Justin Sky, CEO and Co-founder of Rose Rocket spoke with Santosh Sankar on The Future of Supply Chain podcast. During the podcast, Justin and Santosh talk about the early days of building Rose Rocket, our Network TMS, the power of our integrations, as well shaping the culture of our company.
This episode is packed with lots of great information and insights about creating a transportation management software product and company, so we highly recommend you tune into the full episode. If you’re a bit tight on time, we’ve pulled out a few highlights below.
Listen to the full episode here.
(Highlights have been condensed and edited for clarity)
Santosh: We're going to dig into this, but in broad strokes, tell our listeners here what you and the team are building up at Rose Rocket.
Justin: Rose Rocket is a TMS, transportation management software. I call it a next generation TMS and we can dive into why I think that is. We also have this product called the Network TMS, which we really only just stumbled on recently over in the last year or so. But traditionally, if you want to think about it, TMS is the operating system of a trucking company. Every staff member, including drivers, will be touching our software all hours of the day, all operating systems. Sometimes our customers actually beat us if we have a bug or an alarm. So they're using it every second of every day. And the TMS is really just the orchestration of the jobs to be done, whether that be from quoting all the way through to invoicing. So an operating system, we're building sort of the HubSpot, the Workday, the NetSuite, but specifically for trucking.
Santosh: Where are you all today? What's the company up to?
Justin: We just announced our Series A at $25 million co-led by Lee Fixel of Addition Capital and Mo from Shine, who's originally from Spark Capital. So what have we been up to?
We discovered something quite interesting in transportation. When we started Rose Rocket, we got into Y Combinator. And so we were just talking to every customer, we're doing the YC thing. And a lot of trucking companies didn't even want to talk SaaS in 2016.
They're like, "Nope, you got to be on Prem. I got to go touch the server, security, firewall." All those types of things. And then around, I want to say '17, '18, right around when Amazon announced they were getting into freight, there was a sentiment shift. And a lot of trucking companies started looking for technology and seeing the value in it. I almost think that trucking is the market that SaaS kind of forgot about for 10 years, but everybody else has been piling in all sub verticals. And we were the only folks there. When we went through IC there were only two other trucking startups. What we stumbled on though was in 2018, 2019, we started seeing a lot of our customers actually already working with our customers.
We were starting to see less about direct competition. But a lot of customers were instead of, so say traditionally in 2010 you're a carrier in Dallas and you want to open up the Houston market because you have a couple of customers down there, you would go open a terminal, buy trucks down there, have pump shacks and shelving and racking and real hard assets. And then that arrhythmic change where it's like, "Well, why would I do all that? Why wouldn't I just call up a carrier down in Houston and say, 'Hey, I've got some Houston freight. Do you have any Dallas freight?' And let's work together on that lane." And so we started seeing this happening. So take that. And then on the other side of it, what we did was, I'm going to call this the Canadian angle of building a startup.
I don't know if this is actually true or not. But when we first started, if a customer said, "Hey, could you build this?" We'd be like, "Yeah, sure. Do you have money?" We will 100% build that. And then another customer would come in and we're like, "Oh yeah, completely, slightly different." But they say trucking. So maybe LTL and FTL. "Sure. Yeah, we do that too." We started building it. A brokerage comes in? "Yeah, no problem. We'll do that too." And so we weren't really thesis driven. We were like, "Hey, where are the customers? Where’s the money? Yeah. We'll build them a product." And so we got really good at building products and listening to the customers.
What ended up happening was we started building for a couple of these sub verticals in the trucking space. So 3PLs, LTL, FTL, even some hybrid models, a little bit of drayage from time to time, final mile for sure. When you take those two factors and you put them together, you have a bunch of our customers working together, and then you have a product that can work for a bunch of those sub verticals. Then I zoom out and we look at it and you go, "What trucking really is, it needs a horizontal software inside that vertical." You need one piece of software that can work across all three. 'Cause you're really just moving stuff from point A to point B. But it's really hard to do that.
Normally you would raise some money, hire a bunch of developers. You'd find the same type of customer so you could build something scalable. And you'd build an FTL product for instance and then you get so far down building that FTL product and when you come up for air and you go, "Okay, now it's time to attack brokerage or LTL or final mile." You realize you've made some product decisions that are hard to unravel to then go down the other continuum. We were sitting on these two things, "Hey, they're all working together. And we have a product that's kind of a horizontal product inside this vertical. Why don't we put those two together?" And so that was the birth of the Network TMS. And really the insight that the Series A investors were really excited about, where we have a potential chance here, where it's a B2B software that's driven by a viral efficient loop where one customer comes in and gets us five more because they're working together and it's better with friends.
Santosh: On the subject of integrations, how does Rose Rocket think about offering integrations, but also front running and developing integrations vis-a-vis there's a mosaic of solutions out there that one leans on to build, whether it's like an asset centric business, a proper trucking business or a brokerage, right? Like you could have Xero, QuickBooks — you might have your route optimization business, perhaps it's something like Wise. You might have things that are home brewed. How do you bring all this together for this next gen philosophy you hold?
Justin: Okay. So let's get into the weeds for a sec. We're very aligned to the general strategy and vision where we do have an integrations team, we call them the ecosystem team. We have a professional services team that might do a little bit more black box type stuff. And of course we have developer docs. So we have people developing their own use cases or their own services that they need. So I think long-term, we will just always invest in that side of the company. We will always be building more integrations, getting deeper, working with people like KeepTruckin or Geotab. We're not trying to pick a winner here. What works for the customer is best for that customer. But I think what's interesting is a lot of times, and let's get structurally and almost talk like a database for a second.
I look at every trucking company as two envelopes connected by jobs to be done. And envelope one is called the order. That's how I make my money. And you're going to have a whole bunch of integrations that need to talk to that order object or like that DB table. Then you have the other side, which would be how I spend my money or how I deliver the goods, and that would be either a manifest or a trip, or a load, that type of object. And that's where I'm going to engage with my partner or my driver or et cetera. And then I think there's this middle layer that not a lot of TMS softwares actually have, which is the tasks, the jobs to be done. We call them legs or tasks, and those can also have independent connection points. So you could have a leg that's a part of a large load and maybe it's a multi-stop, you're driving across the country.
And maybe just that leg needs a temperature reading. Well, if you were doing that from just an order object, well, then you would have to go to the order object. You would have to find the sub bullet point, then load in that piece of data. But then you're going to need to rely on a human to connect the dots. Whereas if we break it into the smallest pieces possible, you can then connect those through an integration. So whether that be temperature, whether that'd be location, whatever is needed to get that job done.
Santosh: And I want to pull on a string that you mentioned earlier in the conversation around network effects and how you're digitizing and are the glue between these natural nodes in the network. How have you seen that play out and more specifically, how have you seen one of the nodes come on, fall in love with your software and then pulling on their stakeholders and their supply chain partners to also be a part of the Rose Rocket network or I think what you called the Network TMS?
Justin: Yeah, the Network TMS. Yeah, totally. For us, it actually started with our first "network feature" and I'm putting those in air quotes because we didn't know it was the Network TMS at that point. We have customers as small as two folks all the way up to thousands of folks in their head office. That in itself is a whole podcast of how to build software for that wide of a range of audience. Our first land and expand opportunity when we were talking in our seed investors was we have the shipper portal that, because from our previous company FR8nex we learned the shipper TMS, we understood the challenges that they needed, we bolted as our first main feature on Rose Rocket.
Every Rose Rocket instance has a shipper portal as part of it and you can talk to your customers and they really like going there to see the ETAs or get documents or whatnot. What ends up happening is a bunch of those were brokerages. So if you're selling to an asset, the brokerage is the customer, they're going into the shipper portal to then update their customer and on and on. And what that ended up doing was they taught us, we didn't learn this, they taught us like, "Oh, well, why don't I just have Rose Rocket and we're looking to upgrade." And then those two points can connect together. And then instead of me having to go somewhere, it just naturally exists in my natural flow of work to be done that day. So that's step one. And then step two is to think about it the opposite way, starting with a brokerage and going downstream to say a carrier or even an owner operator.
Santosh: How does Rose Rocket stick out from the landscape of other providers they might be looking at or evaluating? What do they need to walk away remembering?
Justin: I'll drop it down to three points and I'll go as quick as possible. Number one, we're the one of the first or one of the best, and I don't know everything, but one of the first one or one of the best that can do horizontal inside trucking. So whether you do LTL, FTL, brokerage, a hybrid, drayage, final mile, you can actually work how you need to work inside Rose Rocket. We can adapt. And if things change in your business, we can change right alongside you. That's one. Number two is we're open and have integrations by default. So you want to have your point solution or you want to use our driver mobile? Great. You want to use your driver mobile? Even better. And so we have an open platform that allows you to pick the point solution. You need to do your job. That's number two. And then number three is the Network TMS. The Network TMS is just a really interesting and compelling way to level up your workflow. So you manage your house very well. You get your folks to do what you need to do, derive value for your customers, but then extending that into your partner network or all the way up to your customers. So those three, I think, are distinct unique value props.
Santosh: What's your approach to thinking about scaling culture?
Justin: This is honestly one of my favorite topics. So when we started the company, I'm going to go back a second here, Justin Bailie and I... I'm a little bit more of a robot. Justin Bailie is much more empathetic. Alex is just a hacker, frankly, he gets so much done, it's impressive. And so we really play off each other. We lived together during YC. So we'd sit at this table that a former YC company had put in our rental unit. And we'd always say, "Hey, when we're big, you'll be in front of culture and I'll do..." You know, the total garage days. And the funny thing is that I sort of became that North Star on the culture side. I really fell in love with it, which I never expected I would. I expected, do your job, go home, enjoy your life, come back, do your job.
That was my old school way of thinking. And I've really become obsessed with the idea of what is culture, what it means. We had this really big breakthrough on values, and I can talk about that for a second if you want. I have a lot to talk about on values.
Santosh: Go for it. Yeah.
Justin: Okay. Ultimately, what is a company? It's a bunch of folks trying to point in the same direction for a certain period of time. It's not a marriage. You're not going to stay together for your life. When you think about that, it's really around alignment. And I think the alignment of any relationship, the sum should be greater than the parts — I like to think of them as one plus one equals three.
It doesn't make sense, but great relationships don't either. That idea came to me... It didn't come to me, I probably learned it from someone else and it just stuck in my head. But we had a lady named Elizabeth come to our team. We didn't have any values. I was anti value for about three or four years of our company's history. We were like 40 people when we did our values. I found this lady named Elizabeth, who really taught me about that alignment thing. She took our team of 40 through a three day exercise and we came up with our values together. We tried to write down what one plus one equals three for us. But I think for me, from a cultural standpoint, it's around alignment. And what are you trying to align to?
So back to your final thing of like, how do we scale our culture? I think it definitely begins with alignment and values and 100%. I also think it's about what you don't do, not what you do do.
Santosh: What's the number one lesson you've learned building Rose Rocket and leading a supply chain business north of the border here from us in the States?
Justin: Good question. When we were leaving YC, I cornered Sam Altman and we're having the debate of do we move to the Valley because we were living in the Valley with the co-founders or do we go back to Toronto? And Sam said, "There's a tax to being out of the Valley. Big companies can be built anywhere, but there is a tax you must pay being out of the Valley." And I think he was pointing towards access to investors and back pre COVID it was really hard to raise a round without being on the street. Executives, I think are another one. You've got a wealth of executives that go from that Series A to Series D size or a Series A to Series C and then C to E on and on and on.
And that really stuck with me because it was like, "Well, this is a really smart person telling me that I should be in the Valley. And it was really hard for us, the co-founders, to really make that choice to come back to Toronto. In hindsight, great decision for us, not for everyone, of course. Specifically talking about Canada, I'll talk about the advantages that I see in Canada. Number one, the cohort of risky co-founders, say the top three co-founders or the top five early employees. They have a risk profile where if you're in the United States, they may be like, "I don't need health benefits. I can take that risk. Or I don't need health benefits right now where I can be laid off and I'll have health benefits. But if I get laid off, I'll be fine." But that doesn't extend to the top 20, the top 40, or even the top 100 people.
They have lives, they have folks that are getting pregnant and want to have kids and have conditions and all that type of stuff. In Canada, you don't have to worry about that. We don't have the cost basis of having to have health benefits or that risk of if "I got laid off, I wouldn't be able to provide for my family." So I think early days, let's say the first 100 employees, you're going to get a higher quality employee who can take a little bit more of a risk. They might not have elsewhere because they want to be gainfully employed and they can't risk being laid off. So that's one. Number two is I think Canadians are really great at service. Canadians have spent most of our economy in servicing Americans, frankly. It's sort of ingrained in our culture, a little bit.
And so you have really great folks in sales, in marketing, in customer success and those type of endeavors. And then you also have that really wonderful, strong base of developers. I will say the counter position of what's wrong with Canada is I do believe that our executives are just not there yet. We don't have the thousands that are in the Bay Area, just rotating through companies and we're getting there for sure. And I'm seeing really strong wealth of executives coming to the market. I think Clearco is a great example of some folks that are really being the lighthouse, if you will. Shopify, of course. And then what else would I say that is really strong about Canada is the cost base, you can do more with less.
We hope you enjoyed reading some of the highlights of Justin and Santosh’s conversation! When you have the chance, be sure to listen to the full episode.