Builders vs Everyone Else
Welcome back to the second edition of The LogTech Letter, a weekly look at a particular aspect of the impact technology is having on the world of global and domestic logistics. This is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories from me, my colleagues at the Journal of Commerce, and other stories I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@ihsmarkit.com or on Twitter at @LogTechEric.
Let’s talk about the idea of “builders” today.
As many of you know, I spend a fair amount of my day on Twitter, and one of the communities I make sure to follow are generalist tech leaders - both VCs and entrepreneurs that have little to no direct interest in logistics. Following them can be aggravating because they: a) think very highly of themselves; b) have never met an opinion of theirs that’s wrong; and c) apparently feel duty bound to share every brilliant opinion with the world. Pontificating on Twitter strikes me as the same game as venture investing. You’re hoping that people hold onto one of five or 10 things you say in the same way a VC hopes one or two of its investments make their fund.
But I won’t lie - they also get me thinking about things in a different way, which I suppose is their end goal. One thought in particular that’s captured my attention of late is the idea that in the world, there are builders and there critics. The implication, of course, is that tech founders are the platonic ideal of builders, literally creating something useful for society out of binary code. As with most arguments on Twitter, this is too simplistic and mostly designed to provoke a response. But it got me pondering on whether there’s a framework to categorize the importance of builders, while not demeaning everyone else.
A spectrum seemed like the best way to express this, with builders on one side of the equation, critics on the other side, and users, worker bees, sellers and investors plotted somewhere in the middle.
Why does this matter in logistics? Because the last five years have created a tension between two different kinds of builders. While most large global shippers and shipping lines and forwarders are massive, long-established organizations, there are tens of thousands of small companies globally that play an integral role in moving goods. Small forwarders, customs brokers, trucking companies, software providers. They are all builders too.
But over the last decade, you have a new class of builder entering the logistics space that uses venture capital to goose growth in a way that wasn’t previously available (and still isn’t to a large swathe of small business owners in the industry). There’s a prevailing sense that one type of building is unfair or inorganic, while those using growth equity think bootstrapped businesses are missing a critical lever to compete in 2020.
When I look at the logistics industry, I see builders all around, whether bootstrapped or VC-backed. Going back to that original idea of builders and “everyone else,” the logistics industry is absolutely filled with market makers. It’s not just the CEO or CTO that’s building things - the foundation of this market is the ability to hustle and innovate. To figure out a way.
That’s why, I think, it’s been hard for VC-backed companies to carve out the same types of dominant positions in logistics as they have in other industries. This is a market full of builders that’s accustomed to competing and adapting every day. That is difficult to dislodge with a pure blitzscale model alone. Technology is changing workflows and access to information, but it’s not yet changed the underlying structure of the industry. Because in an industry full of builders, there’s a lot of structure to deconstruct.
Here’s a roundup of pieces I wrote for JOC.com the past week (note: there is a paywall):
And here are some recent discussions, reports, and analysis I found interesting:
https://www.linkedin.com/video/live/urn:li:ugcPost:6692050788564520960/
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.