Joshua Chin 4:47
What kind of an impact are you seeing with tweaking pricing and optimizing pricing on unprofitable
Chad Rubin 4:54
a great one or else I would be doing it and people wouldn’t be signing up the way that they are. But if you look at our website, we have wall charmers, they were in our first beta cohort, they generated 30% more additional profits by using Profasee. Now, we can’t always promise 30% increase in profits. And by the way, the profits are rolling. Because we’re AI, we get smarter and the learnings compound over time, which create a competitive mode. So $90,000 of incremental profit per year straight to the bottom line is what we generated for wall charmers. And now we’re moving into our second cohort. And like, if you think about it, by the way, it’s not just even data we’re generating, because then you think about the sale and the multiple on the sale, which is a conservative three or four acts on EBIT da, and you’re creating that much value for our brands that are using us.
Joshua Chin 5:47
Well, yeah. That’s a good way of thinking about it, and how much how much are you paying Profasee?
Chad Rubin 5:55
We do a flat fee. And we’re giving people lower flat fee pricing today, because we’re just trying to scale and get clients in the door, right and grow from there. So we’re a flat fee. So we don’t take a percentage of revenue, we don’t take a percentage of profits, the upside is yours. Interests, everything about it, right, like every other industry has been, is utilizing dynamic pricing, right, Amazon, Expedia, Uber, Airbnb smart pricing. And so we’re just duplicating that same strategy and giving Amazon brands the same technology that they haven’t had access to.
Joshua Chin 6:37
Would you say it’s leveling the playing field? Just a little bit more?
Chad Rubin 6:42
Yeah, so essentially, algorithms historically have rendered old paradigms extinct. So and help people make mounds of money, for example, Uber surge, pricing, or hedge funds. And the beautiful thing is that we’ve spent all the money to give this to clients to utilize. So most, only bigger companies really had access to this technology. And when I say this technology, I’m talking about true AI, not just like, there’s a lot of software companies out in the EECOM space that claim to be AI. They’re really just if then logic that’s masquerading as AI, if you’re really truly building a true algorithm that’s capable of self improvement, right. That’s what we’ve been investing in for the past year. And we’ll continue to do so.
Joshua Chin 7:30
And what’s so difficult about about that building an AI model, and what’s the advantage of doing that versus just building like a massive if, if this then that.
Chad Rubin 7:41
So think about, so if this, if this then would have so many nodes of if then they need to create manually and it’s, it’s open to human error. Algorithms create their own nested nodes of events, they trade them for every single product for every single product, you’re selling for a brand. And they’re faster than us. They’re cheaper than us. They work as they should, and they work 24/7 They make less mistakes, and they can evolve. And these are things that the traditional brand hasn’t had access to hover in his past. And so it’s not just pricing that AI is disrupting. But it’s pricing spend content, and forecasting demand planning. So you’re essentially an algorithm with link a mathematical function, right to learn from, or to your inputs. So it links the mathematical function to a user input and create its own yes, no decisions based on the output that you want to create. In our case, we want to maximize profit without sacrificing your discoverability on Amazon.
Joshua Chin 9:04
That’s really interesting. Now, Chad, what you’re what you’re building a Profasee. Are you building a foundation of AI for Amazon, and ecommerce? Or are you building a foundation for pricing? And the reason I’m asking that is I’m curious about the future development, potential of Profasee and what we can expect to see.
Chad Rubin 9:30
I have a very, very large ambition. And so that means that pricing for me is a wedge into a end to end software stack, driven by AI to maximize what I believe is the future which is the algorithmic brand, right, the rise of the algorithm and the the algorithmic takeover on Amazon.
Joshua Chin 9:54
Interesting Well, look, you’re telling me more what does that mean?
Chad Rubin 9:57
So, like I shared price Seems to me is just like a gateway drug into the future. Right? So pricing is monetization. But if you think about the way that even ecommerce brands look at advertising today, specifically on Amazon, there’s a terminology called A cos. Are you familiar with that term? I’m not. So eight cross is your advertising cost of the sale? Oh, yeah. So it’s a ratio of what is the ratio of what you spend to what you make. And most people are siloed on this side of the equation, which is what you spend because agencies, that’s how they’ve always worked.
Joshua Chin 10:36
And that’s the equivalent of row us on the DC side.
Chad Rubin 10:40
Yeah, so it’s an inverse of rho s. Right? If you actually take the inverse of that it creates rows. So okay, so I digress. So essentially, a cos is a person, what you spend to what you make, and everyone’s focusing on what you spend, but no one’s focusing on what you make the revenue portion. And if you actually combined the two together, you create the Holy Grail. It’s like peanut butter and jelly. Makes sense? Actually, it tastes it tastes much better together, you can have them separate, you’d have a peanut butter sandwich, you can have a jelly sandwich, but together, they’ll actually it’ll be monetization and acquisition together.
Joshua Chin 11:21
What’s the what’s the role of the brand owner in your vision, when Profasee’s completely built out?
Chad Rubin 11:31
There role of the brand owner is to provide the inputs so that the data is being calculated into the proper insights and actions by AI. And the second input, which I think is very important, is the connection, the authentic soul. And like, right, I haven’t been able to see any brands using like, for example, ChatGPT, which is like the latest buzz to generate content that actually has soul. And it’s hard to explain that soul. But I looked at my LinkedIn post, I’ve been posting on LinkedIn pretty frequently. I ChatGPT, could never write what I’m writing. Or maybe maybe in the future, maybe a future state where it’s so good. And the and the prompts that are created are engineered masterfully. For right now, we’re just not in that state yet.
Joshua Chin 12:26
Interesting. What’s stopping us from what’s stopping AI from getting there? Is it a matter of, you know, like, like, a little essence that humans have that AI just cannot encapsulate or is a matter of time?
Chad Rubin 12:46
Essentially, when does AI get there? It’s a great question. I don’t know when I know it will. I don’t know if you ever heard of the term technological singularity? Yep. So it’s when AI becomes uncontrollable, and essentially, changes human civilization. Right. So technically, it’d be like aI with a conscious or conscience. And I don’t know when we get there, but it’s not actually so far off.
Joshua Chin 13:19
Interesting. All right, a little bit of a sidetrack here, but at that point. what’s your what’s your point of view? Are you optimistic or pessimistic? As you approach singularity, where AI is just as capable, which is a smart business, indistinguishable as as a human being? What then?
Chad Rubin 13:47
Well, I think like any great technology has unintended consequences. You can say that about any anything that’s been created, Facebook, Instagram, Amazon, there’s always going to be some Tesla. There’s always unintended consequences. And I think AI is gonna have the most unintended consequences. Because essentially, if you look at ChatGPT in itself, right now, it’s, it’s based on its creator. And so it’s injected with the biases of the Creator. So that’s one challenge. And if ChatGPT becomes the prevailing AI model, then we’re all going to be using AI that is bias and has a to an element of being flooded. The second is the the point of singularity when essentially you have humans that can be programmed or robots that can be pre programmed to act like a human. Because you look at this Alex Hormozi post that he didn’t have you seen it on AI specifically at the end of 2022. He talks about the only thing that hasn’t been AI yet is sound. We have images because images can create videos. And then we have text. And so once you have video, and then you add sound to it, you pretty much to like replicate humans. And that’s super scary. There’s actually a site out there right now called character.ai. Yep. And have you gotten to yet?
Joshua Chin 15:20
I’ve checked it out. I think that’s, I’ve seen a couple of videos of that.
Chad Rubin 15:24
Yeah, it’s super cool. So essentially, it’s a model that’s been created around a person’s idea. It’s, it’s studied the human so much, where it can respond, just as if the person responded. So I’ve tried Elon Musk, I’ve tried Joe Biden before. It’s It’s pretty wild. And we’re literally in the first inning of this and and I think everyone should be paying attention.
Joshua Chin 15:48
Interesting. Are you the optimistic or pessimistic?
Chad Rubin 15:55
Well, I’m building a business around it. I’m very, I’m very optimistic of how AI can leverage data to drive decisions. I think for a long time, ecommerce brands are just like, sprayed and sprayed with tons of data, and they don’t know what to make of it, which comes over analysis paralysis. And I’m concerned when they’re when it becomes so powerful, where people actually don’t think for themselves. There’s like brain atrophy. And humans get toppled by AI and computer code.
Joshua Chin 16:32
Interesting. All right, let’s get back. Now Profasee, why why hasn’t this been built in the past decades of ecommerce? It’s not it’s not a new problem. It’s it seems like it’s a problem that’s been around as long as Amazon’s been around then some
Chad Rubin 16:58
Yeah. I had a few things. One is there are reprice errs that are out there, right. And we are the first private label repricer that is AI first. But there’s reprice errs out there for people to win the buy box. So what does that mean? It means if you’re selling this iPhone case, on Amazon, you’re competing with three other people in the buy box. And essentially, somebody has built a software to programmatically figure out how to win the buy box. Profasee focuses on Amazon brands, brands that sell on Amazon, who don’t have to compete for the buy box. So they always own the buy box. But they want to own the search engine ranking page on Amazon. That’s where we focus, that’s where we we live and die by by the search engine ranking page on Amazon. So there’s a few other revolutionary things that have had to happen to enable Profasee to exist where it is today is AI has come a really long way. Now we started building this a year ago before AI became mainstream, right? We ChatGPT But let’s just say we’re 100 under underground AI, right, we built a proprietary model. And nobody has spent the dollars because it takes a lot of money. I raised $2.3 million for this business. Nobody has raised the money and has had the experience to build something like this so
Joshua Chin 18:21
interesting. I’m, I’m really excited to see the development of the product. And there’s there’s a lot to be to be had. But here’s, here’s here’s the dilemma. Now, if everyone selling on Amazon, every private label seller, and every third party seller and Amazon is using Profasee that levels out the playing field completely and nobody has an edge. How do we How should I think about that?
Chad Rubin 18:59
Yeah, so first of all, that would be a great problem to have if everyone uses Profasee. Right? It could be the War of the algorithms right? It could be that other people build algorithms and then there’s Profasee competing with another AI driven repricer right and then it becomes a well becomes a who’s who has better tech, right, who has built the technology in a superior manner to win the AI war. But if everybody is using Profasee, which would be super cool. That means that we essentially have so when you come on Profasee, we asked you to put in your min price and your max. So you give us the boundary so we can operate within and you give us your landed cost. Now imagine we are working with the top three companies that make hats, right? And they all give us their cost. They give us their mins and maxes. So like there are there is user input that sky hitting us. And so like Profasee would work its best to figure out what is the Apple price point for each given listing on Amazon to maximize profit based on the user inputs. I don’t necessarily see a conflict. What I do see is that Profasee has all the data to be able to make the most optimal decision for each product detail pages on Amazon.
Joshua Chin 20:25
Chad, what you’re saying is that the the future of this market isn’t a monopoly, it’s not a winner, winner takes all type of a situation, it’s going to be two, maybe three players in the space competing.
Chad Rubin 20:43
Right now we have no competition outside of like pretenders that say that they have AI and they don’t. Now, is it possible that they can create an AI models on that Jonah has deep pockets can do it? Sure. But they’re gonna have to catch up. And so I’m already a year ahead. Right? So if you think about the technology, technological advancement, they’re gonna be a year behind us. So like, I believe that we’re building something that’s amazing. That’s and help people flourish. Whether it I can’t hypothesize whether or not it’s going to come in and compete with us. But right now we are, we are the only players in the market that do this.
Joshua Chin 21:22
Interesting for people listening, selling on Amazon. And thinking about thinking about using using the products. What would you what would you tell them?
Chad Rubin 21:43
Well, I would love them to sign up, but in reality, right, we’re not for everybody. And that’s in our values on our About Us page, right? We’re not for everybody. And we work with more sophisticated sellers, typically above a million dollars to $2 million in revenue. But if you wanted to just see the pricing impact, how I suggest you try it manually to understand what goes into pricing. Because it’s not as simple as just like marking to market and letting a price stay static. We believe in the idea of dynamically changing pricing and building a spreadsheet around your price changes and seeing how your price influences your profit. Now, what makes it more complicated on Amazon, Josh, is that there’s something called a knock on effect. Your price today affects your orders tomorrow. Why? Because Amazon’s is fast driven marketplace, where your discoverability changes your BSR your bestseller rank changes on Amazon. And so we we understand and our model is smart enough to understand those changes and to incorporate it but just take one acent and see what it’s like to make changes in price.
Joshua Chin 23:03
Very cool. Now, before we move into talking about the business side of things, I have a couple of questions. I’m really curious about when can we expect or should we expect a similar platform? Or would you build a similar platform within Profasee for other marketplaces like Shopify? And etc.
Chad Rubin 23:32
Yeah, so that’s directionally one direction we can go into it’s I’m not I’m unsure if that’s the direction we’ll go into. And for a specific reason, I think on Amazon, people are accustomed to price changes, customers know how your basket changes the price changes of a product. So I can add 10 products to my Amazon basket. And I see that the price fluctuates, I don’t care. Now, if you’re buying from a DTC brand, even a champion, and you go and you spend $120 for a hoodie, and now that hoodie is $199 you might have some remorse, right? You might contact the company and be like, Hey, I just bought this hoodie. And now the price is 20%. Lower, like, what’s that? And so I’m unsure if that’s the direction we necessarily want to go into make sense. But I do know that a lot of these DTC brands want to have like ego around their price. They’re like, Oh, um, you know, I have the best price and I’m never gonna change our prices. We’re not a discounter. We’re premium brand. And I’m unsure if there’s going to be a high adoption based on like a Shopify merchant base to do so.
Joshua Chin 24:49
Interesting. All right. People listening if, if you’re in Shopify, and you want this on Shopify, go on to Chad’s LinkedIn is the best place to to get In Touch view,
Chad Rubin 25:01
alright, just email me and my personal email. It’s chad@profasee.com. It’s Profasee
Joshua Chin 25:10
love, love is that the origin of name.
Chad Rubin 25:13
The original name is actually the word prophecy which is biblical, which is predicting into the future with a certain level of certainty that something’s going to happen.
Joshua Chin 25:22
Beautiful. Alright, so you still Skubana? Right? A little bit of a segue here. You still skew Burnham back in 2021?
Chad Rubin 25:31
Yes,
Joshua Chin 25:32
what? What’s different with the way you’re building Profasee today? So the reason I’m asking that is I’m curious if you’re, you’re building something with a even greater than ambition, or are you starting from where you started out with Skubana and just building it with a compounded level of skill sets and experience in network?
Chad Rubin 25:59
Yeah, it’s a great question. You must do this a lot, Josh.
Joshua Chin 26:05
I asked him a lot to him for for people. You know, we’re seeing entrepreneurs buying and selling businesses all the time. So I’m always curious about your mindset.
Chad Rubin 26:16
So I’ll tell you Skubana has some highs and low lows. So we started September 10 2015. And we exited in April of 21. So it’s roughly 2000 days. And there’s a lot of mistakes that were made. There’s a lot of beautiful things that have happened, there are certainly a lot of mistakes. And I created a framework around those mistakes. So I wouldn’t make those same mistakes. On top of that
Joshua Chin 26:45
interesting. Hold on Yeah. Frameworks. Are you like? Are these like documentations like SOPs frameworks? Or do you think of like mental models,
Chad Rubin 26:56
mental models, like I journaled about all the mistakes that were made, and how I want my next business to be different. I also took a lot of time between the sale and the departure to invest in myself and become the better version of myself. So I went from version 21, resulting 21 to version 22, to version 23, where I am today. And I hired coaches like crazy to really hone in on self improvement, self growth, and some things that light me up in the world. And analyzing, like where I want to go to next right the mistakes that I made, that I compiled, I journaled about them and really work towards not making the made them learning opportunities.
Joshua Chin 27:46
What are some of the most interesting mistakes that you’ve made, that you could share, or your favorite ones.
Chad Rubin 27:58
So Skubana, we are a multi channel we are or it is a multi channel, I hate to say we but it’s it now working independently of myself. It’s a multi channel operation platform. So it if you sell same on Shopify, plus, it updates Amazon, if you sell on Amazon and update Sephora, we keep all your inventory in sync across the channels. So we do orders inventory and profitability. That software in itself is a line item that’s on the expense line. We’re more of a efficiency software, and a cost saving software. We’re not a revenue generating software. And so one of the changes I want to made was I want to be in the revenue stream help ecommerce brands make more money. And so that was a pretty easy one. Right? Right. So for me, I wanted to be in the revenue stream, right, in the generating aspect of the business, and obviously is doing right now.
Joshua Chin 29:07
Why is it? Why is it the case? Is that a just a matter of scale or impact or
Chad Rubin 29:15
people want to see more money, they want to see addition versus subtraction. Like efficiency doesn’t necessarily like always doesn’t sell like if you’re doing if you’re building an outbound campaign, you’re not going to be like, Hey, we save this person 15% And it’s hard to quantify that percentage.
Joshua Chin 29:34
Right? So efficiency, okay.
Chad Rubin 29:37
So as i Hey, we synchronize your inventory. You don’t have to have a full time employee synchronizing inventory. We’re also our onboard are really quick because we’re a multi tenant software. So it’s not a six month onboard. It’s a three month there’s a three week onboard. So things like that are still it’s still a cost item on the p&l When you look at the p&l. So you know, that’s how it’s say like, that’s something that’s I’ve codified for myself. During this great reset that I took between the sale and Profasee, I made a list of my personal values, core values that drive me. And I’ve embedded those into the business and I let that run a lot of my decision making process.
Joshua Chin 30:24
Interesting. I am personally, I’ve I’ve been I’ve been following your journey from from afar, just kind of appreciating what you’ve done. And at my company Chronos, we have done a little bit of a little, a little bit of partnership work, not not a ton was Skubana, with your colleagues. I’m, I’m really curious why you didn’t decide to take a little bit more of a time off between the end of your journey of Skubana and Profasee because that was like just a couple of months not even. Was that half a year? Less than half a year? Right?
Chad Rubin 31:02
No, I didn’t even take time. Right. I actually sold in April, I worked at the company for a very long, not very long time. I worked at company from April till October, I resigned. And I started Profasee in December.
Joshua Chin 31:17
What was going through your mind? Like what why? Like before? Before that, how much can you share about the the exit and the financial impact that had on your life? Was it life changing? Or was it just incremental? What was that like?
Chad Rubin 31:34
Oh, it was life changing? And one of the questions I sat with, which is a really important one, right? If my if it’s life changing, then why didn’t my life change? Like, after the acquisition happens, you’re you have more money in your account. And you’re still the same person. I’m still in the same house. I bought myself a present. Sure. But that didn’t change who I am how I operate the people I hang out with what I do from day to day. So I would I would say that a few things. One is I think a big mistake in hindsight was being impatient. I should have sadly and patients a little bit longer because I took from October to December like not a very long break. Yeah, now I did. I did have some time. Like during that transition period, right. Skubana We sold in April, it was a different flow for me a different work life balance. So there was a different flow and pace of life that happened for me and like I can call submit that part of my great reset too. But I think I probably should take a little more time.
Joshua Chin 32:48
Interesting. What What else came out of your reflections
Chad Rubin 33:04
I found my mission in life. So I worked on my values, but I also worked on my purpose. Could you share? Yeah. My purpose is to elevate the human condition through holy moments and sacred experiences. I love turning with maybe just could be a dinner with friends and making it a lot more meaningful to activate potential through it could be through meditation at the table or a ceremony or being an active facilitator. But I really love and like crave experiences where you you leave better than when you began the experience together.
Joshua Chin 33:56
Interesting, I understand I can relate to that. I dread meaningless interactions. And often when the you know how, when people kind of meet up with friends for for drinks and dinner and like a meal. Often the conversation goes into a really just meaningless spiral of gossip or just hey, how are you? What are you doing what how are the kids how to has a wife as your husband? It’s it is such a like in my in my opinion is such a waste of interaction, such a waste of human connection that I think could be done better. What what’s what’s your take on that and tell me more about what where that came about.
Chad Rubin 34:54
So my take on that is I agree with you 100% And you have to be an active facilitator, like I moved to Miami in 2020. And like you usually go to dinners and you don’t use long tables and you don’t meet everybody, you’re kind of stuck at the same part of the table with other people. So I would leave these dinners uninspired and underwhelmed. So I was thinking, like, I need to take matters into my own hands. So I started hosting at my house. And I hosted and let people know, like, Hey, I’m gonna host I’m gonna actively host and like if you don’t want to, some people don’t like doing. I don’t know, like my mother in law, she doesn’t like it. When I facilitate active discussion. At the dinner table, which she likes, she doesn’t, she doesn’t like it. And that’s not who I’m catering to. And certainly not somebody I’m going to have at my house for dinner, when I’m hosting a bunch of other entrepreneurs or other serial founders at my house. So I just, I always gravitated towards creating these meaningful experiences, whether it’s taking tea, and making like doing a proper tea ceremony. Or it’s like, could be hookah, it could be just having dinner, it could be meditating, just setting the right atmosphere up to activate potential. And that became more cognizant for me and more in the frontal lobe of my brain. After I did a psychedelic as part of the my, as part of my reset,
Joshua Chin 36:40
very cool. What do you go? What was it? Uh, was it a ceremony I was a ceremony or was that something else?
Chad Rubin 36:48
I know, it’s something else. And it was facilitated by a very close friend. And it was like, hyper optimized, and it was done very intentionally. So, you know, I’ve been in therapy for a very long time, I feel like I’m very reflective. And this was a really healing journey. For me.
Joshua Chin 37:12
There is just a little bit of something that sets most entrepreneurs apart from people who have not gone through the experience of building and selling and scaling a business. And I think that’s unique to every entrepreneur that I’ve spoken to. And I’ve spoken to many in an EO and Entrepreneurs’ Organization we’re both member at, and also outside of you. And I’ve come to realize that not many people, not many entrepreneurs are aware or cognizant of what that thing is, whether it be a character trait or value or tendency. What’s yours?
Chad Rubin 38:05
My my tendency or character trait as it relates to what exactly?
Joshua Chin 38:10
Do you how you perceive the world? Life work, I don’t like to think about thinking about life and work as separate profiles. I think we’re just one. And I like to kind of hear about your reflections about who you are and what you’ve learned.
Chad Rubin 38:31
Okay, so that’s a very large question. So I’m going to try to see my narrative properly. You want to understand, what are some experiences that have led me to the entrepreneurial route?
Joshua Chin 38:45
Let let me rephrase that. What are some of the character traits that that you have? That you’ve realized over? Over the years that have stayed consistent, that I’ve allowed you to do what you do?
Chad Rubin 38:59
Okay, so I would say one is okay, so what is Hungary, Hungary, I grew up, hunger, I grew up poor. And the to never want to go back into that realm of life again, has kind of, I would say, has propelled me to want to achieve success. And so I’ve been very hungry, right? I went, I went, I was first generation college grad. I went to university and paid my way through school, studied finance because like I felt that’s where my family was deficient. And went onto Wall Street, which is like my was my dream job at the time. And I was like, Oh, this is going to be amazing. And I never wanted to be an entrepreneur and my father was an entrepreneur. And I saw him struggle, and we can barely make payments to rent. So I think that’s like a defining characteristic for me was, is that right? I used to have an unhealthy, like, I used to look at my bank account every single day. On Wall Street, even though like, it was for what for nothing, like, my bank account was typically the same or not my checks every two weeks from Wall Street and my bonus at the end. And so that’s one, I would say two would be. And like, I’m giving you like, AEO principles here, right, where we encourage vulnerability. So another one would be, I was also fat growing up, I was obese. And to be shamed, and to be ostracized from society allows you to see the world in a different way. So I think you can, you know, while I’ve lost the weight, and I feel like I’m in great shape, I am always have like that. I always can see that, like, Hey, I was on the outskirts of society. I didn’t fit in, right, I didn’t see the world the way everyone else saw the world. And that has really empowered me forward.
Joshua Chin 41:10
Very interesting. Very cool. Chad, I wish we had more time. This is a great conversation. I really enjoyed this. What’s the best way for people to connect with you is so email for people wanting to learn more prophesy, where should they go to? And yeah, go ahead.
Chad Rubin 41:32
So my personal email chad@profasee.com. You can check me out on LinkedIn, Chad Rubin, Twitter, Chad Rubin. But yeah, feel free to email me reach out. I want to be supportive. I want to help the community.
Joshua Chin 41:46
Chad, thank you so much. Again, I hope to have you on sometimes on a roll and things have evolved a little bit more.
Chad Rubin 41:56
Awesome. Thanks for having me, Josh.
Outro 42:02
Thanks for listening to the eCommerce Profits Podcast. We’ll see you again next time and be sure to click Subscribe to get notified of future episodes.
