Nov 13, 2023 · 1h 3m · news
Ryan Petersen: Why Velocity not Speed is Most Important in Company Building | E1081 · 20VC with Harry Stebbings
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In this episode of the 20VC podcast, host Harry Stebbings interviews Flexport founder and CEO Ryan Petersen to explore his return to the helm of the company. Ryan shares critical insights on leadership, the strategic distinction between speed and velocity, the realities of capital discipline, and his optimistic outlook on the future of global logistics and AI.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 15.3% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 3.4 Guest disagreement 2.1 Harry pushing back 1.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 57:15 Ryan's takedown of domestic remote work advocacy
Ryan forcefully attacks the logic of US tech workers demanding remote arrangements, pointing out that remote work creates a global labor arbitrage where domestic employees will be replaced by international talent.
Hardest push from Harry ▶ 16:40 Harry challenging Ryan using Parker Conrad's thesisHarry directly counters Ryan's statement that raising large sums of money leads to over-hiring by citing Parker Conrad's argument that capital never kills a company.
Biggest teaching moment ▶ 19:56 Physics vector correction on startup speedRyan reframes Harry's premise about startup speed by applying elementary physics, explaining that velocity requires both speed and a correct directional vector.
Harry holds his own ▶ 35:41 Harry's CEO people-management breakdownHarry demonstrates strong domain mastery by delivering an insightful three-part breakdown of a CEO's constant anxieties regarding top, average, and poor performers.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcoming Ryan and Discussing Early Ambitions | 1 | 1 | 1 | 0 | Harry opens with lighthearted, exploratory questions about childhood ambitions and early career moves. Ryan warmly recounts his youth, living in multiple countries, and starting an early internet motorcycle import business with his brother. | |
| Transition to Chairman and Reflections as an Investor | 2 | 3 | 1 | 1 | Harry inquires about Ryan's step back to Chairman and time at Founders Fund. Ryan explains how analyzing balance sheets as an investor reshaped his operating perspective upon returning as CEO. | |
| The Link Between Quality and Efficiency in Logistics | 3 | 4 | 1 | 1 | Harry prompts a discussion on quality versus efficiency. Ryan educates on logistics operational realities, citing W. Edwards Deming and Eliyahu Goldratt to demonstrate that logistics efficiency is a downstream byproduct of quality. | |
| Raising Capital at the Peak vs. the Missteps of Over-Hiring | 3 | 3 | 2 | 2 | Harry asks Ryan to evaluate his best and worst capital allocation decisions and probes on last-round valuations. Ryan reframes company valuation as a probabilistic distribution curve rather than a fixed reality. | |
| Imposing Cost Discipline and Reining in Aggressive Growth | 4 | 3 | 3 | 4 | Harry directly pushes back on Ryan's claim that excess capital causes over-hiring by invoking Parker Conrad's view that capital never kills companies. Ryan acknowledges Parker's thesis while defending how cheap capital induces corporate indiscipline. | |
| Distinguishing Between Speed and Velocity in Startup Strategy | 4 | 5 | 3 | 4 | Harry introduces the common startup trope that speed is the top determinant of success. Ryan rejects the premise, differentiating speed from velocity by emphasizing that velocity includes direction. | |
| Historical Synthesis as a Framework for Cross-Functional Business | 2 | 5 | 3 | 1 | Harry asks about lessons from the Roman Empire based on background research. Ryan corrects Harry's assumption, clarifying a preference for the Greeks and explaining how historian Will Durant's synthesis method informs cross-functional business planning. | |
| Amazon's Siloed Business Units vs. Cross-Functional Collaboration | 2 | 5 | 2 | 1 | Harry asks where cross-functional interlinkages break down. Ryan outlines the multi-leg operational steps of global freight to illustrate why isolated corporate silos fail in complex logistics networks. | |
| Managing 15 Direct Reports and Driving Small-Group Decision-Making | 3 | 3 | 2 | 3 | Harry questions whether having 15 direct reports is inefficient. Ryan defends his direct report count by explaining how decision-making occurs in targeted, small cross-functional sub-groups rather than large committee meetings. | |
| Blending Intuition with Data for Strategic Judgment | 3 | 4 | 3 | 2 | Harry explores strategic judgment and hiring limits. Ryan offers a contrarian critique of over-relying on data, pointing out that all data originates from the past and becomes useless when future conditions change. | |
| The Reality and Struggles of Being a CEO | 4 | 2 | 3 | 2 | Harry shares a structured framework categorizing a CEO's anxieties around top, middle, and poor performers. Ryan agrees and criticizes sensationalist media coverage of minor operational mistakes. | |
| The Future of Global Trade and Geopolitics | 3 | 5 | 2 | 2 | Harry prompts a discussion on macro geopolitics and China trade. Ryan explains China's irreplaceable manufacturing competency over simple low-cost labor and provides historical context on 800 years of global trade growth. | |
| The Value of Planning in a Chaotic World | 3 | 4 | 3 | 3 | Harry questions the value of corporate planning during global disruptions like war or pandemics. Ryan cites Eisenhower's axiom on planning and expresses skepticism toward macroeconomics. | |
| Interest Rates, National Debt, and Inflation | 2 | 2 | 1 | 1 | Harry asks if interest rates will hit double digits. Ryan notes the fiscal constraints on US national debt before the conversation shifts warmly to parenting and work-life boundaries. | |
| Retaining Romance and Partnership in Marriage | 2 | 2 | 1 | 1 | Harry asks how Ryan maintains personal relationship priorities while leading a large company. Ryan credits his wife and reflects on living on $17,000 a year in China to show that financial security is relative. | |
| Investing in Rebels and the Power of Revenge | 4 | 3 | 2 | 3 | Harry asks why Ryan backs controversial or rebellious founders, offering Parker Conrad as an example. Ryan explains that revenge against prior unfair treatment is one of the most potent motivators in entrepreneurship. | |
| Quick-Fire: Global Concerns and Company Mission Focus | 3 | 4 | 4 | 3 | Harry leads a rapid-fire round touching on global risks, workplace politics, and remote work. Ryan takes a strong stance against US-based remote work, arguing advocates overlook global labor arbitrage. | |
| Changing Minds on Process and Bureaucracy | 4 | 3 | 1 | 1 | Harry shares his own shift in perspective regarding serial founders before asking closing questions on historical figures and AI's impact on logistics coordination. |
Statements from this episode (45)
Petersen: Data is useless when the future differs from past trends
“All data comes from the same place, which is the past. But if the future looks different from the past, your data is completely useless.”
Petersen: Raising excessive capital leads to loss of discipline
“The biggest risk to raising too much money is you just lose discipline.”
Petersen: Every highly funded company eventually spends money unwisely
“I've never seen a company successfully raise a bunch of money and not start spending it in ways that aren't actually very smart.”
Petersen: The main purpose of corporate culture is driving velocity
“The goal of a culture is to drive velocity.”
Petersen: Freight forwarding jargon is a rookie detector to overcharge customers
“There's a lot of arcane terminology, kind of code words, acronyms. And now my working model is these are rookie detectors so they can figure out whether or not I know anything. And if I can't, they can charge me a lot of money.”
Petersen: Flexport cut 27% of costs in his first five weeks back
“We cut 27% of our costs already in my first five weeks.”
Petersen: Flexport will reach profitability by end of 2024
“We've got a roadmap to get the company profitable by next year, by the end of next year without raising prices for our customers.”
Petersen conducted 115 customer calls in his first eight weeks back
“I've done a 115 customer calls. In the first eight weeks on the job try to do four or five every single day.”
Petersen: Focusing on quality lowers costs more than focusing on efficiency
“The more a company in logistics focuses on efficiency, the less efficient, efficient they'll get. And the more they focus on quality, the lower their costs will be, the more efficient they'll be.”
Petersen: Resource allocation drives public CEO success, not private
“Over the long run, 50 year period or something, the CEOs who have the best returns in the stock market have been really good at resource allocation, meaning, meaning they really understand when their stock is overvalued or undervalued. And if it's undervalued,…”
Petersen: Flexport raised nearly $2B and still holds $1B in cash
“We raised a billion dollars in 2019 and then in 2022, we raised nine hundred eighty four million dollars. That turned out to be true. Like that we were kind of at the peak of the bull market and that balance sheet serves us very well today that we have a billi…”
Petersen: Founders raising large rounds should institute immediate 90-day hiring freezes
“If you raise a lot of money, you should immediately the next day do a hiring freeze and don't hire anybody for 90 days and go, look, money's not going to solve our problems. We're going to solve our problems.”
Petersen: Flexport grew engineering to 1,300 before laying off half the team
“We let go of a lot of amazing people a few weeks ago. We let go of about half of our engineering team. We know we grew our engineering team this year from 450 software team members, product and engineering team members to 1300.”
Flexport is the only top 100 freight forwarder founded after 1994
“Flexport's now the third largest of the American companies and top 10 globally. And if you look at the top hundred providers of global freight forwarding services, customs brokerage and freight forwarding, we're the only one founded after the web browser was i…”
Petersen: Velocity, not pure speed, determines startup success
“I don't think speed is the most important thing. I think it's velocity. And if you remember your physics, velocity has a vector. It's speed in the right direction.”
Petersen: Flexport's best customer relationships stem from past service failures
“A lot of our best customer relationships are people that we royally screwed up with five years ago, but it's how do you respond in that moment?”
Petersen: Corporate values are meaningless without financial sacrifice
“Your values don't really count unless you're willing to give up money for it. Otherwise it's just word on the wall.”
Petersen: The average importer of goods onboards 18 factories
“The average importer of goods is onboarding, 18 factories.”
Petersen: Effective decisions require small groups with front-line employees
“So we, what we do instead is we grab four or five, six people for whatever the topic is that we need. And we'll go deep and not just those six people who report to me, but some usually the layer down from the technology or someone from the front lines who unde…”
Petersen: Employees complaining on anonymous social networks are cowards
“There's this anonymous social network. It's like the terrible, all the cowards go there and just talk trash. Like, You're obviously a coward until you're allowed to talk in public and ask the open question, but you're too cowardly to do it. And you post on the…”
Petersen: Most people use data only to justify pre-made decisions
“Most people know what they want to do and then they use data to justify what they were going to do anyways. And you could always find some data to back up your case if you're certain.”
Petersen: Hiring external executives is much riskier than internal promotion
“Don't hire outside people. I rather much, I don't hire senior executives. I think in almost all, I'm not, look, that's not a blanket rule. We've hired a lot of great senior executives at Flexport over the years, and a lot of them are doing amazing work for us,…”
Petersen: Flexport would be 10x better if top departed talent remained
“And if I just think about all the great people have left Flexport over the years, If they were still here, we'd be like 10 times better company.”
Petersen: Flexport on track to deliver 33M consumer packages in 2023
“Flexport delivered thirty-three million packages to consumers' homes. That's what we're on track to do this year.”
Petersen: Average hourly wage in Mexico is lower than in China
“The average hourly wage in Mexico is now cheaper than in China.”
Petersen: Global trade has grown 4% annually since 1200 AD
“Global trade has grown four percent annually since the Mongol invasions in around 1200 AD.”
Petersen: Future trade will remain globalized rather than nationalized
“I think it'll be globalized trade.”
Petersen: Shipping Fiji water emits less carbon than trucking from Rockies
“Shipping it from Fiji to the west coast of the United States emits way less carbon than running a truck from the Rocky Mountains to the west coast.”
Petersen: I change company direction too easily
“I'm very good at changing direction, probably change direction too easily also.”
Petersen: Chinese believe in China, while half of Americans hate America
“Chinese people believe in China. Half of Americans hate America.”
Petersen: Most Chinese people work six days a week
“I lived in China for two years. They work Saturdays. We don't work Saturdays. You know, that's a bit extreme, but most Chinese people work six days a week.”
Petersen: People claiming to understand macroeconomics are probably wrong
“I always found macroeconomics to be impossible. I think people who pretend they understand it are probably wrong.”
Petersen: Double-digit interest rates would trigger US debt-inflation spiral
“If they do, the United States government's gonna be in a lot of trouble. We can't pay our debt of 10% interest. They have to keep printing money, and then you have an inflationary cycle, which then makes interest rates go even higher.”
Petersen: Avoid hanging out with people much richer than you
“You have to be very careful of who your role models are and who you imitate and be careful not to hang out with people who have way more money than you. Cause you'll, you'll aspire to do things that you can't afford and spend money on stuff that won't actually…”
Petersen: Revenge drives overlooked founders to build comeback companies
“Revenge is a really powerful motivator. In life, you know, you want people who are motivated and driven, and if someone feels like they've been wronged, there's a couple benefits. One, they're gonna be incredibly driven to go solve that, you know, to go have a…”
Petersen: Parker Conrad was wrongly scapegoated at Zenefits
“I think Parker was wrongly scapegoated and run out of town at benefits. Then he, and he proved it by going to build rippling into a business that's much bigger and better than reference benefits ever was in the exact same space.”
Petersen quit angel investing because time away hurts Flexport
“I actually quit angel investing a while ago, basically. I'll do it a little bit here and there if it's a friend of mine or something, but the reality is any time spent away from Plexport is probably net negative for Flexport.”
Petersen: Flexport employees must focus exclusively on company mission at work
“Finding people at Flexport who are focused on anything other than making Flexport successful at work, It's like really, really frustrating. I don't care what you want to focus on outside of work at all, what your politics are, what your cause is. I think that'…”
Petersen: Remote work prevents effective team formation and company culture
“I think remote work is Very, very difficult to achieve a build a company culture. I think individuals can succeed. I'm incredibly productive working in my house with there's no distraction. I'm incredibly productive individual contributor, but great things get…”
Petersen: Flexport is struggling to get employees back into the office
“Flexport is struggling to get team members to come back to work right now. And I, it wasn't, you know, it wasn't our focus the last few months, but it's absolutely my focus right now. I'm pretty frustrated by people at Flexport who don't want to come into our …”
Petersen: Remote US workers will lose jobs to offshore talent arbitrage
“By the way, I think remote work can really work, but it's not going to benefit the people who think like, it's not going to be people making 250,000 dollars a year hanging out in Jackson Hole. It's going to be geniuses in the developing world Making, you know,…”
Petersen: True corporate bureaucracy stems from a lack of process
“A lot of the true bureaucracy in companies comes from a lack of process or people can't get anything done and they don't know how it works”
Shorts cut from this episode
▶ "Money Always Makes Companies Spend Stupidly" 💰 · 20VC with (@0:06)
▶ The World’s Most Environmentally Friendly Water Bottle · 20V (@41:57)
▶ Is being CEO a dream or nightmare? · 20VC with Harry Stebbin (@35:42)
▶ The #1 Lesson in the Logistics Business · 20VC with Harry St (@8:29)
▶ How every startup should look at valuations 💵✍️ · 20VC with (@13:56)
▶ How NOT to spend your startup money 💰🙅♂️ · 20VC with Harr (@0:15)
▶ #1 Mistake Every Startup Makes · 20VC with Harry Stebbings (@0:09)
▶ Founder Advice and Future of Trade 💰 · 20VC with Harry Steb (@0:00)