The hottest new brokerage in Chicago is being run by a young man with deep roots in logistics: Andrew Silver, son of Coyote Logistics founder Jeff Silver. MoLo Solutions was founded in July 2017 by Matthew Vogrich, who currently serves as the brokerage’s president; Silver joined in April after taking a year off to work at a shipper and took on the CEO role. In its first twelve months of operations, from July 2017 to July 2018, MoLo hauled in gross revenues of $20M; Silver and Vogrich expect to do $70M in MoLo’s second year. MoLo’s broker headcount tripled in the five months since Silver joined the team.
FreightWaves discussed MoLo’s story and philosophy, Chicago’s freight culture, and the current market outlook with Silver and Vogrich by phone. Both Vogrich and Silver hail from Lake Forest, Illinois, and graduated from the University of Michigan.
“I played basketball at Michigan and graduated from Ross School of Business,” said Vogrich. “I sold supply chain services in IBM’s distribution vertical, helping retailers and CPG companies more effectively manage their networks. Many of my customers vocalized a need for better transportation suppliers. It became apparent to me that there was an opportunity for a new 3PL to come in and add immediate value,” Vogrich continued.
Silver started in freight even earlier. He grew up with Coyote and brokered his first load during his high school Christmas break in 2006 at the tender age of 16. At Michigan, Silver didn’t attend many classes, but leased office space above the bar Red Hawk on State St., right across from campus, and helped cover loads as a carrier rep for Coyote about 40 hours a week.
“I fell in love with freight brokerage at an early age—especially the competitiveness of the industry,” said Silver. “I left Coyote after we got bought by UPS. I loved it all, every part of the company, but it was about going out and building something of my own.” Silver then worked for a food service company, managing their carrier network, while considering what to do next.
“We founded MoLo last July, based on the fact we knew there was a customer need: drivers are aging, more products shipped on a daily basis but with less capacity out there, so we were going to try to build something and deliver value,” said Vogrich.
Both Silver and Vogrich said that MoLo’s main point of differentiation was a laser-focus on service, and that means both honoring their commitments to shippers no matter what, and treating their carriers like family.
“In our world, every time you lose a truck you’re faced with a moral dilemma, and when you build a brokerage with commission-incentivized people, there’s a risk they’ll make the wrong decision,” said Silver. MoLo has changed the compensation structure for its brokers, Silver continued, to incentivize service and make it easier for brokers to make the right decisions when they face what he called “those 3 PM moral dilemmas” every day. MoLo has a driver loyalty program that pays out more rewards and perks to drivers the more loads they haul for MoLo: the goal is to keep drivers so happy that they don’t want to haul for anyone else.
“The lack of respect for drivers in our industry is frankly infuriating,” said Silver, “and brokers can be so short-sighted about how they do their business and treat drivers. A broker happens to type in the wrong number, someone sits waiting for 10 hours. and then the broker doesn’t want to pay accessorials.”
“We want to treat our carriers and customers better than anyone else in the industry. We have zero customer turnover so far, and attribute our growth this past year to the hard work and dedication of our people, who have embodied our values from day one,” said Silver.
Both Vogrich and Silver said coaches from Michigan’s Athletics Department inspired MoLo’s hard-driving, competitive culture.
“John Beilein is an incredible mentor for me. I learned how to build a winning culture during my time with him,” Vogrich said. “He had a way of driving home his values and the importance of every deliberate action: I knew what I was playing for and how my role contributed to the team’s success. Every person matters and it all comes back to values, and rallying everyone around those values.”
Silver had Michigan football head coach Jim Harbaugh’s quote memorized: “Attack each day with an enthusiasm unknown to mankind.” Along with the student-athlete mentality comes a respect for personal growth and investment in people so that MoLo’s employees can realize their own aspirations.
“A lot of brokerages around here are like this,” said Silver, “you get a desk, a computer, and a phone, and are told to get to work. A lot of people burn out—they’re doing the same thing over and over and they’re not growing. The joke is you’ll spend ten years in this industry, leave, and the only you thing you know is how much it costs to move a truck from Chicago to Atlanta.”
“The question for us was how do we invest in people’s growth despite the cost to do so? We’re working with a company to teach our employees public speaking, for example,” said Silver. “I didn’t want to come back to be just another broker—I wanted to do something different. We’re tech focused, but so much money is being dumped into technology while the people are being neglected. Our goal is to be a very efficient, tech-enabled broker, where we create these efficiencies internally so our people can maximize their output, and grow… they deserve a mutual investment coming back from their company.”
MoLo’s co-founder and Head of People Development Will Jenkins has developed an in-depth training program that has differentiated the company from other brokerages. Every training class gets bigger and more extensive, Silver said, as MoLo continues to invest in its people. Training last about three weeks, and then there’s a two month period of close supervision once the broker gets on the floor.
As far as technology goes, Silver said that MoLo uses a a customized system based on Salesforce. It’s a nimble platform that can be easily expanded, Silver said.
What’s sustaining MoLo’s exponential growth and commitment to service? Vogrich said MoLo was able to find a group of savvy investors in the Chicago business community who were willing to back a proof-of-concept and let Vogrich build a team.
“Our investors believe in our model and have given us a runway to build out a network of the right shipping and driver partners,” said Vogrich. Silver said he expects profitability by the end of next year, but that right now the focus is on adding customers and covering competitors’ failures while we’re still in a capacity-constrained environment.
Toward the end of the call, the conversation shifted to Chicago’s unique culture of freight brokerage, which ultimately stemmed from American Backhaulers, a brokerage founded in 1982 and sold to C.H. Robinson in 1999 for $136M. Leading up to and after the sale, the original American Backhaulers executive team founded a new wave of brokerages. Paul Loeb founded Command Transportation in 1997, which was sold to Echo Global Logistics in $420M in 2015; meanwhile Jeff Silver started Coyote Logistics in 2006—the same year that Andrew brokered his first load—and sold it to UPS in 2015 for $1.8B.
“Many of today’s 3PLs, both in Chicago and throughout the country, were the spawn of American Backhaulers,” Silver said. Silver noted that MoLo was the first brokerage born out of Coyote—not counting Chattanooga’s own Trident Transportation—and considered outfits like Arrive Logistics (started by Command alumni) a peer in the third generation of modern Chicago freight brokerages.
Finally, we talked a little bit about the current state of the market.
“It’s been a nice month, month and a half for a cooled down market where we can breathe a little bit,” said Silver, “where we’re not chained to our desks for 17 hours a day, and everyone appreciated that. But we expect it to get very busy again, and we expect a lot of customers to see challenges as capacity dwindles. This industry is cyclical in nature and it makes sense that we could see a slowdown in 2019. Our customers have told us that our driver loyalty program is very different from what they’ve seen before, and a slowdown would be where we could prove our value to our carriers.”