Let's Talk Logistics with Michael Caney

Speaker A: And I'm gonna be high. Good on you, Donald. I'm the rocket man. Yeah.

Speaker B: Take me through what before there was highway. How did people do what you just said? Like they just went to RMIS or carrier 411 or.

Speaker A: Yeah, so I mean, I'll just tell you what I did. I'll tell you what I did. Like so uh, you know, my, my reps are ran. I ran several brokerages and they're covering freight and hey, you want to set, get set up? Yes. Send me your packet. Right. And so back in the day it was like had a packet on my desk. I would fax it to the carrier and all RM did was they took that packet and they said we'll just put that on the Internet. And, and the closest thing to a multi to, to like a. You know, it's the closest thing to like having a bunch of individual apps on your iron as possible is rmis. So there's a web app. But like the, the rules engine wasn't global. So we all had different rules. We all had different things. So highways rules engine is. Sits at the top. Right, Right. Pick what rules you want to enable. So rather than like me saying, okay, I'm gonna invite, you know, Gabe's trucking company, uh, and I'm gonna send him a pack, I'm gonna do all this.

Speaker B: Right.

Speaker A: Gabe's trucking is already logged into highway and it functions just like the technology used all day long. There's a JSON token sitting there. If you're an authentic user, I invite you to connect with me. And so now the motor carrier just signs into highway and I already know everything. I don't have to do the onboarding all over again. Right. So we don't think about it like vendor clearance, we think about it like connecting. We think about it like you connecting your calendly app to your Gmail or

Speaker B: connecting Gmail to Claude these days the connectors. Yep.

Speaker A: Yeah, same thing. And so, but, but every time a carrier does that, it's the same thing that happens when you use Gmail or Facebook or any kind of, you know,

Speaker B: OAuth, uh, two flow multifactor authentication.

Speaker A: You're, you're re authenticating that user that's

Speaker B: a data and you're when you book them not just one time. Now this carrier is green in the system until we've heard otherwise.

Speaker A: Yeah. And so what happens is like that motor carrier, it's fast, right. It's a 30 second onboard if they're a good actor because they're just going right to the broker carrier agreement, they're answering any custom questions and it's done. They don't have to redo onboarding, but when bad actors come in, we can do things like rate limit them, like, hey, this is a ten truck carrier. They usually onboard with two brokers a week. Why did they suddenly just try to connect with 20 brokers? That's really weird. Right? So, so you're, you're using just cybersecurity principles to look at patterns and introduce friction when there's a potential problem.

Speaker B: Okay, well, we got Michael Kaney, the cco. Is that what you go by cco? Chief Commercial Officer at Highway Michael. Um, where are you calling in from?

Speaker A: Chattanooga, Tennessee.

Speaker B: Some people would call it someone called the freight capital of the world. Some call it Freight Alley. I think there's probably bias towards people who live there, but I do think there's something to it. Uh, anybody, anytime I talk to a freight professional from Chattanooga, they seem to know what they're doing.

Speaker A: Yeah, um, there's like, it's like working in tech in Silicon Valley. Like, um, there's been so many exits that like they just keep spinning off talent. Yeah, that's really what I mean, that's really what it is. Like not, not a lot going on in Chattanooga other than like insurance, Coca Cola and freight.

Speaker B: Exactly. So, so you, you're repping highway. And we just did a bunch of chat before this so I could understand it better. Uh, I like to bring on guests that I don't know a lot about you and I don't know a lot about the industry. I know a lot about fraud and a lot about truckload and stuff. But this new tech that highway has, and last week I had someone on from genlogs and like it's really interesting how you guys are solving the problem. And then I think about it, I'm like, man, I just asked you this question. I was like, well, what did people do before that? Uh, and it's pretty shocking. And then we also talked about how you guys have fixed it. And then it evolves because fraud evolves as fast as you can fix it. So give me a high level first question. I'm a broker, I want to book a freight carrier off a load board. I sign up with Highway. How does it work? How do I know that you verified that this is a good carrier for me, similar to how I used to go to rmis or do my carrier packets?

Speaker A: Yeah, I mean my first, my first thing would be please don't book carriers off load boards. That my first reaction is please, please don't do that anymore. Um, you know, if you're so the, the reality is for your audience that isn't a freight broker. This can be fun to talk about, but the real, we do business with like 98 of the top 100 so highways actually fencing. You know, most brokered freight in the country already. We went from uh, from basically zero to 1200 customers in four years that the problem was that bad. And, and a lot of it is because we're, we're very good at what we do. But a lot of it is there was not, there was not a better option. Gabe, that was just, you know, you're sending out packets, right. And none of it's connected. They weren't. And the incumbent. And now they, they, especially with Scott Mossgart being back, like Truck Stop and RMS are doing a much better job of tackling the fraud problem. But their initial response is not our problem. We do onboarding, like literally that was their initial response. We're not the fraud like we do onboarding. You need to go, you need to go figure out fraud broker. And we just said like, you know, we would call ourselves as much a service business as a software business. We just believe in owning outcomes, not just shipping features.

Speaker B: Right.

Speaker A: And you know, when we looked at it we were just like, this is an outcome we can own. And so you know what a broker does, they look at a carrier and highway and they don't just see if it's passing gay because some carriers can partial pass.

Speaker B: Okay.

Speaker A: Carrier may. And carrier may. So you do a lot in the LTL where they classify carriers, right. Like we classify truckload carriers as in like hey, you absolutely should use them, you know, to move bottled water or scrap paper maybe not electronics. Right. Like a broker is gonna, is gonna put risk in a matrix. And so a carrier, a carrier can have a valid identity and still be problematic.

Speaker B: Right.

Speaker A: Does that make sense?

Speaker B: Yep.

Speaker A: And so it's not. We were the first ones to just say hey, we're going to put risk in a matrix and we're going to, we're going to put limits around how carriers can behave in a freight brokers network. Um, and one of the ways we're going to do that is we're going to take a network wide like macro approach and allow a broker to make decisions based on a carrier's overall behavior, not just their own little individual rules world.

Speaker B: I like that and I think that that solves a problem that I see often with these types of tools. Not necessarily highway, because it's A newer one built with really good software and service. But it was like, oh, there are good carriers out there who couldn't. Who would get blacklisted or, you know, get a freight guard or whatnot for an erroneous reason. And now, um, they can't be used and. Or the factoring companies would, you know, say, hey, we're not going to factor loads for these. And I'm kind of segwaying into how this got started with highway, but I think that if you guys are able to put them in a risk matrix per se, as you called it, then you could say, hey, the broker can kind of decide, do I want to move them for this load. It's not like, yes, no black, white. Is that what you're getting at?

Speaker A: Yeah. And then the other thing is, is understanding that a carrier that, um, you know, onboards or connects to the broker on a Monday might look different on

Speaker B: Tuesday, especially in this exact environment.

Speaker A: And so if you think about. So how did they do it before? Right. It was, it was, it was a handshake. It was, it was, it was what amounted to a handshake. And fraud wasn't really bad. I mean, I did this for 20 years before it got bad. I mean, you'd have a load stolen and double brokering existed. But the reality is, the worst thing about double brokering was an unpaid cargo claim if there was an accident. And really, it's just that, uh, as a freight broker and your logo double brokered, you were pissed because it meant somebody was better at buying capacity than you because they were.

Speaker B: Yeah, there's a margin stack that was

Speaker A: actually worst part is you got beat. And now it's, it's truly dangerous. You know, they're, they're stealing freight, they're misdirecting shipments. But the thing to understand is that, um, there's no, like, there's no. In what we do. There's no panacea. There's a magic bullet. Yeah, we just did a roadshow with our biggest customers and said, like, the vendor that walks in here and says, we did it, you need to throw them out. Because, like, we do this all day long and we're telling you there's no magic bullet. Because there's not been a magic bullet in bank fraud, wire fraud, medical. Like, when fraud shows up, Gabe, it's there.

Speaker B: And then you fix it, and then they figure out how you fixed it and then they come up with a new scheme.

Speaker A: Yeah, I mean, I mean, organizations now have a C suite position called the Chief Information Security Officer For a reason. And it's not because some vendor said, we fixed information security. It's done.

Speaker B: Right.

Speaker A: And I think that's the biggest thing that our industry is having to adapt to is like, it's a newer problem for them, for us. But every maturing market has gone through this, brother. Like, every maturing market has had standards that, like, look, look at banking. Look at the savings and loan scandals of the 80s. Look at the 2008 financial crisis. Every time.

Speaker B: Look at the PPP funds in Covid.

Speaker A: Yeah, but. But that's the point is, like, every time there's something that can be exploited, trust breaks down. And what happens is you need. You need standards, you need new standards. And so really what's missing is not like, software or, you know, better checks. We have all the signal we've ever wanted. What's actually missing is an enforceable standard.

Speaker B: Right. All right, I'm going to pivot back to how highway started. And we won't do the whole like, hey, how did you start it? And why did you do it? But we will. Do you know, it started as a core question of who's hauling your freight?

Speaker A: Who's really hauling you?

Speaker B: And Jordan. And Jordan Graft, who is the CEO at Triumph and then founded.

Speaker A: He was. He ran a business unit there.

Speaker B: His Triumph Pay.

Speaker A: Yeah, good point.

Speaker B: Very large company.

Speaker A: Yeah.

Speaker B: They do everything. Triumph Pay. And then he's, you know, the way that I understand it, at least, and you correct me if I'm wrong, and if I'm really wrong, just cut it out. Um, but he was saying having these brokers come to him saying, I don't know if you should pay this bill. That's a freight factor. But I don't know if you should pay it because I'm not sure who actually hauled it.

Speaker A: Yeah.

Speaker B: And he's like, wait, that can't be true. Like how we have a pod. We have the paperwork. Of course they hauled it. And unbeknownst to him, the industry had this underbelly of double brokering and different carriers and all that stuff. Would you say that that's still. The main problem is, like chameleon carriers or double brokering or is it something else? Now, in fraud, what's the.

Speaker A: You have three. The three most, um, effective vectors. So there's a lot. There's a lot of fraud vectors. Like in every business, um, and I'm sure in the world that you participate in, you know, in the last while in the LTL war, there's a different way that, that maybe fraud, bad actors

Speaker B: exploit Things in terms of not nearly. Like truckload though.

Speaker A: Yeah, not nearly. But the point is like anytime, anytime that there's something that can be exploited, you exploit it, right? Oh yeah, maybe pilferage in your world. So let me, let me give you the three most effective things. In truckload there's a lot of things, but one is direct theft. And so in highways is direct theft. Uh, and a lot of, there's a lot of talking heads that like to say a lot of different things. What we mean is there's a carrier that's been in your network, a broker's network for months, years, whatever, and they just break bad, Gabe. They just say, hey, we're gonna break bad. And the thing that's driving the growth of direct theft is, um, really, Secretary Duffy, regardless of your or mine or anybody in the audience's political opinion, Secretary Duffy made some, some statements about non domiciled and limited term CDLs. Yeah, and, and, and the administration, you know, signaled they were going to take action. And so what they said is like, we're just going to get all we can and go home. In a nutshell.

Speaker B: Wow, I hadn't heard it said that way. I was just talking with Shannon Breen at Freight Vana a couple of weeks ago about freight fraud and the markets and non domiciled cdls in uh, a different aspect of like what that's going to do to supply. Yeah, but that just makes sense, that's easy to understand for anybody. Hey, if you've been doing this for a long time and you think it's going to end, you're probably going to say, hey, one last hurrah.

Speaker A: Yep. And, and we know this because they're, they're, this is internationally orchestrated crime. You know, they're controlled by overseas dispatch services, you know, very early in highway, first year highway. The first time we ever talked to a task force leader at the end FBI, I, um, can remember them saying, well, wait a minute, they're getting me to explain the problem to them. And they were like, wait a minute, I don't know if this is us, if this is Homeland. Because when we were saying like you have people operating here that are being controlled and dispatched from Indiana, Pakistan, Serbia, um, Uzbekistan. Yeah, Uzbekistan, Yeah. Um, and so it's just a layered thing. So anyway, direct theft, that's a big one. Um, but we can see the data and we can give you the signal and you can make a different decision. I mean there's a, there's a data driven line and a disproportionate amount of risk associated with that carrier cohort. Uh, the second one is the sold MC that you hear people talking about. Or, um, just the change of hands, the change in credentialing somehow. This is a really hard one to spot because, um, it's not just about going on a telegram site and pretending to be somebody else so you can watch and see who's gonna list their MC number for sale. Like they figure out you're doing that because you go post about it on LinkedIn, they're just gonna reroute and do it somewhere else. That is a signal. That is one data point. That's a signal. And so when you're, when you're watching for the, the sold MC or the changed, you know, chain of, change of control, you've got to use an algorithm with a whole lot of, a whole lot of points to say, hey, this, this behavior is suggestive of an entity that has had a change of control event. That's not legitimate. That's the second. It's very, very effective.

Speaker B: Yeah.

Speaker A: One of the reasons it's effective in Truckload is because they know that us and everybody else now watches for the physical footprint. So when we first got into this game, you know, if you had telematics or if you knew where trucks were, bad actors weren't hip to what we were doing. So they would, they would get control of a motor carrier, they would get into a brokerage network on a load board and that carrier maybe ran the eastern seaboard and they'd go steal a bunch of freight in California. So now they're very good at also stealing freight where the real motor carrier has been present.

Speaker B: And what you're saying there, for my benefit, just to make sure I understood it, is that if they're domiciled out of the Northeast and they're stealing freight in California, then it would be more. Back in the day you didn't have the telematics. And so it was like, hey, if you did, if you do that now, it's like, hey, this carrier is out of New Jersey. They shouldn't be there anyways.

Speaker A: It's painfully obvious now. So what I'm saying now, their impersonation efforts, because they know what Gen Logs does, they know what we do. There was a theft the other day that like they stole freight in Indiana where the carrier that they were impersonating ran freight. So if you go and look at

Speaker B: the things, all the signs made was clean. The carrier should be there. The carrier runs there all the time. He's on the cameras, he's got the telephone telematics. They just are smarter now.

Speaker A: Smarter. And then, and then the third most effective is the, the, the poor digital hygiene of the motor carriers in box. So freight brokers in truckload, you know, a little different than find them on LTL. Freight brokers are doing business with about 170,000 different motor carriers and about 1.4 million vehicles. So the fragmentation is incredible. Um, um, and the dirtiest, dirtiest digital hygiene in the business is the motor carrier carriers inbox. And so the bad actor knows that we've shut them down and we've. But if they can get in that inbox they can watch. And we, we saw theft a couple of weeks ago where they actually, the carrier allowed us uh, to do a full like digital scrub of their systems because we didn't believe them. They said, you know, we got every, that's, everybody's like I got hacked. So they said no, no, we'll you take over our systems. And so our team actually did, did some forensics and did some work on their systems. And the bad actor had actually installed malware and gotten complete device control of three devices. And it set up rules to send incoming emails automatically to spam folders. So the carrier didn't even know they were getting emails. And the whole time the bad actor is lying in wait in the inbox looking for the freight.

Speaker B: What are they doing with that? What are they looking for rate confirmations or just.

Speaker A: They're looking for rate confirmations, rate cons.

Speaker B: And then they're like yeah, then they go and impersonate that carrier with the

Speaker A: broker with, with the shipper. They just show up and pick it

Speaker B: up because they got the raycon.

Speaker A: Mhm.

Speaker B: They've got the paperwork.

Speaker A: They say this is the real carrier doesn't know that, that they have a load.

Speaker B: So then when the carrier shows up to pick up, they impersonate that carrier. How are they impersonating them? MC number on the side of the vehicle or dot or what do they do?

Speaker A: Because the shipper doesn't, the shipper doesn't care. They don't, they don't check. And so they just show up and go, hey, I've got this right, I'm here to pick up such and such. And this is the broker and this is the pickup number and this I'm going here. And they know everything about the load. So, so the way that we cut, we have a product that actually secures the rate confirmation where even a bad actor is sitting in the inbox when they go to access the Rate confirmation digitally. It's like, like my accountant sent me my tax return today and it's, it's definitely not attached as a PDF.

Speaker B: It's like when you buy a house and you get in a mortgage document and you're like, okay, go to the secure portal and then you have to. You can. It's almost impossible to get in.

Speaker A: Exactly. But, but like when I, when I click to see my tax return today, the tokens already on my. I've already logged in, so I just. It pulled right up. But if it wasn't me, it's gonna, it's gonna put me through mfa. It's gonna do something. And so like legitimate carriers can get rate confirmations from us really easy. Yeah. Um, and if it's a bad actors in the inbox, then we see that it's a. It's. It's not that person trying to authenticate. So then we have the. All kinds of. We have to IDV these folks. We. We've had to institute all the security that you interact with as a consumer. We've had to build to protect.

Speaker B: Yeah. I think that's a good thread to pull on. Is like, people are so used to logging into Gmail. If I log into Gmail, I buy a new laptop and I log into Gmail, it's like, we don't recognize this device. Now we need you to type in a number from your phone and it needs to match. And people are so used to that, maybe annoyed by it, but consumers are used to it. Now that doesn't happen at, uh, or had not happened at all in Truckload and freight. No, man, it was like, hey, we filled out a piece of paper and you. And we did a. I think what, what I'm trying to get to is like, it's not even. They didn't have to be that smart in the past. They just had to do a couple of good loads, get some good standing, get paid by a few freight factors and then buy their time and then be like, all right, now we can be bad actors because we're accepted in everybody's systems. It's not like they. Day one, um, they're like, hey, I'm going to steal the first load I get.

Speaker A: That's right.

Speaker B: And because it's organized, it's not just some random guy driving a truck. It's organized overseas as well.

Speaker A: Yeah. And if you. And if you keep pulling on that thread. Right. I just had to do this. Fraud's a business and they're. They now have more invested working capital to run that business because it's harder.

Speaker B: Right.

Speaker A: So when they hit, they can't miss and they have to hit a lot of freight. And so, and so here's what I'll tell you. Like they're in the network, they're running, they're, they're picking up and delivering freight. And, and like we're hunting them all day long. We're looking at patterns all day long going. Because we, we now track things at the load level. It used to just be the onboarding and so now like we actually look at the broker's load, look at the assigned carrier, track the truck, look at the digital signature of who's accessing. Like we're now looking at every single transaction to validate it.

Speaker B: Are you doing that with integrations with the TMS providers or how do you guys.

Speaker A: Mhm.

Speaker B: Are you in. What, Are there any tmss you're not integrated with right now or like, are you with them?

Speaker A: No, there's, there, we're integrated with any, any important commercial TMS is what I would tell you. Some of them struggle to support all of our features. And so you know, a broker's got exposure because their TMS doesn't have the technical ability to play ball. But all the big ones, you know, McLeod and Revenova and you know, they're all, they're all great. They all, they all work with us. And then the largest brokers have their own system. So they just wired up themselves.

Speaker B: Yeah. And you guys have the API, uh, or web hooks and just wired in.

Speaker A: Yeah, absolutely. Like we built our stack this in this century, so.

Speaker B: Yeah. So you have everything people would need.

Speaker A: Yeah.

Speaker B: Okay, well, let's just, let me keep talking about tech then. So you guys started it four years ago. What was your go to market strategy? How did you get, did you first go and create the shell of all the profiles and say, hey, now we have the product and then let's integrate it into tmss.

Speaker A: Mm. It's a really, it's a really interesting founder story. Um, um, one of the things that helps us go really fast is we have a very technical founder, but especially

Speaker B: in today's world, that's a huge advantage.

Speaker A: Yeah. And so we didn't, we didn't have to raise a ton of capital. We didn't have to go spend a bunch of money on developers. And you had a guy that had worked in a business that dealt with all of these integrations. And so you, you know this like you run a, you're, you're, you're not a freight Guy like, you've done a lot of things right and so. But you've been in this vertical long enough to know it gets very small very quickly.

Speaker B: Oh yeah.

Speaker A: And so, and so Jordan had already written integrations with McCloud. Like he already, he done it on the payment side. And so we had a lot of relational capital, you know, between Jordan being from that side of the business and I've been hanging out in this vertical for 20 something years. I kind of, I knew a few people. And so our go to market strategy initially was like building the secure sign on for the industry, building the sso. Nobody understood that. And so I just called my friends and said, how about your freight doesn't get stolen? They're like, that's great. And so the initial go to market was just like, you have a problem I can solve. Like let's, let's just, let's just own the outcome and solve this problem. Um, and it's, and it's evolved from there, you know.

Speaker B: Yeah. Now that you have a track record, you're probably on. I would imagine your growth curve has been probably pretty good the last few years now that you have a track record. Because I mean anecdotally and I do play in the truckload space. We do 4 PL work in there. So our customers will use our TMS and bring in all of their brokers. And I see all of them and I see all the loads and I hear highway with the USPS and I hear highway with this major tms. So I hear it everywhere. I was curious how you guys decided to go to market and penetrated that quickly because there's a lot of SaaS. Startups don't do that or never get that type of market penetration. You know, I, um, I'm not comparing you guys to Claude, but it's a similar thing. Like Claude, right now they're. I feel like their entire marketing strategy is like, hey, AI might take over the world and it's too powerful and it's too dangerous. We have this new mythos, you need us. And you guys used a much more cogent and relevant, hey, we can fix freight fraud. And like, I think the reason I say it that way is I think you guys do more than just the shell right now. What else, what else are you guys doing?

Speaker A: Go back to your original question. Yeah, Jordan, Jordan bought a, um, a little business called Carrier lists dot com. And so we initially had this whole shell of carriers and we said, okay, m. You know, when he sat and did this before I took it to market before I took the integrated product to market. He's like how do I just, how do I look at this carrier file and keep it trued up, keep it up to date and then how do I persist that into a freight brokers network? And so there was a lot of thought around just architecture. And I would say the main difference is like we're from this business. So one of the things that I had to deal with as a freight broker was young, well intended founders that would come out of Silicon Valley and sit in my conference room and tell me how stupid I was and that and freight's fragmented and you guys are just doing everything wrong. If you just do this, it'd be great. And I don't. Let me just say none of those founders have had a great exit.

Speaker B: Not on the horizon either.

Speaker A: Yeah man. And so rather than showing up to freight brokers and saying man, we're smarter than you, we just showed up and said hey, we understand your workflow and we're going to meet you exactly where you are and solve the problem.

Speaker B: Right.

Speaker A: The second thing we did was he said hey, we won't sell to shippers.

Speaker B: Okay.

Speaker A: Uh, and so one of the things that freight brokers have gone through is, is people will use them. Yeah, Access. Right. Because spray rivers have the money. Then they go raise capital. The investor shows up and says you either have to go down market, right. And and have like a freemium whatever or you have to go up market and that means go to the shipper and sell the shipper.

Speaker B: Okay, I don't want to get controversial, but how many AI load building carrier sales companies are going to have to do exactly that? I mean that you just laid out

Speaker A: the exact scenario like unit economics don't work. And that's what brokers know is like you're only so many brokers and then you're going to betray me. Yes.

Speaker B: Because there's only so many brokers and they're going to build the automations and learn the workflow and then they're going to be able to sell that to Menards or Home Depot and they don't need to use tms as then they'll have the AI. Yeah, that's uh, because the PAM is larger and maybe they're well intentioned. It's not the founder's fault. I'm not saying anybody that I know in the industry is like. But the VCs are going to say hey, look at the TAM over here. Compared to the TAM here.

Speaker A: It comes down to an incentive alignment issue.

Speaker B: Yeah.

Speaker A: And the incentive Alignment. When you raise, I would just say this word, a stupid amount of capital and you don't control your business anymore. So like today Jordan we, it, we, you know there's a PR out there. We have a minority investment from FTV and Lead Edge but it's a non controlling investment. Jordan still controls the business.

Speaker B: That's rare.

Speaker A: Uh, yeah. But uh, we grew fast enough where we got to control our own destiny. And I think it's important for brokers in the audience to even understand that is like this is not a pump and dump. Go chase a bunch of ARR and then betray the customer base. It's just not. We just won't do it. Um, because there's plenty of money to be earned and value to be created and creating a platform that's more like Visa where you create the standards, the operating standards that freight, which is now a digital transaction is able to trade on. And that's actually what's been missing. That was always the founding vision. But you first have to kind of like stop the bleeding. Gabe. Just like yeah, uh, right before you

Speaker B: can and you got to get some short term value added and say hey, we did this and here's tangible value and you got to build that. You're a startup. So not anymore. But you were.

Speaker A: Man. It's weird like we kind of still are. Like most people aren't where we are in four years so it's weird to think that we're.

Speaker B: I think that startup is not defined by revenue. So I would say you're still startup especially if you're running lean then definitely.

Speaker A: And I would say we also try to do is, is keep true our ethos of like owning outcomes, being responsive. And so as we come out with new products like we break the business up into business units so that they get focus so the customers are always getting a response so that like, so that a solution isn't lost in another product leader stack. Like the only thing that product leader is worried about is his solution stack and how it uh. And so we try to keep breaking the business up uh, to keep it focused so that the customer doesn't lose that feeling of responsiveness from us.

Speaker B: Exactly. That's how every startup fails is if they grow too fast. Well maybe not every startup but if you, you just said you're not going to do a pump and dump.

Speaker A: Yeah.

Speaker B: The startups who do that don't care if that eventually happens because they don't plan on being there. They hope that companies buy them and they can figure that part out.

Speaker A: It's a financial engineering scheme where the founder and the founding team have their own unique share class and they're worried about what chips they can take off. And look, no fault. You're a founder. Like Jordan's a founder. Good founders should get paid for what they create, for creating value.

Speaker B: Absolutely.

Speaker A: But, but we also just, it's a moral thing to us. We think that that value should be tied to customer outcomes. So we just, we have a breath of fresh air to the industry.

Speaker B: Michael. Breath of fresh air. Wow. I didn't know that part about Highway. I think I incorrectly lumped highway into that same category as all the other. Not all of the other, but a bunch of the other companies that you just described. Yeah, because the earliest investment was from freight brokers. That's pretty rare too.

Speaker A: Like, like freight brokers are like, yes, I'll give you money to go solve this problem. Jordan.

Speaker B: There it is.

Speaker A: So we, like, we can't betray, like, I mean, there's CEOs, a company that invested in this thing because they believed in it. And so it's just like some people don't believe it when I said, but it's just a moral thing. It's where I come from. I can't go betray my, I can't go to like the TIA conference this week and betray my friends.

Speaker B: Right. And you have to be able to live with yourself if you're going to do that. And it's doesn't feel like you that you don't give off those vibes. Michael. Um, but at the end of the day, even if it wasn't vibes, it's really just. We talked about it a little bit, but I. Last season on this podcast, I talked a lot about VC money and like the, the reverse incentives and how that doesn't always work well, um, with freight brokerages, I didn't talk about maybe the Silicon Valley AI companies because they were still just kind of coming out now. There's a lot of them, but it's really just incentives. Even if everybody involved is, really has great intention, if the incentive isn't there, it doesn't matter. Uh, and so at the end of the day, it's capitalism.

Speaker A: And I think that's the thing too, is like, when you really look at the ethos of a company, like, man, we have great investors. Like, I love our board. Like, they're so supportive and they're like, man, how can you go faster? And they've, they believe what we believe and they're very, they've made other, they've made other Investments in the identity space and in the fintech space. So they get it right. They understand like the, the durability of what of a business that comes out of like building like solid core infrastructure. And so I think sometimes when you're looking at a company, you know, you've got to look at the underlying investor and like their exit track record.

Speaker B: Right.

Speaker A: So the CEO can say anything in the world that they want. But if you go look at the underlying investor and their track record and how those companies exit and where they go, it will tell you the truth about where that founder is going to take the company. Because the CEO is going to say whatever they have to say to make, to be commercially viable because they don't control the business anymore. That's the reality.

Speaker B: They have to. Yeah, yeah.

Speaker A: And so I don't know that maybe I'm getting off topic. I'm pretty passionate about it because, because I feel like I've suffered from the poor outcomes of that, you know, in, in, in tech that I really wanted to believe in that just really crap

Speaker B: the bed, you know, I've seen it too many times. And I also, because I'm a founder, I'm like, hey, I did it a different way. So I'm always like, I'm biased towards doing it bootstrapped or maybe bootstrapped and then take investment in a minority stake but still controlling the company. So I'm always like checking my own bias. Like, okay, just because I'm doing it this way doesn't mean. But it's just so blatant. Some of the investment incentives and how the shares work and how ARR has to work and there's never a path to profitability until an exit. And I build tech and do managed transfer shippers. So I'm like, I just can't think of how that I'm kind of similar to what you were saying is like, hey, I want to make a bunch of money, but it's going to be tied to bringing customers value. And that's about it. Whether we're building tech or consulting. It's like if I bring my whole

Speaker A: executive team, we, we ran like what I like to call 4.0 profit businesses.

Speaker B: Yeah.

Speaker A: So this idea of just like don't ever make money is not in our DNA. It was like, get to the black. Get to black. I mean, I mean the whole thing was like, I mean my first one on one with our CEO was like, okay, how fast can we get in the black? And I was like, hold my beer, brother, I got it. Like it Wasn't like, how can we get the funding round? It was like how fast can we get in the black? And I was like, let's go build that model. Right?

Speaker B: Yeah. You didn't build it off of a rule of 40 basically.

Speaker A: Yeah. And you just like, how fast can you be cash flow positive?

Speaker B: All right, let me dig into some of the stuff with highway here. So this is just me speculating. I don't really know anything about what you guys are bringing out for new products. But if you have the carrier shells and you have the two factor identity basically for the carriers, then you guys have that data. Correct. And wouldn't a broker eventually want to be like, I need to find a contract carrier for this customer that's going to run X and A to B and Z to X and. And couldn't I just go to highway and be like, which carriers are already running here that you trust that I can contact instead of. And I may be talking out of pocket here because I don't do it all that often but I used to a lot back in the day you would post a load, you'd cover it on the spot, you'd figure out which carrier you like, you'd go then to them be like, how often do you run this? And then the advantage was C.H. robinson and T.Q.L. could do that at scale and Arrive could do that at scale but you couldn't. So it's like ah, uh, you live on the load board but does highway already have that product? Is that coming?

Speaker A: Nope, that's, that's exactly. You know, you're man, you're, it's like, it's almost like you founded a business before. So highways organized into three business units. One is identity, which is what we've been talking about. How do you, how do you um, maintain an identity infrastructure that lets a lot, that lets the rest of our business and a broker's business run. Second business unit is load level complex. So that's where we take all of the identity and we contextualize it at the load level. And the data that's used to do that is a mix of both physical footprint and digital footprint signal and then also financial capability. So like we're reading a carrier's cargo policy through an LLM looking for potential exclusions. We've mapped the commodity to the facility, not relying on the payload data that's in the load. Like we've independently gone out and said

Speaker B: this out, uh, does this warehouse actually. Okay.

Speaker A: And so we're looking and saying okay, we know what the value is. Independently of the broker's payload, uh, the load data and we know the commodity independently and we know this carrier only has this cargo limit and has this potential exclusion on page 82. Does an alert need to be. And so we're doing that. So yes, the third business unit is our capacity business. And so there's really two primary functions. One, we have something called the trusted freight Exchange. So it's not a public load board. And so when a motor carrier, it's free for a motor carrier, they authenticate through that sign in that I've been telling you about. They've connected their telematics device, we've read their cargo policy, they've agreed to highways terms of use.

Speaker B: They dressed up for a prom date.

Speaker A: They do.

Speaker B: They're like, hey you and I am.

Speaker A: And we only show them the loads they're qualified for. So flatbed carrier is not going to see refrigerated freight and vice versa. And they're not going to see freight that falls outside their cargo limits. And so what that means is not only is that freight protected, but the carrier gets a really curated experience. So we use a machine learning model and it's, it learns their preferences and what they do for other bro and it suggests loads to that carrier. It's really great. It's really awesome.

Speaker B: And is that success in loads from um, in your guys's network or like from other load boards?

Speaker A: Brokers sign up like, like they would a load board only, only it's private. Right. So they send the loads into, into the freight exchange and they, they can make them available. But the beauty is like let's say a rocket shipping broker did that. My guess is like you have some kind of authentication. So if someone, if, if a carrier wanted to book that load and say yeah, when they hit that sign in with highway, what we would actually build is a way for them to authenticate and go right into rocket shipping.

Speaker B: So the whole idea being like, all right, now I'll email you.

Speaker A: Yeah, so the whole idea is that like if you have a great digital experience that you've created, we want the carrier, we actually just want to sign them into you.

Speaker B: It's pretty cool.

Speaker A: We just want to sign them right into like that broker's native digital experience. We don't want our app to be the point, we want it to be the gateway. Now some brokers that don't have that capability, they use tfx is like their whole digital booking suite. Um, and then yes, your other question, like yeah, that's all via API. So we have Brokers that hit that um, endpoint programmatically and are consuming tons and tons of lane information to go out and target the best carriers. And that result, like we talked about earlier, I think, I don't know if we were recording, but the result is not just capacity but it's, is it, are they the right carrier for that load based.

Speaker B: Yeah.

Speaker A: Based on the cargo requirements.

Speaker B: Yeah. And you have that information based off of other loads that they handle and what they normally have, their insurance and all of those variables.

Speaker A: Yes, it's the carrier's equipment and insurance. The carrier's equipment and insurance will tell you. And then the broker's rule set, the broker may not want to load a carrier that's only been in business a year on electronics load. And so the, the, the result, so the old way is like you have to, you get, you get the, the result based on just lane history. And then you have to go do all this diligence around should they even haul that load? And we just do all that for them.

Speaker B: I think, and maybe this is a stupid way to put it, but like that will also drive down freight fraud because when you say things like you used to have to then go do the diligence, guess what? Brokers don't end up doing the diligence because they are. Whether it's because they're bad actors as brokers, because there's plenty of those, or they're just too busy and they don't have enough people and they just can't. They're like, ah, uh, the first person who called or the first person I called that said they'll accept the load, I gotta move it. Or maybe it's actually upstream. The shipper is putting so much pressure on them. Cover it for whatever it takes. And they get all that pressure and they're like, ah, okay, I got to cover it by four. It's a hot load, production load. And so then it creates that.

Speaker A: But if shippers are finally starting to change. But the number one incentive we talked about, incentive alignment. The number one incentive problem in freight is the shipper. Yeah. The shippers talk about service and they don't have an adequate way to consider risk as a part of service.

Speaker B: Yeah, it's just on time.

Speaker A: We're going to give them that. We're going to be releasing a performance guarantee and standard saying, hey, if a load, if a load looks like this, it's guaranteed. Highway will stand behind it. And if it doesn't look like this is not guaranteed. And so for the first time ever, the industry will actually be able to consider risk as a part of a transaction.

Speaker B: And is that for the broker to digest or will be like an index for every broker?

Speaker A: Digest, like we'll tell you, hey, yeah, this meets a performance guarantee standard.

Speaker B: Pretty sweet. Okay, so that's the third thing. Maybe I shouldn't ask this but uh, are you guys going to part of that ecosystem? Could be like the payment side or is that like, hey, can't do that right now.

Speaker A: Let me, let me tell you how I think about. I'll tell you how I think about payment providers.

Speaker B: Yeah.

Speaker A: As well as insurance agents and as well as telematics providers.

Speaker B: Okay.

Speaker A: We're not going to get in that space because I don't think that's what's needed. There's great payment companies, I don't need to go do that. There's great telematics providers, I don't need to go do that. Um, I don't want to be in the insurance business. But what is missing from those things are standards. So insurance agencies going back to the visa. Okay, insurance agencies today, Gabe get to feed me millions of lines of data every day. You know how much accountability they have for that data?

Speaker B: Hmm.

Speaker A: M. There's 10,000 insurance agents in highway for 1.4 million vehicles. And 80% of those vehicles are covered by 300. So I got 9,700 insurance agents that

Speaker B: they're just throwing it spaghetti.

Speaker A: Yeah, but dude, uh, but in some way they're credentializing that motor carrier and the freight broker is making a hiring decision based on their data and they don't have any, they don't have any contract with me. Well, we're going to change that, right? Same thing with a factoring company. Somebody said, hey, uh, I'll finance this carrier. I don't care if they're good bad, as long as I can buy the paper. So. So we don't need to get into that business. We just need to hold them accountable.

Speaker B: Which again, you'd be pretty broker friendly to do that because that's uh, insurance and payments. Most brokers when they first start don't realize that that's actually all that matters to start because you can't. No carrier or factoring company will work with you if you just started. And then working with carriers that want to be quick paid and then maybe you use a factor and then the factor won't work with them. That's another part of this whole exchange. It ends up.

Speaker A: One of the things that happens in the long tail is, is a person that doesn't have a lot of morals will go get a couple of commercial insurance appointments and then their buddy down the street will go set up a factoring company and then their other buddy will go set up um, a white label ELD and they're all in cahoots trying to credentialize bad carriers because hey, has factor, has eld, has insurance. Must be great. You see we see all the time and no one holds them accountable.

Speaker B: It's actually not even that hard. You just dick's like you just off the cuff explained a pretty sophisticated fraud ring that could be set up by three dudes.

Speaker A: Happens all the time.

Speaker B: We pull and thread and if there's money to be made it'll always happen.

Speaker A: And if, and if there's nobody. So, so one of the things that we've been saying is that like if you can't enforce a standard, it's a suggestion.

Speaker B: Well enforcing a standard and there being a standard are uh actually two different things. So is there even should there be just be a different standard than like. Yeah, they check these three boxes and they're good.

Speaker A: So what, what well meaning friends of mine, people that I care deeply about would tell you is that they have standards and they publish them. And, and there's trade associations multiple that publish freight broker standards and hiring standards and they're these PDFs what the hell are you supposed to do with that? Then it just. And every quarter when they meet the new one gets ad. How do you keep up with that? And so in no other digital commerce do we do that. The standard is encoded and in the trading of the transaction when the money moves. And so yeah, you can't just go

Speaker B: trade stocks and um, you know, you have to, you have to use an exchange. Yeah.

Speaker A: And so that's what we're saying. We're saying look, look we're just going to go build standards around how this actually moves. And look you can move it in a non conforming way. You just, you, you will have an understanding of the potential risk versus something that completely conforms to the standard. Like loans get made in non conforming ways often but it's the risk is priced differently. It's that debt is sold differently like and it's more transparent.

Speaker B: Wow. All right, let me ask you another pivot question. But I think it'll be all encompassing. Yeah, you said LLM how much? With Jordan being a technical founder being a huge asset at the moment. Uh, already was four years ago but now it's like a whole different ball game.

Speaker A: Yeah.

Speaker B: How much AI can Be put into HIGHWAY to be able to supercharge the fraud prevention or the carrier identity or even, you know, the next scheme. And how much is that a broker giving you more data to train it? Is it you guys creating your own AI? Like what are you going to do with that, man?

Speaker A: We're still trying to figure that out, brother. Like, honestly, the best thing about having a technical founder that loves really good SQL queries. Yeah, he's very skeptical of AI. AI, AI. And we've seen AI causes many problems for our brokers as it has. Look, if you turn, if you turn agentic AI loose on a really bad work stream, it's actually just going to make it worse. If you turn agentic AI loose on a brokerage floor and let it just start answering the phone without any security around it, it's going to tell a bad actor whatever's on the screen.

Speaker B: That's what I'm um. As if I teed that right up for you. The reason I asked it is because I keep hearing about all of the advances in AI for carrier sales and booking. Right. And I just, I don't know if I was talking to Shannon or another guest last week, but I brought it up in the same way, which is. Isn't that going to cause more ability for the humans to not stop the fraud? It's just going to be supercharged. And then how.

Speaker A: What.

Speaker B: What are we going to put in place for that? Which is if it's. Because then at the same the end of the day highway could be well positioned for that. If a broker is using one of those agentic AIs because at least your system is the system of record. They're checking to see if they should use the carrier. But if they're not, then it's like you took out the human aspect of saying something.

Speaker A: Hm.

Speaker B: Doesn't look right on this. And yes, agentic AI at a lot of things can do things at a higher level than a human, but context of the industry is not really one of them.

Speaker A: That's right, Gabe. And the other problem is like my own chatgpt, we have an enterprise account. I had to talk to this thing for a year before it understood freight. It would just say things like this makes no sense. Like why did you say that? You know what I mean? Um, but here's the unknowns, right? You sign up ABC agentic voice AI guy. I mean I haven't read the data agreements, but what are their models learning? What are they doing with everything that they learn? How is that data being secured? Like, what can be? Uh, I just, man, I'm really, I think because I live in bad news all day, people do bad things. I automatically go to like, ah, I'd be real careful. Like this is a founder that's never been in freight. They don't know anything about it. You know, if you look at their pricing structure, there's nothing in there about security. So I can tell you what we've done. We have built a couple of our own. Um, so we use LLMs from Amazon. Like, we use stuff that's bomb proofed, right? Like, yeah, like the framework that we use for the suggestion model is the one that runs under your Netflix account. Like so first of all, it's like, go get stuff that works. Just don't try to go reinvent the wheel. Right? Like, go get stuff that works. Um, the second thing is, uh, I have a great partner leader and we've cut off like I get a voice AI and I'm like, no, you're not gonna partner with us. So we've just limited the amount of voice AI partners that will even allow to integrate with highway and we're, we're going to start holding them to like some security standards. Like, what are you doing? Like, because it's interesting, it's a danger, it's a brand issue for us.

Speaker B: Well, and I, this is something I'm going to say as speculative. I don't know this for sure, but my assumption and my educated opinion is that it's actually a level upstream of the voice AI providers. It's what is OpenAI doing with your data and what it's like. Because unless they're using an open source model and then forking it and then putting it in their own git and like doing it that way, which none of them are as far as I know because they're not as powerful, they're not frontier models. Then it's not even their data. That's probably why they don't even have the ability to be like, yeah, we won't, we won't do anything with your data. They can't control that. And maybe they can and they're going to DM me and say, hey, you're totally misinformed.

Speaker A: Yeah, but the other thing, you're a big customer experience guy. Okay, I've wrested for stuff like uh, eventually the motor carrier is just gonna quit answering the phone. They don't want 1500 brokers robots calling them.

Speaker B: Well, or they will get a robot to talk to the robot and then there you go.

Speaker A: And then terminator and we're just living in some dystopian movie. Look, we have our own. We have, we have Holly for Holly from highway and Holly from highway calls carriers. And it's our own. We made it, um, to verify like pickup information. But we use her for really benign tasks. I would even not try to replace really important workflows. Like we use it for exception management and we're testing that and seeing what the response is like.

Speaker B: I actually think to go further on that this is maybe, maybe we'll be at odds on this, but I think you'll see it. I've been starting to like at uh, rocket as we roll out AI of our own. And mostly it's internal and we have some of it customer facing now. Now granted we don't do carrier sales. So that is like a whole thing. I look at it as two years ago it was like, hey, let's use it for the stuff that like track and tracer updating systems of record and things like that that no one really wants to do. And now we started using it in a way where it's like, hey, we're augmenting the work that we're doing. So when a customer emails in and says, hey, why isn't this, why did this claim get paid for this amount? AI is so good at reading every email about everything from accounting through sales, through the ops team about what happened with this shipment and why it was damaged and what did the carrier pay and what did we mitigate. It's supercharging that. And then I've even taken a step further and said there's some things that the AI customer facing or load, building or quoting will do more accurately and better than our team and we'll use it for that. But then like what I keep communicating with my team is like, hey, then the humans that are still here are going to do the thing that AI can't do, which is human relationships and using critical thinking and being able to problem solve at a level. Now maybe they'll use the AI to solve the problem. But I think carrier sales is the one thing that shouldn't. Why did they start there?

Speaker A: You want the honest answer? Because, um, brokers have a. Brokers have a labor problem and they always have. So when you look at any brokerage P L the front of house labor cost is going to run anywhere from 35 to 50% of the broker's gross margin. Yeah, right. So you take a. I mean the. Look, the rule back in the day was you could do a million dollars ahead and you control your costs and you can run 5% EBITDA in a freight brokerage. That was like simple math.

Speaker B: Yeah.

Speaker A: Okay. And so, but back then, like, you know, you can make 18, 19, 20% margins and you could find niches and so. But brokerage margins keep compressing.

Speaker B: Yeah.

Speaker A: Now they're out reps for $36,000. They now cost $55,000.

Speaker B: And your margins are 11% instead of 19.

Speaker A: Yeah. So you have margin compression, you have tech spend that's gone up. Insurance costs more. Right. Brokers have taken on a ton of risk transfer. You sign Supercomp contracts. You know what they put in those? Yeah. Like, the broker is down the last line of defense for all risk. And so.

Speaker B: And you can't redline anything today.

Speaker A: Yeah. And so the way that we started dealing with labor problems, we just sent them all to Colombia.

Speaker B: Amen. That's what everybody. And the Philippines, Columbia, The Philippines.

Speaker A: Look, a lot of Lahara, some people went to India. And so we just said, we're going to offshore all our labor. And then that got expensive. And so, and so all, all that they're doing. And so these voice AI guys are like, hey, you pay Lean and Rapido this much money, we'll just do it for this. And so their whole go to market is we'll just disintermediate your offshore. That's your whole go to market.

Speaker B: Yep. And they, they took that. And they also use a psychology of like, although this probably isn't the right thing to do, founders, people, leaders are less connected to the offshore staff through Lean or through Rapido Rabido, uh, than they are to their in house team. And they're much likely, much more likely to be like, yeah, I can replace that group with AI, but I wouldn't replace my team with AI. Of course. Yeah, that's where it's going. Look at C.H. robinson.

Speaker A: And what, uh, they fail to realize is that like, one of the things that Lean and Rapido do really well is like, they're training people and they're dealing with education. Like, there's, there's added services that you can't.

Speaker B: They're not apples to apples. Yeah. It's not like, hey, AI versus Offshore.

Speaker A: So you should, you should talk to the CEO of Augment. I really like Harish. She came from Deliver.

Speaker B: Um, I met with Augment, but they were, they were, they're not quite ready for ltl, but I want, I wanted it so.

Speaker A: But, but they think more like what you're describing is like, how do we get into the workflow and augment the human. Like, like we do that highway. Like we have OpenAI connected internally, like where it's not shared. And Mike, it's faster for my team to just ask ChatGPT than to like ask somebody else.

Speaker B: Oh my gosh. Yeah, we have an Ask Rocket shipping. It's amazing. We use cloud and we have an Ask Rocket shipping and anything that I've ever said in a recorded call about, yeah, we're doing this CSP for this customer, they now no longer have to slack me and be like, hey, what did you say we're going to do with this? They just ask and they know it's an amazing training and onboarding.

Speaker A: What did I do right m?

Speaker B: Oh yeah, I had that.

Speaker A: I had that happen today. GONG sits on top of our, our sales calls and is the best manager I have is Gong. Um, we use a system. I'm out to your whole test. We use this called Intercom for like tickets and they have a bot called Finn and Finn like tells us our response time. So I'm with you, like if you, you shouldn't replace it. But man, I can supercharge a really good human being. Oh yeah. I can 10x their output and them not feel fatigued. That's the best part is they actually feel less cognitive load and fatigue and that's. I think that's probably the smartest way to use AI in its early innings.

Speaker B: Yeah. And I mean, maybe in three years there will be other ways. That's the other thing. AI is going to move faster than people expect. And in three years or two years, maybe this conversation is irrelevant, but today I've always been skeptical and I'm like an AI first guy like I love. Well, maybe I'll back up. Earlier you said something about putting AI into a system that really like if you let it loose in carrier sales in a system of record, that it would just wreak havoc. So I think that actually my take is that in order to use AI to do logistics work, new software has to be written at a TMS level and a, uh, operating system level. And if you write new software that can maybe has a CLI capability or even mcp, but CLI is already starting to replace that. So we'll see if MCP is relevant. If you do that, then you can actually put logic and safeguards and rails around the different agents agentic AI. But if you put it into existing systems, it's just not going to be one. You're not going to get as much juice from the squeeze. M&2, you just can't know if it's going to work well. So not many people are going to be like, let it loosen. So they're going to use it like training wheels.

Speaker A: I mean, one of the reasons that AI works so well outside of freight is it's, it's running on top of, in conjunction with modern web applications.

Speaker B: Yeah.

Speaker A: And there's not a lot of modern

Speaker B: web applications like Google Chrome browsing or Gmail or.

Speaker A: And the reality is not a lot of modern web apps in freight.

Speaker B: Well, even if they were modern, they weren't built to be able to like, there's not a TMS provider out there today that's like, yep, we have MCP level, uh, integration. So, but there is Intercom, that's an SDK plugin or mcp. And Fin is really cool. And Front has a SDK plugin for customer too. Yeah. And so it's like, okay, so those pieces of software work really well with AI. And if I draw the comparison to, you know, a lot of our customers still ask us to do EDI integrations for some of their private fleet stuff or whatever it is, I'm like, okay. And those go really slow. And they go, why isn't it. I'm like, yeah, edi, that is a, it's a tough one to do. And, but API isn't even the standard yet. So.

Speaker A: But think about, but think about, let's go back to standards. Why does EDI work? Because it, because it runs on a standard.

Speaker B: It does 204s. There's 210. Yeah.

Speaker A: 990. A 204 is like the damn thing

Speaker B: runs on a standard and it's a file and it's like it, okay, it just needs to change this part of the file and we're good.

Speaker A: And, and so Steve at the van has had the same job for 20 years and he configures your. I mean, and it works and you can trust it because it runs on a standard.

Speaker B: Well, I will say though, this is now talking specifically highway, you guys have a strategic advantage in that your software was written in the last four years and you have a technical founder. So when it does make sense for you to do more with AI to combat fraud in a way that is useful and productive for the broker, you're going to be the first one to be able to do it or first few to be able to do it. So that's pretty interesting.

Speaker A: The other thing too is we can tell a broker, like, we know the tmss as well as anybody because we deal with those integrations. So we know our data model, we know their data models. And so we almost, we almost have this like kind of unofficial brokers come to us and they're like hey, tell us about this with yours and that. And we're like don't do that.

Speaker B: That is pretty interesting. You have an interesting uh, like the catbirds view. Almost like hey, I kind of can see all of this and I'm not being paid to say this but I

Speaker A: can just tell you what I wouldn't do. Yeah, you know, I can tell you what you know we have to be very careful. And what I typically say is let me tell you what questions to go ask. These are the questions you should probably ask with what you're thinking about doing. Um, but look, I think for the most part we've pulled on a lot of throws. I think for the most part the founders that have gotten into this early, um, on the AI space they're very ambitious and I think they mean well. I just, I'm one of those, I'm probably like this old curmudgeon. Like that sounds like I'm telling the kids to get off my lawn. But like there are nuances that if you don't account for they can be very, very expensive.

Speaker B: Expensive in more ways than financial.

Speaker A: So reputational. Um and like I've always been a guy Gabe that if, if your business fundamentals aren't sound like let's can we just talk about that first? Like do you know how to read financial statement Mr. Freight Broker? Like do you. Are you familiar like what moves your P L the most? Like what today are what's happening on your carrier sales floor. I can't tell you how many when I consulted I kind of specialize in the sub $200 million space and I would walk in and I would say give me two numbers. I need your load to carrier ratio and I need like, like what's your average throughput per rep is. And I never had one client that we mean load to care. I mean you move X amount of loads a month. How many carriers do you use? How, what's your reload rate? Like how often do you do it? Like just tell me, just kind of give me an overview of your network. I didn't have one client. These are people that built 200 million dollar businesses.

Speaker B: They didn't know the number. Yeah, they probably knew their ebitda.

Speaker A: That's where all the juices is like in optimizing your network, like how you hold people accountable, how are you paying them? Like what are you doing? It's like if you can't answer that question, like, please just let's not, let's.

Speaker B: No AI is going to answer it, Michael. I mean, yeah, just drop it in there. And I, uh, if people watch more than one episode of this, they'll hear me say that AI is the greatest thing to happen to Freight. And then they'll also hear this episode. And when I, I think the nuance is that when you talk about like the use cases for it, it is some of the coolest stuff that you can do sales wise like with Gong and all of that and what you can do with Front and Intercom. I just think it's. You can, I guess we'll full uh, circle this, go back to incentives. We talked about like VC funding model and shares and all that. With incentives it's the same thing. Whatever they're attacking first is where the brokers have the margin to gain. But that wasn't the, necessarily the best problem to solve with AI, I don't think. I don't, um. And there's other companies that are doing,

Speaker A: I think you look at the ones that have a little less like big pop. They're, they're trying to play the long game. And actually, you know, there's some founders out there that have made mistakes and I like those guys.

Speaker B: Yeah.

Speaker A: Because they kind of know they're, they're not as high on their own supply. And I'm really, you know, I just, I'm very impressed with you know, kind of their sober approach to the problem. Yeah.

Speaker B: And if they're playing the long game in AI, they're probably doing the right thing. But it is so tempting and it doesn't necessarily mean it's a morally bad choice, but it is tempting to do the pump and dump because everybody is afraid someone else is going to do it faster. And that is the VC game anyways. It's like, hey, you got to be first to market, second to market, third doesn't matter. So I get that it's just all incentives, but. All right, let me wrap it up with this, Michael. Um, I'm a $200 million broker. Not rocket talking, just some random 200 million dollar broker out there. And I'm looking for, uh, to work with Highway. What problems are you going to solve for me? I use DAT today and trucker tools and I use Truck Stop and I just post loads. I have contract freight. I don't know what percentage, but I move $200 million. Why would I use Highway?

Speaker A: Yeah. Uh, first of all, it's just leakage. You need to stop risk. You know, you need to close the front door. I mean, we, we tell brokers, we do three things for them. We reduce their surface area of risk, we make them the hardest target, and we help them divide the world between good guys and bad guys. And so the first thing we're going to do is just give you an honest look at your network. So typically when a broker comes to us, it's 200 million bucks. The very first thing we do before we even sell them anything is we run an impact report and we just want their carriers and we say, hey, here's what your network looks like. Here's where you see the risk today. That's the first thing. The second thing that's going to happen is you're going to get load level visibility. You can keep your track and trace provider if you want, but we track all their freight and it's included.

Speaker B: Oh really?

Speaker A: And then we do it in a license, like one, we just do it in tiers and like you pay one set fee like your cell phone. We don't charge per, we don't charge a dollar for a dot or any of that. So we'll track all your freight and, but we do it, we do it in a compliance first way. And so if a load is not trackable, that's a risk signal. We're not trying to figure out how to get you a dot so that we can charge you a dollar. We're actually telling you, yeah, we're saying, hey, problem, yeah, um, and then, and then, yeah, we'll give you capacity. I mean, we'll give you a way to stay out of. The thing that we say about load boards is they have their place. They really do. But they have their place the way Craigslist has their place. They have their place the way Facebook Marketplace has its place. And anytime you post in public, you are, you are choosing to leak intelligence.

Speaker B: I've never heard it said exactly that way. I'm gonna let that sink. You're choosing hosting in public, not just load boards, but posting in public. You're, you're advertising. I have this load. If you'd like to try to game the system and steal it.

Speaker A: Because, Gabe, they know, they've been watching us for years. They know what cities do what. They know which brokers have what they will pick up and deliver loads for a broker to steal them from a different broker that has the same freight to learn the network, to learn the docs. Like, I mean, I could tell you so many Horror stores. We've already been at this an hour, but I could tell you so many stories where we're just like, how did they know? How did they know? And so they're in your network. And so anytime you post publicly, you are choosing to leak intelligence. I'll give you a scary stat.

Speaker B: Oh, uh, I love this.

Speaker A: We're gonna release a performance guarantee. 80% of carriers in a freight broker's network meet the standards of the performance guarantee. Freight brokers overall, just. Overall.

Speaker B: Yeah.

Speaker A: Put 50% of their freight on the worst, 20% of carriers.

Speaker B: Oh, uh, I was going to say, is this the 8020 rule?

Speaker A: No, it is, dude. It is. I mean, it's not like Pareto was not wrong. And the reality is, because the thing that freight brokers are going to have to deal with, the next thing is, are they willing to adopt and enforce standards and are they willing to do work because they still want to post their freight? They still want to post their freight and they want a different result?

Speaker B: Yeah.

Speaker A: And they. Some, Some brokers are working to change their culture, but the reality is, like, there are some cultural issues about what it means to do procurement that have to be dealt with, that no solution. Like, you got to be willing to do the work. You got to be willing to hold your people accountable to actually utilize a different source. Like, I can give you. I can give you the capacity, but the fish are not going to jump in the boat game.

Speaker B: Right.

Speaker A: And the fish that do jump in the boat, they're gonna steal your loads.

Speaker B: The first fish to jump in typically are a little, uh, A little too eager.

Speaker A: Yeah.

Speaker B: Wow. All right. So how do people connect with you? Michael? LinkedIn or email or LinkedIn?

Speaker A: Michael highway dot com. I was early, so I saw the first name. Email. It's great.

Speaker B: Michael highway, look at you.

Speaker A: Um, if you're going to tia, I'll be there next week.

Speaker B: Capital Ideas Conference. I've been a couple of times. I'm not going to be there this year, but.

Speaker A: Okay.

Speaker B: I try to limit my travel for conferences because I travel to so many customers now, and I got the three toddlers. So I pick and choose conferences.

Speaker A: Where do you. I didn't ask you. I'm sorry. Where do you. Where do you live? Where do you sit?

Speaker B: Fargo, North Dakota, the freight capital of the world. The freight tech capital of the world. Because Rocket is here. But no, uh, Fargo, North Dakota. Grew up in Minnesota and then came, uh, over to North Dakota. It's an hour from where I grew up, but it's North Dakota.

Speaker A: Scared of the cold, like, guy. I've never. I don't. I think I've been through North Dakota.

Speaker B: If you've driven through it, I feel bad for you. It's not much to drive through.

Speaker A: There's some insurance agencies in North Dakota that I had to go see.

Speaker B: Oh, yeah, there are. How do I. So do I find you on LinkedIn email. LinkedIn's easy.

Speaker A: I'm easy to find emails, Michael. Highway.com. super easy.

Speaker B: So I think you just advertised. You just leaked intelligence. Your email is now out there, Michael. So had hit up his inbox.

Speaker A: They're gonna try to email me and ask me for a gift card after this.

Speaker B: Uh, iTunes gift cards. And they're gonna wait until you, Jordan, and you hire a new employee. And they're gonna hit them on that day. They are pretty good at that

Speaker A: reporting channel like, it's hilarious. It's. It's comical.

Speaker B: Oh, man. Well, I appreciate your time, Michael. We're gonna get back after running, uh, the businesses and growing highway and growing rockets. Appreciate it.

Speaker A: Thanks, Gabe.

Speaker B: See you.