Jeremy Cai - Manufacturer to Customer – [Founder’s Field Guide, EP. 33]

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. Founder's Field Guide is part of the Colossus family of podcasts and you can access all of our podcasts including edited transcripts, show notes and resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:49)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:14)
My guest today is Jeremy Cai, founder and CEO of Italic, a subscription marketplace for consumer goods that works directly with manufacturers. I was introduced to Jeremy about my friend Blake Robbins and was dying to better understand the Italic business model. In our conversation, we discussed the business model, the evolving role of manufacturers in supply chains and the concept of building the next generation's everything store.
As you all know, I love learning about and discovering new business models and this was fun to dig into. Please enjoy my conversation with Jeremy Cai.
So Jeremy, I've been so looking forward to this one. I came across your business through our mutual friend Blake Robbins and was sort of instantly obsessed with the business model. And maybe we could just start there on Italic. We're gonna talk about a lot more than just Italic today, I think, but it's a great place to start. It's such an interesting business. Could you lay out the business model first? And then we'll talk a little bit about the product itself that consumers enjoy.

**Jeremy Cai** (3:08)
We really have two components of the business. The consumer side is obviously what you see publicly and what we offer is a membership that provides access to over a thousand products that we design and develop ourselves and consumers pay a membership fee to shop from our store. And the spin on it is that we went and found the same manufacturers as high-end brands, but we sell those products at prices where we don't really monetize. So typically 50, 60, sometimes 70 or 80% less than what practical consumer brands or traditional incumbents might charge. But what's I think more interesting and where we spend a lot more time is actually on the supply side. And not many people know this, but we actually run a very heavily managed marketplace model underneath the hood.
I come from a manufacturing family. It's really bad business to be honest with you. It's very low margin, super competitive. You can lose clients in a second. But ultimately I think the longer you spend in manufacturing, the more you realize, hey, I'm producing these finished products for someone else to ultimately sell for five times, sometimes 15 times what I sold it to them for. Business model for Italic is ultimately to essentially provide the infrastructure. I call it private label in a box for these manufacturers to empower them to become merchants of their own.