Latest / Beyond Fulfillment Podcast / Everyone Said Marketplaces Would Fail. Then COVID Hit. | Jorrit Steinz, ChannelEngine

Transcript

Everyone Said Marketplaces Would Fail. Then COVID Hit. | Jorrit Steinz, ChannelEngine · Beyond Fulfillment Podcast

• 0:00
  the beginning years were slow because I started this company,
• 0:02
  this idea thirteen years ago. and I spoke to brands back then telling them,
• 0:06
  well, in the future you're gonna sell direct to consumer.
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  And you're gonna sell direct to consumer marketplace as well.
• 0:10
  And they all said, You're completely crazy.
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  Retailers are doing that. We're not gonna compete against them.
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  was there ever a point where you thought about giving up?
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  No.
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  stubborn in that sense.
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  It always takes three times as much time and three times as much money as you think.
• 0:27
  You have to be comfortable in the uncomfortable. So after a while there there's
• 0:28
  always something. It's the stupid
• 0:31
  but stuff like that shouldn't affect you.
• 0:33
  So it needs to be the bigger picture.
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  when you're a leader, you need to hire
• 0:41
  Dave Gulas here at Shop Talk, and I am with Jorrit Steinz,
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  the founder of Channel Engine.
• 0:47
  Hey Jorrit. Hey Dave, thanks for having me.
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  So wanted to just get into the story of Channel Engine,
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  what was the genesis for this idea?
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  Yeah, so all the way in the beginning
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  I think it's 23 years ago I started a company called
• 0:58
  website lease
• 0:59
  Website. Back then I thought it was lease because it was a monthly fee.
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  Started growing that for small retailers for some brands.
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  The first big brand was LG Mobile,
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  built their e-commerce store, connected it to ERP and warehouse management systems,
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  and I thought that's kind of fun to do these more complex things.
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  So started building that and then with one of my customers who
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  was selling gadgets on gadgethouse.nl and
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  We decided to launch a few shops together when it was relatively easy
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  to do search engine optimization.
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  So that was supposed to be a side business,
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  it became a main business. So eventually we had 75 e-commerce stores,
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  30,000 different SQUs in stock in our own warehouses.
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  that was in the time, you know 2003,
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  2004, where we had to build all the technology ourselves.
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  So we built the e-commerce framework,
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  warehouse management system, forecasting system,
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  all the stuff you can now buy off the shelf.
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  Okay. R real quick. So you're talking about the very beginnings of e-commerce,
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  right? And I can only imagine what the technology was like in those days.
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  There was something lacking. Like how did you have a background in that type
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  of stuff where you just jumped in and was into building it?
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  I've always been in technology,
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  so I've got a master's in production automation and mechanical engineering,
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  which means you do some programming and I was always doing something commercial.
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  So the combination of
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  Trading stuff and programming and then the internet coming up was
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  a perfect segue into e commerce.
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  we're twenty, twenty some years into it,
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  but at that time, right, when e commerce is just starting,
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  did you have any idea how big this would get,
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  how quick? I was expecting that e commerce was gonna be a huge thing because
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  everybody wants to buy stuff and it's super convenient to do it online.
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  couldn't anticipate on the whole marketplace growth like we've seen in
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  the last few years. Yeah, yeah,
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  it's totally and we were just talking too and you told me the number
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  of marketplaces that you service and I didn't even realize there were that many
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  marketplaces.
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  Which is immense, but it's covering everything from North America,
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  Europe, Middle East, Southeast Asia,
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  Australia and New Zealand. And we're expanding.
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  Okay. All right. And then so what made you actually decide
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  to start ChannelEngine.com.
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  ~
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  development teams connecting all these different marketplaces,
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  custom made. And because we were selling thirty thousand SQUs,
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  we didn't want to sell everything everywhere for the same price.
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  So I wanted the commercial teams to be in in control.
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  And we didn't find a good solution.
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  So what we did is start building it.
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  So I sold my previous business and with that money I started investing
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  in building channel engine as a technology platform.
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  You had this idea, right? You wanted the solution.
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  It wasn't available, so you decided to build it,
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  right? Sold the other company and went all in on channel engine.
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  Absolutely. what were the beginning years like of this company?
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  the beginning years were slow because I started this company,
• 3:55
  this idea thirteen years ago. and it started in the Netherlands in Europe.
• 3:59
  and I spoke to brands back then telling them,
• 4:02
  well, in the future you're gonna sell direct to consumer.
• 4:05
  And you're gonna sell direct to consumer marketplace as well.
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  And they all said, You're completely crazy.
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  That's a channel conflict. Retailers are doing that.
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  We're not gonna gonna compete against them.
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  Luckily there were some retailers and some online shops that wanted
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  to use our technology. And then over the years that shifted.
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  So over the years that shifted to people thinking you're crazy,
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  they they don't believe you
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  said this idea will never work.
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  So it's been done before. All right.
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  And so like when you're here like you went all in on this business,
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  you had this vision and many people in the market are telling you this
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  is never gonna work. Like what were you thinking when you hear that at that time?
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  And it takes some time. So I saw the first proof points,
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  I saw the first shifts in the market,
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  where you saw small sellers and then shifting to bigger distributors
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  and the first brands taking a leap.
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  And that started accelerating early 2020 when COVID hit.
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  because the first brand said well we wanna do this,
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  but now the retail is closed anyway,
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  so let's go. So they were never not afraid of channel conflicts anymore.
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  that led to me saying well right if this thesis is correct that brands
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  are gonna do this, then in the future they're gonna need a global network.
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  So raised our series A funding,
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  set up entities in Australia, Singapore,
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  Dubai, New York and in Toronto,
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  hired people, connected to first marketplaces and started scaling from there.
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  So cov
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  big inflection point as far as the company.
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  prior to that too, like you said,
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  it was very slow, right? You had some retail business but not a lot
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  of people were adopting. In those early years too,
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  right, when you're still you have a small team,
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  you're years in, you're not really getting that traction,
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  was there ever a point where you thought about giving up?
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  No. No.
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  I'm really stubborn in that sense.
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  still to this moment some brands still don't think this is a good idea.
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  And it just takes some more time.
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  Wow. It always takes three times as much time and three times as much money
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  as you think. That's what I always hear.
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  How how long how long before you realize that?
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  It's it's gonna take three times as long and be three times as it costs three times
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  as much. So everything restart
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  Got it. Okay. All right. So COVID happens and then all these brands realize that
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  retail is going to be closed for a while.
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  They have to sell online. They're no longer scared of the channel conflict.
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  So things start to take off from there.
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  you immediately started scaling and you're you're already thinking global,
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  not even just maximizing the domestic business.
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  You're already thinking how can we we expand this globally.
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  So what what's the transition like going from like a small
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  Bootstrap team and you get this immense growth to now you're raising a series
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  A and you're totally kind of transforming the business the way you scale.
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  It was a rollercoaster
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  smaller seed round started growing.
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  COVID hit, raised Series A wanted to grow globally.
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  so we really started scaling up,
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  but then every region we started hiring some people,
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  which is challenging during COVID.
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  So lots of online calls early in the morning,
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  late at night. You have to cover everything from Australia to the US.
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  But that was an interesting phase.
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  and then we started seeing the first proof points,
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  and then early 2022.
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  raised for Series B to really double down on this.
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  And the reason why we wanted to do a global network is the logical
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  way would be building in Europe,
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  doubling down and then going to the US.
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  I said, Well, if a brand wants to do this,
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  they don't want to have different suppliers all over the world.
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  So you want one partner that can service every region.
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  So it was hard to build, but we did it in those years.
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  and especially the growth from twenty people to over two hundred was interesting.
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  Interesting and challenging. Yeah,
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  what I mean what's that like too?
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  Because twenty people, right, you kinda know everybody,
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  you can be in touch, right? And then what's it like because I
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  I'm imagine you're having to really empower your managers to deal with
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  the day to day
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  think one of the biggest challenges while you
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  to maybe a hundred where it's a lot of people already but you don't have
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  all the supporting functions. You don't have a full ~ HR team,
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  you don't have a full legal or finance team.
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  So all these supporting functions are not there yet.
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  Plus everybody that's good in your team is busy interviewing people,
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  training them, fixing stuff that new people broke.
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  so y you go through this sort of valley in the beginning.
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  So you first the productivity goes down before it can go up.
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  So you really need to go through that.
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  And that's a very inefficient time because people are distracted by the growth.
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  So I think as soon as you go over a hundred,
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  hundred and ten people, you have someone for every support function,
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  you you get to hire some more experienced people and then everything starts leveling
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  up. And how how do you handle that as like the founder and the leader,
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  and I can only imagine, right?
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  Like you gave us the high level version,
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  there had to be some growing pains,
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  some still to today.
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  Like how how do you manage that as the leader and again now you're you're dealing
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  with other people's money and I'm sure there's more pressure,
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  more expectation, you're trying to grow as fast as you can at this breakneck pace
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  and then stuff breaks or people flake out on you or whatever,
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  right? how do you manage that transition to being in that that position?
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  You have to be comfortable in the uncomfortable. So after a while there there's
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  always something. It's the stupid
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  Stuff like today, Shop Talk, our booth didn't arrive,
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  so he was flexible. I didn't hear until I was at the event.
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  but stuff like that shouldn't affect you.
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  So it needs to be the bigger picture.
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  Eventually to overcome the changes when you're a leader,
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  you need to hire people that add value and are different than you.
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  So I always look at where where are my my pitfalls,
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  where's my strength, and then try to hire people that
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  cover for my pitfalls. it. And your role changes over time.
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  So you continually need to learn and adjust.
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  what's your role like present day now that you've grown to you have over
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  two hundred employees, you're servicing thirteen hundred marketplaces globally.
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  you've raised a bunch of money and you're still growing.
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  Like what's your day to day like now?
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  Well, these three weeks I'm traveling through the US,
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  different events.
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  Lots of conversations with customers and partners with our team.
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  it's getting that inspiration and sometimes jumping on calls like this morning with
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  the leadership team. so there's so many different threads that are running.
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  Operationally I don't have to be involved.
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  So I can be stepping into commercial processes,
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  thinking about the future, what needs to what the product needs to be.
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  so it's a lot of different streams.
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  keeping me busy and it changes from month to month.
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  So you're the true visionary, right?
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  And always working on what's next and what's next but also what needs
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  to be done now.
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  And when you look back at the whole journey,
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  right, where you had this idea,
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  you had this vision, you sold off your other businesses,
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  you went all in, people are telling you it's not gonna work.
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  You really endured some some challenging early years and then
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  you get this exponential growth during covet and it's really been just fast track
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  from the you know what, over the last six years or so since then.
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  Looking back at this whole journey,
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  what's been the best part of it for
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  you?
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  I think the best part is being able to connect to someone.
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  amazing people across the globe where you see people with the right values
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  and right positive energy. and seeing how customers and partners respond
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  to each other. so that's super cool to see.
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  we've got people working in my team throughout all these companies,
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  so even for twenty years celebrated anniversary.
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  So it's not that everybody started from scratch at Channel Engine.
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  what for me is interesting, I love traveling.
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  I love meeting new people and companies,
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  so being able to do that with this company is is amazing.
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  Okay. All right, and Jorrit if people want to find out more about Channel Engine,
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  what's the best way they can get in touch with you and and find out more?
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  ~
• 12:21
  All right. Jorrit Thanks so much.