Eddie Leshin, a 30-year veteran of American Backhaulers, C.H. Robinson (NASDAQ: CHRW), and Coyote Logistics, has returned from a stint in private equity to take the helm at a new freight brokerage, Anthym Logistics. Most recently, Leshin was the chief operating officer at Coyote from 2010 through the end of 2014, and then a partner at Woodlawn Partners until this summer.
Anthym was formed out of a merger of Chicago’s Atomic Transportation and Boca Raton’s Cousins Logistics earlier this summer. The combined entity is on a $85 million gross revenue run rate, Anthym chief strategy officer Michael Redisch told FreightWaves.
Merging the two operations makes sense as a foundation for the next big freight brokerage, Redisch said, because while Atomic focused on dry van freight, Cousins’ book of business had reefer and flatbed at its core. With no overlap between the two customer bases, Anthym expects to leverage significant cross-selling opportunities.
In a phone conversation with FreightWaves, Leshin reflected on his career and, by way of anecdote and analogy, articulated his view of the problems and opportunities in the logistics industry.
Lessons learned from difficult integrations—especially Robinson’s acquisition of Backhaulers in 1999 and Coyote’s acquisition of Access America in 2014—as well as firsthand experience as a private equity partner have made Leshin skeptical of PE-backed rollups in the logistics industry. PE firms tend to be better at financial engineering than integrating logistics operations, he said.
“It’s hard to do even one deal in the non-asset-based space with people and culture and systems,” Leshin said. “Private equity doesn’t care about [integration]; they care about rolling up numbers into bigger numbers. There’s so much capital and dry powder on the Street waiting to be deployed, they’re looking for ways to do bigger and bigger investments—they’re not doing a Brad Jacobs-style operational rollup.”
For those reasons, Leshin said that Anthym would likely only take on capital for a few strategic acquisitions if opportunities presented themselves; Anthym had little desire to become a platform company for a private equity firm. Instead, Leshin wants to focus on people and customers, and solve problems in a thoughtful way.
Technology was another area where Leshin took a refreshingly contrarian view. When asked if and when Anthym would build its own technology platform, Leshin demurred, saying that there was a lot of great software already available in the marketplace that still needed to be evaluated. While Anthym might build small solutions on the margins, he believed that largely off-the-shelf technology would carry Anthym far into its next phase of growth.
“I mold clay, I don’t build models,” Leshin said, explaining that he preferred organizing processes and hiring different kinds of people as the business scaled in an organic way, rather than rigidly executing a pre-written strategic blueprint.
“Most of the evolution in this space and the opportunities I’ve seen presented themselves while we were already in the business,” Leshin said. “Customers talked to us about things they needed or wanted to change about how business was done. We created differentiation through technology that helped make those things happen and make them real. I’ve never seen anything that’s been truly disruptive that was borrowed from another industry or was ‘disruptive’ before it was actually built.”
A looming recession may dry up the credit that private equity firms use for leveraged buyouts. Recent IPO underperformance in public markets has caused venture capital investors to re-emphasize gross margin and unit economics. The conditions are right, Leshin believes, for a new big mega brokerage to be born, one built his way.
Over the course of a storied career in freight, Leshin gained the self-knowledge that he believes is crucial to achieving success in any industry. Leshin likes to grow small companies with momentum to maturity—from late elementary school to college, he said. But he hates graduate school.
Leshin is a freight broker at heart, really, a trader, and some of his best friends work in the public equities markets. He was bemused by the “behemoth” C.H. Robinson’s insistence as the millennium approached that it would “never be the first company to give everyone a cell phone, to build a website,” and he knew that he didn’t want to work for UPS (NYSE: UPS) post the Coyote acquisition.
“We’re all traders,” Leshin explained. “We aren’t great corporate types who like being in boardrooms with PowerPoint presentations.”