Powering the Future of Commerce: A Discussion on MACH® and Composable Commerce

Jun 7, 2023 1:30 PM2:30 PM EST

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Key Discussion Takeaways:

As eCommerce capabilities become increasingly sophisticated, organizations are considering various composable and headless solutions, including MACH (microservices-based, API-first, cloud-native, and headless), to streamline operations. While 85% of businesses plan to adopt headless commerce within the next two years, transitioning out of a legacy platform is time-consuming. With so many vendors and other factors to evaluate, how can you determine the best path forward?

MACH delivers flexibility and speed by allowing brands to harness best-in-class software to build accessible and personalized consumer experiences. When assessing MACH solutions, you must have a comprehensive understanding of its capabilities, including API, to select leading vendors. It’s often beneficial to take an incremental approach by exchanging various APIs from legacy systems to MACH software.

In this virtual event, Aaron Conant hosts Kelly Goetsch, Chief Strategy Officer at commercetools, who shares key considerations for transitioning to MACH and composable commerce solutions. Kelly explains the role of APIs in MACH architecture, how MACH promotes agility and speed, and the common barriers to adopting MACH. 

Here’s a glimpse of what you’ll learn:

  • What are MACH and composable commerce?
  • The role of APIs in MACH architecture 
  • Educating executive teams on headless and composable commerce
  • How vendors leverage MACH for speed and agility
  • Foundational considerations for evaluating MACH vendors
  • The barriers to MACH adoption 
  • Top tips for transitioning to MACH solutions
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Event Partners


commercetools is a cloud-based headless commerce platform that provides APIs to power e-commerce sales and similar functions for large businesses.

Connect with commercetools

Guest Speaker

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Kelly Goetsch LinkedIn

Chief Product Officer at commercetools

Kelly Goetsch is the Chief Strategy Officer at commercetools, the world’s leading commerce solution built on modern MACH (microservices-driven, API-first, cloud-native, and headless) principles. He is also the Chairman of the MACH Alliance, which helps organizations navigate the complex modern technology landscape. As the author of four books and the owner of three patents, Kelly focuses on promoting MACH architecture as the foundation for the future. 

Event Moderator

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Kelly Goetsch LinkedIn

Chief Product Officer at commercetools

Kelly Goetsch is the Chief Strategy Officer at commercetools, the world’s leading commerce solution built on modern MACH (microservices-driven, API-first, cloud-native, and headless) principles. He is also the Chairman of the MACH Alliance, which helps organizations navigate the complex modern technology landscape. As the author of four books and the owner of three patents, Kelly focuses on promoting MACH architecture as the foundation for the future. 

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Aaron Conant

Co-Founder & Managing Director at BWG Connect

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution.

Co-Founder & Managing Director Aaron Conant runs the group & connects with dozens of brand executives every week, always for free.

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Discussion Transcription

Aaron Conant 0:18

Happy Wednesday, everybody. My name is Aaron Conant, I'm the co founder Managing Director at BWG Connect are giant networking knowledge sharing group 1000s of brands. And we do exactly that we network and knowledge share together to stay on top of newest trends, strategies, pain points, whatever it might be the shaping the digital landscape, I try to talk to 20 to 30 brands a week startups to Fortune 100 to in pretty much every vertical just to stay on top of what those trends are. And then that's how we get the topics for these educational events here. We're gonna do close to I don't know somewhere between 203 100 virtual events, but we're gonna do right around 100 in-person small format events as well. If you're interested in any of those, we'd love to have you attend. If you're at a tier one city across the US, just let us know. I'd love to have a conversation with you as well just to pick your brain. But as we kind of kick off this topic today, a discussion on marketing composable commerce. Kelly, I was just talking a little bit, you know, in the pre call, chit chat here, around we're at a point now where we can take a breath, take a step back and really evaluate what best in class means and what it looks like. And even a what is composable mean? And so the team over at commercetools, they've been great partners, supporters of brands and the network as well as the network as a whole. And so Kelly Oh, can kick it over to you. If you want to do an intro on yourself and commercetools. That'd be awesome. And then we can kind of jump into the conversation. Sounds good?

Kelly Goetsch 1:42

Sure. Sounds great. So a little background on me. I started my career with ATG, which was the leading commerce platform back in the 90s and 2000s. And I spent my last couple years there as chief architect of ATG for all the Walmart properties. And that was a really good foundational experience doing in the fields, hands on implementations getting woken up. This isn't working that isn't working, racking stacking, cabling servers, like you know all of that that work. And that was a great foundational experience. I then went to Oracle, where as a product manager in their cloud application foundation group, and I lead product management for some Oracle Cloud services back in the day. And then my last year there I lead microservices for Oracle. And I really wanted to get back into the commerce space. I'd been there for five years, and I, I actually Googled commerce, cloud and microservices, and I found the small German company that I'd never heard of called commercetools with a poorly translated English website. And I joined as the first CPO, and I was, I think I was employee number 75, somewhere in that neighborhood. And third employee in the US, and I lead products, development ops, I've done a little bit of everything at commercetools. And in my past year at commercetools I've been now here for seven years, I lead our Strategy as a company as Chief Strategy Officer. So do a lot of writing, speaking, lot of m&a type work, working with our investors. You know, do we build or buy this piece of functionality? manage a lot of our partner relationships, I do a little bit everything at commercetools. It's a it's an odd role.

Aaron Conant 3:38

Awesome. Well, thanks for jumping on today. A quick note for everybody, if you have questions, drop into the chat or drop them into q&a. And we'll get them answered real time. And I've got kind of a question bank here from brands that I've been talking to around this topic as a whole, but feel free to shoot any that you have as well. The one I want to kind of kick off with is, you know, when we think about Mark and composable commerce, like how do you define that I think you guys are pretty much the leaders in this space at this point in time. And we'd love to hear your thoughts as people I figured we taken a lot of notes, actually, there probably be more notes than questions coming in this space. Because people are they understand that there's an opportunity here, they understand there's a benefit, but, you know, trying to understanding, you know, get a hard understanding of what that means is something they're trying to tackle. So I highly define Mark, how do you find composable defining composable commerce? And then we can maybe talk about like, how do they blend together? What does it mean? We'd love to hear your thoughts today.

Kelly Goetsch 4:40

Sure. So we let's go back in time, a little bit to 2013. And back then, the commerce platforms had the head included. And the head was often in or it was interdependent. It was also inseparable from the back end code.

Aaron Conant 4:59

And when you saw Going out the head, you mean the Interact layer with the? What's that? Yeah,

Kelly Goetsch 5:04

like the website, basically. Because back then, you know, there weren't a lot of apps really out there. And if you go back to 2007 2007, was really the first time we had real, you know, iPhones, real smartphones capable of running an app. And it wasn't until, you know, 1112 13, that we started to see mass adoption of apps out there. And that's the first time that a lot of these brands needed a second experience. And I won't name and shame the client I was working for but a very, very giant multinational retailer. They were running ATG, and they had a flagship.com. And when they needed mobile web app, they literally and I'm not, I'm not joking here, they took 6 million lines of code and copied it. Right, like that's how it was done. So we have duplicate functionality, because there was no concept back then of, we're going to have one back end code base and have multiple heads had being a website, a mobile app, mobile web app, you know, anything of that sort that just didn't exist. And Dirk, our founder and CEO, and my boss had commercetools invented headless commerce back in 2013. And the big innovation then was, you have a single back end, and you're exposing your data and functionality is really nice, clean, easy to consume API's. And now the heads don't matter, they're almost disposable, because you can just simply spin up some front end, you can go to GPT for today and say, write me a react based front end for commercetools, and it will spit out all the code for you to do it. So the heads now are disposable. And a lot of our customers have had all over the place that beheaded in the store in a kiosk type application. They have Android apps, they have iOS apps, they have, you know, big displays, you know, you name it, they've got it. So that's been all pretty new. And in 2018, we had commercetools, invented the acronym MACH, and it stands for microservices, API's, cloud and headless and that acronym really crystallize what we as a company pioneered and what we what we do. And a micro service is a small individually, buildable and deployable app. A is API first. So we as a vendor, start by writing out our API's, and then we write the code behind the scenes. C is cloud native multi tenant SaaS. So that's real software as a service. But delivering in a multi tenant fashion, right? You don't have to call us to say, hey, commercetools, we need a QA environment, right. And finally, the H is headless. And we started using that term. We had partners pick up the term. And that's actually what led me to co found the MACH Alliance, which is the commercial entity around that. So MACH is more of a vendor centric term. It's how we as a vendor, or how a brand out there themselves are building these experiences. They're using microservices, API's, cloud and headless it's very standard these days to build something that way. So that's more of a tech view. And it's more of a how you build this stuff, view. And then composable came along in 2020 2021, give or take, and that was Gartner term, still is trademarked by them. But what it means is you can now as a business user compose and experience from multiple best of breed vendors. So you're composing an experience from commercetools, you're picking a CMS, you're picking a personalization engine, you've probably got your own API's there. Right. But there's a nice clear delineation now of you know, data and functionality from the head and composable is how you compose those experiences. So then,

Aaron Conant 9:01

is this replacing slowly, you know, the Shopify ice the world? Or is that still I mean, that's the other place, right? As people are looking for that delineation, I've got my website, it's up and running. Is this the next evolution? Or is there a clear cut around who should use it and who's not?

Kelly Goetsch 9:19

There's a, there's a dividing line in the market. And but it's pretty fuzzy, though. And, you know, if you're selling a million dollars a year, through Etsy, by all means, just pick Shopify off the shelf or big commerce or something of that sort. Just pick one of those solutions. They work fine, great. And they do have had the support, but you probably don't need headless if you're doing, you know, under let's call it 25 million in online sales. GMV. Right. Now, if you're doing 5 billion, you know, obviously headless is really the only way to go there. And I think the question is where do you draw that line? We had commercetool was about our cutoff is about 50 million in GMV. So anything above that will sell to if we're below that, we're probably not even going to enter into a sales cycle, it's just probably not worth it for either party to do. Because there is complexity with it. It's not a you know, Shopify is great, it gets you off the ground really easy. Same with big commerce find solutions. And you know, if I had a family starting a small business, I'd absolutely tell them to go pick up Shopify and use it. But you know, commercetools is is a very different approach, which is very unopinionated. We have all these cool API's. It's a big toolbox, but we don't dictate to our customers what they should build with those tools that's up to them. In any case,

Aaron Conant 10:43

you know, we brought up multiple times API's, like the roll, cannot walk through like the roll the API's, and then mark them in the MACH architecture as a whole. We'd love to hear.

Kelly Goetsch 10:56

Yeah, it's it's an it's a, it's a nice, clean way of offering up data and functionality. So before then API, there really wasn't that right, you had these things called SOAP web services. But there wasn't a very clean way to say here's a product, right, or here's an Add to Cart function. And what an API does, and API's were only first invented in 2001, roughly, and it was in a PhD dissertation. And they never really got widely used until iPhones came along. And brands started to have to retro actively add API's. So you know, 2009 2010 is when they really started to pick up but it's basically just an HTTP, it's a REST endpoint. And it's, here's a product, here's a, here's a shipping API, where you can enter in your shipping details. You know, here's an API for promotions. But it's a nice clean way that we as a provider, as a vendor, or you as a brand or retailer can say, you know, we're going to have this data and functionality. And that data or functionality might be a loyalty program, it might be promotions, it might be content, personalization, search, anything like that. And you just really clearly demarcate it and say, This is how you call it. This is what the API produces as a response. Right? It's a nice clean separation there between those two layers.

Aaron Conant 12:27

When you think about just a question that comes in is around explaining to executive teams. And this comes up all the time. So great question, which is, how do I explain composable, to an executive team who, you know, has not had any experience in the digital space, which is a lot of larger companies today. Usually, you know, the smaller the startups, you know, they're under 50. People, they really get it right. If even if you popped up in the past 10 years, you're a smaller brand, the larger, more legacy brands and kind of where you're at if you're a 50 million 100 million, a billion executive teams today don't necessarily get it is there like an easy way? But they're asking, Hey, what is headless mean? What is composable? Is there? How do you how do you how you got to run into that all the time would be my guess.

Kelly Goetsch 13:22

Someone. And we do help, and we do offer some guidance. But at the same time, there is also kind of a cut off, you know, if somebody is on Magento, and a third party has done the implementation and runs and operates it for them, and their business is selling, you know, T shirts that they manufacture, and they're not at all in cloud or have anything to do with modern tech, you know, that's probably not a good fit. And we're probably not going to spend our time trying to push that rock uphill. And the market is so big, and it's changing so quickly that, you know, to be honest, we're inundated with, with leads and prospects and folks who are more mature wanting to make that transition. So I think we as a company are pretty good about qualifying. Are you ready yet? Because there are some prerequisites, right, you have to be able to call an API. And if we're at the point of, they don't know what an API is, then we're not a good fit, because API's are all that we do. Right? There has to be some maturity there and recognition and a need of of why they would want something like us. So that's the first thing. And it's pretty easy these days, like the you can go out and use AWS or GCP or Azure. And it's pretty easy to go out and consume data and functionality as an API and start to get used to it. But know if if somebody's not shown an inkling of support down this path, we're probably not going to sell it The other thing I see is there's this. There's a famous security researcher, his name is Eric Graham. And he has a blog that I love to read. And he's, uh, he says what he thinks he's very, you know, you're not going to find this squishy marketing stuff from him. And he said, you know, his whole thing is, is security, right? It's information security. And he has this fantastic blog post about why people are so terrible at security. And it comes down to the people who get promoted at retailers are often merchandisers or their CFOs. Technology is not their core competency. And if I were to ask you, Aaron, like, Okay, I need you to go out and hire five veterinarians and go build a clinic for me. And then I need you to evaluate how you select them. And then I need you to pay them appropriately. Are you gonna have any idea how to hire denarian? No, not what you do, right? It's completely outside of your business, or, you know, somebody had me go out and hire a cardiologist. I don't know how to hire a cardiologist. And the slightest idea, how do you pay somebody like that. And you see the same thing in the corporate world, where you've now got a CFO who's come up through the ranks on the accounting side. And now all of a sudden, they're having to hire a chief digital officer at a retailer, they don't know how to hire a CTO, or anything and spend their days in accounting software, they haven't the slightest idea. And you end up having a lot of people who are promoted or get brought into this role, and don't necessarily understand the technology behind this. So it's, you know, it's, it's hard, it's a hard problem to solve for. And I think, as we mature as an industry, we're gonna get better and better about hiring and promoting digitally natives, because the people who are getting promoted in the C suites now are increasingly those who have digital competency. Right

Aaron Conant 16:56

now, I like this little analogy I use, it's the, you know, when the when the president or CEO meets the young kid on the airplane, right, and they're enamored with them, because they bring up all these, you know, acronyms that they're using. And, you know, because the CEO on the digital exam would score, like a 10% in this kid would only score like a 40%. But it's four times more, though, they immediately thinks that the person is, you know, you know, the epitome of all things digital, but they still only score 40% of the exam, in when these hirings or they they hear terms, that then they come back, and they're trying to push through the organization. And then, you know, a lot of people I'm talking to you like that scenario is real. It happens all the time, like, hey, how do I even know I heard composable? Commerce, I need to at least evaluate it and push it through headless should I be doing it or not? And but it sounds like that's a conversation for like your team where you're going to clearly tell them yes or no? Right? Like this is right for you, or this is not right for you. And to be candid, I think that's really what people want. But if you're an actual option, people want to know it. But if you're not, they don't want to go, Well, number one, the CEO asked him to do it. So they can't not do it. Right, unless they bring somebody in from the outside that says, hey, you're not the right fit. And here's 15 reasons why. And then they can just at least go on with their day. But you know, in that in that same phrase, if they want, if they can, and it is right, they want to pull the trigger on it. They know,

Kelly Goetsch 18:27

it makes perfect sense. And the barrier to adopting I list is coming down by the day. As people learn more about it as people play with API's more. As leadership changes over as a technology vendors aged out, and a lot of the big legacies are really showing their age these days. And they don't want to pay $3 million to do a non functional upgrade. Yeah. Like the world has moved past that. And you do enough of those upgrades. And pretty quick, you're gonna be looking at version lists, alternatives like, like a commercetools or other MACHk vendors.

Aaron Conant 19:00

Right. And you can control your own destiny. I guess that's the other thing. If you're locked into a platform, it's Hey, what are they allowed to be plugged into it as opposed to you creating your own? But like, what do you what is the like the sort of like a top reason? Besides, you know, when you get into the flexibility side, is it personalization? Right? Is it payment flexibility? What do you see people winning with the most?

Kelly Goetsch 19:25

The speed, that's the number one, Issue three and four reasons why people adopt us? And it's because if you have a big, monolithic application, and all of the legacy products out there are monolithic by definition, you you end up in this monthly, sometimes quarterly release cycle. So anything that needs to go to production, gets queued up with everything else. Right and you've now got 100 changes sitting there and you have to retest your entire codebase usually by hand. You also have to test your Finance as well, and make sure nothing broke. And then you say, Okay, on a Sunday night, you know, at 1am in the morning, we're going to do this deployment to production. And you get a bunch of people in a conference room or virtual room, you order some pizza, and you hit the button, and you hope everything goes okay. Right? That was kind of the old school approach. And you know, I gained plenty of weight in that pizza in those rooms back then, you know, like, but that was the world we lived in. And, but that doesn't really work. Well, when you've got an Amazon out there. I don't know what the status today but in 2017 amazon.com, was released to production more than one time every second. And it's because every time you check in some code that kicks off this automated testing and approval process. And it's modern CI, CD tooling. And when you're running a single, these digital natives rollout features instantly, and it's taking you once a quarter to do that stuff. And you're basically treading water, that puts you at a pretty big disadvantage. So Mach, and the whole reason we created the acronym Mach was speed, Mach Speed fast. And you can get a future out there by lunchtime. And you can start seeing real live examples of how it's being used, you can start collecting data, you can a be tested, you can iterate that feature over your afternoon, your afternoon, and by dinnertime, you can have that feature out there and generating revenue. So that's, that's the power of this stuff, right? Is being able to change stuff quickly. And when you break things into little microservices behind the scenes, now you've got teams that are each able to work on their own functionality in parallel and just hit the Deploy button and release their microservice independently. But that's modern tech,

Aaron Conant 21:49

we're talking about like on this MACH side, and composable where do you find the vendors? Right, because a ton of them are developing stuff on the back end at Shopify, you know, the App Store is awesome, right? You just go in there, and you immediately plug it anything go? This is the next level, right? Which is, then is there a curated group

Unknown Speaker 22:10


Aaron Conant 22:14

you know, that are already approved within the system? Or are you just going randomly and trying to find people that will fill these gaps for you? My guess is there's a ton but we'd love to hear your thoughts on you know, the payments front the apps, I How do you know maybe it's a CDP with

Kelly Goetsch 22:34

vendors, a class of software that just doesn't matter what what it is behind the scenes. So payments, for example. You know, to be honest, I don't really know or care if the payment vendors using MOQ. Behind the scenes, you might see it in terms of release frequency, you know, versioning, but generally not right, same with like a content delivery network or DNS. And in the MACH lines, we call those enabling services. You know, MongoDB, for example, most popular database out there. But it is not Mach itself because of the nature of the software. But we all use it. What I'm looking for are vendors that are MACH Alliance certified, and there's a very rigorous process that these vendors go through. And those are the ones think of commerce content search, personalization, CRM CDP, you know, all of those types of products, and they're a really does matter behind the scenes, because we as vendors are therefore able to innovate much more quickly. we're iterating. We're version lists. So we're adding more and more functionality all the time without customers having to uptake those features if they don't want to. So for all those reasons, you know, we're in a pretty good spot to do some innovation that I think our legacies aren't able to do. And in the market, we see vendors fall into one of three categories. There's the unabashedly legacy and don't care. Right? And think of your typical your payroll provider, HR, finance stuff. You know, think of your timekeeping system for your employees when they nobody cares if that's mark, right? That stuff doesn't ever change. It's, it's low cost. It's very commoditized. Who cares, right? I don't care if my if my my, my payroll system is MACH based, I just want my my deposit every two weeks or whatever it is, right? Fine. Then there's the category of vendors that are claiming to be MACH but cannot be. And you can't retroactively add API's and call yourself MACH. You can't be hosted. And then wrap some marketing around it and all of a sudden, you're magically cloud like and that's not the cycle of software. The cycle of software is as you build a product, you get hundreds if not 1000s of customers at Stop that products. And the good thing and the bad thing is okay, sure you you've got 1000 customers. Now the bad thing is you can't really change your product anymore. Because anytime you change your product, fundamentally, all of those 1000 customers are not going to be in the market now for your competitors to pick off, and you're forcing them to each reimplement your products, and that nobody wants to do that. And also, from a vendor standpoint, an established existing customer paying a legacy vendor, the legacy vendors get upwards of 90% profit margin off of all the maintenance that they that they pay. So somebody like an Oracle and SAP Salesforce, and those vendors are making the vast, vast majority of all their revenue. And they're making it at 90 plus percent margin based on the maintenance payments of all of their 1000s of customers. So the very last thing they ever wants to do is fundamentally introduce a new product. Because now you have to resell this new product to all of your existing customers, you're gonna screw up all the commercial terms, because many of them have signed five year unlimited license agreements, right, and they have long term contractual obligations. So you're gonna give the product away for free now to those customers. And then the other thing is the implementation in nobody wants to re implement a product that they already own. So for all those reasons, the vendors are heavily disincentivized from actually making changes. What they do say, though, is they go out and do stupid press releases that say, Hey, we're microservices now, or, you know, we're API first, even though it's impossible to be API first, because you would have had to have done that back in 97, when these platforms were first built. So they're incentivized to, we used to use the term cloud wash. But it's true, right? You're incentivized as a vendor in that middle category just to go out and bluff your way through the market and pretend and give people enough cover that they're hopefully going to hold their nose and buy your product anyway. But

Aaron Conant 27:02

it works right now. Because, you know, people have been so inundated on the brand side for so long, that they would every 150 Other things to do to go back and truly do a deep dive and understand what API first means? No, they just can't. So they're believing it right? So I think it's going to work for probably another three to four years. If and then people are really going to start sniffing it out.

Kelly Goetsch 27:29

What's interesting is when each of these legacy vendors as they've been discontinuing their product, and we're now at two of the big ones that are largely discontinued, we see a massive surge in interest from all of them, because like Oracle killed off ATG, right, that was their cash cow product forever. And they had 1000s of customers on it. And they just said, Nope, we're, we're done, right? Like, we're not going to do this product anymore. Because that's what happens to software over time. And we got a huge influx close a lot of lot of good, good big brands there and gone live with and we made the mapping

Aaron Conant 28:09

where two more players in this couple things come to mind. One is if if gardeners out there promoting this, right, and a lot of people turn to them. And you know, there's all these key benefits, why aren't? Why isn't there more buzz? Why aren't more people talking about it? And then the other side is why aren't there more vendors out there? This is what is befuddling me Is it is it because of what you're saying the big the ones that are big enough and willing to handle it are focused on other things.

Kelly Goetsch 28:41

They so there is a lot of buzz and the vast majority. I think Gartner put out a study, it's something like 85 or 86% plan to do are on headless are planning to do headless within the next 24 months. So the adoption is there. The interest is there. It's it's a couple of factors, it takes a long time for an organization to get rid of their legacy platform. So you know, the average lifespan of these things is about 12 years a lot of organizations bought 56789 10 years ago, well, you know, there's a cycle there. Right. And we've caught quite a few in the you know who were in the 1214 15 years of that but you know there's a lot of organizations out there a lot of commerce platforms, and over time in a chunk of that market goes up for grabs and we we grab way more than our outside share of what we should be getting. Second, there are a ton of vendors out there. The problem though is not the tech so we we as a as a company are offering the functionality we offer is pretty boring. And I mean that in a positive way. We do shopping cart really, really well. Promotions pricing inventory product catalog, checkout and shopping cart, right? Like those are things that we've had commerce platforms on the market since 2000. Since sorry, 1994. If you think about it, so we're basically 30 years after the stuff was all invented, what we do at commercetools is we execute really, really well. We also benefit from being the only vendor in our category at scale. And that's what matters. And if you look at the cloud vendors, Google has a relationship with to cloud vendors, awesome at the top end, Shopify and the bottom end Contentful Contentful, we are their top enterprise partner, content stack, right. And we then at commercetools, we have relationships with sure we have, you know, relationships with other search vendors. But you know, the vast majority of our business goes to a golian constructor, the vast majority of our CMS business goes to content stack Contentful, bloomreach, it's a little bit too. But I guess what I'm saying is, is across the board, you end up with a couple vendors at scale in any one category. You know, Deloitte can't have 50 commerce practices, they have three, right? And all the all of these vendors have the same handful of partnerships, because you end up in this flywheel and we are the vendor at scale, we just crossed the 100 million arr. And we could realistically double that by the end of this year, just based on how well we're growing, you know, you end up with this flywheel effect of because we're big, we get all the big GSI partnerships. And because we have the GSI partnerships, we then get the cloud partnerships, which we already have, you know, and then we get an analyst reports. And we're you know, we get an outsized role there, because we're getting so much of the new business. So you end up with this flywheel effect. And what you end up with is, you know, good parallel here is the cloud market. Sure, there are 1000 different cloud providers. You know, Linode is a perfectly good cloud. But who gets all the market share, AWS gets 50% of the market share, and nobody gets fired for bringing on AWS. Right, right. And then you've got GCP, and then you've got Azure fighting over that last 50%. And there's a long tail there. But that long tail is probably 5% of the market. And you know, the lines of the world duking it out over the last 5%. And that's what we see in the commerce space. It's always been a couple big vendors at scale. It's been Salesforce Hybris. With SAP, it's been Oracle ATG, you end up with a couple of those big ones at scale. We are this generation's only vendor at scale today, and I'm still waiting. I'm a little paranoid to be honest about who's coming up behind us, but it's awfully hard and we've got the moat, we've got the 30 different security certs, we've we've got all that stuff in place and executing volume.

Aaron Conant 32:56

Yeah, I don't see anybody I just realistically I don't. And I, I'm talking to 1000 brands a year, right, and hosting, you know, 100 dinners in all in the digital space. And obviously, this comes up quite a bit at Amazon, obviously, as well, but completely different ballpark there. So what what is the biggest inhibitor of of more people rolling this out? What's in many companies? What are the barriers that are out there?

Kelly Goetsch 33:26

There's, there's another factor out there that I see a lot, especially in retail, and it's it's it's folks are incentivized to do the same thing that they've done year after year, but usually a little bit better. And there is a risk to to doing big transformational changes, right? Anytime you blow up your entire stack and re re platform. And look, it's not in, it's not done overnight. You know, it's done over the course of nine months or a year. But if you touch it, and it doesn't work, you get fired for it. Right. And what most organizations do is organizations reward not risk takers, because risk takers get fired. If the bet doesn't go, well. Organizations have this inertia about them where they promote and pay people to do the same thing they've done year after year, but a little bit better. So if your hybrid implementation is up, it's running, it's functional. And your upgrade cost goes from 2.8 million to 2.4 million. Right? Weirdly, perversely, you get incentivized, because you can say look, I save the company money, right? That's great. Look how well I'm doing. And look at my budget because you've budgeted for this. It's like okay, well, you know, we've saved the company, some some cash great. And, you know, maybe implementing a B testing tool and you get a 3% better conversion rate, right, whatever, right, but you're incentivized largely to chip away at this and not really make fundamental changes people who, you know, there's an old Chinese proverb, The tall, what is it the tallest flower gets cut first? Right? And it there's truth in that right if if you raise your hand and say, You know what this, this 20 year old commerce platform that we've used, has served us well, but we need to spend some money and some time and reinvent ourselves as a company and do this whole MACH thing. You know, and it's, especially if you get buy in to do it, and it doesn't go well, for whatever reason. You're the one on the chopping block, you're gonna get canned for that. You got to move your family and move your kids schools because you screwed up. So

Aaron Conant 35:43

I also see, you know, the times where just because I came from corporate America, the great idea gets presented, and then it's turned down, kicked over to a BCG, right, who then puts it on their slide deck and brought back in. And now if anything goes wrong, it's BCGs fault, not the company's fault, right? Not the person whose idea it was this this, again, weirdly perverse

Kelly Goetsch 36:10

way of really crystallized the business model of these consulting firms. Yes, yes. Yes.

Aaron Conant 36:17

They're giant cya. Organizations. That's how I view them. Controversial maybe I don't know. But happens literally all the time.

Kelly Goetsch 36:30

It's true. It's absolutely true.

Aaron Conant 36:33

So like challenges if people are thinking about doing this, number one, I'd say a reach out to Kelly in the team commercetools that have a candid conversation, but they're like the standard challenges people have to, like, shouldn't be aware of and maybe they're red flags to say I shouldn't even address this or

Kelly Goetsch 36:51

before to What do you mean by the challenges, like things internally that would prohibit a MACH adoption?

Aaron Conant 36:58

Yeah, just even like, if you're going to do a legacy platform evaluation, is it worth it to go? Because a lot of times, I think in that space, it is, if you see you want to do it, you have to realize internally, everybody you have to convince, but then externally, all the different partners that you have to line up to help execute it. Right? Because it's not something you just like you're saying it doesn't happen in a week. Right? It happens over time. Are there like major barriers on either side, where Hey, make sure you've got this group of people in place, and make sure you don't forget about bringing in finance or regulatory or shipping or whatever it might be? I don't know, maybe I'm just making these other barriers,

Kelly Goetsch 37:40

fair. The first thing is Yes, always happy to take a call. But so thank you for the recommendation. But the new way of software is, if somebody wants to try it out, they should be able to go to the vendors website and get a free production self service trial. And since day one, anybody's been able to go to commercetools.com. And they can sign up for a full production account. And they get unlimited usage of our products for 30 days. And our documentation is public. And we've got some great starter reference stores. But that's that's the right way to do it. You shouldn't have to talk to somebody in our sales team to get a demo of the product. Right? It should be so clear and self evident what we do and what we don't do. And we actually have a lot of customers who come to us and say, Well, how are we going to get oversold?

Aaron Conant 38:31

If we're not talking to somebody? Yes, exactly.

Kelly Goetsch 38:35

They'll they'll do this the trial themselves, they'll build a POC, they will select US, and then they'll come to us and say, Hey, we need to figure out how we pay for this. And then our sales team will take over that. But that's that's the right model for sales. Internally, there needs to be there needs to be consensus from the board down, that this is not a Website in a Box type of approach. And again, the old school approach was I gotta make a vendor X. I write them on a giant check. I have a CEO to CEO call once a quarter. Right? The rep on the account takes my team out to a nice steak dinner once a quarter like everything's fine. There needs to be a realization that MOQ is not that. Well, actually, we'll we'll happily take you out for dinners here and there. But that's not the that's not the point of this, right? The point is, is you're going out and you're buying and building an ecosystem of best of breed technologies for your business case. So look at what we do, right, and we do a relatively narrow band of things and we do them really, really well. You're gonna have to go and buy a third party content management system. That's not something we do. Same with order management. Right? And you're going to have to come up with a plan of gradually incrementally swapping out different API as its build and buy approach, versus you calling up your your neighborhood Adobe rep and saying, Hey, I'd like Magento, please, and install it for me. Like that world just doesn't exist in the MACH, right? It's very much an evolution of, of API's, you're building a catalog of these things, and then you're incrementally adopting them over time. Yeah, so question. I mean,

Aaron Conant 40:26

what I've done with BWG Connect is put together. I mean, we've got 8500 brands now, I think maybe I think it's, it's between there. And I think we stopped counting at 500. And we all network and knowledge share together to stay on top of newest trends, I kind of serve as a focal point, we've got a few other moderators, and then we're doing events around I mean, we're feeling like, again, I feel 20 to 30 a week helping people with, Okay, well, you're in this category, this is what you're looking for. These are the top vendors. Are you doing that on the the MACH side, because that would be very, very meaningful, which is because it is so new. And because people are trying to understand it and try to do research on your own. And then you're talking to, you know, these vendors that are out there? Well, of course, there's a perfect fit for you just ask them, like groups of people that are networking and getting together would be fantastic. I think,

Kelly Goetsch 41:23

for sure we'd never want to compete with you. Well, well, you,

Aaron Conant 41:26

there's so much to learn. I'm just saying like I can see for the brands in your network, or even brands that I have that are looking to learn more, if you're hosting events, I would just, you know, send them your way to connect that's, you know, at one of these events where they can talk with other people and say, What did you use for CDP, right? What did you use for search? You know, how did you handle payment? How did you do all this stuff within the function of poseable, headless, MACH commerce

Kelly Goetsch 41:53

as a whole, we do quite a bit of that actually, a lot. So it's a couple of things. First, we have a lot of events ourselves. Usually around the worlds three, four dinners, or some other events, we have a big flagship conference coming up next week in Amsterdam. And that's, that's amazing. It's all brand focused. We keep the vendors out largely. And then we also do webinars. So yesterday, I pulled together a CEO, only panel with the CEOs of our LMS vendors in the MACH Alliance, and we have six of them. And they talked about MACH LMS, and what's happening in the LMS space these days. And then we do a lot of other educational sessions webinars. And then finally, we have an ambassador program, which is 35. senior folks on the brand side a little bit more technical, but you know, we've CTOs of a lot of retailers, those types of folks, and they then go out and meet with potential MACH converts. You know, something of that sort where, you know, hey, I'm Brand X, I'm interested in MACH, you know, we're in similar but different categories. Could you please spend half hour and educate me on this? And those calls happen all the time?

Aaron Conant 43:08

Yeah, no, awesome. Yeah. What? What am I going to miss here? What do I What are the pitfalls? What are the the, you know, the gold nuggets that you found that I should pour into month three, rather than month six. Now that is, that is awesome. Are there other things like, come up routinely that haven't come up today? Like topics that you get asked regularly? Like a top KPIs, maybe so you said website speed? Is it increased personalization

Kelly Goetsch 43:38

is it one, one is how the transformation happens. And I think there's this, there's a, there's an old school way of thinking where you go from vendor a vendor B. And to make the switch, you flip the light switch one night, and everything magically switches over. And that's how it used to be. It does not work that way anymore at all. Instead, our customers are saying, I'm going to swap out one of my product detail page API's from a legacy vendor to commercetools. And then the next week, they'll switch over the second API and the third and they'll just keep chipping away at that over time. Until they figure out what they what they want, right until they figure out how it works. We also have a lot of customers who will pick a small brand that nobody it's the what would I not get fired for doing if I screw it up brand. And you know, I won't name country names, but in every every company has their flagship.com they also have subsidiaries and little countries around the world. And what you want there is to find a brand that if you completely screw it up, you're not going to get fired for it and it's not going to generate a disclosure dinner. In this call, okay, for a line of business of some sort, you know, maybe it's an outlet site or you know, something of that sort, but you want to do an end to end brand, top to bottom. And that's another good way of doing it as well. And these implementations, you know, overall can go, I don't know, two months, all the way up to two years, right? It depends how fast companies want to go. We're not the gating factor here, right? We have nice, clean API's. They're really well documented and exposed. You call them and hammer them all you want. Right? That's, that's what brands should do with our API's. But how fast do you want to make that adoption is between you and your SI, if you choose to use one, we have commercetools, don't do implementations ourselves, are entirely product focused as a company.

Aaron Conant 45:55

Awesome. Any questions like for me, I've been picking your brain nonstop for like, 15 minutes now. I don't mind throwing it back to you. If you have questions that yeah,

Kelly Goetsch 46:04

um, what do you see as the reasons for folks staying with products that are clearly legacy in many cases discontinued? We see that sometimes they just don't even want to have a discussion.

Aaron Conant 46:18

Yeah. I liken it back to. So if you think pre pandemic, where a lot of eCommerce was just a nice to have for companies. And in that there's probably 1500 people across the US that really understand digital commerce and what it meant. And then you have the pandemic hits, and there's a need for 8000. But nobody can learn this stuff instantaneously. But they're almost required to but then you can't. So then as you get two years out, you might now only have, so you have a bunch of people who are just faking it, right, because they were asked to not because they Oh, there's a chunk that probably wanted to write. But there's a lot of people that just like faking it, just because they had to do it, that's just the reality. So you have about 1800 people to 2000 that really understand it right now. And they're the ones that are running everything day to day. So they're the ones that everybody's looking to, and they're the ones that are going to take the fall if something goes bad. And so a couple things come into play. One is they just plain don't have the time to take on one more thing. And then there's another whole segment of who's running it. In a lot of cases, it's the Digital Marketer who's running it. And it the same time all this stuff is changing on the eCommerce side and all the different platforms that are out there. Digital Marketing has been hit almost as hard is like it has over the past few years where if you think about the rapid change of okay, well now you're just kind of doing it for fun. Now it's full time get paid search, get paid social. Oh, by the way, there's tick tock, there's a whole new platform, you can do now, streaming TV ads, we want you to show us attribution. And yet there's no multi touch attribution tool that works plug in a CDP, right? Where's your data, it's all these things. And then iOS 14.5 update comes through like their world is just a giant tornado. And in where I think we'll start hearing a lot more as things are slowing down a little bit. And as they slow down a little bit, they're going to be able to pop their heads up. And now they're going to be a little bit more strategic. The only thing I'll put alongside of that is right now the middle layer of digital, that middle management that got hired during the pandemic at a 50% premium is now being scrubbed out. And I think they'll come back. But that's being removed right now as people tighten their belts. And then that pushed everything back up to the people who would make the decision. And they're like, Well, I don't have time to do it. And so it's just, it's a crazy time.

Kelly Goetsch 49:00

But I think organizations need to understand that. And even though they're a retailer or manufacturer or something, they need to have some people in house who know what the hell's going on. And they don't, they don't know. And you can't just outsource this stuff. It's just it's too important. just outsource it.

Aaron Conant 49:20

It's really interesting. If you follow what happened was you had these e-comm people tucked in the corner. And everybody thought it's funny what they're doing kind of Pooh poohing it. Now, you don't really know, you know, we don't really need it. e-comm is not that important. And then as the pandemic hits, like e-comm is important. But we just told that person, they were no good for the past two years. Now we can't go back and tell them they're good. So we need to go hire somebody in place of them to put ahead of them, then that person leaves. And as that whole scenario took place. Now we're in this also in a time we have these teams at an executive level don't really understand and they're the ones that will come in and say hey, Let's go composable. And beware, like, Whoa, yeah. When I watch a Shopify site here, this is completely different. We do $500 million a year, who's going to do it? But it's other people side right now. And again, I think three to four years. I think, oh, slowly, not in three to four years. But slowly over the next, you know, three to four years, we're gonna have executive teams become more educated, we're gonna have people that get filtered out naturally. And then it's going to be crazy. And if people aren't leveling up now, like, if you're not learning over the next year and a half, then somebody else is and they're just going to come in and kick butt and take names. That's what's got

Kelly Goetsch 50:44

kids in high school today, regularly work with API's High School. Like if you can't call an API, and you're entering the business roles, you're done, right, like that's a requirement for working is how do you call an API, so that tech literacy is really bubbling up and today? You know, it's funny, we'll talk to some folks and like, the tenor of the discussion is why wouldn't we choose a MACH based solution? Like, what was there an alternative? Like, are we supposed to call you like, somebody pedaling a bike back there, keeping a server running? Like, how else would you do this? You know, but it's a very useful thing.

Aaron Conant 51:26

Right? Yes, yes. It's like the My parents still have a phone with a cord on it. Yeah, my kids are like,

Kelly Goetsch 51:33

why? What? What is what?

Aaron Conant 51:36

What is that? What? Why would you ever have that? Right? Because they don't walk around with a computer in their hand. Right. And

Kelly Goetsch 51:44

yeah, but that's, that's very generational, and it's already changing pretty rapidly.

Aaron Conant 51:51

Well, Kelly, this is so much fun. We'd love to have you back a ton. We'd love to have you back on the podcast anybody you know tune into the podcast Kelly's on it but in the past it's just been super fun to always connecting with you. Safe travels next week. Hope the the meeting what is it? You said an Amsterdam kind of like the global commercetools.

Kelly Goetsch 52:14

We have one before that and then Mach two was is an Amsterdam.

Aaron Conant 52:18

Okay, awesome. We'll sell you safe travels my friend. With that everybody. We're gonna wrap up pretty much here right on time. We always like to give you a few minutes before your next meeting. But then, if anybody wants to follow up conversation with Kelly or any of the team over commercetools, I strongly encourage it. And I look for a follow up email for me. I'd love to have a conversation with you as well. And with that, we're gonna wrap it up. Hope everybody has a fantastic Wednesday. Everybody takes care stay safe and look forward to having you had a picture of it. Thanks again. Kelly has been awesome. Thanks.

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What is BWG Connect?

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.
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