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Conversations between the venture investors and operators at Dell Technologies Capital and the people who are building what's next in enterprise technologies.
Arthur Bellamy (00:01):
The reason this has so many implications when you start thinking about building a product that's scalable rather than doing everything that is tailor made, it reduces drastically the complexity that you have to manage as a company. And instead of managing that complexity, a hundred percent of your effort and focus can be on making your product more reliable, cheaper. I believe if today we're 2 billion company with a thousand of employee, that's largely because of that.
Voiceover (00:35):
Welcome to the DTC podcast, a series of conversations between the investors and operators at Dell Technologies Capital and the people who are building what's next in enterprise technologies. In this episode, Scott Darling, president and managing director of Dell Technologies Capital talks with Exotec CRO, Arthur Bellamy. Exotec is a Series D material handling company that's building the next generation of warehouse automation. Scott and Arthur cover off on Exotec's approach to product management. Arthur's philosophy on hiring a global sales team and why the old school trade show is still the place to be. Without further ado, Scott and Arthur.
Scott Darling (01:14):
Arthur, it's a pleasure to see you again.
Arthur Bellamy (01:17):
Hello. Pleasure seeing you.
Scott Darling (01:19):
Yes, Arthur Bellamy, the CRO of Exotec. Delighted to have a few moments to talk with you today about Exot Tech's journey. Maybe the place we can start, Arthur, is give us a brief introduction of Exotec. What does Exotec do?
Arthur Bellamy (01:36):
Exotec is in the material handling industry, which means everything that happens within a warehouse from unloading a track until you load the truck with something different in it. So it's all the process of managing the material within a warehouse and Otec is helping to robotize that process by creating a system that you put in your warehouse and where robots come and compliment the work done by humans to create some efficiencies and hopefully help our client to manage better is a labor shortage which they're faced with. And so we serve companies throughout the world. We work with companies including Gap, Uniqlo, gym Shark, and a number of Fortune 50 companies that I'm not allowed to cite explicitly right now.
Scott Darling (02:34):
It's a truly impressive list and it's a real testament to the value these customers place on Exotec. These are household names around the world. I might add United States of course, but also Europe, of course where you started and Asia as well. So it's a real testament. Arthur, I think of one of the ways as an investor that I think about Exotec and I'd love to hear your thoughts about this, is the world is in this process of constant technical innovation across all spheres of life, and I think of Exotec as effectively preparing the backend warehouse for the E-commerce revolution that's taken place. How do you think about that?
Arthur Bellamy (03:30):
I think it's exactly how it started right after or during Covid where e-comm truly rose really quickly and all of a sudden a lot of the disruption of Covid onto supply chain was very visible from the world and companies like ours basically help to move from usually people going into shops and doing their own peaking of products into while somebody's got to take care of that now, now that this is happening through the e-comm platform. So all of a sudden the need to prepare orders and how we could supplement operators to do that more effectively came really at full scale and that's how exotic started. And I would say today it's even more than that. Today, exotic has expanded also into the more traditional area of supply chain where we also help with store replenishments that are becoming an area that's getting more and more sophisticated.
(04:41):
In the past, you would not think much about having a bigger inventory. You would send a lot of pallets and full cartons to your shop and then you would store them at the back of the shop. But as retailers are trying to be more sophisticated and operate with more efficiencies, instead of sending 50 items in a full cartons, they're going to say, no, I'm just going to need five of those and three different ones. And so you go and you're much more fine, and that means you need to prepare the orders one by one, which is where we help and shine.
Scott Darling (05:19):
Maybe we can go back a little bit in history, Arthur, and you can tell us a little bit about the origin story of Exotec. He referred to the discipline that Raman and Renault exercised early in their product vision. Tell us a little bit about the history of Exotec and how it came to be.
Arthur Bellamy (05:39):
Yeah, so Exotec is going to be a 10-year-old company next year. It was started in 2015 in France by Renaud Heitz, Romain Moulin, who were both talented engineers working together at General Electrics at GE Healthcare, one in charge of the hardware, the other one in charge of the software, and had a great working relationship and worked previously in supply chain together as well before. And in 2015, Amazon acquired Kiva just a few years prior to that and then announced that they would close the commercial department of Kiva system. And Kiva, if you remember, was the first company that introduced robots, autonomous mobile robots, an MR to the supply chain world. And Amazon made that acquisition in 2012 for what was a hefty sum of money back then. I think it was 700 million. Yeah, sounds right about. And then it was surprising to hear just a few years later that they would stop serving their existing Kiva customers after having paid so much money.
(07:00):
So oh, now we're thinking that must be something interesting, so interesting about this technology that Amazon prefers to just retain it for their own purpose only. And on the other hand, that creates a need that is not covered any longer in the market. So why don't we go and try to build our own technology and let's not just do the same, but let's take advantage of all the evolution of technologies that took place in the last eight years since Kiva was founded and use cloud-based principles and philosophies in how we build software and introduce that to the market. So that's what truly triggered the idea. And then what followed was six months of intense customer discovery phase where they spent time in warehouses talking to clients and to uncover the unmet needs of existing automation technologies because automation is supply chain wasn't new, robotics was new, but automation wasn't new.
(08:16):
And for the last 30, 40 years you've had a lot of German Australian based companies building some very sophisticated, pretty heavy hardware automation PLC based automation hardware with conveyors, with shuttle based systems, et cetera. So they came and understood that what those technologies were missing were on one hand a lot of flexibility that e-com companies needed to grow and not being so able to predict accurately whether their growth is going to 10%, 20% or 30%. And they were also missing with especially the Kiva a MR type of technology, the ability to densify storage and hence create efficiencies in terms of the space they are using and how they're using their warehouses. So that's how they ended up with a Sky system concept, which is basically a 3D moving robots, which brings the great performance of traditional automation with the flexibility of robotics and the density of going all the way to the top of a warehouse.
Scott Darling (09:32):
One of the other things that really intrigued me as I learned more about Exotec a number of years ago as we were preparing to invest is that many of these warehouse systems are customized designs. A huge retailer has many warehouses around the world and they decide to build this customized solutions. And one of the things that I thought was so impressive about Exotec is it really looked like what I understand from the tech industry is a scalable product that you can sell on a global basis, that you can go into any warehouse, your system is modular, scalable, and you can adjust, as you were mentioning, the amount of stuff coming in the rate or this amount of stuff going out or if you need to just hold more inventory in general, very different than the traditional material handling kind of business, which love to hear your thoughts on that.
Arthur Bellamy (10:46):
Yeah, I think Scott, you put the finger on what I believe is one of the key success factor of exit tech and maybe a learning that could be helpful to some other funders or business owners listening to us. What I'm really impressed about with the story of exit tech, especially early on was the ability of the founders to say no to clients asking some very specific and tailored made things. And as you are just getting started and you have this 10 million contract that you're about to get to and it's the first one you can get, it's easy to fall into the trap of saying, yeah, let's do something specific for that guy. It's so important for the company When Car four comes to you, you've sold one system for 700,000, you're discussing a 20 million system, you're running out of cash and they ask you to change how your product is working to accommodate to their needs and you don't think this is a good idea and you say no, it's either you take it like that or you lose it.
(11:55):
I think it takes some impressive courage and you've had a number of defining moments that happened early on in exotic and each one of those moments had to come true to get to such a company. Now I believe if today we're 2 billion company with a thousand of employee, that's largely because of that. The reason this has so many implications when you start thinking about building a product that's scalable rather than doing everything that is tailor made, it reduces drastically the complexity that you have to manage as a company. And instead of managing that complexity, a hundred percent of your effort and focus can be on making your product more reliable, cheaper and to scale. It is absolutely paramount in building a global success like we did.
Scott Darling (12:54):
Yeah, it's very true. This is really a classic, as you know well from living it day to day, this is a classic problem that all startups face. The good news is they land their first big customer who's willing to write a big check. That's really exciting. Then you start talking to them and they want you to do something that takes you off your roadmap into the wrong direction. And you're absolutely correct. It takes incredible discipline to stay focused on the vision you have. And I'll make one more comment about that is one of the ways, again, I as an investor think about exec that attracted me so much was the rest of the material handling business to me looked like customized supercomputers. You're building for a national lab, whereas Exotec is like the microprocessor revolution or something, atomized building blocks that on the one hand you can that are super flexible, so you can address a wide range of needs,
Arthur Bellamy (14:07):
But
Scott Darling (14:08):
Because they're built on basic building blocks, you can scale them in many different directions. And to your point, you get all the advantages of cost, scale, reliability, so
Arthur Bellamy (14:19):
Exactly. Yeah, exactly. I think it's a really good point you're making. When I say you say no to client, the reality is oftentimes you find a work around their ask because of this modularity and because you can play with the different bricks and assembling them in different ways, you can play around and without changing your Lego brick individually, by putting them together in place, you can still develop and achieve the function and the results that they were asking you to reach in a different way. And I think if your product is super rigid but is not flexible and you cannot break your standard, then becomes really hard. But if you having that discipline is possible, if you also get the flexibility to address a wide range of needs by assembling the different bricks in the right way
Scott Darling (15:21):
Because you have everything from, as customers today, what I would call all kind of mid-size businesses that are in one nationality all the way to huge multinationals in Europe or Asia or the United States with literally dozens of warehouses spread all over the place. So I think you have demonstrated that you can work this atomized approach to things works and is highly scalable. Arthur, how big are some of the ones you've installed? Hundreds of thousands of bins
Arthur Bellamy (16:01):
Up to half a million of bins
Scott Darling (16:03):
If you're winning companies like Carrefour from, for those in the US who don't know what Carrefour is, it's the Walmart of Europe, I guess is the best analogy. Arthur, this is a company that is at large and impressive scale and doing well. So congratulations to all of you.
Arthur Bellamy (16:23):
Thank you.
Scott Darling (16:24):
Let me extend the question a little bit on that since we talked about the fact that you are at scale now. There's two things that come to mind that I'd love to hear your comments on. One is how you made the decision to go international. You started in France and Europe as you said, and then the other thing that happens as you begin to scale also you begin to build relationships with the channel. But let's start with the international scaling, if you have any thoughts on that. That's another big decision for startups. Hey, when do I leave my home market? Maybe share a few thoughts on that and then we'll turn to the channel.
Arthur Bellamy (17:08):
Yeah. So when did we decide to go international? I think pretty much when you joined the cap table of Exotec, we understood that being a strong player in France wouldn't make the company really great. It would be enabling us to build a solid business but not to really be a player in our industry. And so early on we understood that we needed to have a global success and especially in the United States, which is by far the largest market to truly shine and build the leader that we had the ambition to build. So starts with kind of recognizing where the true potential is and how well and what your current footprint is. So that's how it started. Then the question is when is a good time to start investing and taking that risk? So happened in I would say three steps for us. So first step was raising the money and having the ability to do such investment if we wanted to and looking for local partners to enter a market that we had.
(18:33):
No, we didn't fully understand the culture, we didn't know so much the competition. We didn't know the clients obviously in the US or anywhere else. So step one, going with the local partners that would believe in our technology that would be willing to invest in it to dedicate resources to push it to their existing client base with the credibility of understanding the local culture and expectations was a great way to test a little bit the water in the US quickly on because there's a great product market feed and because we found a good partner, we saw that we were getting some good momentum in the market. So the second step was to go and start investing directly. So we created the affiliate, we hired our managing director in the US and a first salesperson. So it was a very limited team, mostly supporting the partner, but now having established a small local footprint that would enable us to start selling and supporting our operations over in the us.
(19:50):
And then as we saw the pipeline of projects increasing came a search step where we build the conviction that our product was resonating. Our partner was able to create some really significant success. Our local managing director was convinced that we're off to something big and then we decided, okay, it's going to happen. It's important for the company, let's go and invest. So we started to create a big head office to create a local support that was demanded by clients, the CEO and co-founder Roma and myself moved to the US to truly have a local anchoring and show to the market that this was not just something we would manage from far away, but this was an important priority for us. And from there on we hired and in the last two and a half years we moved from being I think five in the US to now being close to a hundred. So it's been a pretty solid growth we've experienced here. And those three steps with different level of scale, we have replicated in each and every different regions where exec is present today.
Scott Darling (21:17):
Just a small digression, Arthur, you guys are headquartered in the United States, your headquarter is in Atlanta. Tell us how you, not the typical tech hub about a Palo Alto or New York or wherever, tell us why you picked Atlanta, why it's the right place for you in the material handling industry.
Arthur Bellamy (21:38):
Yeah, that was a bit of a philosophical question at first, which is are we a tech company or are we a supply chain company? And our answer was, we got to be a supply chain company. Tech is a way to perform material handling, but it's how we do it, but it's not who we are. And so Atlanta is well known for having a robust supply chain industry with a lot of our competitors or potential partners and even potential clients located in Atlanta because it's a fantastic logistic hub. And from Atlanta, we are also close enough to France, so it's easy to travel in the us, it's easy to travel back to Europe and there are some great universities we can source talent from having already a few Georgia Tech graduates in our r and d team in France. We knew this was a great school to go to hire some talented engineers from.
(22:45):
So that's how it got started. We hesitated a little bit with Boston. Boston was probably more on the tech and robotics side and the supply chain team like the way to go for us. And there is an affordable cost of living in Atlanta, which is another plus because of what we do, which requires quite some square footage to have our own systems installed to repair our robots. We have our own warehouse, we don't have only offices. We need some space. So when you are a young company trying to spare your expenses also plays a role.
Scott Darling (23:27):
This question of going international is a big one, obviously because of the huge investments involved and in every market, I think this is true, but you correct me if it's not. You've won some big brand name marquee customers, which you have used leverage to open up something. Is that a fair description of how you guys think about it?
Arthur Bellamy (23:51):
Yeah, absolutely. I don't know to what extent it's specific to our industry or if you can expand that to others, but there is a real turning point in what we do when we can demonstrate locally that our system is performing and meeting the local expectations. It sounds strange for us because what we believe that what we can pull off in France or anywhere in Europe, there's no reason why we can't also put it off in the US or in Japan or in Germany even. But client do make a big difference and say, yes, your system is running somewhere else, but I would feel much better if I could see it running close to my home base as well.
Scott Darling (24:42):
Be referenceable by you to other customers is critical.
Arthur Bellamy (24:46):
Yeah, absolutely. And if I can put a little bit more flesh into our tactical flavor into what it means going international for us, I think we had a range of tactics we could draw from. Ultimately getting a client site reference was really a turning point, but a lot needs to happen also before that. So we started to work on creating some general awareness about who we are and listing a local PR agency that would enable us to be put in touch with the right journalists who specialize into our field. So targeting some vertical press media, specialized media to make sure that people were exposed to our success, to our product, to our messages, to the problem we could solve. What worked really well for us was to have some significant presence at trade shows. Sounds very basic and maybe even a little bit old school, but it's still how our client and prospect shop and look around and look for some innovation that they can see in action.
(26:04):
And those were some of the aha moment of our prospect were for instance, that's how we got started in Japan. We had a presence at a big trade show in Germany. And because our product is so flexible and easy compared to the traditional automation, one of the advantage we have is within the two or three days that the trade show says, you can go and set up your booth, we can get a full system in there fully functioning. And that means that during the trade show, people will stop by and see our robots action, which if you're a traditional player, you don't have the time to build up the wire and organize your whole project-based system. So that was truly impressive. You could see the difference and the CEO of fast retailing, which is well known as owning Uniqlo, stopped by and said, this is what I want, this is what I want in my warehouse.
(27:10):
And that's how we got pulled into Japan very early on. So it just goes to show that the power of seeing it in action cannot be replaced. And trade shows were a fantastic way for us to go to the market to get some good feedback, to feel a little bit if we create some excitement, if we generate some interest. And 80% of our initial leads and opportunities sourcing came from that single source. And then over time we got a little bit more sophisticated and started to build up our online presence through digital marketing with the various tool sets that you can leverage until you really get to build your own sales business development and finally have your first customer advocate that you can amplify through each one of those different channel. So that was the recipe we tried to copy and paste in the different regions.
Scott Darling (28:17):
And just to emphasize again, from my perspective as an investor, which is not necessarily the correct one, but yeah, no question material handling company, but absolutely technology enabled. So no question that you're a tech company as much a software company is a hardware company really, but I love the way you express it, which is it's using tech to enable to change an industry, which is very much in vogue these days, but when 10 years ago was not. And so that was a courageous move to make at the time. So as a CRO, you have a global Salesforce now literally across the entire planet. Share a few thoughts about how you plan your coverage and growth. Do you hire ahead of growth? Do you wait until you're kind of constrained? Share a few thoughts about that. That's a lot of things that a lot of our entrepreneurs wrestle with.
Arthur Bellamy (29:20):
Yeah, so we do have to hire to some extent ahead and that's a bit of a bet. But again, when you've developed the conviction that you are onto something big, then we haven't waited. We move forward pretty forcefully building teams. So to give some numbers onto that, so when I joined, I was in charge of building the marketing department, which was only one person doing a little bit of everything as she could prior to me joining. And a year and a half later, we were already 25 and or 20 and pretty much scale across the globe and having a global function and organization in each one of our region. And that was truly just an investment. There was no true figures supporting that other than we believe in the potential, we believe in what marketing can do to amplify our success. So let's go and move forward.
(30:40):
I would say it's the same with business development. This is a type of recruitment that you have to do ahead of the needs because that's how you generate the demand and that's how you move from being more proactive and intentional into how you approach your prospects. So those two functions, marketing bd, yes, those were investment into our growth made ahead of a demand for sales. It's slightly different for sales before sales start actively working on opportunities, you can see that your early stage pipeline is growing. You can monitor some trends. So we've put some CRM in place, again, basic, but the CRM wasn't really much used before I came. When the team was small enough, everybody was aware of every project. They were all happening into one geography. So yes, we had a contract with Salesforce, but nobody was truly putting any info in there because what was the need for it?
(31:53):
Truly not much. So we've changed that and we started to truly harness the power of A CRM, which enabled us to truly have some nice data gathering and to see how the pipeline is developing, where it's developing, how fast, what stage the different projects are. And those were the first few charts we made. And whenever we had the conviction that the pipeline growth was strong and that this was in line with our other intake projections, then we would move forward and start hiring based on a ratio, which is how many millions per FTE do we expect each salesperson to contribute? And that's how we've defined with this kind of measure of efficiency and with those charts on expected pipeline development, how to scale the sales team.
Scott Darling (32:58):
So one more question on the sales then we'll just turn to our last topic, but we touched on this a little bit in terms of how you think about the company material handling versus tech, whatever that same thought process, I'm sure you had to go through figuring out the right type of salespeople to hire, right? Do you hire a technologist salesperson or a material? How has that evolved? I mean, how do you think about what is the ideal profile of the salesperson today that by experience works for Exotec?
Arthur Bellamy (33:44):
So Exotec is selling complex projects. That's how we refer to it. Projects that take one year to close, two year to roll out, or maybe we go faster. So let's say a year to roll out.
Scott Darling (34:02):
Yeah, tens of millions of dollars per
Arthur Bellamy (34:03):
Project, exactly. Tens of millions of dollars. They get to all the way to board approvals. So to be able to truly close such a deal, indeed you need a certain profile and seniority of salespeople. So I think it starts, and also because it's a DNA of the company with a sound and fairly deep technical understanding of what we do, and especially on the most complex projects, if you are trying to sell to a Fortune 50 companies, they have big warehouse, they have really complex problem to solve. You need people that are truly able to understand that. I would say even better than the client himself. I would say the best sales guys are able to do what Macey or VCG would do for those clients in supply chain, but they would do it for free based on their experience, based on their business acumen and turn this later on into some system design and contract negotiations and closing.
Scott Darling (35:21):
Arthur, I love one of the things you just said because I have personal experience with this. I worked at Apple in the past, and one of the things that Steve Jobs used to always say is you can't ask what they want. I mean, it's fine to ask them, but they can't envision what the technology can do, so they can't really answer the question for you. And I think the comment you made was fascinating, which is you have to have a salesperson, the customer is super knowledgeable about their problem and their current thing, but the salesperson has to bring to the customer what this new technology that the customer doesn't know about can do for them and have them understand that very interesting analogy. Yeah,
Arthur Bellamy (36:13):
Absolutely. And for the client, most of the time they haven't been through such a change. It's like the first time you implement SAP, how many times do you do that as a client? Maybe you've done it once in the past, and most chances are it's the first time you go through that process while on the SAP side, it's their job and they've gone through transformations and transformation so they know what they're talking about. So as a client, you look up to your sales guy to truly provide you the level of expertise and understanding, and you have to be able to trust that person and you would trust that person if you feel that person is bringing some added value and is able to do the job better than you would on your own. So there is a massive difference between a great sales guy and a good sales guy, and a good sales guy may just be not good enough to close the deal. So it's not a linear correlation between talent and results. There is a disproportionate return on outstanding.
Scott Darling (37:30):
It's a qualitative change, not just a quantitative. Yes,
Arthur Bellamy (37:33):
Absolutely. So I think quality matters a lot, especially in that field and to be able to act as advisors and not everybody's able to do that. So
Scott Darling (37:48):
Two last questions, Arthur, briefly. You have a similar challenge, I assume to the one as you sorted out the right way, the right prototype of the salespeople you needed for the channel. Maybe a few comments are where you are with developing channel relationships as you scale up and start taking products through the channel.
Arthur Bellamy (38:14):
So this channel relationship is a very interesting and strategic question. I talked about how early on finding the right partners has been absolutely instrumental in building the local success and showing us the ropes of the market. And absolutely true. Having partners has also enabled Exotec to scale faster, and partners are also demanding and they expect your product to be perfect, your tools to be perfect. If you internalize all of this, you can create some inefficiencies that you're not even aware of while the partner would chat at you the minute your pricing starts to get off and within a company, those things could get maybe a little bit more unnoticed. So partners really enable us to scale faster and keep us on our toes to make sure that we meet the standard greater standard of the market. On the other hand, what we quickly understood as well is that talking directly to the client was absolutely critical in understanding how to have our product evolve over time and not having somebody in between the client and us was truly strategic. Also, to keep growing at the speed that we decided was in line with our ambition. When a few client can make up so much of your growth, it feels risky to just put this in the hands of a third party company and say, well, my fed is in your hands and go, and I hope you keep pushing for my technology and not a competitive one. So another different one.
Scott Darling (40:17):
It's a complex relationship because if you're winning a Fortune 50 company, the customer themselves wants to talk to you directly, not just on the other hand, they also may have a relationship with the channel and have used to working with them. So yeah, you're managing a lot of complexity there.
Arthur Bellamy (40:37):
Yeah, there's some complexity. I don't think it's possible to take that complexity totally out without losing some of the benefits of both being in touch with the client and both going through the partners that have the benefits we alluded to. So our choice has been to have both coexisting, it comes with some friction sometime, but not as often as you may think actually. And it's very much manageable. And then the question is what is the right ratio that works for you, depending also on the market because some market are more reliant on integrators, as we call this them here, and some market have a preference to talk more directly with the OEM, and that's what they're used to. So I think the local adaptation of this go-to market strategy also is something meaningful that you should discuss with local management.
Scott Darling (41:41):
So maybe a closing thought or two Arthur on what's ahead in the next year or two or three for Exotec.
Arthur Bellamy (41:50):
So let's say exotic started with a fantastic product market fit, and I think this is truly the core of what we do. So continuing to innovate, develop new products. So we expand where we play and we continue to refine our product is I think a top priority and something that's going to still keep us busy for the next few years to attack new markets, and more importantly, also to stay ahead of competition. That also is not just sitting and waiting, but is truly evolving as well. So when you come with the first disruption, it's great, then you have to maintain that disruption of a time, and that takes a lot of effort into the r and d team and to keep that spirit of being in the day one, as Jeff Bezos says, to stay hungry to really push and fight and continue to take some risk to keep your position. For sure.
Scott Darling (42:57):
Arthur, thank you so much. I just want to say that it's an absolute honor for me to work with you with Roman Reno on watching you guys build this amazing company. So thank you for all you do. It's a real pleasure to spend a little time with you today.
Arthur Bellamy (43:16):
Thanks so much and thanks for the continued support. It's a great honor for us to have a data as part of our capital and help us be successful, especially North America. So thanks for your trust, Scott.
Voiceover (43:31):
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