June 24, 2020
In this episode, Santosh sits down with James Coombes, CEO and Co-Founder of Vector AI solutions for paperwork and documentation for businesses.
Santosh Sankar 0:40
Hey ladies and gents Welcome Back to the Future Supply Chain podcast. I'm your host Santosh Sankar. And joining me today: our very own James Coombs, CEO/Founder of Vector AI. Welcome!
James Coombes 0:53
Thanks Santosh. Great to be here.
Santosh Sankar 0:54
Yeah, so you're joining us from across the pond, and I would say You're a portfolio company that we talk a lot about when it comes to the industry. Equally, our listeners might not all be aware of what you're building. So we'd love to just kick it off with a quick, you know, two-minute overview of what Vector AI is and what you do.
James Coombes 1:20
Yeah, sure. We often talk about the elevator pitch, right? So maybe you guys have total buildings, but for me, an elevator pitch goes like three or four floors. So we are Vector AI. We are we're a paperwork copilot, we help to automate paperwork and logistics space. And by paperwork, we mean all sorts of things from bills of lading, invoices, packing lists, and so on. We do about 20 different documents. 200 different data points across 20 different docs and growing, growing over time. And in terms of the scale of what we do, on aggregate. Our customers process about $130 million dollars every year at the moment, that's obviously growing. So it's a huge space and one that I think we can look obviously objectively or not objectively, I think we can make a big difference.
Santosh Sankar 2:11
Tell us about the founding story behind Vector. Because you know, I remember first meeting you and Nisar back in 2017 on a trip to London in like this swanky or I guess I remembered as swanky it might not have actually been... coffee shop in Shoreditch. How did this even come to be?
James Coombes 2:33
Yeah, so I don't know how swanky it was. I can't remember exactly the name of a hotel, but it was just a coffee shop. Every coffee shop in Shoreditch is pretty swanky I guess. We saw this massage. So I met my partner at an event called Entrepreneur First. And we met in Mid 2017 and we've been working together ever since. You and I met on some random Slack channel started by a guy called Sam Cropper. I believe his name was from In Motion. And I think you were on the chat as well. And it wasn't a very active chat. And I remember seeing your name and I remember you had basically said you are going to be in the UK at some point would love to meet interesting people. And I was like, yeah, you know, I think I'm interesting. I'll meet. So I dragged my partner along to this random meeting and just random coffee shop slash hotel review with a random dude. You. You put us in touch with a bunch of people literally from having just met. And I just remember being really impressed that you kind of go to those lengths to kind of work, work with us and help us out, given that you'd only just met us. And for us, that meant a lot and I obviously kept on, kept on going away and kept on. I kept the discussion up a review over weeks and months afterward.
Santosh Sankar 4:24
You explored a lot of different ideas around the supply chain. What was that 'aha' moment where you realized we want to go be the co-pilot around paper and paper communication.
James Coombes 4:38
I'm not sure if it was a moment specifically. I mean, my previous career work, I worked in a big bank. I worked in commodities and trade. A lot of my customers when I trade houses, they're doing a lot of trade finance. And so I was just very aware of all the kind of paperwork issues of around that business alone, I'd also set up had also set up a furniture company as well. At the same time, I was at some point in '08, ended up importing a lot of furniture from around the world into the US and Europe. And had so it was pretty, pretty aware of kind of all the moving parts around supply chain and freight forwarding as a result of that experience. So I felt like I had a pretty good overview of not just the kind of finance and the kind of trade and the trade finance world, but also just general operational aspects of the supply chain. And I think I've been able to combine those in a way that kind of gives us abasing an edge. And that that was how we kind of got onto this. And it was a problem and I think it's one of those spaces that is is a huge problem, but not that many people know about it, and that's exactly where I want to be as a company.
Santosh Sankar 5:56
Mm hmm. I think the interesting thing our listeners might have picked up on is that the one thing you and the team at Vector hold to be true? Is that paper is a mainstay of the global supply chain? Explain that expand on that, because we obviously agree as investors that that's true.
James Coombes 6:15
Yeah. Yeah. It's something we get, you know, occasional pushback on. Really what we're addressing is a standard problem run with supply chain and the very definition of a fragmented industry. I mean, you've got everything from mom and pop shops and kind of manufacturers around all around the world customs, houses, government agencies, banks, insurance companies, shippers, I mean, you've got so many different players in the space. And the idea that they're all going to be on one standard, it just doesn't ring true to me. I think given they all have their own systems, standardization is going to be very hard to come by, as much as it is kind of the holy grail but kind of like the target the end. The end goal, I think, given the constraints of the moment, and the constraints of the moment rely on the kind of lowest common denominator. And that common denominator is often just paperwork, right? It's just communication, whereas the method of communication between all these different players, and it's the only kind of standard they have, and we think that's gonna, that's gonna persist. And really, I mean, I could go on for a long time about this, but we're a company we solve problems. And the problem, real problems today, I'm basically saying like, okay, we accept that this is the status quo. How do we help companies do a bit better? And that's, that's really a core belief. In many ways, you can think of us as being like, the universal adapter. We're agnostic, we don't care what comes in, we deal with it. And we help enterprises around the world have taken that nonstructured kind of data and deal with it and analyze it to that format. And I think that's really powerful. I think another great analogy that like I again, I don't want to like belabor this point. But a great analogy is that people talk about blockchain and stuff in the space. And the big problem that that that kind of approach has is what I call the Oracle problem is how do you get something from like, the physical world onto the digital into digital? And I think that's, that's a large part of what we do. We take the status quo, and we bring it into that kind of digital future. And I think that concept is super powerful. And it's obviously something that resonates with a lot of our customers.
Santosh Sankar 8:32
Yeah, and putting a bow on the paper bit. When people ask me and try to push on it. The beauty of paper across languages, borders cultures, is that it's the most flexible medium. So as long as you know, we have this fragmentation just around the people’s side of things. Paper is going to be a big part of it. And I love that you know how you talked about being the adapter? And I think something that people often mistake this for is Hey, is it just, you know, OCR? I think it's lost on people what it means to be the adapter. Could you expand on that?
James Coombes 9:17
Yeah, yeah, for sure. And I also think, like some of the previous kind of previous points that you've done, you've made right in terms of kind of a universal adapter approach. Or, let me kind of take a step back. What we see like what kind of paperwork aspect is really is really in many ways. It's like the content of a contract that people are kind of passing in between each other. And you see this in so many spaces. You see this in a kind of a swift kind of world and then kind of you see it in GDI. You see that even though you've got a bunch of standards, there's always a bunch of like freeform areas where you kind of need to capture the nuance of that communication on that paperwork. I think that's also something that shouldn't be kind of ignored and forgotten that the huge amount of nuance is involved in the paperwork as well. But we capture. Now to your point on the OCR side. Absolutely. I mean, though, OCR on itself is... it comes up a lot. We talked about it in terms of, it's probably like 5% of what we do with a product. But it is really, it's really important to control. We spent a lot of our time. Actually, I mean, a huge amount of time actually building and training our own AI, so we don't use anything else. We use our own. We train them around on literally millions of images. And we've done it specifically in the supply chain space because supply chain paperwork is always really painful. There are watermarks everywhere. People like to print on top of stuff. We do handwriting so it's important to get that right. And so we trained and built our own so we have control and then that feeds the rest of what we do. The balance and this is a kind of a hard bit is more kind of the extraction site is, is to be able to say, you know what it's not just about extracting the text it's about specifically extracting kind of poor learning is why over contain a number of acts. And doing that in a meaningful way but doesn't involve you know, kind of historical approach are like templates and stuff has to do it in a smart way that can adapt and learn with an operator. And that's kind of where the machine learning part of what we do kind of reality comes into the picture. So that is the lion's share of what we do in terms of the extraction site. But you're right, it's leaps and bounds above OCR, and kind of embedding all of that stuff in a workflow as well is super important.
Santosh Sankar 11:48
Yeah, yeah. It's it's basically taking the physical and turning it into a digital fabric of sorts.
James Coombes 11:54
Yeah, but I would add quickly before as well is that like on the I think MLS has often overused an overused term in the space or not just a space in every space. And I think I think that's also something, whilst it is, I believe in the future where people will talk about it in the same way they'll talk about like, React. Like nobody builds a website now and says, you know, we're a react based website like nobody cares, right. And machine learning will be that in the future. But at the moment it is still important as an important part of our platform. And I think it's, it's important to differentiate ourselves as well because often use you see every company out there that says they do machine learning in some, some form. And I think it's really important to look at the team. Like if, if one of the founders and ml specialists, then probably not a real a proper Machine Learning Company. We built it and in the call, since we started, ML has been kind of been competitive in everything we do. And I just like it's important not to underplay that I think in what we do as a company.
Santosh Sankar 12:59
Yeah, no, that's spot on. And as an investor, that's one of the first telltale signs. If you don't have that town at the table, you're, you're likely not an ml company or a vision expert or whatever else. Yeah.
James Coombes 13:17
Look at the team, just about the look of the team, where we're super lucky to a bunch of other guys on the team who do justice. We live and breathe that.
Santosh Sankar 13:30
Yep, yep. Shifting focus here. You have some noteworthy customers, we're not going to mention them by name, but you know, we have a major global bank, a top-five freight forwarder that you're fortunate enough to count as your customers. How have they dealt with, you know, this issue of the paper and then stitching, you know, trade credit and freight forwarding process together, like what is the status quo you're competing against?
James Coombes 14:00
I think I'd probably go back to my kind of my, my banking background. Banks kind of think of this as kind of split things into like a back office, some middle office, and a front office. And the way I think about it, and the way we kind of describe what we do is actually, we've got, you've got the back office, which is kind of database stuff. But we don't really, we don't really touch that. You've got our front office, which is how do you interact with the customer at some point in some shape or form. And really, what gets ignored is that kind of middle space, that kind of a middle office, and if anything, I think what we're doing and what we're helping to build here is it's kind of a new middle office because that's where everything that comes into a bank to a freight forwarder to the carrier to any large enterprise kind of gets lost in that kind of middle ground. That's where all the unstructured stuff or stuff you don't really know what to do with kind of goes towards that middle office. And at the moment, like the only solution all these companies have is just to throw manpower at it, because there's no standardization. It's a standardization problem. When I think about what we do, that's what we saw. We thought about the middle office layer for enterprises. And I think that's probably the best way of thinking about it.
Santosh Sankar 15:19
When a customer adopts vector. What is that experience like,? What are the benefits that they're seeing as you're taking them from an analog world to a digital world?
James Coombes 15:33
We'd like to that we take them on a happy path, right? So we spent a lot of time with our customers to make sure that the way we work and interact with the kind of fits into their workflows. And we have measurable results. So one of our customers, we've directly measured it and so with them, we basically lead to 92% time saving, which is a huge amount of taking something from. It's taking something from 40 minutes before and just put it in those terms. It's, you know, it's not a tough sell, because you can point to genuine productivity.
Santosh Sankar 16:19
We haven't used the word automation or RPA. But you know, what, what happens from here? Is this the baseline for that type of an effort?
James Coombes 16:30
Yeah, I mean, I think I think a lot of what we do is we've created like this contained solution, where you can do things that people generally associate with a classic like RPA in one area, right? So if you control that kind of platform, and that that ability to work with your customers, then you can slowly start. You can start kind of chipping away at the other stuff that they do, but that should be more streamlined. I think like we're working on a ton of these. But, I think one really good example from the finance world, is that often you'll get things that are phrases. And so it will be literally prose that says, you know, you must have three copies or three copies of a commercial invoice or a bill of lading. And they have to be signed. And it will say that it won't, it won't be like a digital event statement. It's literally a phrase. And so what we do is we actually understand that phrase, we understand what it means in the context of what we do. And we kind of helped drive kind of an understanding and automate the understanding of that in the context of all of its documentation. And that is just the tip of the iceberg. So that's where we're going. There are so many other things if, if this was longer, we could get into it.
Santosh Sankar 17:56
I would love to kind of close it off with how you see a solution, such as a Vector improving the freight forwarding world. Because it's one of those industries, right intermediary long tail, people think you can very easily collapse the intermediary, we've come to realize that that's just untrue. But you can work smarter. So I'd be curious, you know, what some of your freight forwarder customers have seen or benefited from?
James Coombes 18:27
Yeah, I think it's exactly what you mean, what you just said, right? It's that intermediary level where you, you don't really have control over the way your customers interact with you. And in fact, control over that kind of standard comes at a premium, right? Because nobody wants to give that power away. So you're kind of stuck as a freight forwarder to kind of dealing with this level of complexity and non-standardization and I think that's where the next step in freight forwarding is. I think there's been obviously a lot of great work in terms of how, where the customer-facing side is. And the back end, but I think that interaction with this kind of diverse, fragmented supply chain, you know, touchpoint. I think that's where you can really add value, and really change things as a freight forwarder. And, you know, we're seeing that across all markets. There's a huge demand for what we do.
Santosh Sankar 19:31
So I'm gonna shift gears on us a little bit here. And I'm going to talk about, you know, startups and building a business. You've been in the fortunate position where you're London based, but you have customers on both sides of the pond. And it's something you know, many European founders ask us about. So I'd be curious, what would your recommendation or advice be how, how can a European business start playing sales into the US?
James Coombes 20:02
That's a good question. I don't know if I have the most representative opinion on this. We have to because we work with supply chain and supply chains by definition international. So that's always going to be a focus for us. So we're not too limited to working with a company based in the UK versus somewhere else. I think it also helped that I live in the US. I've lived in the US for 10 years. Yeah, I've, I've always found that not so easy, but I've always enjoyed working with us customers. They really kind of adapt and get excited about new tech and, and for me, I you know, obviously make it any easier and easier sell and so it's always been enjoyable. So, I guess the advice would be not to be scared of it. For us, it's it you know, yeah, I've enjoyed every every every part of working with us customers. And I imagine that Continue. Yeah, that's a skewed perspective.
Santosh Sankar 21:05
Follow up to that would be you mentioned, you've had time, in this part of the world. You've been able to appreciate, you know, the culture and the requirements around dealing with that culture as a salesperson. Very curious, you know, taking a step back. If there was one skill you think a founder should have, as they tackle a supply chain problem, or build a business in supply chain? What would that skill be?
James Coombes 21:37
Yeah, I mean, to me, I think, again, I can only speak to my own experiences. But I think the one thing that I knew made a difference from my perspective, is the ability to have a kind of a holistic view of how all of this stuff fits together. I don't think the supply chain can ever be taken in isolation. I think you have to consider it in the same kind of space as finance, insurance, general enterprise, and all the kind of moving parts around it. I don't think supply chain exists in isolation very well. So I think you, I think it's important to have an overview. Again, from but from my perspective is something I find really important. And I think I'd advise potential founders in the budget.
Santosh Sankar 22:26
Yeah, last thing for you here. You've been on this journey for about three years now. Or at least three years since we originally met. What would be one piece of advice you wish you had back in 2017, as you set out on this journey to build vector?
James Coombes 22:47
I've been asked this question before, and I've always struggled with it mostly because I always believe in kind of path dependency. And I think it's just something that you, you just can't enter with it. And that's okay. I don't think it was you, you will always have imperfect information. And I think it's important to accept that. And it's important to not the kind of like over-optimize for having all the information. And I think that as a founder, you have to live in a world where you have to make decisions on very incomplete information. So, like, my answer to that is always like, yeah, nothing. There's, there's not really anything that I would do differently. And that's not to say, I didn't make any mistakes. I haven't done anything wrong. I mean, I completely would definitely have but I just think at the right at the time, I thought this was the right thing to do. And I think I think that's the best approach, right? And it's kind of like serendipity is kind of going through and trying to make the best, the best calls with the amount of information you have is the way to go. And, you know, like, if I look back from where we are now I'm super grateful that we, we have an amazing team, we've got amazing customers. I think we were in a great position here where you can really change things and change how people do stuff. And I, like, it's hard to look back and say I would do anything.
Santosh Sankar 24:22
No, I think that's, that's certainly sound advice. I‘ll say, you know, having had the good fortune of working with you. You always look to gather as much data as possible at each juncture before making a decision and that sounds like what you're alluding to, and provided one is comfortable with the framework that they're using and the inputs they're using around a decision. You shouldn't have to look back and really have too many regrets.
James Coombes 24:59
Yeah, because the cost of making that, like the cost of making a decision usually isn't that bad. So it's almost worse than not making the decision. So just make the decision and if it's wrong, adjust.
Santosh Sankar 25:10
Awesome. Well, James, I appreciate you joining us this morning, or rather this afternoon for you. And I look forward to seeing Vector continue to change the future supply chain. Cheers!