You recently took over as CEO of Agflow. What’s the biggest challenge you have faced so far?
We’ve had several challenges.
One was to revamp our pricing strategy. It was the first thing I identified. CEOs have different backgrounds, but I consider myself a marketing person. I like to sell things. I believe I am sensitive to understanding what clients will be satisfied with. I won’t relent until they are.
I saw that our churn rate was too high, not because the product wasn’t right, but because our pricing was skewed.
I said, let’s look at how we could do our pricing. We need to be entirely transparent about our pricing model because pricing should not depend on who the client is. You can’t charge different people different prices for the same product. We revised the pricing model, fragmenting everything by product and commodity. If you are looking at soybean meal and only want tenders and quotes, you should pay for that. You shouldn’t pay for the entire platform if you’re not using it.
We also had to improve our customer relations. I told the team we must be the Four Seasons of customer care. I recommended they read a great book, Four Seasons: The Story of a Business Philosophy, by Isadore Sharp, the hotel chain’s founder. He understood that a happy customer brings in more customers.
You may have an issue with a product or a product that flops. It’s what happens in business. We don’t live in a fairy tale. But we must communicate correctly with our clients, listen to them, and understand their needs.
We have adapted our approach and have had excellent feedback. We have cut our churn rate by half. We have improved our ease of conversion and shortened the timeline to close.
There have been some tough choices, and we have had to let some people go, but the team must fit correctly. It’s like a football team. Sometimes, it’s not about having only star players. You need players who can play together.
On the personal side, it has been challenging to understand what is essential in the data and what isn’t. It has taken me at least 4 to 6 months to fully understand when people were telling me something had potential when it didn’t.
Businesspeople often invest heavily in marketing the wrong product and ignore a more profitable product that is quietly selling itself. You must identify and focus on the right products. We’re in that phase now.
What is your elevator speech for the company?
You may have heard about some of our competitors, but we have a completely different methodology and are in a blue ocean of our own. We work with a network of more than 150 contributors and can give you a view of what the market is doing at a particular time and place for a specific commodity. Our methodology is our differentiator—it differentiates us from our competitors.
We are not analysts, and we stay as impartial as possible. However, our AI-powered market intelligence chatbot arm drives rapid insights from our database.
Okay, so you’re an accumulator of data which you distribute. I recently interviewed Vosbor and CM Navigator. Are they doing the same thing?
Every company is a little bit different. I don’t think we are competing because the idea driving these companies comes from a different place.
CM Navigator was initially a facilitator for the group and their clients, but it is not, at its core, a technology company. We will compete in certain areas but have the upper hand in the number of commodities. If we go down to the subclass of the subclass, we’re covering about 280 commodities.
Vosbor is different. They are less a data provider than a digital exchange for physical commodities.
How is Agflow using AI now, and how will you use it in the future?
We use AI to parse the data as we receive it, and we have automatic outlier detection. Our technology speeds up the process so that the client gets the data as soon as it arrives.
For the last year and a half, we have been working on a new project, which we will probably launch as Agflow AI. It’s a chatbot, like Chat GPT, that can prompt reports within our database. Our clients can access the reports we aggregate, but instead of reading them all, they will be able to ask the chat box a specific question. We will limit it to our database to ensure it doesn’t hallucinate. It will tell you where it got the information and won’t give you an answer if it doesn’t have the information.
It’s a massive win for us because we see that we will be able to leverage AI in a reliant, constant, and scalable way. We are now linking our entire quotes database to it.
I see a world where clients will have an app and be able to ask questions. We are working to be ready for that. However, the commodities industry is not as fast-paced as some other industries. Clients still ask for an Excel sheet emailed to them every day. We can still do that.
AI isn’t going to give us data; our methodology is still going to do that. AI will help us acquire, clean, and deliver the data to our clients.
Instead of working your way through a table with different origins, delivery months, qualities, and price quotes, AI will do the work for you, and the chat box will answer immediately. It will take time to be 100 per cent reliable, but we will get there.
What do you see as your growth drivers?
I believe price discovery will drive our business forward. Working with many contributors and looking at many bids and offers gives us an edge. We do not assess our prices in a journalistic way. These are the actual market prices, with an algorithm to create the forward curves. It is a different methodology.
Our basic model is yearly subscriptions. We also have a data services arm that offers consulting services to help small or midsize firms create internal systems to drive insights from their data. We then add in our data. We have had two mandates so far, but it’s not something that we see as a significant lever of growth. We view it as another service that we offer.
We see many new applications for our data. We currently have about 75 clients, including some of the ABCDs, and there is still a large pool of potential clients for our existing services. Our clients, ranging from FMCG companies to hedge funds, are extremely fond of our data because they use it to build the best models.
By the end of Q2 next year, we expect to be in profitable waters. We are close to achieving right now.
© Commodity Conversations®2024
Sacha will present at the Grain Com 24 Conference in Geneva on 14-16 May 2024
