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Fuels

Instafuel’s Stealth Growth Story

Mobile fueling service sets its sights on new markets after years of Texas expansion
Photograph courtesy of Instafuel

HOUSTON — Of the different mobile fueling services that have launched in the past few years, Instafuel has been happy to keep a low profile even as it amasses clients in Texas, one of the largest fuel markets in the United States.

Instafuel co-founders Wisam Nahhas and Nour Baki began in the mobile fueling space in 2014 with another service, FuelMe LLC, which specialized in corporate clients, universities and other large entities. They parted ways with FuelMe to found Instafuel in 2015, with a focus squarely on business-to-business (B2B) fueling. Since then, the company has quietly worked to establish a base of fleet customers and compete with other mobile fueling services for market share.

“We've been bootstrapping … in stealth mode for the last four years, just trying to grow this business one [client] by one, trying to truly understand what it means to be a mobile refueler, or what we call a compact mobile refueler, and trying to target and understand the business model for small- to medium-sized business fleets,” said Baki, who is vice president.

In the beginning, Baki and CEO Nahhas drove around with a 110-gallon fuel tank in the back of a truck to handle the fill-ups. Since then, they’ve moved to the corporate office as Instafuel’s fleet has expanded to 30 trucks that have dispensed nearly 10 million gallons of fuel to more than 150 B2B clients in major Texas metro markets such as Houston, Dallas-Fort Worth and Austin.

While declining to share the names of specific clients, Baki describes them as a mix of large landscaping companies, construction firms and even a wine delivery service, some with fleets as large as 50 vehicles.

The demand for mobile fueling appears to be robust. “Every time we get a new truck it's presold—it's pretty much got 80% of its capacity sold out,” Baki said. “So we literally cannot keep up with the demand.”

Data Download

Instafuel supplies regular-grade gasoline and diesel, as well as diesel exhaust fluid (DEF). It aims to match the market retail average for gasoline and charges a delivery fee—anywhere from $30 to $200—that varies depending on a client’s fleet size and gallon requirements. This fee is determined after a two-week trial; Nahhas said 95% of fleets end up signing a contract, and Instafuel enjoys a 98% retention rate overall. “Once we get them, we don't lose them at all,” he said. Instafuel buys fuel direct from the rack to help keep its pricing competitive.

The company also points to Instafuel’s trucks as a competitive differentiator.

“There's a lot of technology that we built in the back of these trucks to make it everything very seamless and efficient to provide a much better price for our customers,” Baki said. While declining to offer technical details of the trucks, he said Instafuel’s drivers go through multiple weeks of hazmat training. The company’s driver retention rate is 90%.

“Safety starts and ends with the driver, making sure you're hiring the right person, they're listening to what we're telling them and they abide by the rules we've set,” he said. (Local fire marshals in some markets have challenged the safety of mobile fueling services.)

Instafuel also has a patent-pending tech for tracking fuel transactions.

“Transparency is one of our key factors for Instafuel,” Nahhas said. “All of the data and reporting that we offer to clients is something that they've never seen before. They're all used to seeing fuel card reports and receipts from gas stations. And the stuff we give them is broken down and very, very detailed. So that differentiates us and it basically leads to our high retention rate on our clients because they get addicted to the data.”

Money Talks

Instafuel is “the first profitable mobile fueling company out there,” Nahhas said—a milestone the company said it reached in third-quarter 2019. He estimates that up to 70% of the mobile fueling services that launched since 2015 have gone belly up. Instafuel, meanwhile, has the highest capacity, number of customers, better word-of-mouth and quality of service, he said. Of the remaining, largest survivors—Filld, Yoshi and Booster Fuels—“We've taken customers from all these competitors,” he said. Instafuel estimates it has more than 25% market share in Texas among mobile fueling services, a figure it expects to more than double in the next six months.

Other mobile fueling services have enjoyed large infusions of money over the past year. Filld partnered with Parkland Fuel, ExxonMobil and General Motors invested in Yoshi, and Booster Fuels secured funding from Total SA and Enterprise Holdings, which has helped the companies expand into new markets. (Instafuel is currently engaged in a lawsuit against Total SA, accusing its Total Energy Ventures subsidiary of sharing trade secrets with Booster Fuels after Total declined to invest in Instafuel, Law360 reported. Instafuel executives declined comment on the lawsuit for this story.)

Instafuel, meanwhile, points to its low overhead as a sign of its efficiency.

“These guys have all raised … $20 million, $30 million, $50 million at this point. We've only raised $2 million, to be honest with you,” Baki said. “We're much more lean than them. So given all their funding and all of their success, in terms of gallons dispensed and fills, we're right there with them.”

Instafuel is looking to expand to five to six new markets in other states in the Southeast or West, using new national accounts as a base to jump into them. It plans to double the size of its fueling fleet within the next year to support the growth. And despite its early focus on B2B, Instafuel is eyeing an expansion into business-to-consumer services with its current clients in 2020.

While the executives said Instafuel is able to grow without outside funding, they are open to forging partnerships.

“If we find the right partner that can expedite this, that shares the same vision, then we're all ears,” Nahhas said.

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