From Bootstrapped Startup to Finnish Tech Unicorn: RELEX Solutions' Rise w/ Johanna Småros, RELEX Solutions

SCS (intro):

This episode is brought to you by Helsinki Partners, a city marketing investment and talent attraction company owned by the City of Helsinki. Helsinki Partners is offering two unique programs one designed for international scale up founders and another for international LPs and VCs.

Both programs aim to help founders and funders, just like you build a relevant network and the new Nordics and discover the right opportunities in the region. The next edition for these programs will be held in Helsinki around Slush, the world’s largest gathering of venture capital in November. Applications now open until August 18th. Don't sleep on this one.

Today, we have the pleasure of speaking with Johanna Småros, co-founder of RELEX Solutions, one of Finland's leading unicorns. In 2021, RELEX Solutions raised in a funding round led by Blackstone at a €5 billion valuation to help retailers and brands avoid food waste and tackle disruptions in global supply chains.

In our conversation, we delve into the intricacies of supply chain solutions, explored the latest trends of sustainability and discussed her evolution as a leader, including a favorite new mantra I will be adopting of: Don't do stupid things. Enjoy.

SCS:

What a poster child really for Finland. Tell us a little bit about you know, we always start with the personal right? What is a crucible moment of your life that sort of shaped you?

Johanna Småros:

Well, first of all, thank you. And thank you for the kind words.

SCS:

Most welcome. I mean it.

Johanna Småros:

I feel the pressure of living up to that expectation. Yes, moments. I think there are a few quite important moments. So, depending a bit on how you want to frame it, my version of the story is that my career, if you want to call it that, is a series of accidents.

So, first of all I did not plan to go to a university of technology. I just didn't know where to apply. My brother, who is also an engineer, talked me into it. So that was one of those important moments. Not super planned, but you have to apply somewhere, so I picked Helsinki University of Technology and I picked industrial engineering and management.

I needed to do a minor on the technical side to be able to call myself an engineer. I started with electrical engineering. I realized that no, this is not for me. So I switched to computer science and realized that, ooh, I actually quite like this.

Because programming is quite creative, you build stuff and then you get it to work. The second thing was again, a bit accidentally landed a summer job in a research group. And then they quite liked me and they managed to get some funding so I could stay on to do my master's thesis.

As part of that I had a very inspiring supervisor. So he just told me that, Now, Johanna, you need to write some research papers on your stuff. And I was like, I thought it was like old men with beards. And then he was like, ah, look at these, just do the same thing.

And I was like, okay. I'll write. And then we submitted those and they got accepted. And suddenly I had my master's done and two accepted journal papers and you need about four or five to do a PhD. So then I was like, ah, maybe I should pursue a PhD. And we had the research group and, and it was a really nice environment. So then I just ended up becoming a researcher.

SCS:

But before we go there, I mean, you talk about men in beards, right? And of course, It sounds normal to you to choose the path in technology because that's what you sort of grew up with, with your brother, and I know you had a single father who didn't make a differentiation in gender. We know the facts, right, that women are not as prevalent seen in tech jobs and in entrepreneurship.

I mean, you know, the work that I do in the gender venture funding gap, how was your upbringing such that you were able to think that I could do it too?

Johanna Småros:

Yeah, I don't think there was ever any questions about can I do it? It's more like, what do I want to do? So I do think that in my family, engineering was in high regard.

You know, my dad's an engineer. My brother knew that I want to go into engineering like super early on. I was the only one who was a bit wobbly on what, what I want to do. I do think that that comes from home.

Dad’s always been like super encouraging. And he knew that we got good grades. So the only things he asked about was how did that math exam go, and how did that physics exam go?

And then if I got stuck on some homework or whatever, he had endless patience because of course I threw tantrums. He would sit there and breathe and wait for me to calm down and we would work through those things together because he knew that of course you can learn this.

It's a given. Everyone can learn this. And I think it's a good message that yes, it might be difficult at times, but anyone can do STEM things.

SCS:

So you were already in research, and thinking about Academia but with a practical element.

Not many people from academia decide to take action. How did that shift happen for you?

Johanna Småros:

I think maybe it was a smaller shift than for some other people because we had done applied research. So we were working with companies and I think that was also why we decided not to continue in academia because the part that we really enjoyed was kind of coming up with better solutions and testing them out with companies, but you can take it only so far.

Because you can take it one step and then somebody actually needs to implement it. If you want to take further steps, it kind of turns into science fiction if nobody implements it. I think, the frustration that it's so slow. The impact, maybe it was there, maybe it wasn’t.

And the slowness of the whole thing. So I think that was the main driver off kind of founding RELEX, and actually trying to implement these ideas that work and you can scale them further, improve them and kind of build more.

SCS:

Bring us back to your Johanna as a student here doing the research.

How did you pick a topic? You've been in business for almost 20 years, two decades. What was the core thesis of that research? And I believe you did it with your co-founder, Mikko. Is that right?

Johanna Småros:

Yeah, so we were in the same research group and then the third co-founder, Mikael, joined a bit later, so he actually did his master's thesis for me.

We actually did research on many different topics. We were working with different companies. So we also kind of followed what they felt was urgent for them. And we had a lot of flexibility. As long as we had funding, we were delivering to the partners what they wanted.

We could fill up the rest of the time with, with doing things that were generally interesting. So I did a lot of research on supply chain collaboration, because it was really hyped, 20 years ago.

Everyone was talking about collaborative planning, forecasting and replenishment. And I did research on it and concluded that this won't fly.

SCS:

I'm deep in this world with you, but perhaps our audience isn't right. So when you talk about supply chain here, what are we talking about?

What kind of research were you doing?

Johanna Småros:

The world is full of supply chains. So you basically need to have a lot of different companies involved to get, for example, a physical product to a consumer. Yeah. So you have all the ingredients, you have components, you have whatnots, you have factories putting these together, you have distribution, maybe you have stores.

It's a whole system. And I think the pandemic actually kind of demonstrated how global and how complex these supply chains typically are. There's lots of moving parts but the research we did was specifically on consumer supply chains, like groceries, like these normal everyday things.

We've been looking from the collaboration perspective, we've been looking at retailers and their suppliers. So the brand manufacturers. It's kind of been, it's obvious that if you collaborate, you get efficiency, but there wasn't a whole lot of collaboration happening. And then in the, early 2000s, the CPFR movement kind of, was growing out of things that Walmart was doing with their suppliers.

Everyone was excited. Now, now finally, they'll start sharing information and collaborating. And my own dissertation was on where it actually makes sense, and why it's not happening, and why it was too difficult. If you were to have a retailer sit down with all of their hundreds of suppliers to look at a plan together and collaborate. You just can't do it. You don't have time for it.

That's something we're helping our clients now do more automatically. So you don't sit down and look at those forecasts together, but share the information and flag certain exceptions, for example, for review together.

We looked at many things. So store replenishment was just emerging.

SCS:

That is basically how quickly you need replenish your inventory.

Johanna Småros:

There's a lot of stuff in stores. People don't think about it. Even like a small neighborhood store has thousands of products. And then a Finnish hypermarket with 50,000 SKUs. So stock keeping units.

And then a big US retailer can have like a hundred thousand items. And then we need to make sure that the shelves are restocked, continuously. Especially in physical retail, if the goods are not there, it's really hard to buy them. And then you're going to lose out on sales.

SCS:

And we experienced that during COVID. Everyone was buying toilet paper.

There was not enough toilet paper going around in distribution.

Johanna Småros:

Join the whole of humanity in the quest for more toilet paper.

SCS:

So 2005, 2006, you have the basic idea for what this would be.

Was there a vision for a step by step plan? I mean, you were bootstrapped. Till very, very late as well, which is pretty unusual. Talk to us a little bit about the evolution of the business over almost two decades now.

Johanna Småros:

So in 2005, we both defended our dissertations with Mikko and we were both in the same place of what next?

And then we thought, well, maybe we should take this idea of improving automated store replenishment and see if we can make something out of it. That's what we started with.

So in the beginning we didn't have much more than, our research and confidence based on that research, that you could actually automate these difficult things like perishables.

SCS:

So you mean everything was manual, where basically the stock people will have to say, okay, I'm low on mangoes, go and get it.

Johanna Småros:

People walking around in stores and punching in numbers. You have the demand forecast, demand varies, if something is promoted, if something else is promoted, that's going to have an impact.

The weather, the season has some impact. And then if you're doing this manually, you need to look at what you have on hand and you have to think about if you have something coming in.

And then you also need to figure out is it coming in tomorrow or the day after? So how many days of coverage am I aiming for?

If you have thousands of SKUs, you can't really spend more than a second making that decision. So It's kind of a no brainer, right, that you should automate these things.

But back in the day, companies were able to automate the simple things like canned food. But they really needed help to automate the difficult things. And our original idea was that we would infuse some intelligence into the existing systems. For example, which forecast model to use for, for which products.

But then when we got started, we realized that there is nothing to optimize. We quickly realized that if you want to actually deliver what they were planning to, they have to build those systems.

We actually have to build the infrastructure. And I was like, well, how hard can that be? I'm so glad I did not know how complex that is. We kind of optimistically got it started and step by step actually realized how much.

SCS:

Well, naïveté is the entrepreneurs blood, right? So many entrepreneurs that have been on the show, I was talking to you about James Rogers from Apeel, one of his struggles was understanding the supply chain and the incentive structure.

And he's done it for almost 10, 11 years now. And he said the same thing, like, had I had known how damn hard this was, I wouldn't have started. And it was the same for you.

So what was the first product? Like, what did you focus on?

Johanna Småros:

Very simple forecasting and replenishment solution that be delivered to consumer electronics company. It was definitely not best in the world. Luckily, we did not know either too much about the competition. That would maybe have been another reason to just go home. But it solved the problem.

So we were like agile and cheap option that sold. A really tangible problems, right? So that we got that going. And then every client after that was for the next couple of years, like an R&D project at the same time.

So everyone had their kind of specific challenges, like in bookstores, Christmas sales are huge. And all the books you sell at Christmas are new. So you don't have historical data on how they're going to perform. So that was a key challenge that we needed to solve for them.

And then, for example, winter Nordics, it's that first snowflake. Then it's like, boom, everyone needs tires. Some nice, interesting challenges to solve along the way. So then we kind of added and added and added and sold more and more things.

SCS:

So basically it was not vertically driven. you would go into tire company and pitch a pilot R&D project. Is that how your market entry was in the beginning? And here in Finland, of course, of course, we have to speak a little bit about that.

Johanna Småros:

We started out in Finland. So I think we spent pretty much the first four years I was also in Finland, Finland only. Maybe, you know, some Finnish companies have subsidiaries in other countries. So some international touch point but really in that phase, when every client wants an R&D project, we focused on Finland.

It took some guts from them to invest in us. And we kind of understood it from the get go. Also, tech startups was not a thing back in the day. It was not an opportunity in many people's minds. It was a risk, so we really invested in taking as much of that risk out as possible. So for pretty much all clients that we started with, we started with a simulation exercise.

Maybe took their data, and then we kind of put our system on autopilot, like this is how our system without anyone touching it would have forecasted and replenished your stores. And here is what actually happened. And now you can see the difference.

So they could see exactly what would happen to their inventory levels and their on shelf availability and their goods handling costs if they were using Relex on autopilot.

So that was one thing, it's really kind of not just have a business case, but be able to really show where exactly that business case comes from, which products, which stores, all that.

And then the next phase was a pilot in the early days. We actually had a money back guarantee that they can step off anytime and we'll just refund them what they paid us. So their risk was the work that they needed to put in, but we never needed to refund anyone.

SCS:

So basically the business model from the start was almost like a consulting model then it became more and more you build the infrastructure. So it becomes a software as a service kind of model.

Talk to us a little bit about the shift of supply chains and sophistication. How many clients do you have today?

Johanna Småros:

I'd say about 500.

SCS:

500 and big, big store names. And we were talking about Asia pack, America, LATAM, that's growing as well. All of which are different, right?

More complex, different regulations, even on the data that you capture. Talk to us a little bit about how that scale up happened for you, starting from Finland as I suppose an R&D hub.

Johanna Småros:

Finland is one of the smallest markets in the world. So in some ways you would think that it's, it's not a great place to start a company.

SCS:

And give us a sense here for those that don't know the size.

Johanna Småros:

We have a population of about 5 million. If you think about retail, we would never have been able to just specialized in one retail vertical because we have like three grocery chains. That's it.

We have maybe two chains of bookstores. That's it. We have, I think maybe, except from Ikea, like one furniture retail chain. It's small.

SCS:

Yeah, small but mighty.

Johanna Småros:

And that also explains, as I mentioned, you know, consumer electronics, agricultural retail, car tires. Big variance in clients that we landed, but that was a blessing. It was a bit of a challenge, but it was actually a huge blessing for our R& D effort.

Because really early on, we needed to think carefully about what kind of, Things that are kind of built into supply chain planning have to be kind of in the product itself, have to be super efficient, like forecasting.

You have massive data, you have to spend a lot of time to get the performance right, so that you can recalculate these, like, billions of forecasts.

At the same time, we need to think really carefully about how we built in that configurability so that we can deal with, you know, fresh products and we can deal with furniture and we can deal with like, super peak season products like winter tires.

That's been so valuable than going forward and scaling. All kinds of clients because everyone has something unique.

SCS:

I love that. I just want to pause a second because this was an aha moment for me. I didn't think about how you were forced almost like if you want to be in business in Finland.

You can't be a specialist. You have to generalize almost at the start, which gives you an upper hand because then you're versatile. You're able to adapt in different markets.

Johanna Småros:

Yes. And that's also why we have such a great implementation track record. It's always when you implement something, it's still quite a complex thing. So even if you do all the planning and preparation perfectly, there will be some surprises.

And then if you have a system that's configurable, you can just work around those while continuing the implementation. You never need to stop something just because you have an issue. So that's been super powerful.

SCS:

Yeah. So tell us a little bit about some of the complexities here for us that are not experts in this, what were some of, I guess, your failures, if you can speak about that, or early mistakes that you didn't expect coming out from this business.

Where do I start?

Johanna Småros:

I don't want to throw the client under the bus, but we've talked about car tires and, you know, it's quite obvious that if you're buying new tires. How many do you want of them? You want, you know, one, two or three? No, you want four.

SCS:

Four, yeah, for the whole car.

Johanna Småros:

That sounds obvious now. But you know, most replenishment systems, you look at demand, it might be something like 2.5 tires per week on average. But then, of course, you sell zero, and then you sell four, and then you sell zero, and then you sell maybe eight.

you start piloting, and then you realize that yeah, it's not very helpful to have three tires in stock. And then you reconfigure that, yes, it has to be multiples of four, to make sense. So that's like a simple example you would think of it beforehand.

SCS:

And how about getting into bigger brands? Like, how did that happen? I mean, I understand you, you mentioned you started perhaps with the Finnish subsidiaries, right?

But how did the market entry happen for the work that you do? I mean, if a Finnish company is tuning in as well and you were able to do it, what feels almost quite seamlessly, how did that happen for you?

Johanna Småros:

I'm glad that it looks easy. I think it did require quite a lot of hard work and some trial and error. I don't say that I would recommend this, but we took the smallest possible step to begin with.

It was in 2009, so three or four years in. We felt that now we have a product. Like something that's repeatable. You're going to sell and deliver pretty much the same thing with some configuration, but it's still kind of a product, not an R& D project anymore. And then it was time to go international.

We actually had a bit of pressure because we had managed to get internationalization grant. And the clock was ticking, nothing's happening. So then I decided that, I guess I need to make it happen.

I'm Swedish speaking. So started cold calling the Swedes to see if we can get traction in any market outside of Finland. Then we managed to get Sweden going. Then I did the same for Norway and finally Denmark. And then in parallel, we started working in the UK and Germany. It worked.

SCS:

Yeah, so so an introvert realized that she's good at sales.

Johanna Småros:

I never pictured myself in sales because I had this idea that sales is about pushing stuff at people who don't maybe even need it. But it was so different and I've started getting these meetings, I walked in, I realized that they have all these challenges that I could actually help them with.

SCS:

So you have two other co-founders, of course we want to give them full credit.

Tell us a little bit about choosing the right partners. I've heard you say this exact line, which is pretty hard to say. I mean, we work with a ton of entrepreneurs, but you said this about your co-founders, if we were faced with a big decision, I would trust that Mikko would make the exact same decision that I would make because we come from the same place.

How'd you get to that place with partnership?

Johanna Småros:

I think it was really helpful that we were never like friends in that sense. We didn't hang out. So we really met at work and we worked together. And you could see, how you take accountability, how you deliver things, how you work in a work environment. I’ve also seen how brilliant they are.

But, you know, being brilliant is one thing and then being able to execute on that brilliance. That's a different thing. It's just so much easier when you have brilliance and execution in the same head. And I really felt strongly about that with the co-founders, that these are people who are really bright, but they also get things done.

Of course in the beginning everyone does everything. We hired a couple of more but still it took a while before we were even 50 people.

I think that's why it worked because we weren't picky. Everyone did a lot of different things and wore a lot of different hats. But I think Mikael probably has had the, the largest number of official title, because I think he's been CFO and he has led our R& D and he maybe went into the US. Michael went there to start up Relex in the US.

I think the most constant thing has been Mikko as CEO. And then for me sales Kind of grew out of a necessity and I quite liked it.

But then of course you need to have people to deliver so that's where operations come in, right? When you start to have traction you need to have people so built up the teams there. But marketing was really a byproduct of having a baby and not being able to travel 150 days per year anymore. Well, marketing is increasingly important when you want to grow fast.

It's not that important in the early days when you still have to kind of find those evangelist clients. it's a very personal thing. But then when you really want to scale, marketing is of course super important. So we had good marketing people, but it's fairly complex space. So I think my role in marketing was more to kind of really make sure everyone understood the problems we're trying to solve.

SCS:

So zero to one, what you're talking about is essentially the one to ten, right? Like the scale bit. And supply chain as a whole has evolved over the years. The question on sustainability in supply chains, the inflection point of the pressure of what should be done and what sustainability even means has changed.

Can you walk us through a little bit about where we are today? I mean, of course, it's 2024, I can't leave you without talking about AI and ML. And you've been deep in data all the while.

How has this shift happened over the years in the almost two decades of your work in supply chain?

Johanna Småros:

Yeah, technology has been pivotal, of course, to us. I did mention flexibility and configurability as a key thing to be able to accommodate various needs from quite different types of clients. And that really pushed us very early on into in memory computing. That was kind of an emerging technology back then.

Weirdly enough, we built our own in memory optimized database, because we couldn't afford buying it. There weren't that many options out there. So we ended up building our own database and the whole system around it to get that flexibility and performance that we needed.

So, that was something where the technology really kind of had a huge impact on everything we did. So both the flexibility and the performance and scalability, all those things really come back to that one choice of technology back then.

But then of course things evolve. Now machine learning is kind of mainstream in demand forecasting, but when we started, everything was time series forecasting because you just couldn't do it back in the day.

So we pretty quickly launched a gen AI based helper for our clients so that they can ask questions about like why, what is this, what happens if I change this, what does this parameter do, what should I adjust because now I'm seeing these and these things.

The next step is to connect it to actual client data in the client environment make it easier to analyze what's actually going on in the supply chain and provide recommendations on how they can, for example, improve the forecast

But some challenges in demand forecasting is that, for example, you promote this product. It's actually going to eat away from the demand of this other product.

Especially if we talk about perishables, it's super important to capture this cannibalization as well because otherwise you have goods that spoil unless you manage to kind of lessen replenishment of those goods while at the same time increasing replenishment of the promoted product.

So that's kind of a simple example that makes perfect sense, but it's been quite hard to capture in data.

SCS:

I guess the other bit that's important is, You are one of the only Finnish companies that has raised, what is it, over 800 million euros now. you had one of the largest funding rounds a couple of years ago, I believe 2022, is that right?

Johanna Småros:

21, 22, I have to say time flies.

SCS:

So that is during the high of COVID where you raised this huge round and of course you, uh, earlier made a little bit of a shift, from doing a bootstrapped function into private equity. Talk to us a little bit about that decision making process.

Johanna Småros:

Yeah, so we bootstrapped for the first 10years, and that was a decision based on Initially, we thought about do we want to raise seed funding or not?

And then we decided to get let's say, a hundred thousand or two hundred thousand from somewhere. We would probably be spending as much time speaking with potential investors as we would be getting the money from clients and speaking to clients.

SCS:

You mean revenue is a way that we can raise money?

Johanna Småros:

Yeah. What's really urgent and important to those clients? So we actually just opted that, let's go and get enough money from clients instead. And that involved doing some things that, for example, consulting in the first year, I did a lot of consulting.

We grew at a pace where we could manage to grow based on cash flow. We were also very scrappy and lean when expanding within Europe.

But then in 2015, when we had made the decision to go in to the US for real, we raised our first round just to have the finances needed.

SCS:

For someone in Finland, you know, building a company that is seeking to be global, what would you say were your early mistakes in thinking about how to scale here?

Johanna Småros:

Yes, luck has played a part, but I also think we made some kind of sensible decisions back in the day. One thing was that we decided to do everything in English day one. We need Finnish and Swedish and a mix of both, right?

But we decided to have everything in English, for example, localize the UIs English first. Just to make it easier for whomever we employ to be able to work with us.

And when we were looking for funding, we chose Summit Partners. We wanted a funding partner that would be able to also give us like a recognition, a stamp of approval, something that the US market would recognize. Because we didn't have in the beginning, those references, local references in the market.

And something that companies think about when choosing their technology partner is that, will they stay? What happens if they land just us, but no other clients? Will they be around? Will they get service? Will they support us when we have some difficulties? So we wanted to kind of also be able to signal through our investors that we are here to stay.

And they are investing specifically for us to go to the US. So we chose Summit because it was US based, but they also have a European team making it kinda the day to day communications easier.

So I think we were in a great position back then because we had been profitable and growing fast for a decade. So that's kind of a nice way of standing out. We actually had quite a lot of people reaching out to us. And we told many of them that it's not now. And then when it was, oh, it's now, then we started setting up meetings.

Then we had a few key things that we wanted to have a look at. We also wanted to have funder that was okay with owning a minority of the company because they were not willing to let go of more than a specific share of the company at that point. And we didn't need to either.

And we wanted to pick a partner that wasn't, like, stressing about fund timelines. We did not want to end up in a situation where there's like, okay, five years, time for an exit. Now we need to have whatever liquidation event.

SCS:.

And that's an important point that I did want to touch about. The exit and liquidation landscape.

I mean, you've been around for 20 years. You have brought a private equity partner in some ways to scale even bigger. I think you were at 2000 employees right now.

Where do you see the Finnish entrepreneurial ecosystem moving towards? How have you seen it really support you as a founder?

Johanna Småros:

To be honest, there wasn't much of an ecosystem when we started RELEX. There weren't many people who thought that I'm gonna start a technology business. That's like my mission in life. Out of the people we studied with, I think most went into big corporations or then management consulting.

And then we did this weird thing of going into research first. That was pretty weird. And starting a company. That was also pretty weird back in the day. So I think that's changed massively. So now there's a lot more really focused interest: I want to become an entrepreneur.

There's more information available. There's more classes at the university about entrepreneurship. And there's also more examples. So yes, we are an example, but then we have companies like Volt or Supercell. Supercell is just so massively successful that everything pales in comparison, I have to say.

But yeah, it's changed a lot. So back in the day, we didn't have a whole lot of network to support, but maybe we can now then support some newer entrepreneurs.

SCS:

So why did you stay? I mean, you could have had a choice of going to the US, right? That may have been a more natural choice in some way, given what you're doing.

You were talking a little bit about talent and all these things. Like, what do people need to know about Finland today and the entrepreneurial ecosystem today?

Johanna Småros:

Yeah, I think Finland actually has turned out to be a great choice for us. We still have the majority of our R& D in Finland, although we have clients all over the place. But Finland really has such great talent, especially in software development, but in R&D generally.

So we have lots of highly educated people and to be honest, also comparing to Silicon Valley, it's more affordable for a company starting up to build on, on the talent pool we have here.

I do think that Finnish or perhaps more broadly Nordic culture also plays a role, we don't believe too much in hierarchy here in the Nordics. We don't like people to be bossed around or being bossed around. Which also means that, that you get access to all that knowledge from all the employees. The junior ones, the senior ones, you know, different backgrounds and so on.

And that's actually super helpful when you're starting your own company because you don't have all the answers. So you need to have people around you who are willing to offer their opinion and their expertise, and I think in Finland, that's quite natural.

You can really get so much out of people, because the culture is such that people aren't too afraid to say to the boss that.

SCS:

But of course, part of that has to do with your culture that you created here, right? I mean, scaling from 50 to 100 to 200 to now 2,000.

I was telling you at coffee earlier that one of my favorite culture framings, frameworks that I've ever seen, ever, among all the entrepreneurs, it's by you. Don't do stupid things.

Tell us this five elements of the culture that you've created just very quickly and then we'll go to a billion dollar move.

Johanna Småros:

We asked our employees, what do you value at RELEX and what should we preserve going forward? Documented them and we didn't really know how to use these values. So they got parked. They were stored on Mikko's hard drive for several years.

And then the chairman of our board back in the day, Andrew Blatherich, told us that we were probably something like 400 people at that point. You're growing in all these different countries, and your culture is so important and you need to preserve it.

And then we were like, they don't even understand what our culture is because it's natural to us. How do we go about preserving it? And another was, well, you have to work with the values and make them explicit and tell.

People about them. Ah, okay. Good news, we have these values here. In Mikko's hard drive from years ago. We did a new round, asking people what they value in RELEX. The same results. So we have managed to preserve the culture. That's amazing. We just hadn't done it explicitly. But then we started working with the values and communicating them and so on.

But yeah, “customer is a friend”. It's not about like, being friends, going for beers, that sort of friendship. It's more about respecting each other and being honest. For example, when you implement something, something looks a bit fishy, something's going a bit south, speak up. Solve the problem. Don't try to hide it. Like you would do with a friend. You don't try to hide things. You tell them that you have an issue.

“Colleague is a friend”, so that's kind of the low hierarchy. That you kind of assume that people have good intentions and also value everyone's expertise. Sometimes the best expert is very junior.

Then “we deliver measurable value”. That's super important for me because that's really what motivates me still to be able to move the needle at clients. So having those tangible KPIs.

When we do things together with clients and being able to put a price tag on it. So it's kind of undisputed, but this is the value that's super important. That also means that we just. We don't just kind of implement the solution and be like, Oh, we've done our job. We also need to keep monitoring those results and, you know, go in together with the client to figure out if we're not seeing the results.

Then the “stops stupid things”. That's been really hard to board. So I think we've had like five different versions. But the essence is that we have to also let go of things. So what worked when we were, let's say, a hundred people probably doesn't work when we're 500 or at least when we're 2000.

So we're constantly going to add new things because we have to. But to make room for those, we need to make sure that we also clean out it things that just don't serve us anymore. They might have been like super important, we have to kind of not be nostalgic and make sure that we also do the maintenance of things.

The fifth value. “Life is supposed to be fun”.

SCS:

Yeah, so life has to be fun. Looking ahead. I mean, it feels like you're in a different company now today from when you started, that keeps you motivated. But what are we looking ahead to? Like, what can we expect? Where do you see RELES going?

Johanna Småros:

We work with supply chains and kind of retail planning, the commercial planning. We've had a huge impact already, but still, most of the planning is still in silos. So you have the supply chain people with their KPIs, then you have the merchandising people with their KPIs.

Nowadays, you also have the sustainability people with their KPIs.

SCS:

Yeah. Which has shifted significantly over the years.

Johanna Småros:

Many of these decisions are not like seamlessly connected. So you still have the issue of, we made this, decision in assortment planning. But now it's actually causing a problem in space planning and a problem in supply chain planning.

So now we're going to go back and forth and so on. So I do see that there's still a lot we can do by connecting these different planning processes. We're seeing a bit of collaboration emerging. But it's still far from having like one supply chain.

SCS:

And is that to do with incentive structures? Like there is a reason that why this continues to exist, no?

Johanna Småros:

There is incentive structures, but I also think that the cost of collaboration still needs to come down. So if we are doing things manually, there's just limits to what you can do in a supply chain with thousands of different entities that are somehow interconnected.

I really think technology has to be a part of the solution, otherwise it's just too costly.

SCS:

Yeah. And RELAX Solutions is going to be part of that solution and driving that, hopefully, in the next few years.

All right, well, we've come to my favorite part. This is rapid fire, billion dollar questions. So this is when we might sweat a little bit. I know we've been here for a while, but the first thing that comes to mind.

Earliest childhood memory that you still remember, which continues to make a mark in your life.

Johanna Småros:

Dad helping with the homework.

SCS:

A moment you felt like you failed.

Johanna Småros:

How embarrassing! I should have something! I don't think failure kind of exists in my vocabulary. Yeah, I think actually that's the beauty of having three co-founders. Everyone is in a while, one is like, ah, this is too much.

Then two others go, ah, we'll pull through. So then you forget about all of those moments. But yeah, I've had moments.

SCS:

What was the hardest one?

Johanna Småros:

At the airport. You're coming down with the flu. The flight is delayed. You're stuck in the middle of nowhere. Everyone's going home because they're kind of shutting down the whole airport because you're gonna be on that last flight, if it ever gets there.

SCS:

When you were doing like a sales pitch and all that. Yeah. And all that wasn't going through.

Success is?

Johanna Småros:

I've managed to get this far without going crazy. That's some sort of success.

SCS:

That is some sort of success. Although it's not in your vocab, what is failure to you?

Johanna Småros:

Failure to me is basically, you can get things done in many different ways, but for me failure is when you had a realistic target, and emphasis on realistic, not like a super stretch goal, but a realistic target.

And you did not manage to get there, even if you kind of should have been able to get there. That's the failure.

SCS:

Okay. And this is a final one that I have to ask. Out of 166 tech unicorns in Europe, only 19 have women in the founding team. And you're one of them. What needs to change for more women led unicorns to emerge?

Johanna Småros:

There's a bit of selection bias here, there's lots of female entrepreneurs around the world, but tech unicorns, it needs to kind of be tech to be a unicorn in like most of the cases.

I think the issue, we need more women in tech and then we'll have tech unicorns founded by women. I think that's kind of really the big, big missing piece there.

SCS:

Yeah. Okay. And the final thing for anyone tuning in, a woman who's wanting to be the next Johanna in tech, a founder in Finland who's building, a funder who's investing in Finland.

Final words of advice.

Johanna Småros:

Find a problem that's super relevant, that really makes a difference, that you can solve. Fall in love with that problem, and you'll have endless energy to work it out. And if it's a difficult problem, all the better because then there will be less people who can actually solve it.

So I really encourage everyone think hard about the problem, if you find the right problem, many kind of bits and pieces will just fall in place naturally.

SCS:

Yeah. Well, Johanna for falling in love with the supply chain problem of the world, thank you for your leadership. This is why we're here today. Congratulations on your version of success. High five for billion dollar moves!