Q&A with the CEO of a logistics software company that quietly facilitated 35m+ deliveries across Uzbekistan, Saudi Arabia, and 8 other emerging markets in 2023

35 million+ deliveries facilitated, 10+ countries, $1.5m+ ARR, a second time founder, and a blue ocean market.

In ‘The Little Prince’, the author shares the line: ‘What is essential is (often) invisible to the eye.” In many ways, the infrastructure that moves, coordinates, and stores the products that make up modern life tends to be invisible to the average buyer. Including warehouses, fleets, logistics operators, and millions of marginal operations that enable next-day delivery and a great customer experience. 

Haider Badat is the CEO of Zip24, a company that builds software solutions for the logistics sector. They have two main products: Storfox is an all-in-one warehouse management solution. Shipox is a delivery management solution. These serve any logistics participants which either store inventory, or have a delivery fleet. This represents a $200B+ market across Central Asia, South Asia, and the Caucus. In 2023, their software facilitated 35m+ deliveries, across 10 countries, generating a $1.5M+ ARR run-rate. Their customer base includes UzPost, the national postal service of Uzbekistan, which handles 3m+ orders per month and has 3.6k branches - and Safe Arrival, one of the fastest growing logistics providers in Saudi Arabia. 

We spoke to Haider prior to his latest presentation given at the the 56/45th Joint Meeting of the RCC Commission of Postal Communication in Central Asia, where he shared a vision of the future of digital transformation of logistics to the heads of all 12 postal services across Central Asia (including: Belarus, Tajikistan, Azerbaijan, Kyrgyzstan and Turkmenistan). 

In our conversation, the topics we touched upon included: 

• Learning from one of the founding fathers of Pakistan’s logistics industry.

• Honing the skill of building logistics companies through turnarounds, international education, and trial and error. 

• Designing a business model that has scalable unit economics and capital efficient growth dynamics, in an industry that’s known for being capital intensive.

• Systems building an operational excellence in company building, leading to 35m+ deliveries across 10 countries in 2023.

We learnt an immense amount from this conversation, and hope you get to as well. Let’s dig in.

Learning from one of the founding fathers of Pakistan’s Logistics Industry

Krish: Haider, could you walk us through your early experiences building knowledge in the logistics industry through your father's business? Maybe tell us a bit about the business as well and how that influenced your trajectory. Any stories are appreciated in this context.

Haider: My father has been in the logistics industry for more than 40 years. When he was 18, he started his first company with one file and one desk. Along with his brother he grew the business over the years, not just in a private capacity, but in a public capacity as well. He served the country by consulting the government in various ways. He was the first South Asian to serve as the president of FIATA, which is the global governing body of all logistic companies around the world. It was a great honor for us as a family and as a country.

With that, I got a lot of exposure. Sometimes our family holidays were tied into those conferences, so I had the opportunity to meet people there. From a young age, I had great exposure from going to the office during summer holidays or just overhearing casual conversation at the dinner table regarding all sorts of cool logistics-related stuff, from moving cargo for the forces in Afghanistan to various interesting scenarios that happened over the years. From a young age, I always knew that my profession and career would be built towards that trajectory somehow.

Krish: What trajectory did you witness for your father's business? You mentioned he started when he was 18, just a desk and him. Could you share a bit more about how it went from zero to where it ended up, plus some of the challenges you observed during that journey?

Haider: Sure. My father, with the support of his brother, started off as an entrepreneur, but he's the kind of person who always believed in partnerships. Over the years, he built the credibility to do joint ventures - one with a Belgian-based company, the other with Sinotrans, a Chinese state-owned enterprise and one of the largest logistics companies in the world. He did a joint venture with them in Pakistan, which still exists now.

What I learned from him is the value of partnerships, because he knew that the market is too big to do it alone. Better to partner and do it with people. He grew his credibility and his business portfolio into a holding company with multiple joint ventures and operating companies within that. And that's the state of his business now.

Krish: I appreciate you mentioning the idea that he grew his credibility such that he could do the joint ventures and became essentially the selected partner for international companies because reputation-wise, credibility-wise, there's that embedded trust within that. That's almost your moat to a certain degree. I guess that kind of plays into how you build businesses today.

Haider: Yes, and that's key for markets like Pakistan, where multinationals need a local operating partner because of the dynamics of the market and the regulations. He built that credibility on a personal level and as a family as well. His public service in the logistics space helped - when the UN comes to speak about connecting Pakistan to Central Asia, they come to him. When the World Bank comes to advise on how to export Central Asian commodities from Karachi port, he advises them on how to build regulations and support the private sector in doing that. It was his reputation that helped him in a public sense and privately in business. That's what's been very inspiring for us..

Krish: How did he go about building his knowledge in the sector when he started at 18? Was it a formal education process? Was it through these kinds of international forums that he learned? How does one go about becoming that kind of expert, especially at a time when the internet wasn't a thing?

Haider: The funny thing is, he's probably one of the most senior subject matter experts in the world to a large extent with no formal education in this space. It was all practical, all hands-on, from doing practical business himself. This is predominantly international freight movements, shipping, air freight, road transportation from Pakistan to Afghanistan, building a fleet of specialized trucks in Pakistan. It was all from the operational work that he's done.

Learning to Turnaround and Grow a Logistics Business

Krish: Now let's move on to your story. You go to university - run us through what happens after that as you build out your practice and knowledge, getting the best practices from outside of the family business such that you can do interesting things in the future. Share a bit about that, please.

Haider: Sure. I went to Australia - it's a great place, lovely people, lovely climate. I did my undergraduate there in accounting and economics. Then I went on to do my master's in logistics and supply chain because I was inclined to specialize there. Interestingly, my father was very supportive of us getting educated in the vertical, something that he didn't have or couldn't pursue at his time. So that encouraged me to do that.

Halfway through my master's, I got an internship at DB Schenker, one of the largest logistics companies in the world, working directly under one of the most senior people in the organization. Luckily, that helped me build a rapport with him. Within six months, I got a full-time job there while studying and working at the same time - working 9 to 5, doing my master's classes 6 to 9pm. Within a year, at the age of 24, I was the youngest manager at Schenker Australia from a team of 3,000 people. I was very fortunate and learned a lot. It was all about  building bespoke solutions in warehousing, cold chain logistics for key accounts like Red Bull and Apple. It was very practical and hands-on.

Then in 2015, I moved back to Pakistan to join one of the family companies, which was a Belgium-based joint venture called ECU Worldwide. The company was 30+ years old in Pakistan, with older staff and more traditional practices. It didn't really have much of an ERP, HR department, or proper finance function. Within months after learning what they do, I was thrown into a leadership position to lead the company. In summary, within a few years' time, I grew the bottom line multiple fold, which was a big accomplishment, by introducing technology, best practices, and applying what I learned in my professional career. I took that very traditional company and grew it.

Shortly after, I wanted to do something new. So I put that company on autopilot and started a trucking company. This was a very traditional trucking company where we buy the trucks and move bulk transportation. The innovative part was that we partnered with a Dutch hydraulic company and a local truck fabrication plant to literally construct the largest dumper trucks in Pakistan. Pakistan had never seen dumper trucks that could carry more than 60 cubic meters of cargo before. We managed to build those to transport oil seeds and coal from port to terminal. But a regulatory shift made us have to pivot that business. Within a span of three years, we built up a fleet. But then when we liquidated it, we gave back investors exactly what they invested. It was a great exposure where I learned how to operate a business, start from scratch, and scale it down successfully. That was a great learning experience as well. .

Krish: I really like those two stories because they remind me of the trial and error learnings of my favorite entrepreneurs. For example, if we look at Orlando Bravo from Thoma Bravo. Before he went on to build Thoma Bravo, which became an iconic software private equity firm, he was relatively successful, but he’d also lost like $50m on some bad internet bubble deals.  When reflecting on this, his mentor said: “No, I've sunk $50 million of experience into you, so therefore, you're a star now. You got a lot of good expensive training.” His mentor doubled down on him after that - and Orlando today talks about the lessons leaving a very strong mark on his investment style - and leads to a better muscle for future decision making and dealing with stress.

Haider: Yeah, that business taught me so much. I spent nights at the port with truck drivers facilitating cargo dispatch. It was very operationally heavy and intensive. It was commercially competitive as we were bringing in innovation in a very traditional concept. I learned a lot about people dealing skills, how to scale up a business, and how to scale down a business with minimal financial impact. The win for us was that despite the regulatory shift, we wound down the business with no financial loss to any of the investors. That was a great win for us and something that our competitors didn't manage to do.

The Next Venture and Tackling a Bigger Market in a Way That Scales:

Krish: Do you want to run us through what happens afterwards?

Haider: Sure. I had the opportunity to go to China with a friend and we met at a company called JD.com. JD.com is the largest e-commerce company in China, as big as Alibaba, sometimes even bigger in certain metrics. What differentiates them from Alibaba is the way they do logistics. That's their core pitch and core competency.

I got massively inspired by their very advanced warehousing and came back to Pakistan with the inspiration to get some of that knowledge and implement it here. The Pakistani market, when it comes to fulfillment and warehousing, is about 50 years from where it should be. To build that sort of competency there would take years of investment and time. So what we did was a partnership with JD.com where we represent their software here and build fulfillment centers. We built that, and got some major brands on board. 

But soon after, we realized that to scale that to a global or pan-national level, we need an abundance of capital and the market needs to be ready to pay for those efficiencies. While doing market research, I read up on the  concept and benefits of SaaS , and that's what inspired  me towards getting into SaaS. While doing market research, I came across a company called Zip24 and that's when the Zip24 story starts.

Krish: Before getting into Zip24, can you provide some broader context? You mentioned the Pakistani market is 50 years behind where it should be. Could you give us a broader context on the macro when it comes to logistics markets in the regions that you're serving? What are some of the numbers or some of the broader tailwinds that exist in these contexts?

Haider: Logistics in the MENA region is estimated to be $163 billion for 2020-24. But that's not too relevant for us. What's relevant is the amount businesses spend on logistics - businesses like logistics service providers, retailers, e-commerce stores, quick commerce merchants, manufacturers, and what they spend on their logistics, in-house or outsourced. That's what our target is - how can we optimize that. 

The numbers are ridiculously large. Very often for businesses, up to 20-30% of their top line is just spent on logistics, on moving goods from A to B. Our role comes in on how we can optimize that spend and bring in more efficiencies, more visibility, and more control over that process.That's what our focus is.

Krish: Is it okay if you share some of the notable players in the space that you guys take inspiration from, such that people know what success stories may look like more broadly in the ecosystem?

Haider: Sure, there's a US-based company called ShipHero. They're valued at about 200-300 million. There's ShipBob worth more than a billion. There's Flexport that's worth multiple billion dollars. Specifically, ShipHero and ShipBob are in the logistics SaaS space, doing what we're doing except in the US market. Those companies are who we take inspiration from.

In India, there's Fareye worth more than half a billion dollars and Shipsy worth more than 125 million. They're in Logistic SaaS, mostly on the delivery management system (DMS) side, with a focus predominantly on India. The Indian market itself is so big that they're busy riding that wave, whereas we've chosen markets that are still relatively virgin, especially MENA, Central Asia and Pakistan.

MENA has a bit of competition, but we feel that we have a good edge over the competition there. All these companies have proven their case, worth hundreds of millions of dollars, and provide enough inspiration for us to move forward.

Zip24, 101 - Problems, Customers, Solutions, and Economics

Krish: Okay, awesome. Could you give us a high-level summary of Zip24 in terms of the product suites, the problems it solves, who the customers are, and some customer stories before we get into the origin story?

Haider: Zip24 is a B2B SaaS company in the logistics space. We have two major products: Shipox, a  delivery management software, and Storfox, a warehouse management software. We solve for companies that have warehousing or a delivery fleet. Our universe is anybody that stores inventory and anybody that has a fleet. Within those, we've picked two verticals to target and try to conquer. Typically, our ideal customer profile consists of third-party logistics (3PL) companies offering these services to merchants.

Our biggest success story and customer to date is Uzbekistan Post (Uzpost), Uzbekistan's national postal service. We did a contract with them a couple of years ago where we provide end-to-end supply chain and logistics technology for them - first mile, mid mile, last mile, driver app, customer app, hub to hub movements are all done via our technology. We've done tons of builds and fulfilled regulatory requirements for them, and we've built a lot of IP which we now want to export to other regional postal companies.We've helped them grow. Two years ago, they used to do about 200k parcels a month. Last month, we did over three million deliveries for them. We've helped them become competitive against the private sector and their competitors.

UZ Post and the Uzbek Ministry of Digital Technologies has been incredibly helpful in helping us connect to the right people in the region. 

Another example is IDH, the biggest medical diagnostic company in Egypt. They do more than 100,000 pick-up and deliveries of blood samples and reports within their network using our software. Now they're scaling the use of our software to Saudi, Nigeria, Jordan, and one or two more countries they're in. They may be contracting us to build a customized mobile app for customers to book blood tests, further deepening our relationship with them.

Quality Foods, a grocery delivery company in Dubai, is another interesting use case. They don't have their own fleet but are using our DMS system. They've crowd-sourced riders with the help of our technology, doing tons of deliveries a day managed entirely on our software.

Safe Arrival in Saudi is a typical 3PL last-mile logistics company that wants to innovate in technology. We've put them on our enterprise-level package, where we've picked up our software, put it on a separate instance for them, and do builds for them  based on their requirements for reporting dashboards and custom KPIs.

As a B2B SaaS company, we solve critical problems for our customers. Unlike a HRMS, CRM, or financial module that often provides supporting services, our customers typically rely on our software for core operations. If we stop working for a minute, an hour, or a day, it affects their core businesses, especially for 3PLs. The upside is that there's a lot of dependency on us, stickiness, and once we're in, we're in for the long haul.

We're customer-obsessed, so product innovation flows through solving customer problems. We don't have to invest much in R&D because we're busy solving problems for our customers, which feeds into our main product stack. The downside is that the sales cycle is long, and there are more people up the chain of command we need to convince to get our software. It's typically a larger decision for a company to move to us than it would be for a support function SaaS product.

Krish: Could you walk us through the economic attributes of the business in terms of unit economics and the economic story you tell investors?

Haider: Sure. We're doing more than a million in ARR now, which is a great milestone for us. The next stage in the medium term is to take this from one to three, and then in the medium to long term, from three to ten. We've built  our base now to achieve these goals. We have a clear cut goal to be the number one logistics SaaS provider in the markets we operate in. We will be selective in the market we choose, but we will conquer. 

Our product is great, and we're solving key problems for different verticals. Now our entire focus is on scaling it. We've set our North Star at 9-10% sustained month-on-month growth, which translates to 3x in 12 months. This puts us at the top of the class for global B2B SaaS companies. That's where we're striving to be in the coming months and quarters.

When we 2x our revenue figures, we'll be at a solid operating profit of more than 30-40%, which will allow us to reinvest cash back into the business for growth. The $100 million question we're cracking now is which levers to pull to achieve that growth, and that's where all our time and effort is being spent. We have some really good contracts in the pipeline, focusing more on enterprise-level deals to unlock those larger steps of growth.

Growing through M&A:

Krish: Could you go through the origin story of Zip24?

Haider: While doing market research, I came across Zip24, based in Dubai and Uzbekistan. I got to know the founders, Asif and Muzaffar, who bring in tons of experience. Asif was the CFO of Souq and helped orchestrate its acquisition by Amazon. Muzaffar was the founder of Wing, a company that Souq (an Amazon subsidiary) bought, and he subsequently worked for Amazon as well. Both of them retired from there and founded Zip24.

I was heavily inspired to do SaaS. For me, the concept of SaaS logistics was putting all of our experience and learning into a technology product and then scaling it. It was the best way to spread my learnings and knowledge and try to monetize it as well. One of the biggest inspirations of SaaS was selling internationally while being based in a certain place or keeping your costs in a certain market and selling in another.

I got to know Asif and Muzaffar and built a great rapport with them. I figured out that they had unmatched experience and wisdom, and perhaps I was bringing something to the table that they couldn't give at the time, which was time commitment to take this company to the next level. We agreed on the terms, and Sturgeon facilitated that. In June last year, we merged.

I flew to Uzbekistan because that's where the entire operations of the company were. Soon after that, I realized that we'd have to move a lot of the management of the company to Pakistan for cost and control reasons. We flew a team from Pakistan to Uzbekistan and completely restructured the whole organization.

We did code documentation, bug fixing, restructured the entire tech team into different verticals, restructured HR, put everybody on fresh contracts, rebuilt the customer service team, and moved a lot of back-office functions to Pakistan. We still have a great team in Uzbekistan, so now we have two back offices, one in Uzbekistan and one in Pakistan, and we have customers in more than 10 countries.

Quite a few months were spent on restructuring and building that base to support 3x and subsequently 10x growth. I felt it wouldn't have been worthwhile aspiring to achieve that growth immediately without having a strong foundation and a strong base of an organization. At this stage, I'm more than happy with what we've achieved as far as base building is concerned. We have a great sales mechanism in place, a customer service mechanism in place, and we're working on marketing now. On the software side, I'm very happy with the position we're in at the moment.

Krish: In that restructuring process, what were some of the major challenges that you faced and the lessons you've learned so far in building this up?

Haider: Naturally, there was a cultural shock and language barrier that we had to overcome. Every time there's a merger, it's quite a tricky situation with a high percentage of mergers failing. That's because the change management isn't handled well.

The most challenging part for us was managing that change, keeping the staff on both sides motivated despite the ups and downs, keeping the North Star in focus, at times being compassionate, at times bulldozing. That was a skill I had to learn on the field.

The biggest challenge was keeping the staff motivated, explaining to them what our mission is, what we're trying to do, streamlining things, and dealing with customers. Those were the biggest challenges.

The biggest lesson I've learned is that all that we did was great, but it's not worth much until we're able to achieve a high percentage of sustained growth. Our entire lesson is that base building is essential and super important, but it's only worthwhile when it translates to growth. That's been my key takeaway.

Risk Management and Blue Oceans

Krish:A key part of being a founder is anticipating risks and challenges and adapting before they come. What do you think the main risks are and how are you planning on managing those as it relates to building this business out for the longer term?

Haider: Risks are there like in any business. However, I feel that the markets we're operating in are still relatively blue ocean. Often, we go to customers and pitch our software, and they're shifting from an Excel sheet to us. So there can be a risk of adaptability, but there is definitely a use case there which keeps us going.

Another risk is competition coming in with a bigger budget. But we've countered that by localizing our sales efforts, which is essential, and working on local integrations and solving for customers in a localized way. Something that just can't be bought.

Honestly speaking, I think those are the major risks. There's also the risk of not achieving growth or of growth slowing down, but I don't know how we can articulate that.

The Longer Term Vision:

Krish: What is the broader vision for Zip24? What are you most excited about in that macro story and with regards to the roadmap that exists over the next many years?

Haider: We're building ourselves up in a way that we are attractive for an acquisition in the years to come. We're working on this from now. Apart from the obvious, which is growing our revenues, we're working on a solid foundation and having our documentation and corporate governance in place. Everything in the organization, from responsibilities of each person on the technical side, like sprints and tasks, is well documented to the T. That's my way of ensuring that it's a well-oiled and well-synchronized setup. This is one thing we're doing to enable ourselves for an acquisition in three to five years, or even an IPO.

What's attracting me towards an IPO is that our unit economics are great, but they will just get better with time. Because we're a SaaS company operating from competitive cost centers, once we have our base cost in place, any incremental customers or order revenue have a diminishing effect on our cost ratio. We foresee us having super healthy unit economics that will allow us to do an IPO in the years to come.

As for who could acquire us, logistic companies and shipping companies have done tremendously well over the past few years. Companies like Maersk and DP World have done tremendously well. Over the past few years, they have been investing in avenues that are not their core operations. DP World, from being a port operator, is now investing in technology and end-to-end supply chain functions. They even have a marketplace called Dubuy, which by the way is our customer for both our products. They'd be an ideal candidate for an acquisition because we're solving problems for logistic companies that connect to their ecosystem. And we have a tremendous amount of data. The data that we possess, we haven't even begun to get into that now because that will require a whole different level of focus on what we can do with that data. Another potential acquirer is the Australian logistics technology giant Wistech - which over the years has acquired dozens of related SaaS companies to complement their product suite.

So the broader vision is predominantly that.

Krish: How can people learn more about Zip24?

Haider: We obviously have our websites, but please reach out to me or any of our management team on LinkedIn. We like interacting with people, with customers, with potential investors. That's what excites us the most. 

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Here are some images from the journey: