“Don’t Take the Burn to the Next Milestone”
It’s hard to deny that e-commerce has a bright future in this world. But how are small entrepreneurs supposed to succeed in this industry? Well, the answer could come from a startup called 8fig, which is using AI to help small e-commerce businesses replicate an executive team, helping them across several layers. In fact, 8fig got its name because it strives to help small e-commerce businesses grow to be eight-figure companies.
Yaron Shapira, the co-founder and CEO of 8fig, joined startup coach Roland Siebelink on the latest edition of the Midstage Startup Momentum Podcast. He shared the secret sauce that makes 8fig so helpful for small e-commerce entrepreneurs while also opening up about 8fig’s own journey as a tech startup.
- How 8fig’s AI is able to analyze every e-commerce business individually.
- Why 8fig’s product is designed in a way to ensure that customers don’t outgrow the platform.
- Insight about 8fig’s go-to-market approach as a product-led company.
- The challenge of raising awareness for a startup that’s focused on product-led growth.
- What it’s like being in the same space as massive corporations like Amazon and Shopify.
- How to compete with companies that are also collaborators in the same space.
Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I’m an ally and facilitator for many of the fast-growing startups in the entire world. We’re really happy today to have with us an up-and-coming startup out of Israel, dialing in from Tel Aviva is Yaron Shapira, the co-founder and CEO of 8fig. Hello, Yaron.
Yaron Shapira: Hi, Roland. Thank you for having me today.
Roland Siebelink: The honor is entirely ours. We’re very glad that you could fit us into your busy schedule, Yaron. Let’s get started with the same question I ask every founder at the beginning. What does 8fig do? Who do you serve? And what difference are you making in the world?
Yaron Shapira: We are helping eCommerce sellers to grow. E-commerce sellers, very small businesses usually, 2, 3, 4, 5 people in the team. Very talented, very skilled in what they are doing. They are running very profitable businesses. Obviously, very scalable businesses that they’re running online. But one of the things that they lack is an executive team, an experienced executive team.
I mean someone like a CFO. They will usually use external accountants or external advisors that can help them in this field. Same goes with COO, Chief Operations Officer, or Chief Marketing Officer. They might have some of these skills, but rarely they will have all of these skills. As these businesses grow - and they grow, believe me; they are growing so fast, they are so good - at some point, they are starting to feel the impact of the lack of these positions in their teams, which just makes sense. They are very limb businesses by nature. Therefore, they will also suffer from that.
Me and my partners, we are engineers. We know how to build technologies. This is what we’ve been doing for the last 20, 25 years. And in our last business, we developed technology to underwrite the risks in the supply chain. We became experts in that. And then we thought we are able to take our abilities of building technologies and our knowledge in the supply chain and try to help these awesome entrepreneurs to grow their business using the data that we have to help them to manage their supply chain better, to help them to get better executive decisions they are doing on their financials, in their operations, in their marketing. And this is the mission that we took upon us. We hope that we’re doing this good for our clients. And we are happy to serve them.
Roland Siebelink: Excellent. And just to be clear, Yaron, this is not a consulting for those e-commerce sellers. It’s a productized offering, isn’t it?
Yaron Shapira: This is correct. We are not consultants. As I said, we are engineers. We all learned computer science. We built products for years, financial products, data products. We know how to build technology. We are collecting tons of data about the supply chain. As I told you, this is what we have been doing since our last company, so we have been doing this for the last decade. We have tons of data on the supply chain. We know what a sustainable and healthy supply chain should look like. We’re using this data to feed our AI engine, which is analyzing every business individually, every business independently. Because every business - every small business, every eCommerce seller - is different. They have different items, lead times, cost, structure, marketing needs, different competition. We analyze every business individually. And the AI, the technology, offers them the relevant and tailored business plan to manage their supply chain according to the changes that are actually happening all the time. I might even say on a weekly basis.
And what is so unique about us is that we are not just offering them funding - we do, we offer them funding to help them to carry on their business plan, to execute them - but I might say that the secret sauce or what our clients mainly care about is the fact that we help them to plan their supply chain, which means that every change that they have in their business is going to influence their cash flow.
Let me try to explain. We said earlier that they are lacking an executive team or executive experience, which leads them to mainly experience three layers of problems. Layer number one, how do I get funded? Mainly working capital. And then they are seeking companies who are able to provide this working capital. This is layer number one. Layer number two is how do I get my logistics done, which means how do I do freight? Fulfillment? How do I make international payments? More on the logistics side. And on top of that, how do I make my sales? What we believe in 8fig - and I’m telling you this based on years of working with small businesses in eCommerce and supply chain - is that each layer influences the next one.
Let’s say that they have some delays in the logistics. Problems in the manufacturing or problems in shipping. This is going to cause changes in their sales, which is then going to cause changes in their needs for working capital, which then changes logistics again, and it’s going on and on and on. What we saw is that these changes happen to these businesses on a weekly basis. How do you think about this? It’s a crazy business.
Roland Siebelink: It’s like sailing a ship through wild waters, right?
Yaron Shapira: Exactly. If there are e-commerce sales who are listening to us right now, they might see themselves in this problem on a weekly basis. They’re getting calls from their manufacturers, from their partner who is dealing with the sales. There are changes on a weekly basis. It’s crazy. These businesses, in 8fig’s case, are being fed into the system, dating the plan, and then what do we do? We translate these changes into the updated needs for cash flow. The cash flow is super flexible and adjustable to the changes that they are experiencing every week.
Roland Siebelink: And you mentioned in the beginning, Yaron, that you help primarily these very small e-commerce sellers. Is this something that can grow with your clients or at some point in time it just turns too complex and then you are saying, “Well, you’re not in our target market anymore.”
Yaron Shapira: It’s actually the opposite. It turned out that the bigger they become, the more they understand their business, and therefore, the more they understand our service. It actually is the opposite. Our name is 8fig; 8fig is named after our goal. We want to help these eCommerce sellers to grow to eight figures. Eight figures means that they’re dozens of millions of dollars per year. We’re very happy to say that we already helped six-figure sellers to become seven-figure sellers. We’ve also helped low seven-figure sellers to become eight-figure sellers. We already helped a bunch of these super successful entrepreneurs. Actually, the bigger that they become, the more they understand what value we give them, that we help them to plan their supply chain to maneuver through the struggles that they’re seeing.
Let me give you an example. We had Prime Day on Amazon. Let’s talk about Amazon sellers. We had Prime Day in early July. None of us knew how it’s going to go. Will it be successful? Will it be a disaster? We heard in the news all the time about challenges in the market. What you are going to do. Should they order inventory or should they not order inventory? Same question now about Q4 and the holiday season. Will it be a high season, as it should be or will it not? What will happen then in Q1? Usually low season for most of the products. Not all of them but most of the products. These are questions that our clients deal with on a weekly basis. What we say is that through very detailed planning, which is what they are doing in our system, planning and then as they see results in the market, they can adjust the plan.
The plan is adjustable. It’s not that you make a plan and then it is fixed. You make it once and then you keep on updating it. It gives them the peace of mind to be able to make a plan, change the plan, and always have a funding partner who’s going to support you.
Roland Siebelink: How do you find those e-commerce sellers? What is your go-to-market? How do you reach out to them? How do you get people to sign up for a platform like this?
Yaron Shapira: We believe in the product and in giving value through the product. What we’re doing in the company is to focus on building our product to be the best that it can be. The product is super complex in its backend. Our work is very hard. We’re doing the heavy lifting and we are making sure that the front end of the product - what our clients experience - is super simple. Making it super simple, that means that it’s super hard for the engineers on the back end. This is what the company is focusing on. And then what we are doing to get the clients to notice it is just to try to talk about that. To try to show it to them in events, in podcasts, on social networks to try to expose what value our product can give. And then we just let them experience the product. We believe that our product is the best seller for us.
Roland Siebelink: How big do you think that this could grow over time, Yaron? Even if you have a big vision, what are the biggest barriers you need to get out of the way?
Yaron Shapira: I think if you are talking about barriers, I think it’s mainly awareness. You are currently helping me with this barrier. It’s about awareness. We want clients to be aware of the fact that there is a company that is not just offering them a loan. Getting a loan is awesome. But we think that they need more. They need someone to help them on planning their supply chain. And according to the planning offer, the financing. And then whenever the supply chain changes, the funding is changing as well.
I think the barrier is about awareness. To make people know that this almost science fiction can be real. Because what is usually happening is when people hear about that, they say, “Okay, you are a bunch of very good consultants.” And no, it’s not like that. We do not believe that we as individuals are smarter than the eCommerce seller. The eCommerce sellers are the real entrepreneurs. They’re the entrepreneurs that are driving e-commerce. Let’s talk about this in a second. They are the real entrepreneurs. We are not smarter than them. We just know to play the data better because we’re engineers. We are trying to support them from the data science point of view, to give them the insight that we learn from the market to try to help them to navigate through a very challenging atmosphere where their business lives. This is what we’re trying to do. We’re trying to empower the real entrepreneurs.
Roland Siebelink: You’re more offering a compass, not setting the direction, right?
Yaron Shapira: No, it’s very important for us not to tell them what to do. These e-commerce sellers already achieved something awesome. I usually look at our clients in admiration. They build from scratch, from nothing, from their garage. Usually from their passion, they build a business. They are usually selling things that they are passionate about. It’s a problem that they have. It’s something that they like. It is their hobby. It’s usually something they are very passionate about. They try to sell it. They failed and failed and failed and failed and then they succeeded. And they’re doing great. They are doing great business.
I do not think that we are in a position to tell them what to do. They probably know how to do it by themselves. We are in position to help them with some data analysis that we did, that we are able to do because we do it in scale and to help them to avoid problems, to help them to finance their dreams. We think that this is our task. This is what we do. This is how we can add value to these great entrepreneurs.
Roland Siebelink: How big could this be? Exactly. Where are you today in terms of whatever you can share, a number of clients or revenues or anything. And then how big do you see this grow in a 10-year timeframe?
Yaron Shapira: I will share this in a second, but I just want to zoom out a little bit because it’s not about 8fig. The story is much, much bigger than 8fig. Please look at e-commerce. I think that e-commerce today in the year 2022, it’s very similar to the internet in the year 2000. Not all of us remember this. But for the ones who do, they remember for the ones who don’t. I will try to describe how it was. In the year 2000, the Internet was here. Everyone used it. Everyone knew that this is going to be the future. It was clear. What was not clear is where exactly it’s going to go. We couldn’t imagine big companies like Netflix, like Amazon, mobile phones running on the web. We couldn’t imagine it in the year 2000, but we all knew that something big was coming and we knew that this is the future.
I think that eCommerce in the year 2022 is very similar. We all use it. It’s clear that this is the future of commerce. But I think it’s too young for us to really understand the impact that this is going to have upon our lives. What I do know is that this is going to be a success. In the US, e-commerce penetration is just 20%, compared to UK penetration, it’s 40%. The US still has a lot to go. The UK has a lot to go as well. Twenty percent e-commerce means 80% brick and mortar. It’d be a big guess to say that in a few years it will be 80% e-commerce, 20% brick and mortar.
We know that this is going to happen. We do not know what impact it’s going to have. But I can tell you what I do know. I know that e-commerce is going to be a success. And I also know that e-commerce is very democratized today. It’s being led mainly by small businesses. You see it in Amazon reports that they’re reporting that more than 60% of their sales come from independent sellers. These are small businesses.
I think this is what we are going to see, we are going to see a lot of small businesses, people working from home, doing what they are passionate about, and they are going to be the real backbone of e-commerce.
Roland Siebelink: How do you compare 8fig to other independent seller focused platforms such as Shopify or maybe Amazon? Are you seeing them as competitors, as collaborators, as potential exit opportunities? If you want to answer that, of course.
Yaron Shapira: You can mention them as both partners and competitors in a sense. Potential exit, I will put aside. I do not subscribe to that. I think that 8fig is able to grow itself to be a very meaningful platform and data-focused company that is helping eCommerce in general to grow. Let’s put the exit aside.
But Amazon and Shopify, you touch two of the best and admirable companies in our industry, helping people to be successful. We have so much respect for these platforms. They are doing a great job. Of course, they are partners because our clients are using their platforms to sell their goods. Both Amazon and Shopify are doing a great job in doing that. You can say that they are competitors because Amazon offers loans, Shopify offers capital. You can see this as competition. I do not see this as real competition because maybe they compete with us on the funding layer. But as I explained earlier, funding is just one layer. We have logistics, we have sales, and the influence that each layer is upon each other.
And at that point, I think that we are winning on providing working capital. There are many opportunities. The two that you mentioned. But I think that we are offering something more deep, more long term. We see ourselves as their partners. I think it’s a little bit different.
Roland Siebelink: I love the strong purpose behind the business. That’s very clear. Yaron, as people are listening to this podcast, how can they help 8fig? What are you looking for and where should they go to find out more about the company?
Yaron Shapira: You should go to 8fig.co. Register to the platform. Read some stories about our clients. How they did that. What are the steps that they did in order to be successful? What part 8fig took in helping them in their journey. Read some of these stories. Educate yourself a bit about how we can help. Start to explore that. It’s self-explanatory. You do not need to get on the phone with anyone. Just start to explore the product.
How can they help us? Please come. Please experience. Tell us what you think. Tell us what we can do more for you. We are adding more and more features, helping our clients to execute their supply chain all the time. Please join us.
Roland Siebelink: Sounds amazing. Just to repeat, go to 8fig.co. The number eight and then F-I-G dot CO. This was Yaron Shapira, the co-founder and CEO of 8fig, who gave us an extremely good overview, not only of the business but the bigger, broader changes in society and e-commerce in particular. Really appreciate your time, Yaron. Thank you so much for joining the Midstage Startup Momentum Podcast.
Yaron Shapira: Thank you so much for having me today.
Roland Siebelink: And for the audience, we will have another amazing interview with one of the world’s most momentous startup co-founders next week. Keep listening. Thank you.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.