where consumer spend was quite low. And therefore we always grew with our commerce business. It’s very profitable cash generating. And with our software business, I would say, especially the last years, we really had a run.

Haley Boehning (04:37)
and

Tarek (05:02)
I think we are in the last five years always the fastest growing software vendor in the e-commerce space, according to Gartner data at least, at least as far as I know. So we really had a lot of really major wins while being really profitable because we have a very, very small sales team. So the software business now is at approximately a little under 100 million in ARR, so quite sizable.

I think with a sales team of maybe five to 10 people worldwide, because we are very fortunate that our customers usually recommend us and therefore we usually win new customers without huge sales efforts. ⁓ yeah, we have won a lot of new logos in Europe. We have won very cool logos in the UK like Harrods and Manchester United. And then last year we made a step to the US and just recently announced a lighthouse win.

Haley Boehning (05:45)
Thank

That’s fantastic. Yeah, you’ve it sounds like in the progression of your company from your founding over 12 years ago, you’ve had four or five major bets that you’ve made. Kind of what might have been seen as the from the outside as a risky bet. So I wonder if maybe we could walk through the insights that brought you to the space of being willing to make that really risky bet. You mentioned a few of them. Perhaps we could go back in time and talk about

Tarek (06:00)
with Levi’s.

Haley Boehning (06:30)
⁓ that moment when you founded your first business, not a fashion person, ⁓ a technology person. What was it in the marketplace? What was it with your initial customers that you saw, maybe because you didn’t come out of the fashion or retail world, what was that need that you saw that you thought you could feel better than other people in the marketplace at that time?

Tarek (06:57)
Yeah, I mean, when we founded about you, so about you as my third company already, I founded an e-commerce company that was basically building niche online shops. But this was then basically disrupted by Amazon because Amazon really disrupted more or less all the niche categories in e-commerce. And then I had a consultancy firm. So the e-commerce company I sold, I founded a consultancy firm called e-Tribe, which is still very successful.

And it’s also consulting a lot in the retail space. And what I always felt is that due to Amazon’s success, all online shops suddenly looked like Amazon. ⁓ They all have a search category focus, PDP focus, it all looks the same. Which I think makes sense if you’re selling something that people buy out of a need. So typically you go to Amazon if you need something. And often you already know the exact product. ⁓

specific book. it’s more of a, I always call Amazon a bit of a digitized warehouse. Yeah. So it’s a huge warehouse and they put a search on it to navigate you through the warehouse. And then it’s a fulfillment machine. Now that is a very good proposition if you know what you want, because it’s a very, very efficient machine and kind of the whole Amazon experience is built on converting you as fast as possible. Now that is actually a good experience if you know what you want, which is

Probably 50-60 % of consumers spend. But there’s also another side of the angle of the metal, which is categories that are driven not out of a need, but out of a desire. So fashion, most people spend money on fashion not because they ran around naked before. Or they are freezing, but they want to freshen up their wardrobe. They want to change their look.

Same for home decor, example, same in parts for beauty. it’s not fashion is not the only category where people actually often spend money out of a desire rather than a need. And they come to a store without a very specific idea of what they want to buy. Now, that’s the case. If you interview people entering an offline fashion store, they often come with a very broad desire of something. Yeah. Or they just want to look around. Now I felt that this is really not covered online.

Because of Amazon’s success and because all online shops were, in my view, really boring, we thought e-commerce has to become more exciting and less of, you know, you only visit us if you need something, but also, hey, why don’t you visit us just to stroll around as you would do it offline? Now, that was basically the customer insight that we had when founding About You was basically…

Offline, the majority of money spent in fashion is spent in a strolling mode ⁓ and things bought off an impulse. And this part had not been digitized and this we have digitized with About You. And I think that was the reason for our huge success. mean, we’ve scaled to, yeah, two billion in FRS net revenue within less than 10 years, yeah, with very high capital efficiency.

while already having a very high competitive field. So there is an Amazon, there’s Zalando and all these other competitors, Asos and Farfetch and everyone playing Revolve and so on and so forth. And obviously the brands, I think because we had a bit of a different approach towards commerce.

Haley Boehning (10:32)
And you mentioned earlier this second customer that you began to address with scale. Did you know when you were founding about you that you had this second customer in mind, that if you built the back end and it worked and it worked for you and your business, that it was something that you wanted to bring to the world, or was that an insight you had later?

Tarek (10:53)
No, this was the plan from day one. mean, and this was actually before Amazon developed AWS. I would say now it’s a bit of common sense that as a commerce player, you can develop adjacent businesses in the infrastructure. So we just had the feeling that you cannot just found an enterprise as a The barriers to entry those markets are really high. Now that’s the reason why these markets are barely being disrupted.

But they are extremely profitable if you crack it. So with scale, are, since we were publicly listed, we had to report. it’s public that we are running on ⁓ profit margins, EBIT margins of 40%, roughly. mean, that’s EBIT margins, profit margins you cannot achieve with commerce. Same for Amazon with their cloud business. mean, the profit margins they are doing in cloud business exceed the profit margins they are doing in retail by far, but they wouldn’t have a cloud business if it wouldn’t be built on the

back of the infrastructure and the volumes they have built in retail business. So for us, the idea was always, we want to succeed in the retail business and kind of build about you as the leading destination for online fashion, but in order to increase our margins and also because we can in a way, because we believe the competitive landscape in enterprise is not good, to be honest. We should actually

we should start a SaaS business, ⁓ which we’ve done. And my co-founder, Sebastian, he already founded SaaS companies before. So he was experienced in SaaS. We already worked together. So we knew the SaaS space. We knew enterprise is a very good space. So that’s why we had this idea from day one. But it took us like four years or so until we had the software on a quality level where we thought, OK, now we can license it out. And then that’s

took us another two years or so to build a B2B organization. So go to market, account management, everything you need. I mean, you need more than just a good piece of software to build a ZARS company. So at the end of the day, obviously it took a couple of years to actually do it then at the end.

Haley Boehning (13:01)
And so you built this SaaS company, you built this platform for others, but you were the first customer for it. What did that experience, what differentiating qualities did that give you as you were going out to the B2B market, having been the first customer of your own company?

Tarek (13:21)
I think it’s a great advantage to be a technology company, which obviously all of those companies are, but at the same time kind of being in the arena every day. if we speak to our customers, I think we, we can, we do speak the same language in a way. So we know the hassle of a retailer and a brand and how complex it can be to manage an operations, to manage logistics stuff.

you know, buying and all things. Yeah. So I think it was a great advantage to have the, I would say, industry knowledge of operating an econ business ourselves, but being a technology company and developing software. this, see also our USP as a kind of cultural company, culture DNA, basically a software. And I think at the end of the day, what does it lead to? I think it leads to, it leads to better quality of features ultimately in our space. Yeah.

But that’s also why with scale we are very laser focused on B2C enterprise because we say, hey, this is really our home turf. Now this, think we are really good at, but we are not touching B2B for example, because like it’s not our home turf. Probably other companies are better than that. But I think we can really say B2C e-commerce in lifestyle. I think we really know what we are doing because we are doing it every day. And our organization is doing nothing else. I mean, we wake up in the morning, we think how to sell more stuff online.

in B2C lifestyle and this is the last thing we do when going to bed. I would say other SaaS companies or the tech conglomerates like Salesforce and SAP, know, they are thinking of a lot of things and not only commerce, for example. So I think it’s a great advantage to be very focused, but at the same time, obviously the disadvantage is you’re leaving out a lot of the market. But if you are in our ICP, so you are B2C, Ecom, large and ideally lifestyle, I would say

then we also believe we really have the best product for you in terms of software.

Haley Boehning (15:23)
So you mentioned a few times the marketplace. It’s a very crowded marketplace, enterprise commerce platforms. What are you seeing that retailers are getting wrong or the problems perhaps that people in this space traditionally were not solving that you’ve been able to solve better with scale?

Tarek (15:44)
I mean, first of all, don’t think it’s very crowded marketplace. Given the size of the market, it’s actually looking at enterprise. It’s actually not so crowded. It’s not so many companies that are playing in the enterprise field. I mean, the market leaders are Salesforce and SAP with their commerce solutions. So Salesforce, formerly known as Demandware and SAP, formerly known as Hybris. Now I think both name themselves Commerce Cloud.

Haley Boehning (15:47)
Good.

Tarek (16:14)
So they would say they’re the market leader in this kind of enterprise field. So I’m talking about companies that are doing a of hundred millions up to a couple of billions online. Yeah. So if you’re looking on smaller online brands, it’s certainly Shopify market leader. But then if you go to the larger segment, will find SAP and Salesforce probably leading the market. Now, both of these companies have acquired their solutions. Like the solutions have been founded 25 years ago or so.

Haley Boehning (16:37)
sense.

Tarek (16:44)
Funnily also by Germans like SAP bought Hybris. It’s the German founded company Demandware, which was acquired by Salesforce now Commerce Cloud is also founded by Germans. Shopify also founded by Germans. for whatever reason, we are good at exporting shop ⁓ software. There’s a bit of a community, I would say in Germany around building software for e-com players. the mentioned companies, Shopify is definitely more from…

more new age basically, but ⁓ the big tech conglomerates, think they are in a way built long time ago and they’re not focused on this segment. Now, I think we have the blessing of the late birth. So the technology that we have built is built on modern technologies, modern programming languages, et cetera, et cetera. We all know how fast these things advanced.

Now, it’s always a great advantage to work with newer technologies than with older technologies. That’s, think, one thing that differentiates us. So it’s modern technology combined with this industry knowledge and laser focus on the industry, which means we have more features usually that are relevant to our software customers. Combined, would say, with a…

boutique approach that we don’t have a lot of customers, but they are really large. So in order to do a hundred million AR, we don’t need thousands of customers. Yeah. ⁓ And by this, by just having a, I would say a ⁓ relatively small number of customers, we can also invest a lot in the account management. So we know all our customers, we know their roadmaps, we know their strategies, we know the people, we know the shops in and out. Like

and we can align the roadmap with them and basically really build something that makes sense for them. I would say the combination of modern technology, industry knowledge with great, and I would say boutique-like customer account management, customer success management usually resonates.

Haley Boehning (18:44)
So you mentioned earlier that you put a significant amount of time, many years invested in building up this company, building up scale. ⁓ You’ve got a huge market in Europe. What made you feel like the risk of moving into the US market was worth it?

Tarek (19:04)
mean, the US is the largest software market in the world. And I would say it’s the defining software market in the world. And it’s the only software, it’s the only market where you have global spillover. I mean, if you’re successful in the US, you have global spillover. If you’re successful somewhere else in the world, there’s no spillover usually, ⁓ or very, very small spillover maybe, but I would say barely any spillover. So I would say it’s…

essential to win in the US. So for us, it was always clear we have to win in the US. And we probably also have to move certain functions there by this become a US company in a way at least for certain functions. It was just a matter of time until we went until we enter the US market. Also, because our positioning of we are serving the largest in the market, obviously,

due to the US being not only the largest software market but also the largest consumer market, you will find more large companies there than you will find anywhere else. Now for us actually the larger the company, I would say not larger, the more complex the company, the better our software suited and complexity usually correlates with revenue. So that’s why we find more of our ideal customers basically in the US than we would find anywhere else.

Haley Boehning (20:26)
So there was an inevitability to the move into the US market. And certainly those ⁓ large, complex clients are here. ⁓ I imagine you have other folks who also see this in their growth strategies and plans. What made you confident that ⁓ your team…

⁓ could do this work in the US and earn the trust of US companies who might be skeptical of unfamiliar vendors.

Tarek (20:57)
First of all, I think the competitive landscape is more or less the same everywhere. you find maybe, I mean, I’ve named two Salesforce and SAP being the market leader in this enterprise segment, and then you probably find three, four challengers, us being one of them in the enterprise field. So it’s not a huge competitive set, they are always, they most, basically all of them are playing everywhere. So whether we go into an RFP in the UK, in Germany, on the US, we always see the same competitors.

There are no local differences. It’s a global market, The enterprise field for sure, but even the SMB space, would say, is fairly global, but an enterprise for sure global. So the competitors we are seeing are the same. The systems that we are replacing are exactly the same. Actually, there are very few specialties in the US as in every country, address validation, VAT. ⁓

taxonomy, customs, et cetera. But it’s technologically not very difficult to basically solve the things that are special for the US. And then I would say the vast majority of things the US company need are the same as any company anywhere in the world. Especially because most of the companies that we are serving are global anyway. So take Levi’s, take whatever, Harrods, take Snipes, take whatever, Feelman. Like these companies are selling everywhere in the world.

We already had customers selling in the US, but they were just not headquartered in the US. it’s basically kind of easy to enter the market because the software product is the same. Nevertheless, as you rightfully say, you have to build trust. Nobody wants to buy from a vendor they don’t know ⁓ because it’s seen as risky. So we definitely had to convince. We had to be more convincing in terms of product quality to overcome the trust problem.

which is always a problem we have in the beginning. But I mean, we have customers now. I mean, we have just announced one being Levi’s. But we saw very early great successes in RFPs. And I would say it’s because companies usually didn’t know us, took us into consideration, saw the quality of our product, checked our company, saw we are publicly listed. We now belong to the Zalando Group.

The Solano Group is a group of 17 billion in GMV, more than a billion in cash on our bank account, 700 million in EBITDA. So very profitable, catch-ish company. We will not go away. We are not a startup that is maybe bankrupt in a year or so. Because these are the typical concerns of buyers in the enterprise field to say, okay, I’m signing a five-year contract. Do you exist in five years? I mean, I think we can really prove we are very solid, very well-financed, great backup in terms of

Haley Boehning (23:28)
Okay.

Tarek (23:45)
shareholder and governance, very serious about the US market, great track record in terms of customers, basically no churn in the last seven years. I think we’ve lost one customer in seven years ever. So really speaks for the quality. In terms of the NPS, we are usually the highest rated software vendor. So I mean, once people, think, look into our company, they realize the risk is actually not a risk, even though they might have not heard of us before, which I believe also changes at the moment.

in the US, so I’m sure in two or three years, this will not be a topic anymore because people see our logo wall and kind of, they can have reference calls and the ecosystem we are building around us, I think that’s all going to be solved in a couple of years.

Haley Boehning (24:33)
Great. I know you mentioned when you chatted with Shelley last that you win a disproportionate number of the RFPs that you ⁓ go for, which is pretty remarkable. And you get great references from ⁓ your customers. So customers refer you ⁓ a lot.

What do you hear from your customers that do those referrals that speak on your behalf that kind of ambassadors for the work that you do? What do you hear that they value most about what you’re offering versus what they’re seeing in the marketplace? What’s that gap?

Tarek (25:10)
First of all, terms of the RFP win rate, think there needs to be an important caveat is that we just enter just a very few RFPs. I think other companies, are going in way more RFPs with a way lower success rate. Now, we are so specialized, B2C, large complex lifestyle. There are not that many RFPs, but if you are in our ICP and we go into the RFP, usually

with more than 50 % of the cases we also win the RFP, which is good and bad sides. mean, obviously being very laser focused means if someone is in the ICP, it’s the best product, but we are not participating in lot of RFPs that are in different fields. I think it’s a good thing to be focused. In a way, kind of this ZAS get on that happened a little bit in the capital markets in the last…

month, would say, where the last companies really lost value. If you look on the companies who lost and those who didn’t lose, I’d say the more specialized, the more mission critical you are. And if you have a take rate model rather than a seat based model, then you didn’t really lose value. Now we are mission critical, very specialized with the take rate model. I would say the, I would say the positioning that we have now, I’d say also proves a little bit that it makes sense.

I think it’s better to be the best in something than mediocre and everything. And that was ⁓ always our idea. But this by design means we are only participating in a very few RFPs. ⁓ we are, I would say, boutique in question marks. I 100 million ARRs certainly is fairly large for a SaaS company. again, given the high ARR per customer, doesn’t mean that many customers.

So what we usually hear from the customers doing reference calls is they are saying exactly what I said, kind of as USPs I would say, they’re usually saying modern technology, the developers like it, developer experience is great. A full suite of features, so the business users usually like it as well, because it comes with a panel and UX that feels a little bit like Shopify and kind of the modern.

software in the enterprise field. Now usually in the enterprise field you have these like really shitty panels, shitty UX, really horrible to work in. So the developers like the modern technologies and the developer experience, the documentary, everything you usually know from a modern piece of SaaS company. And the business users also like it because they can do a lot of things without calling the IT, without opening a ticket.

Haley Boehning (27:37)
Thank

Tarek (27:58)
So we try to enable the business user to do a lot of things, start promotions, run campaigns, do tests, internationalize, and spawn everything in all countries at the same time without logging into five systems. So the business users usually like it because it’s very efficient, very modern. And then it’s the results ultimately. So after migration, our customers usually see a really strong increase in top line while improving the profitability.

The C-suite is happy about the results, more top line, more profit. The developers like it because of the documentary, the modern technologies and the business users like it because they are able to do way more with way less clicks at a way higher efficiency in a modern panel. And this is usually what our customers say.

Haley Boehning (28:48)
It’s interesting, you mentioned earlier all of the things that are similar moving from the European market into the ⁓ American market, especially because you’re working with international retailers who are everywhere. So there isn’t that much difference. ⁓ Were there things about the American market that gave you pause or that you needed to prepare for in some different way?

Tarek (29:13)
I mean, every market needs localization. there were a couple of technological things that we had to implement, but this had been implemented because we had European headquartered companies being active in the US. So the software being ready to serve a US consumer was actually done before we actually entered the US. But then obviously we set up an office in New York. We had to hire people in the US. Obviously you need people on the ground.

to serve the market and to do the basically customer success management, implementation support, all of these things obviously have to be in the country in the time zone. So this had to be set up. ⁓ Yeah, but that’s also not so special because we’ve done this for the UK as well, for example. So you have to do this for every market in a way, but obviously the US being so large, it requires more from everything in a way. It’s more expensive, more marketing money.

more people on the ground and so on and so forth. So obviously entering the US is the most complex and most costly expansion you can do. Plus, as mentioned, I do believe that the US is not only the largest, but also the defining market. With defining, mean, there’s a lot of talent there that is the best in the world. So I do think that over time, certain functions are headquartered in the US.

that it’s also normal transition. Most of the ZARS companies, no matter where they were founded, at some point become de facto US companies. So the developers, they will always be spread over the world and these are the most important people and this is the DNA of the company. So they will always be headquartered basically, this is a global headquarter in a way. But I would say things like marketing, go to market, certain parts of product.

⁓ They usually are at some point headquartered in the US, which I think makes sense ⁓ because it is the defining market with the largest pool of talent in the world when it comes to basically everything digital. I would say engineering wise, and that’s also back to the point that for whatever funny reason, most companies in the e-com space were founded by Germans. I engineering wise, I think that’s totally fine to have it outside of the US because I think there are great engineers everywhere in the world.

Haley Boehning (31:17)
it’s paid.

Tarek (31:33)
And I would say Germany has a good pool of engineers being very knowledgeable about commerce software. That’s why hybris here, demandware, commerce tools, Spriker, Shopify, a big community of Germans. So the engineering part, I think it’s fine to keep it in Germany slash the world, but other parts have to be in the US to also be successful in the US. So I think a mistake that some companies did in the past, also spoken to a lot of founders actually.

Expanding to the US was basically trying to do it from Europe. That doesn’t work I mean you have to if you want to succeed in the US you have to be in the US Yeah, I think that’s and you fall for some parts of your business have to be also kind of headquartered in the US I think that’s very important

Haley Boehning (32:16)
So it sounds like you learned from others mistakes or missteps perhaps as you were planning your expansion into the US. What have you learned? What surprised you? What is this expansion of the company right now teaching you?

Tarek (32:31)
mean, we are very early in our expansion. So we had the plans already 2024, but then we’ve merged with another e-com company in Europe called Zalando. It’s the largest e-commerce player in Europe being also publicly listed. So this whole merger took a year or so. So this was basically a bit of a pausing point in our US expansion. But I mean, that we seriously basically started.

Yeah, go-to-market efforts, would say, was 2025. So we are fairly new to the market, but already have really good wins.

Haley Boehning (33:10)
So you talked about creating impact with the business.

And you’ve already talked about the impact that you’ve been able to have on your customers. So first, the consumer in Europe with About You and how you’ve been able to improve that experience and digitize the experience of being curious and finding and exploring and discovering things. You talked about how you were improving the day-to-day lives of your customers with scale, creating a UX that solves all of their problems and makes it

much easier for both the developers and the business side of the business to use your product and get the results that you’re offering. ⁓ But I wonder when you think about impact for the business, is your vision for the greater impact that scale as a business or about you can have?

Tarek (34:05)
I mean, generally we want to power as much of lifestyle e-commerce worldwide as possible. And parts of it we are powering through our own front end, being about you. ⁓ But the larger part will be powered through scale. Because about you is only European scale as worldwide. And obviously with scale you can scale much faster than with just one front end. ⁓ yeah, mean, our vision is to really build

or to really make the e-commerce experience for the end consumer more fun, more entertaining, more sticky, more personalized and better overall. Because the reality is that today the majority of money is spent offline. ⁓ people make a big effort to go to an offline store. They drive long hours.

Yeah, and we believe this is also due to the fact that the online experience is not how it should be. We believe technology actually would enable a better customer experience online than you find in most online stores today. Because online e-commerce is very complex. mean, that’s the thing that I think most ZAS-only companies get wrong. It’s like…

E-commerce companies struggle with a lot of things. It’s not only building a great customer experience. It’s the supply chain. It’s the order management system. Especially, that’s why we are focused on this complexity, is especially if you are complex. We call it the multi-dimensions. If you are running multiple countries, maybe you want to connect online and offline. If you are running multi-categories, so you’re selling products from different categories, for example. ⁓ Maybe you’re selling beyond your own DTC also on Amazon Marketplace, on TikTok Shop.

Now these are multi-dimensions that bring a lot of complexity. Maybe you’re running multiple warehouses. Maybe you are, if you’re a retailer, maybe you are having your own own buy plus marketplace. If you’re a brand, maybe you’re selling on your own DTC plus on marketplaces. So there’s so much complexity to handle. that usually customer experience is just one of many things that a company tries to solve. And, that’s the re and often the backlog of

things you want to do is so huge that you really are not able to actually innovate in your front end and innovate on the customer experience and kind of online experience and purchasing experience. our goal is really to basically help companies to become better in their own online shop experience to ultimately help basically

deliver the end consumer a better shopping experience than they find today. And by this basically deliver also on the goals that our business customers have. So it’s basically growing and becoming more profitable. yeah, especially the profitability is something that often basically multi-gen retailers, so that if companies are online and offline, finally, they are often struggling more on getting the online part profitable than the offline part, which also speaks for them not really being able to kind of

to the complexity they are finding online.

Haley Boehning (37:29)
It’s interesting. Last week, ⁓ we spoke with Tim Baxter, who’s launching ⁓ a physical retail platform. And he spoke of some of the same things you did, that customer experience, the human experience of shopping and buying and trying to bring that back and use kind of similar language to you in what was lost and what’s not there. ⁓ So am I hearing?

As you’re thinking about the mission or kind of the higher purpose of your work is to bring some of that experience back, the ability for that customer experience to ⁓ be better and more human.

Tarek (38:12)
Yeah, I mean, it won’t be more human in the sense of you are having a human but I mean the emotion you feel when buying offline is a positive one usually you enjoy taking a shopping straw and you go out of the offline store with a positive experience and a positive emotion. Now usually that is not the case for most online shops here. So they are just these digitized warehouses like the Amazon case here. And now I don’t think copying what works offline is the recipe to become successful online. So you have to really

think how can I build a great customer experience online at the end of the day without the ability that people can touch it and without the ability of them talking to a human because these are the two factors you don’t have online. But I think you have a lot of things online that you on the other hand don’t have offline. Obviously it starts with a huge selection. can never build such a big store. But I mean, that’s just one thing. The other thing is personalization, for example. Now, if I enter the offline store and you enter the offline store, we’re entering the same offline store.

That’s not necessary online. Online you can personalize things. Now that is also, for example, personalization is something that is in our DNA since foundation. That’s why about you is called about you. Because if I log in on about you, the logo changes to about Tarek, which is a visible sign of personalization, really saying, hey, look, we don’t have one version of about you, but we actually have 60 million versions of about you reflecting our 60 million customers.

Now personalization is something offline can never do. Now we should use the technologies online to personalize to the user because it’s a huge advantage we have against offline. Now that’s one thing. Second thing is that we can play with content. Now offline you can just show the product. Online you can show the product in a context. In fashion for example, you can show occasions, can show outfits, you can show styling ideas of that product.

You can show with what it could match. all of these things personalized. You can be a bit of a fashion magazine in a way as well, not only showing products. So you can go so way beyond only showing products online. Again, all of these things can’t be done offline. Now with AI, you can have a conversational experience.

that goes beyond anything you find offline because first of all, usually you don’t find any humans in the offline store. And secondly, they’re obviously not as knowledgeable as an AI. So if you ask an AI, hey, I’m invited to a wedding in August in Italy and the wedding theme is boho chic. Now the AI will understand all of that. It will understand what boho means. It knows me and then it can make

personalized recommendations based on the ask I have. This is not possible offline. Plus the selection that you would find in an offline store is so much smaller. the selection in which the AI can choose off is much larger online. And there is an AI that understands Italy, August, Boho chic and knows me better than any human can do. mean, probably my wife knows me better, like barely any shopping.

employee can know me better than the AI knows based on my customer customer history. this is three examples. I could go on with live shopping and you know, whatever many other things ⁓ size and fit virtual try ons kind of bringing social elements to e-commerce world. Like all of these things I think at the end of the day result in customers enjoying online shopping and

getting to the right product faster and better than they would find offline. And I think that is what ultimately customers are looking for is basically a fun, inspiring, personalized shopping experience because of this you can build more, thanks to technology, much more online than you can ever build

And AI will certainly have some impact offline, but it’s, think, 100 % sure that the impact online is much greater than the impact offline.

And AI is a whole new game changer, would say, in what’s possible

in terms of online experiences.

Haley Boehning (42:27)
Right. So this, when you think about your retail customers who are looking to implement scale, bring scale in, what does this make possible for them that ⁓ might not have been possible before?

Tarek (42:43)
Yeah, I mean, first of all, it’s a backend technology that comes with the front end boilerplate. it is what you make out of it. So we are depending on a customer that has some sort of idea what they want to present online and a ⁓ team that can also drive this. it requires a

bit of resources on the customer side, which is not a problem because we are talking to enterprise customers. So that’s usually, they always have teams here. And then it’s really what they make and want out of it. So our customers usually pick two or three battlefields where they say, here, we really want to make a difference.

then we usually take care of the rest with out of the box functionalities and they can then really differentiate on the two or three things based on our technology on top of our technology, but also enhancing these things to their own business needs, ⁓ tailored to their own and consumers. And that can then be different things. But ultimately our technology enables them to move fast with whatever they want ⁓ because it is composable. So it means we deliver a full

feature set and a full suite of features but composable means they don’t have to use our features but they can which means if they have if they say i want to be really differentiated in x then they don’t use x from us but build it themselves or maybe use another vendor it’s also fine for x so this composability gives them flexibility to customize but the

The fact that we are coming as a suite means you don’t need 100 vendors. But we come actually with a huge breadth of features that they can use out of the box but don’t have to use out of the box in a modern architecture that their developers can really onboard fast, which means they invest very little in maintenance and legacy and can really focus on innovation and differentiation.

Haley Boehning (45:00)
So the retailer customers that you have are focusing on what they do best. You’re focusing on what you do best. So if this enables them to scale in the way that you you envision and it enables your business to scale scale to scale, no pun intended. What ⁓ what do you think? You know, if that all works the way that you’re expecting it to over the next five years, what does that tell the industry? Does that give us some insights or lessons about how retail can operate?

and what we’ll be able to build.

Tarek (45:34)
mean, what it tells the SaaS industry and I would say Shopify is also an example first of all is that being specialized on something, it’s not 100 % sure you will build something that’s better, but you have a higher chance of building something that’s better. Shopify, I love Shopify because they are specialized in building e-comm software for SMBs that then basically also come out of the box with a of things in the modern technology stack and that they don’t, it doesn’t require

that doesn’t require tech knowledge in a way. At the same time also, think the limitation. So I think if you are simple, it’s a perfect system. But once you have more of the complexity layers, usually we see companies migrating away or not even considering Shopify. But what I like about Shopify is the clear focus on e-commerce SMB.

our focus is e-commerce, enterprise complex lifestyle. And I would say, and I see this in more and more fields that specialized solutions beat generalized solutions. And would say our success and the success of many other SaaS companies ⁓ shows that I think specialized solutions, mission critical solutions specialized usually work

That to me at least is a bit of a take of the last year’s alignment of interest. mean, show me the incentive, I show you the result. We are taking a take rate of the revenue of our customers and therefore we are fully aligned. If they grow, we grow. If they don’t grow, we don’t grow. I would love to switch it to a profit-based model. It’s obviously not possible because most it’s very complex to calculate profitability. But at the end of the day, I think you have to be super aligned with your vendor.

⁓ And then it drives results. Yeah. And I think the business model is as aligned as it can be ⁓ building on top line. Would be better to build on bottom line, just not possible, unfortunately. ⁓ So I think that also helps. ⁓ And it’s something that I think more more ZAS companies are also trying to, yeah, also incorporate in their businesses of saying, let’s align.

⁓ on business goals here. Yeah.

Haley Boehning (48:05)
⁓ Tarek, what’s something that you wish more people knew about the scale business and what you hope you’ll be able to do here with your new expansion into the US?

Tarek (48:18)
I mean, I wish more people know about us. feel ⁓ that that is positively changing over the last years. I can see this as we are getting invited to the RFPs we want to be invited to. But at the same time, I also see that every now and then other vendors are announcing customers that we haven’t seen in the RFP process. So that for me is an indication of

them not being aware of us, which is no surprise because we are so new to the US market. I haven’t expected anything else, but I wish for a scale ⁓ making a name in the enterprise e-com industry and for companies considering replatforming to another e-com solution to invite us to the RFP and take a look on our product.

and have a conversation with us. I think we always love to talk to eComplayers. mean, it’s a bit nerdy, but eCommerce is our passion. So even if someone doesn’t choose us, we really like to talk about eCommerce and exchange ideas and be very open. I’m a big believer in open and not hiding things that work. So even if someone chooses for another vendor, or even if someone

is on another vendor not considering to replatform. We love the exchange comparing nodes, what works. We are very open and sharing what has worked for us. ⁓ Technologically, obviously, we are never talking about our customers, customer secrets, but for us, a scale about you. So yeah, I hope we will be part of the e-commerce industry in every country, but most importantly for us, ⁓ in the next years.

Haley Boehning (50:17)
Great. Well, thank you, Tarek, so much for spending time with us today and sharing your story. We’ll be following your ⁓ progression here in the US, and we look forward to seeing what’s next for scale.

Tarek (50:30)
Thank you very much. Thanks for having me here.