Is Anything Real In Paid Advertising?

[00:07.5]
Welcome back to "Is Anything Real In Paid Advertising?", The show where we unpack what's real and what's just noise in today's marketing mayhem. I'm your host, Adam W. Barney and today's guest is building something bold at the intersection of AI, E commerce and founder First Discipline.

[00:23.8]
Vinod Kumar is the founder of Syntheum, a startup creating AI-powered merchandising agents for e-commerce teams. But what makes this conversation really stand out is Vinod's belief that paid ads should never come before clarity. Vinod, welcome.

[00:39.1]
Let's get into it. Thank you, Adam. Thank you for inviting me. It's a pleasure to be here talking to you about paid ads. You got it. So to start off sort of what exactly are AI merchandising agents? Merchandising is one of the most critical functions in e-commerce success.

[00:57.8]
And we believe that merchandisers are the glue between a shopper and the shopper converting on the storefront. So while marketers drive demand, merchandisers drive conversion. So in the context of paid ads, specifically we help merchandisers take the traffic that demand generates through organic and inorganic demand gen and merchandisers convert them and merchandising agents that we build help merchandisers execute faster and in a more data driven manner without having to revert back to Excel spreadsheets and so on and so forth.

[01:32.1]
We just collapse the work required from half a dozen different steps to one or two steps. That way they are able to execute faster, keep conversion rates higher and overall keep customer satisfaction higher. That's incredible. Vinod, where did this idea come from? Me and my co founder are both former Salesforce, employees and we spent most of our career in e-commerce tech building commerce platforms essentially. We both came from demandware.

[02:00.5]
Demandware got acquired by Salesforce. We stuck around for half a dozen years doing various things. And then a small group, me and my co founder and a small team spawned out to really address the problem of the fact that commerce, running E-commerce is becoming more and more complicated.

[02:18.6]
Now if you roll back time to like 2021 or 2022, you know that the heydays of Facebook ads, people were throwing money at demand gen, and CAC was going through the roof. And e-commerce teams were struggling with figuring out how to convert the traffic, on the site because on one hand, CAC was increasing, but on the other hand conversion rates would be decreasing.

[02:45.0]
So they were stuck in this world where they had to drive demand through some way, but at the same time also figure out how to get a boost conversion. And what was in between was complexity, the complexity of taking shoppers and converting them into customers. So that was the genesis of Syntheum.

[03:02.5]
We thought that this is an important problem to solve. It applies to both small merchants as well as multimillion dollar merchants. So when we started building it, we didn't really call it agentic, but it turned out that what we built, the market was calling agentic. So we just started calling it the way the market was calling.

[03:19.7]
So that's how we ended up building merchandising Agents. That's fantastic. And I know you've mentioned also Salesforce as a partner. I'm sure your history played into that. Absolutely. How did that alignment with Salesforce really get nailed down, even knowing you have a history there?

[03:38.1]
Relationships is the key to everything in this business, especially in the venture world and the startup world. So the white space we found turned out to be interestingly complementary to what Salesforce was offering.

[03:55.3]
And therefore our path to becoming a certified ISV partner for Salesforce was fairly straightforward. Plus also knowing the people, knowing the process, knowing how things work behind the scenes helps a little bit. I love it.

[04:10.4]
And I know you call, you've called yourself seed strapped. Talk a little bit about operating lean, but with intention. Yes, we are seed strapped because we are completely self funded and customer funded at this point.

[04:29.4]
So we are in the market for raising a seed round. And eventually we will get seed strapped, which is a combination of seed funded plus bootstrapped. Right, it's an amalgamation of those two terms. So we are seed strapped in the sense. We believe that we are at a point where we can get enough traction with the customer base and the revenue base we already have with an incremental seed round that can help us actually get to escape velocity.

[04:58.0]
So that's the startup game, right? You have to figure out a way to get escape velocity. And we believe we're on the path already right now. So that's why we call ourselves seed strapped. And therefore we have to be super, I wouldn't say frugal, but super conscious, super intentional about how we spend our money, where we invest both in infrastructure, development skills, people and more importantly, customer acquisition.

[05:24.0]
Right. I love it. We've talked a little bit about, you know, paid ads and a pause sort of approach there. I'd love to get into sort of why you're holding back there. You mentioned to me that you reject about six paid ops a day. What types are the ones that you reject and what makes you say no so quickly there?

[05:44.6]
So you produce podcasts so you know this probably. So we get paid ups from podcast hosts, newsletters,

[05:54.6]
plain old fashioned Google PPC agencies that promise no commitment conversion. So there are several out there. Well they are all businesses and I wish them success.

[06:13.1]
However as a seed strapped company we are very intentional about how we spend our money and we are very intentional about what that gets us. Given the fact that we are all experienced individuals, this team is very experienced. What that means is we already have a lot of relationships in the market.

[06:29.5]
What that means is we can get to a good baseline without having to spend money to attract customers. So from that perspective we have invested in brand building and in complete organic way to raise awareness and we have stayed away from paid advertisements so far.

[06:50.6]
So for example, if you look at agentic merchandising operations, you'll probably find us on the first page of Google. Just yesterday we found that for one of the key terms that we target we are actually in the AI overview snippet of Google.

[07:08.3]
So we have sort of planted our flag in the zero click apocalypse that everybody else is dealing with right now. Yep. And organic is the way to go because right now what's happening is, and you know this, there's this LinkedIn on one side which is has become completely overridden by thought leader ads which we may have to do at some point.

[07:32.7]
I'm not saying we can't. Right, but we have to do at some point. But on LinkedIn it's more about establishing yourself in the company. Company profiles don't really perform well on LinkedIn. That's data driven absolution. So on one hand you have to establish yourself as individuals on LinkedIn and only then you get to a point where there's sufficient traction to actually invest in boosted posts or thought leader ads.

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Because what happens when you find a thought leader ad or boosted post immediately that person or that target individual is going to click on your profile, or the person to see what this person or the company is about. And if we have not invested in building a presence through organic content, then we lose that prospect right there.

[08:19.2]
I mean it looks fake, it feels fake. And in a landscape where there's a lot of fake happening, you have five to seven seconds to convince someone that this is real. And to do that the Only way to do that is investing in building organic presence in these destinations.

[08:36.7]
So we've invested a lot of effort in LinkedIn, we've realized that the company profiles don't really do much well. So we focused on building our individual profiles on LinkedIn from an organic perspective so that eventually when we do get to intentionally spending on paid ads, there's sufficient corpus of presence available otherwise it looks fake.

[08:57.1]
Right. Same on the organic side. If you take Google as an example, you have the AI overview that's killing pretty much everybody. People don't even get to see the organic side. Exactly. Right. It's throwing everyone for a loop there.

[09:13.5]
Right, Right. And you cannot pay yourself into it. Maybe eventually Google will figure out the paid model and I'm sure they will. But as it stands today, you cannot pay yourself into getting into the ai overview section. The only way to do that is to invest in organic, is to invest in brand building.

[09:30.8]
And only then Google essentially sort of absorbs your information and makes you part of the overview section which is now becoming prime real estate. Because no one really. Not no one, but it's starting to look like that section is starting to absorb a lot more traffic and it's creating the zero click, situation.

[09:49.6]
The third and final piece of the puzzle which no one really talks about or maybe a few people talk about is the emergence of ChatGPT and Perplexity and Gemini and all these gen AI search engines, which as of now, well maybe Perplexity has a sponsored ad model that it's only now starting to introduce.

[10:09.9]
But predominantly these engines are all about you convincing it that you are an expert or you are the best of breed in whatever the subject matter is. So in our case it's merchandising.

[10:26.3]
So when it comes to e commerce merchandising we have to convince ChatGPT, we have to convince Perplexity that our content is relevant to become sort of the prime response in whatever conversations happening with the user.

[10:43.5]
So these three things are happening and when these two things are happening, the relevance of this is a temporary short period of time. The relevance of paid right now seems super low. If you don't invest in organic, you're going to miss the next wave of paid that's going to happen maybe two, three years down the line similar to what happened back in 2019 and 2020.

[11:06.1]
Right. So that's my long diatribe. But it gets, it gets into the information diet. Right. And finding your ICP where they're actually consuming content. And I think you're dead on that there's an evolution that not a lot of people are talking about where I've even, I've spoken to a couple people recently who they run consulting practices or they're building startups and Claude, Perplexity, ChatGPT have fired their company back as a recommendation in the chat for the client that they just landed.

[11:37.6]
It's an incredible evolution that we're going to be writing, I would say in the next six months, 12 months, 18 months of how that search bar that stems from Google is extending into different, different areas. But you touched on something here also around the organic growth and the trust that comes with that.

[11:58.2]
And it also requires discipline to wait with paid ads and things like that. That's kind of where "Is Anything Real?" these days comes into play. From your perspective, what traction signals do you look for before flipping the paid switch?

[12:16.0]
We look for organic, awareness generation. So for example, it depends on the destination. Let's say LinkedIn We would consider paid ads if a specific post or a specific subject matter crosses a particular threshold.

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You don't even have to. The threshold is not an industry standard. It's your own threshold. Like for example, if you've been investing in organic content on LinkedIn, let's say for the past six months. Sure. And if you punch in all your likes and engagement metrics into a spreadsheet.

[12:52.8]
Right. A median will emerge, a median number of likes, a median number of views and a median number of comments will emerge. Say a post crosses that median threshold, whatever that is for you. For some people it could just be 20 likes.

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For some it could be 200 likes. Right. It crosses the threshold, then that is an interesting candidate to get boosted further. So that is an interesting candidate to go above and beyond your own immediate first and second degree connections to go into the ether to appeal to a much broader audience with the goal to attract more views, more engagement from outside of your immediate circle.

[13:35.2]
So that is an example of how I would consider something that goes from organic to over to the paid threshold. Gotcha. And I mean I'm picking up on the threads here that through your sales, even with Syntheum, you've learned that it's about prioritizing relationships over campaigns.

[13:53.6]
However, let's say I'm handing you $50,000 right now for marketing. How would you deploy it? Where would you put those dollars? And you don't have to be super acute about it. But where would you run with that? That is a very good question. There are several subject matter experts out there that seem to have the blueprint of how to deploy these dollars.

[14:13.5]
But actually it's very much context driven. It depends on what you mentioned a few minutes ago. The information diet of your ICP. In our world, our ICP, VP of E Commerce, that's one role that we target.

[14:30.3]
Reads Substack, listens to podcasts, is on LinkedIn. They don't do Google searches, they're not on Instagram, they're not. Maybe they are on TikTok, on Instagram, but they're not there for professional reasons, they're there for personal reasons. So, when we have to engage with our ICP, these are the three destinations that matter to us.

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So Google paid ads don't matter at this point in time. Right, right. Maybe we could do sponsored newsletter posts, with some of the more popular Substack subscribers. And of course LinkedIn with thought leadership ads and boosted posts. So in my world there are three destinations where my audience lives from an information diet perspective.

[15:13.7]
That's what they consume. And so if I had $50,000 to deploy, I would deploy across podcasts, Substack and LinkedIn. I love it. And I think that gets into how your leadership style, both from your corporate career and in building this though, have influenced how you show up in what is an incredibly noisy ecosystem.

[15:34.1]
It's a hard market to break through, even LinkedIn especially. But when you talk about these other channels, they're incredibly, incredibly difficult to break through.

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What's your take on your favorite modern sales channel and why today? Oh, favorite modern sales channel is always the sales channel of the old.

[16:09.4]
Before you sell something to someone, know that someone. Build it off the relationship. Relationships. Yeah, I love it. Well, I say this with a caveat. We are not selling $20 a month subscription.

[16:25.0]
Our average contract value is 5, 6 figures. So in that case, and these are mostly enterprise deals, in that case, we are mostly looking for figuring out how to establish new relationships, how to cultivate new relationships, how to nurture new relationships.

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And we basically latch onto any opportunity available to create, discover new relationships out there. So in our world, in this particular pocket of ecomm tech, it's pretty much getting to know the person first, before you get to know the company and the problem they're going to solve.

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So the modern technique is the age old technique of relationship selling. It's probably a bit of an odd thing thinking about the buying committee within those organizations. Right. Who are the people that are actually the direct people you need to influence, but then who are the secondary people that you need to buy in?

[17:26.9]
From a buying committee standpoint. Yeah, it is a team, it is a portfolio effort. So connecting all these things together. The modern technique is to drive through relationships and that is targeting the primary decision maker.

[17:42.3]
But like you said, there are influencers and there are other responsible parties and we have to figure out ways to get in front of them in different ways and forms. And the three channels that I mentioned, podcasting, Substack and LinkedIn are our primary avenues of raising awareness.

[18:03.1]
So for example we are having this discussion, that's the podcast angle. We have a fairly reasonably new Substack presence but we're also fairly active. Like we interact with others and we build relationships on Substack, and on LinkedIn. We are pretty active on LinkedIn at this point.

[18:21.5]
So what we try to do is, to your point, there's one sort of direct relationship person that we focus on and we try to get in front of that person as frequently as possible. But you're right, all these decisions that when we sell the decisions are committee based and we have to make sure that the committee has a positive sort of perception of what Syntheum is and what we do.

[18:49.8]
And to do that we have to make sure that the message is reiterated across multiple channels and our channels of choice of are those three. Right. Awesome. Vinod, this was refreshingly grounding. I love, you know you're operating as a founder who is walking the talk on discipline, intentional growth and clarity before scale.

[19:14.2]
Where can people learn more about Syntheum and connect with you? Yes, people can do three things. One is obviously Syntheum.AI is our website. Go there, check us out. If you happen to be an ecommerce in the E commerce world, we offer a complimentary AI Visibility Audit Tool to people.

[19:35.3]
One way of establishing trust. AI Visibility Audit. The auditor is called AVA: a, v, a, so it's an auditing agent. So AVA.Syntheum.AI. 100% complimentary. Go there, punch in your e commerce storefront URL, you'll get a nice report that talks about if ChatGPT is talking trash about your brand.

[19:56.3]
And of course last but not the least, I am on LinkedIn every day, most of my team is on LinkedIn, so if you're interested, DM me and I will respond. And everyone listening you can find links to each of these these pieces below.

[20:12.6]
Vinod, thank you, and thanks everyone for tuning into "Is Anything Real In Paid Advertising?" the show where we find the signal behind the noise. I'm Adam W. Barney subscribe, leave a review and check the show notes for again links to everything we covered. But Vinod, thank you for joining us today.

[20:29.5]
Thank you for having me.