How Shipedge CEO Jose-Ignacio Flores grew Shipedge to $10.2M revenue and 300 customers in 2024.

hello everyone my guest today is jose flores he's an electrical engineer and serial entrepreneur he's developed inventory systems for small size companies since he was 12 and then at erickson corporation as an employee after college he launched a multi-channel retailer company in 2003 and then developed an automation tool for to scale this e-commerce business in 2007 he started a fulfillment services company that sold in 2016 and was recently acquired by rakuten in 2016 in july 2016 he started ship edge his current company with an elite development team it's a full stack e-commerce operations software platform warehouse management supply and logistics management for fulfillment networks jose you ready to take us to the top uh yes great all right that's a mouthful so help us understand what the company is doing and what your pricing model is are you pure place ass uh yeah we're sas company um we have two types of customers so first what we are is uh what we call a wms or warehouse management system uh so we take care of everything of after the sale has uh happened so after you finish a sale online on any channel whether it's a marketplace or a shopping cart the order comes into shipped automatically we tether it to one of the warehouses that has your product so one of our mottos is inventory everywhere because we can route the order to the right to the party that has the inventory something else that we do is that we keep up with inventory uh in the channel so you don't over sell and we can uh update the inventories on social media are these are these physical warehouses sitting on your balance sheet the the no the warehouses are our clients and our clients uh suppliers okay so you don't have any big hardware or or real estate expenses related to the operation no no so it's purely software as a service we charge a fee that it's uh depending on the modules that they they want so they can choose an order management system for one of their customers uh two order management systems they can choose a shipping tool they can choose from devices so for example for the devices we charge 15 a month for each device and health device for moving inventory around and yeah the price starts around 600 so it's not a solution for the smaller guys it's more a solution for uh people that really want to accelerate growth they probably have investment in some real state like a big warehouse or something like that jose what would you say kind of the average i know you have a lot of cohorts what would you say the average customer pays you per year for the tech around 20 000 okay so call like a thousand or 2000 a month something like that yes and most of our customers are third-party logistics companies or fulfillment service providers name one or two uh so for example we have uh rally live guardian logistics uh fulfilled uh it's a company called fulfill ship ship zoom we have a number uh of uh companies what was that ship sue s spell it uh zoom ship zoom om yeah okay it just uh started with us you just mentioned the 15 a month for each device i mean that sounds like a piece of hardware are you providing the device no we just give access to the app so we have an app okay and yeah we do have a sourcing partner um so we have a device that we can rent if the customer wants to go that route how many of those have you rented in production today and deployment of hundreds but you know we don't um yeah i can't say exactly how much we are still bootstrapping it's a company privately owned that's great why did you decide to well first off put this on on its timeline for me so we can understand your history when did you launch the company what year yeah so this is a company that's been in in the works in my mind for for over 10 years right but we launched in july 2016 officially and uh with uh we saw exclusively as a software as a service company but the software came from a previous company i had where i had i owned the warehouses and you know we managed the warehouses and we were providing the service for other clients for for merchants selling online um but since then the software has improved tremendously and now we uh software service we rented i guess uh access to the servers uh to many customers and some of sellers said but how did you get walk me through the early days how'd you get your first 10 customers do you remember well yeah let's start way back in well i was selling online i was selling on ebay amazon in 2003 as one of the titanium power sellers i was selling camera accessories and then the 2007 problem came up the recession and then i couldn't afford to pay the fulfillment service partner i had so i brought that in-house and because i didn't have enough space for my inventory i partnered with some guy who did not have the means to do it he had the labor and the space but he did not have the software to automate and to to provide what i wanted so we created that software and since i was creating it for my company i decided to create it for everybody else and um so your first 10 customers after 2016 came from basically warehouses and third party logistics companies you'd already worked with in your life selling on e-band camera parts and things like that uh no we just they they came out because they needed the service yeah but how did you it's not that easy right how did they actually find you what was the job title after um i was in production so i started in 2007 with my own warehouse right not as a software service but as a service provider and then um that the first year we had 80 customers it was it was booming and then i grew to a number of warehouses and i sold the company but i sold the company without giving away the software i just sold them as licensed to the software and then we kept the software and then we started improving the software and prioritizing it so we can commercialize it with other people and that was launched in 2016 and uh and since then you know it's been uh slowly because we don't want to trip on ourselves when you launch a warehouse there is an implementation process there are certain needs some customers have so so it's not it takes us at least two three weeks to launch a warehouse so we are getting around five a month uh no more we could get a lot more but i'm trying to pace it so you're currently adding about five new warehouses uh uh per week per week you said per month okay adding five per month and how many total are you serving today uh we don't really say this it's on the hundreds it's uh okay around 300. yeah that's fine now do you consider each warehouse a customer or do those 300 warehouses belong to say three customers you actually interface with uh when i i was referring to warehouses as one customer but many of them have several warehouses you're right so some customers will have a warehouse in canada another warehouse in the u.s east coast west coast yes so do you actually have you actually have 300 customers but it's actually more like 500 or 600 actually physical warehouses they put you in yes and some of those customers have like 80 customers themselves yep um yeah those are the good ones the one the one to many plans they're higher more revenue for you right yeah i mean my philosophy in business is that it's what i can do for my customers rather than what my customers can do for me that's something i learned in business if i kind of share something with the audience here would be that uh think of what you can do for others and the rest will will follow so jose so i mean just to be clear though i mean you were building this for decades that that advice doesn't just happen because you can't just help customers if you have no revenue to build a team to help them right you you know you were building the right thing because you slugged away for you know decades but i have to say that i did it in a very selfish way at the beginning because i was creating it for myself and i was my own customer that's perfect my own customer as the warehouse as the customer of the warehouse then when i had warehouses i was building for myself because i had the warehouse and now that i'm building it for others it's a it's a much more gratifying experience because it's about of course customers help me understand a little bit more about kind of team today how many people are on it uh we have 12 full-time developers and we have uh staffing marketing and sales around five guys okay so about 17 total yeah okay and as you're obviously growing the company churn is critical in a sas business do you know what your churn is today um i lost two customers since i launched so basically no well what about what about customers that also you know churn isn't just measured by lost customers it's also measured if customers started with 10 warehouses then and year two downgraded to five customers they're still a customer but they pay you less yeah that hasn't happened okay so no downgrades and since 2016 over the past three years you've only lost essentially two customers so churn is essentially zero yeah i mean you're too cheap uh the other one was that he sold his business so josie i actually see that as a weakness uh because it makes me think that you're actually providing way more value than what they're paying you and if they paid you more you could hire more engineers and give them more value are you priced too cheap you're right i believe so yeah why would you increase prices uh i don't um i think that my customers are not doing extremely well...