Our founder, B, had the chance to sit down with Justin Bailey, host of the podcast Freight Famous, to discuss everything from Denim's background to factoring to how today's economic environment is shifting the freight brokerage industry.
Watch the whole interview below or read the highlights here!
The podcast's goal is to interview thought leaders in the space that are helping to build, scale, and automate trucking businesses. Here are some of the topics B and Justin discussed.
How is Denim Doing Today?
After spending some time going over B's background, Justin asked how Denim was doing and B was happy to point out some of our powerful statistics, such as:
- 0 cumulative loss rate for the year
- 0 loss rate so far this year
- We collected on every penny of the $100 million we have put to work which is unheard of in this industry
- We are processing over $10 million a month of invoices
- NPS score of 70
- Our team is over 70 people and growing
We are really proud of these accomplishments and are excited to grow even more.
What Type of Freight Brokers do you Work With?
Next, Justin asked B what type of freight brokers we work with and he shared that the vast majority of the approximately 20,000 freight brokers are doing less than $25 million in revenue and this is who we service. At Denim, we have clients who are really tiny startup brokerages and we have clients who have been around for 5 or more years and are making millions of dollars a month in revenue. Through our platform, we are able to service both of these segments.
How do New Freight Brokerages Manage Their Cash Flow?
In the past, one of the biggest struggles for new brokers has been managing cash flow because they had to wait for the shipper to pay them, to then pay their carrier.
Today, that dynamic has changed because more and more carriers are expecting quick pay which a lot of startup freight brokers can't afford until they get paid. With Denim, we help solve this problem by paying the carriers directly. This is a win-win-win scenario because:
- We make payments directly to the carrier, which helps eliminate their risk and the risk for the freight broker
- The freight broker doesn't have to worry about payment processing, mailing out a check, or other back office operations. We do it all for them.
- The carriers get paid immediately, which makes them happy and helps build trust between brokers and carriers
This system not only helps smaller freight brokers have more cash flow, but it also gives them an advantage because they can attract and retain the best carriers with reliable, consistent, fast payments.
While talking about cash flow, B also brings up the quote from Jeff Bezos about building a business strategy around things that are "stable in time." He says that "customers want low prices, fast delivery, and vast selection" and this isn't going to change in 10+ years. We approach freight broker payments in the same way. People have always wanted to get paid faster, and they will continue to want that, and today it's even easier to pay people faster via new technology and being able to move funds electronically. Freight brokers always ask us, and have asked us since the beginning, "can we pay my carrier faster?" and the answer is yes. We have doubled down on this promise.
How did You Find Your Voice Among Freight Brokers After Not Having Experience in the Space?
B and Shawn, our CTO, are both in an interesting position because while they have always been entrepreneurs, they haven't worked directly in the freight brokerage space. But, that hasn't been an obstacle when growing Denim. In the interview, B says that one reason for this is because we approach everything from the position of curiosity rather than righteousness. We aren't telling brokers how to do their jobs, but are instead asking "what technology can we make that will help you grow your freight brokerage more?"
This positioning of always learning has helped us evolve our product into something that freight brokers actually need. We have worked with some amazing brokers that tell us what would be most helpful for them. One example of this is when we had a misaligned focus and had to shift it based on the industry.
What's One Assumption That You Made That Was Proven Wrong?
This focus that we shifted came in the beginning of Denim. We built an amazing platform and like other tech companies (Facebook, Twitter, etc.) we were judging our success on how much time brokers were spending in the dashboard. But, we realized that instead of maximizing the time brokers spend in our dashboard, we should be minimizing it so they can spend more time growing their freight brokerage.
With this goal in mind, we released some super helpful integrations, like the ones we have with QuickBooks and TMS providers like EZLoader, Tai TMS, and AscendTMS. These integrations make it easier for brokers to factor invoices and manage their back-office operations and these improvements came because we listened to what our audience needed.
The Current Conditions of the Freight Brokerage Market
As we talk about digitalization, it's really interesting to look at the current conditions of the freight brokerage market and where we see it going. The industry is growing and most of the increased revenue is flowing to the smaller brokerages, which are generally young people starting out. These are the brokers that are looking for new tools and that will be dominating the market in 10 years. In 10+ years, the brokers dominating the market aren't going to look like the brokers dominating the market today.
Conclusion: Where is Denim Headed?
B closes out the interview by talking about current market conditions and how these market conditions will impact both freight brokers and Denim. As a company, we are well-prepared for these changing times and if anything, these obstacles will make us stronger. Make sure to listen to his thoughts during the last quarter of the interview to understand more about how increased interest rates, a potential recession, and our current economy may help Denim, and our freight brokers, grow.