Why You Should Join Traba
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Why You Should Join Traba
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If software is eating the world, e-commerce is eating retail.
Between 2019 and 2021, global e-commerce grew from 15% of total annual retail sales to over 21% of total annual retail sales. Between 2022 and 2026, that number will grow to 27%, representing a 2.1 trillion dollar (63%) increase in annual e-commerce spend.
Thanks to e-commerce, you can, for the first time in history, buy groceries, lifesaving medicine, or a 1985 Sikorsky UH-60A Black Hawk attack helicopter from the comfort of your own home.
What a time to be alive.
Of course, none of this has come cheap.
Quietly powering all this is an ever-growing chain of warehouses and distribution centers.
Warehousing is the backbone of e-commerce: for every $1 billion increase in e-commerce sales, there needs to be an extra 1.25 million square feet of distribution space supporting it. For the exact same volume, e-commerce supply chains need triple the warehousing and logistics space of brick-and-mortar supply chains, since they have to support things like same-day delivery and free returns.
As a result, the rise of e-commerce has driven incredible growth in the light industrial businesses powering it. We can already see:
The average asking rate for warehousing rent rose 20.6% year-over-year to $9.19 per square foot in 2023.
We’re experiencing historically low warehouse vacancy rates and historically high amounts of warehouse construction, even after pandemic-induced surges in demand.
In this month’s piece, we’re interested in exploring what this has meant for warehousing employment.
Like the growth in warehouses themselves, there’s been similarly rapid growth in the ranks of the workers staffing those warehouses. Warehousing employment has tripled in the past decade: between the first quarter of 2013 and the first quarter of 2023, the number of warehouse workers grew from 700,000 to over 1.9 million, with the broader market for transportation and warehousing workers growing to 6.5 million. In 2020 alone, 80% of Chief Supply Chain Officers had to increase warehousing headcount to accommodate increases in returns.
Even still, this hasn’t been enough:
2022 saw 34% of warehouse operators forgoing business due to a lack of available labor, up from 31% in 2021.
Among those that had to pass up revenue, 64% had to forgo what would’ve been more than 25% of their total business.
2022 saw 73% of warehouse operators reporting problems attracting employees, up from 26% in the 2021.
Like many things, some of this can be blamed on Amazon: they alone are on pace to “deplete the available labor supply” in certain metro regions within a few years.
Most of it, though, can be blamed on the ineffective staffing agencies businesses use to fill roles: despite 84% of businesses using two or more staffing vendors, just 6% are consistently able to get all the workers they need.
Light industrial staffing is a problem not just at the core of e-commerce, but all of logistics. There’s a need for a better solution: one that’s modern and can beat the 59% fill rate averaged by traditional staffing agencies.
That’s what Traba’s built.
Background
Traba is building a vertically integrated labor marketplace focused specifically on the light industrial sector.
Uniquely, their
Narrow focus on light industrial businesses (warehouses, distribution centers, event venues)
Deep stack of supporting software (geotracking, data pipeline integrations, 1099-NEC preparations)
allows businesses using them to source, onboard, and manage qualified workers significantly faster and more consistently than traditional staffing agencies or job platforms.
This focused, end-to-end approach means a better experience for both workers and businesses:
For businesses, Traba makes finding workers fast, easy and consistent: Traba can fill 95.3% of roles with just 24 hours of lead time. In comparison, traditional industrial staffing agencies take 20 days to fill just 59%.
For workers, Traba makes finding jobs fast, easy, and consistent: industry-specific worker profiles, verified skillsets, custom shift recommendations, and in-app certifications mean users are already building entire careers on the platform.
Concretely, the product today consists of a mobile app helping workers to find and manage shifts, a web app helping businesses to find and manage workers, and a broad selection of internal tools used by Traba’s operations team to keep things running smoothly. Functionally, there’s a marketplace where businesses can list open roles and a stack of peripheral software on top helping businesses to do everything from filtering candidates to managing timesheets.
Like the staffing agencies they’re disrupting, Traba monetizes by taking a ~35% cut of each worker contract they facilitate.
Traba was founded in 2021 and has grown swiftly since launch. Since going from zero to a million in annualized revenue within 8 months, they’ve launched in 9 different markets across 5 different states: Central Florida, North Florida, Austin, Houston, Dallas-Fort Worth, San Antonio, Atlanta, Phoenix, and Nashville.
Businesses love the product: they grew revenue 9x last year, had several months of over 100% MOM growth, and are (anecdotally) considered one of the top performing companies across both the Founders Fund and Khosla Ventures portfolios.
Workers love the product even more:
The company was founded by Mike Shebat and Akshay Buddiga. Mike was previously Senior Manager, Global Product at Uber, where he was on the founding team for UberEats and launched the product and operations in over 16 countries around the world. Akshay was previously a Senior Engineering Manager at Fanatics, where he launched and scaled their consumer platform to over 300 global e-commerce properties.
To fuel their growth, Traba raised a 20 million dollar Series A from Khosla Ventures in July of 2022. Before, they had raised a $3.6 million Seed round from Founders Fund and General Catalyst. Other investors include Atomic and SciFi VC.
Traba has an excellent product with strong traction. Better, they’ve got an excellent team constantly improving that product. Best, they have Keith Rabois on their board and an office in ✨ Miami ✨
But can they be a category-defining business?
We think they have the potential to be.
In this piece, we’ll dig deeper to see why this is the case. We’ll look at how they’re targeting a massive, globally important market. We’ll look at how they’re well-positioned to become a leader in that market. We’ll look at how they stack up against the competition, and why their team is perfect to execute on this opportunity. And we’ll do it all as thoroughly as we can.
Ready? Let’s begin.
The Opportunity
We’ll begin our exploration of Traba like we do for all of our companies, from a first principle:
Large companies lead massive, growing markets.
Many startups with product-market fit don’t get very big (and aren’t worth joining) because they don’t meet this condition. Thus, we must establish two things:
Traba operates in a massive, growing market.
Traba will become a leader in that market.
A Massive, Growing Market
Traba operates in the market for industrial staffing services; they make money from industrial businesses who need help filling temporary roles. If there are lots of industrial businesses looking to fill lots of temporary roles (i.e. forklift operators, material movers, manufacturing assemblers) then the market for industrial staffing services is large.
Empirically, this seems to be the case:
In 2020, American businesses spent 30.5 billion on industrial staffing services.
54 different American industrial staffing firms generated at least $100 million in revenue in 2020, representing 85% market share and over $25.9 billion in collective revenue.
The broader temporary staffing market is even bigger. In 2019, there were over 25,000 staffing agencies operating out of 49,000 brick-and-mortar offices across the country. Over the course of a year, they placed 16 million temporary or contract employees, with about 3 million of them working on any given week. Of these, 36% worked in an industrial role, making industrial staffing easily the largest category in the market.
There’s a lot of money in getting temps hired.
Industrial staffing is also the fastest-growing category in the market. A 2022 survey of staffing agencies found that almost 70% of light industrial-focused ones grew by over 50% the year prior, with about a quarter growing by over 100%.
Looking at the growth in our warehouses and distribution centers (the largest segments of the light industrial space), this makes sense:
There’s currently 593,857,321 square feet (roughly 10,000 football fields) worth of warehousing and distribution space under construction across the country, with 90% of that set to deliver this year.
Between the first quarter of 2013 and the first quarter of 2023, the number of warehouse workers across America tripled.
Even still, 73% of warehouse operators said they have problems attracting employees in 2022, up from 26% in the 2021.
At a higher level, several tailwinds are driving this growth:
The rise of e-commerce. E-commerce supply chains require triple the warehouse and logistics space of brick-and-mortar supply chains: every $1 billion increase in e-commerce sales requires an extra 1.25 million square feet of distribution space supporting it. As a result, the average US warehouse is over 40% larger today than 20 years ago.
The on-shoring of high-tech manufacturing. Between the 2022 CHIPS and Science Act and the Inflation Reduction Act, we’ve seen over $400 billion worth of new incentives for US-based high-tech manufacturing. As a result, the stock of US industrial property is set to grow nearly 4% in 2023, the fastest rate in over three decades.
Before moving on, it’s also worth noting that the market is highly fragmented. In 2020, the 5 largest industrial staffing firms had just 36% market share, up from 33% five years prior. The largest firm, EmployBridge, had revenues of $2.678 billion but only 9% market share.
So in short, the market for industrial staffing services is massive and growing but fragmented and overwhelmingly inefficient.
It’s the perfect market for an ambitious startup to attack and consolidate with technology.
Market Leadership
So we know businesses are spending lots of money on light industrial staffing. The question now is whether Traba will be their solution of choice.
We’ll consider the question of market leadership in two parts: whether Traba can gain a lot of market share, and whether they can defend it.
Gaining Marketshare
To gain significant market share, you have to be much better than what people are currently using in some way. If you’re not “10x” better in some way, no one will bother switching over.
As a marketplace, Traba has two primary stakeholders: employers (the supply side) and employees (the demand side). Let’s see how they improve the experience for both.
Employer Experience
Traba 10xes the employer experience by making it easier to both find and manage workers:
Finding Workers
When given less than 24 hours of lead time, Traba still fills an average of 95.3% of roles. In contrast, traditional staffing agencies take 20 days to fill just 59% of roles.
This is a remarkable improvement in fill rate and time to fill, the two most critical metrics for any staffing solution. Traba’s able to pull this off through their software and unique focus on the light industrial sector:
Workers can become verified for industry-specific skillsets (i.e. forklift driving, loading and unloading, different types of quality control, shifts with GMP), which is leveraged to construct highly detailed worker profiles. Whenever a new job is posted, Traba leverages this information to generate priority lists of workers with matching scores, instantly sending push notifications to the most qualified ones.
Not only does this lead to faster hiring, it also results in better fits: in the first quarter of 2023, the rate for shifts completed by “qualified workers” on Traba (workers who’s vetted attributes exactly matched what was listed for a role) rose from 62.9% to 75.4%.
No more of this. Traba’s operations team offers customer service and helps everything move smoothly. They’ve also got a suite of custom internal tools they can leverage:
Custom communications tools to orchestrate scheduled SMS/push notification campaigns to workers if needed.
Custom search and prioritization filters to customize worker cohorts by role fit and availability if needed.
Custom geolocation tools to see where workers are and if they’re running late.
Payments tooling to flag/review abnormal activity before automating the rest for Instant Pay.
Managing Workers
Traba’s job doesn’t end when a match is made. Their vertically integrated philosophy means helping companies through the entire process. To do this, extra functionality they’ve shipped or are building on top of the marketplace includes:
Paying workers by unit or container completed. This is specific to the kind of work Traba helps facilitate and is hugely convenient for business users.
Integrating with VMS (vendor management systems) and MSPs (managed service providers) like Beeline, SAP Fieldglass, and TapFin. These companies serve as centralized portals for businesses to vendors like staffing providers. Integrating with them allows businesses to both push requests out to Traba (i.e. making staffing requests or booking workers) as well as receiving data back from Traba (i.e. worker timesheet data, productivity metrics, staff reliability and quality metrics). Traba can even build workflows that trigger actions in Traba based on VMS data (i.e. updating staffing requirements automatically based on inventory forecasting or lead time updates).
Integrating with WMS (warehouse management systems) like Logia, Deposco, and Manhattan. Partnerships here can allow Traba to hook into productivity tracking and demand planning workflows directly. For example, a business user planning flexible labor needs for next month’s volume could easily estimate and book those needs via a Traba integration.
Detailed reporting and analytics around worker productivity. For example, a supervisor managing two lines at the same plant or workers at two different plants might want to understand differences in productivity between the two or trends over time.
Again, It’s worth highlighting how these unlocks are driven by Traba’s mastery of software and unique focus on the light industrial sector. Without both, Traba wouldn’t be able to automate as much or integrate as tightly with existing light industrial workflows.
As a result, this is an entire dimension of value add traditional staffing agencies and more horizontally-focused job platforms can’t touch.
Worker Experience
Traba 10xes the worker experience by making it easier to find jobs and build careers.
Finding Jobs
Traba makes it easier for businesses to find workers, so the corollary is they must also make it easier for workers to find jobs. Industry-specific certifications, verified role attributes/responsibilities, and personalized shift recommendations all make it easier for workers to get matched into relevant roles.
Building Careers
Several people are already building entire careers on Traba. They told us about Rene, a worker in South Florida who’s already worked 124 shifts on the platform and recently leveled up from a warehouse associate to a warehouse manager. They also told us about Jose Daniel, another worker in the area who leveled up from a warehouse associate to a supervisor role. This sort of thing is easier on Traba than elsewhere for a few reasons:
Since everyone on Traba’s a light industrial business, reviews are more valuable since they’re guaranteed to be by a similar/relevant business. With time, your Traba profile sort of becomes a light industrial-specific resume - you stack skills, reviews, and results that help build reputation in your area or skillset. Unlike working with a staffing agency where nothing carries over between jobs, this can compound with time.
Beyond tracking certifications, a skills system Traba is currently piloting goes further and actively helps workers get certified in certain areas or skillsets. For instance, you might want a security license to help setup/takedown certain events or forklift certification to drive forklifts.
And like with businesses, Traba’s vertically integrated philosophy also extends to helping workers beyond just finding a job. To do so, extra features they’ve shipped or are building include helping workers with taxes, managing certifications, and various financial services (Instant Pay, Traba Debit Card)
.
Defending Marketshare
Now that we’ve dug into how Traba’s been swiftly gaining market share, let’s consider how they can keep it. As a vertical marketplace, Traba has several moats built into their business model:
Review and profile data - if Traba can become a system of record for light industrial workers and their careers (by centralizing reviews, certifications, completed shifts, etc.) then it becomes difficult for those workers to leave the platform, as it’d effectively mean leaving their resumes behind.
This then makes it difficult for businesses to leave the platform: if relevant and qualified workers are more concentrated and discoverable on Traba, it’s hard to justify using an alternate solution.
Marketplace liquidity - liquidity is valuable and difficult to achieve from a cold start. Once it’s going, though, it’s a real flywheel: more workers means more jobs and more jobs means more workers. It’s difficult for a new players to attract either, as it makes more sense for anyone to go to a market that’s already up and running.
Competitive Landscape
Traba is far from the only business operating in light industrial staffing. Now that we have an understanding of their unique strengths as a product and company, let’s see how they stack up against their competitors.
Staffing Agencies
Staffing agencies are the traditional solutions in the space. Major players include EmployBridge, Express Employment Professionals, Aerotek, Randstad, TrueBlue, Adecco, Kelly Services, Elwood Staffing, and Tradesmen International, all of which generated over 500 million in revenue in 2020.
Staffing agencies primarily operate out of brick-and-mortar branch offices, using recruiters to find workers and match them with opportunities. Technology isn’t used to manage relationships, only the operational overhead: most agencies source workers on LinkedIn/Indeed and use basic ATS tools like Bullhorn or Tracker process them. In 2019, there were 25,000 such agencies operating out of 49,000 offices across the country.
Compared to staffing agencies, Traba leverages technology to improve the experience for both workers and businesses:
Automation allows Traba to reach more workers, onboard them more efficiently, and match them more optimally than a staffing agency relying on human recruiters (and with far lower cost!). The greater scale and efficiency this creates results in higher liquidity, which when combined with algorithmic magic drives fill times down and fill rates up.
Product features make life easier for workers and businesses. Instead of relying on recruiters to funnel roles to them, workers can browse openings and chose their own jobs instantly. Instead of waiting weeks for their paycheck, instant pay lets them use earnings right away. Likewise, businesses can more easily manage overhead with timesheet features, invoicing features, and a suite of integrations with other warehouse management tools.
Startups
There are a good number of startups operating gig labor marketplaces similar to Traba. Popular players include:
Wonolo - Last raised $140 Million in October of 2021 from Leeds Illuminate.
Instawork - Last raised $60 million in May of 2023 from TCV.
Shiftsmart - Last raised $95 million in December of 2021 from D1 Capital.
Other players include Shiftgig, GigSmart, and a swathe of smaller companies like Flexy and Job Today.
Being focused on hourly workers, these marketplaces are more specific than LinkedIn or Indeed but less specific than Traba. Instead of focusing just on light industrial workers and businesses, Wonolo, for instance, supports opportunities like data entry, food production, delivery, sales, and software testing, and is interested in expanding into “teachers, nurses and other care staff, and even more technical jobs.”
Compared to horizontal marketplaces like these, Traba’s focus allows them to improve the experience for both workers and businesses. Specifically, vertical integration allows them to integrate tightly with existing light industrial workflows, allowing them to help with far more than just recruiting. We cover this in greater detail above, but peripheral features like industry-relevant payment options (i.e. pay by unit), integrations with common warehousing/light industrial planning software, analytics tooling, certification management, and in-app courses all make Traba more than just a jobs marketplace.
Execution
Traba’s endgame resembles something like an AWS of labor, improving the productivity and potential of both businesses and workers worldwide.
It’s an ambitious vision requiring an equally strong and equally ambitious team. While it’s still early, they’ve already got a lot of the engineering and operational experience needed to pull something like this off.
Consider a sampling of their roster for yourself:
Mike Shebat - Co-Founder, CEO
Mike was previously a Senior Manager, Global Product at Uber where he was on the founding team for Uber Eats. Prior to that, he led a 36 person team at McMaster-Carr, where he worked with multiple staffing agencies. Before that, he was at Blackstone and Goldman Sachs.
Akshay Buddiga - Co-Founder, CTO
Akshay was previously a Senior Engineering Manager at Fanatics, where he launched and scaled their consumer platform to over 300 global e-commerce properties. Before that, he was a Zenefits, where he worked on their 401(k) product during hypergrowth. He holds an MS in Management Science and Engineering from Stanford.
Luis Enrique - Head of Operations
Luis was previously a Senior Strategy and Operations Manager at Uber, where he launched Uber Moto in Brazil. Before that, he was a Supply Network Operations Manager at Procter & Gamble.
Michael Staunton - Software Engineer
Michael was previously Co-Founder of Buzzle (YC S21). He holds a BS in Computer Science Engineering from the University of Michigan.
Jessica Xu - Head of Finance
Jessica was previously General Manager and CFO of Coupang Eats. Before that, she was an Investor with SoftBank’s Vision Fund and an Investment Banking Analyst with Citi.
Ben Schoeggl - Founding Software Engineer
Ben was previously a software engineer with Roblox and Tesla. He holds a BS in CS from the University of Washington.
Seth Samuels - Chief of Staff
Seth previously led Gopuff’s North American assortment strategy. Before that, he was an Associate Director at McKinsey.
Anurag Choudhary - Senior Software Engineer
Anurag was previously a Senior Software Engineer and Tech Lead at Microsoft. He holds an MBA from UChicago Booth and a BS in CS from UIUC.
Allison Hojsak - Senior Software Engineer
Allison was previously a Senior Software Engineer at Twitter. She holds a BS in CS and Economics from Brown.
Conclusion
There’s a vast amount of stuff for Traba to build, but we’re especially excited to see them grow along the following axes:
More locations. In the near future, Traba will expand across the rest of America’s major industrial staffing markets. Later on, they’ll expand globally, starting with Latin America.
More products. Like we mentioned above, Traba’s endgame looks like an AWS for labor, all built specifically for the light industrial sector. Owning the employee-employer relationship via vertical integration end-to-end would make leaving the platform almost impossible, giving them a good shot at finally consolidating this highly fragmented market.
It’s about time someone solved this problem. We’d hate to wait any longer for our helicopter.
They’re hiring.
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