SmartHop — A platform for truckers, by truckers
By: Rick Zullo, Co-Founder & GP @ Equal Ventures
Trucking is one of America’s most critical and vital industries. Not only is it one of the US’s largest labor categories (employing greater than 3 million individuals), but COVID has served as a harsh reminder of the vulnerability of our nation’s supply chain and our reliance on these workers. I was first acquainted with the trucking industry in 2015 when I met Doug Waggoner and the team at Echo Global Logistics, a publicly-traded freight logistics company co-founded by my bosses at Lightbank. Over the next several years, I spent hundreds of hours getting to know brokers, dispatchers and the drivers they work with. These drivers represent some of the hardest working, yet most underestimated workers I’ve ever met.
Our industry often focuses on “disruption,” but seldom views the universe through the systems we are disrupting. While more than $10b has been invested into autonomous driving start-ups, little has been invested in improving the lives of the millions of drivers on the road. From helping them access better loads or navigate turbulent freight markets to finding ways to reduce the egregious rates they pay for working capital, insurance and leasing — the opportunities to improve the welfare of these drivers are nearly endless, however, seldom delivered.
The challenge is a tale of two stories. Enterprise trucking companies are heavy users of technology, have access to premium loads and can receive financing/insurance at reasonable rates. Small fleet and independent drivers, however, are a very different story. This group represents the vast majority of drivers (~90% of fleets have <10 drivers) and unfortunately, many of these drivers live paycheck to paycheck, limiting their ability to make upfront investments in technology and pay disproportionally higher rates on virtually everything (e.g. insurance, working capital, fuel, etc.). While enterprise fleets optimize routing via transportation management systems and track real-time driver behavior via telematics systems to reduce the risk of accidents, smaller fleets are often stuck using a disconnected web of load boards, apps and predatory financial institutions. For these drivers, the road looks very different compared to those at the enterprise carriers, with many often struggling to make a livable wage.
With that, I couldn’t be prouder to announce our investment in SmartHop — a platform for truckers, by truckers. SmartHop is the first and only platform that is proven to increase driver take-home pay by providing access to not only the best technology but the best loads in the market. The company does so by opting to transform the industry, rather than disrupt it, by partnering with many of the nation’s leading brokers. SmartHop’s ever-growing pool of drivers establishes a flywheel, attracting more brokers seeking greater driver supply who in turn provide increasingly better access to high quality loads. These brokers partner with SmartHop to streamline their operations with smaller carriers (who have traditionally been more costly to service) and the availability of premium loads attracts even more drivers with the promise of higher utilization (less “dead-hauls”) and better take-home pay. The company’s AI-driven dispatcher (Axle) augments the company’s dispatching personnel to enable SmartHop to offer a measurably better service at a dramatically lower cost than incumbents (SmartHop charges 3% of gross bookings for load access and dispatching, while incumbents charge 10–15%). The company has swiftly threaded the needle, creating a solution that makes both brokers and drivers better off, while enabling a business with virtually unlimited potential.
I initially came across SmartHop after hearing Guillermo (the company’s founder and CEO) featured on Dynamo Ventures’ Future of Supply Chain podcast roughly a year ago (Thanks Santosh!). Guillermo had previously run a successful trucking business in both Latin America and in Southern Florida before but was now seeking to build something bigger. We spent months getting to know him, and it was clear that we shared a mutual vision of empathy for today’s drivers. Guillermo had been in the cab himself (you can often see him wearing his trusty “trucker hat”) and knew that these drivers needed and deserved not just modernized technology infrastructure, but access to the premium loads that had traditionally belonged to the enterprise carriers. The two of us shared mutual connections in the industry like Jett McCandless from Project 44 (who is a LP in our fund and an angel in SmartHop) and as I spoke to other acquaintances in the industry, the feedback on both him and the company was resoundingly positive. Guillermo has surrounded himself with an incredible CTO / co-founder in Miguel and an uncanny mix of best-in-class startup operators and logistics talent (including recent additions of former Uber Freight and Trucker Path executive, Jeff Ogren, and former Uber and Oyo executive, JP Restrepo). He’s also attracted some of trucking’s most influential executives as advisors/investors and has executed partnerships with some of the most prominent companies in the industry. None of this came easy to Guillermo or to SmartHop, but his perseverance has set a foundation for what we believe can be a transformative company.
We couldn’t be happier to welcome SmartHop to the Equal portfolio of companies and Guillermo took quickly to becoming a member of the family. The day after he signed our term sheet, his daughter was born. It didn’t take long for both Guillermo and his daughter to be showing off their Equal pride and we couldn’t be happier for them and the company to be part of our extended family.
