Hiten Patel: Delighted to have with me today, Raju Daswani, CEO of Fastmarkets. Raju, do you want to kick us off by just giving a brief intro to yourselves and your role at the company?
Raju Daswani: Great, thanks Hiten, and thanks for having me on the podcast today. So, a little bit about me. As you say, I'm the CEO at Fastmarkets and it's a position I've held for just over 17 years. In fact, I began my journey with the company 28 years ago [1995] when I started my role as an economist and steadily advanced through various different roles. I moved into a commercial role in 2006 which is when I took over leadership of the business. And that coincided with the point that the business had been acquired. The business at that time was called Metal Bulletin and we were acquired by Euromoney Institutional Investor, PLC, which has just gone through a P2P [public to private] transformation too. But that transformation, or transition I should say, was a pivotal moment in my career, aligning with the evolution of the business into the entity it is today under the name Fastmarkets.
Hiten: Awesome. And for the listener’s benefit, P2P is public to private change in ownership and Raju, just tell us in your own words what Fastmarkets does today and the role it plays.
Raju: Absolutely. So Fastmarkets is a commodity information service, and what we do is provide prices of commodities that are used in the industries and the markets that we serve to underpin and drive transactions in those markets. Typically, a buyer and a seller will enter into a contract, and will use our price to inform those decisions. It may be Amazon that uses our price to inform a decision around its purchasing of its cardboard for its boxes. It could be Mercedes that will use our prices on battery raw materials to inform its prices and its purchasing of electric vehicle batteries.
Hiten: Amazing, amazing. Thanks for sharing. And a lot of these companies and businesses like your own have a heritage in publishing or specialist publishing. Talk to me about how those prices used to be derived, how they were communicated back when you were younger, 17 years ago, and how that's changed now and how do you guys deliver that information into the ecosystem today?
Raju: I mean, I think there's been a significant amount of change over the business, and I'd love to spend a few minutes on this as I think it's quite important for you to understand it, because this is a business founded more than a hundred years ago. It was founded as a magazine, a print publication, that provided news as well as some pricing information right from the first day back in 1913 as a metals [information] business, and became the Metal Bulletin business that I joined [in 1995]. Actually, our history dates back further, but that's driven by acquisitions we've made, with an even longer history. For the business I joined, it was seeing that shift from being a print business to becoming a digital business. And that happened over the last two to three decades, really since the turn of the millennium, and the market dynamics under which our business operates really underwent profound evolution.
Raju: Initially that magazine, which primarily served the metal trade industry with news, gossip, and market insights, relied heavily on old school metrics for publishing such as advertising and circulation. Print advertising at the time, was a major part of our business. It constituted a significant portion of our revenue and was the lifeblood of any old traditional print publishing model. However, there were two transformative forces, one was the Internet, and the second one was China that reshaped our trajectory in really astonishing ways. Let me just talk a little bit more about that. Firstly, the advent of the Internet altered the mass market for news and it challenged traditional print models. And while this led to a reduction in volumes for a magazine like ours, it also allowed us to identify far more sophisticated users who sought deeper insights into the data. The decline in print advertising we saw at the end of the nineties to early 2000s, was offset by our ability to sell a web-based service which allowed us to gate our content more effectively and sell subscriptions at a premium. The second transformative event was the explosive growth of the Chinese economy and that happened through the nineties and into the 2000s and was driven by mass commodity-intensive urbanization and infrastructure investment. That led to an unprecedented super-cycle for our markets and commodities [in general], but also introduced much more volatility to these markets. As a result, that shifted the traditional long-term fixed price contracts that existed before then, into index-linked [floating price] contracts. The use of these indices derived from our pricing data significantly enhanced the value that we provided to the markets. And that really changed the evolution of our business in terms of how we delivered that data.
Raju: And we saw that [type of transformational] shift from print into web-based subscriptions again [as we transformed] into being a digital data platform. We've done that through various technological investments, both in the product, but also at the back end, which helps us to help assess and create these indices in a far more coherent, joint-up way for a global business. Meanwhile, at the front end with our product, it's been all about how we distribute that data, whether it's through APIs, through platforms, or through Excel add-ins. You can see a complete shift from a business that was a print magazine to being a data-first business.
Hiten: Yeah, thank you for sharing. And I guess when I hear you describe that journey, I guess it feels like at the core of it, there has always been this expertise around metals and commodities. It sounded like a hundred years ago people were fishing around for info and gossip to guide pricing, and it sounds like you've really just sharpened the point now so that there is much more around data and intelligence that informs pricing, decision making around that pricing and the delivery model has evolved over the century to reflect how people consume that.
Raju: Absolutely. Like I said, I think the key thing was before the Internet, the magazine was the single source of truth for what was happening in the marketplace. So, people came to us for things that were more than just pricing. It was about selling information on company results, selling information on people who moved or changed jobs, gossip in the industry. But of course, a lot of this was disintermediated by the Internet and as a result, we had to evolve. It was a case of change or survive, or not survive. I think we looked at where the value proposition was in our product and adapted our business model to focus on the value proposition and that was happening at a time when the value proposition of the data was growing because of what was happening in China and with the global trade flows of commodities. I think both things came together and further drove the success of this business over the next two decades, and especially in the last decade we really doubled-down on that transformation into being a data-first business.
Hiten: Yeah, yeah. No, it’s a great, great journey. Thank you for framing it so well. One of the reasons I was so keen to get you on The Innovators’ Exchange is just the last two or three years in particular, has seen a massive spike in interest in all things commodities as well as all things data. You sit at that intersection and you’ve been around, as you say for decades. In your words, what has driven this new most recent wave of interest? Why do you feel like you guys are much more in the spotlight, linking it back to, I guess to the energy transition, some of the broader themes that are going on there? Just in your own words, what's driven this most recent mass market interest in what used to be quite a niche and specialist area that you guys operate in?
Raju: Yeah, it’s a great question and at the heart of our business we are a price reporting agency. We provide prices and indices around commodities. But we do more than that. We also provide the forecast, the analytics, the events that help to bring this industry together to connect buyers and sellers and to inform buyers with their day-to-day need to understand the direction of these markets. And we provide transparency in markets that are otherwise very opaque. The amount of data we provide is huge. It’s 6,000 different prices across a team that’s globally dispersed with 600 people. As I mentioned in the example earlier, companies like Tesla when they buy their batteries, which are going to be essential in this energy transition shift, information that we can provide creates transparency around critical materials to drive energy transition. Energy transition is having a huge impact on our business and having on our world. We are very much positioning ourselves centrally to both take advantage of these trends, but also to increase transparency in these critical markets that will help drive investments into the energy transition space that is going to be so important to address the challenges that come with climate change. And if you look ahead over the next three years, five years or 10 years, we see key changes that are going to be driven by the urgency of climate transition and the growth and the role of the data we provide. There is, for example, heightened interest in commodities that are crucial to energy transition, and our role is pivotal in offering transparency in those markets. And it's not just about electric vehicles, it's about all the materials that will go into building the infrastructure. To build the energy transmission lines, to build the solar farms, the hydroelectric plants, to build the wind farms. All of this is going to be metal-intensive. For us, this requirement is something that we are positioning ourselves centrally within and we are allowing ourselves to collaborate with many players within the industry to ensure we are serving the market with what they need to support this transition.
Hiten: And I'm sure our listeners would love to hear, just what are the specific kind of use cases, what are the commodities examples that used to not get much airtime but are now suddenly all the rage? Is it cobalt, is it lithium? What are some of those out there that you're seeing suddenly that step change in and just spell out for us, I guess that end-to-end journey around them. Whether it’s from producer to consumer trader. I think there's some interesting stories to be told in what you guys are enabling here, right? In the real economy.
Raju: I'd love to talk about that because that's so important to us and within the space right now. If you take the two examples you just said, and I can give you others too, key commodities like lithium and cobalt are so important for anyone involved in manufacturing a battery-powered vehicle. You need to be certain that you can access the raw materials you need to meet the targets that you've been set, or that you have set yourself, within the broader ESG landscape. And this data is important because it creates transparency in terms of the market fundamentals, where that price really is the interaction between supply and demand. Effectively that price allows investment decisions to be made in these markets to ensure that supply reaches those customers, enabling them to hit these targets.
Raju: So, lithium and cobalt are great examples, but it isn't just limited there. We also, for example, price commodities such as used cooking oil, which is a key commodity that goes into the manufacture of renewable fuels such as renewable diesel, again, it is going to be a very key element of the overall energy transition mix within the transportation field because batteries aren't going to be suitable for all forms of transport. Long-distance trucking, for example, is one case, shipping, airline travel, all of which may need alternate low-carbon renewable type fuel products rather than batteries. And we are also playing a part there.
Hiten: I'm going to pivot slightly and one of the things I enjoy getting guests to do is just talk a little bit more about their personal journey and share some of the development journeys they've been through. So talk to me about some of the challenges that you've faced over those couple of decades being active in the space, particularly when it was kind of less sexy and mainstream perhaps a couple of decades ago and a bit more niche. Talk to us a little bit about some of that that you've been through.
Raju: Yeah, in my role, and I'm thinking perhaps more in my most recent role as CEO, every day brings it shares of challenges. It's part of our responsibility not to just overcome them, but transform them into opportunities for growth. And over my span of 17 years at the helm at Fastmarkets, it's never felt like I've managed a static entity and have seen a number of reinventions of our business and transformational shifts from print into digital and subsequently into a data-centric model. We've also looked at the change in how we manage businesses and I want to talk a bit about leadership as well. Leadership is a fundamental part of what we do, and we are managing a very different workforce today than we did say 17 years ago.
Raju: We need to be adept to making sure our company, our culture and our values align well with the workforce of today, and that's changed tremendously. And whether it's embracing diversity and inclusion and making that a fundamental value for our organization, are all important elements to me. I also think part of the challenges I have personally faced is that you adapt continuously as your business evolves and changes. I've gone from running a business that, as I said when I took this business over, represented about 130 employees, today we are over 600 employees. So, the way you manage has to be different, the way you manage your direct teams, your indirect teams, and you need to continually rethink your approach to management and leadership as well through that process.
Hiten: Has there been any of those transitions or transformations you described, has there been any point at which you stood ahead of it and thought, wow, this one is not going to work or it's going to break, or this is too radical a change? Have you ever felt that fear or nervousness? There's always an ease with that, I find we can talk retrospectively how some of those step changes play out, but just share with me at what point in time, was that always clear when you were going through some of those big changes from publishing to onto the web? Or was it always good clarity and comfort, or how does it feel at that point when you stood at the precipice of something that's about to be a material and major change?
Raju: If you could get complete clarity on every decision you take, I think you probably could run the business with AI or with anyone. First of all, you always have to base good decisions around as much information as you can possibly get, but you'll never have all the information. I think there always is an element of risk, and I guess that as a CEO you are paid to take calculated risks, well-informed risks and well-informed decisions. There've been a number of transformations that we have undertaken and each one presents risk and each one, as I said, is a challenge, but a great opportunity if you get it right. So yes, of course there's been many times when we have entered into new strategic directions and even moving from being publishing into being a data business brought its own challenges because that shift necessitated the complete reinvention of a commercial operating model.
Raju: It necessitated a complete mindset change in because sometimes the biggest hurdles you have to overcome is internal resistance and you first have to take your entire team on that journey before you even get to the outside world. So almost every time we make a big tactical or strategic shift, we have to go through that journey. Whether it's the new brand [Fastmarkets] we created for this business back in 2018, whether it was a shift into data and de-emphasizing our roots as a journalistic organization. All of these things represented challenges, came with risk, and therefore created some level of nervousness I guess. But like I said, it was always calculated and well-informed risks, and the goal was always very clear.
Hiten: Yeah, I guess when you're hearing you talk, it kind of brings home that you need to, I wouldn't say speculate to accumulate, but you need to take those well-informed risks to manage through those transitions and to be able to capture some of that upside.
Raju: I think when you're looking at entrepreneurship, you also accept that you're not always going to get it right. And one of my great learnings is that failure isn't a roadblock. It's an important part of that journey we all take. But like I said, it's about making informed decisions with sometimes incomplete information, and that's the key.
Hiten: Talk to me about this most recent transition, right? I guess you've gone from public ownership into private ownership and then carved out, and many of the audience are active in both the private investing community as well as the public investing community. And one of the things I was keen to hear from CEOs and founders is that balance, how different really is life between those two regimes and how much is similar? Talk to us a little bit about what's changed, what's remained the same over the last 12, 18 months as you've gone through that transition?
Raju: The goals and the strategy for the business remains unchanged. We have a great strategy. We had one under public ownership. We have one under private ownership. In fact, it was a strategy that raised the profile of this business into being a high-growth business in a very important area around [proprietary] embedded data used by our customers [in their workflow], which made us a very attractive business for a new owner. At some point, the business of Fastmarkets outgrew the ownership of the parent company we were a part of.
Raju: What is key is that that we've inherited is a shareholder in our private equity partner [Astorg] that is supportive and that for me is a game changer. Unlike the often short-term focus of public markets, I think a private owner gives us that stability and a much longer-term vision. And I think this support becomes really crucial, especially when we are navigating challenges or executing on long-term strategies. But it also means that the decisions we take as a standalone private business are the right decisions for Fastmarkets, are not decisions that are predicated by the lowest common denominator within a public entity with many different divisions. I also think it means that people are fully incentivized on Fastmarkets, not a wider parent corporation. That also drives the right behavior in the teams to deliver the growth and the goals of this business.
Raju: And I think the most important thing, as I said, is about being the masters of our own destiny. There's a great level of autonomy that comes with not being held back by the constraints of being a publicly-owned entity and this independence fosters a sense of control and the ability to make decisions that are in the best interest for us, our business and our clients. But most importantly, I think it gives us agility and that's probably the significant biggest advantage of private ownership. We can move more quickly to take advantage of emerging trends or to pivot in response to market dynamics or to make acquisitions. And again, there is a big advantage that private ownership provides us with the flexibility, as well as the funding, to make these important strategic or bolt-on acquisitions that we will need to make.
Raju: And it's a crucial aspect of our growth strategy. Being able to identify opportunities and swiftly execute these acquisitions gives us a massive competitive advantage in expanding our footprint and staying at the forefront of our industry. All the investment we've made in our business around the infrastructure, the management team, the operating model, and the technology in the backend for driving our commodity information services is very scalable into other commodity markets. Being able to leverage that is one of the biggest levers of growth that we will have within Fastmarkets.
Hiten: That's great. It’s great to see you guys in the spotlight. And I guess it is, as you described, just given the change of what's going on in the market, it does feel like that agility, that extra focus is great timing, right? Probably not a coincidence that for this chapter that it's taken this form. Just to wrap things up, I always like to invite guests to throw the spotlight, share an individual company that's impressing you right now that you'd want other listeners to be paying attention to. Tell us a little bit more about that.
Raju: There are so many. I spend a lot of time studying the wider space in terms of who is doing what well and what lessons we can learn from them. Certainly the company I find impressive, and I'll pick one that is a customer too, is Tesla. Their impact on the automotive industry and more broadly on the landscape of transportation has been nothing short of revolutionary. What stands out to me when I look at that company is not just their role in pioneering electric vehicles, but really the holistic way that they've approached it. Tesla wasn't just about creating a new kind of car. What they did was redefine the very concept of transportation and they didn't stop at building electric cars, they created an ecosystem around it. If you compare it, it‘s much like the iPhone transforming communication and Tesla turned the vehicle not into a car, but a software as a service product.
Raju: If you look at their over-the-air updates, their continuous improvements and the very idea that your car gets better over time through software updates is game changing. I think their approach has forced the entire automotive industry to reconsider strategies that you're not building a car with software, you're building software with a car wrapped around it. It's not just about electric vehicles, is it? It's about how technology can redefine an entire sector. I think Tesla's success is not only measured in the number of electric cars they've sold, but in how they've influenced the whole conversation around sustainable transport and how they've pushed the boundaries of what people thought were impossible and really contributed significantly to the whole energy transition space. I really believe what they've done for transport is what iPhone did for communications. It's not just a product, it's about re-imagining the industry and that innovative spirit, that focus on sustainability, that commitment to pushing the envelope to make them a standout example of how companies can really drive meaningful change in the world is a great model for me to use at Fastmarkets. I believe what we offer is invaluable data, data-as-a-service and that data, as we evolve rapidly, will be transformational. We are at the forefront of energy transition. We are today looking at how we price low carbon variants of the commodities that we serve, whether it's pulp or paper, whether it's steel or aluminum, and therefore encouraging investment in these areas by creating that transparency.
Hiten: I love it. I love it. Very inspiring. Your “car with software or software with car”, it's one of those reframing moments that as you say, really, really creates a step change in the mindset and the conversations around it.
Raju: And if we take that concept, AI is going to be a game changer when it comes to the way we serve product and serve information, right? People aren't going to come to your website or to your platform to look at data in a very segmented way. They want answers to questions they have, and AI will drive that, and our data will be embedded in that [answer]. We have to evolve with the market, and I think the value of our data is we can serve it through anyone's platforms, but we can certainly create value in our own platform on the data that we serve our customers with.
Hiten: Yeah, the bit I get excited about for you guys and the other people who provide some of that. The commentary and the words, I think for the last 15 years, all this rush and excitement about data has been about the numbers, the quant stuff, the structured data that goes into the algorithm. And I think what gets me excited about this AI wave is suddenly that bit about gossip that you said at the start, a hundred years ago, that commentary, that's what powers these things now, the words and that intelligence and I think that's probably going to unleash just a new wave of focus and raising in quality of that because I think today it's been very much centered around the structured data and I think there should be a second coming for some of the unstructured data that's probably been overly commoditized over the last 20 years and people haven't fully attributed the value they were getting from some of that.
Raju: Being able to drive a huge amount of information from that data pool that we sit on top of.
Hiten: You can have your own Disney moment when they obviously launched the streaming on their back catalog. You can go into that treasure trove of the last hundred years, unlock it.
Raju: We have every edition stored of every copy that was published by Metal Bulletin since 1913.
Hiten: We'll see if that can keep my three and five-year-old hooked for as many hours as Disney Plus did. But let me wrap things up there Raju, by thanking you for taking the time. I know you're incredibly busy at the moment, on the road a lot, and it's been great to be able to have you share your thoughts and perspectives of what you've gone through the last couple of decades. So thank you very much for joining us today. I really appreciate it.
Raju: No, it's been great. Thank you.
