This Week in Startups - E995: The Next Unicorns: NEXT Trucking CEO & Co-founder Lidia Yan brings trucking into the digital age with her two-sided marketplace, shares insights on finding & focusing on an untapped market, owning & innovating drayage, navigating the trucking industry as a woman & scaling the right team for su

Episode Date: October 30, 2019

0:55 Jason intros Lidia Yan 5:03 Lidia describes getting into the trucking industry and why NEXT focuses on "drayage" 13:29 How NEXT has revolutionized drayage shipping 18:22 What is a typical shipping broker's take rate 20:54 How does pricing work in the trucking industry? 27:28 How do trucking companies measure their driver's hours? 29:41 Issues within the trucking industry? 35:14 Did trucking lose employees to ride-sharing? 39:20 How NEXT compares to Uber Freight 44:50 Amazon's impact on the trucking industry 46:22 Trade war bringing inconsistency to trucking 48:41 How Lidia dealt with the challenges of being a woman starting a trucking company 50:47 Importance of getting to profitability early on

This week in startups, the next unicorns is brought to you by NetSuite by Oracle, the business management software that handles every aspect of your business in an easy-to-use cloud platform. Get NetSuite's free guide, seven key strategies to grow your profits when you go to netsuite.com slash twist. LinkedIn. A business is only as strong as its people, and every hire matters. Go to LinkedIn.com slash unicorn and get a $50 credit towards your first job post.

And Embroker. The Embroker Startup Insurance Program helps startup secure the most important lines of insurance at a lower cost and with less hassle. Get an instant quote and $5,000 of AWS credits when you become a customer at Embroker.com slash Twist. While you're there, get 10% off your policy costs by using offer code Twist 10. Hey, everybody, welcome to this week in startups. I'm your host, Jason Calacanis. And this is the podcast where we talk to startup founders. Sometimes we talk to an accelerator class where six or seven people are in their first year and they just got their product to market.

Other times we talk to legends in tech who've been at it for decades. And this year we decided to do something called the next unicorns, sunicorns, as we call it in the industry. We said, I wonder what companies, Wall Street, the press, and generally the public consciousness will become aware of in the coming years. And so there's a pretty easy way to do this. If some of the legendary investors are doing what's called a series B, C, or D in a company, what that means is they've gotten way down the line in terms of the growth of their startup. When you're starting, you are trying to come up with a great idea. If you have a great idea, you might make a prototype or what's called in the industry an MVP,

a minimum viable product. The least amount of work you can do to actually show the product in use. So an example of an MVP for Instagram would be you can upload a photo and you can show it in a feed and you can follow people, right? The most basic version. It doesn't have the Explorer tab. It doesn't have messaging. It doesn't have filters. That would be the MVP.

You have to get your MVP. You might have some unpaid pilots. If it's an enterprise software, then you get people to pay for your product. Then you have some revenue. And then eventually you start scaling revenue and you've got a team of dozens of people and the flywheel is moving. Well, that flywheel, if it's not moving, the company goes sideways, and they don't typically get a big check from the most respected investors. There's a lot of people in what's called late-stage financing today. Why are there a lot of people doing late-stage financing?

Well, there's a lot of people doing late-stage financing because it's a great deal for a venture capitalist. They make a $100 million bet. They make a $250 million bet, a $50 million bet. And when they make that investment, if it grows 10x, they get $20 million. percent of that gain. That's called the carry. So let's say they put a hundred million into a company and that hundred million for 10 percent becomes worth 1.1 million. You pay back the hundred. Now you've got a billion dollars in profits. They get 200 million of that billion dollar gain. Late stage investing has become a thing. And it's become such a big thing here in

Silicon Valley that IPOs have been pushed off. And that's one of the things you're hearing about in the press today is, oh my God, Uber waited so long to go public. Airbnb waited so long to to go public, Slack waited, maybe in the middle of what people would normally consider a long time. People going publics in year 8, 9, 10, 11, when they probably, in the past, might have done it in year 6, 7, 8. What that means is there's more late stage funding. Late stage funding is a little mysterious because you don't know what's happening with the company.

So it's a great early warning system if you were thinking about what companies might go public. And it's a long-winded way of saying, we've done a great job of finding companies that we think have the potential to become the next set of unicorns here in Silicon Valley. Why is it important to be a unicorn? It's not. It just happens to be something everybody in our industry understands a billion dollar company, a company worth a billion dollars. What we're really looking for, though, at the end of the day, as investors, as founders, as team members, is not companies that are worth a billion dollars, companies that make a billion dollars. That's actually the true unicorns that we're looking for. Today, Lydia Yan is with us. She's with Nexttrucking.com.

Welcome to the program. Thank you for having me, Jason. And you started in 2015. Yes. And you want to get right into that microphone there. Okay. Perfect. And you can move the microphone closer to you if you want.

So tell me what was the original idea for NextTrucking.com? And how did you get into trucking? I assume you were a truck diver for a decade or two? Yeah, absolutely I can drive a truck. You can drive a truck? No. No. You've never driven a truck.

I've never driven a truck. I actually got questioned by several VCs about this. Like Lydia, can you drive a truck? How can I trust that you can build a trucking company? Right. So what was your answer to with VCs who said you're starting a trucking company? How did you come up with the idea to begin with? So my family has been logistics for a long time, especially my husband. He operated a 3PL, traditional 3PL company. What does it mean 3PL company?

Third-party logistics. Got it. Yeah. So those companies usually operate a warehouse and also find trucking services for their shippers. Got it. Yeah. So somebody's shipping something typically. from China to America, seems to be a pretty popular route these days? Well, 40% of merchandise in this country imported.

So we do have a lot of imported goods, but of course we do have a lot of products that are made in the U.S. Still made in the U.S. And those products need to be picked up and dropped off to retailers, I guess, or warehouses somewhere. Yeah, so trucking has five sectors. Truckload, less than a truckload. Dreyer just hauling container from the port to a local warehouse. Interiminal is from train station to a local warehouse. And a small parcel.

We're very familiar with small parcel. That's why you order something on Amazon. You get delivered. It's a small parcel. But we focus on drainage is port to local warehouse and truckload local warehouse to distribution centers. Okay, so draage is the term. I thought the draage term was just storage.

No. Dreyage means something else. Dreyage means that... Calling a container from a port to a local warehouse. So when we hear in the bay, area see all these giant shipping containers going under the Golden Gate Bridge to the Long Cork, I'm sorry, to the Oakland port, which is a big port, is it not? It's a pretty big port, but comparing with L.A. and Long Beach ports is relatively smaller.

Long Beach is the biggest one. L.A. and Long Beach, two ports, and they represent about 30% of market share. Of the United States? Yes, in Bung Freight. Wow. Yeah. So 30% comes in from L.A. or Long Beach. Yeah. And when they get off, when the shipping containers come off and they're on the dock, they need to go to a warehouse. Yeah. And that's called drayage. It's sort of like get off my boat so that I can get the boat back to China or Taiwan or wherever it's going.

Right? That's time as money. They got to get them off the boat. Let me give you an example of the whole supply chain for important goods. So for important goods, they will be loaded onto a ship overseas. then come into LA Long Beach port, say. And then you will have a drainage truck going to the terminals, pick the containers up, and then they will move to a local warehouse

because containers belong to the steamship lines on terminals, then you have to return them. So LA along has 36,000 warehouses. And then the- Los Angeles has 36,000 warehouses. But aren't they all like an hour inland? Aren't they in like the inland empire? A lot of them were inland empire,

about 60 to 80 miles away from the port. So all of those containers have to be driven 80 miles to this just hundreds of miles of Local warehouses. And local warehouses will do pick and pack. Then they will get a PO, say from like Walmart or Target or Amazon. Then we'll send truckload drivers to pick it up or LTO drivers to pick up at local warehouse delivered to distribution centers, say in other states. Got it. Then distribution centers will work with the economy. platform or other retailers to do the last mile. So we cover first a mile port to local warehouse and mid-mile local warehouse to distribution centers.

Got it. So you're not doing the Amazon runs from the Amazon factory, obviously. You're just doing that little, I guess it's the first mile off the boat and then the first 60 miles from the boat to a local warehouse. That's about 60 to 80 miles. We also do local warehouse to distribution centers that are out of state. So that could be, hey, we're in the inland empire 60 miles into the desert, basically, east of Los Angeles. And then it's got to go from there, maybe to Boulder, Colorado.

Yeah, or to Arizona, Texas, Nevada, and all those core lanes that we did. And that's all done with shipping, with the shipping, are the shipping containers driven or are they unloaded? So. Because those are heavy metal, like... Yeah, so when we talk about containers, it's usually 20 or 40 foot long, right? So we'll move them from the port to a local warehouse. Local warehouse will unload the merchandise into the warehouse, repack them into normally a 53-foot-long trailers.

That's what you see on the freeway all the time. Then they will go from local warehouse to out-of-state. And then ocean containers will go back to the port. So we're driving those big heavy metal containers on top of what? Railroad cars or? On truck. A truck is polling that. Wow.

Is that dangerous, those big heavy things? How did they become the standard? I'm curious. That's very interesting. As far as I know, 70% of a tonnage in the U.S. are moving on trucks. On those containers? On trucks. Yeah.

Trucks are hauling container or trailers. Yeah. The containers, though, are those big heavy metal ones. Mm-hmm. And those are like some weird standard in the industry. Yes. Where did that standard come from? Do you know?

That I cannot answer that question. I was curious about how that came to be because they seem to be very heavy and inefficient. Are they heavy and inefficient? It's actually lighter than the traditional trailer. Really? And because they go on the ship, but it's more steady, though. So I guess they're designed to be stacked efficiently. Exactly.

Got it. So why does this occur on trucks and not like a train? We do have intermodal. So intermodal is basically when we unload a container, we put them onto the train. Then they will go across the states. Then you have intermodal trucking service. Those truck drivers will go into the train station and the haul that content is out to a local warehouse.

Got it. Okay. When we get back from this quick break, I want to understand what did you add to this that required technology And then how does it relate to Uber Freight? Obviously, I'm an investor in Uber, and I've been hearing about Uber freight for a long time when we get back on this week at startups.

Hey, everybody. I'm here with my friend Jason Maynard, who works at NetSuite. Tell everybody, what do you do, Jason? You know, I do many things here at NetSuite, but I run the field operations for the business unit. And field operations means what? Sales, marketing, business development, all the stuff in terms of how we acquire customers,

take care of them, service them, make sure they're happy. If I'm using a bunch of different products, accounting, CRM, customer support, sales, what would NetSuite do in terms of integrating with those other platforms or replacing them? How should I look at it when I'm, because a lot of people just, they pick whatever they used at their last company, they duct tape everything together. And NetSuite to me seems like sort of a more holistic approach. So how should people look at that issue? Yeah, so we sell a suite. that's the name, NetSuite, right? So it's not net point product, it's net suite.

But what we typically do is we start people in financials. Right. We start with basic financials, inventory, order management. That tends to be the first pain point that we need to remediate. And then over time, they look at buying other products from us, whether it's e-commerce or HR or customer management, things like that. But most companies start with financials. And what is it that founders need to know about their finances in order to

scale properly. Hopefully, founders and executives don't have to spend any time worrying about it. Yeah. Right. Our goal in a lot of cases, if you're a product founder, you just need your systems to work, right? You need to make sure that you have the access to the information you need. And so I would say some of our most successful CEOs and founders don't spend a lot of time worrying about finance and accounting. And that's really our goal, right? We want to make it easy, take that burden off of them. All right. Right now, NetSuite is offering you valuable insights. sites with a free guide, the seven key strategies to grow your profits. So go to netsuite.com slash twist, netsuite.com slash twist and get that free guide.

Seven key strategies to grow your profits. We appreciate the work you're doing in the startup community. It's great stuff. Thanks, pal. Thanks. All right. We'll be back one more. All right.

Lydia Yan is here. She is the CEO and co-founder of Next Trucking. Is your husband Elton co-founder as well? Or just your inspiration? He's my inspiration and my co-founder. Does he work at the company? Yes. So he technically works for you.

Yes. Because you're the CEO. Yep. What does he do at the company? He's, uh, he works out. Whatever you tell him. He works on our sales team. On the sales team, got it.

So what is the technology at work here? What do you do that, how was this previously done, this dredge and this process of finding trucks to move stuff around? How was that previously done? And then what have you done over the last four or five years to, to bring it into the modern age? Traditionally, um, drivers rely on. traditional brokers find them loads. Your phone calls or text messages. Brokers. So there are people

who own a phone, basically. So there are people with phones. Yeah, with phones. And people call those people and say, yeah, shipper will call those people and say, hey, I have a load to be delivered and they find me a truck. How does that shipper find the broker? Those brokers are independent agents who just do this for a living? We have independent agents. We have very large brokers. We have traditional 3PL companies, we have free forwarders, it's not very well organized. It's messy. It's messy. It's very, very fragmented. Got it. And then how does it work today with next trucking? I'm curious. So we call itself the first trucker-centric marketplace, where we connect shippers with small

trucking companies. We primarily focus on trucking companies with less than six trucks and the 10 drivers. Got it. Which actually represent 90% of the market share. So 90% of the market is, is someone with essentially a family-run business that has six or seven trucks. Yeah, typically two trucks. Two trucks. There are a lot of owner operators. Basically, one guy owns one truck and it drives himself. So there's a solo operation.

Then some people get ambitious and maybe have two or three trucks. You're right. And they rent them out to other drivers and they get a piece of their action. They hire those drivers as employees and they lease or buy trucks and those drivers will drive for them. And so now in this new world, how does it work with you guys? You have an app or something for people to do this or a webpage? How do you route all this stuff? Is it like Uber or Lyft?

It's not like Uber or Lyft because it's not on demand. It's a marketplace. So basically, shippers can tender loads to us via our platform or via EDIN API connections. So we got load information. Then the load will be posted on our mobile app. and then the drivers will see them, they can select the kind of loads that they want to haul.

Obviously, we implemented a predictive load offering capabilities. We studied driver's behavior, their own preferences. The reason why we call self-trucker-centric is we actually build a lot of technology surrounding the driver's needs. We wanted to,

because they're human beings, right? They are humans, yes. They have their own preferences. Some of their drivers, they wanted to go home at 5 o'clock to cook for my kids, and I have to take loads before that. I can do midnight loads. I don't want to go out over the weekend. But traditionally, they have to call it broker. And broker has limited information. So then they have to negotiate a back and forth. And for example, I have a driver who live in L.A. took a load to Arizona and he wanted to go back to L.A. He called all the brokers that he know personally. And all the brokers have no loads for him to come home. So he only had two options. One is Bobtail back, which he will lose money, or take a load to a destination that.

he's not preferred. Wait, what did you call it when you come home with no love? Like a Bobtail. Bobtail? Yeah, Bobtail. B-O-B-Tow? Yeah. What does it mean Bob-Tal?

So you're not hauling anything. Got it. Yeah. So you don't want to do a Bob-Tal because you're not getting paid. You're not getting paid and you're paying for the field. You're paying for the insurance. Those are the miles that you're not making any money. So you just list for people.

Here are all the different jobs that you, based on our profile of you, would want to take. So based on the profile of your truck, because I think there's some limitations with the different trucks. Absolutely. Trade trucks, over-the-road trucks, they're a little bit different. And then you might only want to do stuff in the southeast, so you put in your radius that you're willing to drive or something? Yeah, that's also the reason why I think we're very different from some other tech companies that are in the trucking space. We're more original driven. We focus on Elin-Long Beach Port at this point, and we built lanes from SoCal to NorCal, Arizona, Texas, Nevada,

those are the core lanes. It's an $800 billion industry. Dredge of the lawn is $60 billion. Wow. And over the road, if we're talking about truckload, it's about $500 billion. How do you guys make money then? We make the money in between. Like, we take money from shippers, and we make the commission between and pass the rest of the two drivers. Got it. You take 30% or something? What's the average? It's about 15 to 20%. 50%? So it's similar to what Uber takes or lift takes, actually, I think they're 25%. So it's less than the app store. What are they typical, what are brokers in between typically take those people with the phones? It's about 15 to 20 percent, sometimes even more, because they might be multiple brokers in between.

For example, like especially in Southern California, we have a lot of drivers who don't speak English. There are a lot of immigrants. Then they hire a translator in between. So the loads got transferred from a shipper to a traditional broker, then to a translator, then to a driver. So they got, drivers got taking commission. multiple times. What does somebody get paid for driving a truckload

from Los Angeles, say, to Arizona? That might take them 10 hours or something and what would they get paid for that 10-hour journey? Depends on the season. So it's very seasonal. Peak season is usually the second half of the year. Because of the holidays and all the shopping we do? Yes. To school, Christmas, Black Friday.

So they get paid twice as much during that? Sometimes. Really, the surge? Yeah. So what would it, what would some? somebody taking a truckload of toys from the port of or, you know, from inland empire to Arizona somewhere, let's say it's a 10-hour ride just to make it easy. How would they get paid? So we do have algorithms to calculate the market price. So we determine the market price.

And obviously it's very different from January all the way to September. Sometimes the price will surge, especially in peak season. Right now we're in peak season. What would it cost for 10? A 10-hour ride of a truck. What does it cost to ship a truck? truck load of toys. It depends. Sometimes it's really between 900 to sometimes up to 2000. So it could be $100 an hour of driving, $200. Is that a good rule of thumb? Usually we calculate it by per mile. Per mile. So they're going 65 miles an hour on average? Yes. We don't really, we calculated by how much per hour, per mile and also the distance. But most likely we also consider a lot of factors, include supply and demand. Do we have enough truck drivers going to that

route, do we have wrong trips? Because if you haul load over there and you're going to bop-tail back, the drivers won't make money, that's why we also create a new function called trips. So we're going to bundle the loads for them to make sure that drivers don't have bobtail. Got it. So if it was a 600-mile trip, they might get paid $1,000 or $2,000 for that. So it's about $1 a mile, $2 a mile, $3 a mile. What is the average, just in the trucking industry in general? One, two, three, five. It depends on a seasonal. It could be really different because we have, for example, last peak season for long haul,

and because of the tariff and all that situation is happening, for bi-coaster loads can go up to $10,000. Wow. Yeah, so it's very, very different. And I think that's also the reason why it's important to have a marketplace because you can really study the market, the movement, the fluctuation, the fluctuations that we have and also all the outside factors that we have, tariff, and the port congestions. But we actually focus more on drainage, so from the port to a local warehouse. So it's

usually a shorter distance. And that is the same, a dollar or $2 a mile or something? It's still very different according to the seasons. The price could be 3x compared, you know, slow season with peak season. And then so the drivers are burning fuel, so they're responsible for the fuel of their truck or is that like an addition to that fee? If their own operators and also their fleet drivers, we're dealing with trucking companies. So they will be responsible for their own fuel, their own employees, own insurance and everything, because we're B2B2B. I understand.

So let's say they get paid $200 bucks. Is that a fair estimate to go from the dock to Inland Empire or something? That's about right. $200, $250, sometimes $350 depends on the... Okay. So let's say $250. depends on seasonality. We get it.

250. You're pretty good with pricing, I have to say. I'm just also curious because I don't think we know as consumers, like what actually occurs. So they get paid that $250. But they might have a decent amount of fuel, right? Because those things burn a lot of fuel. Yeah.

And depending on the traffic and the low situation. Could be more. So it may take them whatever, two hours and they might burn $100 in fuel or something. How much do they burn an hour in fuel? So their net income usually is about 20 to 25% of whatever the fee is. Yeah. So they might make 50 to 100 bucks an hour. Is that what a truck driver makes?

A truck driver typically makes, if they're salaried truck drivers, they typically make about $45,000 to $50,000 a year. So it's not very high. But if your own operators and you're your own boss, you can possibly make a lot more money. I'll go for dredge drivers to allow them to make up to $1,000 a day. while going home for dinner. Wow. So they can make $1,000 a day,

and they work five days a week. It would be a quarter million dollars a year. So there must have been some massive inefficiency here for you to take all that out. I think one is absolutely. Draage is probably the most complex and the most difficult sector in trucking because it involves terminals,

steamship lines, chassis provider. Chasys is really the platform on which you can put a container. It's a separate provider. Oh, my Lord. Yes. So it's very complex.

Then sometimes it involves yard management. So it's a very, very complex ecosystem. And we're the only company that is focusing on drainage right now. It's a much smaller sector comparing with full truck load. That's almost $500 billion. It's about $60 billion. But we're headquartered in LA, which is the largest support of the whole country. So we're looking at $15 billion business just in our city.

That is crazy. All right. When we get back, I want to talk. about the elephant in the room, which is we keep hearing through auto and other self-driving truck technology, that truck drivers will no longer be driving trucks in 10 years or 20 years. I want to know if you actually believe that truck drivers are going away when we get back on the studio startups. Oh my God, I love LinkedIn for hiring. I have hired three out of the last four people on my team through LinkedIn. Hold on a second. Three out of the

Last four came from LinkedIn, and they are crushing it for me. Amazingly talented people are on LinkedIn every day. And some of them are not looking for jobs. They're just doing their messages, reading their feed, getting all the great content, all the great groups, all the great news, all the great articles and influencer. They're just living on LinkedIn, just like you do. You've been on LinkedIn all day today, I'm sure of it. Over 600 million people visit LinkedIn and search for jobs, and a new hire is made every eight seconds. And that's where you're going to find those qualified people.

And here's Prash putting up a job posting for our new client success manager position in our Toronto office. Because we can't find people in San Francisco very easily. So we're tapping other markets and we use LinkedIn to do that strategy. And my associate, Prash, he's not CMO anymore. He's an associate on the investment team. He is going on to LinkedIn and typing in a bunch of what we're looking for in terms of the skills needed and the description. Maybe he adds a couple of screening questions. which I love, and then he sets the daily budget and zoom, zoom, zoom,

here we go. We start getting candidates all within a couple of minutes. It's so simple. It's so easy. And I want to give you $50, a $50, a $5. Just for typing the word unicorn, you, N-I-C-O-N. You know how to type unicorn, and you are building a unicorn right now with the help of your team that you're going to source on LinkedIn.

So why don't we just give you $50 right now? LinkedIn.com slash unicorn. Can you remember it? LinkedIn.com. That's already in your history. It's going to auto fill it. Flash, Unicorn, as in the company you're building with the incredibly talented people you find on LinkedIn. $50.

Terms and conditions apply because it's $50, obviously. Let's get back to this amazing episode. All right. We're back. Lydia Yann is here. She's the CEO and co-founder along with her husband and inspiration, Elton, and her employee of Next Trucking.com. And they do, they focus on Dreage, getting the shipments off the barges and into the warehouses as we discussed. and we heard all about

deadheading and bob tailing no container in the back no shipment in the back but deadheading we've all heard that term for pilots that's when you're going from you dropped off your load

and now you're going with an empty load to pick up a load and then going on your next run so you have a leg that's a deadhead I got it you're right all right so truck drivers it's a tough job it's a tough job imagine

like you're sitting in a truck for eight hours a day or 11 hours a day. That's illegal driving hours. 11 is the max they can drop. Yeah. Yes. It's very tough. Like I drove myself to Vegas once and I drove like four and a half an hour. I was so frustrated.

You should get a Tesla self-drives, put it on autopilot, and you get an audio book from audible.com slash twist to get your free for a copy. Sorry, I just dropped in an ad there. So they can drive up to 11 hours a day. That's police, right? They get pulled over. they check their logs. And so that is a serious thing if they go over, right? They're not allowed to go over.

Does there abuse in that system? Do you think people go over or? No, actually last year, I think April 1st, we have ELD mandate, electric lock device mandate. So every single truck needs to install an ELD. So the drivers will be measured by the number of hours they're driving. Oh, wow. So there is a device starting next April.

last April. Last April, called an ELD, an electronic locking device, that when the truck hits 11 hours, it's no longer allowed to drive? They have to reset at certain times. Ah, they have to reset it. So the goal for ELD is really to make sure drivers are driving safely because you cannot drive too many hours.

Then you'll be distracted and you will fall asleep. It's really for the safety reasons. Yeah, that makes total sense. And does the truck turn off or something when it hits 11 hours? No, you just need to turn it off yourself. Got it. You got to turn it off. And then they get fines if they blow past 11 hours or if they were to mess with that.

So it's a difficult job. People can do 70 hours a week, 60, 70 hours a week. There's some limit. There's a limit. Yeah. They have to reset after, I believe, it's five days, 11 hours. They have to reset. Five days at 11 hours, they need a weekend off or a day off, two days off.

They can choose when they want to reset. Got it. Yeah. What does it mean to reset? Reset, which means you have to rest for two days. For two days? Yeah. Wow.

So that's great in the United States that were that safe. I don't think it's a good thing for the industry overall because we're, the biggest problem of our industry is truck or shortage. We don't have enough truck drivers. We don't have enough capacities. And with the ELD mandate, obviously it's safer for the truck drivers, but overall we'll have more severe truck or shortage problem. Ah, so it should be one day maybe instead of two?

There are certain hours, but yeah, I don't want to make comments on the policies. And I think there's a reason why it's there to really protect the drivers, their mental health and health. You can't get enough drivers. That's the big problem in the industry? One is a lot of people said we're short of at least 50,000 truck drivers.

And in another five to 10 years, we're going to short, that number would triple. But you said 50,000? 50,000. So we need 150,000 more truck drivers over the coming years. We're not keeping up. We're not keeping up. And an average driver's age is over 50.

I think it's 51 now. Ah. And a lot of people are retiring. A lot of people don't want to drive. And it's a tough lifestyle. Yeah. Especially for long-haul drivers, they're out of home nine months out of a year. Oh, brutal.

So, you know, it's not. And also they're driving on the road all the time. They sleep in truck stops. It's not a very healthy lifestyle. They sleep in the cabin of their back of their truck, right? They do that too. So a lot of them do, especially long-haul drivers, they have a bed in their truck. They have a bed?

They have a bed. But they don't have showers and they don't stay at a hotel room? They do have truck stops. Truck stops actually offer a lot of things, including, you know, hotel rooms and showers and shopping malls. But still, a lot of them actually, they're not a lot of nice restaurant on the road. Yeah, no. Yeah, so obesity is actually one big problem in the drug industry.

You're sitting all the time. You're sitting all the time. You're drinking a big gulp or coffee. And you eat fast food. And you eat fast food. Yeah. Oh, terrible. It's very bad.

So we have a shortage now, but a lot of people are saying that truck driving is going to be the first easy thing to do as self-driving. When do you think self-driving trucks will actually exist in the United States? and be on the road without a driver in them. I'm sure they'll be driving assist technologies like we have in cars, and I know they're already testing that. But when do you think we'll have trucks going between Long Beach and Arizona in this hypothetical situation and not have a driver in them? 10 years, 20 years?

I'm thinking about technology probably will be mature in five years, and the biggest hurdle is really regulations. Right now, autonomous trucks can operate in two states only and only on certain freeways. So I think the bigger hurdle will be how they overcome the insurance policies and make sure that every state government allowed that to happen. So that will take more time. And I believe autonomous trucks are here to really to empower the drivers. I talked to multiple startup funders who focus on autonomous truck manufacturers or technologies or kits that empower the traditional trucks.

And a lot of them told me that, you know, when they believe when those trucks come into the market, they will probably go to the long haul first. So it will be a yard, we call yard-to-yard operations. So they will go to a local yard like a parking lot. Then they go on a freeway immediately, then get off the freeway to go to local yard. Because local situation is a lot more complex than a freeway. The freeway is easy. Yeah, and it relieved the burden for drivers to drive many hours. And also driver can drive more than 11 hours a day

because they can take a nap on the freeway. So they could still be in the truck, but when on the freeway they could take a nap in the back, they would get alerted if there was something wrong to take over. They might have 10 seconds, 20 seconds to take over, but they could be napping or doing whatever. So they would be more like a pilot who's on autopilot. Exactly.

That's what we believe that will happen in 10 years. And we could be one of the few companies, or the first few companies that start using that technology. Because we have a lot of routes. You know, drivers don't want to go. We call those drivers not so hot lanes, right? So because normally they don't have run trips because typical long-haul drivers' behavior is they go out of state, they come home, right?

But a lot of routes, for example, L.A. to Montana, a lot of people don't want to go there because they don't have a bad call. Right. Right. So those routes can be covered by autonomous trucks. And also, once those trucks are ready, they need to know the routes. They need to, at the end of day, no matter it's a truck with a truck driver or truck without truck drivers, the loans have to be removed.

Right. Like who's doing that, right? And we are aggregating all the data and aggregating all the shipper resources. So at the end of day, we're going to tell those trucks, okay, you go to this place first and then go to go around, really to minimize the debt head or they don't need to bobtail. Do the drivers in a truck driver is responsible for unloading the trucks or does the person they're delivering to have to unload them? Usually warehouse will be responsible for unloading. They have warehouse workers.

So that's also the reason why we have appointments with the warehouses, especially during the peak season. And how do you get more truck drivers in this kind of low employment environment? we have, they have other options. They could drive for DoorDash. They could do any gig work, right? Yeah, they can be an Uber driver. It can be an Uber driver, et cetera. Then they could just drive whatever number of hours in their local community.

How do you compete for that? And did you lose people to that ride sharing? Or did the industry lose people to ride sharing? Yes. Actually, the industry lost a lot of drivers to ride sharing because it's a much, the reason why people choose to drive is because they want freedom. They want flexibility. They want to have choices.

But unfortunately, as a truck driver, even though you chose to be in this job, you didn't have a lot of choices because you work with traditional brokers. And brokers would decide where you want it to go. So that's what we wanted to change. We call self-trucker-centric. We want to put the drivers on the driving seats, allowing them to dictate what they want. That's the reason why they choose that job and allow them to make more money, become more efficient. Then that's a career people wanted to pursue. then we can attract the younger drivers to the industry and the really balanced supply and demand.

All right. When we get back from this final break, I want to know what the impact of Uber Freight has been. I understand that business is growing like crazy. And are they a competitor or not? And then I want to know why the drivers don't set the price as opposed to the person who is, you know, putting the shipment out there. I guess the person who makes it or, you know, is doing the shipping the product when we get. back on this week of startups. All right, listen, you need to have insurance for your startup. I do. And with me today, Matt Miller from Embroker. He's the CEO and founder. Welcome to the pod.

Thanks for having me, Jason. All right. Tell me, what is the Embroker Startup Program? The Inbroker Startup Program is the first fully digital insurance program for startups. So we can provide startups with all the coverage they need, less than five minutes, save them a bunch of money. Amazing. You just fill out a form. It's like checking out at Amazon. Just that easy. Basically that simple. So why did you build the startup program? Why? Why isn't the regular insurance programs that are available good enough? I actually had to buy insurance for my own company, the founder, and it was literally so painful, but I didn't do it. I actually did not buy the coverage, and I decided we actually had to build something that was better, that was worth the type of overall software we're building.

Why are insurance brokers so annoying? I don't think they try to be annoying. They are. They can be. And it's so confusing. It is so confusing. Why is it so confusing? Why are they so annoying?

I think it's confusing. because the industry wants to make it confusing. They make more money the more confused you are. If you think you need this guy to help you, you don't ask the right questions. Got it. But it doesn't have to be. It feels like you's car salesman.

It can a little bit feel like that where you're getting sold something. You don't really know if you need it. Right. And that's what I love about you. Like the Tesla of insurance because you go to Tesla, you just sign up and you get a Model 3.

You don't negotiate the price and you get it instantly. That's exactly what we're trying to build. And yeah, we think it works pretty well. Yeah, I use it and it's amazing. So thank you for building it, Matt. Thanks, Jason. So get an instant quote and the $5,000 in AWS credits right now by going to a broker.com slash twist.

And when you check out, use Twist 10 to get 10% off. Thanks for coming in, Matt. Thanks for having me, Jason. All right. And we never thought we'd see the day here in Silicon Valley of Silicon Valley taking on really the final couple of industries that are been resistant. Transportation, hospitality, construction, education, and music. were always the verticals that venture capitalists said, oh my God, stay away from those.

That's where startups go to die. But we're seeing it now. I guess Flexport has had a big impact on the industry. Yourselves, obviously having raised over $150 million or so, maybe $125 million. Yeah, $125 million. And then on top of that, you have this Uber freight. Is Uber freight competitive with you?

Because that's on-demand trucking, or is it more like what you're doing, like trucker-centric? Uber freight focused more on truckload, long haul. So we focus more on drainage, so it's a different sector. So they're doing that long haul? Yeah, they're doing the long haul. Are they on demand? It's market place, right?

Because for most of the drivers, they have to plan their trips at least 24 hours prior to the trip because we're not like driving a small car. Right, yeah, you've got to get the truck filled with gasoline, you got to get a good night's sleep. And the safety, they need to check the engine and everything. We're moving millions of dollars with guns. And then why is the price, how does the price get set? Like, shouldn't the driver say, I'll, or has anybody tried, the driver saying, I'll do that ride for 1,200, somebody else coming in saying, I'll do 1,100, somebody else saying, I'll do it for 900.

Why isn't it like an auction like that? And did you consider that business model? No, because it actually adds more complexity to the business. Trick drivers are more reactive. So what we wanted to do is really provide them with a fair market price. Because it really determined by the market. It's like stock price, supply and demand. Like during the peak season, we have a lot of loads.

We don't have enough drivers. We need to pay more slow season and we have a lot of drivers. So you know that better than they do. So when you put the options out there, don't see somebody picking up that ride, do you raise the price? So we do aggregate data from the market, different source data, and also our own resources internally. So we do have a data science team that studies the market price and it determine the market price. And for the person who's doing the shipping, do they get to say, listen, I want to get somebody on this quickly,

I'm willing to pay a little extra. You know, I'm doing Apple watches or the iPhone. And Apple is making so much money on that, they care that it gets there on time. Do you have that where you have certain shippers who are like, you know, somebody like an Apple or somebody like a Samsung who's like, you know what, I'm not price sensitive here. I need to get these things as quickly as possible and I'll pay a higher price. Is there like a bifurcation of that? People who want to save money and go slower. People want to go faster. Most shippers do have shipping windows, which means, because we're a shipping truckload, right? Containers, big amount of goods. So comparing with like you're shipping a small parcel, so it's very different. So usually when we ship on-time delivery is very,

very important. No matter it's an enterprise account or a small shipper, they always wanted to make sure you ship on time. And we work with primarily enterprise shippers, Fortune 500 companies, including Samsung. Yeah. So it's important that we pick up time. We deliver on time. We provide visibility entire route. Because that's what they're looking for. That's also the reason why they choose to work with technology companies. Because traditionally they work with a broker.

Then broker, you probably won't believe this. They will call a broker. Broker will call a driver, ask where the driver is. Then you send an email to ship out, oh, the driver is there. And that would, yeah, they would do that multiple times. Why do they just have an app like Uber that shows where the truck is? Well, unfortunately, I don't think. People were putting a lot of focus on logistics until recently.

Got it. Yeah. So you make it, do you have an app? Yes, we do have a mobile app. Got it. So the app then tells you where the driver is in real time, and does that go back to the? Shippers. And they can just look it up anytime.

Real time. Real time. Why don't the shippers, I never understood this. Why wouldn't the shippers just throw a tracking device into one of the boxes that has an LTE connection and just pings? They don't own the boxes. I know, but if they had a box of iPhones or Samsung has a box of phone, essentially they could turn on one of the phones or just put in any device into the box and know where it is at all time.

Like I put tile trackers into on all my keys, you know, little tile trackers and some of these other trackers. I've used a couple different brands. And I put them on the keys or I put them in my luggage. So every piece of luggage has one. So if a piece of luggage gets lost, I know where it is. I think that also involves privacy issues, right? who's for hauling this, how long you can track the drivers?

Like we don't track the drivers when they're not on the load. It's for privacy. So the same thing, if you put in an item, you put a tracker on an item, which means you know exactly when it arrives at the customers. Yeah. And the customer's home. So that involves a big privacy issue.

Got it. Yeah, I was just thinking if I'm sending, you know, a thousand iPhones or whatever smartphones and they're going to, you know, Circuit City or something, at least I would know. That's a great idea. Yeah, yeah, that's a great idea.

I don't know why they don't do that, yeah. But we do have multiple tracking systems right now. We track the trucks, truck the drivers, in route. So we do provide, you know, step by step tracking real-time data to our shippers. They can go to our website. They really see the little truck icon moving. And also we integrate with their transportation management systems. A lot of enterprise shippers, they actually spend millions of dollars on their TMS software.

Wow. So we actually integrate with them, EDI or API. So we feed the status to them automatically. So they don't need to change behavior to hop between different software. How does Amazon change all of this? Because they are shipping so much stuff. What's their impact on the industry been? Because I know that they have their own airplanes now.

I don't think they have their own shipping containers yet. But what's their impact on the industry been? I think they're doing a great job. they're on the forefront of really promoting the idea of automating logistics. And they also give the impact to the industry that it's time to really leverage and upgrading our software and assistance. Because, you know, like 10 years ago, if we started a technology company in logistics, we probably couldn't even raise money. It was not so sexy for a lot of VCs of investors. And because of the rise of e-commerce, now the demand.

from customers that I want to see where the load is. I wanted to understand real time. And also in the past, for an importer, their margin was so high. Like, logistics cost was a fraction of their margin. But now because of e-commerce, like even Alibaba, everything is so transparent. The margin was so slim for a lot of vendors. So then logistics right now accounts for, what, 10% of average shipper's margin. So now everybody is looking at, oh, wow, $800 billion industry, trillion dollar,

industry for logistics, $800 billion industry for trucking. There's no technology. Most of the softwares were built in the 90th. So now it's time for disruption. And you're from Shanghai originally? I was born in Shanghai. You were born in Shanghai. And what is the trade war done?

Have you seen any impact of that? Because we hear about the trade war. Is it impacting the number of things that are being shipped to America from China? Have you seen any change? Absolutely. Yeah? There's a, in the last. Last year, we've seen inconsistency.

So it's not necessary. It's impacting the total volume of imported goods, but it's changing the seasonality. For example, last peak season, we had the busiest peak season and longest the peak season because all the importers were trying to push the volume before the travel kicked in. Then our peak season was dragged all the way to January. Usually it ends beginning of the December. because that's Christmas shopping. After that, it's post-the-Christmas shopping,

and the Chinese New Year, the ports were not that busy. But last year, it dragged the two January. Wow. And also, they said the delay at the port cost over 300. Just LA Long Beach ports cost over $350 million. Just the delays because so much stuff was coming. So congested. And also, 99, they said over 99% of the local warehouses were full

because everyone's trying to pushing the volume. so nobody wants to pay for the tariff, right? What do you think of the back and forth between and the relationship between China and America today? Having, you know, done a company, you did a company in Shanghai, correct? Yeah. Now you're doing your second company or third company here? Second company. Second company here.

What's the difference as a founder between running a company in China and running company here? It's, I prefer to run a company here. You have a lot more freedom. and the competition is different. Like China's competition is you create a business model, then you have 100 copycats. Immediately. Immediately.

But here is everyone's trying to approach the problem in a different angle. Right. And it's really encouraging creativity, and it's a much healthier competition. Got it. And I think U.S. investors are more realistic and logical when it comes to putting money into startups. So I enjoy working with my investors.

Yeah. At the start of the conversation, you mentioned some of these VCs asked you, like, have you ever driven a truck? I'm curious as a Chinese female entrepreneur pitching American VCs about a trucking industry in 2015, what was that like for you? And how did you overcome the objections? Or did people just say, why not you? It was very difficult. It was? It was very difficult. If you look at my demo app, I did 600 demos in the past four years.

You demoed 600 times to investors? Investors, shippers, and carriers. I was demoing myself. And I think I got rejected over 200 times in the past of four years. It was a journey for me because, you know, I'm 5'2. I'm an Asian woman, and I have accent. Yeah. I went to school here, but I was spent 20 years in China before I moved over here.

So it was challenging. I totally understand. People underestimate you? Well, because I look out of place when people just put me next to a truck. Right. Yeah. Yeah, me too. Yeah.

People can imagine like a Chinese woman in trucking industry, it's irrelevant. But I think I proved it. because obviously the first two years were very, very difficult for us, even though we actually did $11 million first year. You did $11 million in your first year? Wow. And you kept 20% of that? Wow.

So you were profitable immediately. We were profitable, yeah. A Pegasus. You're not just a Nex Unicorn. You're a Pegasus now. So capital efficient. Yeah, we were very efficient. And obviously, we work our butt off.

It was a very small team. We worked many, many hours. What's the right number of hours for a startup in the first couple of years in your mind to work? What was the hours you were working? Six days a week? It depends on kind of founders because I don't have the profiles. I don't have the Silicon Valley typical CEO profile. And I didn't go to, I didn't work at Google, Facebook.

I didn't go to Stanford. I went to USC. You went to USC? Yeah, and I didn't have an engineering degree. So I'm very different from what VCs, what loves. love to have. Traditionally, I think it's changed now. Yeah, but it was, so that's why I didn't have a lot of choices and I didn't have a lot

of money. So I had to work in multiple positions and actually helped me the first two years. So I really worked at from the receptionist to operations to accounting. So I know everything. I did everything. So powerful when you've done everything because then nobody can tell you that it's complicated. Nobody can fool me. Nobody can fool you.

Yeah, yeah. It's just like me, when I did my magazine, 25 years ago, my first magazine, I learned how to shoot the photos, write it, design it, shipping, receptionist, sales. I did everything, subscriptions. And then people were, like, hire somebody. They're like, yeah, this is going to take like 20 hours. I was like, I could do that in two hours. Exactly. They're like, okay, I'm going to do it in four.

I'm like, okay, get to work. Yeah. But we have in China, folks believe 9.96, 9 a.m. 9 p.m. 6 days a week. the commitment level in China for founders and startups is much higher than America today. That's true. That's actually true. I actually went to Alibaba's office because I was at their logistics convention. So I visited their campus and at 8 p.m., the office is worth full. At 8 p.m.

8 p.m. So I was very surprised at the dedications and the kind of loyalty. but I think I we've been a good company culture here. We wanted to move very fast because I believe speed is the only competitive advantage. Speed is the only competitive for a startup. Yes, and because I worked in China

before and I failed miserably because it couldn't compete with the local and I didn't know I could do fundraising I need to build a strong team so I was working. I had a healthy, profitable small startup. And I was profitable six months.

after we launched the website. I had a flash sale website before. And I felt miserably after a year a half because I didn't raise money and there's so much competition. So I know like the first two to two years for me for next trucking, it was very difficult. We had to work very hard because we couldn't afford to bring in the best of people, right? We couldn't pay for the salaries. And my background is not strong enough to attract the top talents. So we worked ourselves. And then there, not, Now, I think when the company has about 50 to 100 people, this size, we really start, especially after we raised the series B and series C, we focus on hiring top talents, the best of people. You had to change your entire game.

What worked for the first two or three years did not work for the last two or three. You have to say, I'm going to do six jobs. Everybody here is going to be a generalist. Do three, four, five jobs. Then you get to the last two or three years, the years five, six and seven, four, five, and six. you have to find people who do one job better than anybody in the world. You're right. And give them four people to report into them.

Yeah. So you have five people doing one job function that previously was one of five that one person was doing. You're right. Now I focus more on company culture, building a rock star team, and they're really trying to let go and then let the people who are better than me in this area to do their job. I'm very happy with my team. Yeah. I'm very proud. Were you able to hand off stuff or was that difficult for you as a type of?

a person that you clearly are. Well, you found out that fast. I found it out in the first 30 seconds. I just revealed it now, but yes. It was difficult to let go at the very beginning, but I realized that my executive's team can do a better job than me. And I focus on bringing in the good people. And I learned from them.

Like, they're better than me in a lot of areas. I felt that way with Sir Charles, my new director here. It was better. I used to set up all the cameras and microphones myself. I didn't. Yeah. No. But it is a nice experience when you can hand something off and know this person's not only going to do it, they're going to do it better than me.

Yeah. That is just such an amazing woman as a family. Oh, yeah. Yeah. Amazing experience. But it doesn't happen unless you can get the best people. Absolutely. That's my okay.

For the year. Get the best people? Build a rock star team. Build a rock star team. Yeah. How do you get that rock star talent for something that, let's face it, try. trucking might not be considered super sexy when compared to making video games or, you know, whatever, some consumer product.

Yeah. I think it comes from the company vision and the mission, right? So we wanted to build a trucker-centric marketplace. And what we're building is actually pretty sexy because we focus on DREGE. There's no DRAGE product or new modern technologies in the world. Like we're the first a company. whatever we're building is one of a kind and is new. So we're inventors for a joint solution.

That's very sexy. And also, we really change people's life. You know, how it feels? When a driver comes in, tears down and say, thank you so much for changing my life. Really? We had a video about this. This driver named is Kevin Luke.

And he had a small business before. Then he failed miserably. Then he went bankrupted. Then he became a company truck driver. He worked very hard to save a little bit money, leased his own truck. He became an entrepreneur. Then he couldn't still make money because he got stuck at a port for seven hours, make $250 a day. So then he joined us last year.

Now he has three trucks. Like it changed his life fundamentally. And the guy came in, we have multiple drives like that. Like they are our fan and they came in. They gave us feedbacks. They tell us what to build and how we can help them. to change life. And that feeling is different from building a video game.

Yeah. Like it's really changing the hardworking people who were underappreciating in the past. I agree with you. Yeah. I agree with you. See, this is the thing. You can find meaning. Sometimes the meaning is deeper.

Yeah. And you have to think about that. And a lot of times people criticize Uber. Oh, you know, the drivers don't get a great deal. I think one of the, I'm very proud of the investment. Even if people are just making $15 or $20 an hour, because a lot of those people would have had to work an hour away from home or two hours away from home making the same amount working at, you know, whatever, a target as a greeter or a Walmart or some

other terrible job. And they wouldn't have been able to pick their hours. And they wouldn't have been able to drop their kids off at school or pick them up or do their homework with them. They would have to get a nanny or somebody to pick up their kids. And what Uber allowed people do set their own schedule. It's a great cause. It's a great cause. It's a great cause that the and this is why unemployment in this country is so low right now i believe the reason unemployment is so low is because specifically of the ride sharing and the delivery services providing this option almost like a foundational option of guaranteed employment for anybody with a driver's license if you have a driver's license you can go work for door dash or grubhub or uber eats or uber or lift

or via whatever they are there's a ton of other competitors and you never have to worry about not being able to get a job that pays 50% more than minimum wage. It's a beautiful thing. Exactly. That's how technology can empower the human beings. That's exactly what we wanted to do. I always told my team that let's walk for a course, not for applause, right? There's so many fancy things out there.

But this is a real deal. This is changing people's life. See, Americans are so entitled that they look at this floor of jobs and they take it for granted. Yeah. But you know people in China, They were coming from the north from farmlands where they shared, you know, one spigot for, you know, five families were sharing one water well and no heat. It actually changed a lot. But it's changed a lot because they got to move down to cities and work in factories and actually have.

And technology. And technology. Things have changed for the better. They're pretty grateful to get those jobs, right? Yeah. Here in America, people are just like, it's not enough. And it's like, we've raised the minimum wage to $15 in a lot of these cities. and it's had a great impact. I mean, the economy here is doing so well

because now that we've raised the minimum wage and people are making $15, you know what they're doing? They're going out to restaurants. So people who normally wouldn't have the money to go to restaurants, they're not making whatever, $19, $25, they go, you know what, I can afford to go to a restaurant once at a while. And that's a group of people who maybe didn't go to restaurants. They just ate at home, whatever.

Yeah. I think the world's, don't you think the world's getting much better? Of course. It is getting better. Why does everybody feel it's not? Well, I think if I feel like it's actually getting a lot better. It's getting objectively much better. The quality of life improved because of technology.

Massively. Yeah, and people have more flexibilities because of technologies. Yeah. Yeah, that's why I'm very proud to be in this ecosystem. Me too. It's about time people in Silicon Valley were proud again of the work we're doing to help humanity. I know Facebook screwed up the election. I know there's like bad behavior that occurs.

But net net, this is big. entrepreneurship has been great for America and great for humanity. Yeah, for sure. Things are going well. All right. Lydia, congratulations. Thanks for coming on the pod. NextTrucking.com.

You're hiring, obviously. Things are going well. You raised a lot of money. And the culture is, if you want to do meaningful things and help people do meaningful work, but you've got to be hard working. It's not 996, but it's not nine to five. I think we don't really force people to work long hours, but we do work very hard over there

because we have a common goal is really to empower the drivers. Yeah, see, that's great. All right, listen, continued success and we'll see you all on the next This Week in Startups. Bye-bye.