What if you could take 9 million cars off the road, speed up deliveries to ecommerce customers, and save small businesses money? That’s the potential of Flock Freight’s shared truckload “freight-pooling”. Rarely are technological advances so win-win-win.
That’s why we’ve been believers in Flock Freight and its founder Oren Zaslansky from its beginnings — with our talent team helping him recruit its first engineering leader and our data science team building their early routing algorithms. Oren’s empathy for merchants and vision for making freight-pooling the status quo are endlessly impressive. We’re proud to have led Flock Freight’s seed, post-seed, and Series B rounds, and are extraordinarily excited for this industry-defining company’s next chapter.
Flock Freight just announced its $113.5M Series C led by Softbank and joined by us at SignalFire as well as GLP Capital Partners, GV, and Volvo Group Venture Capital. You can read more about it in the Wall Street Journal, TechCrunch, Bloomberg, or FreightWaves.
While this big raise brings Flock Freight to $184 million in funding, the truly impressive numbers are in its traction:
Revenue up 4X year-over-year
Contribution margin up 11% and gross margin up 15% year-over-year
On-time delivery rate at a stellar 97.5%
An epically low 0.001% damage claim rate
Fuel emissions savings of up to 40%
So how does Flock Freight work? Well, businesses often overpay for partially-empty trailers to dump their goods at a depot before they’re picked up for final delivery. That loading and unloading leads to damaged or stolen goods, delivery delays, late fees, unpredictable ETAs, and bloated carbon footprints.
Flock Freight instead bundles goods from multiple clients into a shared truckload so businesses only pay for the space they need. The trucks are intelligently routed by Flock Freight’s AI directly to the delivery points, removing the middlemen hubs. It’s like carpooling for freight. Merchants get faster, safer, and more reliable deliveries so they can meet the standards of the Amazon Prime era. The world gets shorter ETAs, more availability for high-demand goods, and fewer greenhouse gases. And Flock Freight becomes the connective tissue of the globalized economy.
I Zoomed with Oren to ask about what it’s been like working with SignalFire over the past five years. His answers reinforced why I joined the fund in May after 8 years at TechCrunch: a unique obsession with solving founders’ biggest problems.
“SignalFire is the best. Exclamation point. What really caught me was just [SignalFire founder Chris Farmer’s] level of conviction” Oren beamed. “Once he made up his mind that he believed in what we were doing, it made me feel like by associating with him, my probability of success was going to be much higher.”
Before we joined the cap table, Oren recalls how Chris and our co-founder/CTO Ilya Kirnos told him “‘We’re going to show you how we can drive value. We’re going to introduce you to the guy we think is the best product and engineering leader in southern California.’ I understood enough to know it was risky and generous but cool of them to make that intro before a term sheet had been signed. That’s really the right way to do business, having confidence that we’ll just see the value”. That intro led Flock Freight to hire Lu Saenz, who remains their VP of product and engineering.
It surprises most people to learn that we have a half-dozen programmers and data scientists on staff. They build recruitment tech for our portfolio companies and support their engineering teams. “Yuriy [Groysman, SignalFire’s data science partner] went to work heads down for six months on writing our v2 solvers and optimization engine algorithms. Before, we could compute routing for 20 shipments in 8 hours. Yuriy took us to 150 shipments in a minute — a mind-boggling step function of increased efficiency. We have PhDs on payroll now but didn’t at the time. Yuriy and SignalFire not only saved us a lot of money, but he was part of a Nobel Prize-winning team in particle physics. We were never going to be able to recruit that kind of talent at that stage. He put us at least a year ahead of schedule.”
Rather than ask our community for favors to assist our startups, SignalFire recruited over 50 top entrepreneurs and tech leaders to become equity partners in the firm who have subsequently become over $100M of our funds’ LP base so they’re incentivized to help our portfolio. “The advisory network is extraordinary. Every venture firm says we have a super ninja rockstar network (Ugh, I’ve heard the term ‘rockstar’ used ad nauseam) but they’re not actually accessible. SignalFire introduced me to their advisor Keith Pradhan [formerly head of pricing for Salesforce and now for LinkedIn]. I’ve since connected with him a dozen times. He’s just so on point for us since pricing is viciously hard in what we do.”
When we invest, we run an all-hands onboarding session between our whole team and the startup’s founders to outline their needs and assign them to our experts. “Chris is still my guy, for sure. We talk a lot, sometimes multiple times a week. Often not about work but about life as well as building businesses and trying to change the world in our respective ways. But now it’s a SignalFire – Flock Freight relationship. It’s Mike Mangini [SignalFire’s head of talent, formerly a Facebook executive recruiter]. It’s the entire talent team [which made 1000 job candidate intros to portfolio companies last year]. It’s Yujin Chung [SignalFire’s head of market development and formerly Andreessen Horowitz’s first market development partner] and all the LPs and the advisors. It’s so many people over there making us better. And that’s why SignalFire is the best.”
“If I lived in San Francisco, I’d be in the SignalFire office every week because there are just so many talented folks around there. So many good operators, which I find to be pretty unusual in the venture world” Oren concludes. “Anyone can lead a round. It’s about taking a company from idea to exit. SignalFire has taken us from idea to where we are. We’re not at exit but maybe halfway, right?”
Flock Freight’s second act: The “Prebate”
To get the rest of the way, though, Oren is well aware that Flock Freight needs another innovation beyond the Shared Truckload model of combining Less Than Truckload shipments into freight-pools.
So he invented the shipping “prebate”.
Bigger businesses typically hire entire trucks to do their deliveries, but get stuck paying for unused space if the recipient reduces their order. A truck fits 26 single-stacked pallets of almonds, but Safeway changes their order last minute to only want 20, so the supplier has a fifth of the truck empty. Flock Freight’s new prebate program lets customers strike a deal where if they don’t end up needing the full truck, they’ll pay a discounted rate because Flock Freight can fill the extra space with goods from someone else.
“We can go to the customer and say ‘don’t pay for a whole truck, pay for the truck space you use, and we will turn it into a shared truckload’” Oren explains. Those savings can add up if you’re shipping hundreds of truckloads per year. Suddenly Flock Freight is winning Full Truckload deals as well as Less Than Truckloads because it can combine them like its shipping competitors can’t. “If you’re spending $100 million dollars a year on truckloads, and some of them aren’t full and some of them are but you don’t know which will be which, what are you gonna do? You’re gonna give all $100 million of that to Flock Freight.”