Monday, May 7, 2018
Interview with Lidia Yan, NEXT Trucking
How do you get top tier venture capitalists interested in your startup? Our interview this morning is with Lidia Yan, the founder of NEXT Trucking (www.nexttrucking.com), a venture-backed startup which operates an online marketplace for freight shipping. Yan tells us how the company's revenues, growth, and profits--even in the early days--drove $21M in funding from Sequoia for the company.
Explain what NEXT Trucking is all about?
Lidia Yan: We call ourselves a digital marketplace for shippers, connecting them with trucking companies who own one to ten trucks. We started in October of 2015, and last year, in December, we closed our Series B with Sequoia Capital with $21M.
How did the company start?
Lidia Yan: My background is in e-commerce, but my family is in logistics. We were one of the largest TV logistics companies in the country, fulfilling about 26 percent of the country's TV distribution. The reason why I got into this, is one day I went to our family office, and it was chaotic. Everyone was on the phone, fighting with drivers over price and things like their availability. I realized all of that negotiation was extremely inefficient, and it took as much as two hours just to cover the negotiations for one load. I realized that was because the industry just doesn't have any other way to do this. Even though my family was reasonably more advanced, they were using a system which was still running on DOS, in black and blue, and was not even web-based. That's when we came up with NEXT Trucking. We really wanted to make something which would meet driver's needs. The trucking industry's number one problem is they have a 90 percent turnover rate with drivers. There are lots of issues over dispatching drivers to locations and jobs. We viewed this as a central marketplace which would allow drivers to be put in the driving seat, get paid what they want, go where they want to go, and get paid the market price, and would help solve this issue. When we started the business, we really didn't have a lot of funding, but it made a lot of sense, and we got lots of drivers on the platform. Plus, our family and our industry connections gave us a head start. We started with a lot of existing drivers we knew, who became our spokes people, and helped us get from zero to today.
It's quite unusual to see such a large round for Sequoia for startups here, how did that happen?
Lidia Yan: It was extremely easy for us, because we had traction, we had revenue, and we were profitable, even though we were running with a very scrappy team. We actually got multiple term sheets from Tier One VCs. We love Omar, our partner at Sequoia, who is an entrepreneur himself, and sold his last company to Google for $700M. He's a very sharp entrepreneur, and shares the same vision. That's why we chose Sequoia over our other term sheets. I also believe they can bring a lot of resources. They've really made us the cool kid on the block, which has enabled us to recruit a great team, including a great director of marketing, an amazing product and engineering team, and talent from industry, sales, and operations.
The trucking industry, as you mention, isn't great about technology. How has that been for you getting them to adopt what you offer?
Lidia Yan: You're right. There's not a lot of technology in this industry, and even text messaging can be advanced technology for them. At the beginning, we did see some pushback, but the software really helps truck drivers. It's designed to meet their needs, so it quickly got traction, without a lot of marketing dollars. We got a lot of organic signups via word-of-mouth. Drivers get together at truck stops, and they talk to each other. If they find they can make more money, and be more efficient, they see that as a good thing. We saw lots of signups, and ended up with more than we could onboard. We're focusing right now only on California, and we have another 10,000 drivers we haven't yet onboarded yet. Our goal is to the Apple in trucking, so we are only letting the best drivers join us, with good clean backgrounds, good ability, and who also have a great credit and the best insurance. We require them to have at least $100,000 coverage. Our goal, is to have the largest virtual fleet, to find drivers who will work with us exclusively. The service provides drivers allows small trucking companies, who don't have a lot of resources and software, and don't have transparency, and we can provide them with a fair market price for their services.
What's been the biggest challenge you've had to overcome in getting this startup running?
Lidia Yan: I think the biggest challenge we had, was at the beginning we were running with a very scrappy team. When we started the business, we didn't have a lot of money. My profile is not the typical Silicon Valley profile, so we raised very little money at first. That really helped us to use the money wisely, and get traction. We also ended up wearing multiple hats. I was doing billing myself, I was doing product management, and that was the same with almost everything for the rest of my team. Although it was difficult, it gave us the pressure to be nimble, and move fast, so that we could survive in this market. The other challenge, was when we were early in raising our round, we didn't have a very big team. In fact, we had a very small team, which was very hardworking, and we were able to show we could deliver lots of revenues and be profitable. Fundraising that first year, people didn't believe an immigrant entrepreneur in trucking, especially a female one, would succeed. I had to work extra hard to deliver, and that meant the second year, we got recognized from Silicon Valley and venture capitalists in LA.
What's the next step for your company?
Lidia Yan: We are growing very fast. We not have 50 open reqs right now, and we now have around 70 employees here in the US, and we have a team of 30 in China, so that's 100 people now, and nother 50 open reqs. We're hiring. So far we've been very successful in recruiting, with people from Blizzard, Apple, Snapchat, and other great companies. We have a great portfolio of talent in house, and we're now attracting more people who share our vision of creating something disruptive in an $800M industry.
Thanks, and good luck!