William Leonard
Hey, ladies and gentlemen. Welcome back to the Atlanta Startup Podcast. I’m William Leonard, your host and investor here at Valor Ventures, a leading seed-stage venture capital firm in Atlanta, Georgia. Today, I’m excited to sit down with the founder and CEO of SemiCab Ajesh Kapoor. Ajesh, welcome to the podcast.
Ajesh Kapoor
Thank you for having me, William.
William Leonard
Awesome. Well, let’s kick it off here. You know for our listeners not who may not be as familiar, you and the team at SemiCab are focused on disrupting the pretty antiquated, long-haul transportation industry, right? You’re focused on bringing technology to enable more efficient collaboration and so we’d love to jump in and really let our listeners hear the Ajesh story.
Ajesh Kapoor
Okay. Interesting. The way I got started in this space is I went to Georgia Tech. I’m a proud Yellow Jacket. Went there and started working on my operations research degree, got associated with the logistics lab there, and logistics is a large field. Very cool, got to work with some of the leading companies while I was still there with the local behemoth UPS. I did a project with Siemens and Atlanta public schools and Praxair and a number of things that got me started and hooked on logistics. I stayed in the industry when I worked with a company called CAPS Logistics, which was started by one of the Georgia Tech professors Don Ratliff. Great guy, a great local presence here in the logistics and transportation startup world. I started my first company back in 2000 in the last-mile delivery space, and when we talk about transportation, there are just so many different areas that we can improve so last-mile delivery was one of those areas that the timing was good. But frankly, the timing right now for last-mile delivery startups is way better, right? Sold that to RedPrairie in 2007 and I was working on another startup in the trucking space and just became aware of the transportation challenges from a carrier perspective. Before that, I’ve all been on the shipper side of things. That was the seed for SemiCab when it came almost a decade later. I worked in a company called GT Nexus, which gave me a great background in building collaborative platforms, and how to make that happen in a global setting. And then 2018, when I had been following all the developments in the trucking space, one of the things that stayed constant was the MT models. All the investment that was going in all the technological developments that were happening, a lot of very good, very promising startups, very well funded, were attacking different problems in the space, mostly dealing with the fragmentation of the market. Small carriers, owner-operators, bringing them into the next, adding to the capacity overall. But the problem that had not been solved was the inefficiencies in the network very directly. We took on that mission and the great part about this mission is when we take out empty miles, it helps the environment tremendously. At the same time, it creates economic benefits for everybody who participates in an ecosystem like that, right? That’s what we are trying to do, completely focused on building the next-gen network that is orchestrating collaboration in that space and bringing all the progressive companies into the mix.
William Leonard
Awesome. I mean, that’s a great story, man. From graduating from Georgia Tech to really being thrust right into the world of logistics right after graduation. Having that experience across several notable companies and even building your own business and having that exit event. I think the timing is certainly right here. I’m excited to really dive in here to this conversation a little bit. You spent some time building your own startup, and then you were really able to see the network and efficiencies in the long-haul space. I would love for you to dive a little bit deeper into practically how you all are solving some of these inefficiencies that are occurring and driving some of these benefits that we’re seeing on the economic side of things and as well as the environmental side of things as well.
Ajesh Kapoor
The approach we are taking, William, is not just pure automation and digitization, right? When we talk about the fragmented market, we forget that it’s fragmented on both sides. It’s not just the supply side where the carriers are smaller, a number of large carriers are very, very small. Also, there are a whole lot of small and midsize shippers who are a part of this network. The larger shippers also have to work with hundreds and hundreds of providers. And so the market presents a challenge where a basic collaboration platform doesn’t really work, right? You cannot bring two organizations into the ecosystem and say, “Oh, you can go ahead and collaborate here.” What is required is when you bring these organizations into an ecosystem, like SemiCab, there is technology as an enabler. I’m very passionate about optimization, right? But in this particular case, we had to go to the next step where we bring prediction and optimization together. There is a very probabilistic element to the entire model because we don’t plan on the shipper side for longer than a day or two when it comes to the long-haul side of things. What we are bringing in from the carriers is trucks being on the road for a much longer period of time, a week or two weeks, and sometimes even longer than that. The approaches we take are bringing large, midsize, and small enterprises into the ecosystem, looking at the network as a whole, and trying to find the best way to move those goods. The big huge element that we introduce is that everybody in this space till now when it comes to pricing and costing has thought about the whole network as a shipper-centric entity. We talk about lanes and the lanes are, “Oh, a shipper wants to move goods from Atlanta to Chicago.” What we forget is those are what we call loaded miles. We look at this concept of all miles or total miles, it has been there but hasn’t been really attacked. And what that basically does is, if you are bringing in a truck, the truck is starting somewhere and has to come back after doing all these loads. That’s where we go. We basically say from a carrier perspective, the carrier is spending money on all the miles. By building these efficiencies the first thing that we have to address is to minimize the total miles that are required to address all the demand that is out there. At a very basic level, if the trucks run 30%, empty across the network today across the carrier base, 25 to 30%, give or take if we bring that down to about 10% – 12%, even lower, in some cases, that’s 20% of the empty miles that we convert. They automatically add to that capacity. That’s a huge part of the carbon emissions that you are tackling right there. The second part of it is, whether we realize it or not, the shipper is paying for those empty miles in the end. When we take out those empty miles, we are able to make it more predictable, more profitable on a consistent basis for the carrier, the carrier makes more money, at the same time, we are able to provide more reliable capacity to the shipper and give them the cost-benefit of that for that transportation as well. Considering how volatile the market has been and how expensive transportation is, with the driver shortage adding to that lack of capacity, we have to attack it differently. And that’s pretty much what we are trying to do.
William Leonard
Well, I think you touched on something really interesting there. You mentioned how the logistics space right now is just undergoing a lot of change, a lot of transformation. How’s the acceleration of digitization within this space helped contribute to success for SemiCab over the last year and a half, two years, as we’ve really navigated the pandemic almost blindly?
Ajesh Kapoor
It’s actually one of those things that were not just in the success of SemiCab, but it was something from a timing perspective that we waited on before launching SemiCab. When we think about trucking and all the traffic congestion and everything associated with it and our ability to predict, there is the ETA prediction where when are the trucks going to arrive when they are on the way, but also, it very directly impacts the drivers working hours and driving hours. There are strict regulations around that. One of the biggest things that enabled a SemiCab kind of approach was these electronic logging devices, which is the mandate that came out from the Department of Transportation. That was very, very big. The second part where all the other digitization efforts are coming in terms of monitoring the freight but also as I talked about other ventures that are bringing the smaller carrier and owner-operator into the max that capacity is very, very important. That capacity is utilized even less. Now, there is another part of this equation that we overlook a whole lot of times. The e-commerce trends that are out there in the market, basically lead to where same-day delivery and next-day delivery has become very, very common, right? That’s the expectation today, right? And as much as the technology enables that, what we forget is it has led to a very unique requirement in terms of what the networks have to evolve to so supply chains have kind of extended closer to the consumer. And we think about all parcels showing up in an apartment complex and then on your front door but then there is a truck feeding that and what is happening out there is a whole ladder of trucks are being taken on by the larger organizations as dedicated trucking fleets. And then there is the private fleetside that is expanding. Just because they are dedicated to a particular organization, the utilization is actually even less. So, we are bringing that capacity into the mix as well, to make sure that we are increasing the utilization across the trucking base, not just focusing on the trucks that are being operated by trucking carriers.
William Leonard
That’s a great overview of how you all have benefited. And I’m curious, you know, I want to dive deeper here. Let’s put you in the shoes of one of your customers for a second, right? How would they say SemiCab really differentiates itself from the competition and really some of the legacy methods that have traditionally facilitated the movements of freight? What would they say is the biggest value add or difference that SemiCab is bringing to their operations?
Ajesh Kapoor
So, the two big things – one, the traditional way of operating in this industry has been where a shipper goes and does transportation procurement. They do annual bids and they are followed up by smaller bids that are happening more frequently, where lanes get added or volume increases. They’re trying to find capacity for seasonal freight and those kinds of things. On the other end, when the carrier is planning for that freight, they are thinking about their customer base and the limited visibility they have. The amount of technology that is available on the carrier side is not the most sophisticated optimization technology either. The one big part where our customers come in and buy into our model and are excited about it is, we break down those silos. We are looking at the demand from multiple enterprises and supply from multiple carriers in a holistic manner and optimizing across the big pieces. If we said, “Oh, you have to come in and collaborate.” That doesn’t really work, right? Because, again, too many partners, too many things. One on one collaboration doesn’t work. That’s where when we take the approach of breaking down those silos, and creating dynamically the opportunities for that collaboration, the multi-party collaboration, different parties in the ecosystem, are collaborating in different areas, different geographies. On a daily basis, that might be changing, right? It’s the dynamic nature of things that we are trying to take advantage of, they do see the benefit in taking that approach, and how we can go as a larger ecosystem into a more efficient network. Now, the alternative approach has been more dynamic pricing. And when we talk about dynamic pricing and freight, that’s more like if we wanted to equate that to the commuter side of things like surge pricing, right? When the capacity gets tight, the prices shoot up. The prices shoot up, the more capacity shifts to that side. We’ve seen that over the last 18 to 24 months, it has increased the volatility on that side. This market was always volatile. But the volatility has only increased with that approach. At the same time, there is nothing really enabling the two sides to come together and collaborate. So that’s where we create the strongest differentiation in the mind of our customers where we say we are looking at it in a more holistic manner and we are creating a platform that allows for larger organizations and smaller organizations to collaborate and draw the benefits equitably, right?
William Leonard
Right. No, I think that value add is clear. I would love to switch gears here a tad bit and get into your background a little bit more. You’ve built a startup before, you’ve had an exit, and this is your second go-round. I’m curious, what are some of the lessons that you’ve learned on your entrepreneurial journey? I’ll let you answer that and I have a follow-up question to that as well but some of the key lessons that you’ve learned that you can really share with our listeners who were other early-stage founders looking to build and scale venture-backed businesses.
Ajesh Kapoor
That’s an interesting question. Because we talked about timing and I talked about timing just a little bit about my first venture. We talked about a whole lot of focus and everything. At the end of the day, when you think about a startup, you have to think about building a startup. And going through the life of a startup is kind of like raising a child. We talk about how it takes a village to raise a child, it literally is that journey, where it’s a whole lot of emotions that you go through. It’s a hard journey. It’s very exciting. There’s nothing quite like it, there is the conceiving side of it, where you are conceiving an idea. And then now you are trying to translate that into a viable organization. The number of people that help in that journey, the people who are looking to help people that you are dependent on, if you try to build a startup on your own, more than likely you’re going to fail, right? Your family jumps in, your friends jump in, all the professional help that is out there. And in the case of a startup, you talk about a venture ecosystem, the way you go through it, and the way you manage it, you’re learning all the time. There is nothing that I can say, there are some things that I learned in my first startup and those learnings were very helpful. But like one child is different from the other and has its own personality and the timing changes of the startup. You’re always learning something new, and you’re always running into things where you say, “Oh, did not see this coming.” And you have to adapt and you have to basically listen to the team that you have surrounded yourself with, depending on that team to grow, and build a responsible company, right? I am a high schooler. She’s going into her senior year and will most likely go to college next year, right? It’s kind of like those transitions in a startup world happen all the time and they are equally hard, right? Exits are something you aim for. But exits are hard as well, right?
William Leonard
That’s important. You mentioned adaptation, iteration, and really surrounding yourself as a leader with a strong team who can not only uplift one another but really support each other, and continue to build just relentlessly. That’s great advice and suggestions. My second follow-up question was, can you share a framework around navigating the early-stage fundraising process? I know it’s fairly difficult and daunting, but you’ve been through it before. Are there tips, tricks, hacks, knee to nose around, really navigating this daunting cycle for early-stage founders?
Ajesh Kapoor
I think there are two ways to think about it. One is, yes, it is daunting. But the amount you learn going through that journey is awesome, right? At SemiCab we did not raise institutional funding very early on. And so, you basically decide at which stage what kind of funding you need, that part is critical, right? At the same time, when you are refining not just the pitch, I think we think in terms of the pitch too much. When we are trying to refine the pitch, what it actually is telling you is you’re going to market with a product, a solution, a service, you are learning more and more about that. You’re learning more and more about how to take that over there, how to take that to the market, how to talk about that with your customers, and how to structure it. Your solution changes during that time. We started talking with investors in different geographies very, very early on. We started in July 2018 and before that, we had already started talking to different investors, even though we were not in the market to take their money at that stage or even a couple of years after that. But we kept talking to them, we kept learning from what they were telling us, what the viability of the solution would be, how to build the business model, how to think about the metrics, so you’re creating a foundation for the organization. And in the end, you’re basically building those relationships, and those relationships come in handy, right? It’s important for you to know the investor, it’s important for the investor to know you. The other big thing that is different now than it was during my first startup days is, the investment choices have increased tremendously. It’s not just that Atlanta has a larger ecosystem when it comes to venture to invest. But the boundaries that used to be associated with that have completely disappeared. I can raise a round in Silicon Valley, I can raise a round in the New York and Boston area, I can raise a round in Atlanta, I can raise a round in Singapore, or Bangalore, or London, any of these geographies, right? Cross-border investing is much more common. I have spoken with, I don’t know, tens of founders, some of them have gone through the accelerator journey. If you are in an early stage, you basically find different ways of connecting to the investors, and accelerators and incubators are a good way of doing that as well.
William Leonard
I think that is excellent advice for a large subset of our listeners who were similar to you in a fashion. Building here in the southeast, at the early stage, might even be a repeat founder like yourself. That insight is sure to resonate with a great subset of our listener base. And you know, you’ve been in the logistics industry, really, since you left Georgia Tech, and you have a strong viewpoint on things and an educated outlook and some curious as to know, what is your take on the state of the logistics industry as the world has seemingly begun to open back up now? Supply chains and freight movements have certainly accelerated. What are some bold predictions that you see or can forecast for this decade?
Ajesh Kapoor
A decade is a long time. I think there are a couple of things that have happened over the last couple of years that I think are going to have a lasting impact on how we think about logistics and how we think about supply chains. I think, at GT Nexus and at other places in my journey, and especially at SemiCab, we think about disruptions quite a bit. We thought about disruptions when the volcano erupted, or the Suez Canal got blocked or, and of course, COVID has been the largest disrupter to the whole concept of just in time that nobody in the supply chain world used to question that right. COVID had caused a huge rethink of that very basic philosophy when it comes to the supply chain. Now, when we look at moving past post-pandemic, I don’t know when that is because right now we are going through a pretty large supply chain reorganization restructuring. We have demand in certain parts of the world, including the US picking up way faster than we predicted. COVID is still going strong in other parts of the world and it’s not uniform by any stretch of the imagination. It’ll still take, I think, a good 18 to 24 months if everything goes to plan in 18 months, we may have COVID under control, globally, because at the end of the day, it is a global economy at this point. Anytime we start thinking about breaking, creating those boundaries back up, and creating those silos, I think that’s not where the supply chains can go. We are very interdependent, that part is going to stay. But when we look at that, we say how do we guard against these disruptions, and instead of creating the boundaries, I am very hopeful. I do see a lot of collaboration, the level of collaboration increasing in the supply chains. The digital part of it has led to a different level of transparency in our company. Companies buy into it. And of course, there is the social and environmental part of the entire supply chain. The supply chains are literally a reflection of the corporate world of businesses, the supply chains are not separated from that. When we think about the impact of climate change, yes, we see it very clearly in terms of disruption in the supply chain. But at the end of the day the supply chain is responsible to address that. When we think about alternative fuel for truck transportation for ocean transportation, I do see that progressing rather fast over the next decade. That combined with building more efficient networks and all the different geographies where we are kind of improving the carbon emissions and moving in that direction, I think that’s going to be critical. Now, I don’t believe that economic benefit is separated in any way from the environmental direction that we are trying to go and that’s the first step that we are taking. That was the whole philosophy behind SemiCab that when you address environmental issues, when you try to address climate change, you can actually do it in a manner where it has significant economic benefits as well. I’m optimistic about the progress that we are going to make on that front.
William Leonard
No. I think that is great insight again, and you mentioned something that people sometimes often forget is that the global economy is really influencing our supply chains. And now I recall last year when the West Coast and the East Coast ports were just so jammed, and goods from Asia couldn’t even make it across the country to their destinations, and just how that really reverberated throughout the country, and led to a lot of shortages and in common household goods. I certainly understand your viewpoint there and really appreciate that insight. As we wrap up our conversation here, Ajesh, it’s been great. You’ve been in Atlanta for the majority of your career. Is that a fair assumption?
Ajesh Kapoor
That’s true. Yeah.
William Leonard
And, you know, I’m curious to hear your take on how the Atlanta startup tech ecosystem has evolved. Throughout your time as you’ve operated in the city, you’ve built in the city, you’ve seen various life cycles of our tech ecosystem, I’m curious to hear how you’ve seen it evolve?
Ajesh Kapoor
Yeah, I do have more of a supply chain-centric view of the startup and tech ecosystem in Atlanta. The 90s was a very strong time for supply chain startups in Atlanta. It was big. It was lots of new companies starting up and a whole lot of innovation in that space. And when we look at it, it kind of went through a period where we did not see a whole lot of exciting developments in that land area. For a good decade, maybe, I would say, maybe starting in the early 2000s to mid-2010s. What has been very, very promising, and of course the universities in the Atlanta area, whether it is Georgia Tech, my alma mater, or when we look at Kennesaw State, the way Georgia State has been expanding. Where we have been able to keep a whole lot of talent in the state for higher education that is leading to a revival when we talk about the startup ecosystem in Atlanta. It’s a very positive development. Have we done enough? I don’t think so. I think we need to be bolder when it comes to creating a sustainable startup ecosystem. We need to make bigger bets. It’s not just the founders. If the founders still have to go outside the Atlanta ecosystem to fund their ventures, it becomes, at some point, keeping that talent after the higher education that you go through where you’ve been successful. We still see a whole lot of talent leaving the Atlanta area for other geographies. I think the key to building and keeping the momentum going on the startup tech ecosystem in Atlanta will be retaining that talent because that talent starts in the startup world but then goes on to have enough innovative ideas and they go on to launch startups. And that’s pretty much how the system grows organically. If we keep losing talent, then that becomes a problem in the long run. I’m very excited about all the developments that are going on and new venture funds coming. A whole lot of investors are moving back into the Atlanta market. So excited about it but I think we have a long way to go.
William Leonard
Yeah, I agree. You mentioned something that’s really near and dear to me. It’s the impact that the local universities are having more houses. The Georgia Techs, the Olga Thorpes, those universities are putting out tremendous talent that is helping drive innovation and really continue to spur growth within our ecosystem. We, as the operators and the investors, have to continue to just pour into those institutions. That way we will ensure that this ecosystem is just in great hands going forward and already know it will be. Ajesh, this has just been a great conversation. I think our listeners will extract a lot of insight from the talking points that we had here this afternoon. We’d love to have you back on the podcast, man, this was just amazing. We really appreciate your time and let’s continue to build together and continue to advance this ecosystem.
Ajesh Kapoor
Sounds like a perfect idea. I would love to come back, William. Thank you for having me again and it’s been awesome.
William Leonard
Awesome. Cheers, Ajesh.
Lisa
Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.
