The Power of Data Podcast
Episode 72: Building International Networks Through Data
Guest: Vivek Ramachandran, Chief Executive Officer, Serai
Interviewer: Nick White, Head of D&B Accelerate, Dun & Bradstreet
Welcome to The Power of Data Podcast. I'm extremely excited to be hosting today. I'm Nick White, and I head up the D&B Accelerate program. I'd like to welcome Vivek Ramachandran, Chief Executive Officer at one of the D&B Accelerate partners, Serai. Hey, Vivek.
Hey Nick, glad to be here.
Great. You've had an impressive career over close to 20 years in the banking industry, working for some of the world's largest institutions before becoming CEO at Serai. For the benefit of the audience. Do you mind sharing a bit about your background and your experience today?
I was hoping to pass off for someone who hasn't worked for 20 years, I'm not sure that's in fashion anymore. But I started my career in management consulting after an academic start in economics. And I moved into banking initially with Lloyds Bank, and Barclays before I ended up at HSBC, and most of my career in banking has either been in strategy or commercial banking, and most specifically in transaction banking. So most recently at HSBC, I ran the global trade and receivables finance product based out of London before the idea of Serai came up and I moved across. But I think one common theme I would highlight is I get itchy feet quite quickly, I like to try new things. Banking has given me the opportunity to move across jobs move across countries and that's been a privilege. It hasn't felt like 20 years, for sure.
Amazing. And so I know you were based here in London for a while, and you're now in Hong Kong, correct?
Amazing. Well, great, thank you for the introduction. Now let's talk about Serai, an organisation that I've got to know well over the past 18 months. For some of our listeners, though, Serai will be new. So for their benefit, do you mind giving us a bit of a background as to how the company came to exist and what drew you to the opportunity in the first place?
Serai is a business to business platform, we help companies build relationships through the exchange of data with each other and through accessing information on each other. And the word Serai itself comes from the old Caravanserai. They were inns along the Silk Road where traders will stop, they were gateways to international trade. And what we think we're building is the modern equivalent of the old Caravanserai. As I mentioned, I was at HSBC, and I ran the global trade finance business out of London. What was amply evident is how companies connect and build relationships did not feel like it does today, it doesn't feel like 2020-2021, it felt like 1980. Business relationships, unfortunately, hinge on who you know, it depends on people jumping on planes, and traveling all over the world to make new relationships. And it depends on proprietary databases with information not being shared over the ecosystem. That was the origins of Serai. HSBC is a trade bank; HSBC was established to facilitate relationships between the East and the West, what we're trying to do is take that concept and take it beyond banking. We help businesses connect, find out more about each other, and build relationships. When we decided to set it up, we proposed to set it up in Hong Kong, for two big reasons. It's obviously HSBC’s home as an operational hub. But more importantly, Asia is where the suppliers are based. And Hong Kong is an international trading hub. Serai is slightly over two years old set up in the start of 2019 and the platform itself has been live for around 16 months.
Great and Vivek, in the early days of the business, have you focused on any specific industries as a priority area?
That was a strategic call we made which has to start with one industry as opposed to start by geography. And we decided to choose an industry because supply chains tend to be vertically integrated so we started with the clothing and garment sector. And we chose clothing and garments and apparel for three big factors. It's a big industry is almost half a trillion dollars of trade internationally. And it's an industry that's going through a huge change in supply chains, where China has dominated exports in the industry. And that domination is dwindling, or at least going down as China focuses more on the domestic market and moves up the value chain. The second big factor, it’s an industry with a pretty low digital quotient. It's not an industry that has embraced new technology that's embraced the use of data; there's a huge opportunity to digitize and move the industry forward. And thirdly, and finally, it's an industry that for good or bad reasons, has had to embrace transparency. Transparency, be its labor issues, be it sustainability issues, be it employee safety. And that transparency has resulted in a lot more openness about where the goods are being sourced from and who's in people's supply chains. So we started with that industry and for now, we are still focused on one industry.
I think it's a great focus area. One of my observations of the clothing and garment industry is the huge variations in sophistication, complexity, size and scale of business, is that what you've seen in the first kind of 18 months of operating as an organization?
Absolutely right Nick. It's not a homogenous industry by any measure. Manufacturers differ hugely in terms of capabilities in terms of practices, and as do plans. But what is quite clear is anyone who's going to make it through 2021 and come out of the crisis stronger than they went into it is going to have a few things in common. The survivors are likely to be people who are transparent about their supply chains, and confident about the supply chains. The survivors are likely to be people who have embraced technology and digital tools. So once the level of homogeneity was quite limited coming into COVID, the demand shock, as well as other factors that have come into play, be it a push for transparency, and a change in the landscape means there will be some common themes coming out that characterizes the winners in the next three to five years.
And do you see that the pandemic, the dreaded pandemic has sped up that transformation of the sector, or is it just meant that there's more opportunity to make those changes today?
I remember talking to the team in 2019 just when we were launching the platform and telling them we have to remember the competition isn't another platform. The competition for us is the status quo inertia, its clients, I would talk to who would say, “I know things aren't perfect, but they just about fine. They work as they are, it's not quite broken, I'm not sure broken enough for us to fix it”. The one silver lining coming out of the pandemic is it's shaken people out of that lethargy about not wanting to change, it's prompted people to act and the industry to find new ways to do things. Sourcing executives would spend weeks on end on planes jumping from one city to another visiting one vendor after the next walking factory flows, touching the garments and meeting people. It was an industry that hinged on physical interaction, that clearly has not been possible for the last year. And it's highly likely even in a world where travel goes back to anything close to what it was before the pandemic, people are not going to be keen to jump onto planes and go to six cities in two weeks and walk factory flows. So I think the pandemic has changed behaviors, and it shaken the industry up and obviously in most cases, the change has been bad because of the demand shock. But in this one instance, the change has actually been much needed in the industry.
I guess the key thing that I see now in 2021 and beyond is the reliance on data taking the place of that human interaction. Is that something that you see Vivek in your interactions today, through the Serai platform?
The origin of Serai was hinged on that core hypothesis, which is the market can be made more efficient by using data that exists in the ecosystem. I'm an economist by background, and it was very clear the market’s inception and the inefficiency was due to either informational asymmetries or the data just didn't exist. That was the core thesis upon which we set Serai up, which is using data to make the market more efficient to remove asymmetries to remove frictions. And absolutely, I think coming out of the last 1218 months, and as we go into 2022, we will see not just the brands, because in the B2C end data has been used quite a lot. But for B2B relationships, data determining decisions, there's always going to be an element of physical contact, you're going to have to touch a piece of garment, you're going to have to feel the fabric. And at some point, you want to shake hands and actually meet your vendors. But there's a huge amount of interactions that don't require physical contact. And I think that's where these would become so powerful.
Great answer. Let's talk a little bit more about the Serai offer in itself, what makes your platform different to other B2B sourcing offerings?
The first big thing is we're not just a sourcing platform. The vision for Serai is no matter who you're doing business with, or no matter who you're looking to do business with your first port of call would be to check them out on Serai. Because what we do is we put together the best available information on a company. That could be information either provided by the company itself, or it could be information provided by a third party like Dun & Bradstreet, who gives you a risk assessment or business assessment of the counterparty. Or it could be data from the public domain beat sanction screening adverse news, shipping data, when it's in the public domain. That information will enable you to start building a relationship. And when it's someone you're transacting with, and someone you have a relationship with, what Serai helps you do is get detailed information at the order level, at the shipping level, not just on your supplier, but also your suppliers’ suppliers. As you go upstream in this industry, as you go from dominant fabric to cotton, it helps you collect information all the way through the supply chain. And in that process helps you deepen relationships. There are lots of niche platforms trying to do individual components of this. The real challenge with going super niche is none of the data flows across the platforms. As a supplier, you put your data into one buyer system, or one platform and then you reenter that data. Another core component of how we built Serai is our integration framework where we can plug in data from third party solutions from third party platforms. If there's a sourcing platform that works well, we're happy to plug it in. And in fact, we've had started partnering with data providers, smaller platforms or platforms meeting niche needs in the industry.
I noticed recently the launch of the traceability solution which builds on your foundational capabilities, would you mind sharing a little bit more about that and what it's meant to focus on?
Yeah, we're super excited about this because you want to know where you who makes your clothes, you want to know where your garments come from, we all want to buy responsibly. The regulators have obviously they need to make sure there is no human rights violations, there are no environmental issues in the supply chains. Even the global plans today, unfortunately, don't have that visibility all the way down to the farm. For in the case of cotton, all the way down to synthetic material, raw material producer. What Serai helps the ecosystem do is every participant in the ecosystem owns their data. That is a big change from how the industry has worked, because traditionally, suppliers jump through hoops that the buyer set for them. Every participant in the ecosystem owns the data, they upload the data once and they can share it multiple times. All the way from cotton, to yarn, to fabric, to garment, to shipment, the data can flow through the ecosystem. And we have plans, we're using it both for internal ESG sustainability credentials. But also now it's very topical in the US and increasingly in Europe, to prove the provenance of where cotton going into dominance comes from and specifically to make sure that there's no forced labor going into the cotton farms or the spinning of the jenny. That solution is live Nick and we are in the fortunate or unfortunate position, depending on your perspective of having excess demand in terms of brands, and manufacturers wanting to deploy the solution, roll it out across the supply chain and capacity without constraints.
And so for the benefit of our listeners Vivek, what type of questions will that allow a sourcing manager to be able to answer? If I'm a major manufacturer of garments in the US, what would I be able to do courtesy of Serai and the traceability solution?
It helps you answer three big questions. The first is it helps you answer the question of where is the raw material going into my product coming from? I know the garment manufacturer I'm working with, in many cases, if not all I know the mills because I've nominated them. But beyond the mills, I don't have visibility on who's in my supply chain. So who are the spinners, where are the farms? So the first basic question is who's in my supply chain? Where's the raw materials coming from? The second big question is, what are the credentials of these counterparties? So yes, I know XYZ company in Bangladesh, is in my supply chain. And I've managed to confirm that, but what are their credentials? So what are their ESG credentials? What certifications do they have, what standards do they uphold? That's the second question. And the third one is helping you make changes when you get alerts. So when you have an issue, like what we've seen with Myanmar, who am I exposed to? What can I do about that? How do I make a shift? Now where we've started? Is we helping you with question one and two, where we see the system evolving, is helping you make proactive decisions about managing a supply chain and moving into the third question.
It's an interesting area, that third area, so being able to make future predictions on the impact of your supply chain is something that other industries have been doing for a while and it feels like maybe the clothing industry is a little bit behind, but we'll fast catch up with Serai.
The clothing industry on the one hand is behind, on the other hand, it's way ahead because the supply chains tend to be more complex, it is an industry quite dependent on labor. And labor tends to be concentrated in both ends of the value chain. At the farm end and then at the other end of the production where the garments are finally getting put together, which is sewing. So it's very labor dependent, supply chains tend to be quite intertwined and they move around quite a bit. So I think the challenge with industry is higher. And to your first question, we've started with this one industry. But ironically, there's nothing that we're seeing that's unique to this industry, it extends itself be it technology, be it retail, the same question the same problems exist in slightly different changes in these other industries.
That's great. It leads me nicely onto the next question, which is, where does Serai go next? What happens over the next couple of years for your business and where do you take this from here?
We clearly see ourselves expanding into other industries. But before we do that, we see ourselves deepening the range of solutions that we pulled together for this one industry. So global trade unfortunately, is way more complicated than it needs to be. The banks are focused on financing, the shippers are focused on logistics, the procurement providers are focused on buying and selling. Linking those together will make the market more efficient, being able to finance based on transparency and procurement practices based on your ESG credentials, that has to be the future is where we get to. It’s easy to talk about sustainability, it's quite tough to do things about it. We want to find a way to link the data to decisions. And so I see us focusing on this one industry at least for the course of this year, if not the majority of 2022. But over time, the vision is it sounds grand, but I would like every company in the world to have a Serai profile, I'd like that to be the basis through which trade gets done.
It's a very lofty and ambitious goal, but I have no doubt that you'll be able to achieve. As it stands right now, how does the user community look, how many how many users do you have on the platform? How many registered companies? What does a user profile look like today?
it took us 300 days to get our first 1000 companies on the platform, it took us a little bit more than 100 days to get the second 1000, 60 days to get the third 1000, 51 days, we've just hit 4000. So we have 4200 companies on the platform.
So the adoption curve is moving in the right direction. We have also a really healthy mix, we've got some of the leading global brands on the platform, but also we have some of the most promising startups are online brands in the platform, too. I think it's fair to say that we are not yet out of the woods, I think we're very much in day one. I see us in a scale of one to 10, 10’s the finished product like put us squarely at 1.5 at this point in time, so we're not out of the woods. And I think that combination of paranoia, and reality is what's going to force us to keep innovating, keep adding features and keep pushing the platform forward.
My involvement in Serai over the last 18 months has been nothing but refreshing and a pleasure to be involved in. If we looked a little bit more short-term feedback, what does the next 12 to 18 months look like for the brand?
I'll start with the with the next quarter looks like is really pushing hard to help small companies make new connections, the small manufacturers on the platform are here for one reason to get new orders to make new demand and to get help doing that. And at the other end of the spectrum is to help the global companies build supply chain transparency and visability. That's the push for the coming quarter. For the rest of 2021, we want to deepen our partnerships. And the reason I keep calling it a platform is we can add products that we don't make. It's not a product where we've manufactured the product and reselling it. It's a genuine platform where I would like to see our partners, Dun & Bradstreet, we've just gone live with a compliance partner, we've got a 3D software design partner who's on the platform, we'd like to see the partners develop their solutions on the platform and add value to our customers. So that's the next phase of evolution for the course of 2021. And I anticipate getting to between 10 and 20,000 companies in the platform over the course of this year.
Ambitious goals, but again, I know you'll get there. As we draw this conversation to a close Vivek, what about you as an individual, what have you got focus and plan for that for the remainder of the year outside of Serai?
You started the conversation by saying I've been in banking for 20 years, I've got twin boys who are 12 and one of my goals is to be able to keep up with them over the next five years and not keep up as the dad to day kind of slow down to indulge but actually be able to keep up with them. And the advantage of living in Hong Kong is incredibly lively outside, you’ve got mountains, you’ve got hiking, you’ve got beaches, so focusing a lot on physical wellbeing is incredibly important to me. And not just from a family perspective. But also something which I've tried instilling across the company is making sure that we have a culture of working hard, but looking after yourself. And I think that's especially important in the time that we're going through right now is to focus on yourself from a physical, mental and wellbeing perspective.
I couldn't agree with you more.
And we've got a new dog, so I've got a new member of the family and that's been hugely enhancing to the overall family.
Well Vivek, as a father of twins myself, I have 14-year-old twin daughters, I know you have your hands full. Thank you very much for the time today, I have nothing but admiration for you and Serai as an organization. And thank you to our listeners for taking the time to listen to The Power of Data Podcast.