A lot of people, when they look at products, go for the flavour or the taste. However, there’s a new trend of consumers that are looking for something more intangible like how they can give back to the community or connect with the story behind, and it’s growing tremendously. Yonathan Lapchik refers to this as conscious consumerism, and it’s going to be the way consumers are going to be in the next few years. Yonathan is the CEO of SUKU, a supply-chain-as-a-service ecosystem that aims to transform global supply chains. A blockchain specialist with a strong business and technology background, Yonathan joins Monika Proffitt to talk about food Sustainability and conscious consumerism and how he fell in love with the concept and joined the movement.
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Food Sustainability And Conscious Consumerism Through Blockchain With Yonathan Lapchik
I’m here with Yonathan Lapchik. Yonathan, thank you for joining us.
Thanks for having me, Monika.
As the CEO of SUKU World, I’m excited to learn more about your background, not only as a Deloitte consultant, bringing blockchain solutions to all kinds of protocols, but also how you transitioned into food sustainability and conscious consumerism. Those two things seem far off from each other and it looks like you’ve taken a leap. I can’t wait to learn more about SUKU. Can you tell me what made you want to start it?
I’ll go back to my days doing my MBA back in 2012. I went to a class of Professor Campbell Harvey, who is now an advisor of our company. He was doing a planner’s class. That day he decided to talk about Bitcoin. I was always crazy about ideas, new concept and new engagements. He said, “Come with me and learn about this.” I heard about Bitcoin, but I never understood. That was the first time that I understood what was blockchain, what was Bitcoin. I immediately got obsessed with it. At the end of my MBA, in 2014, I wanted to do something with that obsession and the passion that I had to build a probe and make some impact with blockchain.
I decided to join Deloitte. I joined Deloitte as the Product Lead for the Blockchain Lab that we had in New York back in 2014 and held them for four years. Connecting with Fortune 500, taking them through ideation sessions, showing them the power of blockchain, how blockchain could transform their businesses and building some prototypes and solutions. At the end of 2017, I was leading Deloitte, creating my own fund when I met one of our clients, a company called Citizens Reserve, which is the company that I’m CEO right now. We were helping them design their supply chain solution. I immediately fell in love with the concept with the team and decided to join thema couple of weeks later.
What made you decide you had to join them at that point? Let’s back up. You were approached. It took you a couple of weeks to make this huge decision to leave what you were doing. How did that happen? What convinced you this was the time and this is the place? This is 2018. We’re talking some crypto winter at that point. What made you think this is the time to leave?
First of all, it was the craziness of 2017. It was a good time to take some risks. Some things you can’t explain. I’m in great connection with the founders. When we were working on Deloitte, we saw through the verticals that supply chain was the one that we had the most structure because everyone wanted to do something around traceability. It was a great fitwith the use of blockchain.
What exactly does SUKU do? What is Citizens Reserve doing in terms of a great fit for blockchain and sustainability? That’s a high level. If you were to tell me in a sentence or two, what do you do that addresses food sustainability?
We connect. We help brands and retailers better connect with conscious consumers byproviding more transparent products. We make products more transparent through the use of blockchain. What we saw is when you think about the traceability of products, not only food but any product, gives you the right channel to connect with this new trend of consumers that are not looking also for the product, not looking for the flavor or the taste or the color but looking for something more intangible like how do they give back to the community, how do they connect with the story behind, how arethey fulfilling these sustainability initiatives.That’s the new trend of consumers. It’s growing tremendously and it’s going to be the way consumers are going to be in the next few years. Everyone is going to be a conscious consumer. We saw a huge opportunity to tackle that group that wants to buy products, but they don’t do it because they don’t trust the brands. We created that technology to help the brands connect better with them.
Is it to build an economy of trust?
I will remove the word trust. We are moving away or moving frommodels based on trust, models based on proofs,transparency and truth. That’s what we want toprovide. I don’t want to trust anyone. I would want to verify that something happened and we created technology to enable that.
I’ve thought a lot about this because when we titled this podcast the New Trust Economy, it was like, “Should we call it the New Trust Less Economy?”It is true that in action, in function, we’re coming to a trustless economy. What that can produce now is emotionally a sense of greater trust in the reality that we put ourselves in. It’s odd that we end up with less trust needed. We have more of a trusting experience and not trust based on blind trust. It’s like knowledgeable trust where you go, “I can look you in the eye and I know what I’m looking at. It’s not only that you’ve proven yourself, but I now don’t have to have this untrusting guard about me because I know who I’m looking at.” In removing the need to have blind trusts, you give a vision trust. It’s very strange butI’ve thought a lot about what is a trustless economy and what is a trust economy.
We madean exercise. Theword we want to replace it was “truth,” the truth economy. Sometimeshuman beings need to trust someone in a relationship. When you’re talking about business, you don’t need trust. I’m buying something. Someone is telling me that something is organic, I don’t need to trust you. Prove me that. I don’t need to spend time on equal technical cases if I need to trust you or something happens when you’re not telling the truth. I just want to be able to prove that.
Is it organic? At some point, we’ve been taught as consumers, we have to trust that it’s organic because it says so and we’re paying for it.
Is it coming from this region? There’s no reason to trustin those scenarios. We replacetrust withthe truth.
I can think of many times when I have thought, “You’re going to up the price. It’d be easy to make, for example, fake non-blood diamonds.” Blood diamonds are everywhere. How would you ever know that unless you could track that? I can think ofmany huge verticals whose matter, especially organic food. I personally have an allergy to glyphosate and that’s in almost all of our food in the States. If I’m going to bake anything, I literally have to go online. I found out there are two countries that were the first to ban Roundup and glyphosate in their wheat production and, therefore in flour. That’s Germany and France. I have to get French organic flour imported. It’s $10 for a little pound and then I can make holiday cookies that I want to make for people so that I can eat them and not have a runny nose and Heinz breakout on my neck. I can’t eat bread. That’s not true. I can’t eat glyphosate. I can’t eat chemicals. I might as well say I can’t eat bread because there is no bread in the US that hasn’t been touched by that chemical. I can’t eat bread until I go to France. It’s amazing and I love it.
I personally experienced the effects of not knowing where something comes from or being the canary in a coal mine to tell myself, “I must have had glyphosate.I’m getting the runny nose that I always get.”If I do it for too long, I’ll have stomach cramps and side effects in my whole body. I’m sure everybody is negatively affected by this chemical, but I am the canary in that particular coal mine. I would love to know for sure so I can be absolutely sure to say no to all these brands and maybe be able to identify more that would be good for me. Organic food and diamonds, when you say brands, it makes me think of fashion because that’s usually the first thing that branding is associated with a look. In terms of brands and verticals, it’s a blue ocean for you guys, but where have you decided to focus on?
We decided to start with food, specifically with meat. We launched our first partnership in Latin America with one of the three largest retailers over there,a $14 million revenue company called Cencosud. They have 1,100 stores with presence in Peru, Colombia, Chile, Argentina and Brazil. They’re big. We decided to start with the meat. You go to the supermarkets in Peru and you’ll see their brand along with premiums with the packaging, with our logo, with a QR. You go there and you scan the packaging. First of all, you havea video of the farmer where you’re going to see their faces. You can create that connection. It’s like it came here to the market this day, from the distributor, from logistics, from the processor. Every step has attributes. I provided vaccines with no hormones. All I have are certificates.
Everything they say about the product is verified either by someone saying,“Yes, that’s true,” or by a document. If it’s a certificate that certifies the animal welfare, you go, “We don’t ask the certificate to them. We go to the certificator directly.” They issue and they send us the certification.In the end, you create value through that. You can see the farmer. You gohome, you like the meat and you can see the farmer on the other side. You have a lot of dynamicsover the app. That’s how we discover that we can fill that gap between the conscious consumers that are looking for something more transparent and there are brands that are looking to connect with them and being able to help with sales hopefully. That’s what we are proving now. This technology is not at all saying that we need transparency. It’s going to hit targets around sales. They’ll be able to sell more through this technology.
It has an additional advertising mechanism for them as well.
It’s advertising, but it’s a tool to communicate these differentiators of their products. Sometimes the product is different than the other and it’sdifficult to communicate a message or to prove different aspects of the product. We started with that. The idea is now to expand into fish, chicken, fruits, wine until we become the sole verificator of all the products.
If there’s any farm-raised salmon, you’ll be like, “Here’s the picture of the farmer injecting it with something orange.”
When you think about cows and all that, you don’t want to really think about the cow.You need to be careful with every product and what you want to show, how do you want to connect with the farmers. There’s food, but it’s going to be furniture, luxury items. Every time that you scan, you can see the transparency. You can see if it’s authentic. You can see their prominence. It is the Trojan horse.For us, these are the channel to be able to help network our farmersthrough financing tools and tools to give themthings that they’re not getting now likeloans. It’s $20 loans every single month through our tooland being able to help these retailerswith the product.
We have these features where you scan and you can get a new experience. We have partnered with a company called Dream View where you can get the object like a virtual reality object. If you’re buying a mat, you can see how the mat places on the floor or a couch. Different ways to engage with the product helping the retailers better sell the product. That’s all helping these farmers through the initiatives that we know we’re doing around traceability.
I now realize that you’ve gone into South America as your primary market. Where are you from and does that influence where you’re focusing initially because you have an expertise in it or that happened organically that it happened to intersect in such a way?
I’m from Uruguay, a small country between Argentina and Brazil. It made sense to go out of the US at the beginning because of regulations. It’s difficult to navigate all the regulations around blockchain and cryptocurrency. We decided to start in Latin America. We have connections there. It made a lot of sense. It’s a market that nobody is tapping. It has a lot of potentials like converting real users into the cryptocurrency and blockchain market. It’s a great opportunity to help them and educate them on the benefits by giving them a real obligation, not by teaching themwhat’s blockchain because nobody cares. You didn’t have a real value. Do I get value or not? If they get a value, they will learn.
You mentioned cryptocurrency in the Latin American and South American markets. I am completely ignorant about what types of laws do or do not exist and if they are more or less or even specifically defined as restrictive or unrestrictive down there compared to the US. Did you have anything definitive to go on?Were you like, “There’s been less out of Nicaragua so we might as well check them out,” or were you shooting in the dark?This seems like in the early days with blockchain, we were in terms of what jurisdiction was going to crack down next. Are there certain areas that you found that they’ve literally definitively said, “No, we’re fine with cryptocurrency and blockchain technology coming into our supply chain?”
It’s still early. They don’t have much yet. They’re still learning from what we’re learning here in the US as well. It’s more open in the sense that you can play with the different solutions, explore and work with the government to show them the benefits. It’s easier to get to those entities by showing them real obligations. If we have the right connections, it’s being able to show them a real obligation working in production and with a real retailer. That’s the opportunity.
You’re going to do other meats, fish and poultry and whatnot. Are you thinking of expanding beyond food?Is this going to be a food-specific, food-focused company in terms of the supply chain?
We are exploring different cases. We’re opening up in different areas, not only verticals but also around different products. What are the features that we’re going to include in order to help retailers, but also help our farmers, suppliers and end producers?We have a strong initiative around luxury items, sneakers, handbags and also furniture. It’s across the board. It’s important to select your battles. The bigger battles, it’s impossible to be everywhere. Focus is going to be important.
It sounds like a hearth and home-oriented perspective that you come from, one where it’s like food and home items, furniture, things that people touch every day. It’s consumer-focused, everyday use type of nice defensive stocks.
It’s important because we are trying to agree on a new engagement model, a new way to connect. The sale doesn’t stop when the sale ended. The sale extends after that so you can create new channels of communication with the consumer where you can buy a t-shirt maybe. When you scan a t-shirt, I can invite you to the fashion show live and you can get access to it. It changes through the products on how you connect differentlywith these consumers, who are looking for something else, not just the product they’re buying.
It makes me think a lot about some cost-based economic models that I’ve been working on because cryptocurrency is the best to take money in the most basic sense. Strip away every regulation or rule that’s ever happened to it before and then rebuild from the ground up to see even as an experiment. You can come up with many more exciting things than inflation and inflation-proofmodels where I’ve noticed that we have everything about our economy that is price-based. The cheaper you can make the price, the more you can continue with your profit as far as you can go. You have to completely externalize the way that you can send new feedback into your mission.
For example, if you’re a profitable company but you want to be mission-centric, you have to have a nonprofit arm or nonprofits that you deliver to. Like at Starbucks, you’re going to get a little token and give back to the farmer or give back to the sustainable bags that you’re buying or whatever those things are. It’s externalized from the internal transaction of what you purchased. If we had a cost-based process, we could cap what it is that our overhead is and be able to replenish an ecosystem that’s larger with the remaining revenue rather than always have extended revenue that can then be diffused or have to be then rerouted secondarily.
Only through cryptocurrencies can these things happen because they can be literally money that is programmed to do and to respond in a certain way to how it is used and when it is transacted. We have this opportunity to do many more engagements that are much more meaningful and lasting and create a circular inclusive economy if we use the best of cryptocurrency. I applaud you for having used fiat in multiple different countries as well as a cryptocurrency to start to get towards your goals. It’s that circular economy is huge.
Whatyou’re describing is part of an engagement that you’re in, is it part of research or you’re building something?
I am researching this now. I’m writing a white paper and I keep anybody who’s already talking about inclusive economic models and they’re in the blockchain/cryptocurrency world. I usually go, “We should probably talk about this.” I’ve been doing a couple of interviews here or episodes on the New Trust Economy that are me talking about an idea. Tracy, my cohost said, “You have many ideas about this. Why aren’t you sitting down and talking to yourself?” I’m like, “Isn’t that a weird format for a show?” She’s like, “No, we’ll do a few. Start with some of these economic models that you’re working on.”
One of them I’ve decided that I’ve called it the cost-based economic model. I compare it in an easy digital app as the product to show two contrasting views of it.I keep looking for new use cases. The first thing you need to find with a use case is someone who has the same perspective of what you’re aiming for has the same value. If you think circular and inclusive economics is important, maybe you and I should have a second episode after we talk about inclusive economics in a more in-depth manner.
It’s something that we’re working on for coffee farmers. These are the model. You have thousands of farmersin Latin America that are in poor conditions. They don’t haveenough opportunities. They don’t have access to financial tools and what they only have is a couple of bags of coffee per month. Through choice, we are asking them to provide us information because that information is going to be valuable for the coffee brand. We will be able to help them connect with the conscious consumer and potentially some more. How do we create an incentive for them to give us that information? We created abox where you send them a text and say, “We sell these bags of coffee to these buyers,” and they will say yes.
Every time they say yes, we give them a token so X amount of token. They started accumulating those tokens. That’s valuable information in exchange for tokens, in exchange for rewards. At the end of the month, they can go in a car and buy products at our partner supermarkets or with the tokens they accumulated, they can put it as collateral. Maybe they accumulated $20in SUKU Tokens every month. You’re getting $10worth of loans every single month to someone that didn’t have access to it.Theydon’t need to put a credit score. They put a collateral based on information that they created. Based on the value they created, you’re changing the lives. That’s the initiatives that welook into choice. It would be achannel for us to help someone, either a retail run or the farmer or the producerthat we’re interested in.
You’re putting into play a basic way of earning value and creating value for people that don’t have money to invest. Passive investment and passive income, all of these things are all for the top 1% of the entire world. The rest of the world has to trade $1or an effort for a thing always. More access points for sweat equity is important. What you’re saying isif they’re already going to be selling this bag of coffee, I ask you a question and if you answer it correctly, then you get additional value. It was off of your labor. That’s the most useful economic process for most people in the world is that they can do a thing because what everybody does have is sometime when hardly anybody has is somecapital. Hats off to you for creating yet another economic model that allows people to maximize their sweat equity opportunities. That’s a huge thing that cryptocurrency is bringing to the world.
I don’t want to get off-topic about SUKU here because this is an amazing episode. We should definitely come back and do a second one or we’ll talk and we’ll figure out if we can do another one of these episodes about a new collaboration in the future. This is fantastic. I usually ask these few basic questions of every CEO or top leader. Assomeone who totally stumbled into being a CEO myself about several years ago, I thought of myself more as thoroughly unemployable, not like a leader. CEO wasn’t something that I associated myself with. It was more like not wanting to follow rules blindly. It was what I associated myself with. Those two things are in alignment.I didn’t know about the second one. I fell into it by accident.
I often thought because I am more of a night owl, maybe I’m not cut out for a day job. I wouldn’t do well in the professional world or I spent twenty years being a working artist, loving Bohemia because the rules are so much more flexible there. The amount of money you make is less, but the amount of time you have is much more. I started to shift my values and my economic system myself and to maximize on what was available to me, which was my time to make things. Now that I’ve moved into a more professional world where I’m creating things, but I am working within a 9:00 to 5:00 scenario. I’m talking to people that have what I used to call a straight job and I’m a CEO, which is a weird thing to be when you used to be an artist.
I ask peoplewhat their background is and you mentioned an MBA that totally makes sense with what you’re doing. I do not have one. It doesn’t make sense with what I’m doing. Are you a night owl? Are there parts of your habits that either you think set you up to easily succeed in this world or things that you’ve found that you’re a little bit of an oddball? One of those questions that leads that one out is, are you more of a night person or a morning person? Do you think it affects your work style?
I’m a morning person. I have two kids. It’s even tougher to be a morning person, but it’s also tough to be a night person. I’m a morning person. I’m most productive between 8:00 and 11:00. There’s no formula. I’m an engineer with an MBA. I don’t think there’s a real formula for leadership, how to execute, how to motivate teams and how to build teams. It’s based on the past experiences and basedon the culture that you want to build. Culture is everything. Here,we put a lot of focus and a lot of energy on the culture that we want to build for ourselves and for our teams. We come fromDeloitte’s Blockchain Lab and we come from these consulting backgrounds, which are rigid and structured. It’sexactly the opposite.
We wanted to have this family vibe, flexibility and leading from the sites.Micromanagement is giving power and trust, which is the only place where we use trust here. Team building is important and we give them enough trust to go and lead and be themselves. The most important thing is being themselves.The one reason that I was excited when I came here was that I used to work for consulting forthirteenyears. It was never me. It was Yonathan inside the office and someone else outside the office. I want to be me inside out. I don’t want to have a filter and think twice before I say something. This place gave me that opportunity and that’s what we’re trying to work with everyone that’s joining us.
The biggest decisions that they make like to lead a company or to go and make this shift, they’ll say, “It made much sense in professional trajectory in those terms, but we’re all human beings trying to find where we fit and what feels good to us.” Whether it takes proof, trust or truth or whatever it is to feel that relaxation of,“I’m not getting screwed over. This is realityand I can trust it. I don’t have to question it.”We all want that and we don’t want to feel like we’re always in a filtered place of saying what we don’t mean or having to make duplicitous or ungenuinemoves every day.Unfortunately, hopefully, it’s dying. The traditional business world seems to require a bit more of that. It’s nice to be in this position where I get to talk to a lot of fellow CEOs that are off doing their own thing. It’s common that we’re the ones that are like, “When I got a chance to jump ship, I did. I had to go.” What other newbig thingsdo you guys have coming up that we can talk about soI can let people know to keep an eye out that’s coming up with SUKU?
We’ve got a couple of other partners that are coming into the pipeline. A lot of features that we’re building in the background,so hopefully we’ll be able to announce some of those. We have a fully-functional productin production. We are a real funder and we’re looking to enhance that and replicate it with different geographies and differentfunders.
It’s been an absolute pleasure to talk with you. Thank you for taking the time. It’s been great. I can’t wait to do another episode with you once you’ve got a few more of these incognito launches out in the world. It will be great to catch up with you again in the future. Thank you so much, Yonathan. I will catch you next time on the New Trust Economy.
It’s a pleasure to meet you. Thanks.