He Sold A Company to IBM And Has Now Raised $200 Million To Build A Freight Shipping Marketplace And Platform

In the ever-evolving landscape of entrepreneurship, few have experienced the full spectrum of highs and lows like Zvi Schreiber. His journey from software engineer to successful serial founder offers invaluable insights into the trials and triumphs of building and scaling companies.

In this exclusive interview, Zvi talks about his experiences selling a company to IBM, taking another company public, and fundraising. He has had a series of successful acquisitions and fire sales.

Zvi is now digitizing a massive, outdated, but crucial industry to bring it into the 21st century. His company, Freightos, is like Booking.com or Expedia but for international freight.

Listen to the full podcast episode and review the transcript here.

From Software Engineer to Serial Entrepreneur

Born in London, educated in Cambridge, and now splitting time between Jerusalem and Barcelona, Zvi embodies the quintessential modern entrepreneur. His story begins with a strong technical foundation.

He pursued a PhD in computer science while working as a software engineer, setting the stage for his entrepreneurial ventures. His first major foray into the startup world came during the dot-com bubble of the late 1990s.

Zvi’s company, Tradeum, operated in the B2B space even before the term “B2B” was coined, and he was at the heart of the tech frenzy in the Bay Area. “Back in 1999 and early 2000, the internet was new, and stock valuations were soaring uncontrollably. Tradeum was part of that wild ride,” Zvi recalls.

At the time, stocks went completely berserk. Startups were valued at tens of billions of dollars even though they weren’t earning any profit. and barely had any revenue.

Zvi sold Tradeum to VerticalNet, a company with a staggering $10B valuation at the time. However, the market crash shortly thereafter led to a dramatic drop in share value, a sobering lesson in the volatility of tech valuations.

Learning from the Dot-Com Crash

The bubble burst taught Zvi a critical lesson: if something seems too good to be true, it probably is. “The things that don’t look real aren’t real,” he reflects. This insight guided him through the tumultuous times that followed, including the early 2000s downturn.

As Zvi learned, if a startup isn’t doing particularly well and has an evaluation that doesn’t make sense, it probably won’t last. He went into the deal with his eyes open and knew that although they were selling the company for half a billion dollars, the paper was overhyped.

When things get overhyped, a correction is bound to follow. In the bubble, everyone was spending money on IT like there was no tomorrow, so companies were really investing. After the bubble burst, Zvi founded a startup called Unicorn. That was before Unicorn meant a billion-dollar startup.

Unicorn, which provided data management solutions for banks and insurance companies, faced challenges due to the conservative IT spending that followed the bubble burst of 2000. Despite significant deals with major enterprises like MetLife and Bank of America, Zvi’s team faced a tough market.

The acquisition by IBM, while successful, highlighted the contrasting dynamics of dealing with large enterprises and navigating a more risk-averse industry.

Buying from IBM was the conservative thing to do in those days, so customers who were reluctant to buy the Unicorn product from a startup were more comfortable buying it from IBM.

A Roller Coaster Ride with Ghost

Zvi’s next venture, Ghost, an acronym for global hosted operating system, aimed to capitalize on emerging web technologies by offering cloud storage solutions. However, being ahead of its time proved detrimental. “We were too early to market,” Zvi admits.

Their product was very similar to Dropbox and Box.net. However, the technology infrastructure of the time couldn’t support the cloud services that Ghost aimed to provide, leading to its eventual firesale. This experience underscored the importance of market timing in the startup world.

“Being too early can kill you just as much, if not more, than being too late,” Zvi notes. While companies like Google thrived despite entering a crowded market late, being too early often means facing a market that isn’t ready for your innovation.

Zvi stresses honesty and explicitly warning his investors that they risk losing their money, which is why he maintains a great relationship with them. Two years later, Ghost might have been a huge success and worth billions of dollars.

The internet was not very fast at the time. When users bought a broadband connection, the typical ‘broadband” home connection speed was just 256 kilobits per second, a quarter of one megabit, compared to today’s 100 megabits and 500 megabits.

Embracing the Hardware World

After Ghost, Zvi shifted gears to work in the hardware industry with Lightech, where he learned the intricacies of managing inventory and supply chains. His role as CEO, although not a founder’s role, allowed him to leverage his experience and eventually sell the company to GE Lighting in 2011.

Zvi recalls being involved in the company for a long time. His dad was an investor, and Zvi had been an active director on the board of directors. He was also involved in the original investment and felt some of the same ownership that you feel when you’re the founder.

The Birth of Freightos

Zvi talks about how he was adept at the ideation process, having built a couple of companies successfully. He understood what it took to take a company from point A to point C. During his time at Lightech, Zvi identified a significant gap in the international freight industry.

They handled international shipping and manufactured electronic power supplies for LED lights, which was great because the market for LED lights was growing fast.

Like most electronics, the company manufactures in the south of China and ships by ocean and air from the Shenzhen area to the US and Europe, where its customers are located.

Despite the immense scale and importance of global shipping, the industry remained outdated and opaque. When Zvi started to search, he couldn’t find a single website that offered information about options to book shipping a container or air cargo, complete with the pricing.

There were no websites where customers wanting to book shipping could check all the prices. They would have to call freight forwarder companies, which is a huge industry.

Considering that 90% of the products sold in America and Europe are imported, international shipping is a huge part of the world economy.

However, connecting with 100,000 freight forwarding companies was very challenging because they could only be contacted by phone. Next, customers would have to wait for two to three days for a price quote. Also, invoices did not match the price quote because of the hidden fees.

Recognizing this, Zvi founded Freightos, envisioning it as a digital transformation for freight akin to what Booking.com and Expedia did for travel. “Freightos is like Booking.com or Expedia for international freight,” Zvi explains. “We’re digitizing a massive, outdated industry.”

His platform aims to make international shipping transparent and automated, much like passenger travel has become.

Freightos Business Models

As Zvi explains, Freightos has two business models. It is primarily a platform or a marketplace that matches buyers and sellers of freight services, so part of its platform revenue is transactional. Since it is a public company, it reports platform and solutions revenues separately.

The majority of Freightos’ revenue is from subscription-based solutions. These include primarily SaaS and software-as-a-service subscriptions, as well as data subscriptions.

The platform sells some of the best data in the world, like the FBX index, which measures the current price of shipping a container, or FAX, which measures the current price of shipping kilograms by air.

That data and related data are published on Freightos Terminal, so essentially, it is a transactional platform that also offers solutions split into SaaS and data subscriptions.

The Road to Going Public

Raising funds for Freightos presented its own set of challenges. Despite being a seasoned entrepreneur, Zvi found that investors were initially hesitant to back logistics and supply chain innovations.

“VCs didn’t see supply chains as an interesting area initially,” he reveals. But relationships and a track record helped us secure funding.” Zvi successfully raised a total of $200M for the company from venture capitalists FedEx and SGX, the Singapore Stock Exchange.

Freightos went public via a SPAC in January of the previous year, raising $80M from long-term investors. While the stock hasn’t performed as hoped, Zvi views the IPO primarily as a means to raise capital rather than an exit strategy, and as such, it was successful.

As Zvi explains, he and his investors haven’t sold any shares. His focus remains on executing the vision of transforming global shipping. Freightos was at the end of the whole wave of SPACs and was one of the last SPACs to get out.

Choosing the Right Investors

Zvi emphasizes the importance of aligning with investors who understand and support the long-term nature of the business. “Choose investors who are in it for the long haul,” he advises. “You need investors who are patient and aligned with the type of business you’re building.”

While value-added investors with connections and insights are beneficial, that consideration is secondary to having supportive partners.

As Zvi explains, they were building a business that modernized and digitalized a very large, very conservative industry. It was always clear that it was going to take time.

Zvi has been fortunate to attract investors who do not press him to help them exit and who are still supporting him in making the right long-term decisions.

Storytelling is everything that Zvi Schreiber was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.

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Looking Ahead

The vision for Freightos is clear: to make global shipping as transparent, automated, and efficient as passenger travel.

Significant progress has already been made, particularly in air cargo, which represented billions of dollars worth of goods that were transported by air cargo that was booked fully digitally last year. Zvi is optimistic about the future.

“We’re starting to see digital transformation in shipping. It’s improving world trade, which is crucial for employment, lifestyle, and even world peace,” he asserts. Freightos brings the same experience for the shipping of goods, similar to passenger travel, where things are very transparent and very online.

As Zvi sees it, even though there are some horrible exceptions, it’s still true that as countries open their borders and trade with each other, it contributes to world peace.

Zvi advises young entrepreneurs to surround themselves with smart, engaged, loyal people. He also stresses the importance of treating investors as part of the extended team. He would suggest finding good investors that align with their vision and time scale.

Zvi says, “Luck plays an important part. So, enjoy the ride and celebrate the wins and don’t beat yourself up about the losses.”

In Conclusion

Zvi Schreiber’s journey through the highs and lows of entrepreneurship offers a compelling narrative of resilience and vision. From navigating the dot-com bubble to pioneering digital solutions in international freight, Zvi’s experiences highlight the critical lessons of timing, investor alignment, and the importance of seeing opportunities where others might not.

As Freightos continues to innovate and expand, Zvi’s story serves as an inspiring testament to the power of entrepreneurial perseverance and strategic foresight.

Listen to the full podcast episode to know more, including:

• Overhyped valuations can lead to dramatic crashes, so approach deals with a critical eye.
• Being too early to market can be as detrimental as being too late, as infrastructure and consumer readiness are crucial.
• Opt for investors who share your business’s long-term vision and are supportive of the timeline for success.
• Digitizing traditional industries, like freight forwarding, can transform outdated practices and create new efficiencies.
• Successes and failures alike offer valuable lessons that contribute to future ventures.
• Building and maintaining a loyal, skilled team is essential for long-term success.
• While immediate results are important, the aim is to have a lasting impact and improve the global landscape, such as by enhancing world trade.

 

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For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here). 

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.