The Freight Pod
The Freight Pod is a deep dive into the journeys of the transportation and logistics industry’s brightest minds and innovators. The show is hosted by Andrew Silver, former founder and CEO of MoLo Solutions, one of the fastest-growing freight brokerages in the industry. His guests will be CEOs, founders, executives, and leaders from some of the most successful freight brokerages, trucking companies, manufacturers, and technology companies that support this great industry. Andrew will interview his guests with a focus on their life and how they got to where they are today, unlocking the key ingredients that helped them develop into the leaders they are now. He will also bring to light the fascinating stories that helped mold and shape his experiences.
The Freight Pod
Ep. #72: Andrew Leto, Founder & CEO, Emerge
Andrew Leto shares his journey from Navy veteran to successful freight entrepreneur, revealing how he built Global Tranz from zero dollars into a half-billion-dollar business by spotting opportunities in the eBay shipping market and creating an agent-based model that revolutionized LTL freight.
• Starting with no money but securing prepayment from customers while getting delayed payment terms from carriers created instant working capital
• The agent model allowed rapid growth by recruiting sales reps who brought their book of business for higher commissions
• Building 10-4 Systems as a visibility platform that was later acquired by Trimble in 2017
• Creating Emerge as a procurement platform that offers shippers a free RFP system while generating revenue from carrier participation
• Napoleon Hill's "Think and Grow Rich" provided the mindset foundation for success through belief and visualization
• AI will transform freight by potentially eliminating 70% of current jobs while creating new opportunities
• Investment strategy focuses on knowing the industry deeply and finding undervalued assets like Roadrunner
• Future freight brokers will need to operate on 5-6% margins as AI creates price transparency across the market
If you have an interest in entrepreneurship, Leto recommends reading "Think and Grow Rich" by Napoleon Hill, which he considers more valuable than a college degree for anyone seeking success.
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. ***
Hey FreightPod listeners. Before we get started today, let's do a quick shout out to our sponsor, rapido Solutions Group. Rapido connects logistics and supply chain organizations in North America with the best near shore talent to scale efficiently and deliver superior customer service. Rapido works with businesses from all sides of the logistics industry. This includes brokers, carriers and logistics software companies. This includes brokers, carriers and logistics software companies. Rapido builds out teams with roles across customer and carrier sales and support, back office administration and technology services. The team at Rapido knows logistics and people. It's what sets them apart. Rapido is driven by an inside knowledge of how to recruit, hire and train within the industry and a passion to build better solutions for success. The team is led by CEO Danny Frisco and COO Roberto Lacazza, two guys I've worked with from my earliest days in the industry at Coyote. I have a long history with them and I trust them. I've even been a customer of theirs at Molo and let me tell you they made our business better. In the current market, where everyone's trying to do more with less and save money, solutions like Rapido are a great place to start To learn more. Check them out at gorapidocom. That's gorapidocom.
Speaker 1:Welcome back to another episode of the Freight Pod. I'm your host, peter Silver. I'm joined today by a special guest, mr Andrew Leto. Mr Leto, how are we doing? Great thanks. Thanks for having me. It's a pleasure to have you. You have one of the more illustrious freight careers of any of my guests thus far, so I'm excited to kind of dive into your journey, and I think it makes sense to start. Just take us back to what even brought you to freight to begin with. How did you find this fun industry?
Speaker 2:Yeah, so when I was younger my dad was a franchise owner of a company called Pilot Air Freight which is still around. He was a Phoenix office and I remember going to his office and I always told everybody my dad's in the freight business. Kind of like you were brought up but my dad didn't own any trucks or any planes. So I was like, how does this work? How are you in the freight business if you don't own anything? I was like, how does this work? How are you in the freight business if you don't own anything? And I went to his office one day and he showed me. He just showed me how shippers call him up and he goes through a bunch of books, aci guides, but they're calling it air freight business and Ford Air is what they put most of their freight on.
Speaker 2:Actually it's kind of funny. They sell expedited services but it's mainly on trucks, mostly air freights. On trucks it's just faster trucks, team drivers. But he showed me how you could just connect shippers. He picked up the phone one day. He's like, hey, watch this, I'll make $100, $200. And he just was giving quotes out, looking at books and then adding a margin to it. And so at a young age I figured out wow, this is how you make. You can make money in freight without owning anything, just by being the middleman, essentially. So that's where I got my first exposure to that.
Speaker 1:So did you work for him, or what was your first actual job in freight?
Speaker 2:Yeah, so as a teenager I worked in his office. I worked in the warehouse mainland and didn't do anything anything great and he was mostly using typewriters and stuff. So I went to after after. I was not an academic, I was, I had add and I didn't realize it at the time, but I do, um and I couldn't pay attention to school. So I didn't have the grades to go to college. So I went to the navy five years from 2000, from 96 to 2001 did five years navy, um, and when I got out again I started working for my dad again after that.
Speaker 2:But my last year in the Navy I was like, okay, I'm going to be so far behind all my friends who went to college and I was actually going to the Navy to get a college degree, the GI Bill, to have something to go pay for college. And when I got out I worked for my dad for about three months. But that year before I left the Navy I just studied every business book I could get my hands on. I went to Barnes and Noble at the time and went to the business section and read every great book on business or every bit. I was like I got to at least figure out how to be an entrepreneur, make money. So I read, like you know, rich Dad, poor Dad, to Think and Grow Rich, which was my favorite book of all time, and it really just.
Speaker 2:I didn't realize this, but my last year, when I was doing all this, I didn't do anything but read for like last year of the Navy just constantly. But when I went and worked for my dad after I got out because I worked for him when I was younger I saw, like you know, we're still, it's 2001 and we're still using typewriters and you know companies would call him up and say, hey, give me a quote on this. And he would go through a bunch of books and you know, add 35, it was a 35% margin business, the air freight business back then.
Speaker 1:But there was not a lot of shippers for it.
Speaker 2:And also it was after September 11th, so you really couldn't get new shippers because there was this thing called known shipper where you'd have to go out and, uh, to get a new shipper was really hard. So I was, I remember, and then one day, I remember someone called our office and was selling stuff on eBay and they they. I told them I said, listen, bring it to a terminal, don't have a lift gate, residential, come up, that's going to cost you a fortune. He was selling an ATV and he says okay, I just sold it to a guy. How do I get it to him? And I told him like, bring this to what a Ford Air terminal. I told him how to package it and have your customer pick it up there. And he called me back an hour later. He's like wow, you're the cheapest quote I got. And I knew I was because you know, everybody else was giving them residential lift gates both ways. So that guy and he also prepaid us on.
Speaker 2:PayPal, which is awesome. I was like wow, this guy is actually prepaying us. So I said I told my dad I was like dad, we should advertise online and see if we get people from eBay to use us. And we did that for a little bit. And I remember someone called me up one day and he said hey, listen, I got a quote from someone just as good as you, or actually it's better, it's much easier to use them. And I said what's that? And he goes freightboatcom. If you remember freightboatcom, it's now RCH Robinson. Freightboatcom was one of the first travel orbits or price lines for what essentially is LTO Not really for truckload but for LTO and I said I saw the system, I saw freightboatcom and I saw all the carriers lined up like you would on travel lawsuit orbits or Priceline, just like you would book a hotel or book a plane. And I was like I told my dad.
Speaker 1:I said this is the future.
Speaker 2:I said we got to do this and he wanted nothing to do with that. He could care less. He was like go out, put a suit and tie on and go go out and sell shippers to call this up and do it the old fashioned way. That's all he knew. And I said we got to invest in this and he wouldn't. He didn't do it.
Speaker 2:So it was literally three months after I started working for my dad and I, really, after reading all these business books, it was like kind of like the matrix. When I worked for him I was like before I read all this stuff I didn't see it. But when I started working for him, I this is crazy, how he's doing and how this whole industry works. It's you know where people have to call you up and get a quote. Why don't they just go online and get a quote? So I left my dad after three months of working with him and he he didn't really talk to me for only my. The only person in my family that talked to me at the time was my mom for about a year, and my dad thought I was going to compete with him. He's like what are you doing? But anyways, that's how I started Global Trends.
Speaker 2:I left my dad's office one day I said, okay, I'm just going to start a company. I had zero dollars to my name, zero. I had unemployment checks from the Navy that was it to live off of and that was only for six months that I would get that. So after about three months of working for him, I said I'm going to do this and I just remember the guy on eBay calling me up and saying, hey, would you ship this for me? But I remember mostly is he prepaid me. So I was like, wow, if I can get prepaid from people, I don't really have to have money to start a business.
Speaker 2:So I went out, started Global Trans. What I did was I just went on eBay for about a month and just emailed everybody that looked like they're selling something that wouldn't fill UPS or FedEx or parcel. It was bigger than 150 pounds. I would say, hey, give me a call when you want to ship this. I went out and got one carrier relationship and I knew the cheapest at the time was a company called Central Transport. They probably still are and I remember because I remember when I seen that, because when I went to freepocom they were the cheapest carrier every lane um, worse service. I don't know if they've gotten better, but back then it was really bad, but it was half the price of anyone else. But also, I was also thinking if I just could tell all these people go to the terminal and have to deal with liftgate residential, it doesn't't really matter. I mean, you're not going to have as much problems with the shipment if you're just using a terminal.
Speaker 1:Well, they'll save so much. And for this kind of thing it's not like most of the like. Someone's buying an ATV, do they care if they get it in three days or if it's two weeks? I feel like back then, if you're shipping something on eBay, you didn't need it to be there by a certain time, so you could probably get away with the worst, worst service as long as it, as long as the price was, was right.
Speaker 2:Right and it was. That's what it was. I mean, they still mess up a lot of shipments, but it was still worth it in the end. And then. So what I did was I went and met the guy for lunch, the guy here. He said I'd have to prepay every shipment, so for about.
Speaker 2:So after a month of emailing everybody on even I probably sent out like 10,000 emails to people I was starting to get calls every day. Hey, I'm ready to sell this. You said you're going to give me the best freight rate. What do you got? And I would just go on. I got the same tariff as Freightboat at the time Freightboat at the time Because they just got to Phoenix and they wanted my business and they gave me the same pricing, which was amazing. And they didn't give me credit right away. But after a week of having to call them every time I had a shipment, they gave me credit. But anyways, what was nice about that? After a month everybody called me. I was the cheapest because everybody else would try to go on, call FedEx or UPS and or even go to FreightWalkcom, I did not know like the whole. Just bring it to the terminal thing.
Speaker 2:They would just put the people's addresses in there, so I knew that if I could get everybody to bring their freight to a terminal I would be the cheapest, especially using just center transport. So after about a month of doing this I had $0 in my name. So after about a month of doing this I had zero dollars my name. I. After about a month and a half I had about two hundred thousand dollars in my bank account because, remember, I was getting prepaid for everything and you know, I was making 30 margin on it, 40 up, something like that time. Um, and so I owed center transport 120 grand of it. Um, luckily they didn't want their their, so back they didn't really they would back. They would call me after 60 days for the writing. So I actually had two months of credit for them.
Speaker 2:And at that point I just hired a bunch of my friends. I said one of my best friends who was my co-founder of Lutrens, I was living at his house, he would email all the people on eBay and then I had another person that would do the bookings and then that person explained to the shippers do the quoting and another person do the billing. So I had like four or five friends working for me after about a month. So I really like. I only had to do really one month of work, Like, and then I was became a master, master delegator after that. But after about a month I said to myself I need to build what Freightboat has. I mean, I always knew that I was like I got to build what they have. So I went to online and I bidded out with a bunch of companies. Actually, Joe was talking about the guy last week on your podcast. His name is Abhishek. He reached out. I went on this company called Elancecom, I put it out there and he was the lowest price for it.
Speaker 2:You're saying to build the actual website Freightboatcom, I was like, hey, build me this. And it was funny, at the time I didn't even know SMC3. So for about three months I was trying to figure out how to do it. I would literally mail to India because that's where I was building it out of all the rate disks from all the carriers. So back then it was like Watkins and Central Transport and all the companies I would try to get rates with LTL carriers and I'd email them disks and they were like we don't know what to do with this. They were trying to piece it together through the disks.
Speaker 2:And then I finally called SMC3 up to buy more disks and the guy's like what are you doing? Why do you keep buying all these disks from us? I'm like I'm trying to build what FreightPoD has. He's like, oh, you just need a RateView product. There was a product out there that they were using. So I was like, oh, tell me about this. So after I figured out RateView and all this, I bought that product. It was either Carrier Connect or RateView, one of those two.
Speaker 2:And we built my first, carrierratecom, which was what we use at Bulbatrans, which was like pretty much the second it was us and Freightboat and then Unishippers were the only companies that had you know a place where you could go online and do and kind of like travel off your orbits for truck, for LTL, and after about two years of doing it it took about two years of doing what I was doing on eBay to get the system ready. And then, once I had the system ready, I was like, ooh, I can go get actual shippers now that I have this. But I didn't. I was like I have no capital and there was no capital at the time Like only Freightboat got invested in until probably about 2010 in our industry. There's no other big investments in our industry from from anyone. And so I was like there's gotta be a way. How do I sell this to shippers without having to hire a massive sales force? And that's where I came up with the idea. I was like, wait a minute. I said dad, how did it work with Pilot Air Freight? And he told me he's like Pilot Air Freight would do the billing, they would do all the back office stuff and we would just go sell it. Pretty much that's how franchise models work for Air Freight. And I said, ooh, I wonder if I could do that for LTL.
Speaker 2:I remember meeting a couple of my reps here in Phoenix. Two of my best reps Jet McCandless, who you talked to last week he was my YRC rep here in Phoenix Then Mike Bookout, who runs a company that's called MyCarrier. They're actually in a legal dispute right now between the two of them. Those were my two best reps in Phoenix for LTL and I literally asked them. I said, hey guys, if you had this, and I showed them. I said here's carrierratecom. It looks just like freight food. We had about six or seven carriers and then we had Central Transport, old Dominion, a couple other ones, a couple of regionals in there that were giving us some rates and at the time, honestly I had to say I was a shipper to get rates. Ltl carriers hated brokers back then. They still don't like them but they at least deal with them now. But back then it was very hard to get rates for LTL. We managed it. It just took time to keep it. Obviously we were doing so much business that we kept them.
Speaker 2:I asked Jet and I asked Mike Booker. I said if you had this and you brought this to your shippers and I think both of them had like five to $10 million books of business here in Phoenix. They were local reps. I said how many of your customers would use this? And they said this probably half of them. Half of them would use this, they would love to have something like this. Because it was 2002, three, when that was like a new thing. And uh, I said um, so I hired both of them and they both brought in millions of dollars of business, like in the first year, of ltl shippers and we'd make 20. It was a 20 margin business. So if, if someone had a 10 million dollar book of business and they brought one, one million of it over, that was 200 grand a year we're making and you know he can make up we would give half to the rep and half of the company.
Speaker 2:So I was after that point. I was like, wait a minute, this makes total sense. Why not have an agent mod? I know at the time I was trying to do a franchise model, but agents much easier to put together. We did an agent. We're the first ones to do an agent model for ltl and what we did is we picked our carriers, we picked the ones that we want to do business and then we went after the reps. For the rest of them it's like YRC, we didn't do business with them. So we went after YRC reps and the and the, the agent. The call would be hey, how much do you manage for YRC? And they'll be. They'll be like oh, we have a $10 million book of business here in.
Speaker 1:You'd make a hundred grand a year, and that's what they're making typically so, and after that you make 50%.
Speaker 2:You know, let's say, you brought $2 million and now you're making an extra hundred thousand dollars. So really so I used my two reps, who were actually two of the best recruiters in the industry now are. Kj McMasters and Brent Orsuga were my two guys that did that.
Speaker 2:And yeah, they would just recruit agents all day for um, um, global trends and um after about. So that's how I, that's how, without any capital, I read $0. People say you need money to make money. I had $0 in my name and I started global trends with zero, but also it was able to, you know, build it to what it was.
Speaker 2:When I left it was half a billion dollars, but just using, you know, I had to figure I couldn't hire a bunch. If I could have hired a big sales force, I wouldn't have done the agent model. But the agent model just worked out great for LTL because it was a new thing back then. And so that was the first five years of Globetrans. And then about 2010 is when we decided to get into truckload, and then about 2010 is when we decided to get into truckload. That's when everything changed for me personally, because I was like, wow, this is way cooler, way harder to do. But I thought way better than LTL, it's a way bigger industry. And actually meeting your dad was really what showed me how the industry works. And I was like blown away when I first met him in 2009. And I met him in Chicago with Jet.
Speaker 1:Yeah, coyote was three or four years old at that point.
Speaker 2:Yep, and I don't know if you were there. I remember him showing me pictures of you like you were playing hockey or something at the time. I remember. I still remember it was hockey You're playing. No.
Speaker 1:I would have been. I was playing football back then. My second youngest plays hockey. There's only one of us in the hockey. Oh yeah, he was showing me pictures of you guys.
Speaker 2:But I remember that's when I first heard of you. But I remember going out to the Chicago office and at the time we were the best, we were the fastest growing LTL brokers in the country and your dad was the biggest, fastest growing truckload. And I told your dad. I said, hey, wouldn't it be cool if we could work together? Somehow we're doing this? And he said, yeah, come out and meet us. And so Chet and myself went out there and we saw what he had going on. It was right before he moved to his new offices. It was the older offices, it was a big campus, yeah, Of course. And I said what are all these? This is what blew me away. I said what are all these people doing? I said, are they selling shippers? Cause, remember, I'm from the LTL world where we have the carriers. Once you, you don't need the carriers Like you have the. You've one guy that has carriers, Cause you have all the carriers.
Speaker 1:You just need to procure the load and then you put it in the system and the system does the rest and the carriers selected and then they do what they need need to do. Right, and that's what I asked him.
Speaker 2:I said I saw hundreds of people. I'm like jeff, what are these people doing? And I started calling shippers. He goes no, and he pointed to like a little room with like 10 people in there.
Speaker 2:Five people, those are my shipper guys and he said I said, what are all these other hundreds of people doing? He's like they're calling characters and that's where it's like oh my god, this is. This is the craziest. How this industry works is, um, you know, that's the model. I mean, even today, it still is the model where you know the, the idea of of. You know what makes ch, robinson and coyote great is we could talk to every. We have a huge care sales force that knows where the market is. Um, I wouldn't even say it's still happening right now, maybe not as bad as it was back then, but um, it's still like that. You know, coyote and and ch and the big guys overall can buy better than any other brokerage because they could call every carrier first and book that freight. And that's what blew my mind and that's when I said to myself man, I'm going to really invest myself and time into figuring out truckload. And that's where my next campaign came in to play.
Speaker 1:Are you looking to grow your brokerage? Are you struggling to land new customers in these challenging market conditions? Look within. So many companies that tender you freight throughout the domestic United States also have business coming out of Mexico. A year ago I understand why you might not have seen that freight as an opportunity, but today Cargado exists and that means any load coming into or out of Mexico is now an opportunity for you to support. In just over a year I've been able to see Cargado go from ideation to launch to rapid growth. It's amazing to see how many logistics companies have been able to use Cargado to expand into Mexico to grow their business. Cargado is the first platform that connects logistics companies and trucking companies who are moving freight into and out of Mexico. If you move Mexico freight or are planning to reach out to Cargado today at cargadocom, that's C-A-R-G-A-D-O dot com. Yeah, no-transcript.
Speaker 2:Yeah, so I was thinking Grow Rich. Honestly, the only reason I'm talking right now is because of this book and I remember I was on the ship. I was my last year in the Navy. I was in my trying to read everything I could get and I remember this one guy came to the ship and he was kind of known as the kind of the ship.
Speaker 2:Uh, he was always in trouble and he was just a bad like, not a. He didn't have a good, positive attitude at all. He was always getting beat up like not beat up physically, just beat up on like mentally by everyone. And uh, I felt bad for him and and I. But then one day he came in and he was uh, acting all very like totally different and he's like I'm gonna be a billionaire, I'm gonna change the world, and I'm like how everybody's asking like're not, how are you going to do this? And then we finally got it out.
Speaker 2:He read this book, think we're Rich, and I was like, okay, whatever, and I just brushed that aside. You know I didn't think about it. But then I was doing all these when I was going through reading I was like man, I remember how changed that a millionaire, I'm going to do whatever I want. I can make anything I want happen. I realized how to do it and the title of the book is so stupid. It's like the worst title ever Thinking You're Rich, but actually that's what it is. But it was written 100 years ago, by it's timeless and it was actually rehashed as the Secret. You heard of the Secret, the book, the Secret.
Speaker 1:Yeah, I didn't know those were. I have it sitting within 10 feet of me, I just don't know where it is.
Speaker 2:Yeah, the Secret is really just an updated version because this was written back in the 1920s. It was obviously. It was definitely written for a man to read. There's a whole chapter on how to use your sexual self for your self-improvement instead of using it. You know redirecting that and it was so. There's an updated version called the Secret, but it's really a manifestation Like you could think. You know, think your riches whatever the mind you know.
Speaker 2:His best quote from Napoleon Hill is the author is whatever the mind can conceive and whatever, he believes he can achieve, and whatever you can conceive and believe you can achieve, um, and that book was written, was was sanctioned by uh, andrew carnegie a hundred years ago.
Speaker 2:He hired this guy, napoleon hill, to write down why him and all his friends, jp, morgan and um, all his buddies at the time rockefeller he was number two, rockefeller's number one how they're so successful. And he didn't say I don't want you to say how we did it. I want you to write down the blueprint of how we think and what makes us, what made us, what got us everyone here to where they're at. And he did this for like 15, 20 years, wrote this book, and it's the time like, honestly, it's the number one self. I think it's the best self-help book of all time. I think if you read this, it's all you need, but you have to take it to heart. And I took it to heart. I really did, um, I also made everyone that worked for me and you.
Speaker 2:If everybody asks like, why is so many people from successful from global trends? Ask them all. I made them read this book. Um, I think that has a lot to do with it. You know, also, if I have to think, I think a lot, of, a lot of white people are successful in global trends. They saw me do it and they're like well, andrew's not any smarter than me, so I could do this, which has a lot to do with it too. But Think You're Rich is like I said, it's time. I cannot wait to share that with my children one day and say hey, listen, this is just as good as if you could just build your blueprint of how you think, like, just make this the mind frame, the framework, this will. You can't go wrong with this. I mean, this is to see everybody that's successful use this and it's very simple stuff like if you read it, but it's uh, very powerful.
Speaker 1:I will. Peter Renshler of Metaphor actually gave me this book like three weeks ago. I just don't know where it is. It's somewhere in the general, general vicinity but now I'm taking it as a challenge for you to read it so metaphor came from jet, who I may read the book so I thought the power of the book is very.
Speaker 2:A lot of people buy it. They won't tell you like it's because it's book, but I think a lot of it has to do. I wouldn't be sitting here talking because that's what changed me the paradigm, how I think, like I always thought you have to have money to make money, or you have to come from money, or you have to be given something or get lucky, or work your ass off at a job and then work your way up, which everybody's taught as a kid, but that's not how it's done.
Speaker 1:Yeah, I mean I do think it's fascinating how you kind of maneuvered I don't know if maneuver is the right word, or things just kind of fell into place where you realize, like wait a second, I don't really need cash. Like these eBay guys are going to prepay me. Central Transport is their billing department doesn't know its head from its butt. Therefore they won't even invoice me for two months. That's two months of revenue. That's just going to be sitting in a bank account. How do I use it and grow it? I think that's really interesting.
Speaker 2:I urge everybody that I know to. If you want to be an entrepreneur or anything, just be successful in life, I'd make all everybody works for me read this book. Uh, because that's how powerful it is. I think it's. If you have, I think it's just as good as a college degree and honestly I mean I'm putting those down, but I think it's just that amazing. It's changed my life and changed so many people I've seen in their lives.
Speaker 1:Did you ever get a college degree? Or you did Navy and then, next thing you know, you were founder of Global Trans. Global Trans takes off and here we are, no.
Speaker 2:I didn't, but I truly believe you have to be educated. I self-educated I read everything I could possibly get my hands on. Every big, great business book I read, I just find myself as an ADD. I can't pay attention to class, but I can do it by myself. I can pay attention by myself and listen to things in my own time.
Speaker 1:Well, I think if your ADD brain works at all like mine, it's if you find interest in what you're reading. You can read it all day.
Speaker 2:Yes.
Speaker 1:If not, you could read it and four seconds later have no idea what you just read and have to go back three more times trying to retain it. I'm the same way.
Speaker 2:And if someone's teaching me something, it's much better. I sometimes have to for some things to sink in. It takes me a little longer. It feels like. So I just that works way better for me than learning from somebody Like I've never had a mentor or anybody in my life. Just because that's who I am, I'm much better. I'm an introvert and I do things better on myself.
Speaker 1:But reading is key to that. So back to global trends. You know one of the things. You kind of alluded to it in terms of choosing the agent model, because that was kind of what was available. But I am curious definitively if you could do it again, would you still do the agent model? And I'm also curious if you could talk a little bit about the nuance, like what does it take to build a really strong agent model from your side of it in terms of like being the infrastructure, because there are a lot of companies trying to do that today and it's just not. I don't know, not all are as successful as global trans was yeah, I think the agent model is great.
Speaker 2:Obviously you have to treat the agents as your customer, the shippers not your customer. Um, that's what we did. Well at global trans. We, we were we didn't really care like if the shippers came in we'd obviously be nice to them, but they weren't our customer. The customer was the agent.
Speaker 2:The benefits of agent models is agents will fight for business more than anyone. They're usually better friends with the customers than any other model Because obviously their livelihood depends on it. They're not going to lose that customer if they switch jobs. In a sense they get to keep the customer Because the customer is typically not using the agent company, they're using the agent. So the agent switches. You usually agent can take the business and then so we treated the agents like customers.
Speaker 2:And the only drawbacks the agent models you're not going to get massive customers. It doesn't work well for fortune 500s maybe pieces of the business, but nothing more than that. And then obviously they they brings a lot of headache with it too, like a lot of cause. Everybody does business differently and, um, you know, so you have to have a lot of huge team managing that. And the biggest problem with with LTL agents is is in. The biggest problem is in.
Speaker 2:The biggest problem in the industry for LTL is for being a broker is, yeah, you don't have a huge carrier sales team, but you have this massive team that does rebuilds. You know everything. Every half the shipments are reclassified, reweighed and every shipper wants to, you know, complain about it and not pay on that. And then the carriers and it's like you have so much you know, probably 20% of any kind of crazy, but 10% of your revenue is sitting in 90 days, plus that you owe the carriers in that model because there's just that much disputes and it's like you just I always looked at it I was like, oh man, is that what's going to? And sometimes it goes away and you're like, whoa, it's my way, how'd that go away? And sometimes it's like no, you got to pay or we're shutting you off.
Speaker 2:But it's just a it. That's why I was happy to get in the truckload after Obatrans, because that's the worst part about it. And the opposite flip side of truckload it's the other side. You have to have stuff carried. A hundred people find sourcing it's all sourcing. Not very little happens after the fact. You know, like an.
Speaker 1:LPL. Why don't the fortune 500s end up using agents? Much Cause this is it's interesting cause. I lived primarily in the truckload Fortune 500 world, so agents are about as far from familiar to me as they can be, which is why I'm just curious about this.
Speaker 2:Yeah. So agents, remember, when you use a CH or Coyote for a big Fortune 500, you're going to have this farm of teams. You know you win a lane and you have all these carrier sales reps going to work for you. The agent model usually is the carrier sales rep or they have one or two people working for them. So they're great for, like you know, if a shipper's given one load a day and they have to find a truck, but if it's like 10 loads a day and they have to source trucks, that's hard for them to do that. But some of the agent models, like Global transit, we had a system where you could feed it to the brokerage there and they could manage it for you. And but then the agents, you know they don't want to share the split. It's just it's, it's, it's almost like it just never comes because of that. There's just too much. It does. They do get them, but it's not as good, as big as the coyotes and why would any shipper necessarily pick an agent over?
Speaker 1:Like, if I'm looking at adding one provider to my network and I've got these four brokers soliciting me and then I've got four agents, like why would I end up picking even as a smaller, non-Forge 500, why am I picking the agent over a broker if it kind of feels like I'm then almost double brokering it because they might give it to a broker. No?
Speaker 2:Well, typically they give it to their broker. So if it's like an Armstrong agent or a Global Trans agent, they have this internal carrier sales team. So it's still internal.
Speaker 2:It's just not the, but typically the agent models. They are brokering loads. You know their team. They might have two people in their office that are doing that, but if they get a big account, they have to send it over to the corporate to do and that's where. But they don't have control over it either, like you know, like, and then it's just you're miss, it's just you have to manage it, while some do, but that's why it's not prevalent as big as.
Speaker 2:And then also agents really rely on the wine and dine. They're the best at it. They're best at, you know, creating best for you know, I would say, buying the business. I wouldn't say they do it illegally, but they are the best at winning, dining and taking out people. And also, if it's a good agent, they're going to be picking up the phone on the weekends. And that's where I think TQL has done so good is because their, they, their model really is a bunch of agents sitting on phones because they get paid pretty much like an agent, their commission. So they're very.
Speaker 2:If you ask any shipper, you know who's your most responsive brokers Typically. You know the ones that have a lot of skin in the game with the commission, which are. You know TQL reps are great at that. And also you know the agent model. You know they'll end up on the phone, they'll handle things. Maybe if it's a good agent now, you might get a bad agent. You're not, you know. Half of them are good, half of them are bad, but um, most of them, if you get a good agent, could be better than going through a ch yeah, I get it.
Speaker 1:I mean, you still have commission in the split model, like coyote, molo, ch, arc, so all those folks have commission. It's just as the selling rep, the customer selling rep, you're getting probably half of what you could get as the agent, but then again you're also doing half the work. Uh, the agent's having to cover the load sometimes, whereas as the sales rep you're not necessarily doing that in a split model business. But I I get what you're saying, so I do miss having the agent sales force.
Speaker 2:It's the greatest way you know this business model you need to. Distribution is key in this industry. Like you have to have a distribution, whether it's lots of people on the phone or agent model, and I do miss having that. It was just because it just always, if you get a good agent, you just know they're going to grow every year and they just do what they're saying. They very rarely lose business because it's like they're lively. They'll fight tooth and nail for that business.
Speaker 1:It feels like it's a lot cleaner of a business to manage financially. In terms of just attributing cost, we struggled with that, I think, in the more traditional split model brokerage where it's like what's the cost of this operator, right, that's doing like three tasks on a load, like how much should they be attributed to the total cost to move the load? Like it just was? There was a little more nuance to a split model where you're splitting up by task versus, I think if you just have an agent whose job it is to procure the freight and you you handle the billing and some of the other infrastructure, yeah, the agents they, since they do everything it's it's it's cradle to grave and they, they, like I said, they have them do good, have them do bad For a company.
Speaker 2:the worst part is like agent models aren't really the most profitable business. If you're actually going to start agent model Cause remember you're the goal and raise like 30% to the agent or to the company.
Speaker 1:But think about this.
Speaker 2:If the agent, if that and this happens all the time they'll move a $5,000 load and make 200 bucks on it because they don't care right.
Speaker 2:And then, but is the company really making money? If you're putting $5,000, getting paid 45, 50 days maybe, and then making 40 bucks on it, 50 bucks, you're probably just breaking even. So you have a lot of that. There's a lot of nuances that you have to fight all the time as an agent model. Then the agents were like, well, I'll just go somewhere else and they go somewhere else and they switch all the time. If you think about it, what would you say? I would say 23% of the business is agent model of the truckload brokers, maybe 25%, I don, of the truckload brokers maybe 25.
Speaker 1:I don't know if I could even put a number. I would guess less because I I just don't know of many companies that are sizable on the agent side. There's a couple, but like if you look at the top 50 brokerages in transport topics, I would guess 45 are not agent.
Speaker 2:Yeah, yeah, it's just it's hard to scale in that model as a, as a broker, as in truckload. It was great for LTL, but for truckload it's just harder to you. Very rare Do you have an agent that you know you met could lay, manage a massive account. It does happen, but it's it's way that way. That goes way more to the carrier sales models with a massive force of people.
Speaker 1:Yeah. So let's back back to kind of just the general global trend story what, how long were you involved in the business and when you did finally decide to sell? Um? Take me through that process and kind of why you did when you did.
Speaker 2:Yeah.
Speaker 2:So about 2014 comes around. We've been in business for 10 years. We're about half a million dollars, but that's obviously actually the last three years of that. Ever since I met your dad, I was really interested in how do you? You know doing truckload, but how do like, how do you? What's the next in 20 years? What does truckload look like from the shipper standpoint? And that's where I realized, when I was at Global Trans, I was like, okay, how do we ask the guys and say, okay, we're getting ABM Bev truckload. How do we get this? Because we started a brokerage internally carrier sales model, coyote model, just like what you guys built there. But I remember how do we get the freight? And they showed me the spreadsheet the shipper sent to us. It was a, it was an RFP, it was a Excel spreadsheet for ABM. They sent us a. They said I put our rates here and I email it back to them.
Speaker 2:And that's where, honestly, that's where the idea for 10, four came. So my first company was 10, four. After the little trans, 10, four was supposed to be. What has emerged right now is 10.4. But then, so in 2014, I started 10.4.com and then, quickly, we started showing the shippers what we built at 10.4, which is essentially a marketplace. It didn't have an RFP platform in it yet, but it was a marketplace and it would show you where all your trucks are at and then you know you could bring all your brokers and carriers in and they could trade. It was I was trying to essentially create a load board for the shipper, like here's a load board that does your procurement. You could bring all your brokers and carriers Instead of saying this email spreadsheet you know, I want to have that digitized especially and your spot but we always had was a spot at the time we We'd have the contract side.
Speaker 2:And then when I showed it to ABM Bev, they literally said could we? Just? We want to, we don't care about the market, we don't care about the marketplace. You go, we like the. They saw the trucks in the map and they're like Ooh, that's cool, we want that. So all of a sudden I like I thought a tooth and nail, but I should have actually went this way. I was actually wrong. Travisyan was running at the time 10-4 um, and he he was my cto at global trans and he started, so he was running 10-4 we did out of boulder, colorado, and obviously every ship we went to wanted the map of seeing their trucks on, because there wasn't four kites or p44 yet.
Speaker 2:Um it was just you know you wouldn't see your trucks and it was, you know we had it. Where you like just uber, you could see all your trucks moving around and we tie into the ELDs and all that. So we had like more like for ABM, but we had like we tied up Warner for them. But the idea was to create a market, create an RFP marketplace.
Speaker 1:And we pivoted right then to a visibility provider. I was going to say I never knew 10-4 as as a Marketplace organization.
Speaker 2:So it was. I'm surprised hearing this. I thought it was visibility. It was 100. We had to switch because that's all the shippers wanted. So we got ABM, but we got about five major shippers and it was just an us and four kites going at it. And then I, my heart was never in. I always wanted to help, be a part of the solution of what I saw at Coyote, which is you need hundreds of sales reps to call carriers every day to find out where they're at.
Speaker 2:I was like there's got to be a better way to bring the carriers and to make this visibility. I was always interested in the matching, not the tracking, and if I could go back to that time, I should have been more interested in the tracking because I see, when the valuations at P44 and all these other guys got Because we were really the first it was us and Forkites at the same time going at it and I thought we had a better product, they had a better connect, they were better at connecting with the EDIs and all that and APIs.
Speaker 2:We weren't that great at that, which we should have been great. That was the key is you have to. The key, the whole idea behind p44 and four guides is let's tie everybody in with apis or edi and then you only have to tie into us, to tie into all these carriers, and everybody brings their carriers on. It will just, it's easy, it's network effect. So I left.
Speaker 2:So at that time I was not really into the tracking of it, and that's where we got an offer from trimble to buy it. That was like too hard to refuse. It was like so we got that, I took the money and then, uh, we split it was. I took that and started to emerge. That's really what. I took all the money from that, which wasn't that much. It was really enough to just pay what we put into it and a little little, and I took that money and it was 2017 when they bought Trimble bought 10-4. And unfortunately it didn't go anywhere. Because If you go to ABM, I was surprised when I went there. It's like they still have 10-4 on the wall like their trucks moving around, because we gave away for free for the first six months and then they never ended up charging for it. But a big company should never buy. You never should buy a startup right.
Speaker 2:Interesting Because right when they bought it, the first thing they did was bring their HR team into it, and that just screwed up everything. You bring their HR in it's like you're a startup.
Speaker 2:You can't act like a big company and so they bought it and it just went nowhere. It was actually a big failure and it's unfortunate. I hate to see that. But you know, back then I didn't really realize that either. I didn't realize like they would. They would just treat it not like a startup. They tried. They treated it like when they bought. So tremble bought like a company. Uh, what was the company they bought? Where it shows the miles, pc Mile I didn't know, trimble owned PC, miler, yeah, okay.
Speaker 2:I think they still do. I might be wrong on that. They bought something. It was either that one or something else, but it worked out because it was already an established product. It had customers, it had revenue. You could bring in a for-hire guy, you could bring in a good CEO to run it. Startups you can't do that. You can't just bring in anybody. The founder has to be there and you can't have a big company overseeing it with HR, that's for sure. So that really went nowhere.
Speaker 2:And I remember when P44 that's when P44 said you know, let's get in the truck with right then because they saw we were doing it and you know, I wouldn't say they took the idea of, but they're the ones that really took the bull by the horns and ran with it. And you know, in hindsight we should have stuck with the, but again, I was just. I came from this whole match. I'm a third-party guy. I've always been that. My whole career is matching. How do you match trucks and shippers? So that's why I left and started Emerge right. Then I took all the technology we built at 10.4, that marketplace stuff, ripped it out, gave them visibility to tremble, and then started Emer emerge in 2017.
Speaker 1:Attention freight brokers and 3PLs. Greenscreensai is transforming how freight professionals price and quote freight. With AI-powered pricing and real-time market intelligence, greenscreens delivers accurate, reliable predictions to help stay competitive in a constantly shifting market, whether managing spot rates or long-term contracts, greenscreen empowers brokers to quote with confidence and boost profitability, removing the guesswork from freight pricing strategies. Trusted by over 220 brokerages, greenscreen is leading the way in the future of freight pricing. And now there's Illuminate, greenscreen's latest product. Designed to shine a light on deeper freight market insights. Illuminate provides unparalleled visibility into spot and contract freight trends, giving users a clearer view of pricing fluctuations and market conditions to inform smarter, more profitable decisions. Visit greenscreensai, slash thefreightpod and discover how Green Screen and Illuminate can help win more business more profitably. Okay, and so? What was the original idea for what emerge was going to be?
Speaker 2:um, I just I said to myself this is all I said. I said every ship in the united states, 90 of the freight is contract and all that is run on a bit, like most of it's run on a bit, and it's either a three, six or 12 month bid cycle. And here's the idea. It just came from this. It was like if everybody was using the same bidding platform, it would make it so much better for the carriers that were within it, because the the carriers then like, let's say, a billion dollar shipper pushes a truck 10 times a day here and this you know. Vice versa, they're pushing all this capacity out, awarding to these carriers. So the system then gets smarter and then the next shipper comes in, runs a bid and now we know how, which carriers to bring into those lanes. Now this, it's kind of funny.
Speaker 2:Our business model during COVID was amazing for shippers. They would love it. They'd be like, oh, we need more capacity. Right now, our business model is really, we're not a SaaS-based product. We do have SaaS you could pay us a SaaS, but it's really. We make money on the matching. We make money on matching new capacity to shippers by using data.
Speaker 2:So the idea behind Emerge is like if you can just get enough shippers using this platform, you can open up a door. Because if you had a carrier with, like, say, 50 trucks and I said here's a shipper, any shipper in the United States, and I said what's the chances that you are part of their bid, it's like maybe 2% that you're invited that bit, like even with 50 trucks, and maybe one of those trucks maybe one of your trucks be perfect for one of their lanes so that was the whole idea behind emerge is like if you could get all the shippers on a platform that's what you gave away for free and then open a door for carriers of size, you know, 20 trucks or more that could buy a contract.
Speaker 2:It would be the first contract marketplace that carriers would have, because they really don't have a place right now. They could go and say they have to be a part of the shippers network, obviously, to get that or buy from a brokerage.
Speaker 2:So the idea behind Emerge has always been give the shippers a free platform for their three six-month, 12, 12 month bids. Make it simple, super simple, because that was a big problem during COVID is using our competitors, which are Coupa and Jagger, were very hard to do. You would run those on an annual bid that's what most shippers do, but for many bids and try if your rings break down, it's terrible you have to do everything by email. We made that simple. Unfortunately, it hasn't been a problem since covid. You know, uh, that you know we. If I told a shipper, why are you better than I say we're faster and easier, they wouldn't really care because they only do once a bit. They don't use that software that much right now, um, but it's always, as we know, like everything cycles, like it's going to be a bad, it's going to be a tight market again, um, so hopefully shippers would want to get ahead of it.
Speaker 2:But we give away a free platform to the shipper. Carriers and brokers are invited, or and their brokers. We also give them a spot market and that's one of our best systems. And we also tell shippers when they shouldn't go to spot, because most shippers I would say 30% of shippers freight shouldn't be in the spot market anyway, at all times, most of the time, let's say 90% of the time, should be in the spot market anyway at all times. Most of the time, let's say 90 of the time, should be in the spot market, not as a contract. And these are the ones that, because I find you go ahead.
Speaker 2:I'm just gonna ask why okay, low volume contract lanes, so like we call them uh, low volume. So let's say you have a bid and you're looking for three trucks uh for truck a week in one lane. You have that in your contract. You're doing an annual contract on one truck at this one location per week. Right now, actually, the small market is way cheaper. It's, first of all, cheaper than contract. Second, usually it's a broker who buys it. It's not a carrier that buys that, it's usually a broker that does buy that.
Speaker 2:So with Emerge, it's like why not allow not just that one broker to have access to it, but all your brokers to have access to it, and then you'll get a true market price. Because, remember, if you do a year contract with anyone, they're going to have to put some fluff in it to make sure that they can service this for a whole year at this price. So you have that and then you have so if and if it's a live live, it has to be obviously not drop trailer or something like that Live. If it's a live live, you should allow all your brokers and all your capacity providers, all your carriers, all your brokers, access to that load when it comes to bill. So that's what we try to push shippers in, 30% of that.
Speaker 2:So if, if, if that was the case, it wouldn't be 90, 10, 90%, contract 10% spot in our industry. It'd be more like 60, 40 right now. But that 40%, 30, 40% would be so much better being in the spot market as far as far as a costing standpoint. Now, obviously you want to be. You're only going to let the carriers and brokers you want to work with anyway do it. So our system allows you to say, hey, allow TQL Arrive and so-and-so, and these carriers to book it. But then it goes into our marketplace. It starts low, so it starts. You said it's, let's say, 10% below DAT 15% and moves up over time and that's one good thing, that.
Speaker 2:Convoy brought. I got that idea from Convoy actually.
Speaker 1:And people can buy it then. So like, if I start the lane Chicago to Dallas at 10% under DAT and it's at $1.90, let's call it. It shows up, so it's a spot load. I'm Anheuser-Busch, that's my spot load and it's coming out of the emerged platform and my approved brokers and carriers can then essentially buy it now.
Speaker 2:Yes, yeah, so you would let any. So instead of saying what we're trying to tell shippers, instead of awarding this to one broker at a fixed price throughout the whole year, push this in the spot market and watch what happens. First of all, you're going to get better price. You're going to save 10, five to 10% of that and then allow the carriers that you want to book it, allow access to it, and so that's so you would allow. Yeah, like you said you would allow, you could pick which carriers are allowed to buy it.
Speaker 1:And theoretically that's best in this market. Right, a down market where people keep bidding lower and lower and the rates just keep dropping, and so you know a spot is well below where the contracts are. But if it's 2021 again or we get another, you know it doesn't have to be another COVID, but the next up market, I imagine it won't be the same, like that 60-40,. You'll want it to lean a little heavier 80-90% contract with lower spot, because the spot's going to way outweigh the contract rates. Right, it's just the other side of the market.
Speaker 2:Yeah, I would say that a lot of carriers did hold their rates for the shippers, but usually it was asset-based carriers, not the brokers. The brokers obviously can't hold a rate like a carrier could and it's typically not on these lanes. These lanes are like, like I said, these are mainly one from the brokers. Like the brokers, just win these one and it makes your big weight, your annual bid, way bigger. Right, if you have all these lines that you should be in the spot market anyway. But yeah, it could go up. But let's say rates do go up and you're seeing a spot market crazy.
Speaker 1:Why not just run a contract that you know you?
Speaker 2:could run a contract at that point and then right now you're going to save 10, 10 to 15 percent. Uh, by doing that and I'm just typically I mean that's uh, on the low, like usually, it could be even better because, remember, you're allowing every one of your carriers and brokers access to this freight now at that current day's price, which is typically, I mean, as you know, for the last three years has been bad or been on the shipper side, it's been really low rates. But, like I said, if things do change, those lanes would have broken anyway. Those brokers would not have committed to it if it's one load a week at that price.
Speaker 1:So it makes no sense to think, oh, I'm going to save myself.
Speaker 2:Some brokers. Yeah, no one's going to lose. Let's say, rates go up 30% Brokers are not going to be able to hold the rates. Anyway, I think it makes sense to do that, but also be nimble. You have to say to yourself I will be willing to run a bid if I do start seeing rates go higher. That's not been the case for three years.
Speaker 1:Yeah, how does it work then in terms of driving revenue, if the tool is free for the shipper? When do they start? Or who's paying? Who pays the bills? Like are carriers and brokers paying to be on the platform, or the shipper pays when a load transacts. How does that work?
Speaker 2:Yeah, so how it works with the merge is, let's say, a carrier. We open a door for carriers Our system's free for the shipper and then we open door for carriers not brokers, but carriers to come in and buy the lane from the platform. And then they were transparent with the carrier. So you see the carrier name, it's like ABC Trucking here's how many trucks they have and then obviously we're just doing the billing at that point. So we didn't have to source. We're not sourcing the carrier. We do have a sourcing team.
Speaker 2:If that carrier does fall off and buys a contract, we have to find a new truck. So we have to act like a brokerage in that aspect. But we'll never win all the shippers for eight, I think you know, five to ten percent. But that will help pay for that's how we're supplementing this. You know, giving you a free platform and yes, it has hurt us with some shippers because they're like, well, I can't give you. But remember it's not a merge pricing, it's the carriers coming in buying it's actual person at the carrier buying it but that.
Speaker 1:And then you have like a transaction fee, like a brokerage, but on top of whatever they're paying.
Speaker 2:Yeah, a transparent fee. That's like $7.9.
Speaker 2:That's so interesting and then we make. That's how we make, that's how we pay for the platform. So the idea of AdWords is like hey, you get a free platform and we only make money as if we save you money, because usually you're not going to give it to a new carrier unless you're getting some kind of saving somewhere. But also it creates a great bidding environment. I think shippers that don't use a platform, that don't do bids a lot, that don't run a three-month I think it's way better to do a three-month bid than a 12-month bid. You're going to get way better rates from your carriers. You have to be quicker, though. You have to be able to do that. A lot of shippers don't like to do that. They like to want you know the worst.
Speaker 2:Thing is shipper, and you've heard this before. Shippers always say I want to whittle down my carrier base, I want to work with as least amount of carriers as I possibly can, and I think that's you know. The best buyer of freight is not the one that does that. The best buyer of freight by 10% over everybody else just allows everybody in. It doesn't matter who you are.
Speaker 2:So they and they play the broker, you know they they do a great job of, like you know, every there's always a broker. There's always someone willing to buy into a lane. So I think it's, if you're looking to cut your transportation costs by five to 10%, be open to more carriers and brokers. You know, think about this, especially a spot market. Let's say there's you, you know this. Let's say the biggest brokerage is at two thousand dollars.
Speaker 2:In this lane there could be some guy like an agent model that's at fifteen hundred, twelve hundred, like a four or five hundred dollar savings on one load, just because they know that truck is delivering tomorrow there and he wants to go back here and the big guy didn't know about it. So you want to play, you want to have enough. You don't need. So you want to play, you want to have enough. You don't need to have every broker in there, but you want to have enough to where it's not overwhelming, like it's not. You know there's a right mix.
Speaker 1:Oh, this is go ahead how do you feel about this? Well, I just this is such a fun thing to think about because there's a rebuttal to all this right. So, like your, your example's right that on a given lane that that ch buys at 2000, there is someone out there who knows about a truck that can do it for 1400. Right. But by and large, if you compare, ch is buying power to the market. Ch is beating any individual across the board, right, whether it's a person or another company.
Speaker 2:So I'm not saying you should let them in. Let them in, you still let them in and they're still going to win their percentage of business. But I'm saying just be open to working with more. I'm not saying work with everybody, but work with the right ones.
Speaker 1:Yeah, I'm not saying work with everybody, but work with the right ones had to have felt like their only path to eventually having a profitable relationship with a shipper is to buy freight from the jump. Because they realize, hey, this shipper is letting me in but only if my rates are good enough to beat the incumbents, which on average a broker on a bid does not. Any random broker doesn't have better buying power than the incumbents. They're just committing to taking the freight at lower rates than the incumbents because it's the only way they can get the loads and their hope, or their bet, is that over time they will quote unquote prove themselves and that means servicing the committed volume they have really well and that hoping that that then leads to getting more business.
Speaker 1:And once you're an incumbent you feel like I don't have to price as aggressively. But if you look at any given bid at any given time, it's very likely a shipper has let in a broker who is thinking about how they have to buy business. So it could be a strategy for a shipper every year to let five or 10 new brokers into their bid who they know will buy 3% to 5% of the bid each if allowed to, and then you've got 10 brokers buying 50% of your bid at the lowest rates, all planning for the future and then the next year you could theoretically just do the same thing and get rid of get rid of the 10 who supported you last year.
Speaker 2:You're always paid 10%. It only works for products that that you know. Like it doesn't matter, you don't have to worry about this, or you have to worry about like it works for like commodities, big commodities, like, and yeah, but they typically pay. I mean we see we have 12 billion dollars running through our platform. Now there we see they are the best guys who do that, who let that in and have that model, and there's a few of them. They pay 10. Take their whole. I mean it's a huge. Say anything about if you're a billion dollar.
Speaker 1:Sure, it's 100 million a year unfortunately, most shippers don't even think that way, like if I said like let's do this, they're okay, like we're happy with our service. I don't think it's a. If you want to save money you should.
Speaker 1:Yeah, if you want to save money today, but I don't think it's a good strategy. Good is not a fair term. If your goal is purely to save money and you don't care long term about the relationships you have with the brokers, then, yes, every year you can burn through a batch of brokers and in this highly competitive, oversaturated industry there will always be a fresh crop of brokers for you to burn, maybe till the end of time. But it's not a good strategy if you're trying to develop long-term partnerships, because eventually these brokers will expect to get good business from you at rates they can make money on. They won't just eat crow year after year. In fact, there's also the argument to be made that a lot of these brokers on they won't just eat crow year after year. In fact, there's also the argument to be made that a lot of these brokers, if they don't feel like they're getting their money's worth within months, will stop supporting the freight.
Speaker 1:I mean we always used to try to be very, very strategic about freight that we bought, and what I mean by that is like I was looking for the low volume lanes. I wanted to be the lowest rate on the random lane from Manitoba to Phoenix that shipped 18 times a year, one and a half times a month. I was happy to be a dollar a mile less than the next guy because I could do the math and over the course of a year it's 18 loads. I'm gonna lose 500 bucks each. That's nine thousand dollars. If I, if I, if I can't find a way to make nine grand back on this good opportunity, then I'm just not a good broker.
Speaker 2:um, so like there's such nuance to navigating that strategy effectively, but it's, I believe, also niches, like think about this, every broker can say we're the best in this one market. A lot of them because I mean over any, you know pick 20 brokers, every one of them, one of them will have like their way, their the way, they're good, it's just the way the work, it's just. It's crazy how it works like that, but that's the way the industry is still. It's big. Like I said, the biggest guy could be at 2,000. The next guy could be at 1,400. It looks like that.
Speaker 2:I'm talking about five trucks a day difference. You're like, how does the biggest guy not know with these carrier base? It's still like that. Now, I'm not saying let every broker in, but you should have a fair mix because of that and there's always someone if you, if you do care about cutting, cutting costs, I mean it does make sense to have a bigger, but you're right, it doesn't for long-term strategy. I would, I would have my the right mix. I think the right way is to do kind of a little hybrid of that, not to have not the extreme of letting anyone in.
Speaker 2:But yeah, the best shippers, the ones that pay the least by 10% over the next guy, is those guys. The ones that do that. They're just very open to carriers. They're not trying to whittle down their carriers. The highest paying ones are the ones always saying we want less carriers to work with. There's a huge cost with that.
Speaker 1:Attention freight brokers and 3PLs. Greenscreensai is transforming how freight professionals price and quote freight. With AI-powered pricing and real-time market intelligence, greenscreens delivers accurate, reliable predictions to help stay competitive in a constantly shifting market. Whether managing spot rates or long-term contracts, greenscreens empowers brokers to quote with confidence and boost profitability, removing the guesswork from freight pricing strategies. Trusted by over 220 brokerages, greenscreens is leading the way in the future of freight pricing.
Speaker 1:And now there's Illuminate, greenscreen's latest product, designed to shine a light on deeper freight market insights. Illuminate provides unparalleled visibility into spot and contract freight trends, giving users a clearer view of pricing fluctuations and market conditions to inform smarter, more profitable decisions. Visit greenscreensai, slash thefreightpod and discover how Greenscreens and and illuminate can help win more business more profitably. I think they're generally accepting that reality that they're getting. They're getting their money's worth, or they feel like they're getting their money's worth in support, in commitment to the business, because it's. It's a lot harder to expect someone who was awarded 10 loads a year to be committed to those 10 loads than it is to expect someone who was awarded 10 loads a year to be committed to those 10 loads, than it is to expect someone who was awarded 20,000 loads a year to actually execute the 20,000.
Speaker 2:But at the end of the day think about this the CFO and the CEO of most companies, big guys. They're going to listen to their head of transportation. He's going to say we have a billion dollar need for trucking this year and they're going to say, okay, yeah, is there any way we could save money on that?
Speaker 2:No, we've done everything we could, but I mean, if they knew like this guy's, this person's only working with 10 carriers. You know, like you and I know that there's probably a 15 to 20% savings if they were just open, more open. But that guy doesn't have the incentive to do that because he's already been okay, I got my billion and, uh, they're happy with it. By the way, I'm showing we're paying average to d18 on freightways. We're showing that we're paying pretty good. Um, so why do we have to mess with anything, anything up and add more people on my team and I have to. Then I have to actually justify like, why do I need double the team? You know like or triple the team.
Speaker 2:You know it's a fight that a lot of guys just don't want to. A lot of men and women don't transportation people don't want to do. But there's a huge cost savings in freight that most big guys, most of the CFOs and CEOs, don't even know about and it's significant. I mean you're talking about 10% or 20% on billion dollar freight spend. You know, and it's there. But most shippers do it good, most shippers are, are good, and they don't just run a spreadsheet, just excel spreadsheet.
Speaker 1:You know, at least they're using kubajagger I'm curious what the reception from shippers was like as you got this business up and running, because it's different than I don't know of any direct competitors. You have that offer all of the services you provide is the right way to put it. I think you have direct competitors in facets of your business, like in. There are, as you said, coupa and Jagger are two direct competitors on the RFP side, but they don't offer. They don't offer the kind of execution platform that you're talking about. Similarly, name a broker Molo CH Arrive. They're competitors with you on the execution market.
Speaker 1:What was the shipper reception like? Because I feel like oftentimes shippers are hesitant of anyone. If it kind of looks like a broker, smells like a broker, it's probably a broker, and if they feel like they're being deceived, then they don't want to deal with it. In this case, it seems like you're open about it. But I'm just curious what that reception was like and if you've had to do a lot of kind of educating to get people on board with what you're doing.
Speaker 2:Yeah, so good question, because I think that it's always been hard because, like, where you're there, they're very confusing when we say it's not a SaaS product. And I'm glad we didn't go SaaS actually at this point because SaaS is very hard to get people to pay right now because everybody's like you know, do we really should we have they're? They're sassed out in a sense. I think we actually see it because we actually have a SaaS model. We we do give the option hey, you don't need to use our market if you just pay us a SaaS. And most people choose the market because it's like that's the way to go.
Speaker 2:But I think the closest competitor we have obviously Coupa and Jagger's coupon jaggers, who we go against for the rfp platform, you know, um, but the biggest, I would say the closest one we have is what transplace was like the transplace without the managed trans aspect. So transplace, we're pretty much what they were without the managed trans. Like you wrote, we run your bid, all the. That's what they do at transplace. They obviously they run the execution layer they have, like you know, they charge a 1520 managed 3PL prices for managing the freight and doing the tendering and all that. But they also manage the RFP and they also have brokers that come and buy from that RFP. So you think about it. That's really what we do. We just automated. We don't have.
Speaker 2:If you use what is Uber now Transplace? If you use them, you're going to see Uber coming as a broker versus in us it's going to say the carrier name versus, but it's just a change of term. I mean, in a sense we're the same company without. I would say that's the closest competitor we would have. Like who are they like? Oh, they're like Transplace, but without the managed trans aspect and you can switch at any time. Like you're not like beholden to it. Like when you and you can switch at any time, you're not beholden to it. When you use TransPlace, it's very hard to switch. You're pretty much riding your whole transportation department over them. Thus you get to keep your transportation department but have all the benefits of that, of having the procurement and all that done, because that's what TransPlace does they do procurement and the execution.
Speaker 1:We just don't do the execution. Yes, it's interesting See those businesses can be messy, because I feel like sometimes shippers don't want or they want like the kind of wall between the technology organization supporting them and the brokers executing for them technology organization supporting them and the brokers executing for them right and so like. I actually remember a very distinct issue where transplace was being incredibly shady. This was well after sanderson was gone, so this wasn't on him, but it was before uber bought them, so I can't blame them. But we had an instance where we had a new shipper wanting a new transplace shipper, wanting to add us as a broker, and when they reached out to their transplace team and said, hey, you should add Molo as a broker for us. We want him on our next bid, transplace said no, you shouldn't use them. Look at their on-time acceptance percentage. For one of our other shippers, they're at 40%. They're terrible.
Speaker 1:And what they had done was this was for I think it was Nestle Waters, one of the water companies. It wasn't Niagara, but it was a company who had primary acceptance and backup acceptance as two completely separate metrics and you could have whatever rates you wanted on file for backup and there were no acceptance parameters. You just take what loads made sense for you. On your primary you had to accept 95% or whatever percent backup and there were no acceptance parameters. You just take what loads made sense for you. On your primary you had to accept 95 or whatever percent. So we accepted 95% on primary and on backup we were like 40 something percent and they only took the piece of information about backup and said this is their acceptance percentage for our other customer. You shouldn't work with them.
Speaker 1:So they essentially manipulated data to make us look worse, which is a big like. It's just an example, but it's representative of kind of the mistrust that can exist when you have these companies that are doing multiple things and there's a conflict. They are incentivized to keep any broker off of that bid because it's more of the pie that they get to keep. So I'm curious, as you hear a story like that, like how do you think about that? Have you had shippers like have concerns about conflict there? Most?
Speaker 2:shippers don't have a problem with them. I would say that. And then I would say that the difference between us and TransPlace is we don't have that control. We don't tell the ship we can't, we don't have that right we place is we don't have that control. We don't tell the ship we don't, we can't give, we don't have that rate. We give them a platform. We hear we say here's the platform you manage it, here's your usernames. They let everyone, they, they.
Speaker 2:Uh, the only caveat is unless you want to pay a sash, you have to let our carriers. And that's what we're transparent. It's not like we use a three, three PL. They always had a problem at Trent like these companies, because they can only. They always say like we can only carve off so much for our brokerage, and then the shippers will get pissed. This is a conflict. But when you're transparent, like our system, you'll see the carrier name, you'll see the price. We don't force you to use them in it, but if you give them freight, then we get paid and that's. But it's your decision, we're not so decision, we're not so. That's how we keep the conflict out of it. Yeah, but it's been tough. I would say it's been hard for us Like a lot of a lot of investors like wait, why would a brokers want to use you guys? If you're doing this, I'm like well, first, of all they do it all day long with 3PLs.
Speaker 2:So every 3PL is a big brokerage and they go into those and they get their freight. Actually, 99% of the freight and emerge goes to brokers. I mean 90 to 8%. We went like 2%.
Speaker 2:So it's like and I don't ever see it getting past. Maybe 10% is like maybe our max, with a shiver, because you know they have these rules anyways that they don't want to give all their eggs in one broker. So I've always have and we allow brokers to come in our system, tie in the rates, so all their spot rates are pushed in our system. So if you have CH Robinson, you see your CH Robinson rates and all that. So we work with, we have to, we have to walk the trend line, but we don't use, we don't compete in the same way that they do. We don't buy the lane and then source it with carrier sales reps. We're just transparent. We show the carriers that are backing it up, which is not honestly. It's like that's why we're not growing. We would be way bigger if we actually did it the other way spot free.
Speaker 1:But I think that's where you get.
Speaker 2:it's kind of you get in a conflict at that point, like the transparency is where we get away with it. We're like, yeah, we are broke. We see your data, but here's a care name. You could use them or not. And it's actually helping you get better rates and find more capacity.
Speaker 1:They don't care about capacity right now, but they will, for you know, in a later day, hopefully sooner than later, yeah, has has this kind of scratched the itch you had? I mean, because you've you've sold two businesses now. At least one I know was was wildly successful. It's not like you needed to start a merge, you know, but like, but like you, you kind of mentioned, like feeling this. You always wanted this kind of mentioned, like feeling this. You always wanted this kind of marketplace. You wanted this kind of carrier sourcing stuff that you saw places like coyote. So I'm just curious do you, do you feel like this itch has been scratched and and where are you taking this from here?
Speaker 2:oh for sure I uh. So I told my wife and family I'm not doing any more business. I don't want to do any more startups. I think three, this is good enough and it's just gone a lot longer than I wanted. I was hoping to be out of it by now, but obviously the three years of these last four years really just don't count in a sense, because it's just everything's on pause I look like everything's. So I think that you know it's going to take probably 10 to 15 years to sell this, maybe 10. We'll be at 10 years and 27. My goal is to get the break even, but I will be there about 12 months to 18 months and then look for an option to get out of it, because I do love this.
Speaker 2:But I found out when I was almost 47, like I definitely don't have the drive that I did when I was 37 when I started. So I'll be much better as an investor and being on boards and stuff like that which I'm doing now. I like that much more than being a founder of a startup and having to make the founder. You know it's enough. Like you know, as you know, as a founder, like there's a lot of hard decisions and having to make the founder. You know it's, it's, it's enough.
Speaker 2:Like you know, as you know, as a founder, like there's a lot of hard decisions I have to make, it's a lot of, it's a lot of pain and a lot of most in very, very rarely you have like the days where you're like, oh my God, this is great. You know, like my whole career has always been like the steady rise up. It's never been like boom and with Emerge it's always it's been like this. You know it's still going like this. And then it's like paused for us for years because everything's like no one cares about capacity and no one's running that many bids like right now?
Speaker 2:why would you run a bid like it's? It's very hard to get shippers to run bids like when rates are bottomed out, but at least they. If it gets any worse. We all know that. But I think the last four years have changed. If you asked me four or five years ago I'd be like oh, I've been working for 60, 70. But now the last four years, I don't know. It's been a tough time for any entrepreneur. Maybe there's a few companies in the news that could say otherwise, but most entrepreneurs it's not been fun the last four years.
Speaker 1:What kind of advice would you give to people enduring tough times like this, where it feels like the cards are stacked against you? Like, as someone who's been through it now with multiple businesses and are currently going through it, I'm just curious what advice would you give to fellow entrepreneurs navigating these kind of really unfun times?
Speaker 2:well, I think the best times, like, for instance, when 2007 date happened, I was like global trends and I didn't even realize at the time, because I didn't have any money, but that there was a crisis going on because we're growing if you're growing in a crisis it doesn't matter. You know, um, you could have, it's amazing and and uh, the best times ever to start a business are now. I mean, it's the easiest. What you need is 10 people to build a. Let's say you want to build a product. You need one person two people now, not 10, just to get your MVP out. And there's always ideas. There's a million ideas, like there's always, and you could see them in your job, you know, like anybody could see, like I wish there was something that did this, I wish there was something that did that.
Speaker 2:And then just look at the town and what's great about our industry, especially freight logistics, is, I would say, in most industries I wouldn't be able to do what I did. It's just because there's a level of competition in most industries. Freight is not much competition Like anyone can build a great company, as you know, you know. Great is not much competition Like anyone can build a great company. As you know, you know a lot of great CEOs and most of them we can only do. Freight Like this is a good thing. They're freight businesses because most of us we couldn't build a tech company we couldn't build. So I think anyone in this industry has capability of being an entrepreneur and I've seen it. I mean, I've seen some of my guys where I'm like how did?
Speaker 2:this guy do it, and we had two guys that sold the company for $200 million. If you would ask, I was like, oh my God, these guys were not the like. How did they do this? But it's freight, it's.
Speaker 2:We're in an industry where I think anyone can be successful. And you know what's even crazier is if you ask any CEO or anybody that's an entrepreneur, let's say you want to hire someone to come run your company. There's such a lack of talent for that, like there's just very no one. I think in this industry this is the best industry where you could work on yourself, work on your skills and move up and be the CEO of any company, because it's very hard to hire. High executive talent is so hard. Like if you had a portfolio, if you had a company right now and you're going to hire a head of sales, you might have two names you know everybody too Maybe one or two names and they're going to be hard to get to, but it's not like there's hundreds of people. There's not a huge amount of talent in our industry.
Speaker 2:I don't know why that is.
Speaker 1:There's got to be something wrong with us that we think that way, because I agree with you, but I I like the these two things juxtaposed don't make sense, right? I thought that on one hand, anyone could be successful, anyone can be a successful CEO in our space, like they can build a business and make money and make it happen, but on the other hand, if you were to look for a replacement, you wouldn't feel like you could find a good person anywhere Like.
Speaker 2:Those two things don't go well next to each other, because I think a lot of people don't work on it Like I wish they would. Just like most people need to like what makes the greatest leaders, sales leaders. Like I studied I wanted to be an entrepreneur. I didn't know how to be an entrepreneur. I just said, okay, I'm going to just read every book. I just got to think like they do. You know, I wouldn't say I'm, I was a D student in school. I'm not, I'm not, I'm not like a high IQ person, I'll admit it, but I just. But I get like I just.
Speaker 2:I think I studied enough and read enough about the subjects that I wanted to be good at that I became good at it. Enough about the subject that I wanted to be good at, that I became good at it. And, like I said earlier, I said that's why most of my people are successful. Maybe it has nothing to do with the book. I think it's because they saw me do it. They're like wait, this guy can do it, I can do it. But yeah, there is a lack of massive like there's. Just I don't know what it is, but I hope people take this as a call to action. Like anyone can, you can have any job If you're not an entrepreneur already, if you don't want to be an entrepreneur and you have your sights in the company, you can take over that company. It's just very few people step up to the plate to do that too.
Speaker 2:But I think that this in the first chapter of my favorite book, thinking You're Rich, talks about that. The guy goes works for Edison and he's like I'm going to work. He didn't know anything about, he just wanted to work for Edison. So he went in there and didn't know anything but just said I'm going to work next year, I'm going to work for free. And eventually he became Edison's CEO and runs the company. That whole story is in there. That kind of stuff never happens, but I think that this is the greatest industry for it to be an entrepreneur. There's so many things that need to be automated, and a lot of them are companies. That's why most founders in this industry always start something new. That's why I asked you and I saw you last time I said what's your next thing? Because I know it's going to be something. You're probably just waiting for the right thing, but you're going to, you know.
Speaker 1:Yeah, it's interesting.
Speaker 1:You talk about the Thomas Edison story and it feels like what I'm taking away from that is the idea of instant versus long-term gratification.
Speaker 1:And you're saying no one ever does that anymore.
Speaker 1:And so I think it's because our, our, our ADD brains and just our dopamine addicted brains are so used to being able to get the next hit and get the next instant gratification whether it's the next scroll on TikTok or whatever that the idea of putting in long-term work, sacrificing short-term gain, saying hey, I'll work for you for free, just so I can learn from you someone like Thomas Edison or any type of visionary and putting in all that time and energy it doesn't satisfy any of our short-term gratification dopamine-addicted brain. But in the long term it teaches us the skills to be the kind of next-level entrepreneur or CEO that you want to be. So I'm wondering if there's a connection there, and that's maybe why you don't see people doing that. I'm not saying people should go work for free, but invest, investing yourself in learning about something, even if it takes hundreds of hours to learn it, and you're not going to see a dollar until you've really mastered it and then applied it and worked hard at it, like that that I get.
Speaker 2:In the Navy my last year. I year I just said I want to read everybody and I did it for like four or five years. I started my first company for everything I could. I was so curious and that's once first said to me I understand why you're successful. And they said because you ask so many questions, I'm just very curious about how things work.
Speaker 1:And then, um, but I think that, yeah, you, if if, if I like my mom used to yell at me, she'd be like cause my mom was an extrovert.
Speaker 2:She'd be like New York and she, I'd be on the couch. She's like what are you doing? And I'd be sitting on the couch. I'm like I'm thinking and she's like, what are you thinking about? I'm like don't worry about it, here's what he's doing wrong.
Speaker 2:And I was just really going deep in everything and I was so committed to figuring it out. I think that's commitment, like just commit yourself. This is the best industry for it to work your way up and be the CEO of any company. You know we are all at the top, we see the guys at the top and we know, like this is one of those few industries that anyone could be and there's so many companies too. But I think anyone could be, and there's so many companies too. Um, but I think, yeah, just planning and then getting better and then learning the skill. If I was going to be the best, if I wanted to be the best uh, ceo or best leader of a company I just follow, I wouldn't read on crowd, just be, read about all the great managers in the country and just get good at it and then just making your goal every day when you wake up.
Speaker 2:And that's actually there's in the in the book Finger Rich.
Speaker 2:There's, like he says, in every he goes in every page of this book there's a secret of how you become wealthy, and he won't tell you what the secret is. He says you have to explain it to yourself, but I'll tell you. I'll let everyone know right now what it is. It's very simple. That's why he wouldn't tell you. Envisioning yourself you just have to picture yourself as there already and live your life like that. So if you want to be a billionaire, you picture yourself as a millionaire. If you want to run a company one day, that's who you are every day. You wake up and then everything. The idea is that everything will come into place to make that happen, as long as you believe in that and make your mission follow that. And if everyone knew that. I think it's such a detriment if you don't understand the laws of attraction, like how that all works, because I think it truly works.
Speaker 2:I couldn't believe when I started seeing it all happen. You could envision your life, and I did. I envisioned my wife. She was a brunette. I got a brunette. Like it was. Like I pictured everything. It happened, um, and then uh, yeah. But you know one thing about these books is they don't teach you spiritual stuff. So I remember I got there. I was like what the fuck? This is all there is. So then I read a bunch of buddha stuff to help that, but that's a whole different story. But, um, yeah, start with that. If anyone wants to read that, read it. Um, but I think it's changed my life.
Speaker 1:Well, I can say I will be reading it. Whenever I find it in this room, I will pick it up and start reading it, and I will. I will let our audience know my thoughts. You'll start a company in one week after you read it.
Speaker 2:I know you're going to do it, but it's kicking in here.
Speaker 1:So last topic I want to talk about is just kind of investing, because you are someone who has now, with multiple successful startups, you've started to take some of the money you've earned and invest it across our industry and I'm curious how do you think about investing? What are you looking for when an opportunity presents itself to you? How do you feel like you're picking a winner?
Speaker 2:Yeah, most of my investments have mostly worked in this industry. I've noticed that you invest in what you know and I invested. So I own a big portion of Roadrunner, the LTL carrier, and I remember I got a call from that five years ago and if you're in the LTL business you know Roadrunner has somewhat of a monopoly on what they do, which is long haul not that many cross-stocks LTL trucking. They mainly run team drivers West Coast, east Coast and it was a very low valuation. It was like an $80 million valuation. I'm like this is crazy. Those kind of things that you can cite once you know this industry.
Speaker 2:I'm like obviously I had major problems and bad former CEO that got convicted for fraud and CFO, but that was all in the past when I invested. And then we brought a new CEO in King Pris. He's amazing. And now that company I invested at five years four years ago and now that company I invested in five years four years ago it's doing great and it's still there. They're public, they're private, so I can't really talk about the numbers, but they are doing great.
Speaker 1:And I think that Maybe I'll get Chris on the show sometime. You think Chris Jamers yeah he'd love it.
Speaker 2:The guy loves. He's always posting videos himself traveling sitting in the middle seat. Yeah, he loves to show that off he's like I forgot, he's got seven turnaround lenders built, so it's pretty, pretty awesome. And what's? He's got a really awesome story because he actually is the biggest owner of you can tell you the story, but he's, uh, one of the biggest owners of it now, not, he wasn't the biggest owner last year, so good for him.
Speaker 1:Yeah, if you, if you'll have to connect me when, when you get off.
Speaker 2:And then I have a company called my carrier which is, uh, doing an lto plot. So the guys mike book on my I told you jet mccannis and mike book on my top two guys at bowletrans and I remember jet called me like right, when he left bowletrans or and started p44 and he said, uh, hey, would you invest in this? And I said no, I didn't have them first, I didn't have that much money then, but I shouldn't have said no because you know people, it was like an awesome valuation. I could have got huge win there, um, but he was just starting and he wanted to create back then. It was a crazy valuation. I thought so I passed on it.
Speaker 2:And then when mike called me up, he left global trends. After I left he was one of my top guys there. He did all my LTL carrier management there. So I managed all the LTL carriers and he started something. I was like let me in and I went all in with him. So I'm a big shareholder there now and I'm on the board. What they do is they're the white label. So Old Dominion SIA say SIA, it might say Averitt, it's all the LTL carriers. With the accession, maybe FedEx is the only one that doesn't use it, but all the LTL carriers use them and white label their system. So now that shipper can bring in not just SIA, let's say they could bring in. Let's say they have a relationship with a little bit.
Speaker 2:So they're really essentially creating, like what Freightboat has and what Volatrans has, but for that shipper direct to the carrier.
Speaker 2:That's a SaaS based model that carriers pay, that it's in my book outs running, that it's doing really well. And then I have a company called E-Dray. So I pick one each model. I have an LTL carrier, I have a LTL software and then I have a Drayage and they're like. E-dray is like the first company I've ever seen. I invested five years ago when they first started. It's over a $10 million company. It's breaking even, which is awesome, Very unheard of in this industry to get break even. And literally they're just like transplace for trucking or transplace. They're a managed transport Drayage and they manage 5% to 10% of the containers. And then Emerge obviously is my main day-to-day Because I put a lot of my wealth into Emerge. I pretty much put all my global trends into that.
Speaker 1:So I appreciate you explaining the ones you're in, but I'm curious more on the thought process as you look at as future opportunities get put in front of you. How are you thinking about whether or not you should invest? What are you looking for in today's industry? Where do you think there are areas that still need better technology or better companies? Where does our industry need?
Speaker 2:AI is a big thing. I think me and you are in the same investment there. The clone ops are doing great, but AI is like we all know AI it big thing. I think me and you are in the same investment there. The clone ops are doing great, but AI is like we all know AI. It's unbelievable. I think AI, even with its current technology, could do 70% of the jobs in the industry, which is scary in itself. It's a whole different discussion.
Speaker 2:It's going to take years for that to implement a company. Now it's much easier to start and then build ai into it, but I think any company, if it was fully using ai, would probably need 70 less people, especially in logistics, which is crazy, um. So I think ai is just the future and I think there's going to be multiple winners, not going to be one or two um, and there could be specific like like, for instance, guys invest prasad, who did a. I'm not invested in it, but he does. He he's doing like Q, which is a. You know, it's just a one, just a appointment scheduling for using AI.
Speaker 1:So it's like there's so many little things, but I think AI is just going to do everything eventually.
Speaker 2:I hate to say, even say it. But carrier sales, I think, is going to be tough. I think there'll always be carrier sales reps, but I think the carousels are up 10 years from now. We imagine 50 to 100 loads a day. You know where the ai is doing most of the work and they've he's managing the exceptions. But, uh, there always be carrier sales reps, but I think there'll be a lot less of them, unfortunately.
Speaker 1:I think that's going to be a tough transition for industry um, I'm so curious I'm so curious how companies are going to do it.
Speaker 2:A lot of people are against using outbound AI, but I've seen it in action. It's pretty crazy what it does and I think the biggest thing that's going to happen in a year is that imagine when the guy with five that Al Jack's broker has five people working for him can now call all 30,000 or 20,000 of his set of carriers every day. Imagine the amount of phone calls that are going to happen. The carriers are literally not going to be able to put up a phone in I would say a year because there will be so many AI calls going to them.
Speaker 1:Well, they'll have their own AI answering calls, right. They're also. You know, I saw Apple's got this thing now where it tells you in advance. You don't even have to answer the phone to get the information from someone. It tells you on your screen. It's an AI call asking if you have a truck available today. Do you want to answer or do you want me to? I think we're going to get to a place where the calls aren't even going to be happening. The data will be exchanged somehow through an app or whatever. I think it's going to be AI talking to AI.
Speaker 2:eventually it's going to be their AI. Your AI is going to call the carrier's AI. Your AI is going to know here's how much we have in the load, just like your carrier sales report, and the AI from the carrier is going to do the same. I think it's a huge opportunity for a land grab of who gets the carriers and for the AI models. That's a big thing.
Speaker 1:But also, it's like you know, a year from now.
Speaker 2:I think, is that going to hurt the biggest brokers like TQ1CH, because that's what they rely on. Their biggest advantage has always been we have thousands of carrier sales. We know where every truck is every day, just because we have enough people to call. But once that's taken away, that's going to be a struggle for a lot of the bigger guys. Maybe not so from I don't know if he feels, but I think TQL will be a company like. Tql is more cradle grade and more customer service and smaller shippers might do better at it. But CH Robinson, everybody's always thought that they're going to. They've still the leader. So maybe they'll figure this out.
Speaker 2:But it's going to be hard for the carrier sales model of the past where you know because think about this the one thing that's never talked about in this industry is how much capacity is eaten up before it even gets to. If I let's say, even at your size at Molo, you guys were maybe big enough to call four or five, maybe 20 carriers in the morning. You know maybe hundreds of carriers in the morning, but you weren't able to call all the carriers and find out. But but imagine when that you could have that same. You know capability of calling. You know you're not going to need worry about CH Robinson having all these carrier sales reps calling and then eating up that capacity.
Speaker 2:I think I wish the cares just wants to move it at $3, $2 a mile. He gets CH the first call, ch, no TQL, all right, send it over. Boom Gone, that capacity is gone. I would say I don't know how much capacity gets eaten like that, but a lot does that they have advantage on. But I think that's going to be spread out. That advantage is going to go away, which is great for everyone else, right? Because now that once that carrier could say, you know, I don't need to take this first load given to me from the first carrier sales rep that calls me, I could wait a little longer and maybe get five to 10 cents more, 20 cents more if I just wait another hour, two hours, and once that digitalizes, I think it's going to be so much better for carriers and for the industry. Maybe not so much for the biggest guys though, which rely on that advantage.
Speaker 1:Yeah, I'm so curious if we get to a place where there's kind of this aggregated data pool, that's a that's transparently available to the market, that shows us where the trucks are and what the trucks are looking for on a price on a given lane, I don't know. I mean, it feels like we could get there If enough of the Happy Robot or Fleetworks whoever they are, if they're talking every day to all these carriers and then they just start to sell that on the open market of these, this is who's available today and this is the price they're looking for on a given lane it's going to be a very different ball game.
Speaker 2:I don't know what that means.
Speaker 2:I think it'd be so much better for the industry. What's going to hurt, though, is imagine the RFPs right now. On the RFPs, you'll see a lane where maybe CX, robinson, rfps. You'll see a lane where maybe ch's romans and she was, but the next lane tkl is cheapest, then the next lane armstrong is cheapest, and so on, so on and um, and then they'll war teach one. But once that level that's a level playing field everybody's gonna have to work on, and that's gonna be like okay, we work on whoever could work the cheapest right. If I could do it on a six percent, seven percent margin, right and I don't think we're far away from that, I think maybe five. But I think it's going to be good overall for the industry, because I've always, ever since even though your dad mastered it the calling of carriers and managing carriers, the carrier sales rep idea I just always felt like that's not going to be. I thought it'd be gone by now, but it's still there where you need massive carrier sales reps. But I think that could be. I not going to be in the. I thought it'd be gone by now, but it's still there where you need massive care of sales reps, but I think that could be.
Speaker 2:I think that goes away in the next five years finally. And then that carries all digitalized. You can put your freight out there and there'll be clicking by. You don't have to negotiate. Negotiation will happen with the AI at first and eventually it'll just be just happen. And then it's going to be who could service this for the cheapest? And I hate to say this, it's going to go. Broker rates are going to go down to, I think, five years, to be 10% on average. I think it's 14% average right now. I think it's going to be on like 11, 12, the next five years. But eventually it's going to be like, if you want this lane, you're going to have to be at 5% margin or 6% margin, cause the rates are all.
Speaker 1:Everybody knows, like you put your load out, there it's the same period.
Speaker 2:If they buy it from cx, you're gonna buy it from tpo.
Speaker 1:They're gonna buy it from.
Speaker 1:It's like what happens at that point, you know, like, yeah, the only challenge is going to be it.
Speaker 1:I my guess is that the average broker that has a buy it now button or or a load board for a carrier to buy freight from without having to talk to a carrier or rep, I would say with confidence that any company that has that has more fraud happening on the loads that are digitally bought versus the loads that a carrier rep is involved, and I've heard that from a couple of brokers that validated that and I can't speak. Well, I'll just leave it at that, because there's less barriers or fewer barriers. You know, if the hacker or fraudster can get your DAT login credentials, they can get your credentials to whatever other tool is being used. They buy the freight without having to talk to someone and then they're stealing it. So I am curious if that becomes a headwind for this kind of efficiency train that we're moving down and if it's enough for companies like Highway to just kind of offset that, or if there's going to be an avenue for a newer or additional fraud prevention technology to show up. Pretty rampant right now it's really bad, and then but.
Speaker 2:I think obviously it could be settled. I mean, if, whatever you're, whatever a person could ask the care you could have, the AI do for sure. But I think that's where you have people. I mean there's, like I said, there's always going to be carrier sales reps. Maybe the carrier sales rep his job is to make sure that there's a little. You know, yeah, I have 50 loads going down. I need to make sure all these carriers are up to par and maybe 20 of them are new or 10 of them are new or something like that.
Speaker 2:Um, but I don't think it's going to be that. That's not going to be the biggest headwind of this. I think the biggest headwind is like one of the carriers gonna. I actually can't wait until the carriers are bogged down with the AI calls so they actually do get digitized Versus. You know, like I said, I think 50 to 60% of the capacity is gone before the average truck broker calls that carrier. It's all gone Like it's all been moved by the carrier. But in Chicago, call them at five in the morning and got that load booked or secured for TQL, secured for CH or whatever it was, I think that's a big.
Speaker 2:I think that's so. I think it's, I think that it's going to be over. But also I worry about also little brokers. How little brokers you know compete 10 years from now when you know they have to come. You know the margins are all the same, like right now. They're relying on the fact that they know this market better than your CHR also rep does. But when that levels out, that's going to be interesting too.
Speaker 1:Yeah, I don't have a ton of confidence in the future of the small broker. Yeah, it's going to be tough.
Speaker 2:We'll see, though. Yeah, I heard that you someone told you he was talking to you. Why don't you start another brokerage? It would be tougher now, right, but I mean you could. It might not be a bad idea because, like, think about it, if you started a brokerage right now, like you, fully AI, like boom, I'm going to start an AI brokerage from start. You don't need hundreds of people, you need, you just need a few. But is where's the industry going? And you know how do you differentiate yourself? That's another key. Like no shipper wants to let a broker in right now because it's very hard to get in anybody. It must be like what makes you different, you know. So that's you have to run into that.
Speaker 1:Yeah, if I was going to start another broker, I would want to be able to be different somehow. I'd want to be connected, I'd want to be tied into a shipper or tied into assets in the right way, or LTI like something. But just starting a traditional freight broker on its own with no special effects, essentially that would be a lot harder than I want it to be.
Speaker 2:Yeah, but we've always said it's going to happen, it's a bad time to start. Even five years ago, I always said no, it's probably going to be a bad time, but it would have been the right time then too. Yep.
Speaker 1:Go ahead. Well, listen, this has been great. I appreciate all your insights, hearing your story, learning about how you built Global Trans 10.4 and now emerging to the companies they are, and I think my audience will really appreciate all the insights you've provided and certainly the book that we'll all now be reading in the near term. People can send you their personal feedback and what they learned from it.
Speaker 2:Yeah, please do. Please send me feedback. Linkedin you can reach me at, and I'd love to hear anybody that has any reaction to it.
Speaker 2:Love to hear about that. But yeah, thank you, andrew. I think I'm glad that you and I have become friends over time and at least I think we got off on the wrong foot. But I think that you're actually the first person I ever said I think I got on the wrong foot with this guy. I usually don't, but then in this industry I've learned that sometimes my way I talk doesn't make friends at first, but that's always been the case for me.
Speaker 2:But I'm glad that you and I have got to that point where we can be friends.
Speaker 1:You and me both, yeah, you too, man. All right, Well with that. We will see you next week. Peace out, Thank you.
