How Onfleet CEO Khaled Naim grew Onfleet to $35M revenue and 900 customers in 2024.

hello everyone my guest today is khalid naim he's the ceo and co-founder of a company called on fleet the world's fastest growing provider of last mile delivery management software all right kyle you ready to take the top let's do it all right man so this is a space people would think and assume has has benefited from cobit people need more help delivering everyone's you know ordering online things are delivered are you seeing a spike definitely yeah i mean you know as you can imagine uh retail is going through a massive sort of transition to online delivery focused um models so yes we we absolutely are so can you help people describe like what is the use case been especially over the past three months how are people using on fleek can you name a company um yeah so drizzly we announced recently they're an alcohol delivery service they've always been focused on delivery but you know many retailers are basically people use onfleet to deliver goods locally so our customers are companies that have some sort of the last mile delivery operation and they use our software to help them manage their fleets of drivers so routing dispatching real time tracking analytics proof of delivery customer facing communication so you know any retailer that's um you know looking for new ways to distribute to get their goods out to their customers can benefit from you know creating a pool of drivers and using on fleet to deliver to their customers so are the pool of drivers on your payroll full time are they contractors are on your cut or are they on your customers payroll full time customers payroll or they are contracted as a as a third-party courier so we also allow for businesses to work with third parties and use on-fleet as kind of a collaboration tool or orchestration layer to interact with that third party so they can pass the work over the third party courier company executes the work and then you know the the retailer gets all of the data the visibility as if it were their own fleet you launched this company back in 2015 were you delivering were you hustling and hustling and delivering yourself and had the idea or what gave you the idea no that's not how we got started we got started we were actually originally down at stanford working on location-based services technology so we were targeting emerging markets at the time this is back in like 2011 helping people that lack functional street addressing systems in their countries to communicate locations with delivery services that's how we got started so we we created a simple web app that allowed anyone in the world to create a url that represents a physical location so that was kind of uh we called it adi and addie was the kind of the the the sort of inception of on fleet happened um as we were building it we sort of identified that these companies that we were talking to for for addie just didn't have any technology um on the back end they weren't they were managing their fleets with pen and paper chat apps phone calls text messages and meanwhile here you know we were in silicon valley and saw all of these companies emerging around us that were basically just using smartphones to better manage fleets of drivers and we saw an opportunity to build the infrastructure for that kind of emerging world and and walk us through customer growth so i remember i mean you've been on a couple of times back in 2017 you shared you'd broken 300 customers in late 2019 or september you said about 500ish customers i was about to almost a year ago now what are you at today today we're close to 900. we're around we're around around 900 right now actually and they're all like do they all fit the persona of drizzles of drizzly drizzly sorry no uh no it's close come on give me credit yeah um definitely not drizzly's you know kind of a modern um you know new consumer-facing like direct-to-consumer delivery service for alcohol but we have customers that are more traditional that have brick and mortar locations total wine and more is an example in that industry their total line what total wine and more they're an alcohol the largest independent uh retailer of fine wines and spirits in the country um a gap you know more traditional sort of retail uh sweet greens so we work with restaurants as well wait how does gap use you so gap in some of their international markets they actually have fleets of drivers that are doing same-day delivery so they offer same-day delivery in some of their international markets and they use that fleet and that fleet that they use to do those deliveries is powered by oncleed interesting okay so using the sweet greens example i mean i'm just thinking well wait why the heck would sweet queens use on fleet when they've got ubereats and doordash and all that and the only answer is the margin profile using you is much better for them yeah great point so they do also work with ubereats um and maybe others as well but i know ubereats and they so a lot of retailers a lot of restaurants are adopting a hybrid model where you know they still there is sort of omnichannel right they need to take orders and from however they can um especially now and they but but because of the you know the margin profile of having their own drivers especially if it's a large order like a catering order um then you know it makes sense to have their own fleets of drivers and to use on fleet to manage those workers the the cost is just is a lot lower when when you're talking about a large order so can we just role play for a second i'm sweet green i have a new 100 order i'm gonna use on fleet can you sort of build a little mini p l for us well so the biggest cost is going to be the driver right so you have a driver on payroll um depending on how you know your location and how you the driver is going to be the biggest uh cost usually they're bringing their own vehicle um in this you know in this day and age with kind of the gig economy drivers you know show up with their own vehicle so you're not leasing or paying for that vehicle or dealing with maintenance um if you look at the p l for like uh you know the trucking industry those are big line items there's fuel costs there's vehicle leasing maintenance et cetera and the gig economy sort of local last mile delivery um typically the largest cost is paying for the driver so say you know 15 20 bucks an hour i got that but what is on fleet take out of 100 order so we don't take a margin so that's the nice thing about on fleet is we charge you based on the feature set that you need within the software it's a sas model so we talked about this last time but it's you know depending on the feature set and the task volume so we do you know charge you based on the delivery volume but we don't care if you're delivering something for ten dollars or a hundred dollars yep yep this is i wanted to give you a chance to kind of explain that because i think that's a massive arbitrage plate for anyone that needs less mild delivery is you you do not maybe your vcs would argue you should but you take no percent of sale it's based off number of tasks processed through the system in a feature set correct yeah you know we're not driving the sales so you know we can't really command a margin um and we don't even know the value of the items that are that are going through all we care about is the volume of deliveries the number of transactions and you know when a driver starts a delivery completes it we say okay that's one task and that adds to their um to their task usage and if they exceed a certain threshold then they they start paying on a per usage uh model but initial they have up to a certain volume that's included in their in their base rate last september you told me each customer was paying somewhere around 800 bucks on average per month is that still about the sweet spot that's the average yeah that's about right i think we're closer to 900 now but in that range and paint that picture for us real quick if i'm paying you 900 bucks a month how many tasks are you you probably processing for me so our average across all of our customers uh paying about 20 cents a task okay interesting our highest volume customers are all the way down to you know 10 cents a task and lowest volume is you know a little higher than 20 cents a task if you're below that like initial tiers threshold you're going to be paying a lot for per task got it so 900 bucks a month at 20 you know 20 cents a task or something like that i mean that's what 4 500 tasks or about 150 deliveries a day through on fleet something like that yeah yeah that sounds about right obviously you know it's it's a the distribution is you know pretty pretty much across the board i mean we have customers doing hundreds of thousands of deliveries a month and customers doing hundreds a month so um it varies pretty pretty dramatically across customers but yeah that sounds about right how many across all your customers how many tasks last month across the entire base we are north of 3 million now wow so you know 100 000 plus a day so i mean at that scale you have to have people that want an asset in this space calling you up asking to buy the company you've obviously chosen not to sell why is that we think we're just getting started i mean you know this this space is just is really growing quickly um you know we've we've achieved a lot over the years we hit break even a couple years ago um break even still break even yeah i mean with the growth this year you know our revenue has growth has outpaced...