Dr. Jeremy Weisz: 14:20
That is wild.
Chadd Olesen: 14:21
It’s super wild. But you know.
Dr. Jeremy Weisz: 14:23
What are the team look like then? I mean, it’s like a.
Chadd Olesen: 14:26
There were I think that there were 12 of us at that time and all engineering. I’m an engineer myself and we for the longest time only had engineering we weren’t focused on like customer success. It was all just like brute force engineering work as we kind of like transitioned from that in car space into business application. We had to figure out, like, how do we build customer success? We felt like it was a waste of money because, you know, some person who’s basically glorified project manager, we had to build like QA systems, etc. that’s actually why we had gone to raise.
But I think when we raised in 2017, we were doing 50 K a month, like 50 K a month in revenue, and that gave us like a far better terms than most people were getting in the market.
Dr. Jeremy Weisz: 15:21
Yeah. And so what was the evolution of the teams you started with 12 engineers.
Chadd Olesen: 15:26
Yeah. Oh my gosh, this is really interesting. I was living in Portland, Oregon at the time and we were having a really hard time recruiting any anybody, and I like I love Portland, I think it’s a great place, but I think the startup scene is really difficult. There’s not talent there. There’s not a ton of money there.
The access to capital is really challenging. And so I was basically flying to San Francisco like every single week, and I ended up like, I, I don’t know if you like, remember San Francisco in like 2016, 2017? It was just like Metropolis, like booming. Everyone had high energy. And I would fly back to Portland.
I’d just see my energy die, like, just die the moment I landed. And so I moved my team to Seattle and we started hiring people in Seattle, mostly on the technology side. We really struggled, like we would hire people from Microsoft. They would come in not super hungry, like really kind of struggled that like that way. And so I had built I started building a data science team in Toronto, and that’s where our data science team is today.
Dr. Jeremy Weisz: 16:35
What are you looking for? At the time you found maybe someone out of corporate wasn’t as hungry and scrappy of what you needed at that point? What were you what did you find was a good fit?
Chadd Olesen: 16:45
I think that what we started doing was we would hire younger engineers, trained like that, literally hadn’t worked before and come in and fully train them on like, literally on spec of exactly what we wanted. And I think Seattle is also a hard market because you look at Amazon, you look at Microsoft, you look at Boeing, you look at Tableau. They have such great jobs and their comp is super great. And they’re like a four-year like vesting like stock schedule that comes in as part of their comp every single year. Like the Seattle original like founders have built like massive machines to retain talent.
And it also stifles a lot of innovation, I think, in that city. But we were just looking for people who were hungry that would be willing to work, you know, 24/7/365. Like, I think that that’s like what we were looking for. My CTO ended up moving. He’s European, he left the US, went back to Portugal, ended up moving to Riga, Latvia, and we split our team completely.
And so I had a like we had a really good friend living in Toronto running that engineering team. Nikolai is living now in Latvia, building an engineering team there, and I was kind of running everything from Seattle.
Dr. Jeremy Weisz: 18:05
So it starts with 12 engineers. Then you grow the team kind of what’s it look like?
Chadd Olesen: 18:12
I think we try like when we raised money in 2017, we raised a million. And then like maybe six months later Fontinalis partners called me and they were like, you guys are killing it. We want to give you a million on uncapped safe. Another one. And I called the rest of my investors.
They were like, yeah, we’re in. And I think that everyone was like, oh, they’re going to like continue to raise. And I think that that was the plan. And all of a sudden we started hitting profitability. And like the technology was starting to be successful.
We were starting to self-fund R&D. And we’re like, okay, well, maybe we don’t need to raise just to raise money. We really feared how high the valuations were back then, like everyone should have. And so we ended up just literally starting to self-fund and pushing that money back into the company. We started to move more and more of our engineering resources offshore.
It was like cheaper, I think, like, I think Toronto is actually a fantastic place to build an engineering team. I think you can probably run like $0.60, $0.70 on the dollar and get really great talent. And so as we started to build this model, we started going like deeper into business applications, and we started to run like what we thought the Silicon Valley-like tech platform was. We were working with like large Fortune 500 companies. So we brought in in-house counsel.
That was an awful mistake. What we should have done was we probably should have gone and started working with smaller companies on our own paper, rather than spending like a year in procurement with a company like a Home Depot. And so we’re just like making all the mistakes. Started hiring customer success in case we hit like specific growth metrics. And as we started to push towards like 2020, the market really kind of like fell off and we stripped.
I think we were probably around like 60 people and we stripped it back down like 20, like buttoned up the hatches because we thought that Covid was going to be really atrocious and awful for business. And it was, but at that same time is right when we entered freight and.
Dr. Jeremy Weisz: 20:17
Freight was probably going ballistic then.
Chadd Olesen: 20:20
Yeah, I think like right now you’re seeing volume being traded at, you know, dollar a mile. Then it was trading at six, seven, $8 a mile. And that’s like a really, really crazy concept. The freight market’s booming capacities doesn’t exist. And so freight trades in a very interesting way, which is they don’t trade shipments, they trade trucks on the road.
And the more trucks on the road, the less the freight trades for the least amount of trucks, the more it trades for, because you’re essentially trading capacity. And this spikes in our business, I think we literally went from like, I don’t know, 2 million to 7 million in a year. Like, you know, like it was like this crazy shot. And we scaled that team up. Almost to a hundred people and mostly engineering.
Since then, we’ve obviously been building our own innovation. We’re using like AI applications for our own internal like internal use, so that we can streamline engineering, etc.. I think we run I think our engineering teams right around like 65, 70 people right now, but it’s been like a super roller coaster with that team. We were essentially we were caught in a trap that a lot of startups get caught on, which is like, how do you continue to grow without hiring engineering? And when the freight market took a nosedive.
So essentially what had happened was PPE loans flooded the market. Freight is like the American great like industry, right? Then everyone’s buying trucks and putting that money from PPE loans back into the market. And what ended up happening is they end up collapsing the market because they brought in too many, too much capacity into the market. And that I think has been a struggle since probably end of 2020, probably about 2022.
They’ve been like really like facing a pretty wild situation from.
Dr. Jeremy Weisz: 22:23
You know, from any SaaS company. Once someone hits like a product market, fit it. It’s, you know, magical. I do want to fast forward through some of the niches that you did before you landed on. Afraid I know that you did some oil and gas, like just fast, fast forward some of the you didn’t land on freight and logistics.
Talk through some of those.
Chadd Olesen: 22:47
Yeah, it’s really interesting. So when we turn focus towards business applications, we saw the world where people didn’t use tablets the way that they use them today, or smartphones the way that you use them today. That same time that the uberization of everything is, is really happening. And so when you look at, you know, someone picking like groceries in the grocery store and they’re scanning items, we went after applications where you know you’re talking to a headset and it’s communicating directly with the device. We started working with auto manufacturers on their bill of materials, on their maintenance products, etc. I think that maintenance was probably where we ended up spending a large majority of our time doing 360 inspections, where you’re talking to your, your, you know, your device and it’s piping all of that data into the maintenance database and then auto-ordering the parts.
And so we were doing the automation on the back side of the NLP. I think a lot of people, like in the industry, don’t understand the difference between speech recognition and natural language processing, but we would take like the speech to text and then go process all of the data we really like started to find niche in that maintenance side, which is how we had met Walmart. And at the same time, we were starting to see this massive traction on oil and gas. Oil and gas actually wasn’t in the field, it was on the brokerage side. So most oil and gas brokers or traders, they trade on this system called Intercontinental Exchange or ICE.
And what they have to do is, you know, ExxonMobil will trade swaps with BP on a well, and they have to manually type these really crazy codes into their ERP system. So you have these traders that are making, you know, three, 4 million bucks a year that are literally manually trading, typing these transcripts at the end of the day into their ERP so that they can process the order and execute it. What we were doing was we were using our NLP to read the chat and pipe that data directly into the ERP. It was like super, like super successful. It’s actually what started to get us to look at the brokerage industry in general.
Dr. Jeremy Weisz: 25:05
And then that led you to JB Hunt.
Chadd Olesen: 25:09
So I was actually Walmart let us they were using our systems for maintenance applications and like in their truck facilities. And they were our first like real transportation customer.
Dr. Jeremy Weisz: 25:23
Yeah. So I can see I mean it’s a crazy journey from a niche perspective from like B2C to B2B and then kind of going from auto, CPG, oil and gas, Walmart brokerage and freight. You know, one of the things that you I was reading one of your LinkedIn posts, it says founders aren’t shaped by wins, right? Yeah, they’re shaped by failed things, issues, challenges. So I know you mentioned, you know, along the journey in-house counsel going back, you would have not done that.
You know, hiring customer success. Like what are some of the things along the journey that stick out to you that allowed you to get to where you are because of that adversity?
Chadd Olesen: 26:09
There’s so much I talk about today. Just today I got trapped in a couple of things. Like one, I was attracted by big logos. And I think that a lot of startup founders get trapped into this like big logo mechanism, like, right. They want to work with Exxon, they want to work with the Walmart.
They want to work with the Walgreens. The challenge with that is that those companies want to work on their paper. They have massive legal teams. They take forever to pay their use, like massive payment processing systems. And those terms override their MSA terms.
And so you get trapped in this like massive legal battle. Fast forward to today like you want to work with AVRL. You sign our paper and if you don’t want to sign our paper, then we’re probably not going to work with you. And I think that that was a huge learning lesson for me. I think on the team side, we got trapped into hiring teammates rather than focusing on building processes and scalable Systems.
I look at my team today and we’ve almost fully automated our customer success, right? Like, just like you supported. It’s going to go literally through an LM model that’s going to get piped directly to my product owner. Like we don’t like and I didn’t think about that before. I would put some person name, you know, Alex in front of the customer and it would take three times as long and the customer would get frustrated and we would get frustrated.
But that’s how we looked at like Silicon Valley is that everyone was hiring these customer like traditional software as a service customer success people, which were literally glorified like punching bags for the customer. Right. And so we weren’t we weren’t we were just focused on the wrong things completely. Like constantly.
Dr. Jeremy Weisz: 27:52
Yeah. I mean, in fairness, they probably don’t have the same development skill set that you do. So, you know, I’m sure some of these things you’ve created internally could be its own product. I mean, for sure what you created there. And that’s kind of the blessing and the curse, because there’s so much stuff that you could do that you kind of see through all these niches, like you can go into any business and help it, but which one do you choose?
And then you’re building these things internally to that are you could probably release that as a separate product or people, you know, lots of companies would be like, wait, I don’t need all these customer support people. You could pipe it in and then it, you know, spits out, you know, answering the questions.
Chadd Olesen: 28:32
Yeah, I think we fell into this common trap that a lot of AI companies are in right now, which is like, you have this tech and now you’re trying to find the application for the tech rather than this search for the problem and then build tech to solve the problem. And if I ever went and built a company again, which likely will probably happen at some point. I would look for be in search for the problem. And I think that that’s what makes like really great entrepreneur entrepreneurs. Great is they’re there building for a problem, not building for tech and then trying to find the application?
Dr. Jeremy Weisz: 29:08
Talk about you know, I know you raised money and as you’re growing. But we were talking before we hit record and you said the founding team owns 100%. Those things in my mind kind of clash and don’t, you know, don’t register.
Chadd Olesen: 29:22
Yeah. I was living like this Silicon Valley like dream when we were starting AVRL, I was going to raise a price round. We were going to raise it from like really, really big venture capital. We weren’t looking that at this like play as like money is fungible. Find the cheapest money and I’ll give Mike Greenberg credit.
I don’t know if he’ll watch this, but I have a buddy that lives in Santa Monica, and I was in San Francisco and I was getting ready to close a round, and it was a price round. He was like, come down, hang out with me for the weekend. And he had just sold a company and I’m showing him like what we’re working on and where we’re going. And he’s like, dude. Don’t raise a price around raise a safe.
And I’m like, what is a safe? And he like walks me through a safe. And we flipped the deal to a safe and we closed it maybe within like, I don’t know, a week. And this was back when safes were really becoming like an interesting mechanism.
Dr. Jeremy Weisz: 30:24
Talk about that for a second.
Chadd Olesen: 30:25
The safe is so a lot of people will raise like a convertible debt or convertible note. And they’re like, you know, for like really, really early seed. And it essentially would be a certain amount of money that would either pay back or the investor takes a certain portion of the equity and usually comes with a discount, but there’s always a maturity, a date on that. So at a certain time a safe doesn’t have a maturity date. And it’s essentially an option to participate in future funding at a priced round.
And what happens if you don’t ever convert it because you never raise a priced round, is that you hold that safe, and it’s like it’s essentially an outstanding liability that needs to be paid out at some point in time.
Dr. Jeremy Weisz: 31:20
There’s like a fixed like interest rate or something like that on there or.
Chadd Olesen: 31:24
Yeah, there’s usually like a discount that’s based off of that. So or a cap. So you could have like a safe that has like a ten cap. So the discount comes you know, post ten.
Dr. Jeremy Weisz: 31:35
And investors don’t typically want to do that because they’re like we’re risking our money. We want upside.
Chadd Olesen: 31:41
I think it’s interesting I think that it’s Y Combinator created the safe, and it’s still the mechanism that that those companies use today. However, what Y Combinator does a really great job of is that post their program, they put you in front of a bunch of investors to raise an equity round or some type of like, instrument. We didn’t have that. And I had and maybe we will convert them at some point. I don’t necessarily know today, but we really like creating great business.
I started spending a lot of time with a guy in Seattle named John Connors. He was on the board at Nike. I can’t remember what that their firm was called. It’s called Fuse Venture Partners now. But he had me with his lawyer and I was showing him our tech.
And the lawyer was like, hey, did you come from a lot of money? I was like, no. He’s like, have you like, ever, like, sold a company before? I was like, no. And he was like, okay, focus on base, hit like, don’t focus on the grand slam right now.
And I literally left that meeting like, okay, I’m like, protect equity. Hit a double, hit a triple hit a base hit, like whatever, just get on the map and then go and figure it out later. And we were probably pretty close to running, like needing to raise and Fontinalis partners called me and offered me an uncapped safe again. And I think, like, I think that my other investors got really pissed and they wanted to participate as well. And so we ended up raising another million and a half.
And that’s ultimately like what led us to profitability. And since then we’ve just been self-funding our R&D.
Dr. Jeremy Weisz: 33:28
I love it. Chad, talk about mentors for a second. You talk about John Connors. You talked about your friend from Santa Monica, and these were pivotal advice and things. Who are some other mentors?
It could be colleagues in the industry who’ve just given you some good advice or lessons along the way.
Chadd Olesen: 33:44
Yeah, this is super interesting. And I don’t know if other founders have this experience, but some of my customers today are some of my best friends, which is a really wild thing for a founder to experience is that I’m helping my customers make money, and maybe that’s why they want to be my friend. But, you know, I’ve literally gone to Aruba with a customer. I’ve gone to really interesting places with them. I go to College World Series with the customer every year for fun, and my wife comes and their kids come, you know.
But some of my mentors now are customers that I work with, like really, really closely. There’s some guys in Omaha and like Tom, they run a company called Kirsch Transportation. Matt owns that company. It’s just great people. Russell White, Paul Transportation or Paul Logistics.
He taught me something that I had never been taught before that I literally use on almost all of my meetings, which is like an IT team and a vendor, like when they talk to one another that talk is or that discussion is either going to bring them closer together or push them further apart. And I’d never thought about that from a vendor perspective before. But, you know, we have to think about what is the outcome of this. And yeah, so there are some companies that we don’t want to work with and that we do want to push apart, and we treat them like we treat that conversation in a different demeanor than others. The guys at Echo Global Logistics like Jay, Scott, Zach, some of my like really great friends that are also like mentors to me.
But what these people have done in transportation is they’ve introduced me to some of the most important people, and they’ve really been pivotal in the success of AVRL from the standpoint of they saw what we were doing, they believed in it. One, they believed in the vision of where we were going, but two, like they were seeing the benefits of it and in like a fairly incestual market like that. I think that what the logistics companies do is they push you out or they like, bring you in. And I really feel like we’ve been brought in as an organization.
Dr. Jeremy Weisz: 35:54
I want to talk. I mean, there’s so many moving pieces in this industry in, like, what you do pulls a lot of these pieces together and it’s just a hard thing. So I want to talk about I mean, right now in this point in time there’s Port wars and tariffs. So I want to talk about that. I do want to just point out one thing you mentioned Echo Global Logistics.
I would have no idea who that is or what that is. But the funny thing is, so, you know, my background is a former recovering chiropractor and in Chicago. And so we were one of the first deals that ran on Groupon, okay, in my office. And I had all these people coming from Echo Global Logistics. I’m like, how is this like, why is everyone from Echo Global Logistics?
Well, I guess I didn’t realize Eric Lefkofsky and Bradley Keywell, but Eric Lachowski was one of the people that brought Groupon to market. And so they ran it at all their big companies. And so I got a flood of people and I was like learning about logistics because of the patients that were coming in from that. So it was remarkable.
Some of the stuff they were, they were doing there. So just funny small world. But talk about tariffs and import wars for a second and how this relates to making your job harder.
Chadd Olesen: 37:14
Yeah. When you look at the current environment, I mean, the three planned carriers have seen so much rate compression over the past three years where the shippers will continue to take volume to bid, they’ll take on the RFP contractual side. They’ll keep like literally usually they’ll use like one RFP for a year, for six months. But what they’ll do is they’ll continue to whittle carriers and three pulls down to drive the rates really low. And right now you have the rate like rates are at almost like pre-COVID level.
And that’s like a really interesting concept because the market moves in a very cyclical nature. And right before Covid was a down cycle in 2019. And so the market moves like a traditional cyclical market. But with all the PPE like money that entered and how the ports were so backed up in Covid, it drove rates through the roof to a level that no one had ever seen before. And so clearly, your cyclical market’s going to be like it’s going to take a lot longer to go down.
What the industry needs for rates to go back up is they actually do need three Pls and carriers to either get consolidated. So purchased they need capacity to leave the market. So you need three Pls or carriers to go out of business, which has been happening like hundreds per day. And when you look at what’s happening with the ports and with tariffs, There’s two things that are happening. One volume is being like, it’s not coming into the United States.
And I don’t actually know how much of domestic transportation runs on international volume. But when you look at things that get manufactured, either in the United States, like, let’s say, a home or commercial real estate, etc., that steel comes in from China, it comes in from other places. And what we’re seeing right now is we’re seeing almost no ships enter the market where companies are just in a holding pattern to see what ends up shaking out. I was with Red Flyer. Do you know that the little wagon company?
Dr. Jeremy Weisz: 39:27
Oh, yeah.
Chadd Olesen: 39:28
Sure, sure. And I have a friend that works there, and he was talking about, you know, what they were doing is they used to manufacture in China. They moved that manufacturing to Sri Lanka because that’s where they thought they were going to manufacture tariff hit Sri Lanka. So then they froze and they’re like, we’ll just stop manufacturing for right now. As you see, I think there’s probably like 59 ships or 96.
I think it’s 96 ships that are hovering around in the ocean around Seattle. They’re being rerouted to Canada. And what they’re going to try and do is avoid tariffs in the United States. And so there’s this fear of is that volume gets unloaded in Canada and then it gets trucked down to avoid. Or there’s another theory where volume arrives in Canada.
It lands in Canada. And it just sits there and no one claims it, because you don’t have to pay the tariff until you claim ownership of the property. And so I think that we’re really near pre Covid level of, of actual vessels in transit or at ports at the same exact time. I think there’s negotiations with the ports. And that’s an interesting thing.
I think that there’s a lot of people in the industry who are not sure what’s going to happen. Vessels that come into the West Coast. You have a port in Seattle, Port in San Francisco, port in Long Beach. And it wouldn’t surprise a lot of people in the industry if they just stopped coming into Seattle and into San Francisco. And they arrived in Long Beach, and then they transported that on a different mode via train could be via a domestic truckload to those markets.
The really awful thing about that is that if you live in Seattle and your port’s not utilized, volume of product is going to be a really difficult one, but then you’re going to definitely get the price inflection of that transportation cost that’s going to come in. And so I think the entire industry right now is really frozen and just waiting to see what happens at the time, at that same exact time that freight brokers and asset-based carriers don’t have like volume to move, rates are really depleted. Drayage will definitely get crushed. Drayage is the mechanism that takes volume from a port to a distribution center, maybe like a 100-mile run. They expect massive bankruptcies in those markets.
There’s just, you know, there’s just not any volume. There’s super bad margin compression. Plus you’re talking about an industry that operates at, you know, four 5% already.
Dr. Jeremy Weisz: 42:10
I mean, talk about the ripple effect. You know what I mean? I’m going to just really quickly, if anyone at this point in time or whatever is like, you know, how what are the tariffs mean? And we were talking about this before we hit record. Chadd, actually, my brother-in-law, Brent Nyman, who’s an economics professor at University of Chicago, he’s on you know, he’s been talking about this.
And he puts it in a way I can actually understand of what’s going on. And, so here’s one him on CNN. There’s a bunch out there of him on various new news channels. If you search Brent Neiman, you’ll see MSNBC or CNN or wherever. And he just kind of breaks down what it means and kind of how it affects things.
Because he did specific research on this because that’s what he does. So people can check that out. Chadd, last question. First of all, thanks for sharing your journey, your stories. It’s amazing.
If, you know, I usually point people to someone’s website, but there’s not you know, you could you can go to apple.io and there you can. There’s a number, you can email them if this is of interest. And but he does post a lot on LinkedIn. So you can also check out his LinkedIn musings as well. My last question is just about leadership and post child and pretrial leadership.
And I find this to be an interesting topic. and just talk about you maybe pre-child leadership and post child.
Chadd Olesen: 43:41
Yeah. So for those of you who don’t know, I had a child on New Year’s Eve. She was six weeks early and that was like really an interesting situation. And I like wasn’t sure. And my wife the same, like if we were if we wanted to have children.
AVRL is kind of my baby and I’ve been working on it for almost a decade. Pre-child leadership. I’m I have almost like zero empathy just in, in general. And I think that when we looked at recruiting, when we looked at that, we were so focused on hiring people who were motivated by money. Because when money is like something that we can control, even if we’re going to like work.
24 over seven 365 post child Chadd is really interesting because I just feel like I’m a lot more empathetic towards my employees and needs. I still work most of the time that I’m alive. But I started to understand the need for work-life balance for other people, and them wanting to spend time with their family and the reward that they get out of that and taking vacation, etc.. And so I would just say that that’s been a personal transformation for me, that I’ve been talking to some of my friends about, that I don’t know if you get to experience unless you actually do have children.
Dr. Jeremy Weisz: 45:09
Yeah. Chadd, first of all, thank you everyone. Check out AVRL. I don’t typically do this on the interview, but I’m going to do it this time because I find it fascinating. I have a special self-proclaimed talent where I can spot celebrity lookalikes.
Okay. And sometimes it just comes to me. And for some reason, in the middle of this interview, I’m like, Chadd has a celebrity look-alike, and I’m going to pull it up so people who listen or watch us could agree or disagree. And I don’t know if you get a celebrity like do you?
Chadd Olesen: 45:42
No, but I’m excited.
Dr. Jeremy Weisz: 45:44
Okay. Okay. You’ll ask your wife. Your wife will be the true test. If people don’t follow basketball.
JJ Redick, you could take a look, see if you agree with me or not. That’s my Chadd’s celebrity look alike.
Chadd Olesen: 46:02
I’ll take that. I think that’s good. I’ll take that.
Dr. Jeremy Weisz: 46:04
Yeah. Yeah. So anyways everyone thank you. We’ll see you next time. Chadd.
Thanks so much.
Chadd Olesen: 46:10
Thank you.
