Lori Boyer 00:00
Welcome back to Unboxing Logistics. Everyone, you know the drill. I’m your host, Lori Boyer from EasyPost, and I am really, you guys are in for a treat today ’cause we have a fantastic guest. Barely needs introduction from me, Benjamin Gordon. He has seen logistics, I feel like from every side, every angle.
He’s been operator, deal maker, investor now. He built and sold a logistics company to Maersk. He’s advised big names like UPS, DHL, on billion dollar deals. Today he runs Cambridge Capital where he basically has to have all the knowledge to know what he thinks is gonna be the future in the logistics industry.
And he also runs the BGSA Supply Chain conference. You know, that’s basically the power summit conference of our industry where all the biggest CEOs, investors, innovators in supply chain meet, figure out what’s going on. And I was just really excited to have Ben on today. I have to also throw in, you went to both Yale and Harvard, is that right, Ben?
Ben Gordon 01:15
I did not, ’cause I got kicked outta one, but one was.
Lori Boyer 01:18
Oh, okay. Yeah. You were the, you were the troublemaker, huh? So, Ben, tell us a little bit, anything I’ve missed, anything you’d want our audience to know about you and your background?
Ben Gordon 01:31
Well, Lori, such a great introduction. Thank you. I, I think anything I say won’t won’t match up to the fantastic billing, but I, I appreciate it.
So thank you. Great to be with you.
Lori Boyer 01:39
Well, I’m excited. And you know, I really was thinking, I was telling him beforehand that I was really thinking through which topic we should discuss because he has incredible. Hanta and thought leadership out there that I’ve read. And so today we’re gonna be talking a little bit about AI.
I am really excited about that. Before we do Ben, why don’t you go ahead. One thing we’ve been doing this season in our podcast is asking people to share a person in the industry that you just really admire and, and kind of why. So I would love to hear from you having been around for, for a hot minute.
Ben Gordon 02:10
Well, thank you. And there are lots of amazing people that I’ve had the opportunity to work with including sadly, the late Fred Smith who just passed away very recently hundreds of CEOs that I’ve worked with either invested in in their companies or advised but I’m gonna go old school and, and, and tell you that one person in the transportation industry who I admire, who’s the reason I got into this industry, it was my grandfather. And the reason is because my grandfather started a, actually, he started a car dealership business back in 1948. And, and the reason he got into the business was the job that he really wanted, he couldn’t get. He wanted to go into the steel industry. And, and his dad had a small steel business.
They did business with Bethlehem Steel. He couldn’t get hired into the management training program at Bethlehem Steel. And so he said, okay, and this is the case with so many great entrepreneurial stories. He turned adversity into success. He went, actually, he went into another car business and then said to the owner, here’s the deal.
I’m gonna be the hardest working best employee you’ve ever had. And then in four years I would like your permission to let me buy you out. Which is a pretty let’s just say a, I dunno, about a 21 year olds that would say that. Ballsy. And, guess what, he did. Bought it, rebranded it, built it out his way, grew it and then, and then moved into truck leasing and started a, a dedicated contract carriage business that would ultimately evolve into logistics.
And so the reason I got into this industry, I never, I didn’t want to be the guy that had a job ’cause he was related to somebody else. So I went my own way. But I, I mean after, after Yale, I went into strategy consulting, worked at a Bain spinoff called CDI, then Harvard Business School. And while I was there, I wrote what I thought was gonna be the business plan for a technology division, an internet division that would help my grandfather automate part of his logistics company, AMI. ‘Cause they had in, in a room probably smaller than the room you’re sitting in right now. They had a, a couple of guys on phones calling, trying to broker freight so they would have dedicated lanes so that lanes would be full going one way, empty coming back.
The brokers would try to fill the lanes. And I said, Hey, there’s this thing called the internet. I bet we could do this more efficiently. And and I, I pitched my grandfather on it. Of course, in true nerdy fashion, I wrote an 86 page business plan. And in true old school, focus on what matters fashion. My grandfather read the first four pages and then closed it and said, well, I’ve seen enough.
So I said, well, what do you think? He said, it’s a good plan. I said, well, do you wanna do it? He said, no, my plan’s better. I said, well, what’s your plan? He said, well, I’m selling my company. So and he did. So he sold his company. Today it’s a part of Penske. But it gave me the catalyst ’cause I thought, okay, I spent all this time creating this idea, it’s not gonna work here.
Why didn’t I just turn this a new startup? And so I did. And that company in 1999 became Threeplex, which would be one of the first SaaS TMS companies. So, you know, I learned a lot from my grandfather. Learned a lot about the value of, of grit of tenacity, judgment, people judgment, situational judgment, willingness to know what, when it’s time to you know, get, get outta the details and, and, and pull back.
But I, I, I owe him the inspiration for starting my first company. So thanks to his not going with my idea gave me the catalyst to go start it.
Lori Boyer 06:05
I love that. And what was his name? Is he still around?
Ben Gordon 06:08
No, no. He passed away in 2010. His name was Gene Ribicoff.
Lori Boyer 06:12
Gene. Okay. Love that story. I especially loved the fact that he said no.
Because it is one of those life lessons as well for you as like, when are the times that you need to say no? Like this isn’t the right move today. And I think especially as kind of an investor or whatnot, there’s a lot of times where doesn’t mean that the idea was bad, it just wasn’t right for that time in that place.
So totally, totally love that. That’s amazing. Okay Ben, you’ve been around in logistics you know, since a long time before AI sort of became our buzzword. When you look at sort of today’s AI boom, what kind of parallels do you see maybe to earlier waves of tech hype in logistics? Sometimes I hear people say, this is just another thing, you know, another big tech thing.
I guess, why do you think it is such a huge topic in, I, you know, I can’t go to a conference for like a second without seeing AI everywhere. What, what is your impression? What’s the, what’s the Ben Gordon take on it all?
Ben Gordon 07:11
Well, look, my take is, on the one hand we are in a hype cycle. On the other hand, there is no doubt that AI has the capacity to totally transform, not just logistics, but everything. But particularly logistics because AI is outstanding in areas that, one, are process intensive and there are an awful lot of processes to automate. Two document intensive. And if you look at, you know, the various, the, the fact that you know, here we are all these years later and there’s still a tremendous amount of EDI and there’s still a tremendous amount of, of, you know, Excel based work. There’s just, there, there’s a lot of data workflow process and, and transaction intensity.
AI is, is really a perfect tool to help automate all that. And then lastly it also addresses the thing that I think has been a hurdle for so many prior technologies, which is the natural language processing makes it easy to use. You don’t have to be an engineer to use it. You know, they all just talk about vibe coding and the idea that you or I or somebody else that isn’t a trained engineer can use AI to to do things that, that took much more technical training before.
Now a natural language processing makes it possible. So I think all that’s great. What does it remind me of? Well, it reminds me of what we were just talking about. It reminds me of 1999 right? Why? Because in 1999, what people said about the internet, in many respects, similar to what people say about AI now, they said, number one, it’s gonna transform the industry.
It did. Number two. Interestingly, they said, well, the internet’s gonna cut out the middleman. So is logistics, you know, our truck brokers gonna go away. Well, obviously that proved not to be true. It, it turned out that it became a powerful tool to automate brokers, not to replace them. Number three you know, people assign tremendous valuations.
So much so, I mean, it’s interesting. I was, I was talking with Tom Sanderson recently. Tom was the CEO of Transplace. When Transplace was formed, it was the logistics arms of six different trucking companies. They formed it in 2000 and they thought, hey, if we call it Transplace, add a dot com at the end, and then go for a plan to try to take it public, we will instantly, massively increase the value of our trucking companies just by virtue of the share that we, we hold in this. Now of course, that was crazy, right? It didn’t actually make sense. But the substance underneath all that was legitimate. internet powered businesses made a huge impact.
And I think the same is true here. So is there lots of hype? Yes. Will a lot of companies fail? Yes. But in the end, will AI be a tremendous source of productivity gain for companies that use it well? Absolutely. Just like it was the case with the internet and those that were early adopters and companies that, that used Threeplex and others back in 99.
I think the same is true today.
Lori Boyer 10:19
I love that. I love because it’s like, similarly with the internet, we don’t know for sure exactly what changes it’s going to implement, and sometimes maybe we’ll think it’s gonna, you know, spur a change here or there, and then it doesn’t, but it does it in a different way, so that’s super exciting.
One of the articles I read of yours, you said AI should not be just a shiny dashboard. Sometimes I’ve seen that as well. Like people saying it, it just looks good in the sales deck sometimes, right? It has to actually get your data and turn it into action, so. We have a lot of shippers listening out there.
If I’m that shipper, how can I tell the difference maybe between a, something that really is gonna work and something that is just sort of a shiny dashboard. It’s just hype. I, I like to think you’re saying right along this, you know, AI is sort of like the most overhyped, but kind of underused and taken advantage of tool because of these shiny dashboard sort of views.
What is your advice for shippers?
Ben Gordon 11:21
Number one is start with a clear definition of the business problem. Right. What is it that I’m trying to solve? I’ll give you an example. GreenScreens, which is a company that I co-founded five years ago, and it was focused on AI powered predictive pricing for trucking focused on one very specific problem. There’s no ambiguity about it. In fact, we wouldn’t have even called it an AI company. We called it a predictive pricing company, ’cause the focus was the problem. What was the problem? Well, if you were a truck broker or shipper, or a carrier for that matter, it’s tremendously important for you to know how should you price.
If I’ve got a truckload of freight going from Salt Lake City to Miami, you know, and I get the price wrong, it makes a big difference. Now, if you’re a carrier and you get the price wrong, it matters. If you’re a truck broker, and right now average margins, gross revenue to net revenue are about 12% in the industry if you get that wrong, if you are off by 6%, right, that could be the difference between making you know, normal money versus, you know, making net of everything. Because at 6% margin, you’re actually losing money when you fully load it with all of your costs. You know, that’s a big difference. And it turned out that NFI, you know, major logistics company did a study and they found that using the other 60% market share company in pricing, they found a 20% error rate.
In what in, in, in the pricing that they got. So if you have a 20% error rate and a 12% margin, you’re pricing at a gross margin loss an awful lot of the time. So this was the big problem. The issue was not AI, the issue is solve the problem.
Lori Boyer 13:07
Well, wait, wait, okay, I gotta pause that. That was so good, Ben.
The issue is not AI. The issue is solve the problem. I mean, that’s critical right there. Okay, go ahead. I just love that, that was genius.
Ben Gordon 13:20
By the way. I mean, you, you see this whenever a company leads by saying, I am, fill in the blank. Something, you know, that sounds shiny. Usually that’s a sign that, that they’re not the, the best at the problem.
You know, there’s a, there’s a saying in in law, which is if the facts are on your side, cite the facts. If the facts are not on your side, cite the law. And if the law’s not on your side, pound the table.
Lori Boyer 13:43
I come from a long line of, of lawyers, so I know what you’re talking about.
Ben Gordon 13:48
But you know that. Yeah.
Mm-hmm. So to me, you know, people that start by saying, I’m an AI company, that’s the equivalent of pounding the table. Whereas if the facts are on your side, you lead with with, with the facts, which in this case, it was solve the problem. And the problem was get the pricing right. So, so for GreenScreens it was focus on the problem and then communicate with truck brokers.
Truck brokers were the ones that needed it the most because given that thin margin and wide dispersion based on getting the pricing wrong, if you’re using DAT or somebody else, it really mattered to get it right. And guess what? The early adopters were all major truck brokerage companies and, and so within, I don’t know, two years, something like 150 of the top 200 truck brokers, something like that, you know, all you know, signed on because it was such a clear, compelling value proposition.
They weren’t doing it because of AI. They were doing it because it helped them boost their margin because they’re getting the pricing right. So I think lesson number one is look for companies that are laser focused on the problem that you care about. And that’s, I think that’s a, a big deal.
Lori Boyer 14:57
Can I ask one question there?
So I’ve talked about this a little bit before, where some of the best AI tools are kind of vertical. They go deep on one specific niche. You know, rather than really broad and horizontal. And then I’ve had a few people question me, when I go that way, my tech stack sort of starts to blow up with too many tools.
Do you have advice for that? There’s not always a great easy answer, but I’d love to hear what you say.
Ben Gordon 15:22
Yeah. So a couple things. I mean, this, this also comes to the question of do you want a bundle or a series of great point solutions? And in the early stages of innovation, the point solutions are almost always better.
Same was true with the internet. You looked at the best internet companies, 99, 2000, 2001. You know, you, you would have one company for one feature, another for another, et cetera. And then eventually, as the market matured and consolidated, some big platforms came out of it. And of course, those platforms included large TMS providers and then people that would aggregate other capabilities.
You know, like, like you know, someone today like a, a BlueYonder would be an example. You know, or an Infor. So you know, you have that maturity cycle. Well, today because of the early stage of AI, you are usually better off picking individual point solutions that are great. But there will come a time in the next three to five years where that evolves and, and then you’ll be better, you’ll be able to find integrated platforms that could do it all. It is actually part of the reason why GreenScreens sold to Triumph, because GreenScreens’ strategy was be the best at one thing. Predictive pricing. Then there were other individual companies that GreenScreens thought were great in different areas, whether it was in capacity or visibility or TMS or, or otherwise.
So instead of doing all those things themselves, GreenScreens said, hey, we’ll be like the it, it’ll be like the, the open architecture platform, right? Like you could be Apple and you’re the walled garden and everything has to happen inside. Or you could be the open architecture and you’re like Android, and you’ve got all these other companies and partners and, and it turned out that at this stage of the game, the open architecture pick your best partners approach, I think made more sense. But we also knew that a time would come when this market would consolidate. And so one of the reasons why GreenScreens ultimately sold to Triumph was Triumph had lending, factoring, a whole series of intelligence capabilities, and predictive pricing fit into that strategy and fit into that bundle.
So now Triumph plus GreenScreens, there’s a bigger bundle. And so much in the same way that these point solutions from the internet days evolved into bigger platforms. I think that’s what we’re starting to see now with AI, and GreenScreens, Triumph is a good case study.
Lori Boyer 17:52
So we’re just on the cusp of moving from individual point solutions to maybe some more.
So hang in there, is kind of what I’m hearing. We’re still a little bit in early days, but eventually our tech stack isn’t gonna blow up. So, okay. Getting us back on board. So our, our first thing that we need to look for is that, that you’re actually solving a pain. So, one thing I kinda loved with that is sometimes I feel like I talk to shippers and I love you guys.
You know, I talk with you all the time and, and sometimes though you’re out looking for an AI solution just to see where can AI fit into my business instead of, love what Ben said, what, what problems are you having? It doesn’t matter if it’s AI or something else. You know, find solutions to your problems.
Don’t find ways to fit AI into your business. So, okay, first thing, start with the problem, then you had a second one.
Ben Gordon 18:43
So then the, the second one is make sure that there are other adopters that look like you, that are getting tangible benefit. Now, this is, this is really important. And look, I’m, I’m. An investor.
We, at Cambridge Capital, we invest in great supply chain companies. We have eight portfolio companies. And I’ve, you know, invested in dozens of others over the course of, of my career. And the number one thing that earlier stage companies that, that succeed tend to do really well. Well, I think there are two.
One is focus on the problem, but, but the, the second is show the use case. In other words, give an example of somebody else that’s using it. Show the case study. What was the problem they had before? What else did they consider? Why did they choose you? How easy was it to get started? And then lastly, what were the results?
Now those, those five elements are super important. It’s very logical, simple, and straightforward. But not a lot of people do a great job of systematically demonstrating that. If they do that, two great things happen. One is from a marketing standpoint, they do a better job of conveying the value. So if you’re a shipper listening to this and you’re looking at an a AI powered supply chain technology company, you ought to ask them, show me the case studies that, that take you through that.
If they do a good job of that, then great. It’s gonna be better for, you know, for you and better for them. But there’s also a second benefit. The second benefit is it creates a feedback loop. And that’s really important because the best AI powered company, the best companies period, tend to be really good at saying, okay, I’m gonna get this out to the market.
I’m gonna listen to the customer’s feedback and then I’m gonna make sure that that gets recycled into the next iteration. And so again, with GreenScreens, you know, NFI was a great early adopter because they were a terrific truck brokerage company demanding high standards, but also representative of what lots of other truck brokerage companies cared about.
So you knew that if you did a great job for them, there would be 200 other companies with similar goals and needs. And so you gotta pick the right early adopter. But if you pick the right early adopter, you’re gonna get a great virtuous circle of feedback loop. And so, you know, NFI used it and said, well this is great, but you’re missing a few things and we get all this value in these lanes ’cause you’ve got high volume, you don’t have as much volume in these other lanes. So what do you do? Well, guess what? GreenScreens then said, okay, let’s take that back to the product side and create sort of a, a, a, a green, yellow, red rating system so that if the lane had high confidence, ’cause it had high volume, it would be denote, it would be marked differently.
And on the other hand, if you didn’t have as much data, you let ’em know so that maybe they don’t put as much weight on what the system says. ‘Cause the system hasn’t been trained as effectively as high volume. You wouldn’t know that, or at least you wouldn’t know that instantly unless it was out in the market and you had that tight feedback loop.
So I think that that process is super important.
Lori Boyer 21:48
Okay. You broke this down so well. So if you are looking at AI, step one, is it solving a problem? Is it, so maybe there’s a great idea, we’ve got a problem, it’s being solved, step two. Does it actually work? Because sometimes there’s a lot of ideas and you get that through use cases.
What can they share with you? Is it actually working. And then moving on, are they iterating upon that? Are they making changes and listening to customers and getting the feedback and growing. Fantastic advice there on how to find the right AI. I have a question. I’m wondering, you know, you mentioned the problems being solved.
Are there certain problems that you feel like right now, kinda the stage we’re at in AI, in the logistics and supply chain industry that are, most likely to be solved by AI, you know, what kind of areas, what problems are the biggest pain points that it’s solving?
Ben Gordon 22:41
Well, I’ll give you a couple. One is in the realm of post purchase tracking and visibility.
So you buy something online, then what? Okay. So. And everybody besides Amazon is struggling with this question because everybody wants to be able to give their customer an experience that’s equal to or better than that. ‘Cause otherwise, why, why would a consumer buy on any site other than Amazon? And a big part of that is the post-purchase experience.
You could think of that as several elements. One is tracking, you know, where’s my stuff? And, and visibility and, and the analytics around that.
Lori Boyer 23:18
Which is massive.
Ben Gordon 23:20
Which is super important as you know, and of course, you know, relevant to EasyPost as well. And, and then, then there’s the issue of, of the customer communication, right?
So a consumer wants to know when they write to you and say, where’s my stuff? Or whatever, and. Do they get some sort of automated bot that doesn’t really tell them anything and just makes them frustrated? Or does it say, we’ll get back to you in two business days, you know, which is not the answer that you want.
Or, or, or does it give them A, an a direct answer and B, a positive tone and level of, of constructive engagement that makes ’em feel good about you? Because what brands, I think often underappreciate is, the supply chain is the weak link in the brand process.
Lori Boyer 24:07
Supply chain is the weak link in the brand. That is incredible. Right there. You could take that and go with it. So anyway, yeah, go ahead.
Ben Gordon 24:16
I mean, I’m a, I’m a, a runner and I’m, I’m gonna be in, in the Catskill Mountains for my half brother’s wedding next week. So I bought some Salomon you know, trail running shoes and, you know, the shoes weren’t the right size.
So I wrote back, you know, tell me about the, you know, returns process and, and when you get an automated email that says, well, we’ll get back to you in two business days. You know, no matter how great I might feel about that shoe or that brand boom, I, they, they, they just lose customers when something like that happens.
So the supply chain is the weak link in the consumer brand experience. And if you’re a brand and you’re listening and you’re, or you know, CPG company, you’re thinking about that, what you should be thinking is not how much am I spending on post-purchase tracking and visibility in the customer communication side, what you should be thinking is, how much does it cost me to acquire a new customer, and if I lose them because of this, how much does it cost to have to go replace and, and do another? There’s an interesting study on, on customer loyalty by Bain a few years ago that showed that that the cost of people usually underestimate how much it costs to win a new customer and. The cheapest new customer is always keeping the one that you already have.
And so when you think about it that way, number one, it means that you should be thinking more about investing in that post-purchase experience to make sure that you keep your customers, your future customers, keep ’em happy, keep ’em engaged. And then, and this is to come back to your AI question, how can you use AI to do a better job of customer engagement?
There’s no excuse in, in the, in the world of AI today to not have an instant answer to a customer question like that. Where’s my stuff should never be, you know, we’ll get back to you in two business days. Or, or any variation to that. So, turns out that in that post-purchase arena there’s a company called Parcel Perform which of course, I think so highly of them that, that I invested in the company and so, so put my money where my mouth is. And what they do is specialize in exactly that, and they power marketplaces and brands and companies like Shopify and Espresso and a variety of others.
So they’re really good at it. What they’re increasingly doing is using AI to look for patterns. And, for example, wouldn’t it be good to know that if you’re an ecommerce marketplace that, that whatever ships out on Tuesdays tends to be, you know, faster than what ships out on Fridays. Maybe because you know, there’s a, there’s a lull over the weekend. And does that maybe influence, do you wanna do more to push promotions on a Tuesday than a Friday, because that way the customer gets it faster, then they’re happier, then they have a better experience, and there’s a whole virtuous cycle that comes outta that.
Or maybe it turns out that there’s AI powered analytical work that you could do to figure out that some carriers do a better job for you in certain situations, and maybe you wanna allocate the, the right orders to the right carriers at the right time. There’s just all kinds of interesting analytical stuff that you can do.
So I think, look, post-purchase is one great example of where I think AI has media application.
Lori Boyer 27:44
I love that. And I am so on board with you. I am, of course, it’s interesting to be in this industry because we’re the consumer ourself as well, right? So we all have our, our shipping experience, and I’m a mom and I have seven kids.
And let me tell you. We do a lot of shipping and yeah, it, it can be just a horrible experience for me where, you know, I, I’d like to tell people I don’t blame the carrier, which I should, when something gets lost or something, you know, I’m looking at the brand and I’m saying, this didn’t show up. And you know, I also don’t care which carrier’s bringing it.
I just want it to come and I want, so, yeah. That’s fantastic. Well, I want us to pivot just a tiny bit ’cause I’ve heard you talk about that you feel like we’re going into kind of the fourth wave of supply chain transformation. I would love to hear a little bit about what that means, what you think that means and, and maybe kind of where AI fits in since that’s our conversation today.
Ben Gordon 28:42
If we zoom super high level, 50,000 feet, waves of innovation in, in supply chain. You could argue that a first wave in, in the US supply chain was in 1869, because that was the year of the golden spike in Promontory Utah, that connected East Coast and West Coast. Of course in, in, in Utah to create the, the first Transcontinental Railroad.
Why was that important? Well, it finally meant that you could ship something coast to coast in an efficient manner, right? I mean, what, what were your alternatives back then? Horse than buggy? I mean, it was there were not great alternatives. It wasn’t like today. You didn’t have airplanes and a highway system and everything else.
So, so guess what? Not only did that create multi-billion dollar fortunes for the, the railroad owners, but also for people that could use those railroads to ship things more efficiently. And so yes, you had people like here I am in our, our, our offices in West Palm Beach, Florida was built by Henry Flagler.
Henry Flagler of course built the Florida East Coast Railroad. But he also was partners with John Rockefeller in Standard Oil. Well, Standard Oil in part made a fortune by virtue of being able to do low cost shipping of oil that the railroads facilitated. So, you know, again, the, the, the immediate winners were those that built it, but then you also had the people that, that were able to benefit from it.
So I would say that’s, that was a first wave. Second wave came when a man named Malcolm McClain figured out that he could take containers from railroads again, that, you know, we’re, there’s a, there’s a theme here that, and put them in steamships. And he took an old oil tanker and put, put these containers in it and said, hey, it’d be a lot cheaper and faster if instead of packing ships item by item.
I mean, think about how inefficient that is, you know, to put you know, a, a, a box here, you know, a little, you know, parcel one at a time into an entire ship. A, it costs a lot. B, there was all kinds of theft. C, there’s all kinds of inefficiency with the loading and unloading. Malcolm McClain figures out the 1950s that he could do something called containerization. So he invents containerized shipping. And interestingly, the port in the Northeast that had the most volume at the time was New York, port of New York. The, the gangs of New York tells you something about what it, what it was like back then. There was a lot of theft and a lot of a lot of inefficiency.
He said, no, we’re gonna do a deep water port in Newark. And, and the first route was Newark to Houston that carried that containerized ship. And by virtue of figuring this out, first of all, Malcolm McClain made a fortune building sea land and then selling it to Maersk. And so of course that was great for the steam ships, but it was also great for the people that could take advantage of high volume, low cost shipping.
And so if you think about it Walmart, Costco, Target, like these retail powerhouses today exist in their current form, only because of Malcolm McClain containerization. Because without containerization, you would not be able to buy, you know, the shirt that you’re wearing or sit on the chair that you’re sitting on for anywhere close to the price that you paid for it.
Now we all benefited from that because low cost manufacturing offshore, you know, whether in China or elsewhere, low cost shipping to bring it here. I mean, in the end, the reason why supply chain as a percent of GDP is dropped by about 10 points from 1980 to the present. Which if you think about a $20 trillion economy, that’s $2 trillion of annual savings.
It’s because of this supply chain innovation. So, massive. Well now we move to the third wave. Third wave is the internet.
Lori Boyer 32:47
Gonna say, I’m thinking it’s the internet. Okay.
Ben Gordon 32:49
Exactly. So here we are back, back to the internet. So in the nineties, and you could, you could say that. The launch of, of Amazon Prime, you know, a a couple years thereafter.
I think 2003 is, is a good milestone for that. What did that do? It made it possible if the first two innovations were about low cost, high volume shipping. The third was about personalized shipping, you could get things delivered to you faster, cheaper, better than ever before. But it also created all kinds of other ripple effects.
It was great for Amazon, but it was also great for all these ecommerce logistics companies. I mean, look, EasyPost is a participant in that ecosystem too, just as so many other great supply chain technology companies. So that’s, we’re all living through that one. I won’t say more about it. So now the question you’ve asked is what’s the fourth wave?
And, and, and the fourth wave in my view, is possibly about how people can use AI to make better decisions. The, the big transformations I think are one, being able to take all this data to make much better decisions, whether GreenScreens with predictive pricing or or, or or Parcel Perform with, with, you know, the post purchase.
You could look at someone like Autoscheduler.ai, which is really a layer that sits on top of a WMS that it creates much easier to use analytics, tools, labor management, et cetera, or dozens of other AI powered applications. But basically this is gonna change all kinds of workflows. Fundamentally if companies can build businesses I mean the, like, one of the things that, that people talk about in Silicon Valley today are the rise of tiny companies. The idea that you could have 1, 2, 3, 4 people that you know, builds a multi-hundred million dollar business. And there’s a a wager right now who, who will be the first one employee company to build a a billion dollar business.
These things all sound crazy, but the reality is technology and AI in particular makes it possible to do so many things in an automated way that wouldn’t otherwise have been the case. So will, will AI powered supply chain be the fourth big wave? Maybe. We’ll, we’ll see. This would be a good topic to look back on and say three years from now.
Lori Boyer 35:07
I know. I’ll have to have you back and we can like, review everything.
AI is super fun and exciting for me. I’m just that nerd brain who loves to see fundamental shifts in how society’s working and, and everything. So I love this. Okay, we’re kind of running out of time wrapping up here. What excites you for the next like five years? You know what, what kind of, maybe some Ben Gordon predictions.
What do you think is gonna be exciting? And I’d love you to end with any sort of piece of advice for all of those who are listening today. You know, one thing they can do maybe to kind of get started or, or something from you.
Ben Gordon 35:44
Three things that I’m excited about and, and that I expect will happen. One is that maturation that we talked about from these point solutions to platforms, that’s happening now.
GreenScreens’ triumph is one example. What DET has tried to do with convoys and other, you know, Truck Stop, you know, with, with their acquisition of Denim a couple days ago. Another like … platforms looking to take on more. So I think one, one clear theme is you’re, you’re going to see the big get bigger, you’re gonna see a, a handful of major platforms emerge, and it’ll be an interesting battle.
We’ll see who the winners are. The three companies that I named are all combining supply chain and finance in different ways, right? So if you think about it Triumph started on the finance side as a bank, you know, lending and factoring, but now going aggressively into the, you know, intelligence and analytics side.
On the other hand, DET and Truck Stop have both made acquisitions to go from their roots on the freight side, you know, marketplaces and, and other capabilities into factoring and, and, and related fields. And so, you know, two giants approaching the same opportunity in the middle from opposite sides. Who will win?
I dunno who will win. But certainly that battle as, as you see this evolution from point solution to platform is, is going to be very very interesting to watch. And, and certainly I think will produce some multi-billion dollar winners. So I think that’s one. I think two is yeah, the, the, the AI powered applications, we’ve talked about some, I’ll mention a couple of others.
Returns is another big one. We, we spend 800 billion a year. You alluded to that, you know, with seven kids I, I, I shudder to think how much gets returned in the, in the Boyer household.
Lori Boyer 37:36
I think I’m just like fueling the entire industry at this point. Yeah.
Ben Gordon 37:41
Well, it, it, that can’t be because you haven’t seen what, what happens in my house, but, but maybe the two of us, so.
Lori Boyer 37:46
I’m not alone.
Ben Gordon 37:47
So with 800 billion being returned annually, there’s, there’s a massive pain point, massive problem, and that, that needs to be better solved. And, and so and there are multiple candidates, companies that do different things. Genco is a pioneer in this realm. My friend, Herb Sheer built Genco, grew it, sold it to FedEx for 1.4 billion.
And, and since then a host of other companies. We invested in a company called Reverse Logics, which using software to. Basically think of it as like a WMS for automating the returns process. And, you know, wonderful. And again, powers a number of majors, including FedEx and others, and that’s that, that’s great, but they’re not alone.
There are others in that realm. Optoro just sold to BlueYonder a couple of days ago and, and there various others. So there’s, look, there’s a huge need to solve that. Similarly, I think there are a handful of other big supply chain problems that are out there. So whether it’s post-purchase, last mile, fulfillment, returns I think you’re going to see some multi-billion dollar companies emerge in those realms.
So I think that’s second and then third you know. It’s, it’s very trite when, you know, people love to quote the Wayne Gretzky line about skating and where the puck is going. But, but, but not that many people actually do it. And, and what does that actually mean here? Well, I’ll give you an example. And it’s a little bit of inside baseball and something that we’re you know, pursuing our ourselves right now.
But if, think about it, where is their huge supply chain spend? Well, I mean, look. You could look at cross border, you could look at things where there’s strong underlying demand like healthcare spend that you know, never goes down even regardless of what the government does, regardless of recession. So fine.
There’s another one. Data centers, the massive demand for data centers because of the massive energy needs of AI. Again, think about those second, third, fourth order ripple effects, just like we were talking about with railroads and ships. One of the third or fourth order ripple effects of the growth of AI is what are the supply chains needed to support it?
Well, it turns out that building these massive data centers to, to be able to, to fulfill the energy demands of AI is a huge opportunity. Interestingly, we worked with a company there’s a tombstone, you can’t see it right here in my office for a company called IT Renew. And what they did was what’s called ITAD, IT asset disposition for data centers.
So think about it like this, your you know Apple or Microsoft or Facebook or whomever, you’ve got these, you know, huge data centers. You’ve got row after row, after row of, of servers. Think of it as like being on a football field and it’s like, okay, well if it’s Monday. We’re replacing everything on the five yard line, and if it’s Wednesday, it’s the six yard line.
And so, so there’s this cycle for replacing these. And what I, what IT Renew did was they managed that reverse logistics process for the networking equipment. So there’s a whole series of opportunity in supply chain around data centers, and that’s certainly something that we’re actively looking for and investing in, and I would would welcome any ideas from, from anybody listening if, if you know great companies anywhere in supply chain.
But particularly in areas where the puck is going, of which data center logistics is an example. Please reach out to me because who knows? Maybe, maybe you and we will team up on our next investment.
Lori Boyer 41:26
So, so smart. There are just articles recently about these big data centers and, and that need. It’s really cool.
I love with AI how many additional ideas and just industries and just everything that can splinter off from it. Really neat. Okay, so. Thank you so much for being here. Do you have a final piece of advice for shippers, 3PLs, anyone that you have out there for riding this AI wave?
Ben Gordon 41:56
Yeah, I think the, the biggest thing if you’re a shipper is just make sure you’re talking to a company that, for which this is the main thing.
This is, this is worth noting if, if I went back to the early internet days, there were a lot of people that tried to dress up with it. The transplace adding a.com at the end was a really good example. Just ’cause you added .com at the end of your name doesn’t make you a.com company. Just as if you added a.AI to your name or put AI in your tagline doesn’t make you an AI company.
Look for companies where, where your problem is their main thing. Because if it’s their main thing, they’re a lot more likely to focus on it, focus on you, and do a great job. So I think that’s, that’s one for shippers. For you know, for logistics companies I think A similar point, you know, with, with respect to partners, but also B, if you are looking to add capabilities, I would think seriously about either buying or partnering with, you know, other true supply chain AI, pure play companies that could be the best in a particular realm. I’ll just, I’ll give you an example. As we were talking about, I’ll use one of the companies we talked about earlier, Parcel Perform. Parcel Perform can go direct to all kinds of these major brands.
But one of the things that that they figured out was, why go build a giant sales force when you could partner with great logistics companies that already have a giant sales force and their own customers? So it makes a lot of sense if you’re a logistics company and something in the post-purchase experience is relevant for you.
Why not partner with somebody else like a Parcel Perform that has all that? A, it doesn’t cost you much upfront because fundamentally it means that you win when they win. It’s more like a, a joint selling arrangement to, to your customers. B, because they’re a pure play, it’s their main thing, so you’re gonna get something better.
Right. Jack Welch famously said, your back office is somebody else’s front office, and that’s why you should outsource. Work with someone where their, their business is the number one thing, and it might not be the number one thing for you. And then look, lastly, it also does give you the ability to say your customers that you’re giving them true, outstanding, best of breed, AI powered technology.
So it would be my advice for logistics companies. Look for those pure play partners. And then third, look, if you’re a supply chain software company I think, the biggest thing that I would say as an investor, I hear all the time from people that say, oh, well we don’t talk about that. It’s confidential, or we’re in stealth, or you need an NDA for this or an NDA for that.
Look, when I started my first company, you know I did and said all those things as well. And, and what I realized was what I thought was important turned out not to be. ‘Cause in the end, it’s all about execution. So if you’re a supply chain technology company and you’re building the business, just remember the thing that’s gonna matter for you most is how do I scale up?
It’s a lot less likely that Lori or Ben or hundreds of other people that are out there are gonna somehow steal your idea and make it theirs. Mainly A, because they’re busy doing their own thing and, but also because it’s really hard to do that. Like it’s all about execution. And so if you focus more on how do I go fast and less on, how do I prevent anybody from knowing about this thing that I think is really special, the, the people that focus on getting there faster are usually the ones that win.
Lori Boyer 45:39
Interesting. Okay. Love that. That’s totally a hot take there from Ben Gordon. So thank you so much again for being here. Totally gonna have to have you back in three years and we’re gonna see how all these predictions went out to play.
But thank you again so much.
Ben Gordon 45:55
Lori. Thank you. Great to be with you.
Lori Boyer 45:57
We’ll see you all next time.
