SaaS Interviews with CEOs, Startups, Founders
FlockFreight Grows 400% YoY, 500k Pallets Shipped, Still Shy of $1b Valuation
01 Jan 2021
Chapter 1: What is the background of Oren Zislansky and his experience in the freight industry?
If I sell at $2 and I buy at $1, buy low, sell high, like the real estate guys tell us, then we have, for freight, like 50% margin potential in an industry that supports like 10 to 12. So we have many times higher margin potential than anybody ever in freight before because of this financial arbitrage that gets unlocked. You are listening to Conversations with Nathan Latka.
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My guest today is Oren Zislansky. He has logistics and innovation running through his veins. He followed his parents' footsteps who created their own freight forwarder after years with Foreman's Van Line. He founded his own 100-truck fleet at age 20, providing white-glove freight service through the U.S. and Canada.
Next came sole source Oren's First Brokerage, which services major clients like Whole Foods and opened his eyes to the unnecessary complications and inefficiencies of L2L shipping. Oren, you ready to take us to the top? I am. Thanks for having me. So through all this experience, you've now built Flock Freight. Let's start with a tease there and then get more of your history.
What's Flock Freight doing today? We create what we call shared truckloads or algorithmic carpooling. So it's a little complicated thing to think of. But if you have four pallets of commercially manufactured goods and you're in LA and you want to ship them out to Chicago, you would otherwise move them through the LTL industry, less than truckload industry, or hub and spoke model.
So just think terminal, terminal, terminal. UPS without the aircraft. What we do is we come in and we use some really sophisticated algorithms to match your palletized freight with our other customers' palletized freight. and instead create a carpool or a shared truckload.
So we just book a big truck out of the full truckload industry, have them make multiple pickups, picking up our various customers' loads and shipments, and have them drive direct to destination. The reason the customer cares is that by making a hubless offering, no terminals, no warehouses, it picks up on time, delivers on time, It's faster. There's zero damage, no loss, no theft.
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Chapter 2: How does Flock Freight's shared truckload model work?
A very common pattern would be people who make stuff and it's going to an Amazon fulfillment center or they make things and it's going to a mall or some type of distribution center. So I would not quite say Etsy. I would say more like a $25 million minimum side manufacturer. That's their revenue, not their spend on freight, but that's how big a firm they are. Up to several billion dollars a year.
Again, the ABM BEVs of the world. And in 2020, how many unique shippers shipped at least one thing with you? One freight bill? Like 2000. Oh, wow. Okay. And I just am really uneducated in the space. I mean, what percent is that of the total brands shipping something? It's, it's, it's bips. Okay. The beauty of this industry, right?
So we'll just say us freight is believed to be like trillion dollars across all the varying ways that you might move things. And look, we're not a tiny company anymore. We've had explosive growth. We plan on growing a ton more, but the reality is that, you know, it's, it's basis points. So, yep. Um, how do you guarantee that you have the truck inventory?
If I believe LTL is paying the same as you are, but you're just doing it more efficiently. Like how do you make sure you have enough trucks? If there's a Christmas blip or something? Yeah, that's not just the billion-dollar question. These days, the $10 billion question. Yeah, trillion-dollar question. It is really hard.
So one of the hardest things, but I would say the most fun and the most interesting things that we do is we work in probabilities. So we have a lot of applied data science and machine learning environments here where we are constantly ingesting as much data as we can. from third party data lake so data sources where you can build a an integration with.
And you bring in the like what's the spot market doing what what's tender rejection meaning. Freight that's not getting picked up for you know if there's freight not getting picked up you can infer there's probably not a truck in that market to pick up that freight yeah- Furthermore, we shape that with our own internal analytics, our own team of people talking to the world.
And then lastly, working in probabilities. What's your belief that that truck's going to be available? And not only available in a binary, non-binary way. Yes, it's available. No, it's not. But also, if it's available, what's it going to cost? Mm-hmm. It's a spot market. So it may be a low price today. It may be a high price tomorrow. And then to really blow this thing up. Wait, sorry.
I don't understand that. What varies in price? The dollar per 26 pallets could go up or down?
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Chapter 3: What are the advantages of Flock Freight's hubless shipping model?
Yeah, the cost of contracting that entire truck. He may charge you $1,000 today. It may be $900 tomorrow. It could be $1,200 the day after that, especially around the holiday time. So the context of your question, given holiday, you're right. Demand is surging right now. Supply is kind of fixed. This is not a gig economy the way we see with Uber and Lyft in rideshare or DoorDash or Instacart.
Those are gig economies whereby, in theory, supply conflicts with demand. In our space, you're a commercial truck driver driving a $100,000 tractor trailer full-time. You're drug and alcohol tested. This is what you do. It's not a side hustle. You were either a truck driver or you're not a truck driver. So supply is changing, don't get me wrong, but it's relatively static.
Demand is porpoising like crazy, whether it's COVID or holiday time. So
That's where the data and the analytics and the data science and trying to predict what the future is going to look like all the way through to, in our case, not just can we get a truck or not, and not just how much is that truck going to cost, but what is the probability that we'll have many different customers' freight bills or shipments that are going to Tetris fit together into that truck at what varying costs.
I mean, that's honestly, I think, the number one reason why SoftBank made the investment as they did is they looked at the hard science, the hard, the algorithms, the mathematicians, the data scientists that we employ to not just predict the future of is there a truck or not, but to slice those trucks into little bits and pieces and then try to determine, can you see the future?
And in our case, with all the data that we're building, every ship we move becomes a data point. What's total team size, Oren, today, and how many of them are data scientists or engineers? We're about 130 W-2s. Basically, here in San Diego, we do have a few people scattered throughout the U.S., particularly over COVID. We've been pretty agnostic to that. We just want great talent.
And then engineering, mathematicians, which we'll call part of the optimization group, data scientists, analysts, analytics, that represents about half the payroll. Oh, wow. Okay, so call it 65 people there. Do you have any quota-carrying sales reps? Oh, yeah, yeah, yeah. How many? Jeez, 30, 35. Interesting. And they're selling to the head of shipping in these massive billion-dollar brands.
Yes, and they're selling to a manager of shipping at a $50 million manufacturer that you and I may have never heard of, and they make you know, tables, they make chairs and they, you know, have a need for our services as well.
And with all these operations sort of coming together, I mean, do you know, I mean, it's, it's obviously, I mean, it's definitely maybe the millions, tens of millions, how many individual pallets you shipped in 2020? Do you know that number?
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Chapter 4: What metrics does Flock Freight track for growth and success?
But to get to a future state where what we call the first mile and last mile, that's backing out of a dock. picture your neighborhood or commercial district and ultimately getting onto the freeway. And then the last mile is that process in reverse, getting off a highway exit, navigating through urban, rural environments, backing into, I mean, you can picture what this would look like.
I think that is a long way out. That being said, when, not if. There's a regulatory problem as well. Interesting. Yeah. Interesting. Quickly, before we wrap up here, you launched the company what year? commercial launch, kind of official first round, hire our first employees January of 2016. It was a year and a half project side hustle for me prior to that. How much revenue did you in year one?
Do you remember? Yeah, well, run rate revenue in year one, I think we went out at about a 2 million run rate and 2.5 million run rate of revenue. And we were pretty darn proud of that. That's pretty, you should be really proud of that. And then last growth question, you mentioned freight bill growth year over year, 2019 and 2020 was 400%. Is that the same?
That's revenue growth is the same about 400% or lower? Yeah, no, no, it scales pretty. Wow, that's correlated. I mean, I imagine you have some serious scale growing at your scale at 400% year over year. It doesn't surprise me SoftBank comes and says, please, Oren, please let us put in 100 million. It went well. Anything else I haven't asked about that you're like, why hasn't he asked about this?
It's critical to our business. No, I'd say we are really proud and passionate about being the only certified B Corp in freight. So we have an opportunity here kind of from a social entrepreneurism angle to create significant market value, real returns for our investors and ultimately in the public markets and have a real market cap.
We want to build both the largest freight company in the world and the most profitable freight company in the world. We want to do both of those things. The scale will come before the profit, but we intend to do both. While we simultaneously help do our part to save the world.
We believe passionately there can be a 40% reduction in greenhouse gas through our model, so much so that we're on the precipice of being able to launch actual carbon credits to our customer for buying from us because the model is so much more efficient. You're actually kind of getting the first word on that externally that we're in the process of bringing that to market right now.
The outside world doesn't know it yet, but we've got a certifying entity of actual carbon credits, not some... white labeled, you know, off market product, but like, you know, Tesla carbon credit, so to speak, to Toyota, bring that to market now, because the certification entities are looking at what we're doing and saying, man, that is no joke, that is so much more efficient.
And of course, we believe that it's an awesome opportunity to drive additional acquisition retention, but to further drive our purpose of saying, you know, we think we can build a very viable asset while at the same time helping to do our part to save the world. Or an incredible story. Let's wrap up with the famous five quick answers here. Number one, favorite business book?
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