Today’s Q&A Wednesday is with Mickey Millsap, Co-Founder and Director of uShip, Inc., the first and largest online marketplace for shipping services. The company has received venture financing from DAG Ventures and Benchmark Capital.
 
Give us the elevator pitch for uShip, Inc. for those that might not be familiar with the company?
uShip is the first and largest online marketplace for shipping and moving services. uShip members list anything they need shipped in a variety of categories, including household goods, motorcycles, boats, freight, and vehicles. Once listed in the marketplace, these members receive bids from over 70,000 feedback-rated movers, carriers, transporters, van lines, freight brokers and other specialty service providers. On any given day, uShip has thousands of shipments representing millions of dollars in business. Our reverse auction style marketplace dramatically reduces the cost of shipping, sometimes as much as 80% compared to traditional shipping companies, by allowing service providers to find shipments along their routes to fill their empty cargo space. For consumers and businesses that require shipping services, uShip reduces search costs by having service providers come to you to bid on your business. uShip’s feedback system holds service providers accountable and allows members to make more informed decisions when selecting a transportation provider.

How did the idea behind uShip first come about?
Matt Chasen, our CEO and one of the co-founders, got a call from his mother who was trying to ship an old family heirloom dresser from Ohio to her home in Houston. After several frustrating calls to UPS, FedEx, and large moving companies, she called Matt frustrated by three things: 1) The exceptionally high cost to ship a single item; 2) How difficult it was to find someone who was willing to ship an individual item; and 3) Finding someone who could do it in a reasonable timeframe. Matt figured there had to be a better way, did some research, and ended up with the same frustrations as his mother.
It wasn’t until Matt rented a uHaul for a cross-country move that the idea came together. After packing the uHaul, he realized it wasn’t more than 1/3 full. As he was driving down the interstate, he started counting the trucks going up and down the highway – he wondered how many were partially empty like his. He realized that if there were trucks running at less than full capacity, and there were consumers who needed to ship goods, there had to be a market – the problem is that none existed. He used the rest of the trip to bounce ideas off of his then fiancé, and came up with an eBay-like model for shipping services. Consumers could list their furniture or other large items, and service providers with excess capacity could search for these items along their route to more efficiently fill their truck. If there was no market, why not create one?

Who were the founding team members?
uShip has a unique founding team in that none of us comes from an internet or traditional shipping background. This allowed us to think about the problem without any preconceived notions of how things were done in the transportation industry. We were able to be innovative, because we weren’t constrained by old industry practices.
Matthew Chasen, CEO
Jay Manickam, Director of Strategy Reporting and Analysis
Mickey Millsap, Director of Community, Trust & Safety

What milestones or key moments have you had when you all said to yourselves, "We’ve really got something here!"?
uShip’s first transaction was a very important event. Not just because your first dollar is an historical milestone, but because it dramatically changed the nature of the business opportunity.
The site had only been live a couple of weeks and had maybe 10-20 shipments listed. Keep in mind that these shipments were dispersed all over the country, so it was not exactly a liquid marketplace. During a one week break in our final MBA semester, the team went to Houston and set up appointments to pitch the site to various moving companies. One of our first meetings was with A. Allen Movers – they are a medium-sized family owned moving company that did mostly local moves, but also took a monthly trip up and down the east coast for longer distance moves. Their problem was finding loads to fill their return trip, or backhaul, to Houston. We sat down with them, showed them the site, which in those days moved at a snail’s pace, and they actually found a load from Houston to the Poconos – it was 2 dressers, a bed and an armoire. They ended up accepting the price, and we had our first match.
There were two very important lessons from this transaction. First was the match price of $900. In our original business model, we projected average shipping prices of around $60-80. The realization that average shipping prices were going to be much greater allowed us to completely re-work the business model – needless to say, the opportunity looked much bigger and had us much more excited. The second important lesson was confirmation of the excess capacity issue and the need for a marketplace that would benefit consumers and transportation providers. A. Allen Moving became the model for our early marketing efforts to service providers. They were big enough to make national runs, but not big enough to market nationally. uShip, in a sense, became their virtual van line.

What challenges have you faced and how did you overcome those obstacles?
One of the biggest challenges was raising money as an internet company in 2004. The internet wasn’t experiencing the funding boom that it is today, and things were even worse in Austin where very few internet deals were even getting looked at. The funding process is a rollercoaster of emotions – one day you are fired up that you got a meeting, the next day you are down again because you heard ‘no’ for the umpteenth time.
There are a lot of days you want to shut it down and go get a ‘real’ job. What helped us was our team – Matt, Jay and I all believed passionately in what we were doing and about the potential of the business. When you have three guys, you can serve as a kind of mutual support group to keep the positive vibes going. We also learned how to stop taking the ‘no’s’ personally and instead turn them into a motivator. It’s kind of like the NFL draft pick that falls further than he expected. He makes it his goal to prove to all those other teams that they made a mistake by passing on him. I think we started to feel the same way. We were determined to prove all those people wrong and make them wish they hadn’t said no!

Who would you consider your competitors?
There are two ways we look at competition. First, are there any other online marketplaces for shipping services? The direct answer is no, there aren’t. Over the last couple of years, we have seen companies attempt similar ideas, but none have gained significant traction. In the traditional truckload freight space, there are several monthly subscription load boards, but they don’t really compete head-to-head with uShip.
You could also look at competition in terms of anyone who can provide shipping services. This could include freight companies, freight brokers, moving companies, etc… The difficulty in calling these entities competition is that they are also our members. uShip itself is not a transportation company, rather, it is a platform where any company that can provide transportation services can come to bid on, and win, business. Our job is to get them to understand that uShip exists to help them expand and grow their business.

What kind of capital have you raised so far?
When we launched, we looked at various financing options like angel funding or even a friends and family round. I think business school provided one too many horror stories about taking venture capital. However, in 2004/2005 when we were raising money, most of the angel or intermediate funding had dried up. At about the same time, we realized this opportunity was much bigger and we really needed the amount of capital that only a venture firm could provide.
To date, we have raised two rounds of funding in June 2005 and September 2006. We are fortunate to have great partners in Benchmark Capital (A & B round) and DAG Ventures (B round). Contrary to all the horror stories, our experience couldn’t be more positive. From the beginning, it has always been about working together to build the best possible company.

Tell us a little about the role Moot Corp. played in the success of the Company.
MOOT Corp was an incredibly valuable experience. MOOT Corp, and really all the other business plan competitions we participated in, allowed us to flesh out the business plan and test our pitch before having to go and do it in front of real investors. Most entrepreneurs have to adjust their pitch as they go, keeping what works and changing what doesn’t. By the time we were out there raising money, we had pitched the idea at least 50 times. Throw in the incredibly constructive feedback you receive along the way, and it really helps you focus on what issues investors are going to have, and how you can overcome their concerns.

What can we expect to see next in the future from uShip?
Hopefully you will see uShip continue to grow and become one of the next great internet companies. I am confident that if we maintain our focus, and continue to hire great people, that this will happen in the not too distant future!