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- [00:02]
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- [00:23]
Sarah Lynch
I'm Sarah lynch and you are listening to your Next Move audio edition produced by Inc. And Capital One Business. For this season, we gathered a group of conversations with entrepreneurs who made last year's Inc. 5000 list. They joined us in our your Next Move Booth at the Inc. 5000 to share lessons learned and anecdotes from building their businesses. In this episode, Inc Staff reporter Ali Donaldson interviewed Abel Horvath. He is the founder of fulfillment hub USA, ranked number 4493 on the 2024 inc 5000 list. They are a fulfillment services provider offering warehousing solutions, transport services and more. Abel tells Ali what he attributes the company's growth to truly meeting the client's needs.
- [01:13]
Abel Horvath
I would say we unlike other companies in our industry, we are really focusing on our clients. We are also adaptive. So we are very flexible when it comes to what our client needs are, which is quite tricky since every business has different, different and we're supposed to create this standardized logistics solution for all companies equally. So we offer equally good support and assistance. And I think we managed that really well with technology, with our team. We got really good people. So it all helped us to grow.
- [01:45]
Ali Donaldson
And Abel, could you say a little bit more about that being adaptive? Are there any strange things you've had to do for like specific products when it's like in your warehouse?
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Abel Horvath
Yes. So we work with anything from jewelry, but all the way to hot tubs, jacuzzis, things like that. So that definitely quite a tricky one. It filled up the warehouse a lot faster than we have anticipated it. Especially after Covid, everyone was ordering hot tubs and Jacuzzis for the house. So we got tons of container after container filled with hot tubs and we didn't know where to put it. So we definitely did had to do some tricky moving around opening up new warehouses on last minute. It's developing, it's changing. So it really during COVID especially really this B2C became a big deal. Amazon was one of the pioneers in the industry and as other marketplaces adopted it, there's more solution needed. One of the growing factors for us, our system is linked with all these different marketplaces. So you can come with us and we work with Amazon, with Walmart, with whole foods, with 47 different marketplaces and we have Multiple shipping methods. So we're trying to offer a lot of options for customers to choose from.
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Ali Donaldson
And how do you let customers know about all that technology, all those options? What are some of your best marketing tips?
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Abel Horvath
We really try to focus on the problem and then providing a solution for it. So we market what are the common issues potential customers would be facing, which is usually the same thing as transparency is a big deal. Customers are concerned that, for example, billing is unclear. Logistics is a complex business. So no one really knows upfront how much they're going to get built. So we try to make that as simple as possible.
- [03:30]
Ali Donaldson
And Abel, when you look over the past three years of growth, were there any inflection points, like a certain point where you're like, okay, that strategy, that thing we did, really helped us get on this growth trajectory?
- [03:41]
Abel Horvath
Yes. So I would say partnerships was a big one. We managed to generate or create really, really good partnerships through networks like Inc 5000. We met great people who are in the marketing industry. They referred us customers. We referred them customers to the folks here at Inc 5000 who are in the finance world. They're doing finance for e commerce brands. And they told them, hey, you could save on your shipping, on your fulfillment. So they send it our way. So that was definitely one way where we realized, okay, this is a really good growth opportunity for us.
- [04:15]
Ali Donaldson
Well, I love that. To hear that, that you all are working together and making sure that you can find those opportunities to partner and really make it a win for everyone. What has been the most surprising lesson that you've learned?
- [04:26]
Abel Horvath
Okay, that's a tough one. I mean, once we start scaling and open up multiple locations, I realized it's a lot harder to maintain the same level of quality at every location because we are dealing with different cultures, different mindsets. We started out in Miami, then we opened up a facility in LA that was already quite a difference of culture. So we had to learn how to deliver the same level of service. And then once we went to Europe, it was a whole different game. And India, you know, that's just something completely different. So it took us a while to learn how to manage that and make sure, like, if you go with us, you use all of our facilities, you get the same level of service everywhere.
- [05:06]
Ali Donaldson
And was there a moment that you were completely unprepared for?
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Abel Horvath
Yes, we had several of those moments from cash flow that we realized that the importance of cash flow. Because I feel like a lot of entrepreneurs, they look for the future and they're like, all right, this is a great Idea, let's push it, it's going to work out, but you also need money to make it work. We spread ourselves a little too thin at certain times and because we were expanding, we opened up new facilities. And unlike in the software company, we cannot have suddenly thousand more customers. We need to invest into real estate, so we need to get warehouses, equipment. So it's a lot harder to grow than some of the other industries. So some of those were a bit of a moment that hey, let's take a step back realize let's do this better so more thought out and long term.
- [05:58]
Ali Donaldson
And do you have any keys to staying productive?
- [06:01]
Abel Horvath
Yes. I mean, I think focus is a very important one. Prioritizing correctly as the company grew. I mean, day one I was literally moving boxes sitting on a forklift. That was six years ago. Then I took a step back, I was focusing more on the overall operation and then took another step back more in the sales. And now we are thankfully at a point where I'm really focusing on acquisitions and buying other fulfillment centers. So that's my main focus. So I feel like my time is invested the best in that way.
- [06:32]
Ali Donaldson
When you're thinking about making those priority of your time, are there any apps you use? Are you a big calendar person, list person?
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Abel Horvath
I like calendars. So I put all the tasks I need to do on the calendar and I'm trying to do it, although every other day I'm moving them to the next day and just keep gathering, staying flexible. Yeah, exactly.
- [06:53]
Ali Donaldson
How many employees do you all have now?
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Abel Horvath
We have around 100 employees globally. We also have a lot of software developers as well who are helping us provide the services for our customers. We also outsource quite a bit. We are also in Colombia. We opened up an office, so we have another 25 people there.
- [07:11]
Ali Donaldson
And what is your secret sauce for hiring the right person for the right job? Maybe how has that changed now that you're hiring Columbia as well?
- [07:17]
Abel Horvath
We are trying to create a profile of the employees we currently have and look at what's missing. What kind of personality is missing in our group? Because for example, in accounting, obviously detail orientation is very important. But also we do need people who are creative, who can think ways how to optimize operations, financially speaking. And Columbia has been fantastic for us. They've been a really good assistance in everything we do. We normally have an HR person in the US Sales for every position. We have someone in the US and then they are kind of assisting them to be able to grow. Because once we did an acquisition in February in San Francisco. And while the operation was running smooth, we realized on the administrative side, we were falling behind. So on the billing side, on customer service. So we needed to create a solution where we can scale quicker when we need to. So we are always a little bit overstaffed right now, thanks to Columbia. So when we do the next acquisition, it's going to go smoother.
- [08:16]
Sarah Lynch
When we come back, Ali asks Abel what he thinks is the biggest challenge facing the logistics industry. But first, a quick break.
- [08:28]
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- [09:07]
Ali Donaldson
What do you think is the biggest challenge facing your industry?
- [09:10]
Abel Horvath
Facing logistics right now, I would say labor and efficiency. So companies who are very like old school, they use Excel sheets to keep track of things. It's very hard for them to compete. I think keeping up with the times is very important. I mean, Tesla just introduced the humanoid robots a few days ago. I think that's going to be quite a game changer in our industry. We already have robotics in general, but the cost of it is tens of millions. So we are really hoping that once robotics becomes more of a mainstream, then it's going to make it more accessible for others as well.
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Ali Donaldson
And what has been the most important thing that you've learned as a leader of your company?
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Abel Horvath
I would say giving employees the space to explore and learn on their own. Because in many cases when you micromanage, you're gonna have to keep micromanaging and an employee is just accepted and they actually enjoy it because if there's a mistake, it's your mistake. They just execute for you. So once they learn to have more responsibility, take ownership of the tasks. So sometimes just throwing them in the deep water and learn to swim, I learned that's a really good way for them to learn quickly and really understand. And for their own good, they are trying to learn more than what's the absolute minimum.
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Ali Donaldson
And it sounds like too, it's just much more satisfying too as like an employee, I mean, I certainly feel that way, as like an employee, that's like, okay, you don't want your boss over your head, over your shoulder.
- [10:38]
Abel Horvath
Exactly. It's more fun. And, you know, you feel personal growth as well and accomplishments.
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Ali Donaldson
And what's the best advice that you've ever been given?
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Abel Horvath
Best advice? I would say probably try to control the things you can and just accept whether you cannot control the way it is. Because I feel like a lot of people get really stressed out about certain things that they have no control over it. Like, in our industry, our revenue is based on our customer success. So if they sell a lot of products in that month, we make more money. If they sell less, we make less. So there's no way for us to control that. I used to stress out about it, but really there's nothing we can do about it. So I learned to deal with that and accept it the way it is and then focus on the things we can actually improve in terms of efficiency and profitability and focus all of our attention on that. And that's the only thing we can do.
- [11:33]
Ali Donaldson
And like, you said that you had to focus on other things. Like, how did you really implement that, knowing that, like, okay, we cannot control that revenue that's coming in, but, like, we still need that cash flow coming.
- [11:42]
Abel Horvath
Yeah, that was tough at times, especially when we were growing, we spread ourselves quite thin so that then it became a big topic. How are we going to manage this? Because we are. During the summer months, we made a lot less. And then Black Friday came and we doubled Christmas, we did double. So we had to have higher savings during the lower months. Like after. In January, February, no one buys anything. Everyone spend their money in December, Christmas, and then it goes down. And so did our business. And it's still the case, but we just know how to deal with it and we prepare for it.
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Ali Donaldson
And what's that like? You know, because it's like retail, like you said, it's such a seasonal business that's like, you know, Black Friday. Like, fourth quarter holiday spending is huge. You're gonna have slower summer months. How do you plan for that?
- [12:25]
Abel Horvath
We are trying to get a balanced customer base. So we have customers selling bikinis, which is great in the summer. We have customers selling skis, which is great in the winter. So we are trying to balance it out in each location. So is busy at all times. It's sometimes a little bit tricky, but it definitely works.
- [12:44]
Ali Donaldson
And was there a moment where you thought, okay, this might not work for.
- [12:48]
Abel Horvath
The company in some cases, let's say the Jacuzzi customer. Because in, let's say a bikini, we can always put the bikini aside. It doesn't take up a lot of space. But once you have hot tubs and jacuzzis, they take up 20,000 square foot and they're not moving. So we did realize that we have to spread it around in general between all of our locations, some of the slow moving customers, because otherwise it's just sitting there. And we don't make money on storage. So it's only when it moves. In terms of the company, yeah, we did have ups and downs, especially at the beginning. We took off really quickly, very well. But how I got the first customer, which was a very risky take. They ended up going with us. I didn't have a warehouse at the time. I sold my previous company. I had no warehouse. I had no team, I had no employees. I had nothing.
- [13:35]
Ali Donaldson
You had customers, but nothing else?
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Abel Horvath
Nothing else. So it was a massive company. They told me on Friday that they to go with us. And their previous fulfillment center was sold. So they're like, on Monday we are sending the containers and we are talking about like 81 containers. And I'm like, I don't know where to put it.
- [13:52]
Ali Donaldson
So get them in your driveway.
- [13:53]
Abel Horvath
Yeah, I was calling real estate brokers in Miami. I'm like, I need a warehouse where I can move in on Monday. Everyone's like, nope, that's impossible. That's not a thing. So I ended up finding a sublease on Sunday. Monday, I was sitting there with a forklift moving or I did the containers in. I hired everyone that moved through, walked through the door, whoever, whatever. I said, I don't need to know your name. Just get on and start moving the pallets inside the warehouse. So it was a risky time, but we made it.
- [14:22]
Ali Donaldson
Had you ever driven a forklift before? Were you like on YouTube, like how to do this?
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Abel Horvath
So I do that a lot. I don't have a logistics background. I used to work in car manufacturing, so the whole logistics was brand new for me. So I did definitely use a lot of YouTube.
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Ali Donaldson
Have you thought about like an exit strategy at all?
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Abel Horvath
Yes. We fantasized about doing an ipo maybe in a few years. Obviously we had a lot of talks with venture capital firms, private equity firms. I do not want to sell as of today. Probably not for a while. I enjoy what I'm doing, so I would like to keep it that way for a little bit. And then again, if the right offer comes along, who knows?
- [14:58]
Ali Donaldson
You had mentioned that you all have done some acquisitions, so how do you all approach that?
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Abel Horvath
Our approach is a little different than most. We are looking for fulfillment companies who are not profitable. So ideally losing quite a bit. We analyze it because in most cases, because of our volume, we can cut the shipping cost. So because we already have the back office, we eliminate some of the administrative staff they have, so we can really quickly turn a company profitable. So that's kind of our focus, that they're losing about 100, $150,000 a month due to all these administrative expenses they come in, and then literally in a month, we make it profitable.
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Ali Donaldson
That's really interesting. It's almost sort of private equity approach.
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Abel Horvath
Yeah, kind of. Yeah. We are leveraging the network we built up for ourselves, and it's been working so far.
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Ali Donaldson
Well, thank you so much. This has been great.
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Abel Horvath
Thank you.
- [15:48]
Sarah Lynch
That's all. For this episode of youf Next Move, our producers are Blake Odom and Avery Miles. Editing and stuff. Sound design by Nick Torres. Executive producer is Josh Christensen. If you haven't already, subscribe to your Next Move on Apple podcasts, Spotify or wherever you listen, your Next Move is a production of Inc And Capital One Business.