💼 BRIAN ROSE // ENDLESS COMMERCE CO-FOUNDER

0:00I'm Sam Rose, and this is Commerce is Chaos, the podcast for consumer brand founders who know that building a business is messier than the highlight reel shows. Your supplier just missed their deadline, your top product is out of stock, and your competitors somehow just launched the same thing at half the price. Sound familiar? Every week, we dive into the real problems that keep founders up at night, from inventory disasters to supply chain nightmares, because surviving the chaos is what separates brands that fail from brands that scale. Okay, welcome to... We have two options for what to call this segment.

0:33It's either Commerce After Dark or Chaos After Dark or Commerce and Cocktails.

0:38Brian Rose:I was leaning towards Commerce and Cocktails, but it could be Commerce After Dark. Commerce and Cocktails After Dark. Cocktails After Dark. Hey, thanks for coming on, Ryan. This is such a delight to have you. I'm delighted to be back. Okay, Commerce After Dark, Chaos After Dark, Commerce and Cocktails. Welcome to it. This is a special episode. I have a feeling that it's going to be a recurring segment. Our kids are in the kitchen cooking dinner, I think, and maybe watching the Olympics. We're having champagne and we're going to talk about the state of the art of commerce and chaos. But I kind of want to like interview you for a second because I like people.

1:14Here's here's a fun fact. Every time Brian comes on this podcast, viewership skyrockets. And I'm not saying that because I want to engineer viewership, although I'm very grateful for anyone who's willing to listen. But we think, speaking on behalf of myself and the audience, that you're a really interesting guy.

1:31Brian Rose:Well, thank you, America. Thank you. You and I started our careers in like the same, in fact, a block away from each other. A block away, one block apart. So differently. How it started, how it's going, is that kind of like... Yeah, it was like same, you know, same Zipka, but two different worlds, it felt like. It was two different worlds. And we started across the block and then we ended up one like foot away from each other. So I don't know if that's like success or failure. We finally got our trading desk where we get to be side by side. It's practically a bullpen. Tell us a little bit about how it started.

2:09Seriously, like where did you start your career? What was fun about it? Was there anything that wasn't fun about it? It seemed pretty glorious and fun to me from where I was sitting across the block.

2:17Brian Rose:It was pretty fun. I started my career at a hedge fund called Blue Mountain Capital in New York. And we did a lot of really interesting and kind of complicated arbitrage trades in the credit default slot market. And my first week on the job, I was an English major and a physics major, just kind of how that all came together. And my assignment week one was to explain to people why the implied correlation in the equity tranche of a synthetic CDO went from 12 % to 20 % that month. And you guys are still married now. I knew what the word percent meant, but other than that, I didn't know what any of that meant.

2:56Brian Rose:And the reason why that job was so fun was that I got to take my ability in training, I guess, as a writer and my ability in training as a, not a scientist, but as a science oriented, math oriented person and learn something completely new. I hadn't taken a single economics course, finance course. I didn't know anything about it. But that job and the team there really gave me the freedom to learn and to apply those different skills to a completely new subject matter. Where you are, failing upward. It was fascinating. And it was also the right, it was the best of times and the worst of times. I started that job in July of 2007.

3:34Brian Rose:And implied correlation went crazy that month when Bear Stearns had two hedge funds that invested in mortgage-backed securities. And that was like the canary in the coal mine for the crash of 08 a year later. And we were kind of right at the forefront of it. We sort of saw the cracks in the credit market happening. And so I learned in the first two or three years. I fell through one of my friends. You fell through a crack, yeah. A lot of people did. And I felt like that time of such insane chaos in commerce meant that we were learning, I was learning anyway, at an extremely accelerated rate. So I felt like I got 10 years of market knowledge in like two and a half years.

4:16Brian Rose:So I'm very, very grateful for having not only been at Blue Mountain, but also at that period of time. I had such an interesting experience living with you through that because you were sort of on this learning curve. And I think to process some of what you were learning, maybe I'm just imposing on this, this on you, but it felt like we got to process some of that learning together and we would like talk about it over dinner. And so I got this like incredible kind of like sideline education and all of it because, you know, you'd go like have this insane exposure at work to like really you really were.

4:50And your fund was like on the forefront of everything that was happening in like contemporary economics and like finance. And and then we would come home and like, you know, talk about it. And I got like the most. So anyway, I got this incredible education kind of vicariously through you and continue to be appreciative of it because it's allowed me to, in effect, punch above my weight where I wasn't educated in a lot of these things. But like now we get to invest together and operate together. And it's really fun.

5:22Brian Rose:Yeah, we kind of got to share it. And I think that someone smart, probably someone at Blanant said, you really only know how much you understand something when you have to explain it to somebody else out loud. And that was a little bit of that experience for me was talking through what was happening and trying to explain it to you could prove to myself how much do I really understand it. And so I think we got to go up that learning curve together. You're an honorary member of the credit default swap aficionado club of New York. Wow. Do I get like one of those broken Olympic battles for that? Yeah.

5:54Brian Rose:Did you buy insurance on it? Nope. I bought reinsurance on it. Okay, so you have run the gamut, like investment side and then operator side, as I dragged you into my sort of operations adventures, shall we say. And now the infrastructure side. Is there like, what are like the common denominators? Like, what are the things that you have always done at your job, whether you were investing or operating or like building for operators? Is there, or are there any? Oh, that's a really good question. I mean, my cheeky answer is VLOOKUP is like the, you know, the common thread across everything. But it's kind of true.

6:31Brian Rose:I mean, you need to relate things to each other. And I think one thing about, to make it about you for a second, is that so much of what we do in commerce is like just connecting the dots. And we do that in Excel, right, with lookups and references. And we do it in code now in our day-to-day life. But so much of what commerce is about connecting the dots. And I think that's probably like the through line is how does this relate to that? I think half the people listening to this will understand what a VLOOKUP is. And half the people would be thrilled to have like one of your skill sets is explaining complicated things to sophisticated but on the learning curve folks.

7:12So what's a VLOOKUP?

7:13Brian Rose:Well, if you remember Aladdin and the genie offering some of column A and all of column B, is looking for a value in column A and then looking for the value in column B that correlates to the same line in column B. So you look across that line and say A is the B is. SAT scores are to me forgetting how to SAT. Oh, it's an XLOOKUP. I've heard that too. So a VLOOKUP is you have a data set of some number of columns. And your parameter is, I want to look up in this data set. I'm looking up in the first column, and I'm counting over 12, 13, 15, whatever number of columns you count over. And XLOOKUP is column A, column B.

7:56Brian Rose:You don't have to pick a whole table and count over the number. Which one's harder? VLOOKUP. For some reason, I always assumed X. I don't know. It seemed harder. Anyway, this is... I feel like Xlookup kind of came out late in life, and I wish I had it the whole time. Because you could have used it for easier things? Yeah, much, much better. Okay, I'm going to attempt to make myself look less stupid and ask more sophisticated questions to you. But thank you for answering that. I've always been curious. Now you know. Have you used Excel with Cloud Code? You know, I haven't. I have not used Excel with Cloud Code, and it's not because I don't want to, But it's almost like, you know, it's like it's like opening the seal on something you've been saving for a while.

8:36Brian Rose:And I want that. I want that experience. I want to see. You need like a long weekend to be like, don't bother me for three days. I'm going to be with Claude in Excel. I'm well, yeah, it may be because you kind of have to put it through his paces a bit and say, like, will it write a bunch of formulas like accurately? Probably. Yes. But but really, what what can I do with it? And I have been reading a lot about the impact of Cloud and Cloud Code on the software development industry for obvious reasons. And I thought, oh, yeah, gosh, what must it feel like to be a really, really great software developer, a really great engineer, and now have a model be able to split out 10 ,000 lines of code while you're having lunch and you come back?

9:16Like in Carrick's in the other room.

9:18Brian Rose:What does that feel like? That would be me with Exo, right? So I'm almost, and now I have to think about, man, I let Cloud Code take a crack at Excel and I come back and realize like that 10 years I spent becoming really masterful at it, has my moat evaporated? You know, has my competitiveness gone away? Well,

9:41Brian Rose:I'm a little apprehensive to see what I could do in a certain way, which is ironic because I have applied it. I've been such an early adopter in using it for software. But for Excel, it's like, oh, no, that's my, that's not. It's so interesting because like for the writers of the world, which, you know, if I belonged to one category, AI is completely unraveling its writing. And the same thing, but it happened first and most obviously. And I think also writing is like a skill set that pretty much everybody shares to some extent. Maybe not like really prolific creative writing, but, you know, there's literacy is pretty widespread.

10:19right? The people who can do cool stuff in Excel is like a smaller cohort. The people who can code is an even smaller cohort, I think. And so, yeah, like watching the specialty of creative writing kind of like evaporate and in front of us is like, oh, OK, well, I guess I guess now I'm just going to figure out like how how to have it give me leverage. And I think one of the most interesting things that and you and I've talked about about this a little bit together, like I think that we, that our generation, this is probably the generation of people who are on LinkedIn watching this video, right?

10:53Like, is uniquely positioned to take advantage of what AI can do for us today because we grew up in a less dynamic and very kind of analog version of this skill set. Like you were just in Excel as an analog tool, basically like writing formulas and building models and the whole bit. And now you are like an expert evaluator of the output of anything that I could possibly present to you that is an Excel formula or an Excel model. And I fear for I'm very curious. I don't fear is the wrong word. I'm very curious, though, for like our kids growing up with these things that they're not going to have to they're not going to ever have to write a formula.

11:38and Excel on their own. Like they just won't have to, they're going to, they're going to natural language interact with it. And I wonder how they're going to be able to build kind of like filters and guardrails and like, like a good, you know, how are they going to synthesize the output when they have so much leverage? It's almost like, you know, it's like, I don't know, it's like being on steroids. You're not, but you haven't had the training of being an athlete. And so you're just really strong but like are you gonna flail about or what's gonna happen i think it's a really interesting moment and i think that i was reading i was reading today everything back to 2023

12:17Brian Rose:the conversation around ai was chat gbt and llms and the hallucinations and like the hilarity that would ensue with them getting things wrong and it was sort of cute and adorable like a toddler trying to talk and messing up the words and that is like gone they are just prolific they're prolific they're accurate they're better than the average human doing that same task now and it's been two years and like i'm not sure what the the uh the equivalent of like gosh what's the law right every 18 months like like the capacity doubles per size for oh murphy um it's something like seven months right now for like the cycle for for lma you know murphy's law is different that's a little bit wrong it will you know we'll go look it up but uh it's incredible the pace of it and so i think that more it's another m it's another irish name with an n it's not my fault i'm sure claude could tell us no it's more more's law more's law murphy is about anything can go and And honestly, at this rate, and I'm so sorry to interrupt you, but I feel like Murphy's law and Moore's law are going to urge.

13:30Brian Rose:Yeah. Anyway, sit with that. Keep going. So we don't know yet what the Moore's law of AI is, but it's a very tight half-life for how quickly they're advancing. And I think that you're right. It may not make sense to write out formulas when you can write in natural language what you want it to do. And the models just get it accurate pretty much the first time. But how do you evaluate the output? And now it's less about, did they hallucinate? Did they get the date wrong? Did they really mess up? And more about, is this accomplishing the objective that I set out to accomplish? Then, and I think this is where I kind of fall back to it, and I want to come back to what you said about creative writing.

14:08Brian Rose:Was the objective I laid out correct and useful in the first place? And that might be the big divider. We will all be able to use AI to make things faster, easier, better. But are we doing something worthwhile? Like, is the output itself, or was the input that I gave it something intelligent, worthwhile, and worth doing in the first place? Yeah. And I think that's probably where, and I hope you're right, that our generation will be in the sweet spot is being able to evaluate the output, but also generating the right input to make a practical, useful, actual output for the world. Can we use it to just Google things instead?

14:44Brian Rose:Will we just pick a different verb than Google and give us an answer? Sure. But will the output of the prompt be meaningful and interesting? And I think for something like creative writing, we've done a lot of AI-assisted writing recently in terms of things where the content and accuracy of the content matters, then the style or the tone. Like, contracts is a great example. But will it have taste? Will it have discretion? Will it have a point of view? Will it be art? That I'm really interested in. And I think probably for a while, creative writing will be safe. Maybe not forever. I think art will be the furthest frontier.

15:18Yeah, I can. It's so interesting. I'm like an avid consumer of Substack around four in the morning when you're still asleep. And I'm like just, I'm up because I'm up and there's nothing anyone can do about it. And the texture of real writing is so like, it's so palpable and it's so good. And I, you know, when I read something that's written by AI, I can still feel it. And I don't think I'll be able to feel it forever. I can still kind of feel it now. And it's because, you know, for so long, it was sort of my job to consume prolific amounts of human written content. So they're just, it has a texture.

15:54It does. You know.

15:57Brian Rose:I think a good LLM is supposed to gravitate toward a median, right? It's supposed to be, it's following a predicted pathway. And what is the most correct logical word within some amount of tolerance that follows the one before? And really great human writing, real art, is unpredictable and might not make sense. And I'm hoping that LLMs are tuned and trained towards being predictable, making sense, and art. doesn't have that constraint. It makes me wonder if there's like a standard deviation of human creative writing. Yeah, there probably is, right? I mean, the memorable stuff, right? It must be an outlier.

16:34It's got to be an outlier. Yeah. Okay, I'm going to completely change tack. One of the aspects of our life that I reflect on a lot, it's not that deep, but you spent a long time like evaluating dispassionately or at least as objectively as possible the opportunity the financial opportunity around consumer brands and then as a matter of circumstance you sort of like were thrust into this chaotic world that I had created in like a founder-led brand in a really crowded category that we just happened or I and we I mean we we loved cooking together so you were there for the whole thing and and like not just cheering me on like like seriously enabling the entire journey and i'm very grateful and you went from like you know the whatever is floor with a refrigerator full of yogurt and cold brew like working at our kitchen table with me and and again i'm very grateful it's been like the privilege of a lifetime to work together and I'm glad that like a weird twists of fate brought us together in that way.

17:46But like when you're looking at like a big publicly trading company and you're like, you know, you've got your fingers like this and you're sort of, and your spreadsheet in front of you with your whatever lookups and you're like figuring out how to like make an investment decision and then you're brought back into, or down, I should say maybe, into like operations and then you float across to investing again. Were there like things that you learned on the ground as an operator in like the icky VLOOKUP trenches, like XLOOKUP nightmares that are helping you as an investor and as a like platform builder today that maybe like as sophisticated as you were at the time, something about the grunge of just like being in it helped you to learn?

18:33Brian Rose:Well, I think my favorite story here, the complete crossover for me of doing a securities analysis on a big publicly traded company where the management can't really tell you that much because it's a public company. They can't give you inside information. You're reading through reports. And I mean, I guess you could have hired drones to fly over the parking lot at Barnes & Noble and take pictures every day of how many cars are there. I mean, there's stuff you could do, right? But in terms of the overlap between real-life operations and financial analysis, I had a meeting one time with the CFO of Best Buy at a conference.

19:10Brian Rose:And she was talking about Q4, that holiday, and why she was so confident that they would do well. And the reason why the CFO of Best Buy was bullish on the Q4 was that they had bought a company that made an attachment for a forklift that instead of picking up flat screen TVs like this, it grabbed them from the side like that. Because they had in the warehouse at Best Buy, ridiculously high breakage rate on flat screen TVs, which are like high cost and a damaging one is bad. And also really high margin and high revenue. But the forklift that did this tipped them over all the time, and they were like losing flat screens left and right.

19:49Brian Rose:But the clamp held it like this, and their damage rate went down 95%. And so they were buying these attachments for the forklifts to hold their TVs. And it was going so great that Sharon, the CFO, she bought the company that made the forklift attachment so that Amazon couldn't have it. And they'd be the only one in the market with a forklift attachment. So they were going to crush everybody on their sell-through of flat screen TVs. And that's why Q4 was going to crush, was a forklift detachment. And that for me was like the major, that was before we, you know, we even really got into business together.

20:24Brian Rose:And I became aware of what a warehouse and a forklift were. Huge public company, wildly talented CFO. And her ace in the hole was a forklift detachment company. Okay. I'm having so many feelings right now. Number one, that's really cool. Number two, this is probably one of, I mean, just, we know each other so well. I've been married for a long time. We haven't heard that one before. I've never heard that story. How do you have a story that I haven't heard? That's so cool. I saved it through this. You know what? If it's not commerce after, whatever we're calling it, commerce after dark. Commerce after cocktails is what it's about to be.

20:59Brian Rose:Night, chaos at night. This is what you got to come here for. So, okay, but what I'm confused about is like what signal was that? Was that like a cool insight or a stupid? That sounds really cool to me, but. No, it was super cool because it was like, hey, you know, you really kind of got a Q4 for any retailer is the Super Bowl and you got to show up for the Super Bowl. So all the analysts were like, hey, how's it going? You know, we own the stock and how's Christmas going to be? And she said, team, it's all fine. I got the company that makes the forklift attachment that goes like this, you know, like the doors, you know?

21:36Yeah.

21:36Brian Rose:Yeah. You want the doors to go like that. And you believe that as the make or break. It didn't matter. She believed it. and i believed her and they did fine they did great buy or hold don't sell don't don't sell i mean the other half of it was they were like uh this what moment was this this was like 2012 era and what we were finding in retail was that like you you pretty much not unlike what we see in in how in like the power law and how and how venture capitalists invest or at least the outcomes. In retail, for these big box stores, the category champions, you had one that would make it. Circuit City went out.