Freightosrevenue, market cap & funding

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is v schreiber he is the founder and ceo of freitas the digital backbone for the trillion dollar international freight industry previously he was ceo at light tech which is acquired by gen founder and ceo of unicorn which is acquired by ibm along with many other successful exits he has a phd in computer science and his author of fizz which tells the history of physics as a novels v you ready to take us to the top yup the history of physics as a novel that sounds like hell well for me for me right for me for you it sounds like this might be great so first of all why write them people are interested in the universe you know they may like it and it sounds like you weren't what does it mean though through a novel lens i mean could a non-technical reader like me that does not have a phd in computer science read it and enjoy it yes if you're interested in science then you don't need any background it's a it's a story about a girl who time travels and has a chats with galileo and newton and einstein so you learn about how uh you know how over the centuries we started to understand the universe in a in a pretty informal way um but you've got to be interested in in the matter but it's it's totally non-technical interesting okay good well no i'm very interested in the matter but i've read i've tried to read some of these very technical books and i go oh my gosh this is very difficult to read i know not very technical although once you know once you get onto relativity and quantum mechanics the concepts are a little bit tricky but there's no formulae nothing at all technically all right for those of uh those folks that missed our first interview back in may of 2017 together what does fredo's do and what's the revenue model how do you make money yeah i mean fredos does a couple of things which are all related to making international shipping just way easier um the model in a way is passenger travel we want to make it just as easy to ship a container from china to the us as it is to book a flight from china to the us so we're all about making a freight air and ocean international freight uh really easy using modern digital techniques and in order to do that we have to do a few things we have to help to get data about rates and capacity from the carriers to the freight forwarders and from the freight borders to the importers and exporters in the end it'll it all funnels through to freightos.com which is a public website a little bit like booking.com or expedia but for international shipping so in the end we give you the modern digital experience there's quite a lot of infrastructure behind that to to actually get the data and the prices and the roots so what is the equivalent of like delta and american air in your world well delta and american air both they both do a lot of cargo um so they are uh they have cargo departments uh you know below the you're familiar with the upper deck where the passenger sip on the lower deck is not only your luggage but also cargo and both of those are companies we have a relationship with of course but the other equivalents of course are um in in ocean musk line and cma cgm and costco uh so so you may not you may not know those companies but they're for ocean there are there are big carriers who you would not be familiar with um and then what typically happens is you typically don't work directly with the delta or american or mask line uh typically you work with a with a freight forwarder who's a bit like a travel agent but they're taking care of the whole door-to-door so that they um move your stuff you know all the way uh companies like did they take a cut is there a middleman is there a middleman tax there they are yes they're a middleman uh they certainly take a cut for arranging the whole thing door store for making sure that the truck connects with the ship or with a plane uh they also typically get it through the u.s customs uh which has become more complicated with all the tariffs that keep changing at the moment so are you putting them out of business are you disintermediating them or they you need them no we're giving them a digital platform um so we're not disintermediating them uh but we're making sure sometimes there's two or three free forwarders involved we make sure that there's um you know no more than you need and in certain cases you could work with the carrier directly but in most cases we're enabling the the freight forwarders uh some company i mean some the companies you know you know fedex and ups also have freight forwarding divisions and then other big companies you may not have heard may not have heard of like um c.h robinson and hellman and panalpina these are very big freak orders yeah when you and your executive team sit down at the end of the year what's like the big value usage based metric you track is it kind of tonnage shipped number of freight forwarders that put at least a dollar through your platform like what is the metric yeah so it's it's sort of both it's actual dollars through our platform how much was spent on our um on our platform but but that also sort of depends on prices which we can't control so as you correctly guess we look at tonnage for air freight and number of containers for ocean freight tonnage for air freight a number of containers uh for ocean and is the reason that you measure it based off uh the tonnage for air but number of containers for ocean is because the number of containers are standardized it's always the same tonnage per container uh well just because that's the way the ocean industry works there these standardized containers which you see you know going up and down the highways 20 foot or 40 foot um so it's very easy to count uh air freight doesn't go in a standard container it goes in loose in most cases so we measure it in kilos or tons i see interesting okay so the company was founded in 2012. do you know the information the the life of the company what were those metrics tonnage of air freight number of containers production how much have gone through your platform well fundamentally enough we only started our platform in 2016. and the reason for that is that before yeah but the reason is you know actually we mentioned sort of expedia so if you think about the history when expedia launched uh i think around 97 um the data for air travel was all collected by companies like sabre and amadeus had been around for decades actually and so they had all the the backbone of the data and they could start marketing in our industry there was no such thing so we had to spend the first four years building the equivalent of sabre and amadeus getting all the data from the freight forwarders the the data the rules the uh in order to have automated pricing because if you call up a freight forwarder you do not get a price instantly you get it after two or three days so we had to create that infrastructure first in a way we had to be like a saber or an amadeus who collects all the data why people give it to you early on before you had scale what leverage did you have to convince them to give you the data so we actually provide them you know sas software as a service to help them automate their own pricing so these big companies like hellman and palapina ch robbins and they're using our technology in-house so you call them up to get a price quote it actually comes back powered by freightos so so they're using our technology in-house to make their price quoting much more efficient um and then secondarily that then enables them to sell online both on their own websites if they have but but especially on freightos.com yep okay that makes sense so 2012 to 2016 so you were doing revenue and that that wasn't all pre-revenue you were doing revenue on the sas model we're doing revenue and that sas model is continuing to grow um and then since 2016 we have the actual the public platform which is like a marketplace where you can uh where you can compare we don't we don't publish um the actual volumes on that but it's growing very rapidly it's growing you know at least 100 a year if not more on all of the things total dollars for the platform air freight tonnage and number of ocean containers yes typically i mean this year the prices have been a bit soft so the for example in air the tonnage has grown more than the than the dollars but yes they're all growing rapidly yeah that's interesting can just because i'm totally uneducated in the space and i don't know what's good or bad i don't know if a hundred tons or 100 you know billion tons is is big or small i mean can you give me a general range be as big as you want uh well i can tell you that the world market i was just looking at that today the world market is 30 million tons a year in air or ocean yeah and in ocean i forget how much it is but it's um tens of millions of containers okay um and yeah i'm not going to say how much we do but i will say that we're the biggest online so we do more we're still a tiny proportion of the world market um but we do more on the web than anyone else based up by some measure yeah i mean look your penetration of what you think the total market value is is obviously you know the smaller it is that you know you could argue the larger area and room you have for growth i mean so would you quantify yourself and say you're you right now less than five percent of the market you still have 95 percent that you can go tackle oh yeah i can tell you that we're less than one percent of the market oh good okay good um and but that's not because someone else is bigger that's because 99 is still done offline um there's another area behind the scenes i mentioned that we're also doing the the the rate management and so in there in air we're particularly strong we were just getting i just got an update today actually so air freight forwarders 30 percent of the world market is using our platform so we have an amazing market share there uh very few companies of 30 of the world market thirty percent of the freight forwarders that do everything the air freight forwarders yeah yeah exactly the freight forwarders who do aero using um web cargo either the web cargo is the name of our platform for freight forwarders how many total do do the whole market like how many are there total um so there are about ten thousand air freight forwarders there's about a hundred thousand fruit floaters in total um and we we don't have that we don't have three thousand we have about a thousand five hundred but we have most of the big ones so although it may sound like we have 15 of the market by volume we have 30 percent okay volume 30 interesting that's really good okay so 1500 meaningful ones that you have uh and and you said they make up the uh the majority the 30 of the market you mentioned the air freight market was 30 tons per year so you're basically 30 million tons so you're basically saying you're basically saying those 1500 freight forward air freight forwarders that use you represent about 10 million in tons per year in the air yeah oh interest okay i mean that's that's pretty significant market share now what one they want to understand about kind of what you're building because um this is a business model right i'm gonna turn away from your industry and more into sas in general but marketplace plus sas there's a lot of companies really killing it doing this you started it sounds like with sas and use it as leverage to launch a marketplace model before i ask more questions here i'd like to understand the significance of each so you know to the extent you can in the last 12 months what percent of your total revenue would you attribute to the sas model versus the marketplace cut you take right and by the way those are closely related you know the reason you're quite right this combination of a sas enabled marketplace is a model which people are pursuing and they're doing that because it helps to solve the whole chicken and egg uh problem of the marketplace so in our case uh and you referenced this before uh correctly nathan you know by getting by sending sas to the sellers on the marketplace we were able to engage with the sellers even before we had liquidity in the marketplace yeah the buyers the buy side the sell side actually the freight forwarders are typically selling um so in our case a lot of a lot of companies use this strategy to engage the buy side but we actually used it uh sas to engage the sell side and have the freight forwarders ready to sell on our marketplace when we launched it um in terms of revenue so sas is still in well what we do in marketplace is we don't we have our gross bookings or our gmv uh we don't book that as revenue we back up book only the net so if you look at the gross then the marketplace is a lot bigger you know just in there that sas is still bigger than marketplace in terms of our net revenue okay i mean why are we talking like sas is 80 percent and net revenue on marketplace is 20 uh yeah a little more than 20 now okay fair enough yeah okay 25 net uh that's interesting and you sorry which one do you say is growing faster the marketplace is growing faster it's interesting you know selling staff to freight forwarders is a great business it's growing at a good clip um but we already have significant market share especially in air so it gets once you're 30 of the of the world market it gets a little harder to grow fast um and you know 200 growth will have got the whole world market so we're starting to um starting to slow down a little there just because we're so big already uh marketplace like i said with less than one percent of the world market so uh that's growing very rapidly have you passed a billion dollars in gmb through your platform yet yeah you're twisting my arm here and not going to go into any more specifics actually well i'm curious when you you gave me earlier numbers of containers and numbers of things i'm curious you can give me the total what you think the total market is right so on the 30 million tons of the year that go through the air and the 10k or sorry and the other the 20 million containers that go through oceans what's the total gmv on that as a market the total gmv of the wild market yes so let's just be specific number of containers for ocean is 20 million containers right uh annually oh that was a rough number i need to look that up and there i have the number at the top of my head order magnitude tens of millions yeah well the the total market is about um at the carrier level um both air and ocean are each at about 100 billion order of magnitude and then when you add the freight forwarders they resell it then that gives you another 300 billion or so yeah so just to be the total sorry let me make sure i understand that so you you think there's about 400 billion in other words if you processed 100 of air freight right shipping you think that's a 400 billion dollar gmv business no air on its own is about order of magnitude 100 billion to be more accurate it's probably 70 to 80 billion order of magnitude ocean is a little bigger but maybe 120 billion um these numbers are not 100 accurate because there are different estimates but but they're definitely order of magnitude yeah well you're you're playing direct carry yeah go ahead sorry go ahead direct carriers 80. direct carriers air and ocean together would be about 200 billion and then the freight forwarders who resell that at about 300 billion yep okay yeah interesting well um and then again are you is it as simple as you taking a percent of gm3 through your platform or is that your marketplace model different than that it is yeah we we have slightly distinguished we take a slightly higher percentage for um ocean for air slightly lower percentage for air for ocean so there's a little bit of nuances but basically it's a percentage uh of the gmv yeah now i'm not going to push here because i'm certain it differs based off volume and who your partner is but just so i can get some kind of range is it between zero and ten percent or yeah well that i can tell you actually we're quite open about percentages okay just a little more discreet about the total volumes um so we take uh it basically comes to from the sellers we take two percent in ocean and four percent in air okay and from the buyers we take three percent mainly to cover the financial fee so the credit or the credit card three percent on ocean and air okay got it because that's not really to do with error ocean that's really to do that's not the cost of sale that's really the financial cost that costs the credit card that covers credit card processing or credit if they if they want to pay later so so on one cargo what's by the way what's it cost to ship one car container from hong kong to la um order of magnitude depending if it's door-to-door or not so let's say two thousand dollars is an average okay so two thousand dollars with an average order on our marketplace so if you set up that two thousand dollars what you're saying is you'll take because it's ocean you'll take about two percent right so that is uh four four uh forty dollars on the seller side and then you'll take three percent right about sixty dollars on the buy side so you're making essentially 100 bucks per cargo container shipped correct interesting okay very cool um last few questions i got deep into this and then missed some other macro stuff the last time you were on you said you raised about 50 million bucks still at 50 or have you raised more now we've raised more we've raised 95 million in total now jesus that's a lot of dilution why'd you have to raise so much well we're going after a big big market here so uh you know we have people around the world we have customers around the world it's a big market so i'm not worried about dilution so much i want to make sure that we're capturing the you know capturing the industry yep team size today how many people uh we're um creeping up on 300 okay how many engineers um about yeah the best part of half of that maybe a hundred and twenty hundred and thirty okay and any quota carrying sales reps if so how many uh we do have yes um we have you know both on the buy side on the south side um order of magnitude um 15 15. okay so not actually not a ton relative to to what i imagine your scale is um okay good so fifteen folks and then look at this there's a lot of digital marketing as well right it's they're backed up by the direct sales um and for the big forwarders we need direct sales but but a lot of our marketing is digital yep and when i if i asked you how many customers do you serve today how would you answer that well we serve a thousand five hundred trade forwarders so like i mentioned earlier we sir and then with the buyers on our marketplaces is thousands uh i don't remember even exactly the number but it's uh quite a few thousand yeah but you the reason i asked it so you consider the freight forwarders your customers um both but yeah technically the freight forwarders are our customers yep you when you when you last came on i'm i'm gonna guess this number one up when you came on back in 2017 you said on average these freight forwarders you had about a thousand back then i think you said and they put about twelve thousand dollars in terms of what they paid you per year on average uh when you add up kind of total volume they put through you has that increased well it's probably decreased because we now have a free offering for freight forwarders so some of them pass nothing yeah um at the top and yes we have more guys who pay us you know six digits we have guys who pay us two three four hundred thousand a year and we have more of those but then we also have more at the lower ends so i'm not sure the average has gone up interesting so just be clear over the past two years the trend has been you have gotten way more value from your top five percent of your customers right in terms of more volume to your platform but you've also opened up top of funnel as well even more with your free tier so there's more people coming in and getting started yeah very good all right zv let's wrap up with a famous five number one what's your favorite business book oh my goodness i haven't uh actually read a book i read sort of you know bits and pieces i've read a book for a long time um i still like the um the classic innovators dilemma yeah you gave crossing the chasm last time yeah and i still like that as well i haven't forgotten many years ago number two is there a ceo you're following or studying no not really number four what's your favorite online tool for building your company what was number three oh sorry no that was number three favorite online tools favorite online tool for building the company yep um well we use uh you know i'm not sure if this is your question we use tools like salesforce.com we use segments um and actually maybe our favorite tool is domo we use domo a lot for business intelligence okay number four how many hours of sleep do you get every night i sleep well seven hours okay and situation married single kids uh married kids and and two grandkids now ooh exciting how many kids yeah four kids four kids two grandkids uh my big daughter had uh baby girls yeah how exciting that's very exciting all right and how old are you i'm 50. 50. last question what do you wish your 20 year old self knew wow now nothing yeah you know i think it's fun to learn as you go along i wouldn't want to spoil any of the learning experiences for my 20 20 year old stuff guys there you have it from zv working with over 1500 freight forwarders creating an expedia-like experience for uh both air uh and cargo containers uh on on oceans believes a total market there on the air side is called 80 billion in terms of gmv they've got thirty percent right of this market share uh fifteen hundred of those freight forwarders using them but they're the ones that do do it a lot right there's ten thousand total but those fifteen hundred that they've got do it a lot a lot a lot on the ocean side twenty million containers or caught tens of millions of containers uh per year they believe they have less than one percent of the market so lots of room to grow and over 90 million dollars raised to continue to grow this again they make money by on the sas platform 75 of the revenue comes for that about 25 comes from their marketplace but that is growing drastically as they take four percent or two to two to four percent on the seller side three percent on the buyers side on both ocean and air v thank you for taking us to the top thanks nathan these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now