Before he started Canal, Bennett Carroccio was a consumer investor at Andreessen Horowitz, specializing in consumer networks, and even more specifically, marketplaces. “The power of a marketplace is that network effects translate to tangible economic value—financial empowerment—on the supply side,” he said.
While hypothesizing about the future of these marketplaces, Covid hit. Carroccio really started to think about what the pandemic meant for the future of consumer behavior. One critical shift, which he kept going back to, was the consumer’s newfound propensity to buy more online—both essentials like grocery and non-essentials. “Consumers are realizing online shopping can be a delightful experience, and in some cases even better than brick-and-mortar,” he says. “I really started to dig into what the future of commerce will look like, specifically the new types of experiences and sellers that will emerge as more consumers look to discover and purchase products from destinations they trust.” That is when the opportunity for Canal revealed itself. “Agnostic to what these experiences are—there is one traditional element to ecommerce that is structurally constraining the ecommerce industry, and that’s the need to hold inventory in order to sell.”
Many online experiences today present the perfect opportunity to move product, but would-be sellers don’t even try because it’s such a headache to procure, maintain, and ship inventory on their own. This was the opportunity that Carroccio seized upon: unlock new shopping experiences by providing access to inventory in a matter of clicks for the sellers. “That’s the idea for Canal,” says Carroccio. “If you could dramatically lower the barrier to entry to sell products online, that will make way for a whole emerging ecosystem of commerce experiences that are no longer bound by the need to hold inventory in order to sell.”
Carroccio teamed up with Liam Kinney (CPO; formerly Canvas) and Clay Schubiner (CTO; formerly Canvas, Airbnb) to allow anyone to monetize their influence and sell online. Since Forerunner and a16z partnered to lead Canal’s Seed funding, the team has helped a number of brands launch storefronts to sell products. Here, Carroccio talks about how he decided to leave VC, building the “inventory layer” in the future of commerce, and adding creators to the Canal network alongside brand partners.
JB: At what point did you realize you were going to quit your job at a16z and build Canal?
BC: One thing I learned as a VC is that I was on the wrong side of the table, especially later on in my tenure at a16z. [Laughs.] What I found to be most fulfilling was building—not necessarily as a founder, but just being a part of building something new and meaningful, and getting my hands dirty for a mission I truly believed in. In terms of pursuing Canal and making the jump, that was easy. I became obsessed with the opportunity I saw, and I had the privilege to team up with two amazing co-founders, Clay and Liam. The decision to leave a16z was a lot easier than I thought, which is ultimately how I knew it was the right one.
JB: Walk us through the experience of being on Canal as a manufacturer, brand or seller. What does that look like in practice?
BC: We talked about access to inventory, but what does that mean in action? We are building a heavily curated network of trusted brands looking for new and trusted distribution channels, and matching them with online storefronts looking for access to inventory. Storefronts simply have to look into the Canal network to discover like-minded brands, identify what they want to sell, agree on a commission, and then go sell—without any operational lift. Today’s version of Canal is matching brands together in this partnership ecosystem. We recently launched with Fellow, which makes beautiful coffee kettles. Among coffee aficionados, they have insane brand equity, and they want to sell all products that they know their consumers want to buy from them, like coffee. Through Canal, they can curate exactly which products they want to sell, on behalf of the roasters that they believe in. This means shoppers can now buy a kettle, and then they can buy exactly what they use that kettle for—a bag of great coffee—in the same checkout flow.
JB: Canal has such a unique tool to empower sellers like Fellow to monetize their influence in such an organic way, which is really at the heart of Forerunner’s vision of the future of commerce. What do you think about this shift toward empowered sellers?
BC: What’s changing is who has the relationship directly with the shoppers. Shoppers used to go on incumbent websites and kind of ‘DIY’ the discovery process. They’d have to figure out what they wanted to buy, do some research on what’s most important to them, and then decide. Now, shoppers really want to access the product recommendations of trusted individuals they follow. Consumers are thinking, ‘Why should I develop my own thesis for what to buy, when there is someone I just need access to that could tell me?’ These curators and tastemakers have real influence over captive audiences, who are actively looking for inspiration. Consumers, especially younger ones, have this connectivity with folks that they trust, and they are increasingly buying with their hearts. They are evaluating values. I think a lot about the influencers with real trust, who are not just shilling products for the sake of it. Those who have the strongest bonds with their audience are able to drive meaningful sales, not just with their body of work, but the values that they hold and amplify. I think brands are responding to this mentality, as well. When I think about the brands in our network, and a lot of emerging brands, so much of their brand identity is a function of their values, and what they want to amplify those values to their consumer base.
JB: You’ve been hiring rapidly, and launching new brands on Canal. What are you thinking about as CEO as you enter a new year?
BC: As a CEO, I care about culture, vision, and execution. We are lucky to have 16 employees, and each and every employee on our team is incredibly talented, motivated, and enjoyable to work with. Liam, Clay and I all really want to foster a culture where people actually care about each other and the vision of the company. In terms of vision and execution, at the end of the day, Canal is a marketplace matching supply with demand. Supply is the brands seeking new distribution channels, and demand is the sellers looking for access to inventory. With that in mind, a big share of my focus is on growing our Canal network on both sides, strategically balancing the quality of the network with quantity—because that balance is instrumental. A large part of our future, too, is powering what we call “latent commerce,” making it extremely easy for a trusted individual—think influencer, curator—to launch their own ecommerce destination with products on their shelves, entirely powered by Canal. A sneak peak into what this will look like is the Sharma Bodega, which we recently launched [with brand and marketing expert Nik Sharma] this past week. We provided the store, and then using our network, Nik was able to easily curate dozens of brands and sell over 70 products, all of which he loves and cares about. We are really excited to lean into this in 2022. We have exciting plans, so stay tuned.
For more information, or to join the Canal network, visit shopcanal.com.