October 5, 2017

Veho Technologies Crowdsources Package Delivery

In September of 2016, then Harvard Business School students Itamar Zur and Matt Graham traveled to a transportation conference in Dallas to share their idea of crowdsourcing the last mile of package deliveries.

Confident a model similar to Uber would bring huge efficiency gains to the delivery industry, the two 20-somethings eagerly went from exhibit booth to exhibit booth trying to persuade CEOs to partner with them. Unfortunately, industry veterans were not as enthusiastic about the idea.

Itamar Zur, Co-Founder of Veho Technologies
Itamar Zur, Co-Founder of Veho Technologies

“At every booth, they said, ‘You guys are crazy, it’s never going to work,’” Zur remembers.

Even if people were interested, there wasn’t much reason to get excited about the company’s prospects. Zur and Graham had no prototype app to show off or any formal experience in the delivery industry.

One of the only things the two men did have, in fact, was a tenacious commitment to learn about the industry and turn their idea into a reality. Perhaps if the conference attendees understood the extent to which that was true, they would have been more interested.

Zur and Graham became friends during their second week at HBS in 2015, bonding over a shared passion to make a difference in the world. Rather than secure summer internships by leveraging connections at the prestigious school, they decided instead to meet at the Harvard Innovation Lab at 8 a.m. on the first day of their second summer. The two men were determined to start a company, they just didn’t know what kind of company.

Zur had recently had a package stolen from his apartment, so they began looking into package theft and the delivery space.

“We realized the bigger problem was the cost of last mile delivery,” Zur says. “When you ship a package from San Francisco to Boston, about 50 percent of the shipping cost is getting it to Boston. The other 50 percent is getting it from the warehouse to your door.”

Veho Technologies was born from that epiphany with the mission of reinventing the way packages are delivered by using crowdsourced drivers in their own cars. Although they were largely unfamiliar with the industry at the time, the founders have focused on executing a relentless campaign of market research ever since.

They began by following UPS drivers on their routes to learn about delivery methods, at one point frightening a driver enough that he threatened to call the police. Another driver using his own van welcomed the mysterious stalkers to ride with him, and Zur peppered him with questions about the profession.

A breakthrough came when Zur pitched the idea to the CEO of a company with a packaging warehouse in Boston. The man liked the idea and agreed to give the ambitious entrepreneurs a delivery route.

“We spent our entire second year of HBS waking up at 5 a.m. and driving to the warehouse,” Zur remembers. “We’d do it seven days a week, just getting packages and delivering them. It was a test.”

Soon after passing their own delivery test, the founders set out to prove that anyone with a car could deliver packages, but first, they needed to find drivers. Once again, Zur and Graham took a creative approach to solving the problem.

Veho Technologies Software Screenshot

“We came up with the idea of ordering food on one of those food delivery services, and we’d just sit in a restaurant five minutes from campus ordering from that location,” Zur explains. “When the driver would come in we’d say, ‘Don’t worry about the food, just come and sit with us.’ And we convinced him to come and drive with us because we’d pay him more money. We did it again and again, so we basically poached our driver base.”

In November of 2016, serial entrepreneur Lukas Keindl came on as CTO to build the mobile app for drivers. Until a prototype was deployed in February, Zur and Graham had been managing deliveries manually using spreadsheets.

“We knew software would ultimately be the competitive advantage, but we didn’t have anyone who knew code at first, so we figured we’d do it all ourselves,” Zur says. “We wanted to learn how to operate the business on a low scale with no technology, prove the concept, then build the software.”

Today, Veho Technologies is run through a robust software platform and mobile app that’s helped the company deliver around 9,000 packages. Each day, drivers are contacted ahead of time with offers to participate in certain routes.

Veho Mobile App

The offers give the driver the time of the route and the exact amount of money they’ll make, bringing more predictability to shifts compared to companies like Uber and Postmates. Zur says Veho drivers are always paid at least 18 dollars an hour, and routes typically take around three to four hours to complete.

“The app does everything for you, you don’t need to have done package delivery before,” Zur says. “You scan the packages, it gives you the addresses, then it optimizes your route. When you arrive at the right address, it allows you to take a picture of the house for proof of delivery, and when you’re done you can just turn off the app. You don’t have to go all the way back to the warehouse.”

The founders believe there are several market factors working in their favor, with the proliferation of eCommerce hanging over everything. Issues companies like UPS have always had to overcome, like fluctuating demand and the unionization of drivers, also give the crowdsourcing delivery model an advantage.

And, of course, the delivery and logistics industry has never been known for leading the way in adopting innovative technologies.

“Most of the systems these companies use are the same ones they’ve been using for decades,” Zur says. “We built our solution from scratch with the latest technology. When you use our system everything is just a lot faster. Scanning is faster, route optimization is faster and more accurate, and you don’t have to go back to the warehouse every day. I’d say it increases productivity by 20 to 25 percent.”

That technology also translates to a better customer experience (marking another parallel with the ride-sharing industry).

“We’ve almost eliminated home missed delivery attempts, [which is when] the driver leaves a note saying, ‘Sorry we missed you,’” Zur says. “The problem is there’s no communication between the delivery company and the customer.”

Veho’s system texts customers ahead of time to let them know exactly when the package will be dropped off, and customers have options such as having the driver call them upon arrival, leave the package at the front door or even drop the package off with neighbors.

The company delivers packages all over the greater Boston area, as far north as Gloucester and as far west as Framingham, and Zur says they’re looking to expand to new markets soon. The founders have also been approached by at least one large retailer and even some existing delivery companies about partnerships, including some of the very same companies that turned Zur and Graham down at the conference just one year ago.

That quick turnaround must make the founders feel accomplished, but you wouldn’t know it by watching them work. Keindl and his team of engineers are hard at work adding features and automation capabilities to the Veho software, and Zur still wakes up at 5 a.m. on the weekends to make deliveries.

“We’re very hands-on because we want to make sure we’re doing things right,” Zur says. “We’re still in the stage where we’re experimenting and learning. I still drive routes because part of my role as CEO is to understand the nuts and bolts of the business, so I’ve got to get my hands dirty.”

Meanwhile, Zur’s evolution from knowing nothing about the delivery industry to running a company in it has reinforced his disdain for the oft-cited idea that companies must have “market-founder fit,” or the concept that founders must have a prior deep understanding of the market they are entering to be successful.

“I never agreed with that,” Zur says. “Don’t let people tell you what you can and can't-do. If you’re confident, if you’re smart enough, scrappy enough, willing to learn things by yourself, you can make things happen. If you believe in something that other people don’t, just do it and don’t listen to anybody.”

Zach Winn is a contributor to VentureFizz. Follow Zach on Twitter: @ZachinBoston.

Images courtesy of Veho Technologies.