Why This Ex-Goldman Sachs Analyst Ditched the Corporate Grind to Become an Entrepreneur
Entrepreneur's New Year’s Guide
INS is a decentralized ecosystem that enables consumers to buy directly from grocery manufacturers, bypassing retailers and wholesalers, at prices up to 30 percent lower than in supermarkets.
The company has got our interest and we have interviewed Peter Fedchenkov, who is the co-founder and CEO of INS, to find out more about what is INS up to.
You have worked at Goldman Sachs, Credit Suisse, IBM and even have an MBA from Harvard Business School. What made you start your own business and leave the corporate lifestyle behind?
Fedchenkov: I’ve always missed the creative component in the corporate lifestyle. Even if innovation happens, you’re part of a very large team and can’t follow the process from A to Z.
Entrepreneurship’s ultimate challenge—to establish a valuable and commercially successful product—often starts with just an idea and limited financial (and other) resources. Although it’s often stressful, the reward of steadily achieving your goals is just unsurpassable. You can’t get this feeling elsewhere.
You have founded INS which is a decentralized consumer ecosystem. Could you tell more about what INS does exactly and what benefits do you provide to all parties?
Fedchenkov: INS is building a decentralized marketplace connecting grocery manufacturers, consumers and third-party fulfilment providers. Unlike Amazon or brick-and-mortar grocery retailers, INS is building a platform that enables parties to transact directly. The underpinning idea is to make the supply chain shorter and cheaper to run by using blockchain. Any manufacturer, from small farmers and artisanal producers to large multi-national fast-moving consumer goods (FMCG) companies, could list its items on the platform and sell directly to customers.
Why did you decide to disrupt the industry? What obstacles have you met so far?
Fedchenkov: The grocery supply chain hasn’t changed much since the early 20th Century. It’s expensive to run and subject to inefficiencies and avoidable costs that needlessly increase prices for consumers. According to a United Nation’s study, roughly one-third of food produced for consumption is lost or wasted. In the United States alone, farm-to-plate distance is 1,500 miles, which is a good indicator of the inefficiency of the grocery supply chain.
Overwhelmingly dominated by retailers, the grocery market has seen a select few outlets capture a staggering share of revenue and exert control over manufacturers, causing significant inequalities worldwide. We believe that INS has the power to revolutionize this industry by creating a decentralized, transparent marketplace. Early recognition from industry heavyweights such as Unilever, MARS, and Valio has further highlighted the far-reaching potential of our project.
What is the idea behind INS? For beginners, could you explain how blockchain, manufacturers and consumers are connected? Who manages the quality?
Fedchenkov: Blockchain is an exciting technology that brings a bunch of opportunities to different industries. What we’re interested in is a distributed ledger to record information about the location of the goods, their condition, and payments in a single shared database, rather than each counterparty maintaining its own ledger and spending countless hours reconciling them as the goods are moved from manufacturers to wholesalers to retailers and end customers.
We also enable manufacturers to run bespoke loyalty programs powered by smart contracts. According to American Marketing Association, trade promotion spending accounts for approximately 70 percent of a manufacturer's marketing budget and is the second-largest manufacturer expense after the cost of goods. Currently, manufacturers have limited ways to reach consumers directly as retailers own these relationships. With smart contracts, any loyalty logic can be coded in and whenever a consumer fulfils the conditions, they get tokens as a reward. The INS loyalty program would enable manufacturers to reach consumers in a targeted and personalized way, and to reward them without third-party involvement. The INS token serves as a method to power direct manufacturer-to-consumer loyalty programs and can additionally be used as a means of payment.
What business model is INS? When are you going to earn your first million?
Fedchenkov: INS is a decentralized marketplace by nature, and INS tokens are going to become its fuel, immediately connecting manufacturers, third-party fulfillment providers and consumers using blockchain and smart contracts as a unique and fully transparent ground for the interconnection. We expect the platform to be live in the second half of 2018.
Where do you see your company in the next five years?
Fedchenkov: We see a huge mega-trend that we call “Consumption 2.0”. Consumers are looking for alternative, smaller brands and manufacturers. They want to buy local, to buy organic, to support producers who do great things. And importantly, they also want to maintain a two-way dialogue with manufacturers—give feedback, receive loyalty points, etc. This is something that couldn’t be achieved with the current industry setup. This is why we chose a direct approach for our distributed marketplace—we have no say in terms of which manufacturers can access the platform and the prices they set.
Can you share insights of your INS solutions could potentially solve any social problems in the upcoming 10 years?
Fedchenkov: We believe that making the grocery supply chain more efficient would help to decrease the amount of food wasted. Today, according to the United Nation’s study roughly one-third of food produced for consumption is lost or wasted—not this is uneconomical, but also irresponsible. Given that groceries take an up to 50 percent share in consumer spending, making them more affordable would also make a positive impact on individuals.
When building a company as big as INS, how do you manage to get everything done? You must be extremely busy partnering with top companies and advisors. Could you share some tips how to manage your work day efficiently?
Fedchenkov: There is no way for a single person to handle it all alone. Having a team that works together and understands the goal is critical. Productivity is also important—we use Slack and Telegram for efficient communication and Trello for task management.