The Exchanges

Q No, I, I, I agree totally. Uh, penultimate one, favorite warlord general or emperor and why?

A Definitely Napoleon. The reason why he's a very interesting mind. First of all, uh, you know, won like 38 battles or something, 38 and one, I forget his record. He's pretty, pretty great. Uh, general rose through the ranks, came up through the, you know, from the grass, grassroots came up, uh, And, uh, incredibly well read as well. Like, you know, the Egyptology is basically created because Napoleon wanted to invade Egypt, uh, to, to cut off the British empire's access to India. And, uh, while he was there, he brought all these scientists and like, you know, that's where we got the Rosetta stone and the understanding of the decoupling of the hieroglyphics. And then he wrote the law code, the Napoleonic code, which is basically the law of the land and half of Europe today, all the way until now reorganize everything. Yeah. Napoleon is incredible. Um, there's a great book called The Mind of Napoleon, which is out of print. It's like 200 dollars on eBay. Uh, and it's just full of, all of this is his quotes. And he has a quote on every subject. And half of them will appall you in the modern world, but I find those to be the most fun. Uh, and half of them are just like, man, this guy's an actual genius. But yeah, it has a nice index in the back so you can look up any subject and see what Napoleon thought.

AI assessment note: “Definitely Napoleon. The reason why he's a very interesting mind.”

Q Do you think any of your investors bet on you because of the market? I don't think they did. I think they probably bet on you because of the...

A Maybe. Yeah, they mostly bet on me. Um, they didn't, they had never invested in this market before, and that's for sure. Pete, uh, Peter, you know, I met Peter, Sam Altman introduced me to Peter. Uh, Sam was one of our early, earliest investors, and he invested me to Peter to get advice. It was a classic thing, because I, everyone loves this book, right? Zero to One is such a great book, and so I, Sam introduced me, and I had, that book has, Six or seven. I can't remember. I think there's like six questions to decide if you'll change the world. They're like, this is like an incredible startup that you should ask. And on five of the six questions, I felt like Flexport knocked it out of the park. Best possible answer. But then one of them was, one of them is, um, is it a small market? Cause he, his whole thesis was like, you should have a market that's small enough that you can be a monopolist. And when I went to whiteboard with him and hang out with him, I'm like, well, look, it's, I want to know, like, should I be, should I make myself, like, I can make this a small market. I'd be like, oh, we're going to dominate, like, logistics for hardware companies in Silicon Valley or something, but, like, it's kind of fake. Like, the market's actually really big, and he, like, stopped me, and he's like, look, it's, don't be too dogmatic. It's okay to have a big market, you know. And then…

AI assessment note: “Yeah, they mostly bet on me. Um, they didn't, they had never invested”

Q Your brother told me you're unemployable. Uh, no, uh, your, your, your wife, though, asked the question. You said there about kind of the, the mirage of entrepreneurship. Your wife said, what's the biggest misconception people have of Flexport today versus what it is really?

A Oh, well, there's been a lot of, uh, you know, Flexport's been in the news a while lately. Um, we had the CEO transition. The demand for scandal and drama is way higher than the supply. In this world, and the media has been really sensationalizing some stuff. There was a story about Flexport that I will not point people to because I don't want to give it any attention because there was other crap, but it was a whole article. Flexport delivered thirty-three million packages to consumers' homes. That's what we're on track to do this year. Then one package got lost, and they wrote this, all of this mainstream media publication wrote an entire story where the first four paragraphs are about a lady whose package got lost. I feel bad for her. I'm sorry. Like, we lost the package. We genuinely We screwed that up. We reimburse her in full, but like one out of thirty three million, I mean, that is like, you know, this is people trying to sensationalize and stir up drama or like that same article clean that one of our biggest customers was really unhappy with us. Literally the customer went on the record telling them that it's not true. We were very happy with Flexport and they didn't publish that. They wrote that we have sources saying that they're not happy, but like the source of the company told you that that's not true. So the media wants to drive these narratives about Flexport as …

AI assessment note: “media wants to drive these narratives about Flexport as if we're a mess or something”

Q They will trade more and more and more. I'm just really intrigued. Do you think that will be globalized trade or nationalized trade?

A I think it'll be globalized trade. I think, uh, first of all, the ship is an incredibly efficient way of moving things around the world, far more efficient than any other, you know, land-based transport. In fact, you know, I, I, I, I've had this blog post that I want to write. About how Fiji water is the most environmentally friendly water. It gets criticized all the time. There you go. Because ocean freight is so carbon neutral that by getting it and 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. You know, there, there's a lot of reasons and ocean freight is cheap. It's reliable. The fact that you can ship a TV across the world for a few dollars is just a remarkable feat of engineering and human ingenuity. Now war is a big risk. I have no, no way to understand the risk of Of a war and, and what that can do to trade civilization and therefore trade depends on peace. We take it for granted. We've lived in this great period of peace for most of our lives, at least in the United States and the Western world, the wars that have existed have been largely removed from us in the daily impact, thankfully. But if that changes, yeah, of course trade is at risk. And so we take, there's a lot of black swans that can happen, but even more is that, you know, world war II seemed like the most …

AI assessment note: “I think it'll be globalized trade.”

Q But you mentioned the fundraising there and how you've managed it so successfully. Uh, and it was one of your investors that introduced us after all. So we do have to chat about it, but it was a little different than traditional SF software companies, stereotypes. So what was your experience in explaining kind of real world businesses to VCs and, and what was the reaction?

A Yeah. Well, in the very early stages, it wasn't too bad. I, people really, it's hope and a dream and, and, and you sell on the market size and the track record and, and, and some of the vision. Right. And so the, the seed round never, I don't think was ever a problem explaining anything. I don't even think people bothered to understand it. Frankly, they're like, Oh, those four check boxes look good. Let's do this. Right. Uh, when you get to later stage, especially, so we just raised a few weeks ago, There you're talking about a lot of money and all of a sudden they want to ask tons of questions and try to really understand the business, which one, our business is immensely complex. I mean, you're talking, we're, we're a global freight forwarder, which means we're coordinating a multi-sided platform of real world assets that move cargo all around the world on behalf of thousands of other companies without owning any of those assets. So we were like this glorified middleman, but we're really, we're coordinating complexity with For a living. That's what our company does is coordinate complexity in people's supply chains. So that's just really complicated, right? And, and the business model's novel, like we give the software away and charge for the freight. So that's confusing. And then when you look at our P and L, there's 175 people. A lot of them are in customer service and acco…

AI assessment note: “then they look at the P and L and go, wait a minute”

Q I want to do a quick Friday because I could talk to you all day. So what have you changed your mind on most in the last 12 months?

A For the last decade, I wanted to be, I didn't want to compete on price, and I wanted to be the premium value, premium provider in logistics and thought it would be bad to compete on price. And now I'm like pretty convinced that we need to be the low cost leader and just Go so hard at lowering our costs that if you're cheaper, you just take all the market. Uh, and I think I was maybe lying to myself because it was too hard to automate the work and too hard to become the low cost provider. And our, we're smaller than some of the big peers. So they buy freight cheaper than us and stuff. And I think I was lying to myself and it's like, no, you need to be the cost leader and we have to figure out everything we can to be the cost leader.

AI assessment note: “now I'm like pretty convinced that we need to be the low cost leader”

Q Leadership team distributed. You said remote work is what? Dot, dot, dot. Can you help me fill in the statement here?

A Well, I got, I say, I say it's white collar fraud. I have a three year old and a five year old. The idea that I could do any work at my house is like a total fantasy. Like, come on, you're kidding. And like, I have a bigger house than most employees do. Like, I actually do have a private office I can close the door on. It doesn't matter. Like, there's no work getting done at that house when the children are around. And the kids come home, like, at, when the school end, three p.m., like, your workday needs to keep going. So I, I think, um, I'm highly against it, but we're five day a week in office as the baseline assumption at our company. And I made the mistake during COVID of, like, going remote and letting it stay remote for way too long, and so, like, I think our culture suffered as a result.

AI assessment note: “Well, I got, I say, I say it's white collar fraud.”

Q to ask, you know, I, I spoke to many of our mutual friends before the show. And they said, ask about the time slightly away from being CEO and your reflections on that time. You were CEO for so many years, and then you had a little bit of time away. How did you use that time? And how did you reflect on your life and Flexboard in that period?

A I wasn't really away. I was the chairman of the board for Flexboard. So I was less involved. I was more of a board member. I would say I spent a lot of time. Well, I did spend a lot of time with my family. I've got two young kids, um, and a wonderful wife. So I spent a lot of time with the family. Uh, I think the, The time to reflect and really think about the business from first principles as an investor was really valuable. I became an investor. I joined Founders Fund as a partner, uh, and which is like one of the top VC funds in the world. And so I looked at a lot of businesses and I started looking at Flexport from the mindset of an investor rather than a founder. I think that was actually really healthy to kind of step back and look and look at the P and L, look at the business model, think a little bit more clear added about where we are. You know, you're in the business every day. It's a little bit hard to step back.

AI assessment note: “started looking at Flexport from the mindset of an investor rather than a founder”

Q We're going to unpack quite a lot of what you just said there. I do want to start more around you and your leadership actually, Ryan. And it's something that I want to start with, which is quality versus efficiency. Can you talk to me about how you view the two and the relationship between quality and efficiency?

A Yeah. You know, I don't know if this is true for every company in the world, but it is, it is the absolute truth in logistics is that almost all inefficiency comes from bad quality. Very practical. What does bad quality mean? Something was late. It was shipped to the wrong address, use the wrong customs classification code, or you cleared it through customs when it should have traveled through that country without clearing customs on to the next country. Call that an in bond shipment. A mistake like that will cost you all your efficiency gains for the month. And you know, one mistake because it takes weeks to unwind things and the penalties and, and you can't, you can never quantify the lack of loss of trust that a mistake like that will, will bring to your customer. It's very ironic that 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. Uh, it's not, it's counterintuitive. It's not obvious at all. Although if you read a lot of the literature of, um, Yeah. The great American business philosopher is W E Deming. Um, and he's known as like the grandfather of quality or something like that. And you read his stuff, you're like, yeah, none of this is surprising. That's been known. And it's like the heart of the Toyota production system. Uh,…

AI assessment note: “almost all inefficiency comes from bad quality”

Q is a more nerve wracking place than ever in many ways. I spoke to Brian Singerman before this, and he said, there's nothing he loves more than talking to you about bluntly the state of the world and how you see kind of macro geopolitics today. And I'd love to ask, When you think about kind of geopolitical macro, how do you think about the future for trade with China?

A Well, China is a very unique manufacturing capability that you can't replace easily. You know, people will love to say the United States government's doing their best with imposing tariffs on, on imports, uh, coming from China. Companies with simple products, like think apparel, et cetera, are moving that away from China. One to avoid the duty, but Chinese, uh, the Chinese economy has done so well that their labor prices have gone way up. You know, the average, uh, hourly wage in Mexico is now cheaper than in China. So if you're just looking for cheap labor and that's great for China, right? Like good for them. Like they're making more money as a, uh, you know, their population. So China's no longer the cheapest manufacturing site in the world, but it's the best manufacturing. Like they're the highest quality, highest competency in manufacturing. So if you're doing electronics, you're doing anything sophisticated, not anything, but a lot of the really sophisticated forms of manufacturing, China's the best place to buy things. Um, so I don't think that's going to go away. I think People will always be shifting away from higher labor costs to cheaper labor costs and tariffs. They're going to do what they can to optimize against tariffs. I think in general, there's global, it's a, we're in an interesting moment right now where globalization is in question, like whether or not we'r…

AI assessment note: “China's no longer the cheapest manufacturing site in the world, but it's the best manufacturing.”

Q In the spirit of adventure that takes you to China and reselling scooters, motorbikes, how does that lead to Flexport with your bro?

A 20 years ago, early 2000, we, my brother, I started working for my brother when I graduated from college and we built this company buying motorcycles, off-road vehicles, dirt bikes, ATVs, doing buggies and selling them through the internet. And it was really a technology company. Well, like we didn't market ourselves that way, but it was before Shopify and Stripe, and we had to build our own inventory management systems and accounting. And it was in the browser, like in the late nineties, early 2000. Um, so, you know, we should have built like a software company and sold the software. Instead we kind of sold these motorcycles, but we learned a ton about import export and about how difficult it was to work with the great forwarding and logistics companies in the world, both because A lack of technology, like fundamentally, I mean, 20 years ago, , there was just nothing. The, the trucks, trucking side, we could 20 years ago, log in to platforms and gets rates. Uh, and we built a lot of automation around that, but the, the inbound side, the import of containers and air freight, like just nothing, we couldn't get anything. And then two, I felt like the freight forwarding industry just really didn't It wasn't easy to work with. They didn't want to see the world through my eyes and help me as an entrepreneur to build my business. There's a lot of arcane terminology, kind of code word…

AI assessment note: “we learned a ton about import export and about how difficult it was”

Q When you look at those a 115 calls, what have been your biggest lesson in doing them?

A Well, customers really like collection. They want us to succeed. They love our vision. They love what we stand for. They love our people. And they love, they love our products. They've given us a lot of feedback of areas of like, oh, you know, the biggest things in logistics are on-time performance, cost, and accuracy of data. And they've given us a lot of feedback of areas that you're like, hey, you guys need to do better on this or that thing. And it's great because it lines up with exactly our roadmaps and where we're focused on. So that's been like confirmatory. I learned something in every call. The other things I learned is how much customers like Flexport Capital. Flexport Capital is our inventory financing product. We finance inventory as it's traveling through logistics networks. And customers who use that are super happy with Flexport because we're giving them money and financing their business, which isn't surprising. But they also become more profitable too. So it's just like a huge win-win. They become stickier. You know, we help them grow. They grow more. That was a little surprising. I didn't know how they'll cut the capital. I hadn't spent enough time with all the capital customers, but They definitely stand out as being happier customers.

AI assessment note: “The other things I learned is how much customers like Flexport Capital.”

Q Ryan, do you think that the best CEOs are the best resource allocators? It's commonly said as a kind of throwaway phrase. Do you think the best CEOs are the best resource allocators?

A I think there's so many different kinds of CEOs out there. If you look like 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, they really understand when their stock is, uh, overvalued or undervalued. And if it's undervalued, they buy their own stock. If it's overvalued, they issue stock and buy other companies. And they have, they're very in tune with how to buy and sell in the public markets, other companies doing M and A or being very smart. And that's a, that's a, that's a, Pure form of resource allocation within a public company and a private company is way less important. I think, uh, in private company, it's much more, yeah, I guess you can say resource allocation across teams and okay. Do I want to put headcount into this or that? I don't think that's the most important thing in private companies though. It's usually like, do you have a great vision? Can you attract the best talent? Uh, and can you just like execute, can you actually deliver results against your vision? I don't, I don't know if that's really resource allocation. So it's probably different public versus private.

AI assessment note: “So it's probably different public versus private.”

Q Before we discuss the flip side, can I ask a blank question? Do you feel the weight of the valuations raised up? Obviously it was a bull market and prices were high. Do you feel the waste of last round price?

A I know, I don't. I think, um, because the reason is I, I've, I've told my team after every round that we done, this is not our evaluation. This is a moment in time, a group of people with a view of the future. And, you know, because the value of any company at any time is the, well, it's the net present value of the future. Cashflow is discounted by some, you know, risk rate of whether or not that's going to come true and what, you know, what the best opportunity cost is. And the future is inherently uncertain. We have no idea what the future is going to look like. Everybody has their own view. And so our valuation is sort of like, you take all the probable possible futures out there, you assign a probability outcome to each of them, and you collapse that distribution curve down, and you get a price. You know, another way to say that is like, hey, there's, when we were worth eight, when we, our valuation was marked at eight billion dollars, you could say, well, we're never worth, we, I literally told our team this the next day, we're not worth eight billion dollars. There's a some probability chance that we're worth, we're going to be worth eight hundred billion and some chance we're going to be worth 80 and some chance will be worth nothing. I mean, and our job is as here as employees is not to sit here and think about our valuation and hope that it goes up. It's to go make it…

AI assessment note: “I know, I don't. I think, um, because the reason is”

Q Well, there's another common trope, which is like speed is the single biggest determinant of success in startups and company building. Do you believe that's true, or given what you just said, is speed actually not as important as people maybe suggest?

A Oh, well, I think, uh, you have to be very careful with your definitions here, because 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. If you're going the wrong direction, you're like, this is terrible. And so sometimes the highest velocity thing you can do is stop and do and go nowhere. Cause if you're, if you're, if you're speed in the wrong direction, that's negative velocity. And that's really bad. Um, and so that's the key is being agile, being able to change direction. Cause the world's chaotic. The world's gonna, especially in logistics, like we've seen crazy stuff, COVID and, uh, you know, bad bankruptcies of shipping carriers. And then you had them make hundreds of billions of dollars. Five years later, you've had Terrorists, uh, we're seeing everything. And so you have to be very nimble as the world changes to be able to change direction without losing speed. That's a very hard thing to do.

AI assessment note: “I don't think speed is the most important thing. I think it's velocity.”

Q is a more nerve wracking place than ever in many ways. I spoke to Brian Singerman before this, and he said, there's nothing he loves more than talking to you about bluntly the state of the world and how you see kind of macro geopolitics today. And I'd love to ask, When you think about kind of geopolitical macro, how do you think about the future for trade with China?

A Well, China is a very unique manufacturing capability that you can't replace easily. You know, people will love to say the United States government's doing their best with imposing tariffs on, on imports, uh, coming from China. Companies with simple products, like think apparel, et cetera, are moving that away from China. One to avoid the duty, but Chinese, uh, the Chinese economy has done so well that their labor prices have gone way up. You know, the average, uh, hourly wage in Mexico is now cheaper than in China. So if you're just looking for cheap labor and that's great for China, right? Like good for them. Like they're making more money as a, uh, you know, their population. So China's no longer the cheapest manufacturing site in the world, but it's the best manufacturing. Like they're the highest quality, highest competency in manufacturing. So if you're doing electronics, you're doing anything sophisticated, not anything, but a lot of the really sophisticated forms of manufacturing, China's the best place to buy things. Um, so I don't think that's going to go away. I think People will always be shifting away from higher labor costs to cheaper labor costs and tariffs. They're going to do what they can to optimize against tariffs. I think in general, there's global, it's a, we're in an interesting moment right now where globalization is in question, like whether or not we'r…

AI assessment note: “China is a very unique manufacturing capability that you can't replace easily.”

Q Yeah. No, I have to say fizzy water doesn't quite cut it in that respect for me nowadays. Ryan, can I ask, because you look at the headlines, and you look at the valuation numbers, and was there any insecurities for you attached to the drinking, do you think?

A I didn't know when I go out in a social setting, I'm not like the most gregarious extroverted person. And so even though I sometimes come off that way, and I think I was using alcohol to kind of like help me settle my nerves and become like feel a little bit better in those settings. And like, by the way, as the CEO of a semi big company, you get invited to these things like four or five nights a week. And a lot of them are really interesting and you want to go. So the normal thing to do in these scenarios is to have a couple of drinks. So pretty soon, if you're not actually really conscious about it, You could be drinking a lot. And once I started to become conscious about it, I started realizing, whoa, I'm having to turn down alcohol really often. But one of the things I noticed was like, actually nobody cared. Really zero people cared whether I drank or not, especially at my age. And like with my friend group and the one or two people who did pressure me to drink, it was like a heat seeking map for like who I shouldn't be friends with. Cause they're probably like, why would you care if I drink? Like you drink, I don't, I don't drink. Like who gives it? And actually very, very few people care. It's all in your head. And you can do what you were talking about, have a lemonade, and nobody notices or cares. Really, people are not, they're much more obsessed with their own life t…

AI assessment note: “I was using alcohol to kind of like help me settle my nerves”

Q really consider myself a founder, but I, you know, I am alone in, in kind of founding what I, what I do, and, and I do find it difficult sometimes. I'm intrigued as to hear when times have been tough, how have you dealt with those hard times when there's no one to pick you up, when, when I'm not there to give you a hug and a mojito? Yeah.

A That, that I, I, dang, that was going to be my answer. I call Harry to get a hug. Um, well, I would say this starting a company solo is very good. The number one reason that companies fail is that the founders split up like early stage, right? So you eliminate that risk right away. If you do a great job, you get some traction, you get progress, you build, you know, you start really doing something, especially you raise some money. Now, all of a sudden you can go recruit your co-founders. And so that's what I did basically was One, I had my brother as like my emotional, spiritual co-founder. I can bring all my problems to him and talk about, but two is I went out and actually recruited co-founders. And in that case, I got better people because I had demonstrated some progress. I had de-risked it to an extent and I got better people and for less equity, right? Like if they were my original partners, we would all just split everything, right? 50, 50 or whatever the, whatever the number of people is. And in this case, I gave them something less than that, right? So it worked out better for me. And now I, they really are like, Co-founders in all but name. Like they, they're my partners in running the business for sure.

AI assessment note: “One, I had my brother as like my emotional, spiritual co-founder.”

Q They are the best investors, aren't they? God, love it when that happens.

A But honestly, the investors that the notion, there's this notion that goes around that investors are going to sort of Run your business or dramatically change it. I don't think there's an investor who's like had this life changing life career or like company trajectory altering effect on Flexport, right? I mean, all of our investors have been great. Most of them have been amazing, like connecting, making connections and stuff, but we would have pretty much had the same company without any given thing that any of them did besides give us lots of money. And there's this pervasive idea out there that you need someone's Permission and know-how and knowledge to run a business. Like, someone else is going to come and do this for you, and that, you know, even being an investor in another company, like, I don't know that you learn that much investing in a business about how the business works and what made it successful. Like, they're on the sidelines for sure, right? And in the back, and maybe not even in a front row seat. So my preference for an investor is one who's very smart, gets your business, gives you money, and pretty much stays out of the way, except for maybe asking how they can help. But like, someone who's going to come in and try and strategize and vote and Make decisions in the company seems like a huge liability. I, I wouldn't want that. I haven't had that, thankfully.

AI assessment note: “my preference for an investor is one who's very smart, gets your business, gives you money”

Q When you, when you put on the ambassador hat, you're like big time tick. Um, on the flip side, What was the worst resource allocation decision? What was a mistake that you allocated resources to that you shouldn't? And how did that change your perspective?

A Oh, you know, the Flexport is over, over the last decade, capital raising came easy to Flexport. I mean, you had zero interest rate, Flexport's a really good bet. We get, we raised a lot of money. I think that that money in it, I've never seen a company and I've tried this and I've raised as much money as almost anybody. I've never seen a company successfully raise a bunch of money And not start spending it in ways that don't, that aren't actually very smart. It's the biggest risk to raising too much money is you just like lose discipline and you start spending money. This was true, um, by the way, from day one, we raised a twenty million dollar series A. The time it seemed like a ton of money. The next day or like within a week, we had a conference coming up like a, where we were exhibiting a trade show or something. And I immediately purchased a shipping container and transformed it into a booth and spent like 50,000 bucks on this thing. And like, I don't know if that was a good or bad decision, but like, I definitely wouldn't have made it two weeks prior when we didn't have the twenty million bucks in the bank. It's like the money wants to spend itself. And so that's the ultimate risk. And you can sit here and go, we're not going to spend it. We're going to pretend we didn't raise it, but you would be as a founder, the first person ever to succeed in that. Um, now I think my…

AI assessment note: “my advice to my former self would be like, if you raise a lot of money”

Q I want to do a quick Friday because I could talk to you all day. So what have you changed your mind on most in the last 12 months?

A For the last decade, I wanted to be, I didn't want to compete on price, and I wanted to be the premium value, premium provider in logistics and thought it would be bad to compete on price. And now I'm like pretty convinced that we need to be the low cost leader and just Go so hard at lowering our costs that if you're cheaper, you just take all the market. Uh, and I think I was maybe lying to myself because it was too hard to automate the work and too hard to become the low cost provider. And our, we're smaller than some of the big peers. So they buy freight cheaper than us and stuff. And I think I was lying to myself and it's like, no, you need to be the cost leader and we have to figure out everything we can to be the cost leader.

AI assessment note: “now I'm like pretty convinced that we need to be the low cost leader”

Q Is it challenging to be, uh, kind of having to educate the VC without being patronizing?

A Yes. Super. And it's a really difficult problem. And what it means is you just have to spend a lot of time. Like you're used to this one hour investment pitch and like in an hour, I can't teach like, wow, I'm going to teach you about freight, which you never knew about, like what the market even is. That might take me an hour. Right. And then to teach you our business and why we're going to win. And like at the start of this conversation, you didn't know anything about freight forwarding. And at the end of the conversation, you need to not only know about it, but know what we do and why we're going to win and take my word. You have to take my word for it because like, You didn't know what freight forwarding even was when we started this conversation. And by the end, you need to not only know what it is, but understand why this company is the best. And that is, that was a hard, that is a hard problem for us.

AI assessment note: “Yes. Super. And it's a really difficult problem.”

Q I interviewed the founder of Invisible, which is another data provider, um, and he said that you can't do enterprise without a fully fledged FDE model. Do you think that's true working with some of the biggest companies?

A No, it's not true. You can do it without that, but you, your business is better. But I, if you can get that level of integration, you know, the freight, freight industry was the original FDs. Uh, they just weren't engineers. They were just, but I met, uh, I mean, one of the big tech companies that runs like a hyperscaler, let's call it, um, has one of our direct competitors has 130 full-time employees that work at that company that have badges that show up to work every day that run their logistics for them. And we cannot crack the door at that place. I won't say their name, but we cannot get our foot in the door because all the decision making is done by our competitor. I think it's an insane, what an insanely great competitive advantage in positioning to have at, so I'm jealous, and I don't know where you find, but they're not software engineers. These are just like logistics people. Um, if you can get that same thing and just deeply embed yourself into the process workflow of a company, it's so valuable. It's not easy to do. And like, it's not easy to find in the FTE model to find good FTEs who will like, know what to do, like show up and do a good job every day and like stay in the job and not have the turnover.

AI assessment note: “No, it's not true. You can do it without that”

Q I interviewed the founder of Invisible, which is another data provider, um, and he said that you can't do enterprise without a fully fledged FDE model. Do you think that's true working with some of the biggest companies?

A No, it's not true. You can do it without that, but you, your business is better. But I, if you can get that level of integration, you know, the freight, freight industry was the original FDs. Uh, they just weren't engineers. They were just, but I met, uh, I mean, one of the big tech companies that runs like a hyperscaler, let's call it, um, has one of our direct competitors has 130 full-time employees that work at that company that have badges that show up to work every day that run their logistics for them. And we cannot crack the door at that place. I won't say their name, but we cannot get our foot in the door because all the decision making is done by our competitor. I think it's an insane, what an insanely great competitive advantage in positioning to have at, so I'm jealous, and I don't know where you find, but they're not software engineers. These are just like logistics people. Um, if you can get that same thing and just deeply embed yourself into the process workflow of a company, it's so valuable. It's not easy to do. And like, it's not easy to find in the FTE model to find good FTEs who will like, know what to do, like show up and do a good job every day and like stay in the job and not have the turnover.

AI assessment note: “No, it's not true. You can do it without that, but”

Q But a lot of founders are sitting in the seat today going, man, I want to bring it back. I want in person. I know the value of in person, but I don't want a revolt when I say I'm sorry. What advice would you have to them?

A Yeah, I just gotta do what you want to do. I mean, I think that all the bad things that have happened at Flexport were when I didn't do what I wanted to do and was trying to, like, you don't want to ever be afraid of your employees, first of all. Like, the employees don't want that either. They want a leader who's gonna, like, go in the direction that they believe in. Even if they disagree, like, they want to follow a good leader. And if they opt out, like, that's fine. They can opt out. Like, not everyone, you know, and There's a lot of good jobs. I, I think that, um, also the, the, the idea that work from home is going to benefit highly paid employees is sort of a total fantasy. Like, work from home done correctly, you should be hiring the world's greatest geniuses. There should be a labor arbitrage here, where you're finding really, really smart people who make a lot less money because of the, the, um, the way that our economy is structured, where some countries just have a lower purchasing power.

AI assessment note: “I just gotta do what you want to do. I mean... you don't want to ever be afraid”

Q No, I'm just always fascinated by it, but I think it's always indicative. Did you know that you would be successful?

A No, I don't think so. I spent a lot of my time learning languages. When I was younger and I liked adventure, you know, I wanted to get out there. My favorite, uh, kids book was always a Curious George. Want to get out there and see what's happening in the world. Cause I'm going on some adventures, cause some trouble. So yeah. So I, uh, you know, I lived in, lived in like five countries before I was 24 or something, uh, learned how to speak Spanish, Portuguese, Chinese, little French, but, uh, it was all just in the spirit of adventure. I don't think I had like longer term ambitions and so on. Got into working for my brother and doing business.

AI assessment note: “No, I don't think so. I spent a lot of my time”

Q Did you take those reflections into how you act as CEO today? Like, have you kept that lens and applied those reflections into how your action plan is today?

A For sure. Yeah. I mean, I came back to the company about two months ago. First thing, you know, I come back with basically three things. Now I'm not saying, oh, I come back as an investor. I do. There are some aspects of what I'm doing right now that feel a little bit like private equity. I'll come in and run a tight ship. We cut 27% of our costs already in my first five weeks. 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. So that's super important. But that's not the most important thing I'm doing, actually. The most important thing I'm doing right now is actually as Not, not something an investor would do. It's really about the culture of the company and driving a culture where our leadership, starting with me, but all of the people in leadership at the company are way more in tune with our customers and with the people that serve the customers, like spending way more time on the front lines, um, getting to know the customer, getting to know the problems that customers have, whether that's a problem with how we operate, but more often it's a problem out there in the world of supply chain. And how do we solve that? And then I can't meet all the customers. I've done a 115 customer calls. In the first eight weeks on the job, um, try to do four or five every single day. The, um, I can't meet all t…

AI assessment note: “For sure. Yeah. I mean, I came back to the company about two months ago.”

Q A lot of what you just said is predicated on actually having the right people on board as well. You know, they have to want to learn. They have to bluntly be honest and genuine people. I again have made many hiring mistakes. What are some of the biggest hiring lessons you have that you wish you'd known when you started or in the earlier years?

A 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, but it's so much higher risk. Then promoting from within. Um, and, and so much better get to know people. You get to really get bought in that they believe deeply in your mission. They build credibility and respect and stretch people and promote people from within. I think that I didn't do enough of that over the years. I think, uh, trying to pursue in blind pursuit of growth and, and, and hitting our goals and being global and taking over the world and bringing our vision to life. You need help. And you turn externally instead of going, Hey, I'm a, I've actually got amazing people at Flexport. Like we have ex Flexport people who are in key roles, like way more senior at amazing companies than, than they were doing at Flexport. And we didn't promote them and they left and do better things somewhere else. And like, so I, I think, uh, spending more time with your customers and more time in the presence of your people and more time with the front lines, So you can identify like the key job of leadership is identifying talent within your company. And certainly yes, but like, it's so much better if you can get internal folks a…

AI assessment note: “Don't hire outside people. I rather much, I don't hire senior executives.”

Q Final one for you, Ryan. It's twenty-twenty-three now, soon to be twenty-twenty-four. Where are you in twenty-thirty-three? Do you still see a Flexport? And where's Flexport then?

A Definitely still see a flex war and hopefully, hopefully, you know, the rest of my life, uh, can, can stay in the seat and health willing. I love this job. I never, I never wanted to leave the job. I just thought Dave would do a better job than me. Uh, and so I'm thrilled to be back and, you know, executing. So it's hard to predict though with what's happening with AI and everything else in the world, you know, I don't, I don't really believe in predicting that far out, but one thing I definitely want to still be the CEO of flex war. And I do believe Global trade is here to stay. And I think actually what we're seeing is that Flexport is incredibly well positioned from an AI to use AI to implement it because we've structured all the data at global trade and have, we're basically an incumbent. We're the third largest provider of international forwarding services in the United States. So we have incumbent level data, but we have the technology stack and the team that can actually go and implement. Well, one of the things we've done is break a shipment When you ship a container from door to door, we've broken it into these discrete tasks, like a work item, uh, that, that get completed. And we're finding out that once you've chunked it down into something that simple, that AI can complete the tasks. Uh, and so we're, we're like almost every couple of weeks, we're implementing somet…

AI assessment note: “Definitely still see a flex war and hopefully, hopefully, you know, the rest of my life”

Q Did you see it differently when you looked at it as an investor through that lens?

A Yeah, I did. I did. I think, um, looking at it from my sort of a balance sheet perspective, return on assets, return on capital, return on invested capital. How do you think about, uh, what kinds of return on capital do you want to generate? How should you reinvest profits? How do you generate profit and then reinvest it in ways that compound and add more like an investors had rather than a founder, we just like build, build, build, Solve problems and build and the investor can take a step back and like look at the company without even looking deep into the company just by reading the income statement and balance sheet. And those are kind of things like boundaries and you do way more often is like really live in reality and sit down with their business and look at it the way the investor will look at it.

AI assessment note: “Yeah, I did. I did. I think, um, looking at it from my sort of a balance sheet perspective”