The Freight Pod

Ep. #43: FreightVana Acquires Loadsmith Brokerage Operations - The Making of a Merger

• Andrew Silver

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FreightVana has acquired the brokerage operations of Loadsmith. We are joined this week for a special episode breaking down the making of the merger between these two organizations. FreightVana CEO Shannon Breen and Loadsmith CEO Brett Suma join the show to break down the deal, explaining why Loadsmith is divesting it's brokerage operations and why FreightVana is the perfect complementary partner. 

With mutual backgrounds at Knight, it was easy for Shannon and Brett to see eye to eye on how a deal like this could come together. Both organizations had a similar approach to brokerage, focusing on power only and leasing their own trailers to build an asset-like network for their shipper customers. These similarities should lead to an efficient integration opportunity.

Shannon and Brett explain the due diligence process and integration plans for the organizations, emphasizing the importance of transparency, learning from one another's teams, and making decisions in the best interests of their people and customers to ensure as much continuity as possible throughout the transition.

***Episode brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services.***

Follow The Freight Pod and host Andrew Silver on LinkedIn.

*** This episode is brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services. Visit gorapido.com to learn more. ***

A special thanks to our additional sponsors:

  • Cargado – Cargado is the first platform that connects logistics companies and trucking companies that move freight into and out of Mexico. Visit cargado.com to learn more.
  • Greenscreens.ai – Greenscreens.ai is the AI-powered pricing and market intelligence tool transforming how freight brokers price freight. Visit greenscreens.ai/freightpod today!
  • Metafora – Metafora is a technology consulting firm that has delivered value for over a decade to brokers, shippers, carriers, private equity firms, and freight tech companies. Check them out at metafora.net. ***
Andrew:

Hey listeners, before we get started today, I want to give a quick shout out and word to our sponsor, our very first sponsor, rapido Solutions Group, danny Frisco and Roberto Acasa, two longtime friends of mine, guys I've known for 10 plus years, the CEO and COO respectively, and co-founders of Rapido Solutions Group. These guys know what they're doing. I'm excited to be partnering with them to give you a little glimpse into their business. Rapido connects logistics and supply chain organizations in North America with the best near-shore talent to scale efficiently, operate on par with US-based teams and deliver superior customer service. These guys work with businesses from all sides of the industry 3PLs, carriers, logistics, software companies, whatever it may be. They'll build out a team and support whatever roles you need, whether it's customer or carrier, sales support, back office or tech services. These guys know logistics. They know people. It's what sets them apart in this industry. They're driven by an inside knowledge of how to recruit, hire and train within the industry and a passion to build better solutions for success. In the current marketing conditions, where everyone is trying to be more efficient, do more with less near shoring is the latest and greatest tactic that companies are deploying to do so, and Rapido is a tremendous solution for you. So check them out at gorapidocom and thank you again for being a sponsor to our show, a great partner. We look forward to working with you To our listeners. That's it. Let's get the show on the road.

Andrew:

Welcome back, ladies and gentlemen, welcome back to the Freight Pod. I'm your host, andrew Silver, and before we get started today, for those of you watching on YouTube, I'm rocking my Michigan versus everybody shirt. My Wolverines last week beat the Doors Down off the OSU Buckeyes. Actually, we didn't really beat their Doors Down, it was quite an anemic offensive performance from both teams. But I'm relishing in the glory of us beating Ohio State with the worst team we've had in decades, while they have the most expensive team they've had in ever. And Mr Ken Adamo from DAT has just been. He was talking so much smack for like two weeks leading up to this like how bad Michigan is. And yeah, we were bad, but our defense showed up and I've never seen a team play as scared as the Ohio State Buckeyes did throughout the game. Their fans were booing them in the third quarter because they kept running the ball in third and 10, which I don't know why. You'd run the ball in third and 10 when, for a two-minute offense at the end of the first half, they dominated us throwing the ball and then just forgot that that would have worked. So with that, we're opening the show with that and then go blue.

Andrew:

But we've got some breaking news, breaking news that we have here on the FreightPod News Network. We're announcing an acquisition today. I'm joined today by two fine gentlemen CEO of FreightVana, shannon Breen, and CEO of Lodesmith, brett Suma and we're going to talk about Freightvana acquiring the brokerage operations of Loadsmith. This episode will be released in tandem with the press release and I really appreciate Shannon reaching out and asking if I'd be open to this. I think he's thinking about this. Both of you are thinking about this the right way.

Andrew:

We're calling this episode the Making of a Merger. We're going to dive into how this happened, where the organizations are going from here, how you guys made this deal work. So before we get started, I want to start with just a couple introductions. So, before we get started, I want to start with just a couple introductions For our usual listeners. Shannon has been on the show once before, so you've had an in-depth understanding of the Freight Vauna business. But for those who might be just jumping in to get an understanding of the deal. Shannon, why don't you just give us a quick?

Shannon:

kind of 60-second blurb on kind of your background and the Freight Va of business and what you guys kind of stand for today. Yeah, perfect. I would just pause and say hashtag fire day is trending still, so that probably makes you really happy based on third.

Shannon:

Yeah, but no, I appreciate you having us, andrew and excited to talk about this, this big moment, big inflection point for both Brett and myself and our businesses.

Shannon:

Shannon Breen, ceo, co-founder here at Freyvana We've been on the journey for about three and a half years now. Specialize in power only, bring the trailers, bring the carriers, creating a national network of doing that and have our own tech platform which focuses on transparency and building trust in an ecosystem that I think lacks it, and I think we both know those words get thrown around loosely and often in the space, but I think the proof is in the pudding and we're really excited about this opportunity to take on the brokerage operations of Loadsmith, the great people, the forward-facing technology components that they're bringing to the table, and so it's a big moment for our team. In the face of what has been, as everybody knows, a great recession, we're really excited about being able to kind of outperform. Markets, continue to grow, keep our heads down, work really hard, and so this is a big moment for our 3PL organization and we're excited about it.

Andrew:

Awesome. Thank you, and Brett, I'm going to give you a little bit more time here, given that we haven't had you on the show before and we haven't talked about Loadsmith before. Can you give me a little bit of your background and then kind of what the original vision for Loadsmith was, what you guys have been working on over the years? And we'll start with that.

Brett:

Yeah, no, andrew, great to be on and thanks for having us. You know I'm Brett Suma and I'm the founder and CEO of Loadsmith. I've been in transportation for a little well, coming in on 26 years. I spent 20 years working at Knight Transportation prior to leaving there and founding Loadsmith. Well, coming in on 26 years, I spent 20 years working at night transportation prior to leaving there and founding uh loadsmith.

Brett:

Uh, when I, when I left night and and started working on loadsmith, really what we were focused most on was emerging technologies in the industry and how could we capture those emerging technologies?

Brett:

And and ultimately, you know we're a firm believer in autonomous and autonomous trucking and what that's going to do to serve our industry, serve labor in the industry, serve society and serve the environment. And so those are the things that we work on at Loadsmith and you know it's a natural progression of our business, as we work on new technologies, for us to find a partner and really the right custodian of our freight brokerage. I think that that's ultimately, as we dive more in today, the conversation with Shannon and I about Freyvana really being the right custodian of the freight brokerage entity of Loadsmith, as we go on and work on other things in the space from a technology perspective. So we're very excited about what we're doing and excited about the opportunity to partner with Shannon and his team and bring what we think are very complimentary businesses together and have a much larger version of the complimentary businesses that we've built thus far.

Andrew:

Can you talk a little bit about the autonomous trucking piece for a minute, of just kind of where you see that going, like you know, and maybe even a timeline, and that may be really hard to to kind of describe. But I'd love to just kind of pick your brain a little bit on that, because I've not talked about autonomous trucking yet on the show and I'm curious as someone who's kind of invested a lot of time and energy and has a vision for that, like what do you see? How do you see that playing out?

Brett:

Well, I think that it's. I think that it's a very gradual, you know, entry into the industry, meaning that that not every lane, not every load is designed for autonomous and probably never will be if, if we're being honest, you know, autonomy thrives and I'm not. When I say autonomy, I don't mean autonomous trucking, I just mean autonomy in general. Autonomy thrives in repetitive tasks. So any anything that's repetitive in tasks you can look to, to, um, apply autonomy to. And when you think about autonomous trucking, um, high density freight corridors, repeat, you know this, the same load over and over again. That makes a lot of sense for autonomy, and particularly in the types of driving jobs that we'll call them less desirable by the new entrance into the industry, and what I'm talking about is more of your multi-day away from home type movements, right, and so when you think about, like labor coming into the industry and what that new labor is in terms of their you know their principles that guide them in terms of the decisions they make in terms of jobs, probably being away from home as much as typical, you know, what you would call legacy truck drivers have done is probably not very attractive and appealing to them, and so, really, I think that as long as anybody wants to be a professional driver in this country, a job will be available to them. Is there an ability for autonomy to supplement the work and energy of those individuals? Absolutely, there's a place for it. It doesn't become ubiquitous by any stretch of the imagination.

Brett:

And as far as timeline goes, andrew, you're really talking about like this confluence of, like societal acceptance and technology, right? And I would say that technology is like outpacing societal acceptance currently, and so those two things kind of have to meet with one another. You know, incidentally, this morning I was driving to our Phoenix office, where I am now, and for the majority of my drive I was next to a Waymo. You know taxi, which is a completely level five autonomous. You know taxi, which is the completely level five autonomous, you know taxi. So there is starting to be that societal acceptance piece.

Brett:

When you start talking about trucking, though, that's a whole different thing because of the fear that people would have of. You know, I'm not really overly concerned about a Volvo, you know, passenger car, but a Volvo tractor and autonomy, maybe a different, different concern, right? So, um, those things have to come in confluence with one another. Um, when that happens is is anybody's guess at this point. You know, I can tell you what the autonomous manufacturers say, um, and I can tell you what my neighbor says about it, right, like, so there's, there's two different you know two different sides, right? So we believe that there's a horizon in which we can see it, and so those are the things that we're working on, based off of that horizon where it exists. Or maybe five years ago, that horizon, you couldn't see it.

Andrew:

Yeah, you know it's interesting. I've always thought that it would come, and I appreciate the way you described it, because it's not necessarily or at least I think the fear that people who are maybe uninformed have is it's going to just replace all drivers and then there won't be a need for any of us to do anything. But it sounds like what you're saying is there's a way to create a more efficient system to make the life of a driver better and give them the opportunity to drive in a way that doesn't keep them away from home for three weeks at a time and such, and I think that's interesting. I also think your point.

Andrew:

For me, my concern around this was always like it's going to take one accident for everything to explode and then it gets pushed back five years. But I think the data actually probably suggests that it's a safer process than most humans who are out on the road staring at their phone, texting or on Instagram or whatever the hell they're doing other than paying attention the way that a system designed to drive effectively would. So I just appreciate you giving some color there and, if I'm correct, your background was almost exclusively on the asset side at Knight, so jumping into this at Loadsmith was your first kind of foray into brokerage. Can you give me a little bit of an understanding of what you learned over the few years that you were kind of at the helm here of the brokerage? I'd love to just get a lesson or two from that.

Brett:

Yeah, shannon and I have known each other since 2012, although we worked in completely different planets at night the freight brokerage side of the business versus the asset side of our business, and so I spent my entire career working on the asset side of our business and really a lot around. How does the network deliver to the shipper, the driver and to the company. What I mean by the company is the network can really deliver value. Network design can really deliver value to the trucking entity based off of how productive and efficient it makes its users right. So how productive does it make the tractor? A byproduct of tractor productivity is driver pay. And then, from an efficiency perspective, how do you drive the most amount of costs out of the system that you can to generate revenue? And so my job really was a lot around like network and how does the network serve all three of those entities. And so coming to Lodesmith with having zero freight brokerage experience at all with anybody on our team on day one was an interesting exercise and really we started the freight brokerage and I think it's an interesting conversation that we're having when we're talking about the divestiture of our freight brokerage, and I think it's it's an interesting like um conversation that we're having, when we're talking about, like, the divestiture of our freight brokerage, because when we got into the, the business, we started the freight brokerage as a means to get to the, the next things that we were working on, which was like the, the future of autonomy and, and, and how we can build that. So it's an interesting timeline that we're talking about, right, so we leave night, we start, we start this freight brokerage and you know, I'll I'll never forget the first load that we booked I, I, I. We were waiting for our authorities to be active and so I took a like a last minute trip to Paris, our authorities to be active, and so I took a like a last minute trip to Paris, and so I was in Paris and it was, like you know, dusk and our authority came in, and so David, our chief operating officer, booked a load, and I was like a little frustrated because I was out of town, like I wasn't anticipating us, like shipping our first load. While I was gone, and I remember calling him, he's like, hey, we booked our first load. And I'm like, well, like what are you going to do? He's like, well, I don't know, like I don't know how to do this next piece. The next part was the part we didn't know how to do so in the beginning.

Brett:

For us, booking loads was easier than covering loads because we didn't really know how to do that. And so we learned a lot in our first year in lot in our first year, in our first, you know two years. Then we had the joy of the growth of COVID right, and so we went from never being a freight broker to now, all of a sudden, like booking, you know, thousand loads a week, and so that was like a very like learning, you know time for us. And I think that what stands out to me the most in terms of, I guess, my perception versus reality in the industry is that I came from this asset world where what we sold was our infrastructure right, we sold all of our trailers and all of our truck assets and all of the. You know how much capacity we had to offer and all of that. But that didn't really necessarily equate to, you know, just premier customer experience and customer service, right, it's when you have scale and capacity. Sometimes what you're selling is scale and capacity, and so for us, I think that what has stood out for me most is just the level of excellence that we have from a on-time pickup and on-time delivery perspective and I don't think that's unique to Loadsmith, I think that that is more unique to freight brokerages.

Brett:

In terms of the, let's just say that the stakes are higher for us to pick up and deliver a load on time, comparatively to a trucking unit that has a tremendous amount of scale.

Brett:

A because we're held to, I think, a little bit of a higher standard in terms of service, and then B, that our carriers, so the third party that is moving the freight. Our interests are aligned in the service aspect of it because the reality is, if we miss delivery, we don't have as much ability to recover from that from a utilization perspective. So if you get a five day reschedule, that driver or that carrier is now stuck with that load. So all of a sudden, our interests are aligned in terms of on-time delivery, whereas if you're working in a larger organization that has a lot of real estate, the ability to just drop that load in a yard and move on to the next one, there's not a lot at stake for the driver if he misses. And so I just think that that's been an area, I think, for me that I have been pleasantly surprised at just how well service works in the logistics side of the business.

Andrew:

Yeah, I appreciate you saying that, just as someone who's been a broker his whole life. I spent a year working on site at Kraft Back then it was Kraft Foods when they still had Mondelez under them or that business under them and being on site I had a lot of access to information that a typical broker wouldn't. But I could see the safety or the service scores every week of every carrier and broker, and the brokers were way up there in terms of the numbers and they were held to that standard. And then I would listen to the weekly calls between Kraft and their dedicated people and it was always just focused on price and not so much on the execution, and I think that's just the way that it has historically been. And, given how competitive it is for brokers, we just don't have another choice. We have to execute at that level or there's 400 competitors waiting to pick up that freight and kick us out the door. So I appreciate that perspective.

Andrew:

Now let's talk about the deal for a second. Well, for the rest of the show, how did this come up? Was this something where Shannon, your team, was out looking to buy something, or Brett, it sounds like, based on some of the commentary already. This was kind of a plan all along and it was just a matter of when and with whom. Let's just talk about how that all originated, when it originated, and go from there.

Shannon:

Yeah, I'd say I was in Green Bay with my boy a Saturday before our first Lambo game together a few weeks ago and the call came through with my co-founder, john, and Brett had reached out to him and kind of expressed some interest.

Shannon:

I think Brett is naturally looking at a few different opportunities Let him talk through that as far as who the best fit would be but we got the call and it was really interesting time. You know, we've got a lot of things going on here. You got peak season, as you know, you know busiest time of year for us and so a lot of moving parts. And so the call came through and it was just one of those moments where I kind of sat and just kind of smiled and was like, okay, you know, I think they always stay like you can only get what you can take. You know say like you can only get what you can take, you know, and so, with all the moving parts, adding this to the mix, but, um, you know, I think a few days later got some some data, uh, from from brett and his team and we started looking at it.

Shannon:

So I'll let brett probably figure in, like his, his side of the deal. But for us, look, I think we're heads down, we're on a growth path. Uh, we got some exciting stuff uh happening here just on its own and then so to add this to the mix was really exciting for us. We weren't out actively seeking. I just think, naturally after the couple years in this market condition, right, andrew? Like there's just opportunities that are going to be had, that are out there, and there's people looking to transition, whether it's out of a brokerage operation which we saw, you know the transfix NFI deal a few weeks ago or months ago now. So there's just opportunities for companies. They start to realign and assess what they want to be, how they want to position themselves, and so we feel like we've earned the opportunity to have this opportunity and we worked really hard to do that. But you know, brett probably has more feedback on just why and what his thoughts are going into. You know a suitor and why freight vana and all those pieces.

Brett:

So yeah, I think, um, you know, first I want to say, andrew, that it was the plan all along. I would just say that that over the course of the last, um you know, really, 18 months, we have been working on some other, some other technology platform, um, things around, um, around trailers and around, um you know, acquisition, disposition of, of of trailers and inspections and and, uh, damage audits and those types of things, and, and so we're excited about the, the technology platforms that we're working on and building. And I think that, again, if you're looking at what our plan around autonomy has been is, I believe that the autonomous future can operate much like a utility from a network perspective, and what I mean by utility? I'm referencing something similar to like the railroad as an example, where people buy capacity on the railroad. They don't, you know, have to go out and build a builder on railroad, right, they can buy capacity on it. And so it wasn't like this, like plan plan.

Brett:

But as things evolved and we started building this other technology platform, it became apparent that there would be a conflict, right, If we were trying to operate a freight brokerage at the same time trying to get carriers onto our trailer management platform and divulging all of their lane information to us us and so we didn't really want to be trying to operate a freight brokerage and building a tech platform that could seem a little bit like intrusive in regards to data. So that really led us to. The next question was okay, we have this asset in the freight brokerage, which I believe has a very good, you know, resonance in the industry, meaning, you know, we're not the largest by any stretch of the imagination, but I think that we present well in the industry. We're respected with our customers, with our shippers and carriers, and we have a lot of really good shippers and we have a lot of really good employees and a lot of really good carriers.

Brett:

And so there was value in that, in that entity, right, and because there's value, you want to protect that value and you want to grow that value, and so for us looking for a trading partner for it, it had to be the right situation for us to be able to take that value and transfer it to to the acquiring entity and for that, that new entity, to be bigger and and let's just use the word more complete, not better, no-transcript with managing a fleet of trailers, and that's totally fine and respectable. There's less that want to take on that challenge and take on that responsibility. Freyvana happens to be somebody who wants that. They also happen to be Shannon and I, I think, are sitting about roughly 600 feet away from each other in our respective operations offices in Phoenix, and so there's a lot of of of proximity, right, in terms of continuity for for the Lodesmith legacy employees, in terms of where are they going to work every day? You know terms of where are they going to work every day, you know. And then, from a an experiential perspective, you know, shannon and I have, while we worked on different planets at night, we still worked in the same, you know, solar system, if that makes sense, and so so there's a lot. So there's a lot of of of training and development and experience that we have. That is very much the same. And so there just seemed to be a lot of things in the pro column and really none in the negative column to making the phone call right. And so once you make the phone call and then we start working on the diligence side of things, all of those pros really, you know, really shine bright in terms of.

Brett:

I think that the number one word that we have used throughout this entire experience has been how do we have continuity? How do we have continuity right? How does post-transaction does it feel for the shipper, the carrier and the employees? And ultimately, what it really comes down to is the employees okay, are the ones that are ultimately going to affect the shipper and carrier experience. And the reality is, is that and I can't stress this enough to Shannon and his team is, is you know their, their willingness to accept that right and understand the people piece of it? They're, they're taking our entire operations team into their organization to provide that continuity to the shipper and the carrier. And so we're providing. Frank Vana allowed us the opportunity to provide the continuity for our employees which will provide that continuity for the shipper and the carrier.

Andrew:

Ultimately, yeah, I mean I think you're thinking about it the right way, you know, as someone who's been through three of these, one being Coyote Buying Access America. So I was on the buying side, but I was a salesperson at the time. So salespeople going out conflicting, that can be a problem. And then Coyote being bought by UPS and then certainly my business, molo, being acquired by ArcBest. I kind of have this belief that you're not really ever buying a freight brokerage. You're kind of just leasing or renting the people and the relationships they have, and you can keep them in perpetuity for as long as you're able to take care of them and keep them happy, but as soon as they're not happy and they leave, so do the customers that generally were loyal to them. So I'm curious. Let's talk about the due diligence process. You know when did it start, how long did it last? And I'm curious what kind of surprises came up through that process, things you didn't expect or you know, anything like that.

Shannon:

Yeah, I would say pretty quick, right, if you go back to that phone call on that Saturday I don't know the exact date of the game, but probably mid-October, I think, when the Cardinals were playing at Lambeau Field, right? So there's your timeline. I'd also say the experience. You mentioned some of your experience, right, and Brett mentioned our common shared experiences on our end. Look, I tell people often Andrew and Brett knows this to be true like the lessons I learned through the Night Swift merger in 2017 were worth more than any college degree, at least for me, professionally, especially in industry. Right, like, because, primarily, you get to bring all of that to bear, you get to understand the people side of it, the system side of it. There's so many major lessons learned there, and so that gives us a lot of confidence as we look forward to this deal and then go through a diligence process which is expedited, right, I think, and there's a lot of components of this deal that helps us expedite it.

Shannon:

Myself or Brett can get into those, but coming from a publicly traded, multi-billion dollar company, like, let's go into everything units and diligence, your data rooms, your accounting protocols. I mean, we have a data room here. Like you know, brett has highly qualified COO and CFO and that all of that stuff is well prepared. I would tell you from my vantage point right, because we've done some advisory work here over the years and have some experience there, most people aren't prepared, right. Most people feel like it starts when, oh, the call comes in and now it's this scramble effort to pull stuff together, and then, oh, we got to get reviewed financials, what's that? And like, you're just, you're chasing, you're constantly chasing, right.

Andrew:

And so you're giving me nightmarish flashbacks of my own experience of six months of that Cause that's what we were. We were not a company who was prepared. We weren't expecting our deal to happen the way it did. So you know, we were chasing is the best word and you're just. Every week you have something new to start chasing. You haven't finished. You haven't even caught the last thing you were chasing.

Shannon:

Well, let's be honest, and how does that affect your business? Right, I'd ask you that, like for six months when you're chasing that, how much for you? I know you're what you build, I know how fast you build, I know your passions, but let me tell you there's no way you can carry all that and keep your eye on the ball of the business.

Andrew:

Our eyes were not on the ball. Not at all. I'm with you. It was really hard for the team to stick Because, especially you know you have seven or eight people managing the data room or taking out tasks. Because you're splitting it up Like you own this. You take the claims, you take this and then you're double checking everything and it definitely takes your. If you're not prepared, it takes your eyes off the prize. So, not prepared, it takes your eyes off the prize. So I'm I'm curious, like how you guys were able to be in a position to be as prepared as you were on a Brett, because you were on the on the other side of that.

Brett:

If you want to talk about that a little bit, yeah, well, I think, from a preparedness perspective, you know the call, what let's just say that it was October 15, or something like that. I don't know the exact date, but when I talked to John, I said, hey, it's a transaction that I want closed by the end of the year. And I said, but, we're ready for that, like there's no question that we're ready for it. And I think what it comes back to, Andrew, is that, again, we never it wasn't like this was planned for us to be to divest this business unit at this point in time, but we always knew that we wanted to be prepared for anything.

Brett:

And so, you know, I have to give a lot of credit to Jessica Kane, our CFO, who was, you know, with Shannon on the 2017 acquisition as an you know, as an accountant, doing a lot of the due diligence on the accounting side of the Swift acquisition. You know she also worked on the Bar None acquisition. She also worked on the bar none acquisition. She also worked on the avaline express acquisition and so, um, if you went all the way back to the beginning of of our business, I mean, we we have audited financial statements from our very first year and, like when we first did our first audit. Um, you know, people were like well, nobody does an audit after year, one with you know, little revenue.

Brett:

Like hey, we understand, but we want to be thorough. And so, you know, when Shannon asked, you know, set up a data room, and like, hey, we need your financial statements, right, okay, we'll send you like three years of audited financials, like okay, they're in the data room, you know. And so literally every single thing that they asked for it was not. I mean, shannon, would you say that we'd have it to you within months?

Shannon:

Never more than just a few hours.

Brett:

Yeah, you know what I mean. And so, for us, we just always were prepared that way. I think that that is a lot of credit in terms of our CFO and our accounting team, just in terms of keeping track of everything and keeping everything in relatively ease for us to be able to extract and forward, you know. But look, I also think that there's an element of the tailwinds that we benefited from because, you know, just as Shannon and I have known each other it's not like Shannon doesn't know Jessica doesn't know David Stem, our COO, john, knows everybody as well. And so, um, you know, for us, we we had the benefit of, of familiarity, right, and we weren't trying to get to know each other. There was no dating period, um, you know, and so so we didn't have to, we could cut through that aspect of of the due diligence side is is this even going to work culturally? Um, you know.

Brett:

And then I think also, too, I'll credit, I'll credit, you know, shannon and his team. They asked a lot of really, really great questions, those questions we had answers for, because, again, that similarity of background, right, they would. They're asking questions that we would have answers for, because we would have those same questions for them and just because of how complimentary the businesses are to one another. And then again our backgrounds, and so we did have some tailwind just in terms of our familiarity. But I do think that we were very well prepared for a due diligence period to be expedited, simply because of how much time and energy that we have always put into making sure that our I's are dotted and T's are crossed.

Andrew:

I'm curious, shannon, you know I think it definitely is a sign of a good business when you know everything's as clean as Brett's describing it to have been.

Andrew:

But how do you evaluate the quality of the relationships with the customers and the quality of, say, the culture of a business like this in a due diligence process?

Andrew:

Because I remember when I went through our situation and I was so scared because they wanted me to set up phone calls, meetings with five of our customers before the deal was done and with myself, the customer and the two of the C-level people from the acquiring team and it's scary because you don't know the deal is going to be done and you certainly don't know how the customer is going to receive that information. But it did give them a very clean understanding of the relationship I and some of our team had with our customers and how they felt about us. And I think that gave them one of the final kind of boxes to check of, like hey, you know, it's not just numbers that we're looking at, there's real value to these relationships. So I'm curious from your perspective, how did you think about trying to understand the quality of the culture within their business and the quality of the relationships to the customers they had.

Shannon:

Yeah, I think the culture one was easier to Brett's point because of the familiarity our teams had. Right, like, I know David, I know Brett, I know Jessica, like and I know, because I know them, I know the types of people that they would want to have in their organization and we've seen each other at conferences and all those pieces. So culturally I think not a lot of cause for pause. Let's call that.

Brett:

On the customer side.

Shannon:

I think data tells a story, always right, Because you can see the historical growth path, you can look at service scores and metrics internal, external. What was all the information shared? And so you can create a story of a customer arc and a customer trend. And, like all of us, right, there's no perfect stories. There's customers that came in and you know for whatever reason they go out and you ask questions and you can learn. So data is an incredible way If you have it right. This goes back to being prepared. You have data. The data tells the story, Like well, look, you grew this customer to here and then now, like they're trending this way, what, what's the story? And there's usually a story, but because you have the data, you can ask. And so that's been a lot of the last two, three weeks, as we highlight the growth stories, highlight some of the other stories, and just dig in and then naturally look, I think, when you think about power only and assessing, like what's possible power only from a network effect, right, We've seen all these businesses talk about the network effect, whether it's a platform or technology and one platform to solve them all, and I don't agree that that's ever the thing right now you know what I mean as far as what it's going to be.

Shannon:

But when you think about growing a homogeneous trailer pool that can deliver high execution service, keep the equipment maintained with consistency right on committed lanes, density matters, and so this move for for us. When you talk about evaluating that the trailers, the network, that brett, but when you interlace those right, that becomes a larger, uh, more scalable network. That then continues to take us on a journey where we start to approach the levels of efficiency, uh, maintenance, safety, cargo, all the different things that you have to be maniacal about if you're going to operate assets in this industry. That helps us expedite our path there. And then you didn't ask about this piece, but I think it's an interesting nuance for us.

Shannon:

The nearshoring piece is really interesting about Brett's business. Brett's got a pretty sizable group of nearshoring folks out of Columbia that support his business. We here at Prevana we don't have. That has not been a large part of our early stage development growth operation. So I'm wildly interested and I have been really always very curious about it.

Shannon:

But this expedites us very quickly into having those types of associates that can help us grow and build, that are doing creative things for Brett's business, and so when we think about assimilating those businesses together like I am so, so excited to see, like what are the learnings, the best practices that come out of the melding of these two businesses?

Shannon:

When you think about operating, you know thousands and thousands of loads a week now under one umbrella. That becomes an interesting test case, use case and a huge learning experience which I've kind of shared with our leadership group and I will share also with the incoming employees. The opportunities here are so great for learning and growth I mentioned for myself I go back to 2017, huge for us, right For these employees. They will learn so much over the next 3, 6, 9, 12 months. It's really exciting. It should be an exciting period for us because the new challenges and bringing it together and what has been, and then it challenges you to kind of take yourself outside your own ecosystem and really evaluate what's possible, which I think is just an amazing time, and a deal like this for us forces that and I think it couldn't come at a better time.

Andrew:

So you know, I think it's fair to say that, ultimately, a culture is what defines whether or not a merger can succeed or fail, especially with respect to the integration process and how you navigate the integration process. So, moving off the due diligence piece, what's the integration plan? Or, at least today, how are you thinking about that process?

Shannon:

Yeah, I can start, brett, you can finish. Look, we've got a multi. We are moving relatively quick, so the rest of December will look like a lot of cross-functional training, getting a chance to meet the new folks. I think we've talked a lot of cross-functional training, getting a chance to meet the new folks. I think we've talked a lot about continuity. But another word that I would say that we've used often between Brad and myself is humility. We don't know what we don't know, I think, what happens and I've seen this and I'm interested in your experiences too, andrew Sometimes and I've seen this firsthand the acquiring company sometimes has a little bit of an air from an egotistical perspective or a better than thou perspective, or hey, like right, it just happens. It just happens naturally.

Andrew:

The. We bought you, so we know what we're doing.

Shannon:

So you hit it right on the head, and what I learned in 2017, why I thought that that was a very successful venture for us there and what I am most passionate about working hand in hand with Brett on here is making sure we show up.

Shannon:

No one's better than anybody and I think culturally which you asked the question on that is the key premise. That then will allow for learnings that allow them for best practices, that will allow them for change, because as soon as you are able to dampen that ego, then opportunities and really creative stuff happens. If you show up the other way, it crushes it, right, it crushes it and then and then that what happens internally is so damning, and so I've seen it go really well in my own experiences as well as the industry, and we're just you know, brett and I early stages. I want to set the standard. I want to do this for our people the right way. Both people and I want to show up with a lot of humility so that we can make sure we land in the best possible for the continuing brands, and so that has been the guiding light and premise, and will continue to be, for our teams over the next few weeks as we, as we merge these two businesses together.

Andrew:

Go ahead, Brett, if you want to add on to that.

Brett:

I was just going to say. I think that, from an integration perspective, andrew, I think that you know that Shannon has has highlighted the aspect of if you have humility when you start talking about people and integrating people, because systems integrations are much more straightforward than people integrations, right, and so, okay, well, how are we going to transact the loads? Well, we're going to have to transact the loads. That's a given right, like we know that we're going to have to do that. So how do we do that? Okay, that's a, that's a more linear thing when you're talking about systems integrations than you are like people integrations. And so when you, when you start talking about the people aspect of it and, as we were working through, what is the integration plan, look like from a from a people perspective, you know Shannon and his team were like okay, tell me about this person, what role do they do? And you know what effect they have on the business? And you know, those are the things that I think that I've been very, you know, encouraged by in terms of the freight monotene and coming at it as like, okay, well, what's the process and what works and what doesn't right? There's elements, obviously, of each.

Brett:

Both businesses are successful. Both businesses are successful for a reason, right? Well, what are the driving reasons behind the success between Shannon and his team? And what are the driving reasons behind success of Lodesmith and our team, our team? And so how do you take those successes and create wins and create a better version of the combined entity than each was individually?

Brett:

I think that that's and to Shannon's credit. It's like when we would uncover certain things about our organization. I think that we're a very process-driven organization and when we would uncover things about our business that worked very well for us, shannon was like, okay, well, how do we take that and apply it to the entirety now, as opposed to saying, well, this is the way that we've done it. Perhaps the way that you guys do it is different, but works right or has had a better result for you. Because if you think, you know, for the last five years we've been learning how to do this business and so if we take those learnings and we apply it, we create processes around them.

Brett:

For the last almost four years now, shannon, right, you guys have been learning and building and creating processes around it and learning. So now let's take those that like collective nine years of starting a business from nothing. Right, and take those nine years of collectivity and apply that to the new entity. I think that that's really where you're going to have success, and I think that that's where I think that's why this will be very successful. Is because of that reason, not the oh hey, we acquired you and so this is how we do things here, and fall in line.

Andrew:

Yeah. So I think you both made some excellent points. I think you know my two cents, having gone through three of these on both sides. There's been great and ugly in all cases, and I think that the best thing you can do is you know, as Brett said is understand. Why do these organizations win today? What is what makes these companies great and how do we get the most out of that? How do we squeeze as much juice as we can out of those? The humility to say I don't have all the answers today. What I've done has worked, but there's a fresh opportunity sitting in front of me and I have to learn as much as I can about how to bring it into my business and make my business better.

Andrew:

At the end of the day, growth solves a lot of problems. Growth creates opportunity. People make more money when the business is growing. You can promote more people when the business is growing, and change is something that's often looked at in a negative light. For people, it's just a scary thing, whether it's a change of a comp plan, change in a boss, change in a company name, whatever it may be, changes can be scary and I just think that having the mindset of how do we make these businesses grow as one business moving forward will solve a lot of those problems.

Andrew:

And then the last piece I would add is transparency, which, shannon, I know you're big on.

Andrew:

It's part of why we're sitting here talking about this right now.

Andrew:

The more honest and open you can be with your team about both teams, about what you're doing and then, most importantly, why you're doing it, the better you'll be, as long as you're making decisions with your team's best interests in mind. And that may not be one individual's best interest. I've seen situations before where one individual on a sales team was getting a commission five times higher than everybody else, and it's not fair to maintain that. So that person is maybe not thrilled when you change it. But if you're making decisions that puts the team's best interests in mind and you can explain the why on that decision, will some people be unhappy? Sure, it's impossible to make everybody happy all the time, but people respect leaders who are honest and explain the reason they make the decisions, especially if they trust that they make those decisions with their best interests in mind. Yeah, I think that's one of the driving forces reaching out to you, right, talk about the mindset. Especially if they trust that they make those decisions with their best interests in mind.

Shannon:

So, yeah, yeah, I think that's one of the driving forces reaching out to you. Right, talk about the mindset, talk about the thought process, talk about the work that goes into it. Right, a lot of companies and publicly traded or not, right, there's so many risks and they've got 300 things they've got to check a box on. You know that, well, from your last run right, and so your last, your last run right, um and and and so for. For brett and I was like, hey, how do we show up and and be authentic with our folks, share the story with our folks, let them hear it from us? We're, we're going to plan on, you know, uh, having these conversations, naturally with you know, both of our teams, uh, in short order, uh, in in capacity, because we've got to get moving forward and kind of these next phases, um, and you've got to be out there and front forward. And it all comes down to leadership, right, andrew? Like leadership can really set, I think, these deals up and then setting the appropriate expectations. So I think leadership and expectations are huge keywords. When you think about mergers, acquisitions, I think expectations may not be set appropriately. And then leadership, whether it's authenticity or planning or what may not be in it, in the best spot to deliver the goods of what, uh, the opportunity really presents itself. And look, that's, that's the cool part about business. That's the fun part.

Shannon:

The reason why we are all doing what we do is we all have a passion for, for growth. At least certainly the three of us do right, and I didn't, and brett didn't. Brett's got these other ambitions which he talked about and I didn't leave a prior career to no offense but maintain a X level brokerage. I came to do really special things in the power only segment and the technology piece. From a cultural perspective, I know you're still jealous of our branding and our marketing.

Shannon:

From your, your commentary back in Nashville Like I wanted, I wanted to do things different, right, and this you know. Coming to chance to talk to you today and like what we're giving you that insight, like that's just another step of us trying to be a unique, unique entity in a space that, look, there's, to your point, thousands of people and there's 400 people lining up behind you to move the same freight. So then, how do you differentiate yourself? And we feel like for our employees, for our customers, for our carriers like this is how we do it. At least they know when they come work with you. Know someone like Freightvana and certainly Loke Smith and his history like here's what you get behind the scenes, here's why you want to work with a company like that 100%.

Andrew:

Now, as we get ready to wrap here, I guess I would just ask if we were to have this conversation again in a year, what would success look like?

Shannon:

Brett, you want to go first?

Brett:

No, go ahead, Jenny.

Shannon:

Yeah, I'd say look for our teams. Like continued growth, right. We have charted a very unique growth path here in our three and a half year history. In the face of the freight recession, Regardless of which way the market winds blow, we plan on this being another stepping stone to our continued growth and expansion. So for us, we want to continue on that trend line, clearly 25, you know, if the market winds blow, you know, with a little bit of winds in our sails, and even find some semblance of equilibrium, right.

Shannon:

And that's the other thing about running assets. You know you've got to have a certain you know revenue basis to be able to cover off on your fixed costs as you build these networks, and so that will surely help a company like ours. But, overall, continued success on building our tooling around our trailer technologies, certainly our team and then our customer base. We're really excited about where we sit. That's what success would look like and do it safely, right. And then, ideally, I would tell you the retention we talk a lot about the employees, like retention of both teams and growth and the new opportunities that come with new roles, new segments of our operating business which you've seen as you've grown. You know Molo and others like. There's just new divisions that stand up, there's new like. So to us it's that continued growth path with new leadership opportunities like. To me, that that's legacy, that's the one that I believe that Brett's excited to see for his team in us, and that's the one I'm here to help lead us towards.

Brett:

Yeah, no, I think you know success for me is really all people driven. You know you mentioned earlier about making decisions that are in the best interest of your team. It's a tough role to have to make a decision that affects so many people. That's a very hard thing to do and ultimately that's the decisions that we've been tasked with. And so making a decision that you believe is in the best interest of many is hard, right. And success for me is looking up in a year from now and people recognizing that it was the right decision, that we made the right decision, that we went and found the right home, the right custodian of this great business that we've built and all of these great people that have contributed to it right. So to me that's success. How you measure success is pretty simple right Continuity, growth, expansion, building something new and fun.

Brett:

Success for us, the remaining people who are staying at Lodesmith and continuing to work on other things, you know we hope to have success as well, but you know, I think it's important for everybody to understand from our team is that by no stretch are on Jan 1 when the freight starts transacting as Freightvana and those employees have moved over.

Brett:

Is that I'm not wiping my hands clean and saying, hey, have a great one. I'm going to continue an active role with Freightvana as an advisor to Shannon and helping them in any way I can. I imagine that getting some FaceTime customer visits over the holidays might be a little difficult, and so I imagine that Shannon and I will make some in-person sales calls together to talk about the why and to talk about why Freightvana is the right custodian for the shippers freight, and that's my commitment, my continued commitment. You know we're getting out of the freight brokerage business, but we're not walking away from the business, and so that's, I think you know. For us, success is easily measured in terms of continuity and growth, but what success looks like to me is really looking back, the team saying, gosh, that was really the right decision, based off of this inflection point that we're at at Loadsmith in terms of another business and how do they scale that business, and then also continue to have success with the legacy brokerage that we built.

Andrew:

Yeah, I mean, I think that's very well said by both of you. So, listen, I think we can end it there. I think you guys have really given us the audience a clear understanding of how this deal came to be, why it is what it is and why you guys have made the decisions you've made, and I think we're all kind of wishing for your success and hopefully, a year from now, we can sit back down and maybe do this again and talk about. You know where Freypana has gone. And then I'm very curious, brett, where you're taking the team at Lodesmith and when you're ready to talk more about that publicly. I'll be happy to have you on again and discuss it. So, with that, that's all we got. Thank you to our listeners and we'll see you next time.

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