The increasing primacy of e-commerce ensures that logistics and transport companies are well-represented on recent Inc. 500 lists. (Indeed, last year's top 10 featured two firms that serve that space, including the No. 1 company, SwanLeap.) That opportunity has drawn lots of new businesses. So how can you succeed amid all that competition? Matt Pyatt, the co-founder of Arrive Logistics--which brokers vacant space in trucks for clients like Kraft and Pepsi--knows how his company cracked the 500 this year: It all comes down to the math. --As told to Una Morera
I love numbers.
When I'm driving down the highway going 47 miles an hour, if the closest city is 57 miles away, I'm going to calculate exactly how long it will take to get there.
When you're very numerical, you're very logical. I'm not very emotional and that's definitely one of my issues, especially in my relationships. People hate to hear statistics.
At 13, I played video games competitively--there were teams across the world that would play each other online. At that level, you need specialty machines to compete. That got me into building computers.
At 15, I was hired at Circuit City as seasonal help in the CD department. That Christmas, I was the No. 1 sales rep--in the computer department. I wasn't supposed to be selling them, but the departments were connected, so I'd wander over.
In college, a friend convinced me we'd learn more starting a company than going to class. Right or wrong, I kind of bought into it. We started Miami Muscles, which sold supplements across the country through people we'd known growing up, who'd make commissions by selling on their college campuses.
Then we found a handheld portable mixer that instantly dissolved protein powders in shakes. We rebranded it the Vortex--and quickly realized selling it was better than selling supplements. We partnered with a company called Nutrabolt, which had relationships with big retailers. I brokered the distribution rights, and earned a per-unit royalty while still in college.
I convinced myself that I was going to be this really big entrepreneur at a very young age. But when I was a senior, we started having some issues with our manufacturer in China--the units were becoming defective at an alarming rate--and Vortex fell apart.
After graduation, my fraternity brother Eric Dunigan persuaded me to join him at Command Transportation, a freight brokerage company in Chicago. To be honest, at the beginning, I didn't know anything about transportation. But we lived together, and soon we were joking that we would be able to do this on our own.
Then the co-founders of Nutrabolt--Manish Patel and Doss Cunningham--called us from Texas. Manish said, "We're looking to make investments in young, aggressive entrepreneurs. We would love to do something with you."
I thought, "We could build a freight company using Nutrabolt's domestic freight." If you have a large customer that's going to guarantee you business on day one, it will lower the risk of your business plan. It made the choice a lot easier for us--and the timing was right.
The conversation started in October 2013. We spent the next few months pitching them on the amount of capital needed and what the projections looked like, and Eric and I put in our notice in January. We had a six-month noncompete, so we spent that time getting everything ready.
We made plans to move to Austin, because our investors said, "You're 25 and 26. We'd like you to be a little bit closer." We decided to bring around five people from Chicago with us. We wanted a team for day one, so that we could hit the ground running.
That May 13, I'm driving the largest U-Haul you can rent, in a school zone. I'm paying attention to that, and not paying attention to anything else--and I hear this explosion.
I'm stuck under a bridge, and I've basically ripped the top off of the U-Haul. We were there for three hours. We had to deflate the tires all the way to get unstuck. That's when Manish joked, "I don't know if I should be investing in you guys for a transportation company." And why I joke that that's when we decided not to own any big trucks, and instead be a nonasset-based broker.
Nutrabolt was 70 percent of our business in 2014. In 2015, it was 13 percent. This year, it will be less than 1 percent.
Have you seen Moneyball? We do the exact same thing, but in sales and transportation. We have data to support the performance of every individual. Every month our model gets more accurate as we add more data points from each employee. As long as we continue to hire well, train people, and retain them, then the metrics are going to come true, right?
We've simply taken an antiquated industry and applied decent math to it.
The Logic of Logistics
The Bureau of Transportation Statistics' Transportation Services Index for U.S. freight this May--the most recent data available at presstime--shows some slight softening from recent peaks, but still clocks in near this century's all-time high. Which means there are a lot of trucks on the road--and connecting carriers with shippers continues to be a challenge on a scale that trucking hasn't seen before. The industry remains fragmented: There are only a handful of major carriers with large fleets; most carriers have six trucks or fewer--and e-commerce-stoked demand for faster and better shipping continues to mount. This creates a huge opportunity for companies like Arrive Logistics. "The industry is an $800 billion market, and we haven't even scratched the surface," says founder Matt Pyatt. "Not all businesses have the ability to build a math equation like that."