Johanna Småros On Raising Over $800 Million To Automate Supply Chains And Minimize Wastage

In the bustling world of technology and entrepreneurship, few stories resonate as deeply as those of RELEX Solutions. Founded by Johanna Småros and her co-founders, this Finnish company has not only revolutionized supply chain management but also embodies the power of resilience, innovation, and teamwork.

Johanna’s company, RELEX Solutions, has attracted funding from top-tier investors like TCV Capital Advisors, EASME, Summit Partners, and Blackstone.

In this episode, you will learn:

• Johanna Småros’ journey exemplifies the power of perseverance and creativity in overcoming challenges.
• RELEX Solutions’ founding team’s synergy underscores the importance of collaboration in driving innovation and impact.
• Transitioning from research to business, RELEX Solutions transforms cutting-edge ideas into practical solutions for real-world challenges.
• Strategic fundraising rounds propel RELEX Solutions’ expansion into new markets and the development of advanced technologies.
• Leveraging artificial intelligence and machine learning, RELEX Solutions optimizes forecasting, recommendation systems, and sustainability efforts across the supply chain.
• Johanna’s advice emphasizes the importance of resilience, learning from mistakes, and upholding integrity in the entrepreneurial journey.
• RELEX Solutions’ commitment to a sustainable future underscores the transformative power of innovation in shaping industries and driving positive change globally.

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About Johanna Småros:

During her time at university, Johanna worked with BIT Research Centre, collaborating closely with Finnish retail and consumer goods companies.

She’s been responsible for groundbreaking work in planning and forecasting collaboration (CPFR) between retailers and suppliers, sharing and utilization of point of sale (POS) data in supply chains, and automated store ordering.

Together with Mikko and Michael, Johanna founded RELEX in 2005, coding RELEX’s first simulator.

As the leader of the sales and business development team, Johanna has driven international expansion and opened up new markets across Scandinavia and the Baltic region.

Nevertheless, she remains actively involved in our research and development.

Johanna is a bilingual native Swedish and Finnish speaker, fluent in English, and reads for pleasure in several languages. She keeps fit, teaches kickboxing, and previously fought to competition standards.

She’s a fan of contemporary dance and, though she doesn’t expect anyone else to get it, of Swedish and Finnish hip-hop.

Connect with Johanna Småros:

• LinkedIn
• Crunchbase
• TheOrg
• RocketReach

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the dealmakerr show. So today. We have an amazing founder joining us. You know we’re gonna be talking about what they she has been able to build with her team. You know, remarkable. Um, you know the journey you know they’ve been at it for over almost two decades actually in 2000 you know employees. According to Crunchway. It’s over 800000000 raised incredible investors like tcv blackstone and so forth. So I think it will be amazing. You know the podcast that we have in front of us so without further ado. Let’s welcome our guest today Joanna Smoru welcome to the show.

Johanna Småros: Thank you so much and perfect pronunciation. That’s the best I’ve ever heard I Have to say.

Alejandro Cremades: I love it. So so hey so give us a walkthrough memory lane. How was live being born and raised. You know there in Helsinki in a place called kium may.

Johanna Småros: But that was not quite perfect. But here conno meas. So that’s a small place just outside of helsinki I think my childhood was very ordinary. You know basic finishnish stuff you walk to school you occasionally ski. Do all those things. Um, what was maybe a bit unique for me and probably had a huge impact on me going into engineering was that my mother actually died when I was only two years old so I’ve been raised by a single dad a single dad engineer and.

Johanna Småros: I Don’t know what he did but somehow he managed to make engineer out of both of his kids so myself and my brother ended up studying at the Um helsingke University of technology just like my father. My. For me engineering was the kind of normal way of doing things and anything else would have required a bit more thinking So I Do think my dad had a huge impact on those kind of fairly important life decisions that I made later in life.

Alejandro Cremades: How do you think that engineering and problem solving has say has served you in life because it sounds like problem solving was say something that they was ingrained. You know in you especially with your dad.

Johanna Småros: Yeah I think he really kind of um he relied on us to make our own decisions. But the thing he always asked about was how did the math exam Go How did the physics exam go and then he didn’t care too much about the other things. And he also had a lot of patience if there was something I didn’t understand he really you know went through all the steps to to make it get it and then of course he exposed us to a lot of pop culture things on the Science. So these interesting findings. And that’s actually something I’m trying to pass on to my daughter now when you see something interesting Science Biology Um Whatnots I try to share those insights with her and see how you know it’s quite inspiring um to see what. You can do and and all the amazing animals. For example, we have on this planet cool.

Alejandro Cremades: And obviously you know every event that happens around us you know shapes who we are so I guess perhaps in this case, you know not having the mother figure you know fortunately given the event when you were 2 years old. How do you think that? also. That shaped you at a personal level and then also how do you think that helped you with you know, anything else. You know that came your way in the future.

Johanna Småros: I Think it’s of course hard to know because you this is the cards you were dealt so you don’t have anything to compare with. But of course one thing I think was had a massive impact is that my dad did.

Alejandro Cremades: Yeah.

Johanna Småros: Everything in home. He we didn’t have like male chores or female chores because there were only adult chores and kids chores and I think that was actually quite healthy in that sense that I did see that you know. If you need to you build use power tools if you need to you will use a sewing machine if you need to you’ll you know color the pictures in in the picture book to entertain your kids so that was really a good showcase that that you know humans are humans and and. We can do play all those parts as needed.

Alejandro Cremades: So in your case you went on to study engineering and then after studying engineering. Essentially you went into research so out of all things. Why did you choose research as your path to follow.

Johanna Småros: Yeah I actually didn’t really choose it. It wasn’t an active choice. It was a lucky coincidence I would say I managed to land a summer job in the research group and then. Continued on from there to to write my master’s thesis as part of of the research they were doing and then they managed to get some additional funding and they they offered me the opportunity to stay on and do a ph d and at that point I’ve already. Written a couple of papers and and it felt like why? Not why not do this thing when when you have this opportunity and of course I really enjoyed working with the research group they were doing a lot of cool new things and my. Supervisor feels like he was always at least ten years ahead of the curve which has also made it a bit problematic sometimes for him because back in the day you know 2000 early 3000 um he was really excited about things like.

Johanna Småros: Internet of things. It didn’t become a thing until later 3 d printing. It didn’t become a thing until later and viva doing quite a lot of research on for example e grocery that became a thing a bit later. But that was a really cool and exciting environment to be in that really kind of pushed you to look into things and be curious and and and really study what you felt was interesting and and exciting and that’s um, yeah, it was. Fun to be there. But then at some point you know the clock is sticking and I’m a bit of an overachiever and in Finland at that time people typically finished the dissertations in you know four and a half years that was kind of the standard time to do it. And I was like okay now I spent 4 years on this. So now I need to wrap it up and complete my dissertation and I did that and then it was time to you know, look forward again.

Alejandro Cremades: And you had the opportunity to during the research years to basically because he was like almost seven years that you were doing research so you had the opportunity to meet your cofounders you know for for your business for relay. So so how was that team. You know how was meeting them. How did you guys connect where were the skillsets. You know, blending in and and what what was that moment like where you all felt like it was time to to launch a business I mean walk us through the sequence of events.

Johanna Småros: Yeah I think yeah, we actually knew each other already earlier. So we’ve all studied the same thing industrial engineering and management. But then we started working together in that research group and um.

Johanna Småros: I think my relationship with miko us a bit different because we were on the same level we had done our studies at the same time and and we kind of finished our dissertations at the same time whereas Michael is a couple of years younger so he actually did his master’s thesis with me. As his supervisor. Um, but what I did get to know was their work ethics and also you know intelligence. So if there’s something that and that’s kind of a common trait for the 3 of us is that we really enjoy problem solving. And we love that challenge of having an interesting problem to kind of pick apart and and and and solve better so something. For example, we were working on together was automated soul replenishment and we did our research together with. Some companies. Um that were piloting different things and gave us access to data. We could do simulations and and suggest new things and but for example, looking at fresh product because everyone had automated. The simple thing. It’s like canned food. Nothing much happens but nobody had automated fresh products. Nobody had automated promotions nobody had automated the like really c products and we got the opportunity then to try to figure out how how you could actually do that. Can you do it and then use these.

Johanna Småros: Um, company Partners data to do simulations and we were quite excited that yes I Really think we can do this better. But then you know it’s hard to get things implemented when you do research so we felt that we were. You know, coming up with clever ideas writing research papers. But then what happens to practice. So I think that was the kind of key driver for us then leaving at Academia and going into you know entrepreneurship trying to actually build these things. So that we could really see how they can be implemented and what results they will deliver and then kind of be able to further improve on that.

Alejandro Cremades: So then so then in this case here you know like how was the why did you guys think that the problem was meaningful enough to jump in you know?? Ah because obviously you guys are very customer Focus. So How was the the. You know, like really having the problem in front of you analyzing it looking at it and then being like it’s time but was that day where you were all sitting down and you were like let’s go.

Johanna Småros: Yeah I think the the kind of business case was really a no brainer and that was the reason why companies had started to automate these things already because back in the day ordering in store. Happened manually people walked around in the stores and punched in numbers I need one case of this maybe I’ll take 2 of this one and you know even in a small convenience store. You have thousands of skews and then in this. Mega centers you have tens of thousands it just takes a lot of time to do that and to do it. Well you should be able to you know factoring. Let’s say weekday variation. Um, shopping patterns look different on different days then you have seasonality you you have holidays you have promotions you have cannibolization. So if 1 product is promoted. Maybe another 1 drops in sales and maybe you have some halo effect. You know if people buy a promoted. Let’s say hot dog sausage. Maybe they don’t want the buns as well and so on and so forth. So the business case was a no-brainer huge time savings. Huge impact on on shelf availability.

Johanna Småros: Which is of course key to sales because especially in physical stores. It’s really hard to sell if you don’t have the goods but then also a huge business case in in driving down inventory levels and and removing waste. So. Obsoles and spoilage. Although it’s negative things you have and when you have too much stock so that was kind of a nobrainer. But then I think the moment when we went into this was when we decided that you know we finished our Ph. With with miko and and but thinking you know you could go continue on ah on the research path maybe go into a corporation to work with these things maybe go into consulting but then we kind of agreed that it would be really cool. Do something of our own and see if it really Works. So I think that was the moment and then we decided that we’ll we’ll give it a shot. We’ll will we’ll see if we can make this fly but of course you know we all have decent. Education and and and some work experience and so on so it wasn’t like a huge leap of faith if we hadn’t you know, been successful in in getting things off the ground.. The worst thing would probably have been that people would have needed to get real jobs.

Alejandro Cremades: Say So I guess for the people are listening to get it. What ended up being the business model of of relex solutions solutions. How do you guys make money.

Johanna Småros: So in Essence we are a sauce company So software as a service. Um, we started out with with doing a said store replenishment. But then of course we’ve expanded across the whole supply chain. So we work with. All the way from manufacturing to the consumers Manufacturers distribution centers retailers the whole supply chain and then we’ll also expanded our offering um to adjacent areas. So For example, space optimization in stores. It really has a huge impact on store replenishment. How much space you’ve allocated to different product in stores and then of course promotion planning again something we saw quite often when we were doing the promotion forecasting for client is that there’s actually quite a lot of completely useless. Promotions out there promotions that don’t really move the needle and worst case actually lose money so that was also kind of a no brainer if this is the starting point. There has to be a better rate. So We acquired a promotion planning company and have been developing those capabilities Since. So yeah, as last company we charge our clients money for using our um.

Johanna Småros: Services and and then the aim is that everyone is super happy with the savings they increase sales that they are seeing and never leave us and that’s pretty much doesn’t worry.

Alejandro Cremades: That’s amazing. So so in your guys’ case I mean according to crunchries I was saying that you guys have raised over 800000000 I mean you have people like a Tcb Blackstone what has been the journey to of um. Going through all these financing cycles with with external invest with outside investors.

Johanna Småros: Yeah, we actually bootstrapped for a very long time. Um, at least if you look at source companies. Sometimes it feels like ah like everyone’s discussing how how to raise money and how much but the bootstrap for 10 years and that means that we were profitable so we we managed to to get enough money in to do r and d and and and pay people and do all those things but then we had decided that we wanted to go into the us market. So. Up until 2015 we had expanded within Europe and that’s something you can do in a fairly lean way because there’s not too many time zones and and distances aren’t very long. Um, you can have a lot of centralized support. In 1 place to serve many markets. But then when we had decided that that we want to enter the us market into 2050. We knew that we just need more resources. It’s not something a bootstrapping company or at least we. Have been able to do so That’s when we first raised money and then subsequently um, we’ve done I think 3 like real rounds of fundraising and they all have had.

Johanna Småros: Slightly different focus is but I don’t think they have been overly complicated or painful or difficult. There’s of course quite a lot of due diligence involved which is super important. But. From our perspective having that track record of consistent Growth. You know a decade of growth before we even raised that first round and then continuing on that growth track and also being able to show that we have the unit economics to to make this profitable. Ah, soon as we we stop investing aggressively in expansion I think that made the discussions quite kind of let’s say clear in that sense that we had our story but we also had the proof points. And um I think that’s something that the investors quite like and and all of them have been following us for quite a while before actually investing in redlex. So Um I think they have been you know keeping a close eye on us. Um, which means that they are pretty familiar with the business with the clients. The word on the Street. Um, which just makes it easier from our perspective um to have those conversations.

Alejandro Cremades: So obviously with investment. You know there comes a big responsibility you know and ultimately investors they’re betting on vision you know and I find that that vision too is going to enroll employees customers. You know into the future that you’re ultimately living to as well known. So I guess. Your case imagine if you guys were all to go to sleep tonight and you wake up in a world where the vision that where the vision of relax is fully realized what does that world look like Jonna.

Johanna Småros: Well, um, there’s many facets to it. But 1 thing I think is highly motivating and very meaningful is that that would be a world where we have. Consumer goods supply chains with 0 based so 0 wasted products should highly automated execution very meaningfully impactfully ah less emissions. Both from products but also from transportation you know distribution getting it to the consumers homes. So that’s really kind of where we are aiming to go remove all that unnecessary waste um making the whole supply chain a lot more sustainable. But of course also and that’s actually 1 of the nicest things about working with supply chains. Some people find them quite boring and that’s fine I’m I’m not going to try to convince you otherwise it’s a bit of an acquired taste. But it certainly goes hand in hand with sustainability and resource use and that’s something that should be really kind of top of mind for everyone in today’s world

Alejandro Cremades: So can you expand a little bit more into how you guys are all thinking about Ai you know and then also gen ai as well as you’re thinking about the future of relix.

Johanna Småros: Yeah, yeah, so of course Ai is super impactful in in our area as probably most of of the technology companies would say um, much robs me a bit the wrong way about Ai is that that you know sometimes people feel that it’s. It’s Ai. It’s one ai it’s not 1 ai there’s so many facets to Ai. There’s so many different technologies under that umbrella. But for example for us um machine learning super big. All our demand forecasting is based on machine learning. And what that means is that we can really finally make use of all that rich data that is out there and pour it into the system and see what really adds value and makes sense without having a lot of people plowing through all that. Available and trying to understand where to apply it and where not so that’s been ah, quite a game changer. Um, really makes a huge business difference then um, Jenna Ai the hype of today. Also super exciting. So. Of course we use it internally quite a bit in in these kind of knowledge intensive roles that we have a lot of it’s very handy for many tasks but we’ve also packaged a lot of our product and and process knowledge um into documentation.

Johanna Småros: Are kind of a fairly documentation oriented company. We like to write things down and that’s been so powerful because now we can make that knowledge that documented knowledge available to our clients as well. So we’ve launched our own um relax. Robot that replies to clients questions. It can be like niggered things like how does this parameter impact my order proposals or it can be something more broad like um I have a challenge with my promotions. What are the things I should be looking at and that’s actually quite cool because documentation is something we did for us to make it possible for us to to serve our clients better. But now we can remove ourselves as the man in the middle from that equation and. Our clients kind of direct access to our consultants brains and that’s pretty cool but then that’s plenty of other cool application areas. So something I’m quite excited about is also that we’ve developed some ai capabilities to. Suggest promotions to our clients. So I mentioned earlier that there’s a lot of bad promotions out there that aren’t really doing anything for anyone and 1 thing is to be able to analyze and prune them out. But now this is the next level having.

Johanna Småros: Ah, solution actually suggests what products to promote with what you know promotion tactics and at what price point to get the outcomes that your kind of business strategy has set for you.

Alejandro Cremades: So imagine I was to put you into a time machine and I was to bring you back in time Joanna I bring you back to 2006 you know, maybe that moment where you were still at the helsinki university of technology and now you’re talking to your co-founders and is.

Johanna Småros: And that’s that’s pretty cool.

Alejandro Cremades: Just at the moment where you’re giving the notice and venturing into the unknown. Let’s say you have the opportunity of stopping your younger self coming out of the building of the helsinki university of technology and you’re able to stop that younger self on the tracks and you’re able to give that younger Joanna. And perhaps your other co-founders 1 piece of advice before starting the business. What would that be and why now that you’re in almost two decades. You know into the business.

Johanna Småros: Yeah, I’m be super hesitant when it comes to advice even to myself because the thing is you know how things ended up happening but you don’t know what the alternative looked like so. Sometimes you make a mistake and you feel bad about it and be like ah should have done something different here. But then there’s a series of events and you know maybe you didn’t get that client. But then you got the other client. Maybe that was actually better in the end. So. Maybe the advice is that don’t worry too much about the Mistakes. You know there’s going to be mistakes. There’s always mistakes the key is to learn from them fast. Why did it happen was this avoidable was it just random. You know what can I take away from this. How can I learn Faster. And then the other thing is that as long as you do everything you do with Integrity. You’re not going to have any regrets.

Alejandro Cremades: I love that so Joanna for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Johanna Småros: No I think Linkedin is probably the easiest one. You just need to figure out how to write my name I think that’s the key challenge. But if you manage to find 1 yohanas models there. There’s only one in the world at the moment. So now you should be pretty pretty simple. But.

Alejandro Cremades: My god quite unique. Yeah you honor I love it I’m very straightforward so hey well thank you so very much for being on the dealmakerr show today. It has been an honor to have you with us.

Johanna Småros: Thank you so much.

*****

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