Rabah Rahil (00:11):

All right, ladies and gentlemen, that's right. We're back for another one. I am Raba the CMO of triple whale, and I am here with my co-host partner in crime and gem of a human max Blan. And today we're joined by Pernet Sherin Neva. Ah, dang it. I practiced it so many times and I've messed it up, but he is an absolute Titan in the supply chain, 26 plus years, he runs an incredible software platform for supply chain and financing called manufacturer. Um, with all the nonsense and Hulu going on in the supply chain, we wanted to bring you one of the experts and we have per Renee. Welcome to the show.

Pranay Srinivasan (00:50):

Thank you very much. It's really good to meet you. And max is always great to catch up again with you. Max is a great friend and he's been, uh, you know, one of our earliest customers and manufactured used there when we had very little software and, uh, has always been wonderful supporter of ours. Uh, excited to be on the podcast. I haven't been on a podcast in many, many years, so this is awesome.

Rabah Rahil (01:13):

Oh, that's fantastic. And so I'm out in Austin. Our satellite campus, max is in Columbus. Where does this podcast find you today? Renee?

Pranay Srinivasan (01:21):

Uh, I'm in LA in Ville city.

Rabah Rahil (01:23):

Oh, cool. Actually I'm heading out that way for, uh, geek out shortly. Um, okay. Let's drill into it. Max, do you wanna take it away?

Maxx Blank (01:31):

Yeah. Sure. Well, first let's hear a bit about P Renee's journey and what he's been doing for his 23 years. Just maybe take, uh, you know, 60 seconds right now, or two minutes to go through some, some of your journey.

Pranay Srinivasan (01:43):

Yeah, absolutely. Uh, so I was born in India, uh, brought up in Bombay, um, used to be it's part of Mumbai now, but I know it is Bombay because that's what I grew up in before it was name was changed. Um, I used to, um, I went to college there, high school, all of it done there. Um, and I started working in my family business, my father's business, uh, very early when I was about 14, 15 years old, mostly lifting boxes and moving goods and out of warehouses, you know, earning your team and then basically figuring out how to work with the government on exports and imports and documentation, and then with banking and their transactions and figur out how to do sourcing and understood how to do like we used to my first product, I sourced was steel toys out of deli for a customer in, in Holland that they were basically buying, you know, uh, steel toys that were made authentically by hand, hand rolled steel and were sold as curious hand painted, you know, those old, uh, you know, those old fire engines, like train engines and stuff like that.

Pranay Srinivasan (02:47):

Yeah. So they were sold as superiors in Europe. And I remember sourcing those in 1994. That's when my first started, my sourcing journey was still just out of 10th grade. So, wow. That's when I started sourcing and manufacturing and supply chain and, you know, um, being working, I worked with my family business for a while, and then I started my own business in 2009, also doing supply chain. Uh, I've done multiple products, multiple industries, multiple geographies, uh, for the last eight years, I've been trying to build digital platforms for supply chain and manufacturing and, and sourcing. Uh, my last startup was called source easy. Uh, source easy basically was a vertically integrated manufacturing platform for clothing. Uh, it was venture backed, uh, by lots of very even well known Silicon valley investors, including bullpen capital, uh, Joanne Wilson, bloom ventures in India, 500 startups, uh, structured capital.

Pranay Srinivasan (03:44):

And, uh, you know, that company, we had five offices in five different countries. Uh, we had three offices in the us and we were essentially imagined what flex export does, but for clothing, that's what we did that company didn't end in really good circumstances in 2017. It taught me a lot. Uh, you know, the one thing it taught me the most was, you know, be open and transparent about everything that's going down. Yeah. And, uh, you know, uh, it's really max knows this now also that, you know, investors find it very hard to trust founders who keep information from them. If you're not overcommunicating, then the investors don't trust you. And so I was basically having daily board meetings, weekly board meetings as the company was entering into, you know, a tail spin. And, uh, it was extremely perfect circumstances, but the company ended up filing for chapter seven bankruptcy.

Pranay Srinivasan (04:33):

And then, you know, a week later, those investors put fresh money into a new company that I started, which is now manufactured. And the reason they did that was because they knew exactly what was going on as it happened. And now I run a company called manufactured since 2018, which is basically a platform to supply and finance inventory. It's different from what we did before in many nuanced ways. But the core idea is the same inventory. Manufacturing is broken. Supply is broken. Uh, sales is broken. Uh, financing is broken. There's a lot of people who have been running manufacturing and finance and sales. Mm-hmm, <affirmative> very different in silos. You, if you want to manufacture your product, you go to a factory. If you want to ship your product, you go to a logistics provider. If you wanna finance your product, you go to a bank.

Pranay Srinivasan (05:22):

If you want to finance your, in your receivables, you go to a factor. If you finance your eCommerce, you go to some of these online lenders and it's all being siloed into all different things where it's just one product that is driving all of your business that has to be tracked from the time is made to the time track to the time it's sold and figure out how to make more of it. If it's succeeding and less effective, it's not succeeding and figure out how to keep your business successful. That simple thing has basically been complicated and divided into so many 40 different ways. And to think that it's a three, $4 trillion industry that has been disrupted is something that I feel needs to be collected. So we combine finance and supply into a single system and we are building software. Uh, we are building systems. We are gonna build our own credit lines. We're gonna build our own businesses to be, to help, uh, merchants of any sort buy and sell product without having to worry too much about the supply and the finance in separate process.

Maxx Blank (06:19):

Mm-hmm, <affirmative> very good. Um, yeah, just working with Pernet, uh, with my supply chain, I can tell you that, uh, he knows what he's doing, knows what he is talking about. <laugh>, he's extremely transparent and has been a guide for me throughout of my journey. It's great to have him here. Um, so we'll get into the value add segment and, uh, I'm just gonna fire away some questions and we'll have conversation around a few different topics here. Um,

Rabah Rahil (06:43):

Let's can I cut you off there real quick? Max, let's drill into something cuz I know we have some really high level people. Um, but we also have some people at a different stage in their journey for, can you just kind of explain like what you mean when you say supply chain and kind of just go into like BA a basics, like 1 0 1 primer on supply chain and why it matters for our business.

Pranay Srinivasan (07:02):

Yes, absolutely. So, uh, if you look at the evolution of commerce, uh, if you start from people in the first century, when they basically took camels along the silk crude and actually started creating Baars to sell product it's it's essentially, it started out with a demand and supply, which is at its most basis, reason satisfying someone's need, uh, now needs have evolved over time and you people's need to be satisfied by a product is now more emotional than it is transactional. For example, you go to a store to buy rice because it feeds your stomach and it makes, it makes you feel good, but you buy organic plus math rice because it feeds your soul stomach, but it also feeds your soul and an emotional need to feel like you're eating a good product. That's actually organic. That's good for the industry. So you are now solving multiple needs and you're solving multiple just you're feeding multiple needs by creating the product and supplying it.

Pranay Srinivasan (07:55):

Now, if you look at the evolution of, of commerce, whether it's physical or digital people have basically reached the peak of base level supply and base level feeding of, of needs. And they have started creating tertiary needs and ancillary needs, which is how brands are created. Now, the reason why a brand exists is because it feeds your soul as much as it feeds your need. And the reason feeds your soul is because you feel some sort of a connection to it through either the story tells or whatever it does. Now, if you look at the evolution of digital commerce over the last twentyish years, that's literally what has happened if you look at it, but it's been accelerated it's the digital commerce has accelerated in 20 years, what physical commerce did in 2000 years. Uh, if you look at physical commerce coming from the time, you know, from the time of whole Testament or whatever it is from two, 3000 years, that's how creating actually started is you started with butter, then you started with money and then you started with, you know, former sophisticated ways of moving goods across countries because you're finding something that people need and you're making money on it.

Pranay Srinivasan (08:52):

Now, if you look at E farmers, eCommerce basically started out with, you know, highly basic things, which is, can I find something on the internet then it went to, okay, can I buy something on the internet? Then it went to, okay, how do I differentiate what I'm selling on the internet? And I think Bonovos was one of the first brands that actually showed you that you cannot just have to buy basic stuff on the internet. You can actually create something that is unique for a customer, which is the curved waste brand that they created. Now, if you expect extrapolate that and take that forward to, you know, the millions and millions of brands you have online right now, brands started out by drop shipping product. They drop ship product because they find something that satisfies a basic need. I mean like max, max basically wanted to find a solution for, for, you know, increasing the volume of hair that women have without making it look like crap.

Pranay Srinivasan (09:40):

And he took something that was aesthetically interesting, like a head rate and basically started pushing him through. But over time, max also realized that instead of just selling a hair braid, you're now selling an experience that includes the head rate at the core of it. And that experience, making people feel better about their appearance. And now you'll be able to elevate the story and make a brand author. Now you cannot sell crappy product that just satisfied a need. You have to sell beautiful, elevated product in beautiful, elevated packaging with a beautiful, elevated story that appeals to people, not just at the basic sense, but at an aesthetic elevated sense. That means you have to create a unique product. Now products come in multiple levels of customization. You could start with a highly basic product, which you buy off the shelf. It's like going and buying a stick of cheese.

Pranay Srinivasan (10:25):

You can buy a stick of cheese off the shelf and that cheese, somebody decided what to put in it. Somebody decided how to make it. Somebody decided what shape to give it. So what to package it, where to sell it and what to price it at. And you just picked it up. And did you drill all the way down to the materials and you drill all the way down to the packaging all the way down to the quality of the product, all the way down to the base layer of what makes it special. And then you've suddenly figured out how to unwrap that entire product. Now e-commerce has been going deeper and deeper, deeper down the rabbit hole, starting from, okay. I just want to take in resale this box of cheese to, I wanna figure out which cows, the milk comes from to where the cheese can be made. And what manufacturer does with the supply chain is basically help you expand that all the way down to which cows to buy your milk from, rather than you just buying a sticker cheese.

Maxx Blank (11:12):

Right. Pernet so an interesting thing, you know, in terms of like, sort of that, are you gonna just resell a stick of cheese or are you gonna sell the experience of what it's like to, to, to eat this artisan cheese that's made on this like farm that has a whole family story to it, right? So like you can almost extrapolate that and compare it to like, okay, an Amazon purchase, right. Of some kind of generic brand to the artisan cheese. Right. It's more of like a D to C you know, direct to consumer brand with the whole story behind it. So that's

Pranay Srinivasan (11:45):

Right.

Rabah Rahil (11:46):

I think the Amazon's actually interesting cuz in a way Amazon drives a ton of utility, however, that doesn't really carry over. There's no halo effect for the brand. Yeah. And so it feels like a Costco almost like you can still buy fancy stuff in Costco, right? Like you can get nice electronics, like all this stuff, but you don't really connect with that brand versus like buy, put it another way. Buying an iPhone in Costco is totally different than buying in the apple store. Right. Yeah. And so that's a kind of interesting paradox there. How's brilliant per Renee. Yeah. So great. Can I interject one more question, max, go for it. What are cause out of the three of us you two will know more or forget more than I'll ever know about supply chain, but what are kind of when you look at like DTC businesses like maxes and per se, what are the biggest cost drivers in the supply chain?

Pranay Srinivasan (12:38):

So if you look at a supply chain, I think the, you could either look at them as cost or you could look at them as levers, right? So there's multiple costs that you have to balance in a supply chain or there are multiple levers. You can pull to figure out what you want to work on and what you don't wanna work on. So, um, 99% of the time when I meet somebody who comes in and says, oh, I wanna fix my supply chain. I'm like, you don't want to fix something that's not broken. So you have to figure out how to balance, leverage with your cost. So I have customer coming into me and saying, oh my God, China has tariffs of 12%. I need to move to Vietnam immediately. I'm like, okay, so let's do the math. What do you buy? Okay. I buy, um, you know, shovels, I buy shovels to, to sell to minors and I'm buying 10,000 shovels a year and 10,000 shovels a year costs me 10 bucks.

Pranay Srinivasan (13:28):

It's a hundred thousand dollars. And now 12% of that is $12,000. So I'm going to lose $12,000 on a hundred on 10,000 shovels. And so therefore if I move to Vietnam, I will basically save that 12,000. I said, okay, but you're assuming that number one, you'll be able to buy those shovels for $10 out of China, out of Vietnam, as you can out of China. Number two, you're assuming that when you stop working in China and you move to Vietnam, you'll find the same vendor that can do the same quality and the same amount of production. You're then gonna assume that the materials you're getting outta Vietnam are not actually sourced in China, which means that the materials coming from China take longer than you're going to lose unique time. But the most important thing is you're gonna have to still coordinate Vietnam, likely to China.

Pranay Srinivasan (14:06):

And the switching cost of a vendor going from China to Vietnam is three to six months, which means that you are lost 2,500 shovels of sale. When you move from China to Vietnam, which means that you lost $25,000 of sale moving from China to Vietnam. That's just your cost, not even what you would sell on. So I suggest you don't move and keep paying pay the $12,000 and absorb. And then just add that cost to yourself rather than you move from China to Vietnam. Now, if you were selling a million shovels, let's talk about that separately, but you're selling 10,000 troubles. Don't move. So when you talk about cost, I talk about levers because the cost affects the levers. Now, when you talk about a supply chain, you basically have supply. You have basically four aspects for supply chain. You have the materials, you have the assembly, you have the transportation and you have the packaging.

Pranay Srinivasan (14:52):

I mean, you gotta have the packaging and then the transportation. So either way we look at it right now, when you also have duties and taxes that are included in the transportation. So you have the assembly, you have the materials, you have the assembly packaging, you have the assembly, you have the transportation that includes the actual shipping of the product and then the duties and taxes. Uh, and I can go down deeper into that where the shipping includes your origin shipping, which is basically going from the factory to the, to the port. You can have the actual shipping, which is between the port to the other, to the port that's arriving at. And then the shipping from the port all the way to your door. And nine times out of 10, you almost underestimate what those costs. And you only focus on the port to port because that's like the big story of the world today. But sometimes those internal shipping costs can actually overrun what you're doing on the port as well.

Rabah Rahil (15:38):

That's so fascinating. And, and that's, that's kind of known as the last mile problem, right? Where getting, getting it the last mile is kind of really, really hard in terms of logistics and expense.

Pranay Srinivasan (15:50):

That's different. The last mile I'm talking about is at a wholesale level when it's coming to your three PL or to your warehouse.

Rabah Rahil (15:56):

Oh yeah, yeah. Got it. Got it. Yeah. I'm talking from, yeah, I'm talking warehouse to consumer. I I'm tracking now. Okay. Yeah. Yep.

Pranay Srinivasan (16:02):

You're talking about there's two kinds of last miles. One is when you have a grocery problem where you're buying from a local store and they have to deliver it to your home, some teachers walks over and gives you the product. Normally, if you walk to the store, you are the last mile. So you walk to the store, picked up the store where product came home, you completed your own last mile logistics. So you literally paying yourself for doing that last mile logistics, but let's say they deliver to you. And then that last mile is basically from wherever that product is sitting to your home. That's their last mile. Whereas our last made is from the port to that person's warehouse from where they will then sell it to the consumer.

Rabah Rahil (16:38):

Oh, that's, that's super illuminating. And so I guess small digression there is that one of the reasons why Amazon acquired whole foods was to essentially eliminate a lot of their last mile costs because they can just ship it to a whole foods now and you can pick it when you go to whole foods, you can just pick up your Amazon package versus having them, having them waste money on shipping it from their distributor to the home.

Pranay Srinivasan (16:59):

I also think that Amazon wanted to get into the more premium range of the whole foods consumer. I also think that Amazon fair

Rabah Rahil (17:06):

Point

Pranay Srinivasan (17:07):

To basically figure out how to crack grocery, Amazon has crack grocery. They haven't today. They don't know that the fresh app is all over the place. Whole foods is all over the place. They're still having cracked grocery. And that's the reason why whole foods was a piece of it. And I think the optional value on basically acquiring whole foods for 13 billion for a 2 trillion company was on the margin worth it for totally right. So that's probably why they did it, but the lockers that you're talking about, I think that that's an expanding business that they're going to get to and if they can actually eliminate their last mile by doing lockers, it's it actually saves a layer of complexity on the logistics, which is the routing logistics, you know? Um,

Rabah Rahil (17:48):

Oh yeah, yeah, yeah.

Pranay Srinivasan (17:48):

That's basically the problem.

Rabah Rahil (17:51):

The traveling salesman. Yeah. That's fascinating. Yeah. That's, that's incredible. Wow. Whew. I'm blown away.

Maxx Blank (17:57):

Yeah. Can definitely see why working with a Gaelic print a is very helpful when it comes to running a DDC brand. There's so many complexities you're not even thinking about from engineering, the packaging to be able to ship better domestically. Right? Yeah. To everything.

Pranay Srinivasan (18:11):

We had fun with that. We had a lot of fun with that. We tried to,

Maxx Blank (18:14):

I was able to,

Pranay Srinivasan (18:16):

Yeah, we track the lowest ups, lowest us PS shipping fee for max with the, with the sleeve.

Maxx Blank (18:25):

Yeah. Basically going from spending, let's say three 50 a package to ship it to the customer, to like just under a dollar,

Pranay Srinivasan (18:32):

Like 75 cents or something. I remember

Maxx Blank (18:34):

Now. Yeah. It was wild. So yeah. There's,

Rabah Rahil (18:36):

There's some, that's something you feel for sure. That's, that's some savings right there, max,

Maxx Blank (18:40):

Especially when Facebook starts there, go crazy.

Pranay Srinivasan (18:42):

Like if, if you're doing a million boxes, if you're doing a million units, then that's like easily three, 4 billion a year that you save about shipping.

Maxx Blank (18:51):

Yeah.

Rabah Rahil (18:53):

That's bananas. That is bananas.

Maxx Blank (18:55):

It's good stuff. You know, it's good stuff.

Rabah Rahil (18:58):

Um, do we wanna get into kind of, what's kind of going on now in terms of the supply disruptions, the, the traffic jams at the ports, um, kind of what the knock on effects are gonna be from that. And, and then I guess per Renee, maybe you could take us from the start of how did we get here? How, how did the supply chain kind of just crumble and disintegrate and then from that kind of take us through, up to kind of, uh, today with Nike, not even being able to buy yarn.

Pranay Srinivasan (19:25):

Yeah. I, so I'm not a macro economist. Uh, I'm no kind of economist, but I'm gonna try and give you my theory on what happens and I'm hundred percent sure I'll get emails and you know, comments about it when you guys post this, this podcast saying, you know, the guy didn know shit already talking, but here's my,

Pranay Srinivasan (19:44):

Um, if you take, so there's, there's, there's, there's a, there's a few components to this first is you basically start any material with a commodity. Any product that you create starts with the commodity that commodity is either grown or mind or, uh, created from, uh, in case of an artificial commodity like polyester or something like that. So if you look at any, any, any AR any plastic based product, it starts also with plastic, plastic is created, it'll start with any natural product. It is either grown or mine. Uh, and that's basically the three com three ways that commodity comes in now in, in two out of these three commodities, one is industrial. The other two are semi-industrial, but they all rely on either some kind of labor or some kind of geopolitical conversation that happens is the reason China invests so much money in Africa.

Pranay Srinivasan (20:34):

So much money in south America is because they need those raw materials to come back to them, to create these material. These finished pro they need commodities to come back to them at a cheap price, which they control using infrastructure so that they can bring back the commodity to create raw materials, which are intermediaries that can then turn into finished products. So you take a commodity, then you have an intermediate process intermediary, and then you have finished products. And so everything that finishes in your hands or in your, in front of you started with a commodity. You could talk, talk about I, and talk about our, talk about steel. Talk about any metal. Talk about any company, any word you talk about, anything it's either grown or mind, something like that. Um, now what has happened is three things happened at the same time, right?

Pranay Srinivasan (21:21):

The first thing that happened is, um, people went into lockdown on duty, the pandemic and supply reduced like crazy because demand fell, fell off a cliff. Now, when demand fell off a cliff, what happened is people who had a surplus of commodities, a surplus of items, only a very few number of those commodities were in demand. And a lot of the other commodities were basically, I mean, Matt knows what happened to the price of merit loan during PPE. Like we were tracking on an almost daily basis and it fell off a cliff in September because we went, everything started coming back last year or September, it started coming back to normal, but you know, a commodity prices driven by, by three things, right? It's driven by demand is divided by supply. And it's driven by speculation. Those are the only three that drive the price of a commodity.

Pranay Srinivasan (22:09):

Now in, in the pandemic, what ended up happening is, first of all, you had as limited of a limited supplier of these commodities. The, the second thing that you had is an unlimited amount of printing of money in every country possible. Like, and it's not just one. Normally when you, the reason you have a financial crisis is because it is localized to one country, 2008, America had a financial crisis. Everyone else did in 2002, Europe had a financial crisis. America didn't in 1999, the us had in Europe had a financial crisis. Asia didn't Asia had a financial crisis. The Americans did. So why is localized? White, separated, separated, and localized is because those are highly local issues that are happening that then may ripple across other countries. But don't ripple in that way because the governments won't have to step in when you have a health pandemic, like, like we did China prints, money, Japan prints money, India prints, money, Europe prints, money, us prints, money.

Pranay Srinivasan (23:02):

And what happens is, as a result, everyone is printing money and everyone's basis is going down. And so when everyone prints money, all that money has to enter the circulation in some ways. So money enters circulation in three ways, right? It enters into circulation by, by basically giving it to the people. Literally the second is by entering the, the capital markets. And the third is government spending. That's the only three ways that money probably enters circulation. So if it enters by giving people, that's the stimulus that you've been seeing then does the capital market. So they basically bought back a shift on of their either debt or basically increased debt to basically buy back other people's money. Now, because that money goes in from the top down. A lot of the people who have very strong equity values, who basically own a lot of stock end up concentrating a lot of that money with them.

Pranay Srinivasan (23:51):

And so that's the reason why you see Amazon worth trillion or S of dollars is because people who got money printed and basically could put that money. They put it straight into stock market. And when they put that in the stock market, the most valuable companies appreciate. And when those valuable companies appreciate the people who own those companies, their network appreciate. And that's basically thing happened. The third thing that happened with government spending and government spending hasn't really kept up with the amount of employment that is needed because people are getting free money directly through stimulus, so they don't wanna work. And so you take all these three things that are happening. You know, private enterprises are finding it harder and harder to find people to work for them. Uh, labor costs are going through the roof because people are don't want to, people are having problems with liquidity of cash.

Pranay Srinivasan (24:36):

And the third part is wealth is not being created equally all over the place because the money spending isn't trickling down fast enough. So now what is happening is the money that was chasing the return, which is coming in through the capital markets, starts chasing money in, in commodities and in through speculation. And which is why the cost of commodities start going up too. Now, if you're not buying commodities and you're speculating in commodities, you're betting on the price that commodities are gonna go up suddenly because the price of commodities goes up. The price of the materials come up. If the price of materials go up and the labor is less, you can't find enough material to actually hit the hit the actual market, because prices that want to buy the product are not going up. That's because the demand is suppressed. So imagine that you have a big box store that basically doesn't know how you're gonna sell 10,000 units.

Pranay Srinivasan (25:22):

And you decide to place an order for 5,000 units. But those 5,000 units now, because the commodity prices went up because of speculation suddenly doubled in cost. And now you can't even know if you'll sell the 5,000 units and you cancel your order and you file for bankruptcy. And you have 7,000 people, 70,000 people who basically went out of the job because you couldn't afford the cost of the groups to sell enough to people. Now, the 70,000 people are entered the labor force, but then gets stimulus to stay at home for 18 months because the pandemic allow, doesn't allow you to work. And now suddenly they're out of a job and now you don't have labor anymore to actually do what you wanted to do. So now the commodity prices are high, which are speculative. The cost, the actual physical movement of goods is completely sty and people are out of a job.

Pranay Srinivasan (26:04):

And that basically is a triple value that allows, that caused this problem to happen. Now, when the economy opened up and people started doing work again, and people started getting goods, again, everyone's talking about hyperinflation, but that hyperinflation hasn't actually trickled down to the actual cost goods yet. And the reason it hasn't trickled down to the cost of goods is because it's been artificially subsidized by the money that's been printed. Either the government is giving up subsidies or they're giving out incentives, or, you know, the workers are working for the same wage because they get extra money on the side and that money is gonna get pulled out of the system over the next three to five years. Now you could also see them keep printing money, which is why everyone says the word strong. You know, everything just keeps going up like dumb

Maxx Blank (26:44):

Printer. Gober

Pranay Srinivasan (26:45):

Yeah. Everything keeps going up only because you keep putting money in printing money to keep the value of those things going up. Then everybody is on the same quote. So if you're China and, and max is America, and I am saying Europe, okay, you printed money. He printed money and I printed money. So between the three of us, we've all agreed that the cost of capital has gone down and therefore the value of goods can basically go up. And so we print more money to make sure that we stay ahead of the curve. It basically an unending amount of money that you print, which is why the crypto guys think that the cost of a dollar is now completely based because you can just keep printing paper and everyone keeps printing paper. And no one cares

Pranay Srinivasan (27:27):

Because the dead ceilings are just theoretical, right? No one really thinks the dead ceilings are ever gonna be real. You can just keep printing money at, at international debt and everybody owes each other money. And they all agree to keep, you know, owing each other money. And then everyone's just in the, in, on the same group. And so that trickles down to actual markets in the business where I am producing goods in China, my Chinese guy doesn't know how to pay his people on time. And so basically he has to figure out how to raise his cost, but he can't raise his cost because I don't have demand at that price. And if I basically buy at that at a higher price and try to sell at a higher price, yeah. The people who have to pay for it at a higher price are out of a job are around in stimulus money and cannot generate enough money to get in. Meanwhile, anybody who's in an equity or a stock market, or some sort of a speculative is making shit tons of money and can afford that. But the percentage of people who can afford speculative income is very low compared to the people who can afford consumption income. And therefore the consumption income is driving inflation to them, which makes the government print more money. And now you have a SP

Maxx Blank (28:32):

Oh wow. So what the disparities between their top and the bottom will just get exacerbated a lot more

Pranay Srinivasan (28:38):

That's right.

Maxx Blank (28:39):

Essentially. Yeah. Like I like a lot more around the world and everyone's in on the same thing. <laugh> yeah. That's very interesting. So how much, um, so, so how can, how do we explain, I'm trying to connect the dots and I'm sure you can help me here. How do we explain the amount of backup off the ports of like, let's say LA and things like that. How does that, is that because of the, the close downs and then the opens and the pent up demands and then,

Pranay Srinivasan (29:03):

Yeah. So I, I think that it's all about, so this is, this is basically, uh, two factors going on. One is you had pen of demand and you had a lot of product that had to ship out second. You're seeing a number of people get out there and start spending money. They hadn't spent for a long time, or they had money. They saved up that they haven't spent, or they figured out how to start businesses that they were doing. There's a lot of people out there who think that business and speculator and speculative income basically go hand in hand, which it kind of does in some ways, because if you build a company, the value of your company is in the eyes of the beholder today. If you sell a piece of your equity at 10 million, or you sell a piece of your at a hundred million dollars, that's how much that person's willing to pay for.

Pranay Srinivasan (29:44):

So a person who's in a job who knows they're gonna make $60,000 a year for the next 20 years knows that there is zero speculation they can do on that salary. And they would rather take a jump in, figure out how to start a business and get customers to pay them for what they're doing. So you are going from a her world or a generation of employees to a generation of entrepreneurs or business owners, or, you know, self employees. Self-employed people that is causing massive amounts of shortage in the labor industry on both sides of the port. So that's the first problem. Like you, there was a notice recently that LA port wanted to work nights and weekends and figure out how to do it. Couldn't get past the union. Mm. Right. So that's one.

Maxx Blank (30:28):

And then you think, right, so you got the boats that are off the shore there, and then you gotta have the cruise to unload the boats, and then you gotta have the truck, put the stuff, you know, on, and then you gotta put it to the temporary holding warehouse. This is, then you gotta truck it out. It's like, there's so much that has to happen. And so,

Pranay Srinivasan (30:46):

Yeah, it's, it's, it's, it's, it's one thing at a time that happens, right. It's one thing after another, that is happening. And if you take those cascades and you compress them into a 60 day 90 day timeline, that's all you have 28 boards sitting outside until beach. So that's one problem that's happening. But that problem normally eases up. It's called congestion and congestion normally eases up because your demanded supply is not done Amazon on app on average hires, between 170 and 300,000 workers, every Christmas and holiday season a stem focus. And they're going, they did that same thing at the beginning of COVID. Remember max, I told you that your, your inventory needs are gonna skyrocket at the beginning of February. At the end of February, early March is because that's basically why it happened is because if you look at, uh, the amount of people that you need to balance out spikes in demand, you are not going to, you're not, no, the world of supply chain in the world of manufacturing is no longer this like even keel where you just keep going, keep going.

Pranay Srinivasan (31:47):

And you rise little by little. Now it's like speaks and valley speaks and valley speaks and valleys. You have a lot. Yeah. And then you have nothing and then you have a lot. And then you have nothing. And being able to sustain that needs highly capitalized, highly incentivized, and highly motivated people, both from a dollar perspective, both from a time perspective and from a predictability perspective, if I'm making a hat. And I think that those hats are gonna sell for the next two years, I'm producing as many hats as I can all the time, because I know that at the times of congestion and the times of non congestion, I will then even out on my cost and I'll be able to figure out what the product date looks like because the sale is never going to be, even the sale is gonna be up and down and up and down like it has been. Now, that's going to be the future for the next three to five years. You wanna have intense piece, uh, periods of activity and intense periods of no activity, intense periods of activity again, and no activity. Again, whether it's climate change, whether it's pandemics, whether it's, you know, government problems, whether it's financial problems, whether it's some slow down, some fight, some war somewhere, this is the new world we live in now. It's, it's all basically like your heartbeat going up and down. And you know, the more irregular your heartbeat is the less healthy you are.

Rabah Rahil (33:02):

Wow. And that's interesting too, because that starts to really mess with your cash conversion cycle and cash flow, right? Where if you're, if you're pushing out your accounts receivable and that cash conversion cycle starts to elongate, um, then you either need to a finance, some, you know, get some leverage to buy the new inventory or something to bridge till you get paid. So, wow. That more, more important than ever to kind of have a grasp on all that. Huh.

Pranay Srinivasan (33:28):

Right. And the, the thing that I keep talking to, to our customers about, and the thing we talk about is like, you have to have a balance strategy about, okay, what do you think will be always needed? And you can require this. Also the reason why ATC brands that are too niche are basically too premium suffer. And the reason they suffered is because people, the bottom 20% of the audience and the top 10% of the audience is basically expanding. And the middle 70% of the audience is shrinking. And they're basically be getting absorbed by the fringes. So it is the fringes that are actually turning into a larger things and basically turns into this business. And so if you have a product offering for people who will buy stuff all the time, and then you have, you know, premium product offerings that can basically be, you know, hits driven, that allows you to then have the predictability around the cash flow and your margins, then you then have a blended strategy. It's no longer a one and zero strategy.

Rabah Rahil (34:29):

I love that. Awesome. All right. Per Renee, you've made it to the rapid fire. That was such an incredible value add segment. All right. I'm gonna shoot some questions at you and then, uh, okay. They'll hit us with the answers. Are you ready?

Pranay Srinivasan (34:43):

Yes, I'm ready.

Rabah Rahil (34:45):

Okay. Learning another language, overrated or underrated.

Pranay Srinivasan (34:50):

Uh, I'm sorry.

Rabah Rahil (34:52):

Learning another language. Overrated or underrated, underrated. Underrated. Could you, you speak five languages, correct?

Pranay Srinivasan (34:59):

Yeah, I speak, I speak a bunch of Indian languages. I understand a little bit of French and I speak, uh, and I speak English, so yeah. Uh, definitely underrated,

Rabah Rahil (35:09):

Awesome. Standardized shipping containers, underrated or overrated.

Pranay Srinivasan (35:14):

Uh, okay. I'm gonna hedge on that. It's it right. Doesn. I'll tell you why, because it all depends on the type of product. Yeah. So I would say neutral to that.

Rabah Rahil (35:24):

Okay, cool. Accurately rated. Perfect. <laugh> um, the last mile problem, overrated, underrated,

Pranay Srinivasan (35:31):

Uh, it's overrated,

Rabah Rahil (35:36):

Overrated. I love it. Um, inventory management, overrated. Underrated,

Pranay Srinivasan (35:40):

Definitely underrated.

Rabah Rahil (35:42):

I love it. I love it. Um, USPS, overrated, underrated,

Pranay Srinivasan (35:47):

Tremendously. Underrated,

Rabah Rahil (35:49):

Tremendously. Underrated. Love it. Uh, best country to operate a factory

Pranay Srinivasan (35:54):

Best country to operate a factory. Oh man. Uh,

Rabah Rahil (36:04):

Not enough context.

Pranay Srinivasan (36:06):

No. I just think that every country is, you know, kind of govern in its own way right now and trade offs. I think that there's, there's some trade offs for every country, but if I was to operate a factory today, it all depends on whether it is automated or is manual. So I'll tell, give you two answers. If you have an automated factory, the best place to operate it today is the us. If you have a manual factory, which needs a lot of labor, the best place to operate it today is probably Vietnam or Cambodia.

Rabah Rahil (36:39):

Oh, very cool. Those are interesting answers. Uh, what's the, so if you've manufactured countless products, what's been your favorite.

Pranay Srinivasan (36:49):

My favorite product that I have manufactured, which was a lot of fun. Um, Hmm. I mean, when I define fun, it's probably, you know, fun, something that didn't give me like a real heart attack. Um, <laugh>, <laugh>, uh, we used, I used to produce this, uh, cube of fabric, which basically would be, you could basically make it in. You could, you could do 27 different things. I used to call them cube heads. They were a kind of bandana. So it's literally just a cube. It's a seamless tube. That's probably like 30 inches tall. So you could put it on your nose. You could put it like a ball of CLA you could put it on your head, you could put it on your nose, on your thing. On your hand, you could put it like a bandana. And you'd like this piece of paper that came with 30 different, there's like 30 different ways you could wear that tube. And it was literally a tube of fabric that you could basically do 30 different things with. And that was probably the most fun thing I did. It's the simplest and actually the most value, the utilitarian thing. And, um, it was nice.

Rabah Rahil (37:51):

That sounds amazing. It sounds like something you'd see on like sky mall in the, in the plane or something like that. That's really cool. Yeah. Um, what's the best, uh, Indian meal,

Pranay Srinivasan (38:02):

The

Rabah Rahil (38:02):

Best or like best, yeah. Like a best, uh, uh, entree or something like that.

Pranay Srinivasan (38:07):

Probably Biani

Rabah Rahil (38:09):

What is that? What

Pranay Srinivasan (38:10):

Is that? So B I R Y a N I Biani is basically like it's got rice is got meat. It is got flavored is got all this sorts. It's like a, uh, I mean, imagine, I don't, if have you eaten, uh, PAA, uh, Spanish? Yes. Yeah. So imagine the Indian version of PAA bit with all the spices and all the stuff in it, like all the works it's like really rich and really, really like heavy, but it's also amazing.

Rabah Rahil (38:40):

I love it. That's amazing. Um, favorite place travel to, and why?

Pranay Srinivasan (38:45):

Uh, favorite place to travel to for me would probably be any island with, uh, with snorkeling, any island that that's a good, that's a nice reef. And probably because, you know, I mean, you're under water people. Can't talk <laugh>

Rabah Rahil (39:04):

You can still sign though. I I'm scuba certified, but yeah, you definitely can't talk. What's the favorite way you like to spend your time?

Pranay Srinivasan (39:11):

I love spending my time with the I right now, I have a 16 month old son, so I like spending time with him watching him grow, but I really love spending time, uh, writing about business, talking about business and building businesses. I think I love that's my that's probably my passion. I love that I get to do what I like to do, and that's my favorite thing to do in, in life.

Rabah Rahil (39:35):

That's that's beautiful. Per name. Okay. Last question. Um, or actually I got two more for you. What is your favorite book?

Pranay Srinivasan (39:42):

My favorite book is the Alchemist

Rabah Rahil (39:47):

Fantastic recommendation. Uh, I think that's the second time, right? I think that's the second record. I love that. That's a fantastic, fantastic rate. Uh, okay. Last question. If you could have dinner with three people dead or alive, fictional, or non-fictional, who would they be and why

Pranay Srinivasan (40:04):

Three people dead are alive? Um, Henry Ford, uh, Hmm, probably, uh, who was the guy who ran the, uh, east India trading company, whoever the guy who started east India trading company.

Rabah Rahil (40:33):

Yeah, I'm blanking, but

Pranay Srinivasan (40:34):

I forgot the name east India. That one is east India trading. Yeah. East and, um, probably Albert King.

Rabah Rahil (40:45):

Oh, very cool. How fun? Um, that's fantastic. Renee. This has been such an amazing ride through the supply chain. Just intricacies, man. It sounds like you just ship it, you know, you buy it and you ship it, but there's just so many, like, it's like a rude Goldberg machine, right? Like you take the top off and you're like, oh my gosh, there's all this stuff going in here. Um, so I appreciate the time today. Um, how can people find you and give us a little bit more information on manufactured and how people can get involved there if they, uh, need to save some monies and make some more monies. And so yeah. Give us the spiel there.

Pranay Srinivasan (41:19):

Yeah, absolutely. So we supply and finance inventory. Uh, we do as little as a thousand dollars of inventory as much as a hundred million dollars of inventory at a time. Um, we are, are we, um, I'm my mine. My email is my first [email protected]. It's pretty straightforward. And you know, you could go to manufactured.com and look at what we do. We have, we are a managed marketplace, so we don't really have, we are not Alibaba. So it's like, if you want to, you know, either build a product, add a product, uh, expand your vendor lane, change your vendor. Uh, you know, stock for financing. Our goal in the middle term is to help brands not sell to rollup companies. So, you know, all these rollups that are coming, uh, the reason they buying rollups at the one to $5 million range is because brands are cash for problems at that level.

Pranay Srinivasan (42:13):

Yeah. So one of our, one of our key goals with these brands is to help them skate through it because nobody buys a brand. If you can't, if you're not selling product, nobody buys a brand. If you don't have demand. So if you have demand and you have only an inventory or a cash problem, we want to help those brands actually stay independent. So that's basically what we excited about. We also have an amazing affiliate program. So if you're a three PL a digital marketing agency, or if you are somebody who helps a brand succeed in the world, we will literally pay you for referrals to brands, not just once, but over the period of the over the first year and help you add manufacturing to your ability for the brands that allow them to stay relevant. Three pillars are getting crowded out. You know, marketing agencies are getting crowded out because it's getting harder and harder to build brands without processes and without, you know, uh, without formulas.

Pranay Srinivasan (43:05):

And so the manufacturing side of it is what we do. We do manufacturing that doesn't come with the formula. We are not early express. You can no longer drop ship something from Apresso Roberto and hope to mail the brand on it. You can no longer just buy something and hope to build a brand on it. All those things are gone. Now you have to care about the product you've built. You have to worry about where it's coming from. You need somebody to help you make decisions on every part of that brand process or the product process. And you need to care about how it's sold so that you can buy more. Yeah. And that's what we hope.

Rabah Rahil (43:36):

Fantastic. I love that. We'll put all the links in the show note so everybody can get involved. Uh, max, do you have anything else?

Maxx Blank (43:45):

I think we covered a lot here. Oh, oh yeah. There's a lot. Is the, the guy you're looking for from the, the Dutchies Indian trading company, is it Francis Drake? Is that the name?

Pranay Srinivasan (43:54):

Uh, it's not. It's, it's just, uh, east India trading company. It was probably started, uh, uh, by, um, a private person in, in Britain. I am, I, I need to find

Maxx Blank (44:05):

Them have, uh, founded by Watts, George White.

Pranay Srinivasan (44:13):

I'm sorry,

Maxx Blank (44:15):

John Watts.

Pranay Srinivasan (44:16):

Yeah. That's probably it Francis big was just working for that guy. Who's formed it.

Maxx Blank (44:22):

Yeah,

Pranay Srinivasan (44:22):

I got it. It was, you see it's in 19 15 99, 3 merchants met and started their intention to basically go, I don't know who these merchants were, but those were the, those were the people I would wanna talk to

Rabah Rahil (44:35):

Supply chain killers for sure. Just crushers there. All right, folks, we'll wrap up. We are on Twitter at triple. We can get you into the best analytics tool out [email protected]. Uh, that's all we have for you today. Thanks for stopping in and be sure to sign up for whale, mail our newsletter, and we'll see you on the flip. Thanks everybody.

Pranay Srinivasan (44:56):

Thanks. Thank you so much for having

Rabah Rahil (45:01):

That's fantastic guys.

Speaker 4 (45:15):

That's

Rabah Rahil (45:16):

Yeah, yeah. Okay. Okay. Go ahead.

Pranay Srinivasan (45:19):

So if people want to really solve their Christmas problem, they still have like 60 days to figure it out. First of all, if you are working through Amazon, I can't help you because Amazon is going to be a shit show in November. When they're trying to pull a pull product into their warehouses, a lot of people use, uh, FBA and they're up shit Creek because they're a huge dependency on Amazon. And Amazon is have trucks up to GRA despite expanding their capacity. A lot. Amazon is probably has the best intelligence on logistics and supply chain anywhere in the world. And they know exactly what's going on there on, on, if you don't fulfill by Amazon and you do your own thing, the options are number one. Don't use freight out of China. Basically figure out, uh, fulfillment offshore in China, and then start fulfilling individual packages by Korea, directly to your customers, depending on your ticket size and take from China straight from China,

Maxx Blank (46:12):

Jay hall. And there there's plenty of solutions there's solutions on it. I've used them, China,

Pranay Srinivasan (46:16):

China, or Hong Kong. And so you also accept the duty because under $800 is like free. So you basically are shipping direct to the consumer. From there. It could take you a little bit of tooling to do, but you should, you should think about that. So you can literally have DHL and FedEx basically consolidate our shipping, bring it in the three things it does is number one, it normalizes the freight rate. Even if it's a higher price right now, rate's at about $10 a kilo. But if you're shipping direct to consumer and $10, a kilo is the cost of them bringing it a consolidated list of hundreds of packages to here and then pushing them into the USPS network. It's exactly what people are doing in Mexico for the 1, 2, 3 thing where they avoid duties and they have their warehouses overseas, but you're doing it without having to bring the goods over from China.

Pranay Srinivasan (46:58):

And you do it straight there. Lots of people don't wanna do that because they have a problem, but this will allow you to hit your shipping targets. Even if us PS and ups are backed it like a few days, it's normally not that bad. And they are far more professional at figuring out systemic supply chain in VR. The second thing that you can do is basically start bringing in smaller quantities constantly like every week, every 10 days, bring in quantities. And instead of bringing in large container loads and waiting for them to happen, you're backing up your supply chain ship 5,000 when you have it ship, when you have it ship, when you have it and then have it in here, that's two ways that I think you can save it. And you're still going to get food on supply chain capacity, manufacturing capacity till January.

Maxx Blank (47:37):

Wow. So, wow. I mean, I know I I've personally run like warehouse out of China before. Like not me personally, but I've worked with companies there. Yeah. And they can get stuff here at us. PS, you know, it's not like the EPAC takes 30 days back in the day. You know, they can get it here, like seven, five to seven days. Some of them, right. It's definitely worth looking at for people

Pranay Srinivasan (47:59):

That is gonna be something that's gonna expand in Indian usage over the next maybe 12 months where people will start even just stop using commercial freight. And I think that's a really interesting way of, uh, derisking, the entire logistics problem. It's a blow to Shopify and Amazon and three PLS here. And that's the other reason why I feel like three PLS here are becoming more of an option than a choice.

Rabah Rahil (48:23):

Interesting. Oh man, that's fascinating.

Pranay Srinivasan (48:27):

Yeah. Offshoring 3:00 PM. And using, uh, commercial routes of freight will probably be the next way to disrupt people. And who knows, we might end up doing it,

Maxx Blank (48:37):

Uh, especially if you can go to like, not necessarily outta China, but even a place like maybe a little bit closer to the us. Right. And ship straight to there. And then utilizing that Roco, labor and

Pranay Srinivasan (48:50):

Kong is next door. Korea is next door. Mm-hmm <affirmative>, uh, you know, you

Maxx Blank (48:53):

Know, what about like going to, what about going to a place like in south America where labor's pretty cheap, right. And, uh, and doing it outta there.

Pranay Srinivasan (49:03):

Yeah. You, the problem with moving cargo across the, across the ocean is that again, us has probably got the, one of the most streamlined importation systems in the world. You can literally take a cargo from, uh, not clear to clear in a day in India, in south America, it could take a week or two weeks at a time. And then you also have these problem with systemic corruption. You have a problem with systemic bureaucracy and you have paper documents, you have manual entries, all that basically adds to the complexity. You do not want that to happen simply because that then actually is. I remember what I told you about last mile from the wholesale, uh, point of view, last mile delivery from the freight getting free to LA is 50, like 30% of the problem or 50% of the problem getting free from LA port to your warehouse is probably more of a problem than it is getting from, uh, China here.

Rabah Rahil (49:57):

Whoa. That's mind blowing to me back

Pranay Srinivasan (50:00):

Up. Yeah. And so I, yeah, that's basically what I feel about people on Christmas right now for the short term. Uh, if you're at an Amazon FBA ship air ship, whatever, you have to get the goods here. And if you feel that you have to take a haircut on your profits, do it.

Maxx Blank (50:16):

Yeah. It's better to make a little bit than not make anything. Right.

Rabah Rahil (50:21):

Especially if you spend all this money on, you know, demand and then you don't have the supply to capture, that's a brutal place to be. Awesome. Okay. Cool.

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