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Martin Rand of Pactum: “Technological innovations including AI”

Technological innovations including AI: The retail industry is ideal for implementing innovations and AI systems given the massive number of its locations, 42 million jobs, and its revenue in the US of more than 5 trillion dollars. The pandemic has vastly accelerated our adoption of new tools and technologies. On an individual level, we have […]

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Technological innovations including AI: The retail industry is ideal for implementing innovations and AI systems given the massive number of its locations, 42 million jobs, and its revenue in the US of more than 5 trillion dollars. The pandemic has vastly accelerated our adoption of new tools and technologies. On an individual level, we have adapted via tools such as video conferencing. For retailers, AI could be crucial to scaling up to meet demands, increase efficiency and automate mundane tasks so that human talent is freed up for bigger picture projects and initiatives.


As part of our series about the future of retail, I had the pleasure of interviewing Martin Rand, CEO of Pactum, an AI-based system that helps global companies to autonomously offer personalized, commercial negotiations on a massive scale.

Martin is an AI expert who has many years of experience leading successful startups and playing a vital role at global tech companies, including Skype, where he was a project manager, and Monsanto, where he was the Commercial Lead for Europe. Previously, Martin founded VitalFields, an innovative Estonia-based farm management startup, which was acquired by Monsanto. Martin is dedicated to developing AI that strongly aligns with human interests and values creating technology that supports humanity overall.


Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

When I sold my last startup to The Climate Corporation, I ended up being commercial lead for The Climate Corporation for Europe, and my role was to negotiate with the large Food and Ag enterprises in Europe. I could begin my week by negotiating with the Ukrainians and then end the week by negotiating with the French, and I think I got to see every cognitive bias and every cultural difference there is to see. Navigating all of the subtle variations in negotiation styles was a huge component of the role.

It was through all of these interactions that I realized that there had to be a way that technology could make the world of negotiations a lot more efficient.

Can you share the most interesting story that happened to you since you started your career?

I learned a lot of lessons through my negotiations with enterprises and leaders across Europe. One such lesson came out of hitting a wall while negotiating with a French multinational company.

Initially, the negotiations went pretty well and everything seemed to be on track for a positive result for all parties. But as the meetings progressed, the French company presented demands we were not anticipating, which we couldn’t meet. There seemed to have been a misalignment of goals and communications — which is only human. And, once we bluntly stated that we could not meet their demands, the door was shut, and nd the negotiation abruptly ended. Basically, and it was close to impossible to get back on track again.

We were approaching the negotiations from a totally different cultural perspective. And, neither side was prepared for this. It was a tough lesson at the time, but one I appreciate looking back, because it inspired me to be open to an innovation in the field of negotiations.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson or takeaway you learned from that?

The meeting with the French multinational was not exactly funny at the time, however it was a big turning point for me. My takeaway was that there had to be a better way to conduct complex negotiations without having the pitfalls of miscommunication be a barrier.

It spurred me to think about how much value is lost, globally, due to such inefficient negotiations. Basically, all the flow of money in the world is based on some kind of negotiation. And as we see from human nature, we aren’t always the most rational negotiators due to cognitive biases and cultural differences and lack of preparation and sometimes even abusing a leverage point of strength. All of these are innately humanly aspects. So, I thought — there might be an opportunity here — if we increase efficiency that can basically have an impact on the world’s GDP.

So when friends and former colleagues Kaspar Korjus and Kristjan Korjus called me to ask advice on a potential startup, my sole mission became to persuade them to start something in negotiations instead. Kaspar and Kristjan brought in unique capabilities that made it possible to automate negotiations with AI. And this is how Pactum AI was formed.

Are you working on any new exciting projects now? How do you think that might help people?

Walmart, the largest retailer in the world, was our first Fortune 500 customer and we recently started working with another Fortune 500 company that will benefit greatly from our AI negotiation system. We are very excited about this new partnership and will announce it soon.

As we continue to grow, what we have discovered while working with big enterprises, is that the majority of the suppliers that 80% of their suppliers were small businesses. And that makes it very difficult for the large enterprise to communicate with each of them. Essentially, the process of negotiating with a small supplier might cost more than the deal itself, making it impractical.

Pactum helps its companies and suppliers unlock value by automatically negotiating contracts on a massive scale. Our system is based on the Pareto optimum. Mathematically the shortest way to a Pareto optimal deal is by creating value for both sides. Thus it does not perpetuate existing human biases. The task of AI is to find the best way to get to a Pareto efficient deal.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

I am a big believer in sports and other physical activities to relieve stress. I think it’s the thing with the majority of the highest stress, kinds of jobs — you need to balance mental strain with physical activity. If this balance goes out of whack, then we are all more vulnerable to things like stress and depression. People need to pay attention not only to mental health but also physical health.

This is key to thriving and staving off burnout, especially as we continue to weather this pandemic.

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?

Jeanne Brett, Professor Emeritus, Kellogg School of Management, Northwestern University our chief advisor. She’s a professor of international negotiations and one of the world’s foremost experts on the topic. When we approached her, she was immediately interested in what we do, for which we felt extremely honored. As a startup, we were fortunate to have her guidance and counsel and she is our go-to on many issues involving negotiations and beyond.

How have you used your success to bring goodness to the world?

I’m a member of the Founders Pledge. On joining, every member makes a binding pledge to donate a portion of their personal proceeds on liquidity to charity. And, and similarly to my last startup — which I sold — and this one, I allocate 5% of my assets for charity.

Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share five examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

  1. Meeting the demand for variety: As retailers are moving to digital channels, one thing that will also change is that customers will demand more variety. Now that many of us have gotten used to shopping almost exclusively online, we are used to having access to an unlimited supply of inventory. The pandemic taught us that this is not always true and that there are vulnerabilities in the supply chain and limits to its capacity to scale to demand.
  2. More suppliers: Adding suppliers to meet the demands of the expectation of variety, translates to more complexity to handle. This is where implementation of AI tools such as Pactum will help.
  3. The other part is cost: Retailers are under an immense pressure to deliver better prices. And that pressure is only increasing with the move to digital retailers, so it’s a major adaptation to make. By reaching optimal deals that benefit vendors, suppliers and retailers, Pactum allows for costs to be cut and tremendous value to be unlocked–which can lead to better prices for consumers.
  4. Curbside pickup. Many retailers have a big advantage. They have brick and mortar infrastructure located close to the consumer. And I think they’ve adapted really well by enabling services like curbside pickup. Innovations such as these help them to complement the online shopping experience with the local component.
  5. Technological innovations including AI: The retail industry is ideal for implementing innovations and AI systems given the massive number of its locations, 42 million jobs, and its revenue in the US of more than 5 trillion dollars. The pandemic has vastly accelerated our adoption of new tools and technologies. On an individual level, we have adapted via tools such as video conferencing. For retailers, AI could be crucial to scaling up to meet demands, increase efficiency and automate mundane tasks so that human talent is freed up for bigger picture projects and initiatives.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

One thing that Amazon doesn’t have is all of this retail infrastructure. The physical location is often a place where a consumer has a personal connection with.

People have senses. People will always want to experience things on a sensory level — to see and feel and smell — the internet does not deliver any of this. So if retailers are able to marry these experiences of retail shopping with the variety and availability of online, they will have a winning formula.

Another thing to consider is that — in competing with Amazon — Walmart has delivered.

The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?

It is true that we can see some clear winners when it comes to the last decade in the world of retail. A common factor of success is the willingness to embrace innovation — sometimes that means acquiring it.

Walmart acquired e-commerce website Jet.com four years ago and eventually phased out the brand. On a call with analysts, Walmart CEO Doug McMillon credited the acquisition with “jump-starting the progress we have made the last few years.” Some of the innovations he pointed out included Walmart’s curbside pickup, home delivery and expansion of categories beyond groceries, such as apparel and home decor.

Another similar acquisition was Walmart’s investment in Flipkart. Walmart said in a media release at the time that Flipkart will leverage Walmart’s diverse retail expertise, merchandise supply-chain knowledge and financial strength, while Flipkart’s “talent, technology, customer insights and agile and innovative culture” will benefit Walmart.

In both cases, in integrating with a huge organization, the learnings that came out of were successfully applied, not only in relation to retail, but also in insights into internal efficiencies.

Embracing a completely new wave of innovation is the key to transforming a “retail apocalypse” into an era of progress. Embracing innovation is what sets the winners apart.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

The asset that these direct to consumer businesses have is that they are close to the suppliers. That gives them an advantage. Aside from proximity, speaking the same language and having a similar culture can expedite things.

This need not be an obstacle for multinationals however, because that’s just what Pactum was built for: to reduce friction between the, the retailer and the supplier, transcending cultural differences.

With Pactum retailers are given the tools to negotiate with even the smallest suppliers across geographies and cultures.

One disadvantage for the Chinese DTC companies is that they can’t keep up with the variety and quality, that the US retailers can offer and the global reach of suppliers with whom they have established relationships.

Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I would like to break down barriers and ensure equal access to entrepreneurs coming up with new products services. As we see in various “happiness indexes,” the Nordic countries tend to come out on top. One major reason is because the countries value equality so highly. It has been shown to be one of the best drivers of well being. I would like to apply this equality doctrine to entrepreneurship. Eliminating things like unconscious bias so that the best ideas and innovations have access to the most opportunities. I would like to start a movement of equal access for entrepreneurs.

How can our readers further follow your work?

You can follow the progress Pactum is making via the following channels:

Medium: https://medium.com/pactum-ai

LinkedIn: https://www.linkedin.com/company/28449852/admin/

This was very inspiring. Thank you so much for joining us!


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