Mister Beacon Episode #172
Forget Everything You Know About Sales - Machines Are the Customers NowMarch 28, 2023
In this fascinating podcast episode, we dive into the future of commerce with Don Scheibenreif, author of "When Machines Become Customers.” Based on groundbreaking research, Don shares insights on how artificial intelligence is transforming the way businesses interact with both human and machine customers.
Get ready to discover the impact of AI on customer behavior, the challenges and opportunities presented by non-human customers, and the strategies businesses need to adopt to stay ahead in this rapidly evolving landscape.
Tune in to our conversation with Don Scheibenreif as we discuss the key takeaways from his book and the future of AI-enabled commerce. This episode is a must-listen for entrepreneurs, business leaders, and anyone interested in the intersection of technology and business.
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Steve Statler 00:00
Welcome to the Mr. Beacon podcast. This week, I'm going to be talking to Don Scheibenreif, who is a distinguished analyst and vice president at Gartner Group. And we're going to be talking about machine customers. So this is a topic that is adjacent to IoT, we're going to join the dots in there. But this is an example of one of these concepts that's really coming into its own. With, we've seen examples of bots that buy things on behalf of customers, maybe enterprise customers, maybe individual customers, we talk a bit about the HP venture into printers that reorder their ink cartridges. We talk about chat GPT. The implications are pretty major. So I invite you to stick around and listen to my interview with the Mr. Beacon ambient IoT podcast is sponsored by Wiliot, bringing intelligence to every single thing. So Don, welcome to the Mr. Beacon Podcast. I'm really excited to have you on the show.
Don Scheibenreif 01:13
Thank you, Steve. I'm so excited to be here. I love what you're doing here. And definitely I've added you to my my list of podcasts. So I'm very, very excited to be here.
Steve Statler 01:24
Terrific. Well, what you're doing what you've written about, you've written a book, which is what we're going to talk about. As a gardener group analyst, there's a ton of things that we could end up getting sidetracked on to, and maybe we will, but we're here to talk about your book when machines become customers ready or not. And so I guess we should start off by setting the scene and just explaining what what is a machine customer.
Don Scheibenreif 01:53
So it seems a machine customer our definition of it is a non human economic actor that can obtain goods or services in exchange for payment. So essentially buying and selling. And we are very, very deliberate about that. In the book. We are not talking about Skynet, we're not talking about chat GPT. We're not talking about the singularity. We're simply talking about commerce, which is why machine when machines become customers is mostly a business book, first and technology book second.
Steve Statler 02:22
And what was it that inspired you to write it?
Don Scheibenreif 02:25
So the story is about seven years ago, our chief of research at Gartner, Chris Howard, was putting together kind of our version of TED talks for gardeners a big conference in Orlando every year. So it's our version of TED Talks. And he asked me, he just gave me a title. He said, What happens when things become customers. And seven years ago, that was at the height of our Internet of Things research, which I know you're familiar with. So I said, Okay, that's the I could do that, you know, I'm marketer, I can come up with the ideas, that whole general journalist training kind of kicked in. And basically, I presented did a TED like talk to about 800 people. Back in 2014, I think 2015 Can't remember. And that launched a whole line of research. We probably have 15, different research notes, presentations, web webinars. And what's been gratifying is that concept has evolved over time and had been able to involve about two dozen of my colleagues to co author with me on different things. And now some of my colleagues are taking it a step further on their own. So it started really with a simple question, and then evolved into all this content until finally, I was sitting with Mark risky know, in South Africa, at one of our conferences and say, Mark, I think I've got enough for a book and he said, I think you do, would you mind if I worked with you on? And I said, Of course and that got that guy to start it?
Steve Statler 03:52
That's a fascinating catalyst the that you just described? Is there something? So it sounded like it wasn't like you, you kind of stumbled on this idea. And it came from a client, it was kind of a, a thought experiment that then took on a life of its own. Yeah, and, and it sounds like that flowered in the presentation, you're presenting to 800 people, that's that's a pretty good test, and whether the idea is coherent, but I'm assuming there are implications, things use cases that kind of fired you with enthusiasm, where you know, when I actually read your book, or am reading your book, and I keep on thinking about our situation, and ambient IoT. Now, how do you get people to really think this through and take the ideas seriously? So was there a was there a use case or an application or an event that really fired you with the need to tell this story?
Don Scheibenreif 04:59
Yeah, great. Cool. question, Steve. So when we were when I was doing that first presentation is when I came across HPs. And stunning service, which we've we've featured pretty prominently in the book. And basically, that led us to the fact that HP in effect was manufacturing its own customers. And that very concept of, hey, I can make my own customers, I don't have to try to try to get them and through traditional means really kind of crystallized it for me, that makes total sense. Yeah. So and then that led us to other things like the dog. Like another example, I put in that first presentation was a smart dog tag that was able to, to to track the movements of a dog. And once you start to see all these IoT devices, you say, Okay, maybe they do one thing, and all they do is analysis information. But we asked the question, as we often do a gardener? What if you take it a step further? What if that, and that again, this is seven years ago? What if that sensor on the dog could say, okay, based on the dog's movements and their eating schedule, it looks like he's sick. And you need to, you may need to examine him or even take him to the vet. And oh, by the way, could I can schedule an appointment for you, it's, you take the ideas, and that one colonel, and you start to expand it. And when we share those scenarios with our clients, they kind of sit up and say, Oh, I had thought about that. So I think one of the most interesting things in those early years of our doing the research is, I was able to fill rooms, I was able to get people to read the stuff, but invariably was I never thought about it that way. And that that kept us going.
Steve Statler 06:45
I have to say, swell. Reading your your book, I was I was it was like running from one side of the boat to the other side of the boat, part of me was like, Yes, this is it, it's gonna be a profound change. And I'm like, Well, is this really a thing is that I mean, because you're latching on to things that existed the moment and the big question is, is this going to go way beyond Amazon Dash buttons? And that sort of thing? What was it that convinced you that this was going to be more than it is at the moment? Because you described three stages? And we should we should get into talking about what the three stages, but what was it that really convinced you that this would be a truly disruptive phenomenon rather than kind of a clever marketing gimmick by a inkjet printing company?
Don Scheibenreif 07:36
Sure. So when we actually, Gartner has a power line of research that we call an Africa, which is basically where we challenge our own positions, essentially, it's kind of a counter culture, light of research. So we actually did one on things as customers. And part of that research was we actually examined what you and I do as human customers. So obviously, we buy things, we receive messages, like emails and advertising, we actually request service when something's wrong, we actually negotiate and we all have to negotiate. And then we, we basically tell other people about our experiences. So we do all five of those things. And then as we looked at the, at the time, the variety of IoT devices, we said, Okay, we actually were able to isolate a device or a smart system that was doing one of those activities. And then that led us down the path to find more case examples. And now, I have to say we have we have almost 100 different examples of a device or a smart system because the machine customer isn't always physical, it could be a virtual machine like an Alexa or Siri or some of the other virtual assistants. And again, that again, that led us to keep going and say okay, there's something here. So that that was part of the discovery of it. And when we would talk to people, they would tell us more examples he had so I saw this and I saw that so it was kind of a discovery, a treasure hunt for us.
Steve Statler 09:07
One of the things I love about my day job is I'm constantly coming across new use cases is normally as of customers or potential customers and one of my favorite is a car battery that could reorder itself is nothing worse than having a car battery that gives up the ghost and then you've got to Yeah, it's not a fun shirt, some shopping is fun. Shopping for car batteries is not fun. So I can the opportunity for that to come about.
Don Scheibenreif 09:34
Yeah, we talk a lot about drudgery in the book. You know the things that we have to do not just at home but also at work. You know those reordering of supplies or mowing the lawn or buying laundry detergent, remembering to order pods for your for your coffeemaker, these are all things we're not really good at it we forget. We order too much or too little. And what we the case we try to make is a machine customer doesn't for A gift. It works 24/7 It does what you ask it to do, and it's reliable. And that is, again, when we when we tell that story, it's we're still really much in an education process. Steve, we're trying to get people to realize that these devices can actually do more for us if we let them. And that that's where, you know, we when we share that with a skeptical audience, we have the light bulbs go off said, Yeah, I could see that. It's, it's really interesting watching people's reactions to this.
Steve Statler 10:32
So I want to come back to advantages for the customer is the customer can be a consumer, it can also be a business, right? And I can imagine a lot of benefits for the seller. But perhaps you should enumerate those, if I'm in the business of selling products. Why would I make this a strategic initiative in my company getting ready for this, I have this this change in the way people buy and sell.
Don Scheibenreif 11:00
So the reason is, so marketing at the biggest impact with machine customers is going to be on the marketing and sales functions, because most of those those functions, and I'm a marketer, so I can say this, and I've worked with salespeople is that a lot of that process is emotion based. We basically prey on your weaknesses, we talk about fear of missing out, we appeal to your aspirations in your dreams when we sell products, both at work and at home. And the biggest difference, obviously, is that these machines don't have emotion. They are based on rules and logic. So if you think about the process, we often like to talk about, let's say, for example, you delegate your grocery shopping to the house, and maybe maybe Alexa is your assistant, or maybe something else. And let's say that you're a manufacturer of cinnamon rolls, and you desperately want to get that into the shopping cart. But the people in the house say you know, we're on a diet right now. So there's no way you can put that in the cart. So as a maker of cinnamon rolls, I have to figure out a way to bust through the algorithm, so that I can land in that shopping cart. And that is that's the that's the challenge that's going to be out there. We often talk to our I've been working with our sales practice at Naevi, the salesperson to the future as a data scientist, and not a salesperson in people's heads explode when they hear that. Marketers marketers don't like it. Because what do you mean, I can't I can say this, what do you mean, I can't use Beyonce to sell products. Because the machine customer doesn't care who your spokesperson is, they don't care about your slick advertising, they want to know is do you have the information that I need, because I have this long list of requirements, and I have this much time to do it. If you don't give me that I'm going to switch to the next person, the next company that does it. So the whole marketing and sales process is going to be much more programmatic algorithm driven. And that is what that's the biggest change that we see coming.
Steve Statler 12:59
And really, in a sense, it's an evolution of what's happening already in the, you know, I'm with the CMO. That's my day job. And we spend an awful lot of time on search engine optimization. We're now thinking about chat bot optimization. Like all of us, we you I think you ended up chat GBT and yourself your company. And I've just been amazed at the amount of content that is out there. We're not a fortune 500 company but chat GPT is really smart. And it's fascinating seeing the the the fingerprints of where that data might have come from. And so I think what you're describing is just you know, it's it's a progression of that. Is that fair? Camo? Yes,
Don Scheibenreif 13:50
we get without question. I mean, the EP, think about it, if a machine customer is programmed with rules, and instructions, and their job is tirelessly to find that information, the organization that that is able to make the information easy to find easy to consume, and your e ir e commerce portal is easy to purchase from those of the people that are going to win out. So one of the pieces of advice we give to clients is you have to be exceptional, not good, but exceptional at digital commerce. Because we're our machine is going to go to first they're not going to call your service center to get product so they're going to go right to your digital commerce platform. So those are some of the capabilities that people need to be thinking about anyway. But even it'll be even more so when a million machine customers are knocking on your door wanting something so
Steve Statler 14:43
don't what happens to retail therapy that was one of them. Done like fathering me as I was reading this scan, because for some people actually not so much for me although sometimes depends on the product category. You know, for some people, they love shopping and On you kind of cheating them out of one of their favorite hobbies with
Don Scheibenreif 15:04
no, no, not at all, Steve No, no, actually, what we're saying is, is that if you delegate some of the shopping that brings you joy to a machine, yes, you're gonna lose some of that joy. But this isn't going to be true for every product category. So for example, my wife who loves purses, she would never delegate the shopping and purchasing of a purse to a machine, because it's very emotional for her. Same thing with buying a car. For anybody. That's an emotional purchase. But what I see happening is that maybe the machine does all the research for you, and you still make the decision. So one of the interesting things that I've been doing at the book signings that we've been having is I asked people as they come up to get a book, I said, What do you want a machine customer to do for you, and grocery shopping? plan a vacation for me? Maybe get started on a new hobby, or buy my clothes for me? Because these are all very complex and tons of choices. And so to me that that aspect of shopping where you have a lot of choices, there's definitely purchase regret, you know, we buy something and and we immediately feel bad about it. I think a machine customer can help us with that. But But primarily is focused on the repeatable, drudgery oriented tasks that you could just, I would love to I would love to get rid of some things like buying toilet paper.
Steve Statler 16:27
How do you see chat GPT in this is it? Is it a step in the direction of a machine customer?
Don Scheibenreif 16:34
Without question, Steve, and I'll be honest with you, Mark, and I pushed the button to publish the book on January 4, I think our fifth and then chat TPT literally exploded a week or two after that. So. So we actually, but the good thing is, we actually are planning an update to the book this fall. And because we're publishing it on Amazon, we can actually update the book. And it because it's print on demand, we don't have to have another print run special print run. So the answer is yes, it has very big implications. Because if you think about what generative AI does, is it actually helps the communication process between a human and a machine or a system. And that's one of the big benefits of it. So my belt. So for example, right now, if I work with my Alexa, the functionality is good, but it's very limited. And we all know that. And it's also been mean it's a bit of it's amazing technology. But imagine if Alexa was infused with generative AI at with the type of conversations you could have with it, how you could give it instructions and what it can find out for you. So we are actually going to update the book with the implications of generative AI, we talked about AI Of course, as an enabling technology. But we didn't get into depth on things like chat GPT
Steve Statler 17:53
I'm I was using it I need I don't need I want to get a Bluetooth a bluetooth receiver for my I've got a very kind of geeky Hi Fi system with valves and that sort of thing. And so and I actually found it really helpful in the research, I asked for a short list style set to compare the different components. And I even kind of reset the basis of decision for selecting the company. It was it was a great experience. And I actually really enjoyed it. It helped me less time Googling and filtering through a bunch of extraneous stuff and having it's like having a conversation with a smart person rather than a not smart person.
Don Scheibenreif 18:42
Yeah. Well, I what you just said is that this technology is helping you become more confident in your purchase decision. Yeah. And we all want that we all want to feel good about our decisions. And sometimes we don't. So while we say, you know, conceptually, about what a machine customer can do for you, it was chat GPT. They actually say here's the manifestation of that. Yeah, that extra work that you don't have time to do.
Steve Statler 19:10
So we're moving forward in the evolution of this concept. And you talk about three stages in that evolution. Can you can you outline those?
Don Scheibenreif 19:20
Yeah. So the first stage is what we call machines is bound customers. And basically, I'm the human I'm in charge, I tell the machine what to do, the machine executes. So if you think about the HP example, that's an example of a bound customer because the printer can only buy HP ink. So I can't ask my printer to go off into the marketplace and buy any type of ink. It has to be HP. So that's where we see things happening. It's It's the classic walled garden, I'm going to control everything. And I mean, I keep other people out. And that's fine that that's a good step. But we think the bigger opportunity is the next stage will we call it machines as adaptable customers? Where are them machine actually can choose from a variety of sources. One of the best examples of that are some financial service planning firms like Wealthfront, or betterment, who use tech AI technology to go into the marketplace and select the best investments for you based on your objectives. So they're not just bound to the funds that are owned and managed by themselves, but to entire into the entire marketplace. Think about a little bit like a reverse auction. That is the stage that we're in right now. And we're going to be in that for a few years, because so many customers, people that we talk to, they want to control everything, they don't want to allow access, they don't want to share information. And that's going to inhibit the development of this. In fact, one of our clients, actually, we interviewed them. This is a company out of Italy, call AI prod. And they basically, they're saying they created the first machine customer commerce platform, where they will actually connect machines that are actually requesting items and machines that can fulfill items, and we expect to see more and more of those platforms. But without people sharing information without open platforms, this thing will not progress that far, we don't see that happening. We see it being a gradual, you know, evolution of gradual development of that, that that part of it. The third and final stage is what we call machines as autonomous customers. And what that means is that the machine will actually do things proactively for you, based on inferring your behaviors. So the example that we like to use is that Mark and I are getting older, and maybe our machine customer says Well, maybe you might feel better with three ply toilet paper, or maybe even those wet wipes versus traditional toilet paper. And while at first, your first reaction is well, I'm not getting older, the answer is you are. But it's an example of how the machine is basically proactively suggesting stuff by observing you in detail, but also that the machine has its own needs. And one of the things that we had fun with as we created, we modeled the after Asimov's Three Laws of Robotics to create four different laws or rules for machine customers. But the machine customer in that third scenario, let's say, for example, and Elon Musk has already talked about this is what if your Tesla could hire itself out when you're not using it and earn you money or maybe earn money for its own repairs? So again, it sounds kind of creepy, but not outside the realm of possibility. So those are the three phases that we talked about.
Steve Statler 22:36
Festival, you reference platforms. And I do want to talk about, there's a bunch of other things that I'm desperate to get onto, but I can't miss out on the platform discussion. So we see platforms like Amazon, is this a threat to Amazon? Or I'm assuming it's a huge opportunity as well?
Don Scheibenreif 22:58
No, I mean, we're pretty clear Steve, that that the digital giants are going to bring this to life, they have the they have the computing power, they have the engineering talent, they have the forethought. So the Googles, the Amazons are, are going to be the ones that are going to bring this to life. It will, we will see niche players may be industry specific platforms. But the general will likely be driven by these and I think the the appearance of chat GPT and generative AI, we're already starting to see that show up. So Microsoft just announced that they're going to integrate that into their Microsoft Office 365 suite. What's to prevent Amazon from launching their own generative AI to improve the shopping and the purchasing experience of its customers. So I think that those are going to bring them to life. But the other thing that we didn't talk about in the book, but I'm actually working on a separate project, is the fact that these bots are still owned by somebody else, you don't own your bot. And that's important because the bot is not actually working for you. It's actually working for the person that owns the company that owns it. So we are we call it again, this is a maverick project that I'm working on. What if we could own our own bots? And what does that mean? And that has also very different implications. Above and Beyond we we actually wrote in the book. So again, the idea is, is like we talked, we call like in a virus, it's actually spreading and it's actually mutating and things like this, these conversations are actually bringing up new new stuff. So it's, it's it's really cool how it's evolving. Even though we just published a book.
Steve Statler 24:39
Inevitably, you start to think about risks, what could possibly go wrong, and the fact that you don't turn the bot immediately fits off alarm signals in mind. And you can imagine, in the same way as you hope that your procurement department doesn't get subverted by too many lunches. is from some seller, you know, what are the risks there that we need to worry about? Generally, and specifically with regard to the fact that these platforms are potential that the machines that are, are buying on our behalf, potentially and by other people.
Don Scheibenreif 25:18
So the thing that we are very clear about is that humans have the off switch, we have to, but it's also humans that create the algorithms that lead to the purchasing activity or the activity in general. So we have actually half of a chapter devoted this bad actors will program bad machine customers, it's just going to happen. Just like every other type of technology that has been subverted by bad actors, the same thing will happen with machine customers. So one example we came up with a couple of them that have been in the press the last couple of years, the one of a company that manufactures those cameras for in, in children's rooms, baby camps, I think they're called, those have been hacked by bad actors. There was a company that need a internet enabled garage door opener, and somebody wrote a bad review of it. So basically, that company, somebody in that company bricked the garage door opener, so the person could not open their garage door. And that's a smile. But think about bot attacks and plan sabotage and espionage. You know, those are, we talk about that in the book that there, there's potential for sabotage and damage. But I think most of them are going to be unintended consequences, things that people didn't plan to happen, but they happen. So we've been hearing a lot of examples of the responses from chat GPT that are kind of surprising to us may be raised the hairs on the back of our neck, those are unplanned, right, unintentional, but they're a function of the technology. So those those are those are the some of the things that we lay out, the way to combat that, I think is we apply the same security protocols that you do right now, extend that to machine customers, but also we talk a lot about the ethics of machine customers, and how that needs to be built in up front. And instead of kind of tacky and out at the end. So Gartner says a lot of work on digital ethics, the same ethical rules apply to its use of our use of machine customers.
Steve Statler 27:25
I will Yeah, one of the things where I think machine customer would be really useful is in healthcare. I mean, you talk about a complex buying problem. And you know, how, how do I buy this medical procedure? And my treatment and medicine and all of these things? That could be a huge boom?
Don Scheibenreif 27:46
Oh, my gosh, you know, as somebody who you know, whose spouse had to go through some significant medical treatment recently talked about feeling like you're you don't know anything and being afraid at the same time? You know, it's what if we miss something? Is there a treatment out there that we miss that could have been helpful? I think the health care system is so complex, and it feels like it's getting even more complex. And I think something like this, who could do the research for you and maybe give you recommendations, which will be great. But we also know that the health care regulations in this country are so stringent, that will probably won't happen anytime soon. But the potential is there, Steve, you know, you know, maybe somebody that you love is a rare form of cancer, can you scan all the medical evidence and give me a summary of that? You know, it would take you hours to do that? If and if you can even understand it. Imagine that this generative AI could summarize a you in plain English, which, which is what they do. That is huge. So yeah, I wish for that.
Steve Statler 28:51
So what about IoT? This podcasts is about IoT, and we haven't really talked about it. I think it's kind of been there's those of us who kind of in the ecosystem have probably been like doing a subconscious. So background match to all the IoT issues. But how is IoT relevant to the world of machine customers?
Don Scheibenreif 29:15
Seem it's really how the concept started, you asked me how it started, the right answer was IoT, which the you know, the HP printer is a thing. It's connected to the internet. It's an IoT device. Most people don't think about it that way. But IoT is really at the heart of machine customers. Now, we also have evolved that to include virtual machines that the assistance we have to but IoT is central because you know, like it or don't like it, we're surrounded by physical objects. And the fact that any physical object can be instrumented means that he actually has the potential to be a customer. So you know, there's no shortage of use cases of IoT. But the thing that we we look at is that Why aren't you taking this a step further? Why aren't you getting into proactively recommending purchases, not just what needs to be done? It That, to me is where the opportunities are. And to be able to think through the that's, that's one of the big pieces of advice is you have to start creating scenarios. Take a personnel put an IoT device in, it's connected to a system and becomes a customer, what does that look like for your processes? So I think I see it as Central.
Steve Statler 30:28
And I is, you know, we focus on Ambien IoT, which is the you know, going from the internet of expensive things, the refrigerators, the washing machines, to the things that are inside them, the food, the clothing, the the medicine, and, you know, we already have evidence, we have projects where people are putting containers for herbs and spices online, and then you can imagine, you know, you have, and clothing when clothing goes online. You know, your wardrobe could be managed, you know, a wardrobe assistant seems to know, definitely machine customer, how many people's wardrobes are filled with clothing that they haven't worn for years. And that could be in the hands of someone who could really use it, and maybe you get some value back? And then what do you replace it with? And yes, I struggle with clothing. I like to wear nice clothes, but I'm just hopeless at buying it. I don't like doing it. I would love for a machine customer to make me look good. But
Don Scheibenreif 31:37
well, you know, that actually exists today, Steve, it's called Stitch Fix. In the UK, it's called threads. And basically, you know, while we didn't profile him in the book, we do talk about them. Because essentially what they do is that they learn about you through questions, but they also learn about you, when they they'll give you two items, or they give you an item to pick and say would you wear this and you give it a thumbs up or a thumbs down. So you will, you will actually train that algorithm to know what you like and what you don't like. It compares your responses to people like you. And what ends up happening is that as many times as you want, they will actually curate a set of clothing and accessories just for you based on the sizes and your preferences. But the thing that we like to talk about is that a human stylist is always checking that before he actually gets to you. And that's the thing that you know, you call it human in the loop or or whatever, whatever the term is, we also have considered that in, in this world of machine customers is that there will be a human involved in some part of the process. But yeah, I mean, I have loved to we actually talked to a clothing manufacturer, about this topic. And what that person was talking about is the closet being the basically that sensor device that looks at things and says, Okay, this is out of season, you never wear this thing, because you'd never pulled it out. Once you donate that, or hey, we'll send it to this circular clothing place. And now that they exist and let somebody else take it off your hands, I mean that the possibilities are endless. That's that's the cool part about this stuff.
Steve Statler 33:19
Yeah, there's a group called the sustainability consortium that's been looking at measuring that cycle of wearing and washing and, you know, that has, at the moment, Amazon's amazing but it doesn't know if I've bought the size where clothing and I wore it once or I wear it every week. And I think the opportunity to machine customers could really help with the circular economy by by by kind of exchanging value and understanding getting some insight into how to curate that. That wardrobe. Very good. Well, we've covered a lot and the thing, what did I miss? What did I miss? There's lots I guess people need to buy the book to read books. And
Don Scheibenreif 34:06
I would say that this book is about challenging what the notion of a customer is that you that we are moving to a world where your best customers may not be human. So what we are asking people to do is just consider the fact create scenarios. Think about the implications for your business that if you are selling to machine or machine selling to you, how will you adapt? Because we believe that this this trend, and it's actually happening today will be as big as the E commerce trend, maybe even bigger. And we all know what's happened to companies that that jumped on early and companies that jumped on Li and that's why that's the reason we wrote the book is we wanted people to jump on early and if nothing else to at least start talking about it. So if people have a conversation within their executive suite about this concept after reading the book, And we have done our job.
Steve Statler 35:02
I mean, maybe just to expand on that a little bit more. So I'm the CEO of Ralph Lauren, I hear the conversation that we just had. And I'm convinced, but I'm worried, you know, technology is all about timing, in my opinion. It's just that like, that's the difference between success and failure. It's, you want to move fast enough. But not too fast, whether you're a vendor or a consumer. Yeah. How do you get the timing? So I have two questions. The first one is, how do you get the timing right? And then the second one is, you know, what, what are the handful of things that I as CEO of a company should do to get ready for this?
Don Scheibenreif 35:48
So timing is always tricky, Steve, I think, a lot of predictions that we make a Gartner we actually get the predictions, right. But we often get the timing, and we're often early. So we basically did a little bit of research on this couple years ago, and we asked CEOs, when do you think revenue from machine customers will become material to your business? And when we say material between 15 and 20% of revenue? They told us 2030. So that is the horizon that we work with right now? Is it becoming again, not everything but enough to be meaningful? By the year 2030? Is that going to be right? You know, one of the people we interviewed for the book was Peter Schwartz, who is a futurist at Salesforce. And he was a technical adviser for the movie Minority Report back in 1999. And think about the things that they projected in 1999. But that movie, I believe, was set. I think it was 2100 or 2060. I can't remember exactly what the timeframe they were projecting. And a lot of that stuff happened way earlier than they thought. So you can either be super early or super late. But we think 2030 is a good time horizon.
Steve Statler 37:00
It's great that you're putting a stake in the ground. And you know, who knows, but it's great to have a bit of a basis for your, your strategic thinking. The one thing I'd point out is if we look at E commerce, I mean, I cut my teeth in retail more on the vendor side when I helped start Qualcomm retail. And so we were kind of doing a lot of prognosticating about e commerce in the early days before it really took off. And people would say, Yeah, but it's just such a tiny fraction of spending. But the thing was, at some point, you knew where it was going. And even though it was a tiny fraction, the actual impact on the stock price of the companies, whether they're actually moving in the right direction, I would argue will probably be before 2030. If 2030 is the day when we get to 20%, then you know, you can probably discount that and go back to just a few years when people see evidence that this is happening. And then, you know, there'll be some early actors who will get a huge bump in their stock price and other people who are just in denial mode, and they'll probably be be punished.
Don Scheibenreif 38:15
I mean, the again, the thing that we didn't anticipate was with generative AI exploding, you know, that knee that may accelerate the 2030. Who knows. But regardless of what the date is, whether it's 2030, or 2027, or 2040, we do encourage organizations to really take stock of their their marketing and sales processes since the insanely in customer service and say, What would happen if machines took over for people? Is your digital commerce site up to snuff? Do you offer all the information about the products that you sell in great detail? Is it available is it current is your ability to transact with machines up to snuff, I mean, those are some very basic things that you can actually do today, to start to get ready for it. And it's not going to affect all industries. At the same time, Steve is where we would never be so arrogant to say that, but when we ask customers or survey about where they see it showing up first one is automobiles. So the self driving vehicle, and the second is in software. But we asked that, you know, two, three years ago, and now, you know, with Microsoft's announcement about chat GPT being integrated in office 365. We're actually seeing it well before we project it. So the point here is that there are things you can do today we actually go into detail in them in the book.
Steve Statler 39:39
So Don, I was stalking you online and you have an amazing career. You've done a lot of things. So you know, one of our standard questions on the podcast is how do you get this job? It's probably a long answer, but I'd love to hear you. You know, you've worked at Pepsi. You work do you With your coke as well, Coca Cola, right? Yeah, Coca Cola. Yeah. So, Phil, tell us a bit about your career and how you ended up being a Gartner Group analyst.
Don Scheibenreif 40:08
So I started out my career in marketing at the Quaker Oats company in Chicago and started off as an assistant media analyst. It's ironic that my first title is actually not at the analyst title as in my current job, but I actually really enjoyed the discipline of marketing. When I was in business school, I had to pick and marketing to me felt the most creative, but it also has a very strong analytic bent, which I also liked. So to me, it was that balance of the two that kind of kept me in the marketing profession. So a Quaker, you know, I got a job right out of school, I was actually an intern there for several months, actually couple years, and then made my way into brand management. So worked on brands like Oh, cereal, and Gatorade and kibbles and bits, dog food, which was a ton of fun. My big project was actually launching the 32 ounce plastic bottle for Gatorade because believe it or not, back in the the early 90s. I'm sorry, the 80s actually theory was in glass bottles in which it was not allowed on playing fields because it could shatter. So introducing a plastic bottle was actually kind of a big deal. Also, I added a chicken piece to the kibbles and bits dog food brands. So that was kind of fun. That a lot harder than it sounds.
Steve Statler 41:30
So was it like a big deal when they moved to plastic? Were people arguing against it? It'll never catch on?
Don Scheibenreif 41:36
No, you know, we didn't have those environmental questions. Sadly, because they are really front of mind today. It was the biggest thing we had to deal with Steve is a lot of the Gatorade was kept in ice tubs in convenience stores. And our biggest issue was labels falling off because they were getting soaked. So we actually had to create a special type of plastic label plastic paper hybrid label to make sure it stayed on in the ice tub. So I have to say that the issues back then this is an you know, like that the late 80s were very different than they are today. But it's still it's still very interesting. It was a wonderful business to work on. And we got to meet Michael Jordan because we had signed him as a spokesperson. And that was a lot of fun and in the other thing, too, is that Quaker had a did a lot of sponsorship with sports teams because of Gatorade. So you know, Friday afternoons when nobody was using the box at Wrigley Field, we had a chance to go a bunch of us, you know, single people whooping it up in an in the box in Wrigley Field it was it didn't get any better than that. So it was awesome.
Steve Statler 42:43
Yeah. And what a great foundation. I mean for you as an analyst. You were one of the best CPG companies in the world.
Don Scheibenreif 42:52
It really it really was the van, you know, who was sad that it kind of got absorbed into PepsiCo. But many of us who worked in that business, we still call on that training 30 years later. It's It's It's amazing the training that we got in it. I think the thing that kind of helps me today is we were trained to be generalists. We were trained to be dropped into any situation and figure it out and try to solve it. And those skills I use I've used I use them in every point in my career. So after leaving Chicago, I had the opportunity to work in a field office. So working with salespeople, and I'd say about half my career was spent working for and with salespeople in addition to being a marketer. So moved from Chicago to Southern California, which is where I live now. And didn't know anybody but I trusted the gentleman that hired me and I still work with him today at Gartner. And got to learn that side of the business. From there. I got recruited by the Coca Cola company. So my wife and I moved to Atlanta, Georgia. I worked on the restaurant business, so it will be called Coca Cola fountain, which is how coke started. And I was here for a good seven kind of good seven year run there. But ironically, and I love telling the story is that my wife still work for Quaker that's where she and I met so she transferred from with Quaker from California to Atlanta, Georgia, and I was working for Coke. And then there was a time where Coca Cola was going to buy the Quaker Oats company to get the Gatorade business. And then that deal was squashed by the board and then Pepsi Co swoops in to buy it. So then what I had to do is I had to disclose to the company that my wife now works for PepsiCo. And what do you think happened?
Steve Statler 44:47
They asked you to leave.
Don Scheibenreif 44:48
Well, I got fired. I got fired. Because it was a technical violation of the company's Code of Business Conduct even though we actually built the case. And my wife got permission from Pepsi for me to work at Coke. So it was kind of a mess. So actually, I was my first day of unemployment was 911.
Steve Statler 45:09
Oh my goodness. Yeah. So
Don Scheibenreif 45:11
leaving a company like Coke, trying to, you know, my second year, I just I'll never forget that day many of us don't forget where they were that they, I remember, it made the jet and then there was a recession right after that. So trying to find a job in that environment was tough. But I did. My wife and I pointed our arrow towards Chicago, where Quaker was headquartered again. So she got transferred up there, I got a job with an agency working on Burger King. And then from there, I decided I wasn't really much of an agency person. I just did I did it to get to Chicago. And then I got I did something different. I worked for a retailer Rockford the true value company, doing field marketing hardware store, right hardware stores. Yeah, so very different business model than, you know, beverages and dog food and Gatorade and cereal. So got really got to work with a lot of really interesting people and understand the retail business. And that was a lot of fun.
Steve Statler 46:11
I there was stools that was to be so fun.
Don Scheibenreif 46:14
Well, you know, you it's interesting. The hardware shore is a very ain't a very old retail format in the United States, one of the oldest and it actually, what's interesting about hardware stores is that they know about the houses that surround them. They know who built them, they knew all the components. So you go into the hardware store, bring something from your house. Oh, yeah, we know what that is, let me give you a replacement. It's that type of knowledge that you cannot replicate. Even at a Home Depot or Lowe's, they try but they just they really don't do it. And that's the type of service and then also, if you're looking for a present for your wife or significant other, the women, the housewares section in hardware stores are among the best in any type of retail format, because you know, who goes shopping with their their spouses is usually the women. Not always but but often. And so that's another secret there. That was, that was a lot of fun. From there, I got recruited by Granger WW Granger, again, a very different format. So that's a b2b distributor. So I went from B to C marketing CPG, to retail and then to b2b marketing. And there I did segment strategy. I did new product development, I had responsibility for the data and analytics time for a moment. And what do they distribute? So I'm sorry, Granger is a one of the largest b2b distributors of facility maintenance supplies. So think about all the stuff that goes into running a building motors, safety supplies, tools, cleaning supplies, you know, anything you could think of, they sell it, they're a little bit like, at the time, you know, kind of an Amazon for business. And they were actually one of the first pioneers of E commerce right around the same time that Amazon was taking off, which most people don't realize. So Granger has been big. And that was a that was a good experience, because I'd never worked in the b2b business before. But like I said earlier, that the training that I got at Quaker still held true. And one of the things I'm most proud of is I helped launch the first ever TV advertising campaign for Granger working with an agency again, using the skills that I had picked up working for CPG companies and at an agency which was kind of fun.
Steve Statler 48:37
How did how did that work out? The television advertising is just seen as I'm a marketing guy, that's my day job. And it just seems scary, like lots of money.
Don Scheibenreif 48:46
So you know, it's interesting, because if you look at the the hierarchy of marketing, so CPG is the top, you know, the Cokes, the P and G's, the Nestle's, right, that's the pinnacle of marketing. b2b is somewhere in the middle and b2b services is actually near the bottom. But I think what was interesting is that we made a pretty good business case that, you know, we were doing exceptionally well as an organization as a business without TV advertising. We didn't know how much we could do with it. And at the time, we actually signed Mike Rowe, who was kind of doing his dirty jobs thing is our spokesperson. So we built built a lot of advertising and marketing around him as well, that was the first time we'd ever had a spokesperson. So I think what it did for the brand is it added a different dimension to people's perceptions. Because most if, if you've, you know if you're up a maintenance person, you know who Granger is, but most people don't. So it's an opportunity to kind of broaden people's understanding of what we did.
Steve Statler 49:46
But I mean, it's to me that what your buyers are not like, most people are not your buyers, right? So I'm watching Alias Smith and Jones or Kojak or whatever was playing in wasn't veglia you don't need to go. But how do you justify like educating all these people who are not customers with a television advertising campaign?
Don Scheibenreif 50:08
Well, I mean, that was that TV advertising is often an awareness building, we had plenty of other activities. From a marketing standpoint, we would have a very robust sales organization, they were armed with a lot of, you know, ways that we could add value, one of the biggest things that we did for customers is basically teach them how to manage their inventory of maintenance supplies, most most of them, you know, they didn't realize they could use Granger as a just in time warehouse for what they need it. Instead, what people did is, let's say, for example, there was a light on your elevator that went out, right? You searched all of your facilities couldn't find one. Or if you found one, it was broken. So what do you do you over order that part because you don't want to be caught again. And what happens is that stuff ages and it gets broken and it gets lost. Instead, our value prop was, well, when your light bulb goes out, just call us, we'll send it over. You don't even have to well, we'll keep your inventory for you. And that was one of the big, big selling points when I was there. 13 years ago was is, you know, don't buy so much. Because we have it. It's a little bit what Amazon does today, right? Well, you don't you don't have to buy 10 things and inventory them. You just need an Amazon brings it the next day. We were actually we actually kind of pioneered that at Granger.
Steve Statler 51:24
That's really cool. So you mentioned this our marketing hierarchy. I never knew where is high tech mark is the IRR.
Don Scheibenreif 51:33
I would say it's probably I'd say it's in the bottom quartile. I hate to say no, but yeah, yeah, because it's services, right? It's a lot of the tech clients that we work with are very proficient at technology, as you would expect. But when we try to get them like their go to market proposition or their brand positioning, we have a whole division at Gartner that's focused on helping tech companies tell their story. mean, they have a great technology. There's no question about that. But sometimes they don't know how to tell that story. And that's where we help in many ways. So that that's been, I have a number of friends that work in that division, they do a tremendous job. You know, for example, one of the things that we talk about is that people that buy large technology purchases have almost instant purchase regret after they sign the contract. Because they feel like they don't have all the information they were forced into a decision or or they just had to get something done. So it's it's our understanding of tech buying is actually quite extensive. And that actually helps us help them market to the buyers, because we can see it from both sides. It's a very interesting approach that we've taken over the years.
Steve Statler 52:46
I need to tap into that were a client. So I should I should you should use this. Yeah, definitely good. So how did you get from that to garner?
Don Scheibenreif 52:55
So I got caught up in some politics. Unfortunately, at Granger, as we all attended, I was a vice president at the time and it happens, and I don't take it personally at all, I actually got laid off during the 2010 recession. And my wife says, Can you please not get laid off during a recession? So, you know, so obviously, if we're facing one right now, I'm getting a little nervous, but I think I'm in a much better position at Gartner than I was at my previous I think so I'm sure the book helps. It helps. It helps. So basically, again, you know, 2010 or, you know, we're still in recession. I'm a vice president, I make a decent amount of money. You know, I am trying to get a job. You know, it's, it's, so I do the networking. You had a good I had a good eight, nine month runway, so I wasn't it wasn't urgent. And so I basically, you know, network with hundreds of people. And one of the people I contacted was my old friend, a Quaker who I used to work with Steve Smith. And he was a gardener, as well as our other colleague, Dale Hagen, Meyer, and I said, Hey, I'm just networking. You know, here's where here's my situation. You know, I'd love to connect. I wasn't expecting any type of job and stuff. And then, you know, a couple weeks after I talked to them, they said, Hey, we've got a job for you. Now, I was an executive outplacement and I was my career track trajectory was chief marketing officer, because that's what I had been training for my entire career, almost 22 years of training. But then, you know, Gartner comes in and said, we have a job, and we think you'd be really good at it. And I didn't really take it seriously at first. Because I was so I was ego driven, right? My ego said, Chief Marketing Officer, Chief Marketing Officer, but then I did the numbers. And I said, Well, you know, at the time, I was 45. And that, as you know that the tenure of Chief Marketing Officers, they're like fireflies, like going year to year, three years. So I just did the math in my head, and very soon, I was going to be in my 50s and be out of work. And I'm like, do I want to take those chances? And part of me said yes, part of me said no. But as I interviewed with Gardner and learned about what an analyst did, and how my skills can be transferred, I became more and more curious. And the other The odd thing, Steve is when I would tell my friends that I was interviewing and what I was going through their immediate response without hesitation is, oh, I could see you doing that. And, and then my executive coach told me, I think you need to take this seriously. And my wife said, I think you need to take this seriously, because other people around me were seeing something that I did not, which was, they thought I would be very happy at Gartner. It's better if it was a better fit for me. So I took a leap of faith I listened to, you know, my coach, and my wife and my friends. And I, you know, luckily, I needed through the interview process, a gardener, which is pretty extensive. And and here I am. So it's 13 years later. It's been a great ride.
Steve Statler 55:51
That's amazing. So is this the first book that you've written?
Don Scheibenreif 55:55
This is the first book. Yeah. So first book for me third book for my co author, and dear friend, Mark riskiness, who's based in London. So yeah, he actually taught me a lot about how to structure a book, how to do the interviews, how to write because writing a book is different than the normal writing we do at Gardner for our research notes. So it was a slightly different style. And it was, it was kind of liberating. Steve Gardner has a very as you know, gardener has a very specific style of writing. But the book gave us an opportunity to be much more conversational, which I hope you're, you know, you're you've seen so far an approach because this is a it's a great read. Yeah, it's, it's, it's a lot of fun.
Steve Statler 56:38
So that's the difference then, more conversational. Are there any other as a writer myself, and I'm like, the writer side, it's Unix devices, right? Yeah, Bluetooth beacons. But, you know, I really try and bring some humanity to those subjects the first time. We really didn't. But the second time, I feel pretty good about it. But what what were the other Were there any other differences in your from your Gartner writing style and your book writing style?
Don Scheibenreif 57:08
I would say that we use more metaphors, more commercial metaphor. So I'm a big Star Trek fan mark is a Star Wars fan, a big music guy. So we use some of our own personal interests. In in the story, one of the things we talked about in the book is we hate, drudgery, household chores, chores, I hate doing laundry, Mark hates mowing the lawn. So we peppered throughout the book, you know, little moments of humanity of who we are as authors, interspersed with the content, some of it very technical, some of it very business strategic, and some of it just dis fun, and thought provoking. So that that to me was very liberating for us. And, and we had fun, you know, we had we had fun with it. It we also, we also used what I would call what I was taught as Saturday language. So too, too often, we talk in technobabble MBA speak, you know, and I'm guilty of it, you might be guilty of it. But the idea of Saturday language is, you know, if I had to tell my neighbor what I was working on, and he or she did not know anything about my business, or what I did. I know how would I explain it to them? So going back to Saturday language, especially for something new like this was very important to us.
Steve Statler 58:24
And what what was it like having gardeners that? Are they technically your publisher, obviously, that they your employer? But is that kind of if you're going to write a book, and you're Annaleigh, you're an analyst that has gotten a half to publish it? Or was it a choice for you?
Don Scheibenreif 58:42
So it, Gartner historically has published books, we've published about 15 Over the last 20 years. In traditionally we work with a publisher. This is actually the first time that we did it ourselves. So Gardner is the publisher, and we published on the Kindle Direct platform with Amazon, which is all print on demand. And that's why the book doesn't have a dust cover is because that is actually an example of Amazon's print on demand hardcover, which is a relatively new capability there. They've been doing softcover for years now. But hardcover was was relatively new. And, you know, we sought an opportunity, Steve to take our own advice, we often tell our clients, try new technologies, try disruptive things, see what happens and that's what we did. And so far so good. You know, we don't get the benefit of a publishing houses marketing department, but you know, what is marketing today? We basically were all over LinkedIn. We're doing stuff like this. I'm Mark and I are gonna do a 10 different conferences this year, maybe more to do book signings, and you know a lot of this is for our client base. So we're we actually Gartner has 12,000 relationships, we have relationships with 12,000 Different organizations or Around the world 10s of 1000s of people, those are the people we want to connect with and how we want to add value and, and demonstrate thought leadership. So it's a different type of approach to what we normally used to what we have done in the past.
Steve Statler 1:00:15
Very good. Well, I could go on and really get into the, to the, they'll be anything but we'll, we'll spare our audience. But I do want to ask you our traditional question, which is, what three songs have meaning to you?
Don Scheibenreif 1:00:29
So, I love this question. The first one is from 1985, which is Simple Minds alive and kicking and that time I was a sophomore at DePaul University living away from home for the very first time. And that song This was blaring constantly so in addition to being a great song, it actually it was it was a reminder to me and and I still I still enjoy hearing it it brings back a lot of memories that same thing with like, Don't You Forget About Me The Breakfast Club because I'm a Gen X sir. And so that that one was was a good one for me. And you know, here I am 57 years old at Gartner alive and kicking so I think it was hopefully I'll prophetic for me.
Steve Statler 1:01:12
Very good, great choice. And I actually have, we used to have the our editor would put the song in the background, but for copyright reasons, we understand stop doing that. But I do have that song playing in the back of my head. So that was a good choice.
Don Scheibenreif 1:01:27
Very good. So the second one is at last by Etta James and that was a song that played at my white my wedding. And the first stands for me and my wife. So I picked the song and that has a lot of meaning for me. And, you know, that was You've so many people know the lyrics. I don't have to repeat it, but it was it was meaningful. And then my third one was as an introvert, a capital I introvert, I was definitely deathly afraid of karaoke. I mean, I just refused to do it. I refused to do it. So it wasn't until I was with friends in Tokyo, that a karaoke bar with the private room and about five beers in me that actually had the courage to stand up and I sang highway to hell. Oh, by AC DC, so that was the first one.
Steve Statler 1:02:18
Yeah, sounds pretty challenging.
Don Scheibenreif 1:02:21
Yeah, it was really, it was fun. It was fun. And one of my one of my friends said, yeah, there's always somebody in the group that says, I'm never gonna do it. I'm never gonna do it. And they end up singing all nights, I actually sing about five or six different songs and surprise myself. So for me, that song is about kind of breaking out and challenging yourself and having the courage to do things differently. So that those are my three songs.