Express Delivery

After years of careful, deliberate work in the shipping and logistics business, Accuship's Mason Kauffman pulls out all the stops in a race to rule the online logistics market.

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The Traditionalist

After years of cautiously building a business by the book, Accuship's Mason Kauffman pulls out all the stops in a race to rule the online logistics market

Company: Accuship Inc., in Germantown, Tenn.
What it does: Lets companies compare various shippers' services and prices online; processes and tracks delivery orders; handles billing and service auditing, accounting, and payment
Number of employees: 100
Conventional wisdom: Who needs an intermediary on the self-service Web?
Unconventional wisdom: Middlemen like Accuship can thrive online; who doesn't need a one-stop spot for shipping options?
Revenue growth: From $18,000 in 1994 to $3 million in 2000; $9.7 million projected for 2001
Profit profile: 2% in first year; highest percentage profit, 21%, in 1997; planned loss in 2000; projects 20% profitability for second half of 2001
Capital: Start-up investment of $100 in personal funds; founder took no salary for first year; $7.6 million in one round of private funding in 2000

It's been nearly 25 years, but Mason C. Kauffman still remembers the first pearl of wisdom he ever got from Federal Express founder Fred Smith. "He said, 'If you want to create a business, go to a party and listen. You'll hear people complain,'" Kauffman recalls the legendary entrepreneur telling his University of Memphis M.B.A. class back in the mid 1970s. Every complaint, Smith said, equals a need, a problem, a vacuum. Meet it, solve it, fill it -- and there's your business.

After graduating, Kauffman signed on with Federal Express, where he spent 16 years in sales, operations, engineering, and information-management jobs. He learned plenty about Smith's approach to the shipping and logistics business. But at 40, when Kauffman yearned to start his own company, he found himself drawn back to Smith's advice. So he listened . And he heard complaints -- lots of them -- from companies seriously frustrated about every aspect of shipping: the sheer number of carriers; the broad range of services, rules, and costs; and the complex and constantly changing shipping process itself.

Most businesses, Kauffman figured, could use expert guidance in finding faster, cheaper, and easier ways to ship, and account for, their parcels. So in 1994 he left his $100,000-a-year FedEx job to found Express Logistics Inc., a consulting business that helped companies streamline their shipping operations. Today the company (renamed Accuship.com in 1999 and plain Accuship late in 2000) works like a travel agent for parcels. The company provides its customers -- mostly big corporations like the Coca-Cola Co., Sprint, and Home Shopping Network Inc. -- with one online source for shipping and tracking (as well as optional accounting, auditing, and bill-payment services). At Accuship's Web site, users can compare options and prices to decide whether, say, to pay one shipper's $40 fee for delivery by 8 a.m. or another's $8.75 charge to get the package there by 3 p.m. They can also arrange for same-day couriers, print labels, track deliveries, and check invoices -- all online. Accuship takes a flat monthly fee or charges per transaction; the company's share works out to 20% to 50% of its customers' savings on shipping costs.

In many ways, Accuship is a virtual company. Because it doesn't do the actual shipping, it owns no planes, trucks, or warehouses. And all transactions -- about 850,000 a day, worth a daily average of $5 million -- have always been electronic, initially through electronic-data interchange and more recently over the Web as well.

But in several key ways, the company seems more rooted in the old economy than in the new. First, at age seven, Accuship is, by Internet standards, a granddaddy. Unlike most of its dot-com brethren, it's been at least slightly profitable for much of its life (ranging from 2% on revenues of just $18,000 in its first year to a high of 21% on $895,000 in 1997). In another Web-world rarity, Kauffman started Accuship with his own savings and didn't receive any outside funding until the business was six years old. He worked alone in the attic of his home for the first year, taking no salary. After that, he built his staff slowly, making sure he had new accounts in the pipeline before he hired people and funding expansion through cash flow.

Finally, even at the height of the Internet inferno, he hired no dot-com executives and imported no one from Silicon Valley. But even Kauffman will admit that the company's more recent financial picture would raise eyebrows at any traditional business. First, Accuship lost money last year even as revenues increased 36%, reaching $3 million. (Kauffman emphasizes that 2000 was "a planned-loss year" because of major technology and staffing expenditures.) And the company turned to outside investors for the first time, receiving $7.6 million in a single round of private funding in May 2000, two months after its sixth birthday. But, again unlike many other dot-com CEOs, Kauffman expects to recoup his investment quickly and says he's on track for 20% profitability for the second half of this year.

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