Mark Buffington was stunned by the purity of the pitch. And even more so by the kid making it--a student presenting at Georgia Tech's Create-X program for aspiring entrepreneurs. The managing partner of Panoramic Ventures in Atlanta, Buffington had heard a million pitches during his career as an investor.
This one was special. "Simplicity is really hard to obtain," he explains, "and the way he articulated the solution was so elegant I thought, 'This is going to be a massive winner.' " Buffington knew immediately that he wanted in.
That Georgia Tech student was named Sean Henry. And what he outlined that day in 2016 was the concept behind Stord: a cloud-based distributed logistics platform designed to connect companies in real time to the hundreds of thousands of nodes that constitute the nation's supply chain. That includes disparate and disconnected manufacturers, suppliers, retailers, third-party logistics providers, freight forwarders, warehouse operators, freight brokerages, truck drivers, and ultimately you, the customer.
With his co-founder and CTO, Jacob Boudreau, what Henry envisioned wasn't so much a supply chain company as it was a supply change company--a single distributed network that would allow customers of all sizes to shape-shift, to expand or contract their warehouses on demand, for example, without having to build their own or enter into long-term contracts with third-party logistics companies. Essentially, Stord can form an orchestra from scattered soloists.
In many industries, disrupters compete against the established order. Such order didn't exist in the logistics space. "More than anything, they were competing against no one," says Daley Ervin, the managing director of Engage Ventures, a venture platform for some of the largest corporations in Atlanta and an early investor. "When you go into an industry that has nothing, whatever you build is better than sheets of paper and faxes. They were competing against sticky notes."
For Henry and Boudreau, their 20-something ages and their grand vision might have been, to some, their biggest barriers. Unencumbered by industry experience, they set out to create something revolutionary.
If you've tried to order dumbbells, lawn furniture, or even a Chevy Silverado in the past 18 months, you know one thing, for sure: that the global supply chain has been bonkers. The pandemic has exposed the fault lines under such concepts as just-in-time manufacturing and global sourcing. A chip shortage in Taiwan has hobbled automobile production in Michigan and Mexico; a shipping container shortage in Hong Kong has slowed the delivery of all manner of goods; when ships do arrive, they overwhelm ports on both U.S. coasts. Once goods are unloaded, a shortage of trucks and truck drivers exacerbates the slowdown.
That has spelled opportunity for a number of Inc. 5000 companies. At Emerge (No. 530 on this year's list), Andrew Leto is applying technology to connect shippers with carriers in a segment of the industry that has relied on emailed spreadsheets. Today, even large companies don't know how much capacity is available on any given day or for the next month; they send out email blasts asking for RFPs. To solve for that, Emerge has created a platform to allow different segments to have a real-time view of available trucking. It's Leto's second, logistics-based Inc. 5000 company--he also founded GlobalTranz, which made the Inc. 5000 in 2008 (No. 326), 2009 (No. 175), and 2010 (No. 724).
In Jackson, Tennessee, specialty hauler Iuvo Logistics (No. 446 on this year's list) is growing fast by keeping truckers happy. Instead of the traditional pay scale of 50¢ a mile--or nothing if a shipment is delayed by, say, bad weather--Iuvo guarantees them $65,000 annually plus benefits and incentives that can add $13,000. No one works weekends. In a field where the turnover is 100 percent every 36 months, employee attrition is just 9 percent. Co-founded by James Dowd, whose previous two logistics companies got wiped out by a hurricane and the Great Recession, Iuvo landed at No. 310 on the 2019 Inc. 5000 and at No. 246 in 2020. The company now owns 40 trucks and is on the way to 100 by year end.
As the pandemic has unfolded, traditional retailers have been forced to accelerate their shift to e-commerce. That's easy to do on the order- taking side, but not on the fulfillment side. "These companies are configured for truckloads," says Henry. "Pallet in, pallet out. Now the problem is: How do I reach end customers versus a truckload to a partner once a week?" Most companies don't have the capital, or desire, to build out their own multichannel distribution systems. "That's where we come in," says Boudreau. "We can provide that deeply integrated supply chain without their having to build and own all those assets."
There was another large force in play for Stord: the flourishing startup network in noncoastal Atlanta, one that has continued to attract capital and talent during the pandemic. Just like the coastal versions, Atlanta's ecosystem is anchored by the presence of a major research university in Georgia Tech. The ecosystem includes large corporations--Coca-Cola, Home Depot, UPS, Delta Air Lines--that can serve as investors, advisers, and customers.
Stord, No. 42 on this year's Inc. 5000, is a product of all that. Henry and Boudreau met at a startup conference in Atlanta and found that their skills offset perfectly. "Sean was heavy on the business side and knew enough technology to be dangerous," says Boudreau, the code jockey. "I had the opposite: I knew technology and enough about business to be dangerous."
Both men had first encountered the supply chain as users. As a student, Henry had a side gig selling electronics, automotive parts, and cleaning supplies. Boudreau, too, was an online seller, but when friends kept tapping him for support for their own online ventures, his coding chops won out. That blossomed into a business designing inventory management and workflow systems, but he wanted something bigger. "Ultimately, I wanted to focus on a product of scale, beyond a one-off project," he says.
Scale loomed larger in Henry's eyes when he went to work for a German auto and industrial parts firm called Huehoco Group in 2015. In Düsseldorf, he contributed to projects such as process-flow optimization to reduce labor costs. But when the company tried to apply the same approach to inventory reduction modeling across its global supply chain, he ran into a problem. There were warehouses with inventory and software to manage the inventory, but not in real time. "You can't get an active picture because it's not agile," he says. "We didn't have a network. It was all one-off." Much like astronomers looking at stars in distant galaxies, he was peering into the past.
Coupling the physical assets and the software could create visibility and efficiencies. Pooling $10,000 in 2016, and living on a ramen diet, Boudreau headed to his office--his parents' couch--to noodle the code while Henry began pulling the business plan together.
That idea is exactly what had dazzled Buffington at Create-X--though it was not Buffington who funded it. He blew the deal. "I went over to Henry and said something like: 'Holy crap, this thing is awesome.' I think I scared him to death," he says, laughing.
It was, in fact, another presentation attendee, Create-X co-founder Chris Klaus, who ultimately provided Henry $200,000 in seed money. Then it was off to an accelerator program at Tennessee's Dynamo Ventures, which specializes in incubating and investing in supply chain and mobility startups, and, along with Engage, was a seed investor. In 2019, Dynamo took a piece of the company's $12.3 million A round, led by Kleiner Perkins, as did Steve Case's Rise of the Rest fund.
Henry topped off the year by collecting $100,000, and some more tutoring, after being selected as a Thiel Fellow, which is funded by that Thiel fellow, Peter, co-founder of PayPal and Palantir. A recent $65 million Series C round brought the company's total funding to $100 million--and a valuation north of $500 million.
The smart money, in every sense of the word, was betting on Henry and Boudreau, but like many startups, Stord had a difficult time making inroads. The people who run warehouses are not to be confused with fashionistas looking for fresh young faces. The sight of two guys who looked like they just got out of high school selling them a three- dimensional logistics model didn't translate to instant sales. "Ultimately, supply chains are a high-trust industry," says Boudreau. "In the early innings, delivering those proof points was difficult."
The pandemic has proved their case.
Today, Stord's software hovers above the supply chain like some all-seeing drone, allowing any business to see it and connect to it through a single dashboard. Suppose your company wants to warehouse a pallet of goods for 30 days in Des Moines. Next month. Stord can scan its network of 600 warehouses and 30,000 truck carriers and find the slot for a specific time period. The industry was never set up this way; it operates largely on three-year contracts. "In general, we've seen different models play out across different industries, of taking latent and excess capacity and turning it into an open marketplace," says Boudreau. One of those models is called Uber.
Prior to Covid-19, the supply chain seemed, to most consumers, efficient. And it is when we order from Amazon or Walmart. Stuff gets delivered relatively quickly, even overnight, because those large companies are horizontally integrated--from Amazon's somewhat notorious warehouses to its airline and delivery fleets. In the past decade, as consumers began to apply more pressure on companies to deliver like Amazon, those firms often opted to use more third-party logistics providers for order fulfillment, eventually dispersing products across dozens if not hundreds of them. "Once they get into the third-party logistics space, they lose visibility. It's a big struggle for them," says Henry. "What inventory is where? They are making decisions off of lagging data."
The lack of visibility was Stord's opportunity, but how do you tie all these various third-party providers and their warehouses together when they are all using a jumble of software--and acronyms--to track items: warehouse management systems (WMS), inventory management systems (IMS), some of them tied to enterprise resource planning (ERP) systems. Some used an electronic data interchange (EDI) protocol to exchange data, others an application programming interface (API). One customer was still using Excel spreadsheets.
Boudreau and his team cranked out iterations over a couple of years to devise an interface that could make this babble of supply chain software--and their acronyms--completely interoperable. Applying what's known as a canonical data model, they created a flexible integration layer that can translate any data system, from your online shopping cart to a warehouse running a 20-year-old WMS. "It's only once the pieces become connected that you can solve for the core problems," says Henry. "From the point of manufacture to the last mile, you can now solve for whatever inefficiencies arise."
Take Home Depot. The company runs its own warehouses and is great at the pick-and-pack fulfillment of nuts, bolts, household goods, and other small items. But bulky, low-volume items such as replacement doors can now be sent to a third-party logistics provider while still giving Home Depot complete knowledge and control of the inventory. Likewise, if the company wants to run a promotion in 10 cities for a month, it can forward-position inventory in those cities to get it closer to customers, which saves on last-mile shipping costs.
For companies with less-extensive distribution capabilities, Stord's strength is in using its software to identify the best place to stock merchandise in such a way as to minimize the cost of getting one item to one customer in any part of the country, a process that begins with the truckload out of the port or factory and ends at your address. (The company's first customer was a Chinese solar panel maker.) For some companies, that may mean grabbing more space in Portland, Oregon, and less in Portland, Maine--and then having the ability to quickly reverse that if sales patterns change. It's the flexibility that matters. "We are built to help retailers and e-commerce brands deliver faster than they are able to do on their own," says Henry. And that allows them to become omnichannel distributors, an important capability during the pandemic.
At its core, Stord's version of supply chain optimization means getting billions of decisions correct about how stuff is delivered to us in this omnichannel world. Amazon has had a 20-year head start on everyone, but Stord's promise is that its network can offer Amazon-level logistics to everyone-- democratizing the playing field. Indeed, Stord now offers small companies Amazon-like efficiency: two-day delivery in 99 percent of the country, and one-day delivery in 90 percent. "Expectations have gone up tremendously," says Henry. "There's been no way for businesses to expand their supply chains to match consumer demands."
Boudreau likens supply chain democratization to app development. Before the cloud, creating an app demanded tons of processing power and millions of dollars. "Today, you can have a kid in their dorm start an app that's used worldwide," he says. Stord's bet is that the same thing can happen in the supply chain. "Democratizing the capability allows early-stage companies to get that same access; so you can unlock a lot of value to the end consumer."
Stord's logistics engine is currently aimed at the broad, commodity end of the industry. But Henry and Boudreau envision themselves pointing that engine further upstream and down to other disconnected parts of the supply chain: ocean shipments and cold-chain distribution, for instance. The company bought a truck brokerage last year. Stord is also opening a 386,000-square-foot warehouse in Atlanta, which will integrate leading-edge robotics and automation technology. The warehouse will also serve as a logistics lab. The company calls this end-to-end strategy "port-to-porch."
Customers are clearly buying into that vision. Stord hit a run rate of $100 million this year, with revenue increasing 350 percent over 2020. How big can it be? As Ervin says: "This is going to be one of the most important companies to ever come out of Atlanta. It has the potential to be a $10 billion company."
Capitalizing on the logistics industry's inefficiencies would never have been possible without an inexperienced student testing a bold thesis--that the global supply chain was mostly a series of badly or unconnected links. "It was what I perceived to be a total blue ocean market," says Buffington. "Nobody was taking that approach." Now someone is.