Truck Lagbe Founder and CEO Anayet Rashid on the early days of Truck Lagbe, how it has evolved and grown from a mere idea to a team of over 25 people and 150 agents in a span of a year, how Truck Lagbe is using technology to change an age-old complex transportation industry, how Truck Lagbe works, its business model, challenges of Truck Lagbe, its business today and ambition going forward, the hard work and intricacies of scaling a business, the most critical aspects of transportation business, how Truck Lagbe operates as an organization and why having a good idea is a rather inconsequential part of building a company and why execution is what makes all the difference.
Future Startup
Thank you for doing this interview with us. Please tell us about your background and your journey to what you are doing today.
Anayet Rashid
I was born in Dhaka as the second child of my parents. Many of my family members including my father and my uncles have been businessmen for a long time. I initially joined the same school my brother used to go to. I continued there until standard five and then moved to a different school. In fact, I studied at eight different schools in total throughout my childhood. Eventually, I ended up in Shaheen School and College in Dhaka from where I completed both my secondary and higher secondary education.
After HSC, I first got into the Independent University of Bangladesh where I stayed for one semester. Then I transferred to North South University. I graduated from there in 2007. Actually, I was supposed to graduate in 2004. But, by the end of 2003, when I was in my senior year and had only one semester left, I got involved in business and left university without completing my degree. I later went back to the university again in 2007 and completed the rest of my undergraduate program.
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Since then, I have been associated with several business ventures including shoe manufacturing and spice supplying.
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Future Startup
That’s an interesting story. So, it is safe to say that business is in your DNA. How did you come to start Truck Lagbe? How did you come up with the idea? What was the motivation behind starting it?
Anayet Rashid
The idea came from a personal experience where we had to deal with truck transportation in one of our other businesses. My co-founder, and my childhood friend, Mir Hossain Ekram, and I regularly discuss what new things we could try. We do this a lot. We have come up with tons of ideas in the last 10 years or so. For instance, we once thought about opening a grocery shop where people could order products over the phone. It was around 2005 when the internet was yet to become a commonplace thing which it is today. Then, there was this one time when we tried to get into the business of selling automobile components and parts. We went quite far with that plan but had to abandon it at one point due to some issues prevalent in that particular line of business. So talking about business ideas is a regular exercise we do.
One day I was looking into the distribution costs of my existing FMCG Company. Our business is wholesale in nature and it involves a lot of heavy transportation, sending products to many different destinations separately. I saw that although my product cost was the same for every unit, the distribution costs varied for change in geographical location. We started to pay attention to the matter when we found out that distribution costs varied with the product value by a maximum of 5%.
Naturally, I first looked for any loophole in the process. While looking for loopholes, a particular incident caught my attention - a one-time transportation to Jessore. There was this one time we sent products on a truck to Jessore. The transportation cost was around Tk. 35,000. We shipped another batch of the same product the following week and it cost us only Tk. 8,000. The destination was the same, only we used a different truck. That was a revelation for us. We were a little surprised to see the difference in cost and that too, to the same destination within a distance of a week.
When I dug deep into the matter and examined the relevant documents, I saw that the transportation cost is extremely volatile in nature. The reason, our distribution manager said, is a mismatch in supply and demand and a lack of proper coordination in the process.
What happened in that particular case of ours was that in the former instance, when we ended up paying extra for a truck, we hired a third-party truck which wasn't originally from Jessore. So it went to Jessore and estimated that it would not get any deal on its way back from Jessore and they wanted to cover both costs from one trip. That's why the cost went so high. In the latter case, the truck was originally from Jessore and they were on their way back to Jessore when they took our deal from Dhaka and it was sort of an extra deal for them and they could afford it at Tk. 8,000. The issue here is that when a truck travels from its place of origin to other destinations, it usually doesn’t expect/get any deal while returning to its original destination once the transportation is done and that it would return with an empty cargo. And when they get a deal on their way back, they agree to any deal they get. Because they consider it as an extra because they would have returned anyway. This was a classic case of inefficiency. On the one hand, shippers were paying more for reasons they can't control and truck owners were earning less and in between, there was this huge unused capacity.
We have a few of our own vehicles on the road. And the case was the same with them too. That was such a waste and, at the same time, a huge opportunity. The idea struck me right at that moment. I thought if we could ensure a better coordination and better matching using technology this could solve a huge problem and improve the efficiency of an industry which we often overlook due to its difficult nature. That’s when I thought that there is something going on here.
Future Startup
What happened after that?
Anayet Rashid
Naturally, I needed to share it with Ekram first. We are the harshest critics of each other. Whenever one of us tries to do something new, the other helps him to find out the pitfalls in the plan by offering constructive criticism. So, I called him up that night and told him to convince me not to do it.
Initially, he was asking questions and I was answering. After some time it was the other way round. We talked all night that day and assessed the idea from every possible angle. We finally decided to visit a few places like Comilla and Tejgaon to study the market situation.
We spoke to as many people as we could—intermediaries—who book trucks for us, approached the transport agencies and sat down with truck owners. We got a huge response from the owners. They said that everyone would come running to use our service should we decide to proceed with the idea.
Now we needed to make our plans. For that, we continued our discussions with different stakeholders. As a matter of fact, when people look at our company from outside, they think that Truck Lagbe is basically Uber for trucks. While it has some truth to it at a basic level, our service is very different and way more complex than that. For Uber, it is only about the passenger/driver; a rider sends a request and a driver picks her/him up. So, there are two factors: your readiness to commute and an available driver around your location. In the case of the truck, it's a much more complex scenario. Both the truck and the product must be ready to go. Moreover, the price should match the expectations of the parties involved. Now that's a tough game. The price goes up and down and is influenced by a lot of factors, such as the traffic situation. It requires greater supervision when you are sending goods and people should be available to supervise the loading and unloading of the products. It's, you see, a lengthy equation where you need to satisfy all the components to get your products where you want them to be.
Future Startup
That’s a great approach to validating an idea. Now you have validated the idea, then how did you start the operation? What went into building the initial operation?
Anayet Rashid
After much thought and research, we couldn't find any reason for not doing it. So, we decided to go ahead with the plan. It was around December 2016.
Now, this is a technology product and we needed a tech lead to start building the product because neither my co-founder nor I have a sound programming knowledge. From January, the following year, we started looking for a tech expert. It's an interesting story about how we got our chief technology officer. Previously, I have hired tech experts to develop software for other business ventures. All of them charged 6-figure amounts. But when we interviewed our incumbent CTO, he proposed an unusual deal. He said that there was a way that we could make the software simple and build the back-end in a very cost-effective manner. We hired him.
Next, I called up a few of my friends and proposed them to join us. When they came to know the idea, they immediately came onboard. Altogether, we formally started our journey with seven shareholders and four people in the management in February 2017.
In May, while we were just setting up our new office, Sagar, our VP (Operation), informed us that the ICT ministry was organizing a competition for startups where winners would be awarded a small grant. At first, we were reluctant to participate but Sagar insisted. As a result, we submitted our plan for the first phase of the competition at the eleventh hour. In the next stage, we had to give a presentation. The other contestants came with brilliant ideas. Compared to that, ours was a quite simple one. Luckily, our presentation went well and we could satisfy all the queries of the judging panel. 20 teams were announced as winners. To our surprise, we became the champion.
Winning that competition was a significant breakthrough for us. After that, we received huge media attention for which, by the way, we weren’t all that ready at that time. We were featured on national dailies and TV channels like The Daily Star, Prothom Alo, The New Age, and Maasranga TV. Because of the coverage, we started getting a lot of calls and emails from both drivers/owners and shippers. We quickly finished building our system and began our operation.
Future Startup
How are you doing business-wise? Could you please tell us more about your product and service?
Anayet Rashid
On our first month, we were able to facilitate 30 shipments. Then, we started to experience a rapid growth. Today, we have around 8,000 vehicles across the country in our network.
SMEs are our key target group. They suffer the worst kinds of troubles in this space. Transpiration is an immense headache for them. Usually, SME-owners transport their products through drivers they already know. But they may not always be available when you need them. Besides, SMEs generally do not have the capacity to build their in-house logistics service. But their business may very well suffer if s/he can't ensure dedicated transportation for products.
Let me tell you something interesting. Say, you want to send your products to Jessore. The usual rate there is around Tk. 8,000. That's when the truck you've availed is originally from Dhaka. But if you can avail a truck that's originally from Jessore, you can lower the rate to almost Tk. 4,500. This is where inefficiency for both the shipper and drivers/truck owners lies. This is what we are trying to solve and in the process of doing it we are making the lives of shippers easier and ensuring better business for the truck owners.
So, for SME manufacturers and retailers who have to send their products to Jessore today and to Sylhet tomorrow, Truck Lagbe is a life-saver. Not only you get the best rate, your products will be secured all the way to the destination as well.
We are coming up with new ideas to ensure better security. For example, we can streamline the process more by transferring the responsibility of overseeing and receiving the products to the receiver from the shipper. So, when Rahim from Jessore sends goods to Alamin in Barishal, the latter will have the full control and liability of the products once the truck has been loaded and headed out. Also, we are trying to ensure the verifiability of the relevant documents, such as the chalan.
We will gradually include these features into our service. And all of these can be done online very easily. But there is also a matter of consumer habit involved here as well. Customers try our service out a few times before they put trust in it. It's understandable since we are not accustomed to renting, say, a 40-feet long trailer truck by pushing some buttons on our phone, especially in case of the kinds of shippers and drivers/owners we deal with. It needs practice and it will take some time before going mainstream.
Besides the app, people can get our service via a hotline number too. We have made this arrangement considering people who don't need to transfer goods on a regular basis. As a result, if you want to use our service once, you can call us via the hotline instead of downloading the app and we will SMS you the details.
So far, we have 7,500 app users/shippers, among whom around 1,500 have used our service more than twice. The rest of the users have only used it once. They are mainly B2C customers. We are going to release a new version of our app, most probably by August this year. We hope it will be able to better serve the needs of our users.
Many large businesses, MNCs have also shown interest in our service. We are figuring out ways to collaborate with these businesses.
Earlier, we could not provide fixed rates for trucks. But as we have progressed and our knowledge of the market has broadened, we are now able to offer prices lower than the prevailing market rates. And we have been able to develop better pricing models.
On top of that, there are no middle-men in the process. So, we can tender lower rates to the customers, and ensure that the owners and drivers get what they deserve. That's why we call ourselves Truck Lagbe Network because we work as an aggregator platform where the drivers/owners and shippers can connect and do business swiftly.
Our vision is to become so vast a network that no matter how many trucks you need—be it a hundred or a thousand—you just make a request and our system will automatically connect you with them; and that, too, at the cheapest prices.
Another goal we work toward is to change the lives of our stakeholders. Shippers are always our priority, but we also want to help our drivers and owners. We want to make it as hassle-free for them as possible. A streamlined process can help them fully utilize their resource: no downtime, no hazards. An optimal situation for both shippers and drivers/owners which, in turn, will motivate the owners to lower their rates by growing their liquidity and uptime and earning more with a competitive rate. Over the past years, we have been able to meaningfully support owners and drivers by helping them find deals and improve efficiency. As we go, we believe we will get better at it.
At Truck Lagbe, we verify every vehicle that we make available to our users. In fact, we have records of the vehicle identification number (VIN) or chassis number for all trucks. Moreover, we attach GPS trackers on each one of them at our own expense. It's much safer than relying solely on the driver's words about the whereabouts of the products. Right now, it's completely free for our users. They just need to open the app and locate the truck.
Future Startup
How big is your team?
Anayet Rashid
Currently, we are a team of 25 people and we have a two-people team in Chittagong.
Apart from our team, we have over 150 partner-agents who work in the field and deal directly with shippers, and drivers and owners. For example, if one of our trucks breaks down en route to Chittagong from Mymensingh, our partner-agents provide immediate support. We just need to inform them and they will be on the spot in no time. Currently, our partner-agents are spread across 22 districts which we aim to increase to 62 by the end of this year.
Future Startup
What are the major challenges for Truck Lagbe? How do you deal with these challenges?
Anayet Rashid
Over the past year, we have learned a tremendous amount about the industry. For almost a year, we beta tested our service just to understand the market.
Until 2018, we have identified 9 categories of trucks and brought them into our service. Let me explain to you how fragmented this market is. 27 different types of trucks provide a total of 120 different types of services. Every truck serves different functions and to understand the mechanism, you need special expertise. For instance, we have solved the segments of 1-1.5-ton, inter- and intra-city, and enclosed- and open-cargo space truck. It appears to be in a single line but we have actually solved 6 different segments. But, even now, we haven't yet worked out the glass transportation and freezer issue for lightweight trucks.
Now, you may be able to faintly grasp the intricacies of the market. The ballgame of this business is that how fast and precisely someone can work out the segments. One medicine for every patient wouldn't work here. You can't offer the same service to everyone because everyone has different needs. And you can't fix a singular price because this is a market hanging constantly.
On the top of that, there are a lot of challenges that are unique to this sector. Most of the owners and drivers use feature phones and, hence, they are not app-friendly. The case is same with the shippers as well. As a result, it's a daunting job to motivate them to come into the service network.
As for us, we had anticipated these challenges beforehand. We knew that we need to make a lot of changes and fine-tune our operation as we go along. This business is like a jigsaw puzzle. You need to figure it out the segment by segment, and it does not happen overnight.
For now, we are trying to understand the market as best as we can. We are moving from segment to segment and figuring them out according to our priority. We predict that it will take us a period of three years to get a proper grip of the entire market and resolve all the concerning issues.
You will find many companies who offer bus, truck, ambulance, van, and all types of similar services. But for us, it's only truck. That is our only focus. We have consciously made this decision that we want to do this one thing and become the best at it.
Now, let me elaborate on a few issues that exist in the market. Extortion, for starters, is a long-prevailing problem in the transportation business. Truck drivers have to face this in all aspect of their job. And there are a number of parties involved in extortions: local goons to many others.
Furthermore, each region has different ways of booking trucks. The way you book trucks in Chittagong won't work in, say, Nougaon or Panchagarh. It's much more complicated when you go bazaar-wise. Two bazaars in the same city or town may have two completely different and unique ways of booking a truck. If you can't address these issues, your service won't be able to cater to all segments of the market`.
When you ship your products or valuable goods using truck, there are a lot of uncertainties. We try to mitigate these uncertainties. We ensure the safety of your package by taking several measures. Firstly, you can never get the driver's information from the open market. It's tough to identify who will be your courier and what his previous records are and so on.
At Truck Lagbe, we verify every vehicle that we make available to our users. In fact, we have records of the vehicle identification number (VIN) or chassis number for all trucks. Moreover, we attach GPS trackers on each one of them at our own expense. It's much safer than relying solely on the driver's words about the whereabouts of the products. Right now, it's completely free for our users. They just need to open the app and locate the truck.
We are not solving one single problem; we are dealing with a thousand problems. The users have a seamless experience on the one end of the process, and that's what we intend. On the other hand, each transaction is treated differently on the back-end.
Figuring out the segments is sort of a growth opportunity for us. Our model is somewhat like this: we identify a segment, understand its mechanism, determine how to best serve it to the customers, and move on to the next one.
Future Startup
What is your business model? So far I can understand, you make money out of commission, right? How does that work?
Anayet Rashid
We arrange trips for the owners of trucks and, in exchange, we charge a commission for our service. Commissions depend on a number of factors, such as—type of truck(s), nature and weight of products, etc. There is a minimum rate that owners need to pay which ranges from Tk. 100 to Tk. 500 per trip.
We struggled to generate revenue in the first seven months of our operation. In the first month, we could facilitate only one trip. However, we have come out of that situation and our revenue has been growing consistently. Now, we are arranging around 50 to 60 trips every day. Our ticket size ranges from three to four figures.
Our revenue is growing as the shippers are becoming more and more aware. And they are getting benefited by our service. For instance, we have recently facilitated a shipment from Chittagong port. In doing that, we realized that the C&F agent had something else planned and there were people who weren't happy with our involvement and attempted to sabotage the whole deal.
The best part was that we did it much more efficiently and our shipper could save at least Tk. 30,000 and a lot of time. His office is in Dhaka. He wanted to send his products to Chittagong. And at the time of the transaction, he was in another district. So, it turned out that he booked the trucks to pick up his package from Chittagong to send to a district other than where his office is. This wasn't possible beforehand. We are making it possible.
Future Startup
As you mentioned earlier, this is a complex industry with a lot of unique challenges and opportunities. You have been in operation for over a year now, what have you learned about the industry?
Anayet Rashid
Let me share some interesting facts that I have learned from working with people in this line of business.
First, both the driver and the owner of a truck serve different purposes in the process. The owner is in effect a businessman because he invests in the truck in order to earn profits. On the other hand, the driver negotiates and cuts deals with clients at distant locations.
Secondly, the truck is an essential part of our lives. This is something I have found pretty interesting. We often see things from a broad point of view but often things are not what they appear to be. There are intriguing stories behind everything that we take for granted. It's just that we don't see it that way. Take, for instance, each piece of furniture in this room carried by a truck at least once after its production. Going further, the materials that have been used to make them have also got on a truck at least once in their lives.
Most of the physical assets that we use usually travel through trucks. We just don't realize it. To us, a truck does not essentially carry a positive mental image. We see very little use of these vehicles in our daily lives. Despite this negative connotations, we have learned to respect the drivers and owners by closely working with them.
In reality, these people work in a very challenging environment. They stay away from their families for long periods in inhumane places. Their living condition is not much different than that of the migrant workers. This is actually why truck drivers and owners come across us as belligerent and inimical because life on the street makes them behave that way.
We want to change this situation. We want to change the way they do business, and establish driving or owning a truck as respectable jobs. And, lastly, we want to make their lives easy, comfortable, and enjoyable. As a happy mother makes for a happy child, we believe that a happy driver makes on-time deliveries possible.
We are very hopeful of the new version of our mobile app which is set to launch in August. We have tried to incorporate our learning from the last one year into this. We believe that it will make things much easier for both owners and shippers.
Our objective, as it has become clear now, is to improve the liquidity of each type of vehicle at every operating location.
Future Startup
How have you attracted the shippers(users)?
Anayet Rashid
We mainly concentrated on digital media. The first six to seven months we just informed people that a product like ours is in the market. We didn't go to full-fledged marketing at that time because we realized that it might create a problem if we fail to meet the shippers' demand since our capacity was limited at that time.
Also, you may have seen Truck Lagbe stickers on trucks. We do not put our stickers randomly. We only give stickers to trucks that are registered on our platform.
Initially, people were a little skeptic. We require a small amount of money as advance payment before someone use our service. That was a challenge at first. But when someone used our service more than once, their confusion was cleared up.
We got really positive feedback from digital media. Stickers also left a strong impression among our users. Word of mouth has worked pretty well for us. When a retailer or a non-business person was satisfied with our service, which is almost always, they recommended our service to others, which has been one of the most effective growth channels for us so far.
Let me give you an example of how providing quality service can boost your sales. Recently, we served a customer, a Bangladeshi expatriate, who bought some furniture from a web portal. But she was troubled at first as to how the furniture could be carried from the place of pickup to her residence. She then heard about our service from the seller and sought our help. That job was a piece of cake for us since it was inside Dhaka. We offered her labor services too as an extra prerequisite. As a result, she has become our regular user now.
The above was a B2C transaction. As for B2B deals, we have attracted businesses by reducing the hassle they had to take before for hiring trucks and offering them the cheapest rate in the market.
There are exceptions only in uncontrollable situations. Rates in this market change wildly. For example, if you hire small-size trucks at daybreak or at dusk, you'll get amazing rates; the rates are higher at the interval. Low rates prevail in the early hours because there is less traffic on the highways; and, in the evening, because that's the last opportunity for drivers to make one last trip for the day.
We employ probability to estimate the likelihood of finding a given type of truck at a given location. In Dhaka, you will get a small-size truck whenever you make a request. It's same in Chittagong and Sylhet. But in Gaibandha, we can give you only 15% assurance of providing that type of vehicle on demand. Then again, large-size trucks have 85% availability if you want one there at Gaibandha.
Our objective, as it has become clear now, is to increase the liquidity of each type of vehicle at every operating location. According to last year statistics, there are 276,000 registered trucks in Bangladesh. We plan to bring at least 50,000 of them into our network within the next three years. It will help us provide the desired type of trucks to our clients anywhere in the country.
The perception that idea is the only thing you need is not very useful. A moderately good idea would do if you could execute well. Ideas are important but the idea alone is not enough. In fact, there are many good ideas in the startup cemetery. It is how good your execution is. What you must need to do is: work hard, build a great team, and be patient.
Future Startup
Have you raised any investment?
Anayet Rashid
We have so far bootstrapped the business ourselves. We received a small funding from the ICT ministry when we won that competition, the ICT Innovation Challenge 2017.
We have been in talks with a few investors as well. We are in this business not for making money alone, we want to make a difference. While raising money, we want to have people who are aligned with our vision.
At Truck Lagbe, we do not linger over short-term benefits; we think long-term. We need to build up the infrastructure and the network from scratch. In fact, a similar service in China kept their platform free for nine years. We also want to eliminate the compulsory commission and make our service free. But we need investment for that, from people who share the same vision. We are working on that. Hopefully, we will get somewhere soon iA.
Future Startup
What are some lessons you’ve learned?
Anayet Rashid
The perception that idea is the only thing you need is not very useful. A moderately good idea would do if you could execute well. Ideas are important but the idea alone is not enough. In fact, there are many good ideas in the startup cemetery. It is how good your execution is.
What you must need to do is: work hard, build a great team, and be patient.
It's also important to keep your finance straight. You should know where the money is coming from and where the outlays are. It's better if you can lay out your financial plan beforehand. Often, founders ignore this part of the business because it often seems difficult and not so fun but if you are not good with your money, your business will go bust sooner or later. In an early stage company, money is time and it is important that you be mindful of it from the beginning.
