Solving Eminent Problems in Freight Transport with SaaS Entrepreneur Gwenaël Malbec

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For the majority of entrepreneurs, starting a business feels like the equivalent of jumping straight into the abyss. This is uncharted territory. But for the same individuals that end up sailing ahead further than they expected, major life changes happen that don’t easily manifest through other outlets.

This was true for one entrepreneur who took a leap into one of the most complex industries without a hint of knowing what was going to be on the other side.

His journey ended up being transformative and he was able to observe with his own eyes a whole industry evolve and absorb the kind of technology he was building.

The trucking industry is not a new one. But it wasn’t until recent years it started to employ technology in its long treks across hundreds and thousands of miles, carrying millions worth of goods and resources every day. When Gwenaël Malbec, first heard of the idea to build freight software technology from his now co-founder, something in his mind tinkered at this opportunity to create something for himself. Something bigger to him than working in one of the world’s most prestigious technology consulting companies.

Gwenaël, the co-founder of FreightPath shares with us his intentional tumble into entrepreneurship, the future of freight technology, and tackling a behemoth of a problem in the industry

Interviewer: You have quite an impressive career, including senior positions with companies like IBM. What inspired you to leave the comfort of having a secure position to pursue your own business? In what ways do you think having a corporate background helped you as a founder?

Gwenael: The first thing has to do with who I am as an individual. I’m someone who likes to take on opportunities. Throughout my career, I’ve received opportunities to start a business here, or to manage another business there. When I look at opportunities, there needs to be an element that’s enticing to me and is going to help me grow.

There is always a risk, sometimes financial, and sometimes with yourself not knowing if you could meet the standards and the requirements of that job. In 2015, I was offered the opportunity to start my own business and get a 50% stake in a company, which was pretty much unheard of. I was always just an employee, but I was working as hard as possible, and the opportunity to gain some freedom and to be my own boss was really what I had in mind. 

I knew nothing about transportation and little about technology, but it was definitely something that I felt was like a challenge I was due for. As far as how my past experience has helped me with this venture, I would say both yes and no. I would say yes, because obviously I’ve been exposed to a lot of technology, methodologies, ways to conduct business, sales and marketing, implementation, and customer support.

Back in 2010, I was one of the first ones in IBM, to learn and sell cloud-based technologies. This gave me an edge in terms of technical knowledge. I would say also no, because on the flip side if you come up with that experience and you try to apply the rigid methodology that you have with established consulting businesses like IBM, CGI, and Deloitte, onto your little startup, it doesn’t necessarily work.

People at IBM are going to be paid nicely, but they’re expected to produce a lot. You’re going to work 50-60 hours a week, consistently. At a startup, you pay someone $50,000, and guess what? You’re not entitled to tell them to work as hard or to be rigid with them in terms of what they need to produce in terms of work. You need to be taking your life, and work balance much more seriously. You need to understand who is it you are working with and to entice them with something else than just like, you’ll have some real reward one day. It needs to be a lifestyle, something that is embedded into their day to day. I would say technical exposure helped me but I would say some of the day-to-day activities and methodologies couldn’t be necessarily reapplied to the entrepreneurship world.

Interviewer: When your company is in a competitive industry (ie. SAP, Oracle) what do you think your main advantages are as a smaller company?

freightpath app inteface

Gwenael: Just to be super clear, I’m not necessarily competing against those companies, but I’m competing against very similar companies that have most of the market share and have been there for decades. Oracle and SAP didn’t really manage on the supply chain side of things to be big, but the question is still very relevant because we have lots of competitors in the field. Once you are a big machine, you have a very complex back office and bureaucracy, and well-oiled processes to make things happen. When it comes to a startup, we don’t have all those admin layers. But that also means we don’t have all the paperwork that goes with that. This in turn allows us to be more flexible and to come up with solutions in a much faster and cheaper way than those big companies are. 

When a company like IBM advertises or communicates about something they’ll do, they’re not going to change the direction two months later. Conversely, it’s very easy for us to come out and say we’re going to be the best at something, and five months later, reroute because we gathered better opportunities from the market.

For example, when we’re talking about document generation and digital execution online, I can flip the concept and the development on a switch like that, and tell my marketing person to change the tone. Or, we start a podcast about that topic. 

Interviewer: Let’s talk about your recent pivot into the factoring industry—what are some major benefits your clients will get through this integration?

Gwenael: First and foremost, Freightpath has been around for a bit more than four and a half years. That was the problem and it goes back to me not listening so much at the beginning. Many of our clients were inquiring about a better way to submit their documents as it was a very time-consuming process. Sometimes the documents get rejected, and when they do, the vendors don’t get paid as quickly as they should. Workflow in any business is crucial. The other co-founder and main investor of Freightpath himself was experiencing severe cash flow issues so much that last year they were forced to stop funding the company.

This is such a pertinent issue in the market and I think it’s more severe than any of the other challenges we’re trying to solve. 95% of our customers have been telling us “We need a better solution to submit and factor those transactions because we need cash flow”. In a technical sense, we have all the infrastructure to accommodate that. This year, taking a step back, it occurred to us that what needed to happen was for us to move into this factoring market.

I started to analyze and study the freight factoring market, only to realize that the individuals running these companies, most of the time, didn’t know too much about transportation, they’re only the money holders and decide to give you the money based on how you submit the documents. They’re not necessarily tech-savvy either. On the other hand, you have the freight technology industry where it’s a rat race of how many features are you going to have in your TMS, how many integrations you have..etc Most of those features are going to be used very lightly by most of the customers. Now when I’m starting to just look at those two components and say, what if we have a system that can provide that funding and at the same time provide you with an all-in-one system to allow you to optimize and automate most of your operations in the back office? Then you’re able to focus on the one thing that you’re good at doing, which is delivering the freight and delivering the orders that you’ve been assigned to. I think that would help the industry tremendously at large.

Interviewer: What’s your strategy around sales?

Gwenael: Currently, we’re trying to avoid going directly to consumers. The problem with direct-to-consumers is that it takes a big time to market, qualify, demo, close, and retain. What we found is that working with established factoring companies that have adequate funds available and pushing our technology to their end users, constitutes a great sales channel for us. The goal for us is to just do as many partnerships as possible with those freight factoring companies and leverage our technology to bring all of their customers to our platform as part of this joint value that we would bring to them. 

Interviewer: How do you see the current economic situation affecting the TMS industry?

Gwenael: We observed more people coming to us inquiring about the technology. That’s something that between seven years ago, when we started, and now, is day and night. I think people in general are more educated about what’s available out there and the type of service and value-added. They’re asking their carriers and the small brokers that are working for them, for access to visibility. Can I have access to everything happening with my load? Can we stop sending a fax to update something or have to resort to phone calls to try to understand where a truck is?

I see the demand increasing over the coming years. Specifically, with one-stop-shop solutions that can give you high-level information on track and trace, the status of updates, collaborations, document management, and the accounting part is very important. By accounting, I include the payment aspect of things via factoring. All these components in one should allow any transportation professional to come to stay here and keep on doing the transactions with a trusted network. 

Interviewer: In the 7 years you were in business, did you have an ultimate business plan with all the various integrations and solutions you wanted to introduce, or did you develop it as you went?

Gwenael: It’s very surprising, but I didn’t know much at the beginning when I started. The only thing I knew is that I would be a billionaire six months after I started because I was the first one talking about an Uber for freight transport in 2015. In the beginning, my vision was self-centered: it was just me building my product, and the world will only have one choice— to love it and buy it. Then, nothing was well made. We rushed and burned through almost half our money in Year 1.

If I were to give one piece of key advice, it would be: if you want to be successful, pace yourself. Let’s validate, talk, and listen. Once you do that, you change the mindset, and thus, the methodology. That’s the lean start-up concept that comes into play when you’re bootstrapping.

I didn’t see any of this happening, but now every time there’s a new solution or new trend in the market, it’s very easy for me to pick it up and understand how it’s going to work and which market it’s going to serve. 

Interviewer: If you could get advice or mentorship from any person you want in this world (alive or dead) who would it be?

Gwenael: Honestly, I don’t idolize many people out there. I’ve never been the guy who wanted to talk to Steve Jobs. What I’ve found is, I much rather get to know myself more and understand where my limit is, what I can improve, and how I can keep on opening my heart to be a better human, better entrepreneur, and how I can better serve the community rather than having a showy star guide that’s going to come and give me an autograph. 

Although I must say, I’ve met a lot of great mentors in the accelerator part of Downtown, Ottawa. Usually, these are the people that have the background and the experience, so when you’re telling them about your problems with scaling, you’ll have people deliver genuinely helpful advice. I find people who talk from experience and from their hearts, always end up being the best mentors. Specifically, when they do it with the intention of helping, and giving back after receiving in their career. I find that lovely. It’s a profile I’m giving you, but no name.

Conclusion

The freight transportation industry is positioned to grow at 14.6% CAGR from $9.22 billion over the next decade. This leaves ample room for nimble and smaller-sized businesses to continue innovating and establishing themselves in an industry that’s keener on technologies that make their day-to-day operations more efficient than ever. 

Gwenaël emphasizes building great relationships with customers, opening up your ears to feedback, and being able to siphon through the noise to ultimately produce a product that meets the general consensus of all your customers. For him, this was bringing factoring into the equation.

Combining factoring and TMS into one solution will be one of its kind, and Gwenaël has no intention of disappointing; he’s already in the process of forging partnerships with well-established factoring companies.

When great demand meets innovation, this is where the magic happens.

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Naomi Peng
Naomi Peng
Naomi is a business journalist who specializes in crafting the most inspiring stories about entrepreneurs, the startup world, and investment trends.

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