Fashion is one of the most polluting industries in the world, says James Theuerkauf (MBA 2021), who worked in McKinsey’s retail sector before attending HBS. More than 8 percent of global greenhouse gas emissions are produced by the industry, and the amount of textile waste generated each year could fill 20,000 football stadiums, Theuerkauf explains, adding that, “even in 2022, excess inventory is still put in landfills and burned.” To reduce the sector’s negative impact on the planet, he and classmate Ferdinand Stockmann (MBA 2021), who previously worked at Boston Consulting Group and has a background in the technical side of supply chain management, created Syrup Tech, a predictive software that drives inventory excellence, powered by machine learning models. In March, Syrup Tech won the 14th annual SXSW Pitch Event in the Enterprise and Smart Data category.

“Inventory in commerce is a really big problem from both an environmental and a financial perspective,” Theuerkauf notes. The problem is especially acute in the fashion industry—Syrup’s first customers—where inventory is complex and demand shifts by season. Brands and retailers must correctly stock items in their customers’ preferred color, pattern, style, fit, and price without much historical data. “Most of the software out there is backward looking and purely works on averages,” Theuerkauf says. “That works if you are trying to sell toothpicks; you can just follow a linear regression line. But if you are trying to sell a three-quarter-length floral print dress that’s only available for one season, you need more sophisticated models to predict inventory needs.”

Syrup works by integrating a retailer’s data—historical and real-time transactions and inventory, e-commerce patterns, and marketing and promotion plans, among other things—with weather, search, and social media trends. The software can then use this information to make inventory predictions and optimize the buying, sourcing, and distribution of inventory among the omni-channel network. “Syrup gives you the recommendations, and then you as the merchandiser are the decision maker,” Theuerkauf says. “That gives retailers time to focus on the strategic and creative decisions that really matter, while the repeatable actions are done by a sophisticated machine.”

Theuerkauf came to HBS with a good understanding of the problem. He and Stockmann formulated the Syrup solution after meeting in their first year, but it was the Rock Center Summer Fellows program that provided the impetus for the startup to take off. “Having the space and enabling conditions to work on a business in a community of other founders was the catalyst,” Theuerkauf says. The cofounders also credit their entrepreneurship-focused coursework and cases, independent projects, and the HBS network through which they met their investors. “We couldn’t have built this business without HBS,” Theuerkauf says.

HBS senior lecturer Jeff Bussgang served as the faculty supervisor for one of the Syrup cofounders’ independent projects. “They did a remarkable job balancing their coursework with launching and running their business,” Bussgang says. “I would bet their customers—major retailers who are counting on Syrup’s platform for mission-critical business processes—would be surprised to learn that James and Ferdinand were still students at HBS when they founded their company!”

Because of the pandemic, Theuerkauf and Stockmann took a leave of absence from HBS in the fall of 2020 to work on Syrup, which they continued to do while completing their studies in the spring of 2021, and then graduated the following December. Today, the New York City-based startup’s nine-person team has a plan for rapid growth. Syrup raised $1 million in a preseed round and enrolled seven brands, retailers, and manufacturers that use the tool on a weekly basis and implement the inventory suggestions it offers. To date, Theuerkauf says, customers have seen growing revenue through an increase in full-price sales, a decrease in lost sales, and a decline in costs due to a reduction in excess inventory—along with up to a 95 percent reduction in manual labor.

As Syrup expands, Theuerkauf and Stockmann are facing the same challenges all founders do: meeting the day-to-day demands of a growing company while pursuing their long-term vision of reshaping the fashion industry and its impact on the environment. Entrepreneurship, Theuerkauf says, is a lot like inventory management, both art and science. That’s where the name Syrup Tech came from. “Our ‘tech’ is the science, but there’s also art and creativity. That’s the ‘syrup.’”

Post a Comment