Spreadsheets Are Limited! Why AI is the Future with Fabricio Miranda

Transcript:

Transcript 

Jared Ward 00:01

All right guys, welcome to this episode of Ops Unfiltered. Today we have a special guest, Fabricio. He's the founder and CEO of Fleaburr. Welcome, fabricio. 

Brendon Beebe 00:15

Yeah, thank you. Thank you for having me Excited. You came out here. Yeah, yeah. 

Jared Ward 00:18

Fabricio flew all the way from Brazil. 

Fabricio Miranda 00:21

I'm just kidding. No, I didn't yeah from New York, but that's far enough. 

Jared Ward 00:24

Yeah, from Brazil, I'm just kidding. No, I didn't yeah from New York, but that's far enough. Yeah, so Fabricio's in New York City. He's growing Flieber, real fast. What is Flieber, and how did we meet each other? 

Fabricio Miranda 00:34

Yeah, yeah, Flieber is an inventory planning platform. So basically what we do is stock alternative stocks are a huge problem for retail and that's due to mismanagement of inventory, and what we do is we try to organize all your inventories so that you make the right decisions. I usually say at a fraction of the time, which is a big part of it, is to be able to not spend all the time that people are usually spending brands making those decisions. 

Jared Ward 01:03

Yeah, so before we dive into Flieber and what you do there, um, let's, let's go back a little bit, so tell us a little bit about your background. Before you fundraised and started building fleber, this amazing software company that just did its series a round, um, I know you were in a lot of things, from, like, water treatment service businesses to hedge fund to now an inventory software. So how did all of that begin? 

Fabricio Miranda 01:30

It's hard to explain actually because it's so diverse, but I'm from Brazil, rio de Janeiro, and I've been an entrepreneur since 26 years old and out of vocation we're just talking about this before this episode but out of vocation I became an entrepreneur and my first company was an HR technology company. Then 2008 came and nobody was hiring anybody, so the company went down really quickly. We had to lay off a bunch of people and I made the decision of shutting it down. Actually, we say that we sold it, but we actually just transferred the customers to another partner company. And then I joined a water treatment company that had been found a couple of years before by a friend and I joined him in this company and we were very lucky. The three next years were crazy. We became the largest water treatment company in Brazil. We were acquired by the largest construction group in Latin America called Odebrecht, and I decided to come to the US to raise my kids here because I thought it was a better place to raise them? 

Brendon Beebe 02:35

How did you go from technology to completely not technology? 

Fabricio Miranda 02:38

Yeah, that's funny because people ask me that a lot. I don't think I'm a technology person, I think I'm an entrepreneur. I think I see opportunities and I explore them, and it could be anything. I talk to my wife all the time that I should open an ice cream store sometime, or whatever it is. 

Jared Ward 02:55

Or cookies. Cookies are big in Utah yeah cookies, something like that. 

Fabricio Miranda 02:59

So it's not that I love technology and I am in technology because of that Opportunities, it's opportunities that I love technology and I am in technology because of that. 

03:05

Opportunities, it's opportunities, and I love going from zero to one. I usually say that whenever I receive my EIN, the company identification number, I get goosebumps. One of the best periods of my life is when I launch a new company, start a new business, but anyway. So yeah, water, truth and Company was sold. I decided to come to the US. I needed a work visa. The only thing I know how to do is to open companies, and I had relatively easy access to capital. At the time, there was a thesis that Brazilians would invest money in dollars because of devaluation. So all of that combined made me open a hedge fund in Manhattan called Victory Capital. It's Victory with an I in the end instead of the Y. 

Brendon Beebe 03:52

Oh, okay, and was that capital from Brazilians? 

Fabricio Miranda 03:55

Yes, the people you knew down there we had a few American friends that also put capital, but the majority of the capital was from Brazil. 

Brendon Beebe 04:04

Sorry, real quick, what was your role? So what was your role at the water treatment company, the? 

Fabricio Miranda 04:09

water treatment company. I was COO. I was the one taking operations, but not the technical part. The technical operations had a person almost like a CTO. In the technology business it would be a CTO, but in the water treatment company it was a technical water treatment person Got it. But everything aside from that operations, planning, control, finance and everything else I was running. 

Jared Ward 04:32

And for reference, how many employees did that company have at its peak? 

Fabricio Miranda 04:35

So at its peak I think we sold it at 850 approximately. Wow, but I might be wrong. It might be 700 and something, but it was a high, high hundreds because we had uh water to implants, uh in different. So you know if we want to go a little yeah, please, okay yeah, so the model is called bot, which is build, operate and transfer. 

04:56

So basically, you go to big factories. Uh, let's. Let's give an example of a paper manufacturing company. And the paper manufacturing company is manufacturing paper, but they need water and they generate a lot of wastewater in their process and that is really important for them because the water is a very important raw material for them and the wastewater can give them a lot of headaches in terms of environmental problems, but it's in the end of their priorities. The top priority is not treating water and wastewater. 

05:31

So we'll get to them and say, hey, you know what we're specialized in, that we're going to purchase your water and wastewater treatment plant and we're going to run it for some amount of time. It depends on the company, but the minimum we had was 13 years and the maximum we had was 35 years in our customers and we will run it and we will exchange it for an invoice, so you know how much it's going to cost every month and we will deal with any environmental issues. It's our problem, not your problem. So it was a pretty good value proposition for them, so they would get cash up front they would exchange for something that is manageable, that they know how much they're going to spend. 

06:10

They wouldn't have to deal with that part of the plan, and all the environmental problems were our problem, not their problem. So that's why we grew a lot. 

Jared Ward 06:19

How do you assess an opportunity? Because that's an amazing opportunity, yeah. How did you see that it's not my merit? I joined this company after it was founded. 

Fabricio Miranda 06:27

So it was the merit of the founders, uh, of the company who saw that opportunity and they also didn't see that as a whole opportunity in the beginning. In the beginning was the idea was that you had, you know, hospitals and buildings, that you needed to deal with the wastewater, um, and they were having issues with that and it was a cheap thing. I remember the you know, the first time that we got an investor and the investor went to visit a plant before the company was a company and I was not at the company at this specific time. So that's a story that I heard. They took the investor to visit the plant and basically it was like a well and the guy just threw like a bucket inside of the well and pushed the bucket back up and showed and like and put some chemical and showed that it was blue and not green and that was all we had at the time. 

07:18

So yeah, so it's not. It was not that we saw that opportunity. From start, I think what was seen was a much smaller opportunity, but with time it became a big thing. 

Jared Ward 07:31

Okay, what led you to want to go to the United States? 

Fabricio Miranda 07:36

I love Brazil. It's the best place for you to visit. It's amazing. Like I was just saying to you guys before Rio, my city is by far the most beautiful big city in the world and whoever's watching just send me a message of a more beautiful city than Rio. It's impossible. But there's violence, which sucks, and when you have kids it's a big issue, and the economy is always bumpy. So every time people say that Brazil is the country of the future, that never arrives. The future is always there in the future and it's real. The country's economy is full of bumps. 

08:15

It's a very unstable environment for you to open companies and you know it's hard to raise capital. People don't want to take that risk and it's hard to raise capital. People don't want to take that risk. Now it's a little better. I came here to the US 10 years ago. Now the last five, six years it got a little better, but it's not even close to the US. And I think the biggest point is I wanted my kids to have a global view. Brazilians are very, very focused on only Brazil and most of the time, not even Brazil, maybe only Rio or only Sao Paulo, and I wanted them to have a global view, and here in the US you have a neighbor who revolutionized the world. 

Jared Ward 08:55

Yeah. 

Fabricio Miranda 08:56

And in Brazil you don't have that, so I wanted them to have that experience. 

Jared Ward 09:00

I'm curious what do you think is the biggest difference between doing business at a large scale in America versus Brazil? I'm sure there's some massive differences. 

Fabricio Miranda 09:09

Oh, there's massive differences, starting from culture. I think the team we have team in Brazil, we have team in Argentina and in the beginning we were lucky because we got a big part of that team came also from other technology companies, so they already had some experience. But whoever had never worked in an international technology company, the mindset is very narrow. They don't know what is stock options. 

Brendon Beebe 09:34

They don't know what is the benefit of having stock options. 

Fabricio Miranda 09:37

They don't know what is the risk of a startup. It's very like you have a job and you're going to do your job. You know it's not like startup-driven risks and focusing on the future. That is, I think, the biggest point. As I was saying, everybody says it changed a lot now lately, but in my time there it was awful. You couldn't get talent at all with that mentality. Not that talent interesting, not the talent is not. 

Brendon Beebe 10:05

They were amazing uh, you know amazing engineers, but the mentality is very so you're saying that everybody there's looking for a job that will pay them? Yeah, not thinking big picture? How do I actually become something great? 

Fabricio Miranda 10:17

exactly, yeah. And then there's a second thing that I think is crazy, and that's one of the things that I say the most inside of Libra. I talk about the story of Mark Zuckerberg in a podcast with Reid Hoffman from LinkedIn, where he says it's crazy because he's describing his time in the beginning of Facebook. And he's describing his time there and saying that he already had been funded by Peter Thiel and other investors. He was already living in the Silicon Valley and he was with his co-founder at the time trying to guess who was going to build the first social media company. He never thought it was himself. He thought it was Microsoft or IBM, or MySpace would evolve into this big big thing, or AOL American Online was a big thing then and he was like, no, maybe American Online. And he never thought it was himself. Who was going to build the first social media empire, and that is Brazil. Brazilians never think they can really change the world. 

11:20

It's a narrow mentality, you don't even think you're able to do that. So I think that is also a huge, huge problem. 

Brendon Beebe 11:28

This is a more personal question. How do you mentor somebody? So I'm sure you've probably mentored and talked. How do you help them change their mind? 

Fabricio Miranda 11:37

I think showing those tangible examples, showing the insecurities of the big guys, the guys who have conquered Airbnb, is a great example. 

11:46

Airbnb there is a lot of insecurity in their beginning and up to today you know, they talk a lot about that. So showing that the people who have changed the world also didn't know they were going to change the world and also didn't think they were capable of changing the world, I think that creates a little bit of empathy, they create a relationship with that story and that's the way that I try to do it. In the beginning of Flieber, I had a weekly meeting where I only showed videos of famous entrepreneurs to the team and the only idea was how do I make my voice be heard, not through me, but through someone who has gone through the same things and has reached another level of success, and I think it worked a lot. 

Brendon Beebe 12:30

I think people resonated with people because what's the makeup of your team? 

Fabricio Miranda 12:34

you said it's like brazilian argentina yeah, we have brazil, argentina, we have us, we have canada, um, I think today, yeah, that's it, that's the four ones. 

12:45

But we had already Portugal, we had Mexico, we had Chile, we had Peru, so we had people in different places. With time, Wow, yeah, now we're concentrating in Brazil and Argentina a lot the development team because it's closer when we had Portugal and Chile and Peru and Mexico, all these it becomes distant, too distant. So Brazil and Argentina are close enough so we can put the team together from time to time and things like that. 

Brendon Beebe 13:15

Oh, that's really cool. Do they work together, do they work in an office or do you have everyone from home? 

Fabricio Miranda 13:19

The Argentina team has an office where they go once a week I go there. The Argentina team is where I go once a week. I go there. The Argentina team is where the I have the more senior. We have other senior people we have one in Canada also but the more senior people are concentrating in Argentina, in Mendoza, which is a great place to go, also because it's a wine the wine country, in Argentina. 

13:39

So it's a good almost like I'm doing tourism at the same time that I'm working. But I go there once every two months to spend a week with them, okay, and they go to the office together once a week. Okay, but the company is remote. It was not remote. 

Brendon Beebe 14:02

We used to try to focus on having offices, but we were forced to be remote. How do you feel like the technical skill of? Because when I was in Ecuador, I felt like the technical skill was very lacking. I feel like the education was not there. How is it in Argentina? 

Fabricio Miranda 14:12

Yeah, I think I have. Argentina is known for being one of the best educations in Latin America. So the levels of Argentina education, if you go check the rankings and stuff, they are in the level of Italy, france, spain. 

Brendon Beebe 14:26

Really yeah. 

Fabricio Miranda 14:27

They're very big in education. I have a very good team that came in Argentina. They came from Eventbrite. They were already seasoned by Eventbrite by years at Eventbrite. It's an amazing. 

Brendon Beebe 14:43

Did you find them yourself or was it previous connection? 

Fabricio Miranda 14:46

it was so it was we. I had my co-founder and CTO, jair had. An acquaintance was not ever. It was someone that he would talk to technically yeah, called Vinny Vinicius, who is with us still, has been with us since six months of the founding of the company and now he is in Canada. But he was in Argentina and convinced Vinicius to join us and then Vinny convinced the other guys to join us. So then we got a cluster of people from Eventbrite. 

Brendon Beebe 15:20

Okay, so it feels like you always need like a champion down there. Oh, totally yes. 

Fabricio Miranda 15:24

It's impossible for you to start without that. Especially in my case, I was not in technology in the US before I can talk a little bit about the other companies but, I, was not in technology in the US before, so I didn't have all the network. So it was fundamental to have the champions. 

Brendon Beebe 15:40

Okay, that's really helpful and we can fall back to the hedge fund, To the hedge fund. So I'm telling my stories that okay. 

Fabricio Miranda 15:52

So hedge fund two and a half years into the opening of the hedge fund, I met a guy who was opening an Amazon store and he was like that really intrigued me because I thought at the time that that's 2015. At the time, I thought that Amazon stores were something that you would do in between jobs or as a side hustle. I didn't think that was a real business. But this guy was very capitalized, very smart, probably the smartest person I've ever met, and I was intrigued. I went out for a glass of wine with him and in the very beginning he asked me Fabricio, how much percent of retail do you think is online in the US, the most developed country? I thought about all the boxes coming to my house and Jeff Bezos being one of the richest people on earth and Amazon one of the biggest companies. And I said, I don't know, 35%, 40%. And he was like 8% and he said eight percent. I knew at that exact second that I was gonna join him in opening this company. So that's what I did. So I needed six months to reorganize the hedge fund, to live without me. So it was a transition and I transitioned into being an executive with this guy, like opening HeadClicks. So my executive job went from the hedge fund to HeadClicks Like my time, I mean right and so we built this thing from zero and we got to $12 million in sales in the first year, which is great. 

17:20

But the best thing is that the thesis was correct that there was a revolution starting in this industry, but by being inside of this revolution we would see a lot of opportunities, and that's what happened. So we started a company in 2015,. So 2016,. End of 2016, we were already opening the first side business to head clicks, which was a company called sellers funding that now was rebranded to sellers fi is a funding business. So basically, the the thesis is retail is a capital intensive business. There's not a lot of capital available for a lot of these people who are starting retail. 

18:04

So there's a gap between the need for capital and the offer for capital, and SellersFi is doing great. It's been there for what? Eight years now, I think, and then 2017, we started Quartile. Quartile is an advertising platform. Today is one of the biggest in the market. 

Jared Ward 18:21

And what does Quartile do? 

Fabricio Miranda 18:22

Quartile is an advertising platform. So basically the thesis in the beginning. Now it evolved. We made a big acquisition last year that I mean two years ago that that broadened a little bit the scope. But in the beginning what happened was head clicks. It was really hard to manage advertising, um, because everything was too manual. So at a certain point we had screens and six people in a room like just managing the keywords, trying to guess what keyword to add and putting that in a spreadsheet and uploading things to Amazon manually. And you have to do it in a certain way for Amazon because of the way Amazon system was developed and that way was not the most efficient for us, and so we decided to start automating this process and that became a business. So the big breakthrough was the idea that each campaign on Amazon, the way it was done before, it was a campaign of keywords. 

19:20

So you had a bunch of keywords in the same campaign and now the attribution of the success of the campaign is a little hard for you to understand which keywords at which time perform better, because you're seeing that in aggregate. 

19:37

And Daniel is my co-founder's idea at the time and he's the one who runs Quartile. His idea at the time was what if I make each campaign be one keyword only and the only way to do that is with systems, because it's really hard for you to do that manually and that's the big breakthrough, because now you have 100% of the attribution to one keyword and not to a group of keywords. So you can really understand how things are and it evolved to being. You know, in the hedge fund world there's a thing called high frequency trading, which is when you are operating in the milliseconds, right, you're buying and selling in milliseconds, and you do that through systems and it's a little bit like that today. It's not in seconds, it's in like an hour, but there's a rebalancing every hour based on the on the success of each campaign, which is each keyword, and you're downgrading a keyword and putting another one in place of that and that's all automatic and that made makes the result be like amazing another level that's very interesting. 

Jared Ward 20:43

That's the breakthrough. This was your. This was your first exposure to e-commerce. You got tons of experience. I'm I'm interested to dive into fleber now. Yeah, obviously you're super opportunistic. You see an opportunity and you start building a company. Like you said, you take from zero to one. What? What opportunity did you see to start Fleber? 

Fabricio Miranda 21:05

Yeah, it was my pain. So I was running operations. So my role at HeadClicks was also COO, which is a curse In my life because I'm very organized and I always end up being the operations guy, which is terrible because it's where the hard work is right, and in retail it's even more because we have to deal with China and all the tough part of dealing with that language, time zones, lead times yeah, lead times for supply chain and all of the complexity around supply chain, which even before COVID was already a big thing. My first so yeah, so, anyways, I'm at Hapclix and I'm running operations. I have a team of I think at the peak was like eight people running operations and two people in China, you know, visiting factories and doing the QA process and sourcing, and six people here and we're, you know, managing all the shipments and putting in purchase orders. 

22:08

At a certain point we had 300 containers coming per year, which is a lot of containers right and you have to deal with all the complexity and my first idea was Flexport. Was what Flexport? 

Jared Ward 22:19

does. 

Fabricio Miranda 22:20

So my first idea was when I was calling my freight forwarders and I was like, where's my container? And the freight forwarders I don't know. I'm going to call some people and then two days later they will come back and say oh yeah, you know, your container now is 10 days, you know, from arrival day it was like why didn't you do that Flex for it? 

Jared Ward 22:38

I did. 

Fabricio Miranda 22:47

Because I. So I had the idea and I was like, yes, that's the billion dollar idea. And then I start researching and, and and luckily or unluckily, I think it's luckily because it I didn't waste time a few days later. Uh, there was a an article at um, I think, wall Street Journal, maybe about Flexport. Okay. 

23:00

I was like you know someone did that before me and um and then me, and then I ended up calling them and became a customer and then became friends with Sana, who was one of the co-founders, and Sana was one of the early investors and advisor at Flieber. 

23:17

So all of that goes full circle in the end and then I said, okay, so Flexport already exists. The second big problem is it's terrible planning my inventory. I'm always, every time I'm going to place a purchase order, I'm freaked out. I'm like, oh my God, I'm investing these thousands of dollars in something that I don't have any idea if that's really the best decision. Any idea if that's really the best decision because my systems were also Excel spreadsheets. As 99% of the market, you guys probably also see that all the time. 

23:52

And it was painful and I said you know, there must be something around it. I researched and there were some very unsophisticated products developed by the same unsophisticated people who started selling on Amazon early. So those are people with no business experience and they're developing based on their knowledge. That is limited because they don't have, as you were saying, the education and things like that. And I was like, yeah, there is an opportunity there and I decided to start Fleabag. 

Jared Ward 24:23

So what's the biggest difference between basic Amazon-centric replenishment and forecasting tools and Flieber? Where's the sophistication? 

Fabricio Miranda 24:33

Yeah, amazon. By the way, I hate saying sophistication because I say that a lot, but it's not a good word because it sounds like it's something very special that only very big companies, and it's not the case. That's not what we do. My point there is if you're an Amazon-only tool, you're operating around Amazon's paradigms, and Amazon has a bunch of exclusive paradigms to the way they operate. Amazon is the only one that has an FBA program and you have a huge advertising aspect to Amazon. There's rankings, there's reviews and all of that is very particular to a marketplace and, in Amazon's case, the rules that Amazon has, and there's a bunch of rules on Amazon. So all of these tools, what they try to do is to emulate how Amazon operates, and they're great for Amazon-only sellers and especially for smaller Amazon-only sellers. They're great, they do the job. They substitute Excel many times, but the moment that you are going somewhere else. 

25:41

That's why I say we are tailored for people who are taking it seriously, that don't want to have, like, just an amazon store as a side job. If you're taking it seriously, you will have to go multi-channel eventually. It can be in the beginning, it can be in the future, but you have to go multi-channel. You have to be creative because amazon is, since it's so easy to operate on amazon, it's very competitive and it's a game where you're I think you're doomed to driving your margins down with time, first because of Amazon's rules. Second, because of competition. So you need to expand. You need to expand to other countries, you need to expand to other channels. Once you do that, all those paradigms don't fit anymore. So that's why there's tools that are older than us, that were founded three, four years before us, have been saying that they were going to implement Shopify for five years and they were not able to implement Shopify. 

26:35

Interesting, because it's a different mindset. So we are not going to be just resembling the way Amazon operates. Of course, we have a bunch of things that are Amazon only in our platform, like FBA shipments. We collect the FBA shipments and we have a column on the FBA, on the inbound shipment page, that shows all your POs and TOs. That is only for FBA shipments, and so we have some things that we adapt. But all our mindset is you're building a business and you're building a brand and there's since in the past there was no selling Coca-Cola only on Walmart, right? There's not like a Walmart seller. That doesn't exist. A brand has to sell everywhere they can sell. The only reason why that doesn't happen today is because of complexities of selling your other channels, and we are trying to solve the inventory side of the complexity of selling it's so. 

Jared Ward 27:31

It's so awesome hearing you say these things because it confirms a lot of our thesis. Our thesis is about the, about the forecasting market. So what happens with luminous is, whenever somebody needs a forecasting tool or an inventory planning tool, what Brendan and I always do is we just refer them to somebody we've heard of. So a good example is like Cogsy or Central Commerce or like there's tons of people who what we came to find out those tools would. I'm sure they're great tools if you're just an Amazon-centric brand or like very basic. But I'm sure they're great tools if you're just an Amazon-centric brand or like very basic. But when we would refer people to those inventory planning tools, we found out really fast that it would fall apart really fast if they sold on Shopify and if they sold wholesale and if they did big box retail, then they don't work. 

28:20

So it's cool to hear from you that that's where Flibra is filling that gap. 

Fabricio Miranda 28:25

Inventory complexity is crazy. There's so much complexity around inventory and if you think about retail moving more and more, online, sales go digital, advertising goes digital, the payment goes digital, the customer goes digital, customer success goes digital, everything goes digital, but the inventory is still physical. So inventory will be at the center of all complexities in retail forever. 

Brendon Beebe 28:46

for the future. I'm curious. I remember when we talked the first time you kind of had an initial idea or hypothesis in the market and you pivoted significantly right. Yeah, do you want to explain, kind of yeah, your initial yeah, so we became. 

Fabricio Miranda 29:02

Um, yeah, so we became. We started Flieber because we wanted to democratize retail. Our thesis was selling has become really easy. You open a $35 store and you're selling the next day. You just ship your products to Amazon. You're selling the next day, so it's really easy to sell. 

29:22

But inventory is still the 1950s. As Flexport says, inventory still is the only thing that you still use fax up to today. It's crazy. And you still use bill of lading. When we started bill of lading, which is the document that you use it's kind of the passport of your shipment, a document that you use to clear your customs in other countries so you can import, export that product it had to be physical, so you had to have it shipped by FedEx, a physical document from China so that you could show at the port here the document. You couldn't do that digital, and that's only 10 years ago. Not even 10 years ago. Eight years ago couldn't do that digital, and that's only 10 years ago, not even 10 years ago, eight years ago. So it's a very amateur industry in terms of technology deployment. 

30:19

So my thesis was let's make inventory as easy to solve as sales. But it was so naive I thought it was going to be easy. And so naive because the complexity of inventory. When you start doing so let's assume you sell on Amazon and Amazon you only have to ship your products to FBA, and then you are selling right, and you're selling. You're not selling a lot of products in the beginning, so it's fine. You just buy some products on Alibaba or something and put them in a package sent to Amazon. You're selling. 

30:50

Then you start growing so you have to add SKUs. You cannot grow forever with the single SKU that you launched. And once you start adding SKUs, you start adding different suppliers. So when you start adding different suppliers, potentially in different places in China or different places in Asia or different places in the world it can be a local supplier, for example you add a complexity because now you have to deal with different suppliers. And then you start selling more and you say, okay, so I need to expand internationally because that's the easy path for Amazon. It's going international because it's the same proxy, but in another country, and now you have FBA in two places. And then Amazon starts charging you a lot of money for keeping products on FBA because you have now volume. 

31:36

Now you have to have a 3PL to support these FBA sales. So now you have to replenish your 3PL and you have to transfer from the 3PL to the FBA. And now you decide to start selling on Shopify, start a Shopify store, and now the 3PL is not only storage anymore to the FBA, it's also the fulfillment for the 3PL. You have to take into account the sales that you're going to have on Shopify plus the transfer needs that you're going to have on Amazon, which is a complexity, and now Shopify makes it really easy for you to turn on and off features. So one of the things that you can do on Shopify that are great is the virtual bundles. I don't know if you guys know about virtual bundles, but Shopify, shopify basically, since you are informing Shopify what you have on inventory and you are keeping that inventory in a 3PL, you can say to your Shopify customers that you're selling an emergency kit, for example, that has scissors, pliers and gauze, for example, but in your 3PL you're keeping those products separate, so you don't have to have a specific physical SKU of the product. The SKU is virtual only, and that's very clever. I don't know how people don't do that more often, because it's crazy how much potential that has. You can basically have infinite bundles on Shopify and keep the product separate in your warehouse. But that adds a complexity. Because now, when, when you're gonna replenish a product, you're not only replenishing that individual sales, you have to check on each bundle what is the sale of that bundle and summing up to see how many items you have to replenish. But let's say that on bundle two, you don't have the scissors. You're replenishing pliers, you don't have the scissors, so you're not selling that bundle, not because you don't have the scissors. You're replenishing pliers, you don't have the scissors, so you're not selling that bundle, not because you don't have the pliers, it's because you don't have another product that is the scissors. So complexity Then you decide to sell back orders. 

33:35

Do you know what back orders is? Yeah, so back orders, back orders is another complexity. Because now your inventory is going negative, which is counterintuitive, doesn't exist anywhere. You cannot sell back quarters. On Walmart, for example, if the product is not on the shelf, you're not going to sell it. On Shopify, if the product is not on the shelf, you can still sell it. And now it goes negative. So when you receive the next batch, it's not going to replenish to the full, it's going to discount the pre-sold, and then you accept subscriptions so I can go here, you know, for two hours Then you start doing specialty wholesale. 

34:07

Then you do dropshipping, Then you have to do wholesale. I love. 

Brendon Beebe 34:11

I've gone through this exact same, the exact flow you went through as we were trying to build some sort of basic forecasting. We followed the exact steps We've ran into, like the same, exact. 

Jared Ward 34:20

But what about kids? But what about this Exactly? 

Fabricio Miranda 34:22

yeah, it's, I'm talking about kids, but what about this Exactly? Yeah, I say, I have 100 years of roadmap. 

Jared Ward 34:31

If you give me 100 years, maybe I can give you a tool in the end of the 100 years. So when you talk about the naivete of I'm going to solve inventory, so you're specifically talking about like, wow, this is such a big problem. So then you decide to focus in on okay, just inventory planning. 

Fabricio Miranda 34:45

Yes, exactly. 

Jared Ward 34:48

Two questions. Number one is how do you balance, as a tech founder, keeping your blinders on and staying focused on the vision oh God, this is so hard but also looking at the array of competitors. I mean that there are so many like and you can learn you can learn stuff from them. But how do you balance that? How do you balance being curious on who is solving a good problem in the market and keeping the blinders on and building towards your vision? Yeah, yeah. 

Fabricio Miranda 35:21

So it's really hard. So it's, uh, an exercise that I do every single day and with the team, and I have to. I don't even know how many times I say to the team guys, it's all right, it's a marathon, let's keep focused, because many times we're like a customer calls us and says, hey, you know we don't have this, and everybody gets desperate because we know, of course, we know that we have to have that. We have everything. As I said, we have 100 years of roadmap. It's really unlikely that anyone at this point, after five years of company, is going to tell us something that we don't already know. But it's impossible to implement everything and you have to keep focused. 

35:56

So why inventory planning? First, because I think that's the biggest problem, the biggest in terms of size, and solves a lot of the other problems that come with it. If you solve inventory planning, you're going to purchase better. If you purchase better, you're going to have more efficient inventory. If you have more efficient inventory, you're going to have less problems with the warehouses, less problems with the suppliers. So there's a bunch of things that are side effects of having a better inventory planning and the way that I do to keep focus. It's almost like a mantra. It's almost like we have a very strong conviction of what we're doing and it's a marathon and we're going to fight the marathon and to run the marathon, not try to sprint. And competitors it's funny because, if you look, we were on a list the other day of the I don't know how many 15 or 20 best inventory planning tools and we were the oldest one. No way, that's funny because when we started there were no competitors doing what we're doing. Yeah, so we have. 

36:58

There's companies I don't want to say names because I hate talking about, you know, any bad things about competitors? Everybody has their merit. Talking about any bad things about competitors? Everybody has their merit. So I don't wanna say names. But there were companies that were those in the unsophisticated bucket that I'm talking about at the time that we were founded. But nobody had our vision, the multi-billion dollar vision that we had. And you know, stock out of our stocks generate $1.8 trillion in losses every single year. So that's a multi-billion dollar vision, right, and nobody had the big vision. Nobody had. Like, I was the first one to get VC funding in this segment. Nobody had VC funding. And why did I get VC funding? Because they understood that the problem was huge. I needed a lot of technology to reach some level of success, and it was the first company that we raised capital. I had never raised VC capital in my life. I only raised private equity capital after we were successful. 

Brendon Beebe 37:57

I have a few questions about VC, but first I wanna get. I remember you saying you ran into a problem where customers, regardless of how smart your forecasting became, they didn't want to leave the spreadsheets behind. Yeah, we still have that. How do you, why do you think that is, and do you play into that, or do you try and build it better? 

Fabricio Miranda 38:18

Yeah, that's a great question. We still have this problem. Our biggest competitor, our sole competitor Our spreadsheets, our spreadsheets, our spreadsheets. I'm very close to all the competitors I can be close to. By the way, if you have an inventory planning tool, contact me. I wanna get together and I'm close to all of them, and I'm serious about that. 

38:38

If you talk, you know James from Syrup, adi from Cogsy they're close to me because I don't see them as competitors. As I tell them, we have so much competition from Excel that each time any of us converts a customer into using an inventory planning tool, it's a win for the whole industry. So we should be partners and not competitors at this moment. In the future, we can kill each other when the market is more mature, but now we should be partners. We have to fight against this big beast called Excel. So yeah, we still. We still have this problem. What do you think? 

Brendon Beebe 39:17

forecasting tools do wrong or what are they doing incorrectly that makes it so people can't get off Excel spreadsheets. 

Fabricio Miranda 39:24

I think the problem is because each company since there was no technology in the past each company developed their own processes and systems, so each one has their own way of operating, and when you build a tool, you have to kind of choose a certain way to operate. We're trying to be as flexible as possible, but we still have boundaries, and in Excel you don't. In Excel, basically, you're adding new spreadsheets or new tabs or or new columns or new line rows and um, so you can do whatever you want, and I think people are, um resistant to get to leaving that tailor-made tool that they built with their own heart. Um, and they were still not as good as we should to be able to break that. And that's what I say to my investors too. Why are we not in the tens of thousands of customers in the multi-billion dollar valuation? Because we're still not good enough to convince people to leave their spreadsheets Interesting and go to an inventory planning tool. That's the only way I can see that. How do you? 

Brendon Beebe 40:32

think so. It seems like it's you guys. Maybe it's easy to solve that 90% of use cases, but how do you account, or how do you build a software to account for all the exceptions Exactly? 

Fabricio Miranda 40:44

And more than that. I think each exception is a one customer exception. So we started. We were pushed up market in the beginning. We're trying to go back to the vision of democratizing retail because we started having a lot of the big brands and very few of the smaller ones. My dream is to get like when you get to a million dollars in sales, you start getting complexity. You have to have an inventory planning tool. You cannot survive without one. That's my dream. 

41:11

But we're far from that dream because most of our customers are in the 10s to 20s. We have customers above $100 million in sales, which is completely out of our initial focus as a company. But we were pushed up market exactly because all of these customers have the same problem. They were also using Excel spreadsheets and they would call us and say, hey, I want a demo and we'll show the demo. And they would say, hey, but you don't have this and would say, okay, yeah, we're gonna build if you need it. Probably other people also need it. But no, and then we we got to a frankenstein type of product that has endless features and each of these endless features are used by one single customer or a couple of single customers? 

41:56

So yeah, I hear you, it's impossible. Honestly, I don't know the answer. So that's my answer to you Trying to figure it out, trying to figure it out. 

Brendon Beebe 42:03

Yeah, I think that's oh go ahead. 

Jared Ward 42:06

I'm so curious about this just because, obviously, luminous is in the system of record, the ERP, if you will. That's what we're attacking. We want to purpose build an ERP for the modern e-commerce company, so you must have had issues sitting on top of other ERPs that weren't purpose built for e-commerce. What's been your experience with that? Oh yeah, because Flieber has to sit on top of other ERPs that weren't purpose-built for e-commerce. What's been your experience with that, because Flieber has to sit on top of a system of record. 

Fabricio Miranda 42:36

Yeah, kind of. So people don't have to have an ERP to use Flieber, they have to have access to the data that we need. So sales data, we can go directly to the sales channel To Shopify Amazon. Shopify Amazon et cetera, inventory is a little trickier. We built, I think we had, 12 integrations with 3PLs and the more consolidation in this segment, the better for us, because then you have fewer options and you can easily connect to them and POs, tos we connect with, like Anvil, for example, which is a production management system. 

43:08

So, as long as we have those three, because we don't deal with the financial part of it, that's outside of what we're solving today. So we don't necessarily have to be on top of a NRP, but we are on top of a NRP in a bunch of cases. 

Jared Ward 43:24

Do you wish, though, do you wish? 

Fabricio Miranda 43:27

a tool would come in and take over the market clean all the data aggregate everything. 

Jared Ward 43:31

Of course, yeah, clean all the data aggregate everything Of course, yeah, come on, that would be amazing. 

Fabricio Miranda 43:34

My main problem today is integration. So the less I have to integrate with different tools, the better it is right. So, of course, if you guys can dominate the market, aggregate everything and give me the aggregated data, you know we're game. 

Brendon Beebe 43:52

So it's easy. How do you, since 7, recently just bought Inventoro. I wonder if you had any thoughts or insight there. 

Fabricio Miranda 44:00

Yeah, and then before I don't remember which one bought Inventory Planner, so Inventory. 

Jared Ward 44:04

Planner is the only. Yes, I think that's the Inventory Planner. What's that? Bright Pearl bought Inventory. 

Fabricio Miranda 44:08 

Planner. 

Brendon Beebe 44:09

Yes, what's that? 

Fabricio Miranda 44:09

Bright Pearl bought Inventory Planner. Yes, yes, but it was. I think. You know. I don't know the whole history, but I think Bright Pearl bought the company that bought Inventory Planner. 

44:16

But I might be wrong, but anyways, you know, I think there is a. It's one thing that is happening in the market more and more is the verticalization, right. So all these inventory management tools like SIN7, bripearl they have tools to manage your inventory. They're thinking about control present. They're not thinking about decisions, future right, and they need to have something that is about the future to aggregate value to their offering. So I think it's natural. It's natural that a bunch of those companies are going to be consolidated into more vertical tools, and it's one of my thesis also. I think you know a tool like yours and us, and you know even Envil, and all these tools combined they have a huge value and I think that's how the market is going to evolve too. 

45:18

I don't think we're going to have an inventory planning tool for the rest of our lives. This is a beginning of a process, but there will be consolidation of these tools in the market and, honestly, what I dream about is the day that we have enough volume, and I think we can only get volume with these tools combined, because, at the end of the day, you know, Flieber is almost like a feature inside of a bigger system, right, and Envi was almost like a feature inside of a bigger system. And what you guys are building without a planning part, without a planning part, without a PO, you know, a robust PO solution is also almost like a feature inside of a bigger system. And when you combine all of that and you gain scale, then you have a huge business. Because then you have it's a financing business, it's an insurance business and I have the whole modeling for insurance. My dream, you know. I'll say publicly and there's no problem with that, because ideas are worth nothing. 

46:20

But my dream is to have a stock out insurance, something that I can come to the customers and say hey, if you use our system, you're not going to run out of stock, and if you run out of stock we're going to cover your losses. And then you have an insurance policy for that. And I modeled that, and that is 10 times bigger than the technology side of it. So those are the things that you can evolve to with time. But we have to get there right. So that's why we need to focus day after day, building little by little. Focus on Marathon. 

Brendon Beebe 46:53

Do you think a lot of these dreams are killed because of the acquisitions? So I can see a world. Yeah, you're bought up, bundled and I totally think so. 

Fabricio Miranda 47:02

that's why I'm trying to position ourselves to be the one who buys the others, and because I want to build this. Yeah, right, but yeah for sure they are, especially in the case of 3PL tools, because they are a lot more narrow-minded than what we're building here, both you guys and us. So, yeah, I think they're going to kill inventory. They have already, honestly, inventory planner. The feedback I get from customers coming from inventory planner is that they kill them. Yeah, it's a different vision, right. 

Jared Ward 47:33

That happens all the time, though. This is something that Bryn and I always see, and you have a founder with a strong vision. He grows the business to two, three, five, 10 million in ARR. So you know, clearly he hasn't achieved his vision, but they get gobbled up. Yeah, clearly he hasn't achieved his vision, but they get gobbled up gobbled up by QuickBooks or by Oracle or by Insert. Extensive 3PL Central. Why is that not going to happen to you? 

Fabricio Miranda 48:02

It might, I don't know. I'm trying to survive against that and I talked to a lot of private equity companies about that. I really think there is a play, a consolidation play. I think people who are building you know these carbon six and and you know this type of SaaS aggregator. My vision is that they get one thing wrong is that the real value is in the integration of the systems. And if you just acquire a bunch of different systems, yes, you have some potential of gaining with scale because you can sell to the same audience. So as one sales team, you're selling almost like a menu of options, but it's weak. I think the real strong one is when you have the workflow integration between the systems. And now whoever is using this part of the tool and just turns on the second part of the tool has immediate gains by having that combined. Like we are almost entrenched with Envil. 

49:05

It's crazy, because those two systems together are very powerful. Because in Flieber you're making the purchase decision or transfer decision. In the case of purchase, you need to send that to a supplier and as soon as you make that and if you were using both Envil and Flieber you just push a button and it goes to Envil and we even have ERP going to ERP for approval. But anyways, let's forget that part it goes to Anvil and Anvil now takes over that PO and is communicating with the suppliers and whenever there's a change, immediately, in literally two seconds, because it's a webhook that we built in two seconds, that change is reflected inside of Flieber. So, for example, let's assume you have a delay In two seconds, that delay is reflected inside of Flieber. So, for example, let's assume you have a delay In two seconds, that delay is going to show up in Flieber and it's going to raise an alert because now you're probably going to have a stock out because of that delay. 

Brendon Beebe 50:01

How powerful is that right? So it's the deepness of the integration and how well, it talks together. 

Jared Ward 50:07

Yeah, it's the workflow and the specificity with Anvil, because Anvil grabs all of that data Exactly. Which is very relevant for Flieber. 

Fabricio Miranda 50:14

Exactly, and we have that with Flexport also, where whenever a shipment is in, flexport is being managed by Flexport. Same thing happens. If there's a delay or anything, it reflects immediately in Flieber, and then we understand if that is going to generate a problem and we pop up an alert for the customers and the customer now has visibility of something that, honestly, they would probably not have before they run out of stock, and if they had, you would be much closer to the stock out, so they could not do anything. 

50:43

So yeah, so I think that is what is powerful in my vision. 

Jared Ward 50:46

So last question right here, because we're out of time what do you think is the future, brendan, and I talk about this all the time um, ai is this buzzword it's. It's really exciting seeing chat, gbt and and all of their updates. It's really difficult, though, to because, with ai, there has to be a specific use case for it to make sense. Like, technically, ai could do anything, but what do you think is the use case in supply chain that makes the most sense? So, and like isolate a specific use case where you think AI is going to take over. 

Fabricio Miranda 51:22

I'm very critical of the way that people are approaching AI in supply chain. I think the problem that people have today is that they are falling for this buzz and they honestly don't know what AI is most of the people and if we had two more hours we could talk about that, because I have, you know, advisors, ai advisors, ai specific advisors trying to explain to me all these crazy things that are happening. But the fact is that AI today but the fact is that AI today not today forever will depend on the quality of the data. And if you're doing an AI, for example, for a legal software, you're feeding the AI with the legal results of all the legal processes and that is the reality In retail. It's one of the only businesses I cannot think of a second one that the data is intrinsically wrong. So, for example, you get the real data of your sales it's the real, it's stamped, it went through you know luminous, and it's stamped, approved and you feed that into an AI. You still have stock outs in that data. So the AI is not gonna understand that that is a stockout if it doesn't have the context to understand that that is a stockout. So it's going to project a new stockout in the future. You can have the most powerful algorithm and you feed them a data with stockouts. It's going to predict another stockout, at least if you don't have the rest of the data that is needed to give it the context that it needs. 

52:53

And then you had an influencer campaign, for example, where you had a bump in sales. You had no change in inventory, no change in price. Suddenly products start selling more. Is that a new trend? Are you going to sell at that level? For how long are you gonna sell at that level? So the data is intrinsically wrong. It's bad data by nature. 

Brendon Beebe 53:12

Meaning you never have 100% context of the world Exactly. 

Fabricio Miranda 53:15

Yeah, yeah. So I think I'm, at this moment, completely obsessed by what I call data contextualization, which is, how do you get all that data and how do you pre-process that data before you feed the AI models? You pre-process that data so that you can solve for those anomalies, give the context needed for that data and then you can run AI through that data. So, yeah, and I think, in short, I don't think AI works the way it's being applied. I think a lot of people are claiming they have AI when they don't. A lot of people don't know what AI is and we need to work with the data before AI. So in my dream, I know that we're running out of time and I can talk here forever, but in my dream, every company starts the day by tagging and giving context to what happened yesterday. So that would be my dream Because if you do that consistently, you are making the data have the context needed for AI models to then take over and do what they can do best, which is dealing with a bunch of data. 

Brendon Beebe 54:28

Interesting. So in a perfect world where you say AI would be able to identify anomalies and prompt you for the context behind that, yes, and that's what we're building at the moment with AI. That's really cool. 

Jared Ward 54:40

My excitement comes from when you have all the context and the supply chain data. A very interesting use case to me is say you have an AI assistant this imaginary world. Say you have an ai assistant um, this imaginary world. So you have an ai assistant. They have the contacts, they have clean data. Imagine you get a delay from your factory in china or delay from the freight forwarder and say you're, you're connected to everything, you're connected to all of your channels on amazon shopify. How cool would it be if you could raise the price to slow down sales velocity, like even just one small use case like that. How amazing would that be. But yeah, you have to have all the context. 

Fabricio Miranda 55:24

And I talked to my co-founders at Quartile about that, because Quartile was perfect for that. If we combine both systems, when we're ready to have that, fleber is the one telling quartile what are the boundaries for their advertising investment yeah so now you're not investing all this money in advertising, blind to the fact that you're going to run out of stock two weeks from today. Yeah, right, so that's huge. That's my, also my, dream, so, and I talk about this too. 

Jared Ward 55:50

There's like it with supply chain data there's too many layers of human touch points, or I guess you could say context there's too many layers of context yeah like there's the freight forwarder, there's the factory, there's the, there's your um advertising platforms, there's all of your different channels, there's your three p. So there's too many layers. So as builders, we need to isolate very specific use cases where we can just go through one layer of context and apply it, so I'm excited to see what we all end up doing and what actually works. 

Fabricio Miranda 56:22

Yeah, me too. It's tough, but I think you know the world needs crazy people as us to solve the tough problems. 

Jared Ward 56:34

Well, anyways, thanks for coming on for bco. That was a fun conversation. Hopefully you guys get some value out of that. 

Fabricio Miranda 56:38

Oh yeah, thank you so much. It was great, you know, if we had 10 hours. 

Brendon Beebe 56:40

I think that we would be speaking for 10 hours, yeah yeah, okay, all right, thanks, guys see ya.