Welcome our guest today is erin mcfarland she is the vp of innovation with fair market how are you doing today i'm doing fantastic today melissa it's wonderful to talk to you yes um so for transparency i have known erin since probably around 2016. so full transparency there but i did in you know invite her to to be a guest today primarily because of what she's doing with fair market so over the last you know year i've been really focused on the future of procurement technology and where that is leading our transformation and we've noticed that procurement you know companies organizations are working with 40 more suppliers as of 2022 than they have ever before and primarily with that new influx of suppliers is because we have a lot of startups and these startups are there solving very specific business challenges that these enterprise applications haven't really either been able to do or because they're focused on the full life cycle of suite of products some of these smaller business challenges just aren't in their immediate roadmap so now you have a group of startups using ai technology able to solve some of those business challenges that we have before and when looking at companies that i wanted to talk to fair market has been very visible it is still as considered a startup it's worked through and i think just recently another series of funding so congratulations thank you and also this is a unique story with aaron herself she's been in industry her entire career up until about three years ago and then just took the plunge and shifted to startup so there's a lot of things that we really want to explore with you today aaron absolutely and i'm excited to talk about this uh you know you and i work together while we're in industry uh you know sort of sitting on the procurement side of the house and um yeah it's been an exciting few years up here in boston so let's start with that again you know if you go back on your linkedin you've been in industry and every company you've really been in those those companies for at least a good six years and then out of the blue three years ago just shifted from what some people would consider stable income stable industry and these are these are you know these are very well known companies not you know small small companies and then just went to a startup that was and three years ago fair market was still really young in its startup stage yeah it was very very small um when i uh when i walked in we were um the interview was above a bar the corner pub in outside of south station and i was employee number 10 so i mean i was super early on the ground with fair market but i i think i saw and i was lucky enough to see what the potential was around procurement technology so you and i had rolled out some of the quote-unquote cutting-edge technology at a major bank and um and we you know by all notes it was it was a successful project um but despite it being cutting edge and top of the line there was still a lot of frustration that it didn't have the level of automation and data support that you get when you have say hr applications or it applications or really marketing or any of the other pieces of the business so there was sort of this expectation that oh well now that we've modernized we're going to be at that level and have that same level of intelligence behind our software and it really didn't exist so when that project came to an end i i had a choice i could either stay with the safe choice um you know stay in industry and sort of continue working within the box or try and do something new and different and fair market was doing something new and different um was really looking at enterprise procurement um in a very different way rather than just putting a pretty face on the same processes over and over again the mission was to really revolutionize the way enterprise procurement specifically enterprise sourcing works um and that that resonated with me the other thing that really resonated with me was was this mission to make enterprise procurement more fair more fair for enterprises to know that they were engaging with a supplier who was selling to them at the right price and and bringing bringing everything that they said they would and also more fair to the suppliers because it's so hard for small businesses minority-owned businesses women-owned businesses to to get in to some of these big enterprises so i was i was inspired by the technology but i was also inspired by the mission and that inspiration trumped the safety security um the stability the known and really you went into something more risky because again employee number 10 doesn't necessarily mean this is going to be a successful you know no it was a big risk it was a big risk and um i went back and forth on it i um i had a couple of different options on the table and some of them were were very safe um and very straightforward but um so i'll tell you a little story so right at the end of my tenure with the bank um i was briefly moved on to another project and the project was that i was in charge of revising the policy on policies oh and that was kind of a light bulb moment i was like do i really want to be the one working on revising the policy on policies um is that really how i want to spend the next several years of my career is with that level of bureaucracy and my answer was no i want to be able to be unfettered and use my creativity and um and really really revolutionize things and in order to do that i think you have to be willing to take a risk so three years later well three years and yeah three and a half three years and eight months later company is still going you are what series round series yeah we just completed our series c we just announced on september 1st and uh that was 35.6 million um with one of our first customers servicenow is joining us as an investor so uh very exciting and yeah we we now are working with some of the largest companies in the world and helping them with autonomous sourcing helping them manage their tail spend and it's been an incredible journey and it's really exciting to see fair market taking off like wildfire so i recently well see we're still in 2022. i earlier this year i made a claim that we are you know shifting away from the strategic and the agile so 2015 you know the industry thought procurement organizations were in this agile state and primarily to really to try to to move more quickly to meet the the constantly changing consumer demand but i think you've just highlighted it because that was around the time that you also made that decision hey we've got this enterprise you know innovative at the time and it's still not fulfilling everything we wanted to so you know the theory is and with all the technology and the automation we're now moving into this you know and the term intelligent intelligence sourcing intelligent procurement organization is out there primarily because we now have access to ai technologies that can really collect and synthesize and and understand large large data sets which now comes you know bring it full circle and back to fair market what are what are some of the things that you're solving you mentioned tailspin you mentioned automation but can you give us some business challenges that fair market has really been able to succeed in so fair market at the heart of what it does is it helps supply it helps enterprises find the right suppliers for the stuff and the services that they're buying you already mentioned that the supplier base has grown at most companies um by exponential levels there are far more suppliers at your fingertips to buy from than ever before but the knowledge about who sells what and who has what in stock and who's capable of supplying you with what um is locked down um people store it in their heads they store it in excel spreadsheets um they ask their neighbor hey who am i supposed to buy this from um and procurement organizations really struggle to communicate who preferred suppliers are who diverse suppliers are basically who are you supposed to buy this stuff from and what you end up with is people just going to google or asking their neighbor and that's not a particularly efficient way to go so fair market fundamentally solves that problem we digest and ingest into our machine learning system all of our customers purchase history and we align with their strategic initiatives um like diverse suppliers or preferred suppliers or sustainable suppliers and then we use the power of that machine learning as requests come through the system to surface hey these are the top five or the top 10 suppliers that are likely to be able to help you find that item and some of the real world challenges that that has been is is first and foremost um savings uh procurement is driven by savings and one of the best ways to get savings is to leverage competitive quoting and competitive bidding so we automate competitive bidding and competitive sourcing and we're ending up with the results of of 11.4 on average savings of everything coming through fair market which is
unbelievable and that's been consistent even through because kovid was out there and then we're just maybe coming out of covid but maybe we might be going back and then you've got so yeah despite inflationary pressures we expected to see those numbers drop and they haven't i mean it's category by category and region by region things change but no we're still maintaining those savings numbers which is really cool um but what we learned during covid was that price while it's it's important and that's what we built the software to really highlight and and get to know in order to do price you also have to get availability so fair market got very good at finding things that were in stock when your regular supplier was out so if you had a primary supplier and you've been using them for 20 years that supplier has a major issue many companies were just left hanging or they were left making desperate phone calls to anyone they could think of and fair market solves that problem with business intelligence so if you're out of stock with your current supplier put it into fair market and fair market will help you find not only just a secondary third fourth supplier but frequently one that's already in your database that you're already working with that you didn't realize sold that thing oh and you're you're not just looking at suppliers within the company's database you're actually looking externally at all the suppliers that are out there we can do both um some of our customers are have supplier rationalization initiatives and if that's the case then we support it by sourcing only through their existing supplier databases they've got 35 000 suppliers 40 000 suppliers so we can narrow it and we can really focus the machine learning on just their database or um on a region by region category by category basis we can add in external suppliers from the marketplace yeah so if a company already has a procurement team that's you know perhaps you know a couple years ago you know when when they had downtime for covid they went and looked at their suppliers they thought they had rationalized it they'd spend a lot of you know focus time and energy help me understand why then bringing fair market in in that scenario is adding additional value because you may not be competitively sourcing everything that you could um or you may be having your people spending their time on competitively sourcing things that um that are pretty rote and expected so what fair market allows procurement teams to do is to take some of that tactical sourcing activity and let the machine do it so they can focus on the strategic stuff at the top that really requires brain power we say all the time let's automate the boring stuff so if you're buying 10 000 headsets that might not be something that you normally would do a full-blown rfp for it's just headsets but 20 000 headsets wasn't what you negotiated your catalog for you figured you were going to be buying five here or there so fair market enables procurement organizations to to run rfqs and rfps on that sort of mid-range spend that hundred thousand dollar purchase that fifty thousand dollar purchase um and automate it so that your people can spend their time on the 500 million dollar activity or the 50 million dollar contract right so aaron earlier on you mentioned the term tail spend so is is this what you're talking about also or is tailspin something different because i know i know everybody seems to have a slightly different definition on what tailspin really means absolutely and most of our customers have a very different definition but where i tend to place it is there's almost always this upper threshold where you're required to get say legal involved if you spend over x or you're required to have an msa in place and you you know whatever that top limit is and sometimes it's 250 sometimes it's 100 000 sometimes it's 50 000. and then there's usually sort of this bottom level where um where companies will say use your p card it's under a thousand dollars we really don't care but there's this huge space in between the two that is usually just left up to the business to do whatever they feel is appropriate and most of the time the business has better things to do than you know than be procurement so where we focus is in that sort of tactical spend that's between the the bottom bottom buying paper clips um and using your p card and the upper limit where you really need to have uh procurement professionals supervising and assisting and helping the purchase i i was i had the the luxury uh last year 2021 of working with some folks and in that process they were you know implementing a very large cloud procurement implementation and one of the challenges that they kept coming back to was you know what we talked about earlier there's so many suppliers out there i want to go and do this you know what you call the tactical sourcing this quick bid or quote but i don't want to just do it within the suppliers that are in the database of the procurement application i really need to understand and expand it to all these other suppliers that are out there and i didn't realize that that that that business challenge was as prevalent and until having that conversation and i understand that at that point in time they were they were in conversations with fair market and that's i think where fair market kind of came back on my my radar um so i thought that was really interesting and i think that's a really good example of a use case do you have another one that you've seen more recently so i think what has astonished me is that is watching the ways that our customers use fair market in in ways we didn't anticipate and i think what i've seen recently is our shift into some handling some direct spend we assumed that people would be very comfortable using autonomous sourcing and ai and you know really focus around indirect but what we saw over the last especially over the last couple of years is some of our customers dipping their toes into using fair market to manage some of their direct spend and specifically to solve some of these supply chain challenges um so i've seen things like frozen broccolini in bulk and coconut oil and flanges and rubber and all of these direct materials flowing through fair market at remarkable volumes and i think that's really where the difference is um when i've rolled out ariba and some of these other tools it was typical to see maybe one or two hundred rfps a year being done out of the sourcing module what's fascinating about fair market is because it's all automated and because it's focused on the tactical spend it's fairly typical for our customers to run 5 000 sourcing events a week oh my gosh oh it's huge yeah so the impact that you can have when you're functioning at scale like that is just astonishing and when we add in the machine learning's ability to prioritize diverse and sustainable suppliers not only are you having an impact on the cost aspect but we're very tactically helping large organizations um make an impact in esg and it's very challenging to take a strategic supplier and move a strategic rfp to a small business very challenging because small businesses struggle to be able to fulfill those huge contracts but parking lot resurfacing in poughkeepsie we can help you find a small business for that and maybe one of those doesn't add up but when you're sourcing 500 facilities sourcing events a week and you're giving small businesses and women-owned businesses and minority-owned businesses and sustainable business a seat at the table impact is amazing on both sides not just the it because a lot of times procurement will come across as i'm going to give that that small business a chance but i think what you're what i'm what i hear you saying is it's not necessarily you're giving them a chance it's it's a win-win because you should recognize that this small business has value it just doesn't have you know 100 million dollars of revenue like a larger company about a year ago we decided to challenge the assumption that working with diverse suppliers was always definitely going to cost more there seemed to be this sort of assumption that in order to drive your supplier diversity programs you had to be willing to spend a little more in order to fulfill these and we've been able to challenge that with data and found that at least in this tactical sourcing space that's not true you can still save money and work with small businesses and minority owned businesses and women-owned businesses and that's really cool which full circle my statement earlier 2022 companies are working with or should be working with 40 more suppliers than they've have before simply because there's so many um small businesses startups that are out there that truly can provide value absolutely i want to um pivot a little bit more to the technology so uh let's see earlier this year i went to a conference and i walked into the the the space where you have all your vendors and all the vendors are showing off you know demos of their application and what i found um the statement that that i was trying to pursue was do is everybody using ai and yes everybody's using ai but the more i started to to really dive into that there are people out there that claim they're using ai but then after reviewing their applications at depth there's no ai technology there's no machine learning no deep learning no neural networks no um you know all the other you know automation that we've been talking about so i i did hear you mention machine learning several times so i want to come back and just ask you this question are you really using these ai technologies and and where and how are you using them so i saw a joke at one of these ai conventions that said machine learning is written in python ai is written in powerpoint uh that resonated with me i love that uh so what we're using um are a combination right now of multiple technologies that fall into this this digital space um the first is that we're really leveraging neural networks and natural language processing to understand requests coming through the system you know that people want create requests for things in procurement they call it jet fuel but it's really fish tank supplies right so we know that we can't trust um categorization and stuff like that to to necessarily drive our supplier recommendations so one of the first places we invested in was in understanding what is it you're really trying to buy so we're leveraging natural language processing to understand that a boot is a shoe or that blk means black and doing that in multiple languages to auto sense oh is this request coming in in french or is it coming in english so we're leveraging natural language processing there um and then the machine learning is is really a deep learning um that can pull data in from multiple sources and it's all focused around finding the right supplier for this request and it learns every single night so every night using ci cd it's resetting itself for each individual customer and learning from from the bid activity of suppliers so as you purchase things and as you decide to award to one supplier over another or invite or not invite certain people it's learning and the next piece on the bookends of both sides is that we're using robotic process automation to automatically create these sourcing events in some cases automatically send them and we even have the technology to automatically award so really we're layering those three technologies um together with a little bit of um of with the neural networks tossed in um and even with a little bit of blockchain um to trace these transactions as they wander through the system so we're we're trying it all and we're using it all um and as things are used more by ours by our customers and by our suppliers we double down on that but i would say kind of machine learning is the heart of what we do um but we're taking advantage of a lot of of next generation technologies to to to pull off the revolution are you storing that customer's data or because you're utilizing these technologies you're not storing it it's just a funnel of data that comes through you read it you do what you need to do with it but you're not physically storing that customer's data on your on your so we work with amazon web services so we do store some data on aws obviously security has to be an important part of what we do we work with the biggest companies in the world and their data is really important um but we don't store a ton of sensitive information really any sensitive information it's just a purchase history who are you buying what are you buying for but that can be important so we keep it really secure i like what you said and i think this was a bit new for me is i've heard of companies that are trying to automatically create you know the rfx um pull it together i i i've all you know you and i have been on the sourcing side where we've created those manually in word documents we've put those in in technologies to automate them as much as possible but yeah there's still some you know tactical manual i'm going to use the word tail and tailing manual steps and activities that automation is supposed to support but i hadn't really heard of anybody yet fully until just now that you're you're even looking at automating that piece of it and the reason i bring that up is there are companies out there that are being told they have to continuously reduce their their budgets so that we could keep staffing um and you know there are other procurement organizations that are really seriously looking at i think i'm just going to offshore 45 of my my organization to try to keep the cost down but in the end you know you lose you lose some some continuity you lose some consistency maybe some quality and not necessarily because it's offshore but the connectivity between the individuals building the strategy and the individuals offshore executing it there's never going to be that i'm in sync with them we're always on the same page so yeah i'm i hear what you're saying and then my head is just spinning like wow i this would be great for this and maybe this would help companies you know not try to offshore as much because maybe they could use automation and i think that's really what these podcasts are all about is how is ai and data impacting us daily you know not just personally but also professionally and if a chief procurement officer or a chief analytics officer or you know chief tran we've got so many c's now she chief transformation officer chief digital officer i think if they're not really focused on taking the effort to look at a lot of the startups and what they're offering then i think they're doing a disservice to the to the rest of the organization yeah we agree um when people ask who is firmware's biggest competitor i always have to pause because people don't believe me when i say this oh well we really right now there's nobody doing exactly what we do okay except um people are solving this problem right now with offshore bid desks and so we're a different way to solve the problem um or if you want to split things up and have some things handled by a bid desk or you really want to optimize that bid desk um capgemini and jen pact are two of our best partners um and in both of those cases they're giving a best of both worlds in that we do have offshore resources that are that are piloting fair market and piloting the systems and uh you're able to achieve the results of having some people some automation and still some people that are are native within the client who can oversee and create those strategies um and use the technology to make sure that they're implemented properly so in your three years it sounds like you're happy because you you stayed with fair market since employee 10 which is still fantastic um you've got a big smile on your face so this is this sounds like the right place for you in the three years that you've been working with a startup um is there anything that you've learned that you'd like to share with with others who might be thinking the exact same thing i really don't want to be here startups seem really exciting and fantastic and but it is it's not just a leap of faith it's a scary leap of faith yeah it's a scary leap of faith so i think to a certain extent you get out of it what you put in startups can be really fun but they're also a whole lot of work um you have to be willing to put in the effort put in the hours put in the dedication and also to be very comfortable with uncertainty um when you work at a big company you have a job description you have very clear marching orders you have um parameters and and a way of working that's very clear and when you switch to a smaller company especially one that's in a high growth mode you have to become very comfortable with constantly changing responsibilities constantly changing direction and there's no procedure on how to do that um there's no process there's no policy at first you have to write those policies and you have to put those processes together so i think the biggest transition for someone coming from a large organization and moving into a startup is embracing that chaos um and if if you're not willing to do that it's going to be really challenging and really hard because nobody's going to tell you the right way to get it done and you have to work together with your team to figure it out and in a much much more collaborative way than in than most people realize and i think a lot of startups fail because they're not being agile enough they're trying to plan out three and five-year road maps and they're not responding to and watching okay how are our customers using the software what are they doing what do they need what do they need to do and pivoting to support their needs instead i think some people either fall in love with the technology or they fall in love with a concept and try and make it fit so finding product market fit means listening to your customers and and changing what you're doing to support what they need does that tie back to what you mentioned earlier about some of the things that surprise you like some of the ways that the you know you thought that your use cases were x you're seeing that people are using the technology differently and so your conversation now just about pivoting is okay well we didn't think that we could use this software this way or this process let's go and talk about let's add it in there let's see what other challenges are coming from that perspective and and that's what you're talking about this agile the shift absolutely um one of the examples would be uh we didn't carefully think out and plan a global expansion our customers took us there um i remember waking up one morning and servicenow who i've talked about uh several times we logged into the system to see what activity had been going on and found out that we had a couple of customers using fair market to source things in india did you tell them they could do that did you tell them they could do that well no they're doing it okay i guess we we're we got to figure out how to do that um so fair markets now being used in 71 countries oh my god and yeah and that wasn't something that we were with that we were like you know we're gonna do a global rollout it was okay i guess i guess we're going global guys so um so having that elasticity um to be able to support our customers to see what they were doing and um and support those business objectives i think is part of the reason we've been successful you know as as you're talking i'm i'm constantly thinking and true or false so question to you aaron true or false would would fair market have been able you know the product and the services that you're providing last three years would fair market have been able to do that if those ai technologies weren't there no right hands down we wouldn't be able to do anything of what we're doing um without the technologies but that's all we've ever tried to build technology forward has always been where we are but no we wouldn't exist as a company without those technologies so as we wrap up today uh one last question to you anything you'd like to leave behind anything about fair market or your personal you know journey um for the the audience i think it's probably this concept of fair we put it in the name but somehow uh we sort of gave up on the idea that enterprise procurement could do things in a way that is fair and transparent it's just too hard and it's not it's doable and not only is it doable it's it's worthwhile to do for its own purposes um you can make a difference in the world through lots of different things you know you can help out at your local soup kitchen you can you can sponsor somebody you can mentor somebody but when your company as a whole can help to make the way that companies buy and sell more fair and more transparent that's a big deal um that shifts how the world works and so i would say my message isn't necessarily just about fair market but with regard to if you're looking into a startup if you're thinking about your own career really get to the purpose behind it um and understand the why of what you're doing that goes far beyond we're just going to make some money or we're going to have a very successful company because that purpose is what can really drive you forward and what can unify your entire organization and unify you with your customers on a common goal brilliantly said i perfect way to end this interview today thank you so much thank you so much aaron for for coming in today you're welcome i'll talk to you whenever you want melissa okay yeah next year see where the journeys led you let's do that
2022-10-15