– Welcome, everybody, to today’s “Building My Legacy Podcast”. I have with me today two very exciting people. One is Luke Ho-Hyung Lee, and the other is Nikhil Sathe. They are both co-founders of SharedChain. It is exciting because it is a whole new approach to how we’re managing the supply chain, and they’re approaching it in a very interesting and different way, using crowdfunding as their initial source of financing. So I wanna get into their story, what it is that they’re doing and how they’re going about it. But first, let me tell you about each of these individuals. I’ll have them share a little bit more about themselves, because I only have the big picture. Luke has been very involved in supply chain for his career. He publishes and writes frequently for the supply chain magazines. So he’s a thought leader in supply chain, has had two companies that he has managed, one in China, one in Korea, so he comes with an incredible amount of experience relative to supply chain. Nikhil is in Canada, Toronto, and has a large background also in logistics and supply chain. He’s involved in financial stewardship, and has been involved in growth strategies and transforming how it is that we approach logistics and supply chain. So with that said, tell our audience, please, supply chain and what it is that you’re doing, why this now and what is it you’re hoping to accomplish?

– Okay. By the way, thank you, Lois, for having us on this podcast. As you may know, e-commerce sales are surging in the COVID-19 pandemic situation, so existing brick and mortar retail stores have few alternatives but to develop their own e-commerce business as soon as possible. Unfortunately, there is a serious problem in their participation of the e-commerce market. They are usually getting about 10% profit on 30% to 40% markup, but the majority of existing e-commerce and fulfillment platforms charge more than 30% of the total fees on their product price. This basically prevents current brick and mortar retail establishments from participating in the e-commerce market. And because of this, most small and medium-sized local retail stores are repeatedly losing their ground to other bigger competitors with the e-commerce business. The reason behind this is the scarcity of efficient e-commerce and fulfillment platforms in the market. SharedChain is an internet-like, efficient and fast e-commerce and fulfillment meta platform for the entire supply chain process. It is a new physical internet, and we believe it can help brick and mortar retail stores easily develop their own profitable e-commerce businesses. Let me talk more about the SharedChain.

– Please.

– Yes.

– I think, Luke, so many people are… You’re right, they’re struggling, with how do I keep my local business alive with what’s going on, and the reality is we need our local retailers.

– Yes.

– So I’m fascinated by how you’re going about this.

– Okay. We all are using the Internet. The Internet is known as a network of information networks, significantly increasing the efficiency of information transactions, by creating network effects in information. Likewise, SharedChain is a network of supply chain, or e-commerce and fulfillment networks, significantly increasing the efficiency of physical goods transactions, by creating consolidation effects in the supply chain process. More specifically, it is a patented, local-market based e-commerce and fulfillment platform, with an efficient and fast physical fulfillment infrastructure. Our vision is for SharedChain to help reduce current fulfillment cost by more than 50%, and lower the average total fees on the product price to 10%. We do such a fully optimized fulfillment, with a minimized unit delivery cost and fast delivery, it opens the gateway to numerous new, profitable e-commerce businesses, and allows small suppliers and retailers to easily build an integrated supply chain that can compete successfully with big competitors. We believe SharedChain will become the predominant solution for managing real-world supply chains, disrupting the physical market, just like what the Internet did with information, 25 years ago.

– You know, that’s amazing. Okay, so I wanna take what you’ve just said, and break it down a little bit, because I think many people listening are trying to sort, “What does this mean? How does it apply to me and my business?” And so, as I’m listening to you, I’m thinking of my own experience selling to Amazon, for example, and the cost to me was about 40% to have them fulfill and to ship. And so that’s part of what you’re talking about is those costs can be decreased, so the retailer that is selling to the SharedChain, will have lower costs?

– Yes.

– Is that correct?

– Yes, correct. We have already developed three different kinds of e-marketplaces. One is SharedChain Local. The total fees will be about 10%.

– So SharedChain Local would be like the local retailer?

– Yes.

– Okay, that’s a 30% saving.

– Yes, yes. And we also have SharedChain Market That’s just like Amazon. The average total fees will be about 15%.

– Again, a major saving.

– Yes. And we also have SharedChain Wholesale. The average total fees will be about 13%.

– Got it.

– So current fulfillment cost could be reduced by more than 50% in most cases. So by doing that, most retailers and wholesalers can reduce their current total fees to 10% to 15%.

– That’s dramatic. When you think of small retailers, they’re profit margins are very small.

– Yes. Their profit profit is about 10% on the product price, and their markup is about 30% to 40%. So their current expenses will be about 20% to 30% on the product price. So if they use online business, the expense will be reduced dramatically. So even though they use SharedChain, they could still get about 10% profit.

– Got it. So it’s a remarkable gift to the small local business owners?

– Mm-hmm.

– For the larger distributors, also, because of what you’re doing with distribution and fulfillment. If you would talk a little bit about that, because that is quite unique, what you’re doing and just that process alone allows faster delivery, more reliable delivery and at less cost? So please talk a little bit about that.

– Yeah. There are so many third-party logistics companies, and they have just a regional based operations. So currently, we have a just-in-time process on the basis of the regional distribution system, and usually for a dry goods product, from the end of a production line to consumers hand, it takes about 105 days, but SharedChain has developed a new kind of just-in-time process on the basis of local market. If they use SharedChain, from the end of production line to the consumer’s hand, it would take about 10 days. So the market inventory cost will be significantly reduced.

– Much so.

– Yes. And there will be at a faster delivery, so manufacturers and producers and suppliers could save a lot of money. And also, there are many local small and medium-sized restaurants. When they purchase a product from distributors, usually they require a minimum order volume and once-a-week delivery. But if they use SharedChain, there is no minimum order volume and everyday delivery is possible. So I believe many small and medium-sized local restaurants could get great benefit from our system.

– That’s remarkable, ’cause you’re right, also coming out of COVID, the restaurant business has been incredibly impacted, so being able to manage that cash more tightly becomes very important, doesn’t it? Yes. So as you may know, currently we have a serious supply chain risks, in many areas. We cannot serve everything, but SharedChain could provide some providers to minimize those risks.

– So your concept is brilliant. What you’re doing is really… It responds to a huge need. What are the biggest challenges you face, Nikhil and Luke, as you are looking at rolling this out?

– Yeah, I think the biggest challenge is pre-seed fundraising.

– Pre-seed fundraising?

– Yes. Unlike other digital-only platforms, SharedChain should provide both a digital platform and a local physical fulfillment infrastructure, so it is more capture-intensive and requires more investment in the beginning. However, once the actual e-commerce and fulfillment operations are started, we believe exponential growth in revenue and profit could be easily generated with infrastructure effects, and a breakeven will be achieved in a very short period. And another major challenge is the competition with the other existing platforms. There are many big players.

– Yes.

– Yes. So there are two questions on this: One is will customers use SharedChain rather than others? And the other one is can others easily copy SharedChain, because SharedChain can provide much cheaper price and faster deliveries for customers and much cheaper cost for merchants? We believe both customers and merchants will use SharedChain rather than others. And most others already have a huge overhead cost in a low margin, big volume industry, so if they just try to copy SharedChain, they will rather seriously damage their own business systematically, and moreover, SharedChain is a patented system. We believe that they cannot easily copy SharedChain.

– So the whole process of rolling this out, I wanna get into a little bit of that. And then, I wanna come back to what you were just talking about with the seed capital, because you’re approaching this in a very, very current, trendy, modern way, with crowdfunding. But before I do that, your concept with distribution is really quite unique, so can you talk a little bit about what you’re doing with distribution, why local and how you’re creating that, and opportunities, actually, that you’re creating for people within your distribution process?

– Yes. Many years ago, when I saw the Internet, before the Internet was publicly available, actually I used the intranet when I was in the school. And when the Internet was introduced, I thought the Internet is only for digital platforms, for the entire information process, but I thought we could also have something like the Internet in the real supply chain process. So by the Internet could reduce or rather significantly reduce the efficiency in the information area. So if we use this same kind of… Like, we already have the technology, networking technology, almost everything ready, but nobody has tried to integrate the whole supply chain process into one, just like a meta platform, like the Internet. Actually, I’m the first one to develop such kind. So we could create network effects in the digital world, and also, we could create consolidation effects in the supply chain area. Integrating those two, network effect and consolidation effect, we could significantly reduce the current fulfillment cost.

– Got it. How quickly can you roll your program out?

– Yeah-

– I know you’re doing it in a segmented fashion, but what’s your rollout process, and what can people anticipate?

– Yeah, our digital platforms are ready. As soon as we get some funds, we will start constructing our first local fulfillment infrastructure. We believe that we can roll out the full process in a month or two.

– So you are planning to have your initial funding through crowdfunding early in June, and then, within a month following completion of that, you will be ready to roll out your first beta site?

– Yes.

– Okay.

– Yes. Yes.

– So let’s talk a little bit about numbers, if you don’t mind sharing, because there are people listening who may want to invest in what you’re doing, and my goodness, what an opportunity to get in on the ground floor, right? Of something that is coming. And so there may be people listening to this who wanna go to the crowdfunding and participate.

– Okay.

– So your goals: You want to raise about how much? Let’s start there. And then, I wanna talk about what kind of returns do you anticipate, and the timeframe for that.

– Okay. In the pre-seed round, we will raise capital from crowdfunding. So we will conduct a multi-channel digital fundraising campaign, such as emails, social media and podcasts like this. And we are now seeking about $1 million of capital in the pre-seed round, to construct the first one, local market, not multiple, only one local market, and prove the product-market fit. It will take about 18 months of runway. And we are planning to raise further rounds in 12 to 18 months to construct more local markets and the turn-up hit on marketability.

– Got it.

– Yes. So if our actual operation… If we have an actual operation in the market, I strongly believe many big institutional investors will come to us. Yes.

– They’ll wanna participate. So what people are participating in right now is that first round of funding, which is often where you have the biggest returns, isn’t it? Because you’re on the ground floor, and that’s for a beta site in one location, probably in California, which is where you are located?

– Yes.

– And then you’ll roll it out regionally from there. So you have made estimates as to what your projected return on the investment is. Are you willing to share that with the audience?

– I’m not sure. There is tough SEC regulations.

– Okay.

– So at the moment I cannot say how much return they gonna get, but there is a huge potential. Actually, SharedChain will have the potential to induce a new supply chain revolution, just as the Internet did the Internet revolution. So if it happens, the returns will be tremendous.

– It will be like the Internet. It will be exponential beyond the imagination.

– Yes. And SharedChain has an equity crowdfunding campaign on Netcapital. So people can go to www.netcapital.com, and then they can find SharedChain there, and then they can invest through them.

– Got it. Okay, so for those of you who are listening, we will have information about that in the show notes, so the link will be there so you can easily go there and we encourage you. This is a new… You know, we have new tools available, don’t we, to us right now? Years ago, we would’ve never imagined raising money for a startup business through crowdfunding. And yet, this is a remarkable way for just the ordinary people to get involved in something that can be revolutionary, as you say.

– Yes. And for this podcast, I have some bonus.

– Oh, you have bonuses?

– Yeah.

– Okay, wonderful.

– Yeah, the first 100 investors, they will get 1% credit of their investment on SharedChain.

– Wow!

– Yeah. If someone invest $10,000, that someone can purchase $100 worth of products free on SharedChain Market.

– That’s remarkable. Well, thank you. Thank you. I think we’ll put that in the show notes as well, so that those of you who are listening… What an opportunity! What have we missed that the audience should know about what you’re doing, Luke and Nikhil, and what should they know about the crowdfunding that we’ve missed, or about supply chain?

– So I think that’s a great question. My background is more financial, and I’ve been in the M and A market, as well as an operator in supply chain for many, many years in this transportation, logistics, e-commerce segment. I got attracted to this project a few years back with Luke, because in my view, this is a very transformational project, and it’s a game changer in the e-commerce ecosystem. And I think to go back to what Luke just said, it’s a holistic platform. It’s a multi-dimensional patented technology stack, which is highly scalable. The more the local markets, the more the infrastructure, the more the revenue, more the profits. The whole concept of developing local markets drives efficiency in the final mile. Warehousing and fulfillment space is the backbone of some of the problem areas in the system right now. You have UPS and FedEx and USPS showing at your door every day, and there is no efficiency-

– Two, three times a day.

– Three times a day. It brings many merchants in one holistic platform, which they’re running their own silos at this stage. There is also a significant price transparency for the customers, which don’t exist in today’s ecosystem. Whatever the price these mega platforms are gonna give you, you gotta pick, because it’s available. Here, the customer, in a free market economy concept, has a choice to go and pick the right product from the right merchant, at the right price. It’s a lean model. It’s a lean execution model with a lean distribution model At the frontend, it’s a very holistic platform. At the backend, it Uberizes as the concept, the micro warehousing, as well as the final mile. It reduces all the inefficiencies in the system, and it Uberizes at the backend, in terms of-

– Can you talk a little bit about how it Uberizes? That’s something we all resonate with today, so talk a little bit about how it does that.

– I think this is really Luke’s turf. This is where he has spent many years preaching about how he’s gonna optimize final mile and last mile, so I’ll let Luke talk about it, but before he takes over, from an investor’s point of view, I mean, I’m in the mergers and acquisitions market, and I know what kind of a return on investment that you potentially can have. In a private capital world, you invest a $1 of equity, and you need to get $4 out on exit. I can probably tell you that in this particular project, you’ll have a infinitely large cash to cash ratio, infinitely large return on investment. The return on capital employed is gonna be very, very significantly high. It’s a game changer, and it will cause a major disruption in the e-commerce ecosystem. You look at the market right now, 45% to 50% of the market share in North America in e-commerce is controlled by one big player called Amazon. And everybody else now has the remaining of the share. I think that the market does need an alternative disruptor who is going to be on one mega holistic platform , in order to run an efficient, cost-efficient, revenue-efficient, process-efficient, one local market, but multidimensional of a multiple local market system. Excellent market opportunity. Our estimate is that the e-commerce will grow at almost 23% compounded average growth rate over the next five years, if not more. So there is a very secure credentials in the way the e-commerce ecosystem is gonna grow. And I think Luke didn’t touch on it, but I would say that Luke, with his experience, my 30 plus years of experience, we can assemble a fantastic team as an executive team, to really grow this business from where it is today, to where it could be a multi-billion dollar company. So we are ready. We are required for pre-seed funding, and we believe that it will only take off, and take off exponentially, going forward. I’ll defer to Luke to really talk about the final mile and warehousing efficiency model that he has built, which is, to me, absolutely critical in this project.

– Yes.

– Nikhil, thank you for that. I think that financial piece of information, from your perspective in having worked in M and A, will resonate with many people listening, so thank you for that information.

– Thank you.

– So Luke?

– Okay. Let me talk about the Uberization. Uberization is kind of a functional on-demand process system. We could adopt that Uberization process in our warehousing process. So there are many houses, they have garages store and garage spaces, they can use their extra space and join SharedChain-

– So you’re saying that individual people with empty garage spaces can become a part of what you’re creating, is that correct?

– Yes, correct.

– Okay.

– Yes.

– I’m sorry, so please go on.

– Yes. So this is a new kind of things, but already similar things have been made in European countries, already tested. And I believe that it could be also worked in the United States. So on our SharedChain system, everybody, there are garage space and also, there are many retail stores, they have an extra storage space. They could use that space, and they could get fulfillment fees and transaction fees from SharedChain. And also, we are providing a platform, a physical platform. Between this physical platform, there are multiple warehouses and multiple local pickup and delivery centers. Usually people don’t understand the platform effects. In our system, we kept the platforms between multiple and multiple. So by doing that, if one single customers purchase a product from multiple locations, those products are located in multiple warehouses, but all of them will be automatically aggregated into the same local delivery center, and all the products will be delivered to the customers all at the same time. So this will, as you told before, there are three times or four times delivery a day, but through SharedChain’s system, all orders will be delivered all at the same time.

– So they’ll be aggregated?

– Yes.

– It’s amazing. You have done amazing thinking on this. What else have we missed that people should know about?

– I think one point. Thousands of internet retailers are entering the market every day. The number of 3PLs to service them are getting shorter and shorter in supply. So a meta platform like this is gonna be a game changer for these internet retailers who wanna focus on marketing and focus on manufacturing and focus on reaching to the customers, and SharedChain facilitates that reach, that market reach for them, whether it’s the village market, farmer’s market, in a township, whether it’s a grocery retailer, whether it is a small, local manufacturer, everybody finds a home with a very holistic e-commerce platform, as everybody is running silos. And a lot of these internet retailers or small boutique shops can’t even get under the e-commerce ecosystem, which SharedChain will allow.

– Wow, it is so true. Yeah. Anything else that we should be including?

– Yeah, one thing more. SharedChain, just like the Internet, on the basis of the Internet, numerous new businesses and applications could be easily created. I believe young people… There are many smart young people. They have unlimited imagination.

– Yes.

– Yes. We have already founded a very strong meta platform for the whole entire supply chain process. There are a lot of chances to create something more based on this meta platform, so I expect, if our system is implemented in the market, many young people will join us and create their own applications and they couldn’t make good money.

– Isn’t that interesting?

– I think, our appeal to the investors. This is once in a lifetime project, that we feel it’s scalable. It’s got a lot of bandwidth, excellent market opportunities, strong credentials, great team, fantastic market reach, and in a very, very hot segment of the industry. We have seen through the pandemic that e-commerce is not only thriving, but thriving so well, and the consumer behaviors that have changed through the COVID times is not changing. And it’s you are pushing a button and something shows up at your doorstep tomorrow morning is becoming a habit. Why not create a more lean distribution model, efficient model, that’s a win-win for all stakeholders?

– Yes.

– What a note to end on. A win-win for all stakeholders. And, you know, I think right now, we’re hearing so much about supply, right? Grocery stores without items, people having difficulty getting access. So the timing of this couldn’t be better, I think, in terms of addressing what the needs really are right now. I just admire what you all have done. I respect your passion for really looking, with integrity, at how do we solve this problem for consumers, for retailers, for manufacturers, for all of us that are involved. We will put information on the show notes, so those of you who are listening and are fascinated and want to participate, we encourage you to do so. I think there are a few people that I talk with that have a combination of knowledge and humility that Luke and Nikhil have demonstrated, and I always respect that, because that tells you more about what you’re getting into than the raw numbers ever would. And so I appreciate what it is that you’re doing and encourage you to check it out, invest and enjoy being a part of coming in at the ground level. Luke, Nikhil, thank you so much for being with us today.

– Thank you, Lois.

– Thank you, Lois.

– This was my great pleasure.

– And so for those of you who are listening to our podcast today, thank you for being with us, and remember to visit our websites as well, at www.build2morrow.com, with the number two and also our new website, www.startwithcollaboration.com. Thanks so much, everybody.