Over the past 18 months, Echo Logistics (NASDAQ:
) -- a technology-enabled transportation and supply chain
management company -- has made five acquisitions. One of the most
significant purchases turned out to be Open Mile, a truckload
"Generally what we're buying is a small broker -- a freight
broker -- that basically adds sales people to our organization,
adds geographic coverage, adds a customer base," Doug Waggoner,
CEO of Echo Logistics, told Benzinga. "That's typically our
"On occasion we'll do other things. We recently bought a
company called Open Mile, which developed some very interesting
technology that was fairly easy to integrate with our system.
Plus they had a small brokerage business and some really great
talent, so we were able to capitalize on all of that."
"But mostly our acquisitions are small freight brokers that
can benefit from our technology, from our multimodal approach,
and we can benefit from their geographic presence."
Echo, which was started by two of Groupon's (NASDAQ:
) founders, Brad Keywell and Eric Lefkofsky, has completed 16
acquisitions since the company launched in 2005.
"We work…on a continuous basis, so we'll continue to look at
acquisitions on an ongoing basis," said Waggoner.
Prior to the release of Echo's first quarter results (which
became public on April 25), analysts expected the company to
report earnings of $0.16 per share -- one penny higher than
Echo's actual number.
"The economy was a little bit softer than I anticipated,"
Waggoner explained. "Also, we made some investments last year in
our sales organization….which is over 120 people, and [we]
extended their training for six months.
"We've been telling the Street for a year now that 2012 and
the first two quarters of 2013 would be a little softer than
normal because of the investment we were making in our sales
organization. So it's really a function of investing for the
long-term and building what we think is a great platform."
Waggoner pointed out that Echo increased its revenue by 21
percent while the GDP only rose 2.5 percent versus a three
"I'm certainly not ashamed of our performance," said Waggoner.
"In fact, it's probably the best performance of the industry, and
an industry that's very closely linked to the overall
Waggoner is also very confident in the company's potential
during the second half of the year.
"We're gonna produce numbers that will get people excited," he
added. "Like I said, we're not ashamed of the numbers we have
right now. We think they're rock-solid."
Echo's Very Own Cloud
Waggoner is a big fan of cloud computing.
"I think the third-party [cloud] is a great idea, especially
for small startup businesses," he said. "You can create an
application, host it on Amazon (NASDAQ:
) or some other third party cloud, and be up and running for
minimal investment and for minimal configuration. You don't need
an army of engineers that can configure your technical
"However, in our case, where scale is critical, where
transaction volume can be massive, you want complete control over
your environment. You can get that but it costs money -- you
gotta buy hardware, you gotta buy software, you gotta buy
engineers to make it all work and play nicely. Then you have to
have disaster recovery and backup. I think the private cloud is a
great option for those in startup mode or those running on a
budget. But if you're running an industrial-strength platform,
you just need a little more certainty."
To achieve that certainty, Waggoner said that Echo's entire
technology platform is based on its own private cloud.
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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