EP 309 – Glenn Lai – FR8Labs – The Next Generation Modern Operating System for Freight Forwarders

by | Jan 10, 2024

Freight forwarding is a complex and often misunderstood industry that plays a crucial role in global trade. The Asia Tech Podcast had a fascinating conversation with ⁠Glenn Lai⁠, the co-founder and CEO of ⁠FR8Labs⁠ to learn more the industry at large and FR8Labs specifically.

Some of the insights that Glenn shared with us included:

  • Embracing unconventional career paths can lead to innovative solutions
  • The role of a freight forwarders and why FR8Labs focuses on SMEs
  • The power of digital transformation in traditional industries
  • Leveraging existing networks and knowledge
  • Building scalable and adaptable business models – The platform approach
  • The role of AI and technology in enhancing industry practices

Some other titles we considered for this episode, but ultimately rejected:

 
  1. You Can’t Really Have Digital Palm Oil
  2. The Paper Becomes the Commonality Across the Entire Chain
  3. Redefining Logistics and Revolutionizing Freight Forwarding
  4. Reshaping the Future of Freight Forwarding in Southeast Asia
  5. Digital Transformation and Leading a New Era in Asian Freight Forwarding
Read the best-effort transcript

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Glenn Lai 0:05
Yeah, cool.

Michael Waitze 0:06
Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast. Glenn Lai, a co founder, and the CEO of FR8Labs is with us today. Glenn, thank you so much for coming to the show.

Glenn Lai 0:18
Thank you for having me.

Michael Waitze 0:19
It’s my complete pleasure. Let’s give the listeners a little bit of your background for some context. Yeah, for

Glenn Lai 0:25
sure, for sure. So I’m Glen. I’m Singapore. I’m born and bred, but I kind of didn’t do the usual Singaporean thing. We just go to a MNC, or whatever. I actually was hired in a conglomerate that was less well known in this area is listed in Singapore is this company called Golden agri is actually a Indonesian conglomerate, actually. So it’s the palm oil section of the Indonesian conglomerate. I was hired in Singapore, but you know, two weeks in, they sent me to Indonesia. It was supposed to be a three week project, I ended up spending seven years there. So that’s why I kind of have not the most normal Singaporean career, if you may. Right. And I have a great time there. I was working in the CEO office. And so I had that both that luxury or sometimes some people say the curse right off working through the entire value chain, just kind of worked with the CEO, the family to kind of figure out how could we, you know, we had strategic projects on how could we increase the profitability or, you know, maximize the assets across the value chain, typical Indonesian conglomerate, which means that we own every part of the chain. So we had palm oil plantation, the refinery, which then did massive exports, we had the vessels to to the massive exports, globally, we had the entire industrial type product marjorine shortening, we had the consumer product, which is the palm oil, the cooking oil version of it, we had the trucks, the logistics arm that deals with that. And then we also had our own distribution arm to get it to the stores. So as you can imagine, right, I spent a very interesting career spanning through that. Of course, I was in Indonesia, when I first arrived in Indonesia, Tech was still very early. But you know, in year three year four, Indonesia, that’s when we saw goto and, or rather go check independently, right at that point, rise, right. And so I, you know, being seeing that from the sidelines, was super interested in those businesses. But I was in that conglomerate. So I because I had that luxury of working through all the business units, I also had the luxury to therefore say, hey, I want to get myself into this, how, what’s the best way within this context that I had, so I ended up spent choosing to spend my time in the tail end of the business, which is the consumer products. So that’s where we had the actual brand, as well as the distribution arm to bring goods from our factories to store. So that was a very interesting, I would say, choice that not many people had, I ended up doing kind of strategy and hit off digital there. So that was the business unit, I felt that had the most capability to really do a digital business model, because you know, you can’t really have digital palm oil, right. So. So, you know, we ended up doing that in the consumer products. And the reason why we felt that there was the opportunity was because Indonesia, different from most are well, different from Singapore, I would say is that you still have most of goods will be going through what we call Gen tree, which is the regular mom and pop store on the street. And so there were two or 3.5 Million Mom and Pop grocery stores that we dealt with. And we were still at each day and age where we were sending physical sales men to store you know, 220 stores a day in their area to visit to get sales, right. So that was very interestingly that the entire this digital business model could be built out of that. And of course, we saw the rise of many players in that world. Pinta, Mitra, Bukalapak, hula, right, could another right and so on and so forth. And so we kind of, you know, started our own internal version first. And the CinemaScope being service group, right, had to create ambition to their credit, which ended up then allowing us to go through a merger with a few different of the assets right to try to build a Alibaba esque type version of that we had a startup we had two offline assets coming together. Through that that group was called busy group, which I ended up therefore becoming like building the digital business model for the offline assets. So we had two offline assets we had a freight forwarding GPL and the distribution businesses and then I ended up building my own innocence internal intrapreneurship internal business unit called busy digital, which was a b2b e commerce marketplace building on that, you know, the internal initial strategy anyway. Did that for a good time, and then ended up going getting acquired by warp into right one of our competitors no frenemies if you may, right and It was at that point of time it was COVID. My first son was born. I was like, okay, you know what? I need to come back to Singapore. So I left after the merger, came back to Singapore did a few different things before starting

Michael Waitze 5:10
this company that you worked for what was it called Golden agri the palm oil business. This is part of cinemas. Yes. Okay. So this gets really interesting now. So if you go back to when you when you join cinema, you’re working in the CEOs office of golden, golden agri, or cinema itself.

Glenn Lai 5:26
I mean, it’s so cinemas is the family name. And it’s the Indonesian name. Actually, golden agri golden cinema theater is golden light. So you know, all the Singapore versions are called Golden, if you may. Yeah.

Michael Waitze 5:40
So you’re sitting working in the CEOs office? You said it was a curse? No, it was you said it was a What did you say? A luxury and a curse? I think it was more of a luxury than anything else. I mean, the curse is just a time sink more than anything. But the luxury is you get to sit in one of the largest conglomerates in Indonesia, who by the way, were investors in a commerce invested in a bunch of other startups. Right. So one of the most kind of proactive ones. But I’m curious, from your standpoint, what is it like when you’re working in the CEOs office, you can feel what’s going on around you in the market, right? All this stuff is happening, go Jek launches, grab is happening in another country, all these things are happening. You’re a kid, basically, when you walk into the csoft CEOs office and say, I think we need to be involved at scale in this digital business. What were those conversations like? Like? How long did it take to convince them? Because they’re very forward thinking? Right?

Glenn Lai 6:32
Okay, so this is a very interesting layer. Well, the two parts to this right. So let’s let’s talk about the Sinar Mas Group, in essence, a bit first, and it goes into the more detail of how did I eventually get there? So the reality is exactly as you say, I think cinemas as a group is a lot very, very, very frustrating. Yeah, right. And so the family, the senior execs are all quite in that sense, open to this, but they also very realistic in the sense that they recognize the realities of their existing business, as well. And so it’s not easy to move the conglomerate to that direction. So that’s why they also have different spin offs, you know, you have SMD V. Right, which basically does a lot of these investments and try to bring it back to the group. And also you have a lot of internal initiatives now showing from an internal perspective, right, trying to mimic and add value in those levels. So I think, to their credit, definitely very forward thinking group. That being said, internally, yes, it was not an easy conversation, right. So I, being fresh in the CEOs office, right was a very interesting phenomenon, which was that I was always the youngest in the room. Sure. And very common. And the worst part was, Well, again, luxury and curse, right is that I had that luxury to always be, in a sense thrown into a room by my CEO, because it is a Group CEO, or the downstream CEO. So he manages a set of CEOs as well, himself. And so I’m going in to help this very experienced in an agency or as well, as I’ll always the youngest in the room, made a ton of mistakes through that, for sure. This part, definitely luxury is that because I was from CEO office, I had the luxury to really kind of come in take step, take a step back, ask stupid questions. And to get things from fresh eyes, most of the time, which a lot of these operating CEOs don’t have the time to do. And so that’s where I kind of find found my sweet spot, which is that, how can I help these CEOs to really do things that they know that they should do? But they don’t really have the time to do? Yeah, right, and uncover, you know, strategic opportunities, or fix real problems? Right? strategic problems, right? As a free resource, right? So that’s kind of how we kind of structured it. So I was like, you know, from the group, and so, you know, on your p&l, you know, I’m not gonna impact your your incentive, right, in fact, is your incentive to work with me. So that’s kind of how we kind of structured it a bit like an internal consulting. That’s how we eventually formed. But there were four of us to start, and I was the only one left so it’s not easy, I would say, it takes a bit of a different personality.

Michael Waitze 9:11
I don’t know if you know this, right. But I was limited partner in Ardent Capital. So I’ve been living in Thailand since the end of 2011, beginning of 2012. And when I looked around the ecosystem, let’s just say the whole region, right, there were plenty of these big family businesses. And I always had this imaginary story where like one of the grandsons of the founders would go in and say, Hey, grandpa, this business we have is great. Ecommerce is starting to happen. And if we build this e commerce business, we already have the suppliers. We already have the warehouses, like you said, we are we’re vertically integrated. We already have the, the logistics, we could dominate in the E commerce space. And I always imagined the grandfather, the founder saying something like, awesome. We always want to do new businesses. If if I give you $25 million, what’s going to be my ROP and I always imagine the grandson of the granddaughter Going could be zero. And then the founder just going okay, well, we need 8% to 12% annualized returns, because that’s what we’ve always had since our founding. I’m not going to invest in that. And that’s why I asked you that question, right? Because it really takes somebody who wants to take a risk at that level, because the revenues are high, right? Like the biggest revenue company in this country has $65 billion of revenue. Right? So to make a difference, it has to be a billion dollars of revenue, not like 10 million. That’s why I asked you that question. So from your perspective, it’s super interesting. Sorry, go ahead.

Glenn Lai 10:31
So I think you’re absolutely right, right, I think there is that natural, intellectual tendency to say, you know, these guys won’t do it, because they really have other options. And I do think that’s true to a large extent, especially if you talk to talk about a very big ticket size. But I do think that they are also very aware, and they’ve seen how VCs operate. And with small ticket sizes, you know, it’s a bit different. And I think there are there are case studies, especially in Southeast Asia, that has spin off very valuable enterprises, right, or startups right? Through this right, I think a great example is over with the lipo group overstorey, I was kind of, again, I knew the some of the internal stories, because we’re busy, we were lucky to have some of the very senior guys have over work with us. And so overall, I think was was kind of incubated by the Lippo group. And when at the start, it created chaos. But basically, what LiPos over famously did was that they implemented it all their shopping malls, car parks, right that for you to get out of the car park, you must use the overlap, created chaos, because there are people who really didn’t have the app and you know, yeah, then you’re stuck at the, you know, you’re trying to sign up and use chaos. But that really drove adoption, like through the roof. And they, in my opinion, did it the most cost efficient manner. So I think there are ways that it can work, right? My observation, and maybe this is just a cinema observation, right and driving the rest that lens of the world. But my observation is most of these families, in my opinion, understand the value and do invest, the challenge comes with is not on whether they will invest in my opinion, I think the challenge comes from following through whether they would actually properly follow through. And because we’re at the at the starting scale, you know, everyone’s interested, excited. Yeah, we will support. But when you get into the operations when he’s cheating to me, the person saying 30% of my business, because incentives change, right. And so then your traditional existing business incentives get in the way of the startups incentives. So that’s where I saw more failures, right. So I don’t think there is a lack of trying, I think there is a lack of will. And to be fair, the the flip side is also true, because they are startups. So it’s a tricky decision to make, from a group perspective to say, Do I go all in with this, because the startup can very well be riding on the coattails of that conglomerate, and not actually adding value. So I need to be very fun this is that I understand the dilemma. The dilemma is that, you know, it’s hard to follow through. Because so there’s a chicken and egg problem. Yeah, for sure. Yeah.

Michael Waitze 13:15
Let’s jumping into FR8Labs, you said, you went back to Singapore, you did a couple of things first, and then you must have leaned a little bit because I was going to ask you, why would you get into freight forwarding? When you came back, I mean, nothing you’ve done has been traditional. So I get it, you want it to maybe go somewhere where you learn something, it’s in our mouths. And you thought nobody’s doing this? And single? Like, I don’t know. So I’m curious, like, why you even went into this space? Yeah.

Glenn Lai 13:39
So I mean, it’s one of those like, how Steve Jobs is or you wouldn’t look you can’t see in front of you is the only piece the steps when you look backwards, right? For me, it was there was a few things that tough in the end, meet the stars aligned to this right. So the first thing is I already had because of busy because of the mass a understanding of how supply chains work, right? I wouldn’t say like practitioner but you know, that to the level of understanding the strategy and the commercials, yes. Right. And being involved in having to build a digital business model of a freight forwarder as part of it, right? was part of it. But when I came back to Singapore, he joined a startup called gravity supply chain. And gravity supply chain is basically a startup that in a very simple nutshell is a module that allows a freight forwarder to become a four PL or a order management supply chain management platform. So they are module of many things and the customers that we are dealing with in globally with like musk glory BDP so top 101,004 orders in the world and and so I did that for a while because my previous mentor also asked me he investors asked me to help this one right but I also saw the you know, so is an interesting next step to see how can I, you know, like, what am I missing? Right? So So and because that was really Western centric, that’s most of our customers. And most of the people that needed that supply chain solution, right exists in the Western markets, because you need massive scale brick brands, global supply chains to really need to use something like this. So I did that for a while I ended up traveling to us a bit, right? Meeting partners, meeting lock tech players. So a lot of what was happening in the US and Europe from a first hand perspective, because I met a lot of the like this for kite CEO several times in Chicago, and of course, went to a few conferences, etc. So it was very interesting, very insightful, seeing what was happening in the US and Europe. So and so as you can imagine, therefore, because most of our presence was there, but I’m based in Singapore, most of my working hours was US Europe time. So in a day, I was pretty bored, to be honest. Right? So I ended up helping my in laws, right, as well, right? During the day during my day, because, again, I was bored during the day. And I stayed in law. So you know, just nice, right? And my in laws are actually free for us as well. Got it. Okay. Rather, you know, medium size, global freight forwarders. Right. slightly different format. But yeah. And I went in, I looked at it and was like, it was just a very interesting experience. Where am I looking at all this very interesting value adding stuff. And they’re looking at a very traditional day to day. Like, there’s a huge gap. Right, so. So that was the kind of the second star that was the alignment for Star gravity, really engaging second star, you know, seeing what was happening here, seeing that huge match, massive opportunity or gap, if you may. And then lastly, of course, this is less well known story, right. But equally important one, I would say, I am still Asian at heart, in a sense that I didn’t want to really get too involved with my in laws business, right? It’s not something that I wanted to leverage off, get off, you know, I wanted to do something on my own. But my father in law actually came to me and said, Hey, go and take a look at now. Our pseudo global competitor, go for it. So this player in the US got go for it. Taiwan founders, but they approached us. And I said, Okay, I will look into it. And then he told me the story. He said, one of his, or rather, two of his offices in the US, are kind of very early users, to some extent incubator, go for it. But they looked at me and go for it really raise the series is doing pretty well, from what I know, right? Look, then he looked at me and say, why can we do something like this? Right? Oh, you know, it kind of opened the door. I was like, Okay, fine. You know, what, let me take a more serious look into it. The more we look into it, the more fascinated we were by it. So you know, that’s a bit of the how we eventually decided to say, hey, you know what this is, this is really a great opportunity, really exciting things that we can bring to the table. Let’s do it. Yeah.

Michael Waitze 17:57
You were working in the CEO office at Sinar Mas. And you had to convince, but then in your in laws, freight forwarding business, the CEO came to you, and said, Can we do this? So you’ve seen both sides of this? Glen, that’s such an awesome story. So maybe you can explain to people because I think people understand like, what Logistics is, right? They have this big idea about what Logistics is what what last mile is people talk about this all the time. But I think if you went up to anybody else besides like, the people that are in the business, they wouldn’t know what freight forwarding is. So what is

Glenn Lai 18:34
it? Absolutely, yeah. So to simplify what a freight forwarder is a freight forwarder as a parallel, let’s start with the parallel, then I’m going to do what they do. So as a parallel, they are kind of like the travel agents for cargo.

Michael Waitze 18:46
That’s a great, great, it’s a great analogy.

Glenn Lai 18:49
Yeah, so they’re offline, right? They are offline travel agents for cargo. But that is where the, the parallel stops, because it’s a bit more complex than personal travels, right? And so the complexity is you have both sides customs, you have a ton of regulations, it’s not as different but you know, it’s like immigration setting you, you only have one thing to look at, right, but from a customs cargo perspective, that same. Let’s take an item like detto, for example. That’s all so that all could be a soap could be a disinfectant could be many different things. And so how do you treat that, from a customer’s perspective can get tricky in different countries, in different countries as well, right? So different countries have their own different ways of labeling this and that’s the starting point. But the other, you know, bigger thing is that let’s say you are a global business or even a small, small factory, and you are exporting to five countries, right? You know, what’s the likelihood that you have deep understanding 00 of the cross border total regulations, but talk about also the partners right, the truckers, the the you know, what routes what shipping lines what, etc, right? So that the reality is that that’s what a freight forwarders freight forwarder is kind of Have in different formats. But the two ways to think of them one wholesaler of shipping line space container space. But the second way to think of them is that they’re kind of like a fractional logistics department of a company.

Michael Waitze 20:14
But the idea is this is that like, a small size manufacturer, who wants to send something, let’s say, from Indonesia, to the Philippines, is not going to get on the phone with Maersk lines and say, what does it cost to get four pallets of my thing on they’re gonna go to a freight forwarder, who’s gonna say here, you’re five different options, the same way to use your analogy. If I want to stay in Bali on vacation, I can ask my travel agent, what are the three best hotels? That kind of thing? Yeah, absolutely.

Glenn Lai 20:42
Absolutely.

Michael Waitze 20:43
And it’s what you’re saying? Yeah, I

Glenn Lai 20:45
mean, look, it’s, it’s, it’s a very interesting industry, it’s manual. And a lot of people think that that’s a bad thing. I kind of have this contrarian view to this right. Like a lot of people love prefers to use Excel, you know, and differing site different sizes of folders use Excel, but there are different types of folders, there are folders that are like project cargo for this. So this guy is like a, as a as a offshore Marine, oil and gas expert. And he has this project that they are building this mine, or sorry, this platform somewhere. His job is really just to move goods for that three months, he doesn’t, he can just do everything in Excel. Because you know, that’s this is very specialized. It’s very one project. It’s,

Michael Waitze 21:27
it’s coming from here, it’s coming from 10 places but only going to hear that’s it? Yes,

Glenn Lai 21:31
yeah. And he’s expertise in project management. And he’s a one man show, you know, Excel fine. There’s nothing bad about that, right. But I think when you are dealing with, let’s say, hundreds of cargo every day, right, then you can face the limits of Excel very fast. And so that’s where the manual becomes a problem. But it’s also almost impossible to remove the entire notion of manual as well, because you’re dealing with six to seven different parts. If you were trying to do all of this yourself. So say, let’s say you’re dealing with, let’s say, in my previous life, right, we’re dealing with, let’s say, the distributor and the retailer, there is a set of retailers, right? Yeah, it’s easier to say to enforce standards to one player. But a freight forwarder deals with six, seven different players dealing with the customs, like how, what was the likelihood you can change the customs to say they don’t like like, go to food, digital, Singapore, maybe but you know, other countries is always tricky question. There, you go to have to deal with the truckers and depending on country of individual truckers or companies, if it’s companies, again, maybe more possible, but individual truckers again, what’s the likelihood you can bring them to a digital platform. And then you’re going to shipping lines, right? And you’re going to airlines and you’re going into warehouses. Again, there’s so many actors in between. So my opinion, is this right? It’s I think the digital component is more on how do they manage their business? And how do they therefore interact, start interacting with these guys where it’s possible. But there will always be that component because of the nature of cross border dealing with so many different Ecosystm players that the paper becomes that commonality across the entire chip? Yeah, it’s just hard to avoid.

Michael Waitze 23:08
Yeah, I also think that in every industry that wants to go through digital transformation, there has to be a human involved at some level, because at the at the edge, some gal always wants to talk to some guy about that one edge condition that can’t be solved by the platform. And that could be the biggest part, that can be the biggest part of the deal, like the normal stuff that just goes through that goes through every time. But how about now, if it’s blue and the regulation change, and I didn’t know that I don’t want to deal with a digital platform, I want to talk to the guy that has the answer, because I need to really quickly because every day that my product doesn’t get shipped is a day that I don’t do sales. And it’s a day where my boss is leaning over me going, why is it still here? Kind of thing? Yeah, absolutely.

Glenn Lai 23:50
Absolutely. So and so I think that that kind of cuts into therefore the process of why we started freight laps in the way we started freight laps. One thing I will say is that, you know, we’re kind of making it sound like Oh, then digital doesn’t exist, right. But I think that’s, that’s it’s like digital has its place in, in maybe the 80% of the scenarios. And that’s what really, that’s that’s where we want to get to, but there is always this 20% edge cases that you know, you need. So you need an environment and a platform that is, you know, auto centric, you know, and we love this notion of auto came from, you know, my background in distribution, right. But offline to offline online, needs to integrate very nicely. In a seamless, we learned

Michael Waitze 24:30
this plan in the trading business, we could automate a whole bunch of trading. But there was like you said, 15 to 70% of the trades that needed to have a human involved in it, and that needed to talk to the client. Because if we just automated everything, then we’re going to be lots of problems. Right? So you could everything ended up being a hybrid experience. But the 80% that was automated gave us leverage to do 10 times as much business it has to be the same for you.

Glenn Lai 24:54
Exactly, exactly. And yeah, that’s our absolute kind of thought processes there. is our design of our platform and even our business model? Right? So, yeah, for sure.

Michael Waitze 25:05
So can you tell me how that works? Like, how are you using tech to address like these unique aspects of this? Because like you said, in the travel business, although it’s a good analogy, it’s not nearly as complex. So how are you using tech to handle that? 80%? So

Glenn Lai 25:20
I think, to take one step back to this right, freight laps is targeting Asia, Southeast Asia, right. And so we had to also observe what was the market structure of Asia, Southeast Asia. And here’s what our observation is, right? Observation is that, in general, shippers, and freight forwarders, kind of maybe over generalizing it, but it kind of split into two segments, right? The Enterprise way of working, and the SME way of working. So what we’ve been talking about so far, is that the SME way of working is exactly that, which is the fractional logistics arm of the shipper. They don’t want to get involved, they just want to move things, right. And that’s the SME, we’re working in enterprise layer is slightly different, because it is enterprise layer, they are big enough companies who have their own Import Export departments, right? So what do they need? They actually need, they need a digital connectivity, because then they want to manage as much as possible things in house if you may, and kind of coordinate global supply chains in house. So it’s a very different business model. Right? And so when we looked at it, and we asked ourselves this question, so in Asia, is it more SME centric? Is more goods moved through SMEs or enterprises? Right? And when is an obvious answer that we can’t get into depth in most other industries, but it’s a very SME centric, like, our estimate is like 70% of all goods, right? All goods, right? Volume, right? is driven through SMEs, right? SME shippers and SME. forwarders. Right. So we looked at and said, Okay, we really want to solve this problem, right? It’s not that we cannot do it, this is modern enterprise scale, right. But we really, really want to solve this problem, we want we really need to get into the SME layer and configure an SME solution. And so then go go into the next step, which is what we covered. Okay, SMEs, is a service driven game at the end at its core. So because it’s a service driven game, does it make sense for us to this intermediate, forward verse to become a digital for ourselves? And I think that’s the part that really, that’s where it came out and said, Wait, if we were to become a digital for ourselves, we will be replacing all this. People, but there will still be that service component. Theoretically, yes, we could maybe be a 10x more effective freight forwarder ourselves, but you know, at what scale, you know, we won’t have to have huge 200,000 People army of customer service to deal with this entire market. Yeah. Didn’t make sense. Could we leverage the existing supply chain? can we leverage the existing freight? forwarders? Right, so and that’s how we ended up saying, Okay, let’s build into that. Like that notion, right. And ultimately, while it’s not the most sexy business model, we say, let’s start with a SAS, because we needed to kind of standardize the ways of working of these freight forwarders for us to then be able to say, layer in, you know, all these digital services and be able to get that to that full 80% business model. Right. So we are SAS reasons, actually, because I was assessed plus or SAS enabled marketplace kind of business model. The SAS is a means to an end, if you may. So that’s where we start with the journey. The first journey is that we kind of replaced the existing layer. And to be fair, not all freight forwarders are just all Excel, right? They are software that they use, right, like freight management systems, or freight ERPs that they use. But the thing that we found is that most free ERPs besides the global ones, were built 1015 years back, so they’re kind of like a glorified Excel to be honest, like, so. Yeah, so productivity wise, there’s a ton of things that are free for us and doing outside of the platform anyway. So how can we centralize that, how can you centralize emails, Kevin’s CRM component to it, and enhance that workflow, but that becomes the only the starting point. So there’s the in my opinion 30 40% of the digital layer, but that then allows us to then get to the second layer. So I would like to take us to pause here and use an analogy of what is the software landscape for freight forwarder for an option, right, so there are three two options in general in the market. There is a iPhone equivalent option in the market which is super premium, super expensive and is a listed company in Australia called cargowise wisetech super profitable company, they target the top 1000 borders in the world as an ERP they the SAP for portfolio that is not available to the regular order is to premium can’t afford it. It doesn’t make sense when Yeah, it doesn’t sell and your your your regular staff cost. You know, pay per click is as much as the per seat license if you write it does the economist anymore, right? And then you have the other type of solutions which is the classic software it local IP providers, and I call it the Nokia 3210. equivalent, yeah, it works, right you can call you can text but in this world getting more interconnected, cannot doesn’t exist. So we are building ourselves to be kind of like the Android equivalent to it. So you know, to be able to call and text, that’s the core that we have built, right. And that’s, you know, there is a digital layer to that there’s a productivity improvement to that. But that’s the starting point, then we’re moving to the what we call our layer two, where we help these four they start having the apps to interconnect with the AI ecosystem. So a simple example is what we call a customer portal. So again, go back to the very simple thing, let’s say you are a shipper, you are moving things from Bangkok to Singapore, right? You are moving to containers, right? And, you know, they will tell you, Okay, roughly, this is the time, right? It’s gonna depart here and right here at this time. After that, basically, nothing happens, right? You have to call the forwarder. To ask it, what’s the status of this, you might be able to go online and check certain things yourself. But in reality, only the further we actually know what has happened. The customer service component of this is still rather manual, right. And so the simple kind of why we call ourselves a bit of the Shopify or freight forwarding is that we’re giving the access for freight forwarders, using that same call, doing the same things they’re doing on that same call, to enable them to have a digital presence called the customer portal, right, if you will, where people can track and trace is a very simple thing to think about. Ecommerce does exist everywhere. But your freight forwarding just doesn’t exist yet. Right? Not in a big way.

Michael Waitze 31:34
So Shopify and WordPress have done some really interesting things. They’ve built these really successful platforms that are very complex. But they’ve also said we can’t write all the software ourselves, right? WordPress calls them plugins, they let other people come on to the platform, build plugins and make money that way, which is an incentive for other people to build really great software. And I don’t know how much they vet it, you, of course, would vet it. But if you’re building a platform, where people can build those plugins, where they say, you haven’t gotten to this yet, we can build that for you. And then all your freight forwarders have access to it, you take a cut of that revenue, like that’s another great business model, because you mentioned Shopify, they do the same thing as well. And there’s also an opportunity for you based on the revenue that you have from freight labs, but also from your legacy, existing freight forwarding business, to fund some of those businesses as well. And really take some of the upside there is that’s something you’re looking at, too.

Glenn Lai 32:27
So that’s, that’s the ambition. That’s why we kind of actually, instead of calling ourselves SaaS, right, we tried to actually say we want to be the operating system, right? Modern operating system for freight forwarders. Right. But it’s a it’s, it’s an infrastructure thing that we need to build, we need to build an ecosystem, we need to first build the initially, we need to build the first set of modules, there are internal apps, then we will go out and really start doing it. But there are there are notions of this, which is our share. That’s why I kind of mentioned core is, you know, we call it our phase one, there is that customer portal there was kind of describing which we call phase two, right, which really helps voters to have the interconnect is either well, whether it’s a phase three, which I have an example of how we end up bringing partners in, but also kind of changing the entire business model completely right. So so with the customer portal. So that means that now the forwarder has a digital presence. And if they can give it to their customers, the customers can see what’s happening in the shipment, we can then layer in a digital service layer, transactional digital service layer, right. And so what is an example is going to travel travel is a very simple example. Right, which is that you can buy travel insurance through your online travel agencies. It’s so simple, right? But it’s so complex in in freight forwarding today, if you go online to try to buy cargo insurance, you’re going to find everyone asking you to settle questions and quotes and all these kind of things. Right. Exactly. I love it. Go ahead. Yeah. So so. So exactly to that point, right. So what we what we’ve done is actually we’ve partnered with a global player, who’s the embedded InsurTech to work for in the US, they’re called Rick. And what we’re doing is that we’re now enabling the experience where now that your forwarder has a digital digital storefront to your customer, your customer can then basically top up for cargo insurance, all the information, like 90 95% of what we need to give you the car insurance policy already exists in that normal engagement, as topping up that 5% You can immediately get the code, you can even get the policy. So that’s that’s digital service that also changes the business model, because that’s not SAS anymore, right? That’s transactional driven. That’s a marketplace esque business model, right? But that’s kind of how we, we we actually are able to then scale this. And we therefore also do it in a way that becomes a additional revenue model for your freight forwarder. Right. So this is this is where we leverage on their volumes, but we also give them the upside. So if you think about cargo insurance in a tradition In overwhelm, what happens is yes, your freight forwarder already typically sells cargo insurance, but they do it begrudgingly. So I would say it’s because it’s

Michael Waitze 35:08
hard, there’s some friction, there’s friction associated with it, and they’re not insurance experts to be fair. Exactly.

Glenn Lai 35:12
So there’s so much back and forth, that, you know, that’s why it’s, they don’t make the margin. But because of so much friction, they tend not to offer it because it’s not worth the man hours, right. But now that it’s a one click button, experience, totally changes the entire conversation, right. And so we’re bringing the forwarders onto this journey as well, they set the price to their customers, right, I’m not gonna set the hourly set my price to them, right, with this entire digital experience. But so that’s kind of how we think about our business model. And so that’s that, hopefully that component of the Shopify model, but we do want to, we need to build this the in that sense, the case studies behind this, we need to build the, we also need to build the volume, right? Once we have enough forwarders plus, we have, you know, all these case studies to happen, then I think, going back to the true OS, kind of notion, right will happen at that point, which is that then we can invite more players to come in and really contribute to this ecosystem. Because

Michael Waitze 36:10
you’re focusing on SMEs, right, and not the largest freight forwarders in the world. There was also a funding requirement that right, so you can also provide funding to connect to funding sources, the opportunity here is large, and I love the way. So for the people that can’t see this, what I’m doing is I’m drawing a horizontal rectangle. I don’t know if you did this on purpose, but like you said, the core and you just kept doing Oh, don’t do that. That’s not on purpose. But you draw this thing like a core. And that’s normally what I draw is like my favorite business model, because you’re not building a product company. You said OS I call it a platform company. It’s the same thing. Right? I mean, Shopify itself is an operating system for E commerce. WordPress is an operating system for building websites and stuff like that. It’s more complex than that. And if freight labs I noticed, right, like you didn’t call it freight forwarding tech, the word labs in there makes it really interesting. And that was one of the reasons why I wanted to talk to you because I wanted to find out why. Right. And now, the whole business model makes sense to me. And when you first started, I want to go back to your father in law, and your mom and lawyer, when they first came to you and asked you to do this, did they understand all the things that you just explained to me that that was a massive possibility? Or are they just thinking about digitizing the sort of manual processes in the freight forwarding business?

Glenn Lai 37:24
Great question. So my my father, is more competition, my father in law, right? So he is a great investor. One, right? So he has he’s invested in many different things. So and the way he looked at it was more from an investment angle to say, hey, there’s an opportunity. He didn’t have that specific view that say, Okay, this business model is that this platform company was the right way to do it. Right. He just has that kind of sense. He’s not the most educated person, right? He didn’t come from any university. I think he barely

Michael Waitze 37:51
whatever that is anymore. But yeah, like, right. We stopped him. Yeah,

Glenn Lai 37:55
no, absolutely. So but this is the most interesting thing, right? He’s, I have a finance degree, right from from, from business school, right. But he is one of the most savvy financial investors I’ve ever met. Like, right, he does things that we can only dream off from a university perspective, right? When we were studying. So very complex options. And you know, he does accelerators, and accumulators and accumulator options or the like, all day long, right? And I like, oh, my gosh, right. Anyway, point in the story is that, you know, that conversation was actually simpler, right? But he did say, look, there are many opportunities. And you know, and as we saw, it’s not like one conversation actually ended up becoming 10 conversations, right? And then dinner conversations, right? So every dinner conversation would then actually push us to this actually platform mix, or OS, or whatever we call it right actually makes a lot of sense. Because there’s so much, you know, transactional opportunities in all this, right? And you also rightfully mentioned, because we’re dealing, SMEs, financing, payments, infrastructure is a big thing to embed through this. And we don’t want to build everything ourselves. Right? That’s where we want to partner. Right. And so there is there’s that whole notion of going through, right. And we will bring partners as and when. And of course, if the partners are the right partners, and they will have us right, we will be happy to have those conversations. But point to the story is that yeah, absolutely. Right. I mean, that conversation was more developed over time, we saw different opportunities, and it’s actually developing every night.

Michael Waitze 39:30
You said you stay with them. So like, you never get away from the conversation, which is awesome, right? Because,

Glenn Lai 39:37
again, same thing, luxury and a curse. Yeah, for sure. It’s not to switch off some days.

Michael Waitze 39:43
Yeah, in this case, in this case, it’s a slightly different story. But I do understand what you’re saying. You’re gathering all this data as well. And I know it’s early. The company, you said was founded in what? 2022. So it’s still relatively early. But to the extent that you’re gathering all this data, you’re going to at some point you Gonna have to build a data science team that’s gonna be able to analyze all that data. And then I’m just gonna say it use artificial intelligence to help the freight forwarders understand where their best business czar, who their best performers are, where their best financing rates are, like all these things. I presume you’re planning on doing that as well. Absolutely.

Glenn Lai 40:16
And I think I think this is not just about helping the forwarders make better decisions, or connect to the better decisions. But there’s the other component to this, which is that we can actually reshape certain things, or certain products, right, let’s talk about financial product, like let’s say Supply Chain Finance, the typical Supply Chain Finance, in the world that exists is kind of inventory financing is really, you have a purchase order, you know, you’re gonna ship it to your customer that, you know, you’re just gonna factor that specific invoice or PIO. And that’s all well and good. But that’s really not really risk adjusted. And not very, you know, data driven, if you’re right. But if you have access on that, historical transactions, if you have access to the data of the street lane, you know, the transaction history, the likelihood is going to get really quick. There be different financial products that actually cater to the situations that is built, I think, absolutely. Right. And dealing with the Suez Canal type incident, right, right now, right, when suddenly you have imagined if you’re a manufacturer today, okay, and you are exporting to the US. And you usually do 90 days or 120 days, tops, whatever, right funding, and suddenly, now your voyage has increased by last 60 days, or 30 to 60 days to each destination. What do you do? Exactly? If you’re, if you are out of money, right? Or you’re small outfit, whether you’re working capital is screwed that moment, right? It’s a combination of finance, insurance, and a bunch of things, right? But with data, do all those products changes? Right? And all those those opportunities changes? In my opinion. So definitely, the ambition is yes, definitely to go to that direction. But I’ll take a step back. You also mentioned AI, right. So we actually have a unique thought process to AI. Right, my co founder, is a very creative, innovative, hacky guy who I love with after we continue to work together, despite our arguments. He has, you know, we, we love where the entire industry is going from Jenny AI perspective, and all those kind of things. And we looked at it say, okay, how can we do something practical, from a freight forwarding perspective, so what we were able to do, is that we were able to kind of POC that you can actually do a voice recording and say, he helped me create this shipment, help me create a quotation, and it literally transcripts and push us directly to our freelance platform, right. But it’s a very real reason why we want to do this. So we go back to the whole issue of how do you actually properly digitize this entire end to end thing, and we have like six, seven actors, all these different actors, truckers who might not be able to interact with you digitally, because they don’t have the systems. So interfacing, and API’s and a fully digitally connected interconnected supply chain or logistics chain is like a holy grail of logistics, or supply chain. But I think, very hard to get what I think is easier to get to is sudo interfaces, if we could perfect this gen AI interaction between a fusing WhatsApp, right, if basically any challenge, right? We can basically go to all the actors in between and say, instead of interacting with me on a paper, can you interact with me in a whatsapp in a, and we’re not actually asking you to change the way you work, you know, to a voice recording, or a, you know, natural language texts to interact with us that I think can drive huge adoption, right of digital and really create next layer opportunities in logistics, freight forwarding supply chain. So you know, that’s something that for us is that momentum go right, like, how do we create pseudo interfaces between the forwarder and the trucker, the forwarder, and the customers forwarder. And, you know, any other actor in between, right? I

Michael Waitze 44:22
mean, this gets back to your odo example, right, because they’re not necessarily as digitalized as people that are sitting at a desk, it could be a trucker, it could be anybody, it could be somebody moving a pallet around, it doesn’t really matter. But you’re giving them the opportunity to interact with the digital system in a way that they’re already doing anyway, that they already know how to do. But this brings up another question for me. Is there a way because now that you take your system, right, it’s got to be a two sided system? Right? So the freight forwarder has to have it, but then also the people with whom they’re dealing and have to have it as well right. So my question is, this is it once you install the system, this sort of SAS Plus system and all these SME, and small red and middle medium sized enterprise freight forwarders? Do you then have the possibility because this will make your your digital example write your voice example easier to standardize all of the forms that they use the digital forms that they use. So then you can parse all that data exactly the same, and it falls in the same place no matter who’s dealing with it. Does that make sense?

Glenn Lai 45:19
Absolutely. So I think standardizing so the reality is we already doing in some form, because I think when we think about customization, and all these different business processes, there’s always two ways to deal with things. And it goes back to the SAS business process, a little less business process, anyway, is that we need to be very conscious in our design of how do we make that a process that is pseudo standardized, it will not be 100%. But configurable, you know, it’s not customized, it’s configurable to meet your needs. But then the database, the backend structure is the same, the schema is the same such that the language, you create a standardized language on some level. Right? And and it’s that’s why it’s kind of OS like, right? It’s like Android to apps,

Michael Waitze 46:05
the standardization is hidden from the customer. They don’t even need to know what’s there. You tell them, it’s it’s customizable. But even those customizable formats are fields you already know about. Right? And you can add new ones as you go along. And then everyone has access to it. So if they add that field, whatever it is, everyone has access to it. Again, the same data drops into the same place for everybody, even though it feels like it’s customized. Yeah,

Glenn Lai 46:29
absolutely. And of course, that’s a struggle from a design and sure, fast development perspective. Right. But I think it’s a it’s something that’s very worth to do. Right. And so far, it is actually, you know, we at first we thought it was a pain. But you know, we built the infrastructure to do it. And now it’s become sort of a differentiator, which is nice, right? Yeah. You know, yeah,

Michael Waitze 46:51
yeah. So there was something called the fixed protocol in the trading world, where once they digitalize the acceptance of orders, and when all the exchanges went digital, there was a protocol system that sat above everybody, right. And everybody said, This is it was called FYI, X, like, everybody had to use all of those fields. And again, you didn’t have to use all of them, you didn’t have to use half of them. But if you wanted to take an order, electronically, you had to use fixed to do it. And if you’re building that, the leverage you building into your system is just massive, just massive. Yeah.

Glenn Lai 47:20
Yeah, for sure. So definitely, that’s the ambition. And yeah, I mean, I mean, so far, we’ve been, we’ve been lucky in our journey. We have, you know, good set of pipeline and existing customers to get there. We’re quite confident we can get there too, because I think as long as we continue focusing on how we add value, and the way we actually think about this as well, is that as well, because because we are building a second layer, you know, we can afford to be very competitive on our core. Sure. SAS.

Michael Waitze 47:51
This is the Microsoft Intel thing, right? It’s just like, we’ll give you the operating system for $39. But then you have to pay 500 bucks for Microsoft Office, right? I mean, same thing. Absolutely.

Glenn Lai 48:01
So therefore, we can be a bit more aggressive on OS. And so that kind of keeps us very competitive right now. But of course, we’re not gonna go crazy and kind of subsidize growth. Right, right. It’s trying to break even on the call, but then massive upside.

Michael Waitze 48:15
Okay. I’m gonna let you go. I feel like I’ve taken up way too much of your time. This was really, really interesting. And I learned a ton today. Hopefully you enjoyed this as much as I did. Glenn Lai, a co founder and CEO of FR8Labs. Really awesome. Thank you so much for doing this today.

Glenn Lai 48:30
Likewise, thanks. Thank you. Very enjoyable.

 

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