Motley Fool Hidden Gems Investing - Surprising Jobs Numbers and Shopify CEO Tobi Lutke

Episode Date: June 5, 2020

Investors react to surprising employment numbers. Zoom Video connects with its latest earnings and doubles revenue guidance. Slack sells off. And DocuSign delivers. Motley Fool analysts Ron Gross and Jason Moser discuss those stories and weigh in on the latest from Dick’s Sporting Goods, eBay, and Levi Strauss. And Ron and Jason share two stocks on their radar: Target and FLIR Systems. Plus, Motley Fool CEO Tom Gardner talks with Shopify CEO Tobi Lutke about the business of Shopify, the value of diversity, and the future of work.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me this week, Jason Moser and Ron Gross. Good to see you, gentlemen. Hey. How are you doing, Chris? We've got the latest headlines from Wall Street. Shopify CEO Toby Lutke is our guest. And as always, we've got some stocks on our radar, but we begin with the big macro. The jobs report for May showed a surprising increase of 2.5 million jobs. This brings

the unemployment rate down to 13.3%, Ron. We take the long view as investors. Unemployment is still nearly four times higher than it was a year ago, but this was still good to see. and evidence, or at least indications, that PPP worked. PPP worked. The recovery has begun. Let's hope we continue on that road and don't fall back a bit. But this is the biggest one-month gain in history. Perhaps not surprising because we started from such a low base. So obviously, once things start to open up, things kind of get back pretty rapidly. Love to see where the jobs were created. Leisure and hospitality made up almost half of the gain, 1.2 million jobs in that sector. Bars and restaurants, again, these gig

workers, as we call them, 1.4 million jobs in that sector. Construction was big. Labor participation rate ticked up a bit. I think it's nice to see that. Sometimes we talk about the U6 unemployment number, which is a more all-encompassing unemployment number that the government puts out, that actually fell as well, but still at 21.2%, because it includes discouraged workers that have, kind of, stopped working, it includes part-time workers that would like to be full-time. So, that's over 21% still, but again, it was down. And this is all within the backdrop of a stock market that has been anticipating this recovery. We're down only about 1.5% on the S&P 500 for the year. I'll remind listeners that we were up 30% in 2019.

So, we're still unbelievably strong from a two-year perspective. The NASDAQ is actually up 9% this year. Jason, what stood out to you? Yeah, I mean, I guess the timing does seem maybe a little bit early. It was a little bit of a surprising report, I guess, but this generally was or is the idea, right? I mean, this was a self-implemented shutdown and something that was born of, I mean, it wasn't born of an economy in trouble, right? It was born of sort of an external event here in the pandemic. I mean, it does feel early. I mean, it feels like maybe the conditions on the ground convey a bit of a different sentiment. I mean, I think regardless the numbers, the big question for me, I wonder

if we're not headed towards a new normal, so to speak, where unemployment really does kind of hover in that 9%, 10% range for some time, because you do have to wonder with the jobs that do come back, what do those wages look like? Because I think while jobs are one part of the equation, certainly wages are another part. I think it's reasonable to assume, too, that the cost of doing business for a lot of these companies, particularly retail operations, restaurants, the cost of doing business is going to go up. If that cost of business goes up, along with the fact that their capacity for business comes down just based on limiting the traffic that can come into stores at any given point in time, then you start having to kind of wonder, beyond

just the jobs numbers, how do these jobs really feel, right? I mean, what do those wages look like? And then that trickles into economic activity, and we know that really, I mean, our economy is two-thirds based on the American consumer. So, I mean, it's certainly good news. I don't want to belittle it, but we have certainly a long way to go, too. A long way to go. And I hope I'm wrong, but I feel that the stock market is a bit ahead of itself. At the end of 2019, with historic low unemployment and really strong earnings,

we were at 23 times earnings, and that was frothy then. Now, earnings are not going to be near where they were for quite some time. It's going to take a while to get back. Obviously, unemployment is still significantly higher. So, we've got to be well north of 23 times here, whatever the earnings will shake out to be, and nobody's giving guidance, so nobody really knows. But the market's got to be frothy here. I don't know if that means just a kind of a flat market going forward or another correction coming. I got to think when the vaccine actually comes, the market's going to pop regardless. But it does feel a little bit stretched to me right here. Let's get to some company news. Shares of Zoom Video Communications hitting a new all-time high

this week. First quarter results were really good, Jason, but they doubled their revenue guidance for the full fiscal year. Jason Moser. Yeah, that was an attention getter. That was the first thing that stood out to me, honestly, when I read through that release. And I mean, it really does go to show, I think, how large the market opportunity is for Zoom. And I mean, it's not just a Zoom world, right? But they definitely are capitalizing on this situation. I mean, they did note that the pandemic has ultimately added a new variable to the mix, where historical knowledge may no longer apply. So, I will say, let's take that full-year guidance at least with a grain of salt, because one thing they did note was a mix in the shift

of their customer cohorts, where customers with 10 or fewer employees represented 30% of revenue in the first quarter, and that was up from 20% a quarter ago. And that matters because those are really monthly customers, they're not customers locking in for longer contracts, they have higher churn rates. We could see this play out over the course of the year. That's why I was a little bit surprised to see them go so big in the first quarter of the year. I think I'd have probably played my cards a little bit closer to the vest, but the numbers don't lie. 769 customers contributing more than $100,000 in trailing 12-month revenue, that was up 90%. They have approximately 265,400 customers with more than 10 employees. That was up 354%. They even added

one new banking customer there that deployed around 175,000 new Zoom Enterprise licenses in the quarter. So, the bottom line is, people are using Zoom. I mean, that's no surprise. And I know a lot of investors are probably asking the question, okay, we know what they can do now, what's next? Really, it does sound like management is focused on this one thing. they're really focused on making sure they nail this experience. Clearly, there were some security issues. They're wrapping that up as well, trying to focus a little bit on the security. But I think for the foreseeable future, they're going to be working on making this video conferencing platform as robust, as secure, as lag-free as possible. Down the line, we can start talking about

optionality and what they do with it from there. But I mean, clearly a business that's capitalizing on a big opportunity. Well, and they did talk a little bit about how they had R&D plans. And once they ran into those security issues, they basically took all of that money and said, we're not spending a dime on R&D, new features, any of that stuff. We're going to focus all of this on security for the next three months because we have to nail this. Yeah. I mean, I think that's exactly the right move too, because I mean, they've already knocked one of the big barriers out of the way in gaining this market share. And they're doing that in the face, honestly, of one of the behemoths out there in Microsoft and its new Teams offering. I mean,

don't dismiss that. That is real and that is a competitive threat. People are using Teams. But again, it's a big market opportunity. It's not a winner-take-all game. So, I think they've really built that house, so to speak. And now, to use an Under Armourism, it's time to protect that house. And they can protect that house by really making the investments in the security, in the experience, and keeping the customers that they have. Because once you keep those folks in, I do think there's a little bit of a switching cost that builds over time. In the simplicity of the platform, its ease of use, it's easy to use. And I think as time goes on, that becomes a bit of a switching cost that will keep folks in that ecosystem, so to speak.

Well, for the sake of shareholders, I hope they protect their house better than Under Armour has protected, it tells. Shares of Slack down 15% on Friday. Slack's first quarter revenue came in higher than expected, Ron. Their loss was smaller than expected. Why the drop? Yeah, in a vacuum, this was an absolutely fine quarter. And I will remind listeners that even with this big drop, the stock is up 40% year-to-date, so maybe ripe for a little bit of pullback. And let's take the quarter first, and then we'll discuss why the stock perhaps is trading off. Again, really strong, revenue up 50%, billings up 38%, 12,000 net new paid customers, now they have over 122,000, 132% net dollar retention rate. So, not only

are people renewing, but they're renewing at higher dollar, at higher prices. And so, you see over 100% dollar retention rate, great thing to see. Margins widened, now still not profitable, but getting closer. Adjusted operating loss, $16 million, not too bad. They actually were operating cash flow positive at around $9 million, so not burning cash on an operating basis. Now, the stock is selling off because management withdrew its annual billings forecast, and that's a number people really focus on. Earlier projections had them as high as perhaps a billion dollars, and now they're withdrawing that forecast. CEO Stuart Butterfield said, The second half of the year is just too complex. We've got a generational shift in how people work.

It's hard to see too far out. He cited that there are tailwinds. He said there are some headwinds. It's a funny thing to say in one sentence. So, there's pros and cons. There's a lot of stuff happening. Revenue guidance was also light. Investors didn't like to see that. I think, to Jason's point, this is clearly an admission that Microsoft Teams is a formidable competitor, and it's going to kind of remain to be seen how this shakes out. Slack did just announce an interesting and probably fruitful partnership with Amazon, where they will make Slack available to all their employees. That's a pretty big deal as well. So, listen, the stock got ahead of itself, still up 40% year-to-date, and we'll see how the rest of the year plays out from a competitive

standpoint. First quarter profits and revenue came in higher than expected for DocuSign, and shares hit a new all-time high this week. Jason, DocuSign is a $25 billion company, it still feels like they have a lot of room to run. Yeah. We say they're in the business of e-signatures, but really it seems like they're in the business of just smashing their own expectations because they just do it quarter in and quarter out. Encouraging words from the CEO, Dan Springer, on the call. He said, it's clear the ways of doing business are changing. Remote work is here to stay. Core business processes will only become more digital and agreements will need to be completed from anywhere at any time on almost any device.

And DocuSign's numbers certainly reflect that trend. Billings of $342 million grew 59% revenue, close to $300 million was up 39%. Again, they smashed their expectations there. It's a 95% subscription revenue business, which we just love to see. Total customers up 30%, commercial customers up 49%. We're starting to see some leverage flow through the business model as well as they get that customer base as they keep that customer base growing. And so I think that really the future is pretty plain to see for this company. The trend is there. And again, you talk about businesses

capitalizing on big opportunities. DocuSign is another one. And I tell you, as a shareholder myself, Chris, I'm extremely happy I'm owning this one. Don't take this personally, but one clothing retailer says you may have put on a few pounds. Details after the break. So stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Shares of Dick's Sporting Goods up a bit this week, despite the fact first quarter results were about as bad as you would expect given all of the store closures, Ron, but they're opening those back up. In the meantime, e-commerce was pretty strong. Yeah, you nailed it. You can't expect much when all your stores are closed. Obviously,

Sales were down 30% for the quarter, and same-store sales tracking the same, 29.5%. They had been tracking at a positive 7.9% before the pandemic hit, which is a pretty strong number. So, if that's any indication of how things one day may be again, that's a good number to look at. The store closures began on March 18th. As you noted, e-commerce, including curbside pickup, very strong, up 110%. You've got to see that, obviously, when that's your only avenue to get to the customer, and Dick's definitely performed there. The stores are beginning to reopen, 80% open as of May 30th.

Same-store sales for the first week of the second quarter down only 4%, still down, but making their way back. Balance sheet is solid, $1.5 billion in cash. They're not in any trouble there. Suspended share repurchases and dividends for the time being, and obviously didn't provide any guidance. Shares of eBay getting a boost this week after the company raised guidance for its second quarter. Jason, I feel like eBay gets made fun of now and then, and sometimes it is warranted, because sometimes they do things that don't appear to make sense. But the stock hit an all-time high this week. Yeah. They probably get made fun of

more than just occasionally. They do seem to step in it of themselves often enough, though, to warrant that. I think this falls into that statement we heard from Dan Springer with DocuSign earlier, just in regard to the digital economy. And I think that what this pandemic did, Amazon did a phenomenal job early on staking their claim in the e-commerce market, but it could be argued here that the recent demand has certainly marginalized their service a little bit. They're not the only game in town anymore. And we're seeing other e-commerce companies step up to the plate here and try new things. And so, I think with eBay, some marketing investments are definitely paying off there. Can we make the leap to where this is maybe

an eBay worthy of our investment dollars? I don't know that I would necessarily go that far yet. But I mean, this is encouraging news. And I think what we'll want to keep an eye on really for them, it's the gross merchandise volume number. That's going to give us an idea of how much money is flowing through that network. It's been on the decline recently. They haven't really been growing, but maybe this is a turning point for better days ahead. Retailers are starting to open up across America. Levi Strauss, the iconic blue jeans company, has opened more than a third of its locations, and they're noticing a new trend.

Everybody has a new size. That's an actual quote from Mark Rosen, the president of Levi's America's division. What do we think? The combination of everyone being locked in their house with snacks and doing a lot more baking is contributing to ... Ron, he's not saying everyone's coming in for a smaller size. Yeah, I think that's a fair comment. I, for one, I'm exercising more, but I'm clearly eating carbohydrates and bread products and frozen pizza, as I've mentioned several times on this show, more than typical. So, gosh, I'm not getting into a store anytime soon. I don't even want to know.

Although in a weird way, Jason, I mean, if you're Levi's, that's kind of what you want, right? You want people changing sizes so they buy more of your jeans. Hey, it's repeat visits, right? I mean, they probably need to send PepsiCo a thank you letter after making Cheetos available to the masses at free shipping, right? I mean, that snacks.com is working out pretty well for them. Let's get to the stocks on our radar. Our man, Dan Boyd, is going to hit you with a question. Ron, you're up first. What are you looking at this week? I'm going to go back to Target, TGT. Retail shakeout is unfortunately coming. There will be less retailers. Folks like Target,

Walmart, Amazon are positioned to survive. Not only survive, but thrive, I think. They've got everything you need, apparel, groceries, all the household items and electronics you need. Their investment in e-commerce and same-day pickup has really paid off, up huge during the pandemic. They've increased their dividend for 48 consecutive years, over 2% yield at this point. They're still off from their highs, so it's a fine entry point, trading around 20 times versus Walmart 25 times, I think it's a great stock to own. Dan, question about Target? Is there really only one thing I ever buy from Target, and it's undershirts?

So, Ron, what was the last thing you bought from Target? Definitely protein bars. They've got a nice wide selection of protein bars. I encourage you to check it out. Okay. They also have some good frozen pizza. Jason Moser, what are you looking at? Yeah, I've been digging more into FLIR systems lately. Ticker is FLIR. FLIR builds

the cameras, sensors, and additional technology to help us see infrared energy, or heat as we also know it. The name actually comes from forward-looking infrared, but they have all sorts of different applications for this technology from defense to consumer. There are sensors used in immersive technology applications like Microsoft's HoloLens 2. When you hear about places installing cameras and sensors to detect elevated body temps in this pandemic time. I mean, that's oftentimes FLIR technology being implemented right there. And they're even being used in the development of self-driving cars where LIDAR, measuring distance with laser capabilities, can fall a little bit short. So, a lot of different ways this technology can be used,

and FLIR is the company that really leads the way in this technology. Dan, question about FLIR? Jason, do you remember the 1990 film predator with arnold schwarzenegger and carl weathers do i is that what we're talking about that kind of infrared vision technology i think that's that's a great that's a great way to look at it i mean yeah when you're looking at something through your through your phone or whatever you're looking through a heat sensor like that you're going to see different colors that that tell you how much heat that object is emitting that's exactly it dan what do you want to add to your watch list. Well, I am firmly anti-predator in this case. So I'm going to go with target.

Sweet. Nice. All right. Ryan Gross, Jason Moser. Thanks for being here, guys. Thank you, Chris. Up next, the conversation with Shopify CEO, Toby Lutke. Stay right here. This is Motley Fool Money. Chris Hill Welcome back to Motley Fool Money, I'm Chris Hill. Earlier this week, we held our annual FoolFest investing conference for Motley Fool members. One of the highlights was a conversation between Motley Fool CEO Tom Gardner and Toby Lutkik, the CEO of Shopify. The stock has risen 350% over the past two years, but the conversation focused more on how Shopify's business is changing during the pandemic. Tom Gardner kicked things off by getting Toby Lutke's thoughts on recent events.

Here in the U.S., the death of George Floyd, a 46-year-old, is another in a list of crimes against African Americans. And we now have police officers, in some cases, marching in solidarity and kneeling as well. And what do you think business needs to do to play a role in social issues like equality and racial justice and peace. And I'm just out here on your Twitter account referring to some of the comments that you're making about the commitment that you see Shopify being able to play, for example, in the lives of Black entrepreneurs. And we stand with the Black community who are our teachers now. So what role do you think a company like Shopify and other companies need to play in issues like this?

yeah to me um uh the companies are just another form of a community and um like all of us end up being impoverished uh if if any communities are suffering and um my belief is that uh the most important thing you can do is really understand it i have a very firm belief that um um if you would just all understand each other's stories better um the there would be just a lot like this would be a very very different planet so um i i think it's a it's incredibly important for companies to like give space to uh the people who have a vision who have the insight and who have experience to become the teachers and and assume a student role um and um then And then there's concrete things that can be done to be as supportive as possible.

All of us spend a lot of our time working for the companies. We are on independent journeys doing difficult things, often surrounded by good friends. And it's amazing the power that comes from that. I think every good company ends up being able to change the world in some small way, usually just through the availability of some product, but that usually derives from some kind of insight or mission. So those are exactly the groups of people that can enact change. And so in times like this specifically,

everyone's pointing at here's a direction in which When we make these changes and we go into this direction, we'll all end up in a better common shared place and experience. Companies need to support that because they are adapted to changing. I want to do another screen share here. And this time, just hear the role that Siobhan Haspel-McIntosh plays at your company, leading diversity and belonging, and what that means to you all internally at your culture and across your stakeholders. Yeah, Siobhan, when you think of being on a journey doing difficult things around a boyfriend, Siobhan comes to mind immediately. I sometimes talk about this,

about the role of the country you grow up in. I do think companies are much more like infants, especially when they are created and then they go through different stages of their lifespan. Shopify certainly went through its formative years is immersed in Canadian values and cultures, which places a lot of value, deriving power from multiculturalism and from diversity as a strength. We've had, I think, an unfair advantage in that our environment imbued this in us.

And it didn't end up being something we had to understand later. This has been a big part of, I think, the success of Shopify. And so we always had a very, very strong sense of people joined us from all over the world to begin with. And helping them feel like they belong to the company was always a really, really extremely important thing to us.

And amazing people like Siobhan, and David, and before that, and so on, have been the keys to making this a work in place. And now can tell us, in these specific times, here's what we can now do to just make the most out of the pedestals we have, of the word I meant to use, is use our abilities to broadcast, Use our address for communities you have.

Social media internally. Let's have hard conversations that are hopefully and that will help us change for better. I want to now talk about COVID-19. And from a cultural standpoint, first, you all acted swiftly to send your employees home. You gave them a $1,000 stipend to upgrade their home office. And you said you believe office centricity is over and that the majority of your employees will work from home in the future and that offices were merely being on ramp to remote work and digital by default, digital by design. How specific do

you think this view is to Shopify and how much do you think it reflects your vision and what you think is going to happen for office jobs in any category? It's hard for me to spend talking generalities because my understanding of other companies is just not that good. I've really only booked for Shopify my entire life. So what I can say with great authority is that it's a valid move for Shopify. And maybe just sitting out one moment, I do think there's three ways to organize yourself as a company.

There is get everyone in the same place, which is probably the best way to do it. There's unbelievable advantages of proximity. There's an incredible amount of systems you will not have to build just because the proximity alone is a policy and a system that replaces a lot of complexity. Then there are companies where part of people are in location and part of people are in another location or part of people are remote. Those are the hybrid companies.

And then lastly, there are companies where everyone shares a similar experience. zoom call for instance like we are just in and everyone is in their own square there's no two people in the same uh same tile and uh people work together mostly through asynchronous means like and if you're a developer you work uh through github issues and and pull requests uh if you if you're a designer you work on maybe some shared infrastructure tool like figma and then you're in slack and so on so a lot of the hardware conversations are replaced with um observable written or recordable video things, which can get you sort of back to some percentage of where things are like when you're all in the same office.

I think the hybrid model is the worst. And I think this is where my conviction about digital by default comes from. Hybrid is, at best, you're reasonably involved for other people who are remote. there's a lot of meetings that no one thinks about it, but the people who are remote are not being invited to because someone just turned around and talked to someone else in a pod, right? So it becomes a really, really challenging environment.

So our decision was, we knew that there was no way to go back to all being in one location. So the choice really was between hybrid and remote by default. And so we chose remote by default. All the important work happens through the substrate of tools to work remotely together even at a world-class level has gotten

just good enough to pull it off. This is the worst version of working from home that we'll ever experience, especially for parents of young children. This is a very, very difficult time. And we will get better tools, we will get better social constructs, we will figure out how to make this all work better. So we decided like this is time that the office space that we have

should really be in support of this form of function rather than becoming the centricity where everyone goes back and just falls on previous patterns in the past. Coming up, more with Shopify CEO, Toby Luecke. This is Motley Fool Money. Welcome back to Motley Fool Money, I'm Chris Hill. Let's get back to Tom Gardner's conversation with Shopify CEO, Toby Lutke. Just for our members that actually,

and so many of them are shareholders of Shopify and are very thankful for that, but just for anyone who isn't can you can you let us know what shopify is now and particularly maybe what's different about it now than it was a year ago or two years ago yeah so basically shopify tries to be the the best possible piece of software that you could add to your business if if you are a retail business um trying to solve ideally every problem that you might encounter along the way that can be solved in digital means, in such a way that you can focus completely on your relationship with your customers and your products

and be successful this way. The best known for the online store, which is, of course, a part of what you get from Shopify and by far the most popular sales channel. But increasingly, people use us for their point of sale, for our point of sale software to sell through social channels like Instagram, Facebook, Google Shopping, and in any other way. We've committed ourselves to helping with logistics as well.

For a bit more than 100 customers, we are doing the fulfillment now. This is something we are building out. It's going to take us a while, but it's a stated goal. And there's a lot of other things that we are doing as well. We have the payments. We can have the capital. We will in the future provide you with a charge card, which you can use to run your business and so on and so on. Trying to make it so that the process of starting a new business specifically or building up a small business in this sort of digital first world is more generally approachable and more evenly distributed as a capability.

team. And over the last just eight or 10 weeks, a lot of new customers, new merchants coming online at a dramatic pace. Also, a lot of struggles and challenges by existing merchants to make their way through. Let's start with that second group first. How are you helping merchants that are struggling? That's really one of, or obviously a core stakeholder for you is 100% support for your merchants. So how are you, how are you helping them out in times like this? Yeah. So we, we, we set ourselves like on day one of this pandemic, we, we, we said what, what, what we have here with Shopify is valuable. It's going to be needed during times of crisis. And we want more merchants and small businesses to survive this crisis

because we exist and otherwise would. So we have been extremely mission aligned and focused to take all the bits and pieces of our roadmap that we were hoping to launch for the next years and pull them forward in time if they were helpful right now and also stopping to work on some things that wouldn't be immediately helpful.

So what we've done is, for instance, we've significantly improved the process of curbside pickup, which is something that, of course, wasn't a big factor in the world of retail before. In our analysis, e-commerce orders for products that happen to reside within 25 kilometers of where you want them delivered to, they're a very, very small part of our platform before. But with the rise of COVID and shelter in place and these things, this became a very, very large part. So this is really what we've seen, sort of a rapid acceleration of digitalization of a lot of local businesses is one of the main effects. Right at the beginning of the crisis, retail sales really fell off a cliff.

We saw 70% contraction in in-person purchases. Over the course of the next six, seven, eight weeks, we saw a lot of this replaced to the tune of 94% of our sales ended up being replaced through digital channels. And that's good news in general for these local businesses because a lot of the spending power went locally. In fact, we have heard, and this is clearly anecdotal and not by rule, but we did hear about some of those businesses actually doing better than before.

In fact, we talked to some businesses which end up having currently more staff than they had at any other time in their history, which is remarkable. But of course, there's plenty of counter stories to this. But it goes to show that entrepreneurs are adaptable. The people who are running the local businesses are the most adaptable group of people.

And times of crisis really is the times when adaptability becomes the premium skill. And we hope we were able to help as many of them as we could. I mean, we did a lot of, it's a long list of things we ended up doing because it just there's so many sub industries but even just keeping credit available to businesses end up being a huge huge huge uh factor can you give an example of a new shopify plus customer that came online very rapidly and what that uh process was like yeah so one one thing on the plus side we we've seen is and and we've pointed sort of to we pointed

to Heinz ketchup before, uh, especially specifically the UK side of it, which, um, uh, you know, that's 151 year old company, which had no, I don't think had in their particular investment plan for 2020 to go direct to consumer. Um, but, uh, one thing we've been seeing in the, even in the largest businesses is that, uh, and I think everyone sort of intuitively understands this um there have been elements in of all you know in every large company in every large organization in the world where certain people have argued for much more rapid adoption of internet uh commerce and um you know digital things and the the problem with these arguments was always that these would involve significant amount of change which is difficult and and um

also because it was hard for them to argue that things would be massively better afterwards, because everything else was already built, right? So Heinz Ketchup kind of worked. But then as the crisis happened, I think what everyone sort of experienced was saying, oh, if you would have just listened to those people, to Mahler who was arguing for going direct, we would be in so much better shape. And then people go back to Mahler and say, well, you know those ideas you've had like how long would this take in a in in the most accelerated scenario and so what we've seen is that the most entrepreneurial elements of even the most traditional companies just got fully enabled everyone out of a way let's fall in behind

mala let's get this done and and and in a way like shopify like it's like we trained for this day right like we we've built software that um entrepreneurs can use to build an entire business during the lunch break right that's those are environments in which like for for the world of enterprise software those are not the um the kind of requirements placed upon software in terms of how quickly you can get it off the ground like in fact usually that that's as a six-month implementation process which doesn't matter because your sales process also six months and so it sort of all rounds to kind of the same thing right so um but shopify has been fortunate fires of lunch break entrepreneurism and and so once you enable people they can actually bring heinz

ketchup online seven days from first initial contact uh selling direct doing well and um that story is of course then told throughout all the consumer package good companies and and and it's activating more and more people. Again, the people who've been fighting for digitalization and modernization are being enabled now. I think it's an incredible change agent. From a pure digital transformation perspective, I think COVID has already done more than the entirety of all CIOs that have been appointed to their jobs in the last decade. It's an interesting time from that perspective. That's going to do it for this week's Motley Fool Money. Our engineer is Dan Boyd, our producer is Mac Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.