SaaS Interviews with CEOs, Startups, Founders
Trucking Software Goes $0 to $1.4m in 11 Months, $35m Valuation
09 Mar 2022
Chapter 1: What is the main topic discussed in this episode?
Total, right now, your run rate, they did about a million bucks in total project value across those eight shippers in January. Of the 400 loads that were processed, how many truck owners, the 1,200 on your platform, facilitated one of those 400 payments or 400 shipments? So out of the 1,200 that have joined the platform, we have actively used 700 during our lifetime until this point.
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 Ajish Kapoor.
He believes there are better ways to do things. He rejects the status quo and is always looking to learn more so he can continue to improve each day. Numbers are constantly on his mind. Today, he's building Semicab.com to make transportation a competitive advantage. Ajish, are you ready to take us to the top? Excited to do it, Nathan. Okay. So who's paying for Semicab right now?
Who are your customers? So customers are large enterprises like Staples and PepsiCo, Colgate, HP, some of the smaller midsize companies that are always looking to move goods in a truckload, full truckload. When you see those large trucks out there, they're moving goods and they're not doing it very efficiently.
So we are building this marketplace to make them much more efficient than they are today. So let's talk about the marketplace. How many people that own a truck do you have on your platform? That's a good question. It's a very fragmented market.
We have an industry that is dominated by these numbers where people talk about bringing in 10,000, 50,000, 100,000, a million trucking companies on the platform. The fact of the matter is the US market is dominated by small carriers and owner operators, close to somewhere around 600,000 legal entities that are operating trucks.
We try to be very targeted in how we bring in partners into the ecosystem. So we have about 1,200 carriers, but we try to create a very long-term relationship with them. So we are not just addressing the shippers who are paying for transportation, but these guys that we take good care of and build a more predictable revenue stream for them. So they are taking advantage of the marketplace.
And over your entire company lifespan, how many shippers who pay for transportation have paid at least a dollar through your platform? So we, again, on that side also, we try to bring in a small number of shippers that we want to create a core with. And once we have built the core up to a reasonable size, that's when we start attracting the smaller and mid-sized shippers. So
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Chapter 2: Who are the primary customers of Semicab.com?
So yeah, I see what you're saying now. So it's about 2,700. And what's the average use case? Are they driving from Chicago to New York City or from San Francisco to Washington, D.C.? Yeah, there's not a typical load for us. We are moving goods all the way from, so Southern California is big, right? All the stuff that is coming in on those ports, it's going across the country.
So coming in from Southern Cal into Dallas, into the Northeast, into Chicago, into Atlanta, and then you are moving goods between Northeast and the Midwest. That's a big volume. Everything from between Texas, Atlanta in the Southeast, going up into the Midwest and the Northeast. Those are some of the busier lanes for us.
And then we do a little bit of stuff in the Rockies where, of course, you get into all kinds of squirrely stuff as the snow starts coming down as heavy and shutting down highways when it does that. This is fascinating. Okay.
So just to summarize, the marketplace as it stands today has about 1,200 people that drive trucks on it, and you match them up with shippers who pay for transportation, where you have eight big clients right now. Total, right now, your run rate, they did about a million bucks in total project value across those eight shippers in January.
Of the 400 loads that were processed, how many truck owners, the 1,200 on your platform, facilitated one of those 400 payments or 400 shipments? So out of the 1,200 that have joined the platform, we have actively used 700 during our lifetime until this point. So what you mean by actively used means you pay them at least a dollar? You pay them at least a few thousand dollars, yes. Okay, got it.
So yes. What happened to the other 500? You did all the work, did them on the platform, and you haven't been able to get them any work yet. Yeah, every single time. So there are a whole lot of things that we go through.
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Chapter 3: How does Semicab.com improve trucking efficiency?
So we go through a carrier betting period. where we want to make sure that the customers are receiving the best quality service that they can. And so you go through that period, you're watching the carriers, and then some of the carriers don't qualify.
They join the network, they join the platform, but they don't get through the qualification process that we have to bring them in and give them a load, right? What's the number one reason people don't make it through? What's the actual reason? There's a whole lot of... historical data that we want to go through.
We want to make sure that the insurance requirements are met, the safety requirements are met. So we allow the carriers to self-register, but if they don't meet the safety and insurance criteria, it's very hard for us to work with them. I see. I see. Okay. Let's put us on a timeline. So you launched in 2018, your first customer, it sounds like in 2020, you're scaling out today.
Have you bootstrapped this, Ajish, or have you raised capital? We have not raised institutional capital till now. So we have raised capital from all kinds of professionals from the supply chain space, from the technology and finance space. So a whole lot of people who have been very interested and very supportive. How much have you raised from those people? About 5 million. Okay.
And would you consider that like a seed round? What we did the last was a pre-seed followed by a bridge round. Now that,
terminology for the rounds has been changing all the time so most likely what we will raise next we are going to call it a series a i see i see but have you have you has all this been on a convertible note paper or has anyone priced around we have we have done a price round before you you have okay so some portion of the five million you raised today like the last tranche of that was at a priced round evaluation yeah after the price round we again went back to a safe note
Okay. Well, let's break that down. So what was the valuation on the priced round that you did, or a range is fine? So that was below $15 million when we did the priced round in the end of 2020. Okay. And how much did you raise on the $15 million valuation? That was, until that point, we have raised right around $2.1 million until that point. So $2.1 million-
Okay, so 2.1 million on notes, and then those all converted at the 15 million valuation. Did you raise more money at 15 million, like on top of the 2.1 or just 2.1? Just the 2.1, including the price round. And then we raised the rest of the 3 million after that on safe notes. Why did you go back to a safe note?
It's just when you're trying to do a bridge round, Nathan, it's so much more convenient to go the safe route. You can get it done rather quickly. And you don't really put the onus of valuation again, because the market today is where the valuations are pretty nuts, especially in a freight tech kind of marketplace. But just to be clear, that $3 million, was that this year or was it 2021?
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Chapter 4: What growth milestones has Semicab.com achieved?
Small base, obviously. We're playing games with percentages here, but still a good growth rate. I guess I just don't understand. With that kind of growth rate, I just don't understand why you wouldn't go keep things clean and do it on a traditional equity round at like a $30,000, $40,000, $50,000 valuation. Is it really that much faster? Is it worth it to go back to the notes?
It's not about, so the node is just a component of the kind of round that you're doing and the timeline that you're doing it. The reason we did the bridge round was we're talking to a lot of investors, but the investor that you want to bring on as a lead investor, that has a very direct implication on where the company is going to go.
So we are being extremely selective about who we want to lead that round. It's not like we're trying to stay away from institutional money. If you want to grow, from 10 to 100 million, we are going to need institutional money and we are going to go do that round.
It's more a question of not running out of runway and just making sure that you are going to get to the point where you have the right investor in. How do you make sure that your marketplace has liquidity?
So let's say one of these eight shippers pays and needs you to ship shoes from Chicago to Denver, but you can't go buy that inventory from any truckers because some other people are paying more than you. There's a lot of these networks out there. How do you guarantee that placement?
Yeah, it's not just a question of... So that was one of the thoughts that we had when we were starting out and we were extremely focused on it. So that's the one big part where we talk about using the carriers more and more and more that we have in the network and not go for 50,000 carriers. That's a big reason. So the carrier loyalty starts building up.
And when you have that focus, so in our case, we have been able to maintain a good 99% plus load acceptance rate with every single one of our customers. Industry standard out there is somewhere between 50% and 70%. So that's a big, huge jump for us, right? And we focus on that, not stay away from, oh, if we have to pay a little bit more money, we'll pay a little bit more money.
But over the long term, the basic concept is if you're doing right by the carrier, the carrier is going to do right by you. And how many folks are on your team today full-time? 16 people full-time. How many engineers? We have the engineering team of 10 people, including product managers. Okay. Okay. Got it. Very interesting.
It sounds like across eight customers, I mean, it sounds like what they're only eight into a million, what they're each spending like 150 grand a month, something like that. Some of them are just starting out, right, Nathan? So the big, huge pieces where some of these customers have, some customers started in March and April last year. Some started in September last year.
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