A New York startup with deep Canadian roots is hoping to become the Uber of the moving business.
Zootly, LLC, which launched last week boasting the Big Apple's largest network of moving vehicles, has a Canadian CEO and chief technology officer, Bay Street financial backers and about half of its 22 employees located in Kitchener-Waterloo. On Tuesday, Zootly announced plans to become a Canadian public company by doing a reverse takeover of TSX Venture Exchange-listed junior exploration company Ethos Gold Corp.
It also has a politely Canadian strategy of not violently upending an established business like Uber is doing to the taxi business – but to help its existing players. "I call it non-disruptive disruption," said Canadian-born CEO George Colwell.
"Zootly's model is different than others in this collaborative economy. We're not interested in some guy with a pickup truck that wants to make an extra buck, [but] professionals who have dedicated their careers to being professional movers … and help them eat up their capacity and get more utilization out of their assets."
Zootly's aim is to bring technology to a highly fragmented, technologically unsophisticated industry and signing up reputable well-rated moving companies to its platform. Zootly's app acts as the central marketing, booking, logistics and dispatching service to link customers to movers. "We're not basically displacing moving companies, what we are is a value-add," said veteran Bay Street financier Frank Bellotti, one of Zootly's principal backers.
Zootly promises to provide faster quotes, more precise, on-demand moving times through mobile devices, and better service than the industry average, taking 25 per cent of revenues in exchange for providing more frequent orders and marketing heft to movers.
"The hardest part of any business is the marketing," said Mitchell Newman, president of Katz Moving, a 12-vehicle operation based in Long Island City that has joined the Zootly platform. "When a company like Zootly says, 'We'll do the marketing for you, we'll build the brand,' I'll take that deal all the time."
The company – whose invented name is meant to convey strength, action, speed and energy, according to founder Rudy Callegari – has signed up 30 of New York's roughly 500 moving companies, with a combined 250-plus moving vehicles, making it the largest player in the local $1-billion (U.S.) residential moving business. "We want our customers to trust that whatever company shows up is reputable and they're going to do a very good job," said Mr. Callegari.
Zootly was born out of frustration when Mr. Callegari, a New York entrepreneur with interests in logistics, auto rentals and film production, tried to move a couch from Manhattan to Brooklyn last year. "There was no app to download, no app to find an easy mover, and the outcome was someone telling me a week from the day I wanted it I needed to give him a six-hour window, and they wanted to charge me a three-hour minimum." He learned the industry was "had not been touched by technology at all, and more importantly, the moving industry at best works at a 50-per-cent utilization rate … Zootly was born that day."
Mr. Callegari bought a moving company and was introduced to Mr. Bellotti and business partner Greg Mistzela, a Bay Street analyst and financier, through another New York company they had financed. The two tapped Tim Ellis, former head of Waterloo startup Accelerator Centre, who in turn asked Pixstream founder Steve Bacso for his views.
"I thought, 'As far as startup ideas go, this is an 11 out of 10,'" said the Kitchener-based software entrepreneur. Mr. Bacso agreed to become chief technology officer and oversee software development in his hometown. Mr. Colwell, a financial services executive who has held global roles with Bank of Nova Scotia and Germany's SAP, joined as CEO.
Now, after handling 750 moves over the past year as they developed the platform, the Zootly team is focused on conquering New York, and then beyond. "We really do believe in one to two years we'll be able to spread across the U.S. and perhaps internationally," Mr. Bellotti said.
In addition to the business combination, the entity, to be known as Zootly Holdings Corp., will pursue a $1.1-million (U.S.) bridge financing and $5-million (U.S.) private placement.
"Our strategy to go public at this point is that Zootly can be one of the first opportunities for an institutional or retail investor to participate in a "collaborative economy" business model," Mr. Colwell said, referencing companies like Airbnb and Uber. "While Zootly has been approached by venture capitalists, the board has found that their investment terms have been overly restrictive ... Our discussions with both Canadian and U.S. investors to date have been very supportive of our go-public strategy, and we believe that there will be ample capital available without requiring venture capital support."