In this story, we learn from Truck Lagbe founder and CEO Anayet Rashid how Truck Lagbe came into being and how the company has evolved into what it is today. This is an excerpt from our interview with Mr. Rashid published in 2018. You may read the full interview here.
How Truck Lagbe came into being
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 that 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 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.
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 answered. 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.
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 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 on-board. 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.
In our first month, we were able to facilitate 30 shipments. Then, we started to experience rapid growth. Today, we have around 8,000 vehicles across the country in our network.
Read more: This is an excerpt from our interview with Truck Lagbe Founder and CEO, Anayet Rashid. To know the rest of Truck Lagbe story and how it has come to where it is today, you could read our in-depth coverage of Truck Lagbe here.