As soon as Emiliano Luzzi picks up his cell, he is onto the problems with the shipping industry. “Inefficiency”, “logistics”, “charged a premium”, “usual fees,” snaps the IE Business School soon-to-be-graduate.
He is just getting warmed up, telling me about the transportation business he co-founded last year, when he suddenly changes tune. “It’s strange and hard in this industry,” says the entrepreneur, who launched LetsCargo in October last year.
“The companies which ship stuff – that’s their main business. If it goes wrong, for any reason, they lose a lot of money. Building trust is a big challenge.”
His shipping and logistics company has been sailing on stormy seas for the past six months. LetsCargo has pooled about €10,000 in funding into operations, €1,500 of which came from Emiliano’s own pocket. It might not seem like much – but he is also paying off the tuition of a full-time MBA.
The six other co-founders – Cian Kennedy, Nishant Agarwal, Joao Alexandre, Maria Boluarte, Maria Felez and David Andreu – are from IE’s MBA and Master in Management programs. They will all share those financial considerations.
Emiliano’s cohort are set to finish on May 23. But they haven’t let it slow them down. It speaks wonders for their entrepreneurial mentality.
But, then, this is a guy who spent the past five years as a consultant. Emiliano’s career switch has been remarkable. Much of that is down to his time at IE, the leading Spanish business school.
Emiliano’s enviable transition has just become even smoother. His business is in IE’s Venture Lab, a start-up accelerator for students and alumni. LetsCargo has utilized the expert support.
The company is one of the newest additions to the Lab’s 50 high-potential start-ups. It is a competitive process and about 20 per cent of entrants launch their business ideas full-time or secure funding after graduation.
Assessing the progress his team have made, Emiliano is quick to point out the importance of his MBA. Networking has also been essential. “IE has a strong name in Europe,” Emiliano enthuses.
“I’m focused on start-ups and entrepreneurship. And because I wanted to do something just for myself, start my own company, I thought IE would be a good [fit]. I wanted some time to focus on myself and form an idea, and IE was an easy choice because of the focus on entrepreneurship.”
A start-up focus does not tell the whole story, though. There are many achievements on Emiliano’s resume. But he felt an MBA would add fire-power to his arsenal.
“I thought I was lacking some critical knowledge in terms of finance," says Emiliano, passionately spoken. "I also wanted to experience what doing an MBA means in terms of knowing different people, cultures and backgrounds. This pushed me into IE."
He made his first big career-move when he interned at Accenture, the leading management consultancy. After six months, he moved onto everis, another consultancy, before returning to Accenture in a senior role. The firm sent him working around Saudi Arabia, the United Arab Emirates, Poland and Italy. After a couple of years, he transitioned into an associate position at MasterCard Advisors.
Emiliano, who has an engineering background, emphasises his need for change. “I wanted to do something different,” he says. “I’ve always been interested in venture capital and entrepreneurship, always tried to invest in businesses and different areas.”
For Emiliano the entrepreneur, that means having eggs in different baskets. It helps keep him busy all the time. He always wants to know “as much as I can about every industry I’m interested in”. He insists going down the transportation route was the right direction for him at the time.
A consultancy background means he is flexible. “I’ve developed the ability to work in any industry with any background, so it’s not difficult for me understanding how it worked,” explains Emiliano.
This multiple-industry strategy, a favourite of MBA students, is the hallmark of today’s entrepreneur. LetsCargo, based in Madrid, is, like many start-ups, grappling with how to best build up a reputable standing with clients.
But the business may well be much bigger than Spain; the founders have a Europe-wide ambition. For that, they will have to connect with clients and businesses across shipping routes across the world.
LetsCargo is the first online platform which helps firms with similar transport needs reduce their costs through horizontal collaboration. The company was borne out of the frustration of a team-member, during her previous job in a logistics company and as a logistics manager for a national supermarket.
The co-founders aim to be a new generation of freight exchange providers, providing shippers direct access to individual transporters who provide the bulk of their supply.
For shippers, the business offers “group purchasing", which generates scale and drives down unit costs. It could also save them a 20 per cent commission fee typically charged by logistics providers. For transporters, LetsCargo hopes to improve average load factors, through pre-arranged return journeys. The goal is to provide a solution which climates the return "fee premium". It will also improve competitiveness.
Inefficiency is seemingly a word that blights the transportation industry. LetsCargo estimates that, in European road freight transport, average load factors are less than 60 per cent. On one out of every four journeys, the truck is completely empty.
The EU’s CO3 Project estimates that such inefficacy costs the industry €160 billion. About €13 billion is attributed to Spain. Much of the problem can be attributed to the market’s fragmentation.
LetsCargo wants to bring in more collaboration. They will take a 1 per cent cut of the transportation fee. The service is currently free. The current industry's “men in the middle” take up to 20 per cent of total transportation costs.
The co-founders hope to pitch to investors soon – presumably once the MBA is out of the way. They have one partnership with a shipping organization, but another is in the works. LetsCargo want to work with 2,000 clients by the end of 2015. One shipping association they hope to net has about 150,000 companies associated with them. You can see the potential.
“We’ve changed the idea a couple of times and added more features,” says Emiliano. “We don’t classify ourselves as the man in the middle. We are just a connector of shippers and transporters.”
At first, everyone had different ideas. Internal squabbling may have been a challenge. “But it’s just part of the game,” says Emiliano. He continues: “The latest version of the platform has been online for a month. We started developing the idea around September or October .”
An MBA has made the path somewhat easier. He is more comfortable about the company’s financials. But his main role within the company is marketing.
“I was able to develop very good academic knowledge, but also network with bright people from different parts of the world. I am happy with my decision,” he says.
But what about the financials of an MBA? Leaving a consulting gig with MasterCard, paying for tuition and launching a business is quite a full plate.
Emiliano laughs off the question. “In the meantime, I also had a daughter. So everything has changed,” he says. “But we planned to have some money, a back-up in-case I couldn’t find a job straight after the MBA. So we’re safe.”