By Brian Womack – Staff Writer, Dallas Business Journal
Sep 17, 2021, 12:38pm EDT
Trax – a tech firm in the logistics and transportation industry – put its headquarters in Austin in 2019 after a merger between a couple of companies located in other states.
While the home of South by Southwest is the destination of many corporate hubs, this relocation didn’t stick. Challenges for Trax included the costs, especially with housing, according to Josh Bouk, chief revenue officer at the firm. With some of the biggest names in Silicon Valley employing thousands in Austin, competing for key hires wasn’t exactly cheap. “We started seeing the mass exodus from California of technology companies coming into Austin — and with that, the cost of living for our employees going up dramatically,” he said. “Candidly, Austin was becoming the new west coast, and so we started looking at our options.”
Trax ended up staying in Texas and put its roots in Irving for a new corporate home, making the move earlier this year. Dallas-Fort Worth was a good fit beyond costs, including better access to industry talent as a key region for transportation and logistics with multiple companies in the sector having a presence nearby. “DFW is one of the biggest hubs in the country,” he said, noting its central locale and airport make it a good spot in the country.
The company is gaining momentum with what’s called transportation spend management. It’s playing a crucial role in assisting big companies to navigate and manage costs as supply chains are squeezed and stretched amid the pandemic. It’s also providing financial tools to help clients as they juggle bills. “We’re in an environment where enterprises who are trying to ship goods in and out are going to be challenged with the availability,” he said. “And carriers who are trying to expand their capacity as quickly as they can are going to be challenged with the capital required to do so.”
The amount of spend that Trax manages for customers has increased about 25% in roughly 18 months. Revenue has shown the same trajectory as it helps Fortune 500 companies in key markets. “Our services are going to continue to be valuable,” he said. “I think our growth is going to continue to accelerate for at least the next 24 months.”
And earlier this month, Trax announced that it has agreed to debt financing from investment firm Accel-KKR to support its next stage of growth. Trax recently grew to around 550 employees and is likely to hire another 40 or so in the next year, according to Bouk.
The company is the result of a merger announced in 2018 between companies located in Scottsdale, Ariz., and Memphis, Tenn., both of which were backed by private equity. Texas was a good choice as it looked for a fresh start with two business cultures combining. It made sense, given customers there and it was a good locale between the other cities.
Amid the decision to move, the price of owning a home or renting shot up – and that’s a trend that continues. Median home price in the Austin metro clocked in at $470,000 in the second quarter, according to the Texas Quarterly Housing Report released by Texas Realtors. That’s up from $318,000 in the same time period in 2018.
In the Dallas region, the median price was just under $350,000 in the second quarter of this year. That compares to just under$275,000 in the same time period in 2018. Technology salaries are higher as well – and climbing faster. The average tech salary in Austin hit more than $104,000 according to a 2021 report by Dice, and that was an increase of nearly 10% from the year-ago period. That put it at No. 8 in the country. The Dallas region was No. 15 and climbed a slower pace of 3%, rising to less than $98,000.
Still, there are a wide range of technology compensation packages, and it can get expensive quickly. For example, in Austin, Trax might find a good data scientist and make an offer, only to see a deep-pocketed company might swoop in and offer around $75,000 to$100,000 more annually, Bouk said. Being a relatively smaller company, it was difficult to just get people to sign on sometimes. Positions were going unfilled – or not staying filled for long.
Austin has seen Oracle move its headquarters to the city while companies such as Google, Facebook and Apple ramp up their hiring locally in the past few years. Bouk said he doesn’t begrudge the global tech giants, but it makes the hiring process more difficult being relatively smaller. Trax has had success getting the folks it needs since the move to North Texas.
With the move to Irving, the company shuttered its site in Austin, though some folks remain working there remotely. The company is taking a hybrid approach today, and it’s likely to stay that way for at least the next six months. To stay ahead in the industry, it’s putting resources into better technologies, such as artificial intelligence and machine learning. It’s also investing in global teams that now cover places such as Europe, Asia and Latin America.
Trax also is providing financing that lets companies pay bills more quickly, giving them flexibility with less of a hit on cash. So, enterprises can pay Trax in 75 days while it’s paying the carriers in 15 days, making sure they’re taken care of on time or even early. “If I’m a large pharmaceutical — maybe I want to hold on to my cash because I’ve got … research to invest in,” Bouk said. “So I’m not going to use my cash. I’m going to use Trax’s cash to be able to pay my carriers, and then I’m going to pay Trax later on.”
He’s also confident that Trax is providing a crucial product as big companies grapple with challenges, as companies see ports being swamped. Shipping is gobbling up a bigger percentage of the cost of goods sold – and Trax is helping ensure that’s managed well as firms from across the globe may have items traversing the planet. “We provide a platform, and we provide financial services on a global basis to help, large enterprises manage those costs and drive down those costs while improving their overall shipping service,” Bouk said.