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CEO Spotlight: Sue Welch, TradeStone Software
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
The founder of three successful companies, each one delivering increasingly more sophisticated software to handle the complexities of global sourcing and private label product development, Sue Welch has many firsts to her credit. She delivered the first PC-based import software to the global market, she launched the first Windows-based sourcing software and delivered the first Web-based composite application for global sourcing and realized her goal of global commerce. Angel Mehta, Managing Director at Sterling-Hoffman, chats with Sue about all this and more.
Angel Mehta: Given how hard it is to start a company at any age, what motivated you to do it in your early 30s?
Sue Welch: The good thing about being young is not having the experience to know what you can’t do. It was more omissions than it was design, but when I was starting a company, I only had 18 months of experience in international trade. Like most people who start companies, I didn’t know what I didn’t know.
Angel Mehta: What was the hardest thing you had to learn?
Sue Welch: Sales. I had no contacts. I had always been on the buying side and now I was going out to the same people I had dealt with as a peer and trying to sell them something that nobody else was doing at that time.
Angel Mehta: All of the companies you’ve started seemed to be focused on some element of global sourcing. What exactly does your current company help customers with?
Sue Welch: Private label and global sourcing is an important strategy for retailers and one that Wall Street analysts have deemed a key ‘fundamental reactivity’ of the retailer organization that drives sales and profits. However, most retailers operate their global sourcing and private label operations on spreadsheets and email, which is simply not scalable and leaves billions of dollars on the table. As retailers try to do more sourcing and expand their private label offerings, the process starts to break down just as they are scaling the operation up. TradeStone’s software helps retailers increase sales, decrease time to market and improve profits by supporting all the processes involved in developing and sourcing private label products from around the world.
Angel Mehta: Tell me about the sustainable competitive advantage you have over the other companies. Virtually every major application space has been taken over by the large players… Oracle, IBM, SAP, Microsoft What is it that allows or will allow TradeStone to continue growing or carve out something defensible? What is it that you have that you know the gorillas cannot easily duplicate?
Sue Welch: TradeStone wins 84% of the deals that we compete for because we have modeled our solution in such a flexible way that we can transparently support the sourcing and product development process of any product from any country. Key to our success is that we have embedded our 20+ years of experience and deep domain expertise in best practice engines that cannot be duplicated and that mask the complexity of international trade.
Angel Mehta: Is it still at a stage where you need to evangelize the value of your solution, or does everybody get instantly what you’re talking about and is it really just about price, functionality, so on and so forth?
Sue Welch: We’re not evangelists like we were back in the ’80s. Everybody can understand the value of what we do – things like increasing margins by 40% or greater which can add 200 to 300 basis points to a retailers bottom line. Or taking six to 20 weeks out of the supply chain, where every week saves a million dollars for each billion dollars in revenue. We have clients that project ROIs that are over a billion dollars. As organizations change and evolve, they are able to adapt their use of TradeStone to accelerate that change and make them more competitive.
Angel Mehta: Tell me about how you acquired your very first customer. How did you convince them to buy from an unknown?
Sue Welch: A lot of TradeStone’s customers today are those we had before at my previous companies… so they knew us and had faith that we could deliver the next generation of technology that would allow them to grow their private label business and take control of their sourcing operation. And because our early customers included companies like American Eagle, Macy’s and The Children’s Place, it made it easier and less risky for other companies to go with us. It also helped a lot that early customers won awards for their deployments of TradeStone.
Angel Mehta: What was the most valuable thing you carried forward into your current company from the companies you started earlier?
Sue Welch: The people. Most of the execs in our management team today are those we had at RockPort. Even though we are only four years old now, the average working relationship among the executives is 12½ years.
Angel Mehta: Have you ever had trouble integrating a new manager into that core team? How do managers take it when they come into a team that has worked together for so long?
Sue Welch: We’ve learned that if we hire somebody who is very new to the retail industry or is not a seasoned executive, they encounter issues as they try to learn the business while they define their role in TradeStone. If we hire somebody who is a strong manager and executive, they take a seat at the table immediately. We try to hire people who understand the business we are in, software for retailers and wholesalers, so they bring value, contacts, and there won’t be any issues acclimating.
Angel Mehta: You’ve been doing this through the bubble and then through the down turn and now the economy is obviously quite good again. What’s changed for an entrepreneur in terms of the ability to build a company? What’s harder and what’s easier?
Sue Welch: What’s easier is you have business contacts who are willing to take a chance on you with a new endeavor. We have a lot of recognition as being experts in this area of software for global sourcing and PLM. What’s harder is buyers are more cautious. They want to really kick the tires, they really want to look under the hood; they want to take their time making the decision to buy. Once they do, they’re in it wholeheartedly and they want to do it rapidly. When we tell a customer we can implement in 90 to 120 days, they really hold our feet to the fire.
Angel Mehta: What are your key challenges right now? What are the two or three things that you personally are most focused on?
Sue Welch: TradeStone is now at the point where we’ve got great customers, we’ve got a great product, we’re credible in the market, we get a lot of recognition from Wall Street and industry analysts. Now what we’ve got to do is invest in the whole marketing side and to build the company and become THE brand that everybody recognizes so if they think of global sourcing or private label, then it’s TradeStone who they want to be talking to.
Angel Mehta: How useful has the Board been to you in the founding of your companies and do you have advice for other entrepreneurs in terms of managing the Board appropriately?
Sue Welch: The first Board that we had was mostly made up of venture capitalists and although we loved them dearly for their money, they really didn’t bring much more to the table other than money. So, for the second Board, we had some independent people that really were able to give good advice and guidance. But we haven’t really formed a Board at TradeStone. It’s privately funded by the executive team and we are now just starting to form a Board. We are lining up some really great people that are icons in retail technology that can help guide me, particularly as we move forward on the marketing side of the company.
Angel Mehta: What are the areas that you feel you would need guidance on? What are the areas that you feel are your blind spots?
Sue Welch: I’d say marketing, so really getting out there. We develop great products, we have deep domain expertise, we’re recognized for that, but all of our sales have been through word of mouth and we now have got to be very aggressive on the marketing side to claim our rightful place. I think the market is now ready for that.
Angel Mehta: In this day and age when people are saying that the amount of white space has gone and nobody wants to buy from start-ups, it’s becoming increasingly difficult if you’re a small company to have any credibility with large accounts, or to take things to the next level. Are you finding this to be a problem now for TradeStone given that there’s been so much consolidation in the industry and, if not, why not?
Sue Welch: That is not a huge problem for TradeStone, mainly because we’ve got customers like Macy’s, Kohl’s, Boots, JD Williams, American Eagle, Circuit City, Quiksilver, etc. Our customers mitigate the risk factor for our prospects simply because they are highly recognizable and international. We recently signed two companies with revenues in excess of $100 billion; and it is because those types of companies are our customers, we overcome the ‘don’t want to buy from you’ mentality.
By overcoming that, we have solved the problem of the vanishing white space. We think we’ve really carved out a very unique space that we are the leaders in. We’ve been building systems for global sourcing and private label development for over 20 years. We know it better than anybody and we own that space, so the opportunity now is to get the world to come to the white space. Twenty years ago, if you went into a company that was 10 billion dollars, less than 10% was sourced globally and private label was negligible. Today, companies want to double and triple their direct imports and are hell bent on building private label products that dominate their merchandise mix. Quite simply, it is a survival strategy; a way to really differentiate themselves in the market and improve their margins. Now Wall Street is starting to ask every single retailer and major wholesaler what’s their global sourcing strategy and when will you start developing your own private label. Once they hear the right answer, the analysts dig further, asking if that’s your strategy then what is the infrastructure to support it. So we were alone in that white space for a long time; it was the stepchild and now it’s becoming the golden-haired boy. For TradeStone, it really is a beautiful place to be!
Sue Welch is Founder and CEO of TradeStone Software, an established leader in the global sourcing and world trade industry. For 20 years, she has been at the forefront of global trade, developing technology that enables collaboration between global commerce communities. In addition to leading TradeStone, Sue is a frequent speaker on global trade automation and has addressed numerous organizations including a full delegation of the World Trade Organization, the Bankers Association for Finance and Trade, the ICC and the National Retail Federation. She has been celebrated for her innovation in the industry by such publications as Fortune and World Trade Magazine, in which she was named as one of the 50 Most Influential Executives in 2006. Prior to founding TradeStone, Sue started two other companies. IMC was the first to automate the import operations of global organizations. After selling IMC, Welch founded RockPort Trade Systems, which became the number one global sourcing and supply software package in the world. For interview feedback, contact Sue at
Angel Mehta is Managing Director of Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies and lead investor in
http://www.softwaresalesjobs.com , the #1 site for software sales jobs. the # 1 site for software sales jobs. Angel can be reached for feedback at