MIKE DUBOE

Hey everyone. We just spoke with Julie Bornstein, the CEO and cofounder at Daydream. Julie also used to be my boss at Stitch Fix where she was our COO and has a long history in retail. She actually was around in kind of the advent of traditional retailers modernizing to eCommerce where she was leading that charge at Nordstrom. And so she has an interesting background being at the forefront of that modernization as well as the forefront of bringing consumer shopping towards the agentic commerce era and building out Daydream.

RISHABH JAIN

Yeah, one of the key insights that I also learned from her as an early-stage founder is the way she’s thinking about marketing and capturing new customers and running a series of experiments to see what is resonating with her audience as she’s continuing to build out Daydream. And so there’s a bunch of nuggets for people both on the retail side and on the marketing side that I’m sure you’ll enjoy.

MIKE DUBOE

All right, Julie, it is fun to be speaking with you in this context. We’ve been friends for quite a while now, ever since you brought me on at Stitch Fix. I’ve long considered you to be one of the strongest leaders in retail and fashion and commerce. You’ve always been ahead of your curve throughout your career, so dating back to leading eCommerce in Nordstrom back in 2000 to then leading digital at Sephora in ‘07, and then when we worked together as COO at Stitch Fix, founding The Yes, which eventually sold to Pinterest, and now building for the future of agentic commerce at Daydream over the past few years. I would say it’s rare to have someone as steeped in both traditional retail and AI as you. And today we’re excited to explore that intersection. So thanks for joining.

JULIE BORNSTEIN

My pleasure.

MIKE DUBOE

So maybe I’ll kick it off. Dating way back to your time at Nordstrom, what did it feel like to pull a traditional retailer online back in 2000? And maybe as you reflect on some of the challenges that brands are facing now relative to AI adoption, what parts of that change back then rhymed with now?

JULIE BORNSTEIN

Yeah, it’s interesting. Back then, it was really, because we were traditionally a store, there was a lot of fear around channel competition. And so really in the very early days, the Nordstrom store side of the business saw the nordstrom.com side of the business as a threat, which is very funny to think about. Part of it is we had venture backing and we were set up as a separate entity. And part of the reason to do that was to let us move faster. But on the flip side — and it worked definitely to let us move faster — but on the flip side, it created a little bit of a competitive vibe where ultimately everyone realized all brands are going to be multi-channel. So it took a number of years for that to be understood. I would say, one of the biggest challenges … There were two big challenges. One is that technology had the promise of being able to do a lot, but it was hard to build it and there weren’t a lot of experts. So that’s sort of a parallel to today, I would say, in that there are all these possibilities that are pretty clear, I think, conceptually with AI, but yet actually building a product is much more complicated than it looks. There were so many things back in the Nordstrom days that we wanted to be able to do from a user experience standpoint, and yet it just wasn’t possible yet within the technology that existed. And I would say the second thing that’s kind of interesting is, early on we were trying to convince brands to sell online and they were very nervous about it. And so there were a lot of holdouts of brands that just didn’t want to be sold online at that early stage. Kind of the parallel today is, everybody understands that AI and certainly the big LLMs are a new form of search engine. And I think people are trying to figure out how should I show up? Who do we partner with? How does that work? I see some similarities there as well.

MIKE DUBOE

Yeah, maybe just elaborate on that. It seems to me that there’s a spectrum in terms of how big merchants and retailers are thinking about this, some being totally dismissive to some jumping all-in and maybe being too willing to give up the farm almost too early. What are some of the mistakes you’re seeing leaders make today that rhyme with what you saw back then?

JULIE BORNSTEIN

I think we’re still so early on that a lot of people are really trying to figure out what they should be doing. I think that there’s some that are experimenting and some that are waiting to sort of see where things net out. And I guess the thing that I would say is probably a mistake is to wait too long because I think that you want to be experimenting enough that you understand how to think about your own future roadmap. So all of these businesses have these roadmaps around technical upgrades that they want to make or user experiences they want to build. And being able to think about how AI is going to change the way consumers are interacting, I think you want to maybe not be placing big bets yet because it’s still too early, but I think making sure that there’s some people on your team who are experimenting and really understanding what’s going on out there and bringing that understanding back to the organization is important. It actually reminds me of when mobile became a thing. I remember I was at Sephora, and it was … At the time, we called it mobile app and mobile wap — and wap was web — and I remember everyone, this was in 2008, early 2009, and everyone was like, What are the differences? What do they mean? What should we be thinking about? I think there was a lot of confusion. And so one of the roles that I played internally was to sort of explain the landscape and make sure that everyone at the management level really understood what was happening. And of course, AI is changing much faster than mobile did. It was more just sort of understanding it and then building it. But I do think that it’s important to have someone in the organization who understands and can translate what’s happening technically to your business.

RISHABH JAIN

So one of the things that I’m really curious about as you’re talking about the experimentation culture and experimentation velocity of the early-adopter brands in conjunction with this role or this person who is inside the organization is how do you see or what does the DNA look like of a company that adopts at the right velocity to take advantage of these new technology adoption curves? Is it an organizational DNA thing where you have the wherewithal to actually know that I need to assign someone to actually pay attention to this and bring it into the organization? Is it an executive that has to sponsor bringing in this new technology into the organization? If I’m a brand today or a merchant today and I’m looking to you for advice on how do I know if my organization has the DNA to take advantage of this technology wave, what am I looking for in my organization in terms of DNA or composition that tells me that I’m actually correctly organizationally configured to take advantage?

JULIE BORNSTEIN

I think if you’re a company that’s been organized to take advantage of prior technology and digital changes, then you already have someone that does that. And so it’s that same person that should be doing that for AI. And if you don’t have anyone in the organization that serves in that role, you’re probably behind anyway because you don’t have someone who’s actually championing how to keep your business modern and leveraging technology and its capabilities. So my gut is that, for any organization that already has someone at an executive level that’s thinking about the digital landscape, that’s the person you want. And if there’s organizations that don’t, then I definitely would say they should look for someone in the organization who could be that or find someone to be an adviser. Where have they gotten their direction before from a digital standpoint? But I think this is an extension of the digital team. This is just sort of the next evolution of what’s happening. And obviously it’s a little bit bigger and it’s a little bit murkier, but it’s still that same advocate who should be helping the organization think about how to leverage it.

MIKE DUBOE

So I want to stay in this topic of roles within organizations and talk about the evolution of the CMO role. And I know when you took on the CMO role at Sephora, you came from a head of digital background, and I wasn’t there at the time or familiar with the decision, but I would imagine there were options to bring on someone who was maybe a classic brand leader. And now, if you look at what’s happening now, at least in our circles, there’s a bunch of product leaders who are getting vaulted into senior marketing roles who don’t necessarily have a marketing foundation, which I think can be very good, but also there’s some challenges to that. So maybe talk about Sephora first, then if you could generalize: What would Sephora have missed if a classic brand leader had taken that seat? And then maybe as you’re observing today, these types of marketing leaders getting catapulted, what are some watch-outs that you have?

JULIE BORNSTEIN

I’ll just start out by saying I think [it] depends on the organization and the kind of company it is and what they do as to how pure a marketing role … If you’re a digital company and everything you’re doing is leveraging technology, you actually can have a more traditional marketer that’s a brand marketer that serves that role for the company. I think if you are a more traditional retailer, for example, then having a marketing leader who really understands digital and how to use technology is actually more effective. So I think part of it depends on what kind of organization it is. When I took the job at Sephora, prior to me, it was a traditional marketer, and so she had set up a lot of things and put a lot of things in place that were helpful to me. And I realized, coming into it, I wasn’t a traditional marketer, so those are not necessarily things I would know to do, but I could extend them and then I could bring my own things to it. And I would say, for us, I would say the first thing was leveraging our loyalty program, which I was already running — Beauty Insider — and the data that we were getting from it to drive the marketing. When I took that role at Sephora, that was a really big focus, was how do we use all of this consumer data to really drive our marketing efforts. And, how can we — understanding what our marketing goals are — how can we better direct the Beauty Insider program to drive some of those goals. So being able to bring loyalty, which was more data-driven, and the creative side of marketing together was super helpful for us. And then I think, thinking about driving traffic through digital marketing across all channels was a big difference. I know, Mike, you and I talked about this a little bit at Stitch Fix, but back at Sephora, the truth was, search was probably our single biggest customer acquisition driver for both the stores and the website. Looking at that holistically and thinking about how to leverage digital marketing to drive store traffic and store activity became a much bigger focus once I took that job.

MIKE DUBOE

Yeah. Okay. So I want to spend a little bit of time on that Stitch Fix chapter before we jump over to Daydream. To start, Katrina’s journey in recruiting you is pretty interesting. You joined as a board member for a couple years before Katrina brought you on as COO. I think that’s an interesting move that, frankly, I think founders underutilize maybe. What did Katrina do that made you take that jump from board seat to operator and maybe what could other startup CEOs learn from this?

JULIE BORNSTEIN

I’ve definitely told people before that I think if you’re interested in potentially recruiting a senior executive in your future, bringing them onto the board as a first step is a great idea for a couple of reasons. You get to know each other so you can evaluate, they get deep in your business and then they become sort of hooked and they’re, at the time that the need then becomes appropriate, you are already there and already know the business. So that’s certainly what happened with me. I met Katrina originally and was really taken by the idea of Stitch Fix and got very engaged as a board member, and then I was attached to the business and I felt like I was a part of it. And so what happened is, I had made a decision that I was going to leave Sephora for a couple of reasons and was starting to think about what’s next. And she intercepted me and said, If you’re going to leave, you should come here. And so we started to talk about what that would look like, and that’s how it ended up happening. I would say, when I made that move, some people around me said, What are you doing? Why are you going to a startup when you have this great job at Sephora? But I knew enough about that business that I knew what I was signing up for. It didn’t feel nearly as scary as if I were just joining a startup that I had met with a few times. So I think it helped both ways.

MIKE DUBOE

I’ll speak for myself and all of us at the company when I was there: Very, very grateful to have had you at the helm. When I joined, you were actually in the CEO slot; Kat was on maternity leave, and you did amazing things for that business. And I think there are parallels between what Stitch Fix envisioned and being more of, I guess, a competitor to traditional shopping and maybe what we’re seeing right now with some agentic commerce. And so I want to spend a minute on that. And one particular question there, so Stitch Fix was … They were pioneering a new way to shop and the DNA mix in the company, at least in my time there, was this really interesting blend of two cultures that I didn’t really see kind of meld or I would not have expected it would’ve melded. One was like a hardcore Netflix data science DNA and machine learning, and the other was traditional more Gap merchandising and retail. How do you think about, as we’re now kind of entering a new wave of AI-assisted commerce, the value of having traditional retail shops there with maybe more forward-thinking AI DNA? Is there anything you learned from Stitch Fix that actually helps you think about your ideal composition within Daydream or more broadly?

JULIE BORNSTEIN

So it’s interesting, Eric Colson, who ran the data science side and who’s the person you’re referencing from Netflix, really loved teaching. And so he really focused a lot on educating the traditional merchants and the other people who didn’t come from the technical or data science side of things. And so I think that there was a big emphasis on learning both ways. I think the merchants spent a lot of time teaching the data scientists what merchandising was all about and what mattered and what to look at and how to capture trends. And on the flip side, the data science team spent a lot of time teaching the merchants, and I think that was a really neat part of the organization is there was a lot of cross-pollination and a lot of education both ways so that the organization in total was able to march in the same direction. I would say, my feeling about me personally is that I’m very much at the intersection of both of those worlds, the consumer-tech world and the fashion world and shopping. And I do feel like that’s my kind of superpower or strength or whatever is that I understand both worlds enough, I guess, to be dangerous, I should say. But I think that understanding what really matters to consumers and having worked directly in these businesses, what matters to brands — which is really important when you’re working with brands as partners and you’re convincing them to bet on this new experience — and then what the people who are building the technology need to understand. And so I think that that is always a role I’ve really enjoyed playing. I’m a shopaholic. I could spend all my time shopping if given the chance, and I love fashion, and I’ve worked on the brand side before, I’ve worked on the department store side before, so I have a lot of familiarity with what matters to those businesses and how they run and the motivations and how to help make them successful, which is, in my current role, what I need to do. But really what we needed to do in every business was make all sides successful. And then I think on the technology side, it’s really being able to bring in the right partners who understand how to build what you’re trying to build, have the technical skills — it’s very skill-based — but also have the interest in solving the problems you’re trying to solve, which is not easy to find. There’s not a big overlap between fashion shopping and technology, in my experience. And so finding the people who do have that intersection of interest is really important.

RISHABH JAIN

Yeah, actually, I was hoping to take this as a way to pivot into Daydream, and I wanted to share a quick story. So my head of finance, actually, two weeks ago mentioned to me a lot of her friends are at the age where they’re getting married or attending each other’s weddings. And she was like, “Hey, have you heard of this app called Daydream? All of my friends use it now for clothes when they’re going to attend weddings.” And I was so excited to hear that it’s in the zeitgeist. So first of all, I just want to say congratulations on the massive early traction that it seems like you’re having just in the community in general. I want to take that as a moment to just maybe start with just describe Daydream the way that you would describe it, because I know how I guess the consumer is describing it, but how would you describe what Daydream is doing, especially picking up from this thread of technology really weaving into how people shop?

JULIE BORNSTEIN

Yeah. I would say at a fundamental level, we’re building a fashion agent and we think about how do we provide you a service where ultimately you have … Our goal is to build a personal stylist in your pocket. We’re not there yet in that there’s so many more things that we have to build out to get to that promise, but I think in the short term, it is how do you ask for whatever it is you’re looking for, whether it involves a trend, a vibe, a celebrity whose style you admire, addresses a body challenge that you have and getting things to fit you, whatever those things are that matter to you when you’re looking for something, you can ask us in natural language and we can understand it, we can show you products immediately that fit the spec of what you’re looking for, and then we can work with you to refine it. I would say today we’re a fashion search engine that leverages natural language to be able — and photos, if you want to upload a photo — to be able to find what you’re looking for. The second piece of that is that we work with thousands of brands and retailers so that we have a very, very broad selection and it’s growing every week, we bring on new partners every week. It’s very hard to, when you’re trying to help someone find something that’s relevant for them and that meets their personal style, budget, etc., to have a huge catalog without some form of personalization. So obviously that’s a piece of what we’re working on. But on the flip side, it’s very hard to do personalization unless you have a huge catalog. And that’s something that Mike and I learned at Stitch Fix. We had a more limited catalog because we owned the inventory there, and so it was a very different business model, and so you could find the segment of consumer for whom that inventory was a good fit. But in a world where you’re trying to serve a very broad set, you need the widest possible selection.

RISHABH JAIN

And as a fellow founder, when I hear that, I hear that you have taken on the challenge of building both sides at the same time. So you’re building the merchant side and the consumer side at the same time and decided to build this whole entire end-to-end experience versus what our company does, for example, which is just, quote, normal SaaS, for just the merchant side or just the consumer side. What drove you to build this full end-to-end product that serves both sides? What did you feel was so needed that led you to the full experience as opposed to just serving one side or the other?

JULIE BORNSTEIN

So really we’re trying to solve the problem for the consumer, and in order to do that, we knew that we needed a very big catalog. Having been in this space for most of my life, I am as motivated by making the brand’s and the retailer’s business better as I am by creating a great consumer experience. So this idea of sitting in the middle between them felt very natural. But interestingly, at The Yes, we actually were trying to solve discovery through purchase — so at my last startup — and at this company, we’ve decided not to tackle checkout. We actually … We don’t have a single basket. We are really more like a Google Shopping where we help — although our results are way better than Google Shopping’s and our catalog is much cleaner, which makes the Google Shopping very challenging in fashion. We are doing everything from exploring, having this big catalog to explore, to then help you narrow in and find what you want, and then you click out to go make the purchase on the site of the brand or retailer. So our learning from The Yes was that that last step actually is very tricky technically and is not a huge value-add. Checkout’s pretty quick on most sites. Not to say that we won’t look for opportunities to do agentic checkout in the future — we definitely will — but that is a space that’s still under development. And so over time, we can probably have an agent checkout for you, but for the time being, we decided we’re really going to focus on search and discovery.

MIKE DUBOE

Let’s stay on this for a minute, because I think this is a topic that a lot of people are interested [in] right now, is the agentic checkout. So your decision to not own the checkout this time, you explain what was behind it. What would need to be true for you to go and reevaluate that? You were just alluding to it, but maybe let’s go a step deeper.

JULIE BORNSTEIN

So, basically, if you want to do checkout, you need to have visibility to the inventory, where it is, and be able to track its trip from the warehouse of the brand to the consumer, and then also handle returns. And returns are obviously a big part of this business, like it or not. The truth is that when we tried to tackle that at The Yes, we ended up spending a lot of time building systems to do those things, basically to be able to check out using this anonymous checkout path on a site for the user. Then we were basically actually using our email as the way that we would then get notified from the brand that the product had shipped. So there was a lot of translation happening. We were creating a translation layer so we could provide this one experience for a customer, one … They weren’t getting one package, obviously, because Amazon and Nordstrom have been doing multiple packages in one order for a while, we felt okay about that, but we were trying to create this one cart, one checkout experience. And the truth is that the technology just wasn’t there. And it ended up taking so much time to build out that that it took away from the time we could spend on building really great discovery experiences. And so when we came into this we thought, listen, the way checkout’s going to work in the future is going to be different. You’re not going to need to be the merchant of record, for example, and then kind of take the money and then pay the end point and that kind of thing. We were actually the merchant of record at The Yes. We didn’t want to do that. We didn’t think that there was enough value in that role and we felt like it was a lot of work for everyone without a lot of payback. And knowing that the world is going to change and the concept of an agent understanding your identity and being able to check out for you, but staying in the system of the brand or the retailer, is a much better way to do it. So we said, let’s not tackle that yet. Really our value is helping people find the thing that they want that meets their need, and then over time we can leverage technology as it’s evolved to maybe make it easier for the consumer.

RISHABH JAIN

So there’s this other trend that seems to be happening with AI products where people pour their life stories into AI agents. And as you’re describing the pivot off of the product and other mechanisms by which people are shopping, do you think that the AI personal shopper will actually be significantly better than the human personal shopper just because of how much the person is willing to share and interact with an AI agent versus a human agent? And what early behaviors are you seeing that are just, wow, I would not have … There’s no way a human agent would have been able to receive this information and all of a sudden you can actually fulfill desires that are harder to fulfill in a retail setup?

JULIE BORNSTEIN

Yeah. Well, I think one of the biggest constraints for any traditional retail setup is you have a limited set of inventory. And so someone comes in with a specific need and you probably only have a few options for that specific need, whereas when you have the world’s inventory at your fingers, a person, it would be impossible for them to sift through and find all the relevant products there. But in theory, with the automatic agent, they can go through a very large assortment in a very quick amount of time and narrow down and get you the closest match to what you’re looking for. So I think there’s, as you go towards volume and then it becomes more beneficial to have an agent doing this rather than a human. I was going to say, I think that one of the interesting things about shopping and fashion — and there’s other verticals that I would put in the same category — is there’s this question around, in the future, are humans going to be even shopping for themselves or is an agent just going to shop for them fully? I’d say Stitch Fix is kind of like the one of the agent shopping for you in a very tangible way because you didn’t see the product, you just got a box of five things and those were sent to you. And I think that, in the future … So one of the things that I came away from my Stitch Fix experience was, there are different segments of the population. There are people who aren’t interested in shopping or fashion at all. There are people who are interested in looking good, but they don’t really know the category that well. They don’t spend a ton of money on it, but they just want to have someone treat them and get clothes that fit and look good and they get compliments. And that was the perfect customer for Stitch Fix. And then there’s the customer who’s more of a fashion enthusiast who actually knows brands, cares what they wear, and has more opinions. And that was a hard customer to serve through Stitch Fix because the more opinionated you were, the less likely that five items in a box were going to match exactly what you want. One of the things that we think a lot about is that people want agency in shopping for fashion. They actually enjoy the process. They like to shop, they like to dream, they like to see the options, and then they like to select it. And so we don’t think that an agent’s ever going to cut out the human involved in the shopping process. We just think it’s going to make the shopping process a lot more efficient and effective and in some ways more enjoyable because not going through a million things and then still feeling questionable about whether this is going to meet the need or not. But there’s obviously many years to build an understanding of both the user and the product catalog to the point where you can feel that confident in making that experience amazing. But that’s what we’re working on. That’s how we think about it.

MIKE DUBOE

As you’re talking … On the one hand, it’s very clear to me why you started with fashion and why you are going very deep. You could build a very big business just going deep on that, and you will. I also think I tie this to our earlier conversation on memory and being able to extrapolate taste graphs to other verticals as well and kind of where you could pull the consumer into. And it kind of begs the question of, how do you figure out what’s next vertical-wise? Does Daydream have — whatever you want to share — does Daydream have aspirations to go outside of it, outside of fashion? And maybe how do you think about verticals or categories that should be in versus out of scope for a model like this?

JULIE BORNSTEIN

Yeah, we definitely think about ourselves as a more taste-based category. I think that when you look at other verticals, things like electronics for example, those are spec-based. And if you can tell the LLM what dimensions you’re looking for, they can show you the three products that fit that dimension. And then I think for things like fashion and the other big obvious category is home, there’s all of this … It’s just really hard to buy online. It’s hard to buy in-store too, for home, because there’s so many aspects to it. Is it going to look good in the setting and is it going to fit? And there’s a million different places to go and there’s no real one place to see everything. So a lot of the same dynamics exist in the home space as fashion. So if we do go into another vertical, that would be the most natural next one, I think, for us. I think beauty is different enough. I think food is kind of an interesting one, but also different enough. And then of course, travel, I think, is just huge and fascinating but has lots of its own dimensions. We haven’t committed to going into another vertical or not yet. We’re trying to say, get really, really good at fashion first, and then what we’ll do is we’ll figure out, okay, here are all the learnings. How can they be applied? I think certainly we know that there’s a relationship between fashion and home. In fact, I had a designer who I was working with on redoing my house and she asked me to pull five of my favorite pieces of clothing as part of that exercise because she felt like there was a relationship between how people dress and how they decorate their home. And so yeah, I think there would be a lot of interesting ability to see how those translate and leverage all the learnings you have about someone’s fashion interest to maybe some other verticals. We’re still so early that we don’t know yet if and when that will happen.

MIKE DUBOE

So let’s tie this back to some of the earlier commentary on marketing and let’s fast-forward to where we are today in the world of marketing, which I think we’re at a very exciting time. Marketers now have access to a very different set of tools than even we did five years ago, three years ago, one year ago. For Daydream, what’s been working so far on marketing and maybe what are some — given the unique DNA you’ve built around the core product that you’re building — how has that extrapolated into how you’re running marketing as a company?

JULIE BORNSTEIN

So two of the interesting things that we’re doing on the marketing side — and we’re very early on because we’re still really focused on building out the core product — is one, leveraging AI for the photography. I’ve done enough photo shoots with models over the years to know that it’s hit or miss if it turns out the way you envision it, and it’s very expensive. And so we didn’t want to put a huge budget against this early-stage. We are also trying to solve the problem of we don’t want to put an outfit on a model that people will see well enough that they want to buy that item because that’s not how our business works. It’s not about a specific item, and the likelihood of that item being in stock for any length of time is unrealistic. So we knew that we wanted to create this ephemeral, dreamy version of clothing, and it was much easier to do that with AI than it was to do in real life. So I would say that we’ve found a couple of really good AI creators who are designers, but they’re leveraging AI to do it. And that’s been both really fun and a much easier way to get the look that you want than by setting up a photo shoot and then crossing your fingers that it works out.

The second place that we’ve been using — doing a lot of experimentation — is actually in TikTok. And while our target customer is more millennial than Gen Z, I would say both millennials and Gen Z are on TikTok. And mostly what we’re trying to do is really figure out signal, what hooks actually appeal to people and drive them to discovery and check us out. And so we’ve been testing just tons of different creative messaging and angles in to try and learn quickly what we think will, as the product evolves, what will drive consumers in and using those both to think about what is the marketing message and even what is the product evolution. If we test out something that’s around … I’ll give you a recent example around celebrities and celebrity style. Celebrity style was not a core part of our initial product, but we know that there’s a lot of interest in that. And so that’s given us signal both on what drives people in and what to build out because we know there’s a lot of interest in asking to look like Bella Hadid or some other celebrity from a style perspective.

RISHABH JAIN

When you think about a channel like TikTok and all of these different creative angles, we actually just had a conversation with Sam Ross who also thinks about a lot of consumer marketing and interesting angles and different messages to attract people. One of the things that he said — he was talking about it in the context of approaches that he now takes to B2B marketing — and he says you should be unafraid to use paid as the mechanism to drive that engagement. I was wondering, a lot of this content that you’re building, are you doing mostly organic? Are you doing organic and paid? How do you think about the allocation within the given channel and the diversity of the different types of creative? What are the different points of measurement in that journey from the creative onward that you’re looking at?

JULIE BORNSTEIN

I mean, we are doing both organic and paid, and I think longer term we’re building in functionality into the product that will have some natural sharing and viral elements to it. Because shopping is innately social and, to the point of the woman you work with wanting to share stuff with her friend, we are going to create some tools within the product that allow sharing to be easier and that will long-term drive customer acquisition. But in the short term, paid [is] super important because, a) it’s how you get your initial audiences, and b) it’s just a great place to do testing. And so you can test all sorts of things. You can test messaging, you can test if you think this product angle is something you want to build, let’s see if it draws people in. You need to start somewhere.

So we’re big fans of doing very targeted paid testing and learning. Over time, we’re also doing our own channels, which are, we’re trying to make engaging and focusing on what content is most likely to get shared because, or how can we partner with other influencers to get in front of their audiences and bring them in, which is … We’re doing some of that on the paid side, and then we’re doing some of it on just, a friend of ours will do a day in the life and then she’ll share it out to her audiences too, and that’ll bring us people. So we’re really looking at all ways to initially test and learn how we can bring customers in as we build some of the capabilities that will allow us to have more of a flywheel in the product itself.

RISHABH JAIN

One area that I was curious how you think about is … TikTok famously gained a lot of share by advertising on what ended up being its chief rival: Meta. And so I guess the rough equivalent in your world is, as people shop on AI chat engines that are not Daydream, how do you think about showing up inside those LLMs for shop queries? A better example of this is actually, when I search on Google, I end up going to Amazon and then I continue to search on Amazon. There is going to be an equivalent of this world where it’s like you start, but then actually the real search and depth of search happens on a different platform that is built for the intent of that search. How do you think about that mechanism of attracting people given that that’s the posture that someone is leaning in with the first place?

JULIE BORNSTEIN

So we are actually already starting to test this on Google — not on the other LLMs but in Google — because there’s a lot of long-tail queries that are not well-served by Google. We’re doing a lot of testing and learning of showing up there, not in the basic things where it’s expensive and doesn’t really make sense, but if someone’s asking for the kinds of things that our customers ask for, which is usually something that has three to five parts. So an example is, I’m looking for a dress to go to a wedding that’s in the summer in Napa Valley at night. So there’s lots of dimensions to it. That’s not something that Google is great at today. And so we’re testing driving traffic from Google to us for that. I think when it comes to the LLMs, we have a little bit of a wait-and-see approach. It’s unclear to us whether what they’re … They’re all trying to do it themselves. If you ask them for that kind of search, they show you three of the most random dresses you’ve ever seen from brands that make no sense, and it’s just clearly they don’t understand the fashion side of it. So, I don’t know, at some point either there will be a partnership or they’ll all leverage us, or … I think we’re curiously watching and seeing how that plays out. But I think we’re really interested in serving as a partner to anyone who’s interested in being a partner to help people find what they’re looking for in the fashion space. So hopefully it will be some kind of partnership that emerges between the LLMs and a player like us in a certain vertical.

MIKE DUBOE

Julie, we’re running close to time here, and I wanted to bring us home with one question that’s maybe more oriented towards founders. And I would say where we are in this tech cycle right now, it feels like there’s a lot more energy going towards B2B startups, kind of rightfully so. I would say I’m seeing companies get traction faster than ever, and actually durability on a number of these businesses looking pretty solid as well. I know I’m generalizing more broadly, but I think it is … You’ve dedicated, based your entire career to consumer and so it’s no surprise you’re building a consumer startup. It also is both great but also a very hard time in consumer just given the multitude of products that we’re able to try out. And I would imagine creating retentive experiences is harder than it’s ever been, even though the tools to actually drive that are more abundant. How do you think about, or maybe what advice would you have for people who are getting started in consumer? And I guess what are some of your observations right now in building for consumer now versus five years ago?

JULIE BORNSTEIN

Yeah, I think in some ways, because everything happens … So all customer acquisition seems to happen through social media these days. It’s a pretty targeted universe from how you get new customers. And it’s hard because it’s expensive and it’s a million tiny things as opposed to a few big things. But if you can figure out how to make those channels work for you, you have a good chance of being able to get a customer base and grow your business at least in the early stage. I do think that if you’re building a consumer business, you need to understand what actually is going to be needed to make that business successful. I’ve always felt like you need to really understand the core business and the motivation behind the players in the business in order to build something that’s really great for consumer. So in our space in fashion, I’ve seen so many companies launch with a cool feature. They do one thing. They have … They’re a virtual try-on. But people don’t go to virtual try-on to actually shop when they have a need. That’s like a fun game and could be a feature within a broader shopping app. But I think my philosophy and the reason that I believe that we can build something that’s better than exists is because we understand that it’s actually having the assortment and the catalog that is the building block on top of which you can then build great experiences to do it. So I think a lot of people who are excited about a new user experience are good at building that one user experience, but they’re missing a lot of the fundamentals about what would change consumer behavior and how you would become a new way to do something. I’ve always been obsessed with Google — I mean, as everyone in tech is — just in terms of how that became the de facto place that you went for everything and relied on it, and it was sort of so simple and so focused, but so effective. That’s, I would say, how I think about what we’re building at Daydream for the fashion world, and there are a million of interesting features that we’re going to build onto the product over time that are helpful when you’re in a certain use case. But I think you need to really understand what the levers behind a business are to drive them. And if you do and you can build something that — you understand the problems that exist in the market — and you believe you can build something that’s materially better than what already exists today, I think there’s hope. I think that consumer businesses are definitely trickier because they’re not only hard to build these experiences, but you then need to basically find customers. And that’s not cheap and that’s not easy. And so I think for most consumer businesses today, it doesn’t make sense to build a business that’s going to rely solely on paid, for example. You need to think about what the other ways that you’re going to get and retain customers are, and that needs to be core to the way you build your business.

MIKE DUBOE

Julie, always learn a ton from you every time we talk. Thanks so much for doing this, and good luck with everything at Daydream.

JULIE BORNSTEIN

Thank you.

MIKE DUBOE

Yeah, thank you, Julie.

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