How to make the right choice between in-house and outsourced dev teams?

Matt Fain, CEO ● Jun 14th, 2024

The full transcript

Oleg

Hi everybody! Welcome to Devico Breakfast Bar! Here we speak with different people involved in the business landscape, share their expertise, delve into the latest tech trends, and explore the ins and outs of IT outsourcing. I'm Oleg Sadikov, and today I'm excited to have Matt Fain, the co-founder and CEO of PopCapacity, which provides a cloud-based platform that enables shippers and suppliers to seamlessly connect. Don't forget to subscribe and hit the notification bell so you don't miss our new episodes. Hi, Matt!

Matt

Hello!

Oleg

Could you please start by telling us about your professional background, about yourself?

Matt

Yeah, no, absolutely. So, once again, my name is Matt Fain. I'm the co-founder and CEO of PopCapacity here in Atlanta, Georgia. So, I started off my career in sales. I was brought into sales – more corporate America sales – working for a large building materials company. That's why I really fell in love to the art of building relationships, speaking to people, having real conversations, and then selling them products. It also introduced me to logistics. So, in that construction equipment sales role, I was involved in a lot of logistics-type applications, whether it be delays on my stuff, not getting to the customer on time, and it being a trucking delay, or a warehousing issue, or something of that nature. So, I got involved involuntarily, and I started seeing areas and gaps where technology could really help out. From there, I was introduced to a digital trucking brokerage company, franchise-based, decided to start a franchise-based trucking brokerage to dive into logistics. So, I quit my nine-to-five corporate cushy job, left it to be a franchise owner in an industry that I didn't know about. I knew there was trucks and trailers, and it brought products from A to B. That's the extent of it. So, I got into it and really fell in love with just how products move. Right from import to export over the road, and how they got there, and where all the challenges, the hiccups, and hurdles were along that journey. Had a great time operating that brokerage, grew it, sold it back to the franchisor, and started a trucking company. So I'd lived half my career brokering other people's equipment and trucks and making money off other people's equipment. So, I felt that in order for me to give a good, guaranteed service and quality, I could do it on my own. So, I did that for a few years and quickly realized I wasn't a truck driver, but it led me to starting PopCapacity. It led to the idea behind PopCapacity. Driving down the road with a load in the back for an existing customer who just so happened to call me and ask for warehousing space. Naturally, I go to Google. That was my resource. I've been in industry a dozen years now, and Google was still my resource to go find a very, very important node in the supply chain. It seemed crazy to me. I can book a vacation room at the click of a button; I can buy a home; I can get a Lamborghini order to my front door right now through a click of a button, with zero friction, full visibility, and what I'm looking for. And I can make a good, educated decision based on the use of technology. So, I took that Airbnb philosophy – that marketplace-style algorithm – and apply that to warehousing procurement. Fast-forward three and a half years later, we're still on our journey to be this new standard in logistics procurement, warehousing procurement, but that's kind of how the journey started. It was sales-focused that brought me into logistics. And then I started my entrepreneurship journey.

Oleg

In addition to your professional life, do you have any personal interests or hobbies that you're passionate about? How do they complement your work?

Matt

I probably should have more. I can say before I started own and operating businesses, I did have more hobbies. When you become an entrepreneur, you really start seeing that it is your baby. I know they say it all the time. It's your baby. You nurture it, you take care of it, you grow it. You put everything you have into it. So, I probably should have more hobbies, but I enjoy the outdoors. My family enjoys the outdoors, whether it be hiking, or fishing, or camping – stuff of that nature. We're outdoors enthusiasts. Anytime we can get outside, we do, for sure. Other than that, it's making sure that we ensure PopCapacity is the industry standard for warehouse procurement. So, just as soon as that task is accomplished, I'll be able to do anything I want to.

Oleg

Can you share any funny moment or experience that shaped your outlook on entrepreneurship?

Matt

Gosh, there's so many. I mean, even starting at an early age in middle school, I was the kid selling candy in the common area, pushing 100% profit, selling bubblegum. I think that's where it started. You know, I watched my dad throughout his life worked seven days a week in a blue-collar industry, and I knew that he saw the sacrifices he made to provide for his family. He had to take time, and he was around for all the major things, right? But I knew that it hurt him to not be there on Saturday and Sunday, to wake up with me, and do breakfast, and watch cartoons, and all the things. So, I'd admired his perseverance and his drive just to make sure that he provided for his family like he should. But from a logistics standpoint, there's a few as I got into the industry and as I started PopCapacity, Lance Theobald, he was the founder and CEO of SecurSpace that was inquired by Envase and then WiseTech. But I had some early conversations with Lance and more along the lines of what was his journey like. You know, I kind of watched him from afar, seeing him go through all the multiple stages of raising capital, bringing in money from rider, and doing all these things, and ultimately get acquired at the end of the day. I think as an entrepreneur, we all started for the end game, right? Whether it be acquired by a large company, go IPO, and ring the bell, whatever it is, we all do it for that end point. But in watching his journey, it was very clear that he had a defined end point. He knew when enough was enough, regardless of how big it got, regardless of what the possibilities could be. It could be a billion-dollar unicorn, but he was satisfied with what he started his venture out that. And he told me in the beginning of it, 'Remember that as you start growing, as you start getting bigger, remember why you started it and what was the appropriate outcome then.' So, that's always stuck with me, you know, as we start, and that's why we're still bootstrapped to this day. We didn't need excessive cash. We didn't have a need for a hundred heads and a hundred thousand dollars a month in marketing. We felt like our solution was authentic enough to have a real impact in the industry.

Oleg

Cheapest marketing.

Matt

Right. Right. Authenticity referrals. It's just people doing business with people. And that's what we want to create. It’s just how do you access and understand what those people do and how they do it before you go into a conversation. Just like a vacation room. How do you know all about the house? What the kitchen looks like? What the tool is look like? You know it, and you reviewed it, and you were given that technology and tool. Andrew Leto over at GlobalTranz, Emerge. He's a serial entrepreneur, been in the logistics industry for a long time, exited multiple companies, multi-million dollar exits. Just his journey and where he started. And you can see that he was always going to do something else. You know, from 10, 4 systems to GlobalTranz, to Emerge. I mean, he could have stopped at any point that's been set, but he was inspired to make change. He always identified that next gap and how technology can satisfy that gap. It was a different journey than ours. Raised a bunch of money, did that whole, you know, venture capital route, but made it, you know, made it to that unicorn status. And then, I guess, the last one on the list – and then there's so many – but Ricardo Salgado over at Loadsmart, more on his personal journey. I mean, his professional journey has been miraculous. They hit unicorn status. They raised a bunch of money, did a lot of really cool things. But I'm more intrigued with his personal journey, right? So, through all this success, he was diagnosed with, I believe, stage four cancer and fought it, just like the business he had to fight for. Now he's fighting for his life. It's just two different aspects of it, right? You're fighting for a business to stay alive, to make sure you can satisfy all the people who believed in you, and your vision, and your passion. Then all of a sudden you switch gears, and you'd have to think about things that I do so I can still be on this earth. And not giving up. I think any entrepreneur, anybody, you have to have that will to survive, or you won't. He's a model of that both professionally and personally. So, yeah, those would be the few that I can think of off the top of my head.

Oleg

Are there any professionals or leaders in your network who inspire you in your professional journey?

Matt

I mean, other than those, right? I mean, I meet people every day that inspire me, and it could be people brand-new coming into the industry with a lot of motivation, and energy, and different perspectives. The chief supply chain officer at Clorox, you know, recently had a call with them and looking to add some smarter, more intelligent, tenured people to it. I've been in this industry for 13 years. There's been people in this industry for 15. I want to learn any and everything, any bit of information I can about them. You know, my dad always said, 'Surround yourself with people that are smarter than you, and you will inadvertently get smarter.' So, those few people.

Oleg

Those smart people should have interest hanging out with you. So, you should be smart.

Matt

I hope so.

Oleg

How do you perceive the current state of the warehousing and fulfillment industry? And what are some key trends or challenges business operating this space need to navigate?

Matt

It's been a roller coaster coming out of the pandemic, where warehousing space was tighter than ever. You couldn't find space. There wasn't enough. Now coming into a market where there's an abundancy of space from both a leasing vacancy perspective and a 3PL warehousing perspective. There is space. So, I think right now it’s a good time, and we're seeing it with a lot of large enterprises, you know, going through, doing an analysis on your infrastructure, doing a costing analysis on pricing, make sure you're paying the right price. We negotiate terms. Really optimize and look locationally are you in the right place. Historically, you could call out six major hubs in North America that you should be in, historically. Things are changing. The Chicago lands and the LA, Los Angeles, markets of the world – people are starting to identify that it's really expensive to do business in certain markets, and they can push inland and go to other subset markets, like Phoenix, Reno, or Salt Lake, and still have access to the West Coast, still have access to the Midwest and Northeast markets, but not have to be in a major metropolitan area. We all understand the more major metropolitan is, the more expensive costs are. The more rural you get, the less expensive things are. I think freight, and logistics, and infrastructure has started to push out into the rural areas, to where it does make sense for businesses to start reviewing things. As far as challenges, and I've been speaking, preaching this, you know, since we started PopCapacity, was the lack of visibility into space, from what's available to how high the ceilings are. There should be tools and resources out there that allow buyers and brands of any size to go find warehouses that are like-minded, that have similar commodities, that maybe go to the same customer base already. You know, one thing we're starting to see a lot of is this retail compliance and systems integration. One thing these brands do want to have is connectivity into a network. What they don't want to do is bring on another technology to offer that connectivity. They want to pre-integrate, find a partner who's pre-integrated SAP or Oracle. So, identifying what tech stack they're operating in has been huge for us. If you're Coca-Cola looking for 13 different new locations, and Coca-Cola operates on SAP, the two things on any onboarding and startup of a new partner, the two things that last the longest: systems integration technology and legal, right? Sorry out of these stinking emojis that pop up now.

Oleg

It's okay. It's everywhere now.

Matt

But integrations technology and legal are the two things that take the longest. So, we can get you a jumpstart and allow you to understand what is available from a technological perspective.

It makes integration way easier. So, the biggest challenge in our eyes is the lack of visibility. The fact that all of these facilities are locked behind a 4PL, a Google search, maybe a commercial real estate broker is insane to me. We have limit, we have full visibility into just about everything in our lives. When it comes to a box with racks and trucks pulling in and out of the parking lot, we have zero visibility into that. So to me and to us, it's the fact that there's just zero visibility and not a platform to help you navigate to right and appropriate service provider. Google will lead you to the one who paid the most every time, not the one who's truly the best fit based on what you're looking for.

Oleg

Definitely. I agree. Automation and robotics are shaking the logistics landscape. How do you leverage automation technologies within this platform, and what opportunities do you foresee for further automation in warehousing and fulfillment operations?

Matt

Well, I mean, it depends on what applications are you using robotics and automation. I just came from MODEX in Atlanta a month ago, and you gotta see a little bit of everything. Ones that replace the pick and packers, PLCs and things that operate for convey lines, you got to see a little bit of everything, but the reality is our upcoming generations are not excited about working in a warehouse. You're not having a large group of our labor pool coming into the warehousing industry. So, automation does two things. Robotics and automation gives the person getting into the warehousing world a new perspective on how they work, a new way to work. Now they're working with robotics. Now they're working in tandem with something cool and sexy. They're not pushing a push cart and a pallet jack around a warehouse to go lift a pallet up and load on a truck. They're having to do something a little bit more technological. And the folks that don't care about that – you're completely replacing their jobs. You know, one thing a robot doesn't do is take breaks. Restroom, smoke breaks, doesn't take up lunch. It'll work 24 hours a day, seven days a week. All you got to do is plug it back in and charge it. So, I think we are looking at the future. You start looking at companies like Figurai, who just partnered with OpenAI. You start looking at robust and all the various ones out there.

They all had their unique application, but they're all getting more intuitive. They're all learning to work with people within the warehouse, versus working against them. And if they don't want to work with them, then they will replace them. I don't know if we're ever going to be in a world where it's fully robots, like all robots all the time, moving around, doing everything. You're still going to have people in logistics.

Oleg

I hope so.

Matt

I hope too. Right. I started thinking Terminator and stuff like that. It's a scary thing to think about, but it's where technology has brought us to, you know, and I do believe it is the wave of the future. It's not going to go away. The mundane manual task will be replaced by technology. Whether it be picking and packing a box or moving a crate out of a container, a robot can do that. Let's be real. You no longer have to have two guys, and a forklift, and a chain pulling it out and work. Automation can fix that. You start looking at warehousing search and procurement. We're fixing that with AI and visibility tools. It's not rocket science. It's just applying simple technologies and everyday technologies into an industry, in a specific area of the industry. So, I think it's going to be the future, but I don't think that people will be replaced. I think we'll always have a level of human interaction there, but some of the things we don't want to do will be replaced by technology, for sure.

Oleg

Talent acquisition and workforce development are significant challenges in logistics. What strategies do you employ to attract and retain top talent within your organization?

Matt

Having the right tools and resources for one. So, for bringing on talent into our organization, the one thing that they look for is flexibility. You know, being a pandemic-born company, we were always remote. We were always a remote company. But even trying to bring more people back into the office, they need their flexibility. One thing that everybody I interview is 'Is it a remote job?' A lot of these folks are living in Airbnbs and living their best life moving across the country, but doing a remote marketing job, remote PR work. I think we quickly realized that we could do a lot of things remotely. We didn't have to necessarily be sitting in an office every single day at a cubicle to do our work. I think a lot of people realize that they're more productive in a different environment, not being boxed into that cubicle next to Bob every day. They were able to go and sit by the lake, and be in the outdoors, and soak up the sun, and do different things. So, I think that flexibility is key. And then giving them the right tools and vision is crucial. Tools – because they have to have the right resources to do their job. But vision, vision is something that, you know, as a co-founder and starting the company from a pain point, our team members didn't incur that pain point. They may have never looked for a warehouse ever before. So, they didn't ever know what it was, but they knew that there was a challenge. And I think it's super important that as you bring team members on, you let them know the why behind what you're doing. They may care, they may not, but I've seen a lot of people understand that our motivation doesn't come from purely money. We can make money a lot of different ways, doing a lot of different things. Very few companies can change industries and change standards in industries. And that's the vision that we pitched. And then we show them the challenges, and the problems, and how we're solving that. So, resources, clear vision, flexibility – those are the key factors and what I think retaining talent in the industry. And then we touched on, you know, just in general, from a market standpoint, having the right robotics, and automation, and the right people to interact with that is going to be how you bring in more talent from a warehousing purview.

Oleg

I know that you have a combination of in-house and outsourcing development teams. Can you discuss the decision-making process? What factors influence this choice?

Matt

This one is really easy. So, we're a bootstrap startup. So, clearly the cost was the first thing that we look at. We were blessed with having one of our original co-founders being a technical engineer. He is a developer. He's developed platforms in the past. So, we had that luxury of having one of our founders being a technical person. But you start reviewing and researching – US domestic development engineering support is very, very expensive. There's a lot of benefits that are needed. It's just really expensive. You start looking offshore, and you start looking from a quality-to-quality perspective. It's very similar at a fraction of the price. So, this bootstrap startup leaned towards outsourced development because of the cost factor, because we didn't sacrifice a lot on the quality. And that was a big concern of mine. What was the quality of work that we were going to get from someone that we weren't managing and wasn't under our roof, or even in our country, for that matter? And the results have been great. We haven't had any pushback on our platform yet. Knock on wood.

Oleg

How do you ensure effective collaboration and communication between the in-house development team and external partners, vendors? What strategies have been implemented to streamline this process and maximize efficiency?

Matt

I mean, it took some time because there is kind of like bringing on new team members. They don't understand it the way that we understand it. We've been doing and having these brainstorming sessions and brain dump sessions for months, and months, and months. All conversations that the offshore developers do not know. They're just going on the 30-minute quick calls that we have and the shared file that we're able to put in information. So, it's like really getting them brought up to speed on what the vision is, what the passion is, what the why behind it, and why are you doing it. And if you could get that into them and allow them to understand all that, I feel like it does allow a cohesive journey for both in-house and offshore developers. As far as communication, I mean, that is the biggest thing. One of the struggles we found in beginning was a communication piece. There's a time difference. There's a lag and time zones from country to country and continent to continent. Having flexibility from our in-house team, having flexibility to communicate during their operating hours, and then vice versa, them working on certain sprints during timeframes, which they typically wouldn't work. And I found out that that's pretty common. Every tourist, depending upon where you're located, is willing to operate during the timeframe of which you live, or which the company is, you know, a portion of the timeframe, which our company has established. So, that did help a lot. But it's communication, setting some standards, and some goals tied to time intervals. One thing I quickly learned about all developers, whether it be in-house or outsourced, is the development time is different. One day does not necessarily mean one day. So, getting a good idea of timeframes, establishing some meetings, and just we get on a call every week. I have a call with my in-house team, and then we have a call with the entire team once a week. May seem excessive, but it's what we do to make sure that we all are making the right steps and being at the same beat, if you would.

Oleg

As we wrap up our conversation, what advice would you give to other companies considering IT outsourcing?

Matt

There's a lot of options, right? The second that you establish your corporation, or you raise capital, you will start getting lots and lots of developers in your inbox. And they'll all start sharing the portfolio with you and telling you that they're familiar with your industry. Take the time. Do your diligence. Don't just chase a price. You'll have the ones that are at a price point that is unbelievable. That is too good to be true. Everything that my dad taught me was if it's too good to be true, chances are that it is. So, do your diligence in finding your outsource developers. And then, when you find that right one, make sure that you take the time to educate them on what you're doing, why you're doing it, and how you're doing it. So they understand where the passion comes from, right? Whether it be purely money-based and 'Hey, we're trying to spin up a product that we can get a lot of people to access. We don't necessarily need users in it. We just need people to access it. Cause we're going to sell this thing in 12 months.' Or, 'Hey, we're looking to change the entire industry. And in doing that, these are the steps that we're going to take and the timeframe, which is going to take.' I think if you get them to understand that there's no right or wrong in either scenario, but if they understand which direction they go, they will put forth that type of motivation towards it. So, do your diligence. There's a lot of options out there and don't just chase the cheapest one. That's from experience. I've done that twice now. But you live and learn.

Oleg

Matt, thanks for your time. Thanks for joining the video podcast. It was really interesting. And the insights, the information you shared with our auditory, they will find it useful, I'm sure. Thanks again. Great speaking to you. If you enjoy our discussion and want to stay updated on future episodes, don't forget to subscribe and hit the notification bell. That way, you will not miss on the latest insights and conversations from Devico Breakfast Bar. See you in a week!

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