Two years into the launch of Brad Hollister's startup, an online marketplace for buying and selling freight space in trucks, he faced a choice.
He'd sunk $200,000 of his own money into the company. He'd landed a huge client, and parlayed that win into a term sheet for a $2 million venture capital round. All he had to do was sign on the line.
Instead, Hollister walked away--to start what would turn out to be the fastest-growing private company in America: the Madison, Wisconsin-based SwanLeap, which uses an artificial intelligence platform and custom software to help huge manufacturers, retailers, and other clients save money on shipping, and better manage their supply chains.
In 2013--SwanLeap's first full year--it had revenue of $110,000. In 2015, it crossed the million-dollar mark. By October 2017, the company was tracking to take in at least $70 million that year, and Hollister felt confident enough to approach Inc.'s editor in chief, James Ledbetter, during a cocktail hour at the Inc. 5000 Conference and predict that his company would be No. 1 for 2018. "He said, 'That's what everyone says,'" Hollister recalls.
But Hollister was right. Even if, in October '17, he wildly underestimated how the company would do that year: SwanLeap ended up taking in just shy of $100 million, good for a nosebleed-inducing three-year growth rate of 75,660.8 percent. Forgive him for the imprecision, because SwanLeap has been growing as fast as it can hire software developers, who are a rare species in Hollister's neck of the woods. That's why, over the summer, he had his 12-year-old son helping out with programming. "It's like looking through a kaleidoscope on LSD, man," Hollister says. "I never know which way is up." This year, he thinks, there's a good chance he'll break $500 million.
But first he had to say no to that easy $2 million. That startup, Freight Access, was the culmination of a decade of seemingly random experiences. Having picked up Spanish working in restaurants and Portuguese while visiting a friend in Brazil, he landed a job out of school selling airplane parts in South America, and got introduced to supply-chain logistics. Later, another friend hired him to consult with big FedEx and UPS shippers, where he discovered the clunky spreadsheet-based systems big businesses use to manage their shipping. That led to a gig as a freight broker--buying space from carriers and selling it to shippers at a profit. But lining his firm's pockets when he negotiated discounts rather than passing along all the savings bothered him. "I'm a capitalist," he says, "but I didn't like the betrayal of trust."
His solution: build the eBay of freight, a marketplace where carriers would list their spare space and shippers would bid on it. It looked like the right idea when a manufacturer that spent more than $100 million each year on shipping quickly signed on. But shortly before Hollister and his investors were set to close the funding round, he noticed that his star customer's traffic had dried up. Panicked, he called the company--and was told, "It works great, but we're too busy for it."
"My god. How do I unhear that?" Hollister remembers thinking. A way to make shipping cheaper was useless if it required too much work at giant enterprises where its end users are well-insulated from the bean counters. "If it forces a guy at 4 o'clock on a Friday to have to stay an extra half hour--he's not gonna do that," says Hollister.
Crestfallen, he told his investors to call off the venture round. Eager to get their money back, they urged him to take the funds and figure it out. Hollister didn't relish being on the hook for a business he didn't think would have customers anytime soon. He and his wife had two kids--they now have three--and she was earning a social worker's salary. "I had burned through all my retirement," he recalls, "and we were starting to whittle into her retirement."
Fortunately, Hollister had landed a new consulting client: Jim Rogan, owner of Rogan's Shoes, a chain that then had 34 stores throughout the upper Midwest. Rogan knew he was spending too much with FedEx, but the regional carrier that was 50 percent cheaper had an antiquated software system that took far too long to navigate. Hollister got the job by offering to write software to solve the problem, thus saving Rogan--who's still a customer--six figures a year.
With Rogan's business in hand, Hollister ditched Freight Access. Envisioning a way to optimize freight procurement and give manufacturers real-time visibility into their supply chains, he advertised for a programmer on Craigslist, and heard back from Jason Swanson. Swanson was impressed with Hollister--"He's able to see the angles in so many ways"--and got to work building a platform that integrated directly with shippers' and carriers' systems and used machine learning to make sure every shipment went out for the cheapest possible rate. It automatically reconfigured containers--consolidating multiple pallets into a single truckload, say, to allow for more direct routes--thus dramatically reducing the work of tracking shipments. And it saved companies that spent from $5 million to $100 million annually on freight an average of 26.7 percent on such costs.
Results like that pretty much sell themselves. Which is helpful, because so far Hollister has been too busy building the platform every shipper in the world wants to hire any salespeople.
"We haven't even really started building the company yet," he says.