Cold Open On Networks

Nicole Reznic 0:00

You can have the best idea in the world, but if you're in the wrong room, that idea falls short. And it's one of those things where it's the network that you have that changes the game.

Joeri Billast 0:12

Hello everyone and welcome to the Web3 CMO Stories Podcast. My name is Joeri Billast, I'm your podcast host, and today I'm excited to be joined by Nicole. Hey Nicole, how are you?

Nicole Reznic 0:25

Hi Joeri, so much excitement for this because I love your podcast. Your guests are incredible, so it's a massive honor. So thank you very much.

Trust As Infrastructure Not Marketing

Joeri Billast 0:38

I know you are at the Web Summit there at the moment. Guys, if you're now wondering who is Nicole, well, Nicole Reznic. She's the founder and CEO of Mark3t: Rebuilding Trust as Infrastructure in Luxury and Circular Markets. She's also a professor and a speaker of luxury marketing. So yeah, Nicole, we've met at the Web Summit in Lisbon where you are presenting, you know, company. But tell me, what personal moment you realize? What personal moment made you realize that trust in luxury resale is an infrastructure problem and it's not a marketing problem?

Nicole Reznic 1:18

So being someone who has been around marketing for I'm gonna unfortunately date myself, but let's say more than a decade, it's something that I found that marketing is one thing. It's often the veneer, but what you have structural problems specifically with trust, you can't put a veneer on something that's not there or something that's not foundationally built correctly. So when you talk about anything, and let's not even add luxury to the mix, but if you go to a store and you say, Oh, I don't have my wallet, they they can't help you there. But if you go in a small town and you say, Oh, I don't have my wallet, they know that you live there, they've seen your face. So trust is almost inherent because there is a relationship. It's a one-on-one. As humans, we understand a lot more than we realize when we meet a person for the first time. We shake a hand, we see a face. All of those cues of meeting that person give us confidence or doesn't give us confidence in that person. So this is one of the reasons why 80% of business in luxury is done in person. Online sales for everything has exponentially grown, but in luxury, it still remains almost about 80% of business revenue is coming from retail. Because when you're spending that kind of money, you do need that one-on-one personal connection. So with marketing, that's really just to reach people to bring them into retail stores. And with luxury resale, you now have a problem. You buy from a retail store, you trust the store. It's got a physical presence, it has a payroll, there are people there that you trust. You assume the institution is trustable because it has been there. It has been there for maybe hundreds, 200 years if it's a big brand. Now, online resale, you trust the brand. But do you trust the person who's selling it to you in resale? So circularity can't continue if you don't have trust. And so problematically, people would rather, you know, deal with people one-on-one. But if you have something and you want to sell it to a person you've never met before, how do you build that trust? So for me, marketing is really just a veneer, but trust has to be fundamental. And that in retail, it's very easy to do if you have a trustable business. People come, they go, they come back. This is something you build in person. So, how do you build trust online? And this is something that racked my brain simply because I work in CRM. I'm a professor, I have a background in data. So CRM is all about building loyalty. So we're at the bottom of a marketing funnel. We're not about sales, and especially in luxury, it's all about the relationship you have with your customer. And so I'm always using data to leverage understanding the customer. So even if it's a new person they've never met in that store, the store itself will have the data to know who is walking through that store. So this is where I saw resale, it was a bit chaotic. And from a personal perspective, there are ways in which you have to really build trust. And that means extended experiences with that person over and over and over. So that's one-on-one person contact. And online, that's a unique question to answer.

Joeri Billast 4:31

Yeah, makes a lot of sense. Actually, I wanted to ask you. You say, okay, trust needs to be deliberately rebuilt, but what is the smallest unit of trust that you try now to make measurable first?

Why Authentication Theater Fails

Nicole Reznic 4:44

So, as I mentioned, the concept of small town versus global community, right? A small town, people know each other. And again, it's based on the experiences you have. However, it's also based on the people you know. And as an entrepreneur as well, this is something you learn. You can have the best idea in the world. But if you're in the wrong room, that idea falls short. And it's one of those things where it's the network that you have that changes the game. What we're building, we're coming from the B2C perspective first. So what we're building is invitation only, and we are targeting locally French reselling businesses, specifically in France, because that's where we're based out of. So we begin in the world of luxury, in the town that luxury was built upon, which is Paris. And so I've created a community of luxury resellers and vendors. And these are the people who already may know each other. They have worked with each other. The majority of them, I would say like 75, 80%, already know each other. So when you already start with a group that already knows each other, you're able to expand. And the smallest unit we're using is a very niche group of people who are resellers in a geolocation such as Paris. And of course, I'm in Doha because we do want to expand. We want to bring it out to the greater community, especially into the burgeoning markets here in the GCC. And uh it's an interesting mix because here in Doha I find that building infrastructure, trust systems, reputation, these are all things that are fundamental to the culture and to the ecosystem. So these are one of the reasons why we're out here speaking to some really interesting partners.

Joeri Billast 6:32

I love that you, you know, you're traveling and you're representing our company. But I had another question first before I dive going to markets. In luxury resale, what is the most common form of authentication? Theater, and why does it collapse when real money is at stake?

Nicole Reznic 6:52

So uh marketing. Problematically, what we have right now is luxury is built on emotion, and luxury resale is not far from it. But luxury resale has its own motivation. Not everyone buys luxury resale only just for the factor of having the item, right? So what you often have are people who want to buy specifically for investment purposes. I can say that many people know the name Hermes Birkin, right? The Birkin, the Kelly, the Constance. These are household names that people know, and many people may or may not know that the Birkin, once it was purchased maybe about 10 years ago to the resale price of today, you're looking at a higher return on investment than you're looking at, you know, say some bonds, stocks. So it's interesting because it's become an investment piece now. Luxury items, watches, cars, certain things that hold value, things of excellence that can be repaired within circularity. So why am I discussing this? So if you were to talk about like authentication theater, you need someone to look like they're trustworthy, someone to look like they know what they're doing. And problematically, is people take shortcuts. And when they want to make that money, return on investment for whatever it is they bought, there are bad actors out there. And because something is such a high value, there's many, many people out there who can do the marketing. Absolutely. But what is not there is the reputation. It's not the experience. They can have beautiful web pages, they can have emotional language in their the way of presenting themselves. But unfortunately, when it comes to luxury, it's not just that one moment, that one moment of purchase. Luxury is actually the entire relationship from first purchase to generational purchases. It's the person who buys for themselves, and 20 years later, they buy for their children, and then their children buy for their children. So it's it's a perpetuating relationship with the people that buy into your ethos, who buy into your brand image. And problematically is with resale, because of the transactional nature of some people wanting to buy for return on investment, there are people who want a return on investment on fake goods and they want a return on investment without the relationship. And what I'm doing is I'm trying to build the same sort of relationships we have built in retail, but giving that same sort of experience in the resale market, which has never been created because nobody has ever put any thought into how resale should be built. Forgive my saying so, but it's this eBay concept of I have this, I want to sell it, let's just get it out of the way. It came from a transactional perspective. But I believe that if you're going to respect luxury and what luxury truly is, the relationship cannot be divorced from the product. And so I'm putting the relationship back into the product.

Joeri Billast 9:46

Great. Now, as I said, I saw you at the web summit, Elizabeth, and you were pitching there. I think it you had like one minute time to, I don't know how long it was. Two. But for my felt for my listeners now, Nicole, if you had to explain markets to a smart entrepreneur, a smart marketer in about 60 seconds, what would you tell? What are three building blocks that matter? Yeah. Sure. Just go ahead.

Nicole Reznic 10:13

So I'm saying that it has it's a trust infrastructure layer that we're building. And it's the platform that I think there are three specific pillars that you need for trust. So the first one we believe is integrating the marketplace. Now, unfortunately, you have buyers and sellers peer-to-peer. That's easy because there's buying and there's selling and it's a transaction. But in circularity, it's not just buying and selling. It's buying, selling, repairing, shipping, insuring. It's everything. So in a luxury market, you have different considerations. So how about the stylist? How about the personal shopper? How about the authenticator? How about the luxury leather spa? How about the watch repair? All of these things have never been integrated into a platform. And what we're building is that. The second thing is history. And we're putting history into the products by putting our transactions on blockchain. So if you've purchased, if you've repaired, if you've resold, these are transactions that will go on the blockchain so that the life and the provenance of that item is now put somewhere because previously in resale, you don't know. And this has happened to me where I've purchased something accidentally without really verifying it. And I find out it's fake, but I don't know where it came from. I don't know who sold it. And so it's very frustrating for most of us. And then the third and massive layer for me is it's the community. It's the people who make up the trust. And you can't have trust without the community. So we use a reputational scoring system. And the reputational scoring system on our platform is AI driven, but it's very much balanced by the human connections that are in it. So as you interact with the community, your score increases. It includes scoring outside of our platform, because that's important too. But the critical element is if you are a person with no reputation but want to build one, we are constantly looking to push good reputation. And that is, we're not as punitive, but should someone do something wrong, all the people who are attached to that person, since it's invitation only and we use a family tree of connection, um, we're simply making families and human relationships digital and scorable. So the community is a critical aspect to that too.

Joeri Billast 12:30

You mentioned data met data is critical, expert verification, maybe some incentives. If the things in your model that you mentioned, if one of them breaks first, or would say what breaks first, I would say, if one is missing.

Nicole Reznic 12:48

Well, I think that I would still put community as the linchpin. I think everyone's always focused on the tech. So I think that when I have spoken about this, I hesitate sometimes to talk about AI and blockchain, simply because people make that the forefront of what we're building. And the truth of the matter is these are tools. I don't say I have an internet company. So I wouldn't really push and say I have an AI company, I have a blockchain company. But I think because they're innovative technologies, people are excited about them. But the truth is a thing that would break critically if we didn't have it would be that community and the reputational scoring. Um, because even if we didn't have blockchain, it wouldn't change things if people could trust each other. And the core element of all of this for me is the integrated marketplace and the community. So those are the linchpins because we are in such a world where so much activity of technology is flying at us. AI slop everywhere, fake profiles, AI-generated images. Well, I'm not immune to it either. I I enjoy them sometimes from time to time. I just did one in Snapchat today. It's fan. It was really fun. But the problem I have is you still need the reality of human connection, even if that's a digital connection, even if that's typing to each other, pictures, whatever it is, but that interconnection of human to human is the one thing that would break. That would be the difficult part to repair, I think.

Joeri Billast 14:09

Okay. And what is then the hardest design trade-off between removing friction and protecting integrity? And how did you decide where to draw the line?

Nicole Reznic 14:21

Can you explain that a little bit more? Sorry, I'm trying to understand the friction that we're experiencing.

Joeri Billast 14:26

Don't worry, I will just stay so silent so I can edit it out a bit. We can also skip the question. But what is the hardest design trade-off between removing friction on the one side and then protecting integrity on the other side? And where to draw how did you decide to where to draw the line?

Privacy Tradeoffs And Data Sovereignty

Nicole Reznic 14:46

So I think that there's always a unique dichotomy of data protection. Obviously, I'm a huge data protection fan, but there's also something that when people are in a community, there is sharing. So I've had questions come at me where people say, Well, how can you be sure of something? Well, trust is something that is not often quantifiable. But there is a statistical relevance to be able to be determined when a majority of people agree or trust someone, but every human experience is completely different. So if you were to go to a restaurant and love it completely and give it five stars, another person may come in and say, Oh, the waiter who served us is terrible. So problematically is every human user experience, even if it's the same people involved, like the same restaurant owner, same waiter, all of these things are very unique. And so there is this level of you have to use statistical relevancy to say the number of people that believe this is the experience, that is in general. And it's the same when you look at any sort of review for anything. There's a level of calibration really. So one of the things with data privacy that we are looking at specifically is with GDPR. And how do you manage having perpetual data and taking that in a way so that it is maintaining the data sovereignty of the people in those platforms and not just in Europe, but we're talking globally. So when you have a global program, you must consider the data sovereignty of each of the people in each of the countries, in each of the regions. So it's a lot of work. And this is one of the reasons why I'm not going fast and breaking things. Trust is not something that you build fast overnight. It's not something you go and you push and you bank and you make revenue and you're it's something that takes a while, but you do it right. And so we are talking to partners right now about how we can build the right way. And that's something that I feel is critical in building something with perpetuity.

Joeri Billast 16:54

Yeah. Yeah, all of that trust is not bought, it's like something that you build. Reputation very important. Reputation becomes currency. That's a powerful message. But currency is a game. So you know, people always try to game and to have shortcuts, like you mentioned. What are the most likely ways people try to cheat such a trust scoring system?

How Reputation Systems Get Gamed

Nicole Reznic 17:18

No, no, this is the great question because people always ask me. And I had a one guy for 40 minutes pick at me, and it was wonderful. And the reason I say that is it's not that I have every answer, but I definitely understand the psychology of what can be gamed and what cannot be gamed. Now, what can be gamed is marketing. Just as we had started in the conversation, we discussed about that one thing, the difference between marketing and infrastructure. Infrastructure is not something to game because it includes data. You can't push your data into my data models. It doesn't work that way. Anything that can be gamed with quick wins. So even if you were to come into the system, somehow you were invited. Somehow you did something negative. We have systems in place that when there's a negative behavior, there are negative repercussions that follow that negative behavior. And to be honest, you could be kicked out. But that's not the only thing. Since we use trust trees, someone who has invited you will also lose points in the reputation. I like to liken it specifically in cultures that understand you don't embarrass your family. And the one thing that cannot be gained is the reputation, because the reputation is not one transaction, it's the continuity of different transactions over time where people have positive experiences. So you cannot gain reputation because what truly is reputation, and we're measuring it longitudinally, is that reputation isn't that one transaction. You do once something incorrect, there's a grace. But you keep continually doing something incorrect, you're out. And so for us, it's it's again, we are very, very happy to be building something that is going to do what human beings do every single day. When we meet someone, it's the continuity of getting to know someone. We met at Web Summit, we we met through friends. When people meet consistently over and over, that relationship strengthens. And when there are positive experiences from those relationships, that relationship strengthens even more. And so this is what we are measuring. We are measuring that. And so gaming once or twice here or there, it washes out. And without being punitive, we are consistently optimizing good behavior and we are rewarding good behavior because as a professor of loyalty, I know exactly the things that it takes. I mean, teaching this and working in the data side of this for years. And I know that it always is something that you have to look at from day one to day 2000. Because day one to day two to day three, that's barely even a relationship yet. So we we have many things in place that will allow that you not game the system, but you'll look foolish and you'll embarrass your family if you try.

Joeri Billast 20:04

Yeah. Hello, Dad. And of course, you have the background as a professor. But let's talk about governance. How do you think about governance when marketplaces operate across cultures, regulations, and very different definitions of fairness?

Governance Across Cultures And Regulations

Nicole Reznic 20:21

Uh yeah, I mean, I love this question. And it's an odd question because when I was in the Web3 world, I was the odd person pushing governance. For me, I do believe, I mean, and I'm American, so I will be completely honest. I worked in data when we had no GDPR. I worked in specifically optimizing data across different platforms where we had personal data that we used, such as people's GPS data, which was fed into our clients who were perhaps banks or they knew the age of your children and they would be able to highly segment their data to get the right kind of critical marketing message out there, right? So I have seen what data looks like when there are no rails. It can be helpful, but it can also be frightening. And so I think that as a mom, I have a little girl who I have no pictures of her on the internet. She has no personal data out there in the world, and I'm very protective of her data. And I believe that data sovereignty is critical. So when we talk about governance, I'm building a trust infrastructure. Um, so I don't have room to play with things that are not um accurate and things that are not correctly done. So when you're talking about a global company that includes a massive network of people from all over the world and different sovereignties and different countries, different regulating forces, this is one of the reasons why GoFast Break Things is just not how we're going to be doing things. So we have partners that we're speaking to, as you see, I'm here in Doha, where we are having conversations about what data science. Sovereignty looks like because first we are managing massive amounts of data and behavioral data, but it's also something that we keep an eye on. What are the new innovations? How do things work? Things like zero knowledge proofs. How does that allow for people to have a persona, a digital ID that is verifiable without including their own personal information? So that that is protected in a way. And that's a big conversation topic here because there are many people who come from, let's say, a background where their behavior online, they generally like to keep it quiet. So I approach everything with that sense of let's be skeptical, let's always build to the highest bar, but let's deliver what is the most trusted and the most accurate. And so we're taking our time going B2C because we are very, very intent on building our B2C with maximum amount of privacy, maximum amount of protection, and very much in line with protecting global data sovereignty.

Joeri Billast 23:06

Thank you for explaining it, Nicole. Now mentioning you mentioned trust a lot. Actually, trust is actually in every podcast episode these days. It's the word that shows up in AI in AI times. Now, for now, my audience, you know, exists a lot of founders and marketers. What would you say are the earliest signals that trust is improving before the revenue or the scale showing it?

Early Signals Trust Is Improving

Nicole Reznic 23:33

Trust is what I like to kind of liken sometimes to product market fit. So if it's sort of this push strategy, you don't have product market fit. If you have a pull strategy where people are, wow, what is that? I want to get in on it. Or someone speaks to you about something that someone is building and you're not paying them to do it, you're not asking them to do it. That that pull strategy, that is where people are trusting you. People specifically have to be very careful of the time and the attention that they give. Because nowadays everyone is vying for it. Um, everyone wants something fast. And this is a difficulty because I'm a marketer and I understand this, but it's also something frustrating because your attention, your eyeballs, people love their vanity metrics. It has X number of impressions. But I think we've lost the X number of impressions obsession, at least the people that I speak to. And it's about the thought process. Are they thinking about us? Is the word of mouth there? Are they loving us? And this is important specifically in luxury, obviously. But I think that even the outer markets are starting to think this way because we're moving from SEO to algorithms, right? So, how do you show up in your Gen AI searches? And so this kind of concept is now it's no longer the vanity metrics of the eyeballs, how many people? But you're now getting more segmented data about who is specifically finding you in the responses, right? And so this is interesting to us. And what I really, really find interesting on top of that is trust itself has to be built over time, obviously. Um, but when you go and you build something that you're looking for that metric, trust is built when other people are looking for you, when people are knocking down your door. And this is difficult for an entrepreneur because it is very painful to sit back and wait for people, but you have to be in the right room to have that conversation. And I feel that makes trust clear is when people are putting their time and their attention to your product or your your growth, and you're not paying them and you're not asking them to do so. And so that sort of product market fit to me is a thing that happens. And when I go and I speak to one of the beta testers that are working on our platform, and I say it for the first time, we're building, you know, a reputational score and we're bringing together these vendors along with you so that you have this interconnection of people. I hear like, oh my God, that's amazing. I need someone who does repair in this. I can't find anyone. That's amazing that you're bringing that together. That joy, that enthusiasm. That's what really I think is the thing that's driving that people trust you and coming back. Every time they come back, every time they're like, yes, let's do something different. Can you do this? Can you do that? I I feel that that's giving that sort of traction that I'm looking for. Even if we are pre-revenue, it's it's I worry about the the money later, and I'm not a lot of entrepreneurs say that, but it's definitely a a poll strategy. So trust is it takes time.

Joeri Billast 26:44

Trust takes time. It's a powerful message that you brought today, Nicole. And the time always flies when I'm speaking with you, we only have our conversations. So we are at the end of these podcast episodes, but now if people, my listeners, they want to be in touch with you, they want to know more about what you are building, where would you like me to send them?

Where To Find Nicole And Closing

Nicole Reznic 27:05

So we have on LinkedIn our company page, which can direct to some of the news of the company. Our website is opened for our invite only as at the moment our resellers and vendors. But if you are a buyer and many of the women who I speak to desperately want to get on the list of a trust forward community of luxury resale, we also have a wait list for them as well and the company on the company page, which is marketm-ar-k three t.ai.

Joeri Billast 27:37

As my listeners know, Nicole, there are always show notes. The links that you mentioned will be there. So go check it out. Nicole, it was a real pleasure to have you on the show today.

Nicole Reznic 27:47

Thank you so much, Joeri. Honestly, I love talking to you. It's like talking to a friend right across the room, so it's perfect.

Joeri Billast 27:53

Yeah. Isn't it great? Guys, what an amazing episode. I'm sure that you know people around you that can be interested in Nicole's story. So be sure to share this episode with them. If you're not yet following the show, this is a really good moment to hit the subscribe button. If you haven't given me a review yet, if you give me these five stars, this really goes a long way. And of course, I would like to see you back next time. Take care.

Nicole Reznic 28:21

Thank you.

Joeri Billast 28:27

Well, I have some news. The two founders are the co-moderators for the Global Digital Asset Finance Summit. It's an event on March the 20th from 2 a.m. till 6 a.m. JST. You find more information on your social channels.