Having founded and sold multiple ecommerce companies, and having worked for numerous ecommerce startups, Web Smith believes broad economic trends determine entrepreneurial success as much as tactical execution. Successful entrepreneurs, Smith asserts, must be polymaths — possessing extensive knowledge across multiple subjects — to understand opportunities. And that’s the purpose of 2PM, his latest company.
“2PM is short for ‘to polymaths,'” he told me. “That’s for a reason. You cannot start a business and scale it unless you have a holistic view of every aspect of your industry and related industries.”
2PM is a media company, an advisory firm, and a seed investor. I spoke with him recently about his ecommerce journey, 2PM, and his outlook for online selling, post Covid-19.
What follows is our entire audio conversation and its transcript, which is edited for length and clarity.
Eric Bandholz: Tell us about yourself.
Web Smith: I didn’t set out to have a career in ecommerce. Starting in Austin in 2009, I launched, with buddies, SICFIT, an ecommerce and media play for the CrossFit community. We sold that in 2012. I then joined Rogue Fitness in Columbus, Ohio. It’s a tremendous company with roughly 1,000 employees now. Fully bootstrapped.
From there, I co-founded Mizzen+Main, a men’s apparel company. We bootstrap it, too. It was a very painful experience, but I learned a lot — tactically, professionally, and personally.
From there, I decided to get out of entrepreneurship. I was burnt out. I worked for a few media companies, such as Uncrate and Gear Patrol, that set my path forward, which was to launch 2PM. I didn’t have a business plan. I just hoped that it was going to work.
2PM is short for “to polymaths.” That’s for a reason. You cannot start a business and scale it unless you have a holistic view of every aspect of your industry and related industries.
My first phase of entrepreneurship, in my mid-twenties, I didn’t understand how things interacted with each other — such as the politics of fundraising and interpersonal relationships. This time around, at 37 years old, I know my limitations. I understand when I need to outsource. I’m okay growing slowly. I try not to be swayed by others.
Bandholz: Is 2PM bootstrapped, as well?
Smith: Definitely. It was a hobby that became a daily task that I eventually monetized. I had a vision for the platform, helping to move the ecommerce industry forward, with data insights and interpersonal connections. So we’re delivering on that. Could it be bigger? Yes. But I’m not sweating the details just yet.
Bandholz: How do you bring value to your 2PM customers?
Smith: One of the best ways to grow a business is to find the right wave at the right time. Those are typically the most successful businesses. I’ve come from a few of those businesses. Without CrossFit early on, there probably would be no Rogue Fitness. But Rogue is way bigger than CrossFit now. They caught a wave, and they ran with it and optimized after the fact.
So I try to present opportunities to businesses. They can act on them for a strategic advantage.
Bandholz: How can you know when the market is moving or shifting to identify those opportunities? It seems like a bit of luck.
Smith: I don’t think it’s luck. It comes from having an entire perspective of what 2PM represents. If you study the entire ecosystem enough, you’ll discover connections between different events, how various industries interact or react to certain things. You’re going to see it.
Bandholz: 2PM also provides seed level investments.
Smith: Yes, 2PM does angel and seed round investing. We also consult with innovative companies that we call growth partners. Examples include Verizon Media, ShipBob, Passport, The Chernin Group, BigCommerce, CommonThread, ButcherBox, Alibaba, Rogue, Duradry, and Packlane.
Those engagements provide operational insights to 2PM as well as recurring revenue, which we reinvest into the company. It improves our content and our ability to help others.
And, yes, I allot an amount each quarter to invest in brands and platforms.
Bandholz: What do you look for in these investments?
Smith: It depends on the company. If it’s a consumer-products brand, I look for omnichannel expertise. I think that Recess [sparkling water] has done a wonderful job. Element [apparel] has done a wonderful job as has Sanzo [sparkling water]. Haus [adult beverages] is tremendous.
From a fashion standpoint, you have Alps and Meters and Rowing Blazers as well as my stake in Mizzen.
I just look for the companies that are supporting the ecosystem. These are all exciting things for me.
Bandholz: Are the investments purely financial, or is there also a time commitment?
Smith: It’s intended to be purely financial. But I’m always available to help. I’m passionate about that. I want to be helpful, and I want to be operational.
Bandholz: Is 2PM just you, or do you have help?
Smith: I have help. My editor is Hilary Milnes. Andrew Haynes is creative director. Andrew Johnson is head developer. Vincenzo Landino helps me with all audio production. I’m soon to hire one or two others. But the vast majority of the content that you see from newsletters to drafting memos, to managing and growing, to moderating Polymathic (our invitation-only forum) — that’s all me. I’m pushing 70-to-80 hour weeks.
Bandholz: What are the valuations for ecommerce brands?
Smith: Ecommerce valuations are based on EBITDA. We’ve tried the tech valuation thing, which I’ve never agreed with. Ecommerce is about profitability.
Bandholz: We’ve all seen the shift from bricks-and-mortar to online over the past few months. Will this be the new normal?
Smith: Yes. 100 percent. I just published something in yesterday’s edition of 2PM. It talked about how close we are to a cashless society. Cashless societies are a leading indicator of what’s to come in ecommerce. China has mastered the cashless society. Because of that, commerce penetration is inching towards 40, 42 percent, which is insane.
Once the U.S. gets to 30, 35, 40 percent, you’re talking about $3 trillion in overall retail spend through ecommerce. Consider what top-of-mind ecommerce brands can do once the market is much larger, and customer acquisition becomes less expensive.
We’re going to see a lot of companies blow up really fast. It’s just a matter of time.
Bandholz: How does Amazon play into this?
Smith: Amazon is the ecommerce industry’s fullback. We should support Amazon in every way, shape, and form. I try to look through the lens of American history. Our government no longer builds infrastructure as it used to. The infrastructure that Amazon has developed is what would have happened if the government did it in the ’40s, ’50s, or ’60s.
Amazon has built the logistics ecosystem — the equivalent of lines, roads, highways, tunnels, and bridges — that we need to run ecommerce businesses. Amazon should be supported as such. Do I agree with a lot of their practices? Of course not. Would I put my brands on Amazon? Probably not. But the ecommerce industry would be much smaller without Amazon’s involvement.
Bandholz: How can our listeners follow you or contact you?
Smith: 2PM is my home base. I’m on Twitter, too — @web. I like helping entrepreneurs in any way. So if listeners have questions about ecommerce or consumer psychology and sociology, and anything else, I would enjoy the dialog.