Transcript
Speaker: On the next episode of The Market That Moves America, we'll listen to the secrets of the man who runs the company that Inc. Magazine says is the fastest growing company in America. Welcome to The Market That Moves America, a podcast from the National Center for the Middle Market, which will educate you about the challenges facing mid -sized companies and help you take advantage of new opportunities.
Speaker: On today's podcast, we'll hear from the fastest growing middle market company in America and learn why transportation management software is in such high demand. I'm Tom Stewart, the executive director of the National Center for the Middle Market at the Ohio State University Fisher College of Business.
Speaker: We're the nation's leading research outfit studying mid -sized companies which account for a third of private sector employment and GDP and the lion's share of economic growth. It is indeed the market that moves America. The National Center for the Middle Market is a partnership between Ohio State and SunTrust Bank's Grant Thornton LLP and Cisco Systems.
Speaker: With me today is a special guest, Brad Hollister. Brad is the founder and CEO of Swan Leap, a transportation management system software provider based in Madison, Wisconsin. Welcome to the Market that Moves America, Brad. Good morning.
Speaker: Brad, we want to talk about two things here. One is we want to talk about the company itself and its amazing growth story. And the second is about what Swanleap does because, as we've learned at the NCMM, transportation management is critical for companies of all size and particularly for mid -sized companies.
Speaker: But let's start with you. You were just named the number one fastest growing company in America by Inc. Magazine. And Brad, you were just down in San Antonio receiving that honor. How fast have you been growing? Yeah, sometimes it's hard to even step back and look at the result because my job is to really focus on two things. One,
Speaker: servicing the new inquiries that we have with a very small team to do that, but then also making sure that we have the operational capacity to turn those on. So even though we are approaching 350 million or so by the end of the year forecast in revenue, we still have to look in the rear view mirror a little bit on operations, make sure they're still behind us.
Speaker: and that we're also able to now be a little more selective on the types of customers that we're talking to. There is no shortage of awareness out there with a lot of other firms, quasi -competitors raising money in the marketplace. It's just really brought a lot of attention to this space that was previously pretty commoditized. And now there are a lot of people looking to make some different disruptive
Speaker: capabilities and technologies on top of what, what already is out there in the market. Give me, give me a sense. If you're going to end the year at about a $350 million run rate, how did you end 2017? How did you end last year? 2017 was, um, uh, about a hundred million. It was, I think it was either 99 million or 101 million, depending if you looked at the cash base accounting or cruel base accounting.
Speaker: But it was about 100 million in 2017. And we've been able to grow that business with not much more in staff. Really? Yeah, we have figured out where we're good and where we need to automate and what processes are weak. And that's really what I'm proud of our accomplishment for 2018 is
Speaker: We've really made our business bulletproof. So talk to me about that. One of the things that we see in our studies all the time is what you said earlier. Here we are. We're running ahead. And you have to look back in the rearview mirror to see if operations is keeping up with you. What have you been able to automate? What has been the hardest part to manage in this extraordinary growth spurt?
Speaker: Really it's been, the hardest thing is trying to create process around everything so that we can be ready for the growth. So I mean, it's wonderful now that most of the operations I'm completely out of. In addition, if we turn on a new client without a lot of customization, I really don't need to be involved in that either. So we have a really good document of processes
Speaker: for turning on clients, configuring new locations. If a client says, hey, we just bought another company, we need to expand and I need to configure that new location to have this type of visibility and to like, we don't want them to look at this, but we want them to look at this. And there's a whole list of custom permissions. Our account reps can do that without any other management involvement. So in coming from a business out of your basement, that's a heck of an accomplishment because
Speaker: We've been able to scale that knowledge base to other people. And training employees in this kind of environment has really been difficult. When I think of entrepreneurs and process, they're almost like antonyms in my mind. Yeah, that's right. And just when you have it figured out, that's when the wheels are about to fall off. So I heard a.
Speaker: I heard an entrepreneur at the conference last week say, the thing about being an entrepreneur is you wake up, the sun's shining, you stretch when you get out of bed, you make a nice cup of coffee, you come downstairs and you just know in a matter of minutes it's gonna be a complete shit show. And that made me laugh because I can relate to that. So, yeah. Let's talk, I wanna learn a little bit more about
Speaker: the business itself. And maybe I've got a couple of stats that I can throw out that are fascinating. And then you can talk about how Swanleap makes a difference in here. We just did a study of manufacturing for mid -sized companies. And as you probably know, the mid -sized manufacturer is really the core of US manufacturing, I think global manufacturing. In any event, four out of five of them
Speaker: said that their customers are asking for faster cycle times. And virtually the same number said that they were asking their suppliers for faster cycle times. So basically 80 % say faster, faster, faster, faster, faster, faster. And among fastest growing companies, that goes up to 90%, 9 out of 10.
Speaker: And those fast companies say that this pressure for more speed, the only way to do it to meet it is with digitization. Two out of three say digitization of information and supply chain is the only way I can keep up with the speed pressure. Is that what you guys see, and is that what you guys are helping people solve?
Speaker: Probably the biggest thing, that's the result of best practices in a lot of different areas. But in order to fix that problem, I think you have to actually go deeper and get to the foundation of where the problems are beginning. The way that supply chain has worked since the deregulation days is that companies needed to have some kind of trigger to close an order. So if you think about a manufacturing order process or even
Speaker: Um, you know, any kind of distributor order process at the end of that, that product being picked and packed and ready to go. It needs to have a way to tell the accounting department that it's shipped. So that simplicity of what the job of a TMS has been is really still governing this industry today. So you can load your rates in there and then make a decision based on the rules that you enter. And then it triggers that, that shipment to be closed and that's it.
Speaker: that the job is over of the transportation management system. Forget inbound. I mean, you're asking good questions about inbound. The TMS has never been able, the traditional TMS has never been able to touch that. And what we've done at Swanleap is on the outbound side, automate completely the decision, and then not stop at the point that it's executed, but view the shipment in transit, report back any kind of exceptions that happened during the transit of that shipment, and then also,
Speaker: help with the financial settlement and the analytics of that transaction. Now on the inbound side, the way that most companies govern their inbound and their vendor management is simply email the vendor a routing guide to say, hey, ship it on this thing, ship it this way. And then hopefully they do, and typically they don't. What we've done very differently is give a portal that the vendor logs in and goes to
Speaker: And we've made it very simple for the vendors. That's important because we don't want to make it so hard that they can't remember their login and all those kind of things. But we give the vendor the login based on their email address, and they can go in and see shipments and make shipments. So basically, you've opened up these black boxes, right? So basically, if I'm shipping stuff, I can see it after it leaves my loading dock.
Speaker: And I can follow it all the way through. And by the way, that will trigger delivery and the financial processes. And then on the inbound side, I can basically see it coming and be prepared for it. Not only see it coming, but know that it shipped the optimal method. Because most companies out there can cut 30 % off their shipping costs by just simply having dynamic routing in general. And in 30s,
Speaker: It's 27 .6 % on average. Yeah, it's a big number. And the bigger the company, the more they can save. I mean, that's how it goes. So yeah, you can see it coming to you and then you can affect and change your manufacturing process, your staffing of the factory. A lot of different operational decisions can be made based on when that product's going to arrive. And knowing when that you hit a delay too, that's also a problem.
Speaker: But it's a it's something that you can at least be responsive to as a manufacturer or distributor. You know, I was at a conference of electronic components manufacturers and distributors earlier this week and one of the people there was saying that the the cost of the paperwork for shipping many of these orders was equal to or greater than the cost of the of the shipment itself.
Speaker: So if you think of two things, there's the movement of the goods and the information flow. And what I hear you saying is that—so what this guy said is often the info is more expensive than the freight bill.
Speaker: But but what I hear you saying is that with this kind of technology, I can cut both, right? I might be able to cut my shipping cost by 10, 20, 30 percent, while at the same time, I'm dramatically reducing sort of the information processing cost that goes with it. Yeah, there's there's there's just so many inefficiencies in shipping. And and the interesting thing is I was at a Journal of Commerce panel yesterday
Speaker: And I asked if anyone in the audience would raise their hand that didn't think that the shipping industry is antiquated. And I think that's kind of a funny, and no one did. And I think it's kind of a funny question because when you read the trade magazines, when you read the news, when you read all the things in the industry and shipping and all the people trying to make all these new whiz -bang technologies, they're not
Speaker: They're not mainstream. I mean, the adoption rate of technology and just the transportation management platform is 25 % or less according to Gardner. So I mean, you got a lot of really growing. Yeah. Yeah. And it's, you know, I think on one hand we're in the, you know, we're the Jetsons, but in reality they're the Flintstones, uh, the industry. And, and, um, you know, people are, are, are starting to wake up to the, uh, to the fact that they're very much limited.
Speaker: by their own technology and it's really been a wonderful run that we've had and I don't see it slowing down because now we're in a position where we have to start replacing technology that's already in the market. Why did you call the company Swan Leap? Yeah, we had previously been Clearview and Clearview is a nice name for what we were trying to accomplish but it really didn't
Speaker: um I guess give the give the feeling of as much I guess it really didn't nail down the fact we're trying to disrupt the market and change it so we really wanted to to embody the the notion of the black swan because many of our competitors and many people experts in the industry say that what we're doing can't be done and they're saying that you can't execute
Speaker: $250 million parcel shipper in the cloud. Of course you can. And we know that and we're doing it. So we really want to embody the black swan and we really thought that the industry is ready for a leap forward into the next era. I don't see a single provider out there in the market being able to survive the next five years. And what you're seeing in this market is kind of proof of that. As you see, major transportation management systems are selling. There's a lot of acquisition activity.
Speaker: Well, if you're a leader already in this space, which there's certainly, I would say we're not a leader today, um, based on gardener and based on other, you know, acknowledgments in the market. Um, why would you sell now? There's a 25 % adoption rate and the space is hotter than ever. And there's awareness that this needs to, that this type of a system needs to be put in place. And 75 % of the companies out there are going to be buying one.
Speaker: And so it just is a good indication of how truly rim rocked our industry is from a technology perspective because if you're one of those major providers, short of starting your system completely over, burning it down at beginning over, you're really in a tough spot. You can't change your technology. You can't listen to the needs of the market today.
Speaker: become a live system with connectivity because your infrastructure wasn't built for it. But yet that's what the market wants. As we were seeing in our data where people say they really need to see digital solutions to these problems of speed and I guess also the problems of accuracy, transparency, all the stuff that is both where you need a clear view to take the old name.
Speaker: Let me ask you an elephant in the room question. A lot of these shipments are global and international. We are now entering an era where there are suddenly tariffs being slapped onto all kinds of things. How is this affecting you and how is this affecting the industry or trade, I'm saying?
Speaker: Yeah, I'm just basically, as we know, enter a time of tariffs. Is the imposition of tariffs mucking around with this system? Is it making life more complicated? Are you seeing effects on businesses and trade or is it just another data point that has to be handled with the software and are people adjusting pretty well? Yeah, I don't really see, I mean, the trade tariffs right now is more,
Speaker: just rules to the game, meaning like just things we have to take into consideration. And it just affects really more of the rates that we're seeing out there from the some of the from the landed goods costs that we're tracking. So for us, we still have to collect a lot of the same data points. There's not really new data points. It's just, you know, the rates are coming in higher. And, you know, it might it might change sourcing strategies, it might change
Speaker: you know, how our cost customers run the run their decision making. But we really, we really don't see so much of that it's not really our space ours is really more the controlling the providers that are are shipping the product in. And then
Speaker: And then reporting back, making sure the accuracy, making sure it's the right decision, all that kind of thing. Got it. Got it. One last topic, Brad. We've been talking about how you've watched this. First of all, created a company that has a disruptive solution that is
Speaker: really winning against, I guess, competitors who are locked into their own technology and have a hard time changing. And you've talked about how you've been able to build the process and the automation so that the company can pretty much keep up with its growth. How has this stretched you yourself? As you look back over what the company's now, what, five years old, six years old?
Speaker: Go back to your younger self and look back in your rear view mirror and say, wow, I never would have expected this from me or this was the hardest part for me in your own sort of leadership journey. Well, we started this business out of the house and we knew what the market was asking for. I definitely underestimated how difficult it was to break into enterprise software.
Speaker: I always applaud the entrepreneurs out there that make consumer apps. I don't know how you gain traction to grow an app so quickly and get like an Uber. How do you start an Uber app? I don't know. I mean, that's a difficult thing to do. So that's difficult on one side for the B2C. But on the enterprise level, it is so hard because you have to decide that
Speaker: you're going to really convince the market, but then you have to get over the, but you're too small factor. And we, we, the ink acknowledgement has, has definitely helped us with that. And we, we, we have gotten a wonderful, um, stage from which we can tell our story and I think it resonates well with people. But, um, looking back, we knew the opportunity was big. We just greatly underestimated that we could build a better product at a, at a, at a much more aggressive pricing model.
Speaker: There should be no reason to say no, but we still get told no. So, um, we knew it'd be big. We knew we'd grow quickly, but I would have thought actually bigger and faster than even where we're at today. Based on how good the product is and how every shipper in the world from general electric at the big level, all the way down to a very small e -commerce company, maybe out of their first office or warehouse, they need us and we can help everyone in between.
Speaker: It's fascinating because the old saying is, of course, if you build a better mousetrap, the world will be the path to your door. But what you're saying is you're going to have to do a lot of building of that path yourself as well. Yeah, it's definitely been dramatically much more difficult than what I ever would have imagined.
Speaker: So Brad, I want to thank you for this because this has been, I think, first of all an extraordinary window into your own growth story and what you said about the need to build the process that goes with the entrepreneurship and the need to also convince the market that you're real, you're credible.
Speaker: but also a window into this issue about the management of all those goods that are whipping their way around the country and around the world in terms of trade and how people keep track of that and can keep track of that so that their own operations run more smoothly.
Speaker: For those of you who are interested in more about Brad Hollister and Swan Leap, you can check out their website at swanleap .com. I'd like to thank you, Brad, very much for your time and for your insights. Thank you for having us. It was great to tell our story and always a pleasure.
Speaker: And I'd like to thank you all for listening to The Market That Moves America. Never miss a new episode. You can subscribe to the podcast on iTunes, Stitcher, Google Play, or wherever fine podcasts are found. Or you can subscribe and learn more about us, the National Center for the Middle Market, at our website, which is middlemarketcenter .org. Thanks very much.
