Il Protagonista – Fabrizio Fantini (Evo Pricing): “The alliance is between woman and machine”
London, 8th December 2020
Primo Bonacina: “Welcome or welcome back to Radio IT, I am Primo Bonacina, sole director of PBS “Primo Bonacina Services” and co-founder of Radio IT. Today we have with us Fabrizio Fantini who is the founder and CEO of Evo Pricing, for a brand new interview for the IT Protagonist podcast.
Today we’re going to talk about various topics, particularly related to software, artificial intelligence (which is a particularly vast field), machine learning, but above all we’re going to talk about a really hot topic, which is how these new technologies and software, data management and so on, are also applicable to the supply chain and in any case to the company’s operations. So it’s quite a challenging topic and we welcome Fabrizio Fantini. Good morning Fabrizio!”
Fabrizio Fantini: “Good morning Primo!”
Primo Bonacina: “So Fabrizio, first of all please introduce yourself to our listeners. Tell us where you were born and when, something about your personal and professional background, from when you took on your current role (obviously since the company was founded) and then we also want to know which city you are in at the moment, maybe you are at home smart working like many of us.”
Fabrizio Fantini: “Yes, I was born in the province of Ancona, in the Marche region, in 1979 and I am 41 years old. I have lived abroad for almost 15 years and essentially worked as a consultant for McKinsey for many years and then five years ago I set up on my own firm. Today, I am in London in my Soho flat, where we are finally coming out of lockdown and so there is some life in the streets again.”
Primo Bonacina: “Very good, Soho, so Swinging London. We’re interested in getting to know Fabrizio and his initiative better, so first of all let’s get to know each other better, tell us something about you… For example, I know that one of your passions is sailing, so the obvious question is “When will you sail around the world in eighty days?”
Fabrizio Fantini: “I don’t know about a round-the-world trip, but I can tell you that this year, partly because of the odd summer situation and partly because we reached a goal we’d set for ourselves, which was to sign a contract with a client worth over a million dollars, we were able to sail around Corsica in a month. We haven’t yet set ourselves the goal of sailing around the world, partly because long ocean crossings can be boring. It’s an escape from life that I’m not yet ready for, maybe when I’m fifty.”
Primo Bonacina: “Yes, maybe even dangerous. We obviously want you to stay on track and come back to the microphones of Radio IT to tell us about the new and beautiful things you’re going to do, and in fact I would say now is the time to talk about Evo Pricing, obviously a new, or relatively new, company. You’ve just said that you signed your first major contract, so clearly not all of our listeners are familiar with it. So please help us to get a picture of it, describe it to us briefly, in Italy and in the world, since you are currently elsewhere. When was it established and where? What do you do? How big is it? Its markets and customers. In short, let me understand what your daily challenges and activities are.”
Fabrizio Fantini: “The company was founded five years ago as a spin-off of the university system in Turin, and we still have an office at I3P in Turin with 20 people and our headquarters in London, where I have lived for many years. So there are about forty-three of us in total, we collect data on what is happening in the world, so on people, products, prices and geographical locations, and we translate these masses of data into tools and systems that support pricing and inventory decisions, and therefore the allocation of goods in the distribution and supply chain.
From day one we have been working internationally. Our very first client was the Miroglio Group in Alba, with whom we also published a nice case study with Harvard Business School last year. Our second client was a company in California and then from there we now have clients in Russia, Australia, Mexico, so a little bit all over the world.
In fact we work for all kinds of companies that have a distribution chain. So of course fashion, as I have already mentioned, retail, consumer goods, industrial companies, but also, potentially, pharmaceutical, electronic, automotive or any other sector that deals with the movement of physical goods.
Our daily challenge, if you like, is to anticipate the future and to respond quickly. I mean, there are some things that are predictable and other things, like Covid, weather, competitor promotions, that are not foreseeable but that you can certainly respond to. So what we help companies do is accelerate their agility.”
Primo Bonacina: “Very good. You mentioned Miroglio, I think it’s a brand that many people know, a company that was founded in Alba in 1947, so a really important fashion entity. So congratulations on the fact that you have taken on such important clients right from the get-go.
I’ve actually read something about you and you talk about something that I found a rather curious and maybe I want to pick your brain about it. I’ve read that you talk about a man-machine alliance, that sounds a bit cyborg-like, I don’t know if that’s the right way to interpret it. Help me understand what exactly is meant by the human-machine alliance?”
Fabrizio Fantini: “What is meant is that everyone talks about the new artificial intelligence systems, which is a very broad term, as either a challenge or a threat. In reality they are advanced systems, because they can process large amounts of data, but they are also very basic in many aspects. That is, they are bound to the data they see (the word data is a Latin word, from a past participle, meaning someone who has to give you something). They always look back and then, if you will, they are very specialised in doing things that are quite slow in learning. I always say that in order to recognise the difference between a picture of a banana and a picture of an apple, a distinction that a three-year-old can make quickly, you have to give a million pictures to such a system to get a reasonable first estimate. So, they are intelligent, but not as intelligent as humans. So we talk about a man-machine alliance precisely to overcome the limits. That is, not only do tools have to be written by humans, so there is a job of translating problems into tools, but there is also a structural limitation that having human input improves systems.
So, if I had to give you a full answer, I’d talk about a woman-machine alliance, because our first experience with the Miroglio Group was to use the input of the store managers, of the managers, almost all of whom were women, to determine the decisions for allocating goods and therefore products to the shops. We saw that making the two systems work together was much better than each working separately, because the human being, the woman alone, may not have the time, the desire or the skills to do everything from scratch, but the machine does not have its finger on the pulse of what is happening in the market in real time. This is a fascinating research that I think we have both published from a scientific point of view and then replicated in other sectors and other countries. So we are really talking about a man-machine alliance, both in terms of overcoming people’s unfounded fears and the scientific limits of the new tools.”
Primo Bonacina: “The phrase ‘woman-machine alliance’ is certainly an excellent one, and I’m going to talk to my wife about it this evening, also because I think she’ll appreciate a less macho approach to vocabulary. We always talk about the man-machine alliance, or at least the man-machine relationship, whereas this is the first time I’ve heard of the woman-machine relationship, so that’s great, we’ve introduced something new in this episode of the podcast.
But actually, now I’d like to ask you to help me. I’m an entrepreneur by trade, I have two companies, one is Radio IT and the other is PBS, so I’m kind of in a moment of uncertainty. Obviously I have taken my case, but I think of that of any other entrepreneur in Italy, and of course I am not only thinking of small or medium-sized companies, the Italian fabric, but also of large companies. In short, in uncertain times like these, even large companies really have difficulty making decisions. You talked about data, you talked about algorithms, you talked about decisions. So how can we help these small, medium, large Italian companies to make decisions?”
Fabrizio Fantini: “What we do is to give these entrepreneurs and these companies, who have to navigate an increasingly uncertain future and an increasingly volatile demand, tools to help them reduce uncertainty. So using science to help them be more agile and therefore reduce the risk of their decisions.
In concrete terms, as far as what we are dealing with, which is the observation of the dynamics of the potential sales of products, we combine information that we collect every day on more than a billion products in the world, more than two billion geolocations, locations in the world and more than one billion three hundred million people, which is a lot of data, we use it to form our systems or to observe directly or by analogy, everything that happens to each product, in each place, for each customer segment.
We then help them to reduce error, waste, uncertainty and therefore risk. Lately closing the gap that exists between supply and demand is in everyone’s interest, i.e. market efficiency allows both consumers to have a better service and companies to have a better profitability. So, it’s clear that I would not be able to help an entrepreneur like you because you don’t have a supply chain, a distribution chain, but you too are faced with uncertainty in the demand of your listeners, for example. If I had a product for you, I could help you and guide you to choose the topics, the people, the most interesting timing for your listeners. So what we do is actually translate the complexity of an increasingly dynamic and increasingly demanding world into guidelines that help make decisions work better.”
Primo Bonacina: “Very good, thank you also on behalf of all the entrepreneurs. You actually mentioned that you are in London, shortly after the end of the lockdown, at least of a certain lockdown period. In fact, I would like to remind our listeners that this interview is being recorded in December 2020, so at a very particular time, in a very particular year, where in some market segments there was a lot of pressure. You mentioned Miroglio earlier, you talked about fashion, so by definition I’m thinking of shops, retail, which has also been quite upset by the pandemic, the growth of online shopping, Amazon and so on.
I ask you in general, how do you see the evolution of this sector, with a focus on the world of fashion? In general, what advice would you give to entrepreneurs in the retail world? How can we really have good, intelligent retail that is able to serve the customer?”
Fabrizio Fantini: “Here we need to make an important distinction between large and small companies. The classic problem of large company retail is that of the mould, i.e. having a thousand shops that are all similar, receiving the same products, on the same day, organised in the same way. What is certainly changing is that demand is increasingly dynamic and hyper-local, meaning that once upon a time, consumers would look for what they could find in their local area. Among the things they saw in their area, they would choose the ones they liked best, so they searched geographically.
Today, however, the search is different because the consumer first finds the product they are interested in and then look for a place to buy it. So it’s not just a matter of e-commerce, but it’s really a matter of the use of information. The geographical difference between the nature of demand in Palermo in the summer and Verona in the winter are diametrically opposed worlds, so it’s very difficult to serve such geographically and temporally diverse demand with a cookie-cutter approach like the classic one.
So actually, my advice, if you like, is aimed more at the big entrepreneurs, is to think like shopkeepers, that is to say to think that every shop, all things considered, is an individual entity. This is true in the world of retail and more generally in many other sectors, but in fashion it is increasingly true that there are trends that are faster and faster and more localised. So it becomes very difficult to generalise the classic mould approach of the fashion retailer. If you like, what data can help you to do is to understand and intercept these trends, which are not just extreme as they were during Covid, where obviously the geographical dynamics have become extremely volatile, diversified and unpredictable. But even in a hopefully normal year, like the one we hope will happen in the future, volatility will remain because there will be more and more influences and more and more information. The advice is to start thinking with the humility of starting from the data rather than with the intellectual arrogance of starting from your own worldview.”
Primo Bonacina: “Very good. Actually, I would like to make an aside here: Radio IT hosts a podcast on artificial intelligence, which I invite our listeners to listen to, developed in part with Aixia, the Italian association for artificial intelligence. So I wanted to understand with you the evolution of this market. You clearly talked to me about very specific trends, including those related to fashion, retail and the pandemic. However, apart from recent events, let’s try to go back in time, perhaps to when you founded or were founding your company; can you remember what your field, your technology, was like a few years ago? What has undoubtedly changed, what has really matured? For example I’ve been hearing a lot in 2020 about artificial intelligence, also in 2019, but not so much. How do you see this evolution?”
Fabrizio Fantini: “I would say that I fully agree with you. First of all obviously us being a company that was established five years ago, five years ago we were nothing. So, essentially by definition, we have changed a lot. We call ourselves Evo by the way because we believe in evolutionary algorithms, we believe that evolutionary algorithms help companies evolve and we also have growth as one of our core values, whatever that means, whether it’s personal growth, professional growth and also hopefully impact. So, the first comment I would make is that it is a very fast-growing and also fast-evolving sector. The maturity that was there a few years ago today has certainly changed, evolved and grown. It is also true that there is more noise and more confusion because any non-manual system has become artificial intelligence, perhaps even abusing the terminology a little. But it is certainly true that there has been an acceleration, not only in awareness but also in time and tools. A few years ago we used to take months and months to be able to start working with new customers, we have compressed this time down to two weeks and one of our goals for the future is to bring it down to under a day, which in the world of enterprise software is an absolutely transformative timeframe. In fact, we’d like to enable everyone, even small shopkeepers and entrepreneurs, to work with our tools independently, in order to give everyone greater competitive capabilities, not just help the winners win even more. Artificial intelligence, if you like, is a bit of a market leveller, in the sense that it helps everyone to have access to similar tools. What do I mean by that?
In the classical world, I always give the example of Tesco, which is a big British retail company. They invented the club card, the first retail loyalty programme, the points card, let’s call it. Thirty years ago, it was a revolutionary programme, making Tesco the only company in the world that knew its customers. They had a competitive advantage, because they had so many shops and so many customers, they had analytical skills that nobody else could ever achieve.
What we sell to our customers who are able to do that today is to all have access to the same dataset, the same learning capability as Amazon. So, we take away everyone’s excuse of saying ‘I’m bigger, I have more data, so I win’. So I think artificial intelligence has a great power to democratise businesses.”
Primo Bonacina: “Yes, actually as the market observer that I am and we are, I have to say that the binomial of 2019 was digital transformation. Everyone, in every word, even to go to the bathroom or to the supermarket, said digital transformation; this year artificial intelligence, or AI, I agree with you that it’s really a little bit overblown, so it’s good to have some clarity and I thank you for doing that. But we’ve talked about the past primarily, now I’d like to take a quick look at the future. Could you perhaps tell us something about your next initiatives? Do you have any news to announce, any ideas to give our listeners?”
Fabrizio Fantini: “Yes, especially our biggest and most interesting news is that we have just opened our platform to the world, so anyone can go to our website evopricing.com and register. For now, this gives access to our Evo University, which is an e-learning platform consisting of twenty modules that allow you to clearly learn about topics related to our field, so systems, data management algorithms, software development and management of the topics we deal with. In the future, by April 2021, we would like to add to this platform the possibility of using our products in a completely self-service mode, so stay tuned.”
Primo Bonacina: “Great! In fact, it is clear from this conversation that change is the constant with us. So we can see the glass as half full, but in reality it is still half empty, i.e. still to be filled. What do you think is the missing ingredient for you and your market? If you had a magic wand, what would you make happen?”
Fabrizio Fantini: “Well, what we would definitely do is to start having more people involved in sales & marketing, because this has always been a somewhat underdeveloped function in the company, we are after all a technology company.
But more broadly, if I could tell you what’s missing in our industry (and not just us) is the storytelling ability and therefore the skill to convey the idea of complexity. Because then data, algorithms are always technical and complex issues, even boring for some people, but actually the ability to translate them into stories and then understand how these new tools can help, how they can generate impact is a skill that is missing.
So, if I had a magic wand, I would like to educate the world on what can and cannot actually be done and always start from the problem, so as I always say, like a salmon, that is, start from the bottom, from why we are doing something and never from the data or the tool, which is the wrong approach.”
Primo Bonacina: “Very clear, in fact you’ve made us almost an assist because obviously storytelling is Radio IT’s job and we hope we have helped you with today’s initiative, with this interview. Then obviously we’ll be waiting for you in the future to continue telling in more detail, maybe digging a little bit more, about how your technologies can actually help companies.
On the other hand, still thinking about our digital HR podcast, you talked about the need to put valuable employees on board, and you mentioned sales & marketing in particular. It’s no coincidence that Radio IT hosts a podcast on digital HR that focuses on talent recruitment.
So I would ask you, given that you have grown quite rapidly, what difficulties have you encountered in recruiting? What positions are you looking to fill? What tools have you experimented with, again from a recruiting perspective?”
Fabrizio Fantini: “We are a meritocratic company at heart. We started out with an almost extreme diversity, in the early years we always hired more women than men and people from all over the world, so smart working from day one, even with different social and cultural backgrounds.
Our recruiting process therefore starts from objective evidence, so tests, things that level the path of people, so before we see them, we see how interested they are in the job and how much of a specific skill do they possess. We have a bit of a hard time finding people who speak languages in Italy, and we also have a hard time finding certain types of talent, i.e. very technical people who are able to embrace system and software development issues, more generally I would say in Europe. But with our geographical diversity we have always got around this problem without necessarily using recruitment agencies rather than head hunters. We have a very capable team of people in house who look for, select, and train people. So, I have to say, I’m quite grateful for our time in Turin, which has given us access to a truly exceptional talent pool.”
Primo Bonacina: “Very good. Obviously, the search and selection agencies will not be happy, but they will certainly get over it. We’re almost at the end of our conversation, so I will ask you, maybe there is someone or a company you would like to thank, maybe someone who has helped you with their skills, technologies or initiatives.”
Fabrizio Fantini: “I would certainly like to thank the university system in Turin, and therefore both the University and the Polytechnic because, in different ways, they have given us a great deal of help over the years, not only in terms of recruiting but also and above all in terms of research and development. With the University of Turin, we have supported their new Stochastics and data science course from day one; at the Politecnico di Torino, we are now not only guests at the I3P incubator, but we have sponsored a challenge on forecasting systems based on artificial intelligence, so we have forty students competing to give us the best solution. I think this is a leading reality not only in Italy but also at European level. Having recently been confirmed as the Italian capital of artificial intelligence, I think it is a city with enormous potential, and the university system is certainly its flagship.”
Primo Bonacina: “Well Torino and finally, since Radio IT is, at least in our opinion, the best attended podcast on IT and digital in Italy, I would like to ask you if there is a reality to which you would like to ask a question or give a suggestion? If so, the microphone is at your disposal.”
Fabrizio Fantini: “Yes, I would say that for CEOs and CTOs, and perhaps above all for the boards of Italian companies, which often have, let’s say, a managerial matrix, or in any case a strong entrepreneurial presence, I think that even today there is a slightly less marked culture of innovation than in other countries. So, if I could ask a question or make a suggestion, I would like to understand why and how to change the fact that in the United States a new idea is interesting by default, while in Italy a new idea is seen as risky, and potentially a waste of time and resources. I think this is our biggest obstacle both in international competition and also in the efficiency of the country’s system, and I hope I can help change this. If I could have an answer to this question, I think that other than talking about bureaucracy, taxation or investors, I think the world of innovation, and therefore of entrepreneurship, would boom in Italy.”
Primo Bonacina: “Very clear. Actually, it’s true what you’re talking about. I have to say, and also because in Radio IT we host meetings with the key players in IT and certainly in particular with the Chief Information Officers, that it is not easy for them. They are often faced with tight budgets, where there is often little room for innovation, let alone mental space. There is certainly little room in the budget and then probably with an under-staffed structure, innovation is not free, it is not something you do in your spare time. So, I absolutely accept your invitation, and obviously if there are any CIOs, investors or managers who would like to respond, they are obviously welcome to our microphones.
So very good indeed, thank you very much Fabrizio for being with us. We look forward to seeing you on… Radio who?
Fabrizio Fantini: “Radio IT!”