Ryan Petersen, Founder & CEO of Flexport

I'm Jessica Livingston, and Carolyn Levy and I are the Social Radars. In this podcast, we talk to some of the most successful founders in Silicon Valley about how they did it. Carolyn and I have been working together to help thousands of startups at Y Combinator for almost 20 years. Come be a fly on the wall as we talk to founders and learn their true stories. Today I am so excited. We are here with Ryan Petersen of Flexport, which is a platform for global logistics that went through YC in 2014. Welcome, Ryan.

Thank you. Yeah, it's great to be here.

Can you do me a favor and you describe what Flexport does just for the audience?

Yeah, well, Flexport is a technology platform that makes it easy for businesses to get their products from wherever they're made anywhere in the world into the hands of their customers. And we do that by connecting all of the world's logistics assets. So air freight, ocean freight, trucks, rail, warehouses, customs agencies, governments, insurance companies, and banks. And you have to connect all of that complexity together to make the cargo flow seamlessly, even as it crosses borders and changes title, changes hands a dozen times throughout the way so that the customers don't have to think about any of that. They're just kind of getting a price. And they can do, we can do it in any quantity, whether it's like full airplane load of cargo or containers all the way down to individual parcels. So yeah, very complex business. We try to make it simple for the customers so they don't have to think about all that complexity.

Thank you.

So let's go back to when I first met you, which was on the stage in the fall of 2013. You did office hours at Startup School. With Paul and Sam Altman. Do you remember?

Of course. Uh, yes, before I did YC, like before you did YC, or 6 months or something before or something.

Yeah, it was in the fall.

You can probably tell.

No, I listened to it and you didn't seem nervous. But let's talk about how quaint it was that back then you described yourself as a U.S. customs brokerage company built around a web application.

It's been the coolest part about Flexport is that our vision keeps growing. We keep learning more, keep extending it, learning more about every aspect and then being like, oh, we could go further. We could do more. Now we have giant fulfillment centers that we can ship. We ship 40 million packages to people's doors, small package to a consumer's house. So you'll start seeing, if you're not already, well, you're in the UK, Jessica, but in the US, it's only in the US so far. But, uh, if you order something on like a Shopify website, it's very likely to have a little Flexport logo on this, on the label.

Oh my God. All right. Well, we're going to talk about your journey. I'm going to need to apologize right up front. I feel like I'm going to be very frenetic today, more frenetic, Carolyn, than I normally am because I have all these questions. But just before this, I listened to the YouTube interview that you did with Gary. I have an hour's worth of questions just on that interview. It was so fascinating. Like I didn't know all this stuff. So I'm going to be all over the place.

Great. And by the way, on that topic of the custom, you know, we started with customs. I don't think we had some ambitions, like we wanted to do freight, but like the ambitions keep growing. I hope it keeps growing. You know, I hope we keep finding new things that we could do that we hadn't thought realized for problems.

You said in the Q&A, I have it written down. I hope to enter the logistics space, freight and warehousing.

Okay, good.

I did say that.

I mean, ambitions, but like, you know, we try to keep it simple. And in fact, what we found was that when we started out and we did YC, like the pitch during YC Demo Day was we're a customs broker. And we, we wanted to just stay focused on that. Like that was all the advice we got from smart people is like, do one thing really well and then start doing more stuff. But whenever we talked to customers, they were like, well, the customers that we got that just wanted to do customs and not do freight, like separate customs clearance from the freight.

Yeah.

They were always up to something weird or they're just not good customers.

Oh, interesting.

Like, it was like, you know, the importing a tuk-tuk from Thailand, went on vacation and bought a tuk-tuk. It was like, this is not going to be a long-term recurring business model. Uh, some guy bought it. It looks like a little motorcycle taxi, right?

Yeah.

Yeah.

Yeah. Someone was willing to ship the freight, but didn't want to deal with the complex regulations of like DOT, EPA, whatever else has to happen for that. You know? Found all these problem cases. Whereas whenever we talk to a real company, like an upcoming direct-to-consumer brand, a lot of our early customers were YC startups. Like Boosted Boards was one of our first customers.

Oh, no way. Yeah. That's cool.

You like cart? Remember the tablets?

Yes.

Yeah.

Yes. Presto.

YC customer. Yeah. Those were some of the early customers and they they were like, well, I don't want to you know I'm trying to buy air freight and customs. As a package, like, why would I separate these things? So we very quickly had to go into freight forwarding.

So your customers basically dragged you into the freight forwarding business.

Yeah, we always wanted to do it, but we'd have liked to be like much better at customs, be like the world's best, most ironclad technology provider for customs and then go extend from there. But we had to extend and then it's been like a nonstop decade-long race to like keep up with customer expectations and them wanting us to do more.

Okay, put a pin in that. I hate that expression, but put a pin in that because I just have to ask you, this is what I heard in the Gary interview. Your parents, your mother was like the leading expert in food safety and your dad was a programmer. I had no idea.

Yeah.

You know, Ryan's mom has helped some YC startups, like for free. She's just, she's helped some biotechs.

Really?

Yeah, I think so. Right? Isn't that right, Ryan?

Yeah. Food, uh, food people doing food safety stuff. For like food, food products. Probably Soylent was one of them. Some of these companies were trying to do so.

And you, you said that you and your brother David used to like supply her, you know, work kitchen with drinks and snacks. And so you'd go to the store and then you'd charge her presumably a little bit more and stock it and everything. Like, so you were entrepreneurial.

Yeah.

And then Dad taught us to write, uh, software, uh, to that week so we could generate invoices, you know, to submit the invoice to her like accounting team to get paid. Look like a Ryan Soda delivery company or something.

Yeah.

I love that.

That's great.

That is so fun. So you, this is like practically inborn, like with you.

It seems like it. I didn't think about it at the time, but it's all about your role models at the end of the day. I think like that's a huge, important aspect of life and that's really underrated is picking, you know, surrounding yourself with smart people who are doing ambitious things and My mom and dad were both those things, but my brother was just a real born entrepreneur as well. And he had one particular friend, his college roommate, who was just like super entrepreneurial, like couldn't help himself. My brother's 3 years older than me and they had started as entrepreneurs. And like when I graduated from college, I just started working for them. And that's how, that was like really, I give my brother more credit than my parents for it. But of course, you know, we're coming from the same stock.

So. Yeah. Now Y Combinator funded David in winter 2013. So a year before you came on with Flexport, we had funded his company.

Yeah.

And so you had, you worked for that one or an earlier, because you'd been doing your own companies for like 10 years, right?

Yeah. 10 or 15 years before YC, my brother and I had a lot of businesses together and he kind of left and spun off and did BuildZoom, which was the one that went through YC in '13. And then I sort of spun off and did Flexport. So we sort of co-founded each other's companies and helped us, helped each other build. We started to realize we were kind of better advising each other than being in the trenches working together every day. And so, yeah, I never really worked on BuildZoom, but we both kind of worked each other on each other's stuff all the time, helping each other.

Okay. And what did he tell you about YC? Like, did he give you the inside scoop on his experience?

He helped me, you know, connect me the interview on Startup School that I think Paul put out to like the YC community. If anybody knows like a startup that's thinking of applying for YC, we want to interview a few people, uh, on stage. And so he suggested me and they got, and I got chosen. So obviously he helped me get in. Yeah, I think he helped me a lot in kind of understanding the landscape. We're both kind of outsider, like we've done a lot of tech stuff, but we never raised venture capital. We weren't in Silicon Valley. We we built software companies, but like outside that world. So just helping me understand like the investor game, which parts of YC's advice I should listen to, and which part you should just have your own opinion. Which part? Well, for example, I think YC used to be really strict about like don't talk to any investors until demo day.

Yes, correct.

And I would got like inbound from Google Ventures like. Halfway through the batch and they wanted to invest because I had like a friend of a friend who was part of Google Ventures and they were like wanting to invest. And like, so YC is like, don't, don't take anybody's money. My brother's like, definitely take Google Ventures money.

You don't regret taking their money then?

Uh, no, no, no, not at all. I think it was good for us, but you know, every company's, it's very hard. YC has a hard job, like giving the same advice to every single company is not, that's not what they do. They'll give each company unique advice, but, uh, it's true.

I will say for the majority of the founders, maybe not They get inbound calls from people who weren't very serious, and they'd waste all this time having meetings and getting to know each other and not building their product. And then they'd be caught like on demo day with nothing to present, and they'd fail to raise money. So that's what we were trying to prevent.

Totally. 100%. I don't disagree with it. I mean, I think that was the right advice. Well, like, you know, they're ready to write a check on good terms. And, you know, my business is unique because we're a freight customs business. It's like, I mean, every business is unique, but in that space, I really thought Google was the best possible investor for us because like everybody knows Google, but in our industry, which is like old school logistics industry, no one knows Sequoia or Andreessen Horowitz. Like maybe they're more famous VCs, but like in that space, you're like, that's not remarkable that you were funded by Sequoia. They're like, whatever.

Right.

But when you're like, hey, we're a customs broker funded by Google, Customers, like, it's actually almost an intelligence test. Is that interesting for you? If so, like, yeah, yeah. Like, you're going to want to, you'll want to talk to me. And if not, like, I'm like, well, maybe you're just not that interested in technology or what's happening in the space. So, uh, it was, it was like, they were like really high on my hit list. And anyways, my brother, um, yeah, gave me good advice on, on YC. I, I, I, I managed, I think, to, um, be, uh, because he was already kind of had made some good relationships with some of the YC partners.

Hmm.

Helped me to kind of build more like, I don't know if I was a peer, but like a little bit closer relationships with some of the partners that kind of already knew me or knew my brother. And like they were, helped me a little bit with the relationship side of things.

All right. I want to dig into like, go back to when you started Flexport. This industry was so backward. Why was it so backward? Who were your first users? I mean, I, People were using fax machines in 2013, right?

So can you— Pieces of paper are still part of the process by default. You have to opt out, uh, of having a piece of paper serve as title for your goods.

Wow.

And getting a piece of paper flown across the ocean, uh, to, and have to in a race to get there before the container does, uh, so that the new owner can take it. Um, It's an ancient industry, you know, thousands of years old, moving cargo around the world.

Yep.

And one of the oldest industries, and it's really complex and global. The fundamental problem is that for a container to move, let's call it from Vietnam to St. Louis, there's no one company that owns all of the logistics assets from door to door. that would have trucks in Vietnam, container cranes, port loaded on a ship. Like, there's not one company that can do that. So it's a fundamentally, it's a complex coordination problem. Like, you have to get lots of different companies on the supply side of this to execute a transaction. And these are legacy old school companies that own trucks and ships, and they're not sophisticated IT departments if they even have software at all. And so if you want to coordinate that in today's world, pre-Flexport, and to an extent Flexport doesn't get to change the whole world overnight. So still this exists is like you have to either integrate with those systems or build new systems and convince them to use your system. Like there's got to be some way to get data in and out of these parties. And so it's called freight forwarding, but I often joke it should be called freight email forwarding. You're sort of passing data along. as Excel attachments. And, you know, the world is sort of running on these CSV PDF attachments on emails. It's really like the backbone of the global physical economy.

Amazing.

Getting pushed around on emails. I mean, we're willing to send emails and make phone calls. That's differentiated us from other tech companies that have approached this industry and said, well, if I can't do it with all tech, we're not going to do it. And we sort of take that approach of like, no, we're here to solve customer problems. And if Do things that don't scale, right? If I have to do it with people emailing them and calling them, we do that. And then we come back though and build the systems, either systems integrations. It's a lot of kind of API connections, EDI connections. EDI is like a predecessor to the API world of how businesses talk, software talks to each other. And then in many cases, we found there's no system at all. Like you go to a warehouse and there's a guy with a clipboard. You know, paper, just writing down what, what's arrived. And then a woman in the office has like an Excel file. And at the end of the day, he hands his piece of paper to her and she puts it in this Excel file. I'm like, how am I going to get data from this?

Like, data entry, you know, like, wow.

So we ended up going to build over the last decade software for these people. So now we have a warehouse management system that we deploy to these sites and they run our software. So we're getting real-time scanning in of items, feeding that in. We've built software for trucking companies that had no similar thing. Like, how do you communicate with the driver? Oh, they text them. And so we've built mobile app for truck drivers, web application for the dispatcher that's assigning them loads, telling them, go pick this up here, as well as just software that assigns loads.

Are you building all this or is Is this custom software or are you putting pieces together?

Yeah, we build it all.

We'll use other software too. Like we use, we basically build all our own software. The one place we haven't is for, uh, integrating with government, with customs agencies around the world. We integrate with US customs ourselves directly, but there's hundreds of government agencies. We ship cargo all over the world. And so we use like other people, there's other software companies that have done these integrations and we'll integrate with that. like integrate once and connect to like 20+ governments or something, right?

So, so I'm already overwhelmed. All I can think of is like, this is one of these ideas that's very sort of unsexy, but so broken and a giant opportunity to, to improve this. Did you think like, this has to be fixed? This is a great opportunity. I'm excited about this because you were working on that import-export company beforehand.

Yeah.

So I was a customer of these companies. My brother, you know, I mentioned when I graduated from college, I started working for my brother. So he had a business, uh, buying motorcycles. motorcycles in China and selling them on the internet. It was like an early e-commerce company. We built our own web stores, you know, we didn't use ViaWeb, but like it was before Shopify, probably after ViaWeb, before Shopify, we were in that window. And so we built our own e-com sites and inventory management systems and we were shipping motorcycles. So when we would deliver to a customer, it was heavy. A truck would have to come and pick it up and bring it to the customer. Even though it was like an e-commerce site, it wasn't FedEx, right? It was like big trucking companies. We're able to integrate outbound from our warehouse to ship. Like we can check rates with a bunch of trucking companies and book, have a truck show up and take the truck away, take the bike away without us doing anything. Like we wrote the software for that. My brother wrote the software for that. And then we try to do stuff on the inbound side of like, okay, let's get, we're shipping a container. Can we get rates on what that's going to cost us and clear it through customs? Collect all the documents. And we were finding like the customs brokers and the freight companies would only work on email and PDF. Like it was just like, wait, what is this? Like you have to call them. They, and so it was one is the lack of tech. And 2, every time we interacted with them, it seemed like they were ripping us off. They would tell us this is the price and then it would arrive and they would be like, all these other fees they didn't tell us about. And they're not going to give you the motorcycles until you pay these other fees. And we didn't have a lot of money. We were totally bootstrapped. And so then if you didn't have the money every day, you didn't pay them, there was an additional fee.

Oh my God.

And so we had these like horrifying death spiral incidents where mom had to bail us out a couple times and give us like a $10,000 loan to save our ass. And like, it was just like, we, and so we started, we were just like, man, this industry's just like so big, massive, and broken. And the entry point, we, decided was the customs brokerage because that's where we kept having these pain points of like getting the goods released at the port, understanding all the fees. And fundamentally, it's a nice high margin business and it's compliance oriented. So you really need data. You need like good— we saw this opportunity to build like a really nice data architecture, database-driven system to collect all this data, reuse it, collect the documents, have like a repository, So that was like the early product vision. We didn't anticipate, you know, like I said, we got kind of dragged into the freight business. So I hadn't, I had experienced it from the customer experience side. I hadn't worked in the industry, so I didn't really appreciate the nuance of like, I hadn't mapped it out on a whiteboard and said like, oh, you know, there's these 12 companies involved and their IT systems are outdated or don't exist. And like that problem we discovered like You know, a couple years into the business, you're like, oh, this is like a lot more software, a lot more challenge, a lot harder business than I expected. Um, but you know, you don't, you don't make money doing easy things. I constantly remind my team of that.

Like, no, but this is like not only difficult, but it's like highly regulated and there's different governments involved from start to finish. Like what was the first lowest hanging fruit? You, you said it was doing the customs documentation into the US.

You know, and we actually, speaking of which, when I was in YC in 2014, there was a government shutdown. You know, maybe it was 2013. I'm trying to remember. I did YC in 2014, but I'm trying to remember when the government shutdown happened. The government was like furloughed, this thing that happens every year with the debt ceiling or whatever. And they had an actual government shutdown. It happens like every 5 years or something. So we had been licensed, but like customs wasn't like issuing our license or something. So we were stalled in the very beginning for like right away. You're like, oh my God. I'd already, by the way, spent 2 years, had to go through an FBI background check to get the license. So I worked on before YC, I, I started working on the business 6 years before YC.

There's like a secure, some level of security clearance you have to get.

Yeah. FBI background check. Make sure you don't want like criminal people, like customs brokers have access to a lot of stuff and like clearing imports and falsifying that. There's a lot you can do, whether it's counterfeiting or Weapons, drugs, whatever, right? Yeah. So they, they wanna vet everybody who's a licensed customs agent.

What, 2 years it takes you to get vetted?

I think it took like about that. No, I don't know how much at that time they were working on it. I wasn't like they were, you know, interrogating me for 2 years or something. It was just in the queue.

They do call your family though, right? They have to call your family and your friends and—

They, yeah, I think they did. I never really got like a lot of a color of what happened on that, but they, um, because they weren't really just investigating me personally, it was investigating the I do remember once though, I got this very suspicious— I used to answer the phone calls for Flexport. I probably should do this more often, but, uh, used to answer the phone. And, um, the, uh, I got this very suspicious call once where this guy was like, hey, I've got a bunch of guns I'm shipping from Mexico and I don't have the invoice. Can you help me import these things? But I was like, well, you're going to need an invoice. Like that's required by law. He's like, well, they fell off the back of a truck. I was like, sir, I'm not going to be able to help you with this. I'm, I'm like 95% sure it was an FBI agent, like testing if I, if we were like legit or if we were I kind of think so. I mean, it was too obvious.

Doing the worst job ever.

Like, it was too obvious. Like, if you were actually trying to import these guns, you would tell a better story, right? It was like—

Fell off the back of a truck is like a mob movie.

Literally said that. And I hadn't heard that expression before. I was like, oh, they fell off the truck, huh?

Um, sir, I'm not gonna be able to help you with this import.

Yeah, I was like, it was like my spidey sense went off. I'm like, this is— I gotta passing this FBI exam right now. But actually, you know, it's another regulatory thing that YC indirectly— YC, Ron Conway saved Flexport once. I've never really told this story.

Oh, tell this story. We love a good Ron Conway story.

It was during or right after YC. It was like, and so we had been issued a license. Originally, the license that we had for weird reasons was in Texas, in Houston, Texas. And we wanted to transfer it when we came to YC. We're like, we're going to be a San Francisco company. So we transferred it to San Francisco and you need a business license. Everyone needs a business license. This is like business 101. You got to get a business license in order to transfer it, get the San Francisco business license, then like file that paperwork with Customs and Border Protection. Should be straightforward. Well, San Francisco, although we had a business license, could not print the business license. They had a problem with their IT system. And, uh, we went through this Kafka-esque routine where they would print us a letter that said we have a business license, but they couldn't get us a business license proper. And we would submit this letter to customs and they're like, sorry, we need a business license. I'm like, well, San Francisco said, the letter says like, we are unable to generate the license, but this company does have a business license on file.

Oh my.

And so it went on for a while and we were gonna have to leave San Francisco. and register, I don't know, in the peninsula or something. And so I sent that to Ron Conway and he sent it to our then mayor, Ed Lee, rest in peace. Within 6 hours, we had a business license. Like when he was like, hey, the startup is in San Francisco, he had to go down there and fix the printer or something. I mean, it was kind of crazy, but—

That is just a heartbreaking story. That is ridiculous.

It's so silly.

These are all barriers to entry of someone else wanting to come and do this job. It's like you have to go through the hard, you have to go through the pain of dealing with the government and everything else that's in the chain.

So, again, this is why I'm saying the industry is so broken. But anyway, let's move forward. Tell me some more like hair-raising port stories or early, early Flexport shipping stories.

Well, you know what kept us going was there was just so much demand for the product. We just kept getting so many signups. On the website, uh, early days we were getting AdWords just like for like $40, we would acquire customers that were worth thousands of dollars.

Oh my gosh.

Big companies were signing up. Foxconn signed up. Cargill, which is like the biggest ag company.

Of course.

Saudi Aramco signed up. I was like, they were desperate. We were, no, they were desperate. These people know what they're doing, but they wanted this solution. They liked the technology and like, We weren't set up to serve them, but it was obvious there was demand. You know what I mean? It was like, oh, if we can build these types of features, there will be demand if we get this right. And so that really encouraged us to keep going and going. We still don't need to have everything perfect to make it work. Like you can do it the way the other old school guys do it and have humans send emails and make phone calls and solve problems. Like it's fine. You get going. I think if you had to make every, I know that if you had to make all the tech work end to end, Day one, no humans in the loop, no humans processing information, making phone calls, sending emails. Like you could not do this business. We now, after a decade plus of building, have started to build like real automation systems and cut people out of the loop. And a lot of the AI stuff that's happening right now is really working in our favor where you can, that because we've simplified the workflow of what needs to happen to each stage of moving a container, AI can just do a lot of these tasks. So we're, you know, but it's like a decade of building to get to that point. Not, it's not, if you had to do that on day one, it wouldn't work. And so like it wouldn't, a lot of types of founders wouldn't want to work on that problem. Like they want it to be all tech, all software. They don't want to have to do things the old way and pick up phones, make sales.

Like we use the Excel file that the customer's sending you and So early on, your first users, you really had to adapt to each customer. Like some people had Excel spreadsheets, some people had the guy with the clipboard.

Yeah, we still do. We still will. I mean, it's like we, we see ourselves as a customer company, like here to solve customer problems. We're not just here to make technology for its own sake, right?

So I also wanna better understand the shipping industry, and maybe I should have known this having funded you, but I don't. Like what goes wrong with, in shipping, or does it mostly work and they're just these sort of onerous paperwork A lot of stuff goes wrong.

There's many, many problems. Um, and it's a complex dynamic system. So like one of the big problems that the, that plagues the industry is, is it's inherently chaotic. Um, is there's manufacturing upstream of shipping. You got to make the product and there's all kinds of things that can happen. So I think around a third of our containers are delayed each week from the manufacturing standpoint. Like they thought they were going to be ready on this date and they changed the date that the cargo is ready. And so what's industry-wide, a third of containers that get booked with an ocean carrier end up getting rescheduled and canceled. So if you're these ocean carriers that own the ships, you have to overbook every ship because you're losing a third of your bookings. You have to overbook to compensate for that. And then that math isn't that good. They're not really using a lot of data science and stuff. So they're overbooking and you've booked But your cargo's not getting loaded because the ship is too full. And so that's a vicious cycle, right? Because if my ship is, if I think I might get booked, I might book 2 boat tickets to make sure that if one of them gets canceled, I'm going to use the other one.

And you need it by a certain day.

And there's no cancellation fees. And anytime they try to enforce those, customers revolt and switch their business. Contracts aren't really enforced. It's like a super weird industry and it's hard to enforce contracts because the customers got like, look, I'm like, you can't make me pay for this freight. My manufacturing got moved. Like, you know, it's, I can't help that. If you do that to me, I just won't be able to work with you as a carrier. Now these are solvable problems. In fact, the airlines, like 20, 30 years ago, you know, if you remember like in the airport, you would hear way more often they were asking people to get bumped and offering you a reward.

Yeah.

Like $1,000 if you don't fly. And like, that's much rarer now because I think they got much better at like data science and modeling of like how much they should overbook, what's the expected cancellation rate. And that a lot of the airline systems like didn't really take hold in the freight industry. In fact, Google, I mentioned Google Ventures being our investor. Remember they bought ITA, which is now Google Flights. But that's like one of the main database systems for air ticketing. From like, ITA was like these MIT geniuses from the '80s. What they did was build like a real-time relational database because pre-internet, even the travel agents were like dialing into airline systems to place bookings. And as that volume was picking up, they would double book because there was a lag.

Okay.

And so they built like a real-time database to be able to not have the lag. And they kind of took over the whole travel industry. So anyways, I got introduced to those guys to learn like, well, why did this happen in airlines and not in ocean freight? And the answer was the airlines adopted computers in like the 1950s. They were one of the first industries to adopt this stuff. And the container industry just never did. The airlines don't really like being in that kayak interface where it's just a race to the bottom on price. Like they want you to come and have a relationship with them directly. And so I think the carriers in the ocean container industry, saw that and were like, well, we don't really want to adopt technology. This doesn't seem like it's going to be that good, at least on that side of things. It doesn't seem like it'd be that good for us to be in a race to the bottom on price. So we had to like very early on recognize, hey, we're in this multi-sided marketplace. We need to figure out how to make it in the interest of everybody to participate. And if I come in here as like Silicon Valley cowboy saying, I'm going to build Kayak for freight, which is kind of one of the ideas that we had early on was what we were building. We realized pretty quickly that ocean carriers didn't want that. They were like, oh, not interested. Why would I do that? So we had to build systems to understand their problem. Oh, their problem is 30% of cargo's getting canceled. Okay, how can I build a more reliable freight company using data science to model how many bookings I'm getting, cancel at a lower rate? So we have a much lower cancellation rate than our competitors. Now we've built this like automated planning engine. So If one of our customers cancels, we'll look across all the other customers 10 times a day and see, is there another container that's ready that I could pull forward and put it in that slot so that that customer's getting a faster transit time than they expected? The carrier's not getting canceled. Like, it's a huge win-win, right? And so, but in the beginning, it was just kind of like full-on business philosophy. Like, hey, let's not lower, let's, Let's be better at not canceling, like do some statistics. It wasn't like super fancy. Now it's machine learning and other stuff, but in the beginning it was like some simple math and like a business philosophy of don't treat these cancellations as costless, even though they're not charging you for it. It's clearly bad for your vendor. Yeah. Bad for your carrier.

What's one of the hardest problems that you've solved with software?

Yeah, that one's, that's a good example. I mean, just honestly, just breaking down, like when you ship a container from door to door, In the beginning, it was sort of like, okay, just like have some smart people that know how that works and like tell them to do it. And they're emailing people, they're calling people, vendor. And now it took a long time, too long. If we knew what we were doing, probably we could have done this faster, but we're kind of outsiders to the industry and there's healthy naivete to all of that. Right. But we decomposed that into now like 108 Atomic work items, tasks that have to get completed. And each one has a custom screen of web workflow of like, do these things.

And did you just say 108 tasks?

Yeah, that's not that many. I mean, but yeah, from door to door, 108 things that have to get done. And then deciding who at Flexport should do that work and assigning that to a human to do it. And now because we did that hard work of structuring it now, especially just over the last 6 months, we've got those tasks where more and more of them are being done by software. We think by the end of next year, by the end of 2025, 80% of that will be getting done by software. And that's a revolution for this industry because fundamentally the cost is people doing, you know, free email forwarding. But it would not overnight success because it's not, it's fundamentally, it's not really a software problem. This is a human experience problem. It's a data problem. It's an understanding of what is the logistics problem. Like, what is this work? How do I translate this work? And the software is pretty simple. It's web forms and databases. Now you can apply some more sophisticated stuff, but it's the hard problem is what should the web form do? What should the, where should we put the data? How should the data model be constructed?

So has the existence of Flexport like changed the way Trade, you know, it works. And have you enabled like new classes of shippers, for example?

A lot of small business, uh, we really empower small business where they just like didn't— this is like very daunting— and allow them to grow. I wouldn't, I wouldn't say we changed things that much other than like they didn't need to hire like big teams. I mean, one of our customers grew, got to like $600 million in sales and sold for $1.2 billion, and they never needed to hire a second person in logistics. And the first person was a customer service rep. They, you know, sort of like put this in the cloud. So there's like cases like that where like, yeah, that's pretty unique and different. What we've also seen is our competitors. So like we're the only, if you look at the top 100 freight forwarders in the world, Flexport's the only one founded after 1994, which is when Netscape came out, the web browser. So these are not tech companies.

Wow.

And, uh, but they've been investing like crazy in tech. It took, I think like the first 5, 6 years they ridiculed us. Like they made literally like made fun of me on LinkedIn. They still do kind of, but one of them called me, um, Dr. Emmett Brown with his flex capacitor or something. He was at Back to the Future, but he's an idiot because like, that's not an insult. Like that guy made a time machine that worked like, uh, So the, they made fun of us a lot unsuccessfully in many cases, but then now they've kind of woken up because we've taken so much market share. We're the 3rd largest rate forwarding company in the United States and like on track to be number 1 in a few more years.

Wow.

You know, we keep doing a good job. They woke up and they started investing a lot in tech and they're probably a little too late to do that, but like we're starting to see them build better web interfaces. I think it's a hard problem. It is a fundamentally hard problem because you can put like a nice glossy front end. It's kind of easy to log into our site and copy it, but if it doesn't tie into the, you know, 95+ percent of our tech is like not what the customer sees. It's what our operators see, what these truckers and warehouses and ocean carriers use. Like it's not customer face, it's harder to copy. And then if it doesn't all link together, then it's kind of You're actually adding costs because you have to take data from your system that you do use and copy it into the front end that the customer uses. So, um, it's a, it's a hard problem. The other thing that I would say has changed, and I, we, we can probably get, get some credit for this, is like, there's this huge ecosystem of tech companies now attacking related logistics problems. Many of them are kind of building software for freight forwarders to say, hey, run this software. You'll be able to make an experience similar to Flexport. Or, or they're doing solutions for one or another aspect of what we do. I went to a conference, it's called Manifest. It's an interesting tech conference for logistics, which it's only 3 years old and 10 years ago couldn't have existed. And there were like 500 software companies on display demoing their tech. Um, and I think we should, we'd probably get a little bit of credit for that, for making the space, like attracting VC to the space, making it a little bit more famous, et cetera.

Making the unsexy sexier. That's what you get credit for. Yeah. You brought sexy back.

Money's sexy.

Hey, can I ask a quick question? It may not be a quick question, but, um, so the, what's the global geopolitical stuff? Like what's happening in the Suez? When you, when that start, that kind of thing starts to happen, are you like, oh crap, this is gonna be such a difficult thing to deal with? Or you're like, aha, opportunity. Like this is where my company will shine because we can figure this stuff out Both of those at the same exact time.

You have, you know, it's your opportunity to shine, but if you don't, like our, one of our fundamental value props of why a customer uses Flexport is we're going to show you where your stuff is and give you a better sense than anybody else of when it's going to arrive. And all of a sudden we should use satellite data to track the ships and generate ETAs and like they feed into our machine learning models that predict when the ship's going to arrive. Well, in the Suez example, with what's happening at the Red Sea right now, all the, the first thing these ships did was turn off their satellites to their transponders to avoid being targeted by the, the Houthi, the guys shooting missiles. And so that's the first thing they did. So immediately, right when you need the data the most, where is this ship? When is it going to arrive? Like data source goes away. And then, you know, our systems weren't built to just, we're tracking the ship. We weren't, and we were kind of predicting where it was going to go, but we weren't. Built to detect which ship is fundamentally, is like completely rerouted right now. And, uh, and so you had to, we had to scramble when that, when this first incident started, if this was a month and a half or a couple months ago, weekends, nights, like for a few, 3, 4 days going back to old school startup grind, um, update our system. Well, we knew it was opportunity to shine because no one else was able to do this at all. And so that started, I want to say it was like on a Friday when the first missile hit a ship. container ship. And by Monday, we completely upgraded our user experience to be able to show customers, these are your containers that are on ships that have been diverted. This is our best estimate of its new ETA. We changed the color orange in the app. It did create an opportunity for us. We built all these systems over really hardcore weekend of coding to get to where there's a great user experience to show the customer which cargo's being delayed, when it would arrive, and then systems also to empower, largely to empower me. as kind of the face of the company to become a real thought leader on this topic. Like, what is happening in the Red Sea? Give me the data. Show me how many ships have diverted. What's the new transit time? What does that mean for global trade? And so we knew it would be a big opportunity, but it was also a chance to fall on your face. Because if you're the guys saying, hey, our systems is the best at tracking ships, and then it's not true, you look like an idiot. So we've managed to find our business is always in the center of some kind of chaos of global trade and turn that into an opportunity. For the brand and for the customer, do a better job showing up for your customers. Going back to Trump, when he would put out new tariffs every couple weeks, and that was obviously rough on our customer base and therefore on us, but we were better at figuring out, they would announce the new list of these are the new tariffs affecting these products. And within an hour, we were notifying all of our customers like, hey, this is what it's going to mean for you. And no one else bothered to call them at all.

Wow.

So even the bad stuff we kind of can turn into good stuff.

Yeah.

Can I say a fun fact? Because Carolyn, I don't know if you know this, that you asked about the Suez Canal. Um, Ryan wrote a children's book.

Oh, based on— no, I was already thinking about the Evergrande or what it— like all the ships have the word Ever Given.

Ever Given. Yeah.

I was thinking of that and that I do know that he wrote that children's book and You should tell us more about that.

Well, writing a children's book is very easy. It's illustrating the children's book is hard. And I didn't do that. I only did the writing. And your husband edited it and made it great. It was like, I think it was good. And then Paul made it great. He's a great writer. So I should have given him a writing credit, but I didn't want to impose that. So he did it. He made it great. Do your kids like the book? It's a story. I have young daughters and they I feel like all the children's books that I read are like kind of nonsense here, the weird communist kind of lessons. Like, I don't know, I didn't really like any of the children's books. And so I thought, hey, you know, like here's a chance to teach about global trade. And so it features the digger, the little excavator. You know, I was struck by this guy. He went, he sees the ship gets stuck. He's got an excavator. And the whole world started laughing at this guy for using his little tiny excavator to try to free the ship.

Yeah.

But my view was like, hey, you know what? This is a guy, naive optimism, like try your best to solve the problem. And so, the book is about that. The hero is the little digger and try to inspire others to take action. And so, by him getting started, then he attracts other, the pump ship and Other kind of towboat, and they eventually free the ship, and they come to Europe. And one funny story about that book is it went kind of viral in Egypt. No one really noticed this book when I put it out except in Egypt. It went totally viral, and because everybody had been making fun of this guy, and they liked the fact that I made the Egyptian, you know, the hero of the of the story, and I got invited. I haven't gone yet. I got invited by the parliament to come to Egypt and like do a tour of the canal. Yeah, I know.

Oh yeah.

Unfortunately, I think they had like a dictatorship, a coup d'état since that time. So I'm not sure it's the same people in power.

It's okay now though.

Yeah.

John, I'm going to go.

Yeah, you should go.

Oh yeah, no, I want to go. I definitely want to go as a tour racer in the first place.

Yeah.

I don't know if you can speak candidly about this, but were unions a problem for you? Like, did they try to, did they decrease your productivity or try to cause any problems?

They've never been a problem for us. We're a few layers removed. We don't have to interact with them directly. I wouldn't say that the union— there's unions all over the world in ports and they're not, they seem to work fine. It's US ports are the least productive in the world, like less productive than like Tanzania's ports. But I, but there's unions all over the world, so you can't just blame the union for that. I think there's something unique in how the unions in the United States interact with the management of these ports. It's like in that interaction rather than blame one side. And That in particular, like what happens, and I don't know where this, the source of this, I'd like to study it more, but in the, in the US ports, the management company, private company says, hey, I need this many workers tomorrow. And then the longshoremen's union just provides that many workers. And it's not the same people every day coming to the port because there's like 30 different port terminals here. I'm in LA right now, down in the Port down here, there's like 30 different terminals. So these unions get assigned, there's a seniority ranking. I don't know how it all works, but they just get, the workers just get assigned and they're sort of treated like fungible units of work instead of like, hey, we're team members here. Like we've got a manager, we're going to come in every day and try to do a little better than we did yesterday. Like, and there's something about that dynamic for whatever reason. I don't know the history of why it's done this way, but it's like new people showing up every day. Operating heavy equipment without KPIs or enough training. I, there's something just broken, but I can't blame the union per se. It's like just some, something in that interaction between the union and the management.

Well, is that a good segue into what happened during the pandemic?

That's on my list. Let's talk COVID. You, you know, we're having a, we're having a frenetic podcast discussion because you got like masks and PPE kit to San Francisco when no one else could.

Right.

Tell us the story.

Well, yeah, across the world. Um, well, so when the pandemic first hit, we were, we have this group called flexport.org that does, uh, humanitarian shipping. We do basically do pro bono kind of shipping at our cost for disaster relief, effectively some economic development, but a lot of disaster relief, like where there's like most recently the Maui fires or different, whatever Ukraine war. So when, when the pandemic first hit in Wuhan, Shame on us. We took like 500,000 masks from the United States and flew them to China. So like, we're the reason there were no masks in America on some level. We were getting them to the doctors on the front lines and the people of Wuhan. Uh, and that was in January of 2020. We were kind of like early to be like, oh, this is like a big thing. We were talking to doctors over there to figure out what's going on. Then we realized, oh, there's huge mask shortages in the U.S. And then most of the masks are made in China. And we were finding they were actually, China ramped up mask production really fast. So like by April 2020, Huge amount of mask production had come online. There was a lot of mask capacity available. One of the main things that happened in logistics world for the pandemic is all the passenger flights got grounded and 50% of the world's air freight flies in the belly of passenger planes. And so you don't have these passenger planes flying. And so we couldn't, there was a fundamental bottleneck to get the masks imported into the U.S. And the distribution chains of these masks broke down. And then the hospitals are like, actually pretty, tend to be very well connected. Like their board members are, you know, Marc Benioff's on the board of UCSF. Like there's, they have these connections and Benioff's got connection with Jack Ma. Like, so these guys, you know, these business network kind of, kind of got activated. We're able to source the masks for the hospitals, but the hospitals had never imported anything before. They usually just buy it domestically from these distributors. And so while our whole software is made to make it easy to import something, So we onboarded all the hospital networks in the US, like a huge percentage of the hospital networks onboarded as importers and then to manage the customs clearance. And they had the masks, but now we have to get airline capacity. And well, the solution, if you listen to the problem, you can hear the solution is all the passenger planes are grounded and not flying. And so we went and called the airlines and said, hey, can we borrow your passenger planes and fly them to China and pick up masks? And we got a bunch of Delta, American, Atlas, a bunch of airlines gave us planes, Condor, a lot of airlines around the world. Um, and so we flew 88 passenger planes to China and stuffed them to the gills with masks in the seats and the overhead compartments and the belly.

I was just going to ask, did you leave the passenger part empty? But it sounds like not.

No, we just like used every inch that we could. Um, and so we shipped about 500 million units of PPE to hospital networks across the US and across actually NHS in the UK. We did it all over the world, the Dutch government, Australia, we shipped New Zealand all over the world. And then what the other thing we did was we realized from a business standpoint that if these passenger planes are grounded, that there's going to be a huge rise in the price of air freight. And so we went and contracted and signed a long-term lease, like a 5-year lease on 3 747s. Which we still have. And they're painted, we painted them with Flexport logo and stuff. So they're, but that's the reason that Flexport has 747s is we, we, we, we're trying to get all the mass in and get capacity. And we saw a business opportunity at the same time.

Ah.

And so we, the price of air freight long-term is like $4 a kilo. And for 2 years plus, it was $20 a kilo. And we had signed a long-term contract at these low rates on those 747s in large part, just like Like, we don't want to be in the asset business of like operating airplanes, but we are in the business of making money. And I just saw an— we saw an opportunity like, hey, this is crazy. The price, as long as these passenger planes are grounded, the price is going to go crazy for air freight. Now it's turned out to be like, you know, kind of break even. And we even lost money last year on the planes, but we're back to break even. It's a bit of a pain in the butt now, but the first 3 years it was great for our business.

So the pandemic thing that I was thinking about was That, but also what happened in Long Beach, because we were just talking about the unions and like the whole container stacking thing or whatever that was. That was so interesting.

Yeah. Well, so what happened then, there's not a single economist in the world that I'm aware of who predicted this, but that global trade went up by 20%. Volumes went up during the pandemic. Every economist on earth, because in every prior recession in history, volumes of trade went down. But in this case, what happened was people weren't going to restaurants, they weren't traveling, buying whatever services, they switched their spend onto buying stuff. And so the volumes increased and no one predicted that, like nobody. That's why we were able to sign cheap deals on those planes because even the airlines thought, oh, like there's going to be less volume. No one's going to be shipping anything. We'll sign this deal with Flexport. And so this surge of container volumes, about 20% increase coming into the ports. Our ports couldn't keep up in part because of the union dynamic, I suspect, like I was describing, but also just like, how can you scale a physical thing that 20%, you know, overnight? Um, and so you had this congestion at the ports and remember these photos of like the hundreds of ships waiting off the coast and it was super delayed.

Oh yes.

It was super delayed to get anything delivered. And I was just like, it was very frustrating because our customers were getting frustrated. We were charging them so much money to ship freight and it was taking So long and it was so unpredictable. And so I just kind of curious, like, try to get to the root cause of what is going on. Why can't we move these ships through? And what I would see, if you're near a container port, just look, you can see like those things, those cranes, they look like the AT-AT walkers from Star Wars. If it's at an angle like this, 45 degrees up, it's not working. It's not unloading anything. For it to unload something, it goes flat like that. So you can just at a glance, look at a container port and go, are they working right now or not? And like every time I would go by the container, Cranes were up and I started to go crazy because I'm like, you know, you're not unloading the ship, guys. Like this, what is happening? And so I, um, so I wanted to get to the bottom of it. So I was trying to, I wanted to talk to the workers, like, you know, you're trying to get to the bottom of something, go to the front line, the people working on the spot and see. So I don't know how to talk to union workers. Like they won't let me into the port. I don't have like, whatever. They're not going to, you can't just stroll in there. There's security. So what we did was send a taco truck. This was like my version of the Trojan horse. Uh, we sent a taco truck down to the port and just fed the workers and they all came out and ate tacos with us. And then we asked them what's going on.

Oh my God.

And there's probably better ways to do this, but I don't know. I was trying to have fun. Uh, and they, um, they told us that the truckers were responsible, that the truck drivers weren't showing up. For their appointments. You have an appointment at the port. You have to, as a truck driver, you got to get there within this 1-hour window because then they got to have your container ready at the front so that it's, you know, just get going. So if you don't show up, then your container just stacks and gets in the way. And then there were just too many containers in the way and the whole port got a traffic jam and they couldn't unload any more ships. And so I was like, well, why aren't the truckers showing up? So then what I did was We work with this one trucking company in LA that's pretty big. And I got their CEO. I could have probably just gone to his office and talked to him, but I was trying to have some more fun. So I invited him on a boat trip. We rented a boat and went around the Port of Long Beach. And it's a great way to get information out of someone is to get them on a boat so they can't get off. Yeah. They're stuck with you.

Yeah.

So I just interviewed this guy, like interrogated him almost for like 3 hours. And I found out from his perspective why they were missing is that in the Port of Long Beach, in LA, in Southern California, if you have a trucking yard, like where they, you know, the yard where they keep the trucks and the containers, you're only allowed to stack containers by zoning law too high. If you go more than too high, it's either safety or aesthetics or something. You're not allowed to stack more than too high. And so what was happening is their container yard was full. And then so the 3rd container to show up, they're not able to unload it. So it just sits on the trailer. It's called a chassis. It just sits on the trailer and gets stored there, and then they have no more trailers. And so Southern California had run out of trailers to actually go pick up more ports at the container. So you had this total traffic jam. And so I wrote this up as a tweet storm the next day at 6:00 AM. I tweeted about like, you know, all my findings and found, and then by like 11:00 AM, Gavin Newsom called me. to the governor of California. I had Long Beach City Council, and at 2:00 PM that afternoon, Long Beach City Council voted to change the zoning law to allow containers to stack 4 high in a trucking yard and get the containers flowing through. So I don't know if it really solved any problems. So it's a bigger problem than just that, but I got on 60 Minutes. They put me on the COVID of Forbes saying, can this guy solve the supply chain crisis? I missed you on the COVID of Forbes. Oh yeah, I was on the COVID of Forbes because of that. And I learned this, I forget what it's called. There's some law, which is if any headline that starts with a question, because the question was, can this guy solve the supply chain crisis? That's what the headline of Forbes said. Any headline that starts with a question, the answer is always no, because if they could, they would just say, this guy solved the supply chain crisis.

Wow.

That's amazing. And it all started like you were in the taco truck.

It started with me.

Yeah.

Just like trying to get to the bottom of this. And people are like, why is this guy doing this? I'm like, well, it's kind of my job. Like I've got customers who are angry.

Well, it was great because it answered questions that the, the layman out there, all of us are like, we don't get it. Like, why is it so hard to get the stuff we ordered from, you know, Crate and Barrel? Like, where is it? And so like you went out and you kind of like answered The why.

It's a really complex— I'm not sure that we like made, I mean, it didn't just like resolve overnight. It took a while. In fact, it really only resolved because demand went back down and things normalized. But there were technology, like the frustration from my perspective is there are technology solutions that Flexport has that would work to solve this problem because you shouldn't need an appointment. It, now it'd be hard to implement this tech. So it's, it's, it's not, but the tech is there and it solved it. But the tech is simple. It's a mobile app for the driver. It would show up and just give them whatever container is available and no appointment needed. Just run laps on all the containers and you would've cleared them out in no time. And then the other thing is there's some regulatory— I already mentioned a union dynamic, which I'm sure you could get more productivity if you could miraculously solve that. And then look, there's an empty port terminal in Oakland that's unused. Like we could have 4x the capacity of Oakland's operations just by some, like, turning that back on and it works. It was, yeah, it's still closed. They never bothered to turn it on. So there were some like things there where you're just sort of like, well, if we really wanted to solve these problems, like you probably, it's always very frustrating the more you, the closer you get to some big problems to find like, actually, the world's hard. It's hard to solve these big scale things.

Brokenness. Oh my God. What was I living under a rock when all this went down? I'm going to have to like look at the timeframe and be like, what was happening?

Well, you know what, 2020, the pandemic, people had other things on their minds. There was a word about your health and safety and your children and everything, but we were trying to keep the containers moving.

That is just amazing. I love that story. I want to ask you about fundraising because did you not raise a gigantic round, like the largest round ever on a SAFE? Which of course Carolyn Levy created.

Thank you, Carolyn.

Yes.

Um, I, yes, I don't know if that's true or not. You have to, someone is a, we did raise like, uh, $50 million on Safe at one point.

Oh, I thought it was even more than that.

No, it was $50 million. I remember. I, I've still—

$50 million. There was a bigger round, but like only $50 million of it was on Safe. It was uncapped, which is what I think people found remarkable.

Yeah, for sure.

I love that.

Yeah, that was a little scary. Five skinny little pages for fifty million dollars. But the save worked, right?

Yeah, it worked.

It worked.

It converted later. Everybody's happy. They made money. The investors did well. They were aggressive and they did well on it.

So yay! Was fundraising during YC? You got this inbound call from Google Ventures. Was it? A walk in the park for you?

Not always, not always. The seed round was, I think we were kind of a hot company. YC, great brand. There was a bit of a feeding frenzy on demo days, but not everybody has that experience. That seed round was easy, but like, oh, a lot of painful failed fundraisings along the way. And, uh, founders— no, no, post-YC. It's just like, you know, it looks, it looks easy on the outside, but we had a lot of A lot of mostly my fault type of situations, thinking that we were hotter than we were, trying to get better terms than we should get. And Founders Fund a couple of times came to our rescue and said, when no one else wanted to fund us and said, okay, we'll put more money in. So I'm very loyal advocate of Founders Fund as the best VC fund in part. I had such good experiences working with them, but But yeah, fundraising is, uh, the worst part. Try to avoid it. Make your company profitable so you don't need to fundraise would be my advice.

Ryan, can I ask you about Founders Fund? Because last summer you like joined Founders Fund to be an investor and I was surprised, but now you've come back. Like, will you tell us a little bit about that?

Sure. Yeah. Well, um, so about a year ago, I hired Dave Clark, who was the, at that time, the CEO of Amazon Retail, Amazon Consumer, kind of the amazon.com when you buy packages to be our CEO. Flexport, we did a 6-month kind of co-CEO thing, and then I stepped into the executive chairman role. I hired Dave because Flexport's a really hard operational business, and I just have so much respect for Amazon as like the best operations tech company in the world, physical operations. And I just wanted to upgrade our operational excellence. I love being the CEO of Flexport. So I was like, pretty painful for me to step aside, but I really just felt like we weren't getting to the place where I wanted to be of repeatability, metrics-oriented execution, just constant process improvement to ship this cargo over the world. And I wanted to— felt like a better, stronger leader on the operations side would make us way better. And Dave, I got caught a whale with Dave. So I stepped into the chairman's role, got a little bored for lack of a better word. of like, I don't know, I wanted to be more in it. And yet it was clear that Dave didn't need me day-to-day involved in the operations. I was going to cause problems. So Founders Fund asked me, recruited me sort of, and I said no for a bunch of times, but I'm there. I love the Founders Fund team. They've been a huge part of Flexport's success. And I have done a lot of angel investing. Over the last decade, I've invested in about 150 companies as an angel, and I've done really well as an investor.

No way.

I'm not sure that that translates because angel investing's super different than VC. You're not like pricing rounds and making decisions. You're sort of just like putting some money in someone else's deal and hoping for the best. And that worked really well, but I don't know if I'd be a good venture capitalist. But Founders Fund, I joined as a partner and worked there for a few months. And I loved it, but then the Flexport board asked me to come back to CEO. So of course I did. I'm still a venture partner, but I scaled back my role quite a bit as I just focused on scaling Flexport again. It's been, that was September of last year. So it's been about 6 months coming up on 6 months here back in the seat. Been the hardest, most rewarding 6 months of my career. We, just to give you a snapshot, we improved our earnings by $600 million in the last 6 months.

Holy smokes.

While growing market share and reducing the— part of that was reduce the headcount cost by 40%. We really went lean on, especially on the fixed costs. We kind of really stripped out like a lot of that corporate overhead stuff.

So this is what you talked about in the Gary interview, and I have exclamation points next to it. You said, I have lost discipline, High burn rate and you spent, like, you just sort of had a lot of money and you spent it and there were no, like, budgeting processes and you spent 2 years, you said, paying for the consequences.

Yeah. It's, I've never seen a company raise a round and not immediately turn around and start wasting some more money. It's like, and if you think you're going to be the one that solves this problem, you're not. No one's ever done it. And investors will warn you and say, hey, you know, you're going to raise more money, but don't go start spending it. Like, oh yeah, we won't. Founders always want to raise massive rounds at a high price. Investors will tell you, you know, raise less money at a lower price. And founders correctly think the investors are self-interested in doing that, but they are more experienced. They've seen the movie before and seen that if you raise $20 instead of $10, you're going to waste an extra $5 to $8 million of the $20. You know, like, I mean, even Flexport Series A round, which I thought was massive at the time. We raised $20 million from Founders Fund the next day or like within a week. I took a shipping container and turned it into a booth for a trade show to like, you know, wasted $50,000. Like that seemed like a great idea, but it was just like, I would've done it. $50,000 is like a lot of money out of $20 million. Like it's, but it, you know, but, and I wouldn't have even, considered it if I didn't have the money in the bank account. So the money just wants to spend itself. And the last decade of capital markets were booming and Flexport was a hot company. We raised money really easily. I mean, obviously there, I've told you there was some pain along the way, but we raised money relatively easily, a lot of it, and didn't have enough discipline. And that is what it is. We've learned the hard way of how important it is to get really focused and disciplined. And it is, A good finance partner is like key for founders. You know, once you raise a good chunk of money, you think like, oh, our business is kind of simple. I can model it. I don't need it. But like, it's only half of the job of the CFO. The other half is cultural of like imposing the iron will of not wasting money and measuring every ROI dollar.

Yeah. And making sure everyone shares the responsibility.

We're being really hardcore right now about every dollar that we spend and We want to be really profitable and then reinvest those profits in ways that generate the highest return. So we're on track. We're going to get profitable towards the end of this year, thanks to all this hard work that we're doing.

Well, I know we're at— we got to end and let you get back to your work down there in LA. Thank you for coming on. This was fascinating. I learned so much.

My absolute pleasure. Thank you for all the support over the years. And oh, I forgot to tell the best part. Oh, let me end with this story of when I, I told Paul, Paul, no one's ever been more disappointed in me than PG about taking, hiring a CEO for Flexport. And when I met with him afterwards, he was just like, what happened? Like, why are you doing this? Like, he just really loves the idea of the founders running their company. And I told him some stuff and he said, well, I think this guy will be better than me at running the company. That's why I hired him. And he's like, that'd be like saying some other guy would be a better husband for your wife. Like, it might be true, but you don't act on it.

He never told me he said that.

Oh, wow. That's a great quote.

That's so good.

I was just like, oh man, I feel so terrible. So I'm happy to be back in the seat. I can make Paul proud again and do a great job for him.

Oh, I know he's very proud of you. We'll end on that story. It might be true.

Sorry. Wait, I'm gonna laugh about that all day. It might be true.

Don't act on it. I'm gonna go down now and find it and be like, did you really say this to Ryan?

He said it. It was hilarious and so hurtful at the same time.

Oh my word. Oh, PG. Well, thank you again. This is gonna be a great episode. Thanks, Ryan. Thanks so much for coming.

Bye.

Okay. Thanks so much. Bye-bye.

Bye. Oh, Carolyn, that was so fascinating.

Yeah, no, he's got so many good stories. I feel like we could talk to him for a long time.

And I, I usually don't do such a deep dive into the actual industries, but I, I had to learn about the shipping industry. There's so much to know.

Yeah. And I think it's one of those, uh, unsexy industries that actually, like I was saying before, like, You have questions because it actually impacts you every day. So, not every day. I mean, we don't, we don't ship things every day, but like, it, like, it, it's, it's very like, you understand as an end user, like when things go wrong, it's super annoying. So you just want to know more.

Yeah.

Do you know what I did? I emailed them because I had a problem with a sofa getting from point A to point B. I, it's a long story and I'm not gonna, I'm not gonna go into it in this, in this part, but like, um, I had a shipping problem and I was like complaining to John. He's like, well, you should ask Ryan. And I was like, well, Ryan's kind of busy. And I was like, you know what? Why not? And he, he, he, he helped. He helped in the way that he was like, give it up. Don't spend your, don't waste your time because you're never going to solve that problem. Which was helpful here. It's super helpful here because he like, nobody knows better than Ryan. Like, do not waste a minute more of your time trying to solve this dumb shipping problem.

I am filled with so much energy having just spoken to him. He's one of these people that like brings energy and excitement. To the conversation. Do you know what I mean?

Yeah.

There's some people who bring— give you energy and some people who tap it out of you. He gives it to me.

Yeah.

You know? Yeah. I'm so glad we got to catch up with him. It's gonna be a great episode. It will be a great episode. I'm so psyched for it to come out.

Me too.

So awesome.

See you next time.

Okay. Bye. Bye.