Mr. and Mrs. RouteSmith

routesmithlogo.pngDenver-based RouteSmith and I make such a good looking couple. Yeah, not that good looking, but still….

I’ve recently invested in RouteSmith, which provides delivery, dispatch and route optimization software as a service. The typical RouteSmith customer is someone like Mattress King or Spencer’s TV and Appliance who does home delivery and wants to save their employees time, reduce fuel costs, and limit driver frustration. I have a background in logistics and fleet planning, and I know the value of efficient vehicle routing and happy drivers who don’t feel like they’re driving back and forth all day long on inefficient human-generated routes.

RouteSmith attacks a very real problem that has long been serviced with high-end software systems that require large up front investments and can’t effectively reach operations with small to medium sized fleets. The SaaS model is perfect for these cases – RouteSmith can deliver real value to customers with very little up front investment of time and money. Customers can usually justify these types of purchases by thinking about the simple ROI involved with minimizing route planning time, but the ROI can really shoot through the roof when you can utilize your existing fleet more efficiently and not have to do things like hire extra employees and purchase more trucks.

When I first met the RouteSmith founders – Jeff Smith and Matt DeWolf – I was impressed by their straightforwardness, honesty, and up-front analysis of the risks in their business. They often stopped to challenge their own assumptions and it was obvious they were thinking critically about their business on a regular basis. In addition, they had done quite a bit with very few resources (one of the signs of good entrepreneurs) and had landed several customers with only one of the founders working full time. They were also interested in finding “active/interested” investors with a background in their space (or at least a tangential space) who would meet with them regularly and help develop strategies for their business. Best of all, they had that really cool web 2.0 looking mirrored image logo and… bonus… there is a real business model and everything!

As part of my extremely sophisticated due diligence process, I asked Matt all the really tough questions such as “How did RouteSmith get started?”

“RouteSmith started when Jeff was approached by a friend who knew about his background in development and applied mathematics. He introduced Jeff to a small company that delivered and installed products for Sears stores all over Dallas. The owner of the delivery company was spending 3 hours per day organizing and planning his routes. Jeff�s initial application cut his planning time down to 30 minutes.” – Founder, Matt DeWolf.

Matt went on to talk about some early success.

“After a few months of marketing we picked up a few more customers, including Mattress King of Colorado. They had been manually planning their routes which took approximately 6.5 hours per day. By implementing RouteSmith, they were able to reduce their planning time to less than 1 hour. In addition to time savings, they gained flexibility in their scheduling process which dramatically increased customer satisfaction.” – Founder, Matt DeWolf.

RouteSmith has also recently released RouteMeNow, which is a mashup “designed to socialize the the concept of route optimization into the SMB marketplace” and drive leads to RouteSmith. RouteMeNow is very different in nature from Mapquest or Google Maps, which can provide simple directions, even for multiple stops. They key to RouteSmith, and what they’re showing in RouteMeNow is the idea of optimized routes (where stop order is not the driving factor, if you’ll excuse the pun). RouteMeNow can quickly and effectively show small businesses how it optimizes arbitrary stops into the most efficient routes. RouteSmith doesn’t do this with just a simple traveling salesman algorithm – it actually employs and blends genetic algorithms (that are beyond me) into the equation.

I’m rooting for this one. 😉 And so is the mysterious 5280 angel.

file under: Blog, Startups