Podcasts > Ep. 131 - The future of retail with 3D product technology
Ep. 131
The future of retail with 3D product technology
Beck Besecker, Founder & CEO, Marxent
Monday, June 06, 2022

In this episode, we discuss the use of the 3D product visualisation, AR and VR platform at enabling full sales cycle, e-commerce for complex consumer offerings such as home renovation. We also explore the challenges related to 3D content, including large file sizes, complex matching between consumer needs and product lines in a new UI and the evolution of sales processes. 

Our guest today is Beck Besecker, founder and CEO of Marxent. Marxent is the developer of 3D cloud, a 3D leading content management platform, for enterprise retailers and manufacturers.

IoT ONE is an IoT focused research and advisory firm. We provide research to enable you to grow in the digital age. Our services include market research, competitor information, customer research, market entry, partner scouting, and innovation programs. For more information, please visit iotone.com

Transcript.

Erik: Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host Eric Walenza.

Welcome back to the Industrial IoT Spotlight podcast. I'm your host, Eric Walenza, CEO of IoT ONE, the consultancy that helps companies create value from data to accelerate growth. And our guest today is Beck Besecker, founder and CEO of Marxent. Marxent is the developer of 3D cloud, a leading 3D content management platform for enterprise retailers and manufacturers. In this talk, we discuss the use of the 3D product visualization, AR and VR platform and enabling full sales cycle ecommerce for complex consumer offerings such as home renovation. We also explored the challenges related to 3D content, including large file sizes, complex matching between consumer needs and product lines in a new UI and the evolution of sales processes.

If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you would like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.

Beck, thank you so much for joining us on the podcast today.

Beck: Thank you, Erik. Appreciate the opportunity.

Erik: It looks Beck like this is a space that you've been in quite a bit. Actually, just looking at your CV, the first company that you set up here as actually founder and CEO, but it looks like you basically set this company up when you were maybe a senior in college, and then ended up selling it off a few years later? What was the backstory behind your entry into the retail tech space?

Beck: I was in grad school at Purdue and we had a pretty interesting project. So this is like CIRCA 1995 and like big data and scanning and Prospect Management databases, were just really starting to come on the scene. And so I ended up getting like a school project where I was helping scan donor giving histories into a big database, so we could build a capital campaign and get really interested in the idea of what effectively it turned out to be what sort of differentiated or targeted marketing trying to figure out who to call on and why and what was their propensity to give.

And at the same time, Amazon was starting up and pets.com, and there is all these retailers move online, and you have email and other less expensive ways of distributing marketing or promotions that the ability to use those marketing dollars more efficiently is really going to start to become a thing. And so we started this company Copient, which was really initially targeted towards online retailers helping them look at customer, either purchase behavior or surfing behavior, engagement behavior and try to tailor incentives to them that would be more interesting them and optimize marketing dollars.

And then eventually, where we really took off was a lot of the offline retailers, particularly like grocery drug mass, people like Safeway and others that they were having the same challenge trying to communicate to customers at the checkout, they're all sort of like 10 different offers, buy one, get one free, spend $50, get $5 off. And so our cloud based targeted marketing technology ended up integrating into the checkout.

And so in a lot of ways, it was sort of like Google for the checkout in the sense that you could look at previous or current purchase history and then serve up a targeted ad. And then eventually, NCR which is a big point of sale company acquired the company in the mid-2000s.

Erik: So at checkout, maybe they asked the person for their name or based on a credit card, somehow they'd know their identity and then be able to give a targeted coupon based on that?

Beck: Yeah, another way of sort of summarizing that companies if you ever scan a loyalty card and get a really long receipt at checkout, it looks like it's tracking all your behavior where the guy is to blame.

Erik: And then after you sold that off you, you became Chief Development Officer for Catalina and it looks like you're now actually running two companies, Magnetic Mobile and Marxent. But the relevant one for our conversation today, Marxent, you set that up in 2011. And here, we're looking at 3D cloud in 2011, that sounds like a challenging product to build at the time. Maybe you can just share a little bit of the backstory actually why you set the company up. But then I'd love to understand the first configuration and how the company evolved.

Beck: My brother, his background is math, computer science and so he's the inventor on the team. And my backgrounds more like finance and business development. And so this is 2011. And gaming, obviously, it's already hot, and that was something he was into. And he kept sharing with me that the potential of 3D in other verticals. Our background had always been like, how do you take something that needs a content management platform and bring it to market?

And as we started sort of thinking about all the use cases for 3D, and that sort of non-gaming or non-entertainment categories, I thought, man, it's not too wild to think that like why in the heck do we need a picture on a product page? Like, why couldn't we have a fully articulated 3D model for every product that ever existed? And we thought man's, if that ever happens, it'd be a much better user engagement. There's probably other use cases that there's going to need to be a content management platform to make that happen. We were definitely knows, we early, some good stuff came out of that as well, though, of course, we're able to really focus on building a platform.

And then the other use case is things like augmented reality, we actually wrote the very first AR app for the App Store in November of 11. And it was even called Augmented Reality at the time, we were calling it like holograms or something. And then we also built the very first VR application in the history of retail back in 2013, something like that. There's good and bad that comes with that, I mean, if you can survive through it and spend money wisely and sort of increment and work on the platform and get through product market fit and get into pilots and validate your thesis, it can put you in a good position.

There were some tough years in the air, but we've put ourselves in a position now where we're one of the leaders in this space, which is great.

Erik: When did you first get the mature solution more or less as it exists today, when did that first come to market?

Beck: I'm seeing a lot of it in market today sort of people who are coming into the 3D and AR a little later, which is not to say it's a bad thing. But we tested like every single product category to try to figure out which one of these were like actually meaningful to users. I bet we did several 100, like that's probably not an exaggeration. But we did handbags and shoes. And we did an animated notebook thing for Target. And we did lots of beer cans and beer bottles. Like, it became a lot of these like scan that beer bottle, get a dancing character, or scan a calendar and get an advertisement.

We did the big thing for Heineken in Vegas. We did a thing for the 75th anniversary of Batman that was actually pretty fun. But they're all these like marketing campaigns. So you did a bunch of development, launched the thing, hopefully got an advertising impact and then you kind of moved on to the next thing. And so we use that as a way to kind of keep the company going and get revenue and also try to find like where was this thing really going to like make a meaningful and lasting impact?

We found our hook when we started working with a company called AZEK, which owns a company called TimberTech, which is a decking company and we built an application for them. And it was where this is like that fabricated composite deck material. And they had lots of different colors, that was part of the value proposition, different railing styles, different infills, different caps. And we helped them build a 3D Configurator tool really designed for homeowners as a way to sort of get into the sales funnel, and begin experimenting with design and look and then ultimately reach out to like a contractor to get a project done.

And on the user side, man it worked. I mean this was definitely some latent need. Most of the time, these configure price quote solutions were really targeted towards B2B sales. And this was more of a B2C type engagement. I like to think of it as like Expedia. In other words, like, we used to have to call somebody to book an airline ticket, and then all of a sudden Expedia came online, and we could all do it ourselves and how much time people look and compare and think and evaluate. And a lot of ways our business is the same thing: we're using 3D to help users get a head start on a project and think through options long before they ever talk to a sales rep or a contractor.

And so, it really worked from a user perspective. But there was something else that became obvious as well, which was the content didn't change very much. Like once we built that 3D catalog, the decking catalog, which took some work several months to build, but once we built it, it was sort of incremental updates year over year. And so we could amortize the cost of the content creation over a long period of time. And then we were like, okay, we got a great B2C user experience where people are trying to get in that top of the funnel and evaluate opportunities and we could create the catalog and not have to keep creating the catalog in perpetuity. And then we started looking around like, okay, what else looks like this? And obviously, it was like decking in kitchens, bathroom, furniture, office furniture, closets. And so we're just working our way down a list of categories that all have that sort of same characteristic.

Erik: We're just doing audio here. But can you maybe give a best effort to share the end customer experience here?

Beck: I think I can, yeah. So the easiest way to think about this, like imagine that you and I went into like a big DIY shop, and we were going to get our kitchen done. And historically, you'd have a sort of a professional sitting behind a desk and they've got computer with a big old monitor and you're looking at the back of it. And while you're trying to describe to them like what you want, or you brought a bunch of pictures and maybe some pictures from Pinterest, and designers sitting there flipping through a three inch catalog, like looking for all the different elements that they can put in the scene to build your kitchen, that could be a several hours, several trips, several weeks kind of process. And your ability to iterate is basically low to none, it's not like you're going to get 15 designs from that designer.

So what we realized is there was a sentiment in the market that consumers couldn't use these tools, like, okay, the design tool is too hard. And it couldn't have been further from the truth. Now, some of the incumbent design tools were kind of clunky. But like if you gave a user good online experience, they could definitely drag and drop and play stuff in the scene. What was the problem was that they couldn't understand the catalog, not that they couldn't design. And because imagine you have this big three inch catalog like do you know if you need a 10 inch or a 24 inch or a 36 inch? It's like you don't even know what Legos you have to play with, so to speak.

And so what we did is we said, okay, we started testing with consumers. And what we really found is that they actually didn't really want to work from a catalog. They wanted to work from the inspirational photo they brought in. And so what we built was this design from photo experience. And so you can go onto one of our apps, you can do bunch of filters, I want green or white or blue cabinets, I want this kind of floor, this kind of paint and then you get presented a whole list of different inspirational photos. You find the one or two you like you tap on the photo, and then you just start dragging and dropping the objects out of the photo right into your individual, personal floorplan.

And so it's like color forms or it’s like if you can't draw, you can trace and so you don't have to worry about all this catalog knowledge; you just take what you like, drop in your scene, save it as your own project, edit it, if you want to and check out are asked to meet with a designer. So it's super easy drag and drop. It's almost like color by lines kind of experience.

Erik: So you got a catalog of 10,000 skews, but then based on the photo that just can identify the 200 that are maybe relevant to this particular design, and that becomes the Lego set that this person plays with, and if they want more, they basically select another photo and that gives them a different set of things to play with, is that kind of the dynamic here the way?

Beck: That's exactly right. I always like to say it's like if you were going to buy a cocktail dress and you started describing it and you said oh, I want it to be like black and knee length and off the shoulder and have like a white, frilly collar, and you type that search into Google, like you might get hundreds of thousands of photos, right? And so rather than try to use like a style quiz to sort of figure out what the customer wants, just show them a bunch of photos, and let them pick it. So it's you pick the exact dress you want, and you make it fit on you. We're doing the same thing for kitchens, pick the exact kitchen you want and make it fit your space.

Erik: I guess right now we're getting pretty good machine vision technology. So might be possible to that somebody brings in a photo that they tear out of a magazine or take a picture from a friend's house or whatever that might be, you scan it, but then it's not tagged to the back end. But is it technically possible to start doing some matching using algorithms in real time? Or is that too challenging of a task to look at right now?

Beck: No, certainly possible. Yes, definitely where we're headed. The other part of where we're headed is one of the interesting things about our platform is we can build the photos. Our designers in-house, use our exact tool to create a space and then render it out as a high resolution image and that becomes the inspirational content. And so most retail, you think like, oh, hey, there's a lot of photos out there to choose from and it's not really the case we found, is they don't have a lot of content that they can either publish or present. And so we're actually becoming kind of a publishing tool to create inspirational content.

And then the other big advancements would which is so historically, we've been allowing the user to drag and drop out of the photo one object at a time or a couple objects at a time, we're now moving to full automation. So now I can build my floor plan and soon be able to scan my floor plan. And then I pick a photo, and I say build my room and then it presents a whole bunch of it says, okay, here's all the available permutations of that room, here's like a galley kitchen, here's an L kitchen, here's a G shaped kitchen, it gives you all the different options that got created. And you can just sit there and click and just go from kitchen to kitchen to kitchen, I mean, just like you could do hundreds of kitchens in a few minutes that you could click through.

And so now, instead of it becoming a design experience, it becomes more of like a browse through all the possible options experience. And this, of course, is based on a set of business rules and best practices and data. And so like now you can really go through and explore all your different design options as opposed to kind of keep incrementing on one. And if you're like a designer, imagine it's like going the eye doctor, you can go like do you like one or do you like this one, do you like this one or do you like this one? And so it's kind of like, instead of having to sit there design one over a week time, send it to somebody get their feedback, you can narrow their interest much more quickly.

Erik: We're consultants here, so we've got a client who does desktops and kitchen setups, and so forth. So that's kind of their core business. And I know that they were looking into a solution that would allow the property developers to walk somebody through an empty shell of an apartment or something that's been remodeled and then you basically look at the room as it is and you can start to place things in the room.

So you'd be basically have the real world environment that somebody's trying to imagine and you’re taking these virtual items and placing them there in this kind of AR setup, maybe just use an iPad or something. Is that something that you're looking at that you either have live or how do you integrate this physical environment together with a digital catalog?

Beck: We do that using VR. And so one of the core tenants of our 3D Cloud is you can think about a lot of it like a Salesforce CRM system in the sense that if you're a big enterprise retailer, you're not going to buy nine different CRM systems. You're going to buy one CRM platform probably in the cloud, maybe Salesforce, where you can have a single view of that customer across all the relevant touch points and customer history.

We're kind of doing the same thing for 3D in the sense that like you may have a web based browser experience where you allow home design for a consumer or you may have a desktop experience is done in retail that's tethered to VR for like a design associate or a store associate. Or you want to use those same 3D assets that's an augmented reality experience, or maybe you have like a product configurator that you want to do. And so we have about seven or eight different use cases in 3D and they're kind of gradually growing like, oh, I want to do 3D for Google search and I want to expose my 3D assets to the Google algorithm.

So what we do is our real core competency is the content management system and then we feed all the same 3D asset across all these channels and applications in sort of a much more extensible and efficient way. We’ve really focused on the home vertical because that's more obvious use case and we've got real ROI there. But I can imagine lots and lots of other use cases and applications and partners that would want to take advantage of our infrastructure. So that's kind of how we're thinking going forward.

Erik: I always like companies that focus on a vertical initially because it allows you to understand the customer a lot better, even if in this case also, your technology could be quite horizontal in terms of the different companies

Beck: We built this content management platform the best we could without having a use case and started looking around for all the people doing 3D apps and there weren't any. So, we didn't have much of a choice, we had to go vertical, or we were going to starve to death. But you're right, you can't. There's no substitute for working directly with the client and understanding and hearing their problems. And, of course, there are parallels and other spaces that you can sort of begin to see.

Erik: But I'd like to go into the use cases. But before we get there, maybe we can understand the client a bit better. So maybe just who are you working with at the customer side because this is a complex solution that's touching a lot of different parts of the business. So imagine there's different people that have an opinion on what this should look like. So who are you working with? And then what is the process look like? It also sounds like this a project based initiation, and then it becomes maybe like a SaaS offering in the long term.

Beck: When we started, most of the interest we got was from people who were looking for very application centric kind of request, like, hey, we want to do an AR app or something like that or we want to do a product configurator from small companies, and from big multi 100 billion dollar enterprise companies. It was very, like test app centric.

If you're a billion dollar or less sort of regional furniture retailer, you might have an ecommerce team of maybe three or four people and plus some outsourcing and in a small percentage of your sales overall will be online. For those customers or typical clients usually, it's kind of the CEO or president or head of digital CTO. But it's a small group, 3, 4, or 5 people who have maybe had a merge, that's a very application kind of centric discussion still they kind of trust us with. They don't want to see how the sausage is made, so to speak.

So, all of our compression algorithms and converting files and multi-channel management and role management and security and privacy, like they wouldn't care about that. They just want the application to work.

Then you go to the 10 billion, 20 billion 30 billion 100 billion dollar enterprise retailers, that's a very different sale. And they used to start with the application. But now it definitely starts with the CMS. And so now it's like enterprise architecture. And they're thinking about, okay, I have 20 divisions, I work in 20 different countries, I got 10 different languages, I've got privacy, security, SOX compliance, scalability, extensibility. And so, that's like enterprise architecture, digital, IT, dotcom merchandising. It would not be unusual for me to meet with like 20 or 30 stakeholders in a big enterprise company across pretty much every division.

It's not unusual that they may have done a 3D project or two and now they're trying to figure out, okay, how does this thing get manage in scale over time. So they're looking to invest in a 3D content management platform the same way they invest in a CRM.

Erik: And then once the decision is made to build out the platform, who typically is going to be owning it in the long term, who are going to be the day to day users?

Beck: And it's becoming a role that's new and retail. It's like they're hiring people that are in charge of 3D. The other name for that it'd be like product configuration tools or consumer facing configuration tools. And so that's actually a new role that's emerging to work across all the business units to make sure they're all getting served with the right solution. If it's not, that role has not been sort of born yet, so to speak, it's usually now finding its way into IT as the sort of the central owner.

Erik: And then the business model, is that pretty much what it looks like project-based setup fee plus, and then ongoing SaaS modeler?

Beck: Looks a lot like Salesforce, that was kind of we really looked at Salesforce as sort of how they went to market. So, there can be some dollars spent up front around the creation of 3D content, also, the business rules. So remember the kitchen catalog I talked about at the very beginning, how the things in the catalog attached together or don't attach is in the head of designers. And so one of the jobs we have to do when we set up a catalog is to embed behavioral data in the objects so they know how they interact.

So, for instance, we tell like a fan, or a hob that goes above a stove, that it has to least be 52 centimeters above the stovetop in the UK to meet compliance standards. And if you try to put it at 36, it'll give you a red flag and it'll tell you where to move it to for safety rules or protocols. And so that's what makes it possible for the user to actually design is that we created smart Legos. So, when the user tries to do something that doesn't match a business rule, it corrects them and helps them get to the right solution.

So yes, there is probably 8-12 weeks of which includes at creating the content and creating the business rules, setting up the application and merchandising the app, doing integrations and then launching. So, typical project timeline is probably 12 weeks. So it's not a year long project that we've got a pretty good sort of methodology to get live quickly.

Erik: I'd say a nice competitive barrier, right, because it's not just the tech of how do you visualize things, but it's all the back end know how of regulations in the UK versus France, and…

Beck: Nobody wants to do that twice. When I hear criticism of like, oh, you always get to think well, why won't Apple or Google or Microsoft do the same thing? Like, I can guarantee you those guys don't want to deal with kitchen business rules. The deeper and more complex, and of course, we built a bunch of tools to make it easier. But yeah, makes it sticky and you become a long term partner.

Erik: I imagine these have been a couple of boom years for you. I saw that you've raised the seed round last year. But yeah, I mean, this is the type of technology that was very much in need when folks were locked down. There's probably some kind of 80/20 rule here. But what are the major use cases and then we can get into the long tail or the more emerging cases?

Beck: So this has actually been sort of a discipline that's been emerging or we're trying to really understand. And so if you're a major retailer, and the odds are in the last three years you move to like virtual design services, they used to be you'd go into the store and you'd meet an associate, and you'd sit there at the counter. That's definitely going away. One, because those three sources are expensive. They're hard to find. And two, because everybody's learning that it's just a much better experience being on a Zoom call with a prospect than having them to have to come to the store, and you also can reach a broader audience.

So one big compelling event or trend is this development of virtual design teams, step one. And then now you have to think about, well, how do you get consumers there if they're not kind of walking in the store. And so, now lead generation is in demand. And so the way we think about the use cases is there are all these different ways a consumer might get into a big project. And these are like $7,000, $10,000, $15,000 projects, like these are not small projects, and they have a lot value added sales you can do on top of them, like installation services and so forth.

And so imagine a circle and in the center of the circle is your design services team. And you got to find ways to get consumers engaged. And like, you might do something as simple as like how-to guides or before and after photos or customers are getting educated, and then maybe they fill out a five minutes survey, and then they come in as a lead. The odds are you might get a lot of those, but they're pretty low quality leads, like they weren't very far down the funnel if they just submitted a five minute survey. I mean, some may be good, but on the whole, you get kind of high volume, low quality.

But then you go around the circle, like, okay, well, what if I gave you an estimator that you could spend 15 minutes on and you could look at styles and costs and, and so forth. And then you might get fewer leads, but they're going to be higher quality as that person has entered the budgeting phase. And then you continue around the circle, and you go, well, what about a visualizer, where people are picking styles and preferences and spent 30 minutes on it? Okay, now, they're even further down the funnel.

And then you look at something like a planner which is sort of the jewel in our crown, which is, okay, now, I spent three hours, I built four different kitchens, I'm planning, I'm budgeting, I'm visualizing. Like, if that lead comes in, it might be a lower volume, but those are the crème de la crème of leads. And those are the ones designers love to have because consumers have worked that way. A project could be 14 months in these kinds of categories. And so they're much closer to buying.

And so our job in terms of use cases is, okay, do you need helping our customers create that sort of ecosystem of all these tools that a user can use to get a lead and then helping them go, okay, which one do I implement first, and what kind of quality? And then you can get into fun things like lead scoring as well, like, okay, it's a little slow right now, maybe I'll take a lead that's 50 qualified. But if it's a high season, maybe I'll just focus on the 80s and above.

And so there's this whole emerging space that's kind of around these 3D tools which is all around engaging and grading and scoring and optimizing lead gen. So that's a pretty exciting maturation of the space in the last year or so.

Erik: And then what are the technology aspects that are pushing forward the use cases? I imagine on the rendering side, there's kind of developments in terms of how lifelike you can make this. But what is pushing for the ability for you to move into new use cases from the technical side?   

Beck: The big one was rendering engines for browsers. And so you have things like Epic and Unity, which are traditionally big game engine rendering software and they were pretty heavy for browser based experiences. In other words, you can't expect the average homeowner to have a giant graphics card; they're not going to be a hardcore gamer.

And so really what's happened and there's new technologies like Babylon that are like lighter browser based rendering engines that don't require a lot of overhead and still give you some pretty solid quality. So that's probably been in the last couple of years, three years. That's probably been the biggest unlock in the space. And then, of course, you have cloud rendering and pixel streaming and all that emerging ways to move all that processing away from your laptop.  

Erik: And then there's this whole topic of AR/VR, and, obviously, to some extent, this is kind of AR. I think that the AR that people have in mind, which is this really immersive experience is something that we've all been waiting for 20 years now. How close do you think we are in these types of use cases? It sounds like you already have VR experiences. Where are we in terms of having an experience that really feels immersive and highly engaging? 

Beck: So we rolled out VR to 150 stores at Macy's a couple of years ago, still installed there, about 400 stores now total. And that was a first enterprise roll out of VR, I think, in the Galaxy so that we got a pretty good first look at like how people were going to engage. We did a lot early on where it was like you were in the headset and the designer was working on an iPad manipulating the scene. And there's definitely a demand for that. But we found out that, like putting somebody in a headset in a retail environment, they have about a maximum of 1.5, 2 minutes before they start to wonder about their surroundings.

So, VR is kind of like a real time design experience where you stay in there for 20 or 30 minutes, is not really practical. We're finding that VR is more of like a payoff experience. Like once you've gone through a design and maybe you mirror the design on a big screen and then you want to immerse the consumer in it and walk around the finished room, that's probably a much better use case of VR. And so that's the direction we're heading.

AR is pretty interesting. What we've learned in AR, it's a tremendous, tremendous tool for consumers who are trying to figure out fit. And so we've done 3 billion, something like that AR experiences and it's all really big stuff. It's like bedroom furniture, dining furniture, sectionals and sofas, it's become a sort of a proxy for measuring tape. But we don't see a lot of demand for AR for things like putting a lamp on a table. Or actually, we’re so pretty popular, that's actually a good use case. But like art and decor, it's probably not worth the investment. And so, AR we're learning is really kind of is it going to fit use case so far? 

Erik: So you mentioned that maybe you're probably getting inquiries from companies in other industries, you're probably doing some exploration there. What are the other industries? I'm thinking automotive might be interesting in here; they're trying to move towards a lot more configuration. What are the big industries that you might be looking at over the next five years or so? 

Beck: Automotive, we've looked at it for sure. But the range of options that you can choose, it's not like you're moving parts, you're changing where the wheels on a cargo. And so the permutations of configuration are actually quite low. And it's probably something that kind of like an agency can do for a dealer or that really doesn't fit our profile. We're much more into much more complex business roles where there's a higher level configuration.

So we're starting to see some demand and the industrial space like space planning applications. We've had some demand on remote, like if you're a retail, you bought 300 stores and you've got to visually merchandise them or you don't want to travel, maybe some collaboration tools, most of our focus is kind of working down the obvious extensions of where we are today staying vertical, however. So we might go to like landscaping next as an example. 

Erik: Okay. So, looking at different aspects of the home vertical and then the simplest B2B extension would be looking at a retail environment basically again as a building where you have furniture and different types of things that you need to arrange within a space, right? 

Beck: Yeah, it's also hard to be good at every vertical. And we have quite a few categories within the vertical. And Dan Gilbert, who owns Quicken Loans, which is Rocket Mortgage, the biggest lender in the US, is one of our larger investors. And so we had a lot of reasons to stay in and around the home category. We think there's some pretty interesting opportunities there. 

Erik: How did the markets impact your business? So I guess we've gone through a big boom and in terms of people moving out of the city into suburbs and so forth, now prices are relatively high and interest rates are going up. And so maybe people move into a different mode, maybe it's less switching houses, potentially more upgrading. But how important are these trends to you? Is this kind of background noise and you just work your way through it? Or do you find yourself reacting to these market shifts quite aggressively? 

Beck: I was counting earlier last week in running a business went through 911, went through the housing crisis, the dotcom bubble before that and then COVID. So that's four or five, and then I'm not sure what we're calling this downturn right now. The first few I probably especially 911, I didn't know how to navigate through that. COVID, I was much more prepared.

But my kind of personal experience observations about these sort of changes is if you manage cash well, they can be really big opportunities. As investment slows, competitors are challenged by this. If you think of them, it’s like, okay, how do I make this a growth opportunity, I think you can get through it pretty well. But I haven't run into a whole lot of people who have been contrary. Most people are pretty sour right now.

But if I look at the business and I listen to customers it, if I didn't know what was going on outside the business, I feel like we're in great shape. And I still feel like there's quite a bit of demand and I think we're probably benefiting from the fact that that everybody's still thinking there's a big transition online at this. The percent of like on good projects that are sold online is maybe not even a percent. And so there's a big move that's going to happen. And so I think hopefully for us that overtakes any short term downturns. 

Erik: I imagine that's going to be the case here that senior management is now awake to the fact that this is changing and it might be a bumpy ride but it's not moving backwards. 

Beck: We're also inexpensive, relatively speaking. So to speak, like, hey, store traffic is slowing, demand is slowing. Where can I invest? Well, building a whole other store is expensive, but I can improve my own experience. And you have massive addressable market you can reach with these tools. Relatively speaking, we're not like some big major capital investment. So this is a place where you can continue to invest, even if things get tight.

Erik: Can you give us kind of a ballpark there? Are we talking like mid five figures a year for a medium sized client or what's the ballpark range like? 

Beck: An early level client might be like an early stage and we kind of sell the 3D cloud. And then for each application, there's like an incremental monthly fee. It's kind of an entry level client might be 30-50K a month and a big client would be well north of 100K a month. 

Erik: Kind of reasonable as opposed to the [inaudible 41:37]?

Beck: It's not like $10 million SFP project.

Erik: Anything big on the horizon or anything that we didn't touch on yet that you think is important for people to understand? 

Beck: We talk a little bit earlier about this like auto room generation we call “magic rooms”. I'm really proud of like all the sort of infrastructure and platform and tooling and everything we've built to make what we do possible. But we've really been searching for that sort of like moments of the consumer experience where like, okay, this is like it’s ten times better or more than what I was doing before. And when you actually play with the ability to generate rooms and flip through different options, when I first saw it, I was like, oh my gosh, this is so much better than what we… So we're pretty excited about this. We think it's going to be a pretty big deal. 

Erik: I've been talking to a lot of people that have somehow pivoted their companies into the media space, maybe it's an easy way to raise money last year. But this type of auto generation seems like the type of thing where you could spin this as an auto generator for metaverse environments, for example. I think there's a company that might not compete directly with you, but somehow it's indirectly in a similar space and they've been trying to make this pivot. I guess you're already doing that a little bit, but in a very practical project based way. But is that something that you've had discussions around? 

Beck: So our company was born in Dayton, Ohio, it's very Midwestern where the highest compliment is you're down to earth. I lived through kind of the AR and the VR and the XR and the MR, like all the renaming of this category. And I was very happy that we were starting to come out of the hype cycle on 3D and it was becoming sort of a really thing you could really use to drive sales.

So when the metaverse stuff came out, I did roll my eyes, oh my gosh, like we just rename something that's existed for 20 years yet again. But there are probably some pretty interesting opportunities there. My view on the metaverse is that the most important asset that's going to exist in the metaverse is the little portal between experiences, like whoever runs that little HTML link between experience A and experience B and allows all the creators to work together and connect their experiences, I think that's probably what's going to be.

But I just can't see like big companies sponsored advertising centric experiences as being the place where people are going to go. I think it's going to be creators who create really interesting spaces that take advantage of content from retailers and brands. I mean, so we definitely have an eye on it. We're not betting the whole company on it, of course, right now. 

Erik: And the experience I've tested a couple out and they all feel a bit like this is interesting for 2 minutes and then okay, I'm ready to go do something else. 

Beck: You know what I think of it as? I think of it as like whenever these things happen, the first thing we do is emulate what we've already experienced. That seems to like the very first online retail experiences. They looked a lot like how you merchandise the store and then of course, they became much different over time.

To me it's like if I were going to go buy a car, I don't want to go to a virtual parking lot and it be terrible. I don't like to get to the physical parking lot. So it's in that stage where we're all just sort of experimenting. But I'm sure somebody clever out there will come up with a great experience and we'll get on board. 

Erik: Beck, anything else we should touch on here?   

Beck: No, it's just great. It's a thrill I have the opportunity and we've got a great team and just really appreciate the opportunity to get our message out. So thank you.   

Erik: Yeah. Well, thanks for coming on. Listen, if anybody that's listening is interested in learning more, what's the best way is it for them to just go to your website and get in touch there?  

Beck: Yeah. If they could go to 3dicloud.com or they could email me at beck@marxent and arxent.com. 

Erik: We'll put those in the show notes. And Beck, thanks again for taking the time.   

Beck: No, my pleasure. Thank you.   

Erik: Thanks for tuning into another edition of the IoT spotlight podcast. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy or training initiative that you would like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.

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