Fleeting (July 2020)

Deal Abstract

https://republic.co/fleeting

Uber for truckers. If it sounds like an idea that should have already happened, I’d say I agree. Concerns are why large, very well capitalized firms have not been able to solve this market, and why there doesn’t seem to be large progress in this world. Solid team that has good industry experience and generating revenue with relevant market.

Decision

Yes, if I can get off the waitlist.

Why Investing/Passing

  1. I like the company. It’s solved the existential gulf of going from pre-funding, pre-revenue to now funded and revenue generating. The question of scaling is hard, but even with Otto being acquired by Uber, this is clearly a hard problem to solve, and the team has a solid start in the market.
  2. I like the team a great deal. CEO has ideal experience and all have solid professional backgrounds in their expertise. Archetype of three cofounders who are CEO, CTO, and COO.
  3. Fits investment thesis of two-sided SaaS marketplace that is $10 million valuation.

The 6 Calacanis Characteristics (91 161 18)

CheckPass/Fail
1. A startup that is based in SVFail: Brooklyn, NY.
2. Has at least 2 founders Pass (3)
3. Has product in the market Pass
4. 6 months of continuous user growth or 6 months of revenue.Pass: 2019 Revenue was $152k, 2018 Revenue was $11k.
5. Notable investors?Pass: Hustle Fund.
6. Post-funding, will have 18 months of runway Pass: Raised $1.07 million, current burn is ~20k, confirmed will have 53 months of runway at present spend.

The 7 Thiel Questions (ETMPDDS)

  1. The Engineering question:
    • Bad: Not convinced they can engineer a better software product than Uber.
  2. The Timing question
    • Uncertain: economic insecurity is great for the gig economy (see Uber, Airbnb, TaskRabbit, etc.) At the same time, if Uber and Lyft are going into the scooter and package delivery space, it’s possible this market is not great (yet.)
  3. The monopoly question
    • Uncertain: The platform needs to have high platform value to stay relevant and be the one monopoly to rule them all. Just like Airbnb and Uber both sell fears in some way (heavy propaganda/fear selling to make sure you don’t take a host’s name or driver’s contact info and coordinate a service by yourself,) I’d be curious for essentially a B2B marketplace how this would work. Might be instructive to look at something like Jumbleberry, which is a successful B2B marketplace for ad buying. As I write this, potentially also countering myself, for example, if managing truckers is something businesses hate managing, and Fleeting is essentially a dispatcher-as-a-service for truckers, that might work. But then potentially higher management costs, which means they’d have to do the job of building a qualified and reliable workforce.
  4. The people question: 
    • Very good: Like the team. VC’s love seeing someone who has a decade plus work experience in their industry specific.
  5. The distribution question
    • Good: Building two-sided B2B marketplaces is all about bridging the sellers and buyers of services. This team definitely has strong credentials for being able to build up both sides of this marketplace.
  6. The durability question
    • Uncertain: Biggest concern is Uber coming in and tearing it up. If this company is essentially a SaaS enabled workforce provisioning company, it strikes me that Uber has very large moats in all the defensible characteristics of this aspect. That said, if the goal is to get acquired/acquihired, that’s not a horrible outcome (more opportunity cost lost than actual monetary loss.)
  7. *What is the hopeful secret?: 
    • Trucking on-demand is a growth industry, with high moats that only trucking professionals focusing on this market can overcome, and that once established this is a sustainable business abstracting away trucking coordination costs for businesses and business acquisition for truck drivers.

What has to go right for the startup to return money on investment:

  1. Solve a deep existential problem: I keep focusing on why Uber/Lyft haven’t solved this market, and my conclusion is that the pain is high and solutions not obvious. If Fleeting can really solve this in a scalable way, then whether acquisition or public would be great result. For context, raising at $10 million would mean 10x return of capital is $100 million. Do I think company could 10x revenue in 3-5 years ($1M ARR?) possibly, but it has to not just be a service provider.
  2. Platform plus: I love this white paper from Andrew Chen, who now is General Partner at Andreessen Horowitz (commonly known as a16z, a.k.a. big craniums,) and Li Jen. Basically, platforms can’t just be basic listing services like Craigslist (will give music concert tickets for help moving this weekend,) but managed marketplaces providing additional value. Airbnb offers Llyod’s $1 million dollar insurance piece of mind to hosts, Amazon offers crazy customer service, Visor is a “tax preparing firm” which creates value by providing the value add of a nice self-service tech platform to reduce the tedious follow up accountants often do when preparing taxes. Deep understanding of business and truck driver’s needs will help Fleeting figure out what this scalable, unique, “escrow” value prop will be.
  3. Balance problems of today and problems of tomorrow: the future of trucking is highly uncertain. It’s a brutal job, facing labor short supplies, with VC’s and tech firms throwing billions of dollars to solve this problem. Evidently, Fleeting is solving a solid problem today as a service provider. As the landscape challenges rapidly, the team will need to figure out the firm and platform’s core value proposition then be ready to move fast to occupy its niche in the new refactored landscape.

What the Risks Are

  1. Uber (yet.) Why would Uber not beat Fleeting to this market?
  2. Platform value: Charging a 20%-45% fee is not trivial. What’s to prevent truckers and connectors, after the first impression, to just work together there? Similar to Airbnb hosts and guests who pay off the platform after the intro is brokered.
  3. Service provider vs platform: is the core value in abstracting away the costs in trucker management? Can Fleeting increase trucker comfort, consistency in work, or manage expectations of business providers better with more lead time, cancellation fees, etc.? Can it provide a better customer experience to both sides in a scalable way?

Muhan’s Bonus Notes

  1. Oversubscribed! Congrats to the team.

Financials (References)

  • Total Amount Raised: US $1,070,000
  • Total Round Size: US $25k to $1,070k
  • Raise Description:  Seed
  • Minimum Investment:  US $100 per investor
  • Security Type:  Crowd Note
  • Valuation Cap:  US $10,000,000
  • Offering Type:   Side by Side Offering

Updates

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2 comments
  1. Kimberly Robinson
    Kimberly Robinson
    July 14, 2020 at 11:01 am

    Hi, I was a day too late to invest. How may I get on the waitlist to invest?

    Reply
    • muhan
      muhan • Post Author •
      July 14, 2020 at 6:23 pm

      Hey Kimberly, thanks for writing. Unfortunately, you can’t get off the waitlist unless existing investors neglect to reconfirm their investment, or the company opens their round to more investors. Fingers crossed for you, I’m sure the Fleeting team would be lucky to have another enthusiastic investor.

      Reply
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