AI for Logistics: Inside 5U AI’s Journey to Transform Operations

0:00Ben Murray: Greetings, everyone. I'm excited to welcome Yagiz Abik, co-founder and CEO at 5UAI. Yagiz, welcome to the show. Thank you for having me, man. It's a really pleasure to be here. Yeah, no, great to have you. Looking forward to the conversation. First, before we talk about the company and what 5UAI does, tell us a little bit about your background. Yagiz, born in Asia in Istanbul, Turkey, and moved to Germany in 2020 around COVID times for university studies. Actually, university was my wage. I was buying some consumer electronics from China at the time and selling across Turkey. And I wanted to expand that business to Europe.

0:38And generally, Turkish citizens need a visa to come to Europe. And the visa, the easiest way is being a student. So I leveraged being a student and continued the business activities here a little bit. And after, I was never a great student, to be honest. I went to university maybe a couple times and passed the exams, but always have been working since age 18. And I operated that business a little bit. And then after, even though it was pretty difficult, it wasn't getting as big as I wanted. And I wanted to do something bigger. And of course, coming to Munich, seeing this startup ecosystem in tech, it's an eye-opening thing.

1:16Of course, the people around you and how big things can get. I simply passed that business and started to look for a job and look for best founders I can work for. I worked for companies from pre-seed to Series A stage. I saw the growth. I saw the starting points. Always tried to find the best founders to work for and always took roles that are generalists and prepared myself to basically found again. And here we are after around five to six years. We are with Titee now.

1:47Ben Murray: Yeah, I love that story. Appreciate the background. And of course, yeah, really interesting. You said, if I want to start a startup, maybe I should go work at startups, see how they operate, see how the best founders operate. So great, great inspiration there. Yeah, like my motto is how does great look like? Because there is always a better one than you are. And you need to just be the dumbest one in the room to get just better, I believe. That's what I try to do at least. Yeah, no, I love that. Let's talk about 5U AI. So tell us what products and or services 5U offers. So what 5U AI does is simply create and provide digital employees, AI workers, for logistic companies across the world.

2:31And these digital employees do repetitive and operational tasks for the logistic companies, such as order entry to their system of recourse or giving quotation to their customers and so on. What we do at the bottom line is increase their win rate, effectively make them with more business. And at the same time, we probably help them to decrease their operational costs and personal costs on these small, repetitive and boring tasks that they're doing on a daily basis.

3:04Ben Murray: Okay, so interesting. So targeting logistics companies and those repetitive tasks. So is it focused in, say, the back office? You mentioned quotes and order entry. Is there a certain, say, department that you're trying to help within these logistic companies, or could it be any department within the company? Can be any department, honestly, because quoting is in the tail desk office, whereas order entry is, of course, operations and back office. So we tried to create this super intelligent logistic employee that's able to operate in any field in this logistic business by easy configuration and plug and play approach of the product.

3:44And that's what we do.

3:46Ben Murray: Okay. And tell me, where are logistics companies in the AI curve? When you call them, are they very open to this? Does it take convincing? Do they hang up the phone or not respond to your email? Tell us a little bit about that. Very funny. Logistics is an ancient industry. As much as I love my industry, I must say it's behind compared to most of the other industries. Of course, it changes by region. If you go to the U.S., I believe the U.S. market is one and one and a half years ahead of Europe. Whereas many companies you are seeing are deploying AI, already are live, and there is a good market for this.

4:27Whereas in Europe, we are seeing this development just starting, I would say, compared to even five, six months ago. Right now, people have awareness for sure, and they know there's this technology and they can do things. But ideally, there is no deployment. It's still a little bit greenfield. Also, when you look at the vendor ecosystem, there are plenty now that are starting to appear. but generally the attitude was, hey, what is this again on AI pitch and shutting the phone out? And now they are a little bit more responsive. It is affected by, I believe, the industrial education. There are a lot of non-profit organizations that are educating the industry and telling them, hey, this is what you need.

5:11Because when you look at logistics, the nature is they are competing with each other a lot and it's an open market. And as a result, they are operating in very low margin. And they have now existential risk of just shutting their business down because there are the ones that are using AI and literally winning more business and, of course, decreasing their operational costs and they can give better rates to their customers. Whereas the ones that are not using this will disappear, unfortunately. And the market is consolidating. So basically, there is awareness coming and I believe in it. It's been like a very ancient industry so far and very allergic to technology.

5:53But right now, it's changing. And I see it in real time.

5:57Ben Murray: Yeah, that's interesting. Especially it seems like very interesting to tack low margin industries who any little bit can help that margin profile. And so who, tell us your ideal customer profile. Are you going after mid-market logistics firms, global logistics? What's that sweet spot right now for you? Today, I define our ITP as mid-market, especially in Europe. And how I define mid-market myself is that companies that are employing 500 to 50 employees, this range is an amazing spot for us because what we see in our market is there is a lack of IT talent that are able to even think about developing something themselves.

6:37And also, there is not enough talent that are aware of this frontier tech. tech. And at the same time, these companies have enough repetitiveness in their processes that they really need this product. So it's a sweet spot for us. Right now, we are targeting mid-markets, but of course, over time, we are moving up to enterprise.

6:56Ben Murray: Okay. Yeah. I appreciate that. And then what year did you found 5U? It's been a year, almost exactly a year we found it. So pretty fresh year. Yeah. So pretty, still pretty new, but I'm sure a lot has happened in the 12 months and let's talk a little bit about fundraising so sounds like you just raised some capital so how much capital have you raised to date we raised around 3.2 million dollars to date and that's what we call our pretty down quite happy to be honest yeah we recently announced last week yeah okay last week so that yeah so that'd be end of july 2026 and so where so you're 12 months in in did you know from day one that you wanted to raise capital or somewhere in the 12 months, did you decide that it's probably better for us to raise capital on what we're trying to achieve?

7:46In May 1, together with my co-founder, Femi, we were thinking, okay, we can really run this business profitably and grow slow and become like this consultant way of doing things and just make money on the way. But we realized we are spending each and every waking hour in the office. Sundays, Mondays, and other days, no sleep and no holidays or whatsoever. And we thought, okay, we are giving our everything to this business. And this became our life. We lost many things on the way from this business that it became a center of our focus. So why not we just go big and just get the market and be the name in the market instead of us being one of those small owners.

8:32And we selected this show. The decision was quite simple. Again, repeating, we are giving our lives to this and it will not change in any case. So why don't we just go big and just take over the whole market? So it was pretty clear in the first day, I would say.

8:49Ben Murray: okay yeah love it yeah you're all in on this company so let's try to go as fast as possible go big and any fundraising lessons learned in that process with that pre-seed and having seen other startups and you had your other business before anything surprising or anything you like to share with other founders who may be thinking about that first raise well absolutely number one lesson I learned. We have one angel investor in our cap table. He's John Gerling. Just saying hi to him from here. He just wrote our first convertible loan check before the proper round. Like a very small amount but his personal health was very helpful and he was together with me along the way.

9:31And with his suggestion also and with the things I was seeing from my old jobs, the most important thing in this VC world I believe is just time boxing thing and raising in a very fast time there are many ways of raising capital i believe but when you look at venture capitalists they are generally looking at each other's decisions on whether to do this deal or not and they are having a lot of coffee chats with each other and discussing deals in the meantime and so on and so forth so if you're having

10:06Ben Murray: through three, four, five, three C calls every week and you are raising for three, four months, I doubt that round is going to close. If you're deciding to raise capital and you tell it to the world, you really need to time box it, I believe, and prevent the capitalists to talk as little as possible between each other. Because once one of them decides, hey, I'm not doing this deal, Of course, the appetite of the others decreased because there is so little data points in this era. It's crazy. There is barely attraction. There is absolutely no product market fit. There is absolutely not many metrics you can judge on.

10:52And what you can judge the business on is just founder team. And I always see some small data points maybe. So deciding on whether to fund this business or not is actually somewhat of a gut feeling. And if you like the founders or not from venture capitalist perspective. So once these, hey, I'm not funding these guys, news start real easy, many doors may close to you because, yeah, this guy is not funding the guy. Like, why should I fund? And it becomes a snowball. So I suggest just time box the thing, have your two-week period where you schedule all these meetings. I counted all my meetings and in the two-week period I ran, I had 109 VC calls.

11:42And we started raising on a Tuesday and next Friday we had our first term sheet. And then the rest just, and once you have your first term sheet, the rest just like bam and it's the best case you can land it.

11:56Ben Murray: All right. Yeah. I appreciate that. The story there. That's really interesting. Yeah. So sounds like moral of the story. Yeah. Don't let the investors start talking to each other, may have them make their independent decisions. Yeah. Yudis, tell us now, how are you finding your prospects? Are these people you can call the phone, email? Are they at trade shows? Where are you finding them? Yeah. By the nature of our industry, it's old and people are used to meeting each other in person a lot. And that's how the trust is built, especially in mid-market, How they do business with each other is actually meeting each other and just drinking together and doing things together.

12:30So you really need to be at where your customers are. This can be trade shows. It can be network conferences that happen across the world. I was in Brazil two months ago, four months ago I was in Thailand. You always travel and meet these people where they are. And of course, calling is a great channel for us as well. simply because industry is too used to just picking up the phone and talking to each other. They act like they've known you for five years. They either shout at you and shut the phone down, or they think you're sitting in the end and talk to you. I believe these two channels are working for us right now, and we are doubling down on that.

13:07Ben Murray: Yeah, that's interesting. And that's come up maybe just one time before industries or companies that are used to picking up the phone, that they do a lot of business on their phones, So they could be a good, yeah, good candidate for cold calling. So yeah, that's interesting. Yeah. Tell us about your pricing model. So I assume there's some tokens going in here using AI models to power these AI agents. So how are you pricing your product? A lot of try and fail on the way, obviously, but very landed. And what makes sense for our customers and for us as well is that we charge per task done. So that means that it can be an AI worker configured for quoting to their customers or entering data.

13:48So you can say one data entry job in whole is priced like X euros per case. And of course, we have minimum contract values on a yearly basis. And we are not taking some deals that are below our minimum contract values and we bundle it. But that's the pricing that works. because right now, you already go to a logistic guy and tell, hey, this is our token cost and we are going to charge you tokens. What is token? You need to really make it like a real life case. And it's very simple. Hey, this is the job I'm doing and this is the value you are getting and I'm charging you for value I provide. That simple.

14:29And it gets the work on.

14:31Ben Murray: Yeah. So minimum contract values, which I love, and then a charge per task done. And then is it tiered? The more tasks that they do, Will that get cheaper for them? Absolutely. Yeah, of course, because it's an incentivization mechanism to use you more. And of course, it's good for both sides. You're getting more volume in, which is good for us. They are getting in less price for our task, which is also interesting for them. So, of course, that's very important. And there's a lot of debate right now about we know, say, traditional SaaS software margins, we targeted 70 to 80 percent and then ai native came along and said hey no way we'll get 80 percent but i see it all the time so what what kind of margin profile are you targeting are you okay with a company in the 50s or are you trying to get to that 70 to 80 percent traditional software margin yeah of course i believe this changed over time for us simply because when we started we amount to be as quick as possible so we got the best models in place we just burned as much and then just got some customers and did something then our margins were revolving around 40 50 percent and we were thinking okay really did the same thing okay the real SaaS margins are like 80 percent maybe 90 percent in some enterprise product whereas our margins are 40 50 in this business gonna work really and you realize after of course in your product there's a lot of optimization potential plus we realize okay we are using frontier models but at the same time for some some tasks you can really use some open source models and fine-tune them and generally get some parts of the job done with them for example you are processing documents you can easily get to get some model from from open source libraries and just fine-tune it and use it on your own benefit and that only comes down to you with inference cost and model basically does not cost for talking There are ways to decrease the margins.

16:27And we are now around the range of 5 % to 80 %-ish based on the use case. These margins are going through and upward over time. It comes down to capacity and optimization, which at pre-seed start-tapping is not generally focusing on growth. We are more focused on growth.

16:45Ben Murray: Yeah, I love that insight and that you know those numbers. And then Yagis, at this stage of your business, you're 12 months in, do you have a favorite number, operational metric, or customer metric that you're focused on to guide the business? Absolutely. In revenue ranges, I would say contract RR is my favorite number in terms of growth. But product-wise, we are tracking two metrics. One is automation rate, and two is human takeover rate. What this means is, so let's say AI worker does some part of the job and needs human help. So it escalates this request via Microsoft Teams. Hey, teammate, I need help with this.

17:28Can you guide me? So the teammate from Microsoft Teams, let's say, can just say, hey, I take this over. I don't want you to do it. Or can just instruct and AI worker can continue doing the job. So we are trying to decrease that human takeover rate. Basically, we want the AI to do the job by itself. So that's the metric we are looking for. And the automation rate is basically, okay, is AI escalating a lot or is it able to do it by itself without escalating? So these two metrics and product are North Star for us and have been quite helpful on the way.

18:05Ben Murray: Yeah, no, that's interesting. That's really helpful, I think, to other AI or agentic AI founders out there. And so he's a few stats and figures before we wrap up. Where is your company located? We're based in Munich, Germany. Isn't it obvious that I know all my metrics? Yeah, based in Germany. Yeah, yeah. That makes sense. Ed, what is your current team size? We are four full-time, including myself and my co-founder, and four part-time right now that are consistent of students. Okay. Okay, great. Right. And then anything you want to share around ARR ranges or revenue ranges at this point? We are on track to 1 million ARR is what can I tell you right now?

18:47Ben Murray: Okay. Okay. Perfect. Love that. Eze, really appreciate the time today and sharing your journey. One last question here. So what's top of mind for you this year? We're over halfway through 2026. What's that big goal that you want to achieve this year? we want to reach we want we want to triple our customer base by the end of this year which is looking ambitious but we have resources and we have enough conversation that we're going through and by the end of this year we are slowly moving upwards with enterprise customers that are multinationals that we are already having conversations with and next year starting if we have some enterprise logos, that would make me happy.

19:32Ben Murray: Yeah, and I won't be surprised when you land those enterprise logos. Yis, really appreciate your time, sharing your journey. It's been a fascinating journey so far, so look forward to keeping track of where you go. If listeners would like to learn more about 5U AI, where should we send them online? Just send them to me via LinkedIn. I'm very responsive and I read everything. LinkedIn is the only social channel I use the most pleased feel free to reach out to me just write my name and i'm the only guy i think with this name so pretty easy to find me and reach out to me in case you have any questions really i tell this from bottom of my head i had a lot of hardships like going through this thing as also immigrant like this person everything was like two x hardly so i want to help to any farmer that actually trying to do something that actually hustling.

20:24So I just ask anything and I read everything and try to answer as much as possible and just give back to the world.

20:32Ben Murray: That's great. I appreciate that for the listeners. That's really nice of you. So check out 5u.ai and also check out Yugi's on LinkedIn. Easy to find him when I pasted his name into the search bar. We'll put those in the show notes. And then again, Yugi's appreciate the time, sharing your journey and look forward to staying in touch. Looking forward. It was great. Thanks. Thanks.