I’m describing Michael Zeisser, Senior Vice President of Liberty Media Corporation, a leading media holding company, where he created and oversees Liberty Media’s e-commerce group of companies. A humble student of the internet industry, Michael has learned a thing or two from assembling and managing his portfolio of retail e-commerce companies. At the upcoming Shop.org 2012 Annual Summit this September in Denver, Michael will share his insights from 15+ years of work at Liberty Media and McKinsey & Company on our Keynote stage.
What will he share? You’ll have to attend to see. In the meantime, I had the pleasure of sitting down with Michael to discuss what this former Technology Executive of the Year thinks about the next stage of the internet, how social and mobile are changing the industry, and the most common mistakes of e-commerce leaders.
How do you characterize the current stage of the internet? What will be the next stage?
We are currently in a stage of reacceleration of the internet, largely due to mobile and social media. More consumers are using the internet in more ways than they ever did in the past. An analysis of the historical patterns of the consumer internet industry since its inception less than 20 years ago suggests a major discontinuity or innovation shift every 4-5 years. The last major shift we experienced was around the beginning of the decade with the emergence of mobile platforms, smartphones and tablets alike. If the pattern persists, we should expect another major shift around 2015, which will profoundly disrupt existing business models. Some people talk about augmented reality or internet-on-TV, but I really have no idea what that could be. The other characterization of the current stage I would offer is the disconnect between managerial requirement and capability. We currently do not have in our industry a large enough pool of capable senior executives with the managerial aptitude, experience, and mix of new and old skills to run large digital commerce companies. We are in a stage of professionalization with a temporary imbalance that we need to outgrow.
In what ways has the growth of social media and mobile changed the e-commerce business in recent years?
Many ways, but the most important for me is that it has accelerated the growth curve of companies. What used to take years can now be accomplished in weeks or months. The risk, of course, is that we mistake rapid adoption rate for proof of durability. We need to recalibrate our expectations and benchmarks for what constitutes success, particularly regarding consumer adoption. “Easy come, easy go” is as true today as ever – it just occurs much faster than it used to. The other change, in my opinion, are consumer expectations about transparency. Simply put, I believe consumers want to know more about whom they do business with, and decide more deliberately whether to associate with a company. Younger consumers in particular want to know who and what is behind the corporate “wall”, who are the key executives, what values do they stand for? What are a company’s real practices? In turn, companies are beginning to fumble into this new world of transparency out of a desire to differentiate themselves, for example by letting executives and employees blog and interact with users on social networks. If I am reading the trend right, it goes to the heart of what it means to build a brand in the age of digital media.
What are some of the most common mistakes you’ve seen e-commerce leaders make over the last 15 years in the business?
The single most common mistake is to take their users for granted. Internet businesses obey the same laws as non-internet businesses. Winning e-commerce companies develop an experience for a group of consumers that is superior to what anyone else offers. Being successful because you are early is not the same as being successful because you are good – many leaders lack the wisdom to tell the difference. At a more granular level, I would observe that the capabilities required to win in digital commerce are both unique to this environment and evolving. I cannot count the number of times I have been told digital commerce is “just like any other retail business” or “about technology more than retail”. Both truisms are obviously wrong in their simple-mindedness. Every industry demands unique capabilities, and digital commerce is no different. E-commerce leaders can underestimate the need to build new skills in their organizations. For example, who would have predicted a few years ago that any leading eCommerce company would require a Product Development organization distinct from the Buying/Merchandising group, Tech, and Marketing? Yet, this is what it takes to win today. And who knows what capabilities will be required tomorrow. The competitive environment on the internet is not only ruthless because the barriers to entry are continually declining, but the key factors for competing (and winning) are still shifting because of the constant evolution of both enabling technologies and consumer expectations.
How did you get your start in e-commerce? How has working in the industry changed since the early days of the internet?
Almost 20 years ago in the early days of the industry, I was one of the creators of the internet practice at McKinsey because I wanted to do something entrepreneurial even while working in an established, traditional firm. What has changed the most is the importance of the internet. In the beginning, it used to be a hobby of some crazy person in the IT or the marketing department. Now for many retailers and media companies it is the only issue that matters for their long term survival.
What excites you most about the future of e-commerce?
I am an investor and look at the world through a prism of wealth creation and creative destruction. I am convinced that the changes in retail of the last 20 years will pale in comparison to what will happen in the next five. Traditional business systems and models, such as catalogs and store-based retail were built around constraints imposed by the physical world. For example, a catalog assortment had to be optimized against the cost and constraints of adding pages to a book relative to the economics of mailing against prospect lists, not against a differentiated insight into the needs of target consumers. These constraints disappear in a digital environment, which creates the opportunity to redesign business systems and models around consumers, not physical-world limitations. Amazon has already done this, but as we can see from companies such as Fab.com, to name just one, there is a lot more room for further innovation of the basic retail idea. It is evident to me that we are at the early stage of the emergence of retail business models that have no precedent in the physical world, and which essentially reinvent and reinterpret retail in a digital environment. How could you not be excited about participating in such change?
This year, the Shop.org Annual Summit is in your hometown, Denver, Colo. Tell us a few of your favorite things about Denver.
My favorite thing about Denver is its weather, which is spectacular in September, and its proximity to the Rocky Mountains. People who live here take full advantage of everything the outdoors have to offer. In Denver itself, we have great urban neighborhoods and I would recommend walking around our LODO (LOwer DOwntown), or Highlands areas for dinner or drinks. Visitors more attracted to contemplative activities may enjoy the Denver Botanical Garden, also located in town and ranked one of the best in the country.