Agent Model Risks (with Matt Perkins) | Episode 270

Speaker 1: 0:19

All right, welcome back for another episode of the Freight360 podcast. We're up to 270 here. We've got a special guest, matt Perkins, with us. We'll get to him in just a second here, but first, if you're brand new, make sure to check out all the other content at Freight360.net. You can download some content. You've got all sorts of shorter form videos, podcasts For a full length training. We've got the Freight Broker Basics course. The YouTube channel is full of good stuff as well, so make sure to check that out and leave comments and share us with your friends. We'll get into it, ben. What's going on in Florida today? Not much honestly.

Speaker 1: 1:02

Fair enough, and we've got our old friend Matt Perkins with us. Matt, it's been a couple of years since you've been on but BTB Logistics. For those who haven't heard the previous episode, just give us a quick rundown on who you are, what your company does, because we're going to talk some agent stuff today and you're the man to have the conversation with.

Speaker 3: 1:21

Yeah, boys, thanks for having me back, and I realize the last episode we talked about was dealing with bad debt. So it seems like I'm always like the green reaper of freight talk here because we're going to be talking about some negative agent stuff. Yeah, you know, btb, you're just, you're kind of staying at brokerage. I grew up with the Chicago model myself, so when we started a freight brokerage 13 years ago, we based it pretty much off the Chicago model, which is carrier reps and customer reps. We have both an employee model and an agent model that I've expanded through the years, so it kind of makes you and me the agent experts here today.

Speaker 1: 1:57

Yeah, no, that's awesome. We're going to get into it because there's the agent world and we'll save it for the good part of the conversation. But there's some good and some bad. That goes with it. Yes, but awesome, we're glad to have you back. Appreciate it All right. Sports Ben, I don't even know.

Speaker 2: 2:17

Steelers was a great game. It was one of the best football games I've seen in a very long time.

Speaker 1: 2:21

Yeah, they're in the power rankings man. They're like a top five team. I think everyone thinks Baltimore is going to catch up and overtake them in the division.

Speaker 2: 2:29

This weekend I think they played Baltimore, yeah, one o'clock game. But honestly, how the game ended, I mean they definitely looked like they weren't going to win. They drove down, were up by one and then could not get the first down to win the game and run the clock out and they got them on and off sides, which was kind of shocking, considering like everybody knew it was coming. The whole stadium was talking about like they're going to try to pull them off sides to end the game, and they pulled off. So definitely a really good game to watch anyway.

Speaker 1: 3:01

Speaking of your division and Stephen's muted. He can't talk right now, but I'm just going to say I feel for him because the Bengals and Ravens game on Thursday night I think it was the Bengals tied up or could have tied up the game at the end with a field goal and decided to go for two and didn't get it. That was an odd one. Also, kansas City Did you guys see that game? Saw the kick? Yeah, I'm like so, mind you, I'm in my basement, I've got like a big projector, we've got the Bills game on and then I've got like a smaller TV in the corner with NFL Red Zone. So I'm like, all right, the Chiefs lose and the Bills win. The Bills and Chiefs play this coming weekend that's going to be for the number one seed and in total Chiefs fashion, they somehow pull off a win by blocking like a 30-yard chip shot at the end of the game. But hey, special teams man doing the job. Matt, who's your team anyway? I don't recall.

Speaker 3: 4:01

So from two years ago there was no team. Okay, but living here in Knoxville, you can't help but become a volunteer fan, okay. So two years ago I'd say, hey, whatever, I still like sports car racing. But this year it's all about the Vols, baby. I mean. I think they're 7-1, and so they're looking good head through the season. What's their ranking? You know what? I didn't catch the rankings on the news. They were what were they? Seven, I think, when they played and they won. Georgia lost last weekend, so they should be sitting pretty.

Speaker 1: 4:37

I'll look it up here right now.

Speaker 3: 4:38

You've got to quick search.

Speaker 1: 4:39

They've got to be Six, Six Yep at 8-1.

Speaker 3: 4:45

Oh, 8-1. They might have been 11 Saturday going into the game.

Speaker 1: 4:48

Yeah, everyone that's like the big bustle is Tennessee this year. When did you move to Knoxville? I thought I think you were in Chicago or something like that.

Speaker 3: 4:57

No, no. So I've been in Knoxville for going on four years. Okay, in March. So, yeah, I attend a game here and there, but in the last two years the energy Like this town. You would not even think that Tennessee has a professional football team. You do not see Titan stickers on cars, but there's a dude with a Tesla Model X with a checkerboard racing stripe from bumper to bumper on his Model X, because it's all balls in this town.

Speaker 1: 5:34

Yep, go balls. I like it Cool, all right. Well, in the news here we haven't yet seen who the new Department of Transportation cabinet member is going to be. We'll stay tuned for that one. We have seen a couple of other Trump cabinet positions announced so far, but in freight news it sounds like mixed reactions, but mostly positive, about the political environment, what it means for the future of the freight industry. There is some negative in there too. Obviously people are thinking that inflation and tariffs can have a whiplash effect, but overall it seems to be somewhat of a positive thing. Ben, before we hopped on here, you were talking about this Jason Miller and Craig Fuller dispute. Can you give me a rundown on this, because I'm not?

Speaker 2: 6:19

I mean the long and short of it is Jason Miller has been saying honestly for the past few months leading up to the election that honestly he thought he was pretty balanced in how he was approaching it because both candidates at the time, both of their whatever their platform they were putting forward were like increases in spending Both of them and both of them were pretty comparable actually to what they were expecting to spend. But what Jason Miller has been talking about was specifically the terrorist proposed and he's going through and he's put a ton out there with really good, I think, context and background is to what the intention is, what the typical impact has been from these and what the expected impact will be from them. And he's been calling out Craig Fuller on almost every one of these posts because Craig Fuller has been basically boasting that this is going to be the savior and end, all be all. And I think the long and short of what Jason is saying is that tariffs are inflationary, like if you increase the cost even to try to move jobs back to the US, for example, from China he's basically in the most recent one. He's like one they will bring more freight in the short run because companies will try to get as much product into the US before the tariff, right, which is the pull forward which Craig's talked about and nobody's debating. What he is saying, though, is, once you do that, and then, after they go into effect, that increases the cost for every product and everything we buy from another country.

Speaker 2: 7:55

And he said second of all, the thing he was talking about yesterday is a lot of the things we export as a country are basically things we put together from other imports, so we'll bring a bunch of car parts, for example, in from other countries, put them together and then export products in some ways Right. And he's like well, if you increase the parts of something coming in to make it, it increases the cost when you sell it, which makes them less competitive. When we sell things overseas, it's not just like you bring one thing over or you send one thing back. A lot of things that are manufactured have both imported parts and domestically made. And then his final point is that, like it's not as if these companies can just move manufacturing back to the United States to offset the tariff, because the labor cost in the United States is still higher in a lot of cases than the tariff. So even if you are paying a tariff to bring a product from China, even if it's 20 or 25 percent, the labor cost in the US is so much higher than why they moved it there in the first place that it doesn't actually incentivize these jobs to be brought back to the US.

Speaker 2: 9:00

He's basically saying that, like, even if you do this to China, for example, they're just going to make it all in Mexico and try to end around the tariff which Mexico spent I mean China spent somewhere. Like I've seen hundreds of billions of dollars in estimates on what they've spent on manufacturing plants in Mexico, one because of COVID, to bring them closer to the US. You've got less transportation costs, you've got less transportation risk. If something like that happens again.

Speaker 2: 9:24

But again, like we work in a global economy, tariffs don't apply in the same way they did 100 years ago where, like, you brought one thing over and then you use that good, you made one thing and sent it one other place. Most of the things we buy are made up of parts that are both imported and exported, and it's basically making the case that, like, even if you do this, it is inevitable that you will see inflation into 2026. And his predictions were somewhere between six and like eight and a half percent of sustained inflation after the tariffs have sat in place for the better part of the year. Craig is saying that like this isn't going to occur, but I haven't seen anything from Craig that breaks down why he thinks inflation won't result from these, and that's basically the debate both of them have been having.

Speaker 1: 10:10

I think it's such a bigger. I think you can't just take one single aspect of the economy with tariffs and predict the outcome, because there's going to be so many other factors that lead it.

Speaker 2: 10:22

Agreed. There's so many variables Because there's going to be so many other factors that lead into it Agreed. There's so many variables.

Speaker 3: 10:26

You know. So I was at a poker game once six years ago during the first Trump administration, and one of the buddies playing you know he imports goods from China and all they did was they sourced it from another country. So if these tariffs get slapped on Chinese goods, they can still find an outsourced product at a very competitive rate to where maybe it's not as inflationary Cause I you know. I agree with Ben. I mean, tariffs will be inflationary because businesses are not going to shoulder that cost, but they get creative and they'll find it somewhere else, as long as it's not being washed. I have, I have, a story of a customer who when I first actually no, I was an employee, still I was moving honey, and Chinese honey is illegal to bring into the United States, but this company was washing it through another country. And then they got caught. Yes, they got caught.

Speaker 2: 11:18

I saw a documentary on that, by the way.

Speaker 3: 11:20

It's probably my customer.

Speaker 2: 11:22

On the fraud and honey. It's crazy.

Speaker 3: 11:26

Yeah, the C-suite got arrested at O'Hare trying to catch a flight back to Germany. Because the owners were German and they knew that the government was coming after them. So they were at O'Hare ready to get into a flight and busted right then and there.

Speaker 1: 11:38

Needless to say, I lost that customer.

Speaker 2: 11:43

And here's a follow up. So Stephen put in here that he believed that Craig's counterpoint was that tariffs would need to be more targeted to specific products and commodities and incentivize bringing manufacturing not just to the US but to North America, to reduce dependency on shipping lines and increase cross border OTR. Ok, fair point. Here's what Jason posted yesterday. He broke down every one of the commodities, the percentage of which comes from either China or the rest of the globe. Right, and what he said was it's important to remember that we've already seen a substantial decoupling of what economists call gross exports from China to the US, though an analysis of trade patterns suggests that the decline in value added to exports from China to the US hasn't declined by the same degree, because countries exporting more to the US are now importing more from China. So the other countries to your point, matt that are selling the stuff to us are bringing that stuff from China in the first place and then sending it from another country to us, are bringing that stuff from China in the first place and then sending it from another country. And then what he said is for items where China still accounts for most imports in the US.

Speaker 2: 12:49

Quickly realigning production networks isn't feasible. Like you can't just switch all of your suppliers overnight and have products. Like there's a lag, you've got to bring it to 45 days once the order's in to get it to the US, let alone switching suppliers, switching vendors. Like it takes a lot of friction, a lot of cost to switch those in the first place. And like his point again, like I didn't dig too much into this, just reading what his post was like implication. I don't know about you, but toys and Christmas decorations don't seem like a national security concern. Santa might be bringing holiday inflation for 2025. Again, I think there's a little bit of sarcasm in there. But a lot of his posts he's really gone through and broken down the specific commodities that are being proposed as to what is likely to occur, based on what has occurred in similar scenarios. So time will tell.

Speaker 1: 14:49

Well, I guess we'll go from one depressing topic right into the next one here. This is a really gloomy episode. We're going to talk the agent model today. So Matt's company obviously he mentioned has agents, and the company that I work for, pierceville Y, we do as well. Agents and the company that I work for, pierceville Y we do as well.

Speaker 1: 15:16

And, having been around this agent world for a number of years now, matt and I can speak to some of the cautionary considerations if you want to bring agents on, because, ben, you and I have talked about in the past, people often think oh, if I want to just blow my business up, I'm just going to hire a bunch of salespeople to do all the work for me, and that could be in the form of 1099 agents, which I would say is probably the most risky way to go if you're just going to blow up your company with 100 agents, versus 100 people that you actually can corral inside of a building. So there's often a common misunderstanding or false belief that you just bring a bunch of agents on, they'll do the work for you and make you money. Agents serve a great purpose and can really help you expand your company in a way that you'd be limited to or it'd be more difficult to do in a W-2 model. But it comes with the risks as well. So I'll just kind of outline for anyone that's newer to what is an agent. So these are not employees of your company. They're 1099 contractors. So they're going to operate just like a sales rep, but you're not their boss. It is more of a contractual agreement or partnership than it is an employment relationship. The IRS treats them as a contractor so you can't tell them when to work, where to work. There's no salary involved here. There's no benefits or taxes held out of their pay. It's typically just a straight commission check that a company is going to pay to their agent, maybe once a week or every other week or something like that. So the way that most companies will operate with agents is, you know, like Matt's company and the company I work for. Both have kind of a mixed model where there's some W-2s and there's agents. Some are just straight agents, no-transcript. They'll typically work on straight commission. So it sounds like a great idea.

Speaker 1: 17:32

If you can find someone that's got customers, bring them in and make money. The risk, without going down the negative hole of the risk. We'll talk about some of the just general considerations are your cash flow If you bring somebody in that does a lot of business. Your cash flow, right. If you bring somebody in that does a lot of business, even if it's good margin, it's going to impact your cash flow pretty drastically at first until you can, you know, adjust things as needed. If they have lower margins or slow paying customers, that just exacerbates it even more on your cash flow. Not to mention someone how they're, you know, representing your company, the reputation of your brand name and how they're treating customers and carriers as a representative of your company. These are some common risks or considerations, but that's not what we're here to talk about today. Right, matt, we're going to talk about the bad, like the fraud agents that are out there. Yes, we've both seen them dealt with them. We've both seen them dealt with them.

Speaker 1: 18:32

You had reached out to me it was like a month or so ago asked a general question about vetting agents, I think before they come on board, because you've been seeing an uptick in the fraud agents out there, or what.

Speaker 3: 18:46

Yeah. So in the last month when I reached out to you, I went through a week where people were reaching out to me through like the website or just like former podcasts that I've been on, and they're like I want to be an agent. I'm like, okay, great, like where's this influx coming from? All of a sudden, and they've all got business. So they say and so I started asking questions and they just things were sounding too good to be true, which is why I reached out to you, because I can go through kind of the story, so that people can understand the risks involved. But you know, so these agents, they two of them fit the same exact mold. I mean, if they weren't in the same room together overseas, I would be shocked if they weren't. So they come to me. They say I've got business, ok, great, I would be shocked if they weren't. So they come to me. They say I've got business, okay, great, I.

Speaker 3: 19:35

You know, my process personally when an agent is applying is I talk to them just informally. I actually allow them to ask most of the questions, but I will feel them out through their questions on where their priorities are and if their priorities are just the split and that's pretty much it. I'm like, ok, you probably don't have any freight and or you're fraudulent anyways, because they want to ask as little as possible and to agree to it. And then I started asking some questions about the makeup of their freight, what it looks like, how long they've been around where they've been. But these particular agents, their MO was, they had two customers and they moved, you know, a fair amount of business, but nothing to set the world on fire, but nothing too low where you're like that doesn't make sense and you're not worth my time. Yeah, because I mean you and I both know there's costs incurred to have an agent. It's not as substantial as an employee, but there's still costs. So you have to cover the costs and then make a little profit for the house.

Speaker 3: 20:34

These guys would. They would list a large company, so they're like, well, I move like farm parts, and then a food manufacturer. I'm like I don't see a food manufacturer just giving an aid, that an agent business to that small level of degree, yep. And then I asked them for their and then they were very forthcoming with wanting to give their ID. And that's what. That's where I got triggered, because I, you know, with domestic based agents. I don't really ask for ID personally. I'm changing my method after these guys but they sent me their ID and their W-9. And they were very willing to send that over right away. So I'm like, well, send me what you got. I have the means and this is all public information so anyone can research this, but I've got the means to find it on a consolidated manner.

Speaker 3: 21:18

I plugged in these people's addresses and this one guy in particular lived in a town that I lived in once upon a time and he sends me a California W-9, sends me this Illinois-based ID and I look at the address and it's not even a trailer park. It is literally some kind of plot of land with a camper on it. But the plot of land that his address pinged to didn't even have a camper on it. As far as Google's concerned, lives in a tent, yeah, lives in a teepee, and I'm like this is weird. And then I look up the name. The name doesn't exist, there's zero record, phone number does not pull up, so that's usually a burner phone of some nature of voice over IP.

Speaker 3: 22:00

And then I asked him, I said where are you? Just be honest with me. And he's like I live in California. Now I'm like no, you don't. And I had another guy send me a Wisconsin ID and I forgot where the address pull. The address did pull up to a house, but then when I asked him he gave me some excuse that the ID wasn't expired so he didn't change it yet. And we all know on his call you have like two weeks to change your ID when you move and then after that, technically if you get pulled over, you could get a ticket for not changing your ID. So it's been coming.

Speaker 1: 22:35

I remember New York State used to have a little thing on the back of the driver's license that you had to fill out immediately and you had to get a new ID within a month. And if you got pulled over and you were within that little window as long as the back of your ID was filled out with the new address, you were fine. But yeah, you're right, there's no excuse when you move. It's not hard to get an ID these days. Just go to the DMV or do it online.

Speaker 2: 22:57

So, as you're saying this, I literally just renewed my driver's license and the registration for my car because my birthday was last week, right, and I did it in what three minutes Like during that intro. I renewed both of them.

Speaker 1: 23:11

Yeah, that's how easy it is. But, matt, continue on. I know we went on an ID tangent there.

Speaker 3: 23:16

Yeah. So the end story is these guys are coming in, and so my fear, personally and selfishly, is well, I don't want these guys coming in because they're probably going to double broker. They probably want access to the packet, to whatever information, so that they can run loads through DAT or ITS and just start double brokering freight. So I was able to lock those guys out and, you know, squash that Came to you to see what you're seeing. Because I just found it odd that this rapid influx happened within a week, happened within, I mean, within a week. I had four people, I think, ask about my agency, offer up their id, tell me they've got a little bit of freight. That makes me say, okay, well, as long as you're not a pain in the butt, I mean it's gonna be some extra money for me, right, but they're all fake yeah, I've um, so I started to notice the uptick late in 2022 was the first time we really got burned by someone.

Speaker 1: 24:15

That we didn't catch till afterward. But I mean the, the overseas fraud stuff. I've seen it for a number of years, but not to the extent where it is now. So you're right, though, like there's a cookie cutter model of these people is a cookie cutter model of these people Because they've talked to enough either recruiters or brokerage owners or people that run agent divisions that they know what they need to say to try to get past the sniff test, which is like experience book a business. It's pretty much like what most people are looking for, most importantly, having the customer base.

Speaker 3: 24:53

Well, let's be honest too less established brokerages, you know, are they're. They're hungry to add agents. I see it all the time on the message boards right, yeah, they're looking for agents. And then agents are looking to jump on and they're just so quick to take these people on and say well, I'll bring you like you said at the intro of this, they'll'll bring on 20 agents thinking I'm going to retire, you know.

Speaker 3: 25:15

And so they let anybody in but they don't know how to vet them. They don't have the tools to vet them. So, yeah, I figured this would be a great episode just to because you guys have a good reach Let people know like this is not. It's not easy to start an agent program. You know I didn't start one overnight. It is blow it up to what it is today. You didn't do the same thing either. You know it. It takes time and if you don't watch yourself and you don't set up those you know safety gates, it's going to, it's going to get expensive real fast.

Speaker 2: 25:44

The thing I wanted to bring up.

Speaker 1: 25:46

Ben, you remember that there was a guys a few years ago that we tried to help coach through starting an agent program for them and I don't talk to them anymore so I'm not sure where it went, but the amount of time we had to spend talking with them. To drill down to Matt's point, it's not just bring on 20 people and you're going to retire. It is so intricate and there's so many details and honestly you don't know what you don't know and you're going to make mistakes along the way and realize, oh, that's a red flag, I'll look out for it next time. But think about how much you know. We had to spend so much time just explaining, like the recruitment process, the training and onboarding process, vetting all that stuff.

Speaker 2: 26:27

Well, it's the other thing, too that I was thinking of, as Matt saying this right, like, think. The other thing too that I was thinking of is Matt saying this right, Like, think about any fraud perpetrated anywhere. Right, they're going to hit on a hot button, usually greed, right? How do you get a driver to take a load? That seems fishy? It's a $5,000 lane. You offer them seven grand. They're so excited about getting that that they start to overlook details. Right, it's part of human nature, right? Same thing with brokerage owners. They see the upside. They're sold on the fact that there's a book of business. They're going to be able to get more growth that they haven't seen, really, in the past few years. They're so excited. It blinds the judgment to the risk, right, and I think it's really good for anybody to think about this in any business, right? Is it like?

Speaker 2: 27:07

If you are hoping to get a return meaning more than you have for doing something, there's always a risk. Always, it doesn't matter what it is. You're going to make an investment, you're going to buy a stock, you're going to hire somebody as a W-2 or as an agent. There's always risk If you're not taking the time to ask questions to learn about what that risk might be. You're just blindly making gambles without understanding the downside of that action. Right, yeah, and it's like I mean you see it in W2 as an agents where, like, somebody sells you on this and their experience and everything, and then you find out like none of these things are true and what's hard in our industry is is really hard to verify this information.

Speaker 2: 27:47

In a lot of ways, I've seen some other people come up with some things that I think are really good, as well as both of you. I mean, what are some of the things that you guys do? Let's just take a simple one. I call you hey, I got a book of business I was doing 25 million last year and I'm going to bring these this customer, this customer, this customer and this customer over to you. Like, how do you handle that conversation and what is useful for people out there that are having these conversations with potential agents?

Speaker 1: 28:14

Yeah, I think the biggest thing I try to get to right off the bat is what made that person decide to reach out to my company. If it was someone that came inbound, right, because we have a recruiter at our company too and he does all outbound stuff. So he'll go reach out to people on job boards and stuff like that and LinkedIn and then they'll come through a vetting process as well. But the inbound stuff we don't know. We don't know anything about. We didn't reach out to them. So I usually try to figure out what made them decide. Right, is it? It's good, it's got to make sense. If it doesn't make sense, like that's a full stop right there.

Speaker 1: 28:48

If someone's like yeah, you know, I had one the other day, they're like actually, I think it was yesterday, foreign accent. And he's like yeah, I want to come. He had this script, Like I want to come help add value to your company. Blah, blah, blah. And I was like ah. I was like are you brokering right now? And he's like no, I quit two months ago and I was like where did you work? He said freight broker. I said no, which freight brokerage did you work for? And he goes freight broker. I'm like what was the name of the freight brokerage company? And he gave me some name of a company.

Speaker 1: 29:22

I was like all right. And I was like why'd you quit? He's like no specific reason. And I was like, okay, so you just decided to quit one day and two months later, now you want to get back into it. And he's like yeah. So it's kind of like if the story doesn't, if you just put yourself in their shoes and if it doesn't make sense for you to have that situation, it usually doesn't make sense for them. So I normally try to get their story and there's usually a reason why they're leaving and sometimes it is just that they want to go make more money and be independent. And those are some of the best, the best ones I love to work with, because for the first time in their life they get to be their own business owner, right, cause they're so used to being an employee of a company and whatnot. And they want to go off there and and bet, you know, bet on themselves and swing, swing, bet on themselves and swing. What do they say? Swing out, strike out yourself the defenses.

Speaker 1: 30:17

You get other ones too, that they're an agent at another company and their company has issues with support, or maybe their customers are taken because they're saturated with too many agents or they've had a commission issue or something like that. You get different reasons that make sense. Then you get the ones that don't make sense, like, oh, they can't tell you specifically why they left another company, or they can't explain to you specifically the kind of freight that they move. Or if you, if you like, really dig down and Matt I'm, I'd imagine you probably ask these questions as well as, like you know, tell me about your customers and the freight you move and like, hey, what did last month look like for you guys as far as like load count roughly and like margin and revenue and profit and all that stuff, and if someone who knows their book of business and is legit can speak to that, and they're usually like very passionate to talk about their business. So those are some of the questions that I like I lead off with and back to Matt's location thing I love to like.

Speaker 1: 31:16

So if I get an inkling, if someone's like, yeah, I'm in, uh, I'm in Houston, texas, and they give an extremely western name, and then I talk to them and I'm like this is clearly like a Pakistani accent. I'm gonna go look up like the town they say they live in. I'm like, oh, what's the weather like today? And they're like, uh, it's great. Like I had one that was like they told me they were in virginia and I was like oh man. I was like you guys are getting hammered with rain today, huh. And he's like yeah, and I was like no, you're not, it's 75 and sunny. Where are you actually located? Like you can call these people out and a lot of times they're just like oh man that's a good one but yeah that's.

Speaker 1: 31:53

But again, it's terrible that you gotta like go into certain calls like that, like expecting to get, try to get burned by somebody, but you don't want to start off a relationship with an agent where they're lying to you. It's that simple. I've got agents overseas and they were over. They told me they were overseas and they were willing to get you know us-based llc and entity and bank account set up to do business with us so that way we can avoid all the foreign tax stuff, which is still possible, but it's a headache. But yeah, just lead off with honesty and if you're being lied to by somebody from out the gate, it's just a bad look. Matt, how do you pre-screen or vet these folks that reach out? It's probably old, since you've, you know, been burned or you know. Yeah, that's how we learn.

Speaker 3: 33:54

I haven't been burned too bad yet, aside from actually a domestic agent. But ask their numbers, see what's going on, because if anyone in sales cannot repeat their numbers, they're not doing the numbers that they're claiming. I mean, I can still tell you the numbers that I was producing 13 years ago for my last boss. I just have them because that's what I do. So if an agent's telling you something and it's not numbers driven, then they're not doing it. But you can ask for reports, get those. I mean, I had an agent.

Speaker 3: 34:31

He's actually fantastic and I tell him all the time. He's actually a Vols fan too, but he lives in Chicago. I questioned him. He's like I want to get back into it. You know, I used to do this over here. My dad still does this and I'm like do you think you're going to be successful? Cause this is going to be a problem if you're not. And he's like just give me a chance, give me a chance. And I was really hard on him. I was. I'm like I don't think you're going to make it, guy. And he's like I'll prove you wrong. And, needless to say, within two weeks I was apologizing to him.

Speaker 1: 34:59

I'm like you have proven me wrong, but you'd rather go that route than be too loose and let someone that's going to waste your time or money or scam you.

Speaker 3: 35:09

That's just it. I brought in so many agents and cut them so quick because they tell me something and they do nothing, and then it's just gone.

Speaker 2: 35:18

The thing that I was thinking of right, you both said this. Right is when I'm asking questions and again, this is for W-2 or agents. Right, and if you're telling me you have experience, I'm going to start talking to you like a freight broker. Right, and if you're telling me you have experience, I'm going to start talking to you like a freight broker. Right, and this is where I think it's very difficult for people to come into our industry, get a freight brokerage license and say I'm just going to hire agents and they're going to do this for me. Right, because you don't understand the business well enough to ask the questions, to know if the answers make sense. Right, and like the questions I'll ask to your point, matt is like for sure, I'm asking your numbers like hey, what does your load volume look like? What's the load count look like, what's your GP look like, as recent as you can remember, if you don't have an answer quickly, then like you aren't probably doing that because that's your livelihood, that's what you're working all day towards, that's how you get paid. That'd be like interviewing somebody for any other profession and them not telling you what they made at their last job. Like, and just having no idea what they were earning when they come to interview with you, right? The other questions I'll ask is oh, what were your customers? They'll give you a couple of company names. Great, what were some of your like? I'll pick one of like hey, so who are your points of contact over there? And they'd be like what do you mean? I'm like, well, who are you actually working with? What were their names, if they don't know them off the top of their head? Right, that's suspect. Second is just asking questions like what kind of commodities were you guys moving for them? Were they first expressed to you when you got onboarded? How long did you prospect them before they became a customer? How long have you been working with them? Right, and my favorite question for people that say they want to switch especially if they have a gap and they say they're going to do it again is that everybody always wants to tell you the big stories of their big success.

Speaker 2: 37:05

I had a $20 million year, I had a $5 million year. I did this $20 million a year. I had a $5 million a year, I did this, I did this. And I always ask them like okay, great, so when were you there? Well, last year, okay, great, when was the last time you closed a new customer? And they'll be like well, what do you mean? I'm like well, you said you're just leaving this company. When was the last new customer you closed? Well, it's been a while. Like I said, I had a big book of business. Okay, well, you're saying you can go and do this again. When was the last time you actually did it? And you'll find out. It was like four years ago.

Speaker 2: 37:36

They were handed this account. They were really an account manager, never actually made cold calls and they were really just either securing trucks, maybe doing track and trace, and they weren't actually on that hunter sales role. Right, they haven't made cold calls. They think that account management is the same thing as account acquisition. Those are very different skill sets and even I'll use myself as an example.

Speaker 2: 38:00

Like, if I haven't prospected in a few months, it takes me a month or two to get back into that routine and feel again the market's changed, the problems are changed. Like, if you have been sitting on, the markets change, the problems are changed. If you have been sitting on the sidelines managing accounts for a few years and you expect to just start picking up the phone and calling customers or calling shippers to get an account. I've never met anybody that's able to do that after sitting on the sidelines for six months and get a book of business inside of three or four months, if not closer to six, or eight, if not a year. Like you've got to build relationships and the market is much different.

Speaker 2: 38:35

Or especially COVID I killed it. I made all this money. Well, when was that? Oh, 2020. Oh, 2021. You haven't closed a customer, since everybody could close a customer. Do you think you're going to be able to do it in this market? To your point, matt, like asking hard questions because this is the job. Like if they don't have the confidence that they're going to be able to do this, whether they're an agent or a w-2, like you're making that gamble that they can do something, and if they can't explicitly defend why they think they're going to succeed, why should anybody have confidence in them being able to succeed?

Speaker 1: 39:08

I think yeah, and I add into and Matt kind of like hinted to this before is you can validate someone's numbers. That could be a 1099 that shows what commission they were paid at the last company. You could have a commission report. Like anyone who's brokering as an agent currently should have easy access to some kind of reporting tools and if they're going to be leaving their current company for whatever reason, that's a different story. But they should be able to get access to their commissions and their numbers. And if not, it's a poorly run company for a variety of reasons. But if you're a W-2, I get it. I've had people that are like you know I don't have a non-solicit but if I start taking or downloading reports it might raise some suspicion. I'm like, I get that.

Speaker 1: 39:58

I've had people like take a picture on their phone of their report and send it to me stuff like that, but other things too is like yeah, the non-solicit, non-compete gotten cease and desist from companies. People lie that they say they don't have one and they do. I want to hit on some of the extreme fraud cases because my goal is to prevent some of these bad actors and the rings of bad actors out there to not penetrate other companies that listen to the show. Listen to the show. So one of the early on ones we had in 2022, a guy came in and, um, I don't know what it is about california, but I've like had a really tough time having any successful. I have had zero successful agents from california. They're all either fraud or they're not actually in california, they're overseas.

Speaker 3: 40:49

I got one, you had one overseas I got one, you had one, okay. Oh, he's great, I love him.

Speaker 1: 40:54

See, I can't put them all into one bucket then. So I don't even remember where in California he was. But this guy comes on and very, very urgently wants to get trained and get freight going. And I'm like, okay, and the guy that I normally have train our new people wasn't available. So I did it, I trained him up and I helped him get his first couple loads built in the system, and then he just goes silent Like nothing, can't, can't get ahold of them.

Speaker 1: 41:26

He's got like seven loads built in our system. They're not like dispatched or anything. And um, then we end up finding out like I get a hold of him, he's like, oh yeah, I'll get him updated, I'll get him closed out. Um, we get paperwork comes in, we get invoiced. Uh, we pay this carrier same carrier, on all the loads, uh, red flag and and they weren't real loads. We come to find out we can't get a hold of this. The carrier's already been paid, the agent's commission's been paid, and now we're like invoicing customers that are like what are these loads? The agent's gone, it was a quick like.

Speaker 1: 42:04

He came in basically got the money and rolled All within a month Because it was like low suspicion. He's moving freight, all good, but he was probably already on to the next company to set up that same operation and just keep moving around. But basically the loads weren't real. The carrier in question we could never get a hold of. They got paid. The agent got paid. We lost like $30,000. Could never get a hold of. They got paid, the agent got paid. We lost like 30 grand. We ended up being able to sue and he got served. He didn't show up to court so naturally a judgment was placed against him but there was no verifiable assets to do anything with.

Speaker 2: 42:49

That's the thing I want to point out for everybody, right? Is everybody thinks like, oh well, even if they're in the US, then you can do what you just said, right? Like, oh, there's charges, there's a judge involved, they don't show up, there's a judgment, right? I forget? One of my buddies that was an attorney always used the example of OJ. When people say I'm going to sue them and I'm going to get this money back, right, and he's like I don't remember what OJ's judgment was, what the tens of millions of dollars were, you know, like 20 years ago.

Speaker 3: 43:18

Like I don't think he paid any of that.

Speaker 2: 43:20

And it's like again like having a judge say there that you have to pay money does not mean they one have the money or two will still pay the money, and that could drag out indefinitely. You're unlikely to ever see that money back once it's gone right and I know people might go like you know. It's even harder to do if somebody's overseas because they're outside of the US jurisdiction. But even inside the US like, do you guys know of any examples where anybody's ever gotten money back after they've been in a scenario?

Speaker 1: 43:50

like that. I actually do One. So there was this girl this is back at like in the LDI days, when I was over there. There was this girl there that it was like 17 grand. She like again, it was a similar thing Fake loads, fake customers, fake BOLs. We caught it and like went to the fbi and like we actually legitimately got money. Like she ended up paying that money, but that I mean that was a very rare circumstance, um, which I remembered her name because it was like a. We had like a wall of shame of all the scammers and all the bad people. We'd slap their IDs up on there. Um, haven't, haven't done that in a number of years, but yeah, so that was the only. That was the only one um, but the rest of them, no, like there's one right now.

Speaker 1: 44:42

This is a more like complex. This guy, uh, ramadan if you guys ever hear of a Ramadan Korkmaz or a Ray Korkmaz applying for your company, run like hell. This guy has made it. I got friends at like four different brokerages and they've all come across this guy and he burned us and he tried to burn us again under a dead person's stolen identity. And this guy he's got a pretty intricate open investigation from the IG's office at the DOT. It's been going on for a couple of years and they're close to closing it, but it sounds like there's a massive like crime ring. It's a foreign thing. It's like a Turkish crime ring that's infiltrated the logistics space in the US.

Speaker 1: 45:28

And what he did with us was he came on board, he gave me this story of what was it. He was engaged and he called off his wedding and his fiancée's dad was the owner of the company that he worked for and I was like that's a pretty good reason to leave there, man, and so I kind of overlooked a lot of other stuff. When he comes on and I train him and then I start hearing about his wife and I'm like this is all, like after, after the fraud stuff starts coming on. I'm like wait a second, this dude told me he called off his wedding and now he's got a wife and a kid. Like what's going on here?

Speaker 1: 46:05

But he comes on and very, very quickly he builds like 30 loads and somehow is able to bypass our system security settings in the TMS on the amount of wire advances that can be sent out and he wires out like $200,000 to his son and, I think, to his wife or family members either way. And we have the records of they're all being cashed at TAs and love truck stops and things like that, all EFS checks. But he wires out like $200,000. And again, at this point we hadn't even caught it yet. And then we're like, all right, all these loads are done and delivered, and I'm like calling him like hey, we got to close these loads out. And he's like, oh yeah, yeah, I'll get to it, kind of like he's almost surprised that I haven't caught him yet. And then we look at it and we like our accounting team and they've obviously revised their process.

Speaker 1: 47:09

Now Huge red flag that all these wires were sent out. We have literally we have daily limits and personal limits for people to send out advances and somehow he got around those in our system and McLeod had literally nothing to say about it. Like oops, sorry, it wasn't supposed to happen, my bad, we I mean we now restrict when an agent can send it in advance. They've got to have a certain number of tenure and trust from us before we let them start sending money out to drivers. But yeah, so then he made his rounds to other companies and I warned all my buddies. I was like dude, if you come across this guy, stay away. His name is Ramadan Korkmaz or Ray Korkmaz. So then I get another guy later on. This is like six months later. So now there's an investigation open on this guy.

Speaker 1: 47:57

Another guy comes across and his name is Bernard Coleman and he sounds really old and sort of Eastern European and his voice is a little different every time and eventually, like my assistant talks to him, he's like dude. He's like I think Bernard Coleman is actually Ray Korkmaz pretending to be Bernard Coleman. So we look up this Bernard Coleman's information. He's dead. He's been dead for like eight years and this guy stole his identity and literally came. So I like I had like a wiretapped phone call with Bernard Coleman with like the DOT investigators on it like tapping his call and they're like voice comparison. They're like that's him again. Like the guy is ruthless.

Speaker 1: 48:40

Is this guy US-based? Yeah, so he's from Pennsylvania. I believe was where his address was. I believe was where his his address was and I've I've been able to like if you Google him, you'll find out like he used to own a trucking company and a brokerage. Like he's involved in a bunch of like nonpayment issues and scams and whatnot, and he's. I honestly think he's just such an idiot to not realize how dumb he is to keep doing everything under his legitimate legal name and identity. I mean, he obviously tried to steal an old. How dumb he is to keep doing everything under his legitimate legal name and identity. I mean, hey, obviously try to steal an old dead man's identity.

Speaker 1: 49:18

But yeah, so what I'd recommend? I guess the takeaway here is, with new agents that you don't have any like, if it's not a referral from like a buddy of yours at another company, like Ben, I've sent people your way that I think, hey, they're not a fit for us for maybe a customer reason. But take a look at them. If you don't have a good vetted person, kind of like you said, matt, with your guy in Chicago or Illinois or whatever, you're better off to be a little bit harder on them at first and then pull back than to be too loose and allow yourself to be exposed. Little bit harder on them at first and then pull back than to be too loose and allow yourself to be exposed and be vulnerable. So, like I said, we don't let new agents issue out advances. We have certain steps in place. If you're brand new, you're going to do X, y and Z and then eventually we'll pull the reins back a little bit and give you a little bit more flexibility on the ability to fill, fill certain things out and and whatnot. But we're very strict on it.

Speaker 1: 50:16

If you don't like, if you're not producing numbers fairly quickly, there's a lot of questions to be asked, like your story, didn't? You told us you had X, y and Z. Where is that business, you know? And then they're like, oh, where is that business, you know? And then they're like, oh well, they're pushing this back to september, you know? Whatever, I've heard that story a million times and I've just gotten very quick to close people out sooner than later. Um, because, even if it's not, like sometimes, yeah, they just don't have the business, but they might be using your mc to double broker other people's loads on debt. Right, they've got a debt account under you now and they might have four brokers involved to try and get all this, this scamming, done. And you're, you know, you're part of it.

Speaker 3: 50:57

So that's the thing too. Don't. Don't set your agent program on cruise control. I mean, you're not going to bring someone on and then just let them go. Like you said, if you give too much freedom with EFS, next thing you know they're cutting themselves checks. So, like we don't actually allow it, we do it at the corporate level. That is a service we'll provide. That way, no one's going to pay themselves. When it comes to DAT, if I've got an inkling that you might do something shady, I'm going to mirror myself into your DAT account. So, like right now, I am monitoring a load board to see if someone goes ballistic, posting a bunch of freight, so I can vet this guy out. I'm pretty confident he's real and everything's fine, but I'm going to have that safety precaution just in case.

Speaker 1: 51:48

I'm running that one down. I've never done that, but I'm going to have to.

Speaker 3: 51:50

Yeah, safety precautions just in case I'm running that one down. I've never done that, but I might have to. Yeah, so my partner, who is more debt savvy than me, he told me that he watches someone's board. So he's like I'll put you on this guy's board. I'm like, okay, so I'm watching a board, just in case it blows up. All of a sudden, you know, keep tabs on things. We had some agents come in through from India and they were just bombarding solicitation emails. I don't know what their play was. I think they just wanted a chance. Really, I think they were innocent. They just didn't have what they claim to have. But then all of a sudden, my IT company is like these emails are sending spam level quantities. So I'm like if you don't have it, don't go solicit it. So like I had to cut them out just because of that, because they were putting my domain at risk of being a spam farm.

Speaker 2: 52:38

That reminds me of another one. I've heard of agents coming on and doing the same thing and then just sending emails to shippers hey, we're asset based and just completely misrepresenting the company to large numbers of the market. Right, and just sending things that just absolutely aren't true, which is a whole other risk. Right, like monitoring communication and at least keeping an eye on what is being sent on behalf of your company. Yeah, they're 1099. Yeah, they're an agent, but they're representing your company, your name, all of those things, and there is risk in that as well, outside of just financial risk.

Speaker 3: 53:17

Oh, absolutely. I had a remote employee before remote was a thing you know, mainstream, I'll say and he did that. He set me an agreement, I reviewed it and I signed it. And then he doctored it to say that we had three trucks. And then, when, finally, he wasn't doing anything, I'm like you gotta go.

Speaker 3: 53:37

I then contacted his one and only customer that had shipped product. I'm like, are you a broker? And they're like, well, yeah, and the name was very misleading like okay, this is kind of weird because we're a broker and we probably shouldn't work together honestly. And then, like we were asset based though, I'm like, okay, this is kind of weird because we're a broker and we probably shouldn't work together honestly. And then, like we were asset-based, though, I'm like no, we're not. And they sent over the agreement and he doctored it. I mean, like you got to have checks and balances. Setting this thing up, thinking you're just going to hit easy street, is not happening. You've got to stay vigilant. You got to stay in connection with your agents too and know what's going on, so that you don't get taken advantage of, because they might wait, they might kind of camp out for a little bit and then they strike yeah, we'll have.

Speaker 1: 54:16

Uh, I know we're kind of going long on this, but some of the other things I'll just share real quick is like if someone ever violates your credit policies, I'm like a usually like a one strike. Like if I tell you credit, if we tell you no credit and you go book loads, anyway you're gone. Like if you book a carrier that you know doesn't pass our rules and we can't onboard and you do it anyway you're gone. We've had people that like early on, when they're new, like they're confused about a policy and like you know, might give a second chance, but like if someone knows what they're doing. Like we had one last week I think I fired six agents last week. It was like a really a very unusual amount of like turnover and well, I think it was like four. But um, two were um, no, it was five, six, I don't know. Two were like they were bad and we had to fire them and the others were like they had been around for a while and kind of their business fizzled out and it was just time to, you know, cut them loose, uh. But we had two that like one legitimately, just like we called him out like hey, you legitimately manipulated credit on these 30 lows and he's like, yep, thanks for your time, see you later. Like I'm not, like he wasn't even going to fight us on it. And the other girl, um, just, she violated a policy we had a few different times and eventually we were like, no, you got to go, you're putting our company at risk. So, um, but yeah, I mean, don't keep these people around when they're doing things the wrong way.

Speaker 1: 55:51

Same thing if, like you mentioned, matt, someone doctoring documents I've seen it happen. Usually it's the fraud cases where they're doctoring a rate confirmation or maybe they're trying to run fake loads or whatever. If somebody fills out a contract for a customer and signs it on your behalf without your knowledge, that's's a big deal, cause you don't know what they're agreeing to. Right, we always tell people like every, everything that gets signed or filled out for a customer, we're doing it at the corporate level. Like we've created a help desk where they can fill out their request, upload the contract and all that stuff, and we'll review it and we'll we're quick, we're not going to hold them up on it, um, but it's going to get reviewed and signed by us, don't mislead, we've got a trucking company too, but I always tell people don't sell yourself as an asset-based company, because you're not. You're going to be contracting with our brokerage and that needs to be very clear that we're a 3PL. So, yeah, it's just some things to keep in mind.

Speaker 1: 56:55

You get the ones, too that treat a carrier poorly Customer pays a tonu, agent keeps it for themselves. That's not how we do business. Or detention you don't skim off detention or layovers to make money yourself. That's the driver's money. A lot of that stuff is usually programmed from a previous company that they worked at and you can retrain that. But usually, just like, the biggest thing I vet for outside of numbers is like culture Are you going to fit into the values that we have, which is like respecting each other, taking care of business, being prompt in communication and whatnot, or are you kind of like a shoot from the hip, fly by night, going to do it my way, running gun? No, you're not going to be a good fit for our company. So someone else will probably take you on though. So that's my take. You got anything else, matt, on this topic?

Speaker 3: 57:46

No, I mean just if you are a brokerage looking to start an agency model, be careful, I mean. And if you already have one and you've lost some agents, just like you said, you lost what you said. Six last week.

Speaker 3: 58:00

Yeah, I tend to retain I mean mine stick around for quite some time. But last year I lost the most that I've ever lost because they lost their book of business and don't get in a hurry to replace it. You know, be smart. There's a lot. The fraud is coming in so many different angles. I mean I spent half my time dealing with fighting fraud than I am freight brokering and that wasn't what it was even 13 years ago, let alone 26 years ago, when I just had to worry about getting over the computer to DAT so I can download a list of numbers to call or pay 50 cents to pull them back in the day. You know, it's just a lot of fraud to watch out for.

Speaker 1: 58:41

Definitely Absolutely Well. Good discussion. Matt, we're glad to have you on here and, ben, we saved your voice today. For the most part, much appreciated, yeah Well, appreciated, yeah Well, good stuff. And if you guys, btb Logistics obviously is Matt's company If you want to check them out, what's the website or how do they get a hold of you?

Speaker 3: 59:02

Matt, it's shipbtbcom, or just find me on LinkedIn. There you go.

Speaker 1: 59:08

Love it. Good deal. Ben any final thoughts.

Speaker 2: 59:13

Whether you believe you can or believe you can't, you're right.

Speaker 1: 59:18

And until next time go Bills.