332. This Logistics FinTech Founder Has Lent $700M w/ Paul Mudahar | Bobtail

0:00My name is Paul. I'm building Bobtail, which is a logistics fintech in the US.

0:04Amardeep Parmar:So can you tell us a bit more about Bobtail? So like what kind of logistics is it? Yeah. So our mission is to eliminate inefficiencies in the supply chain. And we do that through financial products to trucking, mostly SMB trucking companies in the US. Our biggest product is a factoring product. And so we provide working capital to these trucking companies by purchasing their receivables. so let's use a real world example if you had a trucking company what would you name it what would be called almost trucks oh okay i thought you were gonna say bay trucking oh yeah that'd be good yeah bay trucking okay i like ummer's trucks better though okay all right so uh ummer's trucks so i hire ummer's trucks to go from uh la to new york to deliver something so you deliver to new york and you would invoice me but i'm gonna take 35 40 days to pay you and you have to pay for insurance and payroll and fuel, diesel, etc.

1:00So you can't wait 40 days. So you will sell that invoice to Bob Till. Bob Till will buy that invoice at a slight discount and then you get paid right away. And then Bob Till will collect from me in 40 days. So we just do that at scale. So you're our second ever international guest.

1:18Amardeep Parmar:So thanks for joining us. Well, this is my first podcast ever. Can't tell. So I am terrified right now, actually. So we've actually got some people in the audience. We've got our students who are on our program watching as well. Yeah, I think they're like scaring the cat out of him right now. Oh, my God. There's a 50 percent chance that I will throw up during this podcast. OK, just don't do it on the carpet. OK. All right. Yeah. So people in the UK, right, they don't really have a good idea about how big the trucking industry is in the US. Yeah. Can you give us an idea of that kind of scale and like that market?

1:47Yeah, it's the trucking industry as a whole is over a trillion dollar industry. We operate in the spot market, which is over$200 billion, somewhere in that$200 to$400 billion range. And that's mostly small trucking companies, one to five trucks. They are operating through load boards and brokers. They are going on a daily basis to figure out, okay, which load should I do? Where am I going? Negotiating their rates. So they're working with a lot of different people. And that's why it makes their receivables and their collections quite difficult for them to handle. So it's just easier for them to just say, okay, you know what?

2:24These are the six loads I did this week and send them all to Batil.

2:29Amardeep Parmar:And you've been in effect over a decade, right? Yeah, it's been 11 years now and it's been a pretty wild ride. So we started, we created the company in July of 2015. I can go into a little bit about how we got the idea. I think this was right around the time Lending Club, On Deck, Cabbage were all coming up. and so I thought those are very interesting platforms it's where anyone can go and get a loan right a lot of small businesses who go and just pick up a loan everyone's talking about how this is the new world order this is the end of banks etc and my thesis was well if you just focus on one specific vertical then you'll be able to control your risk and your losses a lot better so then the question became what is that vertical what is that industry that you focus on And so I started looking around and I had a buddy in logistics.

3:21He had a 30 truck trucking company. He ends up actually becoming the co-founder of Bobtail. And he was showing me, he introduces me to this concept of factoring. They were selling their invoices to other companies. and so I looked at it and it was a pretty terrible experience you had high rates long contracts hidden fees terrible service all the tech was off-the-shelf software it was pretty for pretty bad technology and so you know I think we were just like I wonder if we could do something better and so I camped out in a coffee shop for 30 days and coded up a an app where truckers can submit their invoices we threw it out there in uh september of 2015 that was our first month operating we purchased 3 400 of invoices uh this year we will probably cross 700 million dollars this year uh in invoices purchased so obviously like that's like a massive jump in scaling right it in that time yeah yeah so it's it's been it's been a ride so and before you started too you'd

4:32Amardeep Parmar:had other companies in the past you're doing other things like in the entrepreneurial space and like can it says a bit like that background like how you got into this in the first place and like because you comps started right yeah my my uh undergrad was in computer science um and uh you know i got out of school and i was like okay what do i do with my life and i grew up in dc Washington DC so it's a lot of government stuff and I got very scared of you know being in a basement somewhere just coding for the rest of my life and so he says while in a basement yeah yeah and so I started looking around and saying okay what are some other opportunities and at that time the real estate market was just going crazy so I thought okay well you know I feel like this is something I could do so me and a couple buddies we moved to Texas and we started a real estate development company um we developed about 500 acres of property and then the world ended right like it was like the um the recession of 2010 um and uh i was like what's a recession guys like how long is this gonna last but um so that was a a really interesting experience and and i think it's interesting because uh you know we all go through successes and we all go through failures it's just it's going to happen even at bobtail we've had a lot of ups and downs um and but there's there's a beauty in the failures as well like if you can if you take something away from that and you learn from that then it's a success in itself you know because that that's what's going to help you the next time and so i there's so many lessons that i learned in that experience that helped me build and scale Bobtail.

6:16Can you share some of them? Say one is people. People are huge. So, you know, shout out to the leadership team at Bobtail, especially Gurria Singh, Jen Tindall, and, you know, all the people that work there, they're amazing, you know, and they really carry that company. Second, I would say is, you know, we, when you're building a company, you worry so much about product, product market fit, go-to-market strategy, all these things. And we forget about the values. And I think it's really important to be clear about what are your values as an organization, because those values will define your culture.

7:00They will attract people to the company as that they will want to work there. they will attract customers because people align with values they align with values as much or even more so than the product itself you're gonna have competitors it's it's very hard to exist in a market where there's just no competition and so the things that set you apart I think values play a really big role in that so I think value should be operational people should invest time in figuring out what are those values and use that to define their culture and their strategy etc because they will be a force multiplier for the company what kind of values have set up for Bob tell great question I knew you were going to follow up so the first one is trust you know having trust with your team and with your customers that that is by far the the biggest thing and once you lose trust you lose everything so you have to invest a lot of time in creating that trust second is joy you know to create a environment where people are happy to come to work to create a product that makes people happy that they enjoy using that makes their life easier you can imagine trucking is a very difficult occupation it's it's just in every facet physically emotionally mentally psychologically it is just really hard to do and if we can make that a little bit easier for these guys that's a that's a really big deal the third is a learning organization we want to be an organization that's constantly learning and then we use those learnings to create to be innovative which is the fourth value and i know the last one is performance that's the last one so to perform at a high level and so that's those are the values that make up lot too.

8:58Amardeep Parmar:And like how big is your team now? Oh we're knocking on 200 now. And then you said about your co-founders as well so what sort of roles you play and what do you focus on yourself? Yeah I think that's a great question and it's it's so interesting because when you start you have no defined role right and everyone is doing everything. You are making the coffee, you are cleaning the floor, you are answering calls, you are coding, you are engineering, you're doing everything right like everyone is doing everything as you become a more mature company it's very important to have those lanes and those roles to create processes and it's almost a different part of the brain for scaling a company as CEO I would say that I have three main responsibilities one is to set the North Star and say all right this is as a company this is the direction that we're going.

9:52Two is from a capital perspective is make sure that we're well capitalized and three is recruiting. Make sure that we get the talent that we need and we create an environment to retain that talent. So

10:08Amardeep Parmar:which of those three do you enjoy the most? The talent. I think because the the team is everything, the people are everything. And to create a team that you enjoy working with is, and to play a role in their lives, both professionally and personally, I think that's something that I enjoy the most. And then on that capital side, right? So you bootstrapped a lot of this. And like growing it to 200 people, 11 years, 700 million, like you said. But how has that capital journey been there? Was it bootstrap by choice? Was it because that was just the best path at the time? Or what made you choose that route?

10:52Yeah, so this was 2015. And Uber was the darling of the VC world. And so I remember we tried to raise capital from VCs. And we went to a bunch of VCs. And they said, you're Uber for what? And that was the big thing. Everyone's trying to be Uber for X. And I was like, we're not Uber for anything. In fact, what we're doing, other people already do. And they're like, well, that's not special. right like you know get out of here with that and so um so then we had to find a different path to scaling uh we initially started by just raising debt from friends and family so people would um give us capital we would give them a return on a monthly basis and um in 2018 we were able to get a bank uh to back us with a line of credit and then in 2021 bank of america backed us with a larger line of credit.

11:43So they've been great partners to work with as we have continued to scale. But it is, you know, even that first raising capital, whether it's from VCs, whether it's from friends and family, whether it's from banks, you are just knocking on a lot of doors. And you are explaining, you know, what you do as a company, why you will be good stewards of their capital and why it makes sense for them to invest with you. it is difficult no matter the route that you choose.

12:19Amardeep Parmar:And at that point, right, when you're going to VCs and they're saying no at the beginning, and then you're going to friends and family for debt, what's going through you ahead of that time? What kind of keeps you going and keeps you believing that this is something we just got legs? We had a product that people were using, even if it was on a small scale. And so we knew that, hey, there's product market fit here. Like I said, there were other competitors in the space. they were much larger than us and so we had this vision of hey we we could get there right we could grow and we could scale into this thing it was just about explaining that vision conveying that vision to uh these investors and so you just have to keep knocking on doors i think the biggest thing is you can't get discouraged with a no you get you have to keep going and um so you said about competitors a few times as well right what makes people choose like bob tired of your competitors?

13:10Amardeep Parmar:Like what makes you stand out? Service. So we really focus on service. You're right. In a lot of ways, you could even argue that this is a commodity. We invest a lot of time in creating a technology and a product that is seamless and good. But it's a high touch service as well. People, truckers call in all the time. And to be able to make sure that you pick up their phone within a certain amount of time that you answer their questions that you that they hang up the phone in with their answers and that they they want that's a really big deal for us and we put a lot of emphasis and training on making sure that that experience is a good one for them you know if you look at our reviews that's that's the the thing that you hear the most is we have dedicated teams for companies so they're talking to the same people over and over again and we've just built the system in a way where it doesn't feel like a big company.

14:09I don't want it to feel like a big company. It has to feel like there is a relationship, not that you are just a cog in a machine, whether you are internal or external. Hello, hello.

14:22Amardeep Parmar:I hope you've enjoyed the show so far. I'm Amarit Parma, co-founder of BayHQ and the host of this show. For those of you who don't know, BayHQ is the community for high growth Asian heritage founders and investors in the UK. Over 7 ,500 people have attended our events. 200 people have been for our impact programs. And obviously, there's been over 250 episodes of this podcast. If you want to join us and take part in the programs and come to the events, go to bayhq.com forward slash join. We also just released our first ever book called Startups for Outsiders, which you can get on Amazon now. And the link is in the bio.

15:02Amardeep Parmar:Hope to see you soon at our event. Hope you enjoy the rest of the episode. Was there a moment where Bob Toss started taking off and you had to kind of really think about that, where as you start to scale, obviously the system's changing under the covers, right? And how do you try and keep that small company feel and that high level of service, while also scaling so massively in terms of how many people are serving? Yeah. So this was kind of the COVID time. So COVID happens, and there's a lot of bottlenecks in the supply chain. So all of a sudden, freight rates go through the roof. Everyone's at home.

15:37They start buying a lot of things on Amazon. And so the logistics market just really takes off. So we grew a lot during COVID. And because we're growing a lot, we're also hiring a lot. And what you realize very quickly is that you cannot just throw heads at the problem. Things fall apart very quickly. You have to be very intentional about how the processes that you create. And this is, again, where it's product, creating product is one thing, scaling the organization is a completely different part of the brain. And coming from engineering, I was, you know, we had implemented agile frameworks on the engineering side.

16:22and we said, why don't we implement agile frameworks across the entire organization? So things like stand-ups, retros, and our entire organization is remote, which added a whole other layer of complexity. And so how do you keep people engaged? How do you make sure that they're doing the work that they're supposed to be doing? How do you create that culture if you're not seeing them on a day-to-day basis? So these were all challenges that we had to overcome. we had to learn how to create those processes in that environment and really invest a lot of time in doing that. But that was one of the things that we did.

16:58We created these agile frameworks for each department, whether in sales, operations, etc. And I would say one of the ways that I like to think about this is organizations are a lot like organisms. When we think about and the organism that is one of the most complex that we are the most familiar with is our own bodies right so if you look at the things that are trademarks of that you have rhythm and routine right that's that's a big one you have the brain which really is more of a facilitator than a micromanager right so we don't micromanage it's very difficult to run an organization where you're micromanaging and you're not empowering people to make their own decisions.

17:47Different types of communication. So the body will, depending on the situation, it has forms of communication that are very urgent, that they'll pull a fire alarm, or it'll have just regular cadences. You'll have feedback loops. So these are all the different types of communications that you actually need in an organization as well. You have different types of growth right so you have regular you have good growth which happens which is adaptable which is in proportion to everything else which includes different stakeholders and communicates with everyone involved and then you have bad growth which is where you know we think of cancers as they go out of control they're chaotic they they take a lot of resources and so these are all things that actually happen in organizations and so you obviously want to avoid the bad growth or if that starts happening you want to uh get rid of it and uh and so we try to model the organization itself actually after some of these characteristics it's interesting as well about micromanaging because i think that's really hard for a lot of founders yeah and you said how right at the start too right

19:01Amardeep Parmar:you kind of developed the initial bob app and like you did a lot of tech work yeah but then now you're not really part of that at all right right like into your day-to-day role right was that hard for you to let go of when like originally you're the person kind of building it and like set the front lines to then trust other people to then take that side of it over no i'm a terrible engineer i'm not a good engineer i mean i think uh and that really comes into the trust part of it right you have to um you have to trust the people that you bring in uh you bring in good people um and uh you empower them to make decisions.

19:37Micromanaging is a great way of losing good people and losing trust. It's just, I don't think it's a recipe for success. And so we've had, we've really done a lot to try to attract the best people and then empower them to make the decisions that they need to make. and if they make mistakes which people do i made a ton more than other people you have to use those as opportunities to learn and uh and you know again there's um those are all opportunities to just get better for the next time and so the only problem is if you don't use that as an opportunity that's when you're in trouble i think the whole thing too is that when

20:25Amardeep Parmar:you've just hired somebody how do they earn your trust or how is in the hiring process they earn trust or is it like at the beginning when they're working for you how do you get that trust with them i think uh you know uh how do they get that trust it it really is on the performance how they perform um i think you know there's nothing that we do like we don't put them through the ringer or anything like that you just uh you do your job and um and it's how do you communicate with the other stakeholders involved what are your outputs what are your inputs and as long as you're doing that you're given more and more responsibility so it really is just based on your performance and we're talking before as well how like off screen about ai and how it's affecting like your market and what you're doing as well how much has it like disrupted you the last couple of is?

21:19Yeah, I think AI is just getting started in the space. Supply chain, logistics, these are all industries that have traditionally been very archaic, you know, still paper, pencil, in a lot of aspects. So, but it's, I think there's a lot of internal efficiencies that people are starting to use AI for to become more efficient and in terms of how do you process invoices that truckers are submitting how do you collect on those invoices how do you get payment statuses how do you communicate with debtors these are all tasks that are fairly monotonous and can you introduce AI to help the people that are currently doing them become more productive and give them an opportunity to make more higher level decisions.

22:16So I think that's just going to increase the productivity and efficiency and I think it's just really it's just getting started.

22:24Amardeep Parmar:And then as we look forward to it, so what's the plans for Bobtail? What's your plans for the future? Yeah, I mean, I think we don't know. Right now we are just focused on providing the best service for truckers in the US and for our clients and customers. And our hope is that we keep coming up with products, services, and solutions that help make their life easier. We want to be able to sit in their back pocket and help them operate their business more seamlessly. And I think that's our focus. So obviously, we've got a bunch of students watching today. Yeah, they're intimidating. Yeah, so for their future, let's say you were 17 years old today or your advisor is when you're 17 years old, what would you tell them as they get forward into the future if they want to potentially become an entrepreneur?

23:14Wow. If you want to become a, I mean, what I would say is it's really interesting because I think we all have this urge to create, you know? I mean, you've done, I've known you for three years now, and you've done such an amazing job building Bay, creating this community,

23:35creating value. I mean, I don't even know how many companies, connections you have facilitated as an organization. We have this urge to create, whether it's art, music, organizations, communities, families. And I think if you have that urge, you should do it. You should pursue it. The one thing that I would say is that you don't let that become your identity, right? You can't be defined by the successes and failures that happen in that journey because there will be ups and there will be downs. And you are more than that. And I think that's really hard for people to separate because you are investing so much time and so much of your life in building that.

24:25And so it's very important that you always have that perspective. because I think at some point you realize that the things we think are important aren't really as important as we think they are. And if you keep that in context and, you know, you just work with gratitude and compassion, then, you know, enjoy the journey and everything's going to be good.

24:55Amardeep Parmar:So obviously Bob Tiles is an 11-year journey for you. Yeah. What have you learned about yourself, do you think, over that journey? I think that, really. I think there was, in the beginning, you really do define yourself according to the P &L and how it's going and how many customers you have. You are spending so much time in building that. and you realize at a certain point that that's those are two different things you know your your confidence can't come from that so it's it's really important to be aware of that and I think that that's something that people really struggle with like I said failure is there's a beauty in it if you learn from it it's not a failure it's a success you just work on getting one percent better every time so um so yeah i would also say that there is a difference between giving up and letting go uh giving up is something that is a result of you're just exhausted and you're done you have nothing else to give it is um something that causes a sense of defeat and failure and it is disempowering whereas letting go is actually something that's a conscious decision it is something that's empowering it's something that's saying that hey this isn't uh good for me or the team or the customers anymore and it's um it's time to let it go and that's that's actually success in a way so i think those are things to to be cognizant of on your journey so so thanks so much for coming on yeah we're gonna get to wrap up questions now oh man i hate wrap up questions so this is when i throw up yeah so this is this is when it's gonna happen i would normally ask about the free asians in britain but then because you're visiting i'm not gonna put you on the spot but you would obviously shout out me and go there 100 yeah yeah not gonna be actually just just you okay he's not here but and then if you want find out more about you more about bobtail where can they go to uh bobtail.com you can check out the website bobtail.com i'm on linkedin um you know if you have any questions you can hit me up there and is there any way that the audience could help you anything you're looking for anything that people could reach out to you maybe help you with yeah 100 i mean i think i need a lot of help in a lot of different ways but um off the top of my head uh you know no but i'll be sure to reach out to you in the community when when the need will come up that'll probably be in 10-15 minutes something will come up and then any final words for the audience you know this this is a it's something that I think when you sign up for you may not realize what you're signing up for but stick with it and and I think it's so great that you create a community where people can lean on each other because so often people that are not in this won't necessarily understand what you're going through.

28:13And so it's so important to have a support system and to have, because you're spending so much of your life on this, you have to create spaces where you can exit for a few hours every week. and I think that's something to be cognizant of as well which I was terrible at but you know working on it and what should I escape now Netflix yeah no I think I enjoy traveling and I enjoy anything you know I'm I'm loving sports I'm a big sports guy and so getting out doing more sports is a big one.

29:02Amardeep Parmar:So that's the end and you survived your first podcast without furthering up. Oh man, this was terrifying.