The Journey of Building LoadShare

In this episode of Matrix Moments, we spoke with Raghuram Talluri, Co-Founder, LoadShare Networks, on the learnings of being a first time founder and scaling an asset light logistics platform. Rajinder Balaraman, Director, Matrix Partners India, also joined this episode to share insights from an investor perspective.

Salonie: Hi, and welcome to Matrix Moments. This is Salonie and I am here with Rajinder Balarman, Director at Matrix Partners India. Also joining us in this episode today is Raghuram Talluri, Founder of LoadShare Networks. LoadShare is an asset light logistics platform.Rajinder, could you tell us a little bit about how you met Raghu and decided to partner on this journey with him together?

Rajinder:Sure, Salonie. Thank you. Actually, the story starts a little earlier than that. I had heard of Raghu from friends in the networkI spoke with him when he was at Myntrato convince him to come onboard at another portfolio company as a Chief Business Officer.We had a good chat. I remember, Raghu,the end of it, you said, listen, I really believe in startups but most likely end up building my own.and I think six or nine months later we actually reconnected when you decided to start LoadShare.

Actually, you should talk more about yourself before we kind of dive into LoadShare journey.

Raghu:Sure. Salonie, Rajinder, thanks for having me over. I am doing this for the first time but would love to go through and see what this holds and share some of my experiences in the whole journey of building LoadShare with you.I am a tier III guy.I grew up in a place called Bapatla in the Guntur district. Then, stayed in Ranchi and in Dankuni. In all total I was just counting where all I have stayed and worked in, and that’s around 20 states.I am now trying to build a logistics network in many of the places that I have stayed in. For me entrepreneurship NOT was a first default choice. There’s nobody in family who has been an entrepreneur per se. Family of public servants. And for me also it was not that I had entrepreneurship as an objective that I started with. It just happened over time that I felt that there isa) coming together of great opportunity that I started believing in,b) that I understand the basic toolkit - I think there is something that I can now create from scratch and c) belief that I can actually do it. I think these three things came together for me to jump into entrepreneurship.

Salonie:One question, Raghu, that came to mind when I was actually just putting notes together and doing research for this episode was why the name LoadShare. What is the story behind choosing this name?

Raghu:It’s an interesting one and actually we put a lot of thinking behind this name. We had some working name but this one(LoadShare) is a little deeper. We personally feel very good with the connect and rhyme with “code-share” which in the airline industry is the concept where an airline doesn’t have to fly to all parts of the world by itself. But, it can actually partner with other airlines to take you from point A to B and the other partner airline takes you from B to C. Each of the airlines are playing to their strength. And they are collectively adding to themselves as well as to the customer.

That as a concept was quite appealing. And even now the way we think about it is we believe that we are trying to build that code-sharing platform on the logistic side where we can partner with logistics companies -big and small- and help each of them play to their best strengths and therefore collectively come out with an offering that adds a lot of value to the customer and to the individual logistics parties. That’s the genesis of the name. And yes, it’s first time somebody is asking us we are explaining it.

Rajinder:Raghu, coming out of Myntra I am sure you had multiple ideas running through your mind, how did you narrow down and how did you land on the idea of LoadShare?

Raghu:For me what I realized in my experience at Myntra - a very strong exposure to logistics -Ifelt that there were a large number of SMEs in the logistics space who did all kinds of courier logistics, delivering bank account statements, credit cards. There are small transporters who have a few trucks. But, I felt that they were not being fully leveraged.

So the idea looking at ecommerce supply chain and seeing all the sophistication that technology has driven - that if we can take and apply it to the larger world of logistics which is beyond ecommerce and work with the small logistics partnersand complement their strengths of having a presence all across India, having a very good local understanding, having a fantastic cost structure. And if you marry that with the strengths that I could bring to the table which is on using technology,figuring out a professional way of working, and an ability to generate demand for them.

So, the combination could have the makings of an alternate logistics network which could bebigger than existing logistics networks.I had a couple of other friends with whom I started discussing it. And we at one point felt very convinced that this could actually be made to come to life. And so, that’s the genesis ofLoadShare.

Rajinder:How did you distil what you just said into a value prop that was clear for customers and partners?

Raghu:Let’s take partners first. I think the partner value proposition is 1) we are providing them access to top up demand in addition to what they are already working. The quality of this demand is better than what they are able to generate for themselves. 2) We are able to give them professional work practices hardwired through technology. And in effect our partner value proposition therefore is to make them 10x bigger and better than what they without compromising their identity.

On the customer side, our value proposition is like any logistics shipper needs three things. They need reach to their destination. And they need a great service and cost trade off.Here we are 95% of the gold standard, but we are offering it at 60% cost. That’s the sweet spot that we offer to many of customers. We believe that there is a very large market for who values this particular service-cost trade off.In certain other segments,they don’t like the service levels that they are getting.

So, based on different customers segments, we have tailored our offerings so that we get that sweet spot.

Salonie: Sure.But what would say is the key differentiator of LoadShare, Raghu? And similarly, Rajinder, what did you see as sort of like an edge that LoadShare had when looking to invest that it set it part from its competitors?

Raghu:So, I’ll actually let Rajinder take that question and tell us what he saw in us which differentiated us?

Rajinder:Obviously the team comes first.Second, I think the fact is that the logistics market in India is one of the largest markets out there. Ecommerce logistics is one significant segment which is growing, which is doubling every two years. More than 3 million orders a day roughly now. But there is also this vast ocean of B2B logistics where companies are looking to serve their customers and distributors in smaller towns across India. And honestly, service levels are broken.

Structurally, there is an issue that drives this. The demand density in tier I cities in India and tier II cities in India allows for logistics companies to invest in assets. Assets being warehouses, transport, vehicles, people, and serve customers in a much more direct operator fashion.

And to date, many of large logistics companies, tech-enabled logistics companieshave been built on the back of this business model.

When Raghu came and presented his vision for LoadShare actually it was very refreshing because he was actually talking of a different segment in the market altogether where the demand density was very different, where reach was a much bigger issue, where reach at an acceptable cost was a much bigger issue. And, we saw that most the economic growth, ecommerce growth, digital growth, was in tier II and III markets in India, andaccelerating becoming a much larger percentage of the overall market over the next 5-7 years. And a key component of that would be a company like LoadShare being able to fulfill the demand that was getting generated. Honestly, with the team and the fact that this is the big market opportunity over the next five to seven years, it was no brainer for us.And we were privilegedto partner with Raghu, Pramod and Rakib and the entire team and spending time with them over the last 2 or 3 years and honestly the insight and commitment they have towards the business is outstanding.

Salonie:Raghu, would you agree, would you concur that this is your sort of key USP or key offering that sets up apart from competitors?

Raghu:Yes, I think just to maybe step back, when we started the company there were set of beliefs that we had:

The biggest belief that we had was that logistics assets exist. So, it’s not a problem of assets not existing but a problem that the logistics assets are not being managed optimally.I think the way we differentiate ourselves is number one, the fact that we are a supply first platform. We think that in India demand is the not challenge like Rajinder said. It’s a problem statement who is going to get demand across to the customer - the end customer in the most acceptable cost wise and service level wise manner. So that’s why we said let’s think about how you get the supply partners on board and how do we create a very compelling proposition for them.

The second one I think is an important differentiator because again the belief that me and Pramod and Rakib we have is that believe that logistics in India is a problem overall, but it is much more acute at a regional level.There are many large and high performing logistics companies that are coming up at the national scale which are working on the trunk lanes. We want to be that company that is really attacking the problem where it is more acute, which is,at a regional level. So, we are building a regional logistics business. And that could be as an example working in solving the logistics problem ex-Guwahati for entire Northeast. It could be from ex-Patna for entire Bihar. Or ex-Kolkata for entire West Bengal.

And thirdly, I think what we have realized is that basis our background in B2C commerce, we said, look, there is obviously lot of growth and opportunity there, but there is also a very large world of B2B logistics. And I think whatwe have tried to do, which is unique, is to marry both of them. It could be large shipments that, for example, an FMCG giant would ship from its manufacturing location to its distributor, to its warehouse, to its retailer. We serve clients who are B2B clients as well as B2C clients. So far, we have seen mostly the logistics companies who have chosen to be either B2B or B2C. And we feel if we were to take the B2C network and the B2C sophistication the way of working, ,and apply that and try and leverage that for doing B2B. Because you are able to get synergies, you are able to allay your fixed cost, and therefore you are able to get a great proposition forcost.

I would say those are three big differentiators that LoadShare has vis-à-vis other conventional forms of doing logistics.

Rajinder:How do you think about building a team for executing this opportunity?

Raghu:We are building for Bharat, and that comes with its own set of unique challenges. It’s not easy - your team member has to be sent to Nagaland or is to work in Nagaland for some time. And the way to do it is if you are able to, one, create a vision which is very very compelling for them.

And the second thing is which is equally important is to you have to role model it yourself. So, we have basically Rakib, my co-founder has actually relocated from Delhi to setup our whole Northeast network. Pramod who is our CTO actually spends a lot of time on the ground kind of seeing how technology is being adopted. I have personally gone and spent a lot of time in fact to the extent that I have gone and sat across a local goon to say look - who was holding up our shipment and say, look, you have got to give shipment. So, this is something that we have never done in our life. But, it was important for us to do

And also, you have hire people who are up for the challenge. That’s been something that’s worked for us.

Salonie:How did you go about the process of actually attracting thisteam that you just mentioned?

Raghu:This is the hardest part of not just for us but for I think most entrepreneurs that I speak and connect with.You have to tap into your networks. They are often the best source of people that you can get onboard.I think the amount of help that we have got from both our investors Matrix and Stellaris on identifying the right people has been phenomenal. So, no easy answers on this.

Salonie: When did you know that the business model was truly working in the sense of PMF?

Rajinder:Actually, I’ll jump in on that one. I think honestly you will never know exactly when.

You have to create value for partners and you have to create value for customers.

And what it means for customers is lower cost with improved or comparable service levels.The second point is whether this is translating into a unit economic model that actually works for the company to be able to create value long term.

Too many logistics companies have delivered value to either side of the marketplace without ever figuring out a real unit economic model. And I what’s unique and sets LoadShare apart is because it’s been asset light from day one and because they have always had this vision work with local logistics companies who have that reach and lowest cost in their local market,I think the gross margin profile of this business has always been very very attractive and that’s credit to you.

Raghu:Rajinder hit it right on the head that the concept of PMF is that it is an evolving concept. What PMF, what fit you have got for this particular scale that might not work for a larger scale. You have to keep iterating.

If I look at some markers of what is PMF for us, the fact that in the beginning when we made a plan for how we get partners onboard, we said we have put a lot on feet on street who are going to identify the partners and get them on board etc. But what ended up happening is organicallywe had a large pipeline of partners upfront who were coming and said that, okay, look we want to be a part of the network. That for us was one aha moment or one moment where we said look, there is at least PMF onthe supply side of the marketplace.

The other marker for the PMF for us was that there were customers who were saying, hey, look we want your help in this particular area or on this particular part of the supply chain.

I summarize it, there is no better indicator ofproduct market fit than the traction that you are developing . The fact that you are able to create revenues and you are able to continuously grow revenues and you are able to see that across various geographies, aligned with unit economics also being healthy, - then it’s a good marker that where you are, there is good semblance of a product market fit.

Salonie: What would you say, Raghu, have been yourthe highlights or reflections of working with Matrix and Stellaris?

Raghu: Wejust don’t look at investors as providing capital, we also look at tapping into their ability to dispassionately look at the business, to think about the business from first principles,to share with us from their pattern recognition across various different companies that they have seen who are much further in the lifecycle than we are, and give us good objective guidance on what can we do better.

In particular, I think there is one point when I think about what was the place where really this came alive for us is maybe six months back or so, we had a situation where we were thinking about are the unit economics headed in the right direction or not, right? Or, can we do better? And there was a question of saying do we need to grow, or do we need to improve our unit economics?

And at that time, the guidance that I got was that we need to make sure that our unit economics are really getting to best-in-class because that’s a very important proposition for a logistics company.

We started working on that. I can tell you in hindsight that was a fantastic piece of advice because the company is fundamentally much healthier because of that particular push that came from our investors. We have been privileged to have that opportunity working with Matrix and Stellaris on that front.

Rajinder:Raghu, I am sure building LoadShare takes most of your time, but outside of work what do you enjoy doing?

Raghu:I have always been - right from early years been very interested in sports. And I started doing some marathon kind of stuff in between. And then I felt that there is some variety that’s needed, so I took up doing triathlons. I just got completely hooked on to open water swimming which is swimming in a sea or a lake which is a different experience from swimming in a pool.

And as I think about itcomparison between a job and entrepreneurship is very similar to swimming in a pool versus swimming in the open water. For example, when you are swimming in a pool you always have a place to hang on to if you are getting tired or if you just want a break. When you are out in the sea, there is nothing to hold to on to. There is no limit to the depth compared to like a pool which is a much safer confine.

And there are many other external forces currents that you actually are exposed to and you have to get comfortable with that. And you have to manoeuvre around that rather than a pool where there is no such risk. But the fundamentals of it is that you need to know how to swim well,whether in the pool or not.

Salonie:If you had to leave with onepiece of advice to ourlisteners from havingbuilt LoadShare

Raghu: I think for me if I have to reflect on what’s being the hardest part in this whole journey, I think the realization that the buck stops with you. It’s like in open water swimming there are no edges to grab at.

And you have to be radically honest to yourself. You have to keep marrying what you want to do in the long-term vision with the day-to-day realities. You have to understand what things you can influence versus where you have drift along a little bit. And which ones - which problems you can solve and which ones you have sidestep,. I think that candidness and honesty with yourself to say, look, this is what I can do and this is how I can and don’t delude yourself into thinking just long-term vision, but be very grounded. I think that’s very hard and that’s something that I keep trying to do quite a bit.

The other one that I would say - and this is the part on advice to anybody who is starting off, is this is a lonely and a tough journey. You need to be very passionate and clear that is a problem statement that truly excites you. And that you will go any lengths to solve.

And second part of it is that in this journey you need to have with you the right set of people who will be with you. In my case, I have been exceptionally lucky to have Pramod and Rakib as co-founders in this whole journey,you have somebody to bounce off with and kind of collectively come out with solutions when the going gets tough.

Also, I would say getting the right set of people who can add value to you and the business overall as business partners, it could be investors. I think it’s very important to line that up and make sure that you have the best flying formation for tackling that particular problem. The way you want to do it is I think absolutely critical.

And in my case, I think I also want to call out is having a supportive family. Because it is a very tough job, making sure that you have the right family construct that allows you to go out and do this, I think is equally important.

Salonie:Thanks, Raghu. Thank you for taking out the time. We appreciate you doing this with us. And thanks Rajinder for joining us on this episode.

Raghu: Thanks, Salonie and Rajinder. I think it was fun doing this. Hope it’s been interesting if not helpful to people and the listeners.

Salonie:Thank you for listening. And you can find the transcribed version of this podcast onmatrixpartners.in.You can also follow us onTwitterandLinkedInfor more updates.