If you want to buy a shirt directly from a merchant in China, the customs hurdles will vary depending on whether it’s made of cotton or wool. Or if you see a must-have pair of Italian snake skin shoes on Instagram, those are going to require different trade certifications based on which country they’re being shipped to. And don’t bother trying to sell chocolate bars to Spanish customers; the country has banned chocolate imports.
“The reason that cross-border sales is so complex is shipping — it’s customs and it’s compliance, which also fits into trade. Each country is so different,” said Rathna Sharad. “The rules and restrictions are so fluid.”
And that fluidity in cross-border commerce has morphed into a churning river of change under President Trump, who has often lobbed trade-upending tweets into the Twittersphere.
“You can see that the tweets are shifting the tariffs,” Sharad said.
Despite the challenges, Sharad has waded into the maelstrom with Seattle-based FlavorCloud to help ease the exchange of goods between customers and retailers doing business across borders. Sharad, who is CEO, launched FlavorCloud in September 2017 with her co-founder and Chief Technology Officer Sherwyn Soff.
FlavorCloud evolved out of Sharad’s previous startup with Soff, a company called Runway2street that helped smaller companies sell luxury women’s clothing and accessories internationally. That enterprise revealed a huge need for a tool to help companies legally ship their goods across borders at a reasonable price. So they closed Runway2street and took on this bigger challenge.
The company has raised $2.3 million in seed funding from angel and venture capital investors, including Plug and Play Ventures, Revolution’s Rise of the Rest and Keeler Investment Group. Their business doubled in the first half of this year, and Sharad expects it will grow twice as much again in the second half.
FlavorCloud charges a commission from retailers on the value of their shipments, but what the companies save in shipping and customs compliance costs can make up for the fee, said Sharad, who has an extensive logistics background and previously worked at Microsoft.
The company will soon have 10 employees, with plans to double in size over the coming year. FlavorCloud’s technology enhances the algorithms used for analyzing customs regulations and product codes. It’s working to better find the optimal shipping options for retailers. And it’s scaling globally to meet retailers’ every need for shipping and returns.
Their closest competitor, Sharad said, is a company called Borderfree, which is part of Pitney Bowes International. Borderfree initially tackled issues of fraud, currency conversion and credit card processing for international retail. Sharad thinks FlavorCloud has an advantage because it was created specifically to tackle these tricky trade issues.
“We’re not only handling the complexity of trade and shipping, we’re automating an extremely broken industry,” she said.
We caught up with Sharad for this Startup Spotlight, a regular GeekWire feature. Continue reading for her answer to our questionnaire.
What does your company do? We make international shipping easy, affordable and friction-free “anywhere to anywhere.”
Inspiration hit us when: It all started when I found international shipping was a nightmare every time I bought something from an international e-commerce site. It was particularly troubling to me because I come from a deep logistics background. I built cross-border optimization solutions for carriers and forwarders across North America, Asia and Europe. I also worked with customs organizations on trade and tariffs. And yet my past life’s work did not translate to a great consumer experience for business-to-customer transactions.
More recently, I worked on marketplaces, monetization and advertising for Bing, where I was responsible for the advertiser platform and ecosystem working with retailers large and small. I became fascinated with the way brands were finding customers through ads. Geographic borders no longer mattered. I knew this was going to be the future and I felt best equipped to solve the problem, bridging my two worlds.
I started Runway2street with my co-founder to solve the problem of international shipping for small-to-medium-sized brands, enabling them to sell worldwide. We scaled the platform to more than 300 brands across more than 100 countries. We realized that we had to build a logistics platform from the ground up as none of the existing solutions worked. We also started getting requests from larger brands that did not belong in our marketplace, but wanted us to power their logistics. This made us realize there are much more significant challenges in cross-border sales for larger brands.
This combined with the pace of change that we saw in cross-border e-commerce led to the creation of FlavorCloud as a SaaS platform that any retailer or merchant and plug into and start shipping worldwide. It’s like the online payment company Stripe, but for international shipping.
VC, Angel or Bootstrap: We raised our recent seed round through VCs and angels. We are growing fast, expanding our team and our technology. We think VCs are an important partner to help with the network and the funds as we scale globally.
Our ‘secret sauce’ is: Our team. It’s the perfect combination of deep domain expertise in global trade and logistics space, combined with enterprise SaaS technology skills as well as operational expertise in retail and e-commerce.
The smartest move we’ve made so far: Turns out the smartest move we’ve made so far was to start as a logistics platform for our own marketplace. It gave us a controlled environment to scale, the ability to understand every facet of the global trade landscape, as well as nuances and challenges that make international logistics a nightmare, both from the retailer and the consumer perspective. We were also able to create, automate and hone an end-to-end platform for cross-border shipping and returns from the ground-up, as we had to solve for our own challenges and nothing existed in the market that we could leverage.
The biggest mistake we’ve made so far: Quite a few. But one of the major challenges in early days of our marketplace was when we were working with our first carrier, educating them on the nuances of our needs globally. We spent almost six months of our energy, resources and time, only to have our algorithm toss out the option months later as being unfit due to performance and service issues.
Which leading entrepreneur or executive would you most want working in your corner? Katrina Lake, CEO and founder of Stitch Fix. She is a trailblazer in so many respects and a huge inspiration for me for being fearless and charting her own path, in spite of the challenges we face.
Our favorite team-building activity is: Chilling at White Swan Public House in South Lake Union and taking in Seattle.
The biggest thing we look for when hiring is: Creativity. Everything we do at FlavorCloud has never been done before. We are transforming a massive industry that is antiquated, manual and fragmented, while operating in a very nascent cross border e-commerce pace that is growing and adapting at a crazy pace.
What’s the one piece of advice you’d give to other entrepreneurs just starting out: If you have conviction, just jump in and do it. It’s the only way to learn.