Financial Lessons from a Decade of Building Ecommerce Software

Why don't we start with your title? Did I say the new company name right?

0:22 Chris Hondl

Yeah, it's Descartes. It is a Canadian firm, and so you've got that French pronunciation. It's been around for a long time and they're a public company headquartered in Toronto.

0:35 Stephen Brown

So let's fill in some gaps. You were a co-founder and the CTO of Finale Inventory, and then recently Finale was bought by Descartes. Tell us a little bit about the journey. So first of all, what does Finale Inventory do?

0:45 Chris Hondl

So Finale Inventory is an inventory management system for ecommerce companies primarily. And so what that means is it's the core of the processing of physical goods through a business. Everything from purchasing, bringing goods into your company, core stock keeping operations, and then selling, whether you're selling ecommerce, but also if you have some retail operations or some B2B operations. So it's that whole flow of goods through your organization, both from an operational and a financial scene.

1:24 Stephen Brown

And if I read LinkedIn right, you guys got started in 2014, is that correct?

1:30 Chris Hondl

Yeah. We spun out of a prior project that one of my co-founders and I had been doing, and we had a few customers, but we really launched it as an ecommerce focused business in 2014.

1:41 Stephen Brown

2014, acquisition in 2025, and you're continuing on with Descartes and the team. That's a lot of learnings. Ecommerce 2014 versus 2025, talk about two different worlds.

2:07 Stephen Brown

Let's talk about what are some of the things that you've learned from a decade of working with ecommerce businesses? Any key insights for sellers a decade on?

2:12 Chris Hondl

I think that the biggest change, and it's just continuous, is just how much more pressure there is to keep optimizing every part of the business.

When I talk to sellers who've gotten very large, in some cases nine-figure sellers, they just talk about the process of every single aspect of their business having to become more efficient. Not just marketing and sales, of course that's important, but sourcing, how they import, how they package things, exactly how they're doing shipping, exactly how they're doing fulfillment. So every stage along the way, just every year, they just need to be more and more efficient than they were a year before.

2:56 Stephen Brown

Do you feel like the people that you're talking to today in 2025, piggybacking off what you just said, are you seeing a higher level of engagement around inventory management today versus what you saw in 2014 when you guys got started?

3:11 Chris Hondl

Yeah. And I think it's a higher level around what I would say is the actual process of inventory management.

When we got started it was just, can I get these boxes out the door at all? Can I do some virtual scanning? Can I try to start to reduce my error rates? Whereas now it's much more just really getting dialed in about, how can I make sure I have exactly the right product in stock, and I'm ordering exactly what I need to, and I've got less excess inventory on hand.

And so that just requires a lot more rigor in terms of when you're purchasing, how you're accounting for returns, how you're accounting for any errors or giveaways. So that is probably the biggest change.

3:55 Stephen Brown

Yeah. If I look at that timeframe, I don't know when you'd say the gold rush began, but there was kind of the push into ecommerce around 2014 where it was just starting to really explode, thanks to all the tools, Shopify, social media advertising was still fairly easy and efficient. And now to your point, 2025, it's hard. Everything's hard. Nothing's easy anymore.

4:17 Chris Hondl

Yeah, everything's gotten harder. It was easy for a while and it got a little harder coming into COVID. And then of course COVID made it, it was like a second gold rush, a second great boom. And then really the last years, it just kind of gets harder. It just gets a little bit harder.

4:33 Where inventory management breaks down

Stephen Brown

So you've spent a lot of time talking to customers, with a decade of experience, to the point where you had somebody that wanted to buy your software.

If you had a list of top things you would recommend, if somebody came today and said, I'm a million dollar, I'm a $5 million business, my inventory management is a nightmare, what are some of the top tips that you would share with somebody based on this decade plus of building this software and working with customers?

5:02 Chris Hondl

It's really a process, right? Because people are at every different place.

We see companies that are even fairly large that have a challenging time getting their head wrapped around getting effective SKU or product labeling, product aliasing, and making sure that the same product is being tracked appropriately as they go across channels.

5:30 Chris Hondl

Issuing real purchase orders, and then tracking that you're receiving against those purchase orders. That's another area where when you're starting out, it might be as simple as a WhatsApp or WeChat message to order some more product. But as the business gets more complicated, you really want some more control over that. And you really want to be able to have some more sense of, okay, this is what I've ordered. I can actually have software support both, I've placed these orders, I haven't placed these orders, so this is what I need to order in the future. And also to support, hey, this is when I can expect these orders to come in.

6:00 Chris Hondl

And so just keeping track. It's one thing when you're ordering one, two, three, four times a year. But when you start bringing in multiple containers at a regular cadence, if you're importing or placing multiple bulk orders or contract manufacturing orders, it just gets a lot harder to keep track of.

And that's a big tip. You just need to get out of the spreadsheets and out of the email and out of the WhatsApp or WeChat, and into something that's a little bit more rigorous that you can follow through.

6:31 Chris Hondl

And the last thing is integrating all the channels. When you're jumping between your Shopify, your Amazon, your Walmart, your TikTok, your Shein or whatever other channels you're on, you're trying to go to too many different places. Few people are on all of them, but a lot of people start to go to two and three, and even then it gets to be real challenging.

6:52 Stephen Brown

Yeah, I was going to piggyback off what you said. We have a small brand that we bought a couple of years ago, I've talked about it on the podcast, I've had my operating partner on here. And we are feeling the pain of less disciplined inventory management. In fact, we've been using Finale, or in some cases not using it enough.

And then we get chided by the LedgerGurus team who helps us with the inventory accounting, saying, guys, where's your orders, what happened here? And we have one supplier today. We're moving to an additional supplier next year. And just the one, and a couple orders a year, it's hard. It's hard to keep track of that, even with spreadsheets and whatnot. It breaks down very quickly. So I second your thoughts there, that inventory management is really problematic.

7:50 Stephen Brown

In fact, we discovered an issue just as we were finishing up our 2024 taxes. We love to extend. And we had this big adjustment. I was like, what the freaking happened? So we asked our accountant who was working on the project with us, we were like, can you tell us what happened?

And some of it we knew. Right after we bought the business, the 3PL, like a couple of months after we bought it, said, we found some old inventory in the corner of the warehouse, it's all expired. And we're like, dang it. And then we've had some damages.

8:37 Stephen Brown

But what we started finding is, hey, we haven't been watching shrinkage very closely. We were aware of that big discovery of spoiled inventory, but some of it we discovered, the 3PL every month has these little adjustments and we're not sure what those are.

And so it's all inventory management. It wasn't a ton, but it's enough to where that's something we need to keep our eye on, because it's bleeding profits. And we need to either have some insurance or rework our contract to say, damages, somebody's responsible. But it's enough to where it probably would make sense to financially insure it and just see how much are we losing through shrinkage.

9:08 Chris Hondl

Right. And not discovering it at the end of the year, but discovering it continuously every month, so you can keep on top of that.

I was talking with a firm and their issue was they had a customer service team that was basically issuing new merchandise when things were damaged, without there being any good tracking around it. And so they later on discovered that the amount of merchandise that they were issuing as a customer satisfaction thing ended up being good material. But because it was this side door, it wasn't in the purchase order, it wasn't in the sales order, they didn't really know how much that policy was costing them. So that's the kind of thing that you can discover, again, by having a single source of truth that cuts across the entire business.

9:59 Standard operating procedures

Stephen Brown

So we've been working on inventory for a few years with LedgerGurus. You've been doing it a lot longer than us.

What are some of the things that you see when customers fail around inventory management? What are some of the things that they do wrong, or they don't do, that you'd say, here are some keys to success, here are some keys to avoid failure?

10:21 Chris Hondl

Probably, whether you're using a piece of software or using a spreadsheet, it's establishing some SOPs, or standard operating procedures, and sticking with it.

There's no magic wand yet in inventory. You actually need to have a little bit of discipline. And that can be discipline around a spreadsheet, that can be discipline about a piece of software.

10:50 Chris Hondl

But if you're not consistent about how you do purchasing, a lot of the sales side you can get in a fairly automated fashion from the marketplaces. But if you're not consistent around how you're doing purchasing, not consistent about how you're handling returns, not consistent about handling back orders, if your business does back orders. That's what I think, more than anything, is establishing this SOP and then sticking with it.

And again, this is the kind of stuff that when you're small, you're doing a quarter million a year, $500,000 a year in revenue, probably it's not that big a deal. You can keep it in your head. But as it gets bigger and you start to add another person or two into the company, more than anything, that's probably the thing to start to think about to begin with.

11:25 Stephen Brown

Yeah. And to your point, I feel like there are many processes of inventory. When I talk about this from an accounting and finance perspective, there are many things that you need to do. And if you don't do any one of those things, your data gets off. You've got purchasing, you've got receiving, you've got, like I said, shrinkage, something that we hadn't been tracking.

11:38 Chris Hondl

Well, even with purchasing, there's more to it, right? Because you've got placing the order, but you also have a process around, when am I going to order? Am I just going to order when I feel it? When your SKU count goes up and the amount of dollars goes up, you actually want to have some kind of process that is a little bit more regular. Well, here is how I place orders. Here is how I recognize and forecast my future demand.

12:09 Chris Hondl

Most of the time customers have some type of prepayment. So understanding a procedure for how I'm going to record these prepayments, and this $50,000 that went out the door now, there's going to be another payment when it's received. So understanding a procedure for forecasting that.

And then as you said, the receiving. And then if there's a discrepancy, right? So you ordered X and you received a different quantity or different amount. So just even purchasing, you start to drill in and you kind of want some policies for each one.

12:36 Stephen Brown

Yeah. And then obviously fulfillment's a big deal. If you're doing your own warehousing, that opens up a whole nother can of worms of processes.

Other pitfalls I've seen, marketing pulling product for marketing, and samples disappear, and you're like, what happened to my count? There's a lot of little things.

12:55 Chris Hondl

Yep, samples. Yeah, you hear a lot about that.

The purchasing and the sales are the obvious ones, but it's those samples, it's those damaged goods, it's those expirations, it's returns. Those are the ones where things start to really go sideways.

And for a lot of sellers that are doing FBA, what we see is a pretty significant issue between tracking what they have in their own warehouse or their prep center, if they have it outsourced, and then what's at FBA and what's in transit. I'll talk to very big, very mature sellers and it's just a big black box. They just don't have good record keeping at all for what is in transit between their prep center and Amazon.

13:43 ERP versus a federated stack

Stephen Brown

Now, I've seen a lot of businesses over the years think that they need to go to an ERP because their inventory management is a mess, and they feel like an ERP is the answer.

I'm giving you a little bit of a softball, because I know you and I feel differently. But what are your thoughts on ERPs versus a federated system? Basically federated is the idea of, I've got my general ledger, QuickBooks or Xero, I've got my inventory management, maybe I have some other components that are tied together.

I've seen a lot of, I need to go to ERP, and then it fails, and it was really expensive. Is the process the problem? Because some people think the software is going to save the day, and then they go to an ERP and they're like, this was a disaster.

14:29 Chris Hondl

Yeah, it's complicated. It's certainly the case that there are businesses for which an ERP totally makes sense. You're not going to run a multi-billion dollar public company on small business software.

But the challenge is just figuring out where that line is. Because in the same way you're not going to run that giant company on small business software, if you try to run a small business on an ERP, the complexity and the expense you've really got to control.

15:00 Chris Hondl

And it's not just the software expense, it's the people expense. A lot of software assumes that the people operating the software have internal in-house knowledge and expertise on each of the disciplines. So you have people who have specialized in supply chain, people who have specialized in purchasing, people who are specialized in finance and accounts payable and accounts receivable and so on.

And so when you're a smaller business, you don't have that level of in-house expertise and skill in all these disciplines, and you're not in a position to hire folks in all these disciplines. I think it gets to be very hard.

15:40 Chris Hondl

And that's, I think, where the line is, where you start to think about these products that work with a smaller general ledger, whether it's QuickBooks or Xero, most commonly in the United States. And then as the company grows, layering on software such as Finale, but some of the other IMSs, and then in other areas, other kinds of software.

And you get a level of flexibility and ease of deployment. You don't have to deploy all of it at once. You can address this problem this year, this other problem next year or six months from now. And in doing so it ends up being something that can grow with you, versus, I've got to tear apart my business for six months, for nine months, for 12 months, and then put it all back together again. And during that time ecommerce can change, but your business can change. And that's, I think, where you get in these failed deployments.

16:36 Stephen Brown

Yeah. And a mutual friend of ours, Scott Scharf, and I did an episode earlier this year where we were talking about selecting an inventory management system. We didn't get into specifics, but we were talking about some of the dynamics.

My thesis is you can be quite large. When we say small business, the hard thing about small business is some people define it differently. Is it a million? Is it 10 million? Is it a hundred million? Is it based on a number of employees?

17:03 Chris Hondl

Early in my career I did work with SAP as a partnership manager, as I was working for Adobe Systems at the time. And at the time SAP defined a small business as anything under a billion dollars in revenue. And that was a small business.

17:24 Stephen Brown

And I know the Small Business Administration, I think, defines it as anything under 500 employees. Which in ecommerce land, gosh, you could easily be a billion dollar company as a consumer products business, the way you can leverage software and partners.

My thesis is you could easily be tens of millions of dollars in ecommerce before you need to be considering an ERP.

17:48 Chris Hondl

Yeah. For customers that adopt Finale, we do see customers leave to ERPs, but often when they're in the many tens of millions of dollars, sometimes into the nine figures. And the usual drivers for that end up being multi-entity or multi-currency. So people start to have, they actually don't just sell into Canada or sell into the UK, but they actually have a subsidiary there, they have employees. That tends to be a pretty big driver for us.

18:14 Chris Hondl

They get a level of operational complexity around manufacturing, around contracting. Sometimes financial complexity can drive it. But again, it's not 5 million or 10 million. It's 50 million or 100 million is where we see people really start to say, hey, it's time to leave, and then have a successful transition.

We do see people leave at smaller, and then it tends to be a lot less clear how well that works out when they're smaller. Because again, I think the challenge is they find that they're having challenges with Finale, or to be fair, the other people in our space, there are other products in the IMS space that perform a similar role. If they're having trouble because those products are feeling difficult or complicated, or they can't work with them well, going to the ERP doesn't really solve that problem.

19:00 Chris Hondl

Again, you need to build that discipline, you need to build those standard procedures, build in-house expertise in a variety of areas, as I was talking about earlier, that you'll need to succeed at that 50 million level or 100 million level, whether you're on an ERP or not.

19:17 Bootstrapping to an exit, and the math of venture capital

Stephen Brown

Let's take a little dive into a different topic.

You posted some stuff on LinkedIn that went kind of viral. You were talking about Finale and how you guys bootstrapped the company to exit. So you guys didn't take any investment money with Finale, it was all bootstrapped.

19:35 Chris Hondl

That's right.

19:38 Stephen Brown

Which I think there's probably some lessons there we could tease out. Because a lot of ecommerce, I think the days of getting investment in ecommerce for the most part are over. You don't see venture capital putting money in. You might get some money from friends and family.

Let's talk a little bit about the different economics. Instead of having to buy inventory, you're having to hire people. Did you guys focus on profit from day one, or how did you make that work?

20:04 Chris Hondl

I mean, it was certainly challenging. So in the early days we had to develop a lot of discipline. We had to build up the software with just the skills that the three of us that were starting the business had on hand, and then evolve, whether it was selling and marketing or supporting it.

And then that part was okay. But then it was that discipline to not hire, right? We got to a point where, if we were going to raise money, you'd say, oh, we can hire a team, we can expand faster. And we had to accept a longer road, arguably probably a little bit slower growth, a little bit less ability to invest. But in return we were able to bootstrap forward through the 2010s and all the way to the exit.

20:55 Chris Hondl

And so we ended up not actually hiring anyone on the engineering team until 2018. So four years on. We'd have one person on the sales side. We were somewhat limited in terms of our ability to go to market. But the result was good, right? Because we always had control. We always felt like we were in control of our own destiny, which was a pretty powerful feeling.

21:13 Stephen Brown

Now, you're based in Silicon Valley, so I imagine there was a lot of pressure to raise money, right? That's what they say. You've got to raise money, you're not serious about your business. Did you guys have investors that were wanting to invest in the business?

21:25 Chris Hondl

Yeah, we certainly had people. I mean, we're well connected around here in the Valley. And all three of us have been involved in venture backed companies before, and we wanted to choose a different path.

And the crux of it was what I was alluding to earlier, this idea that we had control of our own destiny. We felt that if we could grow the business consistently, be able to not always be at the mercy of having to raise another round of capital, we would have a high chance of getting to a good exit.

22:00 Chris Hondl

When you raise financing, you're going to by definition be operating at a deficit. You're going to be losing money to spend down this cash that's on your balance sheet. And then you're basically making a bet that, before you spend all that money, you'll find a way back to profitability, or you'll raise another round. Both of which are not guaranteed. You're not guaranteed you're going to get back to profitability, because you get used to operating at a loss. Or you're basically betting on raising another round, which, there are a lot of external factors that can control that.

22:35 Chris Hondl

And so on the investor side, they're making dozens of bets. They only need two or three to return the fund. But on the founder's side, you get to make one bet at a time.

My whole career, this one was really long, I mean I was involved in this one for over a decade, but I've been involved in, I think, four or five venture backed startups at this point. I think it's four total. So you don't get a lot of bets. And so the incentive to end up on one where we could control our destiny ended up being pretty compelling for us in this last go-round over the last 10 years.

23:02 Stephen Brown

Now, I've been in one venture backed company, and then three public companies, one private equity, and then one bootstrap tech company. So I've kind of seen the different experiences.

And one of the things you don't realize when you're young, you're like, hey, I've got to go venture backed. Or maybe there's a pressure if you're a founder to get venture backed. But a lot of people don't understand the math of investment and how your stake gets diluted. The other thing they don't understand is the preferential treatment of investors, that usually they get the initial returns and then anybody else gets the scraps.

Do you feel like the financial outcome for you as founders was better because you guys didn't take venture capital? Or do you feel like it might have been different or the same had you taken venture capital?

23:54 Chris Hondl

I think the expected value of the financial outcome was certainly better.

And the reason I believe that is, it's a little bit complicated, but effectively, to your point, with liquidation preferences you end up basically going double or nothing. Think about it like, each time you take a round you get more capital to invest for the future. But you also at the same time get closed off from a bunch of doors, where if you were to exit at those lower valuations, there's no money that's going to flow to the founders or the employees of the team.

And by avoiding that, we were able to get on a path where we actually had a really strong financial outcome for an exit that, had we raised money, I think a lot of the funds would have actually flowed to the investors versus the owners of the team.

24:45 Chris Hondl

So I think that's the biggest thing. And the other thing is a little bit more subtle, which is that within a few years we started to figure out that the size of market that was likely available in ecommerce software, certainly outside of Shopify, setting aside Shopify where there have been some truly large exits in the Shopify marketplace, but in the space that we were in, there really haven't been the kind of truly epic outcomes where venture capital makes sense, where people get to billion dollar valuations and hundreds of millions in revenue.

25:20 Chris Hondl

And so I think that for that situation, when the size of market is not going to produce those types of epic outcomes, you really want to avoid venture. Because otherwise you end up in a situation where maybe you can raise a seed round or a series A, but then as you go into those farther rounds, those follow on rounds aren't going to be there. And now you've got investment on the cap table, you've got an inability to raise more money because people are starting to recognize the fact this isn't going to turn into a return the fund kind of investment. And then you're trying to find your way to some type of an exit that actually results in a good outcome for everybody. It's just very challenging.

And so I think that was maybe not planned, but it worked out in our favor.

25:54 What buyers actually look at

Stephen Brown

So I think there are a lot of parallels with ecommerce, in that ecommerce can't raise money. We haven't seen venture money in ecommerce for a few years and I don't see any sign of that changing. So many of them are like you and your founders were at Finale, where they are bootstrapping. And I think the math is somewhat similar.

When you guys had interest in getting sold, what was it that potential buyers were looking at?

26:34 Chris Hondl

The biggest thing was EBITDA, profitability, and the quality of that EBITDA.

In our case that really turns into metrics like gross retention and net dollar retention. Which, for those not familiar with SaaS, gross retention is, of your customer revenue that you have this year, how much of it will be back next year, excluding upgrades? And then net dollar retention is, how much of it will be back next year, and you get to include the upgrades. So if you're able to upsell people, your net dollar retention goes up. And those may not be the same metrics for a non-SaaS company.

27:14 Chris Hondl

But I think, again, you're going to be looking at how much profit there is and the quality of profits. And then of course growth. Growth was a key aspect of the story as well. Both growth through our business, and then the plan that we were able to have in conjunction with possible buyers of how we would then drive growth in the context of that bigger business.

And again, I'm not sure the exact analogs in ecommerce. But if you're able to put yourself into a bigger company where there's a clear picture of how you're going to drive additional, either EBITDA expansion or top line revenue expansion, that clearly is going to help you have a better outcome.

27:48 Stephen Brown

Yeah. If I were to make a translation, I think for ecommerce it's customer lifetime value. It is obviously profit, EBITDA, which is that fancy finance world that finance people like to use. I think both industries have customer acquisition costs as a big thing people are looking at. It's distribution, how well distributed you are. If I get plugged into a bigger company, will that expand my sales if they have better distribution, of in your case software, or in the case of ecommerce, maybe somebody's selling on Shopify and a little bit of Amazon and they plug into a bigger company that has good wholesale relationships and can expand it.

28:30 Chris Hondl

Or international relationships, that's another one.

28:42 Stephen Brown

At the end of the day, it's business fundamentals. And I think, unfortunately, the software world has had a huge influence on the business world in general. Everybody's like, grow, don't worry about profits. And I think that's a luxury that only a few, even in software, only a few businesses have that luxury. And even then their outcomes are not assured.

Versus, hey, I'm going to focus on creating value, creating profits, creating growth. Just business fundamentals. And I don't care what industry you're in, if you're doing those things, there are people that are going to want to buy you. And if you're not doing those things, it's going to be hard to sell your business.

29:20 Chris Hondl

Yeah. And that gets back to this question of raising money, where people are raising money on the bet for the future, and that in the future this revenue growth would then translate into earnings. Which in some segments and in some markets, it's a hundred percent the path to success. But in other segments and other areas it's not going to get you there.

And that's where, again, to your point, getting back to EBITDA, good quality earnings and then some of those underlying metrics that stand behind them that show the continuity in the future, make such a difference.

29:57 AI, and the future of ecommerce

Stephen Brown

So you're at a crossroads with Finale. I feel like the ecommerce industry is at a huge crossroads with all of the changes we've seen over the last few years, the latest being the crazy tariffs and changing of international import dynamics.

What are your thoughts around the future of ecommerce? Let's talk about a couple of hot topics, you being a technologist. How real do you feel like AI is? Everybody's talking about AI, I'm seeing a lot of talk about AI from Shopify. What are your thoughts on AI and ecommerce?

30:33 Chris Hondl

There are a few areas where I think AI is incredibly real today.

ChatGPT specifically, not even broader AI, but ChatGPT specifically has created a consumer brand and a consumer pattern of behavior in a very short amount of time. I think it's difficult to imagine it will be unseated. And product discovery is already happening in ChatGPT. People are still figuring out how that works.

31:00 Chris Hondl

But this is not unlike, I'm old enough to remember when Google search came on the scene in the late nineties, and new patterns of behavior emerged. And at first it was really hard to understand how it was going to work. And there were also huge efficiencies. I remember a mutual friend of ours telling me a story about how he was running ad campaigns and he was just paying crazy low amounts to acquire new customers, because they were able to be on this new platform, this new distribution channel.

So I think there's been a lot of disruption there. And I think people who move quickly to understand, I don't pretend to understand, but who figure out how to then take advantage of that new consumer buying behavior are going to do really well.

31:38 Stephen Brown

I agree with you. I've been watching AI commerce this year, and I feel like it's evolved. Initially I thought, everybody's thinking about AI as ways to run your business more efficiently, but I actually think AI commerce is massive. And OpenAI has a partnership with Shopify, they're already surfacing product recommendations.

32:04 Stephen Brown

Actually, I talked about this in an earlier episode. I bought my first thing through ChatGPT. I literally had a bracket on my RV generator exhaust that had broken, and I took a picture and I was like, hey, what is this? And it was like, that's your bracket, and here are some places you can buy replacements. I was like, cool. Boom, click, transact.

And I really feel like it's only been the last, not even since January, I feel like it's been about four or five months that we're starting to hear that. And I'm like, it's only a matter of time before that becomes even more seamless. And my question is, when are they going to open up the floodgates on advertising? Figuring out how to create an advertising marketplace within AI.

32:47 Chris Hondl

And again, this is going to be early adopters. Early movers are going to have an advantage, because not all companies are going to be able to move quickly. It may not even be the obvious companies.

And so again, when a new distribution channel opens up, initially click-throughs are awesome. I saw a few months ago, I forget who posted it, it led with a picture of the first banner ad ever on the internet. And it's something like a 30% click-through rate, or maybe even higher than that.

33:16 Chris Hondl

Insane. It's the first ever banner ad. Well, as you know, today click-through rates are one in 10,000 on banner ads. No one clicks on banner ads. And it's going to be the same thing here, and it's going to get worse.

I think marketing technology is another big area. We've done a lot with that and continue to do a lot with that. Coding's a big area. I haven't seen generative AI really hit in supply chain and logistics yet. I've seen other types of AI, there's a lot of use of machine learning or vision in interesting ways, but I haven't really seen generative AI, LLMs, ChatGPT, in those core transaction processing workflows. We're seeing some glimmers with some MCPs, but nothing I've seen have good adoption.

33:55 Stephen Brown

Well, there's a lot of data there. So there are things that could be done, I envision, with the amount of data that's going on in the supply chain or in inventory management. I think the thing that everybody wants is smarter, easier forecasting. Do you envision AI helping make that possible?

34:19 Chris Hondl

I think AI more broadly has some potential. Generative AI, the new thing with ChatGPT, and whether it's Anthropic or OpenAI, maybe a little bit less so, because it's not super well matched. And it's been a mixed bag, traditional machine learning versus more traditional statistical approaches, in terms of which really provide a better forecast.

34:50 Chris Hondl

What I see for smaller businesses, and again when I say smaller, I mean say under 50 million, under 50 million forecasting software adoption is hard. I've looked for a long time for forecasting software that is well suited for that segment of the market. And I haven't seen companies that really crack the nut. I know there's some stuff out there in the last couple of years that I think is starting to get there.

But it's very often the case that it requires a lot more expertise and specific forecasting knowledge than you'll typically see available to a company that can't hire a full-time forecasting person with expertise in supply chain. So I think there's some software out there that's starting to get there, but it's also hard. I think sometimes companies in the space find it easier to do maybe a little bit more helping and supporting their ad hoc forecasting.

35:50 Chris Hondl

So I think it's unclear, but I actually don't think that generative AI is going to make a big change in that immediately.

I do think there are some really interesting things that happen in terms of assessing data, but it hasn't been put together yet. So generative AI techniques or LLMs are really good at coding. They're not really good at directly processing data. But there's a world where you can then interact with a querier and actually generate code on the fly to answer questions or build models that you would not otherwise be able to do. I'm not aware of tools that are there yet, but I think that's a really interesting area, taking these initial things we're seeing in coding tools, which are there with AI, but then doing things that are more specific for specific applications, to allow folks who are not coders to actually effectively create code without even necessarily thinking that they're creating code.

36:35 Stephen Brown

Outside of AI, any other thoughts around the future of ecommerce?

36:38 Chris Hondl

It's not going away, that's for sure. You have a world where more people in 2026 are going to buy online than bought online in 2025, and so on into the future.

I think the question is, where are the profits going to flow, and are there going to be a lot of profits for businesses that are, say, between a million and 50 million in revenue? And what worked a couple of years ago, find some products and be a middleman, is going to be hard.

37:10 Chris Hondl

So you're going to need to, making money in business is never easy, and so you're going to have to evolve. Whether it's creating brand and narrative and storytelling as what makes your business distinctive, whether working with contract manufacturers in a really interesting way to create special products.

We've seen a lot of companies have success with customizations, whether that is mass customization where they're basically modifying the product on demand before they ship it out. So not remanufacturing, but just some kind of customization.

37:40 Chris Hondl

I do think it's going to be hard, though, to be a middleman, where you're basically buying products, importing them, and then reselling them. Because that's a game of scale, and in a world of constantly reduced cost of communication, people that sit in the middle are going to keep seeing their profits squeezed more.

38:01 Stephen Brown

I agree with that assessment entirely.

Wrapping up, I know you graduated from Stanford in the 90s. Did you have any classmates that are famous?

38:10 Chris Hondl

Did I have any classmates that are famous? Classmates specifically.

38:14 Stephen Brown

Anybody that went on to found big companies? Did you know the Google guys while you were there?

38:19 Chris Hondl

I did not know the Google guys when I was there. I was one step removed from the Google guys, one step removed from Jerry Yang, who was there, who started Yahoo.

Oh my gosh. Actually, I did meet, what's his name, the co-founder of WhatsApp. I think I was in a study group with him back in the day. This is over 30 years ago now. He was class of 94 as well. I'm sure there are others. I could have prepped, I could have thought through, who were the people I know?

38:52 Stephen Brown

Yeah, I was just curious if you knew. Stanford's notorious for generating tech founders.

38:59 Chris Hondl

It certainly is. And still to this day it is.

39:06 Stephen Brown

All right, well let's wrap things up. So, Finale Inventory, now part of Descartes. If somebody wanted to connect with you or Finale, what is the best way to do that?

39:16 Chris Hondl

The best way is obviously through the web, finaleinventory.com. You can find out about Finale there. I'm also pretty active on LinkedIn, so hit me up on LinkedIn if you are interested in reaching out to me directly.

39:29 Stephen Brown

Awesome. Well, thanks for joining us today, Chris. And congratulations on a bootstrapped exit and a decade of creating value for the ecommerce community.

39:40 Chris Hondl

Hey, thanks for having me.