WEBVTT - ICYMI: Building a Logistics Empire From the Ground Up

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg

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<v Speaker 1>BusinessWeek with Carol Masser and Tim Stenoveek on Bloomberg Radio.

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<v Speaker 2>Happy Friday, everyone, I'm normal Linda here with Tim Stenovic.

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<v Speaker 2>I'm in for Carol Master today. Tim let's talk logistics.

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<v Speaker 1>I love talking logistics.

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<v Speaker 2>Okay, it's oh Mayor's Tariq's he's a specialty for this.

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<v Speaker 2>This is his specialty. He's the founder and CEO of

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<v Speaker 2>krt dot Com. That's a logistics firm based in Houston, Texas,

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<v Speaker 2>and it provides services for B two C and B

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<v Speaker 2>to B companies think about online store management, fulfillment, marketing,

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<v Speaker 2>and customer support. He's joining us now from Houston. Omiir

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<v Speaker 2>can talk to us a little bit about cart dot com.

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<v Speaker 2>Seems like you all have done a lot over the

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<v Speaker 2>past four years since your inception. What exactly is kart

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<v Speaker 2>dot com and what inspired you to launch it?

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<v Speaker 3>Thanks Er, thanks for having me. First of all, Look,

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<v Speaker 3>we started the company to build the world's flow just

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<v Speaker 3>infrastructure as a service. The problem we're trying to solve

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<v Speaker 3>is we have billions and billions of dollars of GMV

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<v Speaker 3>flowing through our operational infrastructure, the power of the technology,

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<v Speaker 3>services and operational capabilities for brands of all sizes. About

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<v Speaker 3>half a billion dollars in revenue, about ten billion dollars

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<v Speaker 3>of GMV, twelve hundred employees globally, and we're just four

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<v Speaker 3>years old.

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<v Speaker 1>Wow, Okay, that's pretty impressive stuff, Omair. One of the

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<v Speaker 1>reasons we like to talk with people like you is

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<v Speaker 1>because you have a good idea of what's happening in

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<v Speaker 1>the economy right now based on your customers, what you're

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<v Speaker 1>seeing on the B to B and B two C level.

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<v Speaker 1>Have you seen a significant difference in order fulfillment given

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<v Speaker 1>the uncertainty around tariffs post April second?

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<v Speaker 3>Yeah, I mean, look, there has been a volatility of

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<v Speaker 3>things going up and things going down for the last

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<v Speaker 3>two years. Consumer sentiment has been shifting almost every quarter.

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<v Speaker 3>The last couple of quarters. We've definitely seen a couple

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<v Speaker 3>of very interesting trends. The first was, you know, in

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<v Speaker 3>Q one, we actually saw a pretty big influx of

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<v Speaker 3>consumers flying to get ahead of the tariffs, and the

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<v Speaker 3>retailers kind of you know, build up the warehouses to

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<v Speaker 3>have the inventory to take care of the consumers that

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<v Speaker 3>are shopping. Q two. As the sentiment sort of continues

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<v Speaker 3>to be around inflation and pariffs and uncertainty, there's a

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<v Speaker 3>little bit of slowdown that we're seeing across the retail landscape.

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<v Speaker 2>Oh Maeric, bring us into the boardroom. What are conversations

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<v Speaker 2>like right now? What types of changes are you all

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<v Speaker 2>having to implement given the uncertainty?

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<v Speaker 3>Yeah, I mean, look, I think in times like this,

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<v Speaker 3>we are doubling down because if you think about it right,

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<v Speaker 3>scale is something that's going to become so much more

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<v Speaker 3>important as you think about economies that these brands are

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<v Speaker 3>now looking for. The larger we are, the faster capabilities

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<v Speaker 3>that we can provide to the brands we work with,

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<v Speaker 3>the better off they're going to be by working with us.

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<v Speaker 3>So we're actually you know, we've just announced a couple

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<v Speaker 3>of acquisitions in the last nine months, and we're actually

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<v Speaker 3>going to announce a couple of more acquisitions in the

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<v Speaker 3>next six to nine months. So we're going both organic

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<v Speaker 3>and and organically pretty aggressively towards the next couple of years.

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<v Speaker 1>Who would you say, when you know, when you were

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<v Speaker 1>when you were building this company, when you founded this company,

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<v Speaker 1>what was the problem that existed that wasn't being solved.

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<v Speaker 3>Ah, think about a company called Jennie and Jack. They

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<v Speaker 3>you know, made beautiful addresses for girls. And if you

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<v Speaker 3>think about them selling through their website, selling through their stores,

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<v Speaker 3>and their end consumer continuously shopping in other channels outside

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<v Speaker 3>of just online and their stores. So think TikTok, think Amazon,

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<v Speaker 3>think epay, think Walmart, think notestrom everywhere the consumer is going.

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<v Speaker 3>For a mid market retailer to be able to provide

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<v Speaker 3>their product catalogs, their inventory, they're pricing across multiple channels,

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<v Speaker 3>across a pretty complex permutation of product categories is really hard,

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<v Speaker 3>especially when you don't have billions and billions of revenue

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<v Speaker 3>and scale to kind of fulfill that, right. So what

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<v Speaker 3>car dot Com does is makes that easy. If you're

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<v Speaker 3>brand wanting to sell in every channel in the world,

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<v Speaker 3>we enable that technologically and operationally. And you know today

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<v Speaker 3>we're obviously North America focused, but very soon we're going

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<v Speaker 3>to be international where if you want to add Italy

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<v Speaker 3>or France as an international market, you can just come

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<v Speaker 3>to cart dot com and within twenty four hours you

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<v Speaker 3>can start selling there.

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<v Speaker 2>Well, Mary, you mentioned acquisitions. What types of companies are

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<v Speaker 2>you targeting? What comes to mind when you guys are

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<v Speaker 2>thinking about the companies that you'd like to acquire.

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<v Speaker 3>Yeah, I mean, look, I think we're looking for very

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<v Speaker 3>interesting categories that are growing really fast. You know, logistics companies,

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<v Speaker 3>software companies, services companies. Look, the thing about cart dot

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<v Speaker 3>Com is that we're we're known as a logistics company,

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<v Speaker 3>but we're really the broadest infrastructure company and the deepest

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<v Speaker 3>infrastructure company, you know, as a service in the world today.

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<v Speaker 3>We do logistics, we do order management, we do services.

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<v Speaker 3>So when we think about acquisition targets, we're looking at categories,

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<v Speaker 3>not just product categories, but you know, companies that are

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<v Speaker 3>doing software, companies that are doing services, and companies that

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<v Speaker 3>are going to help augment our operational infrastructure and scale.

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<v Speaker 3>So we're very very broad. We're essentially trying to replicate

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<v Speaker 3>the infrastructure that Amazon has built, except in a non

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<v Speaker 3>marketplace format where we're partners with them, not competitors.

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<v Speaker 2>So, speaking of scaling, where are you all currently positioned

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<v Speaker 2>and what are you thinking about in terms of regions

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<v Speaker 2>that you'd potentially scale in.

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<v Speaker 3>Yeah, look, I mean today we're we're you know, we're

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<v Speaker 3>shipping about three hundred and fifty million units a year.

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<v Speaker 3>That's our last year numbers in the US alone. You know,

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<v Speaker 3>we're looking at the UK, we're looking at Europe, or

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<v Speaker 3>looking at the Middle East and Asia and Latin so

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<v Speaker 3>in that order, right, So the idea is to sort

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<v Speaker 3>of start moving eastwards into one geography at a time

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<v Speaker 3>over the next couple of years.

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<v Speaker 2>What are some of the challenges that come with expanding

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<v Speaker 2>into international markets, especially given the volatility right now in

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<v Speaker 2>the uncertainty regarding tariffs. Yeah.

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<v Speaker 3>Look, we're in the business of making it easy for

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<v Speaker 3>the mid market brands that we work with, which means

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<v Speaker 3>that we have to do the hard work. So when

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<v Speaker 3>you enter a new market, you're not only thinking about

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<v Speaker 3>localized supply chain, the mid market challenges that occur, the

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<v Speaker 3>regulatory challenges that are now being thrown because of tariffs.

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<v Speaker 3>You also have to think about Okay, it's not just

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<v Speaker 3>about procuring, it's also about selling. It's about increasing demand

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<v Speaker 3>for these brands. So we sort of solve a three

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<v Speaker 3>part problem. One we help consumers drive to these brands. Two,

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<v Speaker 3>we make sure that they have the technology to basically

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<v Speaker 3>sell in the languages and geographies that we're enabling the infrastructure.

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<v Speaker 3>And then three we have to help with the procurement,

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<v Speaker 3>which is the last amount delivery of those packages, right,

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<v Speaker 3>So we are actually taking over the complexity of the

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<v Speaker 3>problems so that the brands don't have to. Essentially we

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<v Speaker 3>do all the hard work around the complex infrastructure from

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<v Speaker 3>technology to logistics. Brands can just connect and integrate into

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<v Speaker 3>our infrastructure and sell in these geographies.

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<v Speaker 2>How are you thinking about artificial intelligence right now and

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<v Speaker 2>implement it into the work process?

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<v Speaker 3>I mean, look, AI has been in our DNA from

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<v Speaker 3>day one. One of the first three hires we made

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<v Speaker 3>was a chief data scientist at part dot com. We

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<v Speaker 3>have been leveraging AI very significantly over the last four

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<v Speaker 3>years in things like figuring out how to connect demand

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<v Speaker 3>with inventry management. How do you predict demand? So, if

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<v Speaker 3>you think about it right, the logistics problem actually starts

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<v Speaker 3>with the consumer picking yes that they want to buy something.

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<v Speaker 3>And if you can have very large data sets that

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<v Speaker 3>connect the demand problem with the supply problem, then you're

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<v Speaker 3>essentially optimizing the entire value chain. So we have forecasting

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<v Speaker 3>models that are using and leveraging AI today we predict

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<v Speaker 3>demand before it occurs, and we're continuing to invest very

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<v Speaker 3>heavily in that technology so that we can give the

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<v Speaker 3>brands you work with in upper and a much upper hand.

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<v Speaker 1>You know, there seems to still be this disconnection between

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<v Speaker 1>what companies know about me and Look, I think consumers

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<v Speaker 1>value privacy, no question, but I also think that it's

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<v Speaker 1>like kind of weird when you're browsing the web and

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<v Speaker 1>you get an AD for something that you just bought,

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<v Speaker 1>because the browser doesn't understand that you have just bought

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<v Speaker 1>this this good. Is there a way that your your

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<v Speaker 1>software can and your solution can actually help companies understand

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<v Speaker 1>consumers online and offline behavior better?

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<v Speaker 3>Yeah? Absolutely. I mean, look, we're big believers of privacy

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<v Speaker 3>and security and you know, consumer preferences, so this is

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<v Speaker 3>a this is like a very important topic that we

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<v Speaker 3>talk about almost on a daily basis. We use very

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<v Speaker 3>large anonymized data sets to you know, do empower the

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<v Speaker 3>analytics that we ultimately end up providing for the brands

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<v Speaker 3>we work with. So you know, once the consumer feels

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<v Speaker 3>comfortable that you know, the way their data is being

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<v Speaker 3>used is only to help them not to invade their privacy,

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<v Speaker 3>they then become more willing to actually have you allow

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<v Speaker 3>you access to it the way we're connecting for these brands,

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<v Speaker 3>the data from the time that the consumer or starts

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<v Speaker 3>thinking about a product to the time the product actually

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<v Speaker 3>shows up to their doorstep. We're the only company in

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<v Speaker 3>the world that has that breadth of information, right because

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<v Speaker 3>we sort of connect the demand side with marketing services

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<v Speaker 3>and marketplace services, and we obviously have the operational infrastructure

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<v Speaker 3>tens of billions of score feet of space.

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<v Speaker 2>How do you think about sustainability as it relates to

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<v Speaker 2>AI implementations.

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<v Speaker 3>I mean, look, the first thing is that you have

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<v Speaker 3>to prevent AI from running enough, right, You have to

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<v Speaker 3>keep control and tabs of how artificial intelligence is being used.

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<v Speaker 3>I think too many companies are either using AI as

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<v Speaker 3>a buzzword and not really using it, or they're using

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<v Speaker 3>it in a way that's maybe abrasive and not actually

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<v Speaker 3>what consumers really want. So you have to find the

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<v Speaker 3>sweet spot of using artificial intelligence in a way that

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<v Speaker 3>you're optimizing for the profitability of these brands, for the

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<v Speaker 3>growth of these brands. And obviously there are lots of

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<v Speaker 3>internal use cases that we're using II for, but ultimately

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<v Speaker 3>what we're really trying to do is help these brands

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<v Speaker 3>grow faster and make more money.

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<v Speaker 1>Oh maor how do you how do you make it

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<v Speaker 1>so that your order book grows? I mean you mentioned

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<v Speaker 1>a couple of your clients, Janey and Jack. Authentic Brands

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<v Speaker 1>is also another Tom's pacsun certainly brands that our audience

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<v Speaker 1>is familiar with. How do you grow that number?

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<v Speaker 3>Yeah? I mean, look, we are known as a company

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<v Speaker 3>that does a lot of work in the B two

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<v Speaker 3>C space for mid market retailers. But the interesting story

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<v Speaker 3>about car dot com is that about half of the business,

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<v Speaker 3>half of our revenues actually with B two B companies.

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<v Speaker 3>So you know, first of all, you've got virtually almost

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<v Speaker 3>a trillion dollar addressable market in the mid market retail segment,

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<v Speaker 3>and then you've got another trillion and a half dollar

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<v Speaker 3>addressable market on the B two B site. So we

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<v Speaker 3>actually do a lot of work with B two B companies.

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<v Speaker 3>Charismatics Brands is one example where they are the providers

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<v Speaker 3>of scrubs for doctors and they work with a large

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<v Speaker 3>number of shops across the United States where small mom

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<v Speaker 3>and pop shops are the provide their scrupts to and

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<v Speaker 3>we're powering their order management and logistics platform. We actually

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<v Speaker 3>do a lot of work with the federal and state government,

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<v Speaker 3>so we are we're actually doing a lot of work

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<v Speaker 3>in health and pharma. So when you think about the

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<v Speaker 3>infrastructure that we've built for the B two C segment,

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<v Speaker 3>that's only about one third of our overall customer segment.

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<v Speaker 3>But you know the other one, you know, two thirds

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<v Speaker 3>is actually B to B and the government. So growth

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<v Speaker 3>is virtually unlimited when we think about the address of

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<v Speaker 3>the market and what we're going after. That's why we have,

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<v Speaker 3>you know, gotten so big so quickly.

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<v Speaker 1>Oh, Mark Tuick, thanks for joining us. Really appreciate appreciated.

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<v Speaker 1>Founder and CEO of cart dot Com, the logistics firm,

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<v Speaker 1>joining us from Houston