Lori Systems is a logistics coordination platform that connects Cargo Owners and Transportation in East Africa. Find out how the company addresses Global Goals 1, 8 and 9 in this episode.
In this episode, Chandler interviews Ron Okello, the head of product marketing and PR at Lori Systems. Ron shows us how Lori Systems solves a major economic problem in East Africa: the relative cost of moving goods across East Africa is one of the highest in the world.
- 4:30 How the Platform Works | Lori Systems is a logistics coordination platform that seamlessly connects Cargo Owners and Transportation.
- 13:30 Why Does the Data Matter? | With data on transporter reliability and costs, the company helps suppliers optimize their business.
- 19:00 Business Model Insider | Ron talks about three pillars of their business: tech, operational excellence, and customer service.
- 27:00 Tech in Africa – Who Will Survive? | Hear the two main industries ready for tech innovation in East Africa.
- 32:30 Timeline for Exponential Technology | Ron expects exponential tech to come sooner than we think.
- 40:45 Lowering Costs, Alleviating Poverty | Find out how problem-solving in the cost margins can shift a whole economy.
Lori Systems was founded in 2016 by Joshua Adam Sandler, a South African Native and Harvard Alumni. When they saw the inefficiencies in the transportation industry, they created a platform to revolutionize logistics in Africa.
- Manage invoicing and operations
- Visibility of where the trucks are
- Rates for product moves
- Which cargo is coming and going, and the cost
- Access to consistent cargo
- Centralized control system and reliability enforcement
- Consolidation of providers, products, trucks, and feedback on driver compliance
- Journey and performance monitoring
- Push notifications telling their driving habits and arrival times
Formerly, there was no certainty that trucks would show up when a company would call them to transport products. This way, the product companies and warehouses can dependably transport their products and optimize their business based on the data in the platform.
Getting from point A to B in East Africa is not as easy as ordering Uber Eats. Most cities in Africa have unmapped, unpaved areas between them. This makes driving and delivering product challenging.
“The driver is our number one priority. His compliance and reliability is important to us.”
What do you do with the data?
“Every month we have a sit-down with our clients, and have a conversation about performance. We give feedback and they give feedback, based on the data. We better ourselves and also scale with the data.”
Lori Systems decreases the cost of goods for their customers by 15% just in lowering transport costs. “When we do this we will be able to realize more of the global goals – bettering economies and reducing poverty.”
Lori Systems address the Economic Development Global Goal by providing transporters consistent wages, and also they address poverty by reducing the cost to move products.
“The biggest goal for me would be Industry Innovation and Infrastructure. We looked at the challenges within that goal, and we come in to bring the innovation to streamline the process and make it more efficient.”
Business Model Insider
“We are centered in 3 pillars. We have technology to drive decision making, Operational excellence to operate teams, and customer service – which is the biggest one if you ask me. The beauty with Lori systems is that 33% of a move cost goes into fuel. And how we solved that problem is through fuel financing. We provide them with fuel to execute the job, and when they come back they give us the invoice. Then, we handle the documents with the clients and ask for a contract.”
This means it’s an all-around win for the transporters. They have fuel, insurance and access to consistent cargo.
“We map out your future for you. On your journeys we are looking for your return journeys, or move you from town B to town C because we have a new customer there. We always make sure that your trucks are constantly moving. I can’t begin to stress how much time we save the transporters.”
Tech in Africa – Who Will Survive?
“Tech cannot solve all our problems. It needs to be supported by people.”
Ron talks about crowdsourcing solutions to the industry, since it’s an industry “build on relationships.” He sees opportunity in the growing workforce and the government’s support of indigenous companies.
Ron suggests that any tech company oriented toward the Global Goals will be more likely to make it. Agriculture and logistics will especially thrive in African markets.
Another area of tech opportunity is tech for finance. Any technology that can help create access to capital or make fund transfer simpler will go over well.
“In a nutshell, as long as its a problem that you can solve, the industry is ripe and open to solutions.”
Timeline for Exponential Technology
Ron explains that on the financial side, exponential tech could arrive “sooner than we think.” Blockchain is growing in Africa since transparency is an issue in developing markets. “Self-driving cars may take awhile,” he says, since the infrastructure to support exponential tech in transportation is still developing.
Trust is a key factor in adopting exponential tech, Ron says, even if the market is ready. Moving from carrying groceries on your head to riding a hoverboard is an unlikely leap.
As far as Lori’s expansion, Ron talks about moving into Uganda next. Expanding the company requires partnerships and tackling the infrastructure issues in the country. How will they bank? What roads will they use? Though Lori will have the advantage of access to landlocked ports, they will have to create partnerships to allow imports and navigate the existing infrastructure.
Lowering Costs, Alleviating Poverty
Though costs of goods increase as their source companies move more inland, Lori is able to maintain consistent pricing because of the services they offer. Ron says it costs 4x the amount to move product in Africa as compared to the United States.
- Moving things is expensive! Margins are a critical problem-solving opportunity in an emerging market.
- What margins have you planned for in creating a business in an emerging market? How will increasing volume impact those prices and margins?
In this episode, find out how the Hack Fund platform uses blockchain to create accessible funding for startups outside of Silicon Valley.
- 6:30 How to Raise $5 Million: “I don’t know man, I’m a nurse!” Jonathan shares the journey of balancing nursing night shifts, coding, and running Hackers and Founders events.
- 14:00 Choosing Companies in Emerging Markets In Central America, the likelihood of a company going public or selling to Google is slim. How can a blockchain fund incentivize investors, and help them to select great companies?
- 21:30 Thousands of Beers and Founder Struggles Once he was invited to the Small and Emerging Companies (SEC) committee, Jonathan knew “We’re gonna end up solving poverty in emerging markets.”
- 29:30 Investment to Solve the Global Goals One micro VC fund in Latin America grows the market by 10% per year. Hack Fund can transform a continent’s economy by investing with local profitable companies.
- 45:00 Technology to Solve the Global Goals Each new technology job creates a ripple effect of economic growth in an emerging market. See how this blockchain platform addresses root problems to address the Global Goals.
How Jonathan Started Hackers as a Nurse
Jonathan starts us off by sharing the mission and vision of hack fund.
“The mission and vision of hack fund are to solve the world’s liquidity problems and to fix investing in emerging markets.” Jonathan spent a couple of years on an SEC advisory committee looking at why investment gets so concentrated in certain areas of the country. He kept hearing entrepreneurs faced with the same problem, ‘I’m not able to raise money for my business.’
“85% of the world’s mergers and acquisitions happen in Silicon Valley.”
Usually, how funds are freed up is that a company gets sold or it goes public. Otherwise, investor funds are frozen in their investment companies. Chandler explains, “We’re retaining this thing called equity, and it doesn’t actually mean anything until the company is actually sold.” Liquidity means I can turn my stock or investment money into cash.
Jonathan hilariously describes the process of creating a public mutual fund legally. When on the phone with a lawyer who could create such an entity, he heard something to the effect of,
“One second Jonathan, I’m on the deck of my yacht in the Manhattan harbor and it’s very noisy here. One second – Raoul! Pour more Chabli! Don’t spill on the white leather!”
It came out to millions of dollars to get the public mutual fund off the ground legally. But Jonathan was “absolutely convinced we need liquid funds.”
He began to hear more and more about Blockchain, and began to think about creating a digital security with a Token. Jonathan loved this idea, and he thought it was possible if it could be done legally.
“Essentially we’re just issuing a digital stock certificate that is a share in our fund. It’s a Cayman Island company.” Cayman Island companies have specific laws that will recognize both digital and paper documents, and that leave funds in the Hack Fund sector totally unregulated.
“The superpower that the fund gives me is that as compared to a traditional silicon valley venture capitalist raises money from other people and buy stock in other tech companies. They hope to god that 1 in 50 of these tech companies gets acquired by google for 1, 2, 5 billion dollars, and then everybody involved makes money. Unless you have a huge acquisition or IPO, the venture capitalists don’t make money.
In my model it’s my job to make sure that my share price grows. We,, how do you measure that? I don’t know… they have profits?! I said profits in Silicon Valley!”
“My superpower is, i don’t have to worry about whether one of my companies gets acquired or not. I don’t have to ask any of my entrepreneurs, ‘what’s your exit strategy?’ I don’t care!”
Jonathan talks about the auditing and vetting that takes place to ensure his investments are viable companies making profit.
What’s Possible for Emerging Markets
In emerging markets, like Guadalajara or Ireland, potential investors don’t see a return potential on their investment because it’s unlikely that a company from those markets will sell to Google or Ebay, or go public.
It’s unlikely that a startup will find investors if they are in an emerging market like that. The Hack Fund can give emerging markets that same opportunity through a digital stock through cryptocurrency. And, the value of the stock is established by the profitability of the company.
How To Choose Companies for Investment
“Well, I’m actually disrupting my own business.” Jonathan talks about the events and mentoring he’s done to bring companies to Silicon Valley and get them funded. Now, with Hack Fund, he doesn’t have to do that.
To be selected, there are three simple steps:
- Scoring Each company is reviewed and scored by other entrepreneurs instead of by other investors.
- Introductions Those who scored well will talk with the Hack Fund investors, who will review and score them based on their capacity to hit specific milestones.
- Final Cut If they pass those stages, we sit down with them to see if we care about what the company is up to and if we can add value.
From Nurse to Technology Investor
It was Jonathan’s dad who had him become a nurse, because “computers are for video games and you can’t do that for the rest of your life.” His interest in tech and computers led him to move to Silicon Valley soon after becoming a nurse, where he worked as a nurse 3 nights a week and coded for the other nights.
Jonathan gives credit to his wife for the start of his career. “I believe she said, ‘I’m f*cking tired of hearing about coding and entrepreneurs, you have to go out at least once a month and talk about it to someone else.”
“When the economy tanked, the underemployed nerds started to make things. They would come up with a great idea and then ask me, ‘How do I raise 5 million dollars?’ I don’t know dude, I’m a nurse!”
Thousands of Beers and Founder Struggles
“The Hackers and Founders tagline is, ‘Making founders’ life suck 34% less all around the world.’ Primarily that’s because we spent years having beers with founders around the world and talking about what sucks. This money thing came up over and over and over again.”
“Apparently not a lot of people have had beers with thousands of entrepreneurs.” That gave Jonathan leverage, and he was invited to an SCC committee that began his mutual fund path.
“We’re gonna end up solving poverty in emerging markets,” Jonathan says. He talks about his hometown in rural Honduras and being “the only white kid at the end of a six-hour long dirt road. That’s where I came from.” There were 35 coup d’etats in the region, where cops had M16s and AK47s. His friends didn’t have shoes to play soccer. But his dream was to move to Silicon Valley, flip tech companies, and then come back and put shoes on the little kids.
“I think if we can use blockchain to tweak how capitalism works, tweak how we invest in companies, and tweak how companies access crypto markets around the world, I think we end up growing the economies in entire countries. For me that’s fun… That’s my Don Quixote hero’s quest. How do we fix poverty, and to do that how do we fix capitalism and make it a bit more collaborative?”
How does the Hack Fund work to Stimulate Emerging Markets?
One fund can stimulate an entire country’s economy dramatically. Jonathan says, “A hundred million dollar fund, or a micro-VC fund, spread out over 4 years, would increase investment into an entire continent by 10% per year.”
In addition, for every 1 tech job created there are five satellite additional jobs are created. So, each tech job feeds 5 people and impacts 10 or 15 people.
In order to put shoes on millions of kids in these countries, their moms and dads need better jobs. Jonathan talks about transitioning family incomes from agriculture to software-based vocations, and says that transition is possible within one generation. “For each young person who takes their software knowledge and builds a company, they will be making enough to stimulate their whole town on their own.” That creates lasting, systemic impact.
“I’m tired of precious little cute development projects. We need to grow these economies.”
Jonathan suggests transitioning agricultural economies to knowledge-based economies as a way to address poverty and grow the economy.
Technology to Solve the Global Goals
Jonathan talks about the ability to empower brilliant scientists and technologists in emerging markets by funding their idea development. He notices that people like Bill Gates and Steve Jobs had access to capital and that there are similar undiscovered geniuses in other parts of the world. What would happen if they got funding?
Another new capacity with the Hack fund is to enable people in different income brackets to invest, since it only costs $2 per person to become an investor. Once they are on board, they receive tokens that will eventually be used for basic living expenses.
“In emerging markets, there are going to be billions of people that are going to need to put a little bit of money to work.”
Jonathan talks about the inefficiencies of pensions and hedge funds, as he learned about them in nursing. He saw how much wealth was locked up in the nurse’s pension programs, and started thinking on a way for nurses to make 30% a year on their pensions by keeping the management fees low.
“This is why I think Blockchain is the future of finance.”
The Root Causes of all the Global Goals
Jonathan walks through the “clunky” user experience of the current Hack Fund platform. Users can log on now and invest, and the platform will become more user friendly in the next year.
And, Jonathan believes Hack Fund is on the right track to make a huge difference toward the Global Goals.
“I believe the liquidity problem is the root cause of many of these problems… I’m not Utopian by any means. Yes, there’s corruption and scams. But just like the internet democratized peoples’ publishing, Blockchain will democratize people’s access to investment and entrepreneurship… And what the hell, that’s worth spending 20 or 30 years on.”
When it comes to the root cause of the problems that the Global Goals address, Jonathan speaks to education. He says access to the internet and funding education are steps before addressing education itself. He also mentions that corruption is a huge factor in emerging markets, and he imagines all nonprofits and governments putting their transactions on blockchain to create transparency.
Here’s the goal. In a number of years, families in emerging companies will say “I’m selling bananas but my kids are selling software.”
- Learning about a blockchain based fund that can solve the liquidity problem. This way, you can generate returns year over year as long as the value of the companies keeps growing.
- The gap between emerging markets and access to capital is huge! With access to more capital, the problems these economies face can be solved from the ground up. This is possible through new jobs and through equipping specialists in these countries to develop solutions that work.