Todd Ehrlich sees serial entrepreneurship through a sunny-side view, which, he says, aids his ongoing success with Triserv, Kill Cliff, and his more recent venture, BAM Worldwide. “People always accuse me of being too optimistic, which I am, but there’s no other way for me to be,” Ehrlich laughed. “If you’re a super pessimistic person, entrepreneurship is probably going to eat you alive.”
Ehrlich went from consultant to CEO of Kill Cliff, a workout recovery drink company, to serving the housing industry through TriServ Appraisal Management, and, now, the trucking industry via BAM Worldwide.
BAM Worldwide, founded by two U.S. Military Veterans, looks to make the relationship between a shipper, broker, and carrier a lot smoother. Its financial software calculates pricing options, generates invoices and lends capital to transportation companies to make the exchange of money easier and more reliable.
Even as an Atlanta transplant hailing from the city that never sleeps, Ehrlich embraces our Southern charm with open arms. We recently caught up with the self-proclaimed softy to dig into the details of BAM Worldwide and what advice he has to dish out to emerging entrepreneurs.
On a high level, what are you doing and how is BAM growing?
BAM is a financial technology payment processing company, specifically for truckload transportation. It’s $700 billion spent a year and in the for-hire portion of that, it is like $400 billion. So we are focused on that $400 billion and we process payments for companies that are brokers or carriers in that space. So trucking companies or companies that broker freight.
Then we advance the working capital to make those transactions happen faster. There’s a traditional lending style called Factoring that’s very prevalent in transportation and they don’t do exactly what we do, but we provide that type of service just at a lower rate. The reason why it’s a lower rate, generally speaking, is because the customers of the trucking brokers and carriers are a good counterparty risk. It’s like a little tiny trucking company that maybe doesn’t have good credit, but they’re carrying products for Walmart and we know they’re going to pay in 60 days no matter what.
Our average days outstanding days for these payments is 37 and generally speaking, 90% of payments go through without a hitch and then somehow with a little adjustment. But overall, they all kind of just go through. So we connect ourselves to all the transportation management systems in this space and then provide capital as close as the transaction as we can.
Because we can control the transactions so much more and actually provide real value added service to the end user, it’s just a totally different animal. That’s where everybody thinks it’s going, to vertical integration, and not ‘spread the peanut butter across the bread’ kind of integration, that you see in general online lending.
What inspires you to get into this niche market and just go with it?
There’s an investment banker who had been doing loans in the space, a niche logistics investment banker, and he told me that there was this problem where it was kind of like payday lending to trucking companies, but the loans themselves were against AR.
If you think about the average truck, it has about $200,000 in annual revenue. It’s not a big company, right? The average broker, like 80% of them, have less than $10 million in revenue and even if you take out the amount they are paying to trucking companies, which is usually 85% of everything that comes in, even if it’s a $10 million company, you’ve really just got a $1.5 million company. So it’s not pretty. These are small, small companies and they are paying way too much for their working capital loans.
So I looked at that and I realized there was one part of the market, the brokers, where no one should give these guys loans because 85% of their money has to be paid out immediately to the guys that actually carry the loads. But, if you could figure out a way to get that guy to make the payment for the carrier, then that would be a game changer. They could all borrow from you and it’d be great. So, that’s what our technology was initially set out to do, to solve that problem and go from there.
You have serial entrepreneurial efforts. Can you speak a bit about those and how they led to this point?
About 10 to 11 years ago, I moved to Atlanta to be an entrepreneur. I was kind of sponsored by a guy who wanted me to run a company which had already been started, but once I got here, I realized it wasn’t real yet. So, I started that company and pivoted, realizing it wasn’t going to work the way he had it planned out. So I pivoted and made it work, and grew it into a $6 million revenue company.
I lasted there about 6 years and then wanted to go further out on my own. I was definitely a minority partner at that stage and it’s one thing to have 20% of a company when everybody else has like 20% or 5% – it’s another to have 20% and the other guy has 80%. So I needed to step away from that. On the side, I had started a business which is a national appraisal management company, with the concept being pay cycles and technology. There was a law change after the great mortgage meltdown, and the law basically said, “You have to have an appraisal management company in the process,” so I thought, oh, it sounds like a money making opportunity. So I took a small amount of seed money and a couple guys I knew and said, “If you’re willing to work for free for 6 months, we can build this company, follow this plan.” I don’t think this happens very often, but they followed the plan and that company grew substantially. It’s probably in the Top 20 companies that do what they do in the country.
That was the first thing I did completely on my own, and then I started another company called Kill Cliff, which was an idea I had when I was in SEAL training. I always wanted liquid Motrin because I was in pain, but I wanted it to be natural, so that idea bounced around in the back of my head for a decade. Then one day, I ended up being like, I need to do this. I was about to drink a Gatorade and thought, this is terrible. So I wanted to make a low-calorie, natural anti-inflammatory. I didn’t really know what I was doing, but one way or another, putting one foot in front of the other, I figured out a way to make it work.
Last year, I was still the CEO, and we were named the number 103rd fastest growing company in the country in INC 500. In food and beverage we were number 4 and in beverage, we were number 1. I think in Georgia or Atlanta companies, we were number 8, which is pretty good for starting a company from scratch and not knowing anything about what you’re doing. I had an awesome team of people, great investors, a great product, and brand, and then we got into CrossFit and took off. We were very authentic and we had what I’d call a phenomenal online social media presence in a really interesting brand voice that’s unique and people wanted to hear it and it’s doing well and still growing nicely.
Sometimes you just have to dive in, create a plan and execute the technology or resources to make it happen. What advice would you give to someone trying to start their own venture?
I worked for two other entrepreneurs who were really, really badass. I think there’s a period of time that is good to apprenticeship under another entrepreneur to see how it’s done because you’ll start to say to yourself, “Hey, I could do this.” Or maybe you think that guy’s a genius, I could never do that. So having that period of apprenticeship doesn’t hurt and I think it prevents a lot of rookie mistakes.
With that being said, I wish I would have gone out on my own a little bit sooner. When I did go out on my own, it wasn’t like one day I woke up and said, “Hey I’m just going to go out on my own.” It was more like there was a situation I wanted to get away from and move out on my own. Since that time in 2011, all of my companies combined did about $50 million in revenue last year and we’ll probably do about $75 million this year. So I went from almost zero revenue back in 2011 when I left that other company to where I am right now,which is pretty good.
There are other guys who are way farther out than me and I look at them and I think wow I wish I was doing what they’re doing. But I think the advice I’d give is a lot of people rush out and want to capture that dream of being an entrepreneur. I agree with that, but spend a couple of years in an apprentice type state, because I learned a ton from the guys I worked for.
Having those influences are really beneficial, but at the same time, it’s a double-edged sword because you can get trapped into staying for a long period of time. It’s comforting to know you’ve got someone else who’s ultimately in charge, but it’s kind of like having kids. There’s never a right time to do it, and there’s always a reason not to, but once you get it it’s such a gift. Once you’re an entrepreneur and you’re on your own, it’s a real gift.
Also, be true to who you are. If you’re not dialed into being an entrepreneur, you might not want to do it because it gets ugly. The other part is understanding the waves of ‘it’s a good day today, or it’s a bad day today, but tomorrow is going to be good.’ I’m going to make it a step further. If you can keep that positive mindset of, I’m going to go to bed and hopefully tomorrow is going to get better and you wake up tomorrow and somebody calls to say they want to invest, it can be a game changer. So, it’s that positive mental attitude that means everything. People always accuse me of being too optimistic, which I am, but there’s no other way for me to be. If you’re a super pessimistic person, entrepreneurship is probably going to eat you alive.
You’re a transplant to the city, so why choose to stay in Atlanta?
I moved here from New York City and to be honest, the 30 days before I got here, and the 60 days after I got here, I was still very attached to NYC. But I met my wife, who was the first person I met on the first day, and she was so nice. I thought this is the nicest girl I’ve ever met, this is really special. And then I realized everybody here is like that.
Not to sound like a big softy, but it’s just a different attitude. You have nicer people who are easier to get along with. Sure there’s that whole, ‘welcome to the south’ thing, but generally speaking, people are cool. We have well-educated people you can hire them relatively cheaply, they’re generally pretty entrepreneurial in spirit, and want to get involved, help out and help you grow something. The cost of living is a lot less and you can also get anywhere from here so that’s really valuable.
The only challenge is that sometimes when I talk to VC guys on the West Coast it’s like we have leprosy or something. Like, “Ugh, you’re in Atlanta, ewww.” There’s a little bit of that, but just certain groups. I think it’s also still where the puck is going. This is happening more and more, the burgeoning tech scene here. We are the next Austin – it’s happening. The biggest payment processors are here, you have huge financial technology companies, huge logistics companies, you’ve got one of the biggest lenders with Kabbage – growth is really starting to happen, I just don’t think it’s fully matured. It’s the end of the beginning.
Article based on an interview with Editor-in-Chief Kiki Roeder.
