Some sourcing tools compete on features, but Zinit is competing with something far more familiar: the inbox and the spreadsheet.
In this Startup of the Week conversation, host Jyothi Hartley speaks with Stan Moskovtsev, co-founder and US CEO of Zinit, about why eSourcing still runs through spreadsheets and email in many organizations, how Zinit is building an AI-native marketplace starting with fast eRFX execution, and why an outcome-based commercial model is central to adoption, especially for underserved markets.
What does Zinit do?
“Zinit is an AI-native B2B marketplace. We are trying to remove this invisible wall that exists between the enterprise-level clients and suppliers. In many cases, those suppliers would be small and medium-sized businesses, especially when it comes to indirect or non-strategic spend. As our main product and offering for now, we are starting with the e-sourcing solution, which allows us to publish RFPs or sourcing events in minutes, simplifying and streamlining the RFX process, which is currently still very manual.”
What was the inspiration to build Zinit?
“I spent quite a bit of time at McKinsey driving procurement transformations. And one thing I noticed is that although companies invested quite a bit of money over a long period of time into the digitization of multiple corporate functions, including procurement, the fundamental process stayed relatively manual. Very manual in many cases, even for large organizations.
People say, ‘Why did you start an e-sourcing company?’ Because this market is probably the most saturated. But the irony is, we are competing. Our biggest competitors are Excel and email.
And when we talk about smaller companies, or other markets, and Zinit started across Southeast Asia and historically underserved markets, those markets were completely priced out of any digital transformation, really. And we are trying to remove this gap.”
What makes you different from other eSourcing solutions?
“The first one that personally got me excited is the commercial model. Overall, the B2B SaaS model is a little bit broken, especially when it comes to procurement. Procurement is one of the last functions to get budget to do anything digital.
The traditional model was always like, ‘we are going to bring you a tool, and you need to pay a pretty hefty subscription fee.’ In the developed markets such as the U.S. and Europe, this fee is oftentimes six digits, or in some cases, seven digits.
We experimented and came up with outcome-based models. We offer a supplier-funded model where a supplier would pay a small fee to sustain and support the tool. Or a success fee-based model, when we generate actual outcomes for the client and get compensated as a portion of those outcomes.
Beyond that, there is a difference between AI-retrofitted tools and AI-native tools. We built our tech stack in 2023 with AI being front and center.
We also built a supplier network. We built a database of 103 million companies, which we are converting into active suppliers every day. We have AI agents to make sure the database keeps fresh. And we are the only e-sourcing platform that has a dedicated supplier success team, not just customer success. It’s important for us to do the groundwork to bring suppliers and make sure that they participate in your RFP and provide their best bids.”
What customer feedback confirmed you were on the right path?
“The confirmation of our hypothesis is that for a long period of time, the traditional model hasn’t been really working. Companies pitch their tools and they look beautiful on the demo, but then when the actual implementation starts, the adoption rate is not there. The tech is laggy. It’s not working. The company already invested, in some cases, millions of dollars, and they just get back to their email and Excel.
One particular conversation struck me. I was serving probably my smallest client, like an $800 million company. They wanted to do something on digital procurement, and when I presented all the options, the chief procurement officer looked at me and said, ‘Stan, at best, we have maybe like $100,000 to spend a year on all these tools, and it’s just impossible to do anything with such budget.’
This whole idea of aligning the incentives and driving the outcomes versus charging just for subscription really stuck with me. That’s what allows us to grow very quickly, especially in historically underserved markets.”
What has surprised you most about building a procurement startup?
“Some problems have been there for quite a long time, and it was claimed that those problems have been solved. But the fundamental problems haven’t been really solved. Adoption rates are still very low.
When we talk about the maturity of digital procurement tools in general, we are still very early. At the same time, the speed of change and progress changed dramatically over the last few years. It feels like you’ve got to be up to date on all the changes because the minute you are not, you’re going to fall behind. Once you are in the midst of it, it allows you to move very quickly and evolve with customer needs.”
What are the biggest friction points customers want to solve first, and how do they justify ROI?
“The biggest friction point we try to address first is savings. We focus on value creation. How do we ensure that we drive competitive bidding processes and savings opportunities across the entire span, not just core and strategic?
Many companies, large companies, spend below a certain threshold, which is not properly addressed. People say we have bigger fish to fry. We cannot look at anything below $250,000 a year. People don’t competitively source that spend. How do you empower your teams so they can do more with less, tap into the spend, do competitive events, drive savings, with less resources?”
Where does Zinit fit in the tech stack, and how do you integrate?
“We have seamless integrations with existing ERP systems. We have integration with SAP and Oracle. For other ERPs, we can build integrations relatively quickly.
We can get all the data from SAP, standard documents, NDAs, contracts, and supplier information. Once we run the sourcing event, we feed it back into SAP or any ERP, like award decision, new price, or new supplier. We can also upload the entire event history for reporting and transparency.
We also have clients who say speed is more important. For these clients, we start with no integrations. Here’s the login, and you start posting your RFPs right away.
We are building integrations with major orchestration platforms as well, because we see more advanced clients building orchestration platforms, and we want to have integrations there, too.”
To learn more about Zinit, visit their profile page in the AOP Provider Directory.