Kevin Frechette On Raising $80 Million To Deliver An Autonomous Sourcing Solution With AI To The Enterprise Procurement Space

Kevin Frechette brought his sales experience to the startup world and has built a highly successful venture in a massive industry. The startup, Fairmarkit, has attracted funding from top-tier investors like Highland Capital Partners, OMERS Growth Equity, GGV Capital, Insight Partners, and ServiceNow.

In this episode, you will learn:

• Starting up as a non-technical founder
• How Fairmarkit is creating value for their customers.
• Current market trends

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. 

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Kevin Frechette:

Kevin Frechette is the CEO and Co-Founder of Fairmarkit, the autonomous sourcing platform. Since starting Fairmarkit 5+ years ago as a tail spend automation solution, he has met with and learned from thousands of supply chain and procurement executives to understand where technology can transform procurement.

Kevin’s current focus is on exploring the possibilities for AI and automation across procurement and supply chain processes, most recently Generative AI. He notably has led Fairmarkit to being ranked 159th fastest growing company in America by Inc5000. Most importantly, he’s a girl dad to two “spirited” daughters.

Connect with Kevin Frechette:

• Crunchbase
• LinkedIn
• Forbes
• RocketReach

Read the Full Transcription of the Interview:

Alejandro Cremades: Right? Hello everyone and welcome to the deal maker show. So today. We have a really incredible founder. You know we’re going to be talking about becoming a found without having the technical you know background really being adaptable racing money being relentless. You know at it. And again, you know all the good stuff that we like to hear on building scaling and financing so without fartherdo. Let’s welcome our guest today Kevin Freshette welcome to the show. So originally born in Massachusetts.

Kevin Frechette: Um, thank you appreciate you having me on.

Alejandro Cremades: So give us a little if a walk through memory lane. How was life growing up there.

Kevin Frechette: 1 of 5 kids middle of five kids. It’s in absolute blast I mean summers are pretty much just running around like sprinting around the woods making forts ah sports consume most of my time definitely like school. But I think I’m not like some other. And founders that you had in this call where I didn’t like thrive at school I think I was like an okay student. Um, my passion was always for like going after challenges just like typically around sports. Um, that kind of led me to to unass the state school in Massachusetts just seemed like a good fit across the board. So. It’s. Was anything like out of the ordinary my childhood other than the fact that it was constant chaos and constant fighting across my my my 3 brothers and sister.

Alejandro Cremades: So then let’s let’s say let’s let’s talk a little about shifting years here. You know you graduate you got your degree in finance and then you did ah a few internships you know here and there with Emc and and so forth and and 1 thing that you found along the way was your passion for sales. So. How how did that come about.

Kevin Frechette: Definitely rooted in the fact that my dad’s been in sales his whole career and it’s been more of the when I thought sales I thought more transactional sales I think what most people I think with it think sales like you’re going in. Youre trying to a hard clothes to get something done which like I thought I love that and that’s what I thought in like high school even like college like that’s what I’m gonna get into. Um, what really turned that was I started working at Emc right out of college as as an intern we like gam the landmbva class still friends with my like the the guys I started with and the woman I started with in that class but it really kind of shifted my idea that sales was more about uncovering challenges, uncovering opportunities with with the customer with an organization. Understanding how they prioritize it how to like quantify it how to build the business pain and then allowing a solution to potentially solve that to have a great outcome. So like that that was really interesting because that was much more about being curious asking questions and and really just like asking. Being okay, asking tough questions that people aren’t using to get asked to get to the real answer or the root of like a problem or an opportunity. Um, also love the fact that in sales like you have to get comfortableably and uncomfortable I remember my first job right at college literally two weeks in you had to get up in front of the entire company and where that was the whole sales organization. And give a 5 minute pitch to everyone that knew expense more about the topic than you did, but the whole idea is that it just rooted out people that they just they didn’t thrive in that type of situation and if you messed up that’s perfectly fine. It’s all how you bounce back from it but like that whole aspect of I think it does translate to like being a founder to growing a company.

Kevin Frechette: But it’s this idea that you kind of have to step out in the ledge a little more than you normally would and you’re going to get knocked down a ton just like in sales just like being a founder. There’s a lot of Nos but when you do get to the yeses. It makes it that much more exciting.

Alejandro Cremades: So how do you embrace the nose. How how how to go how to go about embracing the rejection because you know as a founder to you know that’s something that they yeah I’m sure that there’s a lot of people that are listening that are right now like me like.

Kevin Frechette: How do I say again? How do you want the nose.

Alejandro Cremades: Going at their first round of financing or pitching their first customers. So how do you go about? not really taking that personal the noes that come your way.

Kevin Frechette: Yeah, just just taking a step back knowing it’s a journey knowing that like it’s hard. That’s why people do It’s why it’s so valuable as well. And honestly just having fun with it where every time you get to know it’s an opportunity to learn to get better. So if you get to know whether it’s hard no or soft. No and a lot of times growing a company, get a ton of soft nose.

Alejandro Cremades: I Mean they they.

Kevin Frechette: Um, like across the board from customers from the venture world and if you can learn something from that and I actually got some feedback and we got feedback early on that we’d get a know or soft now or we a soft. No. We we just turn it to a no and then if they fought back and turn to yes, great If. Not then we try to understand more depth. Why was it a no, not actually to turn them. Because if someone safe from the venture community is not jacked up or fired up by what you’re building your team. It’s very difficult to go from like they’re not excited to the right to make an investment but it is really cool to understand what are they? why? Why is it a no but like what is like what? What’s there been in their impression. What are their thoughts. Because then you take that and you refine your message. You find your deck you refine your story so you can keep getting a little bit better every time if you keep getting one percent better and you get 50 No’s yeah, like you made some serious progress.

Alejandro Cremades: So then let’s talk about shifting gears here into tour boomic you know because this company that you joined there a Vc back company. You know, gave you a lot He gave you your mentor. He gave you your co-founder so tell us about what you were doing there and how were you able to really. You know mean build those meaningful connections that would serve you well down the line.

Kevin Frechette: Yeah I mean it was I wouldn’t call a startup at that point it was like 200 people so they they had go to market fit obviously well past product market fit. Um, that really was my first introduction to. Ah, selling to an audience or an icp that didn’t actually always understand what the exact pain was or have urgency to address the pain whereas coming from a world that was very much this or this ah this solution or this solution but it was much more of that like Sandler methodology or the challenger sale where you really had to get people to uncover that they had the problem. And then why they should solve the problem now why they should prioritize it which is something that is incredibly applicable to a startup. Um, but yeah I mean at there I was actually able to to meet tarick who and my cofounders we were able to spend a ton of time together like get a chance to know each other for about 2 years before we actually started the company um like massive turning point. And then also I got a chance to meet luu shipling. So he’s my mentor. He’s our independent board member just kind of that like level sounding board that I’ve had for the last six years that I can turn to so I’m gonna think every different career step. It’s a stepping zone. It’s trying to figure out what are you trying to build we trying to take away from each one so I did get the introduction more more of a kpi different organization there. I got a different type of sale that was very interesting and then I got to meet some awesome people. So yeah I mean it. It was a huge like little step to to us starting fair market.

Alejandro Cremades: So let’s talk about starting Fur Market You know how does the idea come about and then how do you guys go about hey you know I think this makes sense screw it. Let’s do it. So.

Kevin Frechette: Um, well the how it came about was just a blind leap of faith that let’s try something new. Let’s take a risk It’s got like that uncomfortable and comfortable mental out comfortably and uncomfortable mentality. Um, honestly, we we didn’t come into it with here’s a great product. Like here here’s a great idea. Let’s go run out and see if we can find customers for it like a lot of companies. Do. We were much more concerned about getting in front of as many executives as possible and just being curious and figure out what are the pains that they have what are the areas of opportunity and honestly just asking questions and that’s probably the most fun part still. About fair market. It’s like the discovery phase of just like asking questions and going through the process with them. We did bring in our cto about a month in because we are two non-technical founders. We need to have someone that was technical and ultimately what we found is that a massive opportunity and challenge is that the enterprise procurement space was just wildly legacy and archaic. Ah, the processes were super manual but companies spent over $8000000000000 a year through these legacy processes that weren’t beneficial for the buyers or the suppliers. So we um, we we jammed on the idea for a while we created kind of the initial roadmap and we ended up rolling out an autonomous sourcing solution that leverages ai to automate a lot of their procurement processes. And we’ve been really really fortunate to do it with some of the biggest companies in the world like amazon bt service now capital one. So I mean it’s been it’s been a journey um and it still feels like we’re just getting going.

Alejandro Cremades: So in your case I mean I guess for the people that are listening to to to get a better understanding. What ended up being the business model of fair market. How do you guys make money. So.

Kevin Frechette: Yeah, so we have a a platform fee and that when a customer stands up with us. They get the core platform the functionality and then we do buckets of spend on top. So essentially as they push more spend through our platform they get more savings they get faster turnaround. They get a lot of kpis. There are strong business outputs. Um, and that contract increases as they push more spend through so it’s very much like value alignment as you get more value with fair market which are average. Ah Roi is 10 x roi the contract size increases. So it’s it’s jointly beneficial.

Alejandro Cremades: So you guys have also raised quite a little bit of money for this so how much money have you guys raised today and why was the seat round so difficult.

Kevin Frechette: 78000000

Kevin Frechette: I mean anyone right now that’s raising a seed round that is a first time founder. Ah like I think you know the deal unless you guess you’re gender of Ai right now or that that kind of like is a little bit of a different story. But for the most part. Um, yeah, like there’s you haven’t built any trust you haven’t built any credibility. Um, you don’t know how to have the conversations you don’t have the advisors to really turn to to understand how do you work through that process. Um and and like it is a lot of nose because it’s a numbers game. So we ah we did everything from the angel groups we did ah like talk to every Vc under the Sun. We. I’d say the one like big piece of learning that I think is pretty cool that you don’t hear talked about a lot is like now when we go to a fundraise. It’s very much tops down. We talk to the main partner that we think is the best fit we get an introduction to them. So it’s very much like an enterprise sale. But I mean. And I still give people the advice go tops down when you’re like find the right partner or find the right person then work with them then have talk to the rest of the organization. But I will say like 1 of the best additions to fair market was insight partners that came in not during the seed but the series a and when we started to talk to insight we got I got a cold email from an internate insight Julian Marcu that he just said hey would love to chat? This is why he’d done all his homework done. Alls research a new insight obviously has a tier once I said you know we’ll jump on a call even though as an intern and everyone says don’t do it. Don’t waste your time protect your time but didn’t we hit it off and then for the next year and a half we started to meet more of the team. We started to get more comfortable with each other.

Kevin Frechette: We start to just like they started to really understand our space so we did the seed which is a grind we brought ah ended up ultimately being successful after a long long long run. But we brought in some awesome investors. But then the series a we had a chance to work with like 10 or 12 different term sheets we had but insight had just been on that journey with us. And we had seen their excitement for the se last year and a half we built the relationship so we ended up going with insight for the a they co led the b with ggv who had been tracking us for a long time at that point and the c we brought in Highland Omers and then service now as well. So I think like every step was a little different but. The beginning days were definitely the the ground in pound which what I’m looking back was a blast.

Alejandro Cremades: And I guess say one of the areas that those investors really look at is also the team and the founders and then also perhaps the technical capabilities of the founders. No because I mean to certain degree. You guys are building something that has that the techie. Ness no associated to it. So How do you guys balance you know for the lack of perhaps the technical skills on the backgrounds as founders.

Kevin Frechette: Yeah, um, so I’d say that was more prevalent back in like year one or year two where it was like okay is this team just overselling over their skis are they just like over promising on delivering. We got over that by having our customers talk about the value that’s been driven. Like doing case studies talking to the venture community so we got over that just with like customer references and people talking about it so that was great. Um, in terms of but about year 3 or 4 in we did start to really double down from a hiring perspective on data science on the engineering the development side. Um, so that actually had turned has turned into massive strength for us. I will say though that um, something that we fell into a little bit I’m not sure if other companies do as well is we we had the roadmap division which we do. We went for like two or three years hard at the core use case and we were iterating iterating iterating and then we had about a year and a half two years when we were refining for our customers. Are kind of like really like zeroing in on our core use case make sure people are in the value but we lost some of our agility and lost some of our speed in terms of what’s next What’s next. So the last two or three months we’ve really shaken up the way we think about development and product like like like advancements altogether especially with generative ai. So we’ve moved to much more of an agile releases every week for some of our platform like actually having design partners not just as like like ah a piece of paper that says your design partner but working with 5 to 10 design partners every like every week to figure out. How are we all going on this journey together. So it’s like different waves of development. We’ve seen um, which.

Kevin Frechette: Just a little scary. The fact that we did get into a little bit of that stale area bumpside that we’re we’re out of it.

Alejandro Cremades: And then double clicking on on the fundraising and and also how to think about the fundraising process. You know I Yeah I believe that you also look at it. You know from a sales you know point of view that’s saying ultimately your background too. So How do you?? How do you think about. Those fundraising process in an effective way so that you could streamline it and just as if it was you know Also a sales prospect or or something like that. How how founders should look at it for.

Kevin Frechette: Yeah, um, so it’s 2 sides you have your team in which enterprise sales is very much a team sport. You never have like an enterprise sales team. That’s 1 person you win together. You lose together. So it’s making sure you have the right people on your side and they’re playing the right roles. So that’s a huge piece of it with like our cfo with our 2 co-founders. With our data science team with our Cs team. Everyone across the board and then on the the venture side. It’s a for like any prospect like you, you need to know your prospect super. Well so really start to understand what the cohorts with the icp who you’re going for and then look like any like enterprise sale. It’s not usually not an overnight thing. Like you build a relationship you have what’s called drip campaigns where you kind of like take them on their journey your journey with them bring giving them the right amount of information building their relationships but then ultimately like in it like in a sale. It’s figure out when’s the right time to create the sense of urgency to work towards the actual close and make sure like the strategic part is making sure that. People that you potentially do want to work with you get them to that point at the same time and then you have your inflection point of a why now and then obviously a timeline like reverse timeline kind of all that aspect. Um, but ultimately like there’s not many differences between a large complex enterprise sale. And a fundraise process I’d say a fundraise process just slightly higher stakes. Um, but that’s ah, that’s just my take on it.

Alejandro Cremades: And then I say you were talking here. You know and thinking about because we’re talking about people right? Ultimately investors are people and in the end you know like I find that the people that you bring on to the company. You know that are critical now in a company like yours. The sales you know people that you bring on. You know they’re really important. You know they can make it or break it. You know and I’ve heard that you know and other you know folks that are also pushing Enterprise Sales. So How do you think about building you know a sales team you know Enterprise you know, ah individuals and that have that scale set or that expertise and. And how do you do it so that you’re effective because those people not only they’re hard to come by but they’re also very Expensive. You know they they cost a lot of of money on the payroll side.

Kevin Frechette: It’s double It’s um, quality over quantity is a big piece of it for us what we found even given the market the last like couple years. It’s not about the amount of people you have or it’s not about the quover the quota over a sign that you have it’s about. Do you have the right people in the seat that can actually quarterback ah the rest of the organization to align them around these strategic initiatives that the companies have so for us it is people like a people that fit our culture like that not just sales but like across the entire company. We have 4 core values. We stick to them incredibly strongly we have 0 tolerance when they’re violated but they’re kind of like the foundation for how we’re scaling fair market. Um, and then also like we’ve noticed that accompany our stage the um, the sales directors they do need to be have I won’t call an entrepreneurship mindset a little bit. But it does need to be a little bit creative in terms of how they’re running the sale how they’re pulling in product how they’re pulling in cs how they’re working with finance to ultimately put the whole picture together. So by the time we get to the end of a process like the company that we’re we’re trying to work with has a complete understanding of who we are where we’re going like what teams they’re going to work with. Um, so it’s not a like there’s there’s no silver bullet and there’ like some people that have experience for twenty or thirty years could be a great fit some people that have experienced for three or four years could be a great fit so it’s not about the amount of time I think it’s more about the mindset in terms of how they approach it like an overall like initiative. We’ll call it with a customer. Um.

Kevin Frechette: And being at a company our stage still like you do have to once again, get creative to make sure that like you’re solutioning with the customer and you’re not just saying here’s what we have and we’re giving them a pitch.

Alejandro Cremades: And what do you look for typically in in those sales people I mean is there like a specific thing that you’re looking for maybe like a question that you pay more attention. You know when they answer when they’re like in that interview you know a process I mean what do you really look for.

Kevin Frechette: Curiosity. It’s people that are actually asking a bunch of questions the thoughtful questions then when you answer the question they ask another question about the question referencing what you said and pulling that in. It’s 1 thing to have a set list of questions that you’re going to ask someone an interview. It’s another thing just to like not ask questions just to talk and of any social awareness that you’re talking too much I sometimes do it too. So I need to get better at so always. But essentially um, it’s people that really are trying to ask questions so they can understand not ask a question so they can ask a question and then they can wait to reply with something else. So that it’s it’s it’s tough to teach and 1 way to do it is um, is to actually have like we use gong gall gong recordings have playback sessions like game film and you call out what good looks like when reps are doing a great job of it champing in when they’re not It’s not not coming down their street but like call it out. Ah, so like that it’s at repetition and almost like the gamification of being curious and continuing to like peel back the young in that’s something that um I feel like it’s just absolutely essential if you’re in any bit of like an enterprise strategic sale.

Alejandro Cremades: And talk to us about the I mean the market that you guys are in I mean it’s say anything that is ai automation I mean I think I read the other day that. Compounding annual growth rate you know the growth of of this market of this segment of Ai and automation I mean I think it’s some something crazy like 40 plus percent you know year over year which is like insane. So what? what kind of trends. Are you seeing. I guess you know being at the right time in history is everything when you’re building a company but it sounds that from a timing perspective. You guys are right on.

Kevin Frechette: Yeah I mean we we kind of see 2 different macro trends right now now one is the macro trend of like the financial state and supply chains. So like 1 of the areas is that people are actually starting to look to save money like like people that previously weren’t from like a large company perspective. So like that’s a very interesting value prop for us because we helped save about 11% on average of everything that goes through us the other big one is people are looking to work with more diverse and sustainable suppliers. So esg is becoming much bigger use our algorithms to help the throttle that on top of it like supply chain issues. Everyone’s seen them in the news. That’s real for big companies. So that’s one of our value prop. So like that’s hit very well. So it’s not that like it’s been this massive tailwind that’s been like exponential but it’s been a pretty good tailwin where it’s helped us to kind of get through these these years and like perform very well for them now the ai in the generative ai 1 super interesting because we’ve been a in the and the platform for last four years um but now with genative ai it’s almost like ah in a good way I guess from one side where like every Cfo and Ceo are saying like do we have an Ai initiative. Do we have an Ai project general of Ai and the downside is it’s kind of a checkbox now for ah for in our world for like procurement teams or digital teams and saying like oh do you have Ai. But in reality like Ai is very different like general Ai is very different depending on the use case how it’s set up like how strong the models are um so we’re kind of viewing it as like everyone can have a cell phone. But if it’s a flip phone from 2005 versus an iphone that’s like it’s it’s so different. So that’s one of like it’s a pro because now we’re getting asked about it. We’ve adopted gender of Ai in different parts of our platform.

Kevin Frechette: It’s like bringing it to the fore outfront. So before maybe we couldn’t get to the cfo of a fortune 500 company now. Now we can ah the challenge is There’s a lot more noise in the market. So it’s how do you stay true to explaining and showing with business value. What your use cases are how it provides value to them and where to go in the future. That’s. That’s why we’re rolling out a bunch of betas right now to complement our core platform. It’s because we want to figure out like what customers want to go on the journey and then also what are the barriers like that like obviously data privacy is a massive 1 right now like every single person that’s looking at general ai is going to bring up data privacy in the enterprise space like full stop. So it’s making sure that the way you build from the ground up takes into consideration and make sure that that’s not gonna be a limiting factor in the next 3 to six months as it starts to get deployed widespread.

Alejandro Cremades: Now as we’re talking about here trends I want to keep talking here. You know towards the future. So let’s say you were to go to sleep tonight. Kevin and you wake up in a world where the vision of fair market is fully realized. But does that world look like.

Kevin Frechette: If I think it’s ah the situation. The future. They’ll never be that future state where it’s done because we always kind of take it next. But if it was today I was going to fast forward and wake up. Um, it would be 0 friction in the buying and selling process in both. Sides are optimized with Ai so ai is set up to help companies optimize how they buy and Ai set up to optimize how companies sell today. We’re not even near that today right now. It’s people literally still dropping off pamphlets under enterprises to sell to them. It’s still people making phone calls sending emails. To get bids to actually buy something so it it is very much a future future state. But it’s one that we’re tripling down on with this autonomous sourcing autonomous selling that ah that we’re fired up about.

Alejandro Cremades: So then? So then here we’re talking about the Future. Um, and then I want to also have the opportunity of talking about the past but doing that with a lens of reflection. So Let’s say I put you into a time machine and I bring you back to that Moment. You know that moment where you were still. You’re working for for this other company for turbo I And then you’re able to give yourself a piece of advice before launching a business. What would that be and why given what you know now.

Kevin Frechette: Never expect it to feel like it’s all figured out like it’s perfectly. Well oiled, um, there’s always you need to have a vision like you should have a plan for the next twelve eighteen twenty four months but um even when I as at a dinner with one of our venture teams and like two months ago and a new founder asked me like okay like what do you What do you not have figured out that you thought you would by now and I kind of referenced a couple things about like oh like more predictability. Well a machine like all these different areas that I would have thought at this point in the company we would have down Pat and you’d be like not cruise control. It’s the wrong word but a little more in cruise control. Ah, and 1 of the the partners there ah was like that thatll never be the case like it’ll never feel just comfortable and just like steady state running where their’re best public company like the Ceo doesn’t feel like that at all. So that’s one of those things where um, like the the driver shouldn’t be to get to that state. So can I get all the perfect people in place and can we be working to his team where it’s like it’s almost on ah like autopilot. It’s like if that’s happening. First of all, it’s unrealistic and if it is you’re probably not pushing the barriers as much as you should be and disrupting as much as you should be so just like expected always to feel like like. You’re charging running full speed breaking downdoors and that grit like it’s real like always feeling like you need grit to take that next step. Um, so that’s just 1 thing that I thought at this point wouldn’t have been the case and I love it. It’s that’s that’s the journey. Everyone should always be on a journey but it’s been it’s been a surprise to me.

Alejandro Cremades: I Love it. Well Keing 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.

Kevin Frechette: Just Linkedin and that’s the best way to do it or Kevin at fairmark.com ah absolutely love like helping giving advice like talking to new founders more so just to to hear the story I love the passion that they bring into every conversation the excitement. So I’m always happy to help.

Alejandro Cremades: Hey easy enough Kevin thank you so much for being on the deal maker show today. It has been an honor to have you with us.

Kevin Frechette: Awesome time chat with you? Thank you.

If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected]

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | TuneIn | RSS | More