Chad Wittman of Dolly

Launching in 2014, marketplace liquidity, and the future of delivery.

Chad Wittman is the co-founder and VP of Product & Operations at Dolly, an on-demand moving and furniture delivery marketplace. You can follow Chad on Twitter @ChadWittman

You co-founded Dolly in 2014. What was starting, building, and scaling a marketplace like back then, and how has it changed over time?

2014 was full of folks trying to figure out the next Uber for X. This was a bit of a blessing and a curse for everyone that was in the general space. Investors either hated or loved the pitches in this space, but thankfully most customers were clamoring for these types of solutions.

Without Uber coming first, none of the other gig economy companies would have had the success they had. Customers needed the mental model and trust in the general concept before they would trust a "regular person" to take on their "specialized" work requests. This made starting easier than I typically would expect. 

As for building and scaling, we had to invent a lot of our own solutions or find vendors that were not thinking about this deeply yet.

For background checks I remember Googling "top background check company" and Sterling came up. We scheduled a call and the amount of manual work required to run background checks was insane to me. They had some flavors of integrations, but they clearly weren't built for developers. 

Another challenge emerged with managing a flow of gig economy applicants all the way to activation. We found a small company called OnboardIQ and we were one of their larger customers.

This allowed us to work closely with their team to help them better understand our challenges, luckily this allowed for their product to move in a direction that greatly benefited us quickly. They would go on to build a pretty big company now called Fountain. 

So you had this blend of old archaic systems + new nimble startups thinking about solving for marketplaces. This is definitely the biggest change in the past 5 years when it comes to building and scaling a company in this space.

Maintaining a balance of supply and demand in a marketplace is vital to achieving liquidity. How did you figure out the right balance of supply & demand, and how was that measured?

The balance of supply & demand is very unique to each company. It really depends on the utilization of each side, in addition to the value that's being created in the marketplace.

A unit of supply in our world can maybe do 5 Dollys per day, a customer may only need 1 Dolly every 3 months. So you have an equation that supports say 5 Dollys * 90 days = 450:1 ratio between our drivers & our customers.

This is more of a hypothetical ceiling, you also need to look at the typical utilization rate of your supply and the peak demand.

For example, say you have a 1,000 helpers available in a market on a given day, that gives you a theoretical 1,000 * 5 = 5,000 units of supply for the day.

But if your peak demand is 5,000 units of demand all requesting work at 10am, you actually only have 1,000 units of supply capacity for your peak hour. You're 1/5th supplied, but it's not economical to 5x your supply to cover only 1 hour of demand. 

I'll stop the math, but my point here is that you have to look at a couple of key pieces of data for each marketplace: capacity, peak capacity, demand, peak demand, utilization rate, & some sort of error rate to help fix things when they don't go as planned. 

The way I like to think about liquidity is over a dimension of time.

How does low liquidity in a given market impact our performance? What does high liquidity unlock in a given market? Is supply or demand easier to acquire or retain? What about a new market in low liquidity? Where can we invest to prop up demand or supply to start unlocking the benefits of high liquidity? How can we accelerate that flywheel sooner? 

To answer your question more directly, we look at things like customer price, driver earnings, customer ratings, driver ratings, a few proprietary driver metrics that try to assess a high quality experience on our platform, booking-to-fulfilled time, and other metrics that may be tangential to these concepts. 

What do you consider to be Dolly's sustainable competitive advantage?

Competition in our space is a really interesting topic. For the most part, most of the startups are hardly competing against each other.

We're really competing against non-consumption, traditional logistics / delivery companies, and truck rental (like U-Haul). To best answer your question, we'd need to talk about competition in each vector. 

For non-consumption, it's about educating the market to our solution & converting them into our customers.

I like to think about this in Geoffrey Moore's Crossing the Chasm mental model. For the people on the more progressive side of consumer mindset, we just need to let them know we exist & to try us once.

Once you get the Dolly mental model in your head, you'll see the world differently and will naturally leverage our service as you need it in your life.

For the folks on the more conservative side of the consumer mindset, we need to make sure we've built a great service that addresses their concerns. That might be things like top notch insurance, partnerships, & guarantees. 

For traditional logistics & delivery companies, it's about offering a product & service they have a really hard time providing.

I'm a big fan of Clayton Christensen's Innovator's Dilemma framework and I think it's really applicable in this particular case.

Most businesses tend to look upstream with their product offering. Additionally, they're by definition anchored to their unique value proposition. In this case, that's having large delivery trucks that are optimized to do efficient milk-run routes.

The upside with this strategy is that they can drive down costs against their fleets and any idle time for their delivery network. The downside of this approach is that the actual time of delivery per destination is variable, for the customer this manifests itself in a "please be home between 12-5pm for your delivery".

As we know being customers ourselves, that experience sucks. What Dolly offers (and a gig economy marketplace in general) helps enable is a smaller unit of supply (predominantly pickup trucks for us) that allows us to offer a much more customer oriented experience.

We can flex capacity, we can run point-to-point, we can do milk-runs, we can fulfill orders with a dynamic supply base of vehicle types. So for us, that means offering an excellent customer focused experience that's on the customer's schedule, with maximum customer service, and an even cheaper price. 

For truck rental, it's about trading money for time. It's often going to be slightly cheaper to rent a truck and do it yourself, but you're going to have a lot more headaches and probably 3x the time.

For us, this is about demonstrating this value proposition and making the entire process seamless. Every step of the process that adds time or stress, makes us less compelling against truck rental. This drives product development as well as operations, both are key in delivering an exceptional experience.

I view Dolly's sustainable competitive advantage as being a consumer focused, technology forward company built around providing the best way to move a big bulky object from point a to point b.

It sounds pretty simple, and it actually kind of is. The hard part is executing against that vision and not getting trapped into our business' desires instead of our customers.

I'm convinced that this will be the way that people move big bulky objects and I'm hopeful that Dolly is the company is the one that wins the space.

Between the companies doing something similar, we're all racing to see who can get high liquidity nationwide first -- the winner (in theory) should be able to service retailers and people moving alike better than any company out there. 

Some people believe that remote work culture and automation will negatively affect the moving industry and its workers.

What are your thoughts on this and what do you think the future of moving and delivery will look like?

Well there's a very large conversation to be had about automation and its impact on society.

The Agricultural Revolution brought dramatic changes to humanity, yet more jobs were created to now handle this new wave of work. The Industrial Revolution brought further dramatic changes to humanity, again...more jobs were created working on improving & fixing the machines we built.

We're now in the early days of the Digital Revolution. Will history repeat itself? Is this time different? In general, I believe that these revolutions have brought more opportunity & meaningful improvements in the quality of life for humanity. This gives me optimism about the future as it relates to automation and jobs. 

As it specifically relates to the future of moving & delivery, I think there are a few interesting trends playing out.

First let's look at delivery. Delivery has exploded in growth, between the internet, ecommerce, and specifically Amazon... the way we think about access to physical goods has never been more accessible.

A friend of mine was hosting some friends for dinner the other night, they wanted to do a puzzle, ~60 mins later an Amazon delivery was on their porch with a puzzle. 10 years ago, that would have been nearly incomprehensible.

Until we spend more time deep into VR or perfect 3D printing, I don't see the delivery business slowing down anytime soon. 

As for the moving industry, I think we'll continue to see people flocking to cities. I think we'll see continued rising real estate costs, which will mean fewer homeowners -- more renters. This means more moving, less stuff to move, and smaller square footage for their homes. These trends bode well for anyone in the moving business. 

In the delivery business, we’re seeing the Amazon-ification of traditional retailers.

They’re starting to realize that their customers expect more from them, especially when it comes to delivery. Customers expect deliveries to happen quickly, on time, and done with professionalism. That’s something very hard to scale and something even Amazon is struggling with, but Amazon is relentless on improving it. It’s why we’re seeing them buy airplanes, fund companies that will help them with their logistics, and experiment with gig economy delivery models.

Automation is probably a bigger concern for workers here. Big bulky things will presumably one of the later stage jobs to be replaced, but I suspect consumers will simply leverage labor in a different way. An example of that would be a delivery provider dropping off your item and dispatching local labor to assist with actually getting it within your home.

The opportunity to drive down the price with an automated delivery fleet will outweigh the inconvenience of solving a more dynamic local labor supply. 

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