Disrupting the Shipping Industry with James Kellett

I broke the Y-combinator guidance very early and hired a brilliant, very experienced salesperson former SAP. I sat on every demo in the early days and all the client support calls, but I viewed that cold calling and cold emailing wouldn't actually teach me much about my market and would stress me out. Does it really take to build something extra ordinary, from zero to traction, to scale, to legacy? Welcome to Burnwright, where I sit down with people who are done it and are still doing it. Let's dive in. Hello and welcome to the first episode of The Burnwright. Today we're having the amazing James Kelly. Who is the co-founder and CEO of SpotShip? SpotShip is an amazing startup that is disrupting the shipping industry. Very few people think about going into the shipping industry. Let's alone disrupt it. But our founder today, our guest today, James Kelly, has done amazing things in this field and it's a pleasure to have you. Thank you for coming and the podcast James. How are you feeling today? Hi, David. Thank you so much for having me and it's a real honor to be here. Where I would say you're wrong is about people not disrupting the shipping industry. Definitely when I started that was the case and we had potential clients talking about not even using Excel, but using leatherbound notebooks that they take home at the end of the day. But that since the economic boom in the industry just after COVID and the Suez Canal crisis has actually changed completely. And recent I think at the end of 2023, early 24, described it as one of the hottest sectors for VC globally. And that's something we're definitely seeing. And that's something that's really important. I was actually dragged kicking and screaming into startup land by a much more impressive entrepreneur who now sits on my board, a friend called Herman Neurula who's the founder and CEO of Improbable. I think we're currently the only board he sits on outside of Improbable which was a great win to have late last year. But he was looking at launching a super secret project which actually is come full circle again now, even though it didn't really go very far. So he asked me if I'd be willing to launch a byout captive byout fund under Improbable's umbrella, even though I'd spent my whole career in public markets rather than private markets. And I think what I found when I got into Improbable was just the energy and the speed and the value being created in the tech world. What I didn't like with Improbable is the tech was really, really hard. Sort of Nobel Prize winning staff, most of their highs on the tech side were former deep mind people and I'm not a technical guy, I'm a commercial guy. So actually the value I could add there was pretty small and I got this feeling that it was great and improbable but I wanted that early stage feeling and also the ability to set my own course. So I quietly let it be known that I was looking to join something at day zero and I think people made the mistake of thinking because I was at improbable in a very senior position that I would come with the blessing of soft bank and instant billion dollar investments. I mean, that's just not true. I wish it was, but I had to think about 200 founders reach out to me with Dex saying, please come on board and join us with this. And the one I liked best was from a friend who I'd known for I think seven years at the time a guy called Henry Waterfield who we'd first met when he was serving in the army as a grenadier guard and he said, you will not believe how backwards the technology used in shipping is quite right. I didn't believe him to start. So we we went and staked out some ship brokers in pubs and we heard, you know, he said people using Excel sheets that they're filling out manually every week turned out that was actually kind of the cutting edge of the industry. So when I saw the gap between the tech that was being used and the state of the art, that was just so huge for me. I thought, you know, anyone could make this work. The difficult bit being like that change of behavior, getting the commercials right as opposed to the tech. So that was when I dived into this and I just thought there's an opportunity here. And early days, really the kind of pushback and the problem was why now the industry had done nothing for 20 plus years. Why would now be the time? And I made up an answer to that. We had a why now slide. But I've got it. It was weak because there was no why now. Thinking at my kind of experience as a value investor, one of the things that we always said, and I think it's probably flown through to the way I manage sports. It is no one person is that clever. Like you can't beat markets just by saying we have smarter people and they always said it, you know, when you're looking to buy something undervalued, if you can see the catalyst, if you can see a date where it's all going to change, you're going to make a lot of money, then everyone else can as well. And the opportunity is probably not there. And I think that gave me the courage with Spotship to know there was no why now, but the opportunity was huge. And then after that, we got lucky. I haven't been asked why now for two years, which is lovely. We just been that one of the interesting things I hear in VC circles is one of the interesting frameworks is that TMT. So it's the team, the market and the timing, right? And you really want to understand how this is going to be cutting engine in five years. But I mean, if anyone had a crystal ball to tell you what the timing is going to look like in a comment. You're going to be building an American. So I think that's one of the VC models that I've used just played wrong. And I mean, I am like, I've only done this one. So maybe, maybe I'm wrong. But in my experience, you know, and looking at the shakeout that's happening in AI around LLM's now, if you join a trend that's red hot, you're going to be competing with the best people in the world with loads of funding. Maybe maybe you'll win. But if there's thousands of companies being launched into your space, because it's so obvious, the time is now, you're probably already too late at that point. Whereas I actually think, and we're all creatures of our backgrounds, the time to jump in is when you see an enormous fundamental opportunity. And actually no reason why it should change now because we found ourselves when the market started booming in an environment where there were maybe two others who compete with us who started at a similar time. And shipping is one of the largest markets in the world. It's $250 billion spent annually moving commodities around on ships. And to find just two other companies, it's wild. And you know, I would do this again and again that I'd look for places where value could be created that everyone else says now is not the right time. And just hope that I was able to raise funding to stay alive long enough for the good luck to come around. So you talked about it, like it's few competition in the space, right? And there are lots of listeners are going to be listening to this. And you're going to ask what exactly is the shipping industry? So could you give us a simple or a short deep dive into shipping us a whole and then specifically ship brokerage, right? So that's what we started with. We're a bit broader than that now. But essentially in the world, there are two types of heavy cargo shipping. There's container lines and there's everything else, which I normally call commodity shipping. Container lines in the 2010s actually had a lot of startups. The maths is much easier because container lines have their schedules a few years in advance. So you can actually plan when you're going to load stuff on. It's really exposed to e-commerce. It was growing quickly. And also it was really start up friendly. So if you're looking at a container ship, you can start a business that tries to get one container on one ship. So what you're talking is, I think passage used to be about 10 grand would be maybe three or four grand to buy your container if you weren't going to lease it. And then you try and fill up the container with stuff. And that's where people like Flexport started. I mean, it was just not brilliant. Gorgeous way to do startup. If you look at commodity shipping, which people don't think about at all, not exposed to e-commerce, basically when we started, no venture type people. This is a heavy, dull, dirty, dangerous industry. We're moving stuff that people believe is polluting, but it is the raw materials that power everything. And what people don't really think about is it's actually about 20 times the size in terms of weight of stuff shipped or the containerized industry. So there's about 5,000 container ships, about 95,000 bulk ships. It's so much bigger. But the maths, as well as having that kind of scary, we're dealing with a $500 million ship containing maybe $2 billion of cargo, which believe me, people don't want to take a risk on two guys working in a garage on that type of stuff. It's partly why it took us a while to build up. You're also doing more complicated maths, because those ships are, they run like taxis. So it's almost like an Uber. You can charter a ship to take your commodity where you want it to go. Whereas the container lines are like trains, so the maths is much, much easier. So we're seeing the kind of container lines was a big thing in startups in the 2010s, and now the 2020s is the time for commodity shipping. That's really interesting. So when you talk about the part of a commodity versus the rest, which is like 20X of the rest, how does that work? How does that part play out? So we don't move stuff like that. Why don't we say call it commodity shipping. We're talking like five. 500,000 tons of iron or 100,000 barrels of oil. This is not stuff touched by anyone in the startup community. You're took the three kind of key players in the market. You have ship owners, it's simplification. I mean, you can call everyone in the market a charter of that just. So you have ship owners, the people who commercially control the ships. You have ship brokers who sit in the middle and it's almost the entire market is broken today. You have the commodity owners, so these are going to be commodities companies like BP, Anglo-American, and then you're also going to have the commodities traders, people like Glencore. And they are basically looking to move the commodities typically from where they come out of the ground, mine or an oil well, to where they can sell them for substantially more. So they are looking for them to make a profitable trade. The price that they can sell it for in a different country has to be higher than the price that they pay for the commodity or could sell it for on location at the mine plus the shipping cost. So the shipping cost, they're constantly trying to get the lowest possible shipping cost to get something where it needs to go. And typically the information flows from the ship owners will send out blast lists called position lists or position reports saying when and where the ships become available, those go to the ship brokers and then the ship brokers will get calls from the commodity owners. I'm looking for a ship to move a to be. And that's where sponsorship comes in on moving that process for about six person days to about 10 minutes. 10 minutes from six days. Amazing. 2020 was catastrophic. Generally speaking, for lots of industries, how did spot ship navigate that season when futures for I think Brent crude was trading out a negative, right? How did that play out for spot ship? It was actually 2020, 2021, 2022 were fabulous years for most of the commodity shipping market. I mean, that's I'm sorry, everyone else because prices were up. So it's what could be termed an anti fragile market. Almost anything goes wrong in the world, shipping prices go up. So if you look at the current, the who see crisis in Yemen, now vessels can't so easily sail through the Suez Canal. That means they have to go round the Cape. And that essentially adds, I think, roughly 15, 20 days of sailing. So structurally, the demand for total say days of sailing rises quite a bit. You know, let's call it 20, 30%. Globally, the supply, it takes about seven years to bring a new ship online. So the supply is very static. So you have this very steep demand curve and a static supply curve. So prices roughly across shipping markets, pre-COVID versus post-COVID went up about three times. And that's why we're now in such a great market for shipping technology, because the ship owners obviously are collecting their rents on their ships. As you said, oil prices were down. So fuel prices were also down, which is basically that the only cost except paying crew. So they were, it's typically a very bad business, owning ships. It's like 2% ROE, 2% profit margins, not good, because anyone can just buy a ship if you've got money. And some families in certain countries, particularly Greece, really price having ships. So there's an emotional aspect to it as well. And typically, the smart ship owners have made their money not through renting the vessels out, but through timing the market cycles of selling ships when they're expensive and buying ships when they're cheap. Suddenly, what happened when the prices went up 3%, sorry, triple, you saw instead of these companies making 2% net margins, they were making 70% net margins. And a lot of them were less than 35 years old. So they're making more in a year than in their entire history. So cash built up on balance sheets. The brokers as well, they're directly exposed to charter rates. So they made 1, 2.25% of any charter agreed. Amounts of charters are roughly constant year and year. So you know, they're making 3 times as much money. Suddenly everyone is flush with cash. And what a CEO should do in a bad industry when his balance sheet is suddenly flush with cash. And it back to shareholders. That's the right thing to do. I'm not saying CEOs are unethical. There is a principal agent dilemma there. Because if you do as a CEO, hand back almost your entire market cap as of two years ago to shareholders, you probably expect your comp. If you're not owning a lot of it yourself, you probably expect your comp to go down in the long term because you're running a smaller company. So you're looking, how can I keep cash on balance sheet? And shareholders aren't going to want you buying more ships because it's still a bad business. It was before you can't even do it that quickly. Luckily, some of the consultants, I think BCG, were particularly strong in it. Bain were pushing it as well. And McKinsey too, started suggesting to the ship owners it's time to invest in technology. And there wasn't much technology to invest in. And this suddenly was the CEO's way out of handing back a lot of capital to shareholders. And that triggered this gold rush that we're now seeing today. And while I say when we started, we had three competitors, you're now seeing 10 to 20 shipping software startups launch a year because the market's so hot. But it does, you know, it takes three years, four years to get these things to enterprise grade where you can actually sell it. So I would say they are that all too late. That's interesting. Just pick it back enough what you said. It takes about three to four years to get to enterprise grade. How did you at support ship hack product development? Because I learned about how you had to pay some guys to start the MVP for you. So could you walk us through that? How did you go about product development journey? Absolutely. Yeah. So it was, it was actually a fail at the start. I mean, I think people that back and say how brilliantly clever it was. But it was born of necessity that when Henry and I started off, we were not considered particularly fundable. Henry had had, I think, three months unpaid internship experience in a ship broker. That's where he had the idea. He'd then done some time in Amazon running logistics centers and his experience in the Army as a jungle warfare instructor. I mean, brilliantly capable guy, not a classic startup. For me, I'd done my eight years as a value investor in public markets, never really managed anybody except a few interns, no experience of shipping, then a little bit of time and strategy and improbable. So neither of us, I think, ticked the boxes that early stage VCs look for, which would be deep domain expertise. We definitely didn't have that. People could actually be able to build the product. We didn't have that or second time founders. So we were like a north for three. We were a proper loser team that nobody really wanted to speak to. We even went about things the old-fashioned way. And one of the company's kind of most precious artifacts. We went out to a printing shop and printed out our first deck, which I doubt I've made it as a consultant because my slides are horrible. They're really, we use the Grenadier Gods colors to try and channel in that brand, which was a burgundy and a silver, it's a hideous printed thing that we're running around London with. And I deployed NCAD as a backup plan at the time. And I ended up paying my first installment of fees for NCAD because it was just looking like it wasn't going to happen. And just before I went off to France, I think three days before, I know it was a week before, we had this idea, why don't we run a reversal auction? We were getting all this spam from dev shops, which I could talk about my relationship nowadays with dev shops a bit later. If you have a company, dev shops will spam. Generally, I don't think you should use them, but we decided how can we spin something useful from all this spam? And we ran a reversal auction saying instead of us paying you, why don't you bid on how much equity and debt, which we won't do personal guarantees for, you'll build this product for. And we had three bids within a week. One of them was really attractive. So 5% of the company and an 80K note that was rollable more or less indefinitely to get the what we thought was an MVP bill. We were able to use that to win money. Just to clarify, the 80K was to be given to US debt. So essentially, we agreed that we'd pay them 80K at some point. So at 5% equity and 80K for us to pay them some time in the future at an unspecified point, but it wasn't us promising. It was the entity spot chip, which at that point had nothing, it was worth nothing. So we basically got essentially a free option on this tech being valuable. We thought we negotiated an all-seeing, all-dancing MVP. Turns out we'd underestimated quite how complex this industry is. What was delivered to us kind of towards the end of my time at NCAD, which was good enough to use to win money at the venture competition, which is how we got our real start. That's the anti-adventure competition. Exactly. It wasn't an MVP. It was minimal, but it wasn't viable. And it was ugly. But it did work as a kind of thing that we could show investors and clients to generate a kind of interest in this. And off the back of that, we were able to raise our first tiny little round, about 200K. All angels except one very small VC called Loyal, who invests in NCAD businesses, basically. And we were able to use that to hire our own full-time developers and essentially through the MVP away and started from scratch on building something. That to cut a very long story short, I think the thing with Maritime, and I still have this conversation with the other Maritime CEOs today, is it's not about actually getting kind of MVP out there with this enterprise-grade staff. People don't want an MVP. It's not like if you're in San Francisco building tech for developers, the people are really excited to try something completely new and just have a play with it. People on Dix people would prefer the industry status it was. So you have to give something that works all the time and handles all the edge cases. So actually getting something live that in another industry people would say, "Oh, this is great, this is so exciting." You need to do that in maritime, but the value add is actually on two to three years of iteration thereafter. And I would say it took us, so first money in in 2020, I think it took us to late 2022 before we had clients really starting to stay with us. So it was at that point where I would say we really worried an MVP for maritime, but that was MVP plus two and a half years of iteration. There's something you said there, especially around trying to get an MVP, but it was minimal, not viable, but it was a product anyways. Let's take it back in 2019, right? When you start on up, sponsorship. If this were a pitch, how would you have pitched sponsorship to the investor? What was your elevator pitch? Now now you're challenging me to think back all that long ago. I think the key thing that we pushed was this was an industry where they were using very expensive labor for the first three to five years of a broker's career, typing in stuff off emails into a big excel sheet and then trying to use an excel sheet to optimize a decision on which vessel is best for a cargo. And we thought both of those things were done. The taking the data out of emails to some sort of SQL database, that should be done by an AI and the searching within that data for the optimal ship that needed a searwood algorithm to basically say which ship can be there with the least days of sailing. That shouldn't be a human being looking through a spreadsheet. I mean, some guys would even print it out and have a map of global searuits with a ruler and cross three ships that were underfit. This just seemed crazy and you know, it looked to us like the tech to bring this in the 25th was super simple. So huge time saving ability for those clients to win a lot more revenue, save costs with fairly simple tech. That was that was the early days pitch. We legit made it a couple of minutes without hearing the word AI or artificial intelligence. It's finally here. But before we go deeper into AI, you also may mention that your first funding basically came from INSEAD. And if you look at the entire startup ecosystem, it's an ecosystem that kind of discounts the NBA. But you are not the traditional co-founder, right? You actually have an NBA and you were in an investing world first. What has the NSEAD NBA done for you so far? Would you recommend this or any founder or you just feel like this was just another step in the portfolio? So for me, sponsorship wouldn't exist without my NSEAD NBA. So I am ugly grateful. For my personal path, it was perfect. And I think it did. It did two things for me. I think my first full-time permanent job after university was at a fund called Orbis. Orbis has probably the best track record of any large public markets fund over the long term. So I still think it's running at about 9% unleavened alpha annually over 50 years. And those numbers are INSEAD. It just doesn't exist. What's even more curious about that is it's over such a long term. So it's not just one brilliant portfolio manager. They have been able to create a process to create more portfolio managers who are able to do close to 10% alpha. And that's really wacky. Tiger had bigger carbs. But this is internally just managed to create a machine that created people who did something that most people say was impossible. Part of how that was done is you had to have exactly the same personality profile as the original founder who was considered one of the best investors of all time. Alan Gray who also had the largest asset management firm in South Africa. Orbis was the kind of slightly racier one. And I think that was very focused on being independent and a very clear decision maker. And when I say independent, I mean people who almost didn't feel that greed and fear that pushes everyone else in the market. People didn't care what people said about something. They would form their own views. And if the data change and that was part of the interview process, if the data change, you had to show you could change your mind instantly. Even if you were, we're buying this investment for these three reasons. If two of those reasons turned out to be wrong as time progressed, you had to instantly say, I was wrong. Let's sell it right now. And that is a process that I think is very valuable to me as a founder and apparently particularly working with my CTO now, he loves how easily I change my mind, but also how quickly I can commit. Like this looks right right now. Okay, we're doing it. If the data changes, then we change. If the data doesn't change, then we keep doing it. Even if we're miserable, even if people are telling us we're wrong, the thing that that creates though is people who are not really team players and are quite uncomfortable to be around. I think it's actually least uncomfortable if they're at the very top of the company, but it's still unpleasant. It's a bit cold. And I think for me, I would say I was a naught out of ten manager when I went into NCAD Business School. I'd say I was disruptive even. And I think I came out as a four or five out of ten particularly through the PLDP. Sitting in a group of people at different strengths and discussing actually the dynamics of your interactions, for me, that made me much less disruptive and I think much easier to follow. Without that, without that bet, Spotship wouldn't be alive. And I think without the network, which gave us all that early funding. And I am a great believer until you want to raise more than $10 million. I think angels are the way to go in Europe just because of the speed. But the biggest problem with angel investors is finding them. And I think you need to fight. You not only need to convince people that it's a good business opportunity. You also need to cross the trust hurdle. And I think we have never done any cold outbound for angels ever. I just don't believe it would work. But if you are selected to pitch in an NCAD Angel Nye, you're already kind of pre-vetted and you've crossed the trust barrier. Then you just need to convince people it's a good business. And you have 20 angels in the audience, 30 angels in the audience. So I think those two bits together are very powerful. If you go back to the kind of 90s, almost all founders had MBAs or equivalent type backgrounds, there was a swing away from these type of people that started off as a sort of reversion to mean. Because I think these type of people were. They just they believe too much in their own importance in the 90s and not enough in the importance of technical leadership. So I think we were, if respecting everyone is in the middle, I think in the 90s, we were like, the MBAs know what the MBAs, the consultants, the private equity folks know what they're doing, tech just do what you're told. And then I think you had people like Way Combinator and even more and Dreson come along and say, wait a second guys, it's the tech people have the idea of how to solve these things. These are the guys that master. And you know, at the time that they started saying that, it was right. Because the centre line was here, we were over there moving to hear was right. But I think whether they really believed some of the extreme stuff they're saying, and I think there was a McKinsey interview with Andresson at one point where he said every company should instantly make the best technology of CEO. Like for me, that's crazy. That would be the biggest bonfire of human society. There's ever been. The amount of damage and misery and poverty that would cause is unbelievable. Because a lot of these guys are managers. But I can. Can I force you here for just a second? Because I won't just go deeper into this. I see the fire in you. And there's most people talk about having a CTO. Like you need a technical co-founder. But when we look at the spot ship, right? Spot ship is to non-technical co-founders, right? So what's your view on this? Like how do you think that this is this is the next level? Well, what we're going to see on lock-in, especially what we hear about vibe-colding right now? That's going on. What do you see about this trend? I think as I was saying, as we moved into the tussens, you had, we were over here, people were shouting about it to move us towards here. They kept shouting. And I think it became a marketing thing. Because partly the tech guys, you know, were unpopular. They couldn't raise funding themselves. So Andreessen found by saying NBA is useless. Tech people are everything. They would see all of those deals. And those people would feel good about themselves. And then everyone jumped on the bandwagon. And it went crazy. And people said, "No one who knows how to run a business should run a business." It should just be tech people. And I think there was also part where VC was a bit self-serving there. Because you probably don't want to negotiate with me on terms compared to a much more softly spoken, maybe smaller ego tech person who is still a bit traumatized by life. Like unless we're getting like real value ad, I will make sure to run a process where we'll get the best terms for spot-ship shareholders. That's what I have to do. I don't have a, like, I don't worship VCs. I don't worship private equity. I do what's best for us and in a very sanguine way. And you know, if you're a VC trying to juice your terms, you're rather not deal with that guy. You're rather deal with the guy that worships you that will take the rubbish term. terms. Interesting. So, you know, that flew over that way, but I am not a believer that MBA should be doing it on their own. I believe in that center. And we definitely needed good tech leadership. And I think at the start, potentially because of my naivety, we didn't necessarily have it. And then going on, we realized how important that was. And we started off really increasing the level of leadership in the tech team with Mark Hardwick. And then we took it to another level with our most recent hire called Jimbo, who is one of the best engineers I never seen. So, James, you talked about the fundraising round. You talked about VCs specifically. And I learned that you had a very interesting fundraising round, which I would tag unconventional. Right. And with what you've said so far, you had an angel playbook. Can you walk us through that? Help us understand how did you approach fundraising? And how was it different for you as first-time founders? Yeah. So I am actually not too sure how other people do fundraising. And I think, you know, the courses on fundraising at NCAD, there was a startup bootcamp, which I now speak at as a guest speaker, maybe three or four times a year. That was probably the best. But I don't think anything can really prepare you for what fundraising actually looks like. So we, I would say, very naturally fell into this angel way of doing things off the back of IVC, the international venture competition. And that was because after we finished the international venture competition and won the money, we had three to four angel investors reach out and say, yeah, we'd like to back this thing. So I actually went to my, the professor of the startup bootcamp called Charlie Mason, who's a great friend and advisor to Spotship and said, you know, let's do this. What do we do? So she actually set us up with some really good lawyers and accountants. And one of the pieces of the course that has stayed with me most and has really colored how we do things in Spotship is the concept of a rolling close fundraising. And I like it because it takes a lot of unnecessary power away from investors and gives it to founders. And it also creates something that I would call natural phomo, which I call it natural phomo in the same way that they say with fencing, the, the app has natural right of way, whereas with the foil, there are rules, you know, if somebody tries to hit you, you're not allowed to hit them until you first touch their blade with the app a first stab wins. So they call it natural right away. If you are moving faster, you'll win. So I like the idea of natural phomo, which is if you're doing a rolling close fundraise, which for the folks that don't know basic, you'll set the terms with the first few investors, maybe 10 to 20% of you around. And then you'll authorize the whole round with the board and the shareholders. And then you'll just take money at those terms until you filled the round. And the natural phomo is last week, there was 400 K left this week, there's 300 K left. So the hardest thing for investors is getting them to move at a specific time. And you see all sorts of crazy strategies that founders have trying to get investors to close around generating phomo, a lot of which I'd say is dishonest, whereas this enables you to be completely honest. You can just say this is how much that's left. And people realize that they're going to miss the round, particularly if they stay with you over a couple of weeks, and you say, okay, 400 left, 300 left, 200 left. If they want to do it, they've got to move and they can't on their hands. And I think the nice thing as well is it means you can just get on with running the business. Whereas the traditional way, the kind of bullet close, you have to not just get everyone to yes, because yeses can't become nose over time. A commitment is never a commitment to the money's in the bank. The problem is getting those people all to be a strong yes and ready to wire money on the same day. And if you're relying on doing the whole round in a bullet close, if one person then messes that up, then you've lost your round. Whereas in a rolling close, if you lose one person, then maybe waste a couple of hours, but it doesn't actually do anything strategic to the round. So I think it's a much more natural way to fundraise for small amounts of money. And I would say a small amount of money is any round less than 10 million. I've constantly revised out how much this works for. We've had a few 200k checks, lots of 100k checks. And these are quick. So I will go to pitch events now a little bit less than before. A lot of our investors come in via referrals or clients in the ecosystem saying, are you raising, can I put a bit in? And also just friends of friends. So I would say every founder should be talking about their company all the time. My girlfriend hates it and it puts her to sleep instantly. And she's actually put me on spot ship bands a few times. But you talk about what you're doing with passion. It sounds good. And if you are around successful people, you'll find a lot of them will either ask to invest or give you a kind of soft in how would investing work, something like that. And then bang, you're pitching. And I would say normally after an expression of interest, be that at a pitch event or on a night out, somebody's just like, yeah, that sounds exciting. Tell me more about it. Normally your process to close will only be one one hour call or a set of email, DD questions, which the longest ever, I think has taken me four or five hours. The typical one will take me 20 minutes or so. And then you just get legal name and address. You populate the subscription agreement. They sign they wire money and it's beautifully controllable process. And yeah, we've done about four million dollars like that now. So it's something that is it's not just for that initial 200k round, which is the way a lot of people think about it as. And I would say when you compare it to VC, like we've taken money from three VCs from loyal, which is a bit different from investibles, climate fund, which is very traditional, even though it's in Australia works like a European and then for something called Pershing Ventures. The thing that happens there is you might be looking at a five month process. And it takes an enormous amount of time. People talk about having clean data rooms, etc. If they use even if you have that, these guys just like to ask questions because they're doing it for a living. And you know, you're setting up reference calls with clients and it takes a huge amount of time. I don't think you can run a late stage investment process unless you're having found as associates do all the heavy lifting, which to be honest, we're the fend most investors. So you probably have to disguise them as you with a new email address or have them forward stuff to you that you then forward on. I don't think any founder could run a process with more than three of once in a high quality way. And I think there is I wouldn't say VCs are totally random, but there is a significant random number generator element to whether you're going to get a yes or no after let's say 300 hours of work. And that is that can lead and land you in a really tricky spot. If you do three, three of those investors and then you get to know, then your runway might be shortening. Whereas if you're doing the rolling close through angels, you know, you know, you want to keep your runway maybe six months out. You know how much of that fundraise you need to do in each month. And you reach out to existing investors as and when you need and say, do you know anyone for this? And you're never spending that long. And I would actually say, if you look at, I'm not going to say who it is at this moment that some of the coolest people in the whole industry. But I had a process that I think used about seven minutes of my time for 200K investment. We also saw a 50K check, which was half 25 minutes of my time and money cleared the next day. In terms of dollars per hour compared to VC, you're probably talking 100 to 1000 times efficiency if you're doing it for angels. Really interesting. That's an entire playbook there, right? I'm just going to switch gears a little bit. So you're beauty in the UK, right? And one of the things that you know about insiad is like, it prides itself as a school of the world and people come from all parts of the world. And for beauty in Europe, generally speaking, there is there's always a tug of war. Do I launch in Silicon Valley or do I stay back in London or wherever in the UK? What made that decision for you in terms of spot chip? What made you to stay back in the UK till now? Like why? And how do you sense the UK evolved in the season? So there's a rational and irrational element. And I think both of those will just apply to me. So probably not use so useful for people listening to it. But maybe there's some interesting stuff in there. I love London. London makes me happy. I've lived in London for the 10 years between undergrad, between Cambridge and insiad. And it's just a city that suits me really well. All my friends are here. People say London's a bit unsafe. I don't feel it's unsafe. You can walk everywhere if you're in the centre. I'm not a big driver. I like to stretch my legs. It just works as a city. And then we have the kind of two business he aspects. One is for raising money. My network is here. As I said, I need a lot of investors casually, almost by mistake, rather than structured processes. And that's something I can do in London to a standard that probably very few other people can. But I would be at the same level as other people if I was in another city. And then the other bit is where are the clients? So shipping is a global industry. Like the UK for actually commodity is coming in and out of the UK. The UK is a non-entity. Like it doesn't matter. We're not putting out a lot of commodities. We're not bringing in a lot of commodities. But weirdly, because of history, until very recently, London was the number one spot for ship-roaking and actually also chartering in the world. Singapore has gone past it. The way the Singapore government approaches economic problems is awe-inspiring. I wish we had something like that here. We don't. But when we started off London was the number one client hub. So it was like where's our investment going to come from? Where are clients? US is really weak on commodity shipping. It's growing in Houston, but I think related to tax and history and time zone It's one of the only places that is kind of irrelevant for actually shipping decision making Get getting more so but really where you want to be for clients is London, Singapore, Dubai, Athens and I don't have links to the other places in the same way We've had people trying to bring us across to Singapore quite a lot Weirdly, I don't know the capital raising ecosystem there so well, but weirdly almost all of the Successful maritime startups the big ones are in the UK So there is this cluster effect as well. I mean, I'd say arguably in the UK So I would think of Sadna who are closest partners C which is owned by Clarkson's their tech operation who are very significant partners for us Akira not so much Kepler. I mean, is is all over the place, but I would say London is sort of the hot land Votexa They're all here even though it makes very little sense London just has that vibe for it So I think that's that's why I'm here for and you know, I don't think it would be easy to get my girlfriend to move now I think again now we got the real reason yeah It's the boss without any doubt and she's been very kind allowing me to spend as much time as I have on sponsorship But I think if I was building a business that wasn't in shipping any other business I would want to be in the US. I think the capital just flows so much more quickly Think the way of doing business is much quicker shorter sales cycles and the market itself in most things is is much bigger That's not so relevant to shipping amazing. This is a great segue to you know talking about working and leaving a London You approach a very dynamic team, right? Did you started remote first and you've maintained that and we we're in a world where just about a month ago So I said time of recording Jamie Dimeone who's the CEO of JP Morgan had a leaked audio You're talking about you know working from home and it called it a zoom culture And that's what I like to call it So how have you approached this because I know you talked a lot about all this where you started at and how a lot of that as you know Fed into your work ethics. So how does that play out in the culture at the spot? So we're still a hundred percent remote. Oh philosophically. I'm not a campaigner for remote I don't believe in a lot of a lot of the benefits of remote that people talk about and particularly the better work life balance stuff That's not what we're about in sponsorship. I like I want sponsorship to kind of become people's lives and But we found we haven't really had problems with it I would say when we're interviewing if somebody is most excited about the remote part That's probably the end of the interview process for me The things that we have one exception There's one guy who works harder than anyone else who says it's really important for him to be remote because otherwise He find it really difficult to work 18 hours a day because he needs to sleep So he doesn't want to waste time on commuting a lot of people I see like a lot of the work from home culture I actually see diamond is completely right like I know people do two very days Like a lot of companies have an enormous amount of busy work that if it doesn't get done no one can see you watching Netflix for half the day Spotship culturally is weird. It's a bit of a cult. So the most defining value is maneuverist and maneuverist is it goes further than saying no micromanagement It says a spot chip person is empowered to take the decisions they want to take to make the company better Without asking for permission and we trust their judgment. They'll be held accountable But what that means is for a lot of people that is how like every decision is going to be scrutinized You're not going to be told what to do you know, you could sit there and do nothing for a small amount of people They've hated being micromanaged. They felt they've never had the freedom. They felt nothing they've ever done as massive They've been a massive they've been a tiny cog in a massive machine And they've been told how fast to rotate was in sponsorship you have that total freedom Which I would say for 99% of people is terrifying But that's why our interview processes are really quite long and we have a lot of people drop out of our interview processes And we try and be very transparent of what it's going to be like and we enable people to meet everyone and talk about it Because we think for a small number of people They're almost being rescued from a miserable fulfilling work life But we are our processes to try and find those people and you know the reason we started remote first is we didn't want to pay for an office And we also wanted to have well priced Well priced to the wrong word good value talent So we wanted brilliant people but not paying crazy prices And from day one we wanted to have all of our engineers in Poland That strategy hasn't completely worked because I occasionally find Absolutely astonishingly brilliant people in London and it's like fine This wasn't the plan but we want you come I don't care where you work You know we've had people in Monaco in the past I really don't mind where people work so long as they are the right sort of people for sponsorship And they love this idea of being manoeuvres But you do you get found out in sponsorship like we have basically 0% voluntary staff turnover So it seems that the people who haven't taken themselves out the interview process truly love working for sponsorship And I'm really passionate about it that's that's why people call us a cult But if you're the kind of person who wants to do you know two hours work a day and work on Netflix Because nobody's telling you what to do There's I would see very close to no politics We have another value transparency and I'd say there's There's a kind of no tolerance policy for people engaging in what I what I'd call office politics It means there's nothing for you to do except your work And people can see whether you're doing it or not So you know we do have a tendency those people who are The people who may be like to exploit work from home or do it in a very modern very work life balance But all focused on life sort of way either we'll put them off enough on the interview process Or we we will part ways pretty quickly from amazing So what's one thing that you Execute in the culture at sponsorship that you you've not seen lots of startups doing and you're like wait Why is everyone not doing this? So I think that maneuver is telling them to the culture to me is hugely unusual Like I will tell people off is the wrong word but I'll gently push people away From asking me what I should do my my response is always what you think we should do Um then you know do it tell me how it worked out But don't kind of see permission at every stage And I think that is that is led to us moving unbelievably quickly So we've been told by others in the industry that we move at three to four times the speed Not just on engineering but also commercial functions like we can You can sign a full you know 80-page legal partnership in maybe eight days What I think it takes others in the industry four or five months So this is like an aspect to the culture in terms of what we do to get that Think as well as the really transparent interview process We're we're almost trying to put people off join it That's that's what we're trying to do So you know let me tell you all the bad bits if you still want to come Sure you'll probably love it I think we have these Offsites once every one to two months where we fly all of the Europe team So we have a team in Manila as well who Henry or I'll go and visit every six months But we fly all of the Europe team in once and once every two months And we'll have a whole day discussing where the company's going And I think that generates buy-in and it also at the end of the day We always end in a value session whether we have new joiners or not Normally we've got one or two new joiners And we'll go through each of the values and we'll ask we'll go around the table So we'll pick on people name a sportship value Give me an example of when you've seen it or not seen it Interesting and weirdly one of our longest serving engineer Didn't realize for a long time that the values were actually written down And he thought it was this oral tradition of people like Round of Campa Which I kind of love I feel like we should almost delete all evidence that it's ever written down But he thought they were secret but we've got that kind of vibe around it And I think we also have once a week we do in all hands Which I have never seen the type of transparency before that we have on all hands So we'll go through me on commercial my co-founder on operations And then this jimbo's ctl on tech of what's been achieved this week And we'll have a slide with these clients of sighing these clients of demoed These are accuracy metrics And I mean some weeks I'm going to stand in front of the company I still manage the sales team directly and say this week the sales team has failed horribly And if we keep doing it nobody's going to have jobs Which I can't imagine executives in other companies And you know at the same time we're calling this month March madness Everyone has signed something in the last like three days And including one of our biggest deals ever And it's just a street and that creates these little hands where it's kind of like Yeah it's it's so But it's also kept to 15 minutes there's no bullshit no waffle I've seen let's say in in certain very large professional services companies You can see some of the senior partners will go and take the stage and talk for two hours And you struggle to actually put a single bullet point of what was communicated It's just all corporate blah blah whereas we have we have none of that And I think people really value that And it makes it feel like it's ever-ons company, which with the way we do equity, it is ever-ons company. I just have two questions that I'm done. The first is this. I learned that you turned down and offered at DCG to stop this, to found this entire thing. And my question will be more like an advice to folks that are within that space because these days we're beginning to see a special in EU, lots of folks going into the deep-tech space, right? And you talked about things that you're trying to do with AI. What will be that one line that you give to a younger EU that's about to make a decision and maybe the final year MBA, or in Harvard, or Water, or in Inseat, trying to make a lip into Start-A-Poil. What will be that one line that you give them? Just do it. I think the thing that stops MBA is most is analysis paralysis. And I advise probably five to ten NSEAT founders a year. They hear me do the course and they reach out. And I'm happy to help because I think we need more of them. But if you have a kind of something approaching an MVP and you talk about, right, we're going to plan a raise, the planning stage is going to take three months. It's like, no, just go out and start meeting people, start selling it, get your legals in line. The best time to do most of these things is yesterday. What is picking your interest right now? Biggest thing that I've seen recently that I think needs to be solved is traffic in big cities. Like, it don't travel as much as I should. It's one of the things that I look at. The puzzle I think is the CEO in the industry. I'm most admire is Bill Dolby, who is CEO of sadness. So they were our first big partner. He's an angel investor in us. I'd say I view him as a mentor. His travel schedule for work is unbelievable. I think maybe up to three weeks a month is in the air to client sites spending all of this time around clients. I don't do enough. I'm probably a week a month. But one of the things that I always thought was London traffic is so bad because we don't have any money because UK as a country is kind of bankrupt and there's no budgets. Singapore, you look at Singapore, Singapore doesn't have a traffic problem. I don't know how they do it. But I was in Dubai and Qatar, the web summit Qatar, and meeting clients in Dubai. And their traffic was way worse than London with governments that seem to have basically infinite money. If you look at Dubai, it's like an eight-lane motorway going through the middle of the city. And the traffic is so bad that it seems people don't even mind whether you're on time or not because it's just assumed you can't be. And I think as a species, it's something we need to solve for the kind of speed of business to continue to increase and also quality of life. And I think if somebody can solve that, it will be absolutely revolutionary. And particularly the richer government should be willing to pay almost anything for that. I think it's clear the solution isn't more roads because Dubai have tried that. I don't think driverless vehicles are going to change anything because it's the same amount of cars on the road. I think something different needs to emerge. And I know these kind of ad drones people were looking at a while ago. I think a bunch of them have gone bankrupt now. Something like that needs to happen for humanity. You sound like you're stepping into your Elon Musk era where it's about to go into some the boring company kind of fool after this. I don't want to do that and I want my my board of my shareholders. If I start saying I'm going to start solving traffic just to give me a whack across the face. I have a lightning session right where we're just going to go through a couple questions. And first thing that comes to your mind, you just hit me. If you can give it like a short line on your why for some of the questions and these it right. So I'll start with this. How did you make your first thousand dollars or pounds in this case? Very early clients who trusted us when the platform was at a very early stage. And I would say why that happened. This will be a bit long for far around. But I broke the why-combinator guidance very early and hired a brilliant, very experienced salesperson former SAP. I sat on every demo in the early days and all the client support calls. But I viewed that cold calling and cold emailing wouldn't actually teach me much about my market and would stress me out. Micah Groman is also, everyone loves him. He is just like the ultimate salesperson and he was able to get people to give this a go in the early days, which then allowed us to iterate. So next question is if you were to give your culture at sponsorship a character, whether it's a music character or movie character, who would that be? Horatio Homeblower. A little bit of an underdog, but works harder, makes better decisions, moves faster and has a really good heart. Amazing, interesting. What is a hill you will into Dianne? Because unlinked you have a lot of contrarian posts, what is a hill you will into Dianne right now? Philosophically, MBA founders are equally valid as tech founders, which I think is becoming more accepted anyway. Business wise, the hill that I'm going to die on is that what the shipping industry needs is much faster, more seamless communication of data. And that's what sponsorship enables. You have been very active on LinkedIn and social media platforms and also like appear on podcasts. Do you think that beauty and the personalities are prerequisite for founders in this age or it's just that like must have or something else? It's not a must have, but it helps a lot. I would advise everyone to do it. Necessary evil or? No, I don't think it's necessary. I think it helps. I mean, we're in a world where I think depending on who you ask, 99% of founders fail. And this is definitely something that helps a lot. And I think if you want to be in the point one to one percent that make it, you probably need to be using all of the unfair advantages that you can get. And for us, a lot of investment has flowed to us based on my personality on LinkedIn. I think that's quite different from other founders. It also enables people to decide whether they like it or not when they're thinking of potentially applying to join sponsorship. And it lets clients decide whether they like the flavor of us. We don't need to hire everyone. We don't need to get everyone to invest. We don't even need to serve the whole industry of clients. We need to find the people who get on really well with us. And the easiest way to do that is to show what we like. And, you know, while I do more of the business philosophy type of stuff, which actually that has led to one of our most important business relationships. Somebody said they like the way I thought. We have at the same time, Michael Gorman runs a daily shipping newsletter, Henry Post daily, and we have one other progenbo post relatively frequently. So the idea is if you're in maritime, if you're clicking like occasionally, you'll see the sponsorship persona that you like most. And that's that's the interaction you're having. You won't see most most of the others. But I think we control we control three of the top 10 most followed accounts in in shipping technology, which given our size, we shouldn't as it helps on that that sales process where people say you need 15 touches to convert a customer nine or 10 of those touches could happen by people reading your LinkedIn stuff that you don't then don't have to spend time on end result a much shorter sales cycle. Final question is this, will you ever sell sponsorship and why for the right price? Yes, I I came on with sponsorship not even wanting to be an operator, but with an investor mentality. We are very thoughtful of what we think spot ships value is today as a standalone entity. And if somebody is willing to pay more than that, then you know, it is in it's kind of my duty to my shoulders to do that deal. Mason, that's all for the episode today. Thank you so much James. You've been amazing. This has been like an entire master class, not just on viewed in a company or having an envy or moving in that direction of where you moved in, also been a master class. I'm just viewed in a very contrary way, right? You know, hiring everything is just very anti-wide combination. Every day by me. So, the way to accommodate a stuff is great. Contrary in doesn't mean fighting everything. Contrary in means making up your own mind and doing what seems like the best thing. But regardless of what other people are saying. Exactly. Before we go, how can listeners reach out to you? How could they connect to you? Yeah, so anyone's welcome to connect with me on LinkedIn, pop me a message, whether you're just curious. If you're in maritime looking for a better solution, then that would make my day. A potential investor is always happy to have a conversation with, or even better people who want to work at sponsorship and build a career here. Thank you so much for your time once again, James, and do have a lovely rest of the day. Thank you, David. It's been a pleasure. Hey, if you enjoyed this episode, I would love to hear your thoughts personally. So, I've dropped a link in the show notes or in the description if you're watching this in YouTube. And we would like to get your questions and feedback. Thank you so much once again. Don't forget to subscribe so you get to catch the next episode. And until then, keep growing. Keep thinking. We'll catch you at the next one. Bye.