FreightWaves’ Meet the Investor series delves into the stories behind the industry’s biggest investments, the individuals who manage them and the lessons they learned along the way.
Ben Gordon, the founder and managing partner of Cambridge Capital, has spent his career investing in and advising supply chain companies, ranging from some of the largest global logistics providers to e-commerce startups.
While his younger self was passionate about civic leadership, he realized the impact that entrepreneurship could have on communities and individual growth, something he also learned from his scrappy immigrant ancestors who were able to follow their American dreams.
In an interview with FreightWaves, Gordon discussed his mentors, both within his family and throughout his career, and how those relationships helped drive defining investment moments not just for him but for the logistics industry as a whole.
Questions and answers were edited for clarity and length.
FREIGHTWAVES: You have been a part of a number of industry-defining deals throughout your career. Did you always want to get involved with the logistics industry?
GORDON: “Not always. Throughout college I was interested in policy. I volunteered on political campaigns, interned at the White House and worked with the business liaison on the budget bill.
“But then I thought the great thing about business and entrepreneurship is if you succeed, it gives you the opportunity to do other things over the course of your life. So in my junior year of college I went to work at my grandfather’s truck leasing company.”
FREIGHTWAVES: How did your grandfather get into truck leasing?
GORDON: “Actually, he originally wanted to go into the steel business. His father was in the steel business and worked with Bethlehem Steel at the time. In the summer of 1947, he came home from Case Western Reserve University and the vice president of Bethlehem Steel was over at their house for dinner.
“The vice president asked my grandfather, ‘What are you going to do once you graduate?’ He tells him he would really like to apply for the management training program at Bethlehem Steel. The vice president says to him, ‘I don’t know how to tell you this but there is no role for you.’ At that time they didn’t hire Jews.
“Instead, my grandfather got a job at a local car dealer in Worcester, Massachusetts. He struck a deal with the owner to buy him out over time. This was a gutsy plan for a 21-year-old kid to propose, but he was just that entrepreneurial guy.
“After years, through sweat equity and loans, he bought him out, expanded it to multiple car dealerships and eventually decided to get into truck leasing.
“Without a business plan, he walked into the bank and said, ‘Look, I don’t really have any data but I have done well with the car business and I believe there is a great opportunity in truck leasing.’ The bank agreed and he got started.”
FREIGHTWAVES: It sounds like that entrepreneurial spirit is definitely something you have inherited from your family.
GORDON: “I come from a line of scrappy underdogs who started with nothing and had to work, fight and claw for everything that they have.
“[On the other side of my family], my great-grandfather, Philip, came over on a boat from Russia when he was, we think, 15, sometime around 1905. His parents, at the time, thought they could have a better life in the United States and decided to send Philip over because he was struggling to graduate from high school and they thought he would be a good test case.
“Philip came over as a stowaway. He went to Worcester because he heard that he had an uncle there. The uncle immediately disclaimed knowing him and now Philip was on his own in a foreign country.
“He managed to get a job as a painter but quickly realized that he would rather win the paint jobs rather than just do the painting. Then he figured out that he was spending a lot of money on paint. So he figured out how to start a wholesale paint store. The next step was to sell paint to [consumers] directly. That’s how my great-grandfather Philip started one of the first discount retail stores.
“He lived to nearly 90. Before he died, he managed to sell his little store to Walmart. It’s a great American story. He really embodied the idea that in America, if you work hard, anything is possible.”
FREIGHTWAVES: How has your personal history shaped the way you invest and do business today?
GORDON: “I look for businesses and people that have something to prove. We love to back scrappy underdogs that want to work hard to succeed. Our favorite founders are motivated to outwork their competitors to be the best.
“I also look at Gordy [Gordon] Zacks, who was a mentor for me. He wrote a book called ‘Defining Moments: Stories of Character, Courage and Leadership,’ which profiles people that have reached a crossroads in their lives and the important decisions they had to make. In that book, he guides you to write your obituary as if you were to die now and then write your obituary as if you were to die 30 years from now and figure out how you’re going to get from the first version to the last version of yourself.
“I hope that when my obituary is written, it will show what I did to support scrappy underdogs, whether it was through business or philanthropy, or elsewhere in life.”
FREIGHTWAVES: What would be your “defining moment” in your investment career?
GORDON: “There would be three moments. We can begin with XPO.
“In 2010, Brad Jacobs called me and said, ‘You don’t know me, but I built four companies from nothing to over a billion dollars in other industries. My next one is going to be in logistics. I hear I should talk to you. Can we meet?’
“So I went to his house in Palm Beach, Florida. We talked about philosophy, business, strategy and logistics.
“One thing that stood out to me was his curiosity. I think most of the smart, successful people that I know have a very high degree of curiosity. They don’t assume they have all the answers and ask a lot of questions. Brad absolutely embodied that.
“Brad asked a lot of questions. Where is it the most fragmented? Where is the most potential growth? Why hasn’t anybody else rolled up the industry yet? What hasn’t worked? What could be done differently?
“Would his plan succeed? One the one hand, he was methodical and insightful. He had done it four times before and he surrounded himself with smart people. On the other hand, he knew very little about this industry. Could he really succeed where others failed?
“He bought the Michigan-based company Express-1. Brad said to me, ‘I appreciate your involvement. Would you like to co-invest with me?’ Brad’s a winner and the deal is compelling so my answer was yes. But I made a mistake. Brad, I believe, put half of his net worth in the business. I, on the other hand, put in a relatively small personal check. I didn’t have a fund or mechanism for writing a large or institutional check.
“Ten years later, Brad built a fantastic company that is probably the number one pure play in our industry. That initial investment is up more than 50X, and arguably the greatest deal ever in logistics. I am proud of the fact that I played a very small role in the beginning. On the other hand, I have to look at this and think how stupid was I not to put every nickel I could possibly find into this deal. The lesson for me was simple. When you do the work, and you believe something is going to succeed, go all-in. I didn’t go all-in and I regret it.
“A second defining moment would be Bringg. Five years after the XPO deal, I met Raanan Cohen at a 3PL summit in Chicago in June of 2016. He was building a software company focused on the last mile.
“I was struck by a few things. One, Raanan had charisma, poise and passion for what he was building. Two, he was successful in convincing major companies to use their software. How does an Israeli startup in logistics figure out how to sign Coca-Cola in Vietnam as a customer? Third, he was getting great traction and seemed like a winner.
“I asked him five due-diligence questions and got great answers for all five and I decided to invest. I was planning to invest a portion personally and then bring in some of the operating partners [at Cambridge Capital] who were very successful CEOs in logistics. Surprisingly, I came away feeling great about the due diligence, but none of the operating partners agreed with me. No one else was willing to put in a nickel.
“Now I had a dilemma. I made a commitment. So what were my options? I could walk away from the deal, I could come in with a smaller check or I could find more time. Have I learned anything from the last five years and my investment in XPO? I decided to speak for the whole deal myself. This was a large investment for me personally. I believed in Bringg and Raanan, so I went all-in.
“Raanan pointed out that there were a lot of people that wanted to invest, so why should he choose me over others? My response was simple. I said I would work harder than any of the other investors, including introductions to a dozen supply chain leaders who could become customers. Secondly, I said I would help Bringg with a strategy to scale. Third, I could help the company think about deals so that when it’s time for an exit, the company would be better positioned than it would otherwise be. He said, ‘OK, will you put that in writing?’
“Bringg took off. I am proud to say that a year later, 40% of Bringg’s revenue came from people Cambridge Capital had played a role helping them onboard.
“In the past, I have had investors that have promised a lot of things that they didn’t do. I never wanted to be that guy. Nor did I want to be the guy that took credit for other people’s hard work. So I don’t. I don’t deserve credit for XPO. I don’t deserve credit for Bringg. But we helped, and as a result of that help, I believe Bringg grew significantly faster than it would have otherwise.
“A third moment, and our most recent deal, is our investment in Everest [Transportation Systems], a tech-enabled freight brokerage that combines a little bit of both past moments, as XPO was all about consolidation and logistics services and Bringg was focused on outstanding software to help automate last mile.
Related: Cambridge Capital makes majority investment in Everest Transportation Systems’ growth strategy
“The company also consists of a scrappy entrepreneurial team. Two of the three founders are immigrants who came to this country from Russia. They moved to Chicago, worked hard and learned the business. They are humble, great listeners, curious and attentive to what industry leaders did right.
“They decided to leverage not just their own work ethic but also their international relationships to create a low-cost, high-quality offshore base in Kiev. This gives them a competitive advantage and allows them to staff up and provide more customers and better customer service for their major blue-chip accounts.
“We rarely buy 100% of a company. We typically invest in the range of 20% to 80% so that it is understood we are going to be partners post-investment. So when we invested in Everest, we wanted to help them continue doing what they are great at. Meanwhile, we also sought to introduce them to some of the terrific technology companies, people that we know and resources we can provide to help them scale up faster.”
FREIGHTWAVES: What areas in FreightTech do you believe are having their defining moments right now?
GORDON: “The first is last mile. E-commerce growth is driving expansion in last mile. We’ve invested in several terrific companies in this area, starting with XPO, continuing with Grand Junction, which was acquired by Target, and now Bringg.
“I would also note that today we are witnessing this rush for a 15-minute delivery. … Billions of dollars are pouring into this quest for 15-minute delivery. I actually think it’s going to backfire. The reason I think this is there is a trade-off between what consumers want, which is instant gratification, and what communities want, which is less traffic and a continued role for local retailers.
“You have all of these warehouses popping up in cities. You also have all of these new drivers entering the area in order to pull off that delivery time. If you are doing a 15-minute delivery, you are not going to have enough time to do the proper load planning to fill a truck or car so the inefficiencies will skyrocket because there’s a trade-off between speed and efficiency. Also, if you care about carbon footprints and the green supply chain, you want to see a smaller number of vehicles that are more full. That is in direct conflict with 15-minute delivery. So my personal view is that last mile logistics will continue to grow, while 15-minute delivery may overshoot and may need to overcorrect.
“The second area is e-commerce fulfillment. It’s interesting because 10 years ago warehousing was viewed as a sleepy industry with low growth and low margin, just not exciting at all. Then a lot of the smartest warehousing companies realized that if they invest in creating rapid-response fulfillment capabilities, they could build more value. We have seen five unicorns come to fruition in the e-commerce fulfillment space, and with the growth of e-commerce, I think we will continue to see growth and success in that space. We haven’t invested in fulfillment, but we have backed an exciting software company called ReverseLogix, which focuses on automating returns processes.
“Third is tracking and visibility. Everybody wants to know, ‘Where is my stuff?’ It’s not easy to visualize the supply chain or reduce it to a picture, and the Suez Canal crisis created that moment of drama for consumers to literally see the need for visibility.
“The need for visibility is tremendous. It has allowed companies like project44 and FourKites to become billion dollar-plus companies.
“At Cambridge Capital, we invested in a company called Parcel Perform, which specializes in supply chain tracking and visibility for e-commerce shipments. The founders came out of DHL and understand this business. The need for tracking and visibility will only continue to grow.”
FREIGHTWAVES: What advice would you leave our readers who are looking to become investors or are investors currently?
GORDON: “I can share three suggestions. One, seek to be the kind of investor that truly helps entrepreneurs. Give them something that they are missing. Offer them real help, like getting them in front of customers, recruiting leadership, thinking about what an exit looks like and working through the overall strategy of scaling their business.
“Two, be a genuine sounding board. Many of us live in an echo chamber. Be willing to, in an appropriate context, share feedback that maybe others aren’t communicating to help them think differently about their business.
“Three, really focus on your investments. In my first startup, I had some investors that were on 15 to 20 different boards. You really can’t help a company that way, there is just not enough time. As JP Morgan said, ‘Keep your eggs in one basket, and then watch that basket.’
“I have made plenty of mistakes. These observations come from lessons I have learned, in some cases, the hard way.”