Operators Ep 31: Ben Braverman (Flexport)

Hi everyone, my name is Delian and I'm a principal at Founders Fund, a venture capital firm based in San Francisco. This is Operators, where I interview non-VC, non-CEO, non-founder operators that make the startup world go round.

Today I'm interviewing Ben Braverman, Chief Customer Officer at Flexport. Prior to becoming the Chief Customer Officer, Ben was the Chief Revenue Officer at Flexport. He also worked at URX as the Head of Growth and at Hays App as their Director of Sales. I hope you enjoy the show. Ben, so excited to have you on the podcast. Thanks so much for coming on.

Yeah, man, I followed you on Twitter for a long time. It's somewhat surreal to be here.

Yeah, hopefully you can provide some, uh, you know, entertainment. And yeah, excited. Yeah, we chatted, uh, you know, with one of the other, uh, uh, you know, Flexport, uh, you know, C-suites. And so it's gonna be fun to sort of hear about the, you know, story from a different perspective.

Sonny Manders. Yeah, one of my best friends. Uh, we have a plan to unite the empire, and he, he's got a son almost exactly the same age as my older daughter. Uh, so every time our families are in the same city, we're just sort of like, why don't you guys go play together? Wouldn't that be fun?

And how's that working out so far?

Honestly, they, they, they actually get along great. So we'll mark this on the podcast. If 18 years from now Mateo Manders and Alexis Braverman are married, it's because of their fathers having machinations of real power condensation.

I love that. I love that. Well, yeah, with these types of interviews, I always like to sort of like dive all the way back in people's careers because I think it helps provide some context for the work that they're doing today. And so on your LinkedIn, at least, it says that you just did a single semester at Vassar, but then ended up dropping out and going off to India to find enlightenment. And then, you know, came back to the US. And so yeah, that sounds fun. I mean, I dropped out, but for, you know, much more, you know, boring program where Peter just gave us, you know, $100K to work on startups versus, you know, you went to India. So yeah, walk us through that.

I actually, I tried to get Peter to give me that $100K, but I'd already dropped out. And a very nice lady for him called me and was like, look, you seem like a really interesting young person, but you have to actually be in college to be eligible for this. So at any rate, I dropped out of Vassar because I just felt like, one, $60,000 is a lot of money to pay to do whatever that was. And it was fun, like it was a fun place to be, but I was unsure that I was like moving forward in the universe in any way. And I also at the same time felt like this real draw towards Buddhism where I was like, you know, I don't think I'm going to be immortal. I don't think the science is going to get there in my lifetime. Maybe, hopefully I'm wrong, but I don't think I'm going to be immortal. I don't think my family is going to be immortal. Impermanence seems to be the thing that we all have to grapple with. And so I became really focused on trying to escape from it. I've since made my peace with the fact that that just sort of is what it is. We're lucky to be in the game as long as we are. But that was what motivated it. It was actually, it was like the most sincere thing I've ever done. But I got there and I was volunteering at Mother Teresa's Center for the Destitute and Dying. And one day, one of the ladies who was working there, like, as like a nun full-time taking care of these people, said to me, she was like, look, it's nice you guys come here. Like, she classified us all as like one group. So it's nice you guys come here, uh, but we'd much rather have the money. Like, whatever you paid, like, whatever you paid to get to India and get, get to this place, um, just give us that. Like, we— you're— you don't have any skills. You're not a doctor. You can't fix our sewage system. Like, just give us your American money. Like, that's way more valuable. So I sort of left that with my tail between my legs, and I then went into the mountains of India and just tried to meditate my way to happiness. I was like 9 days into a solitary retreat where I just sort of lost my mind and ran down the hill screaming and then went home. So yeah, and then I founded my first company not long after. It was not terribly successful, but that was enough that I would say I sort of bootstrapped my way into tech. And I ended up meeting Jude and Ahmad through a platform called HireArt that was like, I think it was a YC company actually. And Jude and Ahmad, if you don't know, they were the founders of a company called Heyzap. Now Ahmad is the founder of very well-known Mercury. Jude is the CEO of Golden. And they're two of the world's most interesting humans. And it was just sort of like a gift that I got them as like the first people I ever worked for in tech. And I ended up like through some combination of luck and discovering a skill, On my 9th day of working for them, I onboarded the biggest account in the history of Hayzapp. And I shouldn't say I, it was me and an engineer named Thomas Shattucks who worked together to get this game online. But I realized like, oh, I'm actually much better at sales than I am at seemingly anything else. I should just triple down on this. And I haven't really thought about it much since then. I've just sort of been sprinting in that direction since that day, like 10 or 11 years ago.

Too funny. And so, you know, I'm curious, you know, the company ended up sort of, you know, getting acquired with URX, but it was more in growth. And so was it actually still mostly a sales role, just, you know, titled as, you know, growth? Or what was, let's say, you know, the difference between that role, or how did that sort of come about after the acquisition?

So I, you know, I left HazApp and joined URX shortly before they were acquired. I think the writing was on the wall they were going to be acquired. They were at a point where it was an amazing business. I loved working for them so much. I actually probably at the time didn't value just how good they were and like just what a wonderful experience it was. And like having worked for them and now having gotten to work for Ryan, it's like, you know, it's like several lottery wins in a row. But at the time, I was sort of like, you know, I put my year in here. I think I materially changed the business for them. And I think they would probably agree with you. And then at the time, URX was thought to be like the mobile version of Google, or at least like it was a bet that maybe you had some chance of that outcome. And I met them through one of Hays App's investors and joined very quickly. And it actually, like, in the moments I was joining URX, I was already trying to convince Ryan to hire me at Flexport. I invested my life savings in Flexport. I met Ryan at the dog park. Ryan, for those who don't know, Ryan's the CEO of Flexport. I met him at the dog park. When we were much younger, and we sort of immediately became friends and started walking around the city talking about this new thing he was building. And as part of like me courting him, trying to get me to— trying to get him to hire me, I'd invested every dollar I had in the business. I was like, you know, basically working for free as his sounding board. And I was— before I joined URX, I said, look, man, can we just do this? Like, can I just come work for you? And he didn't actually have the licenses yet to be fully operational. So he said, no, like, there's nothing to sell. Like, it would actually be illegal for, for us to bring you on and for you to do the thing that you do. Uh, so I, I joined URX, and then at some point Ryan got all the licenses, uh, and it just became like very obvious it was the moment to sort of go all in.

And like, what gave you such like strong conviction on it? Because like, you know, in your prior experiences, not like you knew a ton about, let's say, like logistics or shipping or things like that. Like, you were in the world of more, I'd say, like, I don't know, just like standard traditional middle of the road Silicon Valley stuff versus Flexport's pretty far off from that in some ways. What gave you such strong conviction in it?

So most likely the correct answer is just luck. But what I— with the story I'm telling myself is that I was blown away by a couple of things. One, Ryan had already had a company that was extremely profitable, importgenius.com. He and his brother David founded and ran for a long time. When I met him, Silicon Valley circa 2012, it was still a very speculative place. A lot of the companies that today are these juggernauts were still really early. People were deriding them for losing money. It was just a different environment. At the same time, Ryan had this business that printed cash, EBIT margin, that bought assets, and I just didn't see a lot of businesses like that, and so I was impressed by that. I was impressed by the fact that Ryan had walked away from this thing, He didn't care about it at all, despite it having made him personally very wealthy. I was also just— I couldn't believe how bad the websites were of the businesses that he said we were going to go compete against. It wasn't that I didn't trust him, but I went and Googled, what are the market caps of these companies? Is this guy telling me a fairy tale? When I realized, oh, these are abandoned websites from 1997, and this company did $9 billion in sales last year, And Ryan is telling me this is what he's going to build the rest of his life around. It's just like, you don't have to be that smart to be like, okay, I'm going to bet on this.

And so I guess, yeah, he got the licenses a year or so later, you ended up joining, and I think basically immediately on day one, you're Chief Revenue Officer and just like in charge of selling, selling, selling. And so what was—

I just put it on LinkedIn. So he told me he was hiring me, and before we had figured— he said, you know, Ryan is— this is back when Ryan was like a new founder. Ryan has a belief in emergent systems, and that there's more interesting things that happen when you build a system and just see what properties arise than if you try to dictate centrally, oh, this should arise over there, whatever. And Ryan used to let the company really be run in a pretty loose way. No longer the case. Now, we're an Amazon docs culture. Everything's done with 6-page PR FAQs. But this was a long time ago. And so in the intervening 24 hours between when when we finalized my title and he offered me the job, I just put CRO on LinkedIn and started, I started doing outbound as a CRO at Flexport. And at that point it was like, well, the world knows me now as a CRO. And so luckily we ended up delivering on the growth side. I probably wouldn't have kept CRO had we not grown.

So yeah, I guess like walk me through what was the like early sales? Was it mostly to basically the, I assume you have two sides of the market in some ways of like, the folks that are helping you with the actual logistics that you're partnering with versus the actual, what are e-commerce companies or folks that are looking for something to ship? Like, what was the initial seeding of it and where was most of your time focused and how did you convince them, I guess, to shift over such a critical part of their business to such a young startup?

So again, like just so much luck. I happened to meet Parker Conrad like the week I— the very first meeting I took as CRO of Flexport was meeting Parker to learn about how Zenefits was growing so quickly. And Parker just said, look, it's all list construction. If you wanna control your destiny, you need to be methodical about list construction and you need to go and actually go find these customers. He said inbound is effectively a myth. We don't believe in it. We build lists, we attack those lists and we generate enough pipeline to keep everybody well-fed and not even well-fed. He basically said, I wanna break the system. I want every AE's calendar to be so full, the thing just, the wheels fall off. And maybe now with 10 years more experience, He wouldn't say the last part, but the first part ended up being just the most wonderful advice I've ever gotten. And we— it became the foundation of— so we took the, the dataset that Ryan had from Import Genius, which is this enormous dataset of all the goods coming into the US ports. They're categorized by who imported them, who manufactured them, what port they came in. It's really sort of like you couldn't ask for a better, a better seed from which to grow your outbound strategy. So we took that dataset, we started parsing it, and we focused on a few categories. We focused on one, the category where we actually had some inbound, which was Amazon sellers below a certain size that were big enough to do full containers. So we were like, okay, there's a segment of the market that's big enough to spend real money, but small enough that our competitors literally will just hang up on them if they call them. That was really where we started to get well-fed. And then the other thing that seemed to work really well was, was going through the investor network. There was sort of this boom of hardware companies circa 2013, '14, '15, uh, and I don't know that you could build the company the same way again because these companies aren't getting funded anymore. But at the time, those companies were all getting funded. All of them were launching with very expensive air freight. Like, I air freighted in a bunch of Juiceros, um, uh, like one of the— we were one of the last companies to get paid before they, before they wrapped it up, uh, and ultimately we benefited tremendously from that tailwind. And I mean, maybe I'm going to get a lot of flak for saying this. A big part of our outbound in the early days was built around impersonating leadership. You know, everybody does this, or at least everybody competent. Outbound is not something that you can mechanize in a way that a lot of people want to. If you give people these scripts and lists and just say, hey, you have to work in a certain way, your conversion rates are going to be terrible. But if you arm them with all the tools of a sophisticated modern nation state, And you say, look, you can, you can email as an executive. You're going to get access to our LinkedIn so you can see exactly how all the leaders of the company are connected to the rest of the world. We're going to, we're going to maintain this giant list of references. We're going to give you every possible tool so that you can get creative and outbound to these people in a way that doesn't feel like a robot is doing it. And part of that was impersonating Ryan and I. And we had, you know, Ryan P. and Ben B. at Flexwork.com. And the moment they would generate a response, Ryan or I would tag in and the actual— we would lead the sales cycle. But, you know, for the first 18 months when you are a nothing burger company, it is just tremendously valuable to give everyone the power of a title without actually giving them the title. So, yeah, impersonating leadership, early days outbound, I can't recommend it enough.

And how did you think about like building out beyond just like, you know, you guys, the founders, like early hires, building out that sort of like early SDR, BDR, like AE team? Did you sort of know, okay, you know, this is a very particular profile we're going to go for, just like, you know, fresh grads from ASU that willing to like, you know, work 12 hours a week, or is there some level of experimentation of like, okay, let's try like 3 or 4 different types of profiles for these different types of roles, and eventually found, ah, it turns out when somebody has like this type of personality or this experience or this capability, then they're much more successful at something like Flexport versus other types of sales?

Yeah, what we found was in most things there's, there's a real power law distribution between the best people and the rest of the, the rest of the pack. As a result, it's really worth it to spend your time, to spend what feels like too much time building out this organization. And in the early days, one of the number one things that we got flack for was not hiring enough sellers quickly enough. But the reality is we were just being really methodical in who we onboarded. And if you look at the early crew of Flexport, like Justin Schaefer is now VP sales of a Series B company, Taylor Oliver, VP customer success of a Series C stage company. Mariana Kessel, VP Sales at DataGrail. Like, there's just this enormous list of alums of people who came in as ICs at Flexport and are now VP Sales at big, high-performing organizations. And it's partially because Flexport was a good, was a good place to learn. But it's also because we just upfront, we held such a high bar and we realized that one great rep, to Parker's point, if you jammed a great rep's calendar full of 8 meetings, that was way better than 8 reps each having one meeting a day. But the conversion rate of that person actually doesn't go down the busier they get until they reach some extreme breaking point. And so we scaled to a lot of revenue with relatively few people.

And maybe a twofold question, which is like, one, for these people that you brought in that you had a high bar, like how did you filter or like what was the thing that you were looking for? And then two, once you chose them, how did you actually get them onboarded to the world of like shipping logistics, freight, etc., so that they could speak the right language to the customers?

It's so funny, the answer to both of your questions is the same. We effectively hired for intellectual curiosity and energy because so much of the Flexport sale is— first of all, you have to learn this entire new industry. My first month at Flexport was a wonderful gentleman named Michael Backbowl, who's still with Flexport, walking me through on a 30-foot-long whiteboard what a freight forwarder does. Like, here's every step, here's every document, Here's every law. I didn't— I literally did not know what they did. And I think that's true for the majority of the bestsellers that we, that we've hired over the years. And not everybody wants to go through that. Like some people just want to come in and go, oh, OK, we're an email marketing tool. We are sold to this stakeholder. They spend between this much and this much. And our sale is just— it's this long-term consumption sale where you might build one business unit or a second business unit over over 2 or 3 years. It's just not at all a sale that if you're not curious about the customer, you're never going to get these deals done. You're never going to learn the industry. So by hiring people who had enough energy to take those 8 meetings a day we were talking about and the intellectual curiosity to actually be curious in all of those 8 meetings, the problem sort of solved itself. Those people also were able to learn logistics.

And then, you know, let's say, you know, post actually getting a customer excited about it, there's obviously, you know, this isn't like a marketing software automation tool where you can just sort of, you know, hand it off to them and they, you know, can typically start using. You actually, like, you know, deliver on the, the promise, you know, get the goods, you know, communicate well. How did you guys, you know, sort of both, you know, execute that and make sure that customers are successful and, you know, increase wallet share? But then also, how did you make sure to feed that information back to the sales team where it's like, hey, we're actually not ready for like the Fortune 50s yet because we don't have the, you know, infrastructure, you know, set up? Like, how did you sort of balance, um, the both, you know, keeping— getting the customers happy and then also starting to expand what types of customers you can keep happy.

Yeah, so we built the squad. I'm sure Sana talked about this. We've, we very early on, we zeroed in on this squad model where you paired up a seller and what was effectively a very operational account manager at the hip. They are jointly responsible for everything that customer experiences, basically from the discovery call all the way to full share wallet multiple years in. Those two people are end-to-end responsible. The seller more responsible later in the relationship for things like asking for more business, confirming we're going to be renewed, whatever, whatever you want to call it. And the operations manager ended up being this pretty large-scale people manager where a squad probably can get up to 10, 12, even 15 people before we would sort of split the cell and create a new squad. And by pairing those people up, we really diminished the incentive to sell things that were going to break the business because it wasn't just like this esoteric, oh, that's someone else. Someone else is going to have to deal with this. 'But I might still get my bonus.' There was no chance. Not only was there no chance you were gonna get your bonus, you were screwing over your best buddy who was like, you, you know, you and this person have been working together hand in hand on every one of these deals for the last year. If you throw something over the fence that ruins their life, it's very—

it becomes much more personal than, than some, 'Oh, I passed it to another anonymous team in a big organization.' So there's clearly been like a lot of, you know, changes at Flexport, whether it comes from the, you know, uh from the systemic way that Ryan manages the business to even the types of freight that you guys are doing. I'm curious if there was a certain inflection point or moment where you felt quite confident, where it was like, oh, this thing is going to work. There's still a lot of challenges ahead of us, but we've clearly tapped into something that's very unique. When did that feel like it really became clear, and what was that sort of moment?

They were all customer moments. Every time we were surprised when someone either told us how broken their world was when they were a really big sophisticated buyer. Like at one point, like Warby Parker was probably the most impactful sale in the history of the business. They helped us refine exactly what a direct-to-consumer high-growth brand needed. And at the time, like this is when Warby Parker was the number one article in the New York Times for two years in a row. Everyone was talking about Warby. We got them in 2015. They become our biggest customer. They helped us refine the product and they were happy. And all of it, all, it all happened very quickly in like the second year of us building the, building the machine. And that felt like, okay, if we can get them, which is sort of this halo direct-to-consumer brand, we can get every direct-to-consumer brand. So that was a big moment. When Georgia Pacific started paying us to be their like overall management layer. So every, the majority of Flexport customers They pay Flexport to actually move goods from, call it, China to the US or China to Europe or wherever it may be. Georgia Pacific was our first customer and said to us, look, we are too big to buy our freight through Flexport. Like, they're there, and then in their case, they're the second largest importer— sorry, exporter from the United States. So in some years they may even be the largest. They are negotiating directly with the vessel owners. There's just no way a Flexport's going to mediate that transaction in a way that's helpful. However, they said to us, look, you've built by far the best-in-class platform. We audited everybody. We, even though you don't even sell this today, we want the Flexport experience across all of our shipments, and we're willing to pay you like a pretty significant premium to get it. And when they told us that, as this very sophisticated, very large-scale business that was so much bigger than any company we'd served before, and they ended up onboarding something like 75 of their customer service reps to the platform. They all now do their work inside of Flexport. So that was sort of the second— where the first moment was like, oh, we can build this product that allows a direct-to-consumer brand to fully outsource their logistics to Flexport. That can be a pretty big company. The second moment was when we were like, oh, the biggest companies in the world believe they want all of their data inside of our platform. That's pretty interesting. And where we are today, even in the— as the market's been in total chaos this year, we've been able to grow volumes by a dramatic amount, revenue by a truly insane amount. And I think that's probably where I was the wrongest. When we got to a billion in valuation, you know, that round that Founders Fund led 4 years ago, I was like, oh my God, there's only a handful of billion-dollar companies on earth. How much bigger can this thing get? And I was just dead wrong about that. It turns out if your market is big enough and your customers are happy, I was just bad at math. Like the compounding actually happens much, much more effectively than I realized.

Yeah, all the compounding happens in the last 10%. You know, the first 90% is actually, you know, very little of it.

Yeah, again, I'm bad at math and I'm just now figuring this out.

So yeah, I mean, maybe walk me through a little bit of, you know, the pandemic obviously was, you know, changed a lot of different businesses in a lot of ways, but obviously in the world of supply chain, extremely disruptive and continues, you know, to be so. Can you walk through a little bit of just like, was there like a sort of battle room, like, you know, at Flexport where it was like, oh my God, it's like, you know, we're operating in China, we have a little bit of like a heads-up, you know, view on this, you know, vis-à-vis, you know, other people, and like we need to start adjusting. And then even, you know, on an ongoing basis, obviously this stuff still hasn't really settled. Like, what do you think the organization has done well in terms of on-the-fly adapting to such a rapidly changing supply chain?

So chronologically, like beginning in Chinese New Year 2019, or sorry, 2020 rather, coincided with us all globally learning about what SARS-CoV-2 is. Like it was happening exactly the same time that China had shut down for Chinese New Year. Normally the factories were supposed to resume late February and they didn't. So the entire global supply chain just stopped. Our sales dropped by 40%, or, you know, the number of containers we had leaving China dropped by 40%. And then ultimately, there was a few weeks where almost no containers left China. And those were horrifying weeks. We all treat— especially when you get to some level of scale, you pride yourself on being able to at least decently forecast your business. It is horrifying to just see the business freeze like we saw it freeze in February 2020. What happened then, I think, shocked all of us, which was we all were locked in our homes. The government did a stimulus that was unprecedented in its scale and swiftness of deployment. And people weren't allowed to spend it on anything other than physical goods. All of those physical goods are made in a few regions in Asia. All of those goods go on the same vessels across really two major ports in America. And the circulatory system was not able to expand quickly enough to support the deluge of goods that poured into the United States. So as of today, so February 2020, we thought it was the apocalypse. Over the next 6 months, as we really were led by Ryan, Flight Sports business pivoted very quickly into being almost exclusively PPE-focused. From like March through June of 2020, I don't have the exact numbers, but I think we moved something like half a billion pieces of PPE around the world. And it was both the focus of our.org arm and our commercial arm. It was the majority of the cargo moving in the world, like for that first 6 weeks of COVID We were very quick to react there. We also, again, like luck comes into play, we made sort of what some people thought was a strategic blunder in 2018, 2019, which was we built an asset-based air strategy, which means like instead of moving air freight in the belly of passenger planes, so a lot of people don't know this, you can put about 40 tons of cargo underneath people's feet in a 777 that's leaving Asia or leaving anywhere for that matter. And in the old world before COVID with so many passenger flights going Asia to the US, like literally 60 a day in some cases, It was really, really easy to run an air network that was based on around the belly capacity. And because the network was so big with 60 flights a day, there's always an underutilized flight, which means if you're very active in the market procuring that space, you can buy well below actual cost. You can make lots of money as an air freight forwarder and you can sell very competitively to your customer. We were historically at a disadvantage because we built our strategy around freighters. So freighters are dedicated 747s. That have been gutted on the inside where the nose opens up, the tail opens up, and cargo is loaded in by forklift. That strategy is nice in some ways because it gives you a ton of control. It's in some ways a more predictable product. You can move bulkier things. You can move things that aren't allowed in the bellies of passenger planes. But per kilogram, it is a strategy that just costs more to operate. There's fewer of those opportunities to buy excess capacity in the market. There's fewer opportunities to sort of create margin out of thin air. You're running a fixed network and you have the additional downside risk of you're running this asset. If you, every single flight is 100 tons that you're gonna fill up yourself or you're gonna lose money on the flight. So pre-COVID, this strategy was something that we really did a lot of soul searching about where it was like, man, we thought we were optimizing for a quality product, but we might've priced ourselves out of the market. Fast forward to 6 months into COVID, It's clear that we're not going to get back to 60 flights a day from Asia for a very long time, at least not for another couple of years. The freighter network that we've built up in partnership with Atlas has turned out to be this enormous gift to both Flexport and to our customers, where we've had a huge amount of space that was incredibly reliable at a time where the air market is— on most weeks right now, you're 4 or 5x the historical norm per kilogram on the air. This month on the ocean side, For a little bit of context on ocean freight, at the peak, the Port of Long Beach was seeing 50% or 60% more containers showing up in a day than they'd ever seen before. The terminal just couldn't process it. Even today, there's not enough empty containers making it back to Asia fast enough. And the carriers are really in a tough position where they just don't have enough capacity to fulfill global demand. As a result, the prices in the market have gone up to $22,000, $24,000 a container. A couple of years ago, it was more normal to see $2,500 a container. So we're looking at 5x the norm on the air, 10x the norm on the ocean. And the net result for Flexport is incredibly positive from a gross margin realization perspective. Like with prices this high, you just, you do make a bit more money per transaction. The problem is we are maxed out on capacity. We have, we cannot, you know, the limit for our growth right now is purely can we get more space on vessels? Can we lease more aircraft? There's sort of unlimited demand because we've been able to move in many cases, I think, more quickly than some of the traditional folks to add new services or up— even doing something as simple as when the prices have changed so dramatically, it's tough if you don't have a good inventory system to update your customer on what price you actually have to pay to get cargo moving. Like it may be from week to week that $18,000 last week got a container loaded onto a vessel. And in real time, the market has changed so much that same $18,000 rate no longer gets the container loaded. Obviously, if the customer knows this, they'll gladly pay $19,000. Like, it's like that extra $1,000 is surely better than not making— not living up to your commitment to one of your customers. But if you don't actually know that and you don't have the inventory system that says, hey, we have this slot available on this carrier for $19,000, you can't solve that problem for that customer. So, you know, you sort of put all this together. There's more demand right now than we can— that we can get capacity for. I think we've turned down hundreds of millions of dollars of bookings in the last few months. Let me put it that way.

Maybe like a twofold question, which is, you know, one, do you feel like because Flexport has been such a software-driven freight forwarder obviously since day one, do you feel like you guys were just so well suited for an environment that was so volatile? Because obviously software is better at dealing with real-time pricing and adjustments and understanding this stuff. And then, you know, second question being, As you've sort of realized you had to turn down hundreds of millions of bookings, has there been sort of a shift towards, okay, do we have to go even more full stack in terms of starting to lease more and more assets and running more of it ourselves as opposed to having to book on other people's services?

Oh man, look at the big brain on you. No wonder you're building factories in space. Yeah, that's— so full stack is exactly the direction that we have to go. In a world where you just cannot hit your— we're still exceeding our growth goals. Thank the powers that be in the universe, God, whatever you believe in. We're still hitting all the goals. But it's terrifying to know that the limiter is an external variable. That unless we start building vessels, which is unlikely to happen anytime soon, there is a variable that is outside of our control that we cannot build or think or execute our way out of. We've got to develop relationships with these carriers and we've got it to your point, we've got to build more, more of a full stack for our customers. So I think you're going to see a bunch of new stuff coming out over the next 6 months that gives customers more ways to stay on platform with Flexport and allows us to keep growing even if we can't get incrementally more space on these vessels.

It's super exciting. And then, yeah, can you maybe talk through a little bit of just like how being a software-driven freight forwarder has allowed you to adapt in some of these scenarios vis-à-vis, let's say, more traditional providers. Totally.

So in some cases, like the great example is the Trump tariffs. When Trump was announcing these tariffs, the world was shocked, like shocked not just because it was unprecedented in how aggressive they were getting, but just like there was no preamble. It was just, hey, we're doing this. It's effective immediately. Have fun. And for a lot of our customers, the moment those tariffs were announced, it fundamentally changed the economics of the businesses they were in. If you're selling some durable consumer good, a 25% change of your cost of bringing it in the US, it may be that every single one of your retail relationships has to be renegotiated. It may be that you should stop importing that product altogether, or at the very least, you need to be aware that the economics have changed. Because we have this real-time living product library of every single thing Flexport is moving at every second of every day, we can see in real time, OK, Here's all the tariffs that Trump just announced. Here's every Flexport customer that's affected. Here's the projected financial impact. Here are the customers that we think we can dispute it. And we were able to alert these people like within 24 hours of the announcement. We were having the meetings that week with the customer on how we were going to deal with it. They were then able to go back to all the rest of their supply chain and say, hey, here's the decisions I made as a result of tariffs. And it may, I mean, it may sound crazy that like having a searchable database is a big competitive advantage. But in our industry, that was like— it was amazing the gratitude our customers had. We were able to do that. Another example is when Hanjin collapsed and all of this cargo was— those of you who aren't big, big shipping groupies, about 7, 6 years ago, one of the big shipping lines went bankrupt. It was called Hanjin. And all of this cargo was held hostage on the water as Hanjin negotiated with their creditors. And so for 6 months, People had all this cargo stuck in limbo. People, you know, really big companies didn't know which of their, which of their containers were on Hanjin ships and which weren't. Therefore, they didn't know which of their retail partners to update and say, hey, we're not going to deliver on time. It was just, it was chaos. And it really, one, it showed our customers how important it was to know where your stuff was, which is like if the universe is going to deliver a message to the market in the same year that Flexport's being founded, the message we wanted it to deliver was, hey guys, it's really important to know where your stuff is. You should have a platform that does that for you. So you couldn't, you know, you couldn't ask for something better from our perspective there. And the market, again, the pricing in the market changed really quickly. And I'm not sure if it's because we're a tech company or it's because we're just playing a longer game. Our competitors, when the market changed, like in, in, when the market changes, our competitors tend to want to profit take. They tend not to want to do the deal with the overhead of renegotiating with a carrier to try to get a customer loaded. There's all of these things that happen when the market is disjointed that either require more work or may require you to sacrifice margin in the short term, or at the very least require you to act very quickly. All of these things are made easier by software. And it's like there's not one silver bullet that I can say, oh yeah, this is, this is, this is why we're winning. But across the last 10 years of turmoil, I think Flexport has been in a good position every single time the market has done something crazy. Just because our team's on, on the platform together. We see what's happening in real time, we communicate it back to our customers. And like, none of this stuff is— it's not rocket science. We are literally not doing anything nearly as complicated as what you're doing, but we're, we're, we're just serving our customers in a way that they're not used to being served in our industry.

Speaking of turmoil, can you talk through maybe just like the, you know, Suez Canal incident, and then, you know, if there's any interesting like, you know, adaptations or issues that you guys, you know, had to deal with to, you know, work around that for some of your customers?

The most interesting thing from my perspective, I was so impressed. Ryan got a children's book written and illustrated. He wrote it and then had one of our designers illustrated it within 2 weeks of that incident. And they went crazy for Egypt. It's like the most popular children's book of 2021 in Egypt. So on a personal note, that's one of my favorite things that happened in the whole Suez debacle. But for again, it was another example of if you were a Flexport customer, during the Suez debacle, and it wasn't just that vessel impacted, it was all the vessels that then couldn't transit the Suez. If you weren't a Flexport customer, you were scrambling trying to figure out how are we impacted, which products are on which vessels, how long is this delay going to be, what's our lead time if we want to have new SKUs leave the factory. All of these things that our platform just lets these folks dive into in real time. If you didn't have Flexport, you had to do all this work. Uh, and in many cases you had to like get data from people that they were hard to get data from. Uh, it was just another example of, yeah, it was difficult. I'm sure the ops team would think I'm crazy for saying this because they were going through this living nightmare of trying to reroute all this cargo. Uh, but it was another example of like chaos generally being good for Flexport.

So right before the pandemic, you had a, you know, shift in your role. Maybe it was just, you know, more entitled than actual like responsibilities, but at least on LinkedIn you have it shifting. No, no, no, it was really— Yeah, yes, I guess walk me through that shift, you know, whatever, 6 and a half years into being at the company, how did that shift come about? And, you know, what was the sort of change in focus?

Yeah, I mean, ultimately, so the gentleman who took over, his name is Will Urban. I love Will. I actually brought Will to Flexport as an advisor because as we were maturing, it became clear that the problems that we had, you know, I originally would, as I was becoming the late-stage CRO, I was studying these CROs of tech companies. And I was realizing so many of Flexport's problems were not problems that the SaaS companies had solved. Like forecasting a SaaS company is so different than forecasting our consumption business with so much price volatility. And there was sort of a limit to how much we could learn from the best-in-class SaaS companies. And also there was a limit to how much we needed to focus on growth where the growth was happening pretty much with or without me. At a certain point where the machine was just gonna keep growing and the snowball's gonna keep rolling down the hill, but the transactional excellence and really unifying the commercial org in a way that allowed operations and the customer to be served in a way that's end-to-end and for the teams to be able to focus on transactional profitability, it was just really helpful to have someone come in. So in Will's case, he ran the Western United States for Expeditors, which is the most profitable per transaction freight forwarder. It was just really useful to have someone with that skill set who solved a lot of these problems before come in. And although like it is pretty brutal from an ego perspective when your world changes to that degree, however, it was very much the right thing for Flexport. I think Will's doing an amazing job. And if you look at the numbers, like our transactional profitability is getting better. And I right now mostly focused on building a few new things on the side for that are for Flexport, but that haven't launched yet. And then I've been, you know, we've been running the Flexport Fund where we've actually like very quietly done about 80 investments in the last 6 months.

Yeah, walk us through the Flexport Fund. It seems like a very interesting model. Is it sort of fully on balance sheet? How do you guys think about sort of the types of things you invest in? Because you guys have also invested in a variety of companies that, you know, I've been investing in. So it's been interesting to have you guys as co-investors. So I'd love to understand, yeah, what's been the sort of strategy thesis behind that? Do you think that sort of, you know, more corporations at your guys' scale should be doing that to keep a pulse on sort of the up-and-coming new innovation. Yeah, I'd love to understand it.

So when I look at the fund, it's one of those things where there's so many virtuous things happening in parallel that I'm surprised more companies don't do this. And I think in the long term, more and more like great companies that have more cash on the balance sheet than they can efficiently deploy into the core business, I think you're going to see more folks doing it. Because we're Flexport. We sit at the intersection of these 10,000 customers, or however many it is, that we've spent all this time cultivating this really close relationship with. We've got thousands of vendors around the world that we also spent all this time cultivating this very close relationship with. They're on this platform together. We ourselves are this enormous buyer of software and service from other tech companies. And if you put those three things together, you know, and then the fourth track is we've raised a significant amount of capital from people that we respect a whole heck of a lot. And so we see their deal flow. We see which of their deal flow is applicable either to our customers, to our vendors, or to Flexport corporate itself. And if any of those 3 boxes are ticked, or if it's just something that we're like, hey, we're going to learn a lot from this founder, we're going to learn a lot from this new business model that someone is building. For all those reasons, we were able to put these small checks in and they get accepted because Flexport's brand is good. We run this really operationally complex business. And the thesis of the fund is that if we open our doors and say, look, if you want to talk to an executive who manages the $2 million accounts payable, accounts payable that we have to do every single month and is in charge of automating that, I'll introduce you to them. If you want to talk to Jen, our chief impact officer, about how she views our org chart and if she's willing to put it in public, great, I'll connect you to her. There's all of these people in our company that I think are useful to these founders. Flexport, in some cases, can become a customer ourselves. And in some really special cases, particularly in the cases of companies that are selling adjacent logistics products to what we do, we're able to go, okay, look, send us your ideal customer profile. We'll come back with 25 that we think are a great fit and we'll go co-sell them together. And I'll try to drive revenue from our platform into your business. So it just feels like this thing that's very low downside. Like we're deploying relatively small amounts of money, $100K checks. We're occasionally leading smaller rounds into companies that are founded by ex-Flexporters or doing things that we think are really strategic. But for the most part, it's deploying small checks in a relatively large quantity. And we're keeping the option open to double or triple down on companies that are either going to build on top of the Flexport platform or that are just sort of absolute winners.

So I'm curious, like, you know, there are many employees that will join an early-stage company and it experiences such rapid growth that they manage to not really scale up with the company even for like a year or two. Versus, you know, for sure at some level of scale you guys brought in somebody with this very particular, you know, domain expertise, but you still scaled with the company for a very extended period of time. What do you think you sort of, you know, did well vis-à-vis, let's say, other peers at other companies, uh, you know, in terms of being able to continue to, you know, scale yourself, adapt, get new skill sets? Like, was it having a set of mentors for other companies? You mentioned meeting with Parker Conrad in, like, you know, the first week of the role. What do you feel like set you up for, you know, success and, you know, being at a company now, again, you know, whatever, 7 years in and still having a lot of impact at it?

You know, I think I was very fortunate in that I was so outclassed by the opportunity on day one that I didn't have any delusion that I was like, oh, I'm good. Like, I can just, I can just show up and I'm going to nail this. Like, I knew from day one, like from the moment Ryan said yes, and I felt that shudder of just like, oh my God, now I actually have to do this. I really felt the pressure and the weight of this is, this is the biggest opportunity I've ever been, I've ever had in in front of me, I need to give this sort of everything. And I think one of the other things that became clear pretty quickly is if you're working on a company that that descriptor is true, that you're just like, this is the biggest opportunity I'm ever going to work on, you have to subjugate everything that you feel to what the company needs. And the more you can do that and the more you can sort of dependably for the founder that they can just trust that in any situation, any moment, you are always going to do the right thing for Flexport, almost to like a real— with like religious fervor, like that you—

that you—

there's— there's never a moment where you will ever go, oh, this is slightly better for me. Maybe it's a wash for Flexport. I'm going to do that. Like, you can't ever even get close to that line. And if you operate that way, you end up just getting an enormous amount of trust in the organization because like the founder doesn't have that many people for whom they believe that to be be true. So that for me was sort of like the foundation of how I was able to get enough leeway to rebuild myself like every 12 months. And then, you know, the other part is I sold a lot. Like, you cannot keep these jobs without selling a lot of stuff. It's sort of like Elon's thing. Like, if we don't build stuff, there is no stuff. If you don't sell a lot of stuff, you are not going to lead sales. And I don't think anybody wants to work for a sales leader who has not sold a lot. I don't think I would be excited to work for a sales leader who's not— who couldn't go in and show me how to dance in a way that I don't know how to do myself. And I think because I was consistently delivering on that, and because Ryan just trusted that in every moment I was always going to err on the side of what is best for Flexport, I had a lot of then breathing room to get better at the things I wasn't as good at.

Makes a ton of sense. Well, Ben, it's been a really, you know, fascinating conversation, and truly appreciate you, you know, coming on to walk us through all this stuff. Some really great stories.

Yeah, man, thank you so much. And while I have you on here, can you tell the world more about the space factories? And in particular, like, is there enough raw materials in space to produce, like, an amount of stuff that would be worth bringing back to Earth? Or are we making stuff in space just for consumption in space?

So I'll give some, like, you know, one-liner answers to that, which are Varda is explicitly working on space manufacturing for Earth. So we build stuff up there that we bring down here. And the sort of explanation for that is, it turns out there's a lot more buyers on Earth than there are in space. And then in terms of the raw materials, for now the supply chain looks like bringing the raw materials up with you on the rocket, and then fabricate them in the factory, and then bring them back down. And so it's focused on this stuff that's sort of viable and commercially pragmatic today. For sure, over time, do we eventually sell stuff in space, and do we eventually get raw materials from space? Maybe, but the nearest term thing is bringing the raw materials from Earth and then also deliver the finished product back to customers on Earth since there's a lot more customers down here.

Is the big upside that you don't have to overcome as much gravitational force, or is the big upside that you can just pollute to whatever degree you want, or why are we going through all this trouble? I'm sorry. The only reason I'm so curious about this is Ryan and I were talking about this the other day, and I'm on the side of let's make everything in space. Let's figure out how to harvest from up there and let's make everything up there and we'll just drop it down where people need it. He was saying he thinks it's a little harder to accomplish than I'm realizing.

Yeah, unfortunately I don't think that's gonna happen anytime soon. Like, you know, when Bezos talks about let's take all polluting industry and move it off space, it's like, well, let's take cement pouring. You know, if you take the cement up to space and then, you know, manufacture it up there and then you have to send it back down, turns out that's more pollutive than just like sticking with making the cement, you know, down here. So that doesn't really make a ton of sense. There are certain materials though, in particular, types of sensitive, high-value materials, things like semiconductors and fiber optics on the material side, or on the more biologic side, pharmaceuticals, organs, things like that, where you need molecules to stay in very particular structures or formats. And that's a lot easier to do when you don't have to deal with gravity, because you can manipulate them much more precisely, versus on Earth, there's lots of things that will cause it to move around, even if you have it inside of a very protective chamber. Just if one part of the molecule or the protein or the crystal is hotter than the other, there's sedimentation convection. The way that I sometimes describe it is on Earth, you have the idiom of hot air rises. That doesn't happen in space because there's no up or down. If you have a candle that's on the International Space Station, it just heats the air around it and then it very slowly diffuses that heat throughout the space station, rather than if I put a candle on Earth, all that heat goes up. It turns out there's a lot of material science processes that are much better controlled, you can make much higher quality products, and they're so high quality that people are willing to pay for the cost of having them sent to space and sent back down.

Well, I did this podcast just to ask you that question, so now we both got what we wanted out of this.

Thanks, man.

I appreciate it.

I'll make sure to include it in the recording. Uh, okay, thanks so much for coming on.

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