ProcureTechSTARS with Martin Rand, CEO and co-founder of Pactum, an AI-based system that helps global companies to automatically offer personalized, commercial negotiations on a massive scale.
During the conversation, Martin shared his thoughts on ubiquity, passion, increasing the pie, remote advantage, tradeable ESG and sailing…
1. What’s Pactum’s mission?
Pactum’s mission is to let the world know that negotiations create value and technology can bring value to everyone.
Negotiations is a new area associated with technology – we welcome everyone to be involved and to educate the market on how negotiation automation can create value. It is also interesting to note that our approach to negotiations is fundamentally different from any kind of bargaining or sending emails with price requests or auctioning options, because our negotiations expand the pie.
“At Pactum, we bring as many negotiable terms on the table as possible. This allows every trade to create value for both sides, and expands the whole pie.”
2. What have been the most significant decisions in the Pactum journey so far?
I believe one of the most significant and scariest decisions was when we focused only on Forbes Global 2000 companies, who have over $5 billion in revenue. It’s not easy to deal with them, especially as a small company that had just started! We took that decision, and it was a hard path but definitely the right one.
“I think people don’t realise that Fortune 500 companies are responsible for 66% of the US economy. These companies are enormous, and every action we take makes the world a better place, because we’re generating value for both sides.”
Another significant decision is that we didn’t become a platform. We decided to focus on this narrow area of negotiations, thus we’re not competing with anyone.
“We’re creating value for existing platforms, and we’re integrating with them.”
The biggest milestone was when one of our first vendors spoke with a bot: they felt that the technology provided ‘humanly’ feedback. He felt like the bot listened to him, was considerate towards him, and really polite. It was then that we realized that a machine can negotiate with humans!
3. What do you look for in the perfect customer?
Besides the company’s size, we look for complex, large and fast-moving deals, and preferably processes mainly run by humans, or areas that are neglected because procurement teams aren’t big enough to handle all of the vendors, including the tail end. That’s why we’re working with companies like Walmart and Maersk, and not necessarily tech companies.
“In tech companies, algorithms already run deals, which means that any improvement Pactum makes is relatively marginal, compared to if the whole process is either run by people or unmanaged.”
4. What are the foundations of a great team?
We are big fans of diversity because we’ve seen it in our teams as well. Getting people from different backgrounds, educational levels and industries together makes a great and unique team. Of course, passion is also important.
“Hire for attitude and passion, and train for skill is what they say, and I think it’s true!“
Growth is important because as a team grows, people specialise in different areas. This enables us to become more efficient in scaling and to get to the same level of footprint inside an enterprise. We need to be very efficient because the companies we’re dealing with are huge, with revenue around a trillion dollars.
5. As we emerge from COVID what will you be doing differently?
Pactum was forged in the fire pits of COVID, and we became a first remote company. We only have one office in Estonia, but we hire people from all over the US too. This works because many people these days don’t want to come back to the office; some of our team have said they joined Pactum because other companies are asking everyone to come back.
“COVID brought a lot of disaster to the world, but it also brought a lot of efficiencies in many ways, and we definitely would like to keep those in place.”
6. What is Pactum’s vision for the future?
Our vision is that there will be a day when Pactum‘s autonomous negotiation will get you a better deal: you can be an enterprise, an employee in an enterprise or even a consumer shopping at Walmart.
“Ubiquity is our vision, and negotiations are the underlying value to any dollar that has been created.”
We also want to be widely applicable, and in the future, we want to expand into selling negotiations.
We are now mainly negotiating buying, but why not selling? Buying and selling is generally what most big companies do. Once we start negotiating both processes, it would enable us to get the technology to an even more abstract level, like coming up with category strategies and then negotiating them.
7. How are you doing good for the planet?
ESG points are becoming more and more tradable terms in a negotiation. These allow enterprises to match vendors against ESG goals, or filter them based on their carbon footprint, which we are already witnessing with some of our customers.
“In the apparel industry specifically, ESG points are always top of their mind, and these points are already included into negotiations. Vendors can see that if they do good for the world, they are actually getting rewarded for that by getting a good deal.”
INSTANT MARTIN INSPIRATION
1. What is your favourite book?
War and Peace by Leo Tolstoy has some great leadership advice.
Interestingly enough, some of the generals who were more hesitant became more successful at the end of the day, because they brought more input and were able to be more flexible. Another thought from there is that leaders should not be under the illusion that they can control complex processes. They can only nudge processes towards one or the other direction.
2. Who is your favourite inspirational leader?
I always struggle when answering this question. Many leaders come to mind, and every one of them has great things as well as some downsides.
“Success is unique, and I believe everyone picks the best pieces to create that unique mixture in themselves.”
3. What is your favourite or piece of technology?
I love sailing, so my favourite app is Navionics.
The world is so complex with the wind, deviations and definitions like drift, weight and balance. Navionics just crunches through the data and provides you with a line where to go. Easy and simple: I think this is what technology is made for!
4. What is your favourite cocktail?
An old Fashioned. It’s a great starter for the evening because at dinner time, you want sugar and alcohol, and this drink has an abundance of them both!
5. What’s your favourite way to celebrate a success?
Raising a glass with my teammates! We celebrate together, and that’s the best way.
KEY TAKEAWAYS
Negotiations allow trade to create value for both sides.
Diversity and passion are the foundations of a great team…hire for attitude and passion, and train for skills.
COVID brought disaster as well as the necessity for new and better ways of working.
Leaders should not be under the illusion that they can control complex processes. They can only nudge processes towards one or the other direction.
Autonomous negotiations can provide a ubiquitous, democratic and human like experience
Success is unique, everyone picks the best leadership traits and behaviours to create that unique mixture in themselves.
Technology is ideally made to make the complex world easy and simple.
About Pactum
Pactum is an AI-based system that helps global companies to automatically offer personalized, commercial negotiations on a massive scale. The system adds value and saves time for both the Pactum client and their negotiation partner by aligning their values to determine win-win agreements via an easy-to-use chat interface that implements best-practice negotiation strategies. The company is based in Mountain View with engineering and operations in Estonia.
About ProcureTechSTARS
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).
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