Jan Philipp Haas - CEO & Co-Founder @ Conduct

0:00And we are back.

0:01Jan Philipp Haas:Yes, with our next guest, Jan Philipp or JP from Conduct AI. Fun fact, JP and I actually did our undergrad together. So we go way back and somehow both found our way into the tech ecosystem. And so they had a really exciting announcement this week. And we had to have him on for that reason. JP, can you introduce yourself for those who haven't seen you all over SEBs or your LinkedIn? and tell us a little bit about... Impossible, it's so viral. And tell us a little bit about what Conduct does and about yourself. Yeah, sure. Thanks, Paula. Thanks, Seb. Great to be on here, especially in the London neighborhood, all about the ecosystem here.

0:45I'm JP, one of three co-founders of Conduct. As Paula said back in the day when we went to undergrad together doing business, which is what everyone in Germany seems to do. Then we managed to escape from that via an undergrad, a second one in philosophy, politics and economics at Oxford. And then I joined Palantir here in the London office, was part of the early commercial team here in Europe and was part of large digital transformation projects with the likes of Airbus, BMW, etc. And we can go into detail if you're interested, but what it always involved is a lot of enterprise complexity, old systems, old processes that needed some kind of re-engineering and Palantins platforms came in to build kind of new software on top or instead of it.

1:33But then our main insight from speaking to lots of CIOs at the time was, you know, these old systems like your SAPs, etc., these actually contain so much critical business process knowledge and the actual, you know, operational process itself that none of these are actually going to go away. So speak of the stickiness that all your SaaS founders want to go for. I don't think anyone has ever built the stickiness of SAP and Oracle. And so the insight then really came up of what can we do to make the pain around these systems of managing them lower? How can we make that better for companies? And I think the main push where we said, look, we now have to just do this was working with a defense company in Germany who was trying to increase their output of tanks going to Ukraine.

2:24So you could argue that's a very important company mission. But these guys were actually held back by not being able to just change their processes in their ERP quickly enough. They literally gave us an estimate of this is going to take four years plus to make any change to this. And so then let's have another conversation. And at that point, we were like, look, this is just completely broken. The whole system is basically not working the way it's meant to be. And how are you solving it? Yeah, great question. So we then, we thought that same question is to ourselves. We then went in and tried to kind of untangle what even is the problem in that whole space.

3:00And ultimately, it all comes down to a lack of transparency into these systems, both from a technical perspective, as well as from a business process kind of semantic perspective. So what we mean by that is many of our customers at the time didn't really know which data sets are even used for one particular production scheduling workflow. Or by which logic do you call this raw material versus that? And so all of that sits somewhere in the system, but you don't really know where.

3:30Jan Philipp Haas:It's hard-coded in there somewhere. It's hard-coded. No idea how it's actually. By someone 20 years ago, probably. Literally. And that's not documented because nothing's ever documented and always out of date. And so there's just that sheer complexity and size to it, the millions of lines of code. And so solving that requires creating that transparency and then at the same time also putting a layer on top that makes it more intuitive for people to interact with it. So basically the business process side of it. So you don't want to talk to your code base to be like, which tables are used for this and which function does what?

4:04Some people care about that, but ultimately that's not what you want to do. What you want to do is you want to ask, you know, perplexity and chat GPT style questions around, tell me why my production process is broken. Let's fix it. How can I do that? And that's what we enable.

4:17Jan Philipp Haas:So awesome. So it's like ERP explainability and then, you know, actually also fixing those old and black box issues. So we call it enterprise system intelligence, right? And or concretely, it's an AI companion for all of your teams working on SAP and maintaining these systems. Which are IT systems, IT teams mainly? Yeah, great question. So the main buyer and user is the IT org. But, and I would say for the first time, we're really venturing towards a tool that can be a baseline for business users as well as IT. Because you now get to speak the language that everyone understands in the company, right?

5:02So we're also creating that single source of truth for everyone that allows business users to also ask a question that in the past they would have been blocked on a long IT ticket queue for. So it's really starting in IT, but then venturing out from that.

5:18Jan Philipp Haas:Making it broader. What I really love about your approach is that you're not saying, okay, ERP is in this old landscape and the black box is broken. Let's fix it by ripping out the ERP and building another new one. you're just saying okay this is how it is we have to work with it how do we like augment the way that you do work with with sap rather than just ripping it out which is as we also know a very long and and painful process in itself and i mean you worked in vc right so that was the main pushback that everyone came to us with in the beginning they were like but why would you guys try to make something that's pretty broken a bit less broken instead of just building something new but i think our contrarian insight here was these systems are so embedded there's no way they're going to be exchanged in the next 20 30 years plus right and so you need to do something about just making things better today yeah and then it would put you in the best position to ever build something anyway right if you are if you are the close closest to the systems and the pain points how are you finding it talking to potential customers or pilots you know this is you know i my first job as a consultant and consultants can spend years implementing these systems and working with stakeholders and it can be so painful how are you finding it talking to people inside these businesses about this problem yeah i think it's actually this feeling of of empowerment and liberation honestly i think it's the first time that these teams get a solution that can meet them where they are and that understands their pain.

6:57And that is not just a, let me put another SI project on top of that and basically rip your knowledge out of your organization. We're basically bringing that back into the organization. Amazing.

7:08Jan Philipp Haas:And tell us about your round. You just raised a very sizable 12 million seed round. That's right. How did that go down? Yeah, we were very lucky to get a lot of interest. We had six or seven times, Sheets and then ultimately ended up going for Creandum as the lead investor. We like them a lot. They know the space super well. They're great partners. Who is it, Peter? It's Peter being our board member and main investor. And then we also work with Lucid Capital. They were actually part from the very beginning on iterating on the exact problem and them being a kind of operator-driven fund. They've been very, very helpful in the very beginning to get going.

7:47And then we've also got Boom Capital, who's a very well-connected and great supporter of us as well.

7:53Jan Philipp Haas:What an all-star team. And it's great to be working with people that are also your friends in many ways. It's a great privilege. What was important to you in an investor? I think it's mostly the fact that you really know that these people are not going to... They're going to have your backs and they're not going to screw you over. I think that's actually an undervalued in many ways trade, which everyone's talking about who has the best platform team and the best connections to companies. But all of that is great. And we're grateful for the stuff that these funds are doing for us there as well.

8:29But I think ultimately you just want loyal capital that's going to support you in good and bad times and accelerate you even more and push you where you're maybe not as fast yet. yeah it's interesting i've heard that a lot about creandum specifically that they are like really good partners and they are the kind of with you for the long haul um so yeah it makes

8:49Jan Philipp Haas:total sense yeah when i heard you raised with them i'm such a creandum fan so um i think it's really really awesome yeah we're very grateful to have them as partners and we did a lot of referencing on them it was not a decision that we took lightly i think they were like as you you spoke to more founders to back reference us than ever before we were like yeah it's an important decision for us. Speak of one-way doors, right? I mean, you can't get them out anymore. Can't get it back. Can't get it actually back yet. It's great. It's a great networking exercise. You talk to more founders. That's awesome.

9:19And the more you're like, you know, we're not really decided yet, the more high-profile founders they send you, right? So it's fantastic.

9:25Jan Philipp Haas:I think I need one more intro. Can I record founder, please? I mean, you're saying that legacy enterprise software is holding back GDP in a way. And I think the tank example was a really good one. You know, if that takes four years and there's a massive need right now, that's a huge problem. What world, like, can you paint a picture for us what kind of world it would be where this works and where this kind of gets jailbroken? Let's talk about two different things. Number one, what does that world look like and how do we empower it? So the world where processes can just be changed much more quickly is just one of enterprise agility and more dynamism.

10:06You get your tanks more quickly, but you also get all of your business processes more quickly. And concretely, then it's not about cost savings anymore. It's not about saving that consulting project or implementing one change faster. It's about doing revenue generating activities faster. One of our customers is they deliver kind of time sensitive products to their network of customers across the US. And one module in SAP is literally has been custom built to optimize the route and who gets pinged at what point in time. And so being able to change these things and optimize them more quickly means more revenue in a given time unit.

10:47And that's what these companies ultimately need. Despite the complexity, they need faster agility to adjust to an ever-evolving landscape. That's what we empower. And the way we do that is by giving that transparency across the whole enterprise stack. SAP is a starting point, but the more you get enterprise applications built everywhere, the more you have AI and AI agents running around your enterprise doing many different business processes, you need one place that has an end-to-end visibility into which system does what part of my business process. What do I need to change if I need to make adjustments?

11:27And having that layer as one source of truth, that's what conduct is going to empower in the future. And how are you thinking about, you know, at the moment you're going deep into SAP, how are you thinking about going broad at some point and who would be their next platform to kind of help fix? Yeah. Look, SAP and just doing this for SAP probably makes you, not only probably makes you a billion dollar company, right? Yeah. But that's not what we're doing it for. We're doing it for generating that GDP level impact and economic boost. And so the next ones are always going to be the ones that are just most critical for our customers.

12:05That's what drove us to SAP and that's what's going to drive us to the next ones. We're already getting customers asking us about, can you do that for our MES system and for Salesforce? And, you know, there's no reason why you can't do that for all of them. But we're going to let business need guide us. So you want to, like, nail SAP first. And as long as you're seeing great growth, great revenue, you're going to stay focused. Or have you got milestones in mind at which point you think, OK, now we're ready. Now we've nailed SAP. Now we're ready to go on to the next one. I think when you think about it more from a how scalable and kind of standalone is our SAP offering.

12:43And once that kind of runs on its own, we're also going to expand in other areas. And to me, it's not an all question, right? It's definitely an end. Why not losing focus on delivering well on SAP? Got it.

12:56Jan Philipp Haas:What have you learned in this first year of building conduct about enterprise sales? Because you're not just working on enterprise software. you're also building enterprise software for them yourself? I think enterprise sales is at the same time very hard and very easy. So to start with, I think one problem or one error that many startups make and where YC wisdom has completely misguided many of them is that you shouldn't always start mid-cap or SME. I just don't think you do because the problems that these companies have is just very different. and growing from a small, medium cap to a big one, you never would get your, you know, salonuses, your UI paths.

13:40It just wouldn't be a thing. And so ruling out from the get-go working with enterprise, that doesn't make any sense to me. And I would even argue that venture funding is exactly for that. You're able to not generate revenue for years because of funding. And so you should be going for the problems that actually make sense for your product and where you are differentiated as a team. So that's to start with.

14:03Jan Philipp Haas:Yeah, and sort of like, just because they're bigger doesn't actually mean that serving them is that much harder, but it's just different. Look, in some ways it is, right? But your product is also going to be different. So if you're not engaging with them, you're not going to learn, right? And so you're never going to build a good enterprise product if you're just doing SME. Why is it harder? Well, all of your decision processes take longer. You've got much more paperwork. You've got more people to align. You've got procurement. Even after getting the green light from a commercial perspective, that can take you months, right?

14:41But you just have to treat that as a funnel. It just takes time. And you just do several other things at the same or in parallel. But then you're also in. And that almost creates its own mode, right? And we actually started seeing every procurement process and every order form that we have to work through. We saw that as every other company that wants to work with them and every competitor has to go through the same. So we might as well just start it earlier than them. And that creates defensibility for us.

15:10Jan Philipp Haas:Yeah. And maybe those processes are also learnings for your software. Because that's a process and a system in itself that happens every single day at large companies. That happened the other day, actually. We logged into a platform that we had been analyzing in the background. I was like, hmm, now I get where they need us. It's terrible. And what about the$12 million? How are you thinking about spending that? Yeah, so we're spending them in a way where we always tackle the biggest bottleneck. That sounds like a vague answer, but I think it really matters. Like, we had that money, you know, for some time now.

15:56before announcing and it didn't really change what we do operationally. But we just don't see any financial constraint anymore in where we want to invest. But our investments have always been aggressive and we continue to be aggressive. Now we see what we could consider a product market fit. We are building a go-to-market team and we're going to invest without any constraints there. but we didn't what I'm saying is the fact that now we have that money doesn't change whether we consider this a good investment we consider this a good investment because now is the right time from a product maturity standpoint

16:34Jan Philipp Haas:how big is the team now? we're 17 people now you have two co-founders so I've got two as a team of three of all where did you all meet again or how did you we all worked at Palantir together Palantir Mafia and what are you hiring for right now What is top of mind in terms of building the right team? So we're always hiring on the engineering front and exceptional talent. We're super lucky to have a great team around us there already, but we're always expanding there. But the most urgent focus right now is on building that go-to-market org, which is going to consist of account executives, as well as we call deployment strategists like Palantir, which means doing customer enablement and making sure that we extract all the learnings from our engagements with customers and feed them back into product.

17:21Jan Philipp Haas:Great. So hopefully someone who's watching is a stellar AE or a deployment strategist for conduct. That'd be fantastic. What's your commission, guys? And how are you thinking about expansion, global footprint? Are you thinking, you know, you're obviously here in London. Are you thinking about building teams out in Europe, in the US? What does that look like? Yeah, so we've had a focus on Europe for now just because of our network and time zones and kind of pragmatic reasons. We're now starting to also talk to US companies. There's no reason why our product shouldn't work just as well there. And so we do want to be as aggressive kind of on both sides at the same time.

17:58We're building the initial go-to-market org here in Europe, but then we'll be very fast moving over to the US as well. And would one of your co-founders ever think about moving over there? For sure.

18:09Jan Philipp Haas:I can provide a landing pad in New York. That's the right location. Such a useful podcast. So much value. Oh, my God. What is your 10-year vision for the company? What do you want it to be? We don't want it to be a great exit to one of the incumbents. We think that enterprise system intelligence and the fact that you need a layer that coordinates the logic across all of your enterprise systems, that is its own category and we want to own and win that. The ultimate vision here is for us to really be that one-person enterprise IT team, not because of replacing the people there. The key point here is that we provide all the tools that decision makers in IT can do their work better and can provide the software that the business needs at the right time and pace and the right quality right and that is that is empowered by us operating the logic and the process across your whole enterprise estate and that's the role that we want to play amazing love it very cool can you share so many i don't know any mistakes or regrets that you've made so far in your journey that you kind of think oh god like we got that wrong or i made that mistake there and something that's kind of like uh that you've learned from and now you're applying i think i make mistakes every day honestly i've got a long list where i write down learnings every day and it's it's growing which um which is great that's honestly the thing that i'm i'm enjoying the most and you just need to make sure that you're growing faster than you are yeah than your mistakes are so one thing to highlight is especially as a first time first time founder i think pace is just the thing that always matters you always want to buy is for just get it done and just 80 and most things are actually two-way doors and you can you can correct most of these things um and moving much more quickly on these is is i think the the main takeaway from the first from the first few months yeah and there Are there things that you've specifically learned from your time at Palantir?

20:24Not just about the problem itself, but that's like cultural execution. Are there things that you learned there that you're now applying? Yeah. Palantir was really good at being obsessed with customer value and listening to the customer. That's the big upside of the forward deployed model. And so we're taking the good things out of that, but applying them to a more focused and targeted product. right yeah we're not doing that kind of solutions consulting that plant you did um apart from that there was a lot of a lot of good things around how they identified talent how they believed in empowering people and um providing ownership to everyone which is definitely something that we're we're very very um keen on as well amazing well i think we're out of time love it yeah thank you so much jp we're gonna be watching like with a lot of excitement we love what you're building and Thank you so much for coming down to the studio and joining us in person.

21:19Jan Philipp Haas:Yeah. Thank you for the support. Appreciate it. Amazing.