Interview with Jean-Baptiste Clouard, CEO & Co-Founder, Flowlity

Welcome to ChainTech, the show and podcast focusing on the latest trends in supply chain, procurement, and logistics technology. My name is Max Henry from the Global Supply Chain Council, and together with my co-host and special guest, we explore the personalities, startups, innovators, and industry players driving disruption in supply chain. From early stage to unicorns, And from cutting-edge technology to the people using it to help drive more innovative, agile, and resilient supply chains around the world. This is ChainTech. Hello everyone and welcome to another episode of ChainTech. I'm your host, Max Henry, from the Global Supply Chain Council. And I'm joined today with my co-host, Neeraj Krishna. Hi, Neeraj, how are you?

Hi, Max, nice to see you. And quick introduction about myself. I am Neeraj. I head the Continuous Cost Quality Leadership function for Jardine Schindler, a leading market player in escalators and moving walks. And I'm very happy to share this space with you.

It's great to have you again, Neeraj. Thanks again for joining us for this new episode of the show as we continue to host some of the most interesting chain tech founders and discuss the rapid rise of supply chain logistics and procurement technology around the world. As we jump into today's conversation, I also want to make sure that you're aware of our chain tech platform at chaintech.net that we recently launched. And also, if you are interested to listen to all the previous episodes, you can go to chaintech.show. You will find all the interviews that we have made so far. So today we're joined by a special guest, Jean-Baptiste Clouard, who is the CEO and co-founder of Flowlytii, based in Paris. Hi, Jean-Baptiste, how are you?

Hello, Max. Hello, everybody. Very glad to be here today and looking forward to the discussion.

All right, so let's get started. I want to— maybe we'll start with your background first. You know, if you could share with us, you know, a bit your journey before starting Flowlytii. Maybe let's start with the, you know, very early stage where you from, how did you grow, where you go, and what did you study, you know, previously?

Okay, so let's start with the very early. So I'm born in, in Vire, Normandy, so in the countryside of France. Not a lot of things, a lot of cows. And I end up studying engineering and applied mathematics, so I did a I have 2 degrees, one in France and one in the US. So in France, École des Mines, and in the US, it's called Georgia Tech. And I specialized in operations research, so really optimization, applied mathematics kind of things. And, you know, starting from there, I wanted to pursue in that place and, you know, in that study, in that field. And the best place to do that is supply chain technology. Where there's a lot of applied mathematics puzzles to solve. And so I joined a company called Quintiq, which was a Dutch company at the time. It was not a startup, it was like 600 people, so 500, 600 people at the time when I joined. And so they were launching in France, so I was part of the starting team in France. That was quite exciting. And I started as a consultant, so I was basically going to the 2 industrials or manufacturers, and I was trying to understand their way of working, their way of planning, and trying to then propose a way to do that in the tool. And so I did that for couple of years. Then I got promoted to product manager and to head of product. So I was responsible for one product at Dassault Systèmes because in the meantime, Dassault Systèmes, which is a French company, bought Quintiq. So I was responsible for one product that was really focused on S&OP, was really collaborative demand planning and also supply planning long-term. And we started the product from almost scratch. So we, it was not really an existing offer when we started and I did that 2 years and we were able then to be positioned as one of the leaders in the Gartner Magic Quadrant. Then I said, look, I really liked what I did at Dassault, but I really want also to discover SaaS kind of companies. A bit more modern technology. And so I joined a really fast-growing company, which was Anaplan. And I did a couple of— I did one year there really to start to embrace the SaaS world. And then I really wanted to start my own company because I felt that there was still a lot of opportunities A lot of things to be done. And I think also I had deep inside me really the will to build a company.

Yeah. So you work with some big players, you know, Anaplan, Critique. What did you realize and what actually, you know, triggered you to start your own company? When you look at the solution, you were just, you didn't find them to be good enough for the market?

Yeah, it's a very good question. So first, the problems are huge and growing. So supply chain disruptions are here more than ever. The issue we are tackling is inventory issues. So it's overstocks and stockouts. They are getting bigger and bigger year after year. So problems are not solved yet. So there is still room. And in terms of software, in terms of planning software, yes. We feel that, and that's what our customers are saying, that the offer that exists is often legacy software from the '90s, from the year 2000. They are cumbersome to use, cumbersome to implement, very long time of implementation, very costly tunnel project, not user-friendly, not enough performance-driven. So there was a lot of signs from the market that You know, there was a big opportunity to build something different, something more user-friendly, something more performant that could solve this big issue about inventory management. And that's why we launched Fleet. So yeah, problem is still big, unsolved, and inadequate offering that we are seeing now in the market.

So in one sentence, can you tell us what your company does?

Sure. So, Flowity company and solution is the same name. So Flowity is a solution that is helping companies or manufacturers and retailers to optimize their inventory. So to reduce their stocks and their shortages by better forecasting the future demand, better placing inventory buffer to to cope with the volatility of demand and supply, and by trying to order the right amount, taking into consideration all the constraints that they have on their purchasing contracts.

Yeah, Niraj, I had some questions.

Yeah. Hey, well, what are the biggest benefits, you know, that the solution brings to the customers that they are Conventional ERP suits don't work.

Our vision is to reduce stockouts and shortages. If you— and there is a study that is published every year— if you look at the cost of overstocks, so that cause, you know, waste and immobilized capital, but also of shortages, so you have lost sales and other things. If you could look at that cost, It's about $2 trillion that is lost every year. It's in between the GDP of Canada and Italy, just to give you a sense of the amount. So it's huge. And our moonshot is to solve a big chunk of that. So really, that's the goal of the company. That's what we want to do. And so consequently, that's what, you know, we are bringing to our customers. We are measuring and making sure that at the same time they can reduce their shortages. So have a better availability of product. And we can show that for certain e-commerce companies, for example, we have been able to increase by 10 points. So going from, for example, 80 to 90%, the availability of product. So it's a huge boost on the top line. And at the same time, decrease stocks to have also beneficial consequences on reduction of waste, reduction of working capital, those kind of things. And usually we are around 20%, 30% inventory reduction. And so that's, yeah, that's what we aim at. It's very Value-driven in the end. So we are a very value-driven business. We look at what was the situation before, what is the situation now, and we want to prove that we have improved the company or customer efficiency on those 2 metrics.

Any rush?

Yeah.

Okay.

So can you tell more about the solution? Does Flowivity interface with the ERP of your clients or is it a standalone solution?

Yeah, no, it's exactly— it interfaces with the ERP. So we are really a planning solution that is plugged on top usually of an ERP. We need on our side data and basically we need to know historically what has been flowing in and flowing out of any stocking points in the supply chain network. And we learn, our algorithm learns future movements based on that. So that's really what we need. And so usually the ERP for customers is used as a transactional administrative tool. And so we plug on top of this to help them better predict how much they are going to sell and better you know, decide or optimize the order that they need to pass to their suppliers or to production or to distribution. So that's really what it's really about. So sitting on top of the ERP and bringing really the decision support analytics to help decision makers and people responsible for replenishment to take the best decisions.

Jean-Baptiste, those ERP packages also offer, some of them, some kind of inventory tools, So how do you compare Flowity with what's existing from those big ERP packages already? Why is Flowity better than just using the standard inventory optimization tool that those ERP have already?

Yeah, it's a very good question. So indeed, a lot of ERPs offer a lot of different modules, and sometimes they do offer planning packages and planning modules. What we see is that it's very limiting in terms of offering. It's a very simple solution that is not often meeting the needs of the customers. It lacks performance, it lacks user support, and sometimes also it lacks all the constraints that make it a feasible plan. And that's fine because, you know, they're not specialists and so they have a very, let's say, rough, simple solution to do and to handle, let's say, the level 1 replenishment. But for customers, when they feel that this becomes something that is critical, well, they feel that, you know, they can gain a lot of, you know, money by mastering a bit better their replenishment and their inventories. No, we are there to help them. And the ERP or the Excel files are not enough. Because what we see, what we replace often is that they bought an ERP, but then they feel that it's not doing the job. And so very often they have created Excel files on top of their ERP to cover for those replenishments. And 90% of the time we come and we replace those Excel files and we bring the company further along the digitalization of those replenishments and this forecasting.

Okay. And then you also compete with, you know, SaaS best-of-breed software vendors.

Yes.

Like Blue Yonder, the Slimstock, the Relex, and many others. It's a very crowded market already. So what's your sweet spot right now?

Yeah, that's a— it's a very good question. So, you know, the best answer to that is to ask our customers, you know, why do what did they buy us in the end? And what we see from our customers is that there are 3 big reasons. First, we were just the best, say, looking UX-friendly product on the market. And that's really important because when they showed the product to their planners, like 100% of the time, the planners are voting or siding with Flolytia. And it's really important when we know that to succeed in the deployment and the usage, The user onboarding is key in this market. So that's the first thing. The second thing is performance. We invested a lot on R&D, on PhDs specialized in artificial intelligence and operations research to go to the extra mile in terms of performance, to do something that the others don't. And this is leading us further in terms of performance. And when you are a value-driven business, in the end, What counts is the impact of the bottom line. And if you take a Simstock and, or whatever, and you have a 10% inventory decrease because whatever, because, you know, it's digitalization of Excel, and you take a Fronity that is bringing you to a 30%, well, it's a big gap in terms of money. And the third thing that we have is, you know, we are lucky in a sense. We know we are the new player and we have been created 3 years ago. And so it allowed us to be building Flurity on modern technology. And this modern technology is allowing us to be deployed way faster than the traditional players. When you look at Blue Yonder or Recall or whatever implementation of a supply chain management tool, you can count in months, if not years, the deployment of this technology. It's very cumbersome and very painful. And when you look at Flurity, Now we are doing it in 6 weeks, 8 weeks for the biggest project. So that's a huge difference. And so all in all, summing up, our customers are buying us because of better UX, better performance, and faster deployment.

Jean-Baptiste, when you're talking about performance, right, there are businesses where, you know, the SKU demand or the flow are not Well aggregated. How do you cater these challenges for your customers?

So first, so, you know, we have a very dedicated solution. So, you know, we are not doing all the supply chain, you know, planning processes. So we are very dedicated to inventory management, to reduction of stockouts and shortages. In that regard, what is most important for us is the operational timeframe. Basically, what we are trying to do is to be the most precise for the next replenishment. And in that regard, it means that the forecasting algorithms that we have built have been configured to be the most precise at the SKU level. Because it's the stock keeping unit, and it's where you take the decision of keeping stock, replenishing, and ordering. And so We didn't build algorithm to be very precise at aggregated level, at the color, model, whatever levels. I think that's more the focus of S&OP tools, and we are not an S&OP tool. We are really more operational tool looking at 3, 4, 5, 6 months max of horizon. We can do forecast for after, but that's really where we are going the 3, 4, 6 months, where we are going to be the most optimized for and to influence really the stock position and to reduce stockouts and overstocks. So very focused on that. And maybe one word, it doesn't mean that we do not have— we have in the tool the aggregation capabilities. We can aggregate multiple axes. However, the forecasting algorithms have been tailored to be the most precise at the SKU level.

Okay. Let's go back a bit on the Floatity as a startup. When you started the company, did you actually bootstrap the business? Did you raise money? What, and you know, what is your current funding stage right now?

Yeah. So we started the company in October 2020. So we really started working together with Karim, with my co-founder, in October 2018. And we raised our first round in June 2019. So very early, the company. We had one customer doing a pilot and a very, very, very, very first MVP, I would say. Very early. So we raised quite early. So we didn't bootstrap. So, you know, why did we do this choice? First, it's a money, you know, question. You know, we are not rich, you know, very rich people that had a lot of time and money to bootstrap and to build their software in the barn. So, you know, we just had to get money and get paid to be able to live very early. stage of our company. So we chose very early to go toward that VC road and to raise capital to go faster in terms of building a product, you know, also getting salaries and also building the right tech for our customers. So that's the choice we made. And so The first round was a €1 million VC round in June 2019. Then it allowed us to build the product, to build a good first product, which brought us to February 2022, where we raised a bigger round of €5 million. And yeah, and now we are even accelerating further.

Okay.

But yeah, we are very visible.

So from the first round to the second round, you know, a lot of things have been happening, obviously with the pandemic. What has been your main challenge going through that difficult time? Was it, you know, a good time for you to actually, you know, spend time and deliver your solution or pretty challenging?

Well, you know, to be honest, we are kind of born with the pandemic. So if you look at our first live customer, it's during the pandemic time, it's in June 2020. 20, the first live recurring customer. And so, you know, I cannot compare with before in a sense. So, you know, we built Fluidity also to be more resilient, to be on the tech and the algorithm behind, to be more resilient in a very troubled and volatile environment. So, you know, We are born and we thrive with the pandemic. And for us, you know, it has been, you know, quite a nice journey. So we have been signing a lot of customers during this time. So yeah.

So not an issue, actually quite a positive thing for you.

Okay, that's good.

Yeah.

Anyway, you know, we started from zero before the pandemic and now we have 30. So obviously it's an infinite progression. So that's Of course, positive.

Yeah. Okay, so lovely. So you were telling about the company, right? So how many full-time employees do you have? How many engineers you have in your team?

Yes, now we are 35 with a vast majority of engineers. It's 58% of our headcount that is in So more than 15% are engineers, but 58% of the headcount are working in the tech side. So software engineers and also, for example, research, AI, PhDs, statistics. So almost 60% is basically building the product. And then we have people on the delivery side that are also engineers, but more software supply chain engineers. that are helping the customers to configure the product and to deploy it. And even on sales and marketing side, we have quite a lot of engineers to sell the product. So, I mean, we have— and Karim and myself are engineers, so we are a very engineer-driven company.

Okay. Who do you sell to, Jean-Baptiste? What kind of market are you targeting? SMEs, mid-market, MNCs? And which sector and industry are you focusing on more?

So right now we have customers ranging from $50 million to very big customers like Cartier or LVMH. So, you know, very big customers. I would say our sweet spot is kind of the mid-sized companies in between $50 million to $2 billion turnover is perfect. But it's more a fact that they are faster to take decisions. So we are still a young company, you know, spending 2 years in a sales cycle to convert a $30 billion, you know, company is taking a lot of energy. And so we prefer to focus on, I would say, the mid-sized companies that can take a decision in 2, 3 months. And in terms of sector, We are doing a lot of business in the retail, B2B retail or B2C retail. All the— we have a lot of customers as DNVB brands, those kind of things. We have a lot of B2B retail customers. And we have a few manufacturers. So I said, you know, Cartier, Daimler, so automotive. Aerospace manufacturers where we are going to help them optimize the inventory of raw materials and components. So yeah, different sectors and different size.

How many customers do you have right now?

We are now at 25-ish, something like that. And yeah, mostly Yeah. Okay.

How do you actually market your— yeah, Jean-Baptiste, how do you actually market— how do you market—

How do we market the solution? So how we go to the market, so it's, I mean, we have 2 ways of generating prospects and leads on the market. The first one is to create content, to be a thought leader in terms of supply chain management. And that generates a few leads, quite a lot of leads really. So we create content, we create webinars, we create white papers, and we try to position ourselves as a thought leader to generate a lot of leads. And then we have the possibility also to target specific accounts. And then, you know, we go with more traditional sales methods to go and to contact supply chain director and VP supply chains to convince them to work with us. Does it answer your question? Sorry, go ahead.

Yes. So what is exactly, how exactly do you make money and what is your revenue model, business model like?

Well, we are very software, we have a software company. So, you know, 80, 90% of our revenues are coming from subscription. So we are SaaS solutions. There is a yearly subscription of using the software. And so, you know, very traditional, say, pricing and business model for a software company that regards.

And do you find yourself to be more, in terms of pricing, more competitive than the other solutions in the market? Are you more aggressive with pricing?

So no. So no, we see ourselves as a better software that is bringing more value. So we tend to be more expensive than the other guys because we just, you know, we are bringing also more ROI. So in terms of software cost, we are usually higher, but in terms of implementation cost, we are way lower. So it kind of balances out, but, you know, there is a very low fixed or setup cost to go with Frolity, but higher software. cost, but that's fine because in the end they are getting more money out of it. So in the end, the ROI, if you look at the ROI, is largely superior if you look at the fluidity than another software that is already existing in the market.

Okay. Yeah, Niraj.

Jean-Baptiste, do you think the pandemic COVID situation accelerated the adoption of supply chain solutions Yeah, I think it has been quite revelatory that, you know, that companies need to invest in digitizing their supply chain operations for sure. I think there are a lot of CEOs and COOs that have been suffering from either lack of components availability or from issues with transportation, you know, and when they ask for answers, when they ask for simulations, when they ask for guess on when this is going to be solved, usually the answers are very vague from the special directors, or it takes a lot of time and struggle to come with the answers. And so, yeah, I think it came with there has been a realization from a lot of key decision makers, C-levels, that it's super important to invest in supply chain technology and digitalize the supply chain processes to be competitive and to be resilient for the future. And I think the companies that are not investing right now in 20, 30 years with the very volatile and uncertain context that we are facing, they are going to be struggling a lot.

Yeah.

Okay.

Yeah, makes sense. Yeah. Let's talk about the current landscape of, you know, supply chain and startup in maybe in France, for example.

Do you—

is there a community of those companies? Do you know the founders or others? Because there's been some successful, you know, supply chain logistic company raising quite a bit of funds in the past few years. Do you actually meet each other? Do you meet up, exchange experience within Europe or France?

Yes, I would say the subvention tech scene in France or in Europe is still nascent as a community. But we tend to have more and more, you know, co— we are co— creating content together to the market. I'm having regular calls with a few CEOs that have other supply chain companies. And then, yeah, so yeah, we are trying to push that community and to make it more active. In terms of the landscape, indeed, so there's been a lot of supply chain startups that have been created. I think that the startups are more on the transportation, on the warehousing on demand, these kind of things. Those have been very thriving. In our sector, in our niche, transportation planning, it has been less startup field lately, but still there's been a few. So yeah, and yeah, but it takes a lot of effort to build those communities and to make them alive. And so that's what we are trying to do on a regular basis. It's really important.

Jean-Baptiste, what is the biggest challenge that you have in your current capacity and what would keep you awake at night?

The biggest challenge. Well, there are a few challenges, of course. You know, first, building a startup, building a company is difficult. You have a lot of ups and downs and you need to live through it. For us, what are the biggest challenges? First, I think, yeah, we are living in, you know, our sector, buying supply chain planning software is sometimes linked to long sales cycles, which can be a bit painful when you are talking to a company for a very long time and closed only 9 months after. It's slowing the growth and slowing, let's say, the capability to move faster. So that's, I would say, your first challenge that we have. A second challenge is also the fact that to be, to have an MVP on this market, it requires quite a lot of features. And so it also requires quite a lot of cash. And that comes back to the fact where we, you know, why did we raise money? It's because, you know, to build a competitive product, you need a lot of features. It cannot be just something simple with, you know, one feature that you can build in 3 months and then you go to the market, that's fine. No, it requires a lot of things. And if you're thinking, for example, for us about forecasting and replenishment, well, there is all the constraints you need to take into account, MOQ, lot sizes, the fact that you can group orders, the fact that you need to build forecasting algorithms that are going to be good enough for the replenishment, the fact that you need to build all the the safety stock policies kind of things. So to be software complete, to be an MVP, it requires quite a lot of time and a lot of investment. So that's a barrier of entry that is quite important in the sector. So no, that's what kind of comes to mind.

Okay. So yeah, you talk about investment and we also heard that there, you know, quite a bit of funding is drying on the startup whether it's here in Asia or in Europe or the US, do you think that the supply chain startup will be impacted by the lack of funding as they grow and develop themselves in the coming year?

It's hard to predict. What's sure now is that there is a crunch in terms of funding, especially for, I would say, for any types of companies, but, you know, for I'd say middle of the growth of the company, Series A, Series B, Series C. There is a crunch right now because, you know, valuations have been decreasing on the public stock market for tech companies, and it led to a lot of ripple effects and reduced funding at the moment. Whether it's going to restart in a few months or not, it seems impossible to say. What's sure is that the best companies with the best growth metrics and the very unique offers will succeed and will thrive. So our job, my job, is to make sure that we are one of those companies. That's it.

Yeah.

If we are excellent, we'll get funding. And indeed, if you are not Class A+ companies, it's going to get bit more difficult. So we are lucky in a sense because we raised the round just before the crunch, beginning of the year. So we have time and money to make sure that we have the good achievements for the next one.

Okay. How do you see your company or solution in 3 to 5 years from now? What do you want to become in the future with Flolyt?

So first, you know, never losing sight of our end goals. Our end goal is to help, in a sense, the world to solve this inventory problem that we are facing. $2 trillion lost because of bad inventory management is such a waste of time, money, and investment. It's crazy. And so if we can reduce that, by 20%, we already have done quite a nice job. So that's our goal. And we are building products to achieve that goal. And it's not going to be solved only through the product we have now. And so we need to add new products. We are thinking about adding right now a new one to tackle more tactical strategic planning, but also outside of planning, we need to build new product offerings to solve that. In the end, the goal for us is to be a supply chain technology leader. We want to be the supply chain technology leader. Probably going to take a few years, but at ten years, we want to be the leader in supply chain technology and in supply chain planning. Okay, yeah, Raj.

Now, please, what advice would you give for a new founder who would? want to venture into the startup space?

I think what I see is that in between the ones that are still here and the one that is, you know, not here anymore, is first you need to be very resilient. It's hard, there is a lot of crisis, there's a lot of times where you think I'm dead. But, you know, if you look really short-term, you say that's hard, like, you know, it's going to be impossible. But if you look back at, you know, where you were 1 year ago, 2 years ago, you find yourself, you know, that if you push every day, you do quite a lot of improvements. So first, being resilient, getting up, And doing the max every day is going to bring you very far. The second thing that I would advise is that whenever you have— whenever it's time for recruitment, for hires, don't count too much on the money, just hire the best. Because there is a compound effect in hiring just the best and the most talented people. If you start hiring average because you have, you know, your budget constraint and it's not going to bring you very far. It's going to be harder to bring the company very far. So maybe hire less people, but hire very talented people and build a company with the best you can find. And you will see if you hire very good people, it will bring you very far because they will have new ideas, they will have new energy, they will have Those are great advice.

This is great. Okay, I've got some quickfire questions for you, so get ready.

Network issue, so we don't know what are the questions. Ah, Max, you're back.

I'm back. Okay, so I was telling you that I had some final questions for you.

Yes.

So let's get ready. So quick ones. Cats or dogs?

Dogs.

Window or aisle?

I didn't get it.

Window or aisle in the plane?

Ah, window.

One of your favorite movies, best movie you've seen recently? First movie that comes to your mind.

Dune.

Okay. What's your favorite sandwich?

With a lot of French saucisson, so some kind of sausages.

You are in France, so you should know about sandwich. Yeah, but I don't know how to say it in English. Sausage, yeah? Oh yeah.

Yeah. Okay.

Dry, dry saucisson, yeah. What's your most used app on your phone right now?

Slack.

The one you always look at it? Slack, okay.

Slack.

What's your favorite tool to build your company other than Slack? Any software that you use to develop or to—

I would say on my end, HubSpot.

HubSpot. Okay. Interesting. All right. Describe the rest of your life, like the very end of your life in 3 to 5 words. What do you think you will be or what you want to do? In just a few words, what's your goal? Maybe after you exit and sell your Frolity.

I'm sure. So probably I will take maybe, you know, 3 months, 30 days, and then I will get very bored and I will start a new company again in a very different sector and probably taking more physical products where you need even more capital, right? So if you exit and you're very successful, you can even raise even more capital. So I will take probably a very ambitious goal and try to build a new company on this.

As you get older.

Okay. So building a new company. Okay.

This is great.

All right.

Thank you very much, Jean-Baptiste. It was great to have you. Thanks, Niraj, for supporting me with the interview. So again, it was a good talk. I just want to remind everybody that again, this is a new episode of Gentech. We were very fortunate to have Jean-Baptiste Clouard, the CEO and co-founder of Flowlytii, based in France. I'm pretty sure we're going to hear more about Flowlytii in the near future. So wish you all the best, Jean-Baptiste.

Thank you very much, Max and Niraj, and thank you for inviting me. It was a pleasure. Thank you.