Procurement’s Moneyball Moment: Turning Data into Competitive Advantage

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I heard a saying a couple of weeks back around basics being the new excellence.
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And I really like that because if we just get the basics right,
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then we can deliver so much more impact than what we're doing today.
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On this episode of Executive Edge, Greg is joined by Jacob Gorm Larson,
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a globally recognized thought leader in digital procurement and founder of Moneyball CPH.
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Where auctions is focusing on competition, Sourcing optimization is also sometimes
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referred to as collaborative sourcing.
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You would use it on any sourcing event which has a complex allocation problem.
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Jacob discusses e-auctions and its evolution from free markets to today's technology-driven
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sourcing and what makes an auction successful.
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For most corporates, listen, instead of you going out and buying a new shiny object,
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why don't you put your energy in making sure you maximize the value coming out
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of one or more solutions that you already acquired?
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Hello, everyone, and welcome to another episode of Tenzing's Executive Edge podcast.
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Our guest today, all the way from Denmark, is Jacob Gorm Larsson.
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Jacob is a globally recognized thought leader in digital procurement,
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known for pioneering innovative sourcing strategies and technologies.
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He is the founder of Moneyball CPH, a boutique consultancy specializing in advanced
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sourcing solutions, e-auctions, and autonomous sourcing processes.
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Prior to this, Jacob spent 18 years at Maersk, where he served as the head of
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digital procurement, it.
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Leading a globally acclaimed program that executed more than 10,000 e-auctions
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across various industries.
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Jacob is the author of A Practical Guide to e-auctions for Procurement.
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I highly recommend this book, and that book is widely regarded as a foundational
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text in the field of e-auctions.
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His work has earned multiple industry awards, and he's frequently featured in
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leading publications such as Fortune, Forbes, and the Wall Street Journal.
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Jacob, welcome. It's great to have you on the podcast today. Thanks for coming.
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Thank you, Greg. I'm very pleased to be here. No, it's going to be a great discussion
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about auctions, and it's going to touch on that my legacy goes way back to free markets,
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and I know that was sort of the foundation we built there is what you built
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your success upon subsequently.
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And so it's sort of great to talk to a person from the next generation of what
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we started at Free Markets.
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And so let's dive right into it. Let's go into your career.
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When was the first time you heard about auctions? These are e-auctions,
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folks, online auctions for goods and services, business to business.
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And that's what we're going to talk about today, primarily.
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So, Jacob, when was the first time you heard about corporations using auctions?
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So that was probably back around 2005 or 2006, somewhere around that.
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I had been with Maersk for a couple of years and there was this tradition that
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the CPO every year would go to the U.S.
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For a week to meet up with companies, tech providers, etc.
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To get inspiration on what is moving.
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And he would always come back with a long laundry list of look into this,
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could you explore this, et cetera.
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And that year when he came back, reverse auctions was one of the things on the list.
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And I still remember sort of hearing about it and then going back and doing
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a bit of research and then trying to understand exactly what is this about.
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Yeah. So you did your homework and then when was the first time you started
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using them? I'm like, what was that like?
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Thinking back, it was 2008, 2009, where I was taking over.
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Back then, that was a new initiative, e-sourcing, e-auctions.
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We did a few pilots, and then where it really took off was during the financial
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crisis, where we as a shipping company were, say, desperate for cost savings.
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There were literally no sacred cows in our cost-out program.
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And you could say that cleared the way for taking this, which for us at the
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time was a new concept, and then we could address it or apply it more or less across any category.
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So it was actually a fantastic experience for us because we built up a good
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momentum, a lot of learnings, and we also took out a lot of cost with auctions in those years.
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Yeah. And you started, I think, on Procury, right? Was the technologies? Yeah.
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Yeah, so we were on Pecuri back then, and then they were acquired by Ariba.
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And as it goes with those, when one solution is acquired, that's usually a dead
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end to stay on that for too long.
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So we quite quickly moved over, and then we were using Ariba for a number of
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years as our auction platform.
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Yeah, and I should note to our audience, those who don't have the history of
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this technology space, But Free Markets was founded in 1995,
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went public during the dot-com boom of 1999, and then was acquired by Ariba, I think it was 2004.
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So the two companies came together.
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Ariba had had more of a focus on the procure-to-pay side of things.
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Free Markets was more focused upstream on the sourcing side of things.
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It was a good marriage when they came together because it was very complementary.
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You know, Jacobs pick it up around
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the time post-merger here of those two companies and really got it going.
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So it sounds like it was a pretty important tool for Maersk to use to really
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take some cost out in a very difficult time during the financial crisis of 2008 and 2009.
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Then, you know, auctions sort of were falling out of favor. I saw it.
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Unfortunately, my observation was once there was self-service technology and
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clients were doing it themselves,
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the auction game got a little less controlled because we were very careful about
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what we took to market and put up for auction. Not everything's right for an e-auction.
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And I think that spreading that out, giving these tools to everyone without
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a lot of guidance potentially can lead to bad things.
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And I think they kind of faded out a little bit. But you kept going strong.
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And I think you moved from there to optimization.
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Very quickly as well, right? No, absolutely. So we went, you could say,
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before the financial crisis, we were doing a few pilots, so five,
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ten auctions a year or something like that.
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And in 2010, we did more than a thousand auctions. And.
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All of them were done by a small centralized team.
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So that would be my team, partly in Copenhagen, partly in India.
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But we were in control exactly for the reasons that you call out.
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There's both difficulties in using it, but there's also a lot of know-how.
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So if you let it loose, it can indeed lead to bad things.
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And that's kind of the bad reputation that auctions are still struggling with.
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Today that there's a lot of bad practices and misperceptions about it.
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But you would say we went to plus 1,000 and then exactly as you said,
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we said it's great for a lot of things, but there are also areas where we can
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get more value out of a different approach.
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And that's where we then started to look at sourcing optimization or combine
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net, which was one of the few but leading providers back then as well.
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And I should also note being a proud Pittsburgher that not only was Free Markets
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founded and based in Pittsburgh,
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but CombineNet that you just mentioned, which was a company really built around,
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here's a heavy science term for you, combinatorial optimization was also started here in Pittsburgh.
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Eventually became acquired as now part of Jagger, the solution set there.
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But they had a great technology for these very complex auctions or,
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excuse me, sourcing events.
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And can you explain where you used that combinatorial optimization?
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What kind of categories?
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I assume you're still using it on those today.
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That's a lot of what we do or the majority of what we do today is those type of complex events.
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And I think it's a great supplement to auctions as well. So where auctions is
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focusing on competition, optimizing, maximizing competition by allowing bidders
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to bid against each other.
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Sourcing optimization is also sometimes referred to as collaborative sourcing
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because it has more dimensions to it.
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So you would use it on any sourcing event which has a complex allocation problem.
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So where you need to split a ward across multiple suppliers,
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but also where you can split it in many different ways.
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So logistics is a classic example or packaging for that matter.
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You always go with more than one provider, in most cases, if your network is big enough.
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And there are many different ways of splitting the business.
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So what you do is you also open up for suppliers and say, hey,
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how would you like to slice and dice this deal so it fits your network?
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So you allow suppliers to create packages or bundles, if you like, which they can submit.
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The problem for procurement is then you get many different packages which also
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overlaps and that it kind of becomes apples and peers that you begin to compare.
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And that's why you need the combinatorial optimization algorithm that will help
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you sort out, how do I do it overall? How should I distribute or allocate this
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in the smartest possible way?
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So instead of spending weeks in Excel trying to figure it out,
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You ask the optimization engine to give you the different scenarios,
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and it's done in a couple of minutes.
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And you can specify, say, give me a lowest cost scenario, right?
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You give me the best two-vendor scenario, three-vendor scenario, right?
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You can set the parameters and build those out. The starting point is always,
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you know, cherry-picking or the lowest possible cost.
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And then you add constraints on it. Typically, the next scenario you would do
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is an incumbent scenario.
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What if we allocate exactly as it is today so we don't do any change to our supplier setup?
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What would the cost then be? And then the number of suppliers is another classic
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one where I often, very often hear from clients saying, yeah,
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and we want a setup where we have four suppliers or we want seven suppliers.
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And I ask, why have you, how do you end up at that number?
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And it turns out it's often a very random or practical consideration that we
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don't want to deal with the hassle of onboarding more than four.
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Well, what if you're willing to go to five? You can save another million.
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Is it worth the hassle then?
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And that's really the case about optimization is that it enables you to take
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more data-driven decisions.
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So by having all the answers to those questions, again, it's not something that
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will take days or weeks in Excel.
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It's something that the optimization solution will tell you in a couple of minutes
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because you just change the parameters, push the button,
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and then it will tell you what is the extra saving of going from four to five
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suppliers, as an example. Very cool.
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If we can roll back a little bit, I want to talk about how you set up your team and your operations.
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Because, you know, when I was at free markets, one of the big selling points
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that I would make to clients and they would tour through, I used to run the
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global market operations center,
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there before I moved into a more commercial role, but we would often have people
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come in and watch that room.
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It was a pretty cool setup for the time.
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It was very techie and we had a sort of a fishbowl that we operated in and people
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could look in and watch what's going on, but it was very confidential.
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There was nothing on screen about clients or suppliers.
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We were very careful how we manage this, but we could set something like that
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up because we had scale, right?
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It was, I would tell clients, you may run a few auctions a month and,
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you know, for you, it's going to be a back office function.
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Your back office is our front office. We're doing this across multiple clients.
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We're in these categories every day, day in, day out, you know,
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so we would, you know, that was a big selling point to use us as a service versus,
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you know, trying to do it themselves.
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And so I'm interested to know, obviously, when you're running 1000 auctions
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at Maersk, you've got that kind of scale.
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So how did you how did you set up your team?
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And how did you organize it to sort of maintain some of the quality that we
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talked about earlier to make sure that a bad category where only two people
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in the whole world can produce it, you know, is getting auctioned or something, right?
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Tell me how your team was set up. Yeah.
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So actually, the free market's headquarter was kind of an inspiration.
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Of course, we didn't have the funds to build a room like what you got.
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Well, we had money. We spent all sorts of ways there.
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But, you know, one of the things I took away from it is that,
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you know, implementing something like auctions is a lot about selling.
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You have to convince your stakeholders. You have to make them excited about it.
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So if I talk first about that, and then I'll talk about the team setup afterwards.
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We did do, every time we had a high-profile auction, we would book a couple
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of meeting rooms next to each other.
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So one meeting room, we would have the auction administrator.
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We would put up a couple of extra phones, try to sort of mimic the setup that you guys had.
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So we had a direct line to the auction administrator at the provider's site.
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And then in the other meeting room, we would display the auction at a big screen
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and invite all the stakeholders in and do like a popcorn event of it.
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But also, I wouldn't say trying to over-engineer it, but there's definitely
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a change management or selling component to this as well.
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And similar, actually, in our offshore setup, we took a number of attempts,
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but finally we got approval for putting up a big screen next to the auction
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team so that every time we did a big auction, which was monitored out of our team in Mumbai,
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we could display it on the screen so that people could come and watch it and
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then sort of buy in and understand the concept better.
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And in terms of the team, in the first couple of years, we had a small core
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team in Copenhagen because most
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of the stakeholders, the owners of the categories, would be in Copenhagen.
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So we were engaging with them out of Copenhagen, doing the convincing, etc.
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And then once they were sort of won over,
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we had a team in Numbay who would do the majority of the execution.
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And again, we actually spent a lot of time standardizing the processes.
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Taking, again, inspiration from the free market operating model with standardized
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way of setting it up, standardized procedure for checking that it's correctly set up,
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standardized approach to how we train and onboard suppliers, etc.
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It was both for efficiency, but also, again, to minimize mistakes happening in the setup.
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You know, an auction, it has to run flawless or else then you kill competition.
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So we were, again, heavily inspired on the way you guys did it as a business.
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We were just an internal center of excellence doing it.
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And by the way, I could add, it's both some of the same people I work with today,
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but our processes are exactly the same.
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They're heavily inspired by what you guys originally did at Freemarket and what
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we then further developed at Maersk in the team.
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Yeah, that's what I think I was most impressed and surprised by when I first
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got to free markets. I was in the 300s.
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I came in about a month before we went public.
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And in 99, I left as a plant manager for GE Lighting at the time.
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And I think my wife thought I was crazy.
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The year we went public, I just saw the stats because we just have a 30-year reunion here.
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First nine months revenue that year were around 13
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million so even if we were growing at a pretty good clip
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say 20 million that first year and we came out of
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going public at a nine billion dollar valuation i
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didn't i didn't make a mistake there folks nine billion on about 20 million
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a year and in in revenue so it was the heavy days the dot-com era when everybody
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thought maybe the economy's changing and companies can be valued this way it
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was it was tremendous fun but and a lot of there There were a lot of companies
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that were really just propped up at that time.
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But I can tell you, I got inside there and, you know, I was I was coming out
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of an operations background, you know, in heavy industry.
00:17:33.327 --> 00:17:38.247
And I was super impressed with the the procedures, the way that.
00:17:38.723 --> 00:17:42.043
Things were set up as a very collegial atmosphere where you helped each other
00:17:42.043 --> 00:17:43.083
and learn from each other.
00:17:43.563 --> 00:17:47.563
And a few that came up with the best practice that got implemented pretty quickly.
00:17:48.043 --> 00:17:51.563
We had a lot of smart people around game theory, which I do want to touch on
00:17:51.563 --> 00:17:54.243
some more with you because I know we're both game theory junkies.
00:17:54.583 --> 00:17:59.663
But, you know, it really takes people don't understand. It seems easy, right? It's not eBay.
00:17:59.883 --> 00:18:03.683
You don't put an item out there with a couple of pictures and set a bidding
00:18:03.683 --> 00:18:05.243
price, start price and go.
00:18:05.503 --> 00:18:08.223
There's a lot to prepare the bidders. there's a
00:18:08.223 --> 00:18:11.023
lot to prepare the technology at the time we had to
00:18:11.023 --> 00:18:14.443
right we had to pretty much you know configure every
00:18:14.443 --> 00:18:17.203
each and every auction in a very complex on the
00:18:17.203 --> 00:18:20.063
back end way right that was fat client and you know
00:18:20.063 --> 00:18:24.323
it was it was way before sass and and so there was a lot that went into it but
00:18:24.323 --> 00:18:28.303
everywhere you went you could feel the process and the rigor that was present
00:18:28.303 --> 00:18:31.903
and i think that's really what it takes and i think people underestimate that
00:18:31.903 --> 00:18:37.303
part of it and that's again And one of the reasons maybe why when you just gave people the technology,
00:18:37.603 --> 00:18:41.223
they didn't think through all the process, didn't think of it as a system.
00:18:41.383 --> 00:18:44.683
They thought of it as, oh, I have technology now, I can put my RFP there and
00:18:44.683 --> 00:18:50.223
I can take it to auction. And they forget about 20 things that we would have never missed, right?
00:18:50.443 --> 00:18:54.603
So, you know, that's what it really takes. And it's really cool that you were
00:18:54.603 --> 00:18:56.763
able to build that operation out.
00:18:57.023 --> 00:19:01.763
But, you know, it's real time back and forth. And if you make a mistake.
00:19:02.123 --> 00:19:05.283
The impact is so much bigger because it's real time.
00:19:05.503 --> 00:19:10.983
So you can't have those mistakes if you want to do it at scale and make something
00:19:10.983 --> 00:19:17.903
like an auction program a strategic differentiator for your procurement function. Yeah, absolutely.
00:19:18.603 --> 00:19:21.863
Yeah, I can't stress enough the trust you need to build.
00:19:22.393 --> 00:19:26.593
Not just with the people who own that spend and are putting it up, right?
00:19:26.733 --> 00:19:31.193
It's really with the suppliers even more so that they will come in and feel
00:19:31.193 --> 00:19:37.453
that this is a fair market, that they're not being misled by any show bidding or anything.
00:19:37.453 --> 00:19:42.673
And we had very strict rules around that and very strict protocols for enforcing
00:19:42.673 --> 00:19:43.893
the fairness of the market.
00:19:44.333 --> 00:19:47.353
Our market operations team was very neutral, right?
00:19:47.493 --> 00:19:51.633
We were obviously serving clients, but our job was to make sure it was fair,
00:19:51.733 --> 00:19:53.073
the suppliers are treated right.
00:19:53.233 --> 00:19:58.753
Because in any two-sided market, if it's asymmetric and it feels unfair,
00:19:59.113 --> 00:20:01.413
it's very difficult to make that successful.
00:20:01.913 --> 00:20:05.033
And did you have any challenges with that on the supply side?
00:20:05.633 --> 00:20:10.293
We still have that. And it's been the same for the last 15 years, right?
00:20:10.413 --> 00:20:15.253
That you have to, exactly as you call out, you have to build that credibility
00:20:15.253 --> 00:20:18.153
around the process, around the platform.
00:20:18.633 --> 00:20:22.513
And that's also why it's super important that when you do it without,
00:20:22.913 --> 00:20:26.193
you know, I had a saying back then whenever we got a new colleague,
00:20:26.333 --> 00:20:31.253
I said, you need to do two, three, 400 auctions before you can look in the eye
00:20:31.253 --> 00:20:35.993
of that category director without blinking and telling me he'll get a better deal from this.
00:20:36.453 --> 00:20:42.353
But of course, also when you talk to the suppliers, you need to be able to, in a credible way,
00:20:42.573 --> 00:20:48.093
tell them why this is actually more fair than the old school process where you
00:20:48.093 --> 00:20:52.433
negotiate a bit and then you discuss in the corridor and then you call and award
00:20:52.433 --> 00:20:54.753
the business to maybe the best,
00:20:54.993 --> 00:20:57.513
maybe not the best, because you have a personal preference.
00:20:57.693 --> 00:21:01.433
When you have a market that works, it's super transparent.
00:21:02.313 --> 00:21:08.033
Auctions is the only negotiation method where you empower suppliers to take control.
00:21:08.773 --> 00:21:14.833
So if this deal is really important for them, then they have their own destiny in control.
00:21:15.013 --> 00:21:18.353
They can just lower their bid so they're number one, and so they win it.
00:21:18.373 --> 00:21:22.533
If you have credibility around the process and the platform, of course.
00:21:23.013 --> 00:21:27.493
So it's essential for successful auctions that you have that.
00:21:27.633 --> 00:21:32.713
And that's why, again, you did have clients, but you're also the facilitator
00:21:32.713 --> 00:21:38.313
of the market. And that's why you have to own that credibility on behalf of
00:21:38.313 --> 00:21:39.833
both sides in the market, I think.
00:21:40.573 --> 00:21:45.213
Absolutely. And you pointed out, you know, if you're in first place,
00:21:45.313 --> 00:21:49.473
right, a lot of suppliers thought, well, if I'm the low bidder, I win, right?
00:21:49.713 --> 00:21:52.593
And that's how it works in eBay. That's how it works in...
00:21:53.244 --> 00:21:56.104
In upward auctions, obviously, the highest bidder wins there.
00:21:56.244 --> 00:22:00.544
But in these, you know, it was just, well, we had to tell people being the lowest
00:22:00.544 --> 00:22:02.804
bidder is great because you are the best price.
00:22:03.024 --> 00:22:07.264
But the client ultimately has other decision criteria, right?
00:22:07.424 --> 00:22:09.984
There is a switching cost to move away from their incumbent.
00:22:09.984 --> 00:22:13.224
If there's a present supplier today, they have to bear that in mind.
00:22:13.424 --> 00:22:17.664
So, you know, we can't always guarantee that if you're in first place, you're going to win it.
00:22:17.844 --> 00:22:20.964
Now, some auctions were like that. Let's say it was a commodity,
00:22:21.264 --> 00:22:26.624
right? something that was very open market and it really had no differentiation beyond price.
00:22:26.904 --> 00:22:30.944
But it was very often the case that, you know, it was just, this is to get the
00:22:30.944 --> 00:22:33.384
best bid. You'll have an idea of where you stand in the market.
00:22:33.704 --> 00:22:38.004
And we started to see companies in the PC market, right? We were on PC markets
00:22:38.004 --> 00:22:39.964
a couple of weeks for all of our clients.
00:22:40.784 --> 00:22:44.284
And we found one, I won't say the name of the company, but it's well known.
00:22:44.544 --> 00:22:46.344
I'm using one of their machines right now.
00:22:47.124 --> 00:22:50.984
They, you know, they had a strategy to not be first because they didn't want
00:22:50.984 --> 00:22:54.504
to drive the market down. They just wanted to be a close second.
00:22:54.744 --> 00:22:59.924
So they sort of stayed a certain distance off first place and felt that their
00:22:59.924 --> 00:23:05.484
machine and their service and whatever the non-price factors were,
00:23:05.624 --> 00:23:10.584
were going to differentiate them enough that their bid would be considered very
00:23:10.584 --> 00:23:14.544
close to the winning bid as well when you took it at total cost of ownership
00:23:14.544 --> 00:23:16.004
and total value for the money.
00:23:16.104 --> 00:23:20.864
And now I'm not 100% sure whether it's a free market patent or whether it was
00:23:20.864 --> 00:23:23.064
a patent that Ariba took after the
00:23:23.064 --> 00:23:27.304
acquisition, but this concept around transformational bidding. Oh, yeah.
00:23:27.684 --> 00:23:35.584
Where you incorporate non-price parameters into an auction so that whoever is
00:23:35.584 --> 00:23:40.544
shown as you're the lead bidder, it's not necessarily because you have the lowest price.
00:23:40.704 --> 00:23:43.284
It's because it's price plus value.
00:23:43.584 --> 00:23:51.864
And that concept we still use and promote heavily today because it is really,
00:23:52.264 --> 00:23:57.404
unless it is a pure commodity, then really it's not only about price.
00:23:58.160 --> 00:24:03.780
But there are other parameters as well, but the dialogue with the stakeholders
00:24:03.780 --> 00:24:09.980
will then say, okay, just tell me, how much is it worth that this supplier is super flexible?
00:24:09.980 --> 00:24:14.320
I recognize that when you call him Friday afternoon, he picks up and he helps
00:24:14.320 --> 00:24:16.080
you. That is worth something.
00:24:16.420 --> 00:24:20.660
But just tell me, is it worth $100,000 or is it worth a million?
00:24:21.300 --> 00:24:27.460
And as long as you can put, you know, a value to that, then we can incorporate it.
00:24:27.640 --> 00:24:31.760
And then he would come out on top, not because he has the lowest price,
00:24:31.880 --> 00:24:35.000
but because of price plus value.
00:24:35.500 --> 00:24:40.440
So that kind of bonus mail, I think, is, again, even to this day,
00:24:40.640 --> 00:24:45.160
an underused feature of most auction solutions.
00:24:45.540 --> 00:24:51.760
Yeah, I agree. We did come up with transformational bidding at free markets, and it was pretty cool.
00:24:51.900 --> 00:24:57.160
And it went beyond often just saying, okay, because we know this is a high service,
00:24:57.400 --> 00:25:02.660
we're going to take everybody else's bid and maybe bump it up by 5% because
00:25:02.660 --> 00:25:05.320
we just feel this company's 5% better because of that service.
00:25:05.660 --> 00:25:10.280
What we would often do is have the bidders bid on multiple parameters, right?
00:25:10.420 --> 00:25:14.200
And then that would result in a, not a price so much, but a bid,
00:25:14.340 --> 00:25:17.720
right? It would somehow be economically valued, but it was converting.
00:25:17.900 --> 00:25:22.780
So for instance, if I was providing something and I could do a two-week lead
00:25:22.780 --> 00:25:27.040
time versus another bidder that had a four-week lead time and we had the same
00:25:27.040 --> 00:25:30.940
price on the end item, my bid's more attractive, right?
00:25:31.020 --> 00:25:33.380
You don't have to carry as much inventory, right?
00:25:33.500 --> 00:25:37.800
You don't have to tie up working capital to as much working capital to work with me, right?
00:25:37.980 --> 00:25:43.340
So taking those factors into account is what I would say with transformational
00:25:43.340 --> 00:25:46.940
bidding, you know, that became sort of next level, right?
00:25:47.300 --> 00:25:53.200
And that was what was pretty cool back in the day. I know we came up with a lot of.
00:25:53.767 --> 00:25:57.747
Innovations to really, after you observe these markets for a while,
00:25:57.907 --> 00:26:01.827
you're seeing, okay, rank bidding is very frustrating to the bidder because
00:26:01.827 --> 00:26:04.187
they can't find the next position.
00:26:04.367 --> 00:26:07.867
They're looking and they're kind of blind. So we came up with next horse where
00:26:07.867 --> 00:26:11.527
they could see the lowest bid in front of them, the next place in front of them.
00:26:11.647 --> 00:26:14.907
So if you were in fourth place, you could take third place and then you would
00:26:14.907 --> 00:26:16.907
be able to see where second place was.
00:26:17.187 --> 00:26:20.427
So it relieves some frustration for the bidders.
00:26:20.547 --> 00:26:24.267
And quite honestly, it relieves some technical overhead And for us as well,
00:26:24.367 --> 00:26:27.767
because, you know, those bidders would just keep bang and bang and bang and
00:26:27.767 --> 00:26:31.147
bang and trying to find it, taking the smallest step they can toward that bid.
00:26:31.387 --> 00:26:35.727
So there were some pretty cool innovations that happened along the way to add
00:26:35.727 --> 00:26:39.587
a lot of nuance, I would say, to the bidding process.
00:26:39.807 --> 00:26:46.067
And it further legitimized the channel as a way to really negotiate effectively
00:26:46.067 --> 00:26:50.087
and create a competitive market out there.
00:26:51.267 --> 00:26:55.947
But to this day, it's one of the questions I get the most, or one of the challenges
00:26:55.947 --> 00:27:00.307
I get the most is that we say, hey, Jacob, this is not just about price.
00:27:00.507 --> 00:27:02.567
And this supplier is important.
00:27:03.027 --> 00:27:06.107
There's no way I can put a value to it. Right.
00:27:06.367 --> 00:27:10.847
And my response is always, but if you can't put a value to it,
00:27:11.007 --> 00:27:13.687
how can you ever select a supplier?
00:27:14.047 --> 00:27:20.267
You end up doing it, but you do it through Godfield rather than a data-driven process. and I.
00:27:20.909 --> 00:27:26.509
You know, I always think back on a leadership meeting that we had at the...
00:27:26.509 --> 00:27:28.069
So Merch used to be a conglomerate.
00:27:28.249 --> 00:27:33.649
So I think it was a couple of times per year, all the CPOs from the different companies would meet.
00:27:33.969 --> 00:27:38.589
I would typically do a status sing and dance. And then the group CPO could tell
00:27:38.589 --> 00:27:41.189
everybody that they needed to do more auctions.
00:27:41.529 --> 00:27:45.729
But we were having a discussion in that. And I think it was either the CPO from
00:27:45.729 --> 00:27:50.269
the oil division or the drilling division saying this exactly at this point.
00:27:50.269 --> 00:27:53.829
But it's hard and we can't really assign a value to this.
00:27:54.009 --> 00:27:56.049
And it's our suppliers are special.
00:27:56.249 --> 00:27:59.969
And the retail guy, so we also had a retail division.
00:28:00.529 --> 00:28:06.529
He just smiled and then he said, you know, if a supplier is able to specify
00:28:06.529 --> 00:28:12.889
something to me on an invoice, I can specify it back to him in an auction. I don't care.
00:28:13.329 --> 00:28:17.689
Let's just do it. Because the retail, which is traditionally more aggressive
00:28:17.689 --> 00:28:21.109
on cost and use of auctions.
00:28:21.969 --> 00:28:25.229
Yeah, that brings up another point. So you reminded me, I always thought of
00:28:25.229 --> 00:28:27.849
Maersk as a big shipping conglomerate, right?
00:28:28.129 --> 00:28:33.589
And it is, it's a big shipping company, still is, but it was also had other
00:28:33.589 --> 00:28:37.029
businesses, retail, oil, you just mentioned.
00:28:37.449 --> 00:28:43.929
And so across those business units, if you will, what were some of the most
00:28:43.929 --> 00:28:47.949
interesting categories you were taken out to market back then.
00:28:48.149 --> 00:28:53.689
But, you know, there's so many to choose from, but I think one of the more sort
00:28:53.689 --> 00:28:59.589
of exotic categories that we did for a couple of years was actually for the shipping division.
00:28:59.969 --> 00:29:02.009
And it was armed guards,
00:29:02.832 --> 00:29:07.252
You know, back in the time where there was a lot of pirates around the Horn of Africa,
00:29:08.052 --> 00:29:13.372
every container line would hire armed guards, typically ex-special forces,
00:29:13.392 --> 00:29:17.872
and then they would go on board and be on board the vessel until it was past
00:29:17.872 --> 00:29:21.012
the point of the pirates.
00:29:21.012 --> 00:29:25.792
And if needed, help defend the vessel against the pirates as well.
00:29:25.952 --> 00:29:30.092
And of course, it's a super special case to source and negotiate.
00:29:30.852 --> 00:29:34.232
But again, when you break it down, it comes down to a day rate.
00:29:34.372 --> 00:29:37.432
So for how many days will these guys be on board?
00:29:37.952 --> 00:29:43.092
And of course, it's higher than a normal consultant, but in principle, it's a day rate.
00:29:43.392 --> 00:29:49.472
And there were many companies offering the service. So we did auctions for this
00:29:49.472 --> 00:29:51.192
category as well, of course.
00:29:51.392 --> 00:29:55.992
And did you have to specify the weapons that they would have in their arsenal?
00:29:55.992 --> 00:30:00.452
Or was there anything special about that besides the day rate?
00:30:00.812 --> 00:30:05.552
It wasn't so much on the weapons side of it, but of course there was a lot of
00:30:05.552 --> 00:30:12.452
security clearance, a lot of insurance certificates, et cetera, that these sold.
00:30:12.712 --> 00:30:19.512
This quickly becomes a shady market, but there are legit providers of it.
00:30:19.592 --> 00:30:24.512
And of course, again, it's not eBay, so we don't end up with somebody completely random.
00:30:25.172 --> 00:30:30.852
There's a thorough vetting process. So it's only professional legit players that are invited.
00:30:31.172 --> 00:30:36.892
And therefore, we can only end up with one of them as our supplier in this space.
00:30:37.432 --> 00:30:40.912
Right. Yeah, it's coming back to it again, right? Everybody thinks of the auction.
00:30:41.252 --> 00:30:45.032
The auction is really you're compressing the negotiation part of a very.
00:30:45.782 --> 00:30:50.862
Sometimes very elaborate sourcing process, right? A lot of preparation goes into it.
00:30:51.202 --> 00:30:54.622
You've sort of narrowed down the field that these are the qualified bidders.
00:30:54.942 --> 00:31:01.002
Now, the last thing we want them to do is go online and we're going to provide
00:31:01.002 --> 00:31:06.182
a certain amount of visibility into the market based on the parameters that we've got,
00:31:06.362 --> 00:31:10.202
the situation that we've got, and we're going to allow them to negotiate.
00:31:10.402 --> 00:31:13.242
And that's where the name comes from, obviously in a free market,
00:31:13.362 --> 00:31:18.502
right? You have visibility into where the market is and what your level of competitiveness is.
00:31:18.802 --> 00:31:23.442
But the work, you know, this bid you said highlights a lot of the work,
00:31:23.562 --> 00:31:25.482
the vetting and stuff that goes on behind the scenes.
00:31:25.942 --> 00:31:29.522
To even make it to the party, if you will, for the bidders, right?
00:31:29.622 --> 00:31:32.502
They have to be qualified. And people are like, you're just throwing people
00:31:32.502 --> 00:31:33.682
in there like, no, we're not.
00:31:33.682 --> 00:31:38.302
These every bidder, we may have recommended some bidders to the client,
00:31:38.322 --> 00:31:43.302
but every bidder has been qualified to a certain degree by the by the,
00:31:43.502 --> 00:31:45.622
you know, the the client here.
00:31:45.782 --> 00:31:48.082
And and they've been vetted to be in this market.
00:31:48.262 --> 00:31:50.742
They you know, they deserve to be here as much as you do. Right.
00:31:50.902 --> 00:31:52.302
Is what we had to tell a lot of bidders.
00:31:52.522 --> 00:31:54.622
So, again, it's that trust factor.
00:31:55.002 --> 00:31:57.502
So that's cool. And then you also did a lot of road freight.
00:31:57.722 --> 00:32:00.842
I remember when we talked, you said you did a lot of road freight at Mariskin.
00:32:00.842 --> 00:32:05.382
And again, that sort of seems counterintuitive for a shipping company,
00:32:05.542 --> 00:32:09.402
but a big part of shippers is road freight, right?
00:32:10.566 --> 00:32:17.906
Yeah, so we did over the years, I don't know, auctions on road freight in probably plus 50 countries.
00:32:18.486 --> 00:32:22.306
Back in the days, in the beginning, right, you would have some of the suppliers,
00:32:22.506 --> 00:32:28.206
you know, literally going into the closest town to find an internet cafe so they would have access.
00:32:28.586 --> 00:32:33.126
And then they would participate in the auction from the internet cafe.
00:32:33.266 --> 00:32:34.706
We don't have that concept anymore.
00:32:34.926 --> 00:32:40.106
But back in the days, that was how it was. and we literally did thousands of
00:32:40.106 --> 00:32:43.446
them because we would always need more than one supplier.
00:32:43.686 --> 00:32:49.286
We would need a whole portfolio to cope with the volume and also to have alternatives.
00:32:49.686 --> 00:32:53.246
And that's really one of the great things that auction will give you as well,
00:32:53.446 --> 00:32:54.766
which is bid compression.
00:32:54.986 --> 00:32:58.606
So of course you get a bidder price from the league bidder, but you also get
00:32:58.606 --> 00:33:03.706
a lot, you get compressed pricing from number two to number five or number 10,
00:33:03.946 --> 00:33:07.766
if you like, because everybody gets the feedback And you're negotiating with
00:33:07.766 --> 00:33:12.806
30, 40, it could be 50 suppliers at a time sometimes.
00:33:13.346 --> 00:33:20.266
And without having meetings, everybody is coming closer to the true market value point.
00:33:20.466 --> 00:33:23.886
So I think for a category like road freight, and still to this day,
00:33:24.546 --> 00:33:28.086
auctions is just an ideal one because it is very market driven.
00:33:28.246 --> 00:33:33.486
And you need that compression element as well, which takes forever if you want
00:33:33.486 --> 00:33:38.146
to do meetings with 5, 10, 15 suppliers in parallel.
00:33:39.247 --> 00:33:46.287
Right on. So let's move from Maersk. You left Maersk, and I want to know what inspired you.
00:33:46.467 --> 00:33:52.027
What was your inspiration to write this book, Practical Guide to E-Auctions for Procurement?
00:33:52.247 --> 00:33:55.507
I know you can find it on Amazon. You can probably find it in a lot of places,
00:33:55.727 --> 00:33:58.707
but that's the name, A Practical Guide to E-Auctions for Procurement.
00:33:58.967 --> 00:34:02.767
Very practical name for a practical book. But what inspired you to write this
00:34:02.767 --> 00:34:04.427
book, and what was that like?
00:34:04.427 --> 00:34:10.707
It was really down to, I'd worked with auctions for plus 10 years at the time, and I was,
00:34:11.047 --> 00:34:15.487
I wouldn't say I was getting tired of it because it always sparks a fire in
00:34:15.487 --> 00:34:19.547
me, but I was getting tired or frustrated with having the same discussions with
00:34:19.547 --> 00:34:23.767
stakeholders and the same clarifying, the same misperceptions, et cetera.
00:34:23.767 --> 00:34:29.887
So at one point I said, I looked and there were either very academic articles
00:34:29.887 --> 00:34:34.927
on auctions, which was super math driven or some very, I would say,
00:34:35.067 --> 00:34:37.347
light touch consultancy white papers.
00:34:37.487 --> 00:34:41.947
There wasn't any learning books on how do you actually do this if you're new to it.
00:34:41.947 --> 00:34:46.607
So it was an inspiration both to, or you could say the ambition was to write
00:34:46.607 --> 00:34:49.387
the book I would have liked to have had when I started the journey,
00:34:49.707 --> 00:34:56.907
but also a little bit, you could call it self-therapy sometimes to once and
00:34:56.907 --> 00:35:00.807
for all settle the score and explain what is facts, what is myths,
00:35:00.847 --> 00:35:04.247
and how do you do this? What's the process from...
00:35:04.985 --> 00:35:08.705
You know there's value in this, you want to do it, but then what are the steps
00:35:08.705 --> 00:35:12.805
you need to go through in order to successfully execute an auction?
00:35:13.445 --> 00:35:17.425
Yes. I guess you could send that to your clients as a pre-read.
00:35:17.525 --> 00:35:18.805
Read this before the meeting.
00:35:20.685 --> 00:35:25.965
Well, if only they did, they wouldn't need so much assistance because a lot
00:35:25.965 --> 00:35:30.245
of it is, again, the principles that you guys developed at Free Market.
00:35:30.245 --> 00:35:35.525
It, we might have added a small twist here and there, but the thinking around it is the same.
00:35:35.805 --> 00:35:40.325
But of course, if you've never tried it, it's good to have a steady hand at the wheel.
00:35:40.485 --> 00:35:45.345
As I said, somebody who have tried it thousands of times when you get the tough
00:35:45.345 --> 00:35:48.825
questions from stakeholders or suppliers, et cetera.
00:35:49.345 --> 00:35:55.085
But we do actively, of course, use it when we train people. So when I do auction
00:35:55.085 --> 00:36:01.005
workshops, the book is typically part of it as well as a handout to the attendees.
00:36:01.305 --> 00:36:04.245
It just makes a lot of sense. After you've done it at scale,
00:36:04.565 --> 00:36:07.745
you've seen something 20 times that they're seeing for the first time.
00:36:08.285 --> 00:36:13.665
And I always tell folks, like, look, these guides are so great because when
00:36:13.665 --> 00:36:17.125
you're not doing this day in, day out, you just don't have the ability to learn
00:36:17.125 --> 00:36:21.485
at this kind of pace and be able to take away these things and write a book like this.
00:36:21.485 --> 00:36:27.125
So I encourage anybody that's interested in applying auctions to read Jacob's book.
00:36:27.225 --> 00:36:30.865
It's very practical, I'm just going to say it.
00:36:31.025 --> 00:36:36.885
So it's a great book and congrats on getting that published and everything that goes with that.
00:36:37.699 --> 00:36:41.379
Then you started up this company. Let's talk about Moneyball,
00:36:42.059 --> 00:36:46.379
CPH, which I think CPH is a little dedication to Copenhagen,
00:36:46.379 --> 00:36:48.239
where you're based, right? Absolutely.
00:36:48.539 --> 00:36:54.579
And Moneyball is a dedication to the baseball concept that is well known in the U.S.
00:36:54.979 --> 00:36:58.499
Billy Bean. Yeah, Billy Bean and the Oakland A's. Yeah, great movie,
00:36:58.659 --> 00:37:00.079
by the way. I recommend that movie.
00:37:00.299 --> 00:37:04.639
It's very cool. Fantastic. And Mike Lewis's book, if I should give a book recommendation
00:37:04.639 --> 00:37:08.479
as well, a fantastic book as well, introducing the concept.
00:37:08.639 --> 00:37:12.639
I got super inspired when I read the book and also watched the movie.
00:37:13.219 --> 00:37:16.739
And I went back to my, back then, my colleagues at Merck and said,
00:37:17.019 --> 00:37:23.359
you know, we got to be able to translate this concept into procurement of making
00:37:23.359 --> 00:37:25.019
more data-driven decisions.
00:37:26.059 --> 00:37:29.899
And then we started to look for what is the area where we have a lot of data
00:37:29.899 --> 00:37:32.099
points so that we can look at statistics.
00:37:33.162 --> 00:37:36.582
And that's where we, again, stumbled over auctions.
00:37:36.922 --> 00:37:41.742
And then we looked at all from our, was it 3,000, 4,000, 5,000 events that we
00:37:41.742 --> 00:37:43.842
had done up until then at the time.
00:37:44.062 --> 00:37:46.762
We started to look at the statistics there.
00:37:47.242 --> 00:37:52.802
What's the value if we add one more supplier to an auction? What's the difference
00:37:52.802 --> 00:37:54.902
between three and four and five, et cetera?
00:37:55.482 --> 00:37:58.962
And it was approximately 1% up to nine.
00:37:59.162 --> 00:38:04.522
After nine, you couldn't document an incremental savings. So there's a diminishing
00:38:04.522 --> 00:38:07.702
return on increasing competition as well.
00:38:07.982 --> 00:38:12.122
We looked at the best day of the week, Tuesday, worst day was Friday.
00:38:12.642 --> 00:38:16.422
And then we looked at a number of things, also efficiencies.
00:38:16.562 --> 00:38:22.802
So in RFP processes, what's actually the efficient work time from you launch
00:38:22.802 --> 00:38:26.422
it to suppliers, access it. That's the first sort of waste period.
00:38:26.602 --> 00:38:29.442
Then they work with it and then they submit it and then the event closes.
00:38:30.022 --> 00:38:36.802
And for us, it was 25, 50 on 25. So 50% waste time if we add it up.
00:38:36.882 --> 00:38:41.462
And we use that, again, to educate and say, maybe you shouldn't always by default
00:38:41.462 --> 00:38:43.802
keep your IFPs open for four weeks.
00:38:44.142 --> 00:38:47.962
If they only need two weeks, then go with two weeks. So if we,
00:38:48.142 --> 00:38:52.642
again, at scale at a global company can reduce the cycle time for IFPs,
00:38:52.862 --> 00:38:58.602
then the procurement team can do more with the same people and we can have a bigger impact.
00:38:58.602 --> 00:39:04.202
So, you know, it was that thinking of translating the baseball stuff into procurement
00:39:04.202 --> 00:39:09.722
that when I left Merck, I said, you know, that's the mission of this new company.
00:39:09.882 --> 00:39:13.502
It is to help procurement teams make more data-driven decisions.
00:39:13.502 --> 00:39:16.422
And then the Moneyball name was Merck.
00:39:16.823 --> 00:39:21.543
Was the right one. And then the reference to Copenhagen, as you called out, as well with CPH.
00:39:22.143 --> 00:39:26.183
Yeah. And so you're working with clients today to help them.
00:39:26.823 --> 00:39:30.543
Tell us a little bit about the value proposition. And when you work with a client,
00:39:30.643 --> 00:39:32.443
what's a typical engagement like?
00:39:33.323 --> 00:39:40.463
So typical engagement for us would be a large company that are either new to
00:39:40.463 --> 00:39:43.923
an area like sourcing optimization or auctions,
00:39:44.203 --> 00:39:49.343
we would come in and help them get the technology off the ground.
00:39:49.663 --> 00:39:53.723
And, you know, one thing is the practicality of configuring a solution.
00:39:53.903 --> 00:39:56.543
But what is a lot more important is the mindset.
00:39:56.943 --> 00:40:01.643
When you talk auctions, you know, the understanding of what it is and how it
00:40:01.643 --> 00:40:03.063
works and the whole strategy part.
00:40:03.263 --> 00:40:09.203
And when you talk sourcing optimization, that they understand this analytical
00:40:09.203 --> 00:40:15.703
proposition that these platforms comes with that e-sourcing is not just about
00:40:15.703 --> 00:40:20.163
collecting data and rates and then getting it out into Excel to do your analysis.
00:40:20.503 --> 00:40:26.323
You should do and aim to do all your analysis in the platform because it will
00:40:26.323 --> 00:40:31.823
give you both efficiencies, but also there will be a more effective approach
00:40:31.823 --> 00:40:33.483
to market if you can keep it in there.
00:40:33.703 --> 00:40:37.923
So we work a lot with that mindset, changing that with the client,
00:40:38.083 --> 00:40:43.363
making sure they understand the real opportunities of these technologies so
00:40:43.363 --> 00:40:47.063
it doesn't become a tactical solution, you could say.
00:40:47.223 --> 00:40:52.503
We sometimes help them with designing the program so exactly they can do the scale as well.
00:40:52.743 --> 00:40:57.243
And then we can be the backbone for extra complex cases.
00:40:57.443 --> 00:41:03.523
They can call us in, but else then as we train up their own team as well.
00:41:04.184 --> 00:41:10.664
Right. And then I think, if I could ask the last thing, so where we try to differentiate
00:41:10.664 --> 00:41:15.264
as well is that none of us are very experienced consultants.
00:41:15.484 --> 00:41:17.464
We are nine today. Soon we'll be 10.
00:41:17.824 --> 00:41:20.364
Everybody comes with an industry background.
00:41:20.784 --> 00:41:24.764
And that's why, again, when we go into these companies, we know exactly the
00:41:24.764 --> 00:41:29.244
position they're in because we've spent years in a similar role ourselves,
00:41:29.244 --> 00:41:33.224
both operating the environment of big,
00:41:33.544 --> 00:41:37.404
complex organizations, but also the complexity of their projects.
00:41:38.284 --> 00:41:44.084
We've addressed exactly those projects for years with our different corporate backgrounds.
00:41:44.644 --> 00:41:48.204
That's great, because I think you probably have a lot of people who had a lot
00:41:48.204 --> 00:41:50.204
of experience in a corporate environment.
00:41:50.504 --> 00:41:55.024
They're not really the true cut from the consultant cloth, so to speak,
00:41:55.144 --> 00:42:00.344
which, by the way, is not a bad thing. We use many experts here at my company today, right?
00:42:00.424 --> 00:42:05.024
We bring expertise, not just traditional consulting pyramid to play.
00:42:05.204 --> 00:42:07.604
But, you know, the fact that they've done it, they've been there,
00:42:07.764 --> 00:42:10.284
they've worked these categories, they've had these situations,
00:42:10.284 --> 00:42:12.964
they know their way around it.
00:42:12.984 --> 00:42:16.464
And you can take that in your clients. It has to be a massive lift.
00:42:16.664 --> 00:42:20.844
And imagine there's some great knowledge transfer that occurs as well when you
00:42:20.844 --> 00:42:27.264
work with clients so that you can teach their team how to operate as well as your team is operating.
00:42:27.484 --> 00:42:31.564
No, and I think it's actually, it's probably because we come with the background
00:42:31.564 --> 00:42:37.464
that we have, that that knowledge transfer, it's just an ingrained part of our DNA.
00:42:38.244 --> 00:42:42.624
That's our model. We don't go in and lift things out and then execute it.
00:42:42.744 --> 00:42:47.484
We work with them as an extension of the team and we deliver results,
00:42:47.524 --> 00:42:52.524
but we also deliver capabilities while, you know, delivering the results as well.
00:42:53.166 --> 00:42:57.046
We like to say here, and you can steal this line because I stole it from a guy
00:42:57.046 --> 00:43:01.606
I work with, but we like to say, we do it with you. We don't do it to you.
00:43:02.766 --> 00:43:07.366
We work alongside our clients and really co-create because we want to leave
00:43:07.366 --> 00:43:11.166
and make sure what we work on, what we help them with is sustainable.
00:43:11.166 --> 00:43:14.226
Right and it's not going to fall away when we leave because
00:43:14.226 --> 00:43:17.226
we've been keeping something propped up so that's great
00:43:17.226 --> 00:43:20.206
that you're doing that so one thing i want to touch on
00:43:20.206 --> 00:43:24.846
there's two more things i want to hit but one is there are a million solutions
00:43:24.846 --> 00:43:28.766
it seems now out in the market right and i ran a software company for a while
00:43:28.766 --> 00:43:32.666
after free markets and i remember when it was tough to raise money and then
00:43:32.666 --> 00:43:38.066
all of a sudden you know when covid hit and supply chain all of a sudden became a bit of a darling,
00:43:38.406 --> 00:43:44.706
there was an immense amount of funding and capital that went into a lot of companies that started up.
00:43:44.806 --> 00:43:49.046
So I'm happy for all those people that were able to raise money maybe more easily
00:43:49.046 --> 00:43:50.846
than it was when I was running a company.
00:43:51.006 --> 00:43:54.626
But that's a timing thing. That's a market demand thing.
00:43:54.706 --> 00:43:59.686
But there are so many solutions out there now for source, not just auctions,
00:43:59.826 --> 00:44:02.586
but sourcing and optimization and orchestration.
00:44:03.046 --> 00:44:09.246
I just want to get your thoughts on the evolution of solutions and how you feel about it.
00:44:09.346 --> 00:44:13.726
Because I feel like in some way, you don't feel necessarily that the new ones
00:44:13.726 --> 00:44:14.866
aren't always better, right?
00:44:15.146 --> 00:44:18.906
Maybe it's old wine and a new bottle. I don't know. Tell me about it.
00:44:19.406 --> 00:44:24.686
Yeah. So, no, but I share your excitement around the market.
00:44:24.886 --> 00:44:28.506
And there are indeed thousands of solutions.
00:44:29.106 --> 00:44:32.606
But I think and that's
00:44:32.606 --> 00:44:35.626
great and some of them are truly unique and offering
00:44:35.626 --> 00:44:38.386
something new so it's not to put on them but I think
00:44:38.386 --> 00:44:45.646
for most corporates and when I recommend that to clients they are maybe pushing
00:44:45.646 --> 00:44:49.326
back a little bit in the beginning but I do hope they get the point that it's
00:44:49.326 --> 00:44:54.186
out of it out of the best with the best intentions when I say listen instead
00:44:54.186 --> 00:44:57.546
of you going out and buying a new shiny object Right.
00:44:58.180 --> 00:45:01.520
You already paid for free. Why don't you put your energy?
00:45:01.640 --> 00:45:05.760
You don't even have to put money because you already bought them in making sure
00:45:05.760 --> 00:45:12.800
you maximize the value coming out of those one or more solutions that you already acquired.
00:45:13.574 --> 00:45:20.534
But I also know, you know, it's this human thing about always striving for the next thing.
00:45:20.834 --> 00:45:26.574
And I think that's sometimes hurting us, that we are not maximizing the value potential.
00:45:27.074 --> 00:45:32.294
Right. I heard a saying a couple of weeks back around, you know,
00:45:32.954 --> 00:45:34.774
basics being the new excellent.
00:45:35.074 --> 00:45:39.674
And I really like that because if we just get the basics right,
00:45:39.914 --> 00:45:44.934
then we can deliver so much more impact than, you know, than what we're doing today.
00:45:45.334 --> 00:45:50.634
Yes. It's not always popular advice because most CPOs would like a new shiny
00:45:50.634 --> 00:45:54.394
object that they can show to other CPOs or their CEO.
00:45:55.114 --> 00:45:58.134
But the matter of fact, if you want the biggest return on your investment,
00:45:58.474 --> 00:46:01.434
then just get more value out of what you already have.
00:46:01.954 --> 00:46:04.654
Right. Yeah, we call it sweat in the assets, right?
00:46:04.834 --> 00:46:08.554
And, you know, leverage those assets as much as possible. And I don't know,
00:46:08.634 --> 00:46:13.354
it seems to be becoming a recurring theme on this podcast. it about simplicity,
00:46:13.674 --> 00:46:15.714
right? It's very easy to complicate things.
00:46:15.954 --> 00:46:18.474
It's difficult to simplify things.
00:46:18.754 --> 00:46:23.174
But I think as humans, we just have this fundamental flaw that we,
00:46:23.374 --> 00:46:26.934
oh, we can make it more complicated and we can try to overdo it.
00:46:27.174 --> 00:46:31.654
Whereas if you strip it back to the basics, sometimes you really find that you
00:46:31.654 --> 00:46:35.074
can do a lot if you're just focusing on getting the basics right.
00:46:35.294 --> 00:46:39.234
And then, then looking where it can make incremental enhancements to that.
00:46:39.354 --> 00:46:43.194
But you gotta, to have that foundational, the foundational principles need to be there.
00:46:43.414 --> 00:46:46.634
And you got to try to keep it as simple as possible, I think,
00:46:46.794 --> 00:46:49.834
is a lesson we keep repeating on this podcast.
00:46:51.234 --> 00:46:54.374
But it's because it's so true, but it's also so hard, right,
00:46:54.554 --> 00:46:56.574
to implement in reality.
00:46:56.894 --> 00:47:00.834
And I can relate to the need for looking for a new shiny object, but...
00:47:01.421 --> 00:47:04.901
If it's my own money, I know where I would spend them. And that would be on
00:47:04.901 --> 00:47:07.741
sweating the acid, maximizing the value.
00:47:08.681 --> 00:47:13.481
Jacob, I'm going to close this out. I always like to close with a moment of gratitude.
00:47:13.761 --> 00:47:17.841
And you've had a great career so far. You're still going.
00:47:18.021 --> 00:47:23.201
You've got your own business now. And congrats on achieving the 10-person headcount.
00:47:23.341 --> 00:47:28.481
That's a nice milestone for you to reach. And that tells me that you're creating value for clients.
00:47:28.481 --> 00:47:32.541
But, you know, looking back on your career, is there anyone that you would like
00:47:32.541 --> 00:47:36.981
to acknowledge for helping you to grow as a leader and, you know,
00:47:37.041 --> 00:47:39.641
as an author, as a business owner,
00:47:40.221 --> 00:47:43.701
you know, and somebody who's been very influential in your career? Absolutely.
00:47:43.921 --> 00:47:48.181
And there's so many, so I'll guarantee to forget someone as well.
00:47:48.301 --> 00:47:51.581
But if I start from sort of the beginning of it, then, of course,
00:47:51.841 --> 00:47:56.001
someone like Glenn Leakham and the entire free market alumni,
00:47:56.461 --> 00:48:01.221
as I put in a LinkedIn post not that long ago, we are literally standing on
00:48:01.221 --> 00:48:03.441
all of your shoulders there.
00:48:03.601 --> 00:48:07.181
So what Glenn created and with the other, with the rest of the team as well,
00:48:07.221 --> 00:48:11.241
of course, I think is amazing. And I owe that a lot to my career.
00:48:11.891 --> 00:48:15.431
And then you could say the next thing, I am so appreciative
00:48:15.431 --> 00:48:22.271
of the just about 18 years I got at Maersk for the CPOs that I worked with there
00:48:22.271 --> 00:48:29.971
who had sort of the courage to allow us to really go all in on auctions and
00:48:29.971 --> 00:48:33.891
build this beast of a cost-out team and engine.
00:48:34.271 --> 00:48:38.811
And you could say the engine, that was my team and my colleagues at the time there.
00:48:38.991 --> 00:48:45.471
You know, you can't do anything on your own. So, of course, highly appreciative for them as well.
00:48:45.591 --> 00:48:50.051
And I'm fortunate enough that I now have a chance to work with a few of them
00:48:50.051 --> 00:48:52.711
every day as well as they've joined my team.
00:48:52.891 --> 00:48:57.511
And that also leads me then to the last bucket, which is my team at Moneyball
00:48:57.511 --> 00:49:01.311
here, where we allow ourselves to be highly specialized.
00:49:01.311 --> 00:49:05.531
You can even call us sourcing optimization nerds and auction nerds.
00:49:05.531 --> 00:49:11.771
We really love this area and having a chance to share that with like-minded
00:49:11.771 --> 00:49:17.811
people just make it a blessing and fantastic experience to go to work every single day.
00:49:18.481 --> 00:49:24.201
So I'm full of gratitude also for the people I work with right now, all my colleagues.
00:49:24.881 --> 00:49:29.841
Yeah, I can tell you our conversations, you know, as we got to know each other and let up this.
00:49:30.561 --> 00:49:34.421
Jacob and I, for the audience, I always knew of Jacob.
00:49:34.661 --> 00:49:39.281
I kind of watched him from afar and, you know, and I reached out to him at some
00:49:39.281 --> 00:49:44.901
point and we had such a great conversation about the early days and you brought
00:49:44.901 --> 00:49:46.441
back a lot of moments for me.
00:49:46.561 --> 00:49:51.361
And I had the good fortune, as I mentioned, the free markets team reunited for
00:49:51.361 --> 00:49:54.421
a 30-year reunion here in Pittsburgh a couple of weekends ago.
00:49:54.641 --> 00:49:59.021
And I had a chance to see some people and express gratitude to those folks.
00:49:59.201 --> 00:50:05.701
And for what's happened to me, my career was propelled by that company and continues
00:50:05.701 --> 00:50:08.981
to be connected to that company sort of everywhere I go.
00:50:09.301 --> 00:50:12.861
And so it's nice to look back on that.
00:50:13.041 --> 00:50:17.301
But you've had, I just think, phenomenal success. And I think you will continue to.
00:50:17.561 --> 00:50:24.721
I still am happy looking back this many years later that auctions and sourcing
00:50:24.721 --> 00:50:27.461
optimization and some of the technology.
00:50:27.821 --> 00:50:33.421
The pioneering stuff that we were doing at free markets has blossomed and evolved
00:50:33.421 --> 00:50:38.421
and become such a thing to think that there is actually a massive conference
00:50:38.421 --> 00:50:40.001
called Digital Procurement World.
00:50:40.181 --> 00:50:43.101
Shout out to the team there, Matthias and his crew.
00:50:43.301 --> 00:50:46.301
I mean, they've done a great job of building out that,
00:50:46.521 --> 00:50:50.181
but that just speaks to the sort of ecosystem that got created around,
00:50:50.201 --> 00:50:54.841
you know, technology-driven solutions and then service companies like yourself
00:50:54.841 --> 00:50:59.641
that come in and help people make the most of that technology to really drive
00:50:59.641 --> 00:51:01.341
enterprise value for customers.
00:51:01.621 --> 00:51:05.081
So it's been a fantastic conversation with you today, Jacob.
00:51:05.341 --> 00:51:09.001
And, you know, if you have any closing comments, I'd welcome you to have them
00:51:09.001 --> 00:51:09.981
here, but it's been great,
00:51:10.487 --> 00:51:14.067
Great talking to you today, and I think our listeners are really going to appreciate
00:51:14.067 --> 00:51:16.947
some of the things that you brought forward. Thank you.
00:51:17.467 --> 00:51:21.707
Thanks again for having me both on the podcast, but I can only echo what you
00:51:21.707 --> 00:51:24.847
say about the conversation. I appreciate it.
00:51:25.087 --> 00:51:29.467
Every time it's good anecdotes, it's good to catch up on these things.
00:51:29.667 --> 00:51:32.967
And what I think is truly impressive is that a company like Freemarket,
00:51:33.087 --> 00:51:38.267
who was founded 30 years ago, to this day still has impact on people's lives
00:51:38.267 --> 00:51:41.547
and the results that are created in many companies.
00:51:41.747 --> 00:51:43.947
That's quite an achievement, I think.
00:51:44.467 --> 00:51:47.667
Yeah. A lot of the executives could feel that legacy.
00:51:47.707 --> 00:51:50.927
And a lot of people have gone on to do great things with other companies and
00:51:50.927 --> 00:51:52.527
create a lot of value out in the world.
00:51:52.747 --> 00:51:58.187
So I have a lot of gratitude for that experience myself, as you can tell.
00:51:58.447 --> 00:52:03.007
So it's been great. I'm going to let you move on with your weekend because you're
00:52:03.007 --> 00:52:04.927
a lot closer to it than I am right now.
00:52:05.067 --> 00:52:07.247
But Jacob, thanks for joining us.
00:52:07.487 --> 00:52:10.427
And until next time, let's stay in touch. Absolutely.
00:52:10.767 --> 00:52:14.847
And thanks again for having me. All righty. Take care. Bye-bye.