#23 Benefits of Combining Information Technology and Logistics
Episode #23 of Students vs. Startups takes our graduate students to a brave new world: logistics. The business problem is getting price estimates for international freight shipments. This is a business that has been based on paper since the beginning of time. Our Startup, Somil Desai the CEO of Shiply, thinks he as a better solution.
Two student participants are candidates for a master’s degree in Technology Management from Georgetown’s School of Continuing Studies. Jennifer Lee and Rahul Bhardwaj are the ‘wannabes” and Maura Imparato has earned the degree.
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“Freight-sourcing. . . it looks like in some processes such as logistics it’s just not been developed,” Somil Desai, CEO and Co-Founder ShipLync
“So we started developing ShipLync for our own internal use,” Somil Desai, CEO and Co-Founder ShipLync
“We are looking to raise an additional $500,000 this year to hire more employees,” Somil Desai, CEO and Co-Founder ShipLync
If you enjoyed this podcast, you may want to listen to #12 from SeamlessDocs,
How Can I Improve Forms Management?
Another similar podcast #20 was the interview with Manu Smajda frommPower Financial – How is innovation applied to the world of student loans?
Transcript for Somil Desai from Shiplync
about a 19 minute read
John: Welcome to Students vs. Startups showdown on the Potomac. My name is John Gilroy and I’ll be your moderator today. We’ve actually finished 22 episodes. We’re starting episode number 23 believe it or not. Let’s have a round of applause for 23 coming up. Yeah. Great. We’ve got a room full of people here. People who have heard this podcast before know we have a room at the Eastern Foundry and we have three students on one side, we have a startup on the other and let them have at it and have a few questions, and after we’re all done everyone walks out of here as friends and has a good time.
Let me introduce my students. On the one hand we have three students. Two of them are in the middle of completing a Master’s Degree at Georgetown and one is actually a success and has completed the Master’s degree. The first student we have here is Rahul Bhardwaj. Rahul, tell us about your background please.
Rahul Bhardwaj: Sure. I’m a graduate student at Georgetown University. Second graduate degree. I work across various fields in telecommunications, data analytics and what have you. I’m also partner in a holding company that focuses on technology commercialization.
John: Wow, very, very experienced. And Jennifer, your background please, Jennifer Lee.
Jennifer Lee: Hi, my name is Jennifer Lee. I am currently a student at Georgetown trying to get my Master’s in technology management. I also work full time at PricewaterhouseCoopers in their public sector digital solutions team.
John: And I have to warn you, she has a lot of letters after her name. She’s got like PMI and ICP and CSM and all kinds of letters, so that means something. I don’t know what it means, it means something. People’s letters after their name mean a whole lot. The letters she’s trying to get in Master’s degree from Georgetown. Maybe she’ll add that to her long list of degrees. So these are two wannabes. We have actually a graduate and her name is Mara Imparato. Mara, a little bit about your background please.
Mara: Hello John, I’m happy to be here and I finished the Master’s program and went on to a doctoral program as well. And I lectured at Georgetown, I worked as at IT manager for almost 10 years and I’m also starting up my own IT management consultancy and looking for that next big contract.
John: Well, wonderful, wonderful. Those are our students and our startup is on the other side of the table. And our startup, the company name is called ShipLync and our guest is Somil Desai. Somil, how are you?
Somil Desai: I’m doing good, how are you guys doing today?
John: You’re gonna have you hands full with these students on this side of the table, aren’t you?
Somil Desai: I think so, but I think I can handle it.
John: Yeah, I’m sure you can too. Tell us a little about your background please.
Somil Desai: Sure, so again, Somil Desai from ShipLync from Columbia, Maryland. Did my undergraduate degree from the University of Maryland, Baltimore County in information systems. Then went on to start my career at Verizon Advertising Solutions, which then led me to do a dual Master’s degree from the University of Maryland, University College. Started with AT&T Interactive then went on to shipping logistics from there on.
John: So you’ve got some letters after your name too, huh?
Somil Desai: Not as many as Jennifer but-
John: It’d be the battle of acronyms or letters or something. So I’m gonna just ask you a real quick question. ShipLync means many different things, so what business problem does your company solve?
Somil Desai: So we are solving the antiquated process of sourcing freight quotes in the real-time market. A potential shipper that is hauling 40,000 pounds of product in a domestic market can utilize our platform to compare rates from a number of brokers, vetted service providers, in real time.
John: You know, it’s interesting. Jennifer, I’ll let you jump in here, ask the first question please.
Jennifer Lee: Yeah. So I know that one of the articles I read was that you guys started out with 1776 and I believe you guys were hoping in addition to kind of solving the problems that you mentioned in the commercial world, you guys are also hoping to partner with the government agencies. Has that partnership begun or where do you see that going?
Somil Desai: Sure, so I’m actually glad that you asked that question. Recently, about two weeks ago, we did have a meeting with the Department of Transportation where there are a number of programs in place that they are looking to add additional technology to their freight-sourcing platform. You would imagine the government has the highest of the technology developed already, but it looks like in some processes such as logistics it’s just not been developed. So the talks are there. We actually have another meeting coming up in about two months where we will be giving a two hour presentation to the entire DoT board for domestic trucking, export, and rail. So we are preparing and looking forward to that.
John: Mara, please, a question.
Mara: I think it’s fascinating that you’ve got a potential already. That’s fantastic. It sounds like you developed your product under your own company, maybe under your own funding, so can you tell me more about how it got started and funded and how you researched it.
Somil Desai: Sure. So in about 2011 I started with our family company called Niche Polymers. The core company is into plastics engineering and recycling, typically dealing with overseas clients and the major chemical producers such as DuPont, SABIC, Eastman, Honeywell, and many of the, again, producers in Delaware, Pennsylvania, these areas. So we take all their byproduct scrap and ship it overseas and/or to our domestic customers so you can imagine the amount of freight that is involved in just moving around the shipments from point A to point B. So organizing the freight from one warehouse to our warehouse in West Virginia and coordinating it overseas.
We needed a better way to source rates from the open market with more options. Until a few years back we had one lady that would send out an email to a few people on her Microsoft Outlook list and whoever was the best rate, that’s who she would go with. When she left, I jumped in and realized that, hey, I need more options and I need it fast. So we started developing ShipLync for our own internal use. Took about a year, year and a half, once we realized the value that it really had and how much it had saved us money, I then took on the challenge to commercialize it.
John: So Rahul, I think a lot of organizations out there have old-fashioned systems trying to bring them up to speed. Sounds like that’s what they’re doing here, huh?
Rahul Bhardwaj: Yeah, absolutely. Very unique and very interesting business model, and congratulations to your success. Putting the technology management hat on, really trying to understand the basics of the platform itself, and really understanding is it a software as a service model? How do you plan on onboarding clients maybe that exist and then ultimately can you walk through the set of solutions in its own right?
Somil Desai: Sure, so your first question as far as the software as a service model. This is software as a service model. We built it around that platform so customers don’t have to worry about actually installing it in their systems. They can easily just go to the site, sign up, and they can start using it right away. Even before signing up, they can actually go to our landing page and actually plug in the information they need, and without fully finishing the sign-up process they can start to receive quotes in real time. What we’ve seen is that a lot of people just hate filling all of the information out, but they want all the answers right away, so we’ve kind of given them that teaser, and the moment they want to go ahead and confirm a quote, we then get all their information. However at that point they’re already sold.
So as far as onboarding, we’ve been doing a lot of Google Analytics, Bing, Yahoo, AOL. I enjoy it so I’ve bene doing it myself, playing around with a lot of the keywords, understanding my CTRs, my conversion rates. I’m able to then dissect which keywords have been working best for our platform and utilize that to then onboard the internet traffic and get customers involved.
John: CTR, click-through rate. So Maura, this sounds like the Expedia of logistics, doesn’t it?
Mara: It really does. I’m very interested to know, are you interested in scaling it up and investing marketing time? Sounds like you already are playing around with that. And is it a big priority for you?
Somil Desai: Yes, right now it is 100% full effort. We are in a fundraising mode. Last year right at the end we did raise $120,000. We are looking to raise an additional $500,000 this year to hire more employees, invest into proper marketing channels, attending trades shows again is a big cost right there. So these are the outreach programs we want to invest our money in. As far as developing additional technology, we don’t need to do that, so right now it’s just kind of real focused on marketing, customer acquisition and growing from there.
John: You know, Jennifer, we’ve had visitors in the classroom talk about investing and percentage of ownership. It’s a very tricky maneuver, isn’t it? Maybe you want to ask a question about investments here.
Jennifer Lee: Yeah, definitely. So in terms of investing in your team and also kind of making sure you have the proper funding to continue to scale, one, are most of your teams based here in the US and kind of two, the second question, in terms of scaling up, do you have the right strategy to do so in terms of making sure you have the talent to scale up?
Somil Desai: Sure. So your first question with our team. Our team, we have five guys in house, a couple customer service guy and one guy who is our in house visual design. He designs all of our ads, our graphics, anything for social media. He now does our video design, so if we want to do any kind of visual marketing, he can design that. Once we start doing trade shows he’ll be designing all of our booths, our posters, souvenirs, things of that sort.
As far as equity compensation is concerned with the employees, what I’ve learned and this is coming from a lawyer from Cooley LLP, is don’t give out any equity unless you have to.
John: This is what we talked about in class. This is the tricky part here.
Somil Desai: Pay everyone if you can up front. And don’t ever promise any equity. Because when a bigger institution comes down the line, that’s who you’re going to give it to, and you can’t promise anyone right now because again, starting a startup, you’re always going to be uncertain and that uncertain feeling is always going to remain with you.
Rahul: Sure, okay, so another quick question kind of in line with the long term growth plan, given the fact that you have a digital offering and you’re basically finding market efficiencies within an antiquated system. Let’s call it shipping, where a lot of stuff is on paper. This process of creating this digital platform and having all of this data traversing through your platform and this notion of Big Data and all these gimmicks, I guess you can call it. How much of that data do you see as actually monetizable, that can improve the operation efficiencies, but how can you actually market that data, and is that data meaningful? Ultimately, since you’re offering this solution set, does that play into the growth strategy?
Somil Desai: Sure. I’m glad you asked that as well. You would be surprised. A lot of the registered signups we get, a lot of the data that comes across is bad. I would say everyday if we get maybe 15 or 20 signups, maybe 4 or 5 are good. So you always want to think about that. You data, most of the time it’s going to be bad. But the ones that are good, then you quickly capitalize on that right away. For instance, when we have shippers that sign up with us, or run a freight quote without finishing our registration process, our system will automatically email them the following, because we already know they got four or five good quotes, and a lot of times they come back, they sign up, and then they go ahead and confirm their rate and then we get paid.
And the way we get paid is, we have all of these service providers’ credit cards on file, so again we don’t need to go around chasing people, calling debt collectors, all the invoices. Everything is credit card based. Let’s say someone like FedEx, if they go ahead and they approve that lane, we charge their credit card right away. So for every transaction, we get a certain cut and it comes straight to our account.
John: Now if people want to find out more about your company, Somil, what website would they go to?
Somil Desai: Sure. So they would go to ShipLync, and that’s S-H-I-P-L-Y-N-C dot com.
John: Great. Pretty interesting website too, very interactive. The founding sponsor for Students vs. Startups in the Radiant Group. If you enjoy solving problems and like to work with bright people, the Radiant Group is the place for you. Contact Al Di Leonardo or Abe Usher at radiantgroup.com. We are hosted by Eastern Foundry, a community of government contractors who are bringing innovative solutions to the government marketplace. For more information, go to eastern-foundry.com.
Welcome back to Students vs. Startups showdown in the Potomac. My name is John Gilroy, I’m your moderator here. You know our students. We have Rahul, Jennifer, and Maura. And you know our startup, Somil Desai, and his company’s called ShipLync, S-H-I-P-L-Y-N-C. You know, you’re in the Washington Post, you’re in all the business journals. You’ve only been in business a couple years. You must have some pretty good public relations people working for you. You’re getting the word out, aren’t you?
Somil Desai: You know, we’ve attended a lot of networking events. I’ve been very fortunate to meet some pretty good people over at Dingman Angels, Tedco, a few other organizations such as 1776 and it’s just kind of keeping those relationships alive. We got a lot of through the female showcase of the Vinetta Project here in DC which Serena was a part of last year, and she won the $20k challenge over there.
John: Your wife.
Somil Desai: My wife, yes. From there we met a lot of interesting people who just keep floating our name around, keep the introductions going. We have a very good CFO as well, Zachary, who’s with GSP Financial. If you haven’t heard of him, he’s I guess a tech startup CEO. Your outsourced CFO solutions. And he’s been introducing us to a lot of people, just keep the conference calls going every day, and just keep following up. People talk, one word leads to another, and-
John: You get invited to a podcast?
Somil Desai: And get into a podcast. Get into the Washington Post. We were in Baltimore Business Journal as well.
John: So Maura, my question: you’d like $20,000 from a women’s group, wouldn’t you?
Mara: Sounds pretty good. Good job.
John: You have a question for Somil please?
Mara: Actually I have a question about your history a little bit. You started out in information technology, something I’m familiar with, and you ended up shipping plastics. How did you make that transition?
Somil Desai: Sure. When Serena and I got married is when we … It’s her family business. It’s been very big for the last 30 years, and so when I joined with Niche Polymers, which is one division of the entire organization and there’s about 23 plants total, so I joined with Niche Polymers. And then I was selling plastic to our overseas customers in China for automotive specs dealing with Ford, Chrysler, GM, Volkswagen, for under the hood engine covers. So shipping that raw material overseas, picking it up domestic, that it how I got into logistics.
Mara: So family business. Is this something new to your in-laws to do information technology and develop this app that you have?
Somil Desai: Yes, this is very new. It was new to them because right now our entire organization is all manufacturing. They come from a background of manufacturing and importing, exporting material. They’ve been very good at it and successful for the last 30 years, so introducing this type of technology to it, it’s been something new. However, we’ve made it efficient, it’s worked for us, and now we’re excited to see what will happen.
John: So Jennifer, it sounds like the new kid in the family’s gonna change everything. Do you have a question for our guest here?
Jennifer Lee: Yeah. I think during break, we kinda mentioned this is awesome territory to go after, but there is a lot of competition. What do you think, if you had to say one differentiator of your platform and product, what would it be?
Somil Desai: Sure. So the differentiator between us and a lot of our startup competition right now is we actually house all of the competition under one roof. So I’ll give a couple examples. Loadsmart.com, Transfix, cargochief.com, these startup tech logistics companies offer a single rate platform, where in our system, because it is a real time community, we have all of these companies bidding at the same time. So a shipper will get bids from all these companies, and they’ll see the names, they’ll see the numbers, and they’ll see actually who is really trying to give them a fair market rate, who’s trying to rip them off, who’s trying to get over on them, and who’s being fair. And they can make their decision based on that.
It’s also, we have a “Yelp” review section sort of, where customers can then rate the service providers and say hey, this broker’s great, work with them, or this broker will run away with your product. It’s been working on our platform because for example a service provider will charge $1,000 but has no ratings, a guy who’s charging $1,200 but has a five star rating, the customer will still pay the extra $200 because guy that has five stars, even though the guy that has no stars is still good but he has no ratings.
Jennifer Lee: Are you giving users any incentives to provide their feedback? Because I know a lot of the consumer industry out there, they say, “Provide your feedback and win a chance to get like a $500 gift card.” What are you incentivizing, or are they truly just wanting to provide their …
Somil Desai: Sure. I’ll go back to Rahul’s question about outreach. One of the biggest ways that we are actually retaining and getting more customers is through our invite section. What I did originally was send out a $50 Amazon gift card to all of our customers that are signed up with us as long as they brought on one customer that used the platform, signed up and confirmed a lane. And our system tracked that and I sent out a bunch of $50 Amazon gift cards and it worked.
John: Rahul, sounds like an unusual business for the Washington, DC area does it? More like LA or Chicago I think, huh?
Rahul Bhardwaj: Yeah, no, it’s absolutely interesting. There’s no major coast in sight. Maybe the Baltimore harbor. I understand you guys are based in Columbia-
Somil Desai: Columbia, yes.
Rahul Bhardwaj: Columbia, Maryland so there might be some touch points there. But on that note, why the identity here in this location? But then the other thing that I was going to ask, following up, is you’re creating a logistics ecosystem it sounds like where you can start onboarding your competition and other best practices let’s say and have one real marketplace. So that’s a very unique adventure, very ambitious. I kind of think, let’s walk the cat backwards. What’s the, I don’t want to say 1,000 day exit strategy ,,, What’s the game plan? How far are you willing to push the bubble to see where this thing will go and what are some short term milestones for a new business and really evaluating new modules?
Somil Desai: Sure. So right now we are fortunate enough to have this kind of idea where we can play around with different modules, see where our niche really lies and what works and what doesn’t. And because of our tech team being so effective and fast, we can change different modules in the system to adhere to what the customers like. That is kind of a short term goal over the next two years is to grow it that way. Eventually, like everyone else, we want to exit and have a successful exit, sell out to someone bigger such as a C.H. Robinson, XPO Logistics, these multi-billion dollar logistics companies that could utilize our tech or just want us out of the market, whatever the case may be. I don’t plan on holding it long term for 30 years and passing it down, since tech is always advancing. So I’d rather hold it for five years, have a successful exit, and then start something new.
John: Mara, you seem to be an expert in Agile software development. He used that magic word ‘Agile.’ Very, very easy to talk about Agile, very hard to actually implement it, isn’t it?
Mara: It’s true. I wonder how your team works. How did you find the people who are on the team? How do they run their daily operations with Agile methodology?
Somil Desai: Sure. So a lot of our engineers in India in our Bangalore office actually did their Master’s degrees at University of Texas. They actually lived in Columbia, Maryland for five years before moving back to India. I knew them personally beforehand. So knowing them, and kind of growing up with them over the last ten years, them wanting to go back just created more of an idea for us, an opportunity where, other than developing software, we could utilize them for other components of the industry as well. So for the last five years it’s been working out wonderfully.
Mara: Actually, as a follow up, how do you do your daily stand ups that you need to do with Scrum? Do you have your conference calls instead, or how do you do that day to day?
Somil Desai: Sure. So every morning at 8am we have our Skype conference call, so we log in, have our call for about two hours every morning. So between 8-10, we know what’s going on, what changes were made while we were sleeping, what updates need to go on, and kind of what the track record is for the next week or two weeks, and what the goals are and what looks to be completed. As far as any communication … With global outsourcing, a lot of people think there’s a communication barrier, especially when it comes to India and these other countries with the languages. But seeing as how they’ve grown up here, going to school here, lived here in Columbia, the culture difference, they understand the American way. And I know them too. So them dealing with us, it just works out.
John: Rahul, I think I interrupted you the last time. You have a question here, please.
Rahul Bhardwaj: You talked about the objective function is to have a successful exit. Your next round of funding is $500,000. Are you looking at institutional investors? Are you looking at private equity, or bootstrapping, or are you willing to give an exchange for equity or convertible bonds? What are you looking at?
Somil Desai: Convertible bonds. That’s always the safest and the best route to take. Considering we don’t have an official pre-money or post-money evaluation yet, it’s always safe to go the convertible route.
Rahul Bhardwaj: When’s this round of funding gonna start?
Somil Desai: We started. We are talking with VCs, potential investors, and as you know that game can go on forever. But hopefully before the end of the year something significant will happen.
Jennifer Lee: Yeah, so you mentioned the goal with this is to execute in the next five years and then maybe start something new. If you were to start a new company, what would you do differently?
Somil Desai: That’s kind of hard to say because I’m learning everything as we go, but most importantly is the team. You want to make sure that you get along well with everyone, everyone is on the same page. It’s easy to assume that in the beginning you’re going to be successful and start fighting over equity and then disrupting relationships and everyone kind of fighting over something before it’s even begun. So I would say have a clear path, have everyone on the same page, and make sure you know what is the worst case scenario.
Maura: Well on that same note, how do you keep your team motivated? You to start out with that great high up goal of succeeding, then you’re thinking about equity, fighting over it, but you’ve got to work every day. You’ve got two shifts, people working on two continents, how do you keep that team motivated?
Somil Desai: Sure. So from the India team side, these guys are just dedicated engineers. Regardless of the fact they love what they’re doing, they love what they’re building, because even in India, logistics right now is hot. So them also hearing about in America, but also hearing about it in India, that ecosystem is there so they’re really thriving upon it every day because they can go to their networking events or whatever they’re doing in Bangalore, which is kind of the Silicon Valley over there, and they can speak to it.
John: Somil, if people listening to this interview want more information, what website can they go to to get more information about your company?
Somil Desai: Yes, they can go to shiplync.com and that’s S-H-I-P-L-Y-N-C dot com.
John: Well Somil, unfortunately we’re running out of time here. If you like the podcast, give us a review on iTunes. I’d like to thank our founding sponsor the Radiant Group, our host, Eastern Foundry. Signing off from atop a nondescript building in lovely downtown Rosslyn, Virginia, I am John Gilroy and thanks for listening to Students vs. Startups showdown on the Potomac.