Join Jörn 'Joe' Menninger and Michael Wax, CEO and Co-Founder of Forto, on Startuprad.io as they delve into go-to-market strategies, raising over $700M in capital, and navigating co-founder dynamics in the logistics industry. Discover the secrets behind Forto's unicorn valuation and get expert insights on B2B sales, team building, and the future of global shipping. Don't miss out on this insightful episode!
Executive Summary
In this episode of Startuprad.io, hosts Joe Menninger and Michael Wax, CEO of Forto, discuss Michael's vast experience in go-to-market strategies, fundraising, and team dynamics. Michael elaborates on Forto's mission to revolutionize global logistics with AI, its unicorn valuation, and navigating market disruptions. He also offers advice to founders on team cohesion and fundraising and highlights his role as a business angel with a keen eye for visionary teams. The episode concludes with an invitation to learn more about Forto and Michael’s dedication to aiding emerging startups.
Introduction
Welcome to another insightful episode of Startuprad.io, where we delve into the dynamic world of startups and entrepreneurship! In today’s episode, our host Jörn "Joe" Menninger sits down with Michael Wax, the Co-Founder and CEO of Forto, a trailblazing company in the logistics industry. Michael brings over 11 years of expertise in B2B sales, has raised over $700 million in capital, and has a unique understanding of go-to-market strategies, fundraising dynamics, and the intricacies of co-founder and team relationships.
We’ll explore how Michael’s journey—from studying at prestigious universities to tackling roles at Bain and BMW, and founding his first company, Konark Space—led him to establish Forto in 2016. Tune in as we discuss Forto’s innovative approach to global logistics, their use of AI, and the significant disruptions in the shipping industry over recent years. We’ll also uncover the pressures and triumphs of reaching unicorn status with a $2 billion valuation, and Michael’s passion for mentoring and investing in emerging entrepreneurs.
Whether you're a startup enthusiast, a budding founder, or simply curious about the logistics industry, this episode is packed with valuable insights and inspiring stories. So sit back, relax, and get ready to be inspired with Startuprad.io!
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Interview Highlights
Questions Discussed in the Interview:
Content Engagement: Finimize uses "come fo
Key Takeaways
Certainly! Here are the key points or takeaways from the interview with Michael Wax, Co-Founder and CEO of Forto, on the Startuprad.io podcast:
Expertise and Background: - Michael has expertise in go-to-market strategies, fundraising, and co-founder/team dynamics. - He has 11 years of experience in B2B sales and has successfully raised over $700 million in capital. - Holds a degree in mechanical engineering and industrial management, studied at multiple universities, including UC Berkeley and Technical University, Munich. - Worked previously at Bain, BMW, and founded Konark Space.
Founding of Forto: -Forto was founded in 2016, inspired by analyzing the logistics industry with his co-founder. - Focuses on creating a new operating system for global logistics, functioning as a "booking.com for containers".
Forto’s Business Model and Impact:
- Provides comprehensive logistics solutions, from factory to port, including export declarations and real-time shipment tracking.
- Utilizes AI for global processing, proactive planning, and real-time translation to facilitate international communications.
- Raised approximately $6.9 million initially and has grown to a valuation of about $2 billion as of March 2022.
Industry Context and Challenges: - The container shipping industry processes over 200 million containers annually, a key component of global GDP.
- Significant market disruptions due to COVID, demand surges, supply chain bottlenecks, and geopolitical conflicts.
- Volatility due to seasonal consumer demand and events like the Chinese New Year.
Forto’s Customer Base and Strategy:
- Initially served small businesses shipping through Amazon's FBA program, later shifting focus to larger clients with more than 500 containers yearly. - Imports a variety of products including items for German households, industrial goods, and healthcare products.
Team Dynamics and Fundraising: - Michael enjoys helping founders with cofounder conflict and team dynamics, highlighting the importance of a strong team.
- Allocates 1-2 hours on Friday afternoons for founder meetings, given a proper pitch is provided.
Becoming a Unicorn:
- Forto reached unicorn status in March 2022 with a valuation of $2 billion.
- Public perception and hiring have been positive, but the pressure to meet high expectations is substantial.
Job Opportunities at Forto:
- Forto is actively hiring, including for key positions like chief of staff.
- Emphasizes transparent and impactful work culture.
Personal Insights and Business Angel Activities:
- Michael enjoys the logistics and supply chain industry due to technological advancements and growth potential.
- As a business angel, he's made 50-55 investments primarily in B2B sector, focusing on teams he’s familiar with and markets he believes in.
- Prioritizes people over the business topic when making investment decisions.
Accessibility and Future Engagement:
- Business angels can reach out to Michael via LinkedIn or trusted introductions.
- Encourages listeners to explore career opportunities at Forto’s career website.
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About the Guest
Michael Wax, Co-Founder and CEO of Forto (https://www.linkedin.com/in/mikewax/)
In this episode of Startuprad.io, we have the pleasure of hosting Michael Wax, Co-Founder and CEO of Forto, a forward-thinking company revolutionizing the logistics industry. Michael's astute understanding and extensive experience shine through his impressive career, marked by successful B2B sales and fundraising ventures. With over 11 years of experience and more than $700 million raised in capital, he brings unparalleled expertise in go-to-market strategies, fundraising, and managing co-founder and team dynamics. Michael’s journey commenced with academic pursuits at esteemed institutions such as UC Berkeley, Oregon State, Hong Kong University of Science and Technology, and Technical University, Munich, where he obtained a degree in mechanical engineering and industrial management. His early professional stints include time as a trainee at Bain & Company and BMW, and his initial foray into entrepreneurship with Konark Space, a company specializing in railway maintenance.
The seeds of Michael's passion for logistics were sown when he met his co-founder, leading to the establishment of Forto in 2016. Forto, sometimes referred to as the "booking.com for containers" for larger shippers, functions as a modern operating system for global logistics. The company has notably raised approximately $6.9 million in capital and employs cutting-edge technologies such as AI to streamline the processing of shipments, ensure proactive planning, and enable real-time translation for international communications. Forto's mission to bring transparency and efficiency to global shipping has resulted in the rapid scaling and significant milestones, including achieving unicorn status in March 2022 with a valuation of $2 billion. Michael's commitment to the logistics sector, bolstered by his keen interest in technological advancements and his role as an avid business angel in the B2B space, continues to shape and influence the future of global supply chain management.
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Links and Resources
- How Container Shipping Works
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About the Host
Jörn ‘Joe’ Menninger is the founder and host of Startuprad.io. He has worked more than 12 years with household names in consulting, in financial services and startup services, as well as a startup scout. With a passion for uncovering the next big thing in tech, Joe brings deep insights and thought-provoking questions to every interview. Connect with Joe on LinkedIn and Twitter.
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Automated Transcript
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:00:02]:
Hello, and welcome, everybody. This is Joe from start up rate dot o, your start up podcast and YouTube blog from Germany. Welcoming the Unicorn founder, Michael Wax, here with me. Hey. How you doing?
Michael Wax | Co-Founder and CEO Forto [00:00:15]:
Hey, Joel. Thanks for having me today.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:00:18]:
Totally my pleasure. It's great to have you here. Before we get into the interview, I would like to acknowledge that this interview was helped by the Young Presidents Organization founded nearly 75 years ago. The YPO is now the world's largest leadership organization representing more than 35,000 chief chief executives, including you, across a 150 countries. Members are connected by the shared belief that the world needs better leaders and that their business can be a driving force for good. Each YPO member has achieved significant leadership success at an early stage. They lead businesses and organizations that collectively employ more than 22,000,000 people around the globe and generate over 9,000,000,000 US dollar in combined revenue. That's pretty big number, I would say.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:01:13]:
Usually, we start a little bit with what you've been studying. And I see you quite got around the world. I see you studied at UC Berkeley, Oregon State, Hong Kong University of Science and Technology, and Technical University, Munich. Can you walk us through a little bit? And, of course, as always, the question is, what's your favorite dim
Michael Wax | Co-Founder and CEO Forto [00:01:39]:
sum? Well, this, Joe, this feels like ages ago, and makes you realize how, how long this time is is is passed already, but I think I've always been a very curious person. I love to explore new cultures and, immerse into new environments. And I was already expecting that you were asking me for where's the best party or where did you get the best education, but I think my favorite dim sum is certainly Timo 1 in in Hong Kong. I think it's definitely also made for student budgets and still, I think, earned a Michelin star by now. And, at the same time, I must say, I enjoyed all three places because of just the the massive diversity.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:02:24]:
Mhmm. You eventually ended up getting an MBA and a degree in mechanical engineering industrial management. I'm I'm curious. Are you still running around your house and picking stuff as a typical engineer? Oh,
Michael Wax | Co-Founder and CEO Forto [00:02:44]:
I'd say I I, I, yeah. I I was raised, with a with a dad who's been, let's say, very good with his own hands in terms of fixing stuff and doing stuff on his own. So I think that education was certainly more helpful for doing stuff around the house and whatever my 6 semesters of mechanical engineering. But, yeah, my wife may have heard the quote, by myself a few times that, hey. Like, go away. Like, let let the engineer come in. Sometimes with more, sometimes with less success, but I think it would take too long to go into detail here.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:03:20]:
I see. So, basically, she she could still rely on you. I I've seen that before you became an entrepreneur, you have been a trainee at Bain and a management trainee at BMW, and then you started to found a company. Can you take us a little bit through this journey, what you did before, and how you ended up founding your first company?
Michael Wax | Co-Founder and CEO Forto [00:03:48]:
Yeah. I mean, during my studies, I was, curious, to explore, different careers. I was fortunate enough to then join Bain during my, student times to help out with due diligences, predominantly in the private equity side and and kinda, like, learn a basic consulting skill set there. It was interesting, but I think also this way, I could find out that this is nothing that I would wanna do for the rest of my life. And yet I'm I'm super happy that I went through this school and and and got those, those hours of, Excel and PowerPoint in and certainly helped me, in my in my later, life as an entrepreneur. And then I I I actually founded my first company, in 2013, company called Konark Space in Munich focused on, railway maintenance. So, basically, sends an analytics system to detect maintenance cycles for switches, allows for massive cost reduction of large railway operators. And, after I left this company, then I spent a little time at BMW, kinda like probing a corporate career, which, even though I met, amazing human beings and super, super smart people, was not necessarily what I wanted to do for the rest of my my life either.
Michael Wax | Co-Founder and CEO Forto [00:05:06]:
So I think, I've been seeing the consulting world, the corporate world, early start up times, but, I think once once you were drinking from the files once, I I I I wanted to go back and basically wanted to build stuff in my own hands, and and that's where I ultimately ended up at.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:05:25]:
I see. Have you been ever fascinated by logistics, by transportation? Because with ConEx as well as with Forto, formerly Freighthub, you got, you've been always in the business of moving people, moving goods around. I,
Michael Wax | Co-Founder and CEO Forto [00:05:54]:
I I I I wouldn't, say that I had a particular passion for logistics, before then starting Forto, my second company, and the one that I'm today running as a CEO. But, like, just one thing came together. I was very fortunate to, meet during my studies my later cofounder, Eric, Eric Drospar, who has been for a long time the CTO and the cofounder of Fortu. And he and I, were spending a lot of time, analyzing different ideas, going through a brainstorming period together with Fabian Ferri Heilemann, who back then were already well known in the Berlin ecosystem for selling their first company, Datadio, to Google in, in a pretty big lighthouse transaction back then. Was kinda like the first company that did a major exit to a a a big US tech firm. And, Fabi had ties into the shipping scene. Eric and I were spending a lot of time with him, drilling, into the industry, understanding how it works, what the value chain is, consists of because the early hypothesis was that it still remains to be on a digitized market comparative to the size and the opportunity that it offers. Because I like, in the beginning, you would say, like, the Internet came into play, technology and software was eating the world, And at the same time, you would think that, this process, like, happened alongside the largest industries.
Michael Wax | Co-Founder and CEO Forto [00:07:30]:
Like, you would tackle the largest, most, beefy, projects first. And with logistics, it certainly wasn't the case. So something was wrong or something must have preventing, must have been preventing other companies from solving challenges. And with a lot more tech in in the industry, it was still very paper based, very manual. And when we came into the space for the first time and I mean, just to give you a little bit of an idea how well educated I was in logistics, I had to Google the word freight forwarding in January 2016, so just 8 to 10 weeks before we actually incorporate the company for the first time. We just happened to meet a lot of people that on the one hand side on the one hand, were super unhappy with the way they've been, receiving service, in in the industry. At the same time, a lot of companies that were actually operators in the industry were very unhappy with the capabilities that are available there. And so we said, there's, in one of the largest markets in the world, so global trade today is moving roughly $7,000,000,000,000 of goods around the globe.
Michael Wax | Co-Founder and CEO Forto [00:08:38]:
More than 50% of global GDP is driven by trade itself. So there must be an enormous opportunity in digitalizing this end to end process and kinda like building a freight forwarding or logistics company on its own tech stack. And that's what we then started off with in early 2016 and, what we'd, up until today, raised roughly $6,900,000 in capital for to make sure we create the new operating system for Global Logistics.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:09:06]:
To to to give people a little bit more perspective on what you guys are doing, when I went through your company website, I realized you do have a presence in Mainland China, in Singapore, and then on the other hand, on several harbors across Europe, including, but unlimited to, Hamburg and Amsterdam. So, basically, your business is right now focused on shipping, as you said, those overseas containers from the manufacturing hubs, China, but, personally, I'm feeling increasingly Vietnam. Do some reorganization maybe in Singapore and then get the ships out to Europe. Is that true?
Michael Wax | Co-Founder and CEO Forto [00:09:53]:
Yeah. So, I mean, what we ultimately do is you could see us kinda like a as a booking.com for containers for larger shippers. Yeah? So, we help, companies to organize global logistics through a service that entails, the trucking from the factory, maybe in Vietnam, China, Philippines, Indonesia, to the port, all the export declarations and document work, then loading the container or potentially also the freight shipment on the right vessel or plane, making sure the journey is being properly tracked and customers are informed about when the goods are about to arrive. Then we discharge the goods from the plane from the vessel at the port or airport of destination, and we organize after customs the delivery to the warehouse. That's the scope, ramp to ramp, that Fortwo covers for, multiple hundred clients across Europe. And we do this, in order to to to to make the process more intuitive for them, to provide full transparency end to end, and to help them scale their businesses, and to actually have, make make sure that they have time, really focusing on the meaningful growth drivers of the business. Because many, many times, logistics is something like a yeah. It's kinda like public transport.
Michael Wax | Co-Founder and CEO Forto [00:11:10]:
It just needs to run. And and you don't wanna be out of stock because out of stock means out of business, and that's, our commission Fortu was being built on. So we wanna make sure that shipping products for our clients is pretty much as easy as sending an email today.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:11:29]:
That's mhmm. When you talk about overseas containers and clients in Europe, what I have in mind is the classical stuff from Christmas decorations to electronics to, clothing to, maybe machine parts or stuff like that. Would that be true?
Michael Wax | Co-Founder and CEO Forto [00:11:52]:
I I would say that today so after 8a half, 9 years of existence, in every German household, there is one product that photo has imported. So, from knots that, are being, put into RitterSport chocolate, flooring, ceiling, solar panels, sand, gravel, plaster stones at times. So I think there's a bunch of goods that you wouldn't believe, is being imported. A lot of health care goods, a lot of industrial goods like pipes, hoses, and stuff. And so it's it's a it's a wide, wide, wide mix of things. Yeah. Yeah. Some people have thought to even made lists of the most funny items, that we can import, but I'm not sure if kids listen to the podcast.
Michael Wax | Co-Founder and CEO Forto [00:12:46]:
I'm not gonna list them entirely. Yeah. But, I mean, there's a there's a there's a there's a bunch of stuff that is not being, produced in in in Southern Berlin or Munich.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:12:57]:
I see. I see. You you've been talking about your humble beginnings. I do believe you started with one specific category of product ship in an online container and then expand it. Can you can you take us a little bit along the entrepreneurial journey, what you did there, focus on one product, and then expand?
Michael Wax | Co-Founder and CEO Forto [00:13:24]:
So, and the the very first, customer we actually acquired, the day that I I handed them my notice with, let's say then my previous employer, I I I met my boss for lunch, told him about my idea to kinda, like, build the kayak for containers as there's 2 digitization. I think he thought I I was crazy, saying, listen. I mean, this market is governed by DHL. Like, are you really sure you wanna do this? You have a great career ahead of you here. And I was like, yeah. I'm I'm I'm very sure I wanna do this. And he told me a story about his kid just having bought a bike from a, import in Hamburg, a brand in Hamburg called Bogenot, so they make single speed bikes, that seemingly was imported from Taiwan. And and so I left, the canteen, so I I left the the the the restaurant at, at the company back then, looked up the founder on LinkedIn, texted him and saying, hey.
Michael Wax | Co-Founder and CEO Forto [00:14:17]:
Like, I'm running Kajak for containers in Germany, and I really wanna speak to you because I think we can offer you a better importing product for your containers. And, that was, like, March 2016. In in May, this became the first customer once we were able to launch our MVP. A couple of months later, we kinda shipped the first 100 containers. We had a bunch of customers in Germany, and we started predominantly with, like, servicing clients that were shipping up to 10 containers or specifically were trying to sell their goods over Amazon. Yeah. So the category back then was called, FBA, so fulfillment by Amazon. So those are people that would scout products during their vacation in Brazil or Thailand and say, listen.
Michael Wax | Co-Founder and CEO Forto [00:15:00]:
They have those amazing beach ball bats or, there's this amazing cats toys that, is being sold, in in Thailand, and I wanna import this to Germany. And then Amazon would basically take care of the fulfillment, of the listing, of kinda, like, all the marketplace activities. They would do the idea generation, kinda like the create creative part behind product innovation, find suppliers overseas, and we would basically run the entire logistics part. And, this was a well organized small ecosystem where we could get to a large penetration rather quickly. So we were known as the go to party to serve those companies, and so we saw a pretty rapid growth in that domain back then and helped a lot of those companies to ship and to manage their supply chains. Over time, though, this was kinda like the first niche. Right? I mean, we went into this, let's say, very, very specific niche market. Over time, though, we saw that unique economics for larger customers were much better.
Michael Wax | Co-Founder and CEO Forto [00:16:01]:
It makes, more sense to basically focus on a on on a trade for a client where there's every week, 4, 5, 10 containers. So the same processes, the same partners, more reliability, better planning, more sophistication on the customer side. And because in our initial customer group, it may have happened that people were hanging up on calls because they had to learn for their math exam a day later or because they've never used a computer before because they were either too young or too old. So a very diverse set of partially rather unsophisticated businessmen, Orban. And so, over the course of time, we've been shifting more upmarket. And today, we pretty much predominantly serve customers that actually have more than 500 containers a year that they are import or export.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:16:52]:
I see. When I was thinking about the business you're doing. You said you have some bigger that, it that, there are seasonal peaks in what you're doing with that. What comes to mind is I do believe a container ship usually takes, 4 to 6 weeks, somewhere from Asia to Europe. So there should be quite a busy time already that already started, and that will go until, let's say, end of October. Is that true? And how do you cope with those peaks?
Michael Wax | Co-Founder and CEO Forto [00:17:48]:
So I think overall overall logistics is is is partially seasonal business for multiple reasons. Number 1, obviously, because of consumer demand. Certainly, Christmas is playing a big role. Companies, retailers wanna be in stock for that, season. Wanna make sure they, they can, can get customers to shop, for for presents, but at the same time also on the supply side because, given the fact that a lot of goods are being transported from China, you need to also look at their vacation holiday, sequence. And so in early February, late January, usually, you have a Chinese New Year where nothing has been done for at least a week. And so a lot of transports are being shipped out just the days before because then for a certain period so February is usually kinda like a a very slow month, and nothing is being produced, so nothing can be shipped. And so, obviously, you build systems that automate and, digitalize the process to an extent where you can cope with those, volatilities, much better, so that the same number of people can process more shipments.
Michael Wax | Co-Founder and CEO Forto [00:19:07]:
That's one very important, measure. 2nd one, you employ, and and roll out AI to the degree that, operators in Italy or operators also in Poland can, process shipments in Germany or also in China because, like, it's pretty much independent what their native language is because you can real time translate all the communication and the correspondence. So that has been a big lever. And 3rd is, obviously, very proactive, predictable planning with our customers, and that's something where we've built a lot of tech for to make sure you can, forecast, volumes and, better predict those, those peaks.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:19:47]:
Mhmm. You you talked about peaks because there there's, of course, the seasonal peaks, but there are also the the peaks of economic activity in the economic cycle. You once said in an interview that something around 200,000,000 overseas containers are moved annually. And I do believe, events like, for example, COVID, especially the 0 COVID policy in China, must have had a huge impact on your business. How have you been dealing with that?
Michael Wax | Co-Founder and CEO Forto [00:20:20]:
So the container, shipping industry is not that old yet. Right? So the first containers actually arrived in Bremerhaven roughly 1966, so that's roughly 60 years ago. Only 60 years. And back then, on an annual basis, you would probably count maybe 80,000, a 100000, shipments, And all of that was predominantly an innovation in the post Vietnam War, times where they had to make sure that goods are being, shipped back and forth in a very efficient way. Today, multiple 100,000,000 containers are being processed every year. It's rough it's I think it's a bit more than 200,000,000. It's very difficult to get the exact number on a year to year basis. For this year, I think it's supposed to be 213,000,000.
Michael Wax | Co-Founder and CEO Forto [00:21:11]:
And, the big and that today marks, I think, roughly 53, 54 percent of global GDP, so trade as a whole in terms of global GDP. But now the last 2 or 3 years, and I think COVID was one of those events, you've been seeing massive disruptions in the market. At early in early 2022, people thought supply chains would come to a halt. No more people could work in warehouses. No no no one would, wanna order something anymore. And then a big surprise came because people did wanna buy anything that made the house more enjoyable or outdoors more fun. And there was never a more busy period in international shipping than when people were hoarding the latest PlayStation, a new TV, a new sofa, a new refrigerator, and kinda like renovating or decorating the 3rd or 4th house because it's so much fun to be out in the countryside again. Again.
Michael Wax | Co-Founder and CEO Forto [00:22:09]:
And that was the absolute heydays for shipping and being a very inelastic industry. So it takes years to build a ship, it takes decades to build a harbor, that industry was certainly, pulled to, the extremes. So you had massive bottlenecks. At peak times, 60, 70 vessels were waiting out of Long Beach in order to discharge goods that they were shipping there. This means there was a lot of idle capacity that wasn't able to run around the world anymore. So while there was record demand, we had actually less supply, so less ships that were ultimately running back and forth. You had a lack of empty equipment. I mean, in those months, the steel price has skyrocketed by 3 to 4 x, yeah, 3 to 400% price increase of a commodity just because the demand for steel containers grew so quickly, so large.
Michael Wax | Co-Founder and CEO Forto [00:23:00]:
And that was just in, like, it was just an insane time. Container rates for shipment between Shanghai and Hamburg were growing and rising from roughly $1,000 per container to $10,000 per container, so a tenfold increase in a matter of months. And, that was kinda like the first step where you could see, through a volatility period that I think still is not over. After COVID, the Russia invaded Ukraine. Again, ripple effect through the economy. Consumers became more prudent in terms of spending. Inflation was, at record high. Disposable income was shrinking.
Michael Wax | Co-Founder and CEO Forto [00:23:47]:
Preemptive purchases were made, and so less demand for shipping of goods has ultimately tempered and cooled off the market to a certain degree, while there was record order books. So all the carriers, all the ship owners have ordered ships like hell because they made so much money during COVID. And if your business is doing ships, like, if you make a lot of money, you order more ships. Right? It's it's crazy, but it's true. It's always been the case, and it's, it's pretty predictable. So and in the year of 23 24, record deliveries were forecasted and predicted to hit the market in a period where certainly consumer demand was quite soft. And then October 7th, Hamas invaded Israel, in in in a brutal terrorist attack. Since then, obviously, in the entire Middle East, there's, yeah, I think very difficult to find the right words.
Michael Wax | Co-Founder and CEO Forto [00:24:44]:
Obviously, there's more or less a a full blown war ongoing, partially hot, partially cold. But ever since early December last year, the Houthis, a a rebel formation in in Yemen, has been attacking ships very aggressively. So they would build drones. They would build, rockets that would pretty much randomly attack international cargo vessels to disturb international cargo flows. And that has been leading to the fact that the busiest, camel and the busiest, trade lane, between China and Europe has been significantly disrupted, because no more ships or hardly any ship is crossing the Suez Canal today. So a Canada that is usually responsible for carrying roughly 10 to 15% of global, global trade, through the passage, right between the Red Sea and then, Egypt, and you basically end up in in in in in Greece, Tunis, that's that's locked up. Like, no ship is passing that anymore. That means ships need to go around the Cape of Good Hope.
Michael Wax | Co-Founder and CEO Forto [00:26:06]:
It takes 10 to 15 days longer. So you were reporting before 4 to 6 weeks. Yeah. I would say roughly 25 days was a regular trans transit time for vessels between Asia and Europe. Now this is all of a sudden 40 40, days, so 30% longer. And if it takes 40 30% longer, it means that 30% less vessels can complete a journey, during a certain period of time. So you have a massive equipment and capacity scarcity because the journey just takes so much longer. And in a time where demand and consumer, spending is just picking up again, global trade is again going through a massive crisis.
Michael Wax | Co-Founder and CEO Forto [00:26:45]:
Yeah? And and even though you may not read this, on a day to day headline in the newspaper anymore, this is something that really keeps a lot of people busy in the world right now.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:26:57]:
My wife works in supply chain. I don't think there's nothing more to say about that.
Michael Wax | Co-Founder and CEO Forto [00:27:02]:
Yeah.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:27:05]:
As you described, there there's a massive industry out there with the ups and downs where you have to react on. And you've been doing a bunch of good work, which eventually ended up valuing your company as unicorn. You haven't disclosed this, particularly yet, but, I've read some estimates, the with the valuation around 2,000,000,000 US dollars valuation for Fortor, with latest investment round in March 2022. First, congratulations to that. And secondly, there are not so many people out don't get me wrong. There's a lot of people out there who want to found a unicorn right from the start. But I was curious how did it feel the moment you realized you set your your signature under contract and you realized, well, this is a unicorn. This is really big.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:28:09]:
What went through your mind?
Michael Wax | Co-Founder and CEO Forto [00:28:13]:
I I think a lot of founders for a period were, excited about, growing a company to that size predominantly because of, let's say, public perception. Right? It helps you with hiring. That's the number one reason. Everything else about it sucks. And so the moment we've been racing around and did the announcement, I mean, that you were just basically, you're under enormous pressure to deliver, so exceptions are expectations are sky high. There's no merit in basically carrying a large valuation around, and I think there's also no merit in having a company that's valued in a in private markets at that kind of level, because ultimately, the payday matters, like, the the data that you're, whatever, you're going public, the data that obviously also employees, get to end end a fair share. So I think a private market valuation per se is nothing that a company should and, should be proud of. And if at all, it's just a milestone, on delivering on on your mission.
Michael Wax | Co-Founder and CEO Forto [00:29:19]:
And so, I, yeah, I didn't, feel especially great that they, if at all I had, I was a bit nervous and anxious if I can deliver on the expectation.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:29:34]:
See. Usually, I have a little bit different track structure, but you've been talking about talent. Unicorn valuation helps you to raise talent. Are you currently looking for talented people?
Michael Wax | Co-Founder and CEO Forto [00:29:49]:
You're always looking for great people at Forto. I think we can provide a very mission driven environment, very hands on environment. If you want, you get a ton of, responsibility, and you can really make a lot of great learnings for your career and work with super experienced professionals in in their respective field. I think right now, I'm hiring for a particularly interesting role, the chief of staff. So you'd be working very closely with myself, on all kind of strategic matters around Forto, or pretty much on whatever Forto needs. Could be very technical. It could be very strategic, but you would really get to learn and see a organization inside out, communicate to, the organization, communicate to investors, make sure that you help the executive team to run and work more efficiently and effectively, and that's what I'm, currently very actively interviewing for.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:30:51]:
I got I've gotten that basically the day you signed the contract, you were cofounder of Unicorn, You were anxious. How did your friends or family, react? Did your wife at least tell you she's proud of you?
Michael Wax | Co-Founder and CEO Forto [00:31:07]:
Back then, I wasn't married yet. So, I I I think it was just super intense times. Right? It was during COVID, so it was a 100 we only had remote calls. So days prior to this signing, I probably worked 90 to 100 hour weeks, and I can only remember that I kinda left the notary at 5 AM in the morning and and and fell asleep for, yeah, a long time. And, yeah, other than this, you get invited to a lot more events, which just takes a lot of time. So that's, that's something where I had to learn to say no, and it's a lot of stuff, because you can basically just fill your day with speaking slots and panel sessions. And ultimately, what I think I want to do and, what I should do is speaking to customers, building product, and making sure I run a company efficiently. But there was certainly a big change.
Michael Wax | Co-Founder and CEO Forto [00:32:10]:
Right? After this, friends, family, not so much. I I don't think my my my parents are following the development of the company very actively. If at all, I think they're worried that I'm working too much. And, they're the first thing they're asking is, if the grand the grandkids are doing well. I mean, then they're not super interested in the business.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:32:34]:
No. That feeling. I really know that feeling. You do have a kind a pretty good sense of business. And before we get into what you're doing as a business angel, I would be curious about one opinion from you. What kind of business would you start this very day? If you would need to start a new business, what kind of business would you be interested in?
Michael Wax | Co-Founder and CEO Forto [00:33:02]:
I think it's a good question. I think it's a very difficult question right now because there's probably hasn't been a time that, where you had so just massive technological advancement on on all sides, and so it's difficult to foresee how industries will unfold. So, I would do something in the logistics and supply chain industry again where I'm sure that I can, with technology, just cut a lot of cost and make sure I, yeah, run processes more efficiently. But, hey. Wait. I mean, this is this is pretty much Forto. Right? So, I think there's there's no other right idea right now that I'd be more excited to to spend my time on.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:33:49]:
We already hinted that you're also active as a business angel. Can you tell us a little bit if you do have a mental framework for selecting, those investments? And are you also looking actively, or do you get more than enough pitches already?
Michael Wax | Co-Founder and CEO Forto [00:34:11]:
So, yeah, I particularly enjoy working with young founders. I think it's always an enormous, pleasure to work with people that are very driven and ambitious, really wanna change, and, like, build the world that they wanna live in. Right? So there's a lot of energy, drive, and creativity coming with it, and I really, really, enjoyed it a lot, and, predominantly to, like, help stuff I had to painfully learn and ideally where I can pass on learnings or experiences that helps to make those kind of learnings in a less painful way. So over the past 5 years, I've roughly made 50 55 investments into very different companies. I don't have a specific focus, but there's, the majority of those investments are are b to b companies. I'm excited about anything where, the founder really can can tell a compelling vision and where I believe that the team has what it takes to really build a great company, the resilience that you need, the expertise to tackle a specific problem, and unique insight that, reflects that they really understand the market well. I'd say that over the past, I've learned that you don't just need a great team, but you need to operate in a great market. I think even if it's just, let's say, as a solid team but not an outstanding team, if they're operating in the right market, they can still create outsized returns, while even if you have the best founding team possible, if they're operating in a very difficult market, it's probably, very complex to to create outsized returns.
Michael Wax | Co-Founder and CEO Forto [00:35:44]:
And so, I I love to work with people that I got to know already for a while, may have been through, their time at Fortu, may have been through joint time at universities or, introductions through fellow founders, or our VCs. I'm also, I think, by now, invested in a couple of VC funds and work closely with a couple of funds together. And and, yeah. So, people first, topic second, and the match of the 2 is kinda like the final yes.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:36:17]:
It is actually the most cohesive framework I've heard so far about business angel investment. If people are pitching you and at the very end, we we get to to how people can reach out to you, What is usually how and on what basis do you interact? You already said 55 investments so far. Yes. I I do believe they will not all be big. Most of them would other business angels. So there's usually a group that the founders can rely on. In what capacity do you work with them, whether you add value for the founders?
Michael Wax | Co-Founder and CEO Forto [00:37:04]:
I say I can I can help predominantly with 3 topics? Number 1 is go to market. I so I've been in b to b sales now for 11 years. I think I know a bit about how to, reach out to right kind of, customers and and and sell your product. Second is, fundraising situation. So, I mean, I've been raising a bit more than probably $700,000,000 of capital so far. If you take into account all the routes all the rounds that I've been seeing with companies I'm invested in and where I help founders, like, the the number is in the billions. And and so I think I've I've been seeing a fair share of fundraising dynamics and and situations, and that's where founders then often call me up on whatever a daily basis just for, like, a 3 minute check-in. Like, how should I do this? Like, should I write an email? How would you negotiate that? And so, I also love that kind of deal time and, kinda like whispering some of the learnings I've made, and and pass them on.
Michael Wax | Co-Founder and CEO Forto [00:38:08]:
And the last topic is, cofounder conflict or different team dynamics or difficult team dynamics. I think number one reason why companies fail is because teams break. That happens on a day to day basis. It's very difficult to open up with those kind of topics to your lead investor, and so, and Angel is a great outlet there. Right? You don't expect, follow on investment from them. You you don't have them on board for the money. Most of the angel investors know that you probably have to write up at least a third of your portfolio. So, they're not particularly, they're not particularly mad at you when, the investment right now is not showing a clear return, but they are ultimately there to help.
Michael Wax | Co-Founder and CEO Forto [00:38:53]:
Right? And and those situations, when companies are, let's say, at the brink, I think are, make or break moments, and that's when, I've also made my fair share of learnings and experience in the past, and I think, I can I can I can help there to, sort out topics that have built over time?
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:39:16]:
And now would be for the last question because we're running already at 40 minutes here. My last question would be, people are now interested in being, in Pitinue as a business angel, how would they be able to reach you?
Michael Wax | Co-Founder and CEO Forto [00:39:36]:
Well, reach out to me via LinkedIn or ideally, even better, you find someone that I know and trust and you get an introduction, that usually helps to, get, get time much quicker. I mean, obviously, running a company is, yeah, is is is enough of a day to day job, so it fills my agenda quite well. And so I usually just reserve 1 or 2 hours in a Friday afternoon to speak to a few founding teams and, study pitch decks before, go through a deck and material so I'm prepped for the conversation. But then I I also expect the proper pitch from from the founding team so that they can guide me through this journey and the story, beginning to end, explain why they're building the company, what unique insight they're building the company, and why they have the capability and the skills to build a solution that'll tackle the market. And then they can also articulate well in easy words how that, will work and and look like. And I think it's a skill that founders need to build out early on. Right? You you will be telling a story, for the rest of your period as an entrepreneur, and, that just needs to come across well.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:40:44]:
I would say that a pretty good closing words. Everybody who'd like to learn more, go down here in the show notes. There will be, of course, a link to your career website of Forto. There will be a link to your LinkedIn profile and a lot of other information we had. By the way, you've been talking about Long Beach. That is the main container terminal in LA where a lot of Chinese goods are shipped in, through, through, through, containers. Just want to add this here at the end. Michael, it was a pleasure having you as guest.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:41:18]:
Thank you. Thank you very much for taking the time because, apparently, you said you decide what what to do and what not to do.
Michael Wax | Co-Founder and CEO Forto [00:41:26]:
Joe, thank you very much. Pleasure was all mine, and, speak very soon. Take care.
Jörn "Joe" Menninger | CEO and Founder Startuprad.io [00:41:31]:
Take care. Bye bye.
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