ProcureTechSTARS with Kevin Frechette, Co-founder and CEO of Fairmarkit, an autonomous sourcing platform that empowers organizations and helps manage Tail Spend.
During the conversation, Kevin shared his thoughts on data science, diversity, low code / no code, trust, 100% customer retention, work/life harmony and Tesla.
1. What’s Fairmarkit’s mission?
Fairmarkit is revolutionising the way all organisations buy and sell. We are making it fair and easy for all organisations to work together by removing barriers through data and automation to help businesses of all sizes find value in every transaction.
It has blown our minds how convoluted the process is for both buyers and suppliers, and how it throws up different walls for organisations to work with big companies, which then removes a lot of diverse suppliers, local businesses and even sustainable suppliers.
“In order for these types of suppliers to work with bigger companies, you need to spend a ton of time and effort on resources you don’t have.”
If we can bring in a platform that does it intelligently and in an automated way by leveraging their data, then we can bring down the barriers and create a truly level playing field for everyone to compete and do business together.
What makes us unique is our focus on automating Tail Spend. This is where the majority of transactions are for an organisation, yet is typically the biggest black hole.
“Barriers are not limited to technical ones. They could be political, or that their status quo is to always to go to the same one or two suppliers. We’re helping organisations with hundreds of thousands of transactions, and it’s a really cool ability to influence that spend span that hasn’t been influenced before. It’s creating a level playing field.”
The second thing that sets us apart is our ability to easily integrate with all the major procurement providers. We can have a massive impact without having to do any major change management for thousands of employees. In a matter of a few weeks, procurement can influence sourcing within existing processes in a low touch or no touch way. Lastly, our AI- and ML-powered supplier recommendation is different from anything else in this space. We spent the last four and a half years investing a ton of time and money into our data science team, to intelligently understand what people are trying to buy, both from structured data and unstructured data sources. After matching these freeform requisitions against UNSPSC codes, we can determine what suppliers from their database and our marketplace can supply it, and most importantly, we can rank them based on how they performed in the past–maybe they’re the fastest to bid, they’re the lowest price, or they’re a diverse/sustainable supplier. This way, we can ensure that the right suppliers are invited. Part of that is just automating the entire process, so we can recommend suppliers, source out and auto award. That’s the journey to autonomous sourcing that a lot of our customers are on.
2. What have been the most significant decisions and milestones in the Fairmarkit journey so far?
The biggest milestone is to start.
“I think a barrier for a lot of people is giving it a go”
Six months into starting, the first significant decision we made is our pivot to focus on tail spend. Even though that wasn’t our original idea, we saw an opportunity to optimise the space because it included so many transactions and suppliers, which means a lot of data. Billions of dollars are spent by organisations, and trillions if you look at the entire market.
The next big milestone was making a commitment about a year and a half in to double down on data science. We knew that our goal was not to create more buttons for procurement to touch–it was actually to reduce them.
“The idea of ‘the best UI is no UI’ works if you build trust and add intelligence to a process.”
Along the way, on the Inc. 5000, we got ranked 159 across the US.
“We’re the 4th fastest growing company in Boston. And we are the number one in procurement supply chain on the list. This demonstrates true growth.”
Another inflection point was hitting best-in-class gross retention. Once we had our first quarter when we were at scale and had a 100% growth retention rate, it showed that we were going beyond kicking off projects with customers, but adding value. The fact that our customers are not just staying with us but expanding out is what it’s all about.
“You can pump up a company with a ton of capital and you can pump sales and marketing and serve customers, but if you’re not delivering value, then you’re just fabricating growth as opposed to leaning in, listening, and working with customers. I think that providing value is the most important thing.”
3. What do you look for in the perfect customer?
Our Customer Success team has a very regimented way to say what our ideal customer is. For me, it’s the team.
First of all, is it a team that can drive change, or wants to drive change? Is it a team that has that chip on their shoulder to say, ‘let’s shake up the status quo’?
The second factor is the culture of the organisation. Is it a culture that has been able to adopt new technology? Is it a culture where they can explain the why and then that drives the overall project?
“I would say a very big factor, not specific to Fairmarkit, but for most companies, is what are the company goals? What are the OKRs for the organisation? And how do we align with strategic initiatives? Because no matter what size your project is, if you don’t align to strategic initiatives, it’s very difficult to have a seat at the table with C-suite.”
From a tactical perspective, procurement maturity is an interesting one for us. A company with centralised or hybrid structures, with a good rate of PO compliance, will see a lot of value because that enables us to turn on more automation and integrate quickly. If a company is fully decentralised where they haven’t set up a P2P yet, that’s probably not going to be the best fit for us right now due to it being a slower ramp. We’re all about getting customers seeing value as quickly as possible.
4. What are the foundations of a great team?
There are two sides to this answer. One is the team that we have today, second is what we look for when we hire. The common foundation is our core values.
At Fairmarkit, our core values will change over time because our culture and our company will change. But we understand that growing a company is really hard: there’s going to be twists, turns and course corrections.
Our vision is to find people that are able to work together and operate with our core values in mind, which are to be super positive, be an A+ player, be fair and be team customer, and operate with these values through good and tough times. That is what has made us successful to this point, and we’re still working on it.
The other one would be trust. If people don’t trust each other to act in the whole company’s best interest, or be accountable for what they say they’re going to do, then everything else falls apart. This is a work in progress, but you find teammates that want to stamp their name on the company, and attack challenges that are really hard, which motivates everyone else around them.
“They see someone upping their game, so they want to level-up theirs. Not because they want to do better than them, rather it’s because they want what’s best for everyone, including our customers and the industry.”
5. As we emerge from COVID what will you be doing differently?
Similar to most companies, we started fully remote, which is awesome because we can hire the best people for the role, anywhere. We work to provide more flexibility because working from home is a two-sided coin.
One way, you have flexibility and freedom to work how you want and get your job done. The other side is sometimes it actually creates more work for people, where they sit down at their desk without distractions and work crazy hours.
At Fairmarkit, we’re always trying to figure out from a culture perspective, how do we help people keep a work life harmony, and how do we provide that through not just leading by example, but also through the structure to enable that. It’s not easy, so we’re trying to stay very conscious of it.
“We do a lot of surveys, and we make sure that every week we’re talking about how we’re getting better. What we’ve learned is you’re never going to get it perfect, but as long as you’re talking about it and you’re taking steps in the right direction, then that to me is us doing right by the company and our people.”
6. What is the vision for Fairmarkit? What does great look like in five years?
In the future state, we’re the number one B2B marketplace, which means that in our view, we deliver an incredible end-user experience on both the buyer and the supplier side. We enable true autonomous sourcing for procurement teams and autonomous selling for the supplier side. This would help us generate a massive data asset that can be leveraged in several different ways to help our customers, the suppliers and the overall market.
“We’re not trying to create a P2P or a finance solution, we are heavily focused on driving automation across the marketplace. Like in our mission statement, Fairmarkit is reducing barriers so you can have that level playing field.”
In a way, this doesn’t require a lot of manual touch, because the trend we’re seeing is that more of the responsibility is getting pushed out to end users. Instead, procurement or sales teams are giving them the controls and configurations to say ‘How do you want to buy? How do you want to sell? What do you want to optimise?’.
For us, autonomous sourcing is a journey, and it won’t happen overnight. From a tactical perspective, autonomous sourcing is leveraging intelligence to take a request, bundle it with other purchases, find suppliers, manage bid collection, and award the events all without manual intervention. The ability to fully buy, optimise a purchase, keep improving the engine based on market behaviours is what we consider autonomous sourcing.
It’s very similar on the selling side–it’s giving them integration and intelligence for dynamic pricing to set configurations.
Let’s take Tesla as an example with autonomous driving.
You don’t buy a Tesla and immediately put your family and your pets in the car, and go on the highway with your eyes closed. You don’t do it because the trust isn’t there. Instead, it happens gradually–you buy your Tesla, then parallel park, then you go on back roads. Eventually, you’re comfortable having less hands on the wheel, but it doesn’t happen overnight.
“It’s less about the tech, it’s more about the trust, the adoption and the change management over time, which you can’t rush but you need to push people.”
7. How are you doing good for the planet?
Doing the right thing is about making ethical decisions at scale–whether it’s DEI, sustainability, or otherwise.
I believe Fairmarkit is uniquely positioned to help out. We’re taking supplier diversity and sustainability a step further. A lot of our customers have a checkbox for their large RFPs with questions such as: ‘Did you invite a diverse supplier?’, ‘Did you invite a sustainable supplier?’, which is a step in the right direction. The challenge that we’ve seen with almost every company out there is regarding every purchase that doesn’t go through a formal RFP, which might be 50% or 70% of purchases each year. The end user keeps going to the same one or two suppliers, and it’s not their fault. They don’t have the information to know efficiently who they should invite.
With our recommendation engine, we can actually toggle our algorithm to recommend diverse and sustainable suppliers, and give the end user the information needed to make an intelligent decision around who they want to work with. We are not only helping to include them in sourcing events, but also giving direction on how and when to award business to them.
Usually, people think it’s polarising. They think that if they chose to work with a diverse or sustainable supplier they have to pay more. Our data shows the exact opposite.
“Diverse, sustainable suppliers can deliver incredible pricing as well as incredible service and lead times. They just typically aren’t given the seat at the table for this tail spend.”
. That’s why we created Fairmarkit, and we’re uniquely positioned for it. We think that’s the right thing to do, not just from a planet perspective but also from a business one.
INSTANT KEVIN INSPIRATION
1. What is your favourite book or blog?
The hard thing about hard things by Ben Horowitz. I’ve read it multiple times. It’s an incredibly good and relatable perspective on building a company, where there’s no right answer. Every journey is different.
2. Who is your favourite inspirational leader?
Frank Slootman. He was CEO of Data Domain, ServiceNow, and now Snowflake. I’d recommend anyone to read his book, Amp It Up. It’s awesome! It’s this whole mentality that his leadership is all about charging forward, like a wartime CEO at all times. He does a great job diving into the mentality that you can instill across the whole organisation. To have people that are marching in the same direction and towards common goals, it’s a very non-stop thing. Similar to us founders having a positive urgency mentality, where you’ll always have that chip on your shoulder and be charging forward which I love.
3. What is your favourite piece of technology?
I’ve 2: first is the SNOO, for anyone who has kids. It shakes them a bit when they cry and helps them get to sleep – that’s been a great one!
Second, I love Peloton. It helps me out from a business perspective because it allows me to stay level and balanced so I’m not just sitting at my computer all day.
4. What’s your favourite way to celebrate a success?
What I enjoy most is having personal conversations with the individuals that have really driven the company’s success and are embedded in it. I love it; getting their perspectives and then looking forward. I love watching those people promote success and take pride in their hard work. It’s a blast!
5. What is your favourite cocktail?
1. If you don’t align to strategic initiatives, it’s very difficult to have a seat at the table with the C-suite
2. Leveraging data can help create a truly level playing field for all kinds of suppliers.
3. Being diverse and sustainable doesn’t stop suppliers from delivering great value, good prices and lead time.
4. ‘The best UI is no UI’, which works if you build trust and add intelligence to a process.
5. The key to a good customer retention rate is to deliver value fast.
6. Double down on data science.
7. Create a culture of trust, transparency and a ‘charge-forward’ mentality.
Fairmarkit is the intelligent sourcing platform that empowers organizations to more efficiently purchase the goods and services they need. By equipping procurement and supply-chain teams with automation and data, Fairmarkit promotes competitive bidding while reducing manual work within existing processes. Leveraged by innovative procurement departments across a number of industries, such as Univision, ServiceNow, and the MBTA, Fairmarkit aims to revolutionize the way organizations make purchases.
Our industry is moving forward faster and faster, empowered by innovative, progressive digital procurement solutions created and led by inspiring teams. ProcureTechSTARS are the digital procurement company CEOs and Founders that are leading the change, they are entrepreneurs, engineers and architects collaborating to transform procurement and the enterprise. In an open conversation with these leaders, Lance Younger will be discussing the highs and lows of building the future now, the challenges they’ve faced, their perspective on accelerators and hot topics, and what keeps getting them up in the morning (and keeps them up at night).