How FreightWaves Hit $20M ARR by Sourcing 70% of Enterprise Deals from Its Own Media (Interview with Founder and CEO Craig Fuller)

Introduction and Welcome

Nathan Latka

00:00Please help me in welcoming to the stage Craig Fuller from FreightWaves.

Craig Fuller

00:06>> Good

FreightWaves Overview: Media Meets SaaS

Craig Fuller

00:11>> afternoon, everybody. It's always great to be back in Austin. It's one of the greatest — I think one of the greatest cities in the country. And it always reminds me of the college football season that is starting up again. So, excited that we're back in fall. It's my favorite time of the year. I think this bringing together founders to talk about what's happening around the SaaS business and how to build businesses, whether it's bootstrapping,

00:35>> using interesting marketing techniques to acquire customers, that's what this forum's all about. And what I'm gonna share with you today is the story of FreightWaves. Now a lot of people think of us as a media company. We provide supply chain news, data, and context for the global supply chain industry, and we have journalists that write original content. So if you ask someone who is familiar with the brand, they would suggest that we are a media company.

Key Metrics: $20M ARR and Unit Economics

Craig Fuller

01:03>> Our investors, on the other hand, think of us as a SaaS and data company. And in the four years since we've launched our SaaS business, we've achieved 20,000,000 in ARR, and we burn about a million dollars a quarter, but we add about $2,000,000 of net ARR per quarter. We have some of the most compelling unit economics of any enterprise SaaS company, and we're still growing exceptionally quick. And this is really a tribute to our, model of

Company Background: Chattanooga and the Global Supply Chain

Craig Fuller

01:38>> combining media with SaaS. We have coined the term content supported SaaS, which I will walk through how we built this and how we got this today. So a little bit on FreightWaves. We're based in Chattanooga, Tennessee. We have about 200 employees, and we focus on the global supply chain. So if it's a product that moves through the economy, if it's physical goods part of the economy, that is our focus and that's what we are entirely centered

02:07>> on is understanding what's happened around the global economy. I'll walk through how we provide data and intelligence, but the important thing that I think is really sort of different about our business is we go to market thinking about what the community needs to understand what's happening in the global supply chain, the community being the community that we've built, and using both content and data to get there. This is just a story of our growth trajectory. You'll

Growth Trajectory: From Media to Data

Craig Fuller

02:37>> notice, and I'll get into this in a few minutes, is that we started out as a media company. That's how we monetized. And over time, data and recurring revenue have increasingly become part of our business. And we'll talk about what that looks like as we move forward. I often start presentations that for folks that don't know who FreightWaves is and say, the way to think of us as if ESPN and Bloomberg had a baby in the

03:03>> back of a semi. And what I mean by that is, if you think of the way Bloomberg has built their business model, they have a really substantial media brand. They're the largest media organization, news organization in terms of editorial and journalists in the world, but they really make money on their data and their subscription products. People pay companies, traders pay $25,000 a year for this, recurring for this, data platform that brings in the world's economic and

03:29>> financial data. And we are building that at FreightWaves, except we're focused on the physical goods part of the economy. But we also live in an industry and work in an industry that's very blue collar, and you've got truck drivers, warehouse operators. They need to be spoken in terms of the tone and how you talk to them in their own language. And I think ESPN has done remarkable job of really becoming fit. You know, the folks at

03:56>> ESPN are often fanatics. They're former football players. They're former coaches. That's what we do when we recruit our editorial team. We recruit people who were actually on the field to write editorial content. So that it's written from a point of authority and it's written from a point of credibility and not written from somebody who's never actually dispatched a truck, driven a truck, or loaded an airplane. So a little bit behind the scenes, 200 employees, we

04:24>> have 50, right at 50 analysts, I'm sorry, 50 journalists, analysts and data scientists. We get about 85,000 people a day that tune into our streaming content live. And then we get about 3,000,000 visitors, across all channels, across our entire world. 65% of supply chain content is originally sourced from FreightWaves. So if you're reading the Times, you're reading the Washington Post, perhaps you're reading in Bloomberg, a lot of that data material actually gets originally sourced through our data

04:56>> and through our content. And it's as you anyone who's known four years ago, people could, can you really build a media business on supply chain? That sounds kinda boring. If you've lived through the last two years, you know that's actually not true. FreightWaves, as I discussed, has a content supported business model. And what that means to us is we go to market with really two primary products. One is our SONAR data product, which is on average

05:21>> about $25,000 per year is what customers pay us for the data. And our media offering, which is advertising supported media. So companies that wanna reach the same audience, the very same decision makers that we want to reach, are paying to advertise to us. If you've ever watched Bloomberg television or read Bloomberg articles, you will see services and products that are being pitched to other traders that also happen to be Bloomberg customers. It's the same business model.

High-Frequency Data Product and Market Intelligence

Craig Fuller

05:53>> It's just that we focus on the physical goods part of the economy. Our data product, because this is really a SaaS conference, I'll talk a little bit about what we focus on, is high frequency data. So we're tracking the global economy and really at what's moving around the world within twenty four hours. So when the virus hit, Wuhan, China in January 2020, we were monitoring what was taking place and preparing supply chain professionals for what was

06:23>> about to come into The United States. When the economy was starting to roar back in mid, April 2020, it was not apparent to anybody else, but supply chains, you actually see the economy eight to twelve weeks before everybody else does. On March 31, 2022, I wrote an op ed that said we believe a recession is imminent and that global transport sold off. And it's because the high frequency data that we track is showing what's happening

06:57>> globally way upstream. Think about it. If you're building a product, if you're manufacturing a product, if you're ordering a product or a retailer, those products have to move twelve, sixteen, eighteen weeks before you see it and consume it as a consumer. So we see that data. And through that data, we publish it and our editorial team brings content to it so that this data all comes alive. Our media business, I talked a little bit about it.

07:24>> I think really the focus of today is this can apply in any industry. I'm a true believer that content supported x models and what I mean by that, it can work in real estate, it can work in SaaS, it can work in anything. It's basically going at it in an editorial-first mentality of developing content that will drive your audience to buy and consume your products. Let's think about this for a second. Everybody in this room

07:50>> is here because of the content that's being produced on the platform. You have come across and become aware of it, not because you're buying something, but because you're intellectually curious about the topic of SaaS. You came here today for the very same reasons that our customers buy our data products. They become aware of what's happening. They become aware of these trends. Oftentimes these trends that we see because it is supply chain and is upstream happens weeks

08:19>> or months before. Or maybe they're just curious about why is a ship stuck in the Suez Canal going to impact my life? Or why can't I get baby formula for my babies? Those things people get curious about and they're really concerned about. And having that information and being the market leader and in providing that context has enabled us to build not only a very successful media business, but also a very successful SaaS business. So when we

Media Business Economics and Negative CAC

Craig Fuller

08:48>> talk about our media business, our investors often don't really spend a lot of time thinking about media. It's a 50% margin business. Our data business is about an 83% margin business. It operates under traditional SaaS metrics. The reason that they love the media business is it actually generates a lot of cash flow. And that cash flow enables us to reinvest back into our R and D for our data, but it also creates something that we've coined

09:17>> negative CAC. So if you think of a traditional SaaS metric of customer acquisition cost, we actually have a term called negative CAC. So when I pitch in investors and talking to SaaS investors, they wanna see the metrics of your SaaS business. And we provide metrics of SaaS business the way everybody else does. But we have something that very few companies do, which is as we go out and develop content and are developing customers and creating top

09:44>> of funnel, the advertising contribution margins, the profits we make in our media business actually enable us to have perpetual and almost unlimited growth without having to acquire, pay to acquire customers. That's not to suggest that we don't pay Facebook and Google and LinkedIn an enormous amount of money to advertise like every other company does, but 70% of our deals that come into our enterprise SaaS business are closed because those companies read about the data on our

10:20>> own media business. I want to talk a little bit about data businesses because this is, I think, rarely talked about. We think about SaaS businesses, workflow, but I think data businesses are incredibly powerful and it's really what we're focused on. We're not in workflow. We don't match freight. We don't actually provide software that helps companies essentially operate freight movement or track freight. We provide market level data and intelligence that powers some of the largest and most

10:51>> robust supply chains in the same way that a lot of market data businesses do. One of the things about data businesses, if you can actually get scale and you can actually have market success, is these businesses could live on forever. This is a great sort of example of that. Dun and Bradstreet actually has four US presidents that work for it. Imagine businesses that have been around so long that they can say that, that Abraham Lincoln, Grant

11:17>> worked in their business. There's very few and these are data businesses. They don't die. They're like cockroaches. They will live on forever and ever. Because if you become the source of information and intelligent in your market, no one can kill you. Now as we talk about the economics of data models, it's all about data. You have to have something unique and proprietary because if you don't, then you become a commodity. They have very slow beginnings, and

11:41>> I'm going to show you how long it took us to get scale in our data business. It was a very slow go versus the size of our media business and how fast it went. It accelerates over time, and as I've mentioned, they are super sticky, but they're also incredibly rare. If you think of data businesses in markets all over the world, we look at companies like CoStar, which provides, construction and real estate intelligence, IHS Markit, which

12:06>> is now part of S&P, Bloomberg, DTN, which is all about oil, Morningstar, you probably know it if you've ever bought a mutual fund, S&P Platts, all of these companies are involved in global commodities and markets all over the world. But remarkably, even though 40% of the global economy is tied to supply chain, to physical goods movement, there has not been a central platform for intelligence across all modes, and that's what we've set

12:39>> out to build. So this is our SONAR platform. And what it does is it tracks high frequency supply chain data. We take the world's software platforms across it. So we see transactions from Amazon, P&G, Nissan, Nestle. We see the world's freight transactions when they order those trucks and they order their planes. We see it in real time. Containers being loaded in China. We see it in real time. We then provide fundamental data and analysis

13:05>> out to the market, and that enables companies to make and interpret information. This information then gets put into context and intelligence, and we editorialize it through our media business, and that has enabled us to grow our entire platform. So this is our revenue growth. One of the things I want to point out, because I think this is really important. If you look at our SaaS trajectory, it's very slow. Our investors were incredibly patient, a long time

Revenue Mix: Data Subscriptions Surpass Media

Craig Fuller

13:37>> relative to the media business to build up enough momentum. And we look at data subscriptions as a percent of our revenue. Back in 2018, it was 5%. And this year is the first year that our subscription data revenue will have surpassed our media business. They're both growing 90% year over year. But the really important part is that now we can truly say that we are a SaaS business first. A little bit of how we do it

Content Engine: 50 Articles a Day and Streaming TV

Craig Fuller

14:08>> is we provide the insights and we do it through a lot of methodology. So we post about 50 original articles a day. We're not syndicating content from Bloomberg or the journal. We're actually writing this stuff, original content. We pay competitive salaries from Bloomberg and the journal. So you're paying a reporter a 100,000, a 120,000, maybe a 150,000, picking them off from very large media businesses, but they become your primary source of content lead generation. We provide

14:36>> research through white papers that enable us to capture the leads, and then we provide about three hours of streaming live television that goes out to the decision makers that have to get involved in these supply chain issues. So when a president of The United States threatens to shut down the border of Mexico because he wants a wall built and wants the Mexicans to pay for it. If you're an auto supplier and you've got to deal with

15:02>> the threat that next week your border is going to get shut down, what do you do? You've got to answer questions to all of the executive management team. What are we doing? Well, we're right now getting a warehouse in Laredo because we don't have a choice, but there's no warehouses there. Where do we go? This is the type of stuff that we get to cover every single day. How do we put our data? How do we

15:23>> make it present? We make it ubiquitous. This is just a few examples. We put it into our articles with embedded into our articles, write editorial content. We put it on a scrolling ticker. We put it into a daily animated video. We put it in data charts and we put it on our streaming TV. We are trying to make it such that people that are in our community are aware of everything that we're seeing, and we provide

15:46>> it completely for free. So if you never wanted to pay us a dime, you could easily figure out what's happening around the macroeconomic situation in the economy. In fact, all of you guys are welcome to do it. It's completely free. But if you run a $70,000,000,000 logistics operation and you're head of Amazon, a 10% error cost you $7,000,000,000. And that's the reason that the decision makers come and try to understand what's happening around the global economy.

16:14>> And that's why they tune in. When we post our data product, we embed, if you have data intelligence in your product, and a lot of SaaS companies do this as a derivative, we actually have a watermark and we want these charts shared on social media. We want them in the wild because guess what? When you see those charts, I see them on my LinkedIn. I see them on Twitter. I know exactly. And so does everybody else

16:36>> where they came from because that watermark is there. It's ubiquitous. People know the source. So they can easily share it and now everyone knows where it came from. In terms of product engagement, we really got into streaming television because we had a very large virtual events business. In 2019, half of my $11,000,000 in revenue came from physical events, 5,500,000. All of a sudden it was zero in 2020 and yet we grew 70%. The reason is we

2020 Pivot: From Events to Streaming Television

Craig Fuller

17:07>> pivoted really quickly into streaming television. And now 60% of the content that we produce is actually consumed through live video or on demand video that we're embedding our charts into that content. We also have a SiriusXM radio show. They came to us and said, hey, truck drivers are listening to this in their cabs. Can we provide real time intelligence? So every day, Monday through Friday, for two hours, we're talking about what's happened in the market. Now

17:36>> truck drivers aren't interested in the spot rate necessarily, but they are interested in market conditions, regulatory issues. They want to talk about and complain about shippers and their dispatchers and the law. Those are the things that we do. Again, it's being part of the community and doing a lot of things you're not getting paid for because it's all about brand and community equity. Streaming television, we talked about. We have a really robust studio. We have 20 full

18:02>> time folks involved in either our television content, producing content, or in our videographer team. And basically, if you came to our studio, it looks like a cable television production studio. In fact, the person that runs our studio used to run ESPN International's production. And we built a cable network level in terms of infrastructure that enables us to put this information out. Every single morning at 9AM, we provide three hours of content in something called FreightWaves NOW.

SiriusXM Radio Show and Community Building

Craig Fuller

18:38>> It's basically a morning show. I know you're probably not that interested in freight, but if your job and you're one of the 8,000,000 people whose job depends on moving the economy, you are interested in what's happening. And we provide a morning show to prepare them every single morning. We have guests, we have charts, we have weather, we have all the things you would expect on the Today Show or CNBC or whatever your preferred network is to

19:00>> wake up to, talking about the economy, the physical goods economy, and it's all through data. And again, it's all free. We are not charging for this, but again, it's top of funnel because guess where those charts live? People ask me, how can I get the data that you share on Twitter? How can I get the data that's in on your website? Well, you can come pay us the subscription. We're happy to sell it to you. And

Podcast Distribution: What the Truck

Craig Fuller

19:22>> it creates an enormous amount of social credibility and market credibility for it. So these are just examples. One of the podcasts we do gets about a 100,000 downloads a month called What the Truck? Because we take the video, we strip the audio, and put it on a podcast because we live in a market where there are truck drivers driving across the road. They're not turning on TV. They want to know what's happening. And then last but

Live Events: Revenue and Profit from Industry Gatherings

Craig Fuller

19:44>> not least, we bring the industry together much like you guys have done by bringing the industry together by having events. So we do two big events per year. We did one in Northwest Arkansas. We did about 3,600,000 in that, made about 1,300,000 in profit. But it's bringing all of the industry together, the C level suite, the people that are going to spend on average more than $10,000,000 a year in CapEx in logistics together to come to

20:13>> our event to talk about the future of supply chain and what's happening, all the market conditions. And it's a two day commercial data. Thank you. I appreciate your time.