Mike Malakhov with Carpool Logistics

Intro: [00:00:07] Coming to you live from Atlanta, Georgia. It’s time for another episode of Tech Talk with your host, Joey Klein.

Joey Kline: [00:00:17] Greetings. I think that this actually might be the first tech talk of 2023. So welcome, all. We have a single guest today. We’re going to focus all of our attention on one company, Carpool Logistics, founded by CEO Mike Malakhov. Mike, how are you?

Michael Malakhov: [00:00:33] Doing well, thank you. Thanks for.

Joey Kline: [00:00:34] Having me. Sure thing. Okay, so all eyes are on you. And let’s start with just kind of a headline executive summary of what does Carpool Logistics do?

Michael Malakhov: [00:00:46] So carpool is a car shipping marketplace. We support dealerships, auto auctions, individuals that need to reposition their vehicles from point A to point B all over the country in the US. Okay.

Joey Kline: [00:01:01] So I think that most people listening to this, they’re on the ground knowledge of what this might look like is, you know, the the large vehicles on the interstate we see with, you know, ten cars attached to the back of it. Okay. What percentage of the car transport market do those vehicles make up?

Michael Malakhov: [00:01:20] So majority of the transportation actually happens on smaller car haulers that move 3 to 5 vehicles at a time versus the nine car haulers that you see on the road. Those generally support the car manufacturers. So from a plant to a to a rail yard, that kind of transport and the smaller ones usually move. A lot of the used vehicles all over the country are 95% of the market.

Joey Kline: [00:01:46] So like an F 350 with something strong attached to the back of it. Exactly. Okay.

Michael Malakhov: [00:01:52] Yep, that’s exactly right.

Joey Kline: [00:01:54] And are the are the folks that are that 95% of the market. Right. The folks that are taking used car from lot A to lot B right not you know Kia plant to dealership floor is this their full time job? Do they flex what’s the profile of the people that are in that, quote unquote profession?

Michael Malakhov: [00:02:13] Most of them are entrepreneurs and they are a small operation, small business. A lot of times it’s husband, wife, combination, Husband is the driver and the wife is the dispatcher. But yeah, it is full time generally. And usually it’s, you know, small companies, it’s 1 or 2 trucks Max. Okay.

Joey Kline: [00:02:32] And I’m going to guess this is a bit more regional than national.

Michael Malakhov: [00:02:37] It is very much regional. Yes. Most of the transportation is two, 300 miles. Yeah, There is, of course, longer transportation, especially for relocation. And across the country, those are generally a little bit larger trailers that operate those hauls. Okay.

Joey Kline: [00:02:54] But, you know, for most of it, it’s like obviously it depends on the size of the state, but mostly staying within the state or if not, maybe going one state next door.

Michael Malakhov: [00:03:04] Pretty much. Yeah. Okay. Two, 300 miles generally is the range.

Joey Kline: [00:03:07] Okay. So so what is the what is the relationship right now between those kind of mom and pop operations and the dealerships that they serve? How do they get business? How do they know about how do they get opportunities? How do they function in terms of payment? Like what is the disruption that was needed in this space?

Michael Malakhov: [00:03:27] So it’s extremely fragmented market. So as I mentioned, a lot of the small operators, you know, they can only handle whatever their truck can fit. So dealerships have much larger need to support them all over the country. So they want to have 1 or 2 vendors that they work with rather than a plethora of large companies. So and technology lacks in the space obviously is, you know, operating a small trucking company. They generally don’t have a lot of technology. So there’s lacks lacks transparency. You don’t know when the vehicle is getting picked up, when it’s delivered. So the communication and the flow of the dialog is very challenging. So and ability to track those vehicles in transit is almost nonexistent. So one of the things that we at carpool are focused on is creating that transparency, creating the ability to track those vehicles in transit as well as we also focus on pooling multiple vehicles that are moving in the same similar direction that help reduce costs and emissions.

Joey Kline: [00:04:29] Sure. Okay. So let’s say that someone is you know, they’ve got the capacity for three cars. They’re picking up, you know, two from Peachtree Corners. You know, they’re going up to, you know, let’s call it Greenville, South Carolina. If this basically gives them the ability to say, oh, you know, there’s a separate dealership that’s in Buford on the way where I could pick one up and it’s going to the same place.

Michael Malakhov: [00:04:54] That’s exactly right. So we try to aggregate those so it’s already pre-planned for our partner. Transport companies. So we bundle those, give them a full load so they’re able to transport it to Greenville. And then we’ll also help them from Greenville to get back home.

Joey Kline: [00:05:11] Okay. And so your your end consumer is the dealership that is using this technology to better enable the transport of the vehicles.

Michael Malakhov: [00:05:21] It’s so you know, we’re double sided both sides. Yeah. Okay. So on one side it is a dealership and on the other side is the transportation company. They’re both our customers. Okay? And we just help coordinate and flow, coordinate flow of information.

Joey Kline: [00:05:37] That is a very I always whenever we talk to entrepreneurs and, you know, we’re kind of focusing on how does a company kind of go from infancy to, you know, product to, you know, saturating the market with its solution? I always think about the sales process, and part of that is probably just, you know, what I do for a living. But the double sided marketplace is a very complicated problem. In addition to the fact that you have you have a very fragmented marketplace, you have small companies. How are you finding all of these, whether it’s the mom and pop transporters or the dealers, that has to be somewhat of an arduous task to find all these folks.

Michael Malakhov: [00:06:18] So we so 30% of our business is referrals, which is helpful. Yeah, but it is a direct sales process where we reach out to our potential future customers and see if there’s a pain point with their transportation needs. And that’s whether they’re buying vehicles at an auction and need them shipped to their store or they’re sending wholesale vehicles to the auction, or if it’s a consumer buying a vehicle from the dealership, needing to ship that car to their house. So it is a direct sales process. But we do we do get a lot of referrals, which is okay.

Joey Kline: [00:06:57] That helps. Yeah. So what what are the folks that are not using your technology doing right now? Just calling up the same couple of folks they’ve used, you know, every time and just, you know, saying we’ll be here on X day but not really having any way to track it.

Michael Malakhov: [00:07:14] Yeah, exactly. So it’s a lot of it is, you know, texting multiple people to see who’s available to pick up some of these cards and then kind of then following up with them, see if the cars were picked up via calls, text messages. Sometimes you don’t get responses. So really lacks kind of visibility and the transparency in the process. So we’re trying to simplify. They can reach out to us and we coordinate everything on the back end and they get communication from us basically 24 over seven.

Joey Kline: [00:07:41] So but is this, as I’m trying to picture kind of the interface and the experience of a dealer that is calling out for a need? Right. Is this almost like everyone uses an Uber of whatever, but just, you know, forgive me, right? You know, is this like I go onto my Uber app and I put in where I want to go and I’m waiting to be matched with someone. Is it almost akin to, you know, I need to transport a vehicle to Charlottesville, Virginia? Who’s going there? Who can help me out?

Michael Malakhov: [00:08:10] Yeah. So it’s you know, we are the ones that are doing the matching. Okay? So the dealership reaches out to us and then we control the equation from there. They don’t need to be involved in the matching process. We already have pre-vetted transporters to handle different routes all over the country and we all automatically will match them with those and pre-bundled cars and then match them.

Joey Kline: [00:08:33] Okay, So, so it is not just software. It you’re really are offering kind of the full service. Yeah, absolutely.

Michael Malakhov: [00:08:40] Yeah. We’re not a SaaS platform. It is a marketplace where we’re the ones we take the order in, we aggregate, make it efficient, more efficient and then assign it to the pre vetted transportation companies that we already have on our platform.

Joey Kline: [00:08:53] Let me ask you this. Did you consider the other way around the example that I just gave and decide on this for whatever reason you’re going to give me why it’s a better business model?

Michael Malakhov: [00:09:05] So we feel that a lot of the industry in the automotive industry, they want to focus on buying and selling cars. They don’t want to deal with transportation. So we are their managed transportation partner. We basically are an extension of their team as a logistics team to support all of the logistics of their vehicles.

Michael Malakhov: [00:09:25] Gotcha.

Joey Kline: [00:09:26] Makes sense. And your background is in shipping and trucking, correct?

Michael Malakhov: [00:09:32] I’ve been in supply chain 20 plus years. So yes, a lot of it spent on the freight industry side. And then I learned about automotive space and some of the challenges in automotive industry as it relates to logistics and so an opportunity. And improve it and make the process better for our potential clients. So that’s kind of how we focused on it. Yeah.

Joey Kline: [00:09:58] Okay. So you are look, there are some people that are just, you know, they can’t do they can’t work for anyone else and they start a business right out of college and that’s all they can do. And there are some people that I find are, you know, after however many years of professional life and they have the light bulb and they do it, and I find those two people fall into two camps. Okay. Some of them are those that have always wanted to do their own thing, just never really had, you know, the idea or the, you know, the opportunity to do it and others really, you know, it’s like they wish someone else would do it. They’re not really an entrepreneur at heart, but like God, no one else is going to solve it. And you’re making me do this. What do you think that you fall into one of those two camps, or is there a third or fourth camp that I’m missing that you think your your psychological profile is in?

Michael Malakhov: [00:10:43] Interesting point. And I’ve had, you know, a lot of conversations around about this topic. So, you know, I’m probably unique in a way because you have, as you mentioned, you have younger adults that come out of college and they want to be entrepreneur from day one, and that’s what they start doing right away. You know, they do multiple start ups in their career. Some fail and hopefully some succeed. And then you have other professionals that may or may not get into the entrepreneurship. So I’ve always wanted to be an entrepreneur and I was waiting for the right timing and the right opportunity. That timing and opportunity came up during COVID, where I found the the right problem to solve. We felt that this space had growth opportunity because you have the electric vehicles going direct to consumers. You have people buying more cars online. A lot of that drives direct interaction with the consumers and the experience was very poor. So we thought that was a good opportunity to streamline that process. So I mean, I certainly consider myself in that category where I have the experience in the industry, the will to succeed as an entrepreneur, because I’ve I’ve managed teams, I’ve scaled businesses in the past. And having the right moment in your family life as well. And support system also certainly helps.

Joey Kline: [00:12:18] Now, look, that’s that’s a big one, too. Depending on the profile of your, you know, your spouse or your kids, that’s. And look, I certainly I didn’t think about that until I was in that position. But, yeah, there’s a whole other set of people that, you know, your your actions have consequences for.

Michael Malakhov: [00:12:33] I mean, that’s probably one of the most challenges, challenging parts that, you know, if you’re have been in the workforce for 15, 20 years, you know, most a lot of times you’re married with children to to quit your at that time probably a lucrative corporate career and start something from scratch is when.

Joey Kline: [00:12:54] Your expenses are probably the highest. Exactly. Yeah.

Michael Malakhov: [00:12:56] It’s very risky. You have children, you have to pay. So having the right, you know, spouse that can support you and the right infrastructure is very important to be successful.

Joey Kline: [00:13:07] Yeah, because look, at the end of the day, I’ve, I was at a basic I don’t know who told me this maybe a mentor early in my career but essentially said look the the first step that you have to take to bring everything to work and being the most effective that you can be is if everything is okay at home, if something is wrong at home with whoever your partner is and that mental strain is on you, there is no way that you can be 100%. And he was he was absolutely right.

Michael Malakhov: [00:13:38] Absolutely, 100%. I mean, entrepreneurship is a roller coaster ride already. So you have to have some be grounded and you have to have the right support system to get through it for sure. So, yeah, it is a very important part.

Joey Kline: [00:13:51] What has been the thing that has surprised you the most? Right? You’ve gone from you’ve been at some large corporations, you’ve been at some smaller corporations, you’ve managed teams. You know, you are now and I know you have a number of co-founders, but you know, you are you are the lightning rod for the company. You are, you know, the the the success of your team is partly riding on your and your partners making this, you know, something, something real. It’s not the right word. Obviously, it’s real. But I think you know what I mean, Something bigger than it is right now. I’m curious, what has been the most surprising part of building this and growing a team, whether it’s from a management or culture perspective, just what have you found that you didn’t realize you were going to find?

Michael Malakhov: [00:14:38] I mean, I would say, you know, one of the big surprising things, the ecosystem in Atlanta to support entrepreneurs has been amazing. I mean, we’ve been part of the Atlanta Tech Village building since the day we started the business. That decision has been extremely important to our success. That’s what we’ve you know, we found our co founders. They were next door to us in the office. It was a very important part. We were also part of Atdc. So it’s the ecosystem itself in Atlanta has been very supportive from an investor perspective as well as just advisory. So that was very helpful. And then as we continue to grow, you know, having the right people in the seats and the right team has been extremely important as well, because I have three other co-founders and each one of us owns our own lane. We we know what our accountability is and we focus on that. And that creates growth and success for us. Because, you know, one person, it’s very hard for one person to build something. We have 30, almost 30 people now. Yeah. So everybody plays a critical role. And the team that we’re building is also plays a very critical role for for us to continue to grow because we can’t do it alone.

Joey Kline: [00:15:54] That’s right. And, you know, look, it’s in the early stages. It’s kind of all on you and the co founders. And then there gets to sort of be this nebulous point in between where you are power is becoming an influence is sort of diffusing throughout the organization. And it’s maybe not as simple as it used to be where, you know, it’s four of you in a room and you just all know the same things. Each key, the the individual contribution of each player really means a lot more than it ever did before.

Michael Malakhov: [00:16:24] Yeah, absolutely. I mean, we’re at that stage already where, you know, if you were strong individual contributor and you’re in a manager role now, you got to stop being an individual contributor or we stop growing. So it’s extremely important for the leadership to to lead and not do.

Joey Kline: [00:16:42] That’s right. That’s right. Set the tone. You know, this is an interesting time nationally and I think for Georgia and the car industry. Look, obviously, you happen to live here. And so this was started in Georgia. Um, Georgia is just crushing it from an automotive perspective right now. It’s really incredible to see.

Michael Malakhov: [00:17:06] Yes. You know, Southeast is like the new battery belt, right? You have Well, it’s not just the EVs, right? You have a lot of the foreign companies, automotive companies had already established themselves pretty well. You know, Mercedes obviously headquartered in Atlanta. Porsche is headquartered in Atlanta. Bmw has a plant in Greenville. A lot of the imports that come from Europe come to Brunswick and Jacksonville Ports. There’s a plant, Hyundai plant in Columbus. There’s a mercedes plant in Alabama. So it’s the southeast has been very strong in automotive already. Nissan’s in Tennessee. And now you have the EV companies coming here just because there already is an established infrastructure for automotive. Not to mention, you know, Cox Automotive is one of the largest software providers for dealership industry for automotive. So it’s a very big automotive space in the Southeast. Atlanta plays a big role.

Joey Kline: [00:18:09] I’ve always wondered this question, so I’ve anecdotally, I know that a lot of the cars that come in to be shipped across the country come into the Port of Brunswick. Okay. Why Brunswick? Right. You have Savannah so close. What is what is the specific reason behind why Brunswick, Georgia?

Michael Malakhov: [00:18:25] That’s a great question. So, you know, historically, Savannah, you know, became a larger port in the last ten, 15 years. But the history of vehicles coming in into those Jacksonville and Brunswick ports has been there for quite some time. So I think some of that is the continuity of what has been in place. There is good infrastructure, rail infrastructure that carries a lot of these vehicles across the country as well. So it’s not just the port, it’s the rail infrastructure that supports the port that’s heavily influencing that part because, you know, think about who’s in who’s in Jacksonville. Csx. Yeah, CSX railroads based out of Jacksonville. So it’s a it’s no coincidence, I’m sure. Yeah.

Joey Kline: [00:19:09] Okay. All right. Well, just a little, little tidbit there. So let’s see, we talked about your team. Let’s actually go back to capital for a second, because I feel like, you know, even as recently as a couple of years ago, I would I would do the show, would ask about capital. We’d ask about things Atlanta could do better. And, you know, often there was a comment of, you know, the ecosystem is great support is great, talent is great. But I got to go to the West Coast to raise money. Now, I think that we’ve seen influx of a lot of West Coast or northeast operations that now have an office here and have set up roots here. I’m curious, do you feel do you feel the ecosystem from a capital perspective is markedly different than even a couple of years ago? Because from an outsider’s perspective, it feels that way. It feels more robust than it used to be.

Michael Malakhov: [00:19:58] It certainly feels a lot more robust. I mean, there’s a good support. System from investor perspective in Atlanta or the Southeast in general. So there’s multiple funds that already operate in the southeast. And then you have as Atlanta continues to grow as a large tech hub, you have a lot of the VC firms opening up shop in the Southeast as well. And obviously, Atlanta is one of the key hubs. So it is becoming a lot more attractive. So there is, you know, presented a venture, Atlanta, and there were a lot of out of town investors in visiting. Some of them are have offices here. So it certainly there is a lot of attention on Atlanta.

Joey Kline: [00:20:41] There is. I think, look, the the Sun Belt is is doing quite well. Atlanta is doing quite well on a number of fronts. You mentioned presenting it venture Atlanta. I just have to give you kind of another shameless plug here. I believe that you are on the the, you know, Atlanta Awards companies to watch, correct?

Michael Malakhov: [00:21:02] We are, yes.

Joey Kline: [00:21:02] Thank you. Yeah, just just making sure that we get that in there. And for anyone listening, I believe the event is March 16th. And of course, not not planned whatsoever. But my company, JLL, is sponsoring it. So if you want to come on down, I believe it’s at the west side, at the Star Metals Building. There’s a lot of great companies, obviously, including carpool logistics. Absolutely. Yeah. Okay. Now back to our regularly scheduled program. So what what are you up to now? What’s the goal of the next 12 to 18 months? Is this purely just gain as much market share as possible? Is there a new business line you’re getting into new technology? What are you focused on for the future?

Michael Malakhov: [00:21:46] So we’re heavily investing in continuing to build out our platform. We’ve doubled our software development team in the last few months and core focus is on continuing to build out the platform, make it as efficient as possible, create as much efficiency for our customers and visibility as possible. So the tools that we’re building are constantly getting enhancements. So that’s one of the big focus areas. And then also continue to build out our sales team and organization because we’re not even scratching the surface. I mean, we being in Atlanta, we obviously started out in the Southeast heavily and the goal is to expand across the US.

Joey Kline: [00:22:31] So are you does your expansion. I’m thinking about I’m presuming about your sales cycle and you can correct me if I’m wrong, but this seems like certainly for most of these fragmented marketplace like this, this is probably an over-the-phone sale as opposed to kind of an enterprise in-person sale. Are there are there geographies or prospects in which it really makes sense that you’ve got to have someone on the ground there?

Michael Malakhov: [00:23:01] It’s a mixture of both. Yeah. Automotive is a very relationship driven industry, so being local in local markets is very helpful. So we kind of have a mixture of phone in person, yeah, approach, but we keep our operations as one hub in one place so the sales force can be distributed. The operations is centralized.

Michael Malakhov: [00:23:28] Gotcha. Okay. Um.

Joey Kline: [00:23:30] You know, it is it is such an interesting time in the automotive market, not just the shift in geography of where automobiles and components are manufactured, but also the hype, I think makes it sound like it is not real. It is very real. The switch to EV and sort of the race to get into that. I’m not a specific question, but just kind of your thoughts on where things are, who you see as some of the future winners and losers, where you think innovation is going to be. Just overall thoughts on the market as it kind of switches probably one of the most significant shifts since the invention of the automobile, Really?

Michael Malakhov: [00:24:13] Absolutely. Automotive industry certainly going through a renaissance. We’re probably going to see more change in the next 5 to 10 years than we’ve seen in the last 50 years. So electrics are not going away. They’re certainly here to stay. And there’s going to be pretty aggressive push in the next five years for all manufacturers to start significantly expanding that segment. So and also, you know. You know, a lot of car manufacturers are looking at distribution model for EVs, have relationships through dealerships. Dealerships have to make investments. There’s a lot of investment that has to go into to implement this. Not to mention the charging stations all across the country. A lot of innovation around batteries is important. The China controls a lot of the supply chain for the batteries, which is a big challenge for the US. So there’s a big push to start to build control within North America to to supply those batteries and the components of those batteries. There’s a lot of investment going into that space. So I think it’s going to be very interesting to watch the entire supply chain and how that evolves in the next few years.

Joey Kline: [00:25:24] It really does feel like and this is beyond just batteries, but obviously that is a huge component. It does feel like we’re entering a phase in kind of the international world order in which we are.

Michael Malakhov: [00:25:36] Not.

Joey Kline: [00:25:38] Globalized, isn’t ending. We’re not necessarily retreating from globalization. But I feel like things are becoming a bit more regional. I think that certainly the United States is understanding that, look, there was there was absolutely a business case, you know, in the last 50 years for putting a plant of whatever kind halfway around the world. And I think we’re seeing now that, you know, that has its consequences. There is a there is a real advantage jobs, culture, national security, to having things on our own shores or at the very least, our own continent. I mean, I think Mexico is going to be a very big winner as well in this switch.

Michael Malakhov: [00:26:21] Yeah, absolutely. Nearshoring is certainly happening. I mean, as you mentioned, a lot of geopolitical challenges currently. So a lot of companies are thinking about how do we get closer to the United States and those markets that you serve. So that regionalization is very much on top of mind for all supply chains, not automotive specifically, but just all supply chains. Yeah.

Joey Kline: [00:26:48] I mean, the service you’re providing obviously at a at the stage that your company is in, it is very important to focus and focus on doing, you know, generally one thing really, really well and carve out a niche for yourself. My hunch is that the service that you’re providing and the technology that you are using for that service can probably be used for other sort of transport models as well. And I’m curious if that is something that is on your long term radar or it’s too far away to even think about that right now.

Michael Malakhov: [00:27:22] Yeah, kind of like you mentioned. I mean, our core focus is around vehicles. We plan to stick to that core focus there is the freight industry on its own is a $3 trillion industry worldwide. So there is already a lot of investment going into that space. We see part of the thesis was that automotive supply chain and logistics wasn’t getting enough attention and it’s much smaller segment and that’s why we decided to go after this segment specifically. And the tools that we’re building are specifically for automotive industry. And one of the reasons we decided to build those tools is because there’s not a lot of platforms and tools out there to really support this business. So we thought it was very important as the industry evolves. To be able to create the customer experience that consumers are used to. Then Amazon like delivery. Sure, If you want to have a car delivered to your house and have a similar experience, there’s a whole lot more work to be done.

Joey Kline: [00:28:24] Yeah, that’s right. And like, I think that there are plenty of companies that have found a a really strong niche in a process or industry that is highly fragmented, that isn’t really using technology that is somewhat analog. Those are, you know, very, very ripe for disruption and that’s obviously why you’re doing what you’re doing. Absolutely. Yeah. Well, Mike, this is great. Thanks a lot for coming on and telling us about carpool logistics. If there are people listening that want to get in touch with you or learn more about the company, what’s the best way for them to do that?

Michael Malakhov: [00:29:00] Yeah, thanks for having me. You can reach me at Mike at Carpool logistics.com.

Joey Kline: [00:29:04] And again for everyone listening March 16th Atlanta event Mike and his company are going to be there as well as a lot of other great start ups. Thanks for listening, everyone. Have a great day.