After raising $35 million in June, Overhaul Group Inc. CEO Barry Conlon predicted the Austin-based supply chain visibility software company would “very quickly” become a unicorn.
The startup, co-founded by Conlon in 2016, remains on that path — Conlon teased in an early February interview another major funding round is likely to occur sometime in 2022 that could bring the startup into that rarified air of privately held companies valued at $1 billion or more. The company did not disclose its current valuation.
"I’m predicting that we’ll be back in the market probably in the third quarter to close a new round,” Conlon said.
Until then, Overhaul is focused on growing through an acquisition.
“We’re involved in some M&A activity at the moment,” Conlon said. “We’re engaged in that right now, so we’re looking aggressively to find the right fits here. There will be hopefully some news on that coming soon.”
Recent Overhaul product news included a partnership with Microsoft Corp. that will see the startup's software — which digitizes and connects supply chains through real-time dashboards — become available across Microsoft Azure cloud services.
Overhaul can, for example, monitor the temperature of a shipment and notify the client if it gets too hot or cold and suggest solutions, according to its website. Customers include Dell Technologies, Pfizer, Hewlett-Packard, Sony, Microsoft and Amazon.
“They use our tool as an efficiency tool to give to give them greater situational awareness when there’s problems,” Conlon said. “Our platform allows a corrective action to be pushed when we detect non-conformance. So we’re avoiding disruption, which speeds up the supply chain.”
Conlon said Overhaul hired 150 people last year, many of them based in Austin. He said the company is seeking about 50 more employees across a variety of roles. Among the current job postings on the company’s website is for an Austin-based chief financial officer.
“I’ve run into the talent wars here in Austin, Texas,” Conlon said. “It’s very difficult to actually find people now. And it’s not just finding them, but retaining them is a big problem.”
The company has 250 employees total, close to half of whom are based in Austin. He predicted Overhaul would become profitable sometime early next year, adding that his primary goal at present is to build a sustainable business that's not overly reliant on outside capital.
Conlon told ABJ in June — when the startup announced its $35 million series B round — that Overhaul was growing revenue by 150% to 200% year-over-year. At the same time, he noted an initial public offering was "certainly something that could be in our future."
Competitors include Chicago-based Project44, which in September acquired Austin-based last-mile delivery logistics startup Convey Inc. for $255 million. In January, Project44 announced a $420 million funding round led by Thoma Bravo, TPG and Goldman Sachs. The company said it was valued at $2.2 billion prior to the funding deal, and announced it was generating more than $100 million in annual recurring revenue.
Conlon believes there is plenty of room for both companies to grow in the industry.
“It’s one of the few marketplaces that is measured in the trillions,” Conlon said. “Supply chain, just in North American and Canada, I think it’s like $2.7 trillion.”
Supply chain predictions
Persisting global supply chain issues and materials shortages have cast extra attention on companies trying to wring more efficiency out of transportation and distribution. In addition Overhaul, other Austin companies operating in the space include Shipwell, ShipStation and uShip. Conlon expects the supply chain crunch, which he described as “one of these kind of perfect storms,” to continue throughout 2022.
“It’s not a quick fix,” Conlon said. “People are talking about automation and driverless trucks. ... I laugh when I hear that.”
The Overhaul CEO said much of the logistics and shipping industries remain paper-based, including the bill of lading — industry parlance for a receipt for freight services. That would have to be digitized before trucking could be automated, he noted.
“Even if you’re a tech-savvy company like Amazon, they’re still using paper BOL,” Conlon said. “People have to kind of ground themselves in what really looks good on a white paper, versus what actually is going to work out there.”
That digitization is happening, Conlon said, but it won't occur overnight. Yet supply chain technology has gone from something considered “very uncool,” to being “all people are talking about right now,” he said.
Underlying issues in global supply chains were bubbling up well before the Covid-19 pandemic. Conlon cited poor treatment of big rig drivers, an aging workforce and an unfriendly environment for female drivers among the factors contributing to the present workforce crunch.
The American Trucking Associations estimated in October that just 7% of all truck drivers were women. The ATA study predicted the nationwide driver shortage was on the cusp of surpassing 80,000, and that the industry will need to recruit almost 1 million new drivers over the next decade in order to account for growth and replace existing drivers who depart due to retirement or other factors.
“Treating a driver with respect and paying them a living wage was something that, you know, we had to get to a crisis before it was addressed,” Conlon said. “And it's quite a good environment right now for a driver from a pay standpoint, because they could demand more because of the crisis. But it really was too late.”
He recommended paying a higher rate per mile — with payment in advance, in most cases — in order to draw more drivers to the industry.
“They’re hearing from everyone, ‘We’re going to automate your job.’ It’s not a good message to be sending,” Conlon said. “It’s not true, because the technology is not going to be ready to do anything like that.”
