Recently, Latka sat down with Craig Fuller, Chief Executive Officer and Founder of FreightWaves. Founded in 2016, FreightWaves is the leading provider of data and analytics for the global logistics industry. FreightWaves provides the fastest view of transportation and logistics market activity, across all modes. The company is also the number one source for media and market analytics in the global freight industry.
- $15M in ad revenue in 2021 from the media side of the business
- $30M in total revenue with no money spent on customer acquisition cost (CAC)
- 200 employees across two sides of a business
FreightWaves has a unique split of the company between their media business and their SaaS business that is sold to others in the industry, providing real-time, fundamental data to help them manage their business. Craig discusses this business split and gives details about FreightWaves’ incredible growth and revenue achievements.
$15M in Ad Revenue This Year
FreightWaves is unlike any other SaaS company in the global logistics space. Craig and the FreightWaves team have set out to become the Bloomberg for tracking physical objects. They are focused on the intersection of products through the global economy and have a media business to bring context to the global economy.
Back in 2017, Craig started looking for writers or companies to help them create content. After being turned down and having orders go unanswered, the final straw occurred when a PR firm quoted Craig $40k per month for their services. Rather than go down that route and spend enormous amounts of money on outside help from third parties, he hired an internal journalist to create the content FreightWaves needed.
After hiring their first journalist, Craig realized there was a large gap of information available in the market. FreightWaves decided to double-down on their media side of the business, and it enabled them to in turn scale up the SaaS side of the business. Today, 40 journalists work for FreightWaves generating $15m in ad revenue this year.
Managing 200 Employees and 2 Sides of a Business
FreightWaves currently employs 200 people in the full company. 100 employees work on the media side of the business, 100 on the SaaS side, with about 70 of those total employees doing work for both.
Craig set out to build a software business, but over time realized that in order to build a software company that brings something new to the category, you need to have someone to market the product. With the PR firm’s offer not holding up, Craig then created the media half of the business and restructured the company to meet the new growth goals.
$30M in Total Revenue with “Negative CAC”
The SaaS side of the business provides data and fundamental information to companies. The media side provides context and additional knowledge to support the SaaS part of the company.
Today, FreightWaves has around 700 enterprise customers with an average contract size of $25k. They are also adding around 20-30 new enterprise-level customers per month. Around 80% of their customers are inbound clients from the media business.
Most SaaS companies start their customer acquisition with Google Adwords and business development teams to help them bring in leads. FreightWaves went about their process differently. They started with the content and media team and eventually started to add pay-per-click advertising only in the last few months. Most new business comes in through the media team.
Even when a business development team reaches out to companies, the value put in place by the media side of the business is clear, as the target businesses are already familiar with FreightWaves from the articles and publications they’ve put out. The sales cycle is about 52 days from the first contact to closing, but everyone at some point is in the funnel.
FreightWaves currently has what they call “Negative CAC.” The margins they generate from the media business offset the customer acquisition cost from the SaaS business. This allows the company to keep all their capital tied up into R&D and the product rather than direct customer acquisition.
The Journey From $1M in Revenue in 2017 to $30M in 2021
Since the company’s founding in 2016, there has been an interesting trajectory of revenue from both sides of the business. In the beginning, most revenues came in from the media side of the business. The media side is easier to monetize. As there was a gap of information in the market, it took off fast in the beginning years.
SaaS is a slower engine to get started, but once it starts going, it provides a much more dependable source of revenue without needing to put as much into it. If you want to build an enduring SaaS company, you have to figure out how to get customers cheaply. By getting customers for free, you win. If you build a media business that makes $15m in revenue that also brings you leads, you really win.
Another source of revenue from the business in the past has been in-person events. In 2019, over half of the revenue for the company, around $5.5M, came from events, compared to none in 2020 and 2021. Even after losing that half of incoming revenue, FreightWaves still managed to triple the size of the company—an amazing achievement.
The media and advertising side of the business provided the key to growth during COVID. While many companies in the industry lost the potential to gain customers through events, they still had marketing budgets that they could put into digital advertising. With FreightWaves’ established media platform, they could collect enough in ad revenue to more than make up for the loss of event earnings.
$92M in Total Capital Raised with $44M in Equity
FreightWaves has raised around $92M in total capital since 2016, with about $44M of that being equity. Craig is the sole founder of the company and still owns 10-20% of the business today. For a clear breakdown of FreightWaves’ revenue and valuation, let’s break it down by year:
- 2016: Sold 25% of the business for $2m in debt. Investor got $2m+ back and kept 25%.
- 2017: $1m in total revenue
- 2018: $13m Series A at $42m valuation
- 2019: $21m Series B at $92m valuation, a 10x multiple. Made $5.2m in event revenue, $9m in total revenue
- 2020: $6.5m in SaaS ARR, and $7m in media revenue.
- 2021: $16m Series C at $300m valuation, another 10x multiple, and $30m in total revenue split 50/50 between the SaaS side of the businesses and the media side
Craig has focused on structuring his deals around raising capital that can be saved aside but isn’t pulled down into a balance sheet until necessary. That ensures that additional capital raised that is relatively undiluted can be saved until needed for growth or acquisitions.
Speaking of acquisitions, FreightWaves has acquired four companies so far. They take a cautious approach to acquisitions to ensure that the businesses they acquire won’t disrupt the valuation of the company.
$26M In The Bank Today
Craig Fuller is very capital efficient. There are no current plans to raise additional capital. The media business lowers the customer acquisition cost to the point that the business can scale indefinitely without the need for additional raised capital.
Prior to founding FreightWaves, Fuller was the founder and CEO of TransCard, a fleet payment processor that was sold to US Bank. He has also been deeply involved in the freight industry, having founded and managed the largest provider of on-demand trucking services in North America, the Xpress Direct division of US Xpress Enterprises.
With a real media moat around the business, the question is “if”, not “when”, will FreightWaves break $100m in revenue.
Latka estimates early 2024.
