Anthony Lacenere: Propel IT, Bringing Fuel Efficiency to Truckers
What’s worse than having a married couple run an entrepreneurial startup together? Having a married couple who are both entrepreneurs running two startups! Because then both parties are driven entrepreneurs in pursuit of their company’s survival and success. What must their dinner conversation be like?
Yes, I jest, having profiled other couple entrepreneurs in past posts (Modcloth, Foodzie), and will again in future posts. Previously I have profiled Jess Trybus and her startup, Etcetera Edutainment. In this post meet Anthony Lacenere, CEO of Propel IT, which provides software to encourage fuel efficiency among truckers. Anthony is married to Jess. Two entrepreneurs; two separate tech startups; energy and focus and then some!
Anthony’s story is different than most first-time entrepreneurial CEOs. Propel IT has a long history. It was started initially by iNetworks as a consulting company in healthcare and transportation. Anthony was hired by the company , after having spent his early twenties working in Silicon Valley, mostly on the NASA Ames Research Center base. Anthony returned from California at the age of 25 to his hometown of Pittsburgh to start grad school. He recounts the story, “I worked at Propel in sales for a bit but I didn’t want to do consulting. I liked what they were doing with trucking, and I thought that I could learn about the trucking industry and then take what we were doing in consulting and productize it. I sat at a desk at a big trucking company for a while and thought about truckers, software and fuel efficiency.”
He then went to the company managers and made his demands clear: “I told them that they could either lay everyone off and make me the CEO, or they could continue down their path but I couldn’t help them.” Anthony laughs when he recalls the next day, “They did it. I couldn’t believe it but they did it and there I was, all alone, my first day on the job as CEO!” That was September, 2007.
Background. Anthony always wanted to be an entrepreneur, to work for himself. He describes himself as “a strong personality who doesn’t take direction from others that well.” His father, known as Tony, is a Managing Director of iNetworks, a private equity group. Anthony describes his dad: “Tony is a self-made guy. From an early age I saw him make sacrifices to accomplish what he has. That is my best advice to entrepreneurs – be prepared to sacrifice!”
Anthony has known Jess since 8th grade. They were best friends for years before they dated. Anthony remembers hitch hiking a few times from Johns Hopkins, where he did undergrad studies in economics, to Cornell, where Jess was a student.
Post college, the pair drove out to California to seek their first jobs. While Jess stayed in LA, Anthony traveled north and did some electrician assistant work for a relative in San Francisco. He recalls waiting in line to buy a book at a bookstore and meeting Bernie Newcomb who founded E*TRADE and was working on a new company. Anthony has studied the numerous re-starts of E*TRADE and they make a great and ultimately successful story. However, ITXS, launched with Herb Swanson and Mike Symons in 2000 as an auction site for high-end, pre-owned or surplus IT related material, was not successful. Anthony was the first employee of that company. But the experience gave Anthony what he needed in terms of startup experience. ITXS was a victim like so many others of the dot.com boom and bust, where companies went from two employees to 1,000 and then back down to five before calling it quits.
Anthony still misses California for the network, but even more for the surfing which he rarely gets to do, both because he is a startup CEO and because he is miles from any waves.
Opportunity knocks. As he (and Jess) returned to Pittsburgh to be near family, Anthony was determined to take what he had learned and start his own business. He paid lip service to grad school, enrolling at U Pitt and, after having completed half the required credits, quit to get more involved with Propel: “I realized business school wasn’t for me. My undergraduate experience was really great at Johns Hopkins. It provided me with all of the fundamental skills that are taught at most MBA programs. At some point the sheep skin really didn’t have a value to me. Growing and scaling Propel was where I saw the best use of my time. Entrepreneurs are very time sensitive.”
Anthony was surprised that he found his opportunity in an existing company. “Really, Propel was a re-start,” Anthony tells me. “And it’s been fun but challenging to do that.”
As Anthony examined the transportation industry that Propel was involved in, he became interested in trucking: “ I realized that there are 524,000 trucking companies in the US with 6 million truckers. 21,000 of those trucking companies have 500 + trucks each. And no matter how you think about this, that’s a big market and it’s growing. That’s when I got excited that I could make an impact AND grow a business.”
Anthony thinks that he can grow Propel to a $50M company. He tells me, “50% of a trucking company’s operating budget is spent on fuel. And they have 2% margins in the best of years. If you impact that 50% by even a little bit, you can double the profit margin.”
What Propel does. Trucking companies buy the Propel software. The software utilizes pre-existing telematics systems that became popular in the mid 90s. Each truck must carry an onboard computer capable of broadcasting data over a public bus. In the past, the type of information has been limited to GPS location, fuel tax records, etc. This information has not traditionally included performance. Propel had figure out how to collect driver performance data from the engine, and characterize the data in the form of behaviors that correlate highest to fuel efficiency.
Drivers are then empowered to use this information to increase the rating they achieved. If that rating is high enough, they earn points which can be redeemed for things such as a NASCAR experience, electronics, and other goodies. Anthony tells me, “We have basically figured out how to incentivize drivers in a way that correlates to being responsible, safe and fuel efficient. Let’s focus on what the driver can control. They can’t control the terrain, age of the vehicle or load, but they can control their behaviors in the cab.“
Propel provides what Anthony calls, “tangible reasons for the driver to change behavior; it’s software for the driver.” Anthony chuckles as he recalls how, “Drivers would come into the lounge and I would hear them talk about their score [from Propel]. They asked other truckers about their scores. Then several would start asking others about their scores. There was a lot of joking going on, but there was clearly a competition going on!” It’s a clever, virtuous cycle of continuous competition and continual performance improvements.
Growth. Propel was a turnaround, a classic re-start. The growth started happening as Anthony fleshed out the team. By April of 2008, Anthony was introduced to Yunsu Park, formerly of Navistar, an engine manufacturing company, and now CTO of Propel. “He’s the exact opposite of me,” Anthony gloats.
“He is calm and analytical, very much the engineer. That balances me well, since I am excitable and reactive. Yunsu is a think then react kind of guy.”
Anthony knows that it’s important that as CEO he be intimately involved in sales at least for the first 10 customers. But he was able to recruit Todd Kalis to help him with business development, marketing and sales. Todd used to head the NFL alumni association. He also worked in the trucking division of a large insurance company. “It’s great when Todd brings in signed footballs to the truckers; they love that,” Anthony recounts.
Anthony’s team building philosophy is one of “making sure that I have good people around me – smarter, faster, bigger!”
In December of 2010, they raised $300,000 in convertible debt seed financing from Innovation Works, a regional economic development organization funded by the State of Pennsylvania to invest in technology startups.
At Innovation Works, Propel’s Entrepreneur in Residence (EIR) is Tim Fogarty, Vice President of IW’s energy program. Anthony tells me, “Tim is my favorite guy in Pittsburgh. He is super amazing. He has given me great advice, brought investors in to meet with me, provided introductions to trucking companies and he introduced me to Yunsu. Tim is a tell-it-like-it-is, and I appreciate that.”
By July, 2011, Propel had a full commercial launch of its software. By August, they had three customers. If the average customer has 500 trucks and Propel charges $30/month per truck, the scaling potential of the business is enormous. It takes Propel a week to get a company up and running and then the company has 45 days to see value and results and they either pay or give it up. Anthony proudly tells me, “There is no risk to our customer, to the trucking company.”
Challenges. Anthony and his team have faced some pretty serious challenges:
- Cap table. As Anthony puts it, “As a CEO, you can become trapped in the middle between old and new investors.”
- Solo flight. In the beginning it was just Anthony. He had the CEO title and a company but no team. He had to build that from scratch.
- Building what customers want. Anthony had to figure out on the fly the customer problem and whether he could develop a solution.
- Going hungry. Neither Anthony nor Yunsu were able to take any salary for over six months. To survive, the company did consulting projects. This took focus and energy away from building a real solution to a real problem.
Goals. Anthony believes that Propel is the first company to provide incentives for trucking employees to change behavior and improve efficiency. He also thinks that there are more markets than just trucking for this. Not that he is not laser-focused on establishing a beachhead in trucking, but Anthony has bigger, broader market dreams.
Anthony doesn’t want to just run his own successful software company. He wants to make a difference. He really wants to, “have an impact on our environment and the energy crisis.” Anthony exhibits the boundless exuberance that entrepreneurs have to do well and do good.
“So much attention and money is focused on new forms of energy.” Anthony tells me. “But very little is focused on efficiency. That’s low hanging fruit and big impact. That’s what really matters to me!”
It matters to all of us, Anthony!