Daniel Sokolovsky

CEO, AxleHire

Product: AxleHire
A hiring platform for transportation companies
Vertical: Transportation
Tags: Recruitment/Staffing, Delivery, Ride-Sharing, Distribution, On-Demand Economy
Co-founder: Peter Wysinski
Stage: Launched in March, 2015
Investment: Raised angel round
Based: Berkeley, CA

Born in LA to parents who immigrated from Ukraine. Had small business ventures throughout school. Studied Applied Math at UC Berkeley. Launched food delivery service in 2013 that was acquired by customer. Pivoted into AxleHire. Joined SkyDeck accelerator in June, 2015.
We learned just to go ahead and make the product. A lot of people approach investors without revenue, without proof of concept. Don’t go with ideas! Make something to show, because you’ve got to advertise it. There’s an expression: “f**k it, ship it.” It’s better to put out a site with a small bug than spend weeks and weeks concentrating on the font of your interface. Just get something out the door, then you can validate your market.
You can’t solve problems that don’t affect you. We ran a delivery service, we know the problems with getting drivers first hand. We’re not going to start making some rockets or working with big data, we’ll do what we know. We’re not a tech company but we’re providing people with jobs, putting them on payroll to give them guaranteed hourly rates.
My dad. My parents have a ground transportation business. I’ve been in that my whole life. They built it out themselves and it was completely bootstrapped — that’s how everyone used to start a business — and they’ve been able over 10 to 15 years to achieve a pretty good, stable business.
Talk to your customers! We’ve had someone tell us, don’t schedule in-person meetings with your customers. That’s the worst advice we were ever given. When you’re small you have got to give great customer satisfaction and feedback. These are your first customers and you’ll learn so much more from them than they will from you. If you don’t know what problems they’re facing, how can you build the solution?

A lot of companies have no intention of making revenue – they offer a free app or social network, and they hope one day they can monetize. So many think, if we have critical mass, then we can start making money. But you need to start making money before that or you will burn yourself out. If you’re doing developing and marketing and figuring our how to make money later, that’s a problem.

MY STORY

My whole life has been about transactions.

My parents weren’t well off when they first moved here from Ukraine in 1992. Like everyone else in Eastern Europe, they made a living just selling something. So there was no way they could give me money to buy what I wanted. If they gave me a small amount, I had to put it into something else, make it grow.

Supply and demand

In third grade I had a candy-selling business, and I soon figured out supply and demand. In summer there were more people in the park so I got an ice cooler and sold Gatorade. Really, I was just selling convenience, saving people the walk two blocks to the store — and they were willing to pay. So I grew up with the market mentality. In middle school I was suspended for selling fireworks before the 4th of July. In high school and later I sold things that require more capital, like computers. I’ve always been a hustler.

Berkeley Delivers

Peter (my co-founder) and I met in Math class at UC Berkeley. We noticed there were no food delivery companies in Berkeley so we asked on Facebook who wanted food delivered to them late at night. Of course everyone did — including us! So it was again a matter of supply and demand. We tried out different pricing models, put up a stupid website, started getting 2-3 orders a night and at the beginning did the driving ourselves. Then we had an article in the student newspaper and soon we were bringing in $300 a night.

We never looked for funding because Berkeley Delivers was a side-project and we didn’t intend it to become a full-time business, but it pivoted into AxleHire. We saw that scaling was difficult without having a reliable workforce. The on-demand space is so saturated — there’s a limited pool of drivers, and the number of companies needing them goes up but the size of the pool stays the same. We’re now meeting that need from two sides.

We have a database of more than 10,000 drivers in 6 cities that we can match to companies that need delivery staff. The company gets reliable, pre-screened drivers — we do a motor vehicle check, background check, vehicle inspection. And then the next phase is to contract out those drivers, putting them on our payroll, and replacing an unstable income with a consistent one. Our drivers are paid per hour or per route — we consolidate requests from different companies and we take a transaction fee. We’re also building a prediction algorithm to forecast peaks in demand.

We can optimize a driver’s work day by deploying him on an hourly basis — for instance, in the morning he can do ride-sharing during peak hours, then he’ll drive for Sprig for 2 hours over lunch, and then deliver laundry in the evening. We’re working with companies like Rinse, Chewse, Crunchbutton and Dominos.

Less idling for everyone

Basically we’re using math to improve the utilization of vehicles. At the moment data shows they’re used 40% of the time, but with our trials, we attained 87% usage.

A lot of companies mislead drivers by exaggerating how much they will earn per hour. They promise $40 but realistically, because of competition, it’s $8-10. They move drivers around with surge pricing to meet demand, then areas become quickly saturated with drivers and there are no fares anymore. There’s no incentive for a driver to stay loyal to the company because their income isn’t guaranteed. So we smooth out the highs and the lows, and our retention rate is higher.

There’s definitely a social good aspect. We’re not advertising that because we’re not a non-profit but we are providing stable, reliable jobs to the lower middle class and putting them on a decent salary.

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