Loot Crate: Customer Experience and Hyper-Growth

Michael Krigsman: We are live at NetSuite SuiteWorld 2018 Conference. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. We're speaking right now with Erich Gazaui, who is the CIO of Loot Crate. Hey, Erich. How are you?

Erich Gazaui: Good, Michael. Thanks for having me.

Michael Krigsman: Tell us about Loot Crate.

Erich Gazaui: Loot Crate: a fun company, a membership company. We connect fans with their favorite fandoms through collectibles, community, and a really great experience.

Michael Krigsman: What do you sell? What are you actually selling?

Erich Gazaui: Every month or, in some cases, every other month, customers get a crate from us that have curated items that are unique or exclusive to the various different IPs that we have. In these boxes are a range of things such as T-shirts, figures, or other little collectibles, as well as the corrugate itself is an element of the piece as well.

Michael Krigsman: You're connecting fans to the stars on the shows that they love.

Erich Gazaui: Exactly, as well as comics, video games, and other specific areas, for example, wizarding world, anime, and things of that nature.

Michael Krigsman: You're growing really rapidly.

Erich Gazaui: Quite.

Michael Krigsman: How fast are you growing? Can you give us a hint? [Laughter]

Erich Gazaui: Thousands of percent since we started the company. It's been very exciting.

Michael Krigsman: Erich, as a company grows thousands of percent, which is almost hard to imagine--I'm just thinking of how do you hire people, how do you build new products, how do you retain the quality--what kind of systems have you had to put into place in order to manage this growth?

Erich Gazaui: A variety of them. When I got to the company, they were still doing a very manual process when it came to fulfillment and warehouse management. That was one of the first systems that we did, integrating that with our GL, with our ERP, as well as our data platform and other things that gives the various teams involved visibility into the products, both from a receiving point of view as well as how those things are going to get out to the customers and the timeliness of those crates, which is a big element to Loot Crate, in general. The mystery and the timing of the delivery is critical.

Michael Krigsman: All of that depends on the right systems being in place.

Erich Gazaui: That's correct, including not just the ERP, but we're talking all the way into the website, to recurring billing, to our data, to our shipping and tracking systems. All those pieces play a role in how we can deliver the experience to the customer.

Michael Krigsman: In effect, correct me if I'm wrong, you're a logistics company on the backend with a fan frontend.

Erich Gazaui: That's right and, on the front end as well, it's a technology firm. We've built our own websites to host the order management and the general funnel of how we do purchases, all the way into the data platform. That then becomes a fulfillment and logistics aspect. So, the teams involved there are using warehouse management and using other tools that allow them to have that granular control of how the business would operate.

Michael Krigsman: How do you drive efficiency and, yet, at the same time, keep the pulse on what the fans care about because, at the end of the day, growing a business is not about efficiency; it's about innovation and that connection with the customer?

Erich Gazaui: It is. It's about prioritization as well. I think we have a great design team and a curation and procurement team that really get connected with the fans, understanding how to build the themes within these crates, and how that connects with things in the fan's life that may be external to the company, such as movies, theme parks, and things like that.

Michael Krigsman: Do you have a fan quality assurance approach?

Erich Gazaui: Thanks for the question, actually.

Michael Krigsman: How do you innovate during this efficiency?

Erich Gazaui: We have a great deal of feedback that comes from the fans, and sometimes immediate feedback. That gives us the ability to treat our fans with the nature that you're speaking of. In other words, an advisory board or a quality type control board that would give us insight into the customers' expectations, as well as their satisfaction with the products.

Michael Krigsman: You get immediate response back from customers, and that helps then guide you.

Erich Gazaui: We do. We get that even during the purpose process while they're waiting for the crate. There is a process we use to do what's called a theme reveal. We'll let them know what's coming, what the crate is about, what are the items they might expect, not necessarily a specific item, but what that theme belongs to, and that gives them the ability to decide to purchase the crate or maybe they're going to wait for something later, and that gives us that feedback to say, "Okay, now we see what this customer is about, and we can start taking numbers in the aggregate," and say, "Is that going to change how we do our product or how we're going to do our curation?"

Michael Krigsman: You're looking at the data and then making decisions based on the data that's coming in.

Erich Gazaui: Mm-hmm. That's correct.

Michael Krigsman: It sounds like that must be a core part of your business.

Erich Gazaui: It is. We have dedicated teams for this: the community team. Obviously, we have customer support as well that plays a big role in our communication with our customers. But, we have a data team, and we have the product and the brand. These all work together with the curation within the design team to build these themes and to look at what the ideation would be, which is a fairly lengthy process at times.

Michael Krigsman: You have systematized all of this.

Erich Gazaui: Yes, very recently, actually. Using the NetSuite product, we systematized what we call the assortment planner, our ability to understand not just the items that go in the crates, but the various contracts that we have in place with the IP holders, the themes that these would be belonging to, whether there's going to be crossover or an intersection with other crates that we have, as well as what's going on out in the world, whether it's movies, comics, or other events that might play a role in how we would capitalize on those events.

Michael Krigsman: Erich, we're here at a NetSuite event, and so I think we need to talk about NetSuite a little bit.

Erich Gazaui: Sure.

Michael Krigsman: Tell us about your relationship with NetSuite.

Erich Gazaui: Our relationship is very good. When I came to the company, NetSuite was already in place, but it was really being underutilized. It was a very traditional general ledger approach and some PO routing.

When we did our STLC process and looked at build versus buy, it became clear that buying was the right solution. Even though NetSuite was in place, we still did an evaluation of various different platforms for all the different types of modules that we wanted to have.

In doing so, we came back to NetSuite and said, "This is a relationship we want to invest in," and that ultimately was the decision for us to continue with the platform. Building the relationship with our teams at NetSuite was the deciding factor.

Michael Krigsman: At what point did you conduct that evaluation? You said you were a NetSuite customer already.

Erich Gazaui: That's right.

Michael Krigsman: Then you decided to reevaluate.

Erich Gazaui: Yes.

Michael Krigsman: At what point?

Erich Gazaui: It was about the end of 2016, a few months after I joined. We were up for renewal, and we just went down to the process, understanding the modules that we knew were coming, so accounts payable module, PO routing royalties, incentives, just looking at all the different things that NetSuite has to offer, understanding whether or not we would look for disparate systems and then have to do the work to integrate those or just using a platform that had those things in place. That process was extensive, and it led to, now, a very successful implementation of the assortment planner than I mentioned.

That gives our buying team the heads-up display they need to understand all the elements of the items that are going to end up in the various crates, all the way from the royalty incumbent to the margin to how we're going to market these items to what we would do from a photography and design. It's comprehensive. Now, with that, that will actually build the records in the NetSuite system, which synchs into our WMS, which gives an automated process from end-to-end for that team.

Michael Krigsman: All of this, ultimately, is responsive to that fan experience that the company is ultimately selling.

Erich Gazaui: It is. That is right. Fans play a big role in how we determine what comes next for our products.

Michael Krigsman: Let's end with my asking you about the CIO role. What is the role of the CIO at Loot Crate?

Erich Gazaui: At Loot Crate, it's the head of technology, so engineering is there, as well as data, the product management for the technology stack, and business systems, of course. But, I think that what's important to look at from a role like mine at the company is to build the relationships with the stakeholders, to really understand their requirements and their goals, and to support them in that. It isn't just about, in this case, our fans or our sites. It needs to be about the entire business because, as you said, the business is about the fans. Empowering our business users, empowering our stakeholders, our executives is a way to ultimately empower the fan and to make the fan feel like they are part of the engagement that they have with the company.

Michael Krigsman: Okay. Erich Gazaui, thank you so much.

Erich Gazaui: Thanks for your time.