Pallet raises $27M Series B to automate logistics back-office with AI agents amid tariff-driven supply chain volatility

latest update. How you doing? Doing well. How are both of you? Fantastic. Uh would you mind kicking us off with a little introduction on yourself and the company? How you doing? Yeah, sure. So, I'm Susant. I'm the founder and CEO of Pallet.

So, what we do at Pallet is we're an augmented AI platform built for the logistics industry. So, we automate away all the back office tasks you do in running a logistics business, right? data entry, quoting, appointment scheduling, tracking where your ocean containers are.

So there's about like 11 trillion dollars spent on logistics. But what's surprising is about a trillion dollars of that just goes on these back office tasks that you have to do. Mhm. So what we saw was here is like a real prime application of using AI agents to go and automate away these tasks.

But we took an augmented AI approach in that we always have humans QA the work that agents are doing. That way the completion of the task is near guaranteed to very high degrees of accuracy.

So that's why a lot of the leading logistics providers really trust us to automate away what basically eats up about 10% of their opex. What's the wedge product that most companies start with or do do you have uh do you think of it that way or are you trying to sell like a whole uh suite of products on day one?

So what's interesting is that like we built like the technology we built is pretty generalizable and you could customize it per use case. Yeah. So customers have started with a wide range of use cases. Like one of the largest coal chain storage companies started off doing data entry.

Another very well-known shipper has started off automating how they do how they basically bid for freight with different transportation providers. Other folks have looked at using us for automating spot market coding. Other folks have started off with appointment scheduling.

So we always try to start off with one use case but that use case could be quite distinct and the agent we deploy could be quite distinct client by client.

When you say data entry are you migrating people from other systems primarily or Excel or are there still paperbased workflows out there like what are you actually seeing in the modern American economy?

Because I feel like a lot of companies will give the pitch of like get off of paper but realistically most companies are on Excel. You guys have a humanoid robot that goes to a printer to print something out and then faxes still. Still joking. Joking. Of course, humanoid robots will come in soon.

But uh the way it works actually is that like you go to one of these like even the largest logistics providers in the world, right? Like your DHLs, your FedExes, they still get paper documents sent over email. Basically, the way it works is you have your email inbox.

You have a bunch of emails coming in with documents attached to it. You look at it first. You look at is this customer someone I should be working with? Are they someone I work with or not? Then I look at the document. Does it have all the fields I want?

Then I go type in literally all the fields off the document into my system and I'm doing this like a hundred times every single day, right? Like I think the whole reason I started this company was I went to one of her customers offices.

It was like a Sunday afternoon and um he was like typing in data like he was typing in a 100red orders into a system on a Sunday afternoon and he's like I can't watch the NFL playoffs. I have to type data manually in from my inbox. That is my transportation management system and this is how I spend my Sunday evenings.

And I was like that's crazy. Like there has to be something better we could do here. What is the what is the Super Bowl of the industries that you sell into?

Like are there specific conferences where where everyone gets together in terms of like logistics that are super important for you to sponsor or like like what does the top of funnel look like for you or or is it is it very much just like cold outreach, sales reps, dinner, steak dinners, that type of thing or what's the actual go to market motion?

So the go to market motion um I think we we rely on a wide range of channels. We rely on conferences. Cold dialing, believe it or not, is still really popular. Like when I got our first customers, like I would actually do something even more extreme.

Like I would drive around East Bay in Stockton, literally knock on warehouse doors, get kicked out until I could get our first customer in. So I went a bit extreme, but a lot of our SDRs still cold. Um and then there's quite a bit that comes in inbound.

But I think the key the key though, it's not just about the method of the outreach. Like all these companies are a bit skeptical of Silicon Valley technology companies naturally, right? Yeah. Yeah. So the thing I tell like the thing that we've done is about 30% of pallet has come from the industry.

They've worked at places like Ca, they've worked at places like Uber Freight. They've worked at places like Flexport and they understand all the use cases in the company. So I always tell everyone on our sales team, you have to earn the right to talk about the technology.

First you need to show the customer on that cold call that you understand their business really well. That like if I'm talking to a freight forwarder, I understand terminology like how they deal with containers.

what are inco terms and all this industry specific jargon and if I can show that the person on the other end is more receptive to hearing me out about how I can utilize technology because if you understand their business processes you understand their workflows they're like this is not just another company that's in soma that's just like looking at logistics terms on chat GPT these are people that actually just get me how much has AI been just an accelerant of the product that you're already selling versus something that you can upsell and bolt-on as like a new product.

I think AI has been a huge game changer where it's like been like the primary focus of the company, right? Like if these foundation models didn't exist, our value prop of our product wouldn't be as strong as it is today. So, I'd say is very critical.

And I think in fact, one thing that's made it even more critical is what's happening with the recent tariffs, right?

like the volatil like what tariffs have really created is like this extreme sense of like volatility where like April container volumes in Long Beach are spiking now they're down and this the courts reverse the ruling and then it gets reversed back in the last hour.

So people have no idea like my my volumes keep going up and down and I just can't scale up the human capacity to support it. And now AI really just allows me to kind of come and like if I'm getting more emails into my inbox.

I can deploy these agents and then they can go and handle this excess volume that I would otherwise have to hire contractors really quickly to go do. So it's a huge game changer especially with what's happening right now.

What was it like selling uh maybe call it a month ago when when the trade the trade war chaos was sort of peaking in some ways? And I imagine people at that point, you know, feel like they probably need better tools, but at the same time they're like, "Hey, like I can't really handle like onboarding.

" Um uh but I'm curious what what your experience was actually like. What I tell them is like look you're you're kind of like right now the way we price this is on a per success outcome. Your cost of doing this let's say is a dollar in house it's going to be a $130 on pallet.

So if we do what we're going to say you're going to have guaranteed ROI and you're going to have immediate time value. The second thing is that we built a very the way our product works is we can ingest a customer's SOP and immediately spin up an agent that replicates their workflows.

So we also really emphasize our time to value. where we're like, look, you're not changing your tech stack. You're not changing anything about your operation. You're just sharing you give literally give us a video recording of what you do.

We'll capture that and we can then create the agent to go and automate it and it requires minimal touch. You're not changing any of your I just have to call something out. So, you were at Retool before Pallet.

We just had David on and he said that uh he it's just so funny because he was like uh charging on a per outcome basis is BS. That was his take. Uh I don't I don't fully, you know, necessarily agree with it, but but it it's it's amazing uh that that you were just there. Yeah. Yeah. I love David.

He used to be my uh former boss, but I think that's one area we probably disagree on. I think outcome based pricing is uh is a game changer. Yeah. Interesting. Yeah. Yeah. Uh talk about the round. Uh it's only been seven months since you raised your $21 million series A. Now there's a $27 million series B.

I'm sure there's a valuation markup. I don't know if you're sharing that but uh it's not a huge step up in terms of total capital raise. So what does that tell us about the structure of the business and the burn rate and how you're thinking about capital consumption?

You mentioned uh that AI is kind of infiltrated everything. Is that a cost center now?

Are you actually spending significant amounts of capital on inferencing AI models or is this more just we have something that's working so we're going to hire more write more code more sales reps more dinners more steak dinners more champagne more hitting the size gong when you get a big client.

So actually we had we most of the capital from the last round we hadn't even spent like we barely touched tapped into that. So this round was entirely opportunistic and the the part of the reason it came together was the folks at General Catalyst. I knew them really well.

We got to know each other really well and they helped build Samsara and Samsara was probably the most iconic logistics software company. So a lot of it was Hmon Mark and the team there like really knew how to build a big business.

The second part was I kind of felt like the industry was going for a big change and I just really wanted to accelerate our momentum on our product and our enterprise sales motion where what I saw was like I was talking to the CIO and the CEOs of companies like DHL, Kuna, Estee Lauder and all these corporations and they were telling me like we're trying to figure out how to use AI.

We have no idea which model to pick for which use case. It's like these models keep evolving at a rapid pace. we need someone to be that translation layer to kind of make that happen. So that that was very obvious from the conferences that I was going to.

And the second thing was when these tariffs kicked in, I was like there's so much volatility that the the value prop of this stuff is like a no-brainer and we just really need to accelerate at this time. So that's why like it was completely opportunistic where we had the right partner.

The market felt like it was just getting ready for the technology and we were like we know exactly what we want to do so like let's go and accelerate. Yeah. Yeah, you mentioned some of those really big companies and kind of them not being able to decide between different models.

Have you bumped into any of the large consulting firms, the McKenzies of the world? Because we heard this narrative early in the AI boom that they're making more money than the startups and the tech companies because they're they're selling pitch decks at extremely high margin.

Uh talking about AI transformation and then just saying, "Hey, if you're a big company, you can go build it.

here's here's our take on AI or are they more of a partner that could recommend you is do you have any insight into how uh the the big management consulting firms are are confronting the AI issue and plugging into like the Fortune 500.

So what we've generally seen is that the consulting firms are like very much open to partnering with companies. I think the way that you think about it is like the executives at these businesses they're like there's a lot that's happening. There's a lot of noise. I'm not even sure who the right partner is.

Do I go with a horizontal solution like Microsoft Copilot? Do I go with one of these newer players? Like where where do I allocate my capital and who do I pick as my partner?

And think of the consulting firms as a way to kind of help these companies filter out all that noise on who is the right partner for me to work with. So we very much think of them as critical partners that help us like earn the trust of these Fortune 500 corporations. And that's how um that's how we view it.

actually one of as the CEO of one of those firms is actually someone who I've gotten to know well and uh he actually has helped us actually open a couple of doors. Very cool. Just got to say you're exceptional at sales. I'm ready to sign up for pallet right now and I have nothing to do with with your industry.

Hey, we're going to be shipping a lot of hats, a lot of jack he's he's like well a lot of people think that you know our solution might not be right for them but you know actually try Yeah. Yeah. Yeah. Yeah. Yeah. The the the anti- cell. sells sells better than anything else for sure. Um, anything else, Jordy?

No, congratulations on the new round. This is fantastic. Your progress. Yeah, I mean grateful to be here. Um, one last thing, by the way, is that one thing we've uh we've really kind of pushed for at Pallet is this concept called hybrid work. Sure.

Where what we believe in is actually that like there's only two places you could work at pallet. Either in the office or at the customer site. Oh engineers, every month we make our team spend a week at the customer site. So last month our entire team was out in Medí at a customer's BO learning their operations. Wow.

And learning how they can like like every single aspect of their process.

And I think this is really important because in a world where software costs are treading to zero like if you don't understand the customer's workflows like in excruciating detail, you might not be like building the right thing and they don't use all good documentation.

And you can't just go chat GBT the right answer on how does container track and trace work. You actually have to sit there, observe, learn, and then uh that's I love that the hiring the hiring process candidates like, "So, do you guys support hybrid work? " And you're like, "Of course we do.

" You know, about a week out of the month, you'll be, you know, in South America, you know. Um and you and and you built out that function at at Retool, right? This sort of concept of this deployed engineer. Is that correct? That's correct. Yeah. Yeah. I I was the probably the first forward deployed engineer there.

Very cool. That's cool. I love that. So So you're pretty bullish on the forward deployed engineering meme kind of just growing and growing in the future broadly for like every company or is it specific to B2B software or something about AI automation and uh something that needs to be customized.

I imagine that there there have to be some organizations that they they don't need it because the product is so standardized, right? Yeah. I think I think it's not necessary for every type of business.

I think in our case, we're dealing with a company that has a lot of internal systems and processes that you have to hook on to. Y and we're trying to make change management to your point, what you said earlier was like, hey, I don't want to change my operations too much. I want to stick with what I do.

So, if we want to make change management simple, we need to hook in with your existing infrastructure. So, at least for Pallet, we think the forward deploy engineering function is critical to make change management easier. But there's obviously tons of companies that could succeed without that function. Yeah.

Yeah, that makes a ton of sense. Uh well, thank you so much for stopping by. Yeah, congrats on all the progress. I'm super bullish. Yeah, we'll talk to you soon. Cheers. Bye. How'd you sleep last night, Jordy? I historic numbers again. Actually had kind of a brutal bot it. We were on so much caffeine yesterday, John.

I do. You did you track how much caffeine you were on? I was on a lot of a fair amount of caffeine. couple Yerba only got six and a half hours of sleep which is almost seven for me got an 82. What'd you put up? What was your final number? Did I beat you? No, you didn't.

Even on my worst night, John, my worst night this month, I still beat you. I got an 84. Anyway, go get yourself an eight sleep, 5year warranty, 30 night risk-free trial, free returns, and free shipping. It's what Charles sleeps on when he's crying himself to sleep. Yeah.

Uh there's a timeline post I wanted to highlight here from Andy Nexuist because it ties into our next advertisement. Uh Stripe put up a uh a digital billboard in Grand Central and it just says Stripe billing usage based billing to scale your business faster.

And uh and the meme is is everyone there having the same thought bubble? What a silly niche ad. Nobody at Grand Central has even heard of Stripe, let alone implemented it in prod like I have. And it's so funny, but it's so true.

Like I have actually implemented Stripe and I'm sure so many people that go through San Grand Central have.

And I think it's I think my interesting takeaway from this, sorry, is is that um is that there's there is a desire for like we talk about out of home obviously and we're going to read you an ad quick ad, don't worry, it's coming.

But um but I think that there are companies that feel like they need to abstract their message into even broader terms when in fact I think uh just being clear about what the product is and just knowing that yes implementing implementing Stripe is a common thing at this point and and people and those people walk through Grand Central.

Yeah. A lot of people a lot of people do start yelling about their company without being clear about the the product marketing effectively.

And then that can be that can just make your life so hard because people are like aware of your brand or your company, but when the moment comes that they should that they would convert, they don't actually think of you in that context. Yeah.

Like there is a different version of this stripe ad that is uh like a photo of of Patrick Collison talking about increasing the GDP of the internet and stuff and it's very like like high fidelity. I'd like to see him going like one of the classic Arnold houses hitting the zizz the zyz guy.

Um yes absolutely but um but but aside from that it's like it's like it's okay to just send the message up front. Just just be just be just be straight up with it. Uh like adqu out of home advertising made easy and measurable. Say goodbye to the headaches of out ofome advertising.

Only adqu combines technology out of home expertise and data to enable efficient seamless ad buying across the globe. And um yeah I I am I'm still I'm still super long on on out of home advertising. You can see Stripe is doing it in uh Grand Central and uh it is and it's the most fun. It's the most real. Yep. Yeah.

Seeing your ad on on Meta X, etc. is cool. Yeah. Seeing it in the real world. Nothing like it. Nothing like it. It's different. Uh, did you see Nathan Fielder piloted a full Boeing 737 plane? I didn't finish the show yet, but I finished it.

It was kind of a challenge because I kept falling asleep like twothirds of the way through every episode, so I feel I've seen the entire season, but like I actually should probably watch it back again. So awkward.

But um but yeah, it was it was absolutely wild and especially the context like the timing of when of when the show actually premiered and and the episode started rolling out. Yeah. It really is insane. Absolutely. But he's one of the best to ever do it and he's he's a he's a real icon. Yeah.

And uh we have to I would like to be in the next his next season. Well, speaking of icons, there's nothing more iconic than a uh than a Rolex. And you can get one on bezel. Go to getbzel. com. Your bezel concierge is available to source you any watch on the planet. Seriously, any watch.

They have 26,000 luxury watches available. And so go check it out at getbbezzel. com. And next up, we have uh Rob Taves. Good friend of mine. I grew up with him. I went to middle school and high school with him. Now he's a venture capitalist at Radical Ventures.

and uh he's a great columnist uh and writes about artificial intelligence and has been writing about artificial intelligence uh since before it was cool which is fantastic. So we'll