Jonny Plein: Cofounder of YASO

0:00Hello, welcome back. I've got Jonny from Yasso. Now, Jonny, we've chatted before, but for those who don't know, can you give a super quick intro into Yasso and then I want to get into your big funding round. Fantastic. So, yeah, thanks for having me back on. So, Yasso is a full stack e-commerce solution for Western brands looking to sell their products directly to Chinese consumers. so we've built the end-to-end solution covering payments, logistics, social commerce integrations and analytics that allow brands to enter China, allowing brands to enter China that never were able to get there before or for brands already in market switching to Yasso's solution which has seen you know increases for brands that have switched of 300 to 500 percent so just a much more effective way to sell into the world's largest e-commerce market than there ever has been before.

0:45And what's the difference right now in selling to China and how Chinese consumers purchase and buy their products versus Europe? So the biggest difference is social commerce. So buying through live streams, kind of that merge of content and commerce is a lot more advanced in China than it is in the West. There it's been active for about five years now. And the way the Chinese market has developed is you've gone from kind of platform like marketplaces, call it like Alibaba's Tmall, similar to Amazon, to lots of live streaming sites and social commerce sites. So what Yasso does is help brands launch across all of those sites and sell across all of those different platforms simultaneously.

1:27You are now starting to see this same trend in the West with TikTok shop. And you've seen TikTok shop agencies pick up and brands doing really well on TikTok shop. where it's mainly driven by live stream and affiliates. And you will also, in no time, I'm sure that Snapchat will build a Snapchat live e-commerce feature. I'm sure Instagram will build an Instagram live e-commerce feature because that's where all the attention is. And it's a really, really smart way of selling. And you're going to see that same kind of differentiation of channels we've seen in China happening in the West as well. Got it.

2:02And your focus at the moment is taking Western brands and getting them into China. absolutely what kind of demand do you see in the chinese market for western brands massive demand in the categories that we work in beauty personal care supplements high-end fashion and lifestyle um homeware so like candles fragrances these these sorts of things you know massive demand there's a premium on on western products um and we are enabling that demand to be met and we earn a healthy margin in in doing that and our brands earn a healthy margin as well because you can typically sell at maybe a 20 % higher price in China than you could in the West.

2:42So yeah, it's a win-win really for everyone involved. The consumers get the products they desire, brands are entering a new market and making money and we're building a nice business underneath all that as well. Amazing. You're sort of building the infrastructure to enable it all, I guess. Correct. And you mentioned that a lot of stuff is like lifestyle-related consumer goods, you know, healthcare, candles, that kind of stuff. The type of companies that you work with, Are they early stage? Are they well-established traditional brands? What's the mix and the range of the clients that you serve?

3:11So if they are early stage, it means they've grown very, very quickly. And they'll typically have some VC funding behind them. And we work with later stage businesses, too, that may have been around for 10, 15 years and have established international presence, but maybe haven't cracked China yet because of some of the difficulties, language barriers, technical barriers, team barriers that come from working there. We typically work with our typical profile would be a brand that's doing minimum five million pounds a year. If you're not really at that size, you're not really big enough to try and enter the market.

3:47That's the minimum requirement. Most brands we work with are doing 10 plus. The largest we work with at the minute is doing about 50 million a year. so it really depends and as part of the funding round that we're you know we're going to talk about shortly our plan is with most people that raise series a is to crack enterprise so working and building tooling for the largest consumer goods businesses in the world that have a china business but if you look under the hood of those businesses they are very messy lots of different tools mainly run on excel spreadsheets and we're building the tooling to allow them to more effectively run their china businesses too amazing so that would be not just helping brands launch into China, but existing brands that are already there, helping them to optimize and just improve their own infrastructure, I guess.

4:32Correct. Yeah. So everything from analytics to logistics to scaling across multiple channels, maybe they're only on one marketplace, we'll give them access to 10 overnight just through integrating into Yasso's operating system. Yeah. Amazing. Okay. So let's talk about the round. I think it was an 8 million pound Series A closed I think or you know announced in September of this year uh Leber Puma Growth Partners with with follow-on from a bunch of your early initial investors as well how did you find that round it was a really interesting process um but it was difficult we knew just because of the sector we're in we are playing in a market that very few people know about so China e-commerce to enact to understand and analyze the market you need to have experience in it and most investors in Europe don't which is completely fine we're like why would they yeah we are of course like any growing business we utilize ai we're not in our in our workflows in our product but we are not an ai first company so i think a lot of the you know funds mandates we did not fit within um you combine those two things together and there aren't a lot of investors that are going to be clearly looking at us um and so it was an interesting but also quite frustrating process the good thing on our side is right we have incredible clients incredible product incredible margin structure and we were growing quickly so we went from zero to the end of june like a two million pound uh run rate uh so we had you know from a product team growth perspective all of those things were on our side um and that meant that we were getting through a lot of doors having a lot of conversations and we got through to a few investment committees with funds that we really liked and it happened three times where all three investment committees fell down on China risk which cutting through the VC terminology, effectively one partner in the room wasn't comfortable with us having so much China exposure and vetoed the deal which is a very emotional decision not a practical decision because even if we look at the risk to our business everyone said what happens if there's a trade war with the US we haven't been impacted by that at all practically we've grown every quarter since you know every month since January so we weren't impacted at all so it's frustrating because if we were going to lose a deal due to China risk we should never have been bought all the way through to IC in the first place it should have been identified a lot a lot earlier and not really wasted our time and you know the partner's time that was trying to lead the deal through so that was frustrating but because we knew the metrics and the underlying business were solid, you only need one, right?

7:13So it was a case of making sure that we found that investor that appreciated the risk profile, that understood the business metrics, that weren't that bothered, that we weren't like an AI first company and that we were just building like a good, I guess like normal tech company in inverted commas, which is good for them and us. We got an investor that really understood our business. Yeah, okay, if we were AI first, maybe our inflation would be much higher, but we've got something realistic that we can grow into and we're comfortable as founders and for our investors everyone's going to get a good return when we eventually exit in you know a few years time oh that's amazing yeah i can imagine that was yeah yeah i mean it's um it's such an unusual area of business like you said like e-commerce in china and i guess the risks associated you know i imagine that most people is that you say it's very emotional it's just like a knee-jerk reaction that i truly understand the nuances of the businesses and i think when we spoke last time you know i think you talked through the way that actually the the tariffs make no meaningful impact on the business at all and it's um yeah you just need to understand that to understand that there is no real risk correct and we knew that right we knew that there would be some funds that would just say no yeah straight away which is fine right you're not going to hear yeses from from from everyone so it's a case of being very selective with who we did the warm intros to making sure they was done correctly at the right time making sure we had momentum in the round um fortunately you know playfair hatch portfolio ventures all our angels have been very supportive we've had pretty much everyone come in two or three times into the business um so the fact that you know playfair we're going to put in and hatch we're going to put in again gave a lot of good signals uh already so it was just about who's going to write that that lead ticket.

8:57So in the end, we raised 8.25 million from Puma, who did 5 million, Guinness, who did 1.25. And then the rest of our cap table kind of followed on and closed out the rest of the round. Amazing. Amazing. And I guess, you know, you've spoken to some of the traction, you know, I guess, why did you raise the round when you raised it? And why did you try and raise that much so we had runway till probably end of december yeah um but and there's a really big chinese shopping festival uh 11 11 in november and we thought okay maybe we should go out in september and try and close the round after we've got some more brands on board and all the rest but there was just an anxiety that actually a lot of our decision making will be hampered for this like key q4 period um if we're going through an intent fundraise at the same time and as our runway will be you know running out at that point we didn't want to be squeezed to take a deal we didn't want to take because of cash which is i think you know where a lot of founders can get into trouble right you you're more optimistic on the timing and and actually you end up taking a deal that's suboptimal yeah um we'd grown really quickly uh from last july till end of march um we hit that kind of million uh ar run rate figure at the end of march a bit more than that and we knew we were going to have a really good q2 as well because there's a big shopping festival in china in uh in june called 618 so it was a case of i don't actually think our numbers and our growth not we'll get better than this but it was just a great time a great time to start you know you have april may and june to have all your vc conversations get to the term sheet stage and then you've got july and august to close out and that's that's kind of the strategy we went with and it it played out exactly um exactly like that we had a few term sheets um by beginning of july we like pumas the best we like the team the best we thought the fit was was was great and so yeah we went into exclusivity with them for eight weeks and closed the deal beginning of september amazing amazing and you mentioned that part of this funding round is going to enable you to kind of go after enterprise companies the clients as well is there something that you've got in mind that you need to achieve to unlock that series b whether it's validating the enterprise model whether it's a certain revenue milestone how are you going to get yeah how are you going to know that okay now i know that we're going to be able to raise the series b i i think that there's no i was gonna say no master and there will be like we've said we're raising this money to be able to go after some enterprise clients like we call them our icp3 brands uh large enterprises that have a china team that's not working efficiently or isn't you know across as many channels as as as they could be um we'll need to unlock those in order to raise series b but the way our model works because it's mainly transactional revenue the cost of servicing one client doing 10 million a year is the same cost as doing a client that's doing one million a year so it just makes sense to go after larger and larger brands in terms of our margin profile so we'll need to do that but i think on all other metrics it will just be is the team growing sorry is the business growing how is the margin profile maintained um are we onboarding brands at the right pace are we getting that mix of SaaS revenue and transactional revenue kind of going rather today it's like 90 % 10 % is it more at a 50-50 level just the standard metrics you look at for for series b we've known that this is not going to be a business that can be built on hype it needs to be built on actual like revenue and and good business principles you know we want to be profitable by uh 2027 that's the that's the aim and if we get to that point it will be series b or exit or just in control of our own future um as we carry on building the business yeah amazing and um how are you going to change your go-to-market i guess now that you're you're targeting much bigger clients but establishes chinese presence are you having to look at you having to like audit their chinese presence and have a look and say okay well you know we actually don't think this is as good or that is as good and and just overall i guess like how are you going to adjust from selling to smaller clients to much bigger enterprises more resource we've done a lot with very little we have built the whole business with just one full-time bd yeah and we've not spent any money on and we've not spent any money on like paid marketing to grow yasso as a brand so investing in that to establish ourselves in the market i mean we are a leader in in what we do it's a niche solution but it's a niche in a huge market which is kind of where you want to be right like we don't have a lot of competition um but the upside of what we can do for the brands we work with is is just just massive um so yeah marketing yasso as a brand itself uh more bd firepower so go from one to a team of three um investing in events kind of the the standard gtm playbook that you would expect.

14:16But we know that we're going to have to get one or two case studies before we can really show that we've made a splash in the enterprise space. Right now, our core, as we go after those ICP3 clients, our core business is still working with brands doing between 20 and 250 mil who have a China business already, who are moving their China operations from their current setup to Yasso. That's where we see the most growth, the most opportunity for the next 18 months. Anyway, whilst we get those first brands on board. Amazing. One person in BD, that's tough. What's the onboarding process like? Is that a quick process?

15:01Is there a lot of handholding? Does that take a long time to get a client up and running? From signed contract, we can have a brand up and running and selling in China in eight weeks, which is really fast. um other operators in the space will take four to six months but we've invested a lot of time in the integrations between payment platforms logistics platforms social commerce platforms to allow us to do it that quickly the real lead time is actually moving stock from wherever the brands hold it globally to our warehouses in shanghai and ningbo um but we work with brands in new zealand in america in europe like it doesn't matter where they are globally the entry point is just having stock in market um which is in the assos warehouses and all integrated along our um our end-to-end solution so that's the that's the longest lead time but yeah brands we're onboarding we're going to sign in the next quarter we'll be onboarded in in january so it's very exciting nice that must give you a good visibility of uh you know like immediate or short to medium term revenue growth right because you sign the clients now and you know that they're going to come on and i guess part of it is transactional but you must have great visibility and that must be comforting as a founder in a way that many founders really just have to like they don't have that same visibility it it is great when we onboard brands who are already in market and switch them over to our solution we have a really clear idea there um when we're launching brands for the first time we have a less clear idea uh because whilst there is a bit of a playbook it's it's hard to know exactly how they're going to perform in the first quarter.

16:38And we're very transparent with brands there. When we launched Cow Shed into market last year, it went off quicker than any of us thought. And we actually sold out stock. We sold out everything they gave us within the first three months. And unfortunately, they weren't able to restock us for another three months because they have longer lead times on their products. So yeah, that kind of stalled the project a little bit. But that's causing yourself harm for a good reason rather than a bad reason. It's just a lesson. And when we were building the business, we did a pre-seed round and then we did an extension round in July, 2024, where we took another million quid on from current investors.

17:19And the reason that we were able to take on that money is we said, look, here are all these brands we're about to onboard. We know this level of revenue is going to come through, help us get it through because we'll be at like really good series A numbers in 12 months. and that was the exact story and you're right we had the visibility we actually over performed from what we thought uh and having that ability to forecast and plan cash is useful especially going into like series a where the reporting requirements will take a step up um and you need to be really on it with all of your uh all your budgets i was gonna it must be um it well you tell me is it exciting when you launch with a new client is everybody sort of like watching numbers on screen hoping that you know almost like watching the live channels like the the yasso dashboards like is my definitely most visited uh tab i've also i've asked james my co-founder and like technical lead if we can build an app but i think for my own sanity it'll probably be not good to have those dashboards with me on the go because i don't think i would focus at dinners or whatever if i was just checking sales coming through yeah it's really exciting especially when there's a new launch and you have like your first live stream coming up it's it's great it's quite addicting we um thought about having like the amazon bell i can't remember which company it was you know whenever you make your first sale you have like a like a a bell go off in the office and that like we would have uh uh annoyed all of our team at the level of sales and units we're now doing so yeah no it's super exciting um uh but yeah it's our it's our job right like we work on a revenue share basis so when we're excited the brand's excited too and it's just a real win-win in terms of how we operate with our brand partners and how close are you to them are you are they are they watching the numbers as well are you you speak to them on a very regular basis kind of show them the success so if you look at other players in the space especially like local players in china the level of reporting is really poor you're getting one spreadsheet of your china sales at the end of the month can't really audit them you don't know how accurate they are uh quite messy one of our key tenants at yasso in terms of our product is transparency so we can't hide um which is a good thing and a bad thing um bad thing you know when if our dashboards go down the brands are messaging james at like six in the morning saying hey we want to see our china sales but when you've got that level of engagement it's it's it's great and a good thing because we give brands access to all the same sales data that we have it makes reporting much easier makes it a lot more of a self-serve system improves our margins across it because we don't need to have like a team of account managers we've got one person dealing with all the brands that we have because from a reporting perspective um they can see everything that that we can see you know forecast versus budgets how we're performing roys things like that so investing in the tech to be that transparent um obviously if you miss a target in a week or a month you have to have a conversation But overall, it's a much better way to operate.

20:21Amazing. And one of the final questions I wanted to ask is money raised. You know, you've raised you've raised eight million pounds. There's a lot of money, you know, should see you through a decent amount of time. What what are you looking to do with that now? Is that expand the team? You know, you mentioned going after enterprise, but is that higher more sales, have a bigger presence in China? How are you balancing that? so a lot of it is technical investment um to allow brands that have already you know this icp3 these large enterprises that have a presence in china to use part of the asso's infrastructure even if they don't need all of it they may have their own team in china managing logistics they don't need uh you know some elements of our of our solution but they may need the analytics suite so building that out and allowing anyone who is operating in china to use part of the asso's ecosystem that's where we want to get to there should not be an international brand operating in china in the next five years that is not using yasso for part of their china business like that is where we want to get to so and we've also just like on the bd side we've had a very small tech team everything's been built by james and like two freelancers to get to a series a raise like it really was um you know uh a great job by them but we need to invest in the tech team and growing yeso as a brand so market yeso as a brand grow the bd team grow the tech team in terms of china operations that's where we've invested so far so there's a very um there's a tip-top team in china already um which doesn't need any new hires in for the minute um so more of the same like we're doing a good job and this money just allows us to to take it to the next level yeah amazing it's really interesting proposition like carving up your core bundled product offering and just trying to serve different people for different things uh well look johnny thank you so much for joining me it's great chatting again pleasure i love watching yes it's great i think it's a super interesting company and uh yeah it's very it's a very super unusual one you know it's like so interesting when you see startups like they're solving a problem that nobody else is going after i always think they those make for the most interesting stories um so again thank you johnny let's uh let's stay in touch and back with it all thank you speak soon mate bye

22:30Thank you.