“Where is the Value in Strategic Partners”
Let’s face it, the world couldn’t function without trucks on the road carrying goods from place to place. Naturally, the world functions at its best when the freight on those trucks is managed efficiently. Fortunately, there is a logistics startup like Ofload that acts as a service provider and helps to coordinate freight to help trucking companies big and small be more efficient. While Ofload only operates in Australia right now, it has already achieved an impressive amount of traction and has big plans for the future.
Ofload founder and CEO Geoffroy Henry joined startup coach Roland Siebelink on the latest episode of the Midstage Startup Momentum Podcast to talk about Ofload’s past, present, and future. They discussed the role Ofload plays in the supply chain, the success of the company thus far, and how Geoffroy is handling all of the challenges that come with being the founder and CEO of a tech startup.
- How startups can find the right balance between profitability and growth.
- How Ofload has built a team that’s fit for future growth.
- The methods Geoffroy uses when hiring leaders at Ofload.
- The difference between core jobs and growth jobs.
- The purpose behind Ofload’s mix of traditional investors and strategic investors.
- How Ofload benefits from having strategic investors at the cap table.
Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I’m an ally and coach to many of the fastest-growing startups all around the world, one of which is in our studio today, and it’s Geoffroy Henry, calling us from Ofload back in Sydney, Australia. Hello, Geoffroy. How are you?
Geoffroy Henry: Hey, very good. And yourself?
Roland Siebelink: I’m very, very good. Thank you for joining. I’ve heard a lot about Ofload. But for those that haven’t, why don’t you tell us in a brief few sentences, what does Ofload do? Who do you serve? And how do you make the world a better place?
Geoffroy Henry: Yeah, absolutely. We are a supply chain tech company, specializing in logistics. We use technology and data to coordinate freight across the country in Australia. Our clients are typically whoever needs to move physical goods. All of them share very similar pain points in finding ways to do that in the most efficient way possible. And we take care of that coordination piece and optimizing freight.
Roland Siebelink: Okay. Is it a marketplace business model where you connect shippers with carriers?
Geoffroy Henry: It’s more the sense that if we were to do that, we would still pass along the pain points of having to deal with a number or dozens or hundreds of trucking companies. We actually take a different approach. We act as the service provider. We act as the party actually managing the freight and fulfilling the freight. And then behind the scenes, we use our technology to coordinate dozens of thousands of trucking companies and trucks and drivers across the country.
We act as a transport company as such, but we don’t have any assets and we leverage the long tail and smaller owner-operator trucking companies that themselves are suffering from the fact that they can’t usually get access to those very big clients that we have.
Geoffroy Henry: Personally, I’ve been exposed to logistics. Going back a little bit, I started my career in a very generalist fashion with business school. The end of business school, either you do consulting or investment banking. I’ve done investment banking for a couple of years. And when I decided to move to Australia, that got me into logistics because I stumbled upon a startup, a very successful startup called HelloFresh. I joined them very early on, and one of the biggest challenges was actually operationally being able to enter and create a new market. Home deliveries of fresh food did not exist. I got really involved in the nitty gritty aspect of coordinating freight, finding trucking companies, and I’ve dealt with the pain points myself.
That got me into logistics and then I actually had a logistics company myself, which I then sold to HelloFresh. Then in March 2020, which was interesting timing - COVID just came out. I started this company, which to begin with was a super stressful time because no one knew where the market was gonna go and what COVID meant to the world. But very quickly it actually became a large opportunity for us because the supply chain as we know it skyrocketed and became so essential. It is traditionally an unsexy industry. But if you think about it, nothing would happen without trucks. You wouldn’t be able to sit on your chair or even use your earplugs or anything. All of those things are going on trucks and being moved around the country, and so it is a key organ of the economy. And with COVID, it was very challenging, which was a very big opportunity for Ofload generally.
Roland Siebelink: Okay. That’s the first time that I heard it actually started in March, 2020. I’m so glad to see you still alive because that must have been very challenging Indeed. But you did say that logistics started skyrocketing. How fast was that turnaround? How quickly could you actually jump onto that wave?
Geoffroy Henry: That wave got created around September-ish, October of 2020. After the end of the first lockdown where we’ve understood that consumption was still going to continue in different ways. Very clearly, it is not delivering food to restaurants but even more to grocery stores. But we were still consuming a lot. By the time October came in, we’ve clearly seen that there was gonna be a lot less trucks on the road because the drivers were hit by COVID, because of the border restrictions in Australia, and the fact that restrictions are actually by state, and so they’re not well coordinated. It created a lot of shortage.
While consumption was similar to what it was in previous years, when capacity as a market was actually 10 or 20% of what it should have been, it created a market in which fighting capacity and finding the right carriers is the most essential thing possible. And in a model like ours where we don’t rely on one company, we rely on thousands, we were the best place to provide capacity and solutions to the biggest FMCG you can think of.
Roland Siebelink: That sounds amazing. Geoffroy I just wondered, some people must have been doing this optimization even before Ofload came along. What were your rivals, the competition you were fighting against and what do you do better?
Geoffroy Henry: There’s been players like us popping up around the world. There’s been a few very successful businesses in the US. Literally, there’s four of them that are unicorns-plus. There’s big players in Europe. There’s some in India, in Indonesia. That model has been showcased as something successful where the fundamentals are here and where the value add is clear and tangible.
But in Australia, the competition actually didn’t exist at all. There are tech businesses trying to create fleet optimization or trying to create extensions of ERP for the bigger companies in Australia, helping them coordinate cartons into pallets or pallets into trucks. But there’s no one that is acting as a middle man central authority coordinating the market. We were the first mover. Then we were protected by COVID and we are now protected by a potential recession, which means that we are very much benefiting from the fact that we are alone in providing that in Australia.
The Australian market is estimated to be about 65 billion of freight. There will be a lot of time before we actually cap out and max out the opportunity that we have. We’ll be doing 5 billion in Australia before we can consider that our growth will be too linear or too small in Australia. That being said, there are opportunities across the world but are yet to be exploited, and in Southeast Asia, specifically. I have a lot of strategic investors on board with whom I could partner to enter a new market. We will consider new markets, but I am gonna wait until I generate super healthy margins and profitability levels before I take on more burn in launching a new market.
Roland Siebelink: I’d love to hear a little bit more about that. Obviously, your business school education is coming out here. But for many of the founders who are listening here, they often struggle with this balance between, do I go for profitability now or do I just go for growth and the profitability will come later? Can you expand a little bit on your thinking and if you advised other startups, what would be your take on how to balance growth and profitability In what phase of the company?
Geoffroy Henry: Yeah, I think your last point around the phase of the company is Essential. If you are pre-seed or seed, you need growth because growth shows that there’s a product-market fit or close to a product-market fit. And it’s fine not to be profitable at the beginning. Investors know that they are investing money that is meant to be burnt in order to have a scale in which profit can actually one day come. That being said, as soon as you move out of pre-seed to Series A, you’re now into what we call the growth phase in terms of the type of investor. But actually a phase into ‘we want to show that you can be profitable’. And the reason why is that when the cash rate, meaning that the central bank rate is extremely low, that means the way we calculate the valuation of a company is by calculating a discounted future income valuation.
It’s a function of the cash rate where if the cash rate is super high, we’re gonna discount your future income because it’s expensive, and the cash is expensive. But when the cash rate is very low - like it was in 2021 and the early stages of 2022 - then we are gonna tell you to invest in growth because it’s fine. We’ve made the calculations, you can sustain it. But now that the cash rate has changed and they’re actually going upwards, it is very hard for VCs and the private market to value businesses highly that need to burn a lot in order to one day drive profit.
As a founder, my recommendation is very quickly, once you’ve reached a scale in which you think you are not so far away from a tipping point or you think that growth can temper, then is the moment you need to be profitable. Focus on nailing - ideally proactively, not reactively - the point in which you influx and you leave the exponential growth and you have a more double digit year on year growth. Then is the point in time you need to be profitable. As at Ofload, the reason why we’re driving profitability now knowing that we’re still in exponential growth is because we can, because the fundamentals are super healthy and not doing it would be a bit of a shame and would not be reasonable as a founder.
Roland Siebelink: Tell me a little bit about your organization, Geoffroy. You’ve shown huge traction already, big revenue numbers you mentioned. How big has the team grown and how have you built it all up?
Geoffroy Henry: That has been challenging. Like anyone else, you’re only as good as your employees. We’re not selling a product, we’re selling a service. Building the right team is essential. And there was a talent shortage or talent war that is now easing. But that was occurring throughout COVID. We’ve grown our team to about 130, 140 team members here in Australia. A few of them through an inorganic acquisition, an inorganic growth strategy. We acquired a business in September; that allowed us to have offices in Melbourne. That’s the team that we’ve built. They are all split across different teams. We have the product and the tech team that is the biggest part of our organization. And then we have finance through the M&A and FinTech strategy that we have, which we might talk about down the track. And then typical operational, sales, commercial teams.
Roland Siebelink: Okay. What many people want to know when they hear you talk about a team is how big is it overall? And also, how have you divided it between the technical product people versus the go-to market and support people.
Geoffroy Henry: We try to make sure that we actually have the majority of our team members as growth oriented as we can. Even in how we build our business model and our budget, we distinguish what is core and what needs to exist in order to operate and what is growth. And that allows us also to always keep a finger on the pulse on how healthy is the business right now? If it’s all mixed, we never really know where you stand in terms of your actual bottom line. By separating the two, we keep the finger on the pulse in knowing what we’re deciding to burn on the extra headcount while we’re onboarding in order to bring more automation and more product growth in the future, and what we have to sustain the growth that we currently have and the headcount that we have there.
Roland Siebelink: The way you define what is core is the existing business that you are continually optimizing. But then growth is new business lines, new products, new markets, all the additions that you might be envisioning.
Geoffroy Henry: Absolutely. In core, you would even have tech people that are dedicated to the core system that we already have and maintaining it. You have product people that are involved in fine-tuning those. You have the operational team. Some of the commercial team that still needs to be there. That’s core and then all the rest is the new services that we are building. We’re building a SaaS offering team that we’ll release in market, the FinTech business unit that we have, the M&A team that we have, the pure sales team that is just growth oriented, and all of those people are part of what we call growth, which is us knowingly deciding to invest in those things in order to capture more growth down the track.
Roland Siebelink: I do want to ask a follow-up question because you’ve spent so much time and energy on that. How do you actually recruit the right executive leaders for your company?
Geoffroy Henry: I’m not sure if there’s a one way. I actually work with two parts of my body. I work with my brain and my gut. My brain is my ability to put words on feelings I have. And my gut is when I don’t know why I feel a certain way but I trust it as well. I trust the two. I don’t believe in just seeking academics and seeking the biggest badge and the biggest stamps, and if you worked for JP, if you worked for McKinsey, and so on, you now are for sure a golden talent. I actually spend a lot of time doing business cases, and across the business on key areas of their business. Everyone has to make potential new candidates do business cases of what actually the challenges would be and what they would need to solve within their own scope.
Earlier on, we do two things. We make them work concretely on what needs to happen. And sometimes it can be three, four pages that they have to go through in order to reassure us. And then they have to have a cultural fit, meaning that a great talent and the brightest mind that is toxic is actually gonna kill more than it’s gonna create. We first put a lot of energy seeing what is that brightness in that brain and how great they are. And then we take a lot of time thinking, “Okay, if they’re an individual contributor, are they toxic to their peers, or if they’re a manager, how strong are they to get the best out of their own employees?”
The more you’re a manager, the more your value is a function of how much you are allowing your team to be empowered and to take initiatives and how much you’re coaching them. We’re always trying to strike the right balance between either individual contributor, then it’s pretty easy, great mind, not a toxic person, fitting the overall culture. If it is a manager, then they have to have a great mind, but we are putting a focus on how well they can empower and coach their team for them to be stronger.
Roland Siebelink: Okay. How do you figure out if somebody might be toxic?
Geoffroy Henry: Ego is usually a very good sign. Anyone that thinks of themselves first tends to be quite toxic and bring at least politics in the company. Ego is a very, very strong sign for me. And the opposite of that is if you see someone that is extremely smart but humble, you know that you are onto something truly precious. It is essential that everyone always remembers that they might be very strong somewhere but everyone around them is smarter than them or better than them in at least one area. We need to stay humble and consider that success is only if we sum the brains that we have in the room rather than just one that drives it and 99 that actually executes. As long as we keep that mentality and we make sure that the people truly embrace it, and it’s not just words, then usually, you’re pretty safe.
Roland Siebelink: That brings us to this point that I talk about with a lot of founders, this learning to instill confidence in the people on your team. Right. How do you get them to a point where - especially when you talk about your ideal hire is this smart but humble, precious personality - they’re not necessarily gonna push an opinion forward and say, “This is it. I’m just gonna drive this.” How do you get people like that to start taking on those leadership abilities, drive something forward, set the pace as you called it, and not always have everything in the company depending on you personally?
Geoffroy Henry: That is a very, very good question. And the reason why it’s a very good question is actually because if you have a bias with pace and execution, you would naturally have a bias with people that think quickly, make decisions quickly, and then you would actually lean on the people that have amazing point of views but they think differently or they’re not alphas and they don’t like conflict, and so they won’t very quickly jump in the ball and just give their opinion and debate.
Striking again, the right balance between what I’ve just said around the pace and execution I like to see but also making sure that there’s the culture environment in which everyone can raise their concern, give their opinion, and not only profiles that are extroverts and alphas but all types of profile is very hard. You need to keep an environment in which you genuinely foster differences and try to make sure that everyone has a place to speak and everyone can actually raise their concern.
The way I do it at an LT level on a weekly basis, every single LT in a meeting group will talk about their week, talk about subjects. Everyone has to talk. Then they have a week to prepare but at least it’s not as if they have to fight to get the right to speak. That is their time to speak. And then we have different channels in which we try to follow the same process so that we actively give the mic to everyone so that we can make sure we don’t forget anything.
Roland Siebelink: It’s like doing a formal round in a way, right?
Geoffroy Henry: Yes, absolutely. It’s like everything, you need to start with things that are slightly uncomfortable and then it becomes muscle memory. By forcing it now in a forced fashion where it’s not natural, it seems a bit odd to begin with, but when it becomes muscle memory and a habit, then you might not need to have those anymore. But until that is the case, I will continue to have those.
Roland Siebelink: You mentioned before that you’ve just announced an investment round. Congratulations. That’s a very big achievement. And you also mentioned that you’ve got some strategic investors on board. To the degree that you can, can you let us know a little bit of your thoughts on mixing more traditional venture investors with strategic investors and how that funding strategy should help to grow the company further.
Geoffroy Henry: It’s a good point. There’s a natural thing that I want to kind of kill. It’s the fact that everyone thinks that a strategic investor will bring value from Day One. The reality is that there’s very often between the CVC and the core business- the corporate venture capitalist and the core business - they are a Chinese wall, which means that synergies don’t happen across and you still need to sell your business in order to get through synergies.
For me, the value I feel in having some strategic investors, it’s not in the additional traction that can generate, it’s in the advisory role they can play because they know the industry very well. They can help you not make mistakes that they’ve seen happen in different markets. Everyone’s like, “Oh, that’s great. It’s gonna change my company because I’m gonna have X amount of revenue.” It’s pretty rare that those things crystallize. But if you’re smart enough to leverage them as advisors, it is a genuine strength. I’ve spent twice more time on calls with my strategic investors that I do with the traditional VCs I have on my cap table.
Roland Siebelink: And that’s because they have the Rolodex, they have the experience, they help you understand the industry even better.
Geoffroy Henry: Absolutely. The typical mandate of a CVC is usually to invest in the space in which the core business is in. That means that they understand very well, and in my case, it’s the supply chain. My different strategic investors know the supply chain very well. They invested in hundreds or dozens of supply chain tech companies, so they’ve seen what works. They can often guide me and say, “Actually I’m seeing that happening in the US. You should consider those things to build in your technology.”
They actually see more things than you do, and it’s their job to be aware of what is happening in this space. Your job is to execute and it’s super hard sometimes to execute a lot and then also keep a full mind open of what is happening in the world. Media tends to cover successes that are from B onward - Series B or Series A onward. It’s pretty rare that you get a snap view of the pre-seed and very early stage business that are arising in other countries and through your CVC and through your strategic investors, they can actually open those doors and give you a lot of view of what the new players are doing.
Roland Siebelink: Last question out of the blue - actually, I have one more after - but this is my out of the blue question: autonomous trucking?
Geoffroy Henry: I think it is essential that we put a lot of energy there. Australia, for example - and it’s gonna be the case across a number of countries - it is expected to double the population in the next 30 years. Though the amount of new drivers and the amount of new players entering the trucking space is actually decreasing every year. You have more companies going bankrupt, so you’re gonna have a massive shortage. We are already going through it today, and this will increase over time. No one wants to drive 13 hours. No one wants to do that. If we don’t invest in autonomous driving, we are gonna face a very, very big problem in 30-plus years.
Today, we need to invest, we need to build infrastructure, we need to invest in the technology that allows us to not rely on a driver for areas of the supply chain that don’t require one. I believe in it. I believe we’re way too early. I believe it won’t happen in the next 10 years, but I believe that if we don’t make it happen in the next 30 years, we’re gonna face very, very big challenges.
Roland Siebelink: At least in Australia, you have the space to try it out. I can imagine between Perth and Victoria or something like that, nothing could happen there anyway.
Anyway, the more important question at the end is people who’ve listened through this podcast and are excited about Ofload, how can they help you? Where should they go? Where can they find more information? What should they download?
Geoffroy Henry: They can absolutely go on our website. They can register there if they’re interested either way because we are on one part of the market as a shipper, as a carrier. If they’re a candidate, they should go on our careers page and apply to the dozens of roles that we constantly have opened. And if they are a founder and they’re looking for advice or anything, I believe in being a very tight community and all helping each other. I’ve had people helping me and I believe in doing the same. They can reach out on LinkedIn and I’d be very happy to provide my opinion, which is only as good as my own opinion. But I would be very open to that as well.
Roland Siebelink: Yes, excellent. Maybe for investors it’s a little bit too late, but contacts are never too late or too early, so if anyone wants an introduction to Geoffroy, then I’m happy to provide as well.
Thank you so much, Geoffroy. This has been an amazing interview. I love the energy and all the insights you gave, Geoffroy Henry, founder and CEO of Ofload.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.