Exiger CEO Brandon Daniels - tariffs, tech, and trade

Brandon Daniels is the CEO of Exiger, which provides AI-powered supply chain and third-party risk management solutions to Fortune 500 companies and government agencies. Exiger has annual revenues of over $150 million and received a majority investment by Carlyle, Insight Partners, and JMI Equity for $1.2 billion in 2023. In this episode of World of DaaS, Brandon and Auren discuss: Tariffs and supply chain chaosBringing manufacturing back to the USData validation in supply chain monitoringCoun...

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Auren Hoffman?

  Hello, fellow data nerds. Welcome to World of DAS. I'm your host, Orin Hoffman, CEO of Incubate and GP of Flex Capital. Discover more episodes, get weekly data as a service news, original content, articles on data and more at worldofdas.com. That's worldofdas, D-A-A-S, dot com. Hello, fellow data nerds. My guest today is Brandon Daniels. Brandon is the CEO of Exiger, which provides AI-powered supply chain and third-party risk management solutions to Fortune 500 companies and government agencies. Exiger has annual revenues of over $150 million and was acquired by Carlyle and Insight Partners for $1.2 billion in 2023. Brandon, welcome to World of DAS.

• 0:45Speaker 01

  Hey, it's good to see you, Orin. Thank you for having me.

• 0:47Auren Hoffman?

  I'm very excited. Now, let's start with the topic du jour. What do tariffs mean for supply chain risk management?

• 0:54Speaker 01

  Yeah, I mean, for supply chains, right now tariffs mean chaos. It's tough because no one knows what tariffs will actually embed themselves into the market right now. It's been a tariff roller coaster. So at the moment, it looks like there's going to be a lower, but broad reciprocal tariff. But at the same time, I know that the administration is right now working deals with Mexico and Canada and even Vietnam to bring down the potential reciprocal tariffs. And we don't know what that's going to mean for the market. For our customers, it means a lot of uncertainty. And you know that corporations and the markets, they hate uncertainty.

• 1:38Auren Hoffman?

  Yep.

• 1:39Speaker 01

  And so it means a good deal of conservatism around spend decisions, around investments, around supply chain optimization opportunities. For us, as a technology, it means an absolute boom, though, because our customers are recognizing that multi-tier visibility is a necessity in today's very volatile market, in today's very volatile world as our earth and our climate has changed. And it is requiring our customers to understand how products that they make can go through 30 transoceanic hops before they land on a store shelf. And how each of those can be subject to a disruption or a tariff or whatever it might be.

• 2:25Auren Hoffman?

  And I don't think anyone can predict the future, but we probably can predict that it will be increasingly unpredictable. My guess is that these tariff rates are going to keep changing. There's not going to be stability, at least in the next 12 months. Or do you disagree?

• 2:41Speaker 01

  No, I totally agree. I think that what you're going to see are areas of stability. You're going to see some countries that are going to negotiate what I would call a standing truce on tariffs.

• 2:54Auren Hoffman?

  But even then, how much do you think the market will believe it? And then therefore invest behind it? Or are they going to just presume it's going to be higher and invest behind a worst case scenario or something?

• 3:05Speaker 01

  Yeah, I mean, I think the markets will believe the deals that we strike.

• 3:09Auren Hoffman?

  Yeah, okay.

• 3:10Speaker 01

  The deals that we get done. When Donald Trump does a deal, he wants it to be the last and final deal. It wants it to be the deal to end all deals. It's in his vernacular. But I think that everything that stands in ambiguity, the market will disbelieve. Anything that is subject to a broad-based or just standard reciprocal tariff, people will think is going to be subject to and have to adapt to change. But the core concern is how many iterative changes will you make to the benefit of United States or European or Asian corporations on a continuous basis?

• 3:51Speaker 01

  I imagine that our tariff changes or tariff rates might actually iteratively change on very nuanced topics. If you look at what China did to the microelectronics tariffs that they applied or in as response retaliation for the US tariffs on Chinese goods. What they did is they actually said, okay, it's not a tariff on where you're buying the goods from. The stuff could come from the United States. The tariffs are actually going to be on where the manufacturing of the wafer happened.

• 4:30Speaker 01

  And that's such a nuanced and precision surgical attack on US wafer or US fab capabilities.

• 4:38Auren Hoffman?

  Which makes sense if you're trying to direct the tariff specifically at a country or you want to do it at the component level.

• 4:46Speaker 01

  That's right. That's right. That's going to lead to a lot of very detailed regulatory tracking, which I don't think people are prepared for.

• 4:54Auren Hoffman?

  And I assume we're going to see tons and tons of changes in supply chain. Some of them are pretty obvious, but what are some of the non-obvious ones you think we should expect?

• 5:02Speaker 01

  Yeah, I mean, I think some of the non-obvious ones are that different markets have different levels of tolerance for different levels of cost change. If you wind back to 2008, you may remember, Orin, there was a brief period where gas prices spiked like crazy. 2007 to 2008, oil prices had spiked by three, four X. There was literally reshoring of entire supply chain lines. IKEA's major furniture building for the United States shifted to Danville, Virginia for almost a decade because of those price spikes and those intermediary logistics.

• 5:47Speaker 01

  And so the things that I think are going to be really interesting over the next, let's say, five years is going to be the types of manufacturing that's going to come back to the United States because of the imposition of tariffs. And whether or not those industries are going to be sustainable or whether or not those industries are going to be long-term in the United States. Because the ability to reset a supply chain line on some commodity goods has become unbelievably fast because now you can build a plant or you can build a manufacturing site in years or maybe even under a year.

• 6:30Auren Hoffman?

  Not in the US, though, but you could do that in other places.

• 6:33Speaker 01

  In other places, that's right. And in the US, I mean, there are some places in North Texas that are basically deregulated. There's capacity to build.

• 6:42Auren Hoffman?

  And you think you could create a factory in one or two years there?

• 6:46Speaker 01

  You could.

• 6:47Auren Hoffman?

  Okay, so that does change things if it doesn't take three or four years to get something alive.

• 6:51Speaker 01

  That's right. So you have zones that are special economic zones where you could build quickly. You could drop in automation and you could essentially offset the labor arbitrage advantage that a lot of emerging markets.

• 7:05Auren Hoffman?

  In some ways, one of the benefits that China has and Shenzhen or some of these other places, everyone manufactures right there. So just moving the goods between these places, it's like the factory next door is the one that's making it. And then sometimes you'll even have people who move between those companies because they're aggressively hiring from one another and they're taking the best practices there. Could you imagine a special economic zone in the US to rival? And it would have some sort of access to a port and some sort of access to train networks and other types of things?

• 7:36Speaker 01

  Absolutely. They replicated that model in Mexico, Orin, as you know. So I would imagine that the United States will build those similar economic zones. And I think those will be actually high-paying, pretty advanced engineering jobs too. Because, again, in order to compete with China or Vietnam or any of these other countries, you can't be manufacturing with manufacturing workers in the way that we used to. It's going to be non-traditional manufacturing processes.

• 8:04Auren Hoffman?

  Interesting. Ultimately, who are going to be the winners of these new tariff and trade policies?

• 8:10Speaker 01

  The winners are undetermined because what you need in order for US manufacturers to be the winners, you need us to nuance really quickly the tariffs so that you have component level or material level items that are today subject to the broad-based tariffs. You need those component or material level items to be excluded from the tariffs so that you can get the manufacturing of end-use goods, keep the tariffs on end-use goods, get the manufacturing of end-use goods back into the States. And then you can essentially maintain commodity supply chains into emerging markets

• 8:55Speaker 01

  in the way that they are today because it's really hard to build those heavy rare earth element processing capabilities inside the United States.

• 9:04Auren Hoffman?

  Why is it so hard to refine lithium in the United States? Is it just because it's super dirty or why can't we do that here? We refine oil.

• 9:12Speaker 01

  There are three reasons. One, regulation. Two, it's doing it up to standards that the United States can accept. And then three, it is the mining and then the processing capabilities being built. I mean, it is the challenge from a overall infrastructure perspective to support some of these large scale industrial practices. So if we could make it so that you could actually produce a processing center in the United States for lithium and you could get through approvals and you could get through regulatory paperwork in under three years or even under five years, then you could expedite the next piece.

• 9:55Speaker 01

  But then after that, getting to the high tech ways in which you can clean these facilities, you can clean the air, you can make it so that it's safe for employees. That's the next leg. And then the third place is when you've imposed all those regulations, when you've got all those advanced capabilities, making sure your cost comparative, making sure you have cost symmetry, especially after some form of economic incentives, maybe tax based or tariffs, creating blockades or exclusions for other cheaper markets.

• 10:29Auren Hoffman?

  Because shipping that stuff isn't super cheap or easy. So if someone was making something with it nearby, you have some sort of built in advantage. Right now, the problem is, yeah, they're creating the rare earths in China, but also they're using them in China in the process as well. So if they had to use them in Mexico, it would be harder for those guys to make money too.

• 10:51Speaker 01

  You're bringing up a great point, which is in the eighties, certain countries de-verticalized, certain companies de-verticalized. We had hyper-specialization. Then we also had globalization. The only place where that didn't happen was in communist countries. And why didn't that happen in communist countries? Because they own all of the industries.

• 11:09Auren Hoffman?

  Yeah, they didn't have a choice.

• 11:11Speaker 01

  See, they're perfectly verticalized. You're essentially all rolling back up to the Chinese government. So you're not a globalized business. You're a completely verticalized, closed supply chain. But what that also does is it makes it very hard to innovate. And that's where the United States, Europe, lots of places around the globe still have a competitive advantage. Is you can get specialization that drives the profit motive to innovate. And that's why I think the West still wins in the end.

• 11:39Auren Hoffman?

  Are there countries you think are the most likely losers? Or industries that are most likely losers?

• 11:46Speaker 01

  Yeah, I mean, I think some of the countries that are reliant on the infrastructure investment from China that we've seen over the last 20 years are losers like Zambia. Zambia is supposed to become the third largest copper producer in the world over the next decade. And that has largely been due to.

• 12:08Auren Hoffman?

  So who are the top copper producers?

• 12:10Speaker 01

  It's Chile, it's Peru, it's largely South American based. But those mines are starting to reduce in quality of ore. So it's harder to mine, kind of like the issue that you have with shale oil in Canada. So you're seeing reduction of quality of ore. And you're seeing these very rich untapped mines in places like Zambia. China's invested over $5 billion into the infrastructure in Zambia. But what just happened is because they don't have the regulatory oversight and because they cut costs on the mining infrastructure, you have these major security issues, these major environmental problems, these major hazardous risk issues.

• 12:53Speaker 01

  So what just happened in Zambia is they misbuilt the dam. They didn't invest enough into the dam bill that they had to do in order to start one of the major mines. The dam split, opened up and leaked a bunch of mining chemicals into the water. They spoiled over 200 miles of river. Now Zambia has to clean it up, Orin. What do you think they're going to do? They're going to actually have to borrow money from China to do it. They're going to end up in debt bondage.

• 13:23Auren Hoffman?

  A lot of these countries are becoming essentially captive to China because of that debt.

• 13:28Speaker 01

  That's right. Well, they're captive to China because of the debt. They're captive to China because China then owns the market for buying those goods. And if the United States starts sourcing themselves, then those basically vassal states of China, from an economic perspective, are left in a lurch. They're left in a place where they're not able to negotiate and to deal independently with the United States. Those are the real losers. I think like Brazil and Zambia and a lot of these countries are subject to some hard times ahead.

• 14:01Auren Hoffman?

  What about countries like Germany? I've heard all these different prognostications about them. Where do you fall on that?

• 14:07Speaker 01

  Yeah, I mean, I think that Europe is actually going to be able to navigate the next 20 years. I don't know after that, and I don't even know. The Monte Carlo scenario on that would go wild into completely unpredictable, but I think Europe is going to be able to navigate this. Maybe not as a unified EU, especially with the differing opinions on the defense investment that they have to make in order to maintain their own security. But I do think countries like Germany, I think countries like Italy, I think countries like the UK, obviously not in the EU zone, but still in that European corridor,

• 14:48Speaker 01

  still have really important global relationships and really important global supply lines that will keep them in a commanding position.

• 14:59Auren Hoffman?

  Right, but even in Germany, the car industry is so dominant there. If you have electric cars, you have fewer suppliers, so you have all these problems there. Of course, it seems like the best electric cars aren't being built in Germany, whereas in the past, the best cars were being built in Germany. Maybe they'll catch up because obviously they have good engineers there. But that does seem like it could have a huge effect overall.

• 15:19Speaker 01

  Yeah, I mean, I think that's absolutely right. I think even some of the rebalancing with the United States in terms of car manufacturing could lead to a reduction in EU capacity to sell individually. I mean, we talk about what are these tariffs trying to achieve? American car manufacturers want to sell into Europe and they sell next to nothing into Europe in comparison to the three and a half million vehicles that are being purchased there. It's a really asymmetric trading pattern.

• 15:48Auren Hoffman?

  We gotta get some bigger roads for our F-150s though there.

• 15:51Speaker 01

  That's right.

• 15:52Auren Hoffman?

  It's hard to navigate those in Amsterdam.

• 15:55Auren Hoffman?

  There are a lot of areas where the trade restrictions are just super leaky. We've seen that with Russian oil, seen that with Chinese goods, which are essentially just quote unquote packaged in Vietnam. How does one fight these leaks better?

• 16:09Speaker 01

  I think it's difficult to fight the leaks and I think it's difficult to fight the leaks because companies don't want to know.

• 16:16Auren Hoffman?

  Yeah, the end buyer doesn't want to know.

• 16:19Speaker 01

  Yeah, that's right.

• 16:20Auren Hoffman?

  Why would they? In fact, it's in their best interest to not know.

• 16:23Speaker 01

  Exactly. And so global regulation plus the actual governments investing in their own degree of transparency is the only road that I can see to closing some of these gaps. Because what happened after nine 11 was the United States started using all of its dollar processing capabilities to start identifying where people were missing terrorism-related trades, terrorism-related transactions, where they were missing sanctions transactions. If you Google Exiger and Huawei, you'll see that it was reported that Exiger found the Huawei rerouting of equipment from the US into Iran. It was reported by the New York

• 17:06Speaker 01

  Times and Wall Street Journal and a bunch of other publishers. The fact is that the kind of oversight necessary to drive industry action, it has to be invested in at the top level in those global policing organizations. And then that flows through to the corporations just like it did the banks. I mean, the banks scaled up their ability to manage money laundering and financial crime and sanctions issues to the tune of hundreds of billions of dollars between 2001 and 2025 in order for you to see that same kind of modernized change.

• 17:44Speaker 01

  Of identifying sanctions and export control issues, identifying IP leakage or IP theft, or identifying the utilization of forced labor for the purposes of economic coercion, you're going to need a lot of enforcement. And I think the UFLPA enforcement that you've seen with seizures at the border, that's a first step, but criminal enforcement for not having the appropriate level of programs, that's when you're going to start to see some of these gaps.

• 18:13Auren Hoffman?

  It's one thing to figure out things that are coming in, which is hard enough. And you can see that with illegal drugs and everything. It's just so hard to figure out. Another thing with figuring out things going out, that just seems super hard to figure out how that goes. Of course, we can go out, you're allowed to send it to this place, but then it ends up going to place C or something. It just becomes very, very hard to know where that will end up.

• 18:36Speaker 01

  Yeah, it's really tracking the money and our customers have used our technology to do that on the federal government side. As you mentioned, we have 65 federal agencies that use our technology. We're the most widely adopted supply chain risk technology in government agencies. But at the same time, what they have to do is they have to use that visibility to then support policy. And policy then takes a while to get into actual enforcement actions. We just released two reports. Or in one on our reliance on Chinese-made pharmaceuticals, specifically antibiotic APIs and things like that, that are widely necessary in order for us to support cost-effective medicine.

• 19:20Speaker 01

  We just released another report on our ability through our threat actor intelligence to identify all of the original funding sources for DeepSeek. And we were able to show that through grants and through research studies that were funded by the PLA, that China had actually poured tens to hundreds of millions of dollars into DeepSeek, both investment and research, and what we believe is intellectual property theft from US universities that were involved in generative AI collaboration.

• 19:49Speaker 01

  And the fact is, in order to now take that information and do something with it, there are a bunch of policy and regulatory steps that could take weeks, months, years to actually put into action, the things that they're learning from these reports.

• 20:04Auren Hoffman?

  Yeah, it's hard. You see all these stats with the Russian sanctions, like France's exports to Russia went down by X, and then France's exports to Armenia and Kazakhstan went up by exactly X. And so it doesn't take a genius to figure out these things are being routed now, but it still hurt the Russians because now they got to pay a vig. Actually, they're paying 20% more than they were paying before than they were doing. So maybe it does still have a clinical cost to the Russians, and maybe that's reasonable since it wouldn't have any cost really to the French economy. But at least you got to be upfront about that. I feel that's your strategy.

• 20:39Speaker 01

  That's right. I think this issue of transshipping and rerouting and how much it impacts the ability for us to impose things like sanctions, or even for companies to compete more. There's a company Stanley Blacken Decker, and it's one of the major

• 20:56Auren Hoffman?

  I love that company.

• 20:57Speaker 01

  US manufacturers. It competes with Milwaukee Tool. Now, no one takes into account that Milwaukee Tool is a Chinese-owned company using the Milwaukee brand.

• 21:09Auren Hoffman?

  I didn't know that.

• 21:10Speaker 01

  Yeah, it's a Chinese-owned company.

• 21:12Auren Hoffman?

  Stanley Blacken Decker, just to be sure, is not, right?

• 21:15Speaker 01

  Oh.

• 21:16Auren Hoffman?

  I love Stanley Blacken Decker. I've got a lot of Stanley Blacken Decker tools.

• 21:19Speaker 01

  Well, keep buying SPD, keep buying the wall.

• 21:22Auren Hoffman?

  Okay, good. I don't want you to burst my bubble all of a sudden.

• 21:25Speaker 01

  No, no, no, no, no. But Milwaukee, they were doing all of their manufacturing in China, sending it over to the United States.

• 21:32Auren Hoffman?

  Ooh, that's very, very sneaky.

• 21:34Speaker 01

  Yeah, their drills are inordinately cheap. And then as soon as the United States starts tacking on tariffs that could impact those products in China, what do they do? They move them to Vietnam. And literally in three years, Orin, like a light bulb switched on. They're not using any Chinese components. All of it's been up. You think to yourself, huh, is that real? What's really happening there? Do you think that they haven't verticalized all those supply chains from China back into Vietnam? Come on now. So what it does is this kind of opacity, it leaves companies at an economic disadvantage because China's able to wield this extraterritorial power and put these sort of veneer centers

• 22:19Speaker 01

  all over the world, making it so that the components and the parts, those are still coming from cheap supply chain lines. And then they're assembling it, maybe even at a veneer level somewhere else.

• 22:30Auren Hoffman?

  Yep. And the Chinese state is helping companies, their intelligence services and stuff, help their companies. That doesn't happen in the US. It may happen in some countries like France or something, but it doesn't happen in the US. So they have a lot, and those intelligence servers might be involved with bribery, or they might have other types of things to help their companies along.

• 22:49Speaker 01

  That's right. I mean, there are literal laws, there are blocking statutes, Orin, where it gives the companies in China, not only the right, but the specific charge to obfuscate from the United States, anything that could lead to any United States enforcement of their laws.

• 23:08Auren Hoffman?

  Yep. Which is not surprising. I mean, these are very smart people, very smart adversary. Now, we have a lot of people listening that are data folks. What are the big data sourcing challenges around all the supply chain data?

• 23:20Speaker 01

  Yeah. So the first thing is the accuracy of the supply chain relationships. So at first, most of what people were doing, let's go back five, 10 years, most of what people were doing to try to understand supply chains was doing analysis on things like commerce records, import-export records, stuff like that.

• 23:41Auren Hoffman?

  Shipping things, those types of things. What's in the container?

• 23:44Speaker 01

  That's right. Now, there are some countries that have exposed that stuff globally. Obviously, China in 2018 decided to shut down their import-export data sharing with the rest of the globe. The EU has never been big on publishing their data.

• 24:00Auren Hoffman?

  And why not?

• 24:01Speaker 01

  For exports.

• 24:02Auren Hoffman?

  Why isn't the EU?

• 24:03Speaker 01

  I think there are considerations of privacy, considerations of data ownership. They're much more exclusionary than they are inclusionary. They want things to be rebut from being publicly available.

• 24:19Auren Hoffman?

  Yes, they're kind of like anti-free speech in a way, erase your name from the internet type of stuff.

• 24:24Speaker 01

  Yeah, not a lot of visibility to what they believe to be potentially owned information. So I think that the European ports have not gone to open digital platforms because of that. But also, most of the ports still have a huge dependence on written records.

• 24:43Auren Hoffman?

  Yeah, I've seen some of these records. It's like inherent, you can't even understand. And maybe it's specifically done that way. I've seen PDFs of these things.

• 24:52Speaker 01

  It's crazy.

• 24:53Auren Hoffman?

  You can't even OCR it. No AI would be smart enough to decipher this terrible handwriting.

• 24:58Speaker 01

  Yeah, that's right. That's right. And so the jump or the leap from saying, okay, we're going to use things that are shipping records that have limited visibility into more nuanced, more granular, more product-specific supply chain data has been a hard jump. But it's been a fantastic one because the other big data challenge that we try to solve is how do we get from unstructured content? How do we get from non-traditional sources? Supplier reliance? And then how do we triangulate where that supplier is actually manufacturing that information? So I'm going to let you in on a little secret that we use product manuals for a part of this.

• 25:43Auren Hoffman?

  Ah.

• 25:44Speaker 01

  So we get replacement manuals for products. And in replacement manuals, it tells you where suppliers can be found to actually order replacement parts.

• 25:57Auren Hoffman?

  Ah, got it. So if this specific bolt breaks, you can call this guy in wherever, Vietnam, to get that for you.

• 26:05Speaker 01

  Yeah, and this is the MPN to it. And this is the manufacturing process and blah, blah, blah. There's a lot of data in unstructured sources like that.

• 26:17Speaker 01

  And then what we do is we reverse engineer those unstructured sources into the locations where we know that those suppliers are manufacturing. Very often, they have specific certifications or specific business units that are aligned with the type of manufacturing that one part is made of. And so what we can do is we can say, oh, this part is hexagonal self-locking nut. That's made out of their nuts and bolts business that is based in this part of Vietnam. Then that part of Vietnam is the place or the facility that we're going to start monitoring to understand whether or not you're going to be able to continue to get that bolt when the next tsunami hits, for instance.

• 27:02Speaker 01

  So we've been using unstructured mining that we then validate.

• 27:08Auren Hoffman?

  Now, the problem, of course, is I assume a lot of the data that you might get out of a manual may be wrong or hasn't been updated in a while or something like that. Even though when you get this big manual from your drill or something there, I imagine they're not so good about updating it themselves.

• 27:24Speaker 01

  That's right. You do have data latency issues, but if you triangulate between the three major sources. So we have data that is commercial in nature. So import, export records, customs brokers, third-party resellers. There are some great resellers that publish a lot of their catalog and then where that catalog is coming from. So we use a lot of that sort of reseller data. So we take commercially available information. We take the unstructured data. And then finally, we also take proprietary data sets. So one of the things that we've done over the last couple of years is we've made five

• 28:03Speaker 01

  acquisitions and four of those we made because they process proprietary data for some of the largest government agencies or some of the largest corporations in the world. And as a part of processing that data, they've been able to capture data that is their own.

• 28:20Auren Hoffman?

  Like a summary of it or some other type of stats on that data or something like that.

• 28:25Speaker 01

  Exactly. It's stats on the data, the supplier purchase, the price, the inventory levels, all of that stuff. And so those three things allow us to then have a model and we have our own model that we use and that we've built to say, this is the part that is part of this stent. For instance, our AI can say, okay, in the stent, you have a nitanol sheath. You have a polymer layer that's used for insertion. Okay. So then it'll say, in that stent, you then need the polymer. Well, the polymer is made of a natural rubber. Where do you get that natural rubber from? And then the second part is it'll say, okay, so then you have nitanol. Where do you get that nitanol from?

• 29:10Speaker 01

  Who forms the alloy? And then what you can say is, okay, where is the nickel and titanium sourced from for nitanol? And so what we can do is we can say, okay, the Exiger model says this. We can run it then, let's say in our GPT model, and then we can run that in our Mistral model against our data and have them confirm whether or not we find the same thing across each of those different AI tools. And then we can validate a final derivative answer. So that gets us to the most recent information across those three major data types. And then what we do is we continuously monitor that. So we feed data about these parts and products on a continuous basis into our system.

• 29:55Speaker 01

  And that allows us to identify when one of those signals might change and force us to adapt the graph data set that we've created.

• 30:05Auren Hoffman?

  When you're buying these companies, I assume because you're a strategic buyer, you could pay a lot more than a financially oriented buyer, like a PE firm or something like that.

• 30:15Speaker 01

  Yes. We not only are able to make that promise, but the more important promise that we make to them, Orin, is that we will actually deliver to them a better return on investment for any equity they roll in addition to the price we pay.

• 30:32Auren Hoffman?

  Okay, so for the people might want to roll some of their stock into the bigger company.

• 30:37Speaker 01

  That's right. So when we bought Supply Dynamics in August of 22, those employees, those teams rolled money into Exiger and I said, hey, I'm going to make it so that the equity that you roll in will deliver, let's say you roll 30% or 20% or 10%, it'll deliver more in total valuation than your first payout bit. And I can show them the math on the equity to get there.

• 31:04Auren Hoffman?

  Obviously, if you're compounding at 20 plus percent and they're only going to be able to get 10% in the stock market or something or less, so.

• 31:12Speaker 01

  That's right. Our CAGR over the last five years has been just under 80%. So when you're talking about growth, we're a very safe.

• 31:22Auren Hoffman?

  So obviously you can pay more, so that's great, but these companies still just trade whenever they trade. Are you going in there to try to make the deal happen? Or you've got this list of companies and then you're waiting for them to get a process going and then doing it?

• 31:37Speaker 01

  Well, we are proactively, continuously surveying the market. Right now, we're in an integration phase. So we're investing 32% of our overall revenue back into R and D. We're investing a huge amount of CapEx back into integration and R and D. So we're in an integration and R and D phase. But then as soon as we're out of that, we have a list of 20, 30, 50 companies in a priority order that we want to go out and capitalize on, depending on where the market is and depending on where our own R and D has been able to open up and unlock opportunities.

• 32:12Auren Hoffman?

  Let's say you've got these 50 companies on a list from 1 to 50, and you're not ready to acquire something today, but the number 81 is running a process tomorrow. You're in that process, I presume, anyway?

• 32:23Speaker 01

  We're in that process. We're learning about the company. We're seeing if the juice is worth the squeeze. And all of these companies, we don't buy anything for market share, aren't we? We're not yet at that size and scale where we're just looking to create a conglomerate. What we're looking for is enhancement of capability.

• 32:41Auren Hoffman?

  Product, essentially.

• 32:43Speaker 01

  Exactly. Product enhancement, product build out. We want to build everything back into the main platform and we want those capabilities to benefit our existing customers. This is true upsell, cross-sell stuff. And so, we're looking at the depth and quality of the technology and we're looking at the depth and quality of the proprietary data that those companies create. We think that there's something special about what they've done. And so, we're in that process because we don't want to lose visibility to something that could potentially augment our capability to dominate the market. And you'll see the result of that. I think the Gartner Magic Quadrant is being published this week or maybe next week at the latest. And so, for the supply chain risk management market, you'll see the benefit of that when they publish soon.

• 33:29Auren Hoffman?

  But do you or your customers put any stock in anything with the word Gartner on it? Coming from the tech world, it's like, anything Gartner says, almost usually you just should do the opposite. And that's usually the better strategy or forced to. They're usually wrong. Is it still good marketing because your customers are these huge behemoths and they still care about what? Some random entity like Gartner. I mean, I'm showing my own bias here. Gartner just seems like the worst way out there.

• 33:54Speaker 01

  So analysts in general, I think people take a healthy degree of skepticism. But Gartner in particular, because they've picked winners, and I'm not going to mention the others, but some others that said things like, "Oh yeah, right, Apple. You're going to get into the cellphone market." Some analysts have just been so wrong at so many whiffs. But you know, Gartner bet on CrowdStrike. CrowdStrike then dominated. Gartner bet on ServiceNow, and then ServiceNow became something that we couldn't even believe. I mean, think about the CRM play that they've built. It's unbelievable.

• 34:28Auren Hoffman?

  It's incredible. Both of those are incredible companies.

• 34:31Speaker 01

  And so, Gartner, from our customers' perspective, seems to still hold that cachet of a kingmaker is picking the right horses. And so, I think it's beneficial to us. But what they do, that I think is pretty special or unique, is they do take into account the customer testimonials and the customer feedback that they're getting and all of the customer day-to-day engagement that they have at Gartner. And so, it is very ground up from the market, which I think gives it a little bit of credibility. But I know that analysts in general are universally hated.

• 35:08Auren Hoffman?

  Just whenever I talk to them, I just don't find them that bright.

• 35:11Speaker 01

  Yeah.

• 35:11Auren Hoffman?

  That's just me.

• 35:12Speaker 01

  Just getting back to your question on data challenges, because I want to make sure I'm saying something to the data community here. One, the best way for us to validate and to create the best data for supply chains is to have a multimodal, both SLM and LLM structure, and then to consume as much data as possible. Or because of our scale, because we did that recap with JMI Insight and Carlisle in 2023, we've been able to thrust forward our data purchasing, our data scaling, our data consumption.

• 35:52Speaker 01

  And just having access to that now and letting the LLMs and the SLMs make sense of it and give us heavily cited supply chain relationships, it has been transformative.

• 36:05Auren Hoffman?

  Because data is usually our four nouns, people, places, organizations, and products. And I don't know how much you have on the people, but you have tons of stuff on the other three nouns.

• 36:15Speaker 01

  Yeah.

• 36:16Auren Hoffman?

  And then you've got to do all the joins that happen because all these products that are somewhat similar that have to be categorized and you just think of a two liter Coke bottle and then a little Coke bottle and then Diet Coke, they're all related to one another. I imagine in your case, it's even more difficult. They don't have an ISBN number usually and some other type of thing. So it's like, how do you think about all this entity resolution?

• 36:41Speaker 01

  So the first thing I would say is beware the company that says that they are going to implement a standard graph database for you in your supply chain visibility solution. Because the fact is that your products are unique.

• 37:00Speaker 01

  Your products are unique, even if everyone is sourcing to Jabil because they're a standard scaled, top-tier OEM, your supply chains are unique. And so when I bring in, let's say, all of the supply chain data related to your vendor, Jabil, your supply chain for your component, let's say you're a motor scooter manufacturing company, and Jabil's doing your manufacturing, their manufacturing processes, their manufacturing suppliers, their manufacturing capacity for that supply chain is completely different than what they're doing for Google or Azure or AWS.

• 37:42Speaker 01

  And it's going to be subject to different constraints, different limitations, different supplier base, even if they're using the exact same hexagonal nut with cadmium plating and passivated finishes. It's going to be different. And so when people say, oh, yeah, we're plug and place supply chain visibility, it is BS. The only way for you to truly map your supply chains is to take into account the product lines that you're purchasing for, then the parts that are associated with those individual product lines and the unique technical specifications that are associated with those parts, and then to map the supply chain from there.

• 38:25Speaker 01

  Now, you might use the same data set, you might use the same data and information, but your graph set is going to be uniquely different from those other companies that are in the universe. And if you have somebody plug in their entire graph database, get ready for it. The hailstorm, the typhoon of false positives that you have in this.

• 38:48Auren Hoffman?

  Yeah, I mean, the problem with any entity resolution is both the false positives, and most of the entity resolution systems I've seen is just astronomical. And then you're always going to have tons of false negatives too, which maybe is better than having a false positive, but still can be a huge problem.

• 39:02Speaker 01

  Oh, it can be tough. But that's where what we've done is we've been moving away from, on the entity level and the product level and then the part level, moving away from semantic relationship analysis into what I call entity identity. So on both sides of the coin, we force enrichment.

• 39:23Speaker 01

  Let's say I'm looking for JIT Industries in Alabama. So I searched them. I might also get JIT Industries in South Carolina that comes back because they have the same name, same information. I have that disjunct. The fact is that one company makes something very similar to the other company. So you even have this disjunct in terms of industrial classification. You can't just use an AICs code to separate them. What you actually have to do is you have to build the underlying profile. So who are the KMPs? What are the cage codes that they use? What are the facilities that they have? Where has their funding come from? And you actually have to build that in advance of trying to do the match.

• 40:08Speaker 01

  And then that match becomes much richer in terms of false positive and false negative improvement. And so what we're doing right now is we're looking to actually move from semantic relationship and traditional entity resolution clustering, which is just saying, here's where I've got enough information where I know is equally connected to this entity, where when I get a new address in, I can actually connect it to the entity and have good confidence in that. It's actually forcing both sides of that transaction to build out a full generative profile on the fly and then making the match, which actually makes the matching take a little bit longer. But when you think about all of the things you build off of the match or, so I'm going

• 40:53Speaker 01

  to build your risk profile off of what you match against. Well, then if I've got that first match wrong, well, then I'm going to build a risk profile that's going to compound this issue of a false positive. Now I've got false positive risks. Now I've got false positive corruption. It's an exponential equation. So we're just investing a lot more in the entity identity analysis as opposed to just traditional semantic analysis.

• 41:20Auren Hoffman?

  You guys are in the DC area. What are some of the advantages of building a company in the DC area?

• 41:27Speaker 01

  Yeah, so obviously, we have really, really close proximity and really tight integration with the regulators. So that's a huge benefit to us. We talk with the people on the Hill. We talk with the people in the administration.

• 41:43Auren Hoffman?

  Right. And people at your company, their kids go to school with those people. And so they'll see them at the soccer game, too.

• 41:51Speaker 01

  Yeah, yeah, that's right. And so we think about government affairs. We think about integration and writing policy and writing law as core parts of our go-to-market motion. I don't think most people or most companies, until maybe the last couple of years, really thought about how to invest in policymaking, in regulatory rulemaking as a part of creating the market that they're in and defining the market so that they can meet those business needs. And so being in DC, we're just so drenched in it, we can't get away from it, even if we wanted to. And so that's a real advantage. The second thing

• 42:31Speaker 01

  about being based in DC is that there are lots of really nice hubs around DC where you can get great talent. We have an office in Tyson's. And so we get a lot of the pull from the defense technology companies that are out there, like SAIC and all the other great companies that are in the Beltway. But then also, we're a hop, skip and a jump away from Richmond, and we can pull from all of the UVA talent, all of the Virginia Tech talent, all of the VCU talent. We've got these great hubs that are so close to Washington, where it's a 45-minute or an hour and a half drive away. And we're in a completely different cost of living. We're in a completely different labor market. We're

• 43:16Speaker 01

  in a completely different group of people that we can pull talent from. So DC's just got this great central point to it, in addition to be, obviously, the center for policymaking and for world volatility right now.

• 43:31Auren Hoffman?

  Now, back in the day, the only CEO with a beard was Larry Ellison. Now it's super common to see CEOs with a beard. How do you think about that? Obviously, for people who are listening, they might not realize you have a beard. But I would say a very high percentage of people I interview nowadays have a beard. It was that never happened 20 years ago.

• 43:49Speaker 01

  Yeah. So if you look back at my old pictures, I've always had the beard. So this isn't a copycat.

• 43:54Auren Hoffman?

  So you were an OG.

• 43:56Speaker 01

  I'm an OG beard guy. Yeah, yeah.

• 43:58Auren Hoffman?

  Pre-gray hair.

• 43:59Speaker 01

  Yeah. It's now almost completely gray, but it is still, the beard is intact. I think that people used to think that beards reflected either something that was much older, much more professorial, or people felt like a beard was uncouth.

• 44:17Auren Hoffman?

  Yeah, yeah.

• 44:18Speaker 01

  One or the other.

• 44:19Auren Hoffman?

  Well, obviously now we have a vice president with a beard. These are just new things that we just didn't have before.

• 44:24Speaker 01

  That's right. That's right. And so the way that I feel about the beard is if you can keep it intact, if you can make sure that it doesn't go over.

• 44:34Auren Hoffman?

  Too crazy. Yeah, yeah.

• 44:35Speaker 01

  Yeah. It actually shows a level of discipline.

• 44:38Auren Hoffman?

  Totally. Good point. Yeah.

• 44:39Speaker 01

  You really gotta invest. I can shave this beard off and shave tomorrow and shave tomorrow. And it's a quick touch up.

• 44:46Auren Hoffman?

  Yeah.

• 44:47Speaker 01

  It's no problem. But keeping this thing so that it actually looks presentable takes real commitment. Shows that you're a disciplined guy.

• 44:55Auren Hoffman?

  Yeah. It's like gardening. All right. Two more questions we ask all of our guests. What's a conspiracy theory that you believe?

• 45:01Speaker 01

  So I actually, I don't have a lot of conspiracy theories that I believe because I'm actually one of these people that believes that the world is just not that organized. I've gotten the chance to meet a lot of global leaders. Like I said, I spend a lot of time in Congress. I probably have 200 congressional members and senator meetings a year.

• 45:23Speaker 01

  I'm meeting the world leaders. We were a part of the COVID-19 response. I got to meet so many CEOs of major pharmaceutical companies and medical device companies and stuff like that. I was a part of the monitorship for HSBC. I was leading the compliance overhaul for multiple banks after the financial crisis. When I meet people that are in the positions of power and control, they're just like us. They're trying to get through the next challenge, the next hurdle, the next blocking and tackling motion. So I'm not a big conspiracy theorist.

• 45:56Auren Hoffman?

  But we literally just went over like six of them, all these different pricing conspiracies and evading sanctions and.

• 46:03Speaker 01

  Yeah. And that's just habitual greed. But I do have one where I have a anti-conspiracy theory.

• 46:10Auren Hoffman?

  Okay, great.

• 46:11Speaker 01

  So I don't believe that super intelligent life, like a human, exists on any other planet.

• 46:19Auren Hoffman?

  On any planet, period.

• 46:20Speaker 01

  On any other planet besides Earth. And I'll tell you why. Because most of us think about the sort of circumstellar habitable zone. But there's this guy, Dr. Hugh Ross, and I'm a big physics buff. I invented a theory called the probabilistic constrained collapse theorem. And I will probably publish it one day. I've tested it through every model. It's a model that basically marries classical mechanics and quantum mechanics and can help to do things like predict qubit positioning in quantum computing. But basically, I'm a big theoretical physics buff. And there's this guy, Dr. Hugh Ross, who was a Caltech

• 47:00Speaker 01

  professor that wanted to prove the existence of God. But one of the things that he did was he looked at what are called the habitable zones. And there are actually 11 habitable zones. And I've done the research behind what Dr. Hugh Ross had done. And there's the circumstellar habitable zone. There's the ultraviolet habitable zone. There's the tidal habitable zone. There's the obliquity, the eccentricity. But there are all these habitable zones. There's 11 of them. And the probability that all of these would exist at once is so near zero.

• 47:36Auren Hoffman?

  Oh, you have to have them all happening to have intelligent life?

• 47:40Speaker 01

  That's right. All happening and the universe would have to be as big and as old as it is to have all of these probabilities coexist.

• 47:50Auren Hoffman?

  And you don't think it's ever happened in the history of the universe? Or you think it is not currently existing right this second?

• 47:57Speaker 01

  I don't think it currently exists right this second.

• 47:59Auren Hoffman?

  Okay.

• 48:00Speaker 01

  I'd have to do a lot more math and a lot more thinking to think about, did it ever exist?

• 48:04Auren Hoffman?

  All right.

• 48:05Speaker 01

  So I don't believe in the alien conspiracy theories. And I think that there's good evidence that it doesn't exist at all. And so that leads to a bigger conspiracy, which is what the hell are all those UFOs?

• 48:19Auren Hoffman?

  All right, but last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?

• 48:26Speaker 01

  Do what you love. It's again BS. Andre Agassi never loved playing tennis. Incredible tennis player. Incredible tennis player, loved competition, knew he was good at it. A lot of people that are doing the greatest things in the world today, didn't start out thinking that that's what they wanted to do, didn't get joy out of those things. They realized that they had the intellectual capacity to understand them, the unique capability to execute against them, and the will to bear the objections and the rejection that comes with trying to do something new. And so for me, I didn't imagine myself being in supply chains.

• 49:11Speaker 01

  I wasn't originally in love with data analytics and artificial intelligence. I became a programmer because I had to. I became a risk management expert because I had to. I realized the market opportunity in supply chains. And we built this business because we knew it was necessary.

• 49:30Auren Hoffman?

  But you love it now.

• 49:32Speaker 01

  I love it now.

• 49:33Auren Hoffman?

  Right. So Andre Argus had never loved tennis ever. He never ended up loving it.

• 49:37Speaker 01

  It's don't be over precious about what drives your passion because what you're good at and what you love at any one point in time can be in conflict and that's okay. But it's the grit, the determination and the willingness to push through that, to wake up every day and keep working until you've achieved your goal. That eventually becomes the thing you love.

• 50:03Auren Hoffman?

  So I've asked this question out of maybe 200 people and I'd say 50% of them, very high percentage, 40, 50%. You have the exact same answer. You now almost, I feel like now must be the conventional wisdom not to do what you love because everyone now believes this thing. Which makes me more skeptical now. Maybe we should do whatever. I don't even know how I think about it anymore.

• 50:23Speaker 01

  The thing is though, I mean, if you think about the Japanese principle on work. And there are a lot of people that even in my own business say to me, oh, this isn't my core skill set, or this isn't what I'm good at, or this isn't where I find joy.

• 50:38Auren Hoffman?

  Fulfillment. Yeah.

• 50:39Speaker 01

  Yeah, fulfillment. And I still think it is very common for people to think I'm going to do what I'm fulfilled by. Ikigai, Japanese principle and that kaizen incremental growth principle. Where you have harmony between what you love doing and what you love working on. Work is hard and I'm glad that 50% of the people said what I said because I think all of us need to realize that's the reality.

• 51:11Auren Hoffman?

  There's a certain generation where they almost have this expectation like, oh, I have to get the massive fulfillment out of the work stuff. Where maybe that just grows over time. And if you're 23, you're probably not going to get that much fulfillment that comes out of it. One question for you. Tell me if you disagree or agree here, but working with people you don't respect, you don't enjoy. That seems really tough. And so, I mean, obviously for some people, they don't have a choice. They have to do what they have to do. But if you have a choice, should you be choosing to work with people that you respect, that you enjoy working with, et cetera?

• 51:47Speaker 01

  I think you have to be willing to work with the people that fate puts in front of you and learn from it. The people that I have learned the most from, with one exception, I mean, I've had some bosses where they taught me incredible lessons that I took with me. Incredible lessons in the way that they operated, incredible lessons in the way that they thought about business, and I will take those with me. But I've learned just as much, if not more, from the people that I thought couldn't offer me a lick of advice. And I learned how not to do

• 52:27Auren Hoffman?

  things. Yeah, sometimes that's the best thing to learn.

• 52:30Speaker 01

  So many people, by working with people that have those tough personalities, I've learned so many people just want to be heard. And I wouldn't have learned that if I didn't work with people that I didn't enjoy. And so I think life's too short to stay with those people for very long, Orin.

• 52:51Auren Hoffman?

  Yeah, you don't want to be married to those people.

• 52:53Speaker 01

  That's right. But having them in your career, it's like when you lose deals and you do the postmortem and you learn and you get better. It's like Nelson Mandela said, "I never lose, I win or I learn." Same principle goes for people.

• 53:07Auren Hoffman?

  I love it. All right. Thank you, Brandon Daniels, for joining us at World of DAS. I follow you on LinkedIn. I definitely encourage our listeners to engage you there. This has been really interesting and a ton of fun. Thank you.

• 53:17Speaker 01

  Yeah, thank you, Orin. It's been awesome.

• 53:21Auren Hoffman?

  Thanks for listening. If you haven't already done so, please subscribe to World of DAS wherever you consume your podcasts, YouTube, Apple, Spotify, and more. And please help us get discovered by leaving a review. And check out worldofdas.com. That's worldofdas, D-A-A-S, dot com. And of course, connect with me on Twitter, at Auren, that's A-U-R-E-N. Would absolutely love to hear from you.