Ep. #89: Aaron Graft, Founder and CEO, Triumph

Buying a bank during a meltdown sounds like a bad idea until you hear what it takes to survive it. We talk with Triumph’s CEO about growing up in small-town Oklahoma, sprinting through Big Law, and then walking away from the safe path with a young family and almost no margin for error. What follows is a candid story of mentorship, risk, and the kind of pressure most founders only admit to after they’ve made it through. 

From there, we trace how Triumph goes from distressed-debt ambition to becoming a serious force in transportation finance: transportation factoring for carriers, broker payments and supply chain finance, and now logistics intelligence built on an asset most freight tech can’t match, paid invoice data. We dig into why brokers often misunderstand “controlling payments,” how factoring changes the carrier relationship, and what it really takes to sell enterprise payments in a trust-heavy industry. If you care about freight brokerage strategy, carrier liquidity, working capital, or building durable logistics platforms, this one is packed with practical framing. 

We also hit the uncomfortable realities shaping the market: fraud attempts that target remittance changes, why payments are treated as financial crime, and how post-Montgomery liability breaks the risk-reward math for brokers and demands clearer rules. We close with leadership lessons that apply well beyond trucking: trade-offs, focus, and surrounding yourself with people who love you enough to tell you the truth. Subscribe, share this with a friend in freight, and leave a review with the biggest takeaway you’re applying next.

Thanks to our sponsors:

Cloneops.ai: Not just AI. Industry-born AI.

cloneops.ai

Bitfreighter: Scale Freight. Not Integration Costs. Win More. Accept More.

bitfreighter.com

Triumph: Accelerate quote-to-cash with AI-powered invoicing, bank-grade carrier payments, and transaction-based market intelligence.

triumph.io/morecapacity

Transcript

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Small Town Roots And Early Hustles

SPEAKER_01 1:10

Welcome to the show, sir. How are we doing?

SPEAKER_00 1:13

I'm great, Andrew. Thank you. Thank you for having me.

SPEAKER_02 1:16

Glad to be here. You are the second graft to join the show, not the first. How does that make you feel?

SPEAKER_00 1:24

I think in most things with my brother, I went first and he went further. But uh and so I guess he got to go first and further uh here. But I will do my best not to uh disappoint the name following in his footsteps.

SPEAKER_02 1:39

I don't think you will. So the name is interesting. So you guys, you're you're one of five kids, is that right? I am. Yes. Take me back to your origin story a little bit, because you and your brother both have been wildly successful in your own right in the space, but just in general. And uh, where does that come from? Like what's what's the origin there?

SPEAKER_00 1:59

Um, well, we grew up in Clinton, Oklahoma, which is 90 miles west of Oklahoma City. A place you probably don't stop unless you need gas on your way to Amarillo on a ski trip. Small town, great place to grow up. Um just had no idea how small that world was. There's a big age gap. Like Jordan and I are nine years apart. My oldest brother and I are nine years apart, and I'm in the dead middle. Um so, you know, our dad was a lawyer, small town lawyer, a rancher, and a banker. I mean, nothing to do with freight. And uh it was just a small, just a small, somewhat agricultural community, and grew up in a very small school and um played sports, did all the things you would do in a world before you had internet connecting you to the great wider world. So Clinton was a bit of its own isolated pocket, and at least until I went off to college.

SPEAKER_02 3:02

And was there always this kind of entrepreneurial bug in the family, or where did that piece come from?

SPEAKER_00 3:09

Yeah, definitely. I think my dad uh was uh had that uh to a degree. He started his own law practice. For me, my fur my brothers and I started a fireworks stand because we lived right on the city limits and it was legal to have a fireworks stand right outside the city. That was long before Jordan came along, uh, which was great. We ended up popping most of the profits. I didn't understand inventory management in those days. And then my second uh, and I didn't know what the word entrepreneurial meant, but I I really was probably bent that way. The second thing I did is I started a I would be glam over-glamorizing it to call it asphalt resurfacing business. What it was, my uncle was in construction and he showed me how to lay tar on asphalt to like reseal it, give you three to five more years. And so I went out to all the people in Clinton who had asphalt parking lots and asked them if I could do that for them. So that was I don't nobody taught me that necessarily. It just was somewhat creative in that regard. I'm not sure I made a lot of money in any of it, but it felt like a lot of money at the time.

SPEAKER_02 4:22

Yeah, and just the kind of it took an inch to scratch. Like you see an opportunity, just go figure it out, right?

SPEAKER_00 4:28

Yeah, for sure.

SPEAKER_02 4:30

What you went to college, you went to Baylor, is that right?

SPEAKER_00 4:33

Yeah, I went to Baylor. Um, no one in the history of my hometown had ever been there. So I guess that felt adventurous, a whopping five and a half hours away. Uh, I think I nursed a dream of playing baseball there. That dream was quickly shattered when I got there and realized that to be a good athlete in western Oklahoma versus a good athlete in Dallas and Houston, I got I was I was I was below average. Yeah. Like, you know, I I needed my eyes open. But I stayed there uh and met my wife who was not from Clinton, Oklahoma, and therefore preferred not to live in Clinton, Oklahoma, and the rest is history, as they say.

SPEAKER_02 5:13

And you went to school for law?

SPEAKER_00 5:15

Yeah, I mean, in undergrad, I didn't know I wanted to practice law, but they they had this fancy liberal arts degree called University Scholars that they played up was very selective. But what it means is you're unemployable upon graduation unless you go

From Law Firm To Leap

SPEAKER_00 5:30

to grad school. And that I that I didn't understand. So my wife and I got married four weeks, five weeks after undergrad, and then I stayed for law school because I got a scholarship there, and so we stayed in Waco another three years and then moved to Dallas to work for a big law firm.

SPEAKER_02 5:45

And what was the plan? Just you know, crush the law path, and you know, I remember it's so funny now.

SPEAKER_00 5:54

Like I remember walking through downtown Dallas and walking to the building I was gonna office in, and this would have been when I was a summer clerk. And I can't remember if I took a picture, I guess I would have had a camera phone then, but I took a picture of how tall the building felt to me and sent it to my parents just because if you're from Clinton, and I mean I'm not I'm not exaggerating, it just felt like the two buildings like on either side of the street were touching at the top. I'm like, can you believe I'm gonna office here? It just felt foreign because I don't know, it's just in the age before the internet, which I I was part of, probably the last one, um it it it just hadn't been exposed to that. So I I don't know if I thought about partner track. It did not take me very long in the practice of law to realize that lawyers, generally speaking, should be detail-oriented and risk averse, and I was neither. And so that this was not gonna be a long-term fit for me. They're great people, great law firm, great place. Uh, I just that's not my wiring. And it uh I probably figured that out in year one, and then it took me till year three to go out on my own. And what was the pivot? Um, so at the time I was doing, so this was been oh three to 06, and I started in our litigation group and then moved over into commercial real estate and was working on securitizations. We were putting together these bundles of loans. If you've seen the big short, it kind of talks about that in the residential market, but in the commercial market that existed as well. And I didn't know what I didn't know, but I could tell that the the quality of these loans. We had some fake loans make it into the warehouse, like things that were completely frauds from the beginning. And so I had this theory that the world was going to correct, um, or or that this couldn't last. And I wanted to go out and become a distressed real estate investor. Uh, that was at least my my thinking. And I was gonna practice law with some small clients who I thought would come with me to keep the lights on. And um, you know, I think I have been married 26 years now, I'm much better at marital communication now, I think, than I was then. And I just told my wife, like, I'm ready to leave. And we had a one-year-old, and she's like, Well, what about health insurance and the all the things that come with it? And and my nature is much more a trust me, it'll work out nature. And hers is cautious, which is why I think we're we're together. Somebody's

Mentorship And Learning To Lead

SPEAKER_00 8:30

the gas pedal, somebody's the break. Um, but long story short, I was in a Bible study on Friday mornings with a guy named Carlos Sepulveda, uh, who was the CEO of Interstate Batteries. Amazing story, amazing man, still our chairman, ran away from home at 15, self-made per man, just amazing. And he's like, I think, Aaron, you can do this, and I'm gonna put up one year of living expense for you for a percentage of whatever you're gonna go do. And that was enough. That and a dinner with Carlos and his wife was enough to get Kimberly comfortable. And so I left, and that began triumph, uh, March 5th, 2006. No aspiration of being in banking, no aspiration of being in transportation, no aspiration of being in payments. We were a distressed debt investor. At least that's what we thought we were. And the we, it's like the royal we. I used we to see it bigger, but that was it was very skinny. Yeah, yeah, yeah, for sure.

SPEAKER_02 9:28

That's fascinating. What um you've talked about Carlos before in past interviews or articles, um, as being kind of like maybe the most influential person in your life outside of your father. Like that's right. Give me some more there. Like, what what have you learned from someone of that stature with that kind of success?

SPEAKER_00 9:51

Carlos, I think he was recruited by UT to play football. So he's this big powerful guy, but that's not how he comes across. And and so many of the things that I thought I had figured out, like my opinion of myself coming out of high school and college was way higher than it is now. Like the further I've gone in life, and I people say these things, like I genuinely mean like I was good at a squared plus b squared equals c squared, arguing myself into what I wanted to accomplish, but that wasn't like good at caring for people or casting a vision or getting people to follow you, other than like browbeating them. And and so just Carlos, through what he'd seen in his life and and his intellect and his gentleness, uh, it's just had a profound impact on me. That and I'm sure he wasn't this way his whole life. I know that because he said that, but just seeing him like, okay, this is what it looks like to lead your family well, lead your kids well, lead your company well, care for other people well. And um like most people, you know, you can tell me lots of things, but what you show me I remember, and and that's had a remarkable impact on me.

SPEAKER_02 11:10

Yeah, I think that's fascinating because it's certainly not easy when we're young to really do any of those things, let alone do all of them together, you know, to be able to be the man you want to be at home while also being the man you want to be at your office for your wife, for your kids, wherever it may be. Um I'm curious as you look back kind of, I guess it's been what 20-ish years since you started Triumph. How have you personally seen yourself kind of develop and mature? Like, where were you when you started? And then like I guess where do you feel like you had the most opportunity for growth when you started versus where you've seen it develop?

SPEAKER_00 11:58

Yeah. Um, I would say that it's nice to be smart and it's smarter to be nice. And I so look, God given or whatever, I could always do the things. I could, you know, make the good test scores, I could figure things out. I understood business came somewhat intuitively, I was persuasive, I didn't need notes, I could be dynamic on a salesperson. And so like I just thought that was either that I had earned that or deserved that, or that that was gonna wow people. And if I look back 20 years later, um it's much more about how did I serve you as my customer, as my colleague, as my investor, as my family. Uh, and my wife is naturally servant-hearted. She's a lover of people. And between Carlos and her, and just you know, maturing in life, I just came to see that that it is, it's it's smarter to be nice than it is to be smart. I've seen lots of successful people, I'm sure you as well, who are in some ways too smart for their own good and too persuasive for their own good, and they believe their own message. And what I've learned is that I wish I had known more of then is just the more secure you are in who you are, the more humble you can be towards other people. And that's a lesson that is easy to say and hard to hard to model.

SPEAKER_02 13:27

Yeah, it's like that saying um people won't remember what you said, but they'll remember how you made them feel. And uh I think there's a lot of wisdom in what you just said. And that's that's definitely you know, when I think about myself at 27 when we started Molo versus now, it's like I definitely thought a lot of those things you were saying where it's like I can I can you know use my smarts to get through this, I can talk my way through this and impress people with this, this, and this. But like that's just your ego um for sure. And like it maybe works on the surface, it maybe gets you that first customer, it maybe gets this, that, or the other thing, but like in the long run, that shit runs out. Um and and you're left with like how did you really make people feel over time over the course of hundreds of interactions working together, or whether they were

The 2008 Crash And Buying A Bank

SPEAKER_02 14:20

working for you, or it was a customer working with you. Uh so I I appreciate what you just said because that made me think, and um there's some some wisdom there. Um so back to the origin of the business. That this had to be right around the time of the financial crisis, no.

SPEAKER_00 14:38

So we got a couple deals done early. We were able to raise capital, like you know, hand hat in hand. We didn't have I had no relationships in Dallas except some people who were willing to invest in me and introduce me to other people. I had no legacy, no, you know, it wasn't like I was a known commodity. And then uh if you were sitting at your desk in September of 08 when Lehman failed, like the world stopped turning. And now everyone was a distressed debt investor, right? So our I thought our I thought what we had built was we were unique. We weren't unique, we were just early. And and I didn't have uh any secret sauce that made me a better distress debt investor than others than just being a little early. And so that that sort of brought us to a pivot point. And it's an interesting question, Andrew. Had I stuck with what we were doing and just stayed in commercial real estate, buying apartment complexes, fixing them up, selling it would have turned out, I think, just as well uh financially, but my life would not be nearly as full as it is now. And I've I mean, look, I've been through some rodeos since we did this, since we made the pivot. And so the pivot was I went to my investment my mentors, Carlos and a and a guy named Chuck Chuck Anderson, and and I just said, Hey, um, the world's falling apart. I think we should, and I really did say it like this, I said, I think we should go buy a bank. And they're like, What's your thesis there? And I'm like, that is the last thing in the world people want to buy right now. And I also don't think banks are gonna become obsolete. They may all be in trouble, they may have to get work through, but if you paid attention to history in the late 80s and early 90s, there was a massive transfer of wealth between when the banking crisis, the FSLIC crisis happened in in Texas, and all the banks failed, and people who bought them, and and they were there to be on the other side of of the of when the economy started going the other way because banks are very leveraged vehicles. You know, they're gonna when when things are good, they will ride along with it. And so I said, let's let's buy a bank. And they said, Do you do you think you can? And this is where I guess it was helpful to be young because I was audacious enough, bullheaded enough, whatever the right word is, naive enough to believe that, well, yeah, I mean, we can buy a bank. It's like how it's not it's not brain surgery, it's math, and I can I'm decent at math. Um, oh man. How little did I know what I was signing up for, and and what I have learned through that experience is invaluable, but it's something I never want to do again.

SPEAKER_02 17:24

You know, there's maybe value to not knowing enough paired with an audacious mindset, right? Like being an entrepreneur, like if you knew enough, you'd have enough to not move forward in a lot of cases, I feel like.

SPEAKER_00 17:45

No question. Like the entrepreneur's job is to try to drive it at the edges, you just need a few people around you to keep you off the sidewalks. Right, if we're gonna drive right down the middle of the road at 20 miles an hour, you don't need to be an entrepreneur. Like that, that wasn't that's not what we're designed to do. Um so yeah, I think there's good in it, but the wisest entrepreneur listens to the counsel of those around him and and to their credit, my partners weren't like, don't do this. They're like, count the cost before you do this. Are you resourced for this for this, what you're it's setting out to go do? Which I was by no means resourced to go do this, either relationally, I didn't have the credibility with the regulators. It was it was a bet the farm move, which if you're gonna do that, do it when you're 28, not 48 for sure. But every chip was in the middle of the table.

SPEAKER_02 18:38

And and why did you feel like so this contrarian move was like the right one? Like, I mean, like everyone is is going one direction, is zigging, and you wanted to zag. Like what was the impetus for that?

SPEAKER_00 18:55

Well, because if unless you thought the world was gonna end, like it was the end of the decline of the Western civilization, you knew things were going to, the leverage was gonna come out of the system. And banks, by their very nature, are are powerful leverage vehicles. You know, we're 10 times leverage just by the the way the balance sheet is constructed. And so I had seen and I had read histories of people who got control of a bank and then a bunch of banks failed, and they were able to buy those assets at a big discount, and you ballooned the balance sheet. And I think that's frankly, Andrew, that's what I thought I was gonna do. I thought I was gonna buy a bank, clean it up, catch the trade, and exit in three to five years with a multiple amount of money and go do the next thing. That's that's almost I'm almost certain that's what I believe. You know, history rewrites itself. I had no intent, and I do mean zero intention. Not only no intent, I had no knowledge of where I was going to end up now. So I am an accidental banker. I mean, the day I walked into my first the bank, I was the CEO, which is not like that's not the that's there's so much you don't know. And then I was a neophyte of all things transportation. Like I knew less than zero. So it's I would love to tell you there was a Harvard Business School case study that like has constructed in my mind where we were gonna do this and we were gonna use that to do that, and that would be giving me 10 times too much credit. Yeah, right. If the one the one benefit was because I wasn't a banker, I was open to doing things different with the bank, which goes back to what you were saying. If you're listening to this podcast, you know the drill.

SPEAKER_02 20:36

Rates are spiking, margins are tight, contracts are dangerous, the Supreme Court ruling is in, the sky is falling, and so on. Really, though, in an ever-changing market, your pricing and sourcing have to adapt fast and stay dynamic. That's where Triumph Intelligence comes in. Built on green screen's AI technology, it delivers real-time predictive rates based on your data so you can quote accurately in seconds. But here's the kicker. Now that it's part of Triumph, you can tap into their leading network of nearly 70% of brokered freight transactions and more than 170,000 real carriers. You simply cannot get better data anywhere else. Head to triumph.io slash more capacity to get a demo today. Which is which is like so helpful in in a in a in a field where there's like there's not a lot of variety and and it's it's easy to look at a line of a hundred of them and be like they're all pretty similar. Like having that kind of lack of know-how and willingness to try different things, I think, is an advantage.

SPEAKER_00 21:44

Yeah, I mean, banks are where entrepreneurialism goes to die. So I I was I was uh it was a rough. I mean, A, it was incredibly difficult to raise the capital and get regulatory approval. I had no idea how hard that was gonna be. It took my wife and I to the Absolute verge of bankruptcy. No jokes, no overstatements. Like we were, it was costing us every month to pursue the bank. The regulators took over it like 18 months to approve the transaction, which is just you don't, I didn't have the powder to wait. Uh so it was it we it was everything we had to hang on for that. And then to raise the capital. Hey, I've never run a bank, but I I think I can do this. Right. And so we went out and raised uh capital. No institutional capital would have ever invested in us. These were these were oil, oil, you know, guys who made their living in the oil patch who bet on jockeys and they knew somebody who knew somebody.

SPEAKER_02 22:42

Um you didn't have the know-how or the experience, or like what what was the sell that got these guys to put their money behind you in this venture?

SPEAKER_00 22:55

Uh this is where there will still be an argument to this day between Chuck and Carlos and me. They would say I did it with my ideas, and I would say that is such a falsehood. It was their relational capital that got me in the door. And and the I I had an idea, and we were, you know, and then the idea, of course, didn't involve anything with factoring or payments, or it was like we were gonna buy loans at a discount. But I just met some of the right people, the Sparks family out of Midland, and that they had wanted to buy a bank, and we we had this deal tied up, and there were just people who who, you know, sometimes when you're a young guy, you need somebody to just bet on you. Not they're not gonna bet a lot, so you got to go get a lot of people to do it. Um, but it was a I mean, if you if I could go find the slide deck, there's zero chance you would invest, right? If you didn't know somebody, the slide deck was not gonna win. I'm not even sure we had slides. I think it was like a two-pager. And you also found a threshold where wealthy people, there is a threshold where wealthy people who want to stay in the deal flow to see other deals, but they're not interested in your deal, and it gets brought to them by someone and they'll just put a little bit of money in, like to stay in the flow, and they didn't listen to a word I said for an hour and a half. So we we cobbled it together $45,100,000. And I I mean, I

Regulators, Capital Raising, And Near Bankruptcy

SPEAKER_00 24:20

it was we wore out shoe leather, I flew Southwest Airlines anywhere people would would go, and um November 5th, 2010, we got it closed, and I it it could I I don't know how much longer we could have waited and tried to hold it all together with baling wire, but we did get it done.

SPEAKER_02 24:39

What was the hardest part of that process?

SPEAKER_00 24:44

The trying to um have meetings with investors while keeping it together at home, trying to be present for my wife, and then by that point I had three young kids, and and uh there's here, I'll tell you this story you will appreciate. Um, so late in the process, late in the process, I went to Carlos and Chuck and I said, Hey guys, um the FDIC has not approved our change of control. We have spent all the money that I that we had saved up, that I had saved up in this chase cost. Um, I've rowed this ship out to sea and I don't see land ahead of us, and I know we can't row back to shore. Like, my plan is to keep rowing. And you know when you say things to a mentor or someone in your life and you want them to give you a certain answer, and so Carlos said to me, he's like, Aaron, you may have just called a play that or you may have called a play that you just can't run. And how awesome is that? I'm like, not awesome. There's nothing awesome about this, Carlos. I got I'm I'm staring down bankruptcy, I got three young kids. He's like, No, no, no, hear me out, hear me out. He said, You're not gonna starve. You have a marketable skill in your legal profession, and you're gonna make it through this, but um life's not kindergarten, not everybody gets a trophy. And what may happen as a result of this is that idol of significance you have of being labeled as a successful young businessman, they may get smashed to pieces, but you'll be a better man for it. Um, which is absolutely probably absolutely what I needed to hear and absolutely what I did not want to hear.

SPEAKER_02 26:24

You're like, dude, so that still leaves me in the middle of the ocean, and like yeah, with a broken oar in a leaking boat.

SPEAKER_00 26:31

It's yeah, um, but it I think just trying to live well and not bottle that all up, all the tension, the stress, the fear, the insecurity, and those are real things. As you know, this as an entrepreneur, like there is a genuine fear of failure. And I was staring into the what it felt like the abyss. Maybe on the other side of it, yeah, we we you know, I wasn't gonna lose everything, but everything was more you know, mortgaged to the hilt. So sure felt like that at the time. And um, that was the hardest thing and the most valuable thing, as it so often turns out in life.

SPEAKER_02 27:12

Yeah, it's interesting too to think about when you're when you just just the concept of you're waiting on regulators to approve something that who knows when and if they ever will. Like, that's such a great lesson. The idea of focusing on what you can and can't can control versus can't, and like there's just nothing you can do if the regulators aren't gonna approve it today or tomorrow or the next day, and causing a bunch of problems at home with your wife and kids isn't gonna make that any better. So I I don't know. I also I can't help but think about this whole concept of buying a bank when everyone else is running from it, and it just seems like a terrible idea. It just it really has me thinking about where I am today with three months left on my non-compete, wanting to dive headfirst right back into brokerage, buying a brokerage probably to get started faster, and the idea that everyone's like, well, AI is gonna replace brokers, and Robinson had a $600 million liability in this lawsuit two weeks ago. Like it looks so grim. And I'm like, I don't know, I think I want to dive head first right back into it. Um, and and just that story alone just gave me a little bit extra conviction that I still think this is the right path.

SPEAKER_00 28:34

Yeah, man. Hey, you know the space, it plays to your strengths. Conventional wisdom is going to get you a conventional outcome. I don't know you well, but my guess is you don't want a conventional outcome. No. And so when when there's blood running in the streets, when the narrative is the world is over, there are very often great opportunities for those who who can see, who can kind of step back from the headlines and the doom scrolling and the other things and go, what fundamentally is the value proposition I bring to this situation? And I just think there's far more opportunities than than than the the people, you know, it draws eyeballs to say it's the end of all things. You always sound smarter being negative and contrarian. You could be a positive contrarian. You may not sound as smart, but it generally works out. If you believe America's gonna work out, it generally works out.

SPEAKER_02 29:32

Yeah, it's it's just like your thought that like banks aren't like death dead, like banks will live on. Like there, there's like you didn't see the path where banks just disappeared, and I'm in the same mindset, like there's not just not gonna be brokers left. There may be consolidation, which makes me want to move fast and get big, but like there will always be a path for someone to help orchestrate the transportation of goods. And why not me?

SPEAKER_00 29:59

You know, why not all any anyone anyone who is telling the narrative that what we've seen in the last nine months is the end of brokerage, I think is absolutely missing what is happening. Absolutely. Brokerage is gonna change, but that creates opportunity. And I I have you know, there's obviously Triumph serves uh lots of brokers, and there are some brokers who are gonna do great with this. It's gonna be bumpy, it's gonna be uncertain. It's a little bit buying a bank. It got bumpy and uncertain at times, but goods still have to end up at your front door, and drones aren't gonna deliver all of them. Yep, and as long as people are buying stuff, buying water and bottles, all the things that we move up and down our highways, the people who know how to exploit inefficiencies and who build great relationships are gonna do great. And the brokerage is so great because it's a it's a capital light model. Like there's talented people can scale that business. I mean, we can look at the industry. You've interviewed people in this industry who've done that, and it's the intellectual capital that's so valuable there. 100%. So go for it, man. I'm behind you. When you get going,

Entering Trucking Through Factoring

SPEAKER_00 31:10

hey, send me your deck, maybe I'll invest with you because you'll have a heck of a lot more credibility than I had trying to buy a bank.

SPEAKER_02 31:16

Well, I might need you. I might need some credit day one so I don't have to deal with a bunch of nonsense. I'll see what I can do for you. I'll see what I can do for you. You might know somebody. Um, yeah, maybe. All right, so let's pivot. So let's talk about, I guess, the pivot. Or like when how did you get into trucking? Like, how did Triumph become a transportation-oriented business?

SPEAKER_00 31:38

So, my oldest brother was the CFO of an apparel manufacturing company. And apparel manufacturing companies use factoring and asset-based lending to fund themselves. And when you do that, a lot of times, and it doesn't happen in transportation as much, but when you when you do that, there will be lenders will send out people to do collateral inspections. And this lender had sent this guy who had met my brother, and he told my brother, hey, I know this guy in Dallas who runs this small transportation factoring business. His name's Steve Houseman. Um, and I think he's got he wants to recapitalize the business and grow it. And so Steve and I were introduced through my brother. I didn't know a thing about factoring at the time. I mean, I I'd taken an article nine class in law school, but that doesn't mean you know anything about factoring, that means you know the theory of the law. Yeah, I don't know what that is. And I met Steve, yeah, exactly. Exactly. It's secured lending, it's not worth knowing. Um, yeah. And I met Steve, and you just and and Steve Haussmann incidentally serves as uh he he's on the board at Highway as well. But Steve became a mentor. He thought I was mentoring him and trying to acquire his business, but he like you just can't help but love him. I mean, he's just exceptional, he's done everything in trucking, his family owned a trucking business near the World Trade Center in New York, lives in Dallas, had this small factoring business. Explain to me how the math of factoring works, and uh, and that's where, you know, self, uh, you could put that inside of a bank because the receivables turn so fast, they're highly predictable, they're very, you know, generally very high yield, and we could really grow this thing. And so it was a bet on him, kind of like people had bet on me. And I understood by the by the point we got ready to close, I understood enough to understand how the math worked. But could we grow this thing? It was 40 million, which you know sounds like a big number, but when you're in lending, that that's nothing of net funds employed. And he was serving a couple hundred small trucking customers, and we bought that thing, once again pushed all the chips to the table because the bank hadn't really made any money since we had bought it. It was a very small bank on Friday, the 13th, January 2012, and that was the day that I became whatever I am in the trucking industry. That that began my journey in earnest, and it's been remarkable. It's remarkable how little I knew then, and maybe in some ways how little I still know, but I do know certain things. Uh, but it was not driven. If the idea to get into banking was driven by being contrarian and smart and whatever, the idea to get into transportation was driven by the quality of the person, not the quality of the idea. Now the idea ended up working out, but it was just I just couldn't help but like Steve. He was everything that I said to you. He was nice, he's smart. And when you put factoring inside of a bank, it's a very powerful thing because our cost of funds, our scalable balance sheet. So that's how it happened. There's it's just there's no like lightning in the sky, there's no epiphany, just a relationship, man.

SPEAKER_02 35:00

Right guy, right time, right place. That's right. And you're not superstitious closing a deal on on Friday the 13th? I'm just kidding. I uh no, no, no, not not in that regard. So, I mean, how that was this a big bet for you then? Like, or I mean, you said 40 million was of funds to pull like how big was relative to like the size of the bank at the time, was this a big deal for you, or was this kind of like a side project that was like, ah, I like this guy a lot, let's get him involved in our business?

SPEAKER_00 35:34

This was all of our available cash.

SPEAKER_02 35:36

Oh, it was so this was everything.

SPEAKER_00 35:39

This was a it was once again all the chips to the center of the table. Yeah. Interesting.

SPEAKER_02 35:44

And how did how did Carlos, how did the how did everyone kind of view this move to I mean, this was this you this is as big a pivot as I guess you could be making at that time.

SPEAKER_00 35:55

Yeah. They had a remarkable amount of faith in me, and I think they met Steve. I I know they met Steve through the process. And um yeah, a remarkable amount of faith that that they I think there was a lot of skepticism because at that point was the regulators would have had to approve that transaction, even though we own the bank, you don't just get to do what you want in a bank, when you want, how you want. Some there are thir certain things that have to go through regulatory approval, and there was a lot of skepticism that we would get disapproved.

SPEAKER_01 36:28

Um had anyone done this before?

SPEAKER_00 36:31

Uh there have been there have certainly been banks that are in factory, but nobody nobody had bet basically all put as much on the line as we had in transportation factoring. Right? There's all kinds of factoring and asset-based lending, but we were going after a very what at the time, Andrew, was a very narrow slice. What I would say now it's amazing what the factoring industry has done and grown to be and what it's become since 2012. But yeah, the the cement was really wet. Like this, this had not been done. There was no easy path to follow. And I and that's where I think if you were a traditional banker, you would have never done this just because who's gonna I mean, I need to say this. This needs to not be taken out of context, but you're lending money to insolvent truckers. Like that's the that's the theory. Well, that's not exactly what it is, and most not all truckers are insolvent, they're actually um wonderful business people, but that's how a banker would think about this. It's not how I thought about it, but it's how a banker would think.

SPEAKER_02 37:36

Yeah, I mean it makes sense, but I mean they are they're they're doing good business and the work is there and the money comes, it's just you know, they don't have the ability to to to navigate the flow, you know, that that they have to deal with otherwise. Um what what's kind of like you obviously went into this knowing I assume nothing about transportation?

SPEAKER_00 37:57

Nothing.

SPEAKER_02 37:58

Yeah. I mean what what was the learning curve like? I mean what what were some of the kind of early insights that you surprised you as kind of you became the transportation banking guy from knowing nothing?

SPEAKER_00 38:09

Yeah, um I think well the first thing is how much of a small business it is. And the it more than 90% of all trucking authorities have less than four trucks. I I just thought to myself, oh, there's like 30, 100 trucking companies and they move all the freight and they're giant, these huge fleets, and no, it's an incredibly fragmented uh ecosystem. I I I think I would have thought in those days, man, to move a load's probably ten thousand dollars. Well, no, it's not. I can actually tell you right now it's averaging sixteen hundred and fifty dollars, which is twenty nine percent over last year, because we we see it a lot. Um so they're just like nuances like that. That just I now drive down the road, I drive my wife and kids crazy. I'm like, that's a factoring client. That's a factoring client, that's a broker client. Like they're not even paying attention that there are semis there, it's just this whole world that existed, and then the deeper you get into it, you're like, oh my gosh. What the the internet could go down or or Facebook or whatever could go down. If the trucking industry goes down, there's gonna be no produce on the shelves. There's like life as we know it, the supply chain breaks down. And um, so I I think I have a naturally curious person, and it was just fascinating to me. And so I was learning as much as I could, meeting as many people as I could. What was uh about those days, though, is I only saw the world from the carrier's point of view. It was much later that I came to see the world from the broker's point of view, to a lesser degree from the shipper's point of view, and that's a whole nother way of looking at the world, right, than the way the carriers saw it. But that's how that's how I started learning. That's how I got into transportation 101.

SPEAKER_02 40:04

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SPEAKER_00 41:48

Yeah, we just we just grew it organically. We have grown that factoring business by 50x. So today it's $2 billion on our balance sheet, and almost all of that's been organic. We just were good at marketing. Um we hustled, we had an early partnership with DAT on their load board. You know, we would get a lot of factoring referrals from that. Um and it was an exceptional business, man. And I think this is the the second pivot. Maybe this leads to the second pivot, is an exceptional business. And once again, I told you, it would have been interesting to have known had I stayed in commercial real estate and just done that. I think financially would have worked out just as well. I wouldn't, my life wouldn't be as fulfilled. The second question is what if we just stayed in factoring and just put blinders on to the rest of everything and just served carriers? I think that probably would have worked out really well. Right. But the problem, right? I mean, it just that it works well inside the bank and we would have grown even more. The problem is when you're an entrepreneur, when you're a creative, you you try to think about well, what's the next thing? And so the observation I was coming to is the average duration of a factoring client for

Pivot To Broker Payments And Supply Chain Finance

SPEAKER_00 43:10

us was 26 months. And that's the average. Like many would go out of business in three to six months, some would last four to five years, and your cost of acquisition is very high. Like there wasn't, there's never been true stability in the small carrier base. And so the theory, and this was Steve Housman's theory, not just mine alone, but something we rift on, um, was what if we go to the people who pay the truckers and offer to pay the truckers on their behalf? Because nobody likes paying truckers, it's hard to do. And that's essentially reverse factoring or supply chain finance, it's been around for a long time in other industries. And so that began our journey 2017-2018 into serving brokers and to a lesser degree shippers of, hey, we know who the carriers are, let us go help you audit these informations. Invoices and pay these invoices, and um that was the second pivot.

SPEAKER_02 44:07

And how did that play out in its early days?

SPEAKER_00 44:12

Horribly slow. It's way easier to sell a small trucker on meeting his immediate liquidity need than it is to march yourself into a top 100 freight broker and ask them to outsource their payments to you. I mean, think about it. When they outsource their payments to you, you are the one vendor who can sync them. Because for a freight broker, 85% of your expense is paying carriers. You're turning over a massive responsibility. So we had to start small, beg, just felt once more like trying to raise money to buy a bank, meet with whomever we could, do things for free, um, prime the pump, whatever analogy you want to use, but that's where we were. I mean, we just they knew us because a lot of brokers paid us. And then when you could sit down with them, and and I think the light bulb went on, and and this is this is important. The light bulb went on. Most brokers, and I think they genuinely mean this. I'm sure that I know there are some brokers who don't. They genuinely care about the carrier experience, right? They want that carrier to stay with them. And so their thesis was well, Aaron, controlling payments is how I how I, you know, it's a big part of the experience. I'm like, no, it's not, because 65% of your carriers have already sold that invoice to a factoring company. You're not paying the carrier. And the CFO's eyes would kind of like get big. I'm like, you're not paying the carrier, you're paying the carrier's factor. That's why your quick pay program's shriveling to nothing because factoring companies are really good. They're really good not just at providing immediate liquidity, they've gotten really good at aggregating fuel purchases and other things, and it's a competitive industry. And and so helping the the brokers realize that outsourcing payments was not outsourcing the carrier relationship was was a big thing to help us get that going.

SPEAKER_02 46:08

Yeah, and and like what what was there like a tipping point when all of a sudden like brokers started to say, you know what, like this makes sense. Let's get on board with Triumph.

SPEAKER_00 46:20

Yeah, I don't I'm sure what it was was a series of small tipping points. Certainly was helpful when we brought my brother in, put him, you know, Jordan really worked hard at this, building the technology for that. Um, they the acquisition of HubTran in 2021 was a leap forward because they were a well-known audit provider. Um, and Schneider was an early partner of ours. They've been a great partner. So I think there's probably three or four. There was no like watershed moment where you woke up and everybody wanted to do business with us. I mean, we chased doing business with CH Robinson for five years, right? It took me a long that sales cycle. The sales cycles are eternally long enterprise sales um as a payments provider. So yeah, I think it was a series of small tipping points that just built momentum over time.

SPEAKER_02 47:14

And and was this a money drag on the business for a period of time as well? Oh yeah, man.

SPEAKER_00 47:21

So, you know, we all go through the world ends once again. It if it ended in September 08, it ended once again in late February of 2020, March of 2020, and our stock traded down to 19 bucks a share, and luckily we had capital. But for these stories I've told you, generally we make it we manage a pretty conservative balance sheet, right? Because you can't stay in banking as long as we have if you don't. Um and then the world just let loose. Stimulus came in, trucking was on fire. You remember, you saw it. And for us, you you couldn't you couldn't not make money. Like we were because if invoice sizes go up, we we earn a percentage of the invoice. And so if I look back to 21, I mean we're making a tremendous amount of money, but but Triumph Pay, as it was then called or our payments business, was a negative 100% EBITDA margin. It was a $20 million expense drag on earnings, like not small, not small. And I and I kept telling people, like, hey, we are investing in this, we believe in this. We don't need to raise capital. I'm not diluting my shareholders, we're using our earnings. We made $100 million in 2021, and we're reinvesting in this. And and that sounded super good when you were making a lot of money, and I think investors would look at us and nod. Well, late 2022, 2023, 2024, it got real hard. And I would write in our shareholder letters our plan is to stick to the plan. It was a little bit like our view on banking, buying a bank back in the old days. It got really hard for a season, but if you could stick it through the industrial logic of us paying carriers on behalf of brokers, especially when many of those carriers were our own clients, there was a tremendous opportunity. So for three or four years, our payment segment was a drag, and that's a hard thing to do in a publicly traded bank. Banks are not supposed to lose money. We're not fintechs, we're not SpaceX, where you get 100 times revenue valuations. We're supposed to trade on earnings.

SPEAKER_02 49:31

Yeah, but how did you navigate that?

SPEAKER_00 49:33

Just you know, here's Andrew. Uh the my theory, I don't know if it's right or not, but people are like, how can you know, public investors and et cetera, and here's what I've learned, those are people too. Like you can paint them with a broad brush and the quants and other things. Like they are people too. And what I've found with people, you don't have to give people a reason to like what you say if you never give them a reason to doubt what you say. And so we just, this is what we're gonna do. I'm not gonna deviate from it. You're not gonna wake up in six months and now I'm going into another industry. Like we are committed to seeing this through. We believe we have a right to be competitive in this space. And I'm just telling you the truth. It's painful right now, but if you ride through this with me, it's I think it's gonna work out. And I have found that to work with customers, investors, team members. Just it is what it is, so what is it? And and so that's what we did. We just sort of led with our chin and told people this is our plan, and we're not gonna deviate. And we took our lumps, but we stuck to it.

SPEAKER_02 50:43

So, had you ever put like timelines on the process where because like that's where like I appreciate the conviction, and I'm such a I guess detractor to the idea of public investors in transportation because like it's just not a quarterly business. Like the cycles don't work with with quarterly mindsets. And I'm just curious, like if you had said, you know, we're losing 20 million this year, but next year we're gonna make money, it's like all of a sudden you're not necessarily executing on what you said versus we're committed to this plan. We don't know when it's going to turn to the point we need it to, but we're committed that if we stick to the plan, it will work out eventually.

SPEAKER_00 51:27

Yeah, when you're dealing with public investors, the trick is either tell them how much or tell them when, but never tell them both. Because you just don't know. You just you don't know. And they always want guidance, and I don't blame them for wanting guidance. And you gotta, I mean, the people, the investment professionals in in that that buy your stock, they've been lied to, they've been hoodwinked, they've they've seen it all. So we just sort of took the message here. This is what it is, this is our best guess. We're not gonna tell you a precise date because it is if I could forecast it with precision, with precision, I wouldn't need to be doing what I'm doing. I would be in the forecasting business and and speculating business. So, you know, I get it. I get uh, and you could look at it and say, man, I'd have a lot more ownership of our company had we not gone public. Man, I have no regrets. A, you you can't take it with you. And B, there is a cost of capital to everything. If you go with venture capital or you go with private equity, number one, you're selling yourself up for a sale. Now you may recap it with another venture capital or private equity group, and so be it. But in three to five years, you will be back having those discussions. There is a cost of capital, there's a cost of whatever you want to call it to going public, but once you get past it uh and to our size, and we're by no means a big company in the in the scheme of the public world, but there are people who are long and short our stock every day, right? That's why shares trade. And we could go raise a significant amount of capital by the end of today because we're a well-known issuer. Um so I get it. I get not and and also you got to understand, we're a bank, so we have we're already used to the regulated environment far more than a freight broker would be. So adding on being publicly traded to me is just like I'm already, you know, I'm already in the pain of being regulated. Just bring it on. Yeah, that's fair. Just add to it.

SPEAKER_02 53:26

I I respect the your ability to deal with it. I don't know that I ever could, but I I just having seen a little bit of it in a past life and watching how people would scheme to say certain words, manipulate or or massage kind of what a business was so that a certain word could be said that would get to you know a certain audience. It's like I just I think there's two ways to do it, and I appreciate the way you're talking about it, um, because it feels like it's more in line with kind of conviction of your ideas and um kind of doing it the right way versus I don't know, trying to use the right words to to get a stock to bump or whatever.

SPEAKER_00 54:11

So yeah, man, that that stuff that stuff is so short-lived. And and it I mean, at this point, triumph's become my life's work. Like, you know, whatever happens from here, I am not going to, for a temporary 10% stock move, risk the credibility that I've hopefully built with people of do whether I've been right or wrong, at least doing what I said I will do for years. And so I I think part of it is I just free myself from those expectations. Like I'm not gonna say it if I don't believe it. I mean, I believe in what we're doing. I'm not gonna spend a lot of time picking the perfect words. There are words you shouldn't say that I've said on earnings calls that I've been taken to task over later, which is fair.

SPEAKER_02 54:53

Those are lessons you can learn. Yeah, for sure. Um so it's not like the company's evolved a number of times, and like from starting with the carriers moving to payments for brokers. What's the next piece of evolution as the company continued to grow?

SPEAKER_00 55:12

I don't know, um, would be the honest answer. I mean, what we are trying to create

Turning Payments Into Freight Intelligence Data

SPEAKER_00 55:20

is an operating system for the movement of money and freight. So we don't, you know, look, you and I have both been inundated in this freight market with the last 10 years, technology point solutions, we're gonna create a network of this, uh, the of that. Um we move money and data. That's what we do, and we inject liquidity along the way. So we just working backwards from the from the lowest to the to the highest. We serve 7,400 trucking companies, which is about 60 to 70,000 trucks, and we meet their liquidity needs, right? We buy their invoices. We bought 750,000 invoices last month, which is about $2 billion of invoices. Interestingly, our customers, our 7,500 customers hauled for 8,500 different debtors, different companies, shippers and brokers. And about 60% of that was brokers, and 40% of that was shippers. And so we serve the truckers' needs by immediate liquidity. We're trying to get them funded within a minute now. Now, a lot of times it takes a full day, and we also helped their purchasing power on fuel so they can compete with the large fleets, and we give them a virtual wallet to store and move cash easily. But that money all had to come from somewhere that was going to those carriers, and it came largely from brokers and shippers, and so our broker business, we meet we do the accounts payable for, right? Broker needs to pay somebody, we audit the invoice, pay the invoice if the broker needs liquidity, because brokers have liquidity issues too, as you well know. When you have a shipper who rides you 90 days and you got to pay net 30, so we do supply chain finance for them. Um, and you know, we did that like two, we did that uh what four 2.9 million times last month. Just last month for 560 brokers, we we we paid um you know 2.9 million invoices. And so then the next evolution you know is okay, so that's the movement of money from the person who needs it to the person who needs it and financing the movement of it when it's needed. But the next thing is data, right? So if you touch as many loads as we touch, then you ought to figure out a way to grab that data to give it back to your customers in a way that helps them achieve their business goals. Um and and so if you just look at last month, I pulled these figures just to give you kind of an idea. So between the invoices we bought in our factoring business, the invoices we paid in our payments business, and the invoices we audited andor touched in our intelligence business, we touched 5.4 million distinct loads, distinct movements last month. And you know, that's 65% of all brokered freight that was moved. We either paid it, bought it, or audited it. And and or had it submitted to our intelligence. So the next step, I think, is how to make that data valuable to carriers, brokers, and shippers, and other factoring companies for them to achieve their business goals.

SPEAKER_02 58:49

Yeah, because the the that was the piece is you mentioned moving money and data, and it's like the business obviously started simply as the money for the carriers, and then it was providing the money for the brokers. But the data is the rich part of all of it, right? And I mean, uh obviously the money's important and it's a it's a it can be a massive business, but there's so much you can do with the data and the intelligence, and that's where I think green screens first came into the picture for you guys. Is that kind of was that the origin of the we should start leveraging this data in a way that we can really make it a big part of our business?

SPEAKER_00 59:28

I mean, it felt like the next move. Um, and so if you're gonna get into data in the transportation industry, you got to figure out am I gonna just go organically and attack all the incumbents? Is there a speed to market opportunity from acquiring someone? But but it started with this. This is what I say. Quotes are opinions, tenders are expectations, payments are fact. So you can pick where you want to get your data from. You can look at what's quoted, you can look at what's tendered, or you can look at what's paid. And there is no greater amalgamation of payments data in the world for trucking than what we have. And you know, it's it's all the noise stripped out. Now, there can be noise in the payments of fees and other things. And so I started with that premise, right? Like, like we all naturally acquire this in our in how we do business. The second thing is we had brokers come to us and say, Man, we know you have this data. You got to figure out a way to anonymize and aggregate it and bring it back to us so we can accomplish our business goals. Well, great. You always want to serve a customer in multiple dimensions if you can. So it led to the strategic decision acquire green screens, pour into that, rebrand that, and and try to take that and to develop an intelligence product to sit alongside our payments product. And that's how we ended up there.

SPEAKER_02 1:00:59

And so, what does that look like today? You know, if I'm if I'm a paying customer, whether I'm a carrier or a broker, um, how do I actually what am I doing? How do I get this intelligence and what do I do with it?

SPEAKER_00 1:01:11

You can get it two ways. You can come to our website, right, and and you can our user interface, which is what a small broker would do. Or for our larger brokers who want this to be ingested into their ecosystem via API, so it can go through their black box, their carrier matching. You know, every not every, almost every large freight broker I've been to believes their black box is better than everyone else's, and maybe it is. Frankly, not all of them are cut the same, they do different things. So we're a data feed into their black box. So I think if you're going to do data well, and it and look, man, I I'm sitting here talking to you about data. I haven't done it 20 years, right? It's it's my story. We pivot, we learn things really fast, probably get some things wrong. But my theory was we knew we had this giant data set. So we had to figure out, and and and as a result, if you're gonna do data well, I think you've got to have density, neutrality, and veracity. You gotta have density because if I can't show you a lot of lanes, if I'm just showing you lanes that everyone else has, well, that's not that helpful. I gotta have neutrality, meaning I have the broker's the best interest in mind, right? I'm not out moving freight myself or using that data to disadvantage someone, and I gotta have veracity. It's not what you tell me you posted the load for or what it went for. It's literally where it cleared at. Um and so yeah, I think the I think the largest consumers, the most efficient consumers of our data in this world where we're all going, will hit it in an API. It'll flow into their system of operation and and they'll figure out how to use it. The second thing we do that I think is pretty valuable that we rolled out last month is capacity intelligence. So we will show a broker carriers who run on lanes that that broker's been running, but they've never loaded. And we know that carrier is running on those lanes because we've paid them for other brokers. Now we exclude if a carrier gets most of their business from a single broker, we'll never show that carrier's name to other brokers, right? That's sort of a captive type relationship. But if they're just loading this carrier every so often on this lane, then here's 10 other names of trucking companies who we've paid who we know run this lane. And that's a way to find strategic capacity, not necessarily transactional capacity, because I don't know where a truck is at any given point. There's other people who are better at that. We just know where there's a propensity of a trucking company to want to run over time. And then what's coming is financial profiles for carriers in this post-Montgomery world, looking at the payment, the historical payment data to a certain carrier doesn't tell you everything about their operational efficiency and safety, but we've often found that financial discipline is linked to operational discipline. So showing um helping brokers understand the financial like what a what a carrier's done. Think about like a FICO score, right? It won't be called that. Um, but because we have uh a lot of that that data, and and it won't get into anything specific to that carrier, um that like their account balances or anything, it'll just look at their operational history, what they've done. Do they show up on time in full, etc.?

SPEAKER_02 1:04:31

Yeah, I'm curious, like in a post-Montgomery world, if there's anything that has changed in your

Montgomery Liability Shock And Black And White Rules

SPEAKER_02 1:04:40

mind or has given you pause or cause for concern in terms of like how your business moves forward, or if there's risk that now exists within your world as a result of what's going on and and the additional liability that that now is placed on kind of a large percentage of your client base's shoulders.

SPEAKER_00 1:05:06

Yeah. Well, the first thing I would say is one of our largest customers, CH Robinson, got paid $200 to move a load in 2021. That's probably what they made on a gross margin basis, and they got hit with a $600 million verdict. That cannot, no industry in the history of civilization can take that sort of risk reward trade-off. Yeah. A two to three hundred dollars of gross margin to face $600 million. So this is going to get sorted out. I don't know how it's going to get sorted out. I don't know when it's going to get sorted out. But it goes back to my theory, like when all the banks were failing. People need logistic service providers. It'll either get figured out through litigation or legislation, one of the two. And it's going to be bumpy and it's going to be volatility. And I hate it for those involved. I mean, it's awful for the People who lost their lives, but the value of a life shouldn't depend upon the jurisdiction in which the accident happened.

SPEAKER_01 1:06:07

Yeah.

SPEAKER_00 1:06:07

Right? Like it would that it just that shouldn't be the case. So um yeah, I think we have to be thoughtful. Generally speaking, anything that is driving this industry out of the gray area into the black and white area, my view is that it's going to benefit us as a bank. Because I'm forced to live in the black and white. I cannot live in the gray. And so if that's what this brings, then we're prepared to embrace it. It will will we have to change our business model? Sure. Uh adapt. But those who adapt, those who are prepared to adapt, um, are gonna win. So I I don't know how it gets sorted out. There's lots of other talking heads who have that all figured out, but um something has to happen.

SPEAKER_02 1:06:58

Yeah. I I have two thoughts there. One is like 600 million is such an astoundingly like it's such a ridiculously high number. And it my thought when I talk to Vogric about the my partner, because he's like, how do we get back into the business if this is on the table? And I'm like, it just it can't be on the table. Like it the the the the economy won't exist. Like our country can't exist if this is the risk for moving freight. Like you because even if you wipe out all the brokers because this does exist, then the carriers are on the hook. And if it's still 600 million, then what the shippers are on the hook? And can they nobody can afford that? Certainly the consumers can't afford it. Like it just it doesn't work. Um, so I'm I'm hopeful that some kind of rationality like comes to play there. And to your point about black and white, I think the frustrating thing for me is the lack of black and white that we get from the FMCSA, from government to operate in this in this environment, where okay, it's not enough that the carrier is satisfactory now because there's other things. Well, tell me exactly what you want to see. Like, if you're the government, do your job and you tell us who can operate and who can't. Uh, and as a broker, we can do as much as we can beyond that, but like the bare minimum is not enough in terms of what government offers today uh in terms of insight on what's good and what's not. And it just it's it's not right. I I just it it really rubs me the wrong way. So I'm I'm hopeful that we do get to more of a black and white uh arena to play in because the gray is is not a fun place to be operating. And and frankly, the gray is like as a broker, you've lived in the gray in a lot of a lot of kind of operations over time, but this is not one area where you want to be in the gray.

SPEAKER_00 1:08:51

So trade-offs not not worth it, man, to make $300 on a load and expose your entire business to bankruptcy. It's just not nobody's gonna do that. So I yeah, I I think you're right, whether it's federal preemption because this is interstate commerce, whether it's state-by-state tort reform, which is what it took. I mean, think about Texas, we were losing OBGYNs because of the malpractice suits, because you can create a huge damages number when an infant is injured because you got to look over the course of their life. And look, I the the thing is there are egregious examples out there. I'm more defense-oriented because we wake up every day and try to do the right thing and we don't always get it right, and and um and I think the people who operate in our industry generally try to do the same thing. Are there those who cut corners and do they need to be exposed? And have they been um somewhat removed from the industry? Yeah, and has that been healthy? Wonderful. But exposing people to to damages that are 10 or three to five years of your earnings on one load that it's just and and I don't know even if it doesn't stand on appeal, I mean, look what it did to the markets. So the joys of being public,

Fraud, Misdirected Payments, And Hard Controls

SPEAKER_00 1:10:10

man.

SPEAKER_02 1:10:11

All right, well, let's move on to a slightly less well, still not a fun subject, but slightly less uh I don't know, not as not as bad. But I I want to talk about fraud, and I'm curious like how does fraud kind of play in your world? Um, you know, it's it's obviously a rampant issue in the industry, but I'm curious like how it shows up in in your arena.

SPEAKER_00 1:10:38

People sell us fraudulent invoices every week, they just doctor the invoice, and you can't get very far on us because that turns every 30 days. Now we catch a lot of them. Um, people will try to call and change the remittance information in our payments business. So they know we owe a bunch of money to a carrier on behalf of a broker, they'll try to change the pay to account information so we send the money, it's misdirected payment, and then we're on the hook for that. Fraud is a multiple million dollar issue for us. Uh that that we face more as a financial crime than a theft, right? And not a theft of merchandise, but a theft of the payments. Yeah. So it's every day, man. We have an army of people who work on that.

SPEAKER_02 1:11:32

Is it I don't want to say easy to catch, but like I assume it's not easy for someone to just change their the the payment information and you just send them $100,000.

SPEAKER_00 1:11:43

We make it exceptionally hard. Okay. Be careful if you change your bank on us, because I may fly down and meet you in person before I'm gonna agree to a change. Yeah, no, we we've learned that we we've paid, you know, my my chairman Carlos said, Look, Aaron, I don't care what mistakes we make as long as we turn it into tuition, and we've paid our fair share of tuition on account changes. Um yeah, and and people I mean, it's everything from like uh using whiteout on an invoice and changing the date. It's it's crude to incredibly sophisticated all at the same time. And it's not going anywhere. I think my friend fraud has been around since the beginning of time, and it will be around to the end of time. That's fair.

SPEAKER_02 1:12:29

I'm curious because you know, you guys are kind of at the forefront with your data of kind of industry um changes in terms of like the

Freight Market Signals And Who Wins

SPEAKER_02 1:12:40

market. What are you seeing in terms of where the market's going right now? Like, are does it feel like we're officially kind of out of the freight recession and and we're we're at a point where like this thing might really hum for a while?

SPEAKER_00 1:12:58

Well, um, I it is unquestionably clear. Like invoices, I told you we're up 29% year over year. Those are actual payments, month of July to month of July. There is no more demand this July than there was last July. Maybe in the data centers, but just when you look on an aggregated basis, food and beverage, how much tonnage is moving, demand is flat to weak. So unquestionably, we have done things. The government, shocking as it may be, has done things to reduce supply, and it's been healthy and it's great. And I applaud this the what they're doing. I mean, they may not be doing it perfectly, but somebody had to do something. And and I'm uh I give them credit for that. If we get demand rebound, and I'm not in the business of predicting demand rebound, then this market's gonna gap. Right now, how fast that has is if that's like a 20 late 2021 event? I don't know if it's like that. The other part that's a little hard for me is I know drivers are not getting paid over 70 cents a mile. That's gonna pull people who are qualified back into the industry. Now, can those new drivers get freight? I don't know, right? Because the brokers think about the world differently. Now you go work for a big fleet, sure. Um, so yes, we're I mean, the market is markedly stronger than it was. We are not seeing a high rate of new carrier formation. There's not new entities being created at near the rate there were in 2021. Um and so the survivors are having their way. You know what's interesting, Andrew, is about half the freight we see moved in our network, which is call it you know, 65-70% of all brokered freight, is moved by fleets between five to five hundred trucks. And those and and so I think that middle, and I'm not making this prediction out in the future in half. I mean, it could that that's not a precise number. I'm just giving you a directional number. Yeah. Um those fleets I think are going to I think that cohort is gonna do well. I think the large fleets are gonna do well. It's a little more murky for me what happens to the one-to-four owner ops.

SPEAKER_02 1:15:31

Yeah, that makes sense in in this kind of as as the regular Tory environment changes and things get more stringent, I I feel like it gets more challenging for the one-to-four guys to uh persist. Which which is tough. Like, I struggle with that from a personal like when I was a carrier up, when I was this was how old am I? I'm 36, so this was you know, 18 years ago. Um, I spent four or five years booking trucks and almost exclusively worked with owner operators. And most of these guys were not uh were were foreign. Most of them were, you know, guys were born in Nigeria and Senegal and like Bulgaria, like from all over the world. Uh but they were the hardest working guys and great to work with, and they would be under a lot of scrutiny today in this environment. Um just is, you know, it is what it is. Uh but it's it's hard to like kind of because it's just tough. I don't know, it's when you personally have that experience working with great people, it's hard to see that they're kind of even more at odds in terms of what the future looks like. And you know, like you said, they can join larger companies and and still do all right.

SPEAKER_00 1:16:54

Um but that's the industry, so you know it's easy to generalize when you're talking about a cohort of people. When you get to know the people, they're people, they're yeah, they're they're flesh and blood like you and me. They they're they're doing the best they can. The and doing the best they can. Um, some of them not doing the best they can, right? But you can't paint all of them because there are many that are doing the best they can, and most of most of our customers, our factory customers, are small truckers. That's not where most of the freight that we buy invoices comes from. But and and so we absolutely we have if you were to walk down where we don't look very bank, like if you were to walk one floor below me where our small our carrier sales team works to call on small truckers, I mean it it looks like a the floor of a freight brokerage, like you would have known in 15 years ago, and fascinating to listen to these conversations that we have with carriers. It's it's absolutely fascinating. So, yeah, it's there is that part that it's harder to scale. It's gonna be, frankly, man, if you jump back into this industry, and of course you may come in well capitalized, you've got credibility. Um, but if someone jumps in as a broker, it's harder to scale now, I think, than it was then. But then again, it's because it's hard why it's so rewarding and why the opportunities were better, because if it was easy, everyone would do it. And none of us are signing up for easy. I just want a big addressable market and a and a fun team to go run after it with and and let the chips fall where they may.

SPEAKER_02 1:18:30

Well, we're kind of running up on time here. Um I feel like we got to a little bit.

SPEAKER_00 1:18:36

Did I take us off course? I'm sorry.

SPEAKER_02 1:18:38

No, you didn't at all. You didn't at all. I loved our whole conversation, and I still feel like I've got a bunch of things I wanted to talk about. Um, we can do it again. I mean we can definitely do it again. We will do it again. Maybe I'll get you and your brother on at the same time.

SPEAKER_00 1:18:51

That would be good humor. That would be good humor. Yeah, for sure.

SPEAKER_02 1:18:56

I guess one last question.

SPEAKER_03 1:18:58

Um I want to end this.

SPEAKER_02 1:19:05

What's the hardest decision you've ever made as CEO of your company? I guess I won't I was I almost tossed you a softball, but like I didn't want to. I was gonna say, what do you want truckers to say about Triumph in 20 years? I'm like, fuck that. Sorry, no, no, no need for a swear there. Sorry, I'll cut that.

SPEAKER_00 1:19:20

Uh no sweat, no sweat. Um, I think the hardest decision was in the last year or two, the reduction in force we did,

Hard CEO Calls And Saying No

SPEAKER_00 1:19:30

not for the reason you think. Um yes, doing a reduction in force is is very hard. However, I can wrap my head around that. The kindest thing I can do for people who aren't meeting the standard or to and or to take care of the team that's still left is to make the hard decisions. What was hard in that was my bias is to run after everything at battle speed. Right? Like I just see a lot of opportunities, I ideate, I'm pretty creative, and to and that worked really well when I was a CEO going from zero to one. But the CEO that Triumph needs now, from what we are now to where we're going, has to be has to make more trade-offs than I used to in the past. And you're like, well, how's that hard? Well, it just is hard because you see opportunity in my nature, just like I wake up in the morning and I want to, I just want to run to it and dang the torpedoes. We're going ahead and we're gonna do this, this, and this. And the ideas in themselves generally have been more often better than not, but you just run your team ragged and you deliver some mediocre results where you should have delivered excellence. So I think it has been in the last couple of years, hitting that point of an enterprise where I can't run after everything anymore. I have to get better at saying no, and the no is to myself. I was always pretty good at saying it to other people, but uh but helping saying it to myself like that may be a good idea, but we're not going to do that now because I want to let we got to let these things play out. Um it wasn't painful, it wasn't painful in the way when I thought I was gonna go bankrupt in 08 was, but it's hard because it's a learned skill that I'm still learning.

SPEAKER_02 1:21:24

Yeah. How do you keep how do you keep that kind of ambitious nature in check? How do you keep yourself in check while kind of running a business like this, wanting to move at warp speed?

SPEAKER_00 1:21:35

Round yourself with people who love you enough to tell you the truth, and then listen to them. Right? My wife, um, I mean, uh, you know, my my entire worldview, my faith is all built around that that we are fallen and broken people trying to figure it out in this world. And the worst, my own, I am my own worst enemy. And I and especially me, because I'm like I said, I am good at a squared plus b squared equals c squared. And when I want something really bad, I can convince myself and others it's the right thing. The only antidote that I know to that is to be humble enough to let other people speak into your life and to listen and to not be defensive and to not say what about what you did, but just to say, man, thank you for pointing that out. It's not what I want to hear, but it's what I need to hear. And so there are people around me, all of the people who are the closest to me, from my spouse to my mentor to the closest people here at Triumph, have permission to come to me and say, hey man, I know the man you want to be, I know the leader you want to be. That's not coming off that way right here, and I want to help you see that. And that's the I I don't know how if it gets any better than that. Right? So that's what that's what's worked for me for a long time.

SPEAKER_02 1:23:01

Thank you. I'm glad we got the last one in. That was that's that's what I needed to hear that. So my audience, I forgot my audience is here, but I hope you I hope you're still listening, and then uh you probably needed to hear that too. So um listen, this was really fun. I I'm grateful that you gave me the time and um all this insight. There's a lot there, so my pleasure.

SPEAKER_00 1:23:25

Call me 91 days from now when you've launched your uh when you've launched your new venture. We'd love to do business with you, and I hope to see you soon. And and I I think this I think this long form podcast with with you ask great questions and and and you inject your own story, and it it just makes the conversation better. So thank you. Thank you for having me. Thanks, man.

SPEAKER_02 1:23:47

I appreciate it. To our listeners, uh, we'll see you next time.

SPEAKER_01 1:23:50

Take care.