Simpliship revenue, CEO Cory Margand, team size, customer count, churn, and more in 2022.

hello everyone my guest today is cory morgan he is the ceo and co-founder of a company called simpleship which is a startup focusing on creating an international aaron ocean freight sas powered marketplace for freight procurement he spent 14 years in supply chain management working with companies like adidas reebok rockport and has a masters in operations design and leadership from warchester polytechnic institute all right corey you ready to take to the top yeah absolutely man all right so what you guys do is a bit of a mouthful try and simplify it for me no pun intended there what do you guys do sure so in the world there's hundreds of thousands of freight forwarders that can move your freight and if you're a shipper the problem is finding the right price and right service levels for your container or air freight that you're shipping it's b2b right um and you know it's highly fragmented because there's hundreds of thousands so it's similar to when you're going on kayak as a consumer and you're trying to find the best price for a hotel you know all over the world we do a similar approach for that um it's not exactly the same because international freight is very complicated but that's a simplified version of doing that we basically use software to automate that um that process of finding the right right rate and the best service levels so like an adidas a reebok these kinds of customers it sounds like you're playing in the enterprise space but correct me if i'm wrong on average what's the customer paying you per month or per year to use your technology yeah so we actually give um in most cases we actually give our our software away for free um and so what we do is we're we're a marketplace approach so forwarders uh sorry bcos like adidas or shippers we call them as well um can bring on their providers um and use our marketplace as well so we vet our forwarders so it's not like the wild wild west you can feel pretty good about uh how do you make money sure so we take a transaction fee basically on on the awarded freight basically um so you know we are very much an api first company so we integrate on both sides but basically what happens when the forwarder receives freight from a bco we get a commission of that freight okay and is it the same no matter what like how do you quantify what that commission is yeah i mean right now so it's you know we being from the uh the international logistics space we know basically what the cac is for forwarders so we know we have some leverage there i mean right now what we do is we do two percent on the the ocean side and five percent on the air freight side now it you know for us there's a lot of room to uh work with as long as it's below the fortress cac you said two percent ocean five percent error yep and let's role play real quick just so my audience understands i'm adidas who who are you let's say you are the other person adidas needs and simplifies in the middle of us who who are you the actual manufacturer of the shoe in china i'm sorry repeat that nathan who are you right on the side of the equation so i'm adidas sympathize in the middle of us and you are what the manufacturer of the shoe in china well you i'm not uh we're we're a software platform no no we're we're role-playing we're role-playing simple ships in the middle of us right so yeah i'm adidas who are you yeah sure so basically you would have a forder so you have forwarders mvos then you have yeah sorry we don't i don't know what those acronyms where things are yeah so there's so basically from uh from a high level you have an ocean carrier which as the actual vessels or the the ships right and then a freight forwarder buy space with those with those uh ocean carriers up front they then take that space and resell it to an adidas or any um shipper basically and we sit in the middle of those hundreds of thousands of forwarders and basically take the adidas freight and systematically contact all the forwarders either through api integrations or through spot rates and make sure that we're basically getting them the best service rather than having adidas have to go out for rfps all the time okay let me let me get paint this like really clearly so there is a massive container ship traveling from hong kong to uh to la right um and and it you know carries thousands of these cargo containers a freight forwarder has purchased one of these containers which costs two thousand dollars to reserve the full space adidas needs like one third of that space the freight forwarder would typically charge them i'm going to make maybe they mark it up 100 so they're going to charge them whatever 2 000 bucks for just one third of the container that costs them 2 000 all together you're essentially going to take that slot worth 2 000 right compare it to all the other kind of freight forwarders that have pre-bought containers on that ship and then adidas can pick the cheapest option exactly cheapest or best transit time or whatever the case is but they'll have full profiles so it's not i mean it's not just about price sometimes it is but sometimes it's not but so they'll get the full picture of what it would cost them from an end-to-end standpoint through our platform interesting okay so over the past i'm curious about this number over the past 12 months how much you don't call it gmv but i guess how many dollars of placement on the ocean and airside have gone through the platform yeah so we're it's it's a bit tough because we honestly we could we could care we look at the transaction fee but i guess you can just actually look at it but it's multi-million so we are a bootstrap company dude i love it i love that yeah thanks it's been uh been difficult for sure but i would say um we're probably in the 10 to 15 million dollar range and what's the breakdown on uh on air versus ocean um yeah it's a good question so we are a little bit different than your typical open marketplace especially with our api approach because we we integrate our api with specific marketplaces right and so we have one customer that you know is very abnormal compared to the other ones they only do multi-millions of freight spend a month right no ocean freight but i would say typically if you're looking at you know the u.s market specifically you're looking at probably 75 percent ocean freight versus the 25 air freight interesting um and what in that 15 million that's gone through the platform that's over what period of time the last 12 months uh probably roughly yeah give or take yeah so how do you and it sounds like you have one kind of major customer how many how many kind of the you know how many people equivalent to adidas are using your platform how many customers uh so we have well not not adidas from the size of adidas actually they don't even use our platform it's just you know that's who i work yeah but that persona right how many about persona yeah so we have i would say 400 of that typical persona ranging from smb all the way to large global enterprise okay and then so that's 400 on once in the marketplace and then how many freight forwarders are listed on your platform that you'll sit in front of yeah sure we have about 350 um and we're growing that daily um the difference in us and and some of our competitors is we're not really an open marketplace like i mentioned before because if you open a marketplace outside of the us it's not not highly regulated in your basement in china providing rates to our customers and we don't want that to happen so we're actually very careful on who we onboard so the reason i bring this up is 350 is just a number right it doesn't mean much but we could have i mean we don't want to be the marketplace that has hundreds of thousands of forwarders on our platform we want to be the highly curated so we take it slow and we make sure that a4 we're bringing on is actually adding value to our current vco or shipper you know network so so tell me more about the company so your bootstraps how many folks are on the team today uh six and when did you launch uh so we launched basically halfway through 2015. okay 2015. so you've been at it caught three four years um bootstrapped what was total revenue in 2018 do you know uh i don't really share it to be honest for many different reasons but well you just said you put 10 to 15 million through your platform and you take anywhere between five and you call two percent let's say average or three percent that would mean about 450 000 in total revenue over the time period that 15 million went through you so you've already kind of shared it with me yeah sure depending on the product market but yeah that's typical okay what do you mean depending on the product market i understand well it's yeah so as you're doing bootstrapping you also do typically other stuff so on on the domestic side for tmss we kind of what's the team oh sorry transportation management software so basically they're doing the domestic version of what we do so they do trucking um you know parcel maybe but everything within the us versus international and so what you end up doing is um you know in logistics specifically there's not many logistics teams with budgets for software especially because we're kind of early on the transition from to digital um so what happens is they'll oftentimes come to us and say look we like the software we like the rates you guys are getting but we don't have a budget for software so what we do is we actually uh want you to handle it internally so we do what we call quote unquote managed service um so that's why it's not necessarily apples to apples and this is where we control the margins yeah yeah i mean this space though is hot i mean i had patrick on a while ago from i think he pronounces zanetta um like he's they're playing in this space um you know and everyone i mean you know they all all of you guys are kind of attacking us from different angles in terms of pricing kind of perspectives right so so like i guess my question to you is do you view yourself as a sas platform or not because really you have to close you have to get people constantly using you every month for you to truly stack your revenue um yeah i mean first of all zenetta has done a great job by the way they're different total we're not competitors of them they've actually revamped kind of the index you know how you get historical data in terms of sas i mean i think the approach is changing i mean i've had this conversation with so many people especially in the logistics but um i consider a marketplace as an aspect of sas now your pricing model might not necessarily follow a sas model um and to be honest from my standpoint don't really care because our api actually integrates with high volume shippers so my biggest um kpi is really how many integrations we're doing because that's all i care about because instead of going after one vco and getting let's say or charging them a hundred thousand dollars for your software instead we integrate with a marketplace that's trading chemicals all over the world cars lumber whatever it is and now you've got multi millions and you actually got 15 000 bcos that are trading through that market what's a vco a bco is beneficial cargo owner so adidas is a beneficial cargo owner so an importer basically but you just told me you're focused on scaling the other side the freight the freight forwarders not not the not the bcos uh no so actually that's that's not true we're actually concentrating on api integration so we're basically we have a marketplace right where bcos and forwarders basically match supply and demand but really the growth is coming from our api integrations which is b2b marketplaces or domestic tms that want to offer international to their customers let me let me play devil's advocate for a second you are essentially driving margin out of the freight forwarder business they have this nice little kingdom you're coming in and destroying it because you're basically making their prices public to adidas so adidas has more leverage and can choose right why on earth would they ever want to list on your platform when you're help when you're basically taking their margin and you don't do enough volume right now for them to feel like they're missing out on anything if they don't get on your platform yeah i mean sure so um that's a that's a really good loaded question uh so there's a few ways to attack this one by the way it's a good question though right that is the main thing it's a great question because i mean this is something we face all the time right it's it's it's you know you're trying something new and people are you know obviously so you be you beat the hell out of them that's the answer right you force them on your platform yeah i do but actually to be honest you the relationships are so key and this is why we've been able to as a team i think do pretty well because our team's all operators from the industry so relationships are still key yeah to answer your question um it's so many different dimensions but one is the cac for a forwarder is super expensive so not just from a a sales perspective not an operation perspective from from quoting and all that stuff sales cost like a thousand dollars a week just to maintain an account that's not additional incremental business hold on you lost me you lost me um it costs the person that buys the freight forwarder who buys bulk container space um to that then they resell to adidas it costs them a thousand dollars a month to maintain what so that yeah that forwarder is basically taking out that that customer adidas whining and dining or whatever the case is maintaining from a time perspective it's expensive super expensive they don't have to spend that with your market essentially if they go through your marketplace yeah i mean relationships still matter and then on the op side um you know quoting is extremely expensive so everything's manual today for the most part so it costs a four or five to ten dollars to manually quote one customer yeah it's expensive what does it cost what does it cost you to get another adidas on board typically you're fully weighted cac nothing no come on it costs you some you have to fly to them and meet them sometimes in relation sure sorry i just thought like from an api integration standpoint we don't we don't do it no no but fully weighted to get like another adidas a big logo on your platform what's it do you know what it costs you no i mean we're still so early on basically what we do is i mean we we actually don't even target large bcos anymore like i said we're targeting the api side of things because it helps us scale but you know in a grand scheme of things the difference is um for a freight forwarder when they call in adidas what happens is it takes six months to a year to two years to multiple years to actually get freight i can tell you because i sat in that seat um so i mean our where fraction that cost i mean really it's a fly out you know of course there's calls uh prior to that yeah so i mean it's it's it's a fraction of what a ford are spending if we actually want to go after that freight so what's your sorry i'm going to cut you off we're just running out of time so what i want to talk forward for a second now that i think i understand kind of how the company operates i mean how fast can you grow this thing what's the goal in 2019 i mean how much volume do you want to pump through the platform yeah i mean so we're we're actually so so like i said before we're targeting apis right so um api integrations we already have about 10 api integrations on the marketplace and tms side each one of those represents multi-millions in spend um so we're talking in a full year in 2020 probably um you know 10 plus million in revenue for us from those integrations alone okay that would be over what 300 million right or 400 million in terms of volume if you're going to keep 10 per 10 million which is three to five percent exactly yep so we have oh god no no that's good go ahead say we're gonna say i'm just gonna say like that we've really found a key niche in the marketplace approach because they're so high volume like no one buys just one drum of chemicals they're shipping you know hundreds monthly basically and that's one customer so that's kind of how it all all of a sudden exponentially becomes a lot larger yeah and so if 10 is kind of your goal next year i mean what do you think this year what's your stretch goal for this year um you know we're looking at so we have about this is a mix because we're still doing managed services right so we're looking at like 2 million in acv and so logistics a little bit different when you land an account halfway through the year you don't get the whole obviously contract value so it's a little bit up in the air right now contract season do you think you'll hit the two million like are you more than 50 of the way there right now no but we're not 50 of the way there now but we have 1.3 acv that's tied up from last year so basically that back half should speed up a little bit i see i see i see interesting um okay and so what percent of your total revenue past 12 months has been a split like been the commission structure versus you doing managed services to bring in cash to keep the company afloat yeah it's probably like 70 30 reverse the managed services versus the transaction 70 transaction uh 70 managed services okay right now in 2019 we'll have those 10 um api integrations go live yeah be really big for us and that's good that's the goal to really move all the managed services on to the pure tech solution yeah but dude you're due by the way a lot of people especially if you're raised capital will try and ding you for that i actually think it's a major what you're doing is very smart the largest the largest software companies start off as almost purely managed services it's even better when it's by a guy that is from the industry so like listen i think you're building this the right way i just hope you get bootstrapped and don't go get super diluted and raise a bunch of capital no i don't mean to uh i mean that's uh i think it's been really great for us i mean it's been stressful like obviously you know uh yeah i think the key is to obviously raise capital if you need it and when you need it of course i shouldn't say when you need it but you know when you can actually um have that leverage and continue on on your way rather than taking money uh not on your terms last question here do you have any idea what typical contracts like when you start when you launch an api ignore you get a new customer like an adidas a year ago what will they typically expend expand their transaction volume through you by year over year is it 20 expansion 100 it's really super tough because it's complicated like from the bco side what happens is it basically um ties in with their sales plans and then sourcing plans and supply chain so the volumes are really hard to tell on the bco side the marketplace marketplace is also tough because it's it's exponential growth for them as well but i can tell you what we have seen is around 20 growth on the marketplace side and what about any churn um we haven't seen it on the api side um the bso side we've probably had like maybe a one percent churn but you know once again it's also tough you'd have to look at it from a customer size perspective because you know you go from smb to to global um large enterprise so of course one hurts more than the other yeah yeah interesting and last question here before we wrap up the famous five you said you're hoping to do two this year what would that be in terms of growth rate over last year um it would be oh god it would be like 500 percent for us it would be oh wow okay so you're doing like you did like 200 grand last year 500 grand last year exactly exactly so it would be uh it would be huge for us i mean and that's all being really um boosted by inbound so you know we have really tight uh domestic partners that you know do freight or whatever domestic freight trucking and uh you know a lot of inbound referrals and then the api integrations hopefully as well yep no that all it all makes a lot of sense what's the team break down real quick how many engineers uh actually only one oh wow okay good good so you're chugging away man very good let's wrap up with the famous five number one what's your favorite business book oh uh i actually don't read that much to be honest that's okay there's one that actually i just read about platforms but i forget the title it's done by some mit guys yeah number uh number two uh is there a ceo you're following or studying uh no i don't i don't to be honest i don't follow ceo i could care less but i do follow business guys in our industry and um really learn from a lot of people like that and my mentors throughout my career number three is their favorite online tool you have for building your company oh god no not really i mean to be honest dude i'm not really into like we have a marketing guy that handles all that but i do they're not marketing just any tool you use productivity personalized yeah honestly my favorite is linkedin it's not really a productivity tool or anything but i can reach my you know followers and people inside the industry pretty easily corey number four how many hours of sleep to get every night oh my god i i sleep terribly anyway but let's say i would say i hope to get five would be awesome and what's your situation married single kids single single reach out there you go not married all right no kiddos and how old are you i'm 33. last question what do you wish your 20 year old self knew oh my god i wish i really uh understood what i wanted to do but that's a lot of but what everyone thinks but i mean i wish i really knew where i was going to be at 33 in the in the struggle that i would go through in terms of building a business um you know i would have done a lot of things differently through learnings and also um you know been a little bit pickier with with my network both professionally and for on the friends side as well guys simpliship.com six people bootstrapped helping big companies or even smaller companies basically figure out where and how to buy space on whether it's air or freight shipping containers traveling on the seas they've got about 400 companies like that tied into their platform launched in 2015 did about 300 000 in revenue 2018 hoping to get that up to 2 million here this year that's still 70 managed services 30 kind of api sas based open hit kind of the 10 million mark in 2020 as they continue to scale corey thank you for taking us to the top thanks so much guys i appreciate it