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Bootstrapping to $33 Million: Freightwise CIO Richard Hoehn (Part 2)

Posted on Wednesday, Oct 30th 2019

Sramana Mitra: Let’s get into the details. How did you launch the company?

Richard Hoehn: We bootstrapped the company. Freightwise has almost no debt. The way we did it is, we loaded cash in and bootstrapped it. We made one key decision early on that we would build our platform rather than buy it.

With that in mind, the first thing we needed to do is bring in some developers. I was the lead. We brought in two other developers. We started really lean. That let us bring these platform ideas to clients. We told them, “You’re going to be our first client.”

Sramana Mitra: How did you find these clients that was going to let you work with them?

Richard Hoehn: We just mined some customer data. We bought a list actually and then email-blasted.  To be honest, it was pretty darn simple. It was just sending out lots of emails talking about new ways of going online and be up and running very quickly.

Sramana Mitra: This is a very unusual way of finding an anchor client, by the way. People usually find them through personal networks. To find an anchor client by blasting a cold email is a very unusual way of going about it. Interesting.

Once you found these anchor clients, what was the process of bringing that input from that anchor client about what they needed and how you would meet their requirements? How did you manage that process?

Richard Hoehn: With an incredibly agile development team. The nuances per client bubble out when you go live. We started getting pretty attached to them. We made sure that we really heard their needs. We had the base product, but we didn’t finalize it all the way. We let the clients be part of the journey of finalizing.

Sramana Mitra: The baseline specs that you pulled together though, who had the domain knowledge to come up with that?

Richard Hoehn: The client had the domain knowledge. The implementation knowledge came from myself.

Sramana Mitra: Before the client came on board, you already had a base product which you then morphed to suit the client’s requirements. Who spec’d out the baseline?

Richard Hoehn: From past knowledge. I had a lot of experience with shipping, mainly through my work in the operations of manufacturing.

Sramana Mitra: That’s where the domain knowledge came from; from your experience of working in the operations of manufacturing. You got your first client to then take you to the next level of finalizing the specs. How much did you charge the first client?

Richard Hoehn: Zero. We didn’t charge them anything. The way we make money is we employ a gain share. The money we can save a client, we get a cut of that. The way Freightwise makes money is through a gain share model. It’s very enticing to clients.

Sramana Mitra: Gain share is a great model. Tell me more. You got traction from what kind of clients? Was it a manufacturing client?

Richard Hoehn: Yes, heavy manufacturing. 

This segment is part 2 in the series : Bootstrapping to $33 Million: Freightwise CIO Richard Hoehn
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