It’s an astonishing success story that’s fueled in part by the surge in e-commerce activity as well as the sting some online merchants felt earlier this year when Amazon, the titan of the e-tailing world, prioritized essential items for shipment in the earliest phases of the pandemic, thus freezing out the smaller players that make up the foundation of ShipBob’s business. Investors are taking notice: ShipBob raised $68 million in funding from a division of SoftBank in September—and that’s on top of $62.5 million raised earlier from a half-dozen funders, including Hyde Park Venture Partners.
Saxena and Gulati’s tale involves the sort of “aha!” insight that’s the stuff of classic business magazine copy—in this case, a realization that they could meet online merchants’ unmet needs by storing inventory for them and packaging and shipping it at lower rates than those merchants could get at the post office. In short, they aimed to create a ready-made way for entrepreneurs to compete with Amazon’s one- or two-day shipping. Saxena acted on that hunch by hanging out outside a Lincoln Park post office branch and pitching his idea to folks waiting in line. He found takers, and a business was born.
Intentionally or not, ShipBob’s origin story has roots in the very thing that made Chicago a major metropolis to begin with: its central geographic location. This accidental blessing once made Chicago a convenient stop for fur traders when rivers were the primary mode of transportation—long before anyone thought to use words like “logistics” or “supply-chain management” to describe what they were doing. That centrality later made Chicago the right city to become the spine of the intercontinental rail system and, later still, the home of the world’s busiest airport.
So, Chicago has long been good at the business of moving stuff around. ShipBob’s story also underscores the importance of immigration to Chicago’s economic well-being. Both Saxena and Gulati are of Indian heritage. Another key aspect of their success: Both are products of Big Ten schools—Gulati is a graduate of the University of Illinois, Saxena of Purdue—the kind of state-funded institutions of higher education that have provided opportunity to generations of strivers and made the Midwest a key player in the knowledge economy.
There are headwinds blowing in ShipBob’s direction, however, though this company has proved to be better insulated than most against the ravages of the COVID recession. The e-commerce boom benefits companies in the shipping business, no doubt. ShipBob is also a relative exception in another way, in that it has drawn significant venture-capital funding from the coasts and beyond—something other local startups can boast, as well, but not as many as Chicago-area tech boosters would like.
All that said, the torrid growth that propelled ShipBob and 49 other companies onto this year’s Fast 50 list will be a challenge to maintain under current conditions. Note that the latest Fast 50 list measures revenue growth through 2019. For many, 2020 will be another story entirely—and the economic outlook for 2021 is murky at best. Add to that the financial pressures facing the city of Chicago and the state of Illinois, and it’s possible we may have to brace ourselves for much different five-year growth numbers when Crain’s publishes the Fast 50 2021.
So much depends on coming up with a comprehensive, national plan to beat back the threat of COVID-19 and get people back to work safely. A similarly herculean challenge faces Gov. J.B. Pritzker and Chicago Mayor Lori Lightfoot as they wrestle with our calamitous public finances. Still, the list published in this week’s issue provides 50 reasons to be optimistic that Chicagoans, given the chance, are inventive, collaborative and hardworking enough to overcome any obstacle—if only our elected leaders would muster the political resolve to create better conditions for business to do what it does best.