Welcome to episode thirty-four of the SaaS Backwards podcast, where we interview CEOs and CMOs of fast-growing SaaS firms to reveal what they are doing that's working, and lessons learned from things that didn't work as planned.
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Finding the single source of truth to simplify every supply chain
With Suuchi Ramesh, CEO of Suuchi, Inc.
Edited for clarity and readability
Host, Ken Lempit:
Our guest today is Suuchi Ramesh, founder and CEO of Suuchi Inc. Inc., a SaaS that digitizes the entire supply chain, empowering participation and providing a single source of truth across suppliers, factories, brands, retailers, warehouses and customers. Suuchi, thanks for coming to the podcast. Welcome. And tell us a little bit about yourself and what that really means.
Suuchi Ramesh:
Yeah. Thank you. It's great to be here. My name is Suuchi Ramesh and I am a nerd, a technology background in software, and I was in the software space professionally as well, predictive data analytics and supply chain, before starting the company. As for what Suuchi Inc. does, you paraphrased it right. When starting the company, those of us that were the initial group, we had experience across tech stacks for supply chains across mid-tier and enterprise companies. And most supply chains are complex and like other parts of an organization where you have many systems, supply chains were coming upon that point where there were different systems to manage PLM and purchase orders and shipments.
So we envisioned a need for one single source of truth where you could have everybody come in and do their jobs on a daily basis but also provide a seat at the digital table, not just for employees within the organization, but especially those that are outside the organization. Supply chains are unique in that 90% of those that touch a supply chain are outside the company. And so one place where everyone could do their work, a single source truth, while providing a place where someone could collaborate and participate as well.
Ken Lempit:
Interesting. So I think that until the pandemic, not too many people thought about supply chains at all. What is it that made it ripe for this kind of innovation and disruption? What did you see?
Suuchi Ramesh:
Yeah. Well, before the pandemic, we began operations in the start of 2017. Obviously, none of us envisioned that we would be in a place where supply chain would be the topic in good ways and in challenging ways. It was just a natural point for us to start from.
My background as the founder was in supply chain and technology, and I'd been with companies that had spent time developing solutions to help enterprises take their data across supply chain and provide consulting and product solutions that could help them optimize.
What we noticed was the complexity of supply chains and that you need systems that can help erase that complexity and give you something streamlined. Most of the ERPs and PLMs in the market were monolithic legacy UI, and it didn't solve the problem. Just adding more systems has people suffering from software shock.
It was just a natural point for us to begin the company from based of our experience and what challenges we were seeing companies encounter. There was a hypothesis that it was the right time to get into supply chains because of the increasing complexity of the tech stack, as well as how global supply chains were operating.
And I think it's a coincidence, but we also are not surprised that we're seeing the issues that we're encountering, because that's the hypothesis we had in starting the company, is we knew that unless someone was tackling the problem, it would just become more of a maze and become more complex.
Ken Lempit:
What kind of companies are we talking about? Who has these problems? And what are their pain points?
Suuchi Ramesh:
There are mainly two segments of companies that we target.
Ken Lempit:
So these are manufacturing companies? Is that right?
Suuchi Ramesh:
Most of our customers are brands, meaning they're selling products to their end consumers either primarily online and/or a combination of retail channels. And they tend to bring in their suppliers, their manufacturers, their 3PLs on the GRID as well. We provide unlimited external users for these brands. Having said that, we also have customers that are manufacturers, but a bigger segment of our customers are actually the brands. And we're slowly adding a lot of factories and manufacturers. We are agnostic to what the business model of the customer is. It could be anybody across the supply chain. And then they're able to bring the web of other participants on the GRID as well, but a bigger percentage of our customers are brands.
Ken Lempit:
Got it. So in the prep session, you said you had a grand plan. You had this single source of truth idea and you wanted to really create this complete solution for your clients, but you realized you had to start a little smaller. How did you decide what essential function to launch with? And what was it? And how did that go? Just for younger companies, earlier than you, the founders who have their grand plan but haven't figured out what they're going to enter with, anything you can give in terms of how you made the decision on that essential function would be helpful.
Suuchi Ramesh:
As I summarize backwards, it'll probably sound a lot more organized than it really ended up being, because a lot of us have more amorphous ideas of how we want to go about it, but you just must persevere and stick it out and learn when you fall flat on your face and architect from there.
But the one thing I did know at the high level is we were going to create a category and whatever we were building, having started my career as an engineer, I knew that it would take a lot of engineering hours and a lot of money.
We also knew that the system we were setting out to build was not going to be a point solution. And so we had to bring it to some point of relative maturity before it was ready to be commercialized as a software.
So we had to really break the problem statement down into one part, as well as launch with one solution. The best way to describe it is we launched as the Uber for manufacturing capacity. We connected brands and retailers in fashion with the network of factories this side of the world or the Western hemisphere.
That continues to be one of the three core solutions under the platform. So our platform is upstream product management, midstream and downstream purchase orders to shipments to delivery, and the sourcing network is the third piece of it. And across all that is this collaboration and communication layer on steroids for supply chain, and that’s the constant across the three cores.
We launched with the sourcing network because we felt that we needed real-time feedback on what we wanted to build and make sure that our idea was right, and that functionality and the roadmap was informed by real-time feedback as people were using it.
We then added 100s of brands on the demand side, 100s of factories in the supply side over those first couple of years. As they were using this connected marketplace and manufacturing, they also got the software along with it. And so the early version of the software, the beta version, was the ability to create product records and purchase order records in its very basic form, but along that we always gave a lot of importance to the collaboration communication layer, because we felt that the lack of that functionality was the main reason for a lot of the delays in supply chain, the risks. By mitigating these risks, the more communication, the less black holes, the better the ability to be proactive and minimize these exceptions.
Think of the early version like a Domino's tracker. You had the ability to create product records and purchase order records, but you also had the ability to communicate in real-time and with someone within the company, if you were the brand, or also with the factory, and upload, download documents, so a file digital asset management, while also giving the ability to manage projects. So these were the basic functionality modules we launched with. Obviously since then, a lot of this has gotten a lot more baked out, but that was the early version of what Suuchi Inc. looked like in 2017.
Ken Lempit:
Well, I think that's really good instinct. Go where the money is. So right into the heart of the transactions makes a lot of sense, but it's also a chicken and egg kind of problem. If you don't have suppliers, it's hard to get buyers. If you don't have buyers, it's hard to get suppliers. Having seen marketplaces succeed and fail, how did you crack that nut?
Suuchi Ramesh:
We just went with demand. I think even today (and we don't see that changing) the fundamental problem we're solving for with our software is supply chain execution risks and how do you deal with the monstrosity that is global supply chains and the complexity around that.
One big part of the problem is taking all that complexity and providing a simple digital system across the whole length of the supply chain upstream and downstream and having a system that can help reduce that complexity, not make it worse by having 10 different systems.
The parallel challenge is I have goods I'm making across the world, or even if I'm making goods in one part of the world, there's different players involved and I'd like to be able to optimize that equation of lead times, consumer demand, costing and quality. I want to find that right balance across those four levers and parameters.
So that was the problem statement that involves a solution with respect to providing a sourcing solution, but also a digital solution. So that demand was there for us to take. So we were lucky in being able to identify that demand and in saying, "Okay. I'm listening to customers or brands that said, 'We want a nearshore solution potentially. And if we got that digital layer along with it, then that's a great package to have.'" So we over-indexed on that demand side and started off with smaller companies that we don't target that segment anymore, but there was a wide ocean of companies that needed help there with respect to that dual package we offered in the early years, sourcing solution and the digital layer with it.
Ken Lempit:
So, you started with customers who would be hungrier for the solution, the smaller brands and manufacturers that needed to be connected, which would allow you to build your business, build your software, and then go after the larger, more desirable clients. I think that's maybe not often spoken out loud, but I think it's important to just sort of underline that for people. This seems like a really unique combination of things your product does, collaboration, product management, sourcing. These are not always all put together. Is that a difficult thing for prospects to understand, understand the value transfer there? And what do you do to communicate that?
Suuchi Ramesh:
That's a great point. 90% of our customers only use our software. Going back to the three cores under our platform, it's the digital solution, helping with upstream management, which is really product conception and product management, the costing purchase orders, shipments all the way through delivery, which is midstream and downstream, and the collaboration layer supports all that. And we started with fashion and today we're used across 20 industries.
Our top three industries are fashion, beauty, food and beverages and then we have a long tail of other consumer product industries. So less than 10% of our customers, just in terms of the quantity of customers, also plug into our marketplace.
It's a strategic decision. We go deep into our relationships on the sourcing side. And like in the early years on the sourcing side, the customers get the software along with it, but essentially, we're helping plug them to relevant curated factories and we help drive through the platform, a lot of volume for them this side of the world in Central and South America.
So, we're not pitching the software and the sourcing at the same time. We generally get in with one of the two, depending on the company we're speaking with and who the prospect is, and then depending on the entry point, whether it's either the software or the sourcing, then the other piece becomes the upsell opportunity for us down the road.
But purely in terms of acquisition and quantity of customers, it's more purely on the software side. And even there, we have these two cores. We have the upstream and downstream. So it's more likely that one of the two ends up being a little more of a challenge for the company at that point in time. So we get in and get that workflow in order, and then we might either expand upstream or downstream, depending on the point we began with.
Ken Lempit:
How much of your lifetime value comes after the initial sale? How important is the upsell in your business model?
Suuchi Ramesh:
A lot. We’re getting into companies that are fast growing, midsize or establishment size. And then we continue to slowly go up market. We’re able to expand within just adding more of the team inside the company and outside onto the software over time, because the more the adoption, more the usage across departments, the higher the ROI.
There’s also the product upsell because we're going wide. We want more of the functionality to be used across the organization as well and having more of their suppliers, more of their 3PLs added over time, because you can't get the whole population on in day one.
So you want to strategically first drive option within the entry department and then go wider and deeper out from there. And then depending on the company, of course, when I say upsell different products, different products of the software, but also our third core product, which is sourcing as well.
Given our target market, the upsell piece is a very important part for us, and while we're creating this new category and we're going wide, that there's a lot of understanding and scoping and a lot of time we spend on that before the contract is signed. So we can be very focused and identify that entry point and that entry department and make sure they are confident as you look at the first six months and then the first 12 months that we drive confidence in them. And then there's a lot of potential and excitement with the upsell opportunities from there on.
Ken Lempit:
I don't think we covered the category you're creating here. I think we should give some words to that so people know how you envision it.
Suuchi Ramesh:
It's the modern single source of truth for supply chains, and that's just how I would summarize it. A lot of systems may call themselves that, many of them that have been around a long time, but a lot of them have what I call legacy systems.
You don't have any new players that have taken the risk, and I call it risk because building the digital system across the whole length of the supply chain is no easy engineering task. And so we're really building the new standard for ERPs without calling it that, minus the financials. We don't have the financial piece just yet.
I think the dominant brands, the consumer companies of tomorrow will likely not want to go get an SAP. They want something that can culturally resonate with how they're building their own companies and having one single source of truth where even if they have, it's inevitable they might have some systems in place, but just the simplicity of one digital system where everybody can log in and get their jobs done and all the data sets are connected.
There's less manual entry just by nature of having all these data sets connected. So, a single source of truth, that's different because it's easier to work on.
Also, it’s a place where it's not just friendly to employees but it democratizes the access for that big population that's outside the company. And third and probably my favorite piece is the emphasis on collaboration, the fact that we have spent so much time and thinking on building that collaboration layer on steroids for how supply chains work.
Ken Lempit:
Excellent. Hey. Let's turn our attention for a little bit on the role of marketing at your company. How is marketing contributing to your growth where you are today and how has it gotten you where we are today? So how's it contributing? What's the role of marketing?
Suuchi Ramesh:
For us, I'd say we spend a lot on outbound just because of our target market. And as we've gone upmarket, the outbound motion is a very big part of our acquisition strategy.
Outside of that, we want to pick one thing that is successful for us given where we are today and do that well. And we don't want to dilute our efforts. So we spend a lot of time and energy thinking about how we optimize the outbound team for success. And then everything else so far as the other pieces of marketing are concerned.
With respect to the branding or conferences, we don't spend as much on that or paid marketing. Right now, we really want to drive relationships with the right kind of company.
The thinking behind our ABM plus our outbound efforts and our whole call efforts, there's a lot of focus there. We spend a lot on the tech stack, and once we drive that foundation of more customers by building the right customers and selling and upselling there, we then want to as a phase two then spend more on the branding piece of things.
Some companies may look at that as more of a sales function than a marketing function. For us, we do a lot of organic content. We also think a lot about the content that goes into the scripts behind our emails and our cold calls. And so to us, we do consider that as our marketing, but that's where we invest 90% of our effort.
Ken Lempit:
Yeah. I think contemporary firms are looking at the SDR function as a marketing function. So they're saying, "Hey. That outbound activity, it's got to be focused on building some kind of conversation dialogue and value before the sale." So I think you're probably where you need to be in that regard. And I think also you mentioned ABM. There's probably a known universe of companies in your ICP. So do you have an idea of the size of the addressable market? And can you share a little bit about how you arrived at that?
Suuchi Ramesh:
Yeah. It's a massive market. When I say massive, it's obviously relative, but especially as we go across different industries, I mean, honestly, this is one of the largest TAMs that is up there. The world of consumer product companies is large and if you're really trying to go against... I mean, we're not necessarily competing with the SAPs of the world, but more the companies that's say, "We want a different type of business management system across the length of our supply chain." So just per industry, you're talking 10s of billions of dollars in terms of the TAM for each vertical that we're going into. But of course there's also merit in trying to cut it down and be really good in one vertical and then expand from there. So that's really what we're doing right now.
And within each of these industries, it's the same strategy of these two high level revenue segments. So our first segment is companies, say, between 10 and 50, 60 million in size and then the second segment is that 50 to 60 all the way to about a half a billion. So that's really our sweet spot right now. And over time, we might continue to expand. And that's where we've seen success. So we're just going deeper into those two segments across our top three industries right now
Ken Lempit:
Makes sense to me. If you're seeing success and you see adjacencies, plow each one of those fields, get as much as you can out of each one of them. And as you go up higher in the revenue, that's where it's going to get harder to dislodge and compete with those bigger companies. So it makes a huge amount of sense. You mentioned in the prep call that you guys are planning to raise funds. Can you tell us how that's going? And are current market conditions impacting the lead up to that fundraise?
Suuchi Ramesh:
Yeah. We're planning to raise either at the end of the year Q4 or Q1 next, so that's the range we have. We want to line out a tight process. We did our series A about three years ago.
So, the one thing I'm sure founders tell you when they raise money is if you run an organized type process that always makes for a better outcome and then playing it out over a period of time.
At this stage, we're just making sure we're building to the metrics we want to be at before we raise, but in the interim, the funds that are on our dream list, we've stayed in touch with them and we give them regular updates over phone calls, as well as emails. So that's really what we're doing right now. So we'll open the process of depending on how the market is either in Q4 or Q1.
In the interim, obviously the potential recession or the market conditions are top of mind for me as I'm sure they are for other CEOs. As a software company, one of the advantages is you could run the company to be lean.
So, the extra money then is just about putting more fuel into the engine. And so then in the interim, we're just doing all we can to run as efficiently as we can.
In case the market does not get back to good or it continues to just indefinitely stretch the speed that we're in, we just want to be prepared for whatever that scenario looks like. And the best way to combat that is to just run an efficient house.
Ken Lempit:
Sure. I mean, three years from Series A means you must be doing well on your internal financial metrics. That's a long time for an A. So I think that speaks pretty well of how you're running the business. Is there anything in the proposition to your customers and prospects that is more compelling because of the financial conditions? Is there an ROI story you can tell your prospects that actually this plays into your hands a little bit?
Suuchi Ramesh:
Yeah. 100%. We actually use an ROI template with every customer at the bottom of the funnel. And it's interesting you bring that up, because especially in these conditions, the customers we are speaking with, all the executive's top of mind is, "How do I control costs? And how do I continue to keep this business growing without necessarily hiring," because most of them are on a hiring freeze, or worse, they may be looking at getting their team tightened even further. So we are able to drive... There are three vectors at the high level, there could be more, but we are able to instrument and show outcome from three different vectors that they're able to see quantified gains from.
The first is anywhere from 5 to 25% of the team's time that is now digitized. So instead of the team's spending time on tactical tasks, uploading documents, manually filling up Excel sheets, making phone calls to the windows, exchanging emails within the team, a lot of this is now automated within the GRID. And so we're able to translate that time saved into a certain number of people based off the payroll spend. And so that's sort of the low hanging fruit because as soon as you get on the GRID and because it's a system of record across the whole length of the supply chain, the data sets are connected. There's a lot of savings that can be translated into this number of people that we're saving you on with respect to payroll costs. So that's the first vector.
The second vector is improved communication, collaboration, all the digital assets connected, improved lead time, ability to better pick the right vendor because all the cost sheets are automated. You can now more effectively manage bids. You could proactively reduce exceptions, better manage for bad suppliers. All a result of everything being digitized.
Because the data's on the GRID, we're able to show an improvement in margins by reduction in cost of goods sold. So that's the second vector.
At times of recession, being able to drive the same sales with a higher profit margin from that by reducing cost of goods sold is something that is a huge impact statement to make.
And then of course the third vector is if I can keep your costs in check and further reduce it but now I also am able to give you the ability to better react to consumer demand, you're able to now increase sales. So that's our third vector of change. So I mean, this is of course generalizing. There's a couple of other things we're able to show quantified gains from, but these are the three main ones. And especially in the environment we're playing in today, these three parameters are that much more relevant to have a conversation on.
Ken Lempit:
Well, that's great. And this, by the way, was a great conversation. I think this is a great place to land. I want to say thank you so much for sharing your time with us and listeners. If people want to learn more about your company or contact you, how can they do that?
Suuchi Ramesh:
You could reach out to us on LinkedIn, on our website. I'm easy. I'm at suuchi@suuchi.com with two U's. So always happy to have a conversation one on one as well.
Ken Lempit:
Awesome. And if people want to reach me, my LinkedIn is linkedin.com/in/kenlempit and the website is austinlawrence.com. If you haven't subscribed to the podcast, please do so wherever you get your podcasts. And Suuchi, thanks so much again for a great episode. It was pleasure to have you on the podcast.
Suuchi Ramesh:
Same. Thank you.
Thanks for listening to the SaaS Backwards podcast brought to you by Austin Lawrence Group. We are a growth marketing agency that helps SaaS firms reduce churn, accelerate sales, and generate demand. Learn more about us at www.austinlawrence.com. You can email Ken Lempit at kl@austinlawrence.com about any SaaS marketing or customer retention subject. We hope you'll subscribe, and thanks again for listening.