From Texas Humor to 120,000 Orders a Month: How JB Sauceda Built and Sold a Culture-First 3PL | Supply Chain Saga Ep. 015

Mark Taylor : Welcome to Supply Chain Saga. Today I'm joined by serial entrepreneur JB Sauceda. From his beginnings as a commercial photographer to curating the parody account, Texas Humor, JB's journey led him to launch products and eventually create his own 3PL to fulfill them. Sauceda Industries grew rapidly to a 120,000 order per month operation.

We'll get into how a strong culture was key to his success that led to the company being acquired by cart.com. Let's dive in. And we're live.

Good morning. Morning. How are you doing today? It's a great day.

It is a great day. Nice little blue sky, mid-January. Jay B Sauceda : Tons of construction cranes over downtown Austin. Mark Taylor : Yeah, Jay B Sauceda : It's the national bird of Austin is the construction crane.

Mark Taylor : Yeah. Well, JB, thank you for joining. And why don't you just introduce yourself to the audience? Jay B Sauceda : Yeah, my name is JB Sauceda.

I'm an entrepreneur and a storyteller. I live in Austin, Texas. I've been here about 20 years. And most recently, I exited a couple of years ago from a 3PL that I built with my wife and another partner, Ross, who the three of us built this 3PL that serviced a lot of mid-market and emerging D2C brands, especially during the heyday of when customer acquisition costs on Facebook were basically next to nothing.

So it was a fun period in the logistics space. Mark Taylor : Absolutely. If I remember correctly, you did this, it was born from your own need, correct? Jay B Sauceda : Correct.

I had a retail store called Texas Humor that was also born just kind of randomly. It was based off this big Twitter account that just was satire about Texas. And it kind of blew up in the heyday of Twitter, kind of 2010, 2011. And I figured out I've got this big audience, they're captive.

How do I figure out how to make a little money off of them? So started the retail store, it blew up. I knew nothing about what a 3PL was. And somebody said, "Oh, well, if you're going to start an online store, you should farm out at least the logistics piece."

And we went out looking for someone to do this for us and struggled to find someone that we thought would do it at the level that we wanted it, or at least we thought we needed it at. And the one company that I did want to work with was, they as a company are, as I found out, pretty cool people, but I dealt with a not so great salesperson that kind of put a chip on my shoulder and ultimately led me to go just figure out how to do it for myself. Mark Taylor : That's very neat.

And before that you started, I think Will told me at one point you were going over West Texas and taking aerial photos. Is that- Jay B Sauceda : I was a commercial photographer for about 10 years. And so I went to UT and thought I wanted to work in politics for a long time and did that for a short period of time. I did some contract work for a few different political campaigns and ended up just not really enjoying the work.

I love politics. I hate politicking. And so I got out of it and really leaned pretty aggressively into the commercial advertising side and had a knack for photography and really leaned in there. And yeah, I mean, I traveled all over the place.

I used to shoot for the New York Times and Wired Magazine and Texas Monthly, Fast Company. I shop for all the major publications. And then on the commercial side, shot for Southwest Airlines, BMW, who else? Dell.

I mean, name a big company and I did some kind of project work for them at some point. : So Yeti was probably some of my favorite work and Dick's Sporting Goods and a few others like that. Mark Taylor : Right. And then so you started by ...

Okay, so you're doing the commercial photography and then Twitter starts popping up. Jay B Sauceda : Yeah. I had this studio in East Austin called Public School. And the thinking with this studio, it was in the era of late 2008, 2009 when the concept of coworking was like really starting to explode or whatever.

And there was a group here in town that were starting a studio called Conjuncture that was a pure play like rent a desk kind of model. And it was really like the first type of space like that in Austin, that you could rent a space to come code or do whatever. And for me and some buddies that were photographers and designers, we were looking less at the idea of doing something where you rented a desk and more like, can five or six of us split an office and just kind of share in some of the costs and expenses.

And so we did that. And for the six of us or seven of us that were in our late 20s and still just trying to get our name out and our portfolio out, this was also in the heyday of kind of blogging and when that was really blowing up. : And the way that you would get your workout as a photographer, for example, was you would convince ad agencies to come let you show your portfolio. And that was a hard proposition.

They wouldn't always be open to people coming in. And so that was one avenue. And then the other was like get it featured in one of the blogs or publications that all the graphic designers and creative directors look and kind of read every day for inspiration. And so at some point, me and a buddy, Cody Haltom, were sitting there kind of going like, "Well, we're constantly begging everybody else to show our work.

Why don't we just make our own blog and we'll be the people managing and kind of running the channel and we can make the editorial decisions and we'll spend 70% of the time talking about the work that we really like and 20 or 30% of the time talking about our own work." And so we did that. : That public school was the brainchild of that and it became this really well trafficked site that represented kind of the young and creative emerging design and photography community that was really developing in a big way at that period.

And so it was a fun business and the idea for Texas Humor spawned out of that. There were just a lot of other, like we as a studio did a lot of work for Hilton and Spotify or SoundCloud and like a bunch of other brands like that. And so it was just kind of an idea factory. At any given moment, there were like five to seven of us and a few people kind of rotated in and out, but there was always just like a lot of creative ideas and people coming in saying like, "Oh, I have this idea for this project or I just did this random thing for myself or I'm working on such and such for so- and-so."

: And yeah, so the Texas humor thing really spawned out of that. One of the guys was doing something in social media making a bunch of money suddenly and it was really fun and it was funny. And he was like, "You should do something like this. What could you talk a lot about?

" And I was like, "Shit, I can talk a lot about Texas." So that's a long-winded story to say- No, it's not at all. It was a meandering way to arrive at that, but it just came out of the cross-pollination of having a few creative people in the same room every day. Mark Taylor : And so from there you start getting some traffic, Texas humor pops out of that and then you say, "Okay, well, we've got the traffic now.

We're going to start selling knickknacks and mugs and shirts and ... " Jay B Sauceda : Yeah, Mark Taylor : I designed- You even wrote a book, didn't you? Jay B Sauceda : Yeah. So the Texas humor thing blew up and it wasn't completely out of left field because I, as a photographer was known as the Texas guy.

Most of the time when anybody nationally would call and have me shoot something, it was based off of them having seen some of my personal work, which was Portraits of Cowboys and things like that from West Texas and Central Texas. And so the Texas humor theme and the subject matter was absolutely just a function of my interests, but the store itself was like, it wasn't political, it was just pro Texas. And so it was very self-deprecating and kind of humorous and funky in that way.

And then at some point, I think it was in 2013 or 14, a publisher reached out and was interested in having me do a book on being Texan and it came out of that. Mark Taylor : Oh, nice. Yeah. At what point did it really kind of ...

I guess what year was it when your sales of products and that needed to be fulfilled really start taking off? Jay B Sauceda : The store started in earnest in early 2013 as like kind of a print on demand thing. And I think we sold like seven or 800 shirts through one of these like really crappy print on demand companies. And then that was the point at which it was clear that it needed to be its own thing.

And I'd probably make more money if I printed them out physically and things like that. Mark Taylor : Nice. So then your very first ... So the ramp up from the time you started generating traffic to Texas Humor, to you started selling these products, and then to the time you decided, all right, we actually need to control our own fulfillment, how long of a timeline was that?

Jay B Sauceda : That was probably six months. I mean, it really went from like, we launched the store, it was selling a lot. That fall, we started printing our own stuff and then fulfilling it out of our garage. And then maybe two months in, we moved it to a warehouse.

Well, we actually, we moved it to my office downtown at public school first and then we were there for probably six months and that was when it was like, all right, we need to go move into a warehouse. So I guess like from store launch to proper warehouse space, 12 months, from like idea that this thing has legs to when we were shipping product, I mean, it was really only like six, probably less than that. Mark Taylor : So it's kind of wild. So you've had 10 years as a public photographer, excuse me, not a public, but a commercial photographer, and then in a matter of six months, you're like, you've transitioned, you're doing kind of fulfillment at this point.

Jay B Sauceda : I mean, I did the photography for probably three or four years into being a 3PL, : But the way my brain works is it just tends to distill everything down to its kind of root components. And for me, fulfillment is just putting shit in a cardboard box and sending it out the door. That's all it is. It's about a mentality and kind of attitude.

And if anything, in a lot of ways, the photography business was actually more complicated than logistics because with logistics, it's a process driven exercise and the majority of the steps and the process are static and you're grabbing things off of a shelf and you kind of design it once and it for the most part works. And then you're working to whittle away the exceptions and simplify it. Photography was significantly more complex in that every single project you were building from scratch, you'd have teams of 10 to 30 people depending upon how big the production was and each client was wildly different.

: And although there were some that like I worked with regularly, like Tim at McGare Jesse or Robin at Austin Monthly or whatever, like a lot of those people, like I knew what they liked and I could dial it in, but for the most part, you'd get these new clients and the agency might be the same, but the brand that you're working with is different and that means new people, new exercises, et cetera. So everything about that business felt like a Rubik's Cube that you were solving from scratch.

And logistics was actually in a similar way. Photography is the business of taking a creative vision, delivering on it in a specific timeframe, using a predefined budget and a rotating cast of hopefully pre-selected people that you help or you leverage to help produce the work. And logistics is effectively the same thing. You're delivering on some sort of retail or operational vision and you're doing that for a budget, you're doing it within a specific timeframe or SLA and using a predictable group of people to support that effort.

: So they're the same. They're really not any different in my opinion. And what I found is that I think actually having come from the advertising world prepared me more for service side logistics than I think what most traditional operators would have because it gave me what I think was a significantly more empathetic look at how to speak to customers. I think most logistics firms enter or like kind of get built to, again, focus almost exclusively on the exception side of the business, which is great and that's what you're supposed to do, but as like culturally, it kind of sets you up to think about things with a no attitude.

And so you sort of come in and say like, "Fit in this box and that and we can serve you and it requires a lot of molding." And I think the thing that we did really well was we went into it with a yes and mentality and we knew that we needed to get to scalability with everybody, but we went into it understanding we had to speak to and collaborate with creative people, which is basically who runs and starts these brands in the early days. : We had to speak to them differently than like the senior director of operations of Lululemon or whatever, right?

The CEO of a company of 15 people that's doing 10 million in revenue thinks and operates differently than the director of operations for a $50 million company. And dependent upon when you engage with those customers, you're either going to be dealing with the CEO or you're going to be dealing with the director of ops. And both of those people need to be spoken to differently and collaborated with differently and they expect different things. And so yeah, it was a very quick and hard kind of like turn, but it felt like it fit like a glove because it was really the second that we said that we were open.

I mean, we just started getting inundated with people interested in the way that we were operating. So it definitely pulled me along. : It wasn't something that was like, "All right, cool. We're doing this.

" It was just like, "Oh, every day this feels a little bit bigger and more promising." Mark Taylor : How large was your first warehouse? Jay B Sauceda : The first one was 3,000 square feet. We moved there.

It was a total dump, but yeah, it was 3,000 square feet, not air conditioned here in South Austin. And we were there for probably two years and then we moved into a 10,000 square feet facility like 20 yards away. And then we were there for, I would say about two years, and then we added a 8,000 square foot facility right across the driveway, so 18 total, did that for a year and then moved to 60,000 the following year. And we were in the 60,000 square foot building for about a year and a half, two years before we needed to grow into 125,000.

So it was a pretty rapid growth trajectory. Mark Taylor : It's interesting how it always starts with that small one, and then it's like you're refining processes, you're setting up your core team and you're figuring out what WMS do you want to use, what technology do you want to put in here, who my customer is, and then it's like all of a sudden the mountain gets real steep. Jay B Sauceda : The zeros that get added behind every problem multiply rapidly. : There's certainly a lot easier ways to make money than in an industry that's low margin and highly capital intensive.

I still really point to our extreme leveraging of community to the source of success for us because we bootstrapped the whole thing. By the time we sold the business, we were on track to do about 13 or 14 million that year. And again, we started it off of a little dinky retail store that was doing ... At its peak, Texas Humor probably did about 1.

7 million in revenue, but when we started that business, it was doing a quarter million or something like that. And that was enough for me to quit my job and just do that for a little while and do photography kind of on the weekends or kind of as my day job, actually it was the other way around. I was shipping at night and on the weekends. : But yeah, we cash flowed and grew the business off of the cashflow because we took a slow and deliberate approach to growth initially.

And then additionally, we just worked with partners who could see the vision and understood that there was a lot of growth. And we, in every really step of the way, for the things that would typically be long-term obligations, we kind of clued in early on. We said, "Look, we've had, excuse me, a couple years worth of progress and we think that this is going to continue. So what can we do here to in a year not be locked in and hopefully find some flexibility?"

And so Scott and Adam and Merrick, who are our landlords in the first few years, were really big helps in that way and they were super flexible. I mean, going back to the construction cranes, we benefited from the fact that Austin was a fast growing city. : So almost every year that passed, lease values were increasing so rapidly that it wasn't difficult for us to convince them a year and a half into a lease that they should let us out to move into something bigger because they could probably resign that lease for more money than what we were paying or committed to pay for three years.

So that was definitely a boon in a big way back then. But even once we moved to more of an institutional landlord, it was kind of the same thing. It was a lot of handshake deals and just working the phones and spending a lot of time making sure that we were fostering relationships with the right people. Mark Taylor : You're in this weird, it's not weird, but it's unique perspective where a lot of people who start 3PLs come from the industry in some form or fashion.

They may have cut their teeth at Walmart or Amazon or wherever it may be. And then after years, they bounce around the industry and then they decide, "Look, I'm just going to do this on my own." Did you find, I mean, because you and I did something similar where we both were ... I was having to figure out logistics for myself, you were having to figure out logistics for yourself.

And that of course has led to, I think more than a few eyebrows have raised when I've said that this is the way we do things, because they're like, "That's not ... " Jay B Sauceda : That's not normal. Mark Taylor : That's not normal. Yeah.

Did you run into a bunch of that? Jay B Sauceda : Not with our people directly. We were known for our culture and the way that we recruited, and so we were really, really open about the way things operated at our business. And I mean, we wrote our job descriptions in a way that didn't really attract the typical logistics operators.

And it's nothing like, look, there's nothing against traditional operators by any means. I mean, there are plenty of arguments to be made about why we needed more of that, for sure. I think that the way that we operated worked really well for companies at a certain stage, and then most certainly there was a point at which brands would get to a certain size, that director of operations would show up and they'd be looking for a different type of operation than what we were running.

And so in the latter handful of years, it really helped us mature operationally and think about things differently and more traditionally. : But it was never that we didn't want to do that. I mean, it was more that I didn't know in my first three years or two years what Dunnage was or how freight forwarding worked or any of that. I didn't really care about that because for me in running my store, I had product that needed to be put into a box and sent out by this afternoon, end of story, and all the other stuff we would figure out.

And with time, and that's the case again for early stage stores, they're not always dealing with China. They're doing stuff that's sourced domestically or whatever, and a lot of that complicated stuff doesn't really ... The ROI and understanding those things and having an opinion about them doesn't really come until your five, 10, 15, 20 million in revenue. And so again, yeah, I think it was a mixture of the D2C industry was attracting a lot of people who had previously not been in retail.

: So that was kind of one side of it, and it was exploding between 2012 and 2017 in that way with a lot of people coming from private equity or wherever. And they were like, "I have an idea for product and I'm going to sell it. " And then on the other side, as an operator, that's who we were engaging with. So they weren't setting those expectations.

It was really just, "Are you putting my stuff in a box and getting it out on time, period?" Now, in the later stage, we were starting to get more pushback from some of the larger customers asking like, "Okay, I just came from restoration hardware or I just came from Amazon or whatever." And these are serious operators, people who really know what they're doing and they're looking for the types of reports and maybe processes that we don't have in our business because the companies we worked with were too operationally thin or immature to support doing that type of visibility or that type of reporting.

: And it wasn't at that stage, so the product never warranted it or the market never really warranted or demanded that. But as we got bigger and our customers definitely grew in size, that drew us in that direction. And so now what was true is that there were operators of a certain ilk who came from traditional operations backgrounds and wanted something a little bit more creative, wanted something a little bit more free spirited, so to speak. And to them, our operation was like the place to bridge that gap of doing something a little bit more meaningful and not just moving things between point A and point B, working somewhere where the culture and the community was important and really feeling connected to the work that we were doing on behalf of customers.

And I think that's really the biggest difference is it's not that people from a certain scale are solace or anything like that. : I mean, it's simply that businesses at a certain scale operate in a way where you do lose some connection with like that founder story. I mean, I remember when we launched Camek as a client, Greg, or the founder, came over, made a bowl of guacamole and brought a huge bag of chips for our team of whatever, 15 employees, and taught them everything that he knew about his brand, just brought SKUs over and was like, "This does this.

" And it was just so fun to watch him interact with them. And if you work at Geodis or XPO, when did the CEO of whatever client come and bring you a bowl of guacamole and talk to you about how much it meant to launch this product out of the garage? That doesn't happen at that scale. I mean, if anything, at that scale, you're like walking through these warehouses that look like the end of the- Indiana Jones.

: That's what you're like, "I don't have a freaking connection to the brand and the relationship." And that's a bummer to be in that way. And again, some people really like that work. I'm not shitting on it.

I'm just saying there are people who want to have that connection and for that, our brand and our business was a great place to go do that. Mark Taylor : So what would be a good example of how your job descriptions would differ from a typical 3PL job description? And I guess what would the resulting person who came in? Jay B Sauceda : For one, they spoke more to individual experience and kind of would paint pictures of scenarios that would piss you off.

They also said the word shit in them. So one of our core values was give a shit. And it's meant to represent kind of like what a super corporate place would say is like ownership mentality or like extreme ownership or like one of these kind of corporate books. And for us, we were like, let's put a flavor of brand on it : And kind of give people a sense of like, we want to have an ownership mentality too, but we also want people with a little bit of ...

They're a little rough around the edges and don't take themselves too seriously. And so it was like very deliberate that we wordsmithed it to give a shit. So our job descriptions would sound like for a warehouse associate, we're looking for somebody who is competitive, loves finding a workplace filled with people that they like being around and a place where you work with clients who you can have a good relationship with, but we also want people who get ... We'd say this, like super annoyed with people who don't give a shit about their work or who phone it in every single day and aren't really willing to leave it all out on the field.

And so that's not really that different than saying, "We're looking for open-minded, collaborative professional who shows up on time and has an attention to detail." How many fucking job descriptions have you read that say attention to detail? : And like, who out there is going to willingly admit that they don't fucking like detail? I mean, there are plenty of people who don't, but you're going to show up and if you're looking for a job, you're going to say that.

But what we were looking for was someone who would read that. I mean, for one, we want people to read that who are too uptight and are going to be concerned about the CEO saying, "Fucking in all hands," to not apply. We built a really welcoming and inclusive work environment that didn't take itself too seriously. And so I would curse and whatever, and I don't want anybody clutching pearls in our all hands and going like, "My God, I can't believe he said that about this thing or what, whatever."

And so that was important for us and writing Give a Shit in there is a huge flag that just says, "If you see that and you're clutching your pearls at home while you're reading this job description, need not apply." But inversely, if you're somebody who has a, "I am competitive and screw everybody else who isn't," mentality, that's also not a right fit. : I do want everybody at our company to have a competitive attitude, but this isn't like high jump or some single player event.

This is like a team sport. And so I want you to give a shit and want to pull your buddy up off the ground when they're stumbling, not step on their back so you can get ahead of them. : And so we were really purposeful in kind of crafting job descriptions that gave you a sense of what the work environment would be like, because we didn't want you to have this super spitshine thing, come to interview them and be like, "Jesus, this is not what I thought." I was actually looking for Amazon or I was looking for Walmart and I landed at the Bad News Bears.

That wasn't our goal. We wanted you to know you were applying for the Bad News Bears team and to be super psyched about it. And we were really fucking good at that. People would write in and say, "Your job sounds like a calling."

Who says that as a warehouse associate? Nobody says that, but they said that about these jobs and people would say that in their surveys after the fact when they were working for us because they were like, "Man, y'all lived up to the expectation." Mark Taylor : That's great. Yeah.

Did you differentiate with pay or benefits or any kind of unique spiffs or anything like that? Jay B Sauceda : Yeah, for the majority of the time that we were in business ahead of the curve on pay. And I say the majority of the time, because there towards the tail end as we were selling the business was when inflation kind of took off and there was a lot of ... I mean, the job market was really crazy and everybody was getting scooped up.

So as we were selling the company, I think we kind of just fell more in line with market, but that said, where I know to this day, we were certainly well ahead was in benefits. And so we did a lot of little things that didn't cost us a lot of money like a loan program for extreme personal situations. We employed a lot of 20 somethings. So if you were moving an apartment and you needed a thousand bucks for a deposit, we'd loan you the money and there were strict rules and it wasn't a two, three year thing, it came out of your paycheck.

: There were strict rules around it. I think we had one One person out of all the years not actually pay us back. I think it was because they got fired first and we were just like, "Let's not even mess with it. Let's just call it a day."

Nobody took advantage of it because we hired really good people. And actually, we have one guy who still to this day says over and over that ... I forget what ... I think we gave him a loan for a couple thousand bucks because he was buying a house and he needed a little bit of money for down payment.

And it fit within the policies of what we would loan for. And he used it. And he was like years later, because it was a special type of loan. He didn't need like 20%.

So what we could provide was sufficient. : And he used it to buy the house. And then years later, he sold that house for a lot more than he paid and bought a really great place in the next date that he moved to. And he said that over and over.

He was like, "That's generational wealth creation that cost you $0. We were made whole as a company. This dude, we were able to do him a solid and now boom, he was able to do something that he was inches away from being able to do on his own. We gave that little extra push."

And so that was the stuff that didn't take a lot of work. We had a paternal leave policy. Men generally don't get leave at a lot of places, let alone blue collar hourly jobs. And we provided paternal leave and obviously maternal leave.

We did a lot of things. : We didn't do some things like 401k and healthcare for the first few years. And then eventually we rolled out healthcare. That was a big deal.

But yeah, I mean, we were doing things that, I mean, Amazon kind of just does now and doesn't really think about before. Amazon was doing it, but they were by that point billion dollar company, but we were doing it in a way that no other 3BLs were doing for sure. Mark Taylor : Right. Yeah.

There's a lot of little interesting points to take out of that, just how you can ... Just because if somebody's going to go get a job, let's say that they can go out and make $18 based on their skillset. And just the idea of being able to attract someone, it's like, oh, well they could go to Home Depot where they're just going to be kind of going to work every day, clocking in, clocking out, doing their thing, wearing the red smock or the orange mock. Or they can come to this place where people are going to rib each other and still get stuff done.

And it brings up an interesting ... It's a great reminder just how you can set culture and culture matters at all levels. Jay B Sauceda : Every company has a culture. And it's a thing that a lot of people are like, "Oh, well that company's got a culture."

And it's like, no, yours does too. It may just not be managed or it just might not be a priority or whatever. And cultures change too. I mean, for us, : My wife and I were talking last night about recruiting and the company where she's at and the type of people they were looking for and things like that.

And we were actually talking about this specific point about how you recruit people who will feel comfortable given what you know about your business, whether it's very IBM or it's very like Apple. And I think that more early stage companies can arrive at a point where they actually recruit for that if they took the time, but you have to sit down and think about it. And if you don't actually sit down and think about those things, then how can you actually elicit the sort of results that you are looking for?

And that's no different really. I mean, the cultural sort of goals and things like that are really no different than the financial goals that we set for ourselves. : Most companies don't think much of going out and being like, "All right, this year we're going to hit 10 million in revenue." Okay, great.

Why aren't you also thinking about, if you're frustrated with performance or whatever of your company, why aren't you thinking about hitting goals about the engagement and the way in which people work there and the efficiency of collaboration or the quality of the communication, et cetera? Those are actually the things that will help you hit 10 more easily. And so again, I think that it might come off cocky, but I just don't think that there are a lot of 3PLs that could have pulled off the type of growth that we did in the way that we did if they didn't also think about culture.

I think that there are plenty of people that are killer operators, plenty of people who can do very similar growth trajectories, but I think doing it like in a cash flow positive way with no outside investment, et cetera, that was something that really required a lot of that buy-in from people who, to your point, like didn't just want to go punch a car. : And so, I mean, we were really lucky. We recruited some really incredible people. Years later, I mean, we still have a company Christmas party every year.

I mean, we haven't owned the business for two years, going on three years this year in July and we threw a Christmas party this past December and we had, I don't know, 60 people there. So I mean, it's still a lot of our ex- employees get together. It's a really special time in our life in that way. Mark Taylor : That's awesome.

Jay B Sauceda : Yeah. Mark Taylor : So at about 125,000 square feet, you said 13, 14 million in revenue. I mean, and obviously you don't have to disclose anything you don't want to. About that time, what was your order volume?

Jay B Sauceda : When we sold the company, I think we were ... That year we were doing like committed, it was about 12 and a half million. We had some new deals coming in that were going to really push us over the edge, but at 12 million, 12 and a half, I think we were at right around 120,000 packages a month, something like that. And I forget what the total unit count was.

It was massive though because within that 120,000, there was significant wholesale volume. So we did a lot of wholesale for customers, low order count, but just pallets and pallets and stuff going out the door. So Haler Brothers, Camek, a lot of those brands, William Marie Golf, a few of those were really sending a lot of product to retailers. And so that was a pretty significant line of revenue for us.

Mark Taylor : Were you operating forklifts and everything from day one in the 3000? Jay B Sauceda : In the 3000, it wasn't really necessary. The only reason we got a forklift, which was this Japanese electric with this like big crazy charger. I mean, we definitely did not have the setup for it.

We figured out how to get it in that space, but we got that only because we were at grade height and we had to load pallets onto a little short FedEx trailer every day. And so to do that, we needed some means of getting it up and having a pallet stacker didn't make a ton of sense. So we just went ahead and invested in that thing. I think I got it for like four grand and it was a blast to drive.

It was a single wheel in the back Mark Taylor : And Jay B Sauceda : So man, that thing just like turned on a dime and you could fit it in a very, very small space, but it was literally just used to load stuff onto the back of the trailer. So we'd have guys pick a pallet jack up into the back of the trailer and then they'd be up there and then somebody else would load the pallets up and we'd move them around and get it down and stuff. So it was a very fun, scrappy period. We also drove the packages to the post office in the back of my Silverado every day at that point.

So we didn't have a big enough USPS pickup at that point to be warranted. Mark Taylor : Yeah. I think everyone who starts from zero goes through that period. And it's an interesting thing because at the end of the day, your insurance doesn't cover those packages when it's in the back of your truck.

Jay B Sauceda : No, we did have one of those moments and early, early days in one of our one bag of some super light stuff flew out of one of the trucks and a tow truck driver picked it up and was cool enough to call us and find us and bring it back and it made it in. And so all of them got their injection scanned that night. Everybody lived happily ever after. Mark Taylor : That's awesome.

Jay B Sauceda : Yeah. Mark Taylor : So how long did you operate the 125,000 before you guys ... How did the sale process come about and go and ... Jay B Sauceda : In late 2020, I mean, that was just such a slog because we leased that 126,000 square feet in the middle of July of 2020.

And even just the exercise of getting that lease across the finish line was a sprint. I mean, I think from, "Hey, I need a warehouse to ink drying was maybe 45 days." Mark Taylor : Oh, wow. Jay B Sauceda : And it was really aggressive because we knew that FedEx was actually looking at that site for a sort facility.

And so there was a lot of back channeling to try to get it done before them because it was really the only building of that size in our area. And I knew that we could get in there reasonably so operationally during the period that we were in. And so anyway, long story short, at the end of 2020, between a warehouse move and everything else, it was just so challenging that ... I told my wife, I was like, "Look, I think we're at a point where we need to either raise money to think about the next phase because we're going to have to invest in technology and a few other things, or we need to ...

I think I'm ready to sell because I don't think I've got the energy by myself to really lead this team. : I think we either need to invest in more leadership level people, which we're kind of not quite there at the point where we can, or we need to be kind of swallowed up and be part of something bigger to really hit the next era or next level. And so that was where the thinking went. And ultimately, we didn't create a process.

I didn't go to a broker. I talked to a few investment banks and kind of started to think about what the exercise would look like. But I mean, you have to remember in 2020, things were growing so rapidly. I mean, every private equity firm under the sun was looking for an acquisition.

And so we got calls from probably six different firms. I went under NDA with like three private equity firms and we just weren't quite big enough for them, I think, for it to make sense, to be like a pure platform play. : And so for the most part, they were all like, " Call us back in about 12 months, you're like right there, we're interested, but we just, let's revisit this. "I just kind of sat on it, but in the spring, our business partner left in the fall of 2020, and so we were thinking about buying him out.

And then in the spring of 2021, I had two separate interested parties, one of which was cart.com, who we ultimately sold to. And the first party I spoke to in the early part of the year, which was actually Saltbox and kind of chit-chatted with them a little bit about what that could look like. And there were a few reasons it didn't work out at the time, but stayed in close contact with them for a long time.

And then Kart called maybe two months later and they were really hot to trot. : They had some clear objectives and goals of what they were trying to do in the logistics space and they wanted to move quickly. And so, I think I talked to O'Meara, the CEO there, and I got a text message from him in like April that was like, " Hey, I want to buy your company. "And then we talked on the phone about philosophy and just kind of where our heads were about the businesses and through most of that month in May.

And then we spent about two or three weeks working through an LOI in early June, signed it in the third week of June, and then we were closed on the sale in the third week of July ... I'm sorry, third week of June, we closed on the LOI, 30 days later, 31 days later, we were closed in July, July 19th, 2021. So it was a really rapid exit. Mark Taylor : Yeah.

Were you running ... At the time, were you doing any kind of certified audits or anything like that on an annual basis to kind of make it ... It was just ... Jay B Sauceda : No, we didn't need to.

I mean, we ran really good books. I mean, we had invested in a really great accounting firm maybe two years before that, who just got us in chip shape. And I mean, when you're running private books, the audit didn't make a ton of sense. I mean, I wasn't worried that I was stealing money for myself.

Of course. So to that end, we were good. And the company, Ninegauge, they're now called E78 partners, was so good at what they did. I mean, they really just got us in ship shape.

They went back and cleaned up a bunch of stuff that we had done incorrectly or our previous accounting firm had done incorrectly. And when we sold the business and we had someone come in and do quality of earnings on behalf of Cart, that woman that ran that process was like, " Man, y'all's books look like the books of a $50 million company. : "She was really impressed with the management report and condition of the books and quality and organization of them. And yeah, she was like, " The way y'all broken this management report down and set it up to really truly understand it and stuff is well ahead of y'all's time.

Mark Taylor : "That's Jay B Sauceda : Great. Yeah, it was great. Mark Taylor : So we did some crowdfunding and as a result, you have to do an SEC filing and things like that. And so we did certified, we've certified our books and then every year since then we've just continued to do it because I think it's such good practice and every single year we find ourselves kind of upping our game in terms of how we think about things, the invoicing systems and processes that we've put in place since getting the initial certified product.

Jay B Sauceda : Well, I think you're touching on a great point, which is that as you grow, you have to level up your processes. Me too. And there are a lot of things that can kind of like continue on because they're not sexy or going to lead to growth, and so it's easy to kind of ... I mean, accounting's one of them, just like, " Oh, so- and-so's got it.

"And it's still just paper and two sticks being rubbed together behind closed doors. And I think that's an area that most companies under invest in. And so I got good advice, I think probably 2019 or 2020 as I was starting to think about the possibility of an exit. And this guy was like, " Run your business as though you're about to sell it because best case scenario you do and worst case scenario you don't, but now it's ran really efficiently and cleanly and profitably and great, but don't use the excuse of, Oh, we're private, no one's going to look at it as a reason to not hold yourself to a higher standard.

: "I think that's smart. Mark Taylor : And the likelihood of a 45 day close like that happening if your books are a mess. Jay B Sauceda : Yeah, not going to happen. No, I tell people that all the time.

The only reason that we closed in 30 days was because Priscilla was our people department lead and she really ran a tight ship on the HR side. Most companies, there's tons of skeletons in the closet risk wise. And then the other side of it is that accounting sucks and it like leads to these questions of like, " Well, what else is wrong? "And I mean, you hear realtors say that all the time about selling a house like you had an issue over here, if you don't take care of it, then the people coming in see that thing that it's the only thing wrong, but they see it and then they go, " What else do I not know here?

"And so for us, the fact that our financing or our accounting was so clean made it just really easy to trust that there wasn't going to be something that bit us in the rear end. : And so downstream as a 3PL, we could have either done an asset sale or a pure securities purchase agreement. And so we went SPA and sold our shares to Kart versus like a pure asset sale. But we did that because doing so meant that we didn't have to go back and renegotiate contracts because with an SPA, the entity stays the same versus an asset sale.

If it was an asset sale where we sold basically customer list and everything else to Kart, that would have been fine. But the second that we would have announced it publicly, we would have had to go to the customers and try to reconvince them to like sign new agreements with Kart, which isn't necessarily guarantee and might mean that we'd have to take a discount on the sale price, et cetera. So in our case, having really tight books meant that stomaching, purchasing our entity versus the assets was like, it was way more palatable because they weren't concerned that they were going to get bit by some HR or compliance issue in some state that we weren't really above board or something like that.

: And that's, I mean, I asked O'Meara that early in the process. I was like, " What would scuttle this? Why would y'all go pens down and walk away? "He was like, " Typically, skeleton's in the closet around an employee's going to sue you for something or some sort of insurance risk or whatever that you haven't accounted for.

"And he's like, " It doesn't mean we can't do the deal. It just means it gets more complicated and probably more expensive legally for you and us. "And so anyway, again, 30 days, we only pulled it off because of the way that we had the business structured. Mark Taylor : Yeah.

So you guys were able to bootstrap it, self-fund your growth and everything like that. And this was at a time when logistics was not sexy pre 2020. And then all of a sudden, logistics is on everybody. So every single American seems to be saying supply chain multiple times a day, which of course attracted a bunch of professional investment.

What were your thoughts on them bringing in, or I mean, the interest in PE coming in and the interest in these huge investments in some of these companies that otherwise weren't forced to go through the process of like kind of learning and funding themselves via cashflow and stuff like that? Jay B Sauceda : I don't necessarily have a negative view of it. I mean, I think it's worthwhile for new sets of eyes to look at every problem. : I feel bad for anybody who went belly up because they didn't totally understand what they were doing.

And this isn't like an indictment on like Convoy or the people that work there by any means. I think that there were a lot of really great people there, but that's a good example of a business that never really zoomed out and looked at the cyclical nature of like where we're at. And I think everything about the way that that business was financed and structured, I just think it's like there's a reason why the long-term brokerage firms haven't done things the way that you do today or in this like startup environment are doing.

There's a reason why rates are X. There's a reason why. And unless there's something fundamentally different about your business that nobody else has figured out, it should make you feel a little weird that you're doing it so wildly different. : And so for us, we were innovative I think on the culture side, but we weren't trying to go crazy with pricing and things like that.

It's like there's a reason why. I mean, this is the oldest or second oldest profession around. I mean, it's like for as long as there've been humans on this planet, we've been moving things between two places. : So I think that there's space for innovation in some areas.

And then I think that there's a lot of bravado about like, "Oh, these idiots don't know what they're doing. I'm going to come in here." I've never felt that. I've never thought like, "These idiots in this industry don't know what they're doing."

That's never been my belief. I've believed that there are cultural misalignments sometimes between client and operator, but I've never thought the operators are dumb or the retailers are dumb. And I think that that has, I've seen in some places some of that type of thinking backed by money that it's like, "Oh, these people don't know what they're doing. I'm here to save the day with a huge lot of cash and some tech.

And if I put those two things at work, all of this goes away." And that's just not fucking true. : And so that said, I think private equity tends to be a lot smarter and tends to, or not always, but I think it tends to look at the business from a viability perspective. And the reason that the majority of the firms that we talked to at that time weren't totally, totally interested was because they had questions about whether or not the trajectory of the venture backed retail growth would continue long enough to really like for them to have the kind of exit that they wanted to see in the 3PL space.

And so they were looking at it as kind of a hard asset. It wasn't this like VC pop, take a gamble thing. It was like, "Can we bolt on a few of these, put this thing together, grow it four or 5X in three years, and then package it and sell it to somebody else?"That was their thinking.

: And both of us, I didn't want to put my business through that and they didn't think that the VC backed retail thing was going to last forever, it didn't. And they kind of walked away, but the VCs I think is really where a lot of that, kind of what you're pointing to probably plays out more so with. And I think some of that's the, for lack of better term, like where the tech bro mindset has come in and maybe even less than ideal in a few areas. I think there's some really great new thinking.

I love everything that Kyle Burton in Two Boxes is doing. Those guys, Kyle doesn't come from logistics. He walked through multiple warehouses and was like, "Why is the return section always a shit show?" And went and poked on it and was like, "Wow, there's a product opportunity there."

But he's like taking a 3PL forward mindset about that and like learning from them. : Then there's people who've literally never done this before and are just like, "If I throw enough money and people at this, we'll build a product and like, what are you building for? " And they're like, "Well, we're going to disrupt logistics." Okay, what does that mean?

What are you doing that's disruptive? "Well, we're putting tech. What does that mean?" Mark Taylor : It's interesting because so few warehouse operators out there are using the full capability of their stack to begin with.

And so if you come, you get a WMS, whether it's highest level of Manhattan or SAP or something like that, or you go to a mid-market provider like Extensive or Soapbox or ShipHero, there are features within every single one of those programs that aren't going to be used in a particular warehouse. And then there are features that those warehouses probably should be using that for lack of being able to look up and ask to be trained on it or go out there and pay to be trained on it or whatever, there's just an underutilization of what most people already have in the warehouse, not in all cases, but in a lot of cases.

So then you start looking for these other little places to stitch on technology and okay, a corrugate machine's a good example. : So these box things, it's like the idea behind them is excellent. Now you're shipping right sized boxes every single time, but then so few people understand how to go through the cost benefit analysis, like, am I doing enough cardboard spend or what do I need to grow my shipments to? And then what's the real benefit of that?

And so- Jay B Sauceda : I still think that the 3PL that invests heavily on customer centric FP&A is the 3PL that wins. I mean, I think this, to your point, there's way more ground to pick up on that side of the business than there is in purely just putting robots into everything, or software that's going to analyze this, that, or whatever. I just think that logistics is a game of inches and there's no singular wand that you're going to wave to your point- Mark Taylor : Millimeters.

Jay B Sauceda : Millimeters. Yeah. And I also think that : It's a function of its own pricing, right? I mean, the flexibility we were able to provide to our customers was because we charged more and we just said that outright.

We are not competing on price. This is what we're charging. We'll meet in the middle, we'll kind of find some ways to partner together, but you're going to pay more with us. We're not bashful about that.

But that means you're going to have a level of white glove service that you're not going to get at another larger 3PL. And so again, I mean, the companies and the groups of people that I think actually should be innovating aren't always in a position to do so because the price war around logistics cuts out what would otherwise be really great R&D opportunities for 3PL to kind of get interesting. And so then as a result, you've got sort of the other end of the spectrum, like the deliverers of the world who are like, "Oh, we can do the opposite on the spectrum.

: We'll just do everything for PL and then we can invest in basically nothing but the tech." And they miss out on the understanding, like the fundamental understanding of the actual operations. And so, and then they add a layer of complexity by just being like a middle person between the work and the ... Mark Taylor : This is an excellent example of, is it good or bad or whatever?

Because if you look at the ... Deliverheat was wildly successful from any of their investors perspectives, the original founders. And then Shopify bought it and then Shopify offloaded it to Flexport in a stock swap deal and all that sort of stuff and TBD. Jay B Sauceda : I mean, but by all accounts, many of the 3PLs that were part of that network weren't necessarily massively wealthy.

Mark Taylor : No. Jay B Sauceda : Customers turned out fairly regularly. And again, to your point, like it was successful to a group of investors. Exactly.

I would not say it was successful to all investors. It may not have Mark Taylor : Been successful for the ecosystem. Jay B Sauceda : It was not successful for the ecosystem. And again, it basically served to undermine the credibility of like what was happening in the retail space because it was such a land grab and like growth at all cost kind of mentality.

I mean that the 3PLs who basically are left to pick up the pieces were under resourced and put in a position where like once again, the people who actually needed the people doing the work, the 3PLs on the ground level that were the 3PL, not the 4PL layer, they were under resourced to be successful. I just think that the, again, like dependent upon why you're in this business, sure, you can make money that way, but that's, I mean, there won't be other delivers is my point. I think that the time of this crazy land grab of VC, not saying there won't be another cycle in which that'll take place, but that's not happening in the next six months.

: And the businesses that were like going that route are either going out of business, laying a ton of people off or reworking their business models because it just was unsustainable. It was already difficult to pay for the overhead of the 3PL and a 3PL and brand relationship, let alone adding on a layer of like a bunch of tech people : Who were just adding a software interface between the 3PL's work and the customer. You add those on there, how are you ever going to make money, right?

True. 3PL's doing it, but it's the 3PLs. It's not like this outside firm who's like, "We're going to pull together this big network." I think that the future is shared resources, but I don't think the future is 4PL at all.

I think the 4PL model is a challenge in the small to mid-market D2C space. It has places and it works well for pallet in, pallet out and certain types of relationships. But I think the vision that those types of investors and entrepreneurs were building was just not, it was not connected with reality. Mark Taylor : I agree with that.

I would also say I don't find most people that are doing that to be ... I don't perceive them to be nefarious. Yeah, I don't think so either. I don't think it's a nefarious thing and you do have to have failure for progress because not all the things that get thrown out there are going to work and then some of the things that you don't think are going to work are just going to work really well.

Jay B Sauceda : Yeah, but I would, and I'd say that I agree with that, but I'd also say I don't necessarily think bravado equals being nefarious, but I think that bravado perpetuates the type of ecosystem damaging behaviors like that about, again, not having self-awareness about what you're doing or contributing to the ecosystem, I think is something that's important. And again, I never perceived them or anybody for that matter as being nefarious, but I do think, and I've had plenty of conversations with 4PL operators who have asked us to be a part of it or to do whatever, and they have, as I as the operator in the room have raised concerns or questions about how we do some of this stuff, it's always like, "Oh, software will take care of that software.

We'll take care of that software." And I've heard that line, "If I had a dime for every time, I would've never had to be in logistics in the first place." And that's my beef with it, is not that anybody was nefarious, there was an amount of bravado about what software is going to be able to do. : I mean, you see this playing out in other ways around the world, right?

: For all of the hubbub about how much more efficient and better self-checkout's going to be. I mean, there are all these articles about basically every storefront getting rid of them and numbers and more and more retailers deciding this was not worth the investment. Everybody hates them. It's a less ideal experience and people are stealing.

They're scanning bananas instead of TVs and shit like that's playing out. And that's a great example of when you rush to an assumption without really trying to understand and you kind of have a no attitude as opposed to a yes and how do I build upon this and try to fundamentally understand the problem, that's the piece of it. In my opinion, the 4PL model is one that is born more out of how quickly can I cover the map and less out of how much more deeply can I serve the needs of a merchant?

: And I think those are two, both can have very fundamentally : Positive and great outcomes, but they have different sort of motivating forces. And so for whatever crossover there was between Shopify and Deliver, I think Shopify still at its core believes very strongly in its bones about being the champion of entrepreneurship and supporting people and customers in that way. You feel that deeply. And they're going through their challenges of who they are as a company and where they're going to focus.

I mean, we launched the Shopify fulfillment network. So I know firsthand everything about how they felt about that problem and what they were trying to solve. The very first package came out of South Austin two miles from here in August of 2018. It was a Shopify card reader shipped by Carson Menka picked by Tristan Charles, or not Tristan Charles was Tristan's last name.

Forgetting Tristan's last name. But anyway, that process was something that meant a lot to us because we were motivated by the same things. : We are going to go change and simplify and abstract away as much of this complexity as we can. And that's just different than give us a hundred million dollars and we're going to go tell a bunch of low margin 3PLs that they can be part of this network and they don't have to think about sales anymore and we're just going to X, Y, Z.

Those are two different ends of the spectrum, in my opinion. Similar executions, that's what Shopify was trying to do with a 4PL model, but I never saw Shopify's approach to it as being nefarious. I mean, it was actually quite the opposite. I thought it was quite noble what they were trying to pull off.

Mark Taylor : It's not a beef, but it's certainly, I've never understood why Shopify just doesn't create their own little search engine interface that only searches Shopify stores, most of which are entrepreneurs located in the United States. Jay B Sauceda : I mean, I think that's what they're doing with shop. I think that's what that app is meant to be. I mean, the thing that I have always respected about that business is that they've been deliberate about how they design and deploy.

And so initially Shop App was basically just a tool to track your packages, but now, I mean, it is actually that platform and I think they're just slower than what maybe people want them to be. But I mean, look, this is the same thing as what you always hear about Apple, right? It's like, "Oh, well, Android's had this forever." They had that feature.

Yeah. Well, I have to pick between four different OEM providers with Android and every single Android phone's on a different OS. And in Mac and Apple, they're deliberate and they're slow and it generally just freaking works. Mark Taylor : I guess my thought process behind this is, I mean, over the last decade, we've seen the number of Amazon third party sellers heavily shift to being represented in China and most of the three piece sellers are now Chinese.

You were already buying the stuff from China, manufactured in China in most cases. And then it comes over and then instead of it being like somebody like you or me who's now running the marketing and really kind of paying attention to the customer, you've just got a bunch of knockoff products, knockoff, everything. So we're shipping off just a ton of capital back, which that is what it is. Those are my sour grapes, by the way, I recognize that.

: But I mean, if you back it up, and I mean, and that's all been as a result of the way Amazon's done business, like deliver cheaper, cheaper, cheaper, highly rated products like that kind of thing and do it fast. And that's been the natural, I guess, result of that policy. And I guess what was it, 20 years, probably even earlier than that, but I mean, Shopify a long time ago launched its pay with Amazon stuff. And if back at that time they'd say, "No, no, no.

We're not going to link up more with Amazon. We're actually going to do the Shopify shop app and that kind of thing." And we're going to make it such that people really are going to Shopify too or Shopify's ecosystem to find people who generally are going to care more about their product because customer experience at least, they're going to care more about a quality situation because they've gone through the ideas, they've gone through the process of designing their own website and creating their own customer experience.

: So it's a much more involved, thoughtful process of those shops. And I don't know that it would have been successful, and I don't know how shop is doing, but that seems like something I would have personally have always thought that I would have wanted that before I wanted the interface and the seamlessness between Amazon. Jay B Sauceda : I mean, that might be true. I don't know.

I mean, there's an argument to be made to an extent about quality of life and everybody can afford air conditioning now because we make them overseas and the purchase price of those became something the middle class can afford because whatever, that's all a bunch of hopscotch. But I think the thing that you're pointing to has more to do with the way that we subsidize shipping costs from overseas versus domestically, which is more of a policy problem than Shopify is to solve. Because at the end of the day, because of the internet and the abiquity of information, it doesn't matter if you find it on shop.

If it's cheaper on Amazon, you'll go find it there. So I think that at the end of the day, they are probably still going to be really successful in developing shop into an app that people use for that purpose. : And it felt clear. I mean, I wasn't privy to it at all, but it felt like that was the direction that the app was going to go.

I don't know that it's American made per se. I mean, Shopify is based in Ottawa, so I don't know whether they really care about it being domestic to America or wherever. I think for them, it's the best shopping experience being delivered and one that really fundamentally to its core cares about small business. And I would say the biggest difference between Amazon and Shopify is to your point, Amazon cares about lowest cost of operations and Shopify is like, how do we lower the barrier of entry to entrepreneurship?

Those are two different motivating factors that arrive at similar amounts of wealth creation for people. And so, yeah, I don't know. I mean, I think you're right. Yeah, it'd be great.

: I think if there's a company that'll do it, it'll be Shopify. If there's a company that will do it at the pace that makes sense to them, it'll also be Shopify, and that pace tends to be different than what some other businesses take, but I think that's why it's still the best platform for entrepreneurship out there. It's most democratized retail platform that really has ever existed. Mark Taylor : Also a good example of somebody who spent billions of dollars trying to get into fulfillment that probably should not have.

Jay B Sauceda : Yeah. I don't know. I mean, there's a lot to learn from that experience. It's still easily one of the biggest and best learning experiences I've had.

I mean, I met some incredible people working on that project, and I think again, that was just a ... I attribute more of the challenges there to being a product of the time in which it launched and scaled than whether they should or shouldn't have been doing it. I actually think of all the people, it could have been them. Oh, Mark Taylor : I'm not disagreeing that you had a good experience.

I think your situation's fantastic and being able to know the order of the picker of the very first Shopify fulfillment experiences. Jay B Sauceda : Yeah. Mark Taylor : It's fucking cool. Jay B Sauceda : Yeah.

Well, but what I mean though is that I think that some of the challenges and the headwinds that it faced had more to do with the amount of growth that happened in 2020, Mark Taylor : Because Jay B Sauceda : The pace with which we were bolting things on and building before that was very different than really middle of 2020, which was how do we capture as much of this as possible, justifiably so. But anyway, I mean, that's a topic for another podcast altogether. Mark Taylor : Of course.

Have you ever heard the joke where one of the greatest transfers of wealth from the ultra wealthy to the middle class was Uber? Jay B Sauceda : I've heard that. I've also heard that about WeWork, at least from kind of Saudi money to the United States. Mark Taylor : Well, I mean, Saudi, but I mean, basically you had billions and billions of dollars of investment and they've returned not a whole lot of profit, that kind of thing.

And we've all had these easier lives over the last 10 years because of Uber. So the idea, if you take that thought process and you look at fulfillment and everything like that, so if you follow that same line of thought though effectively, like you had, so Shopify bought Six River Systems, they paid a pretty penny of it for it. And then if you look at like what that got solar auctioned off to Ocado for, it was a fraction. So a lot of these outfits and organizations that have received a lot of funding by a lot of nice, new, shiny equipment, and then as they go out of business or they close up, then those robots have to go somewhere, they get auctioned off to people.

: And so in a way, I mean, even like going back to the idea that failures are progressing us, it's like those pieces of automation, those programs, those whatever, those pieces of physical technology are actually getting moved into at a kind of price is right situation to somebody who's going to utilize that and then continue to move the industry forward. Jay B Sauceda : Oh, it was massively helpful to us in that way. I mean, they funded through the growth that they provided to us a lot of opportunity to do ...

I mean, I think we would have ... I don't think our business would have been as marketable as a kind of asset at the time had we not moved into the 126,000 square feet that we were in. And the only reason we did was because of the growth that SFN was going through that period. And so for all of my misgivings about 4PL as a model overall, the relationship that we had with Shopify was strong.

And I always liked the Chuck system. I mean, we never tested them at our facility, but I've been to plenty that did and worked with some of the other 3PLs in the network that had them and they were great. I liked them. : There's always integration challenges and things like that that you have with hardware and that there were some other kind of things that impacted some of that.

But I think I've been to warehouses outside of SFN that use that platform from 6RS and loved them. I like those and the Geek Plus systems, but I think that it's true and for all of the investment that they made in that kind of business for themselves, it most certainly leveled up a bunch of us as 3PL providers. It created platforms. I mean, Supply, one of the earliest customers of a razor company, one of the early customers of SFN did really well, sold their business.

So yeah, I have more beef with the philosophy and the challenges associated with managing it of 4PL than I do with any of that. And I think that like in the future, as more time progresses with Shopify and they become an older company, I think it's going to be clearer and clearer like how much wealth creation has come out of that, out of Ottawa because of the product, because it's just unbelievable when you think about how many businesses were launched and scaled on it. : There are very few products and there are very few companies that the founders of continue on for as long as they have as Toby and really even Harley as president have.

And then there are very few products like the ones that they've built that a customer like myself can take from the office at their house and turn into this sort of enterprise value that I did or larger and there's something to say about that. Oh, Mark Taylor : Unquestionably. And look, I think that's a great place to kind of put a bow on it, wrap it up. I will say we didn't really talk, we didn't get too much into Shopify Fulfillment Network.

We didn't talk about Saltbox, which is what you're doing now, among other things. You've got your fingers and toes into a lot of different things. So one of these days we'll have to have you back and we'll continue the conversation, but it's been really interesting and I really appreciate you opening up and coming on. Jay B Sauceda : Yeah, no problem.

No problem. Thanks so much. Mark Taylor : All right. Thanks everybody.