Latest / Exit Algorithms / How to Future-Proof Your Logistics Business for a Strong Exit with Vince Solo (#89)
Transcript
- Pete Vera, Exit Algorithms: Welcome to Exit Algorithms, the podcast where we decode what it really takes to unlock growth, streamline operations, and prepare your business for a high-value exit. I'm your host, Pete Vera, and today I'm joined by Vasil Soloschuk, who many know as Vin Solo. He's the CEO and founder of Insart, a fintech business accelerator that helps fintech companies with strategy, product, go-to-market. data, cloud, AI, integrations, and fundraising. He's also an author, podcast host, and one of the most connected voices in the fintech engineering and growth world. Vince, excited to have you here. Welcome to the podcast. vince solo: Hi Pete, absolutely, thank you for inviting and I hope it will be a really great conversation today. Pete Vera, Exit Algorithms: Can you share a bit about your background and business journey, how how you built insert into what it is today? vince solo: Yes, absolutely. So as Pete says, Insart is a FinTech B2B tech business studio. So we help companies to build, validate, modernize, and scale software enabled business systems. So we help businesses to turn data into decisions and decisions into dollars. and we built B2B technology that pays back. So I started in SART a lot of years ago and we've gone through several evolutions, evolution stages. Eventually, right now, we are not just like generic. Outsourcing company or software development shop. So we combine software engineering excellence with product thinking with AI business intelligence data automation financial intelligence and also long-term business value framing so Probably the strongest proof base Comes from FinTech. So we worked with a lot of wealth management technology capital markets services, companies like Advisor Engine, like iCapital, like Mirador, like MPI Markov processes, where trust data accuracy integrations reporting, compliance sensitivity, and also the... long-term product evolution matter deeply. So that would be in nutshell our background. So we're headquartered here in Bochraton, Florida. We have distributed footprints across US, Canada, Europe. Like we have engineering locations in Portugal, in Spain, in Poland. and also Ukraine. So happy to be here on this podcast. Pete Vera, Exit Algorithms: was there any difficult parts or moments in in time with your business that it maybe some inflection points you had when in your journey as you grew it to to what it is today? vince solo: absolutely, so I would say I'm reinventing the business every year. So for example, they say, okay, you need to define some kind of strategy to run some strategic session. And founders, do this maybe once every second year, maybe once every third year. But I would say the situation on the market is evolving so frequently right now. Pete Vera, Exit Algorithms: Mm. vince solo: so that you definitely need to review whether your value proposition is still relevant to the existing market. And what we have seen, again, with Insart and with many of our clients, we could be successful with our product and services and our value proposition for a few years. Because you have validated the market, have validated the solution, you have validated your product. But eventually your product becoming non-sellable. And then you need to reinvent your product and your services once again. So that's why don't take it for granted what you have right now. And always... do the market research and validate your product against the market. And the most important question every founder need to ask, if my product will be sellable not today, but would it be sellable in like one year, in two years, in three years? So that is the most important question. Pete Vera, Exit Algorithms: Mm. vince solo: I would say this is the biggest problem I'm seeing with most of our clients, especially with the successful, for example, fintech companies that may have really credible big names under their client portfolio, but. When you have a successful business, have built a successful B2B platform, FinTech platform. But in few years, you're becoming obsolete because now you have the competition. And for example, with all disruption happening with AI, everybody else can build the same platforms, the same features, and new competitors can enter the market. and now your platform becoming obsolete. So now you need to do the platform modernization. So that's why this would be the biggest hurdles we had with Insart and with our clients. Make sure you're relevant and you're sellable and make sure your platform, your product will be sellable in one and two and three years. Pete Vera, Exit Algorithms: Yeah. that's that's really really great advice, very very valuable lesson there. You know, keep changing, keep adapting. I'm curious with your you know the companies you take on, engage with, the clients, what are some of the first areas you you look at to try to determine, you know, viability and and areas for growth? vince solo: very quick story. I was involved as the coin investor in the logistics company back to 2020. And as you may remember, 20... 2020 and 2021, they were really huge years for all the logistics industry. So basically all the companies were growing and logistics, dispatch companies, platforms were growing. But we've got into situation in 2022. with all the geopolitical issues and with some kind of recession issues. So basically the whole logistics market went down. And I would say the companies started to close and the revenues declined. And it was like that. Many companies and our like our... the logistics company that I invested in, it was growing in 2020-2021, but it's hugely declined in 2022. And I think the problem was because we took for granted what we had. And we didn't realize that the market can change dramatically. Pete Vera, Exit Algorithms: Mm-hmm. vince solo: like so dramatically so that the business model, the value proposition, the client base you have right now, the team you have right now wouldn't survive the next wave. Okay? So that's why we need to always analyze and do our homework and research what the next wave would be. Okay? Pete Vera, Exit Algorithms: Mm. vince solo: So if you can do this exercise successfully, so then you would have some chances to survive and take this opportunity to grow. Pete Vera, Exit Algorithms: Yeah. Wow. Yeah. I I imagine you learned a lot from from that experience. I'm you know, I'm curious what separates the businesses that that make it and adapt from the ones that that stall and and become obsolete? vince solo: yeah absolutely so first of all i think this is the the leader So every business would have a founder, okay, chief executive officer, but someone who has specific. character to run the business. So someone who takes the full ownership for their business and someone who can build the team of other trusted leaders so that they can survive the next wave. Typically we're, you know, could be discussing a lot of about, what should be the go to market strategy? Or what should be the value proposition? Or what type of market to serve? What type of customer segment to serve? Or how to improve the product? How to improve the services? But I think the most important question in any business is not, What, but the most important question is actually who. So who is running the business and who is in your team? So that would be the most important probably question for the success of any business. Pete Vera, Exit Algorithms: Yeah. Yeah, the team is really important. it and you know, what are maybe some common mistakes business owners make when they're when they're trying to grow? most common mistakes you see preventing them from growing. vince solo: we call them scale-ups. So scale-up is a company that probably validated the market. So they have validated whether their solution is relevant for this customer segment. So they have built some initial client base. And now the question for such companies is, how they can scale. And sometimes when they start, when they try to scale, it could be like that, they don't have a repeatable sales engine. As soon as they have already validated the customer segment and value proposition, now they need to scale it. So they need basically to acquire more clients in the same customer segment. So basically they need to build the sales engine. I would say the largest inefficiency I have seen is when the founder continue act as a single and primary salesperson. Because at the early stage of the company, it's crucial that the founder would lead the sales, but frankly, I'm not saying that this is still sales. You're still validating your product, and you're still validating the product market feed at the early stage. Once you have done this, Probably the biggest mistake would be to continue doing the same. So that's why the most efficient companies at this stage is the ones that hire the chief revenue officer. So that the founder can delegate the sales to a chief revenue officer. Pete Vera, Exit Algorithms: Mm. vince solo: and chief revenue officer would be 100 % focused on generating more opportunities and closing more deals. Again, letting the founder to work on the strategy and on structuring the company furthermore and building the team further. Pete Vera, Exit Algorithms: Yeah. that's awesome. And and yeah, of course, eliminate key key man risk if the something happens to the founder. yeah, and that's gonna add a ton of value to the business as well. I I know you focus also you help companies with fundraising, taking on investors. what would an investor like to see in a business before they write a check? vince solo: Yeah, absolutely. So many people, they think about fundraising as a kind of show when you need to somehow make some wall effect on your investors and like to pitch them with your pitch deck. And like they are thinking like, the better I will do this, the better I will present. the higher are my chances to get the investment. Frankly speaking, it's not. So what we have learned is that fundraising starts before the fundraising starts. So basically, you need to have a really good traction comparing to what you're asking. So meaning, Pete Vera, Exit Algorithms: Mm. vince solo: you need to justify the amount of investment you're asking against the traction you're having. And certainly you need to package yourself, so you need to have a clear and clean pitch deck with the problem statement, with the value proposition, with the credible team behind your company. with the clear go to market strategy, with the traction, describing the traction that you have right now. But... To get the investor involved, first of all, you need to validate your product at the early stage. And you need to show the conviction to investors that you have validated the problem, you validated the solution. Pete Vera, Exit Algorithms: Mm. vince solo: you validated the product that you're creating. So basically you have validated the demand. And you also have some initial paying customers or the pilot projects. On later stages, you certainly need to show more system under that, like with all the metrics, with all the financial metrics. Like what is your customer acquisition cost? What is your churn rate? And are there relevant metrics? So once you build this conviction, it will be much easier to talk with investors with all the confidence, like showing them the maturity of your business, but not like just impressing them with your presentation. So we have seen the pretty shitty presentations, but for very mature businesses at their stages, which got investment. And we have seen a lot of very beautiful and pretty presentations and founders who are pitching very patiently, but they're not getting investment because there is no validated product and the business is not mature for the amount of money they're asking. Pete Vera, Exit Algorithms: Yeah. that that's really helpful. And I love what you said too, you know, beginning with the end in mind with with an investor coming on. some seen some successful acquisitions by strategic acquirers. what are some things else, you know, the businesses should do to to prep for a potential sale are there any other things you've seen that that work to facilitate a a successful transition? vince solo: So I think and what I see with our most successful clients is that the founder, they need to make this decision as early as possible, whether they want to exit business or not. So what kind of business are they building basically? So when they start the business, they need to answer the question, are they building the business to sell it at some point of time or are they building the business which is just their lifestyle business because they just like it, they're not going to sell it. So this is like a lifestyle business which could be a perfectly fine as well. Or maybe they're building something they would like to go maybe to IPO, not like selling the business to some strategic. So I would say, the most common strategy across the tech sector would be to build something to sell to a strategic acquirer because like very few companies will be able to get to the IPO level. And frankly speaking, not all the value propositions are a good fit for the IPO, but there are plenty of different startups and companies we have seen. that are like perfectly like great company for the specific niche, which wouldn't expand into something like IPO like, yeah, but still the niche is really great and the market segment is really great and they would be able to let's say grow to maybe like 100 million, 200 million and maybe like got acquired, maybe even at all this. Pete Vera, Exit Algorithms: Mm. vince solo: earlier numbers so that's why the founder they would need to make the clear Decision okay. Yes, I'm building the business to sell it okay So now as soon as I am building the business to sell it, I need to know who will be my potential acquirers So I would define three to five strategic acquirers. I would define maybe like three to five strategic and three to five private equities. I would clearly research what are their investment thesis, what kind of companies they typically acquire, what kind of numbers they're looking for, other things they are looking for like client concentration, client segments, maybe some other specifics related to the investor. Pete Vera, Exit Algorithms: Mm-hmm. vince solo: and build the company not to sell to like any kind of investor but like generic investor but build the company to sell it to very specific strategic or private equity acquirers because everyone would have their specific investment thesis. So that is the most relevant, the most successful strategy I have seen with our clients when they were building the business to sell it to the very, very specific investors, Pete Vera, Exit Algorithms: I wanna go a little bit further on AI. I have a kind of a two part question here. You know, first, how do you see it affecting your industry the most? And also, how are you personally leveraging it today? vince solo: So as we see, AI disruption is happening, but let's define what is that. A lot of informational noise, I would say, around this topic. But what is happening? And what is the problem? What is the opportunity? So with the AI, it looks like we can automate a lot of manual or repeatable operations. we can create an agent which could automate a lot of manual operations, which could also automate a lot of research and even decision making support. Again, there are some edge cases, edge scenarios, like the one scenario would be, okay, we can automate a lot of with AI, a lot of current jobs would be replaced. I would say not replaced but augmented, like transformed. anything related to intelligent work, the landscape would be reshaped dramatically. From the other hand, there are scenarios that we would have some bottlenecks here, and AI would be just another tool we use in our everyday life, but without dramatic disruption, okay, just. organically using this technology to automate some operations like a convenient tool but frankly, frankly, okay, you can just continue doing what you're doing but more efficiently if you can leverage, leverage AI and there could be different bottlenecks down the road like even logistics for example, there could be some hurdles with the logistics, with building more data centers, with the price for the energy. For example, some companies they are calculating their costs of replacing some people with AI agents, and once they do this, they look at the budget and they see that now it costs even more than before because the cost of tokens can fluctuate. So that's why there is no simple answer to where we are going. Still, certainly, everyone should think about how they can leverage AI and what AI means for their business and how they can leverage it. Pete Vera, Exit Algorithms: Mm. vince solo: starting from reviewing the business processes, business workflows, and thinking about like gradual implementation and introduction of the AI tools to automate their business. So at the start, this is basically something we help companies with as a B2B tech business studio. So we have a value proposition, we call it AI powerhouse. so we do the diagnostics of the current business what kind of workflows you have and we identify the workflows which is which are data heavy and workforce heavy and like with some repeatable operations and then we create some kind of Roadmap how we can automate this workflows with AI agents and then we start gradually introduce this to our clients. Pete Vera, Exit Algorithms: this has been a a a great conversation. I got one final question for you. If you could pick if you could pick one practical tip for business owners wanting to position their business for a a strong exit, what would it be? vince solo: Absolutely. I would say introduce the financial analytics into your business and start measuring and start collecting the statistics and make your decisions based on data, not just on gut feeling. So this would be my tip number one. So turn the data into decisions and turn decisions into dollars. Pete Vera, Exit Algorithms: thank you, Vince. This has been an incredible conversation. If listeners have enjoyed it as much as I have, where can they find you, learn more about you and your business? vince solo: Absolutely, so you can go to LinkedIn and you can type Vince solo in SART and let's connect on LinkedIn Pete Vera, Exit Algorithms: Sounds good. vince solo: So Pete, thank you very much for inviting me. I enjoyed the conversation. And I wish everybody to grow the valuation of their companies and eventually make the really great exits. Thank you. Pete Vera, Exit Algorithms: Thank you, Vince.