Dr. Jeremy Weisz: 07:34
Yeah, that makes sense. I mean, someone doesn’t want to have too much. They don’t want to have too little. Right. And so it’s hard to manage that. So if someone has like whatever NetSuite. I mean, there’s a number of names on here. If you’re listening to the audio, there’s a video version, we’re at netstock.com/integrations. But they’re using one of these. It kind of overlays on top of that and allows that predictive layer so people can decide, make decisions off of it, essentially.
Ara Ohanian: 07:58
Absolutely. And everything moves faster. Right. We have both. Disruption happens faster, whether it’s a tariff that’s changed or whether it’s some disruption in a geopolitical situation, that’s slowing down or accelerating the need for something. So smaller businesses have to adapt even faster than before. And this is where I think that an agile small business becomes a lot more viable to compete against larger brands. And that’s what we do. We want smaller businesses to be able to like, stand up to the largest multibillion dollar enterprises neck to neck.
Dr. Jeremy Weisz: 08:33
Ara, I’m wondering, you know, I know there’s different categories that you serve all along the supply chain, right? From manufacturing, distribution to retail. I’d love to talk about how each of them are using it. You know, I don’t know which one you want to start with.
Ara Ohanian: 08:49
Sure. Well, let’s start with manufacturing. If you’re a manufacturing business, there’s always a degree of complexity when you create something. Most mid-market companies, they don’t necessarily manufacture everything discreetly. They often buy different pieces of a product and then assemble them together and then sell them. But again, if for some reason, one of your products that you’re getting, it’s a raw material or finished product that goes into a final product, comes from an area that’s now going to have some issues, whether price tariff or geopolitical issue. It would be great to be able to rapidly respond and to replan what happens in three weeks, three months from now so that you don’t run out of something.
Because at the end, there’s a manufacturing company, if you don’t have good insight into what’s going to happen, you could delay the creation of a product or your cost base might change. If you were getting a particular Oura ring that was coming, let’s say, from Vietnam, and something happened. Now it’s tough to get Vietnam, China is not there. It’s only available through Canada or Germany. Your cost based on that product significantly went up. So those are the kind of things the second part are distribution companies.
Dr. Jeremy Weisz: 09:59
I want to comment on that first one for a second because, you know, I was talking to a friend who’s got a protein powder business and there was some shortage at one point of pea protein that was like the main ingredient. And like you said it, it basically puts a bottleneck onto their production. Right? And so it’s a real problem.
Ara Ohanian: 10:22
Absolutely. So the earlier you can plan what you need for the future, when a disruption happens, you can plan again. So if you’re only planning for today and something happens, you’re left sort of in a hole. But if, if you had planned well enough so that if a disruption happened, you had a little bit of excess stock on a particular product that was high risk or on one that has zero risk, maybe you say, I’m not going to trap a lot of working capital in stocking this, because I can get it rapidly from multiple sources. So these are the kind of things we help customers say, hey, I should have more of one, less of the other. Sometimes having excess is a great idea. Sometimes it’s really the dumbest idea in the world. So make sure you have your money where it should be.
Dr. Jeremy Weisz: 11:06
That makes sense on manufacturing. I guess if we go to the next step of the supply chain, the distribution.
Ara Ohanian: 11:12
Distribution and so on, with distribution, now you’re buying somebody else’s product or you’re not even buying it, you’re just distributing depending. So there are two types of distribution. And again, the demand, this is very demand driven. So you know, what products should you keep in your inventory that is going to be needed. So as you move from manufacturing to distribution also, the other thing you’re looking at, not that it doesn’t exist in manufacturing, it’s there as well. But just for the sake of a story here, as you move there, you start looking about what’s the demand against it.
So again, the ability to predict the particular demand for a certain type of products is going to let you have more or less of certain products. And to have them at the right place at the right time and things change. Right. So you may have a business of distribution that’s financed that services 6 or 7 markets. And let’s say something would happen in one market that would slow down the sale of a product, but something is happening in another that would accelerate it. For the sake of argument, maybe it’s the weather. All of a sudden you need to stock on basic products, pet food, flour, or so on because of a horrible weather pattern that’s hit an area versus the other. So again, if you have visibility into your supply chain, if you automate it, it’s not on a spreadsheet, you can literally ask a question to your system and say, where do I have product that I can move from one area to the other to fulfill and satisfy a need that I think about?
So for instance, I’ll give you an example. We have a little AI we created called Opportunity Engine, and every morning a person that is in charge of their supply chain or for inventory. So we’ll click and say, what’s my opportunity today? And they say, I go into all of your planning and looks at all of your warehouses and say, you know, you have a lot more product A at that warehouses, but the demand seems to be slower there. But you’re going to have an up a spike in demand in that product in another area, which means if you transfer these all the way to this from this warehouse to the other one, you don’t have to put a new order against your suppliers. So now you shifted the investment you’ve made rather than make a new one.
This is like, I’m sure you’ve done that. You’ve gone to the supermarket, Jeremy. And, and you forgot which, whether which pasta you were low on or high on, was it the spaghetti or the macaroni I had more of? And then you say, I think I had milk, but. And then you go, you buy and then you come back. Now you see you have three times more of something you wanted, but the one you really needed, you didn’t buy. Right. So this is the kind of environment that we find at home when we’re cooking. But what you make that into a whole business and you need somebody to help you manage that.
Dr. Jeremy Weisz: 13:59
I need that for my pantry.
Ara Ohanian: 14:01
Yeah, absolutely. So imagine taking our individual pantry and imagine you have now hundreds of pantries in different places. The chances of getting the mix wrong is pretty high. So if we can automate that and when you go shopping, say, hey, don’t buy this, buy this one and this one you don’t need in your cabin, you need in your apartment.
Dr. Jeremy Weisz: 14:20
Yeah, I want to, I want a day where I can just pull it off the shelf and then it just knows. Yeah, exactly. It just gets like a couple days later. So that’ll be the next integration with Netstock to, you know, to happen.
Ara Ohanian: 14:35
So imagine in a perfect world, if we always knew what the demand is, whether it’s in your pantry or in the business, and we knew what the supply would be, we’d never need warehouses, right? We’d always connect those two. But because it’s not that easy to predict everything, people have warehouses. So now we’ve got to make sure those warehouses are most efficient. They really work and you don’t over invest in them.
Dr. Jeremy Weisz: 15:01
And what about the on the retail side? So you know product gets made gets distributed. Now it’s in retail.
Ara Ohanian: 15:07
Yeah. So now once you get to retail, you have one layer added is pricing, right? So things change a lot more price wise when you’re at retail than they do. Let’s say you’re at manufacturing. There’s more constant pricing in manufacturing a little bit less, but still distribution. You get to retail. All of a sudden, this is where people put things on sales and so on. So you may have a competitor that in one region decides to really push a product hard and there they discount the product. So your forecasting model can actually get some of that data and say, okay, based on that, where should I be looking for alternate product to compete with it? Or maybe you may say, you know what, I’m not going to be trying to sell in that market. This huge competitor is dropping in prices on this product and my margins would be gone. But I know one thing. Maybe I should take that and shift more of my product to other regions right now. So I move things from warehouse to warehouse to make the difference.
So that becomes much more reactive. And you need to look at how do you do promotion management. So. And then one other thing at retail that we really see is especially as you get into the food area, there’s the time stamp of products you have there. So added complication, you have the pricing, you have the promotion, and then how long this product going to be valid? When do I put it on sale or not. So. So you’re adding this other element also of complexity.
Dr. Jeremy Weisz: 16:28
When Netstock started. I’m curious the type of customer, you know, when a company starts they have to focus on something. So what was the original thought of what type of customer Netstock would go after?
Ara Ohanian: 16:42
Absolutely. You know, to, to say that there were four founders of Netstock, all of them from South Africa. And you could imagine Africa is probably more unpredictability in supply chain than what we’ve seen in any Western world, right? So these individuals were used to do consulting work for some of the biggest brands in the world, whether they were the heinekens and so on. And they would help them plan their supply chain and how to effectively do that.
One day they woke up and they say, you know, all these small businesses don’t have access to our knowledge. Said, well, what if we could like take our knowledge, package it in the software and not only help the biggest companies in the world, but help the mid market. So with this idea, they started and they came to the US, which was obviously the land of opportunity for all and started this business. The first set of businesses really, they were not that different from today’s. But what they did, they went with a product and they said, instead of spending hundreds and thousands. What if we made something available for 500 bucks a month?
And so they started a basic product for 500 bucks a month, you could get in and now it would like tell you what you should have. And over time, they built more sophistication into this product and capabilities where it still always wanted to have very affordable. So, you know, when I come from, originally from the enterprise world, I was one of the executive senior executive at import, for instance, $5 billion ERP company. And most of our deals were in the multi hundreds to a couple million dollars. So per month you were talking anywhere from like, you know, 30,000 to $750,000 a month, sort of. And sometimes it was even million. Now, all of a sudden here we’re in a business where we say, you know, we want to make something for a few thousand dollars a month. I mean, we’re talking two, three, 4000 tops, sometimes 1500. You can actually manage your whole business. So they wanted to stay within that area and help businesses that don’t need to pay an arm and a leg for doing something very important.
Dr. Jeremy Weisz: 18:48
Ara, what did you learn from selling enterprise? You know, because selling something $750,000- $1 million a month compared to 500, like, oh, I got this. This is easy. But what did you learn from selling to enterprise?
Ara Ohanian: 19:05
You know, what you learn is the sophistication of the systems, right? One of the things large enterprises do is do things in a very sophisticated way. And they have large teams of experts. Each of them want their little pieces, a piece of the puzzle and really layer that piece of the puzzle. And then together they bring it together. And one of the things that I learned over time is that sometimes it’s a self-fulfilling prophecy. You create positions and, and then a person creates another. And you have all these experts and they’re overcomplicating a solution. So, you know, it’s a little bit like taking a bazooka to kill a fly.
And I think what’s going to happen over the next few years, even very large enterprises will realize that we’ve overcomplicated the processes to solve a problem. And this is where the founders of Netstock from day one, they say this isn’t so complicated if you actually create some algorithmic models when they started before they went into AI and that automates it, it’s, you know, you can do this a lot faster and you don’t need so many people and so many multiple systems and, and so what I learned is that you can really reduce the cost and accelerate the speed of solving issues. If you start looking at it in a different way than the enterprise did.
Dr. Jeremy Weisz: 20:26
Ara what were some of the big, you know, when you took on CEO role, what were some of big initiatives for you?
Ara Ohanian: 20:33
Well, the biggest initiative was really to retain the culture of four terrific guys who had started the business, entrepreneurs passionately dedicated to helping businesses that were not large enterprise businesses. And one of the founders would say, you know, I want to help create vibrant communities, more small businesses who can challenge and become big. And they also had this great belief that they need to always bring something that is affordable and not try to go and price where the profits were with regular companies, but challenge that model and say we should be able to deliver something at lower cost.
So the first thing was, when you take away from four founders who’ve been successful and who’ve created this customer base globally in over 67 countries. So make sure that we take the meaning that they created in their business, and we can scale it up and build a culture of transparency, a culture where people really are eager. It’s more than just a job. You want to really help businesses succeed to create vibrant communities. And so I think that was the fun challenge, but also something that’s more difficult to judge whether you’re doing well at it. So I think we’re doing well. But that was probably the biggest challenge continuing what this gentleman had started.
Dr. Jeremy Weisz: 22:01
What are some ways that, what helps with culture at the company that other companies should learn from?
Ara Ohanian: 22:07
Yeah. Well, I think the first thing is culture is not a poster that you put on your wall. It’s a conversation. You know, we take a lot of time when we interview in making sure that we have individuals that join us that would meet the values that we live by. And once you meet the values you live by and you say, hey, sometimes you’ll do great. Sometimes we won’t do so great, but we’ll still share those values. So in our case, the values that we focused on, we said, we want to create an environment where people come to us are just nice. Sounds a little bit pedantic, but nice. You know, think of getting into walking when you go walking into a store, you walk into a store and the manager or the salesperson is in a bad mood. They’re not attentive, they follow you in the aisle and so on, you don’t want and you go in the other one, they make you feel great and it’s a great experience that day. You have a great morning and we want that kind of environment. People want to help you when you come out. So that was the first thing.
The second thing, we want individuals that want power to make decisions and rather than fear making mistakes. So we want individuals who want to try new things, but then give them an environment where you don’t get punished for making mistakes. So don’t fear them. You get rewarded for making decisions. And when we make a mistake, we learn from it and we go. And those were two fundamental things. And the third one was transparency. As an organization, although we’re a private company, we report back to our employees as if we were a public company, know everything about the business. And we think with those three things, people get empowered to serve their customers better.
Dr. Jeremy Weisz: 23:43
How’d you get into this industry? Because looking at, you know, what you started at, you know, I know you studied kind of business and corporate communications. I wouldn’t have pegged you for this type of industry by looking at that.
Ara Ohanian: 23:58
Yeah. Well, you know, I actually, my love of life and study was theater. And then when I saw that it might be difficult to make a living in theater, I said, the closest thing is taking business communication. We’re communicating, we’re on the stage and we can make some money. So I came from art, the world of, of, of liberal arts. And so more on the creative side. And one of the things, so I became an entrepreneur first I built two businesses and one of them was in hooking together two types of managers, those who were in command economies from, you know, post-Soviet kind of areas and those in Western world and created programs that actually align the two systems when you would do business. So how to do gap accounting for somebody who never done it or how to figure out things like this. And that business was eventually exited.
And then the second one was a business that was created because I wasn’t very good at learning when I was a kid. So we said, let’s create a tool that allows you to adapt each person’s learning path via a computer to their own skill set and what they have. So we patented a system that was able to link your knowledge base of what you know to the content and would give you a custom path through it. And that was acquired as a learning management system by Info Corporation, a large ERP business. Then I became an executive.
But one thing I found out in the meantime I was doing that. What I enjoyed doing was bringing teams together of individuals with different skill set to be able to create the product and get that product out. So the one constant throughout it is, and maybe because I came from liberal arts side, is finding creative people in each best at their areas, pulling them together and letting each be the best at their instrument, but together have a nice tune. So I think that that’s how it happened.
Dr. Jeremy Weisz: 25:57
What brought you to the States? Because I know you seemed like you grew up a little bit all over Switzerland, France, England.
Ara Ohanian: 26:05
That’s right. I was born in Germany, first ten years in Switzerland, then a year in Rome, three years in Barcelona, seven years in the UK, a couple years at a boarding school, Jesuit boarding school in France. And my dream was. And that was the case because my dad was a marketing executive with Procter and Gamble, so moved around and I was a kid and moved around. My dream was always to go to the States.
And since I was a kid in Switzerland, I watched Western movies and. And I loved everything. To me, the US was, was the frontier. And, and which is interesting as an old person now, I’ve ended up in the cowboy state, which most of my dreams have been fulfilled sitting in Geneva, Switzerland, watching Westerns, and then one day being in the middle of what the Western really is. So the dream was to come to America for real opportunity. You know, my, my background comes as an Armenian where we suffered the genocide in 1914. All of us was dispersed. And being able to find a place where there will be opportunity, safety and a great culture that my, you know, I could bring for the future of my family that. So the dream was realized.
Dr. Jeremy Weisz: 27:21
Why Wyoming then?
Ara Ohanian: 27:24
Well, it went. At one point I had the choice of I could choose where I want to live a few years ago, and I decided that we need a change in life. We’ve had all the large cities and so on, and we used to come and vacation in places like Wyoming. But then I found out you meet people that are different from people in the cities, and I said, I want the rest of my life to be with individuals that are different from myself. So, you know, in New York, my neighbors would be bankers and lawyers. My neighbors here can be farmers, steelworkers. It’s it’s much more broader spectrum. And I’m closer to nature where I want it to be. So it’s great.
Dr. Jeremy Weisz: 28:05
All right, one last question. First of all, thanks for sharing your journey. Expertise. Everyone go check out Netstock.com to learn more. My last question is just mentors. Business mentors throughout your journey and business mentors could be like actually individual members. They could also just be resources. Like there are certain books that you’ve learned from and other things like that. So some of the lessons.
Ara Ohanian: 28:32
Yeah, it’s, and I think you’re right, I mean, mentorship, I’ve been mentored as much by individuals that were 20 years younger than me that I gave their first job to. Then the professors that I lived with, I’m still, I had a teacher of literature when I was in high school, who’s retired in the south of France. And andI went to school a long, long time ago. These were the 80s. And we’re still in touch. So, you know, this individual, he helped me see the beauty in literature and reading. And I love reading today. And I write as well. Over the time that I met different individuals and some of them were individuals in finance, some of them were on the investor side, and some were books. You know, I always look back at certain books that I refer back to, you know, Good to Great. And what was, there were two series with Jim Collins. Yeah, absolutely. You know, and, and what kind of.
Dr. Jeremy Weisz: 29:32
Built to Last, I think was the other.
Ara Ohanian: 29:34
Great. Exactly. So I always remember back of, you know, the content of those books, they’re as relevant today about what one can do for a business and a brand to endure versus one that that isn’t. And the other thing is really every day you’ve got an opportunity around you to have a mentor. In every conversation, there’s a golden nugget to be picked. And I think that that’s one of the things the way to not let yourself age mentally is always go to, and don’t think that experience has the biggest wisdom. Sometimes it does, often it doesn’t. And so I make sure I have lots of younger people around me that are always challenging me and they become my greatest mentors.
Dr. Jeremy Weisz: 30:21
I love it. Ara I want to be the first one to thank you over and check out Netstock.com. Check out more episodes of the podcast and we’ll see you next time. Ara, thanks so much.
Ara Ohanian: 30:30
Thank you, Dr. Jeremy.
