Truckers & Nerds Ep. 11 - Announcing CloudTrucks $115m Series B Round at a $850m Valuation

Welcome to the Truckers and Nerds podcast, where we connect real-life truckers with freight tech companies to discuss technological innovations in the trucking industry. The Truckers and Nerds podcast is hosted by Tobenna Arodiobu, CEO and founder of CloudTrucks. This podcast is brought to you by CloudTrucks.

Welcome to a bonus episode of the Truckers and Nerds podcast. So today we just announced our new round of funding, our Series B. It's a, it's $115 million round, and we thought it would be great to bring, bring a few, a few of our investors onto the podcast to just, to just chat about the round, chat about the company. So, so we're joined by Steve Sloan, and Faiza Haskaraman from Menlo Ventures, Kanyi Maqubela from Kindred Ventures. Welcome, guys. Thanks for joining us.

Yeah, thanks for having us. I am— you know, it's truckers and nerds, and, you know, unfortunately we aren't truckers, so I know where we all fall, but I think we're okay with that.

Yeah, I think it's great. You know, one of the reasons we— I think I've mentioned this a few times— one of the reasons we started the podcast was actually because one of our customers had referred to us as the office nerds, and it was, it was an endearing term. And we just kind of leaned into it and we realized that we should shed some light on what's going on in technology space and how it affects the trucking industry. So, so it's been, it's been fun doing, doing this podcast over the past 10 weeks. Um, so, so Steve, Steve and Faiza, I want to, I want to start with you. You are the newest investors in Cloudtrucks, and thank you so much for deciding to come on this journey with us. I thought it would be great for the audience to get a little kind of background on Menlo Ventures. So can you tell us a little bit about yourselves and Menlo Ventures?

Sure. I'll start off there. My name is Steve Sloan. I'm a partner at Menlo Ventures. I've been at the fund for about 7 years now, and the fund has been around for 45 years. We actually got started as a as a biotech firm and actually incubated Gilead Sciences, which is one of the premier antiviral drug developers, out of our offices. We have been lucky enough over the years to invest in iconic companies like Siri and Roku and Uber, more recently, like Poshmark and Rover, and then a lot of upcoming important companies, the largest neobank in the US, Chime, Carta, cap table management and private markets, Benchling, which is a great company in the life sciences software space, and many more. I think what's in common with a lot of the investing that Faiza and I do is we call it inflection fund investing. We're looking for those companies that have really strong product-market fit, but just really important end markets to go after. They're early days in their journey, but it's just become obvious how big of an impact they're having and how how big of an impact they could continue to have. And certainly we put CloudTrucks in that category. So we're very excited to be investors.

Yeah, no, I think Steve rounded that well, but I just wanted to introduce myself. My name is Faiza Husseiraman, and I work closely with Steve on our supply chain investments at Mount Law. And prior to Mount Law, I actually did some consulting for Fortune 500 companies and worked with a lot of CPG companies in supply chain and logistics, which ultimately coming to Mount Law at Menlo, it was incredible that we had an active thinking around the future of supply chain.

Thanks, Fei-Fei. So that's actually something that was very fascinating to me about Menlo, the deep thinking on supply chain and logistics. So Fei-Fei, you mentioned that you had worked, you had done some consulting with CPG companies. Is that how you came to your interest in the logistics space?

I would say it started Even earlier than that, similar to you, Tobenna, my interest in logistics goes back to my childhood. My family owned a small paper manufacturing business, and I get to observe a lot of the movements of trucks on the ground. And after graduating college, I actually pursued a master's in manufacturing and then went on to consulting doing that. And it was incredible just coming to Mount Law because Steve had already done and led incredible investments in this space. So I had the opportunity to lock arms with Steve and go after it. And, you know, when we think about the space, we say logistics is the backbone of our economy, and we are by no means exaggerating. So by rough measures, and coming— this is coming from our work in the space, you know, logistics industry contributes roughly around 8% of GDP in the United States, and 70% of that is driven by trucking. That is a huge surface area when you know, and that's the one that is quite manual today. We today order food by a click of a button, but trucking companies still need to call brokers to pick a load. So some of this is due to the complexity inherent in the ecosystem, but we feel strongly that digital experience will enhance and streamline logistics in a big way in the next 5 to 10 years to come.

Yeah, and as part of that thesis, we've really been investing up and down the stack. So we're excited to be investors in Cloudtrucks, but there's so much complexity that happens from the initial warehouse to, hey, once the truck arrives, do you have labor and do you have the people there to unload the package that arrives? And we've actually invested in a company called Fox Robotics that brings automated forklifts to the process. An investor in Six River Systems, smarter warehouse management and robotics. That was Shopify's largest acquisition. And ShipBob is the largest diversified tech-enabled 3PL. We were Series B investor in Uber. I'm in a company called Enable, which actually manages B2B rebates for distributors in the supply chain. So it's just been amazing to pursue this thesis and to find so many different areas that both cloud trucks touch and the economy overall overall touches because it's just such a large and important space and there's so much complexity and so much opportunity to bring technology that will make a difference for both people working in the supply chain and frankly everyone in the US who is the end consumer of a supply chain that is seriously strained.

Yeah, we definitely agree with that thesis. I mean, it's for me and for the entire team at CloudTrucks, we get to see every single day all the complexities with moving things from point A to B around the country. And that's something we're excited about, working to make this easier and easier, working to help the trucking entrepreneurs who actually have to do the really hard work, working to help them make their lives easier as well and help them make more money while they do so. Kanyi, I wanted to touch on you a little bit because, you know, you invested in Cloudtrucks much earlier. So I'm sure for you, a lot of this— we looked very different at the time. So one, I wanted to see if you could share some— a little bit about yourself and Kindred Ventures, and then talk a little bit about why you decided to invest in Cloudtrucks.

Of course, I'd be glad to do it. And thank you so much for having me on, and congratulations on all you've done. Kindred Ventures is a much younger fund than Menlo. We were originally established in 2014 and only raised our first fund in 2019, actually. So our investment in Cloudtrucks came very, very early in our trajectory. And the reason that we exist is we want to be, frankly, kindred spirits with founders at the beginning of their journey and partner with them deeply through the life of that journey. And we do that as generalists, and we do that across sector and across geography. But there are a couple of areas that have been areas of particular interest for us, and those include the really big areas of the economy, and then a couple of the frontier areas where, as we like to say, there are no roads. And so we think of the first category as health and wellness, where we invest in companies like Color Health and Tonal, the strength training at-home device. We like to invest in financial technology, which I'm sure we'll touch on in a little bit. Uh, and there's a preponderance of examples like that, like a company called Point, a company called Tala in the lending space. Uh, we're very interested in investing in supply chain and logistics, uh, which we'll talk about a bit here. And then, uh, we're interested in marketplaces of all types. And, you know, we think that marketplaces, particularly digital marketplaces, is one of the most powerful business models possibly ever created. Uh, and then we also touch in, in some of the frontier markets like, like cryptocurrency and the future of social consumer, and, uh, some really interesting hardware. And so we're, we're a true generalist in that sense. Uh, and we are investing frankly at the beginning on people. And so our initial insight and instinct on Cloudtrucks really came down to, to George, Jin, and to you, Jovana. If you don't mind, I'm gonna say a little bit more about that, which is that, uh, it's not often that you meet a team that knows each other with the kind of depth and the kind of, uh, complimentary relationship that your founding team came to market with. And so obviously you and Jin having worked together prior, and you and George having known each other as long as you had, and you sort of being the glue between really great product and engineering leaders who, you know, you were telling a story that ultimately resonated really well with the market. That really spoke to us, first of all, was the dynamic on the team. But then the second was not just the scale of the problem, but the impact potential of it. And so you sat down in our office in, uh, in at the end of that year and you articulated a world where one of the most common jobs that is part of the central nervous system of the economy, uh, is so badly underserved and the opportunity to serve that feels like a mission and the opportunity to be able to create a suite of products that makes that class of small business owner, that class of worker, uh, truly feel empowered felt like a mission to you and that was really, really persuasive to us. And so ultimately we're driven by strong teams and by great emissions.

Yeah, Kanyi, congrats. I mean, wow, Cloudtrucks is one of the first couple investments in the fund, is quite the way to get started. And by the way, I love the Back to the Future reference.

Thank you for noticing. Exactly. Yeah. And the funny thing about Cloudtrucks too, to the point of where we're going, there are no roads, is one of the things that is interesting when you're operating in these big, very, very, very important, in this case, hundreds of billions of dollars industries that have been around almost as long as the American economy has is there are some people who think of them as creating incremental change, and then there are true futurists, by which I mean people who try to imagine a world that almost sounds outlandish at the beginning. And part of what I was so attracted to in Tobena, Jin, and George was the fact that they were futurists in one of the oldest spaces in the business. And so they didn't just think about building software as a service subscriptions, for truckers, they thought about a world where as a small business owner for trucking, you can have a whole system automated and optimized, a whole system from finance to loads to your rig itself, to how you think about managing your business and optimizing it over time. And the idea that you can make something as old as trucking feel like magic, uh, is incidentally one of those things where you're taking a futurist and you're putting them into an old space. And so that's one of the things that not only from our original underwriting of the opportunity, But frankly, as the company has executed over the last two— I can't believe it's only been two years, but over the last two years has just been remarkable to watch is how quickly they've been marching into the future.

Kanyi, one of the things I love about you is that you tell stories much better than I ever can, and you make me sound much smarter, much smarter than I actually am. So thank you. Thank you for that. I don't know that my story was that good, but thank you for that. So one thing I wanted to talk about is, you know, so we started the company in 2019. Kanyi, you were an early investor. And then we go into 2020, we hadn't launched the product yet, and the pandemic happened and everything changed. I'm curious what went through your mind then and how maybe that impacted the thesis that you had when you first—

Oh gosh, that's a really important question. It speaks to how venture capital works, but also to how innovation happens. And so the best analogy for it is, it's sort of like deep sea fishing, when you're looking for the deep sea tuna. And by the time that fish gets to the surface, because of how far down under the water it is, it's a different world. By which I mean to say, most startups are envisioning a world that they're hoping to exist a half decade from when they start. In some cases 7 years, in some cases even 10 years from when they start, which means that whatever is happening in the public markets or on the news or in the zeitgeist at that given moment is typically not that relevant. And so I went into 2019 and into the Cloudtrucks investment thinking about it that way.

Steve, I wanted to ask you the same question because you were investing in the logistics space before the pandemic, and you invested in Cloudtrucks, this year. A lot has changed since you originally had your overall logistics and supply chain thesis. I'm wondering how things have changed for you over time.

Yeah, I think going through the pandemic was an interesting experience in that we were incredibly fortunate to have digital jobs and have the ability to work remotely and so certainly recognize that first and foremost, but there were a lot of anxieties around what would happen to our companies, super promising companies in certain spaces that seemingly had their activity halt overnight. And I think planning for the future was an exercise in thinking about which companies might not make it, which companies would have to dramatically alter their plans. Unfortunately, things just ended up, at least from the technology perspective, to be much, much better than we thought. And to see the kind of resilience of solutions where, hey, you know, we are not going to be able to work and live in the same way that we did previously, at least for some time. And, you know, we need to rapidly pivot, and technology solutions have certainly been at the forefront of that. And I think it's permanently changed expectations. I mean, I think it is particularly in in your space when you think about, you know, the truck driver shortage and the ways in which people may used to have to work and, you know, schedules that were totally set by companies and manual processes and so much done to support a load versus what CloudTrucks enables, which is, you know, just a, a better customized experience, a way to automate away a lot of the painful parts of the job and I think it's a testament to companies like yourself that have been able to rapidly pivot and kind of introduce technology that allows people to not only continue working, but work in a better way than they did before the pandemic. And as to what's changed, I mean, a lot of the things I mentioned in terms of work expectations, digitization, all that has dramatically accelerated, but These things have been kind of slowly investing over the last 5 to 10 years. I mean, if you think about ELD and visibility and all the other things that have come to the logistics sector, I think the next generation of companies will benefit from all that investment that has happened and all the modernization that has happened in the broader logistics tech stack. And so I think it's just a It's a better time than ever to be building a business in the space because companies can leverage the work that other innovators have done before them.

That definitely makes a lot of sense. We have a lot of work to do ahead in this new world. I wanted to close with just one last question. I would love to hear from each of you what you're most excited about for the future of Cloudtrucks, but also the logistics industry more broadly. Maybe, Faysal, we can start with you.

Yes, this is a great question. And I would actually say it again, it's a different time. It's a time of inflection in the industry. It's a very exciting point in time where we are experiencing lots of gaps and shortages, which will turn into opportunities for the future. So I feel that, you know, CloudTrucks is actually uniquely positioned to answer the needs of the drivers now. To Steve's point, and I think Kanyi Maqubela also mentioned this, we are going through this new phase of work. I would say this is around flexibility, and lots of us already introduced this by working from home, but truck drivers didn't have this before. Now they are going back to the decisions. They have done lots of self-reflection and they're asking themselves, why did I miss I miss spending time with my family. What did I do wrong? Was it the job? And I think in this, in that picture, you're seeing lots of retention issues, but Cloudtrucks is coming into the picture and saying, look, you can work your own hours, determine your schedule. We'll give you the tools to maximize your revenue. And that is, I think, ultimately what will help with the shortage in the national scope. So I am very excited to build something with you, Tobenna, that is going to be an answer to the needs of this industry for the next 5 to 10 years.

Thank you. Steve?

Yeah, I think the broader logistics industry, I'd say I'm really excited about people and technology coming together to make things better. And, you know, specifically I had mentioned our investment in Six River Systems and, you know, that was a Follow Me and still is, but just inside of Shopify is a Follow Me robot. And, you know, really made for people working in the warehouse warehouse more efficient, less strain in the amount of work that they had to do, and frankly, a better job. It was not only the robots making and technology making the warehouse workers' lives better, but the other way too. These people were training the robots, they were making them more efficient, they were programming routes. I think technology and the people in the sector have a chance to work together in a way that, you know, is a virtuous feedback loop and makes people's jobs better and also, you know, takes the kind of human element around, you know, hey, we need to make sure that there's people on the other side and, you know, all the things that technology isn't good at— the exception handling, the execution, all sorts of things— and kind of feeding that back into the system. So I think there's just a virtuous cycle that will be part of all the best companies. And, you know, specifically on the CloudTruck side, I'm really excited for the Flex product. I mean, I think just having the ability to meet owner-operators where they are, you know, whether they're on the kind of original product or, you know, if they want to work for CloudTrucks under their own authority, either of that, anything will work. And so I think just the flexibility in the product and the way that you're going to be able to meet various different types of drivers' needs is, uh, is incredibly exciting to me.

Yeah, definitely excited about Flex as well. Um, Kanyi, uh, it'd be great to hear from you too.

Sure.

So Flex makes me think about a really interesting stat that I've been tracking over the last couple of months, which is that there are almost 11 million job openings, uh, that have gone unfilled at the moment in the United States, and yet there are almost 9 million people who are unemployed. And we're at an absolutely once-in-a-generation, literally historic transition in how people work and why people work. And it's a really, really important thing to consider because that means that those companies that are at the forefront of redefining work for the better for regular Americans stand to win the future. And so part of what makes Flex so appealing to me, part of what has made Cash so exciting to me is putting more flexibility in the hands of these business owners, these independent drivers, putting more cash in their pockets quicker, giving them more transparency about the way they work, is going to make their jobs better jobs. And that becomes such an important thing for the future as more and more Americans than almost ever before are realizing today. And so what I'm most excited about of all is the fact that this company is timed not only in the midst of a crisis, and as Winston Churchill said, "Crisis is a terrible thing to waste," and Cloudtrucks has done an amazing job of rising to the occasion on the supply chain aspect of it, but also just making work meaningful. The company has already done an amazing job of that, and I'm so excited to see where that goes.

Yeah, thanks so much for that, Kanyi. And I'll just close on what I'm excited about. When you go out to raise this type of funding, one of the things that happens is you get to really spend time looking at your business. You get to see all the strengths and you get to also see all of the weaknesses. And I'm excited about taking this funding and really investing it in making truck drivers' and trucking entrepreneurs' lives as easy as possible, doubling down on the things that have worked and we've done great at, but also investing much more deeply into things that, you know, we've just not been great at. And I think that— I think this size of funding, $115 million round, is the largest that has been put into a company to just hyperfocus on improving the lives of truck drivers. And this is something I've been very passionate about. A lot of money has gone into building tools for brokers or shippers, but the folks who are doing the actual work on a day-to-day basis just haven't had a deep level of investment going into just improving their lives. So that's what I'm really excited about. It's a great time to really invest in these tools. And thank you so much for all of the help. Thank you so much for all the support. And thanks for coming on the journey with us.

Yeah, I mean, we're excited to join Kanyi and the rest of the investor group and work with you and really help you to realize the vision that I think you've laid out so clearly and compellingly. You know, is working well now, but as you mentioned, it's just kind of early days towards such a broad and important mission. So excited to—

Such an honor. Thank you so much, Tabena. We're so excited for this.

Same here, Tabena. So excited to work with you.

All right. Thanks, everyone. And we will close with that.