#047 : Jim Lofgren @ Nosto

#047 : On this episode of Chill, we chat with the venerable Jim Lofgren from Nosto. Overdose’s Andrew Potkewitz and Jim discuss his journey to becoming CEO of commerce experience platform Nosto, growth, the ecomm/tech landscape, personalisation, post-pandemic trends, and the recent acquisition of UGC platform Stackla.

Now, in his fourth year as CEO of Nosto, Jim is a veteran ecommerce journeyman and recently also took on the role of Chairman of NES – Ecommerce Summit.

When its three Finnish founders saw the limitations existing around customer experience, they boldly set out to revolutionise the whole ecommerce experience. They created Nosto and built it on the premise that every shopping experience can, and should, be personal.

They onboarded a team of top class ecommerce experts from around the world and created their game-changing platform in 2011. Nosto today, is powered by AI machine learning and extensive shopper behavioural data which gives retailers the ability to deploy fully dynamic, personalised shopping experiences and engage customers in a way never seen before.

Jim Lofgren always thought he’d be an investment banker. Disrupting those intentions, was the boss of French ecommerce giant La Redoute, who convinced Jim (who was an intern at the time) to “stick around and do some proper work.” So, he did just that—he stuck around and ended up doing 10 years in retail ecommerce, and never became a banker.

During the earlier, merchant-side phase of his career, Jim spent a couple of years at Ellos, the largest online retail group in the Nordic countries. He ran their ecommerce business and grew online sales by over 60% between 2006 and 2008.

Then, he jumped back on with La Redoute as CEO of their Nordics operation. He was 28.

A few years later, in 2010, he went stateside to the US to run OneStopPlus, the world’s largest online plus-size retailer (later rebranded to Fullbeauty.com). At the time, it was a $40 million business and Jim says they built out the marketplace using ChannelAdvisor and CommerceHub to source suppliers. The business grew to $100 million in two and a half years.

When the group was sold to private equity, Jim went into tech. He joined CommerceHub, which was primarily a drop-ship ecommerce SaaS platform based in Upstate New York.

A few years later, and now a prized Fintech leader, Jim became CEO of Klarna, North America, in 2015. The Swedish startup had only entered the US market the year before but globally was already on course to become one of the most disruptive and promising of its breed in the explosive buy-now-pay-later space.

But, in those early days, Jim explains, buy-now-pay-later products hadn’t come yet to the US, “so we were really just trying to use credit instruments to optimize and improve the checkout conversion.”

Jim initially ran a team from San Francisco managing large global accounts—multinationals like H&M, IKEA, and Ticketmaster. “We built this product where they could integrate with Klarna once but get access to 10 markets of credit issuing and that was very attractive from a large multinational perspective, so we saw huge traction with that.”

Two years later, Jim also became CEO of Klarna’s North American division and it was at this time he says they had to pivot—when they saw what was going on in Australia with Afterpay. Klarna started building out the ‘Pay in 4’ product.

It was in midst of its product launch when Jim first met with Nostos’ three co-founders at Shoptalk. They kept calling him, and by mid-2018, Jim had transitioned from CEO of Klarna, North America to CEO of Nosto.

When Jim joined Nosto in 2018, the company was filled with an ambition to influence and change the ecommerce experience into something far more individual, tailored, and relevant to shoppers. Changing the norm from ‘one-to-all’ to ‘one-to-few’ or ‘one-to-one’ was a founding mechanism for Nosto.

He says there was a decision not to be a point solution anymore and they needed to figure out a much broader experience for merchants. Nosto began building solutions to take over the whole onsite experience­—from the content that is shown on a landing page to all the single pieces of real estate on the PDP, to the category pages, to the ranking of the product on the onsite experience.

He explains the aim is to enable retailers to be able to optimise everything from a one-to-one and one-to-few perspective while overlaying business goals, such as growth, or more specifically increasing AOV, or optimizing for conversion or margin, or product rank, and so forth.

It’s a level of tailoring designed to be specific to the shopper; showing that shopper or segment of users only what they consistently buy. For example, those who always buy new arrivals are shown new arrivals on the landing page—not the sales section or the sales banner; or people who always buy men’s, should only be shown men’s; or new visitors should be given a different experience than repeat visitors.

The key to this, Jim explains, is the algorithmic experience that has to be built out on all of the touchpoints, and the beauty of it, he says, is everything gathered from the core data can then be exported to other components, such as the ESP, or to an advertising platform, integrating the whole, broader experience.

Partner ecosystem – Nosto have always had a partner-first mentality. It’s said a tech is only as good as its partner ecosystem—you need to be able to get data easily from a technology into the rest of your tech stack.

The people – It’s also said that a tech is only as good as the people that support it. Nosto have always held up their technology with an incredible team, some of the best in the industry.

The talented people of Nosto seem to always stick around too. In an industry where people move on every year—or sooner—rotating from tech to tech, to agency, to merchant, and so on, Nosto bucks the trend. The longer-held positions create a wonderful sense of stability that’s not always seen across the ecosystem.

The culture – Jim credits the founders as responsible for building the “friendliest culture he’s ever encountered.” He says there are no politics, just an enviable sense of purpose and professionalism.  Along the way, there have been certain ‘company legends’ who have helped set the tone for what the organisation wants to be and help build the culture. Jim says he’s grateful for all of those people who’ve done all of the hard work: “I need to try to foster and keep it. I almost feel like I inherited a really good thing, I just need to make sure I keep it and I keep it moving forward.”

From the outside looking in, Andrew says he sees a remarkable level of professional growth of the people there. Even those who have moved on seem to always carry a place in their heart for Nosto, like an old flame.

There’s a current push in ecommerce towards adding more features and creating a more robust solution—­­being able to service more areas of the website. Andrew and Jim agree it’s cyclical: where once upon a time, every ecomm platform wanted to be everything to everyone, all of a sudden it changed­­ when there was a realisation other providers could do parts of the ecosystem better. Merchants started to shop around: ‘I need that, I want that, that’s better than what I have.’ They found options (like the Nostos and the Yotpos) that are better for certain features and functionality than the core platform itself.

Then, fast forward three years, merchants have ended up with 35 or 40 vendors for their tech stack. Too many single-spot solutions. So, the cycle starts over again and there’s a move back towards an offering with more robust features, back to the ‘fewer vendors who do more and do it better’ direction.

So how does this play out for Nosto? Jim says his biggest fear, and what they talk about a lot, is if they can’t expand the product or if the solution they’re building is not best-of-breed in its segment. He says he’d rather not build something if he can’t honestly say it’s better than what’s available because “I’m going to be attacked by another best-of-breed solution,” he says. “And if I have only one module inside the platform, that’s worse than the best-of-breed solution, it puts the whole Nosto relationship with the client in danger.” It’s an inordinately high benchmark.

And, as they broaden, there’s the added challenge of an increased level of technical support needed from engineering and product staff. Jim says there’s a lot of work to do to ensure the team knows the product well enough and can talk to it.

There’s also a cautionary approach required to navigate the politics in the ecosystem—broadening their offering comes with the risk of ruining relationships: “If we do this, are we going to blow up a partnership we have with a technology that does something similar?” It’s a balancing act.

The emergence of the trend towards composable headless architecture could also restrict a return to an all-in-one solution because the nature of headless is being able to take third-party tech and plug it into the tech stack, rather than having an all-in-one platform technology.

Jim says they noticed the trend a few years back and prepared for it early. They started creating GraphQL API-type integrations for clients going headless, but it had a sluggish uptake. “We built it out, we had it ready to go, but not too many merchants were using it.” But now, over the last year, he says they’re seeing a migration of larger customers and retailers implementing it: “They’re going quite aggressively from a Shopify Plus, more standardised integration, to using us for GraphQL and APIs.”

Overall, the broader platform approach of Nosto doesn’t really change, Jim explains: “Because you still need someone to use machine learning tech and algorithmically re-rank the products in the category tree and retrieve the behavioural data, the image data, apply the machine learning, and send back the re-rankings. Or, for example, to do the recommendations on the product detail page or category pages, or to provide the out-of-the-box ML-based segments that you can use in your banners. You still need that.”

Jim says the most important benefit of headless is the speed of it. He says the single page application (SPA) version of headless is where it gets the most interesting—the speed of site reloads and the experience that you can have on mobile, for example, is what really counts for consumers.

Jim sees marketing automation as moving in a direction where SMS and ESPs are largely one dimension, and the on-site experience (with search, merchandising, and recommendations) is another. He says at some point those two areas will start to merge, but not for now.

“It’s about defining where your core data sits. Does it sit in your CRM?, ESP?, CDP? Does it sit with the behavioural data and segmentation and one-to-one image metadata? It’s deciding where you start the configuration of your customer experience.”  He says once you decide and lean into something, then you need to make sure you can export and import data from whatever system you have so that you can have a much more holistic experience for the end consumer.”

Big news of late around ecomm circles was Nosto’s acquisition of content marketing startup Stackla.

Australian-originated Stackla is one of the most advanced solutions in the UGC space, primarily visual UGC. It’s a platform that enables brands and retailers to search the social channels for content about their brand and then request the rights to use that user-generated content in their own channels, as a delivery mechanism—whether it’s back into social or on the website or with an ESP or CRM or a loyalty programme.

For Nosto, the acquisition is about realising their ambition to be the technology that provides the most authentic experience possible. “As online shopping accelerates and we crave human connection, consumers increasingly seek the real and relevant user-generated content they trust to help them make purchasing decisions,” he explains. “At the same time, brands are struggling to create enough engaging and diverse content to deliver the types of authentic, personalized experiences consumers expect.”

“The pairing of Stackla’s unrivalled UGC platform with Nosto’s leading commerce experience platform aims to solve this problem for brands; giving brands the ability to create more meaningful shopping experiences.”

With visual UGC, such as imagery or TikTok galleries, the engagement on that content is almost 10 times higher than on branded content. The engagement is just there without the need to have a transactional relationship.

Jim says Stackla’s product blew them away completely. And then, they were blown away by the team. “An Australian-founded company, fantastic people,” he says. “We fell in love with the people after having fallen in love with the product and we decided to do something together that’s bigger than what we are doing now.”

Integration and roll-out are underway and Jim says they want to go to market with something that is really interesting for new clients but also creates a clear benefit for their existing base of loyal customers.

Nosto’s vision to provide a true brand experience has become even more real as they add the Stackla UGC string to their bow. In their pursuit to provide authenticity, it’s hard not to notice that that very authenticity already exists, intrinsically, at Nosto, within its people, and its leader.