SaaS Interviews with CEOs, Startups, Founders
FlockFreight Triples Revenue to $300m Last 10 Months, Raises $215m at $1.3b Post
08 Nov 2021
Chapter 1: What challenges did Flock Freight face in its early years?
It took us all of 2019 of getting it more wrong than right. And then 2020, it clicks. We go from 25 million to 100 million by the end of the year. We go from, you know, we're not totally explicit about the revenue numbers, but more than 300 million at this point already.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Oren Zaslansky.
Chapter 2: How did Flock Freight achieve product market fit?
He's the CEO and founder of Flock Freight and leads strategy fundraising and executive talent recruitment. He also works closely with sales development, product roadmap, and fulfillment teams. They are building an algorithmically carpool LTL freight SaaS tool. It's a mouthful. The growth is incredible. Oren, you ready to take us to the top?
I am. Thanks for having me today.
I don't want to bury a lead here. So I had you on the show back in December.
Chapter 3: What innovative approach does Flock Freight use for freight shipping?
We did an interview, recorded an interview. We go deep. You teach me about shipping from LA to Chicago, trucks, terminals. I learned a bunch of stuff. And you say we're doing about 75 million bucks in run rate. I wanted to feature you in an upcoming issue of the magazine. So I pinged you just to confirm the numbers. And you said, Nathan, we're at 300 run rate now, million. What is going on?
How did you get this much growth so quickly?
uh well i think it's fair to say we've we've achieved product market fit um it took uh we're almost six years old the end of uh 2021 will be a six-year-old company and the first four years were excruciating i cringe sometimes when i meet people today and they they meet us today and they think oh this is easy you guys are killing it and the reality is like well you should have met us in 2018.
So, you know, four years of building technology, building a business, working on use cases, getting it wrong, getting it right, getting it wrong again, listening to the customer, iterating, iterating, not pivoting, but iterating, you know, a very agile environment until we really understood what they needed. And we figured that out in early 2019.
And that was a guarantee of a shared truckload at the point of purchase. For the first three years, we were... Wait, Oren, dive deep into that.
Dive deep what that means for people not familiar with trucking.
Yeah. So, you know, the common way of moving palletized goods, first of all, goods move on pallets in the United States. So you're a manufacturer and you've made tables, chairs, computers, food, you know, kind of everything and anything. They're put on a pallet and they're sent across a very dense hub and spoke.
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Chapter 4: What factors contributed to Flock Freight's rapid revenue growth?
Think eight drivers, eight trucks, eight terminals. To go from that LA to Chicago example that we spoke about last time. Um, and that is unfortunately a very low quality. It doesn't pick up on time. Doesn't deliver. It gets damaged. Things get lost and stolen. It's expensive. Uh, and it's slow. You know, these are not the key performance indicators you typically hope for. What we do instead.
Is we algorithmically create carpools or what we now call shared truckloads. So a customer can come to flock and they could say, Hey, I have four pallets. I have 12 pallets. I don't really want to see my goods take forever and get lost and get destroyed. What is the alternative?
And we would say, well, we're going to use our technology to create a ride share, a truck share program for you, one truck, one driver, and we'll make sure that truck is full. And so initially for the first three years of the firm, you could imagine if you're building a carpooling model, there's technology challenges, but there's also just what we call liquidity. You need volume. Marketplace.
Marketplace, got to line up time and space, simultaneity. So it took us three years to get it to the point where it wasn't just aspirational. We'll try to create a shared truckload. The market, our customers told us clearly, if you can guarantee it, then you've got something. If you're just going to try, that's cool. I mean, we were building a great business.
you know, raising capital and bringing on customers and retaining them. But the customers told us, if you could guarantee that at the point of purchase, that I wouldn't have to gamble on this, then you would be doing something.
Robert Leonardus Just to be clear, these truck drivers, you're trying to sign up to have liquidity to your marketplace. And they're saying, Oren, like, I'm not going to go through the work of signing up if you can't guarantee my truck's going to be full.
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Chapter 5: How does Flock Freight ensure reliability in its services?
This is why this is important to you. Is that right?
Well, there's two components to it. That's the supply side of the marketplace. Yes. On the demand side of the marketplace as a manufacturer, as a shipper that says, if you can guarantee my four pallets move hubless, don't see eight trucks, eight drivers, eight terminals.
If you can guarantee me that if I do business with flock freight, they'll move on one truck, one driver, and never move through a terminal. That was the big activation moment, the big aha moment. So we built that. And that meant additional optimization capability, more algorithms. But what it really meant was a pricing engine.
a pricing engine that could sell you a portion of the truck and predict whether or not we at Flock would be able to sell other portions of the truck and ultimately get that truck full. It took us all of 2019 of getting it more wrong than right. And then 2020, it clicks. We go from 25 million to 100 million by the end of the year.
We go from, we're not totally explicit about the revenue numbers, but more than 300 million at this point already in October. So we're many multiples of growth on an annualized basis.
How are you measuring that, Oren? So when you say 300 in October, what are you taking? October revenue times 12?
Yeah. So that would be, if you said 25 million in the month of September times 12 would be 300 million run rate. We will do more than 25 million in the month of October. So our run rate will be 330, 340 million, give or take in the month of October.
I'm looking for our gotcha. I mean, that's what everyone listening is going to be looking for. That 25 million in October revenue, I mean, that's SaaS margins, right? I mean, you're not having to pay truck drivers. That's not like a GMV number, is it?
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Chapter 6: What was the significance of Flock Freight's recent funding round?
It's not a GMV number. It is a revenue number, although I would not describe it as SaaS margins, to be fair. We have a fair bit of COGS still in this firm. So we've got an incredibly automated middle of our marketplace, the optimization engine and the pricing engine. is phenomenal, right?
Unlike anything that's ever been built before, the demand side of the marketplace, the manufacturer who needs our services is largely very automated. It's never finished, but we are thrilled and it is easily stage appropriate. The supply side of our marketplace, we have a lot of cogs. We are still feverishly building out automated integrations with trucking companies, with carriers.
So right now, we still have a fair number of humans that are involved in what we call the fulfillment. Hey, Mr. Trucker, are you available? What's the price? Can we get it negotiated? That's the primary focus of R&D. So in our latest fundraising round announced about a week ago, The preponderance of- Hold on, Arne.
Don't bury that real quick.
How much did you raise with valuation? We raised $215 million led by SoftBank Vision Fund 2. They led our last round as well.
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Chapter 7: What metrics are crucial for measuring Flock Freight's success?
This was a real preemption with these numbers. They came to us mid-year, six months into the last round. and said, giddy up, we'd like to deploy some more capital. Can you go faster? Do you have a use of proceeds? We said, yes, yes, and yes. And so we raised it to 215 at a $1.3 billion valuation.
And the 113 you raised back in December, the Series C, what valuation was that at?
Wow.
I mean, incredible. So SoftBank likes marking up its own portfolio is the lesson there and you're driving incredible growth. That's what I should do.
Well, to be fair, the latter, yes. The former, no, they don't like marking themselves up. I'm not going to speak to it, but you've got a smart audience that can be problematic. We brought in other pretty significant investors into the round. I'd say most notably we brought in Susquehanna. SIG is a major private equity growth equity fund at 15, $20 billion. So they're participating in this round.
We brought in a firm from New York called Eden Capital coming into this round.
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Chapter 8: What are Oren's long-term goals for Flock Freight?
We also had ProRata. In some cases, I think super parata from insiders. So SoftBank was about half of the check in this round. We had another $100 million come in on top of what SoftBank wrote. SoftBank wanted to write a much larger check, initially up to $300 million.
And from a round construction standpoint, we managed that number down, I guess it would say, so that our other insiders could also continue to buy up and we could bring in new capital. Everybody loves to see some new faces around the table.
Was 215 the actual size of the round or did you raise a bunch more that went into secondary?
No, it was 215 was the size of the round.
Okay. Did all that go right to the balance sheet or did you provide liquidity to some early folks?
A little bit of liquidity to early folks, but only team members, not investors. No investors want it out. I can certainly say that.
I believe that. Many of you guys listening have built incredible SaaS tools to help other founders, specific industries really get value or make some system easier. The problem is you can't help your clients until they import some portion of their data. And you've considered on your Trello board and your Sprint timelines spending weeks building a CSV importer for certain data sets.
You're spying right now because you know I'm right. And either you do it and you waste engineering time or you don't do it and your customers have a horrible time getting onboarded. And listen, let's face the facts. Your ability to give value to your customers sometimes is very dependent on their ability to get you their data. Once you have the data, everything is really smooth.
Well, this exact problem probably explains why Flatfile is growing so quick. They've raised over $44 million and they do exactly this. The data onboarding platform for your marketing teams, your engineering teams, they enable you to get usable data faster so you can focus on what matters most to your business.
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