Clint Betts
Welcome to the CEO.com Show. My name is Clint Betts. On today's show, we talk to Amena Ali, the CEO of Optoro. She's an incredible leader with vast experience. She is somebody whose knowledge, experience, understanding, and wisdom of how to lead a company, how to be a leader, and how to be a CEO were remarkable to witness throughout the conversation. I think you're really going to enjoy this conversation. There are so many valuable insights. Without further ado, here's Amena Ali.
Amena, thank you so much for coming on the show. I want to get a sense for how you're thinking about things as CEO of Optoro and all that type of stuff. Maybe we start with how you became CEO and how you got to where you are today.
Amena Ali
Yeah. Thank you so much for having me on your show, Clint. It's a pleasure to be with you here today. I've had a winding journey through technology over the past 25 years. I, well, initially started off in management consulting and then did finance and marketing for about ten years at a telecom company, and then stepped into the world of software about 25 years ago and made my way through all of the functional disciplines pretty much, from marketing to product, to finance, to sales and business development, to CRO, and then CEO at a couple of companies. This is my third company as a CEO, where I've come in specifically when the company's at a juncture, when it's ready to be scaled, to take over from the founders and really grow the business. That's my winding path, and I ended up at Optoro about a year and a half ago.
Clint Betts
What does Optoro do?
Amena Ali
Yeah. Optoro is a leader in the returns and reverse logistics space. Imagine, for a moment, all of the products that you're ordering online, probably a lot more as a result of the pandemic. You try on those products, or you get them. Maybe it's not trial-like apparel or footwear. Maybe it's electronics or something. And then you return it for whatever reason. What happens to all of those goods as they go back is the art of returns to management and, more broadly, reverse logistics. Logistics were really designed to forward the shipment of goods to retailers and individuals. There's a lot of consistency. You know what the QA is. You know what the product is. When you play that tape in reverse, just like the tape would sound kind of funny, you've got a whole other situation where you need to receive and manage these returns, and it's a huge challenge from a reverse logistics perspective, and Optoro has been in this space for over a decade working on these issues with the largest of American retailers.
Clint Betts
I assume there's a lot of machine learning that goes into this, right? How do you use that? What do you think about that? What is the future of all of that?
Amena Ali
Yeah. Great question. One of the biggest challenges when you're receiving a return coming back, let's assume that the shopper has initiated the return. That's step one. That's got to be easy. Let's assume we figured out a way for that shopper to actually start sending that return back. Multiple transport methods, box-free, label-free drop-offs, and consolidated drop-offs, are used to save on transportation and environmental costs as well. Then comes the challenge of when it arrives at a warehouse. It could be for large customers, enterprises, it's their own warehouse, or even large companies that could outsource it to a third-party logistics player, a 3PL, who would then be faced with the challenge of what do I do with this? And there's a whole lot of software, automation, data science, predictive analytics, and machine learning to figure out what the best home for this product is. What is the optimal home for the product?
I mean, job number one is to put it back into inventory. In particular, for things like apparel and footwear, the bedroom has become the new dressing room now, and if you've talked to anybody, they're usually engaging in some sort of combination of online shopping and real-life shopping. I've recently talked to a variety of people who are spending $1 trillion on online shopping of various kinds. So you know what? I really don't want to get into my car or take transportation or go to a store. I'm just going to order it. So, how do you determine what is new and not new? That's step one. So that is, if you think about it, a very bespoke question because what's new for a shirt may not be what's new for a coffee maker, not new for a water bottle, whatever the good might be.
Clint Betts
Yeah. That's a complicated question to answer, actually.
Amena Ali
It is. Can you imagine these hourly operators working in these warehouses? How are they going to remember, "Well, if it's this branded shirt, here's the rules. And if it's this branded pants, here's the rules"? They can't. They really need software. That's step one in determining how you can have software aid people, these operators, in determining what's new. And the quicker you can do that, that's an easy-to-track operational metric, the more quickly that return inventory can go back into circulation and be listed for sale to the next customer. Maybe it doesn't fit me, but maybe it's going to fit you, that sort of thing. That's the first step.
The second step is okay; if it does not meet the criteria of being new, is it worth repairing? What is the nature of the repair, and what do I do with it once I've repaired it? Maybe a button came off or something like that, or maybe it's a more insidious issue where you need to check various parts of a small appliance or something. Those are all manual touches, and every time you touch the product, it costs money. So the question is, how do you do that efficiently? What can you do? Back to your question on machine learning, what does the data show us? If I repair this well, what can I get for it in the next best home or what's called a channel where I would send it? I'm certainly not going to represent it as new, but it could go to a liquidator. Maybe it's off-season merchandise. Maybe it can go to a secondary channel. Maybe it's a B2B kind of thing, and it would end up at a flea market, or maybe it needs to be donated.
What you don't want to do is to say, "Ugh, this is really complicated. I have all these returns coming back." Imagine this: For apparel and footwear, the rate of return is 30%. So can you imagine taking 30% of goods and saying, "I don't know. It's really complicated. I don't know what to do with it. Nevermind"? You would lose everything from a financial perspective: the revenue and the margin, not to mention the fact that this stuff would end up in a landfill. So there's environmental impact. There's a financial impact. There's a lot of waste in the process, so ultimately, you want software and automation and all the data science to aid in reducing that waste, reducing that friction, and just making it a lot more sustainable in the true sense of the word, both financially and environmentally.
Clint Betts
That is such a complex problem that I never even thought of when I go online and just buy something, and they make it so easy to buy stuff and so easy to return stuff you don't really even think about all the logistics in between those two things.
Amena Ali
Yeah. You know what? Before I started at Optoro, I never gave it a second thought. And then the minute somebody clues you in, you say, "Oh, my god, this is incredibly complex." And every time there's complexity, there's cost, right? So the question is, how can technology and software really change the game in that regard to make it more affordable? Because if you don't do that, that cost will eventually be passed on to the cost of the product. So, it's a competitive marketplace. Retailers and brands are doing their utmost to invest in the product, have a good experience, and make it easy. Now, here's the other thing. If you decide, "Oh, gosh, this is too complicated. All sales are final. No returns allowed." Well, guess what? You're going to lose a lot of your customers who are shopping.
We have lots of surveys that we've commissioned that show that more than two-thirds of some studies show more than 80% of shoppers look at the refund and return policies before they shop. Why? Because you want to shop with confidence. I was just reading an article last night on the psychology of sizing, how it's very different, and what a particular size for one brand may not be a size for another brand. There's a whole sort of separate thread that says there's predictive advice to say, "We believe you will be a size, whatever, X, Y, Z in this brand," to try to reduce the rate of return, but you're not going to get it right. It's a function of the fit, the feel, and how the person feels, so returns are inevitable because online shopping is here to stay, and retailers and brands need to figure out how to deal with it to reduce the costs and actually turn it into a driver of loyalty for their shoppers or shopping on their sites.
Clint Betts
How are you thinking about AI in that rapid advancement, which obviously machine learning probably is AI as well? We're seeing so much change and rapid growth in that every single day, to the point where there are AI doomsdayers and stuff. I just wonder how you're thinking about it as the CEO of Optoro.
Amena Ali
I think there's a whole variety of ways AI is going to come in and try to expedite this whole process. For starters, AI is already being used upfront, for example, to summarize shopper sentiments. So if you think about what are the reviews for a product, I have 500 five star, 300 four stars, 200 whatever. Synthesize for me what people like and do not like about the product so that the next shopper can be aided by it. Help me figure out what size might fit me. Both of these things are already being put to work by retailers.
Amazon's done a lot in this regard. From a reverse logistics perspective, how can AI help optimize the cost and the friction involved in starting that return? So we're using it to help figure out how the policies are then informed based on what's convenient for the customer and what's viable for the shopper. How do I basically hold your hand and make that return experience optimal in every sense of the word? That could be a home pickup. It could be a box-free, label-free drop-off. It might be taking it to the brick-and-mortar store. What's closest to you? How should I present those options to you?
So you need software and AI to help do that. And then you get into the world of, okay, something has come back in a box, so now, there's a growing trend towards machine vision to help diagnose the health of the product when it comes back. I mean, imagine how manual it is to hold something in your hand and go, "Okay, let me turn around and see. Does it look okay, or does it not? And is it the product that you said it was?" Let's just start with the basics, right?
Clint Betts
Yeah.
Amena Ali
Maybe it's not really even a nefarious thing. I have a whole bunch of returns, and I mix up the labels, or I mix up the QR codes, which is more often than not what people like to do, and I showed you the wrong QR code for the right product. So, job one is to say, "You told me you were going to return a black fleece hoodie. Instead, I got the sweatpants instead or the joggers or what have you." So, can machine vision help identify whether it is the product you said you were going to return? Potentially, machine vision could go even further, but let's just start by identifying animals, minerals, or vegetables. Is it the same thing you thought it would be? One of the more exciting aspects, and this goes to the volume of returns, last year, there were about $750 billion of goods returned from 2023.
It's an astonishing volume. You walk into these warehouses, some million square feet. You have tons of returns coming in, and there's a growing trend towards robotic systems, robots, and cobots to help with this manual task. Some of them are designed to expedite receiving. Some of them are designed for what's called put away in terms of move this product from here to here or go up this huge stacking and racking structure and bring it down for me. You're actually moving goods from place to place.
Well, how do you integrate that with what the robot should do, not just how the robot should do it? That's a pretty interesting use case or application where our smart disposition technology is actually informing the robot to say, "The best place for this product is this channel," or, "Take it for refurbishment," or, "Actually, it's not worth it. Send it to this other channel instead." So you've got technology and AI informing that robot based on past history and past learnings, and then the robot does the action. That is a pretty cool thing to watch, actually.
Clint Betts
Yeah, that's incredible. As you're talking through all the various steps and processes that some of these products go through, from being purchased, returned, and everything in between that you just mentioned, I wonder, man, there's going to be a lot of fraud. How do you prevent that fraud? How do you think about fraud? What are you doing to minimize fraud?
Amena Ali
Yeah. The funny thing is that fraud has actually been on the increase, and maybe it's not funny. It's actually not funny. Fraud has increased substantially. It's gone from about 6% to north of 11, 12% of goods, $101 billion in fraud last year. So, step one is determining the various flavors of fraud. One aspect of it is called wardrobing where I would buy a product, I would use it, and then I would return it. It's overtly used. Another aspect of fraud is actually I buy a product. Maybe I claim I never received it or whatnot, and eventually... Let's try it this way. If I return it, maybe it's not that product I'm returning. I'm claiming to return product A, but maybe it's a ratty T-shirt I threw in or the big box of rocks scenario. That would be really sort of egregious fraud.
So, in order to understand fraud, you need to say, okay, you could do one example of you're going to inspect every item in every single detail, so I'm going to spend a lot more in my receiving, in my test and grade in order to make sure there's no fraud. Well, you look at the cost-benefit of that and say, "That's kind of expensive." That's kind of like saying, "I'm going to have a really, really high moat to my castle, a really strong security system, and I'm going to spend a ton on it because I'm going to keep the bad guys out." Maybe that's not the smartest way to do things. Maybe you need to bring it back to our AI and our data science analytics to say, "You know what? Clint is a trustworthy customer. I know how he shops, how he returns. I know his history." You are basically establishing a trust model and determining if Clint returns. I think there's a good chance that it is what he says it is. Oh, by the way, I'm going to ask him why he's returning, and I might even have analytics that says that if Clint says this, chances are that is what happened. Whereas maybe somebody else is not that trustworthy.
So I think you really need to bring data upfront to figure out how do you determine who you trust and who you don't trust, which is kind of like the perennial internet problem, right? Remember that New Yorker cartoon that says on the internet, "Everybody's a dog," kind of thing? Well, who is a dog, and who isn't? How do you link that to dynamic returns policies where there might be a different experience for one customer versus the other? I mean, in a way, it's like when you're boarding an airplane, you've got the diamond level, platinum level, and then you've got various levels. If you fly United, it's kind of boarding group one through six or one through five or whatnot. That's essentially what that is. It's a customer value model. And I think that kind of analogy could be really helpful in integrating that into the data and analytics to determine how you make sure you don't punish everybody as you're trying to keep out just the bad guys or how do you make sure that the bad guys' experience is confined to them and everyone else can transact so that you're not spending a fortune and potentially including needless friction into the process just to keep out the bad guys?
Clint Betts
Given everything that you have to deal with and think about and make sure that the product and Optoro can help the customers, how do you decide where to spend your time each day?
Amena Ali
Yeah. To me, it's all about what has the biggest impact. The old analogy still holds. Way back in the day, Stephen Covey wrote his book, The 7 Habits of Highly Effective People, and there's an analogy in there in terms of there's a jar, and the question is, how many rocks can you put into that jar? That jar could be your day. That jar could be your resources, your engineering capacity, or whatnot. And how do you determine the maximum number of rocks? The parable goes, "If you start with all the little rocks that you put in there, you're not going to have room for the big rocks. You actually want to start with the most impactful things first, and then you can add to it all the other stuff along the side that inevitably takes up a lot of your time."
So, I think it's really about understanding what is urgent versus what is important. And you want to make sure you carve out time for the important stuff, the big stuff, both on a personal basis, as well as more broadly, what's the product team focused on, your sales team, your marketing team, your customer success team, all of your various teams. I think it applies equally to make sure you do the things that have the biggest impact first. In fact, our first value as a company is to make an impact, so making an impact is all about deciding what you do and what you do not do.
Clint Betts
You mentioned Stephen Covey's infamous 7 Habits of Highly Effective People. What do you read? What reading recommendations would you have for us?
Amena Ali
Yeah. Well, recently, my husband retired, and he's been in the startup world for the last 30 years as well. He wrote a book called The Startup Lottery to help understand, and partially, it's informed by my experience, his experience, and what's been around to say how do you know if a startup is going to be successful? How do you diligence that upfront? What are the various phases of success? There's a lot of basic literacy, like what stock options are. How do they work? So it's kind of a bible for the rest of us, if you will, for employees to determine if the startup is right for them, what that journey is like, and how they make sure they are informed customers as part of that process.
Clint Betts
That's very cool. We'll include a link to that book so people can check it out. What are you reading throughout the week, throughout the day, throughout the month? Are you reading books? Are you reading magazine articles? Are you reading the news?
Amena Ali
I'm doing all of the above. I read The Wall Street Journal and The New York Times on a daily religious basis, and it's always nice to have something to read for fun. So I was actually at a conference in New York a couple of years ago, and one of the nicest handouts was actually a bag of Jamie Dimon, the head of JPMorgan. He gave out books that made an impact on him. They weren't all just business books. There were books about the importance of sleep and things like that, but one of the books in that bag of books was The Other Wes Moore.
Wes Moore is the governor of Maryland, and this is a story about his life. It's his autobiography. And there was another boy named Wes Moore and how his life turned out, how they both started off in really hard surroundings in the Bronx and how these two lives diverged very differently. So it's really a story about what are the choices you make? What's the support you have? In his case, it's kind of what did his mother do? Right now, I'm at the juncture where he was getting himself into some drugs and some trouble, and his mother put him in military school. So right now, he showed up in military school, and there's his experience. So I think it's just really important to step out of your day-to-day and just read something completely different because it expands your mind and your horizon, so that's what I'm reading right now.
Clint Betts
Oh, that's cool. Yeah. We'll link to that one as well. You mentioned this a little bit. The goal of the company is like, "Hey, let's make a positive impact in the world." How do you define culture inside of your company?
Amena Ali
Yeah. That's a great question. Another parable, and it's been attributed to an African proverb. I don't know if that's urban legend or real, but it says, "If you want to go fast, go alone. If you want to go far, go together." So, going far together is another value for the company. I'll tell you the four. It's about making an impact, going far together, shedding more light than heat, and enjoying the journey. Those four things, which we spent a lot of time cultivating, kind of represent the culture of the company. Impact is obviously all about what we do in terms of returns and reverse logistics, and it's impactful for our customers, first and foremost, which are the retailers and brands. It's impactful for shoppers and the planet because we're creating what's called a circular economy or its software to promote circularity. The second aspect of it that sheds more light than heat is that a lot of times, answers aren't obvious, and you need to work through what the right thing to do is.
That could be a solution to a problem or a product strategy question: What do you do in a given scenario? We really want to bring rationality, data, perspective, and judgment. Rather than just blind anger and emotion, I feel like there's way too much of that in our country. More generally and especially in the business environment, we want to be data-driven and data-informed as to what we're contributing to the conversation and how we're helping solve the problem. The third part of it, which is to go far together, really speaks to how we think about teaming with each other and what kind of teammates we want to be internally and with our customers. They're really our partners in the broader sense, so how do we show up for them? How is this a win-win relationship, and how do we treat each other? So that's another key element, such that at the end, enjoy the journey. I mean, we spend so much time working. We're on our phones and on our laptops and invested all day and all hours to show up for our customers, and it's important to say enjoy the process, enjoy the journey.
Clint Betts
You mentioned something that is more and more true, particularly in the present day, than maybe it was 20 years ago, and that is that CEOs and leaders have to think about much more than what's happening inside of their company. They also have to think about what's happening outside of their company, the macroeconomic environment, the political environment, all of these various things. And you mentioned just how divided we are as a culture, as a country, all of these various things. What do you think about that? What are your thoughts on the current state of the world? One and two, how do you think about your responsibility and role in actually having an opinion there?
Amena Ali
Yeah. First of all, I think the world is just such a complicated and challenging place and time right now, right? You've got wars. You've got elections. You've got climate change. We've got stressors of all different kinds, and to me, it goes back to trying to find something. And inevitably, there are two or maybe ten sides to every story, so how do you actually engage in the dialogue where you're trying to understand somebody else's position? Empathy is a key aspect of anybody working together and working effectively to even start a dialogue, let alone collaborate, so empathy is a key part of putting yourself in their shoes, understanding where they're coming from, and trying to find common ground. I think that's actually a mentality or a mind-frame that can work for business, as well as society in general, because if you start with demonizing and I'm right and you're wrong, and what's basically called a fixed mindset, there's a Stanford psychologist who's done some great work on that. That's really not very constructive, and everybody sits in their corners, and there's no solution, and there's no bridging of the divide.
If you actually start with empathy and say how you actually understand, what you are trying to solve for, what I am trying to solve for, and what the areas of common ground are, it gives you a place to start. So I think that's a really critical thing. And as to our perspectives on the world, we're very fortunate that June is Pride Month, so we actually have inclusivity and a culture committee, and they actually sponsor things to just get familiar and understand. So whatever, it could be AAPI in terms of Hispanic and Asian holidays around the world, Pride Month, and whatnot. We really strive to foster dialogue where you're actually intentionally seeing things that you may not be familiar with.
I think one of the problems today is everyone retreats into their comfort zones and their cocoons, so everybody lives in their own echo chamber, and it's really hard to actually grow in any meaningful way if that's how you go for it. So I think it's healthy to kind of put yourself in a place of discomfort to learn things that you're not familiar with, and frankly, that's what you need for growth. Right? If you only do what you always do, we're all creatures of habit. If everybody only does what they do and you never try anything else, you're not exposed to anything different; you actually don't grow from that. So, to me, growth really comes from all of those kinds of things.
Clint Betts
I want to go a bit deeper into something you said about empathy and the role that empathy plays in leadership and the importance of that. Tell us more about how you think about empathy and its role in leadership.
Amena Ali
Oh, my God, it's so critical. It's a true statement that the more customer-centric you are, the chances are the better a job, your products, the way in which to bring your products to market, and the way in which you service ongoing customer issues will drive a ton of value for your customers. So the only way to really design the product is not to say, "Well, I think this is a great idea, and maybe it'll help you too," but it's to actually flip the script and say, "What's the problem you're trying to solve? What does your day look like," to really understand the customer journey.
And for technology, it's really critical for product market fit to start with what is that customer challenge you're trying to solve? Unless you exhibit empathy and understand exactly whether it's in a warehouse, whether it's a retailer, whether it's a shopper, there's so many aspects to what we do, understanding what is that person's life like, what's the challenge they have to face, and therefore, how do you design something to address that pain? The better a job you can do, the more valuable your product is and the more value you'll create for the company. So, to me, it starts from the beginning with a customer, and then a lot of ways that I found that you scale companies successfully is through partnerships. Well, successful partnerships are all about empathy, right? Let me understand what your business is, what you're trying to do, and how my company is valuable to you and vice versa so that, overall, the customer wins. All of that requires empathy, so I think that's an absolutely essential skill.
Clint Betts
Finally, we end every interview the exact same way, and that is at CEO.com; we believe the chances one gives are just as important as the chances one takes. And I wonder, when you hear that, who gave you a chance to get you to where you are today?
Amena Ali
Yeah. I would say it happened a long time ago when I was making the switch from telecom to software. I'd never worked in software before, and I think it's true that, ultimately, when you hire somebody, you're placing a bet on that person. So I was given the chance to actually walk into a new industry, into storage and content management software, which I knew nothing about. And that's because someone saw in me some attributes and skills, and they said, "I think she can get there from here. I think she can learn." Ultimately, mechanical skills are easy to get, but having that kind of confidence and taking a chance on a person and their character is ultimately not only what'll pay off for you but what'll be hugely valuable as you see that person go forth.
Clint Betts
Yeah. Thank you so much, Amena. I really appreciate you coming on.
Amena Ali
Thank you so much for your time. I've really enjoyed our conversation.
Edited for readability.