Episode Transcript
[00:00:03] Speaker A: Welcome to INA Insights where prominent leaders and influencers shaping the industrial and industrial technology sector discuss topics that are critical for executives, boards and investors. INA Insights is brought to you by Aina AI, a firm focused on working with industrial companies to make them unrivaled segment of ONE leaders. To learn more about Aina AI, please visit our website at www.ina.AI.
[00:00:40] Speaker B: Good morning and Happy New Year. Welcome to our inaugural episode of the Titanium Economy Podcast series. Building on the conversation started by our book the Titanium Economy, this podcast series will continue the discussion on the promise and value of industrial technology with leading executives from the industry.
These conversations will highlight inspiring examples of innovation and value creation along with candid discussions on what will the future hold in terms of opportunities and challenges, as well as what will be needed from the leaders of today and tomorrow to deliver on the promise and potential the sector holds. I'm very honored to welcome Our first guest, Mr. Omar Asali, Chairman and CEO of RANDPAC Holdings. RANDPAC is the leading provider of environmentally sustainable systems based solutions for product protection for e commerce and industrial supply chain. Founded in 1972, Randpac today is half a billion dollar worth of market cap company with revenues approaching about $400 million. Randpac is headquartered in the Concord Township in Ohio and employs about 900 employees worldwide. Mr. Asali himself has been RandPAC CEO and Chairman of the Board since summer of 2019. He assumed these roles upon the spring 2019 consummation of the the SPAC merger with One Madison Group and its simultaneous IPO. Mr. Asali received an MBA from the Columbia Business School and a BS in accounting from Virginia Tech. Omar also currently serves as the Director at Pickle Robots, Carbon Fine, Food Plenty Unlimited and Virginia Tech Foundation Board.
Omar, welcome to our podcast. We are super excited to have you and are looking forward to talking about RANDPAC and your journey today.
[00:02:21] Speaker C: Thank you Gaurav. It's a pleasure to be here.
[00:02:24] Speaker B: Terrific Omar. So why don't we get into it and let's start by talking about Ranpack. Would you share with us RandPak's story, its mission, its vision and in particular what are your priorities as its leader? When you wake up in the morning.
[00:02:37] Speaker C: So Rampac is 50 years old. We are a leader in protective packaging, in particular in the box protective packaging. So think of e commerce players, industrial players. When they're shipping around parcels, we help them provide the goods that are in these parcels. We are 100% fiber based so we have zero exposure to plastic. That has been the case for the last five decades. So Rampa is very focused on sustainability and through our leadership position in protective packaging, we have invested heavily in the last few years in what we call end of line automation, helping our customers customize the size of the box that they're shipping in, helping them through robotics, do pad insertion, leading labeling, et cetera. So a lot of automation and end of line activity as well as we've invested in helping customers in grocery and in pharma use cocaine and thermal solutions.
[00:03:35] Speaker B: Thank you, Omar, for that introduction. I think you'd hit on a lot of key topics there around environmental sustainability and how this is literally playing a very pivotal role in plenty of industries and products which we use in our daily lives. Any commentary, any guidance on what your priorities are as you take Rand Pack forward over the next few years?
[00:03:53] Speaker C: Yeah, one of the key priorities that we have is to continue to promote sustainability, continue to promote more recycled content in the box and in packaging to help our customers. So that's the key part of our vision and sort of our philosophy going forward. The second piece is frankly to help our customers, you know, reduce costs, have labor savings as well as material savings. So we're very focused on helping them with speed, with efficiency and through automation, with having less labor costs and using that labor in areas away from from end of line. Two key philosophies for us in terms of both mission as well as vision are around sustainability and automation for warehouse activity, in particular end of line activity.
[00:04:39] Speaker B: Got it, Omar. That makes a lot of sense. I think as you're talking about the future, I guess it's impossible to exaggerate the implications of a new macroeconomic regime. I think what trends we are seeing in money supply, inflation, interest rates. I think in your third quarter discussion as well, you highlighted a challenging macroeconomic backdrop. What's your outlook for the broader industry today? And then as you think about that, how does RANDPAC think about dealing with that kind of an outlook? Is it playing offense, is it playing defense? How do you manage and how do you decide the priorities?
[00:05:10] Speaker C: Sure, yeah. I think we're really at an interesting juncture in particular in the industrial space. So in the last couple of years you had the pandemic and its impact on pulling demand forward, in particular in E commerce. You know, last year you had the geopolitical and war disruption in Europe and its impact on both demand as well as the energy dynamic. So we've been living through a period the last couple of years of tremendous amount of changes that are impacting industrial players. When I think about where we are and the outlook I feel certain key themes are still very much intact, at least for the medium and longer term, despite all these, all these disruptions, if you will. And some of these key themes that I believe are very relevant to the industrial complex are around digitization, around automation, and then around, you know, basically embracing more technology solutions, whether both in hardware and equipment as well as in software solutions. And I think that's going to be a key theme for the next number of years. If you look at the last couple of decades, we've seen a lot of disruption in retail, a lot of disruption in media, with a number of digitally native newcomers coming into those spaces. We've seen less of that in the industrial channel. And I think in the next few years, my expectation is you will see a number of industrial players sort of adopt more of an industrial tech mentality and use that to innovate and use that to come up with more solutions for their customers.
[00:06:46] Speaker B: I think, Omar, that's a very pertinent point. I think, at least based on my experience, industrials have been laggards in adopting technology and digitization in terms of improving their products for and services for the customers. I think just looking at Rand PAC from an outside in, I think there are many innovations you have particularly driven in your product portfolio, using automation, using robotics. Can you discuss the impact this is happening on your business model, as well as what it took to kind of bring Rand Pack to this point in this journey of adopting these technologies in such a meaningful way?
[00:07:16] Speaker C: Sure. Well, first I will say that a technology transformation is a journey as you outlined, which means it takes time. This is not something that you're going to do in a very short period of time. And frankly, it involves technology, it involves processes, and it involves people. And you need to do all three in order to get to that journey. The way I think about our technological transformation is twofold. There is what I'm going to say, an inward internal transformation that we're doing, and then there is an outward or external one. And what I mean by that, the internal one, is we are digitizing our own systems. So these are not necessarily things that the customer sees, whether it's in our ops, whether it's our CRM or erp. There is a lot of investments in technology internally to make us a faster company, a better company, to have more data at our fingertips. And that has been a journey that we embarked on three years ago. It continues. The bulk of the heavy lifting is behind us. We are training and educating our people to think technology first. When it comes to some of the internal processes that we have. The second piece of that transformation is more external and customer facing. And that's where we've invested in robotic solutions to help our customers in sort of end of line and packing solutions. That's where we've invested in some of our equipment that customizes box height in order to make the shipping more efficient as well as pad insert. So there's a whole host of automated solutions and data solutions that we invested in that are designed to help our customers and give us sort of cutting edge solutions. And the big mission we've been on gore of is balancing both these internal investments in technology as well as these external investments to come up with more compelling solutions in the marketplace.
[00:09:09] Speaker B: I think honestly the journey is incredible to hear and many of is heartening. Omar, my limited experience also highlights that you're tackling two very strong stakeholders. One are internal folks who have done work in a different way over the past several decades and now you're putting technology in their hands and as well the same time training your customers to use technology in a different way, in a new way. Any learnings you can provide from your experience there as to how to manage that change? For both these stakeholders, I think a.
[00:09:36] Speaker C: Couple of key learnings. One is you have to be realistic with your timeline and expectations. When you're talking about changing a culture, changing people, changing a state of mind, that is a real journey that will take some time and you will be surprised along the way. Some of them are positive surprises, some of them may be not so positive. But you need to be patient in bringing people along to think digital with the customer front. The most important thing I've learned, other than efficacy and reliability of the solution, is really the justification of the solution. The roi, the payback period, the economical impact on the customer. Technology for the sake of technology that doesn't come with financial results is not going to be well suited to your customer and you're not going to have the product market fit, if you will. You need to think about what do customers want and what are you helping them achieve both operationally and financially. And if you can combine that, I think you will have, you know, something compelling. So I would say big learnings are more around patience and then more around making a compelling case to your customer. You know, the last thing I'll say, just because we're involved in robotics automation sounds very compelling on paper. When you actually do it, you realize how hard it is. And one of the key learnings we've had is to take a very focused approach Solve one problem at a time. If you think automation is a panacea and you want to automate everything at the same time and solve a lot of problems, there's going to be high execution risk. And I think the case that you're making to the customer is not going to be very compelling. If I learned one thing, the more time I've spent in robotics is my respect for the human body and what the human body can do has gone up. And my respect for robots now understands more and more limitations and where we need to invest for a longer period of time to sort of create that perfectly robotically, if you will.
[00:11:35] Speaker B: That's very enlightening, Omar, appreciate you sharing that with us. I think one other angle of digitization and technology I want to touch with you was around how we engage customers. So coming out of COVID there was a lot of research around how people's buying habits have changed. And I think one thing team we were picking up was industrial need to now adopt this E commerce channel and E commerce presence to serve customers better. Obviously there was a need during the pandemic, but as we came out of the pandemic, would love to get from your perspective, has that become a part of the arsenal? How have customer buying patterns and interaction patterns have changed and has E commerce become a major area of focus for Rand Pack?
[00:12:13] Speaker C: It has, and obviously that peaked during the pandemic when people could not go and shop except through sort of e commerce and online channels. And today we're in a world where the world has opened up a bit more and people can go back to sort of a more omnichannel approach. I think long term the growth in E commerce continues to be intact. It's just a very convenient way to shop. One can argue that during the pandemic maybe some demand was pulled forward, but at some point the pendulum is going to stabilize and I think you're going to see continued growth in the E commerce channel. In my conversations with the largest retailers in the world, they all agree with that. They are investing in the future in more distribution centers, more capabilities to fulfill online orders. And I think we as customers, that's the new world that we're accustomed to. And going forward, you will see a more balanced world where we can physically shop or we can shop online, or we can order sort of online but pick up in person. I think you're going to see all of the above and net net. I do think the E commerce piece of the puzzle will continue to grow.
[00:13:25] Speaker B: Thank you, Omar. So, Omar, many of our Listeners are keenly aware of the environmental, social and governance dimensions of industrial technology companies like yours. I think in particular in randpac's case, seems that ESG is especially important given the reliance on paper and the role you play in the. In the value chain. Can you share your thoughts about esg, its relevance and where it's headed?
[00:13:46] Speaker C: Yeah, I think ESG is really super relevant. It's certainly part of how we think as a company. It's not a new thing for us as a company. It's part of our thinking, frankly, throughout most of the last 50 years. I know the ESG term right now is maybe a bit different than a year or two years ago, and people are unsure and some people have injected, you know, certain political views in it. The one thing that I would encourage everybody to think about in particular is the E out of the esg. Even though you may disagree on some of the social aspects, maybe governance aspects. I think being good stewards of our planet and making sure we're doing the right thing for the climate are absolutely critical for all of us and we're all in it together. So for me, the sustainability piece, the environmental piece, is absolutely critical. And I continue to believe this is going to be one of the biggest themes in investing and running companies for the next decade. So you may have certain dislocations like we discussed, whether it's geopolitical or otherwise. I do think as the world stabilizes, we can all agree that we have to be good stewards for the planet. We have to be good stewards for it from a climate standpoint, from an energy standpoint, from a recycling standpoint. And that's where we play a big role. The biggest focus at RAMPAC is to continue to promote material that has in actuality very high recycling rates. And that material is part of the circular economy, hence our focus on fiber solutions, because we think that's really important for the environment.
[00:15:23] Speaker B: Thank you so much. I think moving a little bit to overall industry and what your views are there. I think in the book in particular, we talked about industrial companies being underappreciated, misunderstood, undervalued many ways, like being diamonds in the rough. And at the same time they are catalysts for what we call the amplification cycle, where a healthy industrial company would seed a much more healthy economic and social community around it. From your experience, how do you evaluate this thesis? Do you agree? Do you disagree? Would love to get your perspective on that.
[00:15:54] Speaker C: I agree wholeheartedly with that thesis. I think it resonates with me. It resonates with my experience. We are, as I said earlier, at an interesting time where industrial companies have a lot of technology at their disposal. It's just how do we use it, how do you embrace it, how do you bring your team and people along for the ride? And what I mean by that, think about the world we live in today with cloud computing, with IIoT, with developments in software, in AI computer vision. These are all tools that are available to the large industrial guys and medium sized industrial players. These are tools that can make you more compelling for your customers. They can provide more data to your customers. They can make your solution faster, better and cheaper. So all this innovation in technology can be embraced by a number of industrial players to make their solutions that much more compelling. I think companies of the future in the industrial space are going to think technology first and sort of mechanical engineering second, rather than mechanical engineering first and technology second. And I think that's going to be a big theme in the next number of years. And I really agree with your thesis and I think the proof will be in the pudding in the next few years. What we're going to see is hopefully the rise of a number of large industrial tech companies that garner the right market attention and will prove that that thesis is the right thesis and that's the right approach for the next number of years. So it's a very, very interesting time to be wearing an industrial's hat and to look at all the technology tools that are out there and seeing how can you combine these two things to the benefit of your customers and the benefit of your own employees and people.
[00:17:46] Speaker B: Thank you Omar. Omar, as we looked at that thesis in the future, I think we were very excited about the potential and the promise of combining as you were mentioning, industrials and technologies together in terms of barriers, one place which was kept coming as a key one was talent. Availability of it and our ability to attract it, availability to retain it. As you think about talent in the Rand PAC context, how important is resourcing the right type of talent capabilities for you?
How have you solved this problem in terms of recruiting, incubating and retaining the right type of talent?
[00:18:22] Speaker C: Yeah, that's a great question Gaurav. Because talent is honestly the most important thing a CEO can sort of think about bring to the table in terms of elevating their own company by bringing in the right people and the right level of talent. I think at the peak of the pandemic it was very, very tough because in particular there was this robust focus on technology and technology solutions and you were Competing with large companies, with venture capitalists, small companies, Everybody was chasing that talent. Today, the talent wars, if you will, are a little bit more reasonable and chances of garnering strong talent are a bit better today than, let's say 18 months ago. Having said that, the way I've approached it personally is you have to be a little bit more flexible in terms of how you can partner with talent. If your definition of partnering with talent is hiring someone as your own employee and that's the only way you would do it, I think you might be missing the bigger picture. We do a lot of that. We bring in a lot of people in house and invest in talent that way and they become rampant employees. But we also have invested in other companies and other startups. We're helping these companies nurture their business, think about their product market, sort of fit, think about recruiting people, maybe partner with some venture capitalists to help these companies grow. And that's been another way for us to access talent that maybe is not going to be 100% employees of ours. So we've taken a bit of a flexible approach. The key is making sure in our orbit, whether it's as direct employees, whether it's advisors, or whether it's part of the investment universe that we invested in and partnered with, we have access to all the key pieces of the puzzle and that help us to provide better solutions to our customers. The one thing that I would highlight it's, you know, industrial companies embracing technology is something that's super exciting to me. I believe industrial companies are going to crack the code and I think you're going to see the emergence of a number of big players. But it's also important for these companies to understand there are some younger businesses that are digitally native and finding ways to partner with those companies is another way to sort of grow your business as well as meet your customer needs. So that's the approach that we've taken in the last three years. I would say we've been a little bit more flexible in terms of how we can partner with the talent out there to the benefit of our customers.
[00:20:52] Speaker B: That's a very interesting take home and I'm hoping some of our listeners can take some good learnings from that. So I think another thread we were pulling on as we were doing research for the book in particular was another necessary way to become a titanium economy company is to leverage M and A to your advantage. Whether it is looking at market access, we're looking at technology. I think we looked at it, there were enough examples of failures as they were of successes. I think given your experience in the industry, learning from like what makes a good or a working M and A strategy and what does it take to actually be able to make it as a competitive weapon and not something which is value dilutive.
[00:21:30] Speaker C: The first thing I'll say is M and A is fluid business. If you think you can come up with a precise plan, you know, good luck. It's a dynamic world, ma. There are some periods where it makes a lot of sense and there are some periods where it doesn't, either because of valuation or state of capital markets and so on and so forth. So I think by definition in M and A you want to be opportunistic. You do not want to do it all the time. That's the first point I'd make. The second point I would make is be ready for it. In particular, if you like to integrate and onboard companies just doing M and A for the sake of M and A when your company and your business is not ready for it is actually more disruptive. It may create more pressure on you and on your customers. So we try to be very focused when we think about onboarding a company or adding it to our business or integrating that company that we're actually ready and we can dedicate the right resources. The last piece is for me personally, M and A is either about product, where you're acquiring a product and that product makes sense for your customers or talent or maybe both. But to me that's where it makes the most amount of sense. For me personally thinking about RAMPAC and our long term objectives. If M and A is driven more by financial engineering rather than talent acquisition or product acquisition, then it's frankly less appealing to me because I think long term financial engineering will take you so far. So these are just some of the key philosophies that we think about as a company and that I think about when we're executing an M and A. It's an important lever, but you want to pull it in the right environment.
[00:23:09] Speaker B: Not all the time makes a ton of sense. So Mark, I think you are, I think industrials is always known as a very insular sector in terms of like people are in their seats for decades and it's not been the most welcoming sector to bring folks from outside. I think you are one of the very unique leaders in the sector where your career has spanned several different industries. You were in financial services, private investing and now obviously here in packaging with Grandpa. I think as you take a look at the sector from that lens, what lessons around value creation. Would you share with your peers? Now we're talking in terms of investors, talent, technology, operations.
What would you impart as a concluding thoughts to our listeners for the podcast?
[00:23:49] Speaker C: Yeah, I think what attracted me to the sector is what you're saying about maybe how insular it's been. I think there is an opportunity to think maybe a little bit differently for me personally. I've spent time in financial services. I've spent time in the consumer industry. I've spent time in a number of different industries.
And I bring in that perspective. The one thing I'll tell you that's common in every industry is retaining training and hiring the best talent that you can is always key. It doesn't matter which industry you're in, you need talented people around you. And that's the case in industrial space as well. The second piece that excited me about the industrial space is frankly, this cross section between technology and the industrial space that I think right now is still an opportunity for the future. It hasn't been harvested by anybody. And I'm hoping through what we bring to the table at Rampac and our approach, that we would be part of that complex to sort of show, you know, the world that maybe that cross section has very compelling sort of risk rewards. And I think it's going to be, you know, a key piece of the puzzle going forward. And the last piece that I'll tell you that's just important to me and whether that's in industrials or in other areas is the sustainability angle that I've talked about. I think for us as a company, doing well while doing good is just a very important piece of the pie and Rampac stands for that. So to me, that was another part of the appeal to be involved with the company.
[00:25:19] Speaker B: I love that thing. Do well while doing good is, I think, a good note to cap this conversation on. Omar, thank you so much for your time. This was incredibly enlightening for me and I'm sure it'll be for our listeners as well. Thank you so much.
[00:25:30] Speaker C: Go, Rob. It's a pleasure. Thank you.
[00:25:32] Speaker B: Thank you.
[00:25:38] Speaker A: Thanks for listening to INA Insights. Please visit INA AI for more podcasts, publications and events on developments shaping the industrial and industrial technology sector.
