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. #36: Matt Silver and the Official Launch of Cargado
On this week's episode, Andrew welcomes his older brother Matt Silver to discuss the official launch of his new startup, Cargado - a load board and technology platform focused on simplifying cross-border freight operations between the United States and Mexico.
Matt shares his background, starting in the logistics industry at Coyote Logistics, where he helped build out the Mexico division. He left Coyote to pursue his entrepreneurial dreams, founding Forager. Matt's business would eventually be acquired by Arrive, where he stayed on to lead their Mexico division. He recounts his experience from his first startup, including lessons learned, and opens up about some of the specific challenges that can happen if you don't manage your finances effectively. All those lessons and experiences set Matt up well to bring his next business to life.
The discussion dives into the complexities of the Mexico freight market - from the intricate web of carriers, customs brokers, and logistics providers involved in a single cross-border shipment, to the lack of technological infrastructure compared to the domestic US market. Matt explains how Cargado is aiming to bring more transparency, efficiency and collaboration to this growing segment of the supply chain.
The episode provides valuable insights for freight brokers and carriers looking to expand their cross-border capabilities, as well as the broader opportunities and challenges in the Mexico logistics landscape. Matt's entrepreneurial journey and the vision for Cargado offer an intriguing look at innovation within the freight industry.
***Episode brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services.***
I'm nervous. Why not? Why would I be nervous? I've done a bunch of podcasts.
Speaker 2:Yeah, but none with me. I'm not going to take it easy on you just because you're my brother. I'm going to hold your feet to the fire.
Speaker 1:Good, we can prove that I do have a voice for podcasts.
Speaker 2:You don't that's fine, I'm just kidding, all right, all right, all right, let's do this thing, let's do this thing. Welcome back to another episode of the Freight Pod. I'm your host, andrew Silver. Before we get started today with my guest, my wonderful guest, am I going to give my brother that? Yeah, I'll give him that. My wonderful guest, my big brother, my older brother, matt Silver, is joining the show today.
Speaker 2:But before we kick it to him, we got to give a shout out to our sponsors. Our sponsors, rapido Solutions, danny Frisco, roberto Acasa, two guys I've known and worked with for a very long time. They keep the lights on here at the Freight Pod, but their company, rapido, connects logistics and supply chain organizations in North America with the best nearshore talent to scale efficiently, operate on par or better with us based teams and deliver superior customer service. They work with businesses from all sides of the industry three PLS carriers, logistics, software companies, freight tech companies, whatever it may be. These guys have the uh, the talent to support whatever needs you you have. So, uh, if you're interested, reach out to Danny Frisco or Roberto Acasa Again, two guys I've known and worked with for a very long time and can speak confidently about their business. They can take care of you. So go to gorapidocom, and that's that. So nearshoring. Nearshoring has has multiple meanings, doesn't it Matt?
Speaker 1:yes, and also second that endorsement on rapido. They, those guys, are great big fans of theirs as well, and I think anytime somebody thinks about opening up an office in Mexico, I actually tell them to start with rapido. But yeah, you've got. You've got two different versions of near shoring. You've got the concept of historically, people have tried to make sure that they have cheaper after-hours support or cheaper support when they're running a business, a freight brokerage, and so they'll either rely on having people in the Philippines or Colombia or, in this case's, near where you're based, near shoring, and you're moving the talent to that location so that you can lower your cost to serve.
Speaker 2:And that's a completely different near shoring to the one that you post about three times a week on LinkedIn.
Speaker 1:Yes, at least three times a week, so near shoring. Let's talk about global supply chains for a minute. So, historically, a lot of companies have relied on manufacturing overseas in countries like China, because of the cost of labor being so cheap and just the historical relationship that we have with China as a country. Over the last 10 years or so, that relationship has obviously eroded. And when Trump was last in office, he actually introduced the USMCA, which was an update from NAFTA, which is a trade agreement that the United States has with Mexico and Canada. What that basically said is the more parts that you manufacture in the United States or Mexico or Canada, the better you're gonna get in terms of duties and taxes that you're gonna be spending. And so it incentivized all these manufacturers to start thinking about moving all their manufacturing closer to home. And so step one was the USMCA. That became much more attractive to companies to move manufacturing closer to home.
Speaker 1:Step two we had the pandemic. That scared the crap out of everybody when they realized all of a sudden that manufacturing overseas somewhere like China that could be completely shut down by the pandemic, along with the months-long delays of getting containers overseas to the United States, resulted in people going. Well, maybe it makes a lot more sense to do this somewhere that's a lot closer to us, like Mexico, where the cost to employ people is similar, but you're operating on the same time zones, you're a matter of a few hour flight away, and there's a lot more people in the United States that speak Spanish than people that speak Mandarin that can actually communicate with people in Mexico. And so that was the second piece. And then the third piece a lot of political trade tensions between the United States and China at this point, especially with concerns about potential invasion of Taiwan, and so, for those three reasons, everybody's starting to move to Mexico.
Speaker 2:So good things, good things in the on the horizon for US-Mexico relations, for just Mexico GDP in general, as a result of what should be strong business relations with the US moving forward.
Speaker 1:Yep and we're similar impact to Canada too. It's just not. Canada is not as much of an outsourced manufacturing location as Mexico is, but they do benefit from these trade deals too.
Speaker 2:What's the reason for that? Just cheap labor is not as cheap.
Speaker 1:Yeah, they've got what nationalized health care, whatever socialized health care, and it's just as expensive to employ somebody in the us as it is for it in canada for the most part. But um, in mexico your cost is significantly cheaper yep, all right.
Speaker 2:Well, I'm glad we could uh, give people the understanding. I just hear near shoring spoken about now so often and there's clearly two types of meaning there. I'm curious. This is a complete wildcard question, but what's the line when nearshoring turns to offshoring? When is it no longer near? Because you said Philippines. There's no way Philippines qualifies as nearshoring, that's offshore.
Speaker 1:No people were using the Philippines originally and now it's hard to make more sense to move that to the same time zones and a lot closer. It's debatable about whether you could consider somewhere like Colombia nearshore, because you're still traveling to another continent. You're not going to drive to Colombia. You could drive into Mexico. To me it's Mexico and Canada if you're in the United States. But obviously nearshoring concepts happen in Asia and Europe also and people try to move manufacturing closer to home and shrink their supply chain strategy so that they can keep goods closer together.
Speaker 2:Yeah, I guess in the two meanings of nearshoring. In the meaning that's more important for you, which is like actually focused on manufacturing, I think it, I think it matters, whereas for for more, like what we're talking about with rapido and nearshoring talent, I don't know, I think you can use the words nearshore and offshore interchangeably. It doesn't really matter. Uh, you're just. The concept is you're finding talent that is less expensive but hopefully just as capable, and you're doing so in all likelihood in another country. And then you know time zones certainly matter, just in terms of you know you want people working during their day shift versus people on the graveyard shift, correct?
Speaker 1:And I'll give you an example. So I was back when I was still at Arrive. I was flying back from Monterey back to Chicago and I sat next to the VP of operations of a very large manufacturing company who has several plants in Mexico and a few plants in China, and he talked about the fact that he goes down to Mexico once a month to go meet with all the plant managers down there. That all report into him. But China is quarterly because you just can't get there enough times. The language barrier is a challenge. He's on calls at one o'clock in the morning to make sure that he can be talking to people in Shanghai at the right time for them, and he just said he wished that he could see all of their manufacturing move to Mexico, because it's just too challenging to do stuff in Asia and so what that company does, all their manufacturing in Asia, is for Asia, it's not for North America, and anything that they need in North America comes from Mexico.
Speaker 2:At this point, Got it Makes sense, all right. Well, let's get the show on the road here. So give my audience some framework of what we're going to do today. This is the Matt Silver episode, interchangeable with Mexico at this point. If you are in the logistics industry and thinking about Mexico in any capacity, I'm sure Matt Silver has come up, whether it's as a liaison or someone who knows what's going on, or his business or what have you. So Matt has spent most of his career now focused on our neighbors down south and we're going to talk about that today. So this is the first time I think the Frey Pod has dabbled with Mexico at all. But let's start with your background first. Matt, my brother, how'd you get into freight?
Speaker 1:How'd I get into freight? Well, I remember being a little kid running around in American back haulers and honestly having no idea what Dad was doing there. I knew that it had something to do with trucks. I knew that there were footballs being thrown across the office, uh and um, I knew that it was a high energy place. But it it wasn't until I was 19, when I was working at coyote, uh, tracking loads and and trying to book freight, that I actually understood what a freight brokerage did and and what what our family was doing. And so uh started when I was 19.
Speaker 1:Atoyote in 07, started off as a driver services rep, one of the first ones. One day, mark Ford came over to my desk and said hey, you've got a new job, which is to start calling carriers in the Northeast and see if they'll take Staten Island, new York, to Worcester, massachusetts, but start at $400 and end at $475. And I got hung up on every single carrier the entire time. I found one or two carriers that worked, but besides that, that was it. But I did learn about calling carriers that way and learn about booking freight that way and ultimately, between that, going to film school for a couple of years in Chicago and being in college in California for a year. Ultimately, when I was 20, I tried to move to LA to make it in the film industry. And I did not make it in the film industry. I spent a year doing that and got a phone call saying I'm done paying free to fuck around in LA. You can either come back to Chicago and work at Coyote again if you want to move down to San Diego and work at Coyote or get a job in LA, but we're not paying your rent anymore. And so I decided I would move down to San Diego, thinking I would do that for a year, go back up to LA and then go back to making it and trying to make it in the film industry Started operating battery freight. One thing led to another and I ended up staying in San Diego for three years working at Coyote. When, back in 2010, or sorry, that was in 2010. And so in 2013, uh, I decided I wanted to keep growing my career in the industry and wanted to stay at Coyote and eventually move into a leadership role. And so I moved back to Chicago.
Speaker 1:Uh initially joined bullpen, calling uh on the toughest freight that nobody else was willing to cover, and after a few months I was asked to join the private fleet team and during this time I developed these relationships with these trucking companies that were based at the border. Just from trying to cover battery freight, from trying to cover some West Coast freight. A couple of those carriers kept asking me for Mexico freight and I originally said I have nothing to do with Mexico, I don't want anything to do with Mexico freight, it do with Mexico. I don't want anything to do with Mexico freight. It's just not a good fit for me and I ignored, you know, the request for that.
Speaker 1:But one day somebody sent out an email asking if anybody at the company could cover freight coming out of Mexico going up to the Midwest and the Southeast. I sent those opportunities to two carriers that I knew. That would say you know that said that they would service Mexico and we got those loads covered. We actually made about I made about $200 in commission on each of those loads and was making $10 or $20 a load in private fleet at the time and so started seeking that out more and more and I got to a point where I think he was also a guest on the podcast, which is Eddie Lushing came over to my desk and said hey, what are you doing, going after all this Mexico freight, when you're supposed to be in private fleet?
Speaker 1:And I said Well, I'm making way more money on Mexico than I am on private fleet, and so that's what I'm, that's what I'm enjoying doing right now. And so he said Well, then your new job is to go sit in the corner and grow Mexico. And so I went sat in the corner with this other guy, clark. The two of us started figuring out Mexico Freight and started to build out that team, and it grew over a three-year timeframe.
Speaker 2:So you said it was what this is 2014 or so.
Speaker 1:Yes.
Speaker 2:So 2014,? I'm going to guess at this point. Coyote is like a billion dollar revenue organization, maybe between one and 1.2, maybe as a guess, but I bring that up because I think it's interesting how Coyote grew extremely quickly one of the fastest growing brokers in the industry, of course and reached a point where I mean, this is a lot of food and beverage freight, but a pretty diverse, granted heavy enterprise network. But it's interesting to me that a company that's eight years old had become, you know, had been pretty established at this point and there's just an email going out to the entire carrier floor saying can anyone help me cover this load coming out of Mexico? I just think that's an interesting, maybe a microcosm for the state of the industry and how brokers historically have thought about Mexico as kind of a non-focal point. But what's interesting, as you mentioned, is you made a bunch of money on the few loads you covered and you didn't even know that many carriers. You only knew a couple.
Speaker 2:So what that's really suggesting is, as we know to be true, if you go after, everybody's calling Coca-Cola, every single broker, all 20,000 of them are calling Coca-Cola asking to haul their loads, and they're probably asking to haul out of Atlanta because they see this is where they're based, which they have plenty of freight out of Atlanta. But I'm just pointing out that it's really competitive to get business from someone like Coca-Cola and it's really hard to make good money once you're supporting business like that because of how competitive it is. That's not true about a lot of these niche services, niche types of freight, and I think Mexico is a great example of an opportunity that has long been underserved and, as a result, there's maybe a goldmine of opportunity there. I mean, how do you think about that example I'm talking about as far as what you've now learned? You know it's 10 years later. How do you think about that?
Speaker 1:I. It's funny because I get messages like that every day right now. So I get messages from people on LinkedIn daily saying anything from hey, my customer reached out, I've got you know. They're asking me to do Mexico. I see you posting about Mexico all the time. How do I actually go find capacity for this customer? Or how do I price this freight? Or just yesterday I had someone asking me how they could find customers in Tijuana, which is very specific, and what type of freight moves out of Tijuana. And this is stuff that I've been writing in my newsletter, which is very specific, and what type of freight moves out of Tijuana. And there's this is stuff that I've been writing in my newsletter. I've shared stuff like this in the past on social media.
Speaker 1:There's a ton of resources for that stuff, but it is like you kind of just stumble into it a lot of time unless you actually are intentional about it. And everybody always tries to be a generalist and they try to be great at everything and typically start with domestic freight. But that concept of riches in the niches, that's real. You can make a lot of money with Mexico freight. You can make a lot of money with OpenDeck. You can make a lot of money if you can figure out how to move hazmat freight successfully. Same thing with partials, especially if you're consolidating LTL. So there are definitely ways to make money, more money, outside of domestic truckload. It's just a matter of of starting with that one really unique opportunity that comes across the table and actually trying to figure out how to convert it.
Speaker 2:So I mean I say all that to say that it's. I'm curious, you know, for the average. Let's assume that you've got listeners today who are freight brokers. There's plenty of them, I'm sure, that are listening to this show. I'm sure plenty of them are in sales and looking for opportunities. What advice would you give them, as they're, if they're sitting here thinking, damn, okay, this guy randomly covered some mexico loads and there was most profitable loads. Maybe I want to go get some. How should they think about that?
Speaker 1:step one is to stop using google translate, if that was your first attempt at trying to find mexico freight uh, everybody, what's?
Speaker 2:what is google translate going to do for me here?
Speaker 1:so a lot of people try to reach out to shippers in Mexico because they think that's where the contacts are that they should be reaching out to. The reality is, pretend like you're the transportation manager at Honda in Guadalajara, the giant factory down there, that's got a huge logo on it and you've got all these salespeople that drive around in Guadalajara looking for shippers. And you've got all these salespeople that drive around in Guadalajara looking for shippers. And so the people in Mexico are getting harassed nonstop by transportation providers like logistics companies and trucking companies, saying I can move your freight from Mexico to the United States. And so those people in Mexico are getting reached out to every day, all day long by people in Mexico, and so the contacts that are in Mexico typically buy better than the ones in the? U. And so if you're working with domestic customers that move domestic freight on a daily basis, I always say, to start there, go, reach out to your existing customers and ask them if they have Mexico freight. Ask them what their strategy is about nearshoring. If it's automotive, there's a good chance they're moving something.
Speaker 1:Cross-border Food and bev, cpg, tequila everything tequila-related comes out of mexico, same thing with mezcal a lot of health care and pharmaceutical stuff. So you'd be uh, you'd be. It'd be very hard to find a shipper that doesn't have something in mexico. And so, step one start with your customers that are in the united states. Ask them about their cross-border business. Do not reach out to shippers in mexico sending them an email using google translate so that they think you speak Spanish, because the next thing that happens is they might pick up the phone and call you and start speaking Spanish to you, and when you don't speak Spanish, you look like an idiot. You lied to your customer before you even got them as a customer.
Speaker 1:So, step one ask your customer about their cross-border business, if they've got it. Step two at this point, which is what I was referring to, with people reaching out to me, now, people are starting to use our platform to actually win business. And so, if you've got a Mexico business that's already existent, with a carrier team that's already covering freight, feed that team, but also, obviously, still reach out. On the flip side, if this is your first entry into cross-border freight and this is one of the first times we're talking about this live, cargado is a load board for cross-border freight, um, and this is, you know, one of the first times we're talking about this live. Cargado is a, a load board for cross-border freight, but there's there's a few components to it.
Speaker 2:You can post the announcement. Yep, there's the news, see, okay, see, this is the hard thing about a podcast like this, where it's like you, okay, you want this to be the official launch, but I also was going to make it an episode about you. So, like, I have to make the decision of do I walk through your whole story and then we eventually get to Cargado, which point you can make your official announcement, or the mistake I've made is I keep asking you questions about Mexico that lead you into the opportunity to talk about Cargado, but you haven't yet made your announcement. So let's pause for a second announcement. So let's pause for a second. Let's let's, let's stop here and say, okay, we're going to fast forward through your career, through Forager, and we're now at Cargado.
Speaker 1:What the hell is it? Cargado is a load board for cross border freight today. So we see the way that I look at the industry is. First of all, when I was building Forager, my intention was to try to build something that would connect shippers and carriers. I thought that if we could give shippers a way to get prices online, to book freight through our platform, and if we get trucking companies to log into our system at Forager, which was called Scout, if we could get them to go in and bid on that freight, we could start connecting shippers and carriers. I thought here's the way to eliminate freight brokers.
Speaker 1:After doing that at Forager and learning that we couldn't eliminate freight brokers and freight brokers, and after getting a cord by arrive, Spending a little over a year and a half there, it really cemented a couple things for me, which is that one freight brokers aren't going away. It's a very necessary part of this industry and I realized that and this actually came out of a conversation I was having with somebody at Arrive at one point I'll say his name is Duke, because he'll appreciate it but he said what would you have done differently if you could have done Forger all over again? And I said well, I wouldn't have built a freight brokerage, I would have taken everything I understand about Mexico freight and built them into the technology and enable freight brokers to actually expand into Mexico. And so, thinking back about the concept of brokers and how they fit into this industry, my belief is that this industry needs better technology to be able to collaborate. Freight brokers and trucking companies and facilities and customs brokers to collaborate. Freight brokers and trucking companies and facilities and customs brokers everybody involved in cross-border freight deserve a better platform to be able to actually collaborate and communicate and work together. And so we thought about that as we started building Cargato Ryland and I and we started to dive into how people can interact best and we rethought the whole concept of a load board and a marketplace and said best, and we rethought the whole concept of a load board in a marketplace and said let's pull everything into the system. And so we started by building out a way for brokers to actually ask every question that they need to ask to a shipper, whether where it's picking up, where it's delivering, where it's crossing, who's handling the border crossing all these really specific requirements that you go really deep on when you're trying to talk to a shipper to actually understand their freight and instead of having to go take all that information and regurgitate it 25 times to 25 different carriers, you put it in the system and the system shares all that information with any carrier that would be interested in moving that freight. And so we started by building out this load board.
Speaker 1:Brokers can post spot freight and contracted opportunities so they can post something that they already own, a spot load that's picking up today, tomorrow, next week. They can post a potential load, which at Coyote we called that a non-com, I know, at CH and at Arrive we call that a can get. But the concept is basically your customer's offering you freight, you don't have conviction that you can cover it yet, and so you want to go get a truck in hand and price, and so you'll post that as a potential load. The other option is to post a lane or a potential lane, and so a lane would be something that's repeating. Your customer might be giving you one load a week, 25 loads a day, as long as it's something that's consistent in any sort of volume that you want to be able to communicate to a group of trucking companies.
Speaker 1:You can put all that in the system and communicate that, and then you get bids back from all the different carriers and so as you start to get bids from carriers, you can put in a price that allows you to start auto negotiating with the carriers.
Speaker 1:But all the bids come into the system and so as a broker, you get to see who the carriers are, MC and DOT number, where they're based, how big they are, how many trucks, trailers and drivers they've got, and the rate the Mexico portion, the border crossing fee and the US portion. And so, whether that's on loads or lanes, potential loads or potential lanes, we've seen a lot of brokers using it for a range of those different types of postings and have seen a lot of success so far. And so brokers that are using it are loving it. They love the experience of the technology, they love the way that it works, the fact that they don't have to go repeat all these data points to every single carrier and then they could just send people a link. And carriers appreciate the fact that they're not getting harassed 24 seven by brokers calling them because there's no carrier list to call, there's no phone numbers or emails displayed in the system to be able to defraud people. It allows us to be able to create a more secure experience.
Speaker 2:So let me first ask this, non, I guess Cargata related, but I guess it is. But just back up a step with respect to Mexico Freight, comparatively to domestic US. A shipper tendering you a confirmation to pick up in at a facility in atlanta and deliver to a facility in chicago. You have a bol po number, you show up, you give it to them, they load you, you drive, you deliver, they unload you, they give you a p, you sign the pod and it's over. How much more complex is it than that?
Speaker 1:so some of those things happen for Mexico. But you've got two different countries, at least two, unless you're shipping from Mexico to Canada. And then you've got three. You've got two different countries, you've got two or three different trucking companies. So when a load's picking up somewhere, let's say in Guadalajara going to Chicago, which is my Atlanta to Chicago or Monterey to Chattanooga, you're going to hire a trucking company based in the United States and that trucking company sends their trailers across the border. But they don't send their trucks, they just send the trailers across the border. And those trailers go across the border with a partner carrier. So that partner carrier based in Mexico has a trailer interchange agreement set up with the US company that allows them to haul their trailers back and forth to and from pickups in Mexico to the border. So we're going to pay somebody like an M&J carriers in Laredo, let's call it, $3,600 to go from Monterey to Chattanooga. They're going to subcontract that Mexico portion to a partner carrier that they'll pay $600 to take it from Monterey to the border. Then they're either going to have their B1 driver take it from Nuevo Laredo into Laredo and then deliver it and they'll keep the rest of that money, or they'll pay a third carrier, a transfer company, kind of like a drayage carrier at the ports, to take the load from Nuevo Laredo to Laredo, and then their third driver, the US driver, takes it from Laredo to the final in Chattanooga.
Speaker 1:In that whole process, though, the shipper needs to prepare a bunch of paperwork that is related to the cart de porte and the pedimento and everything else that eventually gets sent to the customs broker.
Speaker 1:The customs broker then actually has to process that paperwork. They need to include certain details about the trucking company in Mexico and the trucking company at the border. There's a Mexican customs broker, a US customs broker there, mexico, and the trucking company at the border. There's a Mexican customs broker, a US customs broker. There are customs agents at the border that are inspecting the goods. There are potentially canine units that have to check certain things, because a lot of stuff can potentially come to the United States out of Mexico that we don't want coming into the US, and ultimately you've got those three legs that happen between the Mexico portion, the crossing fee and the US portion, and so a lot of companies have to stitch all that stuff together, or they rely on a third party company to do that, and so domestic loads have you know shipper, receiver, carrier, so that's three parties. Cross-border loads have anywhere between eight and 12 parties involved in a single shipment.
Speaker 2:So that seems to create a lot more potential for issues. I mean, it seems. Is it fair to say that a cross-border load is more likely to get snagged or have an exception than a typical domestic US?
Speaker 1:order. When you say snagged, are you talking about stolen, or are you talking about a snag in the process that causes a delay?
Speaker 2:I just mean a snag in the process that causes a delay.
Speaker 1:Yeah, I mean. If so, mistakes that can happen on a cross-border load can be everything from if there's 200 pieces of a product inside the trailer and then the commercial invoice for the customs paperwork says that there's 197, and they find those extra three pieces. They want to know why there's three extra pieces, and are they counting on every truck? In some cases, yes, especially if it's going into mexico. Um, they want to make mexico, wants to make sure they're getting every dollar in terms of import taxes and duties and all that stuff. So there's intense inspections that happen that are supposed to be performed by the customs broker, who is effectively acting on behalf of the actual cargo owner to file taxes and duties with the government, and so they have to be really accurate about the paperwork they file, otherwise people can get fined.
Speaker 2:And with respect to the customs brokerage, is that something that the freight broker is treating like a customer that they're seeking out quality customs brokers to partner with, or is it a differentiation point where some are much better than others, or it's a simple paperwork process that needs to get handled?
Speaker 1:paperwork process that needs to get handled. So the term is you marry your forwarder, you date your broker, or you marry your customs worker and you date your forwarder, however you want to put that. But the idea is that you're locked in with your customs broker, typically because you sign a power of attorney as a manufacturer and you rely on them to handle all of your imports and exports. You're relying on them to file stuff with the us government or the mexican government and and handle a lot of your your money, to pay the government on your behalf. And so a a manufacturer, a shipper, is going to sign up a customs broker that they're going to work with and then, separately, they will work with multiple transportation providers. So when you start working with a shipper, the first thing that they're going to do is say, hey, my customs broker is Milo Ruggieri in Laredo, texas, and I'll introduce you to him and he's going to be who you're going to work with to get the freight cleared.
Speaker 1:But they're not your customer, but they're more of a partner at that point, because if something isn't going well and you have a bad relationship with that customs broker, they, if something isn't going well and you have a bad relationship with that customs broker, they're way less likely to help you. If you have a good relationship with the customs broker, if you're going to Laredo to meet with them on a regular basis as a freight broker or a trucking company that's moving cross-border freight, they're more likely to help you. They're more likely to stay open late if a driver's running behind. They're much more likely to actually help you. But they're representing the actual beneficial cargo owner or the shipper that owns the goods.
Speaker 2:So there's clearly a lot of complexity in a single order and I guess what I'm hearing in how you described Cargado is it's meant to simplify a lot of that complexity and bring it all into one place. Am I understanding that correctly?
Speaker 1:We want to bring it all online, so we want to get it into the right place, into a single place, and we want to help standardize that process. We know we're not going to change how freight gets cleared at the border we're not changing that process. But right now what people are doing to cover that freight is happening a lot through WhatsApp and through LinkedIn. What people are doing to cover that freight is happening a lot through WhatsApp and through LinkedIn. You can't really post cross-border freight on other load boards and people are trying to do all that stuff in a really manual basis. And then everything about all the customs related information and the Mexico partner care and the transfer care and all that stuff. That all lives in spreadsheets.
Speaker 1:Right now People have hundreds of spreadsheets, each one for a different account. So like, let's say, you have 50 different customers that you're moving cross-border lives in spreadsheets. Right now People have hundreds of spreadsheets, each one for a different account. So like, let's say, you have 50 different customers that you're moving cross-border freight for at a bigger size freight brokerage, you have 50 different spreadsheets because you've got this long list that says all right for this load that's picking up today, it's this carrier in the US it's this carrier.
Speaker 1:In Mexico it's this company at the border. If you're transloading it, you're completely splitting that stuff up and using two different companies completely. So 50 different customers, 50 different spreadsheets, 50 different SOPs. Potentially it's really hard to scale that stuff, and so our long-term plan is to help initially with coverage and help people get freight covered and help people grow their Mexico business. But then we want to go deeper into that process and help bring more of the cross-border process into a single system around the data related to who's moving the freight, how they're moving it, the information that needs to get shared across the different parties, and giving people a better way to communicate than just using WhatsApp.
Speaker 2:You mentioned that people can't post on Mexico freight and other load boards today. Why is that?
Speaker 1:Everyone's focused on the US. I mean, this isn't even just load boards, this is any technology that you look at in our space is. Everybody sees the US domestic freight market as this trillion dollar market that everyone's chasing and they go. If only I can get 10 percent of that market, I can win everything.
Speaker 1:And so, whether it's any, any product in this industry right now is geared towards the US, and so most of these products were built for one pickup and one delivery, for stuff only in English for things that don't involve borders or ports or customs or any of that other stuff. And so any software you can think of, whether it's load boards or tracking or visibility technology or anything I'm not going to start naming names right now but any of these products in the industry, they're geared towards the US, and so it's really hard to try to take something that you've built with walls and windows, and if you think about how software is built, you've got to be able to take some of those walls down occasionally and move things. But everybody built all their stuff for the domestic market because they were chasing that, and so us focusing on building this specifically for Mexico, with my decade of Mexico experience, with Ryland's experience at Convoy and with our entire team allows us to build it specifically for cross-border freight and scale it for it.
Speaker 2:So you mentioned that you had a conversation with Duke at Arrive around what you would do if you could do Forger again. I mean, it sounds like this business is Forger, reincarnated with lessons learned in terms of what needs to change. Is that a fair representation of that An?
Speaker 1:iteration. I don't know about reincarnation, because this is very much also. You know, what I wanted to build on day one is not what we're building today, like when I very first started thinking about building Cargado after I left Arrive, like it was slightly different than what we're building, it was much more of a very basic load board. And then, partnering up with Ryland, who had built out Convoy for brokers and Convoy Go in his eight years at Convoy, he helped me think about that, about evolving that entire concept and building something a lot more integrated and a lot more structured and compounded that could ultimately stack other products with it. And so, yeah, there are parts of it and there's also a lot of lessons.
Speaker 1:I learned as a company builder and entrepreneur and I made a ton of mistakes at Forager and learned from those mistakes, and I even learned a ton from Pyatt and from a lot of the people that arrive about how to build and lead a successful company. And so taking all those lessons and building Cargado out the right way this time around is critical, and it starts with being an agnostic software provider, not somebody that's involved in the actual transaction, not somebody that's trying to make money moving freight, not somebody that's brokering or forwarding or anything. We are purely a software provider. We have no stake in the game as far as who moves what. We just want to make sure that we help people do it more efficiently.
Speaker 2:So I got some feedback from a friend about the podcast only literally an hour ago where he suggested that I try to be more specific with examples when I'm talking about situations or lessons learned or leadership whatever, and so I'm going to press you a little bit right now to try to do that. And you mentioned kind of lessons learned from, or mistakes made from, your first kind of entrepreneurial bout at Forager. Can you give some kind of concrete examples of what those mistakes look like so you know our audience has a clear understanding?
Speaker 1:Yeah, and I'll start with the ending part of this whole thing with Forager, which is that I remember talking to dad six months before he got acquired and the business was not in good shape. We were improving things, our numbers got a lot better and we started to grow a lot more and we had some really phenomenal enterprise customers that I believe are even still with Arrive today, and we had a great team. But I remember having a conversation where he said you have an identity crisis, your business has an identity crisis. You guys are trying to build a freight brokerage and a tech company at the same time and you have to pick one or the other. You can either build the freight brokerage or you can build the tech company, but you can't do both, and so when I kind of rewind from that and think about that, that was a big part of why I wanted to just focus on the tech this time around. But just focus on the tech this time around.
Speaker 1:But we raised at Forger. We raised a little over $15 million in the three and a half or four years that we were building the company. Every single time we got dollars I acted like it was my job to spend it. I tried to hire as many people as humanly possible as fast as possible. I thought that if I just threw more salespeople at something, we would grow the business more. In reality, I hired salespeople that had a lot of experience. They were great people.
Speaker 1:But throwing an experienced freight salesperson into a freight tech startup in our digital freight brokerage model, it doesn't translate and we at some point, I think, had 12 or 13 salespeople and I was landing more business than most of them myself, even though I said that I wasn't a salesperson and so one is. We hired way too many people way too fast and I take full responsibility for the fact that we spent like that because I just assumed if we just kept growing and if we kept increasing top line. Remember having this very specific argument in one of our board meetings. I said look at Convoy, look at how fast they're growing. We know they're not making money, they're just growing and growing and growing. They're throwing more money at it. They're raising all this money from all these amazing VCs. Just keep pouring more money into it. Grow top line in spite of your margin going down.
Speaker 2:We were negative margin at some point and so we just kind of Say that I said yeesh yeah we were negative.
Speaker 1:It got all the way down to negative 8% and it swung over two quarters back up to positive 8%, by the way, after we got some serious feedback about the fact that we were about to die as a business. And so I remember having this argument with my board and saying I'm going to keep pushing, we need to keep growing, we need to go through the pandemic. So, like I, I remember you know you guys at molo, you were moving a lot of cpg and a lot of consumer goods that that people needed during the pandemic. We were moving automotive freight so that all stopped. So, like, while a bunch of brokers in the us skyrocketed during the pandemic, we went in the opposite direction and so we basically had to just go get whatever freight we could do. We had to move it for whatever the cost was, because my belief was get more freight, get more data, grow and power through it and Convoy's killing it. Look at them, they're worth billions of dollars. These VCs gave them so much money and valued them in the billions, and so I thought that's the model, let's just follow that model.
Speaker 1:That didn't work out, and so, and and so, yeah, we learned, you know I learned. One is you know, don't overhire. Do just start with the bare bones in terms of the people that you need and sell as long as you can. And so what I told my board this time around at Cargato was I don't want to hire any salespeople until we get to 100 customers, and that turned out to be a little bit aggressive. We got to 50 before we hired our first salesperson, and she started a couple weeks ago and she's doing phenomenal so far. But I learned not to overspend, to plan so that you've got way more money than you think you need. We had to raise a bridge around every single time we raised our next funding, which meant that we needed to cover a gap for a few weeks if we couldn't get funding in time, and I just kept hiring.
Speaker 1:I just kept hiring and I didn't listen to my board. And I looked at my board as these people that didn't know what my business was doing, they had no idea what was going on, they didn't have experience operating although one of them was a CFO of a very large trucking company, and so he actually did know what he was doing but I was a stubborn asshole and I just didn't listen. And so, as I think about what I'm doing now with Cargado.
Speaker 1:I meet with all of our board members on a very regular basis. Our entire board structure is very different about how we talk about the business, how we present and I look at a board now as an extension of the leadership team that you can partner with the people at one of these investors and they know exactly what's going on with my business on a day-to-day basis because of how up to date we keep them and I know that if things ever got tough, they would actually have my back when things got tough and help me through it, because they know what's going on with the business. Last time around they had no idea what was going on, or I felt like they had no idea and that was my own fault, or I felt like they had no idea and that was my own fault.
Speaker 2:What was so? I'm hearing a lesson just in. I think, as an entrepreneur, as a CEO, it's important to have conviction in your beliefs and I think it's important to be willing to push the envelope sometimes and and and you know disagree with, with your whether it's your board or your, your executive team, but it's. It's hard because you also got to know when to take the advice and it sounds like the end result in this case. You know you went against your board and you were wrong. You kind of were following the convoy path and and just like they were wrong, you were wrong here. What was the emotional feeling, as you know, in the final days of Forger, knowing that you had kind of fought that fight, that you had gone against your board who had put this money into the business, and knowing that you had been wrong about that kind of pursuit, how did you deal with that? What was that process like?
Speaker 1:So it was very, very emotionally draining. There were two entrepreneurs that I talked to a handful of times that helped me, you know, coach me through it. This one guy named John Kaplan, who at the time was the president of Alibabacom for North America and had built out other marketplaces, and he kept telling me the same advice. And before I mentioned the advice he gave me, I'll give the framework, which is when you're building a startup, the concept is you're building the plane while you're flying it. So if an engine goes out like you better hope the other engine stays so that the plane stays up in the air while you send somebody out on the wing. You go fix the engine with duct tape and by the time they finished fixing that engine, the window cracks or the windshield cracks on the front of the plane and you got to go outside and fix that.
Speaker 1:And something's always been duct taped together or fixed, and John kept telling me to land the plane. Just focus on landing the plane, stop trying to get it back up over the mountain. And, um, what that means is, at the time, that we were getting very close to getting a deal done and we had multiple offers on the table to buy the company, um, and so we were in a good spot, like, as far as landing the plane goes. But, uh, I still had this thing in me that I wanted to keep going. I was, you know, do I pivot? Do I cut up, shut down the freight brokers? Do I try to spin this?
Speaker 1:Um, and I kept trying to go find money somewhere and I was getting distracted by trying to do both of those things, and so when John said, just focus on landing the plane, that finally hit for me, rather than crashing the plane into the side of the mountain, which is what happened with Convoy. We landed the plane, and we ended up with a great company and Arrive and a great leadership team. They're like Pyatt and JN and all those people, and so I felt miserable in those last six months leading up to that, but grateful for Pyatt and for the Arrive team and knew that, you know, while we had those other options like this was the perfect fit, given the background, the cultural alignment, the experience that we all had and the fact that Arrive was purely domestic focused. We were purely cross border. It was a great marriage, and so that was one dark moment, I will tell you.
Speaker 1:The darkest moment, though, is when we had to. We had had. We got to 75 people at some point, which was absolutely absurd for the size of the company that we're at, even with engineers, um and we had to go through a res we called it a restructuring. It's like a riff or a layoff and we had to cut 32 people in one day. That was brutal. That was brutal. I had to tell one of my favorite people I've ever worked with, that I had to let her go and I cried. That was my worst day in my professional career was having to do that, and so I've told myself I never, ever, ever want to put my company in a position to ever again have to do that. Don't overhire, don't overspend. Generate revenue, bring money in and prove that you can bring more money in before you hire more people.
Speaker 2:What were the days leading up to that Like, just for you know, there are plenty of people who've been on the opposite side of that or on the other end of it. You know, getting the riff getting laid off, and I think there's a human way to do it which is, as you know, kind of honest and transparent and open, as you can be, from the leader himself, the CEO himself, if that's the case. And then there's you know, the way you see some companies do it, where it's a letter, an email, a two minute zoom, and then your shit's turned off, stuff like that. I think it would be helpful for people to hear what a CEO deals with in the days leading up to that, because I'm sure there are countless situations you run through your mind of well, what if I try this? What if I try that? It's usually the last case that you get to that. Okay, we have to let all these people go. Can you just talk about what that was like?
Speaker 1:Yeah, so I think I knew for about a month that we were going to have to do that and we had to plan for how to keep the business operating at that point, because at that point we were set on selling the company. I was still trying to raise money to rescue the business, but that wasn't going to happen. And so, first of all, we started by talking. We were looking at the financial model. Right, and you go into the model and you go all right. So if these people no longer worked here anymore, after paying out severance or whatever, how much money are we going to have left and how long is that going to last us? And where are we at in that M&A process? Are we starting one or whatever that looks like? But we waited too long, by the way, because our board did tell us we should cut the team down earlier. And I refused and said if we lose these four people, we're going to lose those accounts. If we lose these three people, it's going to kill the culture. If we lose that person on the engineering team, person on the engineering team, it might collapse the whole engineering team If we let go of that person. That person's really expensive and they're a finance person and nobody likes that person, but keep them anyways because they're that person. And it's like there's this, all these debates that are happening.
Speaker 1:But when it came down to it, one of the leaders on the team kept saying you got to cut deeper than you think you need to cut. Cut deeper than you have to cut. You hear about these companies, especially right now, that go through like three or four rounds of layoffs in a four-month time frame and that's brutal. That will murder your culture. At least, if you do it one time and you cut really deep, deeper than you think you need to, then you're in a spot where you don't have to do it again and you have a chance to re-earn the trust of your team. Because we knew we talked about it as a group. We knew we were going to lose the team's trust, so we talked about the fact that we're going to lose the team's trust.
Speaker 1:The biggest thing we went through when we thought about how to make the decision about who to cut and who to keep was entirely based on who we thought would help us keep building, who was the likeliest to stick around and not get scared and start looking for another job, who was gonna be there till the end. Um, people like matt weber, who's my cto. He told me when he first started with us, um, that he was going to be there until the lights turned off. And he was, uh, we didn't turn off the lights, he still works at arrive, but, um, he, he told us that, or he told me that I knew somebody like that was gonna be there forever, um, and so you had to think about who was going to stay, because if you cut the wrong people because you thought, all right, well, that person's a great salesperson, they'll keep generating revenue and they go. Well, I've got this book of business, this company is sinking, so I'm just going to go to this other company. You're like, you're double down, and we did have a couple of people get scared and leave afterwards, but we had to take into consideration who would stay, who would make sure our account stayed alive, because we had great customers and we had good freight from them.
Speaker 1:We just didn't have enough carrier reps, we didn't have a way to source capacity more effectively, and so we had to balance all that out. There were a lot of debates, there was a lot of negotiation. The list on a Monday ended up being very different than the list on Thursday when we did it or whatever day of the week it was, and then as far as how we actually went about doing it, every the five or six people on the leadership team at that point divided up the list and each took different people and called them individually, talked to them.
Speaker 1:Nobody wants to stay on the call with you for more than 30 seconds after you tell them that, and there are definitely people I regretted letting go. In hindsight, I look back at some of those people and go we fucked up and let that guy go. We should have kept him, and because he would have continued to grind, and so we did it individually. Everybody figured it out really quickly because they saw people's names disappearing from Slack. We had a whole coordinated thing. Unfortunately, because you have to, you have to be able to keep going.
Speaker 2:We did it in the morning. You've got to keep the business going and it's a really hard, messy thing because this is as emotional as an event as possible as having to go through something like that and you want to be respectful of everyone. But if you're doing it with 30 people and you want it to be human and something that people, it's hard to get appreciation out of it. But people are grateful when it's a one-on-one conversation versus just an email. But it's hard to navigate 30 of those. So I guess you know, moving from that point, having endured all of those challenges and the emotional drain that comes with that, you've seen the hardest parts of being an entrepreneur. You've seen the hardest parts of being a CEO and trying to build a business from the ground up and what happens when you're wrong and when you have to own that. You were wrong about something like that and I'm just curious why sign up to do it again? Why start this new business, given the challenges that you've endured the first time around?
Speaker 1:I have a chip on my shoulder. I mean, I, I, there's. There's both a chip on the shoulder, but there's also, um, the need to build this. Uh, I, I just have had this concept stuck in my head and need to build it. It is. I know that it's something that people need. Um, we're selling, I'm selling it to myself.
Speaker 1:This has been the easiest thing I've ever had to sell, because we're calling a bunch of freight brokers telling them here's software that's going to be an easy button for you to move Mexico free, and they love it. And people are referring other customers. People are talking openly about the using Cargado. There is not that same shame that comes with using a load board that people feel like in the US, and it's why we were able to get people like Ryder and Nolan Transportation and FOS and Traffics to put their logos on our website and put all this other information out there about working with us. These are big brokers. We have 25 out of the top 100 freight brokers using our software, and so I knew that if we built this product for people that had been in my seat or that are in the seat that I've been in before, that they would actually love it I mean I do have one more quick thing about the layoffs thing now, if we go ahead, one quick second.
Speaker 1:Um, everybody always wants to know why you actually do the layoffs and why you don't just keep everybody longer and stretch the dollars out thinner and cut other costs. Um, you have an option to either keep the company alive by cutting it in half or you let it die six months faster than it might die, and that's ultimately the the point that we landed on when we made the decision to actually do it, when I was actually the one arguing against doing it repeatedly until everyone was like we've got to do this.
Speaker 2:Yeah. So back to appreciate the additional context in the layoffs. I think that's really helpful and it's not something that people are often willing to talk about, so I appreciate you spending some time on it, even though it's not a fun thing to talk about. But back to your comments around Cargado. So I mean it's pretty impressive 25 of the top 100 brokers. When did the business officially launch? In stealth, in quote, unquote, stealth? I refuse to accept that you did this in stealth because you post about it every day. But when did you launch quote, unquote in stealth?
Speaker 1:There's going to be so much new content to write about in my newsletter now that I get to talk about our actual product. So excited to write more so all right.
Speaker 1:So we the way this all started was right. After convoy died, I went out to Seattle and I was able to convince Rylan and a handful of engineers to join, and this was in October. Um, we raised a $3 million pre-seed round that iron spring and Zenda and Nicole wish off and seal bloom and all these amazing entrepreneurs like like Craig Fuller and the guys from Tegas and all these other startups they all invested in back this concept right out of the gate.
Speaker 2:Um, and so so did I. I'm not as cool as any of these other people you mentioned.
Speaker 1:I didn't know if I was um, and so we we started by, uh by, by coming up with the actually sorry, the first two weeks, rylan and the engineers uh, steven, tegan and jonathan they sat down and spent like two weeks on Zoom talking about all the things that they wanted to do differently from their time at Convoy From a technical perspective to a language or a structural perspective about how they're actually building the software. They wanted to change all of that and rethink it and be able to do it in multiple languages. Rethink it and be able to do it multiple languages like English and Spanish, at the same time, multi-currency like USD and pesos, and so started by planning all that out. Next thing that happened is Ryland built out a lot of the designs in Figma as essentially a prototype, and we took that to Laredo. So we went to Laredo in December. We started meeting with a bunch of trucking companies and a bunch of freight brokers and showed them these designs, got a bunch of feedback. About 50 companies collectively across that whole group gave us feedback. They said this thing doesn't work right or it's weird that you're not showing this information, or whatever it was that was going on. Something needed to be changed and so we made those adjustments. Whatever it was that was going on, something needed to be changed, and so we made those adjustments.
Speaker 1:We actually started building it in mid-December from a code perspective and then, early February, we rolled out the carrier side of the product. We started onboarding trucking companies. Based on my relationships, I went down to Laredo a bunch of times, met with trucking companies, started explaining them the vision. It's free for carriers, so it's not hard to get them onboarded, but you want to make sure that you're bringing the right carriers in and that's why it's invite only, and so, starting in february, we started building out the supply side. This is it is a marketplace. We're not going to call it a digital freight marketplace, but it's a marketplace and you have two sides that you have to be able to get going at the same time, because how are you not going to call it a digital freight marketplace, but call it a marketplace when it's a digital marketplace for freight?
Speaker 2:because everybody hates that term okay, so it's not a dfm, it's a dmf, it's a digital marketplace for freight. Yes, dmf term. I get how this is different. I mean I this is it. It feels different. Um, the invite only is interesting to me. Can you talk? Is it meant to be exclusive or what's the purpose of invite only?
Speaker 1:We're not just going to let anybody in and let people get defrauded and let people double broker freight. We want to know that these carriers that are coming in are actually going to be of value to the brokers and we want to know that the brokers that are going to be posting freight are actually going to be posting freight that carriers want to bid on. If we just let everybody into the marketplace and we open it up to owner operators. First of all, owner ops don't service Mexico. Most trucking companies that service Mexico have to have three times the number of trailers that they have tractors. So if they have 100 trucks, usually they've got about 300 trailers.
Speaker 2:Because it's such a drop heavy Can you talk about, give me Because it's such a drop heavy. Let's give you a couple of minutes on Mexico. How is the Mexico carrier market different than the US domestic market? What don't we like you know? Enlighten us a little bit about that. So there's no owner operators at all Like, why not?
Speaker 1:For cross border there's owner operators within Mexicoxico. So, uh, that that story that I told earlier about m j with a partner carrier in mexico and and the transfer company. So let's take monday uh, a trailer gets picked, gets loaded in laredo, texas, with freight to go into mexico. So that gets loaded on monday, that crosses the border on tuesday, uh, and it gets to Guadalajara on Wednesday or Thursday. And so now we're four days in and the load just got to Guadalajara. Maybe it takes them two hours or a day to unload it and they unload it and then it gets loaded again or reloaded on Friday or maybe not till Monday of the next week in Guadalajara with a truckload of tequila to go back up to the border and then go to the US, and so that's the following Monday. So we're seven days out. Now it's in Nuevo Laredo on Tuesday or Wednesday and it crosses the border Wednesday or Thursday, maybe Friday. So now all of a sudden we're almost two weeks out from when that trailer started in Laredo to go into Mexico, and so that's why you have to have so many more trailers and tractors, because trailers are in Mexico for anywhere between two and 10 days at a time to go south and then back north, and the drivers don't stay with the trailers, they get handed off because US drivers get paid more than drivers in Mexico, and so you want those drivers staying on each side of the appropriate border to keep that split up separately so that your costs don't go up.
Speaker 1:And so that's what the market looks like for carriers that service mexico, that do cross-border. Within mexico, intra-mexico, there's about 200 000 trucking companies, and 95 of them have less than 30 trucks. Most of them are owner operators that you've never heard of, you've never been able to work with. There is literally no system that has all that carrier information of any sort or anything about those companies, and so it's completely off the deep end. I guess in terms of what that network looks like. That's not really available yet, but the cross-border carrier network is big and it's growing.
Speaker 2:So if I was a carrier rep at you know this new any brokerage that is just now cracking into Mexico business. How easy is it Like? What does the infrastructure resources look like from a carrier 411 for Mexico type perspective? Like you know, is there something like that out out there? Is there a safe versus out there that you can go and and find capacity and validate the quality of said capacity or reviews on said capacity? What is? What does that look like in mexico? There is nothing. So how do I, if I'm, if I'm literally trying to find a truck somewhere in mexico to to move a load, what, what, what are people doing?
Speaker 1:they're going trucking companies in mexico and hoping they find something yes, uh, they're googling, they're posting on linkedin, they're posting on whatsapp, but there's. So there's two different segments of trucking companies that are involved in cross border freight. There are what I would call door-to-door capacity or door-to-door carriers or through-trailer carriers. Those are the carriers that are based in the US, that have MC numbers and DOT numbers that service Mexico. They send their trailers across the border. Those guys are in your care 411s, your highways, your safer and all that stuff.
Speaker 1:Whether or not it's apparent that they service Mexico is a different story. But if you're a carrier rep working at a freight brokerage especially if you're in the Texas region or whatever you call that, and you're booking freight going into Laredo, texas, for example, the trucking companies that you work with that have that 956 area code. They probably service Mexico. You just have to ask them about it. And so, a lot of the time, if you're in that centralized brokerage model where you've got the care department that's based on backhaul capacity, then you've got a group of reps that are likely booking carriers that can service mexico, and you just might not know it yet.
Speaker 1:Um, if you're, uh, in the cradle to grave model and you don't have a mexico team or any sort of structured carrier team, then you're completely gonna have to rely on cargado. But you could do some googling. You can call the big national guys, but most of the big national guys aren't going to do mexico freight for a broker, um, and so you you kind of have to find a needle in the haystack. Then, separately, there's mexican trucking companies that don't have any sort of structured registration besides their uh, their rfc number and their sT number and that kind of relate. But it's basically a tax ID number and a version of a DOT number, but without a safer system to be able to actually search.
Speaker 2:So how many customers has Cargado been able to sign up thus far in the first nine, quote, unquote, stealth months?
Speaker 1:Well, so the load board itself launched April 1st, and that's when we started actually getting people to sign contracts. We have 60 brokers now.
Speaker 2:Okay.
Speaker 1:That's a good number RPLs, forwarders, some of the biggest, like I said, some of the biggest ones in the industry, but there's also small guys, like our guys at Hoplite with Rico and Rich, that are doing a great job growing their business through our platform. And we've seen brokers like Jones Logistics, who had never moved to Mexico before, start posting and convert business that way.
Speaker 2:And so that's been the experience for some of these companies is they've never moved to Mexico load in their history. They get an opportunity, they throw it on Cargato and it gets covered.
Speaker 1:They get bids back from carriers. They can accept, counter, reject those bids and if they accept the bid, the system sends an email that connects the person that posted the load with the person that bid on the load and they start doing business.
Speaker 2:And are you API'd into the TMS so they book the order through your system, or how does that work?
Speaker 1:Not yet, but that's the plan. We want to integrate and partner with people. We're not trying to replace most of the companies in this industry. We want to connect with them and we have zero plans to ever build a TMS, to be very specific about that. So we've got a couple TMS providers that we're already actively talking to. We've got our first customer that's agreed to do an integration and we just have to set up the time and the bandwidth to be able to do it, because we're building a bunch of stuff at the same time.
Speaker 1:But the goal is to have the ability for a broker to auto post all their freight into Cargato, whether it's spot or dedicated. If it's dedicated, allow it to run through a routing guide that we're building out and then fire back into their TMS to say here's the carrier, book it on the load, send the rate, con and if they're compliant or not, having all that information too, so it sounds like you're off to a great start 60 live customers paying customers, 25 of the top 100 brokers In terms of getting the freight into the platform, top 100 brokers In terms of getting the freight into the platform.
Speaker 2:I feel like you've hit a home run in your first six months, because those are good numbers. It's a two-pronged approach. Obviously you can't just have freight without having carriers. So what's been the strategy for getting the capacity to come online in the system and on the platform?
Speaker 1:the capacity to come online in the system and on the platform. So there are two companies that we've studied obsessively Uber, not Uber Freight Uber and Airbnb, when you think about how to build out the supply side of a marketplace, and it's very much boots on the ground. And so our team, almost everybody from our company has been in Laredo at some point in the last few months, but we have two people already hired in Laredo. We've got one person in San Diego. We're trying to hire people in El Paso and Farr or Brownsville and Nogales so we can continue to accelerate care expansion in those markets.
Speaker 1:But we've found that boots on the ground are massive to growing this out. And so getting down there and meeting with the trucking companies, sitting with them in person, showing them how to use the product for the first time, it's intuitive they can go in and save the lanes that they're looking to haul. So out of the 300 carriers that are in the network today, the vast majority of them have put in the lanes that they actually want to haul. So a trucking company will say I'll cross in Laredo and El Paso and I'll pick up in Monterey and Guadalajara and Queretaro and Aguascalientes and Juarez and Chihuahua and I'll go to the Southeast and the Midwest and so by putting that information in our system and that's what we started collecting back in February anytime a broker posts a load, the carrier gets notified, and so it's passive for the carrier to be able to put that in once and start getting opportunities. And they get notified via WhatsApp. They go in and bid and they match.
Speaker 2:And of the 300 carriers, how many trucks are there in the system now?
Speaker 1:It is 55,000 trucks. So these are, you know, yeah, and about 150,000 trailers. So the smallest carrier, for the most part, is anywhere from 10 or 15 trucks. Like I said, no owner operators, because it just doesn't make sense for this network. But there's you'd be shocked and I don't think I can name names, but there are some very large trucking companies that are using Cargato, that are booking freight through it with brokers that they've never met before and that has been the coolest thing that I've been able to see. It's almost like living vicariously through all these brokers and carriers to see them moving freight, to see them successfully winning business and to see them growing their business by leveraging the platform and communicating through it.
Speaker 2:What are the things that you're most concerned about? What are the things that you see as potential blockers, roadblocks or issues along the Cargado journey that you're being mindful of?
Speaker 1:we, we know how people feel about load boards, the traditional load boards. We know that people hate them just across the board. Um, that's not a secret. The price gouging, the fraud, the double brokering, the theft um, I've said this before multiple times, but I hear more about loads getting stolen through load boards than I do in Mexico, and everybody's always scared of theft in Mexico, but it's not as daunting as people make it sound.
Speaker 1:And so, when I think about the things I worry about, on one side we don't want to be considered, you know, x, y, z for for Mexico quite so much. We want to be something that's more collaborative and that pulls people together, and so we have that buy-in from our customers, obviously. But we want we badly, desperately want to avoid fraud and double brokering and we're doing everything in our power to make sure that we can do that and make sure that we can understand, if it does happen, that we can quickly help prevent it or help solve it. And you know, I was just talking to Ryan from Genlogs, right before this, actually, and talking about ways that we can collaborate with somebody like that to understand what's going on in the market and where the trucks actually are and aren't to understand if things actually match up.
Speaker 2:It's weird you mentioned that because, like three minutes ago, while I was asking you about how you procure the capacity, I almost asked you but didn't know if I should bring up gen logs on the just in this context. But have you talked to them about do they have cameras down there by the those border cities that could get you access to all that capacity, or is that not their wheelhouse yet? I don't know. I'm just I was thinking about it from that lens of if they've got their, their cameras down there.
Speaker 1:I know the planets have coverage all throughout the United States and that would include Laredo. I can't speak to the exact timeline of everything that they're doing in Texas, but I know that that that's on the forefront and we had a very positive conversation about how to collaborate on that. So, uh, we'll see, but yeah, okay. Um, as for in mexico, it's a different story and I don't know. You'd have to ask brian, and at some point you should have him on this podcast because he's got an insane backstory well, I'm meeting him.
Speaker 2:I'm meeting him. He's giving me a deep dive of his business next week, so I have a feeling I'll probably want him to come on the show after that. But it's, it's very cool product.
Speaker 1:So that's that's one side is fraud. The only other struggle that I have right now is we need more engineers, like we have. We have very large aspirations for what we want to build. We look at somebody like Rippling, which is an employee management platform that is effectively trying to replace HRIS and payroll and employment stuff. We use Rippling at Carado, and Parker Conrad is on a second startup after building Zenefits before, and he talks about this compound startup concept of building multiple products that all slot in together and when you build it intentionally as multiple products that all work together collaboratively, all of a sudden freight brokers don't need to sign up for 12 different products to support one group of people, and so that's where we think about our expansion eventually, of continuing to expand vertically beyond just a load board concept and that bit board and going deeper into the process, and so we just need more engineers, which I doubt is any of your listeners.
Speaker 2:No, there's some engineer listeners. There was the truck smarter engineer. I'll have to find this. No, I can't find it quick enough, but I saw somebody posted recently a few weeks ago, I think he was head of engineering for truck smarter maybe and he just said I just listened to every free pod episode back to back to back to back and got a full. It was like I felt like I was getting a full history of the industry from all the operators that have participated.
Speaker 1:I thought that was there are engineers that listen. Yeah, I'm going to take full credit for that, because I talked to him a couple months ago and told him to listen to your podcast.
Speaker 2:I didn't know who that was. I just he's an engineer. I remember seeing he was an engineer.
Speaker 1:I mean, I'll tell you there's. I shouldn't name names, but there are some executives at some very, very large freight brokerages that started in more of the tech space that have told me that their way of learning about this industry has been listening to your podcast.
Speaker 2:That's cool. We got to add some value. We got to be giving people insight. I think that's what they want. They want to learn more from the people who are here building. So give us some more insight. Matthew, what do you got More insight?
Speaker 1:Don't overpromise. To me, the biggest thing about freight brokers is when they say they can do everything. You go to their website. It says they do domestic, they do cross-border, they do international ocean and air freight forwarding customs. Do something great and do it special. And, and if you can extend into mexico, great. We can help you do that faster with our product. But, um, you know, stay focused and build something special.
Speaker 2:The way that you're trying to vote, you know the way that you're trying to build it, rather than telling everybody you can do everything but careful, because you you say that right now, but a minute and a half you just said you're thinking about how you can build all these other products on top of the one you already have.
Speaker 1:Yeah, well, it takes a unique team to be able to do that and I think we've got the experience to be able to do it. But, yeah, there's really you can hear like there's a podcast that I just listened to that Parker did talking about the business. There's a podcast that I just listened to that Parker did talking about the business and he talked about the fact that one of his early investors pushed him against building a compound startup at Zenefits and and talked about focus. And, yes, most startups need to be able to focus and everybody needs a certain level of focus. But we've got the buy-in from our customer base to expand the product for them.
Speaker 1:We've heard the request from it enough times. We have teams and Slack and WhatsApp channels set up with all of our customers, so they message us all day long asking for things and they go. God, I wish I could do this, or I wish I could chat with my carrier through this platform, or I wish I could get this information about them, or I wish I could get their truck list from them through the system, and there's all these other things that they're asking for, and so, as we think about what they asked for and they love our product so far. It would feel dumb not to build that and try to build it quickly.
Speaker 2:Yeah, I mean listen, I think that's one of the smartest things you just said in terms of having a team that's having direct lines of communication with your customers Slack Teams, whatever it may be and freaking, listening and understanding exactly, getting that feedback on how does the product work for you today, how does what we're offering to you add value in your network today and where are the areas it needs to be better, and then actually taking that feedback and taking action and improving it. That's happy customers, happy life. They say happy wife, happy life, but happy customers, happy business. I that's. You know. They say happy wife, happy life, but happy customers, happy business. I think is just as applicable here.
Speaker 1:So I mean we you know you talk about this a lot on this podcast, but, like there's so much that we've learned from our times at Coyote, and customer service being at the top of it, I remember being on a call once with this customer, this guy, paul, from an automotive supplier, and I was on the phone with him back. This was when we were moving his Mexico freight, telling him about all these things that went wrong, as to why his load was going to be late. And he goes are you wearing one of those coyote hats right now? And I said yes, why? And he goes can you take it off for a second? And I'm like sure I took it off.
Speaker 1:And he goes what does it say on the back of it? And I was like no excuses? And he goes why are you giving me excuses right now? And so customer service being one of those core things, like you typically think about software and people buying software and you just send them the login and you never talk to them again, we've made customer service a big part of this, and I know how brokers think about customer service and delivering for their customers, and so their suppliers need to deliver that same service, and so we've invested heavily in being responsive, which right now that means I'm playing whack-a-mole on Teams and Slack all day, but we've got our first customer success person starting in the next week or so.
Speaker 2:No, I think that's smart, though I think the person who's got to own and be accountable to everything the team builds to be playing a little bit of whack-a-mole in that first year to make sure you're really understanding what your customers want. I, now that the business is out of stealth and is live, you're press releasing today. What are your expectations for the next six to 12 months of what will happen with the business?
Speaker 1:We want to keep growing, we want to grow and we want to grow fast. The more freight that gets posted in this marketplace, the more effective it is for everybody that's involved. We had a moment fairly early on where we onboarded a very large broker into the market and they immediately started posting a ton of freight. And I went to go visit one of our earlier customers like that next week. And they go did you double your carrier count? I'm like, what do you mean? And they go our bids just skyrocketed, like we've started getting way more bids on all of our freight in the last like week or so.
Speaker 1:And these are this was one of our first three brokers that had started with us and this was like in may or something or june, and we're just getting started at this point and I said I know've been traveling so I haven't been onboarding any carriers yet. It's just this other company that started posting freight and that started getting more activity because the carriers started getting notified more, and so the more brokers that are posting freight, the more carriers that are bidding freight, the more benefit it becomes for everybody. The more data that we collect, the smarter we can help people make decisions and the faster the flywheel spins, if you think about the Amazon model.
Speaker 2:Yeah, I mean listen, there are a lot of businesses that talk about network effects in our industry and yours is one where it's a very tangible impact. The more carriers and brokers you can get posting their freight and posting their capacity, the better it gets their freight and posting their capacity, the better it gets. So yeah Well, listen, I know you've got time here. You got a bump in a few minutes, so any parting words for the audience on the Cargado journey and what they can expect.
Speaker 1:No, but I have something else for you. So obviously you know my two of my favorite episodes you ever did were Ted Ailing and, uh, kevin Nolan. And they both brought up the same concept about this uh, freight prodigy thing. And JP wrote that article about you a while ago, calling you the freight prodigy. And back when he did that, I actually bought the domain name freight prodigycom. Uh, that I am happy to be gifting to you that you can no, it's all yours, or I can take a picture of your face on there.
Speaker 2:Don't do that, jp writing that freaking article and calling that was the most frustrating thing. I've gotten shit from anyone I know for years because of that.
Speaker 1:I do not condone the nickname, I don not condone that.
Speaker 2:I do not condone the nickname. I don't accept the nickname and I certainly don't want the website. But thank you for the offer. All right, kids, that's all we got this week. Matt Silver, my older brother, and his awesome new business, cargado, making waves. I'm proud of you and I expect this thing to really take off here in the coming year or so. Go check it out. If you're looking to move some Mexico business, cargado is the place to be. We'll see you next time.
