A Product Market Fit Show | Startup Podcast for Founders
00:05:11 · Sean McCarthy
[00:05:11] S0: Yeah, so to conceptualize this, and obviously in supply chain, there's not a lot of folks that are really familiar. And so I'll give you a very basic example, and then a more complex example of what we sell for today. Because when we started, we were handling the very basic examples, selling to mom and pop warehouses, 3PLs. And you can think of it as a consumer where you order a lamp, and the lamp gets shipped to your house, it's broken. As soon as you open the box, you realize it's broken, you call customer service and you say, hey, I just ordered this lamp, send me a new one. They're going to assign that to operations, operations will send you your new lamp, and then they have to file a claim with, say, FedEx. Because FedEx broke the lamp, and then finance needs to track that to make sure they get their money back. That's three business units on a fairly non-complex workflow, being a lamp that's broken and so, when you take that to a much higher complexity. Say we're talking about grocery where you have a truck of food that might have Tyson's chicken and berries from Driscoll, and Happy Egg, and all these different vendors on that truck. And maybe the temperature on the refrigeration unit breaks or exceeds where it's supposed to be. What happens then, right? Now you've got all of these vendors at a much higher complexity with invoices and BOLs, and documentation that needs to be gathered. And so, rather than somebody going and doing these manual reports, they can just pick up the phone from the loading bay and say, hey, we just received this truck. There's a temperature breach, and we'll take it from there, run and gather all the paperwork, and make sure that a hundred percent of those claims get filed. Which is millions of dollars a month on these larger enterprises and so, that same scenario can be done with pharma, with lifesaving medicine as an example as well.
00:06:49 · Pablo Srugo, Sean McCarthy
[00:06:49] S2: Going back to the moment where you beat this enterprise, what would you ascribe that to? How do you think you won? What do you think you got right? [00:06:57] S0: You know, one thing that we've done that is, and we can certainly talk about how we're getting into these enterprises, I think that's a good topic but I think for us, once we're in, we've tried to not just let the normal cycle run us. I guess would be the best way and so, across the board, there's ELT and board mandates to adopt AI, and we know that. And a lot of times, that's why they're speaking to AI companies in the beginning. And what we know that they're going to have to do is show a business use case of why would we entertain this vendor, and what does this look like. So what we started doing was just building the use cases for the customer and giving them the entire use case, and the ROI analysis that they could present to their board with their branding, and all the information that we've gathered to try to make it as light of a lift as possible. With our solution being like the center of that. Being embedded in basically not just educating on AI, but educating BackOps as actual impacts. And so I think that probably contributed to a bunch of the unlock, where when they're thinking about the AI solutions or maybe the vendors. The deck that's being presented is hopefully the one or the majority of what we send to them and so we did that on both of the deals, and I think that that was probably a big contributing factor.
00:06:57 · Sean McCarthy, Pablo Srugo
[00:06:57] S0: You know, one thing that we've done that is, and we can certainly talk about how we're getting into these enterprises, I think that's a good topic but I think for us, once we're in, we've tried to not just let the normal cycle run us. I guess would be the best way and so, across the board, there's ELT and board mandates to adopt AI, and we know that. And a lot of times, that's why they're speaking to AI companies in the beginning. And what we know that they're going to have to do is show a business use case of why would we entertain this vendor, and what does this look like. So what we started doing was just building the use cases for the customer and giving them the entire use case, and the ROI analysis that they could present to their board with their branding, and all the information that we've gathered to try to make it as light of a lift as possible. With our solution being like the center of that. Being embedded in basically not just educating on AI, but educating BackOps as actual impacts. And so I think that probably contributed to a bunch of the unlock, where when they're thinking about the AI solutions or maybe the vendors. The deck that's being presented is hopefully the one or the majority of what we send to them and so we did that on both of the deals, and I think that that was probably a big contributing factor. [00:08:13] S2: And then going back to the beginning, I mean, how do you end up AI for supply chain kind of automating, you know, back office operations. Not the most sexy space, not like you said, a space that many people know about.
00:08:13 · Pablo Srugo, Sean McCarthy
[00:08:13] S2: And then going back to the beginning, I mean, how do you end up AI for supply chain kind of automating, you know, back office operations. Not the most sexy space, not like you said, a space that many people know about. [00:08:24] S0: Yeah, so most prior to this, I was at Amazon. I started in Amazon as a global sales leader in Amazon's marketplace. So, you know, when you go purchase something off of Amazon, that's the marketplace. We were taking U.S. sellers and pushing them internationally and then from there, I went to Amazon Shipping. And for those of you that don't know, Amazon Shipping was created to head to head a lot of the FedEx, UPS, DHLs of the world for consumer, kind of small parcel. And was early there as a number two BD manager. We actually had an in the field designation. So we had to spend four days a week in customer warehouses, which was a really good opportunity for me to kind of develop this thesis and see these things firsthand. And then, also pen test and ask the customers about these problems, and what I was noticing. But that's how I got in. I think non-sexy is probably a good way to sum it up. But if you go to the grocery store, you see food on the shelf, often we don't think about how they got there. We just think that's normal, and maybe it just appeared. And so it's pretty fascinating behind the scenes, but every day is a new journey, to say the least.
00:09:25 · Pablo Srugo, Sean McCarthy
[00:09:25] S2: Can you go deeper on finding the original pain point? It leads to a lot. I mean, obviously you can pivot and all these sort of things later. But at some point you're in pivot hell and, you're just kind of searching and grasping at straws. Maybe you get lucky. If you figure out an initial pain point that is right, it solves a lot of the other things and you're still going to have to iterate, and figure out things. But at least you're starting from somewhere solid. Can you maybe go deeper on those initial, you're spending time, you're in these warehouses, you're seeing things, at some point you start asking questions. How do you structure that? How does that happen? What are you asking? Just tell us more there. [00:09:59] S0: Yeah, I'd be happy to. So as I started to develop this thesis, I would talk to the owners of these businesses and ask them what their number one problem was. And what I was hoping that they were going to tell me was some sort of workflow that they all had in common. That there was this big problem and it actually is not. The biggest problem that they had was churn, is what they would tell me and it derailed my fact-finding for a little bit until I was able to deep dive into why that churn is happening. You're going to have churn on the folks that are doing the physical labor, and there's nothing for us that we're going to touch necessarily on that side. But if you look internally in the admin side, and the customer I'm thinking of in my head. They were churning this person once every six months or so from an administrative perspective.
00:09:59 · Sean McCarthy, Pablo Srugo
[00:09:59] S0: Yeah, I'd be happy to. So as I started to develop this thesis, I would talk to the owners of these businesses and ask them what their number one problem was. And what I was hoping that they were going to tell me was some sort of workflow that they all had in common. That there was this big problem and it actually is not. The biggest problem that they had was churn, is what they would tell me and it derailed my fact-finding for a little bit until I was able to deep dive into why that churn is happening. You're going to have churn on the folks that are doing the physical labor, and there's nothing for us that we're going to touch necessarily on that side. But if you look internally in the admin side, and the customer I'm thinking of in my head. They were churning this person once every six months or so from an administrative perspective. [00:10:43] S2: You're talking about retention on their employees, not customers?