Rose Rocket: The one-size-fits-all trucking operating system
Rose Rocket raises $38 million as demand for one-size-fits-all trucking software takes off // How Rose Rocket is positioned for growth in the trucking industry
Good morning Earthlings 👽️🖖
Before Rose Rocket entered the freight trucking market, you could say the industry was similar to an ambitious band of fifth graders attempting to conquer Beethoven's 5th by blowing into shrieking recorders with no conductor and no sheet music. I’m sure you won’t be shocked to learn that the trucking industry is not fully digitized yet and still operates like an out-of-tune and out-of-sync elementary school band—the industry needs a conductor.
Today, we’re going to talk about a company called Rose Rocket. The Toronto-based startup is like a veteran conductor of a logistics orchestra, coordinating truckers, freight brokers, and third-party logistics providers (3PLs) to deliver a symphony of successful trucking. Rose Rocket does this by offering the same software to freight brokers as it does to trucking carriers. If a freight broker sends work to a trucking company and they both happen to use Rose Rocket’s software, CEO Justin Sky claims the work can proceed as if each company was reading off the same sheet music. Effortless.
Rose Rocket raises $38 million
Rose Rocket is building Transportation Management Software (TMS), the operating system of a trucking company. This software is what every staff member of a trucking company is using every minute of every day. It is the orchestration of the “jobs-to-be-done,” everything from invoicing, quoting, order entry, dispatching and tracking drivers. When Rose Rocket raised their $25 million Series A round in October 2021, with Addition Capital and Shine Capital leading the deal, Sky claimed the business was trying to become the HubSpot or NetSuite of the trucking industry. About a year and a half later, Justin Sky is clear that Rose Rocket is set to become the "operating system” of the trucking industry. On June 20, 2023, Rose Rocket announced that it closed a $38 million Series B funding round led by Scale Venture Partners with participation from Addition Capital, Shine Capital, Scale-Up Ventures, FundersClub and Y Combinator. It brings the company’s total raised to $69 million and will be used to bolster its expansion into larger fleets and support investments in product development and network efforts, Sky says.
Let’s get right into it, Earthlings.
Trucking industry terms normal people may not understand…
Logistics is a relationship-driven business with many “sub-verticals” interacting in complex lockstep to get goods from point A to point B. Rose Rocket customers operate in many of these “sub-verticals” of the trucking industry, from small broker segments to enterprise carriers (think fleets of thousands of trucks). Just before diving in, I’ll spare you all some Google searches and explain the head-scratching terms commonly used in the trucking industry:
Shippers: This is simple: a shipper is a company or individual who sends goods. The real nugget of importance here is that shippers also coordinate transportation arrangements with carriers, handle customs and import/export regulations, and ensure that the goods are adequately packaged and labelled.
Trucking Carriers: These companies typically own freight truck assets and employ a trained, certified, and authorized individual or company specializing in freight movement from one place to another. They typically have strong relationships with shippers that they’ve worked with for many years.
Freight Brokers: These guys are like matchmakers, connecting shippers with carriers to transport goods. They use their expertise and technology to find the best carriers for each shipment and negotiate rates on behalf of their customers. Some shippers prefer to work with brokers because they have access to a wide range of small truckers that a shipper might not necessarily be able to access or approve under their compliance guidelines.
Third-Party Logistics Providers (3PLs): 3PLs can manage the entire shipping process from warehousing to last-mile delivery. They are expertly equipped to handle all aspects of inbound and outbound transportation, as well as warehousing for their clients. 3PLs can also broker freight, but not all 3PLs are freight brokers. Some 3PLs specialize in e-commerce fulfillment and own and operate warehouses and a fleet of last-mile delivery vehicles.
Long-Haul Carriers: Long-haul transporters are carriers that transport goods over long distances, typically between states or regions. They own or lease their trucks and employ drivers. LTL (Less Than Truckload) refers to shipments that do not take up an entire truck and are often combined with other shipments from different companies to fill the remaining space. On the other hand, FTL (Full Truckload) refers to shipments that utilize an entire truck.
Last-Mile Delivery Carriers: Last-mile delivery providers are carriers that transport goods from a transportation hub to their final destination, typically a residence or business. They may own or lease their own vehicles and employ their own drivers. Some 3PLs specialize in last-mile delivery and have their own fleet of vehicles for this purpose.
Thanks for reading Earthlings! Subscribe for free to receive new posts and support my work.
Rose Rocket’s mission is simple: become a one-size-fits-all operating system that is the logistics system of record for the trucking industry. When Rose Rocket entered the arena, the industry was positioned well for change: there was (1) outdated and fragmented software within each trucking sub-vertical, and (2) a culture of collaboration was brewing within the industry.
SaaS left the trucking industry behind
Before 2016, the trucking industry was a mess.
Trucking companies were and remain served by a highly fragmented patchwork of dated software vendors each catering to a specific sub-vertical like brokers, third-party logistics providers, or long-haul transporters. On The Future of Supply Chain with host Santosh Sankar, CEO Justin Sky noted that a lot of trucking companies didn’t even want to talk about software-as-a-service (SaaS) back in 2016. Rose Rocket started its journey at Y Combinator, arguably the best startup accelerator in the world, where Sky continued to learn about the structural problems plaguing the industry by talking to customers. He admitted that “Trucking is the market that SaaS forget about for 10 years.”
Most businesses in the trucking industry were still running software “on-prem” (i.e., “on-premise”) in 2016, which basically means they utilized computing and software within a company's own hardware and infrastructure, as compared to modern-day infrastructure where databases, software, and networking are kept on remote servers and accessed over the internet (i.e., the cloud). Trucking companies back in 2016 didn’t even give Rose Rocket the time of day to talk about their offering because that meant having burdensome conversations about security and firewall—challenges that no longer exist with cloud computing. But Sky noticed a sentiment shift around 2017. This was the year that AWS started expanding its compute services to customers within the freight industry, and trucking companies finally started cozying up to the idea of moving to the cloud and entertaining SaaS solutions of the 21st century.
A culture of collaboration in trucking
Let’s say a long-haul carrier based in South Carolina wants to enter the Florida market, they’d need to open a terminal, buy trucks, and hire a fleet—very capital intensive. In the mid-2010s, many companies in the industry said to themselves, “why don’t I just call up a Florida freight company and we can work together by sharing freight that operate in the same routes?” For this to work efficiently, trucking companies need to collaborate daily, share information, and manage shipments that often spend time on other carriers' trucks. Effective collaboration with partners implies a dependable network of collaborators and having partners aligned in every important location to get the right product delivered to the right customer at the right time.
Enter: Rose Rocket.
What Rose Rocket offers
Justin Sky and his co-founders at Rose Rocket built their transportation management software by trying to solve any problem their early customers asked them to address. “We just said ‘yes’ to everybody and tried to figure it out and chased every dollar as capital efficiently as possible,” the CEO of the Toronto company said in an interview with The Future of Supply Chain.
Rose Rocket allows its customers to manage logistics and operations, including automating order entry, sending quotes, dispatching and tracking drivers, and instantly sharing digital documents as loads are picked up and delivered. The platform reduces or eliminates data entry costs entirely, quickly builds tariffs, and even pulls in partner rates, log pick-ups and deliveries, and send push notifications to customers. Most importantly, Rose Rocket can integrate apps that customers need to run their business, minimizing duplicate data entry and allowing for real-time updates.
Customers love it. The company boasts a strong customer base including industry leaders like Canada Heritage, Trimac, Mayflower, SFL Companies, Gulf Relay, and United Van Lines to name a few.
Network effects: Rose Rocket started building for “sub-verticals” of the trucking industry (i.e., all the companies that work together to move freight). When you have a bunch of customers working together, and both are using the same product, Justin and the early team realized that trucking needed a “horizontal software” that operates throughout the entire trucking industry vertical because you’re really just moving something from point A to point B as efficiently as possible. He refers to this as a “Network TMS”, because it’s a B2B software driven by an efficient viral loop where once a customer uses Rose Rocket, they convince 5 of their customers to join as well. The numbers don’t lie: Rose Rocket’s customer count has increased to between 1,000 and 1,500 from 600 in mid-2021, while the number of companies that plug into its network, often to track shipments handled by a Rose Rocket client, has grown 47-fold to 27,000-plus.
To better understand the nature of Rose Rocket’s software, Justin Sky says to think of a trucking company as “two envelopes connected by ‘jobs to be done’.” One of these envelopes is the shipping “order” itself, and the many integrations that come with that order including order entry, sending order quotes, and dispatching drivers. The second connecting envelope is answering “How do you deliver the order from point A to B?” This includes everything about the manifest, the trip route, the load, and the drivers. The middle layer of tasks and jobs to transport goods is where many other trucking software companies “plug” into. Consider Thermo King's temperature monitoring devices that let you track the temperature of shipments in real-time and gain greater visibility into every step of cold transport. For Rose Rocket to be valuable, a carrier using Thermo King needs to be able to “plug” Thermo King into the Rose Rocket operating system.
Rose Rocket TMS connects with the systems and software needed to run a trucking business
When growing Rose Rocket, the team understood that trucking companies needed to integrate with all the tools needed to run a business. Think about all the services that are needed: accounting software, route-optimization, in-house software, temperature tracking for pharmaceutical or food goods, etc. Rose Rocket has built an “Ecosystems” team for integrations, a “Professional Services” for offering black-box, high-impact client integrations, and developer docs for any company wishing to integrate their own use case. Sky believes that investing in this side of the company will continue to scale the platform. Here’s a few of the many integrations Rose Rocket offers:
Compliance & Safety: The BorderConnect integration allows users to generate eManifest documents directly from Rose Rocket and export them to BorderConnect without ever leaving the TMS. This can help streamline the customs clearance process and reduce manual data entry.
Accounting: Rose Rocket has integrated with popular accounting software, including QuickBooks and Xero, to help trucking companies and brokerages manage their finances more efficiently. The integration allows customers to sync their customer, carrier, and driver records into Rose Rocket and the two-way integration lets users send invoices and bills from Rose Rocket directly into their QuickBooks software with a single click.
Telematics: Rose Rocket has also built integrations with telematics companies (i.e., using GPS technology and on-board diagnostics (OBD) to plot the asset’s movements on a computerized map). They’re currently integrated with Geotab to allows users to track their shipments in real-time, as well as have robust engine data reporting, GPS vehicle tracking, driver behaviour management, route optimization, engine health and maintenance, and custom mapping.
Developer Tools: Rose Rocket also offers an open API that allows developers to build custom integrations with their platform.
Rose Rocket is yet another example of bold founders solving tough problems in the physical world by leveraging bits.
Can we restore a culture of building, bring back the excitement of a booming industrial culture, fix labour shortages, and build some useful products along the way? I think we can. And Rose Rocket is proof that bold entrepreneurs and teams can tackle some of society’s major problems that are ripe for innovation.
‘Till next time, Earthlings. That’s it for today. As always, thank you so much for reading! 🧑🚀
📰 In Other News
Virgin Galactic has successfully raised $300 million via an “at the market” offering of common stock, and now aims to raise an additional $400 million to fund the expansion of its spacecraft fleet. Shares of Virgin Galactic have rallied since the company announced plans to launch its first commercial spaceflight by the end of this month.
Google has unveiled the cohort of 12 startups participating in the first installation of its cloud accelerator for startups in North America, including Vancouver’s OneCup AI that uses computer vision AI for its tracking and monitoring solutions for cattle and livestock.
Announced on June 25, defense contractor Anduril Industries acquired Adranos, a manufacturer of solid rocket motors, enabling Anduril to become a merchant supplier of solid rocket motors to prime contractors delivering missiles, hypersonics, and other propulsion systems for the Department of Defense’s most important programs.
Urine recycling: Astronauts aboard the International Space Station (ISS) have achieved a 98% water recycling rate of urine into clean, potable, drinkable water.
🤖 AI Art of the Day
Thanks for reading Earthlings! Subscribe for free to receive new posts and support my work.