Yann Schuermans: 400 Years Family Legacy, Indonesia Supply Chain & AB InBev to Circles.Life to Baskit Founder - E322

· Founder,Start-up,Indonesia

“Experiences are very important. Feeling grounded in a space that you understand and that you love is extremely important. A lot of folks make the mistake of choosing being a founder as a matter of, ‘This is fashionable.’ ‘This is a resume builder.’ That can put you in a trajectory that is not as productive for your future because being a founder, when you don't have a good foundation, will teach you a bunch of generalist skills, but it's not going to be giving you any depth in any specific sector, especially if you die within the first year of starting that company that you’re not passionate about. The advice that I would give is, don't rush things. If you need to spend more time in a sector and a position, even take an intermediary step like I did, there's no shame in that. Use that as learning. Build your armor. Build your resilience, and then wait for the thing that you are so committed and so attached to.” - Yann Schuermans

“Majority of people or companies who go into the space don't survive long enough to be able to have a medium to long-term adaptation. They go in this with promises of a massive TAM, a massive amount of funding, this promise that the model of disruption is going to take hold. This space is a survivalists game. The companies that will survive within this space are those that will be able to create long term change are the companies that can join and remain nimble, those that can keep their costs relatively low and can find ways to work with the different parts of the ecosystem, not just with a single part. When I say enablement, I'm not just talking about the wholesalers, the distributors, intermediaries. I'm talking about how that connects to the brands.” - Yann Schuermans

“It’s critical to play multi-category. You need volume drivers, and you need margin drivers, and you need to have the data capabilities to be able to know what's what. If you're just a volume driver, it's going to be very difficult. So if you really want to, if you want to monetize from a marketplace model perspective you need to be able to play across different categories, and you need to be able to play across products that have different price sensitivities. Once you're there and building that relationship, and once you're already transacting, it's not too much. It's not too much to go beyond that and monetize different areas. So, once you have become multi-vertical, once you are driving volume for your partners across different categories for you to then use that data to monetize, as I mentioned, for instance, our financing partnerships, whenever we have a loan that is dispersed, we take a cut whenever we bring volume to some of the 3PL players that we're bringing, we take a cut. Whenever we bring incremental volume to the brand, we take a cut. That's how you can monetize.” - Yann Schuermans

Yann Schuermans, Founder & CEO of Baskit, and Jeremy Au, talked about three key topics:

1.Career Transitions and Entrepreneurship: Yann recounted his journey to join AB InBev and reflected on the valuable experiences and insights he gained, which equipped him with a broad perspective on supply chain complexities and industry nuances. He shared his decision to leave his secure role at AB InBev, joining Circles.Life, and later starting his own venture, Baskit. He explained the different considerations behind every career move, including factors like access to capital, geographic location, and even the challenges posed by the COVID-19 pandemic. He advised aspiring entrepreneurs to gain experience and build a strong foundation in their chosen domain before embarking on entrepreneurial endeavors.

2. 400 Years Family Legacy: Yann shared his background of growing up with a family history deeply rooted in supply chain expertise spanning 400 years. He discussed how he witnessed his father navigating various supply chain crises and how this upbringing ignited his own passion for the industry. Unlike conventional career paths, where individuals often pursue professions like law or finance, his family legacy exposed him to the world of supply chain management from a young age, which not only provided him with valuable insights but also fueled his passion for the field.

3. Indonesia's Supply Chain: Yann provided his insights on supply chain from his time at the global beverage company, AB InBev. He talked about Indonesia's vast and multi-faceted supply chain, highlighting the country’s market, geographic challenges, and diverse topography. He also provided a tiered structure of the supply chain, distinguishing between various layers, including wholesalers, distributors, and brands. He also shared his insights on monetization strategies, unit economics, and to carefully assess whether it’s better to disrupt or complement an existing supply chain models.

They also discussed Yann’s vision for Baskit as a software-defined supply chain platform, the importance of staying light and flexible in the industry, various monetization strategies within the supply chain space, and the significance of multi-category approaches.

Supported by Ringkas

Ringkas is a digital mortgage platform aiming to solve the access to financing problem for home seekers in Indonesia and Southeast Asia. Ringkas currently collaborates with all major Banks in Indonesia and the largest Property Developers across more than 15 cities. Ringkas vision is to democratize home ownership and create more than 100 million homeowners. Don't just dream about owning a home. Make it a reality. Explore more at www.ringkas.co.id

Jeremy Au: (01:57)

Hey Yann, really excited to have you on the show. You're a founder, you too also have some experience with the AB InBev slash beer industry. You've been a techie at Circles.Life and now you're a founder, really looking to build out Indonesia's supply chain. Really excited to have you on the show.

Yann Schuermans: (02:13)

Thanks Jeremy. Really great to be here. Super excited.

Jeremy Au: (02:16)

So could you introduce yourself real quick?

Yann Schuermans: (02:18)

Yeah, sure. I'm originally from Brazil. Well, actually Brazilian-Belgian, but Brazilian sounds cooler. So I usually go with that. I've kind of been a world citizen since forever. I've never really lived in the same place for more than two, three years. So ever since I was super young, I kept moving around between Brazil, Belgium, Germany hence the accent.

So, you know, I've been very global. I ended up going to university in the UK at a brief stint, working in finance. In, in the UK after my university, but then again, just kept true to my roots and continue moving around. If I can point to one thing that really defines me and really defines my roots, my DNA, we have about 400 years of supply chain and distribution in the family. And as we'll talk about it a little bit later, that's shaped everything that there is to be about me today. Uh, so that's, that's me in a nutshell and yeah excited to tell you more a little bit about what we're doing.

Jeremy Au: (03:05)

So talk to me about what's it like growing up with 400 years of supply chain history. How does that happen? Do you like, hear a bedtime story about supply chains and how things have moved from one place to another? How does that happen?

Yann Schuermans: (03:16)

Yeah, it was a story I'm really proud of and it's always driven me. I've been super excited and I have this burning fire inside every time that I think about everything that my family has done. So the supply chain side of things actually started in Belgium several hundred years ago. They were brewers. They used to make beer. They were quite big. They were competing back in the day with the Stella Artois and the large brewers. We ended up losing the battle in the fifties. They shut down the brewery, but my grandfather was a young man back then. So he wasn't content on just shutting it down and doing something else.

He ended up trying to do something daunting. He ended up moving to Brazil with the Belgian side of the family, with my grandmother at the time, and he started the orange juice side of the business which is now very interesting because every generation since he started, my father, my brothers, my potentially even my sister, they'll be going to the same space. So I just felt I feel this huge backdrop of distribution and manufacturing and farming that I live and breathe every day. Our family discussions all revolve around that. Ever since I was a little kid, from growing up and in a farming environment and a manufacturing environment to having visiting my dad at work and ports and things like that. It's just been such a big part of my life.

Jeremy Au: (04:24)

I'm so curious. When you grew up in that environment, do you get like business parables or lessons, any moments that kind of shock you to be like, Oh, this is something that's interesting,

Yann Schuermans: (04:33)

Yeah, one of the beautiful things about, let's contextualize this, right? I had part of this experience in Europe and Belgium and Germany, and part of it in Brazil, probably some of the most memorable times that I had were during the Brazil times, because in Brazil, it's a world of opportunity, same as Southeast Asia. It's a new frontier, but when new frontiers come a lot of trouble and a lot of problems and a lot of things that break. So, some of the most memorable moments that I have as a child are basically my dad having to go on these, two-week, three-week long camping trips into the ports and the big areas around big logistics hubs to fix issues, for instance leakage, and ships that were coming into dock in the ports. And then all the orange juice leaks out and then you have a huge environmental hazard. And then, sometimes visiting him and figuring out, okay, how is my dad dealing with all of that stuff? So it's always been a very interesting environment for me to grow up in very dynamic, especially on the Brazil side of things, because there was always something that was just about to go wrong, but also something on the horizon that was the next big opportunity.

Jeremy Au: (05:31)

Fascinating. And there you are, obviously you have this family business and family traditionally there. And then I'm so curious because you joined AB InBev. which is just, again, giant brewery operation. I used to consult for Heineken and Asia Pacific Breweries counterparts, I would say competitors, in the space but you spend five and a half years there. So I was just a consultant at Bain, kind of an advisory for them. So it's very different. I spent five and a half years covering, APAC, Southeast Asia, China, India. So walk me through that experience. What was it like?

Yann Schuermans: (05:59)

So I knew I wanted to work for AB InBev since the age of 13.

Jeremy Au: (06:03)

13? Most people want to be, I don't know, a doctor or a lawyer or a pilot, or a soldier.

Yann Schuermans: (06:09)

Yeah, it was uh, we had just moved to Belgium and we were studying. I was at an international school and back then it was not AB InBev yet. It was InBev. So it was the Belgian, they had acquired Interbrew and they were, headquarters are still in Belgium, in Leuven. So I was studying with the kids of all the executives and this is now the biggest company in both Brazil and Belgium. Anybody who has a dream of making money and just being at the peak of their careers, they're thinking about AB InBev, or they're thinking about InBev. So I had both sides pulling me towards the company.

And there were some of the kids from the executives that weren't my grade, they were peers and whatnot. And every time that the parents would come by, we would engage them as Brazilians or as Belgians. They would give speeches or whatever at the school, I would cling on to them, I just already had this fondness for the company from a very young age, just because of the story of the background around being a brewer and whatnot.

So very early on, at age 13, 14 back then, the global CEO, Carlos Brito, he was the father of a couple of my friends in school. I kind of clung on to him and I said, Hey, I want you as a mentor. So he was my first real long time mentor and that influenced every decision that I made about career, about the internships that I made, about what I studied, about where I studied, and all of those things eventually led me to getting my position, my so coveted position at AB InBev. But I had such a deep relationship with them over the years that I have carved out across the different regions that they gave me leeway to kind of pick where I wanted to go and what I wanted to do. And 400 years of supply chain is great. But, you know, Brazil has the problems that I mentioned and it's a great place, but my family was there. I didn't want to be in their shadow. Belgium is great, but it's kind of tiny. Beyond waffles, beer and chocolate. There isn't much else so I wanted the new frontier and AB inbev gave me that. They enabled me. They allowed me to have this opportunity to move to Asia with them, be in China, cover APAC, spend a lot of time in some of the most interesting markets, arguably in the world, especially during that time. So yeah, it's been just a crazy wild journey and I learned a ton with them.

Jeremy Au: (08:03)

Well, you can't really say no to Belgian waffles there. But like you said, not much of a career. And so you went to AB indev and you spent five and a half years really covering APAC, including your base in Shanghai, you're covering Southeast Asia. So I'm just so curious, what did you learn from five and a half years? Because there's a good chunk of time you went through three different roles. And so I'm just curious what you learned from the experience.

Yann Schuermans: (08:22)

I was so self-actualized at that company. They gave me every opportunity to grow. They made me one of the youngest directors slash partners in the company. They allowed me to run business units at the age of 26, running a full P&L, having a team where everybody else was at least 10 years older than me. And that type of experience was just crazy. It accelerated my learning in a way that I wasn't ready for, but it forced me to be ready for it. So I think there was a huge maturation process and a huge acceleration and what I needed to step up to in order to be able to deliver and to continue the growth trajectory that they put me on.

So I think professionally, from a maturity standpoint, that helped me tremendously, but specifically, I was exposed to a huge amount of variety in terms of markets. AB inbev is large in the region. They have a massive operation in China. I think they have something like 40, 50,000 employees across the region. They're large in Southeast Asia. They're huge in India. Across the roles that I had, for instance, on the Director of Strategy and M&A, but also as the chief of staff to the CEO, I got to work with him on some of the most strategic and important projects at that time. Some of which were related to acquisitions, some of which were relating to supply chain digitization.

And I think that to me, that was the most marking or the most important piece of learning that I got to have during that time. Because I got to really be thrown in the field and really have to face every layer, every part of the supply chain that is insanely complex. For you to contextualize what a supply chain looks like end to end in India, it's massive. There's no one-size-fits-all. You have layers and layers upon layers, and the same thing applies to China. The same thing applies to places like Vietnam, Philippines and Indonesia. So having to understand the nuances, the cultural components, having to understand what drives the various forces within the supply chain for a company to be able to really succeed in that space, I think, for me, was the most transformative experience and learning that I've had. And it's something that I carry with me to this day. It's what drives me to do what I do today. So I will put that at the very top as the biggest learning. And if I could perhaps go with an anecdote or story, that was not very fond of, management by white boarding.

I think even though I didn't speak Mandarin at the time, they were very keen on throwing me to go in the field. They sent me to do wholesaler audits in the middle of nowhere, not speaking a word of Chinese, having to drink baijiu with a bunch of guys that they were trying to do business with and trying to understand whether or not they were faking the accounts. So, really that exposure and that brutal kind of nowhere to hide feeling that I always had being on the field, but then also having to figure out a way around for me was one of the best schools of life that I could have hoped for.

Jeremy Au: (11:02)

So what's interesting is that there you are and you're doing this for five and a half years and I totally get it. I've been a consultant, so I have done three months of bouncing around the jungle, nowhere as much as you did. I was in Thailand and Hainan in China. And so, seeing some of that stuff, but what's interesting is that you then chose to move towards technology. So you joined Circles.Life and So walk me through that process. Why did you decide to strike out?

Yann Schuermans: (11:27)

My runway with AB InBev was very well carved out. So my pathway to leadership, to getting, having a fantastic career with them. There was absolutely nothing wrong with the company, but I came to the realization that in a big corporate with 300, 000 people globally, sometimes you're not as in control of your career as you think you might be. And I've always wanted to be at the driver's seat and I always wanted to be in charge of my learning. And I felt that for the first time in my life, I wasn't anymore. I was now entering phase of where politics and exogenous factors would influence my path forward from there because I had already reached directorship, now what things need to piece together.

So, once that realization came to be, I was just so sure that entrepreneurship was the only path forward, but I wasn't ready yet. You know, I was 28 at the time, most of my life was corporate. I had worked across different parts of APAC, but I hadn't made the difficult decision to get closer to the markets that I thought were the most interesting ones. So for me, the only path forward was to leave the comfort and the warm embrace of AB InBev and then expose myself to a wholly new environment where I could get exposure to technology. I could learn the ecosystem. I could learn what it's like to work with founders and that really drove me to Circles and to work with the founders there, which was again, one of the most foundational experiences of my life. It offered me the opportunity to have a hard crash and a steep learning curve into the world of SaaS, into the world of technology, into the world of venture as a whole.

Jeremy Au: (12:58)

Amazing. And there you decide to go and say, you know what? It's a hot crash. It's a steep learning curve. Let me double down on this and build another company.

Yann Schuermans: (13:07)


Jeremy Au: (13:07)

So walk me through that. And you're like, you know what? I love punishment. So I'm a sucker for more. Let me just become a founder.

Yann Schuermans: (13:13)

I think one of the most pronounced characteristics that people observe in me over time is I like the hard crashing. I like to be in a situation where I know it's going to be such a foreign environment to me and there's a risk of failure, but I overcome that risk of failure and that is then what creates the next exponential opportunity. So, even at Circles, even though it was such a foreign environment, it was such a difficult sector to grasp and not just to learn about SaaS, but to learn about telco and to learn about Singapore, and then to relocate my family here and all of those things. Within a year, I felt like I was on a tear because the learning that I had, I was able to have and that one year superseded anything that I could have ever expected the project I worked on the breadth of and the scope that I was touching was really far beyond what I could have imagined.

And it's almost counterintuitive. It is that breadth, and it is that momentum which made me feel ready again for the next hard crash, which is what happens when you become a founder, which is you go into the complete unknown, and there are no guardrails, there is nothing, and then it's just you against the world. It was part of my maturation process to be able to do it, and it was the right time. It was the right time because I felt connected to the ecosystem. I felt supported. I felt a sense of confidence that I just knew that you can throw me off of any building and I'll land on my feet. So that was really it for me.

Jeremy Au: (14:35)

To land on your feet into Indonesia supply chain. And so, not just any vertical, right? I mean, if you had told me FinTech, okay, SaaS. Okay. I mean, yeah, I got 400 years of family, I don't know, blood and everything into supply chain. But Indonesia supply chain has been tough, and we discussed this, right? I've been a founder before. We were going through the mechanics. We're going through the landscape. So how did you say, you know what, I want to build Indonesia supply chain. I want to work a middleman. I want to build Baskit.

Yann Schuermans: (15:02)

Yeah. The move to Singapore was very intentional. It was always a step be sown into. Just adding another Bayesian filter for me to then be able to make that next decision in a better way. I wasn't ready to skip ahead three steps. I needed that intermediary step. So for me, I always had it very clearly in my mind that I was going to do something either in the Philippines and Vietnam or in Indonesia, which are three markets that I worked in before. And I saw a tremendous opportunity within supply chains just by virtue of how fragmented and how complex they are. And then I think I had already decided on what I was going to do. As I mentioned to you, when I was working at AB inbev, when I was doing the supply chain digitization work and I came across various frustrations and things that I knew were fundamentally broken across markets, China, India, Southeast Asia, very similar components that were broken and we're not being addressed. I already had a very clearly what the backbone of the company that I wanted to build was going to be doing, which is the strengthening of the middle layers of the supply chain.

I just hadn't focused yet on this is the market. I'm going to do it. This is the team I'm going to do it with. And this is how exactly I'm going to execute step by step now. A couple of things happened in 2021 and 2022 that really put the spotlight on Indonesia. I got further appreciation just for how crazy and fragmented and difficult the market is, which for a lover of heart crashes, such as myself was, nirvana when it comes to trying to solve problems and figuring out how to how to toughen the skin, right? If you think about a market where you want to solve a supply chain problem, Indonesia is the most exciting one by far. It's one of the most complex topographies, geographies in the world. You think about tectonic plates and the volcanoes and the thousands of islands, and then you think about one of the largest populations in the world.

It's just so complex and it's that complexity that made me feel okay, that has opportunity, but it also has space. It has the gray areas where a product, the right company can really go and have the right impact. And in parallel to that, a few things started to happen within the venture space. A few investments, a few trends starting to go into the more disruptive approaches to supply chains, which would involve compressing the supply chain so that you have fewer players and you're kind of bypassing some of the middlemen, some of the layers that I've wanted to vouch, to empower and I think that as I saw that happening in parallel, I felt a sense of urgency to ensure that sure, some of that traditional supply chain, some of those layers will indeed be streamlined and there will be some consolidation, but I felt a sense of ownership and just drive that I also needed to be there in parallel to be able to do the opposite. The work that is required not to let those parts of the supply chain fall behind.

So that's what brought me there. And that's what's going to keep me there for a really long time.

Jeremy Au: (17:47)

That's interesting because, we've always seen how tough this category is, so he said something like, oh, the complexity attracted me. Well, the complexity has also killed so many companies in this space. I think from our perspective, maybe at least seven different generations and what I mean by that is seven different generations of different approaches that have attacked the space with different components. Some of them are looking to disrupt supply chain. Some of them looking to consolidate. Some of them looking to complement. Others are looking at the top of the principles. Others are looking at the middlemen and the distributors. And other people are working all the way at the bottom .

Whether there's warungs or saris, you know, so forth, there's so many different approaches. So, really interesting to see you approach this, when you take a step back and you look at this whole landscape, and I think you spell this very clearly in your press release and your communications. But one of the big things you often say is that you're looking to complement and support supply chain rather than disrupt it. And somehow that seems to be very important because you say that all the time. So tell me about what the core of that thesis is.

Yann Schuermans: (18:45)

The core of the thesis is the following. The disruption of supply chain entails that there are players in the supply chain today that are not carrying their weight. They are dead weight within that distribution chain. Either they are intermediaries that don't need to be there. They are providing services that don't need to be provided. And just generally speaking, it's margin that is up for grabs. That's usually the core premise of many of the disruptive models, right? This is a traditional player. I can do a better job, therefore, I'm going to go and I'm going to capture this margin. And it's a narrative that folds itself well on the back of the bus that we have around e commerce. If we say e commerce is going to get huge. Everything is going to be orders and delivered to your door. And then at the same time, we're having this narrative around B2B, which is cutting down the supply chain, shortening the distances, etc. It all sounds very coherent and it all sounds very beautiful. But, you know, when you actually take this out of the microcosm that is Singapore, Jakarta, Ho Chi Minh, where, you have tier one cities where you might be able to do this because of the population density and because of the GDP per capita in that area that it's ready for that type of condensing.

If you take it outside, you realize that the world is not as rosy. You have so much old infrastructure, warehouses, trucks. By old, I don't necessarily mean that it's ineffective. I just mean that it's been there for a long period of time. Generations upon generations, you know, businesses that compliment tier 2 cities, tier 3 cities, tier 4 cities that have been foundational to the development of those communities.

And when I say that empowerment and enabling is the right path forward, what I'm saying is these businesses that have entrenched themselves in those communities for such a long period of time, they will not fall prey to that compression so easily because again, if one wants to remove them, one needs to build on top, one needs to be able to do the work that they do better. And I'm sorry to say, but it would be a fallacy to believe that any startup or most companies, for that matter, have the ability to be more efficient than that guy who's been operating that business in that area for 60 years, that knows the kids of all the other owners, all of the retail folks, all of his peers.

It's just absolutely impossible. So again, we take the approach that this is an indispensable and very important part of the ecosystem by virtue of those relationships and by virtue of the work that they do in areas where, to be honest, startups are going to take a really long time to go into and. Even if they wanted to, they would need to spend a huge amount of money, all those warehouses and those trucks, they don't come in cheap. So, so we work with them. We work with the folks who are there already. We help them to use their infrastructure a little bit better, be it improving how they manage their warehouse, how they manage their logistics.

And by doing that, we create we bit by bit elevate a part of the market that was previously offline and turn that. Into a more conducive kind of layer that can then support all of this digitization that is happening in the other parts of the supply chain, right? You mentioned the upstream, you mentioned retail.

Jeremy Au: (21:43)

I mean, I know supporting, that sounds so boring. Disruption, that's so much cooler, you know, rebuild, restack, compress, disintermediate, right? I think these are things that feels like it generates a lot more value, because of that you can call it data weight, but I think it's the idea of technology can bring a lot of efficiency to the system, right?

The productivity gains are so much higher. The network effects are high as a result. Why do people get it wrong? Or what are people missing in the adjustment? Because nobody's dumb, right? And nobody's. Lazy, right? Everybody's hardworking. Everybody's working their ass off. Everybody's smart. Everyone's kind of like aggressive and trying to figure stuff out.

So what's the kind of, you think, blind spots or what are the frameworks that's causing people to assess this differently from your perspective?

Yann Schuermans: (22:26)

I think the majority of people or companies who go into the space, they don't survive long enough to be able to have a medium to long term adaptation. They go in this with promises of a massive TAM, a massive amount of funding, this promise that the model of disruption is going to take hold. And once they realize that it won't because of the things that I mentioned before, because you have this layer, which is there, which you can't bypass and take over and capture those margins as easily as you thought you might then you start to go into a tailspin because what are you going you're going to compensate the, you're going to compensate the perhaps a lack of traction by hiring more, you're going to grow the size of the organization in order to perhaps fulfill growth metrics, which are not necessarily aligned with the long term survival of the company. So, again, I think this space is a survivalists game, the companies that will survive within this space that will be able to create long term change are the companies that can join, can remain nimble that can keep their costs relatively low, can find a ways to work with the different parts of the ecosystem, not just with a single part. When I say enablement, I'm not just talking about the wholesalers, the distributors, intermediaries. I'm talking about how that connects to the brands.

I'm talking about how that connects it's the financial ecosystem, which is providing working capital, how that connects to the folks that are today providing 3PL services, but you need to be able to survive long enough to understand the nuances and to get the model right without blitz scaling like crazy, and just trying to go for the first thing that appears to be the right solution because it's extremely nuanced. So I think that's what most people get wrong. It's scaling prior to having figured out really. What is the combination of models that will be sustainable in the long term? And once that happens, it's very hard to claw it back because, you know, and you will have seen this before the unit economics, they don't tend to add up in this space for a while.

Jeremy Au: (24:20)

Oh, there's so much to unpack there, right? I think we're going to both nerd out here a little bit. I think there's a couple of phases ahead here, which is scaling before the business models interlock. And that is also hard to unwind once you scale, because of the unit economics don't stack. So this is an expert conversation here. So first of all, what do you think are the business models that do stack? I think you mentioned this, you talk about technology, you talk about operations, talk about financing, and that's something that many startups have actually said, they do provide those things, right? Operations, technology, and financing. So what does it mean to be thoughtful about what you're stacking together here?

Yann Schuermans: (24:52)

So long as your base is light and you're providing those things, you're in good shape. If your base is heavy, meaning that you are working capital heavy business you are providing, you have hundreds of trucks on the streets, you have thousands of people and you're in holding inventory. Let's just say that there's no cash conversion cycle. There's no working capital cycle that can survive the test of time here. You just don't have room because you're fighting in the low oxygen environment with an extremely heavy model. I really do feel that sure, all of those areas can create value, can be revenue drivers, but the flexibility, the lightness on your feet for you to be able to perhaps, crank up the heat on one of the areas that is generating more revenue while departing from others that may have proven not to be so profitable. That's what really dictates the winners from the losers.

What I find is a common mistake in the space is the quickest way to get traction is by entering the 1P model space and just going into a more of an inventory play. And then once you start to do that, it's very hard to go back. It's just really hard to go back.

Jeremy Au: (25:54)

Sounds like there are two, I wouldn't say errors, but the first error is inventory. In order to supposedly increase margins and so forth, but ends up being a whole chimera slash dragon all to manage all together, like you said. But the second thing I actually found interesting was that you said, it's not necessarily that the models in terms of value add is wrong, but it's the denominator is right in terms of your SAP nurse and your approach.

And, you know, and then you said a year in economics doesn't stack as a result. So, could you walk me through the positive version of this from your perspective, what a negative version of this looks like?

Yann Schuermans: (26:24)

Let's use a very simple example here. Let's assume that I am going to streamline the supply chain by becoming an inventory holder. So I'm basically becoming a wholesaler, so you're gonna have to deal with first of all, the massive amount of working capital you need to come up with to be able to source. It's gonna take you a long time to be able to have the right sourcing relationships, to be able to commend good pricing. So your margin is gonna be compressed already from the get go. Now, you're going to have on the opposite side, GMV requirements or promises to investors. So you're going to be subsidizing transactions on the buyer end. So most likely if you break even on CM1, you're already in good shape. And most, most just simply don't. Now, on top of that, you're adding logistics and most of the logistics that is run by folks that go into the space is usually third party, so 3PLs. I mean, I think 3PLs is a fantastic thing for the economy as a whole, but it's just not something that startups in our space can afford to do. You're spending 15 million rupiah or $1, 000 a month on a truck. And on top of it, you're pending, you're basically having to ensure the cash that those that is being collected or is being brought in through those operations.

So now, you're already in a situation where in CM1, you're already struggling, then you add the logistics on top. And then on top of that, you have to pay extra to ensure cash because you're dealing in a super cash rich economy, in a cash focused economy. There is no business that can survive those pressures. Why? Because in the traditional world, none of those things are actually pressures. You think about a traditional wholesaler. He doesn't worry about collecting cash. He's going to get paid anyway. He doesn't worry about the logistics. He's got his tiny little truck there that he shares with 7 other wholesalers and they're all happy.

And he doesn't even think about that as a cost. Actually, the store owners come to buy stuff directly from his store. So the equation just does not add up because at the end of the day, when you get to the consumer pricing, there's only one consumer pricing. They're going to go for the cheapest price that they can afford. So again, I think it's a bit of a meat grinder. If you go into the asset, heavy operations for the space.

Jeremy Au: (28:23)

So what's the solution from your perspective? How do you orchestrate? How do you compliment that, if this is not the way?

Yann Schuermans: (28:30)

It depends what you're after. It's perfectly acceptable to start a wholesaler business, even within FMCG. You can still make good money. Don't get me wrong. You have tight operations. If you insert yourself into the local communities, you can make great business. You can have amazing cash flows. Sure, you're going to have to learn to do all of those things that the local players are doing, but you can still do that. Is it a venture-backable business? I'm not so sure. It's a lifestyle business, so if that's your objective, then that's absolutely no problem.

My objective is to capture data across the entire middle distribution layer in Indonesia, not just because it's a nice to have, but because you think about the applications and what I can do with that data from productizing it to leveraging it for underwriting to then monetizing it with the principles. I win by having the broadest possible base. So again, for me, the lighter I can be, and the more brains I can be inside of those wholesalers capturing data day in and day out, the more that's conducive to what I believe could be a highly scalable and valuable business in the future.

So again, it all comes down to being light on your feet. And it comes down to not being afraid to identifying all of the various areas within the business that you can capture revenue from people would be surprised how many different revenue lines you can create out of this. And sure, it adds complexity a little bit, but there are so many areas within the supply chain that are, perhaps ,you're not making your. 3, 4, 5 percent take rates, but you're making 0.2. You're making 0.3, you're making 0.4. But if your cost is 0.5, 0.05 or 0.1 to run your operations, you're in for a really high margin business, especially if you're scaling that across many wholesalers in the country.

Jeremy Au: (30:08)

How is that a win for the wholesalers and distributors partnering with you in that scenario? Because it sounds scary initially, right? It's like, oh, okay. You're taking data, you're productizing excess. So how is that? How do they benefit?

Yann Schuermans: (30:20)

The wholesalers care about one thing only. They care about sales and they care about their bottom line, and the bottom line is not even that. They care about it, but let's just say that they have difficulties in properly calculating it. So long as we are able to bring additional traffic for them, and technology is an abler to be able to do that, we are both winning. I'm winning because I'm capturing the data that I need in the process, digitizing this wholesaler. The wholesaler is winning because he's selling more. He's able to reach a bigger area, but at the same time, he is bit by bit starting to see the benefits of digitization, how great it is to know how much inventory you have, how great it is to know that you're actually not going to have enough cash this month to be able to fulfill certain orders or certain POs that is a huge value add for them.

One of the major pain points that we see comes month end. And these wholesalers, they started to say, You know, this month, we're going to come short 800 million rupiah because I just ran out of cash. I just don't have enough cash left in my little box here. I cannot fulfill these POs. I cannot go and pay the brand owners or the distributors that alone, the opportunity costs that we help them to avoid. This is great. So those little points of the light create a sense of trust and a sense of, Hey, we're in this together. If you win, I win that is really hard to move away from. So that's why our customers don't churn. And once we start to go deeper and we start to go into other areas of adding value, like helping them to actually, for the first time, outside, because we are now their advocates and saying, this is a good business, Mr. bank, you should look at this business here. Here's the data. Here's how we should be thinking about it. And being able to do that for the first time, that's a whole new world that we open for that wholesaler. Similarly, when we get that wholesaler to be plugged in directly to the brand owner who wants to say, Hey, I want to sell my product X in this region and that this wholesaler is almost acting as a sub distributor now with direct brand investments, you know that is a big deal for that wholesaler because again, in the hierarchy of supply chains the wholesalers below the distributor that he always wants the brand investments He always wants to be more connected with the brands, but the distributors are the ones that are the gatekeepers there. So again, I think there are many ways that we add value and we can work together, and the more we do this, the more we monetize.

Jeremy Au: (32:30)

Right. I think what's interesting, of course, is that for this entire category is very much or so not just about helping, but also how monetization happens. So that's a big question that people have. People have tried SaaS, other people have tried success outcomes. What do you think, not necessarily by yourself, but you look at this whole space, what's the best approach from your perspective?

Yann Schuermans: (32:47)

I think you need to play multi-category. That's absolutely critical. You need volume drivers, and you need margin drivers, and you need to have the data capabilities to be able to know what's what. If you're just a volume driver, it's going to be very difficult. So if you really want to, if you want to monetize from a marketplace model perspective you need to be able to play across different categories, and you need to be able to play across products that have different price sensitivities. I think that, once you were there and once we're building that relationship and once you're already transacting, it's not too much. It's not too much to actually go beyond that and monetize different areas. So, once you have become multi-vertical, once you are driving volume for your partners across different categories for you to then use that data to monetize, as I mentioned, for instance, our financing partnerships, whenever we have a loan that is dispersed, we take a cut whenever we bring volume to some of the 3PL players that we're bringing, we take a cut. Whenever we bring incremental volume to the brand, we take a cut. So monetization, as I was mentioning.

I think the core there needs to be a price sensitivity game, making sure that you are working with products that afford the right margins for you to have at least a base. And then everything that comes on top of that is just margin accretion. So the financing is part margin accretive, all of the stuff that we do in terms of cross. So we do charge for a software as well. For instance, it's not a massive amount, but the wholesalers are happy to pay for that once we deliver, 5, 10 percent of incremental sales for them. So there are definitely ways that you can monetize on top, but if your bucket is a leaky bucket from the beginning, because you're just doing volume driving and that's not generating much margins for yourself or for your customers, then it's very hard to layer anything on top.

Jeremy Au: (34:28)

As you go through and think about point A to point B to point C, what do you think is the vision that you are trying to build out from your perspective?

Yann Schuermans: (34:37)

I want to build out, if I could summarize it in four or five words, it's just software defined supply chains. I want to have the little operating systems and enough nodes within Indonesia supply chain such that anyone who wants to go to market, anyone who wants to participate or to play in specific areas, whether you are a D2C brand, or whether you are a large brand that wants to gain penetration in a specific area, Baskit becomes the go to because we are connected across and I can provide that stitched up distribution chain for you on a silver platter. That's the grand vision that I'm trying to create and I'm driving towards, but for me to be able to do that, the 1st step is colonizing that important middle layer and then utilizing that layer to create value for the other folks. So, it's bit by bit and it's not going to be just 1 layer across the entire country.

We're taking a city by city approach, which is a little bit different than what some other startups do. We're not blitzing all of Indonesia. We're operating in a few cities in West Java and we're really going deep. So this layer cake approach that we're taking, right? We do that repeatedly, it's almost like a little bit of a rocket internet type of game, but over time, as we repeat this across, then I believe we're able to create this effect and hopefully Baskit will be the go to market as a service for any supply chain.

Jeremy Au: (35:56)

Amazing. On that note, could you share about a time that you personally have been brave?

Yann Schuermans: (36:01)

Let's go back to when I decided to leave AB Inbev. So, I'll share a few details here. I won't go into numbers or anything like this, but I had a few houses worth of highly liquid stock that was maybe a year and a half away from vesting that was just going to be in Hong Kong. There's no tax either. So a few houses worth of equity that I would have had access to now, and I consciously decided to walk away from that in the middle of code when every border was completely closed. There were only, I think, 4 countries at the time that could enter Singapore. I think it was China, New Zealand, and a few others and I decided to take this job in a place that in a sector that was completely foreign to me, whereby I knew that I was moving my, I was a newlywed. I just got married with my now wife that I was moving my future. I was moving my family. I was moving everybody in an environment where my life is now dependent on an EP and if I don't pass probation, I have to pack my bags and move back with my parents somewhere in Europe or Brazil because there's nowhere else in Asia that will take me.

There's nowhere. I cannot go to back to China. I cannot go to Hong Kong. All of the borders were shut and I would have just been completely ejected from an environment that I've been trying to, for a very long period of time, to really crack and to insert myself in. So I was very aware that. Taking this risk, if I didn't perform, that would have been the consequence and it would have massively changed the course of my life. So failure was not an option. And I think that's really what stoked a fire that was probably bigger than it would have been otherwise. But yeah, I feel that was pretty brave.

Jeremy Au: (37:41)

Wow. That is brave because you walked away from cash, and those golden handcuffs. For people who are thinking about it, thinking about potentially, leaving. They got a nice job or whatever it is, I think about doing something entrepreneurial. Any advice that you would share about how to think it through or how to position themselves or get themselves ready for that?

Yann Schuermans: (37:59)

Yeah, I think Experiences are important. Feeling grounded in a space that you understand and that you love is extremely important. I think a lot of folks make the mistake of choosing being a founder as a matter of this is fashionable. This is great. This is a resume builder. And I think that, that can put you also in a trajectory that is not as productive for your future because being a founder, when you don't have a good foundation also is not going to be, it's going to teach you a bunch of generalist skills, but it's not going to be giving you any depth in any specific sector, especially if you die within the 1st year of starting that company, not passionate about. So, the advice that I would have is, don't rush things. If you need to spend more time in a sector and a position, even take an intermediary step like I did, there's no shame in that. Use that as learning. Build your armor. Build your resilience, and then just wait for the thing that you are just so committed and so attached to, where you have a thesis that it doesn't matter what the world thinks. It doesn't matter whether it's investor friendly, you with your whole heart, really believe that it's possible, and then you go and you test everything that you can against it. Once you reach that point, then you're kind of unstoppable. So yeah, that would be my advice.

Jeremy Au: (39:06)

On that note, thank you so much for coming on the show. I'd love to kind of summarize the three big takeaways I got from this. The first, of course, thank you so much for being open about 400 years of family experience and supply chain. I thought it was a lovely portrait of what it was like to grow up with that family history but also with that legacy of knowledge and conversation and you growing up and seeing your father deal with various crises and saying, I want more of that. Normally people are like, okay, time to become a lawyer or something, or influencer. So I think it's interesting to say, like, you take out both hands and say, yes, I want to do more of that. And I think that's really a interesting conversation about what it was like to grow with that understanding.

The second, of course, is the interesting piece about the dive on what the Indonesia supply chain looks like. So I think it was very nice and interesting to see how you looked at it from AB Inbev perspective, but also specifically for Indonesia, in terms of the complexity, in terms of topography, which was interesting, obviously in terms of geography as well in terms of markets. I thought it was very interesting for you to split out the different tiers of the supply chain, but also your thoughts about whether the best approach is to either disrupt or to compliment. And even if you're trying to compliment, I think there's this further level of sophistication between the business models that you're there. The pricing or monetization of revenue partnership models. The unit economics, and then the scaling component. I thought it was very fascinating to have that nuanced conversation about, Hey, this is what to learn, hasn't worked for past generations of players and operators, versus perhaps this is the thesis for the future, which we don't know yet. We're going to find out over the next 5 to 10 years together. But I think it's really fascinating to hear that conversation about your hypothesis about what needs to be done and built.

Lastly, thank you so much for sharing, about what it was like to make career transitions. I think it was interesting for you to share about what it was like to make a decision to join AB Inbev. You made a decision to join Circles.Life. You made a decision to build Baskit. But each of them had that inflection point about what were your considerations in terms of capital, in terms of geography, in terms of even the COVID pandemic situation. So I thought it was really fascinating to hear that. And I'm sure that it's going to be so helpful for folks who are considering about their own career transitions. On that note, thank you so much, Yann, for coming on the show.

Yann Schuermans: (41:13)

It's a, It's a huge pleasure, Jeremy, much appreciated and looking forward to hopefully another one in the future.