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AM/FM RADIO/PODCAST & TV SHOW
With millions of listeners a month, Building the Future has quickly become one of the fastest rising nationally syndicated programs. With a focus on interviewing startups, entrepreneurs, investors, CEOs, and more, the show showcases individuals who are realizing their dreams and helping to make our world a better place through technology and innovation.
Kevin Horek: welcome back to the show.
Today we have Patrick Bergland.
He's the c e o and co-founder
Atta Patrick, welcome to
Patrik Olstad: the show.
Hey, Kevin.
Good to be on.
Kevin Horek: Yeah, I'm excited
to have you on the show.
I think what you guys are doing at
Xta is very, very important, but maybe
before we get into all that, let's
get to know you a little bit better
Patrik Olstad: and start
off with where you grew up.
Yeah, absolutely.
So, I'm, I'm, I'm from a tiny
town, uh, in Norway, right.
So, yeah, very cool.
South of Olo, 40,000 people.
Then, uh, then moved to Oslo to, to
basically the study after I was in the
Army, which was mandatory back then.
I'm starting to get old.
Um, and, uh, finished business class and
uh, and randomly ended and, uh, into, I
kind of stumbled into supply chain chain
to be honest, and, and found it super
interesting in terms of the global nature
of it and where sort of cargo flows and,
and where everything is built and made and
how you source these products and then,
you know, move them around the globe.
Um, and that got me stuck in the industry.
So yeah, that's, that's like the
origins I guess from, from my
Kevin Horek: time.
Okay.
So what made you get, or what
made you passionate about
business at such an early age?
Patrik Olstad: I don't, to be
honest, it, it's a great question.
I've, I had a, a fantastic lecture
that was super like, um, Energetic,
vibrant, uh, enthusiastic.
So, so I, I get to, I think
it's pretty much down to that,
that, that caught my attention.
Okay.
Which, you know, made me want to explore,
uh, supply chain as a, as an occupation.
And then I ended up working in Qan Nagle,
which is a, you know, 70,000 employee,
big company, and all they do is frame.
So working out of Oslo, I, very
early on, sort of, I was triggered
by that international vibe, whether
it was Vietnam, us, uh, something
in UK or Europe or Australia.
Everything was like all of
a sudden you go to work with
like, people all over the world.
I was very sort of dazzled by that.
Yeah.
Kevin Horek: Sure.
Okay.
So walk us through your career
up until becoming a founder.
Patrik Olstad: Listen, I've had
jobs since I was 13 years old.
Oh, wow.
Uh, yeah.
I've had all kinds of shit jobs
you can think of, but, um, but I
also did like some different stuff.
Like I, I helped the elderly when
I was like 15 and 16, like, uh,
you know, going home to them,
these kind of home care services.
Okay.
That was like an odd job.
And I ended up, you know, Doing
anything from feeding them, giving
them medicines to like cleaning them.
It was bizarre, especially in that
age, you know, but it, it really
made me reflect a lot about life.
And then I've had the typical jobs,
anything from McDonald's to a deli.
But then, then I started studying, I did
actually some telemarketing as well, which
was, I think, incredibly educational.
All
Kevin Horek: that stuff is
that you outlined, I think is
very educational for a number
Patrik Olstad: of reasons, right?
Yeah, yeah, you're right
actually, you're right.
Absolutely.
What I liked about, uh, telemarketing
is that you, you have such
a limited, um, tool, right?
You have only have your own voice
and you just hammer phone calls and
you gotta convince people to buy
something just by advising your voice.
So you eventually become really savvy at
like, okay, what kind of persona is this?
And how do you adjust your,
your pace, your volume, and how,
what kind of pitch you have?
And yeah.
Anyway, so, so I did those kind of.
Studied, uh, went to the army,
studied, studied, and then started
working for Quinan aga with,
which was International Logistics.
And I actually got my first like,
entrepreneurial experience there
because when you, freight forwarder
is like a middle man, right?
They don't own the vessels, the,
the, the planes, the trucks.
So they buy capacity and
sell it to a customer.
And the business model is
simply you buy something and
add a, add a percentage, right?
So we wanted, we wanted to find a business
model that aligned the incentives of
our customers with our own meaning
when you buy something and sell it
off, the only thing you wanna do is
add as much as you possibly can, right?
So what we wanted to do is to find
a model that allowed us to go to
customers and say, we gonna make
it as cheap as we possibly can with
any transporter around the world.
And the better we make that.
Price tag versus quality.
Of course, the better we make that for
you, the more you're gonna pay us and
we're gonna measure the effect of our job.
And, and then the better we are, the
more happy you will be to pay us.
So in some way, it's all about
optimization, whether it's route
optimization, capacity utilization,
any projects that we could come up
with, really, whether it was moving
warehouses, centralizing it, anything
that optimized their supply chain.
And they, Kuna allowed us to work with
this for about two years, and that
business unit became really profitable.
And that's, that's the origin
actually of Zera because working
through that, we realized that,
you know, the market is so broken.
It's so, it's so volatile and so opaque
that the customers struggle to understand
what they should pay at any given time.
Right, right.
And interesting.
And I, yeah, and I, I
thought about this like.
This is now more than 10 years
ago, and almost anything I could
imagine that I could buy, I could
Google, yeah, I, and get like an
indication, where is the market?
What is the price and,
and what should I expect?
But if you started Googling what
should added this get from Shanghai
to Los Angeles with their volumes
for a long-term contract, there
is absolutely no data on that.
Kevin Horek: Wild.
Interesting.
Okay.
So what made you actually decide to build
the company and how has it evolved over
the last decade or so to what it is today?
Maybe I'm talking maybe about some
of the similarities and differences
between the last decade because.
I think probably, and you can correct me
if I'm wrong, some of it's probably pretty
similar and some of it's probably like a
complete 180 and everywhere in between.
Patrik Olstad: Yeah.
But let's, let's, um, so we do
air and ocean shipments Okay.
To the, uh, to begin with.
But let's, let's hone in on ocean
freight and let's think about the
underlying challenge in this industry.
So imagine you and I ran a shipping line.
Okay.
Now we wanted to order new vessels
and we wanted them to be bigger
to achieve economies of scale.
So we are gonna order them today
and they're gonna be deployed
in the market in four years.
Oh wow.
Now in four years.
You and I need to make up our mind
whether we should deploy it between
Asia to US or Asia to Europe, or
Trans-Atlantic, north, south, which trade.
So we make some assumptions and hope
and cross our fingers that global
trade will sort of continue on its
trajectory in terms of growth, because
then this vessel will be needed,
which by the way, we pay a lot, right?
Right.
There's millions of dollars
we're gonna soak into this.
Now, let's say that, that we
deploy that vessel, but Donald
Trump was just elected president.
We deployed it on Trans-Pacific
going into the US and Donald
Trump was elected president.
We didn't see that coming because the
stats were not in his favor, but okay,
he becomes president, he starts a trade
war with China that has US importers,
front load cargo to avoid tariff.
Right.
Yep.
Which has capacity on transpacific
really tight, which we're
super happy about, right?
It's great for us because now rates are
booming and we deployed our vessel there.
Then another example would be that we
deployed the vessel on Asia to Europe, but
uh, ever given, blocked the Seus canal.
Right, right.
Yeah.
Or it could be Brexit or it could
be, uh, forests, uh, forest fires in
Australia or Taiwan situation, or Ukraine.
It could be yellow West
protests in France.
There's these things that happens that
rattles this industry that changes
how much goods are moved around the
globe, and we're suffering because you
and I as a shipping line, we're trying
to deploy the exact right capacity
at the exact right point in time,
and it's just impossible to predict.
So you, you'll never find equilibrium.
And Covid is a beautiful,
ex beautiful example.
Covid hits, everybody expects
the worst crisis for global
trade, so they pull out capacity.
Oh, wow.
Guess what?
Everybody was buying more.
They should have injected more capacity.
Now, maybe they shouldn't have
because when, when there was so little
capacity and so high demand rates
skyrocket, they go up seven, 800%.
Right.
Everything kind of goes to ship for
everybody besides the shipping lines.
Right?
Right.
So what I'm saying is
nobody's able to predict this.
Nobody's like, you can't
look at any historical data.
I will tell you nothing about
what's gonna happen going forward.
So, yeah.
Interesting.
Yeah.
Kevin Horek: I guess, Hey, well, never
thought of it like that, but you're right.
You're totally right.
Yeah.
Patrik Olstad: That's, And, and yeah.
And then, then the challenge if is
if, let's say you are, uh, Nike or
Walmart or it doesn't matter, any
brand, any pharma companies, automotive
company, any industry, occasionally
they're gonna go and buy ocean freight.
And that occasionally is, is the sum of
$600 billion changing hands every year.
And they dip their toes in and
the market is different every
time they dip their toes in.
So yeah, I'm saying it's, it's
super complex in many ways.
Uh, a lot of stakeholders and very little
transparency, and that's what Zera does.
We make it transparent.
Kevin Horek: Okay.
So how do you do that
Patrik Olstad: then?
Yeah.
Walk us through that.
That's interesting.
So when I was working at, uh, QAN
Argo, right, the biggest freight
forwarding company in the world, we
pitched their whole idea we should
make the market choice pattern.
We quickly realized that there
was no appetite for that.
Because if you're selling something and
the customer doesn't know what they should
pay, that's a huge advantage, right?
So we realize that you
can't look at the sell side.
They will never help you
achieve this mission.
But you can go to the buy side.
If you go to all of these customers,
whether it's, think these brands that
I mentioned, automotive companies,
pharma companies, retail, fmcg, they
have all negotiated a little bit of
contracts with the shipping lines.
So individually they
know what they're paying.
Think Shanghai to Los Angeles, as
I mentioned, they know themself.
Now, if you theoretically could collect
hundred, 200, 300 of them and put them
in the same room, and they all called
each other, what are you paying between
Shanghai, Hamburg or Los Angeles?
They'll all be informed.
So that is the right
way to think about Zera.
We built that pool.
A critical mass of hundreds of large
volume companies that all feeds in
their freight contracts into the net.
And then to make it legal.
We can't tell company A what company B
is paying, but we aggregate it into an
average and a spread, and then you get to
see your own contracts in light of not Ah,
Kevin Horek: interesting.
Okay.
Patrik Olstad: That means that
you have an initial, initial
initial chicken and egg problem.
Right?
Right.
So, so the first companies we
reached out, we, we did four years
free of charge, no subscription.
The only thing you paid with was if you
were willing to give your data, you would
get access because it's proprietary data.
So when I called around for these, First
years, which was horrible, to be honest.
I, I needed to kind of use my
telemarketing skills again because I
needed to tell a compelling story about
where this would go if they gave us
their proprietary data, that we could
make the market transparent together.
Right?
Kevin Horek: Yeah.
Okay.
Patrik Olstad: So you managed
to convince somebody, the vast
majority just says, forget it.
I, I like the idea my, maybe, you
know, to make the market transparent
would be great for me, but I'm not
giving my data away until you have
others who give the data away.
But you get some data and let's
say you get some data on, on, on
Shanghai to Los Angeles, right?
Then you try to find the next importer
or exporter that would have the same.
Trade routes, right?
Yep.
Now you have a limited period of time
to do that because any price has a
predefined valid from invalid too.
So if you're not quick enough, the
data you receive from company AE is
gonna expire and you'll need to call
them back and say, Hey, appreciate
you gave me that proprietary data.
Can you give me the new set?
Because I'm trying to get others on board
and I've been not successful so far.
Make sense?
Totally.
Yeah.
Interesting.
So it took four years, um,
and I think we reached a few
million prices at that point, uh,
accumulated over those four years.
Now we get about 10 million
prizes a month into the platform.
Okay.
Kevin Horek: Okay.
So I wanna step back a little bit.
So, Four years is a long time.
Yeah.
To, to go through building a product.
And I think, but the reality is,
is that's what it takes a lot of
time to actually build a product.
And I think a lot of people
don't understand that.
So I guess a couple questions
to you is how did you fund it?
And the bigger question is,
is how did you keep going?
Because yeah, that's a long time to grind.
Right?
And a lot of people don't have it in them
to
Patrik Olstad: do it.
No, I, I, I thought about
that a lot, to be honest.
I'm not sure I would've done it over
and maybe if I did it over, maybe I
could find some ways to do it faster.
But, but it was a true conviction that
this data was really valuable because
you're right, it takes a long time to
build a product, but we had to build a
product and get the data in order for it
to have any meaningful value combined.
Right.
Hundred percent.
And, and I think, I think
it was beneficial that I was
around 28 when we started.
So, so, um, That meant that I had even
more energy and more grit, I guess, than,
than maybe I would've had today or made
more patience in some way or impatience.
It's a, it's a combination, I guess.
And then we, the way we funded
it is that we, we raised capital
from venture capitalist and we
could show a growing data growth.
So we did an entire thing on, on, on
like a database that grew and then
we had a compelling story as to why
this data is valuable and especially
valuable at scale, and how you will
build a moat around this business.
The more companies you get on board,
because they all provide proprietary
data, meaning they'll be very hard for
others to do the same or to convince the
same companies to give that data away.
And finally, from a cross margin
point of view, if you think about
zera, they all provide data and
pay to get access as per today.
So you have no raw material cost.
And that's what we said in the early days.
We make this fly.
Eventually we start turning the
key and they'll start to pay.
And what we charge four years in, we
charge more than 10 x now on average.
So, so not only, you know, is, are
you able to at some point, turn
around and charge, you're able to
increase price all the time because
the value in the platform increases
with every participant that joins.
Kevin Horek: Yeah.
Interesting.
That's actually rare to find.
Yes.
Like, yeah, you, it's like you
captured lightning in a bottle.
Right.
Because they can't, you're right.
They can't really go anywhere
else because there's no
Patrik Olstad: need to and you
won't be getting the, the data.
Yeah.
So if you have, if you have
400 large, big fortune type 500
companies in the same room mm-hmm.
And somebody else starts it and say, Hey,
I need, I need one to join that room,
it's zero value to go into that room.
Kevin Horek: Yeah, a hundred percent.
So, You have some of
the biggest brands Yeah.
Globally using the platform.
Now walk us through, how
do I onboard my company?
I know you quickly kind of covered
it, but walk me through, how do I kind
of onboard, how long does it take?
And then over time, walk
me through the journey.
I get that it's, when it's
audio only, it's kind of hard
to talk about something visual.
Mm-hmm.
Mm-hmm.
But can you maybe try to walk
us through how people use the
Patrik Olstad: platform long term?
Yeah.
So, so, so the first thing we do,
so when we sort of figure out the,
we, we, so we have our I C P, right?
And then we fi find the contact people
and then we start doing the, the outreach
to, to sort of get their attention.
Once we're there, we start demoing
our software with, um, real life use
cases, meaning they get to see how
it looks like for an other equivalent
company, just anonymized, right?
Right.
Meaning, um, and then, And then from
there we offer a free value assessment.
We say, listen, we have an idea
about where you move cargo around
the world, how much you move it,
and we have no idea about price.
What we will do for you is that if
you give us all your proprietary data,
as so everybody else does, and now
it's, the threshold is much smaller
now because they can see and they can
speak to other customers who does it.
And we do NDAs and everything
is fine and safe now.
But um, if you give that data, we'll
do a free of charge value assessment.
So we will tell you which trade routes
around the world do you pay more than the
market average or the market high or low.
Same so that you get to see
this in today's market tomorrow
and the day after it's gonna be
different because the market moves.
So we are gonna give you value today
so you can see a tangible dollar value
from subscribing to our platform.
That is value in itself for you.
If you decide not to subscribe, that's
fine, but what we really equip ourselves
with is a very strong business case.
Right.
So that allows us to have a much more
fact-based, data-driven conversation with
our prospect because they get to see how
they perform in the market versus the
database and exactly which one of their
suppliers at which trades are sort of
ripping them off, potentially, right?
Kevin Horek: Mm-hmm.
Fascinating.
So it's a no-brainer, right?
Because if you could prove to
them that you're gonna save them
money, they're gonna keep the
conversation going and want to use the
Patrik Olstad: platform, that
is, that is how we look at it.
And then once you, once you get onboarded,
we focus on like four main use cases
that they can leverage around the year.
One is just monitoring and
keeping track of the market.
The other one is like the benchmark.
So if you are a pharma company, how do you
perform against all the pharma companies?
If you're automotive, how do you stack up?
And then it's, uh, the rfq.
So when you actually negotiate the
prices with your suppliers, we will
tell you through the different rounds of
bidding, who, where can you still push?
Whereas there still improvement there is.
So if you have a thousand trade routes
around the world, or 5,000, we will
tell you out of these 5,000, do not
focus on these 3000, here's the 2000
that you still can gain something from.
Kevin Horek: Right.
So sorry to interrupt you.
What, what do you mean by gain
something from like, so what am I
gaining or what am I tweaking there?
Patrik Olstad: Sorry.
Uh, okay.
So let's say that, um, uh,
you're an US based importer.
Uh, you have, uh, tons of
trades around the world.
Now you are, what you do is that
you go out with an RFQ at a tender,
you know what that is, right?
So you, you, yeah.
You go to old, maybe explain that quickly.
Sorry.
You go to all possible suppliers
of ocean fit shipping and then you
say, I have 50,000 container boxes
that I'm gonna move over the next 12
months on these 2000 trade routes.
Please give me your best price.
They submit their best price.
You take all of that data, go
back and say, okay, here's where
I see my suppliers performing.
Then you take the Zera data and you
say, Ooh, relative to the market,
none of them price Santos in Brazil
to Newark in a competitive way.
So what Zera tells them then is,
out of the 2000, you have already
achieved something good on 1000,
but 1000 trades around the world.
You can still optimize, meaning,
reduce prices further down relative
to what is available in the market.
Kevin Horek: Okay.
And so why the fluctuation?
Like what are things that cause
that number to be higher or
lower in those shipping routes?
Is it just they're not getting as
much people sending stuff while
you're trying to send, or, or what
Patrik Olstad: happens there?
So when you have a volatile
market, so the volatility stems
from what I described earlier, how
to, how to reach an equilibrium
between, uh, supply and demand.
And then that volatility
causes a huge spread, right?
So some is paying way more because
the sales savvy sales guy pulled that
deal off and somebody has massive vol.
It's all individually negotiated.
There's no central clearinghouse
and there's industry.
It's wild.
It's, it's, it's, I usually say
it's $600 billion where they buy
and sell in Excel spreadsheets.
And that's the reality to it.
Interesting.
So, so, okay.
So that makes sense how you can use
the data to negotiate better deals.
And then finally, budgeting.
Right.
So we, we know if company A,
B, or C is coming to the end
of their contracts, right?
And we know that they contracted
in when the market was here or
here, doesn't matter, high or low.
Now we will tell them based on what you
have achieved in the market, so let's say
your position was market average minus 5%.
Now the market has moved from a new
contracted and it was high, let's say.
So say that.
So now we can tell you based on
our data and what's it possible
to achieve in the market today.
And if you can replicate your
position of being 5% below the market
average, here's your new budget
so that they can go internally to
their final finance department.
Say, Hey, we're not gonna spend 150
million years dollars next year.
Z has estimated our budget to
come in at 70 million years.
Make sense?
Yeah.
Interesting.
Or, or vice versa.
Vice versa.
It's even arguably more powerful if,
if the budget goes up because when
you then go to your finance director,
they will say, oh, why are we gonna
double our ocean freight spend?
Then they have our market data to
say, well, if we double it, we're
still in line with the market and
the perfect sort of performance.
Kevin Horek: Yeah.
Fascinating.
Okay.
Interesting.
So I keep thinking about this.
One thing you, you kept, you said a while
ago is obviously when you were pitching
to people early on, they were like, call
me back when somebody else is using it.
Right.
How did you finally land that
first customer or the first
few customers to trust you?
Because I think that's really hard for
a lot of startups in the early days.
Patrik Olstad: It is incredibly hard.
Listen, and I think you need to
understand the pain, and this is the
benefit from what we're doing is such
a niche thing if you think about it.
Right.
But, but still 70% of global trade
goes into these container boxes.
70%.
It's a massive industry, but,
but it's, it's very few that sort
of gets it and understands it.
I used to work in it for a lot of years,
so I could tell them, or I could, I
could have a good conversation with
the prospects about the pain they were
feeling about the lack of transparency.
Amazing.
Yeah.
Yes.
And then I could say, listen, there
is no interest from those that sell
side that provides you with those
services to ever make a trans.
But if we can gang and group
together, a bunch of you, ah, you can.
Interesting.
You can find out.
So it's, it, it is all about that
storytelling in the beginning.
And then, as I said, the vast
majority is gonna be nos.
Right?
And then eventually you find somebody
that says, yeah, that makes sense.
And I'm so annoyed about that volatility
and that that lack of transparency.
I'll take, I'll go on a limb
and I'll give you my data.
Right.
But of course, we, we, we
signed NDAs and we did like
everything we could to support it.
And I also think it helped to come,
um, to establish this company out of
Norway because the, the country has,
um, a meaningful, sort of perceived
trust in, in, in global trade and,
and, uh, history within shipping.
So, yeah.
Kevin Horek: Interesting.
That's, no, that's fascinating.
That's actually really good advice.
So I'm curious.
So you, you kind of covered it, but I
want to dive a little bit deeper into it.
So I've been using the platform
for say, three months, six months.
What, what kind of stuff do I
continuously get from the software
outside of just like, oh, you
know, like this is the new rate.
Is there other things I get or, or walk us
Patrik Olstad: through that.
Yeah, so, so you know, the
four use cases I said, yeah.
Uh, those are the primary sort of, uh,
reasons as to why you would return and
just understanding and sort of monitoring
the market as, uh, immense value.
Now I gotta, I gotta share that, you
know, we, we started going to the,
uh, demand side because my hypothesis
is always supply will follow.
Unless you can discover something new
that people want, you should listen to
the customers of in terms of what they
really want and really understand it.
And I think we understood that
they would like this transparency.
So we went for that.
But we always said that if we could
bring the biggest companies in
the world and have them push our
pricing data, our intelligence to the
suppliers, eventually the suppliers
will budge and join the platform.
Right.
So, so think about it because what
you're doing is that you're, you're
tilting information asymmetry in
favor of the customer leaving the
seller to be a little bit, Ooh, shit.
How do you know that's the Tokyo
to Sydney is down 30%, right?
Yeah.
So today we work with four of the six
biggest shipping lines in the world.
Eight of the 10, top 10 global forwarders.
And, and all they did for the first few
years was threatening us with lawsuits.
It's my data, it's proprietary data.
You can't have that.
I've been in so many meetings.
The beautiful thing is we always told
them that, listen, if you want to prohibit
us from getting the data, you go to your
most important customers and you say
you can't feed your data into NetApp
because we have a confidentiality clause.
Now when you as a seller tell your
customer that you're telling them
that you're ripping them off and
you, you don't want them to see it.
Totally interesting that how this plays
out is, is inevitably, it was inevitable
for me that it would end up like this.
And, um, yeah, I think this
is where we are at the moment.
Uh, and then, sorry, you, your question
was around the use cases and what do they
give back to and use the platform for?
Right, and the reason I told this story
is because the sell side is actually
even more engaged with the platform
because for them it's core business.
As for the automotive company,
It's not core business.
So they dip their toes, as I said,
into the market every now and
then and get frustrated by it.
But the sell side has actually
arguably, and I would say there's
even more value from this data
because this is their daily business.
So we can see very different
usage from these three segments.
Right?
That's one part of my answer.
And the second thing is that we
have expanded from price into
capacity, reliability, right?
Emissions, which I call like complimentary
data sets that we've been working on.
The sort of, you don't only wanna
provide visibility from Shanghai to
Los Angeles on price, but also how,
who's polluting more or less if I
choose this one versus that one.
And so,
Kevin Horek: Yeah.
Fascinating.
Okay.
Interesting.
And then, yeah, the sales side
is actually really interesting.
So walk us through or dive a little
bit deeper into how they use the
platform, because then they can
just basically say, well, we are
competitive, we've already verified
the data with an objective third party.
Yes.
And then, then some.
Patrik Olstad: So I would say, I, I
would say there's a couple of things.
So a, you would use it to optimize your
margins to make sure that you, you are
giving the right reductions relative
to the market, but not too much.
Right.
So I've, since I've been on the sell side,
we were always worried the customer would
leave us and we always felt the pressure.
Now we came up with the idea when
we were working for the sell side
and I said it would be the best.
Cool and market intel that I
could have in order to create
lifetime value with our customers.
Because every year they go out with
their rfq, as I described, the tender.
And we need to avoid that.
And the best way to avoid that is to
show that they don't need to do it
because they're in line with the market.
They're not bottom, they're not
top, but in line with the market.
They should stay with us.
So all of these things can just,
everything that the buyer is benefiting
from can almost be flipped and
say the sellers can do the same.
And I would say that it's like
share a wallet and lifetime value.
Those are the two things that they should
leverage the data to drive with their
customer in their customer relationships.
Kevin Horek: Yeah.
Interesting.
So I'm curious what is the supply
chain state of the industry right now?
Because I think we've all been affected
by it for a number of different ways.
So has it,
Patrik Olstad: where are we at now?
We're at a stage where, uh, More
or less on a global scale, there
is a surplus of everything.
It's like calm, right?
Supply chains, breathe more healthy now.
Um, there are, that, that's a,
a holistic sort of approach.
If you look trans-Atlantic,
it's much tighter.
There's always things in some north
south trades that's still a bit
jacked up and, and and so forth.
But overall, now it's much calmer waters.
There's an oversupply relative to demand.
If you see in, in January,
import into west coast of us,
dropped 27 or 28% year over year.
Oh wow.
It's, it's full, full of a cliff now.
Shipping lines hasn't pulled
out the equivalent capacity.
So there's a huge amount of vessels
and space available, which has
had prices going from, let's say
around peak of $10,000 an average.
To like $1,900.
Oh, wow.
Okay.
So it's Holden off a cliff.
Shipping lines will now
start to, it's, it's bizarre.
At the peak through Covid, they
were making more profits than, uh,
i, is it called the Fung Shares?
Facebook, Amazon, Netflix.
It's a, you have few of them.
The ship, think about that.
Steel movers were making bigger profits.
There's 10 shipping lines in
the world that makes up more
than 90% of global trade.
They printed more money in the profits
than these other tech companies.
Right, right.
Which is bizarre.
Anyways, um, now they're gonna
struggle to be profitable.
Even that's how bad it's changed.
And, and this means that the only, the
only thing I find almost, um, bizarre is
that shipping lines controls the vessels.
They.
They are the ones that sit on capacity and
they've learned through covid that as long
as we restrain capacity, we will make a
huge amount of money because right, these,
this cargo needs to be moved, whether it's
pharmaceuticals or a retails or automotive
companies, they need to be moved.
And whether you, you know, multisource
to go from a bit more cargo from
Europe and not have this dependency
on, on, let's say China, or you go
Southeast Asia or South America, it
still goes on these same vessels.
Right.
And shipping lines.
All they need to do is like, they're,
they're almost their worst enemies because
they just need to pull down capacity
where the customers hardly can get on
the vessels because then rates skyrocket.
Ah, yes.
Okay.
Interest.
It's, it's, it's 10 shipping
lines, as I said, and they're
grouped into three alliances.
That's, that's the three alliances
that takes care of global trade for us.
And 30 years ago, the top hold
on, the top five shipping lines
had about 20, 25% market share.
Globally.
Yeah.
Top five today has more than 70%.
So what we've seen over a few decades
is shipping lines being forced out of
the market because of, you know, this
incredibly volatility and, and weak
market conditions for periods of time
where it's been mergers and acquisitions.
Eventually you end up with a few players
dominating the market and at some
point they will control that capacity
so that they always make good money.
Kevin Horek: Interesting.
So how does air freight
play into all this?
Is it the exact same?
Is it quite different obviously like,
Patrik Olstad: That's a great question.
It's, it's, sorry I interrupted you.
No, keep going.
It's, uh, it's pretty much the same.
It's more fragmented on the
airline side, but I'll tell
you a funny story about this.
So back in the eighties, uh, more and
more national freight was, uh, starting
to move around and airlines was moving
passengers, but they got more and more
requests for cargo and this was an
annoying thing, a burden to, to deal with.
Then there was these friendly companies
called freight forwarders who said, Hey,
you shouldn't be bothered with that.
How about you leave it with us and
we will consolidate it and package
it so that instead of having 100
customers requesting this, you'll
have me and I'll pack it all together
and send you like one request, right?
Ah, I see.
So the airlines bought into that and
started working with the forwarders.
Now, uh, you go a decade forward.
Around the nineties, Palem Air France,
and one more, I think it was realized
that shit we're giving away too much
power to this middle men, right?
So they went out and said, now
you can book directly with us.
You don't need to go through this.
Middle men, we're gonna take
that business ourselves.
Right?
Obviously, because it had grown
in volume, it was attractive.
So all the forwarders just
collectively moved all the volume
away from KLM and our France, which
had them go back to the market and
say, Hey, you can't book with us.
You gotta go through these middlemen.
So that's the biggest difference between
air and ocean that is controlled by D H L.
Qan.
Aal, D S V, uh, FedEx, U P s.
Yeah,
Kevin Horek: interesting
how that play, how like it's
Patrik Olstad: totally, yeah.
Kevin Horek: Yeah.
Interesting.
So how do you think they
pulled that off though?
Because that's tricky, right?
Or it was kind of a little big
Patrik Olstad: gamble.
There's, there's like,
uh, uh, 20 years right?
Of, of buildup here, 15, 20
years where, where the folders
just accumulate so much volume.
Eventually that once the shipping
lines realized that they'd done a
foolish strategic choice, it was too
Kevin Horek: late.
Right.
Okay.
Interesting.
Patrik Olstad: But for us as a company,
it doesn't really matter that much.
We work with the airlines, the
forwarders, and the same end
customers and the same end customers,
automotive company or anything pharma.
They do both air and
ocean transportations.
And we, that's why we cater to the both.
The key thing, why we chose is that it's
volatile, opaque for both modes, and the
combinatorics is limited from A to B.
So you gotta go from an airport to an
airport or an ocean port to an ocean port.
Whereas if you look at.
It's almost endless in
terms of combinatorics.
You can go from anywhere to anywhere with
trucks, there's many different types of
trucks, so it would be very hard to bring
hundred companies into the same room.
And they talked about their trucking and
they would get tons of value from it.
But due to the limited combinatorics
and air, ocean, they will get value.
Did, did that make sense?
Yeah, that's
Kevin Horek: fascinating.
Yeah.
Cuz you don't get this.
Well, I've never really had it
explained to me like that or really
understood how, how it really works.
Right.
Yeah.
Fascinating.
So, I, I'm curious though with the
supply chain side of things and all
kind of the good, bad and other things
going on on the planet right now.
Like it, it seems to me, without
maybe getting political, that
some comp countries are kind
of saying, Hey, we can really.
Do this for you when we can handle some
of the manufacturing and actually getting,
you know, your goods and services to,
to parts of the world, and you should
move away from, you know, certain
countries because of, you know, whatever.
What's whatever's happening?
How do you see that?
And like, is that really gonna happen?
And I think the biggest thing right
now is like you said it earlier
with like the US and China, right?
But then there's other countries
that are like, hey, we'll manufacture
your iPhone or whatever, right?
Mm-hmm.
Chip it to like, is that, and I
get it's really complicated to,
to move a whole production line.
But is the supply chain side of
that just as complicated to move
to another country or not really?
Or, or how does that
Patrik Olstad: kind of
work in, in principle now?
Right.
So, so a lot of the actual
transportation, I think is some of the
easiest components to, to work around.
Okay.
I think there's, there's a few decades
of now know-how, uh, that we've
sort of, you know, sunk into the.
Right.
Okay.
Yeah.
So I'm not thinking, I'm not thinking
China necessarily, but you go Vietnam,
India, Bangladesh, there's, there's
tons of these countries, right?
Where we, we built up, um, machinery
and a know-how, and you have a human
cpo, a capital component, sort of there
that is, it's a pretty nice setup.
Moving that is gonna take long time.
What I'd rather see that companies do
it, that is that they move the source
so they, they reduce their dependencies
somewhat and find maybe something
in Turkey, Eastern Europe, south
America, latam, those kind of things.
But they're not moving
the majority, right?
Because they're, so, you see what I mean?
But they reduce their, their dependency
so that if any disruption similar to
what we sort of went through, then they
can more easily scale up elsewhere.
Kevin Horek: Okay.
And then it'll be a gradual shift if they
choose to over the next, you know, five,
Patrik Olstad: 10 plus years.
Yeah, that's, yes, that's
what I'm thinking as well.
So, and then, uh, on top of that,
the, the biggest sort of volume
moves we've seen has been like to
neighboring countries, you know,
Thailand, uh, Vietnam and so forth.
Yeah.
Kevin Horek: Fascinating.
So you've been in the game a long time.
Any other predictions or thoughts
about things that we can expect
kind of in the global supply chain
industry in the next few years?
Or is it just kind of, who
Patrik Olstad: knows?
No, I mean, I, I, I love that we
call it like black swans or whatever.
They're, and they're supposed to be rare.
Yeah.
They're just not rare there all the time.
They're frequent.
Okay.
Uh, and I can, I can sort of list.
15, 20 of them the last four years.
Right.
Five years.
Sure.
Um, and the only thing I think we
should be aware of is that they will
continue to happen because they're
sort of outside of our control.
And for companies it's super
hard to deal with them.
What I think they should,
uh, be more sophisticated.
It's, it's contingency planning
and then having, uh, alternative
solutions because now there's
more appetite to invest in that.
And it didn't be, it always
used to be just in time.
Everything costs pushed
down and just in time.
And now I think there's room to
think differently about supply
chains and stability for businesses
to be resilient and, and profitable
in difficult times as well.
Kevin Horek: Yeah, yeah, that makes sense.
So then how does that affect you as
a software business and your roadmap?
Because so many things are
constantly changing or happening.
How do you manage that roadmap
and that feature request?
Because you and I both know, it's just
cause I dreamt up a feature today doesn't
mean it's deployed tomorrow, right?
Yeah.
That would be ideal, but it's
Patrik Olstad: just not.
So, you know what, let
me give you an example.
If you move a container box from
Inland China or inland India, take
a, since you, you guys are more
friendly with them these days, but
in Inland India to inland us, okay.
On average there are 16 stakeholders
involved to, to make that movement happen.
So I'm thinking, I'm meaning
local truckers on both ends.
People stuffing and stripping the
container box, operating in cranes,
uh, doing the vessels, uh, moving
the container box to back and forth
from the facilities and doing the
warehouse services and then custom.
Those, that's like
simply to explain, right?
16 stakeholders.
Uh, now if you take one of our companies,
uh, uh, customers, uh, they would have
3000 different trade routes as an example.
All of those will be multiplied
with 16 in order to facilitate and
have their supply chains running.
That that's the global scope of, of
stakeholders involved, who are one
big international company, right?
Yeah.
So what I'm saying is that we as a
company, what we've realized is that
the Scoper is so big that what we should
do is that we should collect the best
data sets in the world for air and ocean
fed shipments, and then we should allow
everybody else to build on top of that.
That's how we think about
building a platform.
So we will collect the data, make sense
of the data, and then all these other
services that you can build on top in
order to how those supply chains flow.
We will make our data accessible and
available for those kind of players.
And I think that's, yeah, that's,
so I, I really think we're a
data and product company, right?
So deeply sort of rooted in that data and
understanding it, and then we build data,
uh, software that allows us to make sense
of it, but even more importantly, allowing
others to access the data as well.
Kevin Horek: So is that just
as a developer, I can access
it through APIs or, or how do I
Patrik Olstad: get that data?
We do it with APIs.
Yeah.
Kevin Horek: Okay.
Can you maybe give us some examples
of how some of your customers have
actually pulled your data into their
Patrik Olstad: platforms?
Yeah, so, so actually you can, we
can go through all different core
sort of stakeholders, but if you
look at the shipping lines just to
begin with, we have, for instance,
our data going into their pricing
algorithm to help them with their
pricing towards their clients, right?
Yeah.
Then there's, um, Uh, supply chain
simulation software that uses the data to
help a customer, uh, answer the question
of where should I put my warehouses
globally in sort of, in, in order to
optimize for transportation spend, where
we will just fill one of the data sets
that is required in order to do that.
And we're not offering
that service at all.
So you can go in many different directions
with different types of companies, whether
it's consultancies, tech companies,
or whether it's the core stakeholders
such as the buyers and the sellers.
Mm-hmm.
Fascinating.
Kevin Horek: And then again, you're
just, uh, mission critical type
app for these companies, right?
Because they're leveraging
you across different things.
Like not only are you giving them
pricing from both sides, you're also
giving them other information to
that is core to run their business.
It might be one of five pieces
of data in your warehouse.
Example.
But that's another like, sticking
point for you guys, right?
To be, yeah.
That's fascinating.
Very
cool.
Patrik Olstad: That's awesome.
Yeah, I love it.
I, it's, it's pretty niche in terms
of like the industry itself, but it's
a, it's a big niche, so I love it,
Kevin Horek: but you're also
solving a real problem, right.
And I think that's also really good
advice to people looking like Sure.
You know, saying I'm, I'm gonna create
another social network these days.
It's like, I guess in theory
doable, but I think if you want to
create like a really good business,
you find these niches, right?
Yep.
And you hope it's big and you
hope it's kind of your first
to market in them, right?
Yeah.
Is the reality.
So, yeah.
I'm curious as we kind of coming
into the show, any other advice for
entrepreneurs, uh, that maybe you
wish you knew earlier on in your
career that you'd like to pass on?
Patrik Olstad: Oh, there's tons
of things that I think, I think.
I think one of the things
that I personally have sort of
benefited the most from Yeah.
Is that I, I think I'm pretty
good at, at seeing new ways.
So, so you get a lot of nos
and a lot of closed doors.
That doesn't mean it doesn't necessarily
work or it means that you just got it
slightly wrong, so you gotta try again.
So, uh, there is something about
that grit and the ability to not
sort of get too worn out by all those
nos and disappointments, but you
gotta be, you gotta adjust, right?
So you can't be, and I think
this is an important balance.
You can't be just double and
think that it's gonna work.
And I'll, I'll, I could give so many
examples of mistakes we've done.
Sure.
Right.
Because we were so curious and
so excited in the beginning.
So we ended up doing so many things
and once we sort of hone in on,
on something that worked, then we,
we really stayed with that and,
and ran it as fast as we could.
Right?
Sure.
Um, Yeah.
But yeah, that's not necessarily, um,
a recommendation that I guess yeah, it
would be along the, the lines of that man,
you can go, that's such a broad topic.
Kevin Horek: Yeah.
You could almost do another hour on that,
but No, I, but I actually think that's
really good advice and like tweaking
your messaging and kind of never giving
up and honing on trying to figure out
where your piece is of the big pie Right.
Is, is really challenging.
Or it can be and then never giving up.
Patrik Olstad: Yeah, and it's, it's
a little bit like, I almost get
triggered by when people say no, but
it doesn't mean that I'm stubborn and
clinging onto what I thought was right.
But I'm, I'm gonna find the sort
of like the closest thing they're
gonna move them to agree with.
Kevin Horek: Yeah.
Interesting.
So I'm curious then, of all the no's
that you got in those four years Yeah.
How many of them are now customers?
Bunch of
Patrik Olstad: them.
Ah, that we have so, so
many good stories of that.
Like, listen, I'll tell you a good story.
This is super quick.
So in 2013, I, I, I demo one of
the biggest companies in the world.
Uh, we've spent like a long
time to get to know them.
We did not have data on their
trades because it was Asia to us.
We only had Asia to Europe at that point.
I demo them that they, they tell me in the
meeting, if you ever gonna see our data,
you'll have to pay us a lot of money.
Right?
Okay.
And we hung up.
It was a good, it was a good friendly
meeting, but like, he made it clear,
no way we don't share our data and
no way we'll get, uh, you'll get it
even, even if you pay kind of thing.
Then in 2020, they became a customer.
Interesting.
Paying, paying like six, six digit
subscription to access our platform.
So I'm not paying them, they're paying
us to give their data and, and get in
Kevin Horek: Intel.
Did they ever tell you
what the, like what was
Patrik Olstad: the, the amount of
data, so as, as they said, you just
have so much volume in there now that
we need to see how we stack up in
order to understand our performance.
And, and I, I love them.
It's because they also remember the
first meeting and this I think is
incredibly, uh, important point.
As I mentioned, the whole great thing, it
should always be as nice as you possibly
can because you will meet them again.
Yeah.
Kevin Horek: Wow.
That's a hundred percent.
It's, that's actually really
good advice, actually.
Like never piss off, especially
in your industry, if they say no
a hundred times, you never know.
Yeah.
Like they came back, what,
seven years later for you?
Yeah.
Which is an eternity in tech.
Right?
Yeah.
Like seven years is a
very long time in tech.
Yes.
Like you waited
Patrik Olstad: patiently.
We have, we have quite a, a lot of these
four or five years, uh, of waiting and
we, we just, we, I I always said they
will always come, they will always come.
Don't worry.
We just recycle them year after
year after year and they will come.
Kevin Horek: Yeah.
Interesting.
No, I think that's, it's really good
advice, but sadly we're out of time.
So how about we close with mentioning
where people can get more information
about yourself, the company, and
any other links you wanna mention?
Patrik Olstad: Yeah.
Go to zera.com to read about, uh,
the company and connect on LinkedIn.
Uh, I'll, I'll, uh, reply and
pick it up as, as quickly as I
Kevin Horek: can.
Perfect.
And it's X E N e t a.com.
Beautiful.
Perfect, Patrick.
Well, I really appreciate you
taking the time outta your day to
be on the show, and I have a good
rest of your day, man, and I really
Patrik Olstad: appreciate it.
Hey Kevin, thanks a lot for having me on.
A real pleasure.
Kevin Horek: Thank you.
Okay, bye.
Bye, Patrick.
I thought that was really
Patrik Olstad: good.
How'd you feel about that?
No.
All good.
All good.
You, you're very laid back and easy
to chat with, so Yeah, that's good.
Oh, I'm,
Kevin Horek: yeah, we had a good chat.
I, I like that.
That's interesting.
I like curious about some
of this stuff, right?
I'm always curious to have
people that I don't really like.
Obviously supply chain industry affects me
every day, but I don't really know anybody
that, I haven't really had anybody on the,
the show before that actually is like in
the trenches doing this kind of stuff.
I guess it's the easiest way to say it.
Patrik Olstad: Yeah.
So it's cool man.
Appreciate that.
That really bear.
Hey, uh, I, I got a back to back in five.
I need uh, minute.
I need a technical, anything
else we should cover?
Kevin Horek: Nope, that's good man.
I'll let you guys know
when it's up and airing.
Um, and then if you have any
other questions, please feel
free to reach out to me.
Patrik Olstad: Beautiful.
Appreciate it man.
Thanks a lot.
Thanks man.
Bye.