This Week in Startups - The Case for Adam Neumann + driverDoc's Josh Kolar on automation for trucking companies | E1844

Starting point is 00:00:00 You said it so well before. It's just a real estate business. Yeah, you don't have to really... There's nothing special about it. But what actually is special about WeWork was Adam Newman. The thing that's special about WeWork is the brand. Yes. He is their advantage.

Starting point is 00:00:13 Exactly like Richard Brancy. He stole Richard Brants. He's still Richard Brants as playbook. This weekend startups is brought to you by Northwest Registered Agent. When starting your business, it's important to use a service that will actually help you. Northwest Registered Agent is that service. They'll form your company fast, give you the documents you need to open a business bank account, and even provide you with mail scanning and a business address to keep your personal privacy intact.

Starting point is 00:00:41 Visit Northwest Registeredagent.com slash twist to get a 60% discount on your next LLC. Lemon.io. Get access to LemonHire, a platform with more than 80,000 pre-vetted engineers that you, can interview within 48 hours. Get $2,000 off your first hire at lemon.io slash hire today. And dot tech domains has a new program called startups.com, where you can get your company featured on this weekend startups. Go to startups.com slash jason to find out how. All right, everybody, welcome to this week in startup. Some quick news up top. Producer Nick is here. What's in the news, producer, Nick? All right. All right. So we have some Adam Newman

Starting point is 00:01:28 news. Yeah, this is very near and dear to my heart. This is why I'm on today, because this is my guy. This is my guy. Yeah. You love him. I love Adam Newman. I do.

Starting point is 00:01:38 And this is not like a bit. I sincerely love him. I think he built an amazing company. I think he's a great entrepreneur. I think he deserves a second chance. Call me crazy. Here we go. I'm calling you crazy.

Starting point is 00:01:47 I saw him at the FII conference, by the way. He was in Riyadh running around at parties and whatever, talking to folks. Yeah. Yeah, he's like six five in person, right? He's a giant. Hard to miss. He's, yeah, feels like six, three or four. It looks like a point guard in the NBA, yeah.

Starting point is 00:02:03 So he stirred up some craziness on X because some comments that he made about WeWork's bankruptcy went viral and everybody's talking about him coming back now. So before we get to that, let's just cue up what happened originally. So WeWork filed for bankruptcy earlier this week. Their recent performance was really bad, Q2 revenue, $844 million, up only 4% year over year. And via Reuters, WeWork's lease costs made up $6.5.000. made up 74% of its revenue in Q2. Its net loss was $397 million. And at the end of Q2, they only had $680 million in total available liquidity and only $205 million of cash on hand.

Starting point is 00:02:41 Shares were down 98% year to date when they went bankrupt to a market cap of $68 million. And their SPAC valuation was $9 billion. So that overall, that was a 99.3% decline. Yes, which was they agreed upon in 2021. and then they de-sbacked at some point last year. Makes sense. They have these leases that just don't make sense. They signed very expensive leases at the top of the market using the Vision Funds money.

Starting point is 00:03:08 And here we go. So I guess the question is when you go into bankruptcy, who gets to keep the equity there? Are those leaseholders going to have a claim on them? And I wonder how all of this works out. And who winds up owning WeWork? So right now, SoftBank owns 70% of the company. and they admitted that WeWork needs to restructure its leases if it wants to survive and if it doesn't, it's going to go out of business.

Starting point is 00:03:31 So what happened was, we work as part of its bankruptcy filing, listed $15 billion in assets, and $18.7 billion of liabilities as of June 30th. So basically, they need to wipe out $3 billion of debt on its balance sheet. And here's how they plan on doing that. They're going to immediately reject 69 leases. They're immediately starting renegotiations with 400 landlords. They have 777 total locations across 39 countries to about 230 in the U.S. And then they're going to convert or attempt to convert about $3 billion of their debt into equity with SoftBank retaining an ownership stake.

Starting point is 00:04:10 Yeah, because SoftBank, when they gave the last bit of money, it was probably senior debt as a loan as opposed to them buying shares in the company. So they do that this was a possibility. Sure. So you could invest in a company and buy shares, right? Then you can also give a loan to a company. When you give a loan to a company, that would be called senior debt, right? And there's like a debt stack. And so equity comes below debt. If a company runs, you know, goes bankrupt, the debt holders basically can foreclose on the company.

Starting point is 00:04:42 And this depends on how things are written, et cetera. So while SoftBank may have invested money for equity previously, I think what happened was in these last rounds, they gave them debt, knowing, hey, this thing could all come apart, in which case we would be the senior secured provider of debt, and then the leases would come after them. So I think that's what's happening here is soft bank set it up. So if we work, where to go bankrupt, which they probably anticipated, they took that massive risk with the debt. They take that massive risk, and then they get to take over the company essentially when that converts. But there's a bankruptcy judge who makes sure that all of this occurs, and the people who are in line to get money, get paid. And so who's seen.

Starting point is 00:05:25 Most senior, probably we work. Yeah. I'm sorry, probably soft bank. You're right, right, right. We work put out a statement. They said 92% of the company's lenders had agreed to convert their secure debt into equity. And WeWork will continue operating its non-U.S. and Canada locations as normal. But it's restructuring a bunch of leases. I guess the most expensive ones were in the U.S. and Canada.

Starting point is 00:05:44 Yeah. So here's where it gets a little crazy. Of course, we just mentioned Adam Newman put out this statement. Jason, I'll let you read it. Well, I thought this was great. And the way he released this, I guess, is he didn't go through the press. He just, I guess, sent out a press release with, you know, a little bit of a raw press release, let's just say. It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before.

Starting point is 00:06:10 It's a bit of a run-on sentence. There's some grammar issues there, which leads me to believe that he actually wrote it. That he actually wrote it, yeah. So, like, if you were to just look at it, it's a run-on sentence. It should be two separate sentences, you know. or at least some commas going on in there. You restructure it. Newman's statement continued,

Starting point is 00:06:28 quote, I believe that with the right strategy and team, a reorganization will enable we work to emerge successfully. Again, not a well-written sentence, a little bit cloogee. So this would be, I think,

Starting point is 00:06:41 him saber-rattling that maybe he wants to come in and play some role into this, because he's saying, hey, I have the right strategy. I have the right team. So the bankruptcy judge or does soft bank, when this thing goes private, do you think Masay Yoshisan wants to bring him back or merge it with his new company? That would be the ultimate crazy is after their incredible breakup, you know,

Starting point is 00:07:03 what if Newman comes back and says, I want to own the WeWork brand, I've got this other flow thing going, I've got money from Andresan, I can get some money from the Middle East region, and I have my own money, and maybe he cuts a deal with Masa to come back. And that would be unprecedented and crazy, except Steve Jobs did it. board fired him and he came back so this is you know and everybody here in silicon valley has the this archetype of the steve jobs comeback in mind and so adam newman has been running the steve jobs playbook he left he started a competing adjacent company with flow it's a real estate company it's not dissimilar residential not commercial right residential not commercial but it's residential for

Starting point is 00:07:47 nomads who are workers so it's work from home so how is that different you know you're still working in a space. It's just you're working and living. And remember, we work had started we live. So is it different? It's exactly the same vision, just starting with residential, working backwards to work, as opposed to starting with work and working backwards to residential. So I would argue it's the same thing. It's space that's hip for young people and you try to make a margin on the space by buying low, making it well designed and selling it for a higher price. And parties are actually accepted and not frowned upon because you're not at work, you're at your residential space. Absolutely. If you're at work, you know, in the era of buttoned up work and keeping things professional, the beer was always an

Starting point is 00:08:32 issue, right? They had beer kegs. That was always triggering. And handing out tequila shots and everybody and handing out tequila, always a recipe for disaster at work. These people getting glitzry drunk. Summer camp, people, you know, maybe having too much fun, you know, treating it like Burning Man. So, yeah. By the way, I know someone who worked at we work now in like that, 2017, 2018 era. And he said, was it was a woman? And she said it was the most fun time. She's like, I will never enjoy working at any place ever as much as I enjoyed working at WeWork. She was like, it was awesome. You know, there you can have a lot of fun at work. It's just at work, you can build up liabilities by having too much fun. And this is where like professionalism really matters.

Starting point is 00:09:14 It's funny to talking to her. Like, she is almost like an Adam Newman acolyte. She loves him. She's like he was the best. He treated us so well. How do you think Uber people feel about Travis? I was just going to make that same comparison. Yeah. And listen, if Dara goes for another five years, buys back 20% of Uber stock hits, you know, $250 billion valuation and Cloud Kitchens becomes worth $100 billion, which is on the track to do, I would guess. And then all of a sudden, those become one company and Travis comes back, Return of the King style. I like it. I like it. I always like the redemption story. I'm with you. Our friend Eric Newcomber did some digging around Newman, I think, in his newsletter. What did he have to say? Yeah, so he spoke to a couple of

Starting point is 00:09:55 anonymous sources. One person who he called a source familiar with the matter told him that real people with real money asked Adam Newman if he was interested in getting involved in a group that's going to participate in the restructuring. A former we work executive that he talked to, again, Anonymous said, quote, texted him this. I think Adam Newman comes in and buys the company. He's well capitalized and given that the board is now almost exclusively restructuring specialists, they will take care of all the big problems, getting out of leases, making the company significant,

Starting point is 00:10:24 lease smaller across the board, establishing a sustainable business model, etc. Yeah. And you bring in the hype man. Yeah. And then he was also told that Newman's non-compete with WeWork just ended in October. That's interesting information.

Starting point is 00:10:36 I always discount former executives. There are, you know, hundreds of former executives at WeWork. Who knows what they know. But, you know, speculation is fun. It makes total sense. Who else wants to run the business, right?

Starting point is 00:10:47 That's the issue. you need somebody who wants to run the business and then who better to run the business than the former founder and who's going to make it more exciting uh you know Elon always says like fate loves irony like the most entertaining outcome is the most likely most probable this is the most entertaining outcome so as a yeah you know uh media sphere right blogs social media we kind of steer towards the most entertaining outcome unconsciously right and this is like a really interesting of media. Okay, Trump's crazy, you know, larger than life, he's the most entertaining. And then people all of a sudden, you know, despite what happened on the insurrection or whatever you,

Starting point is 00:11:29 you know, Trump, it's like the whole country is like steering towards, oh, but it's more entertaining when he does stuff. Yeah. And it could be very dangerous. I think it's like some primordial thing where, you know, when there's an accident on the highway, we all look at it and slow down. Yeah. It makes no logical sense to slow down and look at an accident. You're not going to see. anything you haven't seen before. Just a bunch of wrecked cars, right? You've seen it a thousand times. It's terrible, but everybody slows down to see it. We can't not look at the train wreck. And so this is like a train wreck. This is like Shakespeare. It's drama. So we as humans are drawn to the drama. Conflict equals drama. Drama equals engagement. So here you have it.

Starting point is 00:12:11 Massive conflict, massive attention, and then it steers towards that outcome because all the energy starts going towards that outcome. Just like Elon buying Twitter, right? It was like this major controversy, this conflict, conflict, conflict, and then all of a sudden he owns Twitter, boom. And then since he's owned it, right? All this conflict going on and this drama. And, you know, it starts growing and, you know, becomes super important again.

Starting point is 00:12:35 I also feel like... This is the most entertaining outcome. Definitely. Starting a business used to be such a painful process. You needed to get a lawyer. There were tons of fees. It was a mess. But not anymore.

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Starting point is 00:13:54 I feel like Adam Newman unfairly kind of gets grouped in with those people. And maybe he did do some things on the margins that were not great, right? Buying the buildings with his own money, leasing them out to Wii work, owning the trademark and leasing it out for a couple million dollars a year for like personal. Those are, that's angle shooting. Yeah. That's not crime. So an angle shooting.

Starting point is 00:14:13 is you're not breaking the rules of poker. You're just trying to find a little angle on the person, right? So an example of angle shooting in poker, and people look at angle shooting as like a little, eh, smarmy. So owning the IP and then selling it back, it's a little angle shot, right, obviously, or owning the building and then leasing it back. Is it against the law or not?

Starting point is 00:14:34 No, but it's an angle shot. So in poker, if you're like, start talking to the person, like, hey, you want to chop the pot? You know, we're both all in before I turn my cards. if you want to split it, yes or no. And so that's an angle shot, right? I'm trying to get information from you. Then you say, okay, I'll split it.

Starting point is 00:14:49 And you say, okay, well, it's not binding. Or you just are trying to get information from a person, you know, and you take some angle shot. Another angle shot might be this guy did this in a poker tour and Omar over again. He would throw out like three chips, you know, $3,000. And he would say, all in. And then, what, is it the $3,000 or is it the all in? And it turns out the all in. is what matters, not the thing. So you can kind of make a mistake on purpose in order to

Starting point is 00:15:19 like bait people into a hand. That's angle shooting. So he was, he's a bit of an angle shooter. But he's not Theranos. He built a real business. He is an incredible marketer. And he knows how to throw a hell of a party. And people, young people like to party. Now, you could disagree with it. But that was actually Richard Branson's brand was to be a little kitsy, to be a little cheeky, to be a little sexy. I mean, the name of the brand Virgin was meant to a little bit. A little listed a response from people about virginity and, you know, sex and everything. So, you know, I think to a much lesser extent, Adam Newman has that Richard Branson showmanship in him, right? I just think he gets roped in unfairly. Like, I don't think anything that he really did. And he

Starting point is 00:15:58 also built a huge business. And the, another thing I see getting thrown around all the time is like, oh, he cashed out, you know, $700 million at the peak. Yeah. He wasn't selling those shares to retail investors. He wasn't dumbing them on anyone. No, no. This wasn't a purchase from him. This wasn't like, Yeah. You know, some crypto bag being sent to, you know, or some NFT draw from a celebrity. No, this, he sold it to SoftBank, you know. Right. These are the most sophisticated investor, arguably, in the world.

Starting point is 00:16:24 Now, you may disagree with his betting style, but to say he's not amongst the most sophisticated in the world in the history of investing, it would be crazy. He's one of the, he was the richest man on the planet for a while. He's a sophisticated person. So 100% agree with you. Congratulations to Adam Newman for still being in the mix. let's just all keep in mind it's not a technology business a real estate business it has very slim margins it's never going to be some hundred billion dollar companies it's going to be a couple

Starting point is 00:16:50 billion dollar company with a 10% margin it's never going to be some great epic company but it might be a fun company just like virgin you know uh air or virgin atlantic you know was a fun company you know virgin airlines may be a terrible business but it was a fun business and it you know was motivating for him to do it it's just not a tech business that's where i think people get So you're in on the comeback. You're in on the return of the king. Oh, all in. Hell yeah. 100% excited. Team Newman. This weekend startups is team Newman, baby. Totally. Totally. You know what? It's more entertaining for us. I mean, it's fantastic. What if he makes it work? You know, the thing he did was he bought really crummy office space, sea level office space, jazzed it up, convinced people to come to the tenderloin or some terrible area in, you know, that's a little bit dangerous on the fringe and did the arbitrage. He's just got to get back to that. By the lowest possible real estate, which, by the way, you're going to be able to do right now. and so it's a good time

Starting point is 00:17:41 a great time for him to come in it's very similar to the time he started was it called Green Desk the original name it was Green desk, good memory, yeah it's just like a green desk situation like for people who it was like environmentally branded originally and they had some place in like Williamsburg

Starting point is 00:17:56 some little building in Williamsburg and he sold the green desk to that real estate person and then left to do we work I remember like the whole that and that was an angle shot right he's just like let's just sell this back to this guy and then we'll start a new brand and make it even bigger so

Starting point is 00:18:09 congrats to Adam Newman. It's super entertaining. It doesn't really have much to do at tech, but great. He should go buy all these crummy buildings in San Francisco or these great buildings in San Francisco that have no leases and are selling 25 cents on the dollar. Like if somebody gave him, I'm not kidding here, like $10 billion to go buy real estate and figure it out after, he would probably be one of the best stewards of capital if you put some controls in place, like an actual board. That's what the 2.0 should be. Whoever enables him this time around should just have proper governance. Don't let him run amuck. and then have some good people around him to make sure he doesn't, you know, go for like, we'll scale this, sign any lease, and we'll figure it out later.

Starting point is 00:18:47 We'll figure it out later is not a plan. A plan is a plan. And that's always, I think, the lesson of the ZERP environment. Like, you've got to be very careful if you can thread that needle. People say, oh, Travis and, you know, Uber were, you know, subsidizing VCs were subsidizing the rides,

Starting point is 00:19:04 whatever. They had a plan. Trust me, who was a plan? And there was a plan in China and there was a plan for the U.S. And the plan in China was always, let's go for the gold. If we get the silver, we stay. If not, we sell and we own some percentage of D-D. That was the strategy.

Starting point is 00:19:19 You know, Travis explained that strategy to him because I said, hey, this, we're losing a lot of money in China. What's going on? He's like, we're going to go for the gold. But if we don't get it, we'll go for silver, which is owning part, a large part, a meaningful part of that company D-D. And that's exactly what happened. And it worked out great.

Starting point is 00:19:33 So I think you just have to have a really good plan here. I don't think we work had a good plan last time around. Too much money to a mercurial guy. With no controls. With no controls. This time, give them the money, but have there be an investment committee that he has to bring each deal to? And the investment committee says yes or no. That would be what I would do.

Starting point is 00:19:53 I give him a $10 billion facility. He can buy as much real estate as he wants. It has to pass the sniff test with this board. And that board, you know, makes them jump through a couple of hoops to get a, approval to buy those things, as opposed to him just going bonkers and starting a school. Remember that? He started a school. He got the wave machine. He started investing in surfers. Like, no bueno there. That's the same thing that happened with SBF, right? There was no controls, no board, and he just bought whatever he wanted, invested in, bought politicians, bought celebrities,

Starting point is 00:20:25 invested in tech companies, invested in crypto projects. He didn't care. It's just like, that was from, that was designed from the start. He was, that was, SBF was Machiavellian to me. He was like ends justify the means. And the end is like saving the world. So I can do whatever I want, basically. The question is like SBF is like a poor man's like Lex Luthor on that side, right? Of the like Legion of Doom. Okay.

Starting point is 00:20:50 But is Adam Newman part of the Legion of Doom? No. What? Or is he like an anti-hero who's just difficult to get along with in the Justice League? You know, like is he like an X-Men who's kind of like Deadpool? The last thing you'd ever say about Adam Newman is that he's difficult to get along with. I think that is his one strength is that he's amazingly. Is he evil or good?

Starting point is 00:21:11 Is he part of Justice League or Legion of Doom or is he an independent contractor? I think he kind of falls in that independent gunslinger Bobafebett area. You know, is he part of the empire or the rebellion? You said it so well before. It's just a real estate business. Yeah, you don't have to over think there's nothing special about it. But what actually is special about WeWork was Adam Newman. Yes, he can make a boring business.

Starting point is 00:21:33 Yes. He is their advantage. Exactly like Richard Branson. He stole Richard Brants's playbook. You make it a party. You make it sexy. You make it fun. You make it a little out of control, a little dangerous. Whatever. Virgin, you go on a virgin flight, you know, maybe the flight attendants, male and female are a little more attractive and maybe they're having drinks with the customers. Like, I've been to Neckar Island a couple times, not to flex. I was invited. But went a couple times for birthday parties or whatever. and I can tell you, they recruit the staff at Neckar Island based on, like, how much fun they are. And they're partying, you know, doing shots, having a great time, dancing. They're into it. You know, it's like whatever.

Starting point is 00:22:20 The Branson-Noon comparison is a good one. I like that. It's really solid, I think. Yeah. So congratulations. Shout out to Adam Neumann. Come on the pot anytime. All right.

Starting point is 00:22:28 All right. And what's what we got in the back half of the show? Josh Kohler from DriverDock up next. Great. Awesome. So up next, more of these founder interviews. So we'll get a little news in the show, little interviews in the show. Classic twist episode.

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Starting point is 00:23:49 All right, everybody, I just had John from Motive on a few days ago. And today we've got another founder building in an old, slow, incumbent industry. You know, those industries that really need technologies. In this case, we're talking about trucking. Josh Kohlar is the CEO and co-founder of DriverDoc. This is an all-in-one digital management platform for trucking companies. Basically, here's the problem. Ninety-seven percent of trucking companies, they got fewer than 20 trucks. This is a fragmented market. And these smaller companies, they rely on paper. Let's be honest. Facts, manual processes. So what does DriverDoc do? Well, they provide tools for the... the invoicing, the document management, and all that kind of stuff.

Starting point is 00:24:33 Josh, welcome to the program. Thank you so much, Jason. Thank you for having me. I appreciate it. Okay, so you're in Nebraska. We've got a lot of friends in Nebraska, and you came up with this idea to help trucking companies get more efficient in this fragmented market. Explain to everybody, and by the way, we're excited to be investors in the company.

Starting point is 00:24:52 We love these boring businesses that really need technology. They're laggards in some cases, but they're important businesses. And that means if they are laggards, man, the distance between when they're getting off facts and paper and using smartphones and AI, that's a big jump, right? It's like they're skipping three steps. So tell us, how did you come up with the idea for the company? What does it do? How's it going? It came out of necessity from my background and experience in the industry itself.

Starting point is 00:25:20 I've got 15 plus years of experience at some of the largest transportation providers, UPS, Union Pacific, and Warner Enterprises. And so these are top-tier transportation companies. And so getting to see a lot of the pain points, firsthand experience, and then building around some of these companies to solve some of these pain points, gave me an understanding that truly this industry, like you said, is lagging. And it's just unsililied. You think about what I got to see with UPS, very close system, all the way from the drivers in their truck, having digital communication, think use to sysoled.

Starting point is 00:25:58 sign for packages. Now the Amazon experience, right, has changed the game. It's now a photo in your house. And so it's that core concept of when I was at Union Pacific and Warner, we're still engaging with drivers. We're still relying upon paper. And we didn't have the Amazon experience. And that's what this industry wanted.

Starting point is 00:26:19 And so I took a leap of faith and said, hey, I've got the expertise. I've got a network that I believe can help. me achieve this. And so in 2019, left the corporate industry space and decided to start to research and design essentially the starting point to do bill of lading digitization for the space. To recap there, you're working in the industry. You got a lot of insights. You got a lot of frustration. You decide you're going to become a founder. Yes. Now, when you become a founder, you look for an opportunity to build a product that delights users and either saves them time, saves them money

Starting point is 00:26:58 or makes them laugh and entertains them. I always tell people those are the three categories. People forget that last one. Now, I don't think bills of laden are going to make people laugh or cry necessarily. I'm sure they might at moments. But really, this is about saving time and saving money, correct? Yeah, to kind of give you the concepts there of payment terms, right?

Starting point is 00:27:19 If you start with the payment terms in the space and the industry are anywhere from 45, 60 days. And so this bill is, of lading document, yes, it tells you what's being put into like a trailer or container, but in most instances, that was the support that the freight actually got delivered. And because that wasn't being done digitally, it was being exchanged by hand, was causing anywhere from seven to 10 days delay in getting paid. So you think about, yeah, 30, 45, you know, 60 day terms, go ahead and throw another seven to

Starting point is 00:27:56 10 days on that. And that's a huge issue. So that's the first piece you built was the ability to take a smartphone out, take a picture of a bill of lading, digitize it and turn it into, you know, essentially a smart contract or a smart document. Correct. Correct. If I'm correct, yeah. Yes. And so that's what really took us to the point of you had to have a way to digitize it. We had to have a way to go back now and show it to some of the larger transportation providers and some of the larger shippers. That use case that you just described really became paramount over the last six to ten months for us to go show to the likes of a Warner, to go show to the likes of Union Pacific and show them that we know their pain point, but also give them a tangible tool that can be used for them,

Starting point is 00:28:51 but also seen as something they can provide to their customers. We gave them a tool that they could see themselves and grow bigger into it. How do you get into these trucking companies and make money? Because it's super fragmented. And then you're introducing some new technology. How do you get in there and get them to adopt this? Or is it just bottoms up? You tell people like, hey, this app's out there for free.

Starting point is 00:29:14 Go ahead and use it. It's a tool that's available for, I can see the both ways of doing. And you can just put the tool out there and say, hey, there's a free tool out there. And then, you know, oh, if you want to play multiplayer mode or you want to have the pro features, then upgrade. So what's your go-to-market strategy here? And how's that going? We really looked at it is it's a tool for the driver. Another part of the entry point was every one of those documents to date, even if there was a scanning app, was all going back to someone's disaggregated email inbox. And so part of this was offering a portal into the back office of the company, which created organization,

Starting point is 00:29:53 and then truly the API integration capability to take the document and put it directly upstream for them to use it next into their core systems. There are some, I guess, legacy apps that manage all of their stuff. So you're just helping with that first step of getting off of people, yeah? Correct.

Starting point is 00:30:14 And then do you eventually target those legacy apps and try to replace those? How do you think about, hey, I'm a startup with a limited amount of resources. Yes. You know, I can charge for this app or this processes, but I suppose it's probably 10% of the process. There's another 80 or 90% to go.

Starting point is 00:30:31 How much is what you're currently doing and then tell us about the big vision here and how this becomes, you know, 100 million in revenue? You nailed it. It's 10% as well as what we're saying is it's light OCR capabilities, it's light integration capabilities to take that document and put it upstream.

Starting point is 00:30:49 The next part of this is, is truly, we think of like the next 20, 30% is getting accounts receivable automation, billing automation as we start to think about what they do with that document and that process upstream. So instead of people doing, I look at my system of record and I look at this document, it's bringing both of that together and automating that person process today. Okay, we're back with another segment of pitch it to JCal, brought to you by the fine folks at dot-tech domains. Dot Tech domains is giving twist listeners the chance to show off their startups on this week

Starting point is 00:31:32 in startups. So go to startups.com slash Jason to apply. There's only one rule. You need to have a dot-tech domain name to get featured. This week, we have a great pitch from netaI.com. NetAI. Tech is building an AI-powered analytics platform that'll help mobile providers analyze the traffic data on their networks. People in the industry call this deep traffic analytics. Basically,

Starting point is 00:31:55 netaI.Tech serves mobile providers in two ways. It helps them increase capital efficiency and better monetized 5G revenue streams, and it optimizes their infrastructure so they can provide faster and more cost-effective services. Makes a ton of sense. And you've got billions of 5G devices coming online over the next decade or so. So here's your call to action. If you're interested in getting featured on this week in startups like netaI. Tech was just featured, go to startups.com. slash Jason and apply today. That's startups.com slash Jason and fill out the form to apply and make sure you get a dot tech domain name. It's a beautiful domain name. It makes you look serious. Feels like you got a great domain name. So when you see what Open AI is doing with multimodal, hey, you can take

Starting point is 00:32:36 a picture, you can get text as an output, you can give text, get a picture, all this different stuff. Yes. And you know, you built this before that was available. Now all this is available. So how much faster can this be done with AI right now? And what do you do? Just throw away the existing code base and just say, you know what? We're going to start over with AI and just do this by hitting some language models. How do you think about the introduction of AI and multimodal to all this? AI is a great thing. So I think for us, I don't think we have to necessarily throw everything away because there's inherent business logic that the AI doesn't know and can't know yet. And so I think it helps us accelerate the innovation. And instead of like focusing on some of those things that are like rudimentary and should just happen, we can focus on what I'm calling the other truly 40 to 50% of the platform, which is increasing it instead of just that transportation company getting value. You've got a shipper that is producing the Bill of Lading document.

Starting point is 00:33:46 and they actually want it digitized. So instead of, yeah, like the paper being handed to the driver and the driver scanning, we are going to focus on increased adoption and participation from the shipper so that the data becomes digital into the core process. So that's where I see. It's like AI is just going to be our best friend to help replace where our focus has had to Ben, and now it's truly pivoting from that thought of just one company, but getting all parties involved.

Starting point is 00:34:21 And now there's some standards around Bills of Layden. I know, like, there are some organizations that want to standardize all this stuff, kind of like you do an open source or an HTML or RSS. So where is the industry at standardization and publishing standards in the same way? You know, really simple syndication, OPML, podcast syndication, you know, HTML, recipes, all of this semantic web stuff exists. But my understanding is in the industry you're in, it's kind of nascent. Yes.

Starting point is 00:34:53 So think of it as like you've already said this industry is very lagging and disheveled and fragmented. Think of like industry adoption, right? And that part of a lift for that thought. And so truly when I went out out of the corporate world in 2019, I started partnering with freight waves and BIDA, which is blockchain and transport alliance, to help facilitate and think about how those bill of lading standards would come about. The reality is you throw a pandemic in there and everything else, everybody essentially kind of switched where they were focusing.

Starting point is 00:35:32 Speed ahead a couple years, two, three, four years, and we're seeing three industry standard boards and groups of bodies come out, which is, driving this use case of electronic bill of lighting. That's a heavy lift, right? I mean, that's, is that a billion dollars to try and, you know, force an industry to adopt a standard like that? No, they're coming out of necessity because these companies, because of the pandemic. So part of our lift has actually been taking off us. And so part of our, we're calling it our bill of lading chain of custody model, we've, now have this essentially what we're going to say is going to change the game and allow all

Starting point is 00:36:19 parties to really see all the events around a digital document, we're going back to now those standards groups and we're getting them to essentially certify us. So tell me about people tracking what's in freight. I know like there's a big trend. Put your air tags in your luggage. You know, we all do that as consumers. Some people are doing that. They ship something that's important. and they'll throw an air tag in it or a tile before that. The people who are shipping stuff using some sort of standard to track the location of it, how does the industry look at that? I remember one of the airlines was like, you cannot.

Starting point is 00:36:55 They tried to ban air tags and they realized how dumb that was. It's like banning AirPods or something. Like it's going to be built into everything. So it's kind of ridiculous. And it actually works for everybody if you know where your luggage is. It's one less question you have to ask and less customer sport you have to do. So I'm curious, has live tracking of packages kind of. has kind of been incorporated into this yet, or it's not there yet?

Starting point is 00:37:16 Yes, it has. So that was our two core value proposition was the digitization of the freight documents, the bill of lighting, and shipment visibility. We started with visibility around the sense of a driver and being having the app, whether it's on a cell phone or a tablet and their physical truck. Yeah, you know where they are, so that's great. Exactly. But there's six packages in the back from six different senders, and they all get dropped off.

Starting point is 00:37:42 maybe one of them gets knocked off, falls off the truck, back of a truck, anything can happen, you never know. So how do you get that real-time visibility, I guess? Are there beacons that people make? Yes. So that's a sensor play. And so that's what we're learning as we're expanding the thoughts of the platform is you have the transportation companies that truly move the physical goods. You have then shippers that are actually putting in that technology, whether it's a sensor or FRIDs or those types of things. that are being put on the package level. And that's where, as we think about going back to the platform and adding that other participation, we're expanding our ETA, not just from the physical driver, but to include it

Starting point is 00:38:26 to the physical goods itself. Yeah, it seems like a great idea. So you are now building the business. You're building it in Nebraska. Yes. Talk to me a little bit about building a startup in the heartland of America. Yeah. What's it like?

Starting point is 00:38:40 Because obviously, the cost of living there is a. 10th or a third of living in New York, Manhattan or San Francisco, I'm sure, an apartment probably 500 or 1,000 bucks, I take it for one bedroom in Nebraska. Quality of life is absurdly high. So is it an advantage, a disadvantage? What's the pros and cons for people out there listening, wondering where to put their startup, where to live and grow their family? That's a great question.

Starting point is 00:39:02 I think of it is, I don't think all startups are equal. And I think as you think about placement, right, it really is industry. determinate. And I think why Nebraska, like as I went to launch it, made sense is there's roughly 8,000 transportation companies just in Nebraska alone. Oh, wow. Yeah. And as we think about, there's a Class 1 railroad, Union Pacific, and class with top, top 10, top 20, trucking transportation company Warner Enterprises here. And then down the line, you've got several others that follows suit as a top 40 or top 50 transportation trucking company as well.

Starting point is 00:39:49 And so with companies like that here in the backyard, not only was it a beneficial point to start to give us people to help us think through some of the initial software, but also to give us essentially a platform being in the middle of the country. We can get to most anywhere. What's the impact of Uber and what's the impact of Uber and what they're doing in freight and then Amazon and what they're doing in freight? I wonder if those are having some dramatic impact yet. My experience includes running brokerage departments at both Union Pacific and Warner Enterprises. And as I thought about very uniquely what my business model would be with software and not a traditional brokerage model, that's what was interesting.

Starting point is 00:40:38 I think about like you said Uber freight is they went in on we want to be the people that have the load board more towards spot freight like transactional business freight which that's about 20% of the market depending upon the current economy and so I wanted to support and build software for the 80% and there's much more traditional standard contract business in transportation and so I saw that is a better play. If you look at what they've had to do to even show some financial benefit and outlook with the acquisition of like trans place and a 3PL kind of 4 PL like that, they're having to pivot in a way that I think they weren't necessarily maybe wanting to and to get to a financially stability capability in this industry. What happened with convoy? Ooh, yeah,

Starting point is 00:41:34 that's good. That's good. Yeah. Same deal. They can. came out as one of the first digital brokers. And so if you look at that, the brokerage model is you might get 20% margins until you don't. And we're in a high inflation economy and rates are very low. It have been remained low. And so as you look at that business truly, the margin got squeezed out, basically. They got squeezed, they got exposed and they didn't have enough runway. Yeah, it was mismanaged, obviously.

Starting point is 00:42:06 They were going for growth. They raised over a billion dollars, but they obviously didn't manage it well. So it's bad cash management. But you're saying it's a being a broker's not a great business to be in. And here's why is I love the butterfly effect. And I look at other areas of transportation over the last 30 years. So if you think of the airline industry and the railroad industry, hundreds of those companies.

Starting point is 00:42:31 And then after deregulation and after what you call standards and autonomy into the those spaces. Now there's six, right, in each kind of category. And so that's my play. And that's why the Bill of Lighting, why it's very important is there's data that's highly sought after right now by autonomous trucks, manufacturing companies that we're talking with. And if you think about, like, the government use case of some of these things, if you're going to send a truck down the road and someday it's not going to have a driver. The DOT wants to know what's in it and how much it weighs. Right, because the driver was responsible for those things previously.

Starting point is 00:43:13 There was a human who had some culpability that like there wasn't, I don't know, something God forbid a bomb on the truck. Exactly. But they got the truck. It was locked. There was some sort of tag. And then they would untag the lock. So there was some sort of human being.

Starting point is 00:43:27 You could say, hey, what's going on? You were supposed to be responsible for this package from point A to point B. Now it's nobody's responsible. it could get super dark. All right, listen, continue success. Thanks for letting us invest in the company. We're super excited to see where you take it. Just focus on those customers. You delight them.

Starting point is 00:43:42 Save them time. Save them money. Everything will work out. And yeah, keep listening to your customers. Make sure you do those listening labs and everything. This is a, and then product velocity, right? If you do those two things, I find things tend to work out really well for startups. Talk to those customers.

Starting point is 00:43:57 Get them on a Zoom. Get them on a phone call. Or from a $25 gift card for Starbucks, whatever they're just. jam is and listen deeply, look for other product opportunities. And then, of course, you know, that product velocity's got to be there. So make sure you got a team that moves fast and is committed to shipping product fast. And if you think it's going fast, see if you can go faster. All right.

Starting point is 00:44:17 I love that. Continue success, Josh. Everybody check out driverdoc.io. Driver doc. I'm going to try to introduce you to the companies I'm investing in. You all want to know what I'm investing in and what I'm interested in. Man, you know, these boring legacy businesses, you get in there, you advance. them, they really appreciate it. They'll pay a pretty penny for that automation. And then with

Starting point is 00:44:37 AI happening, I think this, you know, SaaS plus services plus AI is going to be just an extraordinary network effect. And you got a really good shot here at making some noise. So congratulations, Josh and the team at driverdoc.io. And we'll see you all next time on this week in startups.

This Week in Startups - The Case for Adam Neumann + driverDoc's Josh Kolar on automation for trucking companies | E1844

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