Hand-Selecting Customers to Deliver White Glove Service

Adam Vazquez 00:25
We’ve got Chadd Olesen here on the show. Chad, thanks for joining us.

Chadd Olesen 00:29
Hey, Adam. How are we doing?

Adam Vazquez 00:31
So we just had like 30 seconds of banter and I already had to start recording because we’re diving into things that I want to discuss. But I guess, you know, just a real quick level set. Who are you and what’s your company do?

Chadd Olesen 00:45
Yeah, my name is chatter. Listen, I’m the CEO of a company called AVRL. Company name was advanced voice research labs, Inc. We had brought some tech out of school and in 2012 that company produced some tech that ended up becoming an in-carboy system for this massive German company. Through trials and errors, we picked up some pretty strong investors like SAP to come in and connect disparate systems. Through the Grapevine of us working with some large fortune 500 shippers, one of them introduced me to a large three PL and intermodal company and like 2019, we’ve been since then connecting large shipper platforms and automating the execution layer from three pls asset based carriers directly to those systems. Without API’s, that’s what we do.

Adam Vazquez 01:37
Incredible. Yeah. Now, let’s get to the most, I mean, that was, let’s get to the most important thing of this conversation, your website, it’s one of my lines. Now, it’s not offensive at all. We were talking beforehand, our mutual friend Scott Oslon, introduced me to some of your stuff, some of your content, I was like, trying to dig into something like, Okay, now what does this company actually do? Went to the website, and I’m not making this up, it said, it essentially says, like, we handpick 18 people to work with this customer, apply or something like that, right? What’s it tells him,

Chadd Olesen 02:12
Basically, when we look at transportation and logistics, there’s this fundamental flaw that’s happened over and over again, which was growing, and failing to deliver white glove service. And so when we were looking at our go to market, we were like, Look, if we kept the number of customers that we bring on each year, we could guarantee deliver white glove service through the entirety of our relationship with those customers. And so the thesis behind the website was that we were going to deliver white glove service in its entirety for however long, what we ended up doing was we I think it was maybe like a year and a half ago, we ripped down our site. And we just put up this banner that basically says AVRL, we select 18 companies per year to automate. And when we look at our automation, it’s decades beyond what is in existence today in the industry. And what ended up happening was that the less and less that we started to advertise, the faster we grew. And so for us, we don’t advertise, we don’t market our services and see if drawn 100% via word of mouth.

Adam Vazquez 03:21
So I want to get more into that and how you foster that word of mouth. But what was the conversation like with investors when you’re like, Yeah, we’re cool on doing new sales.

Chadd Olesen 03:31
So we have some pretty strong investors, we have some money from fontinalis partners, they wrote checks into freightwaves. They wrote the check in to chain IO. I actually did the due diligence for one of them on chain IO. But cool. We have money from SAP SoCal capital, like cha cha it’s doing crazy, crazy, incredible things. But they had never seen a company that didn’t advertise before. And when you look at the VC landscape, they like companies that are consistent, right, do the same thing, over and over and repeatable patterns. I’m pretty sure that every single one of our investors told us that this would fail. And we, I think, if we were to do it again, it definitely would fail. But it worked. And it’s working really well. So why do you think it worked for this one instance? So in transportation and logistics, there’s two really negative things that happen with technology. One, everyone out there features hyping like crazy, right? Like our tech can do this, and it can do this and it can do this and if they fail to deliver a lot of what they promise, and that negatively impacts the entire industry and all technology in the industry. Another thing that ends up happening is that there’s a copycat mentality that happens in transportation and logistics where companies say, Hey, we can do X, they really can’t do that. They’re trying to learn it as they grow their business. And what we’ve seen is that when we don’t talk about our product, we don’t talk about our service and no one really understands We’re doing, how do you compete against that makes it incredibly difficult one, but two, it creates this really like, interesting, psychological moment inside of a customer’s head of like, I want to understand what a VRL is doing to see if it can help my business. And I mean, it also helps that we’ve been delivering some pretty important technology in the industry that’s really been needed for a long time. But I think that our results have been speaking and driving the customer acquisition, like when we look at we did a fireside chat with our best we had increased their net new shipment count by 300%, it’s pretty hard to argue that the value isn’t there or is there. And so what ends up happening in an industry like transportation logistics is that it is pretty instinctual in nature. You know, the head of brokerage at Schneider is friends with the head of brokerage at JB Hunt, it’s guaranteed to be a secret that’s shared internally. And I think that’s what’s been happening for us.

Adam Vazquez 06:07
That’s cool. And I want to hear more about how you broke into this industry specifically, but just following up on that strategy, then what does? What is outbound? Or what does growth look like for you all? Obviously, there’s the one off conversations, but is there any version of pursuing the types of business that you want or the accounts that you want to work with?

Chadd Olesen 06:28
I mean, we’re working with about 50% of the top 103, pls. And we entered into transportation and logistics in 2020, during COVID. And so when you look at the growth, it’s pretty strong, especially for a team that’s about 100. And we have 90 engineers, no sales team, no marketing teams, when you start to like, when you start to look at the growth rate, not even from like a customer standpoint, like the amount of technology that we’re shoving into the industry is insane, because of how large our engineering team is, versus you know, a company that might be 100. Strong has, you know, 40 salespeople, right, right. Yep. Okay, so

Adam Vazquez 07:09
Let’s get into your background, and how I mean, this is an extremely niche thing that you’re doing, and I guess it’s gotten more niches, as you’ve kind of focused on the supply chain space. Yeah, it was a little bit more broad before that. But how did that come to be? Tell us the story.

Chadd Olesen 07:25
So we’re, so there’s this fundamental problem that exists in the supply chain, and we were looking at it from the warehousing side and hearing side of it for large shippers, and it was, I’m going to use an example. Like, if you are, let’s say, a Walmart, and you run, you know, carrier point is your TMS and you run as another platform called retail link, and you have a different WMS that you custom built, and then you have an ERP, that’s SAP. Well, SAP legacy systems can’t expose API’s, you can’t get data in and out, which means you can’t sync information across all systems. The big problem that exists in and persists throughout pretty much every shipper, while we started working with a top five shipper. They ended up introducing me to JB Hunt, we came in and ripped and replaced a bunch of their automation, it was a perfect fit for our technology and the use cases that we wanted to deploy. They introduced me to somebody else, they introduced me to someone else, there was an acquisition that happened to you know, caught on fire, and we got circled into that inner web of supply chain, we actually don’t think that the markets are as limited or niche as it might look. Because when you look at even, you know, a shipper and how they interact, like let’s say you’re Dan owned foods and you want to work with Walmart, you want to work with Dollar General, you still have to interact in those disparate systems across the chain. And so really, it’s not just limited to three POS asset asset carriers, it could expand to shippers, etc.

Adam Vazquez 09:07
I feel like you have this very similar focus that is on providing the solution to the customer. And obviously, that’s paid outcomes with you, but even in how you sell. And then when I was looking up some of the company background, it looks like you’ve raised essentially once and have been able to deploy that.

Chadd Olesen 09:26
Actually, I just didn’t mean to cut you off, but I know you’re good. So we went and raised and our raise was insane. We did, I think safely, that was capped at maybe 10. And because we were growing so quickly, our investors offered us a million and a half or 1.4 on an uncapped safe. And we haven’t converted them because what had happened at that same exact time was that when we started to take off, we’ve self funded a ton of tech like we self funded the building of our own custom browser so that we can manipulate the HTML. You know, most startups don’t have the luxury to do that. But we run extremely profitable. And that’s really important to also not just our direction of product, but also the control of how we want to negotiate contracts, how we approve things via the board, etc.

Adam Vazquez 10:19
Yeah, that’s essentially where I was going to go or where I would I was hoping you’d explain like, so do you think that competitively obviously, at the time, I don’t know if he would have had the foresight to say this or not, but like, do you think you’re competitively advantaged by the fact that you’re essentially cash flowing? And so therefore, not really, like, if you had raised a ton of money, maybe you would have had to have a huge Salesforce? And you know what I mean, like, do you think those distractions come into play?

Chadd Olesen 10:45
Yeah, I mean, there’s this, this alignment from VC versus founding team, or startup, which is the VCs goal is to get you to spend money, so that you need more money, and it creates that playing role. If you’re a startup and you’re trying to run a profitable business, you’re focused on not growing too quickly, you’re focused on making sure you’re expanding, you’re making sure that you’re expanding in those right areas. And what having full control of AVRL allows us to do is that if we see a unique opportunity for a product, I can start deploying resources for it today, I don’t have to go and get an order approval, when we look at, you know, pulling the trigger on a new data science lead that we want to go and try and build a custom product that we might push into another industry, I don’t have to go and beg my VCs to allow us to do that we can just do it. And I think that profitability should be important to all startups, maybe Amazon could have never been profitable from day one, it’s it wouldn’t have been possible, but they always had a path. And I think that a lot of startups don’t have a path to profitability. And so they just consume money, build big teams fire, build big teams fire. And it’s kind of counterproductive to the growth of their organization, versus being super targeted on what our outcome is or what we’re trying to achieve. I love that.

Adam Vazquez 12:17
So what about currently, you know, what are you seeing in the market in terms of, I think, especially when there’s uncertainty, or a downturn, or I’m not even sure what we’re in currently, economically, but sometimes r&d, or these types of new initiatives can be some of the things that get postponed or pushed, what are you are facing? Are you able to? And how are you able to overcome some of that,

Chadd Olesen 12:40
we’re actually seeing accelerated growth. And so when you look at the 18 customers that we’re going to onboard this year, we’ve actually signed contracts with nine of them already. And what we’re doing is we’re actually working on our deployments that will come out in q3 and q4 right now, and that creates this like really interesting model where I’m not stressed about selling for today, or for this month or this quarter, we are working on continuing to provide white glove service so that we do get our annual contract renewals. But at the same time, we’re onboarding at a pace that allows us to also onboard new engineering, restructure our organization as we grow. The thing that’s interesting about automation is that when we look at the market of the past, the tightening capacity loosening, which changes the rates, etc. I think that every single three PL and asset based carriers today are focused on automation. If they don’t, they won’t be able to compete as soon as capacity tightens again.

Adam Vazquez 13:44
Yeah, so everyone kind of knows that’s where they have to head towards. I can’t get over the thing. So I have to ask two more questions on it. When it comes to onboarding the 18. You’re doing that? No,

Chadd Olesen 13:55
we have. So I got really lucky. And it was that I realized that if we wanted to participate in transportation logistics, we needed to hire people from the industry. And we went out and hired former freight brokers or pricing analysts, former, you know, like CSRS that worked for like a TJ x, and we deployed those people. And so our layers, engineers, Project Coordinator, technical Delivery Manager on top, and so it’s the technical Delivery Manager that’s actually doing the requirement gathering, making sure that we’re deploying in a correct way. I think that there is a fundamental problem that persists in the industry, which is people like technology companies think that they can come in and enter transportation logistics, but don’t do any transport, or do any, like technologists understand what an OD pairing is. If you’re not like how you can even communicate with them, and I think that it’s not really talked about enough and maybe it’s on purpose, but transportation logistics has its own language, you have to learn that language. If you can’t learn that language, can’t sell and you can’t deploy, you can’t do the requirements gathering that you need to be successful. We’ve done a really good job of executing on that. Yeah, I

Adam Vazquez 15:11
I was just talking to Whitney Cal from KCH Transportation formerly Freightways, about what you just said. And she said it perfectly. She was like, supply chain, you know, folks, supply chain people are the most proud of being from supply chain than any other industry. Like them it’s very much the jargon, the language, the culture. And so it’s unique that way. Last thought I wanted to dig into is, in the midst of having this brand kind of under cloak and building just a behemoth, that it’s kind of hidden, you have built a very strong following on LinkedIn, you seem to have a lot of engagement there. What first of all, is that intentional? Or is that something you decided you wanted to do? And then what is that done for the business?

Chadd Olesen 15:56
I don’t know how to answer this the best way. So when we looked at my posts on LinkedIn, I talked to a lot of CEOs, a lot of CEOs, a lot of VP of Operations, or head to brokerage. And there’s this consistent theme across everyone. And for some reason, a lot of those people really feel like they can’t really speak their mind from the standpoint of the industry being very political. For some reason, maybe it’s because I don’t advertise, maybe it’s becoming a peasant coming in and increasing the revenues, etc. I’ve kind of fallen outside of that political landscape, maybe because for a long time, no one knew that we existed, even though we were deploying so much tech into the industry. And what I was doing was writing based off of my conversations with the industry. And so a lot of the content that I’m coming up with, like coming up with, it’s not necessarily that I have this massive content strategy, it’s that I’m having conversations with executives, this is what we’re talking about. And I feel like the industry feels that and needs to be heard. And I’ve kind of honestly become like some of the voices for some of the people.

Adam Vazquez 17:10
Yeah, it’s super interesting. If you go and look at Chad’s posts there, you know, you’ll say something like what you just said, like, you know, here’s an uncomfortable truth, nobody really wants to say, and then it’s filled with comments of executives from all that you know, of like, Finally, somebody or I wish I could have, I would have said this or could have said it’s super, it’s just a weird little cultural wrinkle in there.

Chadd Olesen 17:29
I think that people would be in awe, if they saw who text me when I post them then feel like they don’t like my post or feel like they can’t comment on it publicly. But I want to be that person. Because I think that the only way that the industry is really going to move forward the way that it needs to, like we can’t continue to just incrementally move forward, we need to literally leapfrog into the future to reduce cost to carry to increase and maximize yield. And the only way to do that is to change perception of the industry and to make it okay to talk about things that people don’t want to talk about or feel uncomfortable about talking about.

Adam Vazquez 18:06
Do you ever get a bite back or because like the reason that some of those people probably aren’t comfortable with commenting or liking is they think they’re gonna get blowback for whatever you ever receive that? Personally,

Chadd Olesen 18:17
we haven’t received it. I’m sure that there are companies out there that don’t want to work with AVRL, because of some of the things that I write on LinkedIn. And I that is a company decision that we’ve made that maybe those people aren’t the best partners for us

Adam Vazquez 18:32
neither. Sure, yeah. Makes sense. But on the whole, it’s been a net positive for VRL, you’d say?

Chadd Olesen 18:39
Yeah, I would say that. It kind of plays into that website piece, I write something on LinkedIn, they go and look at our website and get a little bit mad that they don’t understand. And then they realize what we’ve been doing for the past two and a half years and maybe that makes them more mad to understand that there are companies out there who have fully automated their spot bidding, fully automated their appointment scheduling, fully automated their track and trace communication. Uploading the pod is bol is lumber, etc. And the whole game is that as soon as the market comes back, they’re going to squeeze the profit margins and it’s going to be really hard to compete on my hands. And that’s what we’re trying to do.

Adam Vazquez 19:21
We’re out here having conversations trying to drive you know, trying to figure out the right messaging, do content treasure, you have a growth strategy of the you mad bro beam leaning into it, and it’s working. I love it. massive respect to it. I think it’s I think it’s an incredible strategy. So Chad really enjoyed talking with you, getting to hear about AVRL if people do want to follow you, LinkedIn or elsewhere, I assume just your LinkedIn profile. It’s charged with two Ds right?

Chadd Olesen 19:49
Yes, sir. Yeah, charities and my last name spelled a little bit weird too. It’s Oh, le Sen.

Adam Vazquez 19:56
Cool. So make sure to check that out and follow him there but appreciate you having me on. And hopefully we’ll talk soon.

Chadd Olesen 20:01
Awesome. Thanks, Adam.

Carlton Riffel 20:02
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