Episode 75

Ed Stockman

Redefining the Value Proposition

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In this episode, Adam is joined by Ed Stockman, Co-Founder and CEO of newtrul. Ed shares his insights on the challenges of monetizing in the transportation industry, fundraising, finding the right investors, the importance of having a quantifiable value proposition, having a differentiator to close a sale or secure funding, and more.

Highlights from the conversation:

  • Value of attending conferences (0:25)
  • Ed’s background in supply chain (3:49)
  • Finding more freight (6:47)
  • Evolution of newtrul (8:38)
  • Selling technology vs freight (10:27)
  • Challenges of monetization (11:23)
  • Quantifying value proposition (13:19)
  • Overcoming challenges of fundraising (19:57)
  • Choosing the right investors (21:51)
  • Lower margin strategy (26:53)
  • Final thoughts and takeaways (28:47)


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Transcription generated by Otter.ai

Adam Vazquez 00:25
We’ve got Ed Stockman from newtrul, Ed, thanks for joining us. Yeah. And um, thanks for having me, man. Yeah, man, we just met recently through a mutual friend, Scott Oslon. And I met you was going to hopefully meet you and manifest and then unfortunately, didn’t make it. But you were just telling me you made it, it was a great show, what was the what was your experience, like?

Ed Stockman 00:46
It was a great experience, it was massive. I heard whispers of anywhere between two and five times larger than last year. So without knowing the exact numbers of the attendee list, or, or how many people actually wound up making it because certainly heard a lot of stories like yourself of flight cancellations and craziness, with weather and all disruptions, but a lot of fun, a lot of energy, a lot of people, a lot of great meetings, I definitely would recommend that for anybody out there any industry, I, you know, kind of what we were just talking about was get out and get what you put into it. And we did a lot of prep work up front and it was a highly successful show for us.

Adam Vazquez 01:28
We’ll get into what you’re doing your background, how you got here, but since you kind of brought it up there, jump into the weeds. What is a success? I think there’s kind of two schools of thought we just had Chadd Olesen on from AVRL, who gave the other side of it, like shows can be a distraction to shows and certainly they can. But what does it look like to prepare for an execute? Well, a show for a company like newtrul.

Ed Stockman 01:54
For us, I would say that the majority of the shows that we go into have to serve, I would say one of two purposes, either drive revenue, or cut costs. So okay, in terms of driving revenue, we obviously want to go where our prospects are want to go where our existing clients are, we want to be able to try to upsell them on ancillary offerings, we want to try to establish a deeper relationship with them to educate them on all of our different offerings could stick here with them. So it’s probably the most obvious short answer for most sales leaders and why they go to conferences. But one of my, I would say, biggest variables, when I’m looking at ROI is how many cities? How many meetings can I consolidate in one place, and that’s personally so if I can save myself four flights and four cities by going to one place, like that’s a no brainer for me, it’s not even about revenue and growth. It’s about time savings and time efficiency at that point. So I would say that those are the two main considerations for us. But it’s crazy how much consolidation there is at those conferences that actually wind up saving time over the next, you know, three to six months.

Adam Vazquez 03:12
Yes, their own cities, right. And we, Santosh Sankar, from Dynamo ventures came on here and talked about, they plan their board meetings, their in person board meetings around now manifest in a few other shows, because they’re bringing in people from the UK, they’re bringing in people from all over the states. And rather than having them make multiple trips for whatever they might be doing throughout the course of the year. That’s one time that you can, you know, have everybody at least in the same city. So it’s interesting how that ecosystem grows around, not even. I mean, I’m sure the show is phenomenal. I’m very sad that I missed it. But there’s a ton that’s going around that as well. It’s pretty cool. Yeah. So So you I want to get into a little bit about Well, obviously, this show is for marketers, and sales people. And so I love talking to people like you because your background is in that space. And now you have obviously founded a business. But take us through that journey. Like what did it look like when you were first starting out? And then I think a lot of people have maybe some, I don’t know if it’s impostor syndrome, or whatever, in terms of like, well, I know how to do this thing I know how to sell but I’m not necessarily a builder or a, you know, a supply chain expert, you obviously overcame all of that what the debt look like. Loaded question.

Ed Stockman 04:25
Yeah. So I started off my career as an individual contributor. And I got the chance to contribute on both sides of the marketplace at a brokerage at multiple brokerages, which was selling to shippers on the customer sales side and then trying to get those loads covered with carriers on the interior sales side. So I feel like in terms of brokerage operations, I’ve definitely been around the block with understanding the full operational workflow. I think that’s the first piece Probably the root of my career. The foundation of the career is understanding the full lifecycle of the load and the operational headwinds and challenges. But also just truly intimately knowing the process. I have the fortune of going through echo Global’s training program right out of school website, regardless of what you think about echo global, like, their training class, their training program at that particular time, was world class. So it was very much a classroom type setting where we had to do cold calls in front of 30 other people and really kind of just get over that. That certain level of intimidation right off the bat. And then you throw in vocabulary tests like what is a dry van? What is reefer like? What is the basics of the industry, but vocab in front of everybody and being put out in a spot like that, like you were studying, we were going home and actually studying for this test. So I feel like those two things go hand in hand gave me a really good foundation for my career, both knowing the vocab having gone through a very deep explicit training program, combined with understanding the workflow and the process of a brokerage was fundamental to my career, I had a lot of success as an individual contributor on the shipper side is something I’ve been talking a lot about with some friends, and we hear it from our brokerage clients all day long it, we know that there’s a lot of early adopters that are trying to get digital bookings, and trying to digitize the booking with their carrier. But what we’re constantly hearing, day in day out right now is the need to find more freight. And that’s where those customer sales folks are, are really under the gun. And under pressure right now I am more afraid, get more customers. And I hear this all day like how do you do it? How in the world? Did you lead sales teams? How did you build these sales teams and I go back to brokerage, I think that there’s probably two main philosophies here, there’s the reactive approach of let’s go out and find a shipment and then try to get a carrier for it. Or let’s be a little bit more proactive in our sales and sell something tangible that is let’s sell capacity. So where do we have trucks on the road every day? Where do our carrier partners have capacity on a regular basis? And how do we resell that capacity? So I feel like just that kind of that slight nuance difference of just going out there and trying to get freight and get a covered versus let’s be a reseller for our partners and resell the capacity that we already have access to is probably like the biggest nuance to how I gained success or had success as an individual contributor. And from there, I just took that same kind of playbook and institutionalized it with my sales team. So I wound up leading a team at Redwood logistics on and along the leading sales efforts for about three years at transfix. Before starting newtrul. The evolution there was really, let’s kind of take what we already know, which is through my time at Redwood and transfix, the most expensive part of a brokerage operation is finding a carrier. So it was really just taking that insight and trying to figure out how to get that piece, how to leverage relationships and be able to apply technology to those relationships to lower the cost to serve for everybody. And full circle. It’s all coming back to how do we get more freight? How do we get more shippers? But that’s really version two of newtrul and where we’ll go in the next 18 months.

Adam Vazquez 08:49
Cool. Yeah, I think your point about learning the vocab and studying. I talked to someone last week from TMSA. And they made the statement, supply chain people are more proud to be from the supply chain industry than any other industry that you’ll come in contact with. And I’ve been around a lot of industries. I think that’s true. I think that you need to know the lingo. You need to know the syntax in order to kind of be a part of the culture. You kind of touched there on what newtrul has become and where you’re building it. But essentially, from what I understand as a layman, it’s a booking platform that you have over 10,000 active carriers on to explain to someone who doesn’t understand, how is that different from the status quo, whether it be obviously like a sales force or even like DEATH or something like that?

Ed Stockman 09:36
Yeah, so we’re a marketplace we like to draw the analogy of you mentioned dt or any of the kind of traditional load boards, I would say I compare them a lot to Craigslist, in the sense that there is a lot of postings there there are transactions but those transactions typically happen offline via phone calls via emails as well. We’re looking to change the way that transaction takes place. So, there are no fake postings, there are no duplicate postings, there’s no bait and switch, we really leverage integrations to connect supply and demand in one place. And, and what that really means is we go out, we integrate with a broker, we pull in their available shipments into newtrul. And then we have those carriers, those 10,000 Plus carriers that you mentioned coming in and searching, finding, and digitally loading those loads, they can be booking from their own native applications, or they can be booking from within the newtrul platform as well. But it’s connectivity, it’s transactions. We’re not a service execution provider whatsoever. We don’t move the goods. But we are competing with those more traditional load boards, in the sense that we want to provide a digital transaction experience.

Adam Vazquez 10:49
What’s that been like for you, as a leader? And as a salesperson? Obviously, you were doing some things like you’d mentioned at Redwood and things like that, but from selling the frayed, or the carrier whatever, to this, which is really a completely different seller, you’re selling the technology now. Was that pretty seamless for you?

Ed Stockman 11:09
Yeah, I think the sales are going to be seamless. Like if to your point, the people that know the industry tend to be really prideful about knowing the industry. Yeah. I don’t, I’d actually probably not fall in that bucket. Okay. You know, it’s when I hear about people that just entered into transportation, I say to my co-founder all the time, like my condolences, like I heard you buy. But I think that when you believe in the product, you know, that sales element is pretty natural. Maybe one of the hardest things for me wasn’t about the bridge from I would say, operations or execution to tack in terms of product, it was probably monetization more than anything else. So how legacy providers service the industry and what our current industry knows today is behind the curve. When you just look at transportation logistics, in general, from a 30,000 foot view. We’re not early adopters, like this group of people are not necessarily on the forefront of technological advancements. So how do you figure out ways to monetize with these folks and kind of bridge the gap between their legacy operations and new technology? And monetization? is a big part of that. So that’s probably been one of the biggest challenges, but I’m not sure that’s nuanced to me or our business, specifically, but no,

Adam Vazquez 12:42
I think it is. I mean, it’s, I don’t know if it’s nuanced to just you, but I think it’s a problem in the industry, right? Where, because of disruptions happening, lots of people are having these types of conversations, and the initial answer is typically going to be some type of resistance, because it hasn’t been done that way. Even if it is as simple as, like, selling, managing trans, like, I’ve talked to a ton of people who are in that space. And you know, you have to take an entirely holistic, different approach in order to let someone else run those things for you. What are some of the ways and obviously you have to give us your whatever, secret sauce, but what are some of the ways you’ve been able to move through that? Yeah, so

Ed Stockman 13:19
So specifically, you know, where we spend the most time is, at least early on, really looking at the value proposition. So if we’re out there saying, we are going to reduce the amount of phone calls, that it’s going to take you to book your next load, how many phone calls do you make? How much time do you spend on those phone calls? If you have to, if you have to spend 30 minutes, 40 calls to different carriers? What does that 30 minutes mean, in terms of the cost of your organization? But what does that mean, in terms of the resource that you’re using? What websites are you going towards subscriptions to you already have? Are you using a phone dialer? Are you using a softphone, like all of these different components are part of that cost equation? So I think just truly trying to quantify your value proposition is maybe one of the hardest things to do. But it’s one of the most important things to do. And the way that I would I actually just had a protocol yesterday about this is if we were to put this particular value prop in a doc, and it was quantified. What are the numbers that we need to advertise in order to have 100%? close rate? Like what are the things that are just gonna be mind blowing to our reader? And that leads into our discussion around like, what are their pain points? What type of value prop or what type of quantification? What type of numbers are going to resonate with them versus just like that? I don’t know. That could just be like some sort of fake arbitrary number. So we spend a lot of time like, really talking about quantifying the value prop and making sure that it’s the right value prop but that it’s actually worse. While to implement,

Adam Vazquez 15:01
man, I love that. I don’t know if it’s just coming from it, you know, as an outsider, it’s moved into this space, and I’m typically coming in a consulting role. But that question seems to get overlooked a ton in supply chain supply chain tech companies, I think it’s because to date, it’s kind of been assumed, like, the value prop is somewhat clear, you need to move things we have either capacity or whatever, you know, the fact that you’re investigating it down to like, what websites are you going to and what that’s, I mean, that’s the way it should be done. But I don’t think that’s the status quo in the industry. That’s probably why you all are successful. So switching gears a little bit you I want to get to raising which it looks like you did last year, and obviously in the middle of a downturn, but you went for four or five years prior without raising this significant series. Was that intentional? And how did that form, the way that you’ve grown and managed the company,

Ed Stockman 16:02
we raised in the middle of 2020. And then we raised again, close September of 22. So there was roughly about a two year period there in between. I cannot say that we did not take any money from those in that too. Sure. There was a little bit here and there. But in the downturn and raising, specifically in the second half of last year, was super, super challenging. And, and I think like, I think, frankly, a big part of it is morale. Like if you talk to any founder that has raised it, it’s not an easy process. And I have definitely admitted that it’s the hardest sell that I have ever been through every single time I have fundraised. It’s been the hardest sell I have ever been through. And it’s I think the morale component is the hardest to maintain a positive attitude to, to make sure you’re not looking at headlines around all of the other companies that are having blockbuster rounds, and you’re on your hundreds past share your 100 and 50th pitch and it it can get pretty demoralizing pretty quickly. So I think just like in any other individual contributor role in sales, you know, taking care of yourself, making sure that you’re in a good place mentally, that you’re doing. The couple of things that you personally as an individual need to do and everybody has their own routines and salespeople I feel like I compare him to goalies in a lot of sports a lot of times like they’re just crazy, and they’re oddballs. And, and I know the same is true of soccer and hockey goalies. And they all are pretty superstitious, and to make sure that you’re kind of hitting your routine and staying in a really good place. So you can manage that roller coaster that, quite frankly, is inevitable. Like every sale is going to be a roller coaster and the visa is not any different. What gives us Yoni superstitions, or any habits like that. I think the one that comes to mind, or the one that’s like, actually on my mind today is I don’t talk about a deal until it’s closed. It’s one of those things that like even going back probably 1015 years, I hated pipeline meetings I hated, like having to present my pipeline to a broader group, because I didn’t want to talk about those deals like yeah, it got to the point where I was leaving off the ones that I was closest to closing. I was leaving them out of the meeting, because I didn’t want to present it and have it go away the next week. So just like one of those things where deals are never done until it’s signed. And yeah, I won’t even bring up a deal. And the same. Yeah, grazing like, and that’s could, that could be a fault, right? Like, there’s times where I won’t tell people about closing money up until the money’s closed, because I don’t want to mention that we’re that close. So that’s probably my biggest one. But yeah, there’s probably a lot less stuff, little quirky things there as well. Those are good ones.

Adam Vazquez 19:18
We talked about the difficulty of that. First of all, I mean, yeah, the headline thing is really interesting, right? Because lots of companies who did enjoy those headlines or have enjoyed those headlines are getting the other side of that coin now. And I wonder if that will change things moving forward, especially when talking about morale where maybe internal team members or folks who are paying attention, remember some of this and know there’s a downside to all of the hype on the other side of it. But is it when you talk about the difficulty of raising? Is it more because like I’m just curious what makes it so difficult for you as a founder? Is it that you’re giving up something that you’ve Like, put so much into and trying to find the right people? Is it? Obviously there’s like the tactical needs for revenue and to continue operating. But just yeah, what makes it so much more difficult than the other types of transactions you’ve done?

Ed Stockman 20:15
I don’t think fundraising is different in terms of the sales process, and what makes it difficult and exhausting. I don’t think it’s different at all. And the only thing that might be different about it is the sheer numbers, the pipeline metrics. So if you look at this, if you look at this as a VP of sales, or a chief revenue officer, right, like you’re gonna take your products, and then you’re going to look at the funnel, what goes into the top of the funnel? What winds up coming out? What are the different stages in between? So where are you spending time? Where are you spending resources, if you’re just kind of visualizing that funnel for a second. And then he puts himself in the shoes of any shipper, or any buyer of software services or anything, that that buyer may get pitched by 20 different vendors in the same category on a very regular basis, weekly basis, monthly basis. Certainly, if they’re shippers they may get pitched by other brokers. So if that’s the case, that buyer could very well go with a handful of different providers. So they don’t have to put all their eggs in Ch DHT que el coyote and maybe 10, 15 more. So. So if you take brokerage sales as an example, or technology sales as an example, you rarely have to be the best in any one particular vertical. In order to close that sale, you probably just have to have a quantifiable value proposition, you have to have some sort of differentiator. And it certainly helps if you’re one of the leading leaders in that particular class, to look at fundraising, and you look at that same funnel, that investor more than likely is only going to make one bet in that category. And they do that so they can support their portfolio company. So if they invest in three competitors, who do they allocate their time to, who do they allocate their resources to? And they certainly can’t share insider information at one particular company and advantage. So as a founder, I’m always going to be looking. Do they have any competing portfolio companies? Do I even want to send them my pitch decK with my numbers on it? So there’s a lot of conflicts that can arise, which is why in a traditional venture capitalists will take a look at one category, they’ll get conviction around that category, and then find best in class for that particular category and go all in on one company. So as that relates to the funnel, when you look at the leads that go in, I may pitch 100 venture capitalists to 100 different investors. And chances are 90% of those will want recurring revenue, specifically in a down market like today, they’ll want contracts, they’ll want to know that I have revenue contracted for the next 12 months, maybe 24 months, maybe even 36 months. So they have some sort of predictability and forecast stability around in our business model. 90% will want that. So I can just go ahead and wipe out 90% of those investors right now. Because we have a transactional business model, you don’t have a whole lot of long term contracts, ones that we do, are probably not enough to really get conviction. So we’re looking for a marketplace investor, somebody that truly understands how these transactions will snowball, and eventually can build a much, much larger business than any one of those kinds of SaaS, recurrent AI models. So right off the bat, I just eliminated probably 90% of the folks that I talked to, from being an ideal investor for us out of those 10%. Who knows transportation, maybe half of those, maybe half of those. And if they do know transportation and logistics, it’s probably not that great, like the amount of folks that haven’t really spent a ton of time in this industry, even as big as it is still fairly minimal. And a lot of people early on made the bets in the digital freight brokerages, and some folks have regrets around those others that have seen their portfolio company do really well. Not as much but there’s certainly some bias around the app and SaaS model, especially in today’s market where those valuations are crashing. So, when you narrow it down, we just got to roughly two, probably to 5% of all investors. Those 100 that went into the top of the funnel are even within, like, my realm of possibility of closing. So, it’s a very difficult equation. And when I compare it to the kind of traditional sales process, it’s just hearing no all day every day. Yeah, yep. And that’s the part now. Now, if you have your habits, if you have your routines, if you’re staying balanced, but you’re also have high conviction of your product, you see that traction, I could get off the call and hear no 15 different times in a day, and we could still close a customer that day. So that’s, that’s kind of like what gets me through is just really making sure that focusing on the wins, and that the product is doing what it’s supposed to do. And if the product is doing what it’s supposed to do long enough, that investors will be able to ignore us. So it’s really the difference of what game do I want to play to I want to play the VC game? Or do I want to play the ops game, and our team is incredibly committed to adding customer value and where there’s customer value? There will be investor value as well,

Adam Vazquez 26:08
for sure. I love that. Thank you for going through that. I feel like that’s going to be super valuable for people just understanding the difference. And balancing like you said, obviously the swings that you’re taking as a founder, and then the swings that you’re taking as a leader of a real business selling real customers and, and you know, doing that whole process, this has been awesome. Appreciate all the time that you’ve given us. Last question for you is, I mentioned I had Santosh Sankar, on here from Dynamo ventures. And I asked him specifically, like, what’s the play in a downturn for tech companies and startups? And his answer was to find some lower margin or just more accessible on ramp for customers, and then just try to sell volume. And he went into a whole explanation then. So I’m just asking everyone that comes on. Have you all employed any type of strategy like that in the environment that we’re in? Or is it just since you’re so transactional, you haven’t had to do that necessarily.

Ed Stockman 27:05
In a sense, our transactional model feeds really well into that approach in itself. And what I mean by that is, we see a ton of churn from subscriptions, because people can’t quantify the value of that subscription, the transaction happens offline, or they don’t know what they’re getting exactly for that transaction. So by narrowing it down and billing on a per transaction basis, we’re sitting there and saying, like this is essentially a metered application. The more you use, the more we charge you the less use the less, which aren’t you. So it’s going in with a pretty low barrier, entry point and sitting there saying, Let’s build upon what we already have. And let’s really take a balanced approach to this where we’ll charge you a very minimal amount coming in. But as all sides continue to add value for each other, and our network effects scale, which allows us to provide more value back to our clients, their invoices will inherently go up. But there’s cost savings, their savings will go up as well. So I think without knowing, you know, the full context of that conversation, I feel like our business model can inherently take that, that strategy. Separation.

Adam Vazquez 28:21
Yep, that’s exactly what we have the same context, the exact same way that you explained it. So this has been really fun. Appreciate you for coming on and sharing all this sharing your background and what you’re working on. Now. If people want to follow along with what you’re doing, what’s the best way to connect with you?

Ed Stockman 28:37
Yeah, reach out to me on LinkedIn, or visit iterable.com and wtrul.com. Thanks, Adam.

Carlton Riffel 28:46
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