# Garry's Channel: Flexport CEO Ryan Petersen on scaling a startup from zero to $8B

**Author:** Garry Tan
**Type:** Video
**URL:** https://www.ycombinator.com/library/Jo-garry-s-channel-flexport-ceo-ryan-petersen-on-scaling-a-startup-from-zero-to-8b
**YouTube ID:** lm3lfZza1ro

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Garry sits down with Ryan Petersen, CEO of Flexport.

Founded in 2013, Flexport combines powerful technology with physical transportation infrastructure to modernize freight
forwarding. Today, nearly 10,000 companies ranging from emerging brands to Fortune 500s use Flexport to move nearly $19
Billion dollars worth of merchandise across 112 countries.

## Transcript

prices are going insane everything from food to fuel is more expensive now and we're feeling it why the supply chain is in bad shape over the last few months container ships have been stuck at u.s ports for an average of 7 days 21 higher than at the start of the pandemic it can take up to 20 different companies to move just one shipment because the system mostly still only uses paper and pencil until now

until flexport founded in 2013 flexport turns that paper and pencil system into a modern marketplace driven by great software we were lucky to invest at the beginning this is a huge business they help nearly 10 000 companies from tiny startups all the way up to fortune 500s to move nearly 19 billion of goods across 112 countries today we're in san francisco talking with ryan peterson ceo and founder of flexport

[Music] ryan thanks for joining us today you come from uh you know family of entrepreneurs and software engineers tell me about that my mom's an entrepreneur my dad is an entrepreneur too my mom is uh probably the world's leading expert on food safety so she has this company to biochemist and if you are a food company and you need to get something approved by fda usda california epa all these

different there's so many different regulatory bodies uh my mom is the world's leading expert basically you guys do that she probably employed like 100 phds when i was in high school she was running this business she would work for about 18 hours a day oh my god and yet still find time to be an amazing mom so she was really my role model growing up also i didn't know i didn't realize any of this was happening i'm not we've never really talked about it but i kind of think she trained me to be an entrepreneur from a young age so i used to my brother and i both we used

to earn our allowance by doing work for her business and then her business would pay us i think it was like also a tax advantage so she could uh make our allowance like tax deductible uh so we would go and pick up sodas and like stock the snack cabinet at her fridge and we'd sell them we'd buy it at the grocery store and then sell it to her company and then my dad was a computer programmer so he taught us the right code to like invoice her in fact he wrote his first software in 1970 for the department of defense

that was analyzing soviet defense spending and trying to smooth it out oh wow a lot of people are watching this channel wanting to start a company through yc we know so many founders who like have both made it and not made it do you feel like that was a formative moment where you learned a bunch of things that now you actually sort of led to learning that flexport was a need i mean yc is an amazing opportunity to like go fast meet build a network turn like venture capital from like an

outbound sale begging people to give you money to more of an inbound sale where they kind of come to demo day and come to you there's a lot of benefits to that but like the downside of it is it's sort of like a really time-bound pressure cooking situation you got 90 days and then if you don't raise money you're kind of like i don't know you might die or you fail and even if you do raise money there's an expectation that's put on you that you're gonna like go hire a bunch of people and have 18 months of runway and then if you don't achieve it in 18 months you're dead i never really liked that approach that

much for me i was like i kind of like paul graham's original teaching which is like be a cockroach stay alive nobody can kill you like on some time frame you'll succeed totally but the time frame is super uncertain so how do you set your life up in a way that you can't fail i mean you had to grow as much as possible before you ever started your company and yeah and like i started businesses and rent companies for 11 years and my brother for even longer than that 11 years before i ever raised any venture capital and like started

some successful businesses that generate millions of free cash flow every year it's like how do you design your life in a way where you're it's kind of like be ramen profitable but in life instead of in your company so for example the the company that i started that um is called importgenius.com this is what i did right before flexport and right before i joined my combinator i was running this business that is a pro one of the biggest if not the biggest provider of data to the import export industry and and global logistics industry we sell data on shipping manifests and when we were starting that business

i didn't know if it was going to be successful i had never really heard of venture capital or been involved in that world it was like very much like well we figured out how to get this data we wrote software to create an interface we could sell the data um and i didn't know if it was going to work if anyone would buy it so i found ways to make money i wrote business school case studies for columbia business school really in fact yeah i wrote the first ever business school case study about an african business i went to nigeria and

like i was you know i was making like 40 bucks an hour or something but like i had income what year was that it was in 2008. oh wow yeah so that was like a job that i got but it was part-time it was flexible so i could do that while working on my startup uh and what was the other one i had um teaching the gmat which is the business school entry class i had like a very high gmat score so that qualified me to uh teach that class because i just like find oh and i had a third one doing consulting to help people with their website generate more

traffic from google uh and so i had three different flexible i could work any time of day on those jobs you're ahead of the curve then and then and then that gave me like freedom to on any time horizon i wanted be successful because i couldn't die my expenses were low i didn't i was paying down my debt my number one advice for people want to be entrepreneurs to get rid of your student debt and then yeah it took me a number of years before we found success but success was certain because like we didn't have this like time horizon

that it had to happen in 18 months or else we were all going to go bankrupt and everyone's going to be mad at us we never had investors we just executed actually it had success pretty quickly so i didn't do those things for very long i i kind of prefer that setup than the pressure of like you've raised money now everybody uh you have to succeed in 18 months or it's over even if you are raising venture capital i don't like the 18 month time horizon it's like pretty short i'm like raise more money last three years i give up more of your company it's fine i mean that's one of the reasons why we are totally cool with

seat extensions like we prefer we actually like to do them because that actually gives the founders more time to develop so it's not an 18 month it might be 36 months it might be 40 months and if you're thinking long term actually trying to help people you will actually help people get to product market fit on a you know longer time frame it's fine yeah i mean vc probably should do it that way because people have a 10 year horizon anyway yeah yeah exactly and the amount of money that's getting thrown around is like great raises a lot of money if it's there but don't go

spend it but it's almost impossible the money wants to get spent i remember we raised um our first big round at that time was pretty big we raised a 20 million dollar series a round and immediately like the next day i was like all right we're getting a shipping container and we're gonna convert it into a booth for a trade show and we're gonna like make it like a party container with a go up on top and party and we went to ces and got a booth it was like a hundred thousand dollars like the next day that i committed the money just the mindset changes right as yeah

and i don't know how to avoid that and we saw it that was true at like small smaller dollar amounts all the way up to when when we raised we raised a billion dollar series d round and immediately like lost discipline started overspending everybody could hire as many people as they wanted didn't have like budgetary control our burn went crazy and we then spent another two years like paying that consequences of needing to tighten belts having hiring freezes like it's

a really bad instinct to just go but i don't know how to overcome it and we just raised a lot a series e round 985 million dollars we're profitable now we're profitable thanks we but we're profitable when we raised this round and how do we avoid that happening again right having really tight capital allocation accounting controls like budgetary process it's um i hope it's good enough but it's like my big fear right now as it happens to us all over again we've done it before and it just happens at a different scale i guess but the tools sound like they're the same

it's have an operating model uh you know give yourself enough runway of the cohort of startups that raised at a billion for you to be profitable with the growth rate you have is sort of unheard of isn't it i don't know that helped us by the way being profitable and i think it raised some red flags and people were like why are you raising money if you're profitable and don't you have anything good to invest in why are you profitable and those are both reasonable questions so it's kind of funny for just startups period

but even you know huge startups like yours the it is still about return on invested capital but the question is on what time frame yeah if you want monthly or quarterly you're doing it wrong in order to actually take over an entire you know sort of section of the or sector of the economy that might take years or ten years you know and then at that point can you have leadership like your leadership that is long-term enough that can actually think and think strategically about it and actually take big bets and like sort of

survive being wrong about things yeah and it's pretty rare you need real job security and like frankly like most hired ceos haven't earned the job security to be able to do whatever they want it's like there's sort of something that comes with being the founder that people are like yeah well he started the thing so he can do what he wants it actually gives you then permission to go do the stuff so i'm not i'm not sure that there's a simple answer like oh every ceo should be allowed to go spend as much they want like they'll probably waste the money that's why wall street has that it's why wall street likes software companies by the way because there's not a lot of assets that they could buy yeah you know in our space

like these um the people who own ships planes trucks like historically wall street hasn't loved these businesses they tend to be family owned because it's capital intensive and what do you when they when they do make a lot of money what do they do they go buy more ships yeah uh and wall street it's an asset business yeah and it's the return on those assets are not what wall street tends to look for it's like five percent a year maybe or something right so you leverage it up you get it to eight it's not wall street's you know you'd rather invest in a tech company where not only is the growth

rate there but there's nothing you could waste the money on in a typical tech company that's been why they're popular i mean in your case you're bringing basically structured data to an area that just never really had it before and so you can actually just deliver things that are better faster cheaper in that way how do you think the street should look at this you know sometimes when you're creating a new category you actually become the comp so and that that might be happening here yeah well i mean fundamentally the end of the day in the long run and i don't

know what long run needs to mean five to ten years let's say really i think longer term than that but okay let's say 10 years it's very hard to predict beyond that we're going to be valued on the amount of cash that we generate sort of similar metrics to it to any other business uh opex the amount of head count that you need to generate that cash which is a sign of scalability how big can you make the thing uh what's your the transaction volume that's moving through this thing and what percentage of those transactions do you end up capturing for yourself so we don't i

don't think that it's like has to be fundamentally different i'm not looking to have a different price to earnings ratio on the long run than anybody else right for example let's say we want to be a 100 billion dollar company that's our that's our current goal uh we had a 8 billion valuation i think actually the 8 billion valuation is not really real there's some within that is some probability that we're worth 80 billion and another probability that worth 800 and another probability that we're zero and like you have to weight these things out and they get to eight you know i'm

not sure they actually did that math but like that's the mental model our job is to dramatically improve the probability that you're worth 80 and then 800 billion well if you want to be just to make the math easy if you want to be worth 100 billion dollars and you have a a price to earnings ratio of 20. you need to make 5 billion a year in profit and you could be like oh but we're a tech company we should have a price to earnings of 40 or something but guess what like apple's price to earnings is 30 facebook's is 20. what's 20 it's probably lower right now you're not like that much better than these company even when you're a great company at some

point you're gonna have a price earnings of 20. yeah that makes sense and a price earnings of 20 means it's a 5 return per year it's not like that great yeah unless there's growth you only get 20 if you're growing so i need to be able to make 5 billion a year in free cash flow and be growing pretty fast that's pretty daunting you know where we sit right now it's a lot to do so we try to frame it back to reality it's like okay what are the big buckets of businesses investments and things that we have to achieve to generate 5 billion in free cash flow because we're not going to be valued on hype in the long term you're

not going to be able to pull things off like that and i think there's we try to ground it in reality and make sure everyone can see like okay here are the things that have to get done to be worth 100 billion dollars and what does each team do and how does your work contribute to that so every single person in the company can know that yeah i was gonna ask even you know sort of going from a billion dollars valuation to eight billion and surviving and thriving and not merely surviving and like getting to break even but becoming profitable with the top line growth that you've had there must have been a transformation in the org

around thinking about different initiatives right like when you're a tiny startup you do basically one thing and then now coming into this next phase it's what are some of the things that are top of mind for flexport like you know this is the core business and then this is the thing that is you know we're investing very deeply into the next couple of years yeah i mean number one's always customer experience like how do we want to be the best way to move products anywhere in the world um and what that means is we onboard importers and then for every importer we get for every brand that

that is importing product for another country we're getting 18 of their factories to come on board on average within the first three years and in fact within six years it goes to 36 factories so you've got this great network effect those importers place orders to their factories through our system and a factory becomes a user places bookings to coordinate okay the cargo's ready come and pick it up and we'll dispatch a truck now in 112 different countries dispatch trucks who go and bring it to the port we clear it out of customs put it on a ship clear it into customs in the in the

country the destination country again anywhere in the world uh and then deliver it to a warehouse so it's that loop that you're trying to run um and that's the core of what we're doing so we're trying to that that doesn't change that much we need to do that better more efficiently dramatically improve the efficiency meaning removing the number of human interactions that take place in that chain it's not all tech like there's some old school companies out there that are really good at some leg of it customs and nairobi or something right and we don't always have it fully integrated so if a human is there what is that human doing how do we get them to be either way more

efficient or remove the need for them to do anything and that's probably like 80 of all the effort at flexport right now is like how do i just run that core loop for customers in a way that's easier and cheaper and make our teams more efficient but there's some real venture bets that come along the way and where the the strategy gets really interesting is what we want to do then is upsell them to other services what else do you need well i mentioned customs clearance unique cargo insurance we've got a financing group that grew 10x last year uh making inventory loans

to the companies so they don't need to think about that flexport capital export capital is a beautiful business and and i think we'll we'll find more uh we do have some tricks up our sleeve that like new things that you can offer but that's that core transaction of global trade and our vision is really look you're a you're a brand you've you've created amazing beautiful products you have basically two jobs make something people want is the yc slogan so like it's really hard to make cool awesome products at scale that stand out that there's something actually interesting about the thing with high quality that's very hard

number two is find customers for this product make a brand connect it's like supply and demand the two things and our vision is like basically companies should be really good at those two things that's all they should spend their time on and everything in between that sort of infrastructure layer to get the goods picked up and delivered optimized how many units to order when to order them where to position them to be able to hit customer demand so like you want to be able to do two hour delivery okay here's what that looks like here's how many units you need to order here's when to order them where to

ship them and then finance it insure it do the compliance to get them across custom across international borders et cetera we want to be able to offer all of that stuff is like automatic you don't have to think about it my analogy here is kind of like the electrical utility when you flip a light switch in your house you're actually controlling a power plant somewhere you know it's probably coal powered in west america but you somewhere that power plant is actually getting a little bit hotter just for you it's actually generating more electricity just for you on demand and like people kind of assume that that must be how the economy works when you

buy a product but actually no it's like there's picked up phone calls emails excel file attachments pdfs getting emailed all over the place and we want to make it much more like the electrical grid where like you buy something and like this whole trigger it triggers this whole series of events to take place and make that all seamless it's like a really hard ambitious multi-decade journey that we're on but we've made a lot of progress so far i mean to me what you're doing sort of taking paper and pencil process and turning into structured data it actually unlocks all of these other market markets and

marketplaces i mean we touched on flexport capital very briefly but in fintech and you know fintech startups broadly you know sort of the buzzword of the day is like buy now pay later and you know what the best buy now pay later is it's actually things like flexport because you have many years and in the future decades of data on like absolutely every shipper every buyer every seller in the world you're gonna have way more data to do way better lending and you know actually lower the cost of capital and

like sort of grease the wheels of international commerce actually and we've proven this already so it is uh flexible capital is almost like a buy now pay later button for global trade totally global trade is 47 of global gdp so like you get a couple you need a couple basis points off that is a massive business uh we have a few advantages so like any lending business you basically need to have four things uh one is a customer acquisition usually a good lending business has one of these four

and there some some advantage in customer acquisition what's your model how do you attract users uh underwriting so how do you decide who to lend to and who's collections what happens when it goes wrong do you have an advantage of how do you secure a collection and then fourth is cost of capital can you get cheap money well flexport capital has huge advantages in the first three cost of capital not really like our investors want to make 30 per year irr even at this scale there that you know we dream big together so but the first three we we already have the customer here they're already placing orders to their

factory so it can literally if we haven't actually integrated into the core platform yet but it can it can easily be pay you know you're placing the order now pay and pay later or obvious things to do underwriting means deciding who to lend to well if you want to clear a product across international borders you need to be able to show u.s customs what you paid for that product you have to pay uh duties on that product so you have to show the invoice so we if we know your wholesale price we know your retail price just by checking your website and seeing what you're selling i know your margins i know your growth

rate how many units are you selling i know do you pay your freight forwarder on time do you pay your factory on time historically and i get to meet the people and like underwrite is this a good business are these good people do you want to lend to them so we have a real underwriting advantage and then the third thing is collections if they were to go bankrupt or fail what happens how do you get paid what happens well under ancient maritime law which is older than the u.s constitution maritime law some of the oldest law existing is um the freight provider has first lien if a

company goes bankrupt we get paid back first so if i have your cargo i can just take it and if you don't pay me back we'll sell it on amazon or ebay and that's actually how i started my career was selling stuff on ebay so it's a credible threat like i get the band back together launch the flexboard ebay site and sell some we haven't had to because we lend it the wholesale rate we lend it on your china price or your you know wherever you're buying stuff from so even if you fail and i have your stuff you rather pay me back and sell the stuff and so we've had

bankruptcies in the portfolio that still pass back so like flex work capital something i'm extremely bullish on i think you'll be able when i say like okay i got to figure out how do i make 5 billion in free cash flow in 10 years or 5 years hopefully sooner than later i got flexible capital earmarked for one of those five right like i need to be able to it can be a massive massive business yeah and yeah to me that that's why it started sort of starts with the software which is like literally having engineers and product people and designers in there being able to make software that

is as awesome as like you going to lunch and taking a photo of your lunch right and you can post that on instagram it's like that level of super ease of use but like applied to something that is the world's commerce actually like it just wasn't available before and it's like i don't think that it's because we're so much smarter there's actually like a ton of really smart people in our industry but we've hired a lot of them and they're like super smart it's there's a real problem that we're the the companies that we compete with that

traditional what are called freight forwarders of the top hundred of them in the world flexpo is the only one that was founded after netscape in 1994 and that's that when the browser came out so you can't they're not built and your return on investment could be years or decades and not monthly or quarterly that well that that is part of their problem now is that basically the founders of these companies have retired uh it's now higher it's an asset just you know run it out don't don't make it go down a mandate from wall street to go and invest in fact most of them

are paying 100 of their dividend of their cash flow back to investors as dividends and buybacks which is like okay clearly assigned you don't have great things to invest in or don't have a mandate to do so and that's netscape by the way that's to say nothing of cloud computing right this is just being able to put it on the web yeah and so that that's the the problem again i don't think that they're stupid it's just like a hard problem tech debt like you've got old systems like it's very hard to take a mainframe a lot of them still run as400 ibm that's why mainframe software

it's very hard to take that and like create you can't really do it to create apis in a modern technology stack so it's a starting from scratch is easier and i'm actually paranoid about this because we've got tech debt and how do i make sure that we're not you know someone else come along and create something that moves way faster and it's pretty interesting to watch like a company kind of slow down and it's i shouldn't say interesting it's horrifying when it's your company um and you see that and one of my lessons that i don't know what to do with yet but i've certainly learned it is

hatred of bureaucracy is not enough to keep bureaucracy away like you also need good process good systems good uh great people and clear strategies to keep the company moving fast and being agile i think that's one of our great challenges that i'm obsessed with learning about at flexport now because i don't want to end up like these other companies really kind of like stuck in molasses and you can't execute and i've seen it like we're definitely moving slower than we were six years ago when it comes to product development and it tastes like you keep adding complexity to the mix and slow down so i'm super

focused on what can we do to make people run faster what do we need to learn what is the skill set what's the tech debt that we need to pay down to make it happen i mean it sounds like that is sort of the moment for you in terms of as ceo as founder you know really the leadership end how do you actually continue to hire and then manage people on all of these different things how are you thinking about that now i think work design really matters i think uh architecture matters from a technology standpoint like getting to a service oriented architecture where

systems can talk to each other via api and not everybody needs to talk to each other and you can't go you can't write code that goes directly to the database as annoying as that is and everyone wants to be scrappy and just do that but at scale if you do that then as soon as they change the schema then everybody's stuff breaks and you just it's it's annoying because you do go slower but you go slower to go fast the the marine corps says this like slow is smooth and smooth is fast yeah there's an element of that that's needed that's on the architects the tech the tech side

but the similar things need to exist in the org structure of the people side it's like how do i get it so someone can be really single threaded on a problem and not have to coordinate with everybody else and end up in these endless bureaucracy of meetings right a meeting is very similar to like an architecture where all everybody can talk directly to the database uh it's like yeah meetings are okay when you're small you just like make a decision but when you're big and you need everybody's approval and you've got big leaders with big titles and they want to get their way it can be very beautiful it's victims

yeah so there's a lot to be done with like what are the most important metrics in the company how do we know like let's back out from that 100 billion valuation that we want to have and the 5 billion in free cash flow like okay what needs to be true to make that happen one of the leading indicators and how do i get someone who can really be single threaded on a metric and responsible for it and actually control all the things as many of the things as possible and so like a good example of this would be net revenue or gross margin in our business what are the components of that

i got to go buy freight from somebody then i have to mark the freight up and sell it i got kind of three things but if you wanted to put one person in charge of net revenue well they would have to both buy it do the pricing and sell it and that probably is more than one person's skill set so you wanna go okay let's create a team that just focuses on buying freight and that's all they're focused on how do i get the best relationship with the people who own the ships and the planes make them love us like be their best

customer help them make more money by working with us two on the sales side someone who just fully focused on sales they don't think about what it's priced at they've got you know they're given a price they're by a system of algorithmic pricing and so you can if you can take that net revenue figure that gross profit figure and decompose it into three teams they can that can just fully focus you can actually break down bureaucracy and move fast whereas if all of the people want to own all the things it's more fun to own all the things by the

way yeah that's right yeah but you'll go faster as and you build a machine and you're like okay i know you want to own all the things that is more fun but i need you to focus on this thing and execute yeah and that's like kind of the a muscle that has to be built as you build a big company small companies are like yeah i get to own all the things that's what's kind of fun about working a small company but i think it's also fun to work in a big company and show like dude we're making this machine yeah and it's excellent like it's the way it's operating so that's that's kind of a transition that we're going through now and learning about i'm obsessed i'm obsessed with you can't figure all these

things out from scratch and you shouldn't it's like people have traveled these roads before or find people who've worked at amazon who've worked at uber who've worked at great companies that have had to solve these things right i mean it sounds like it's you know to borrow a crypto term it's like decentralized autonomy yeah if you do it the right way you know you don't have to be involved in absolutely every single decision so it's decentralized in that way but it's also that people can sort of run in their lanes and there's like rules of engagement between them really you want to get to a world where like people like ideally we're

a team of teams so you're and like everybody's their own little startup within the enterprise and if you can set the architecture up the right way tech architecture and organizational architecture that they can still own something and move fast like maybe they don't own everything but they the thing they own they really own and they don't have to talk to a million people and get permission they can execute that's the dream and i think it's really interesting you think of like the law of large numbers where oh the bigger you are the harder it is to grow but there is a wrinkle in the law of large numbers which is if all you are is a team of teams and it's groups of small

teams and you're in well each of those a small team why couldn't it grow super fast totally then actually if everybody's just if you're organized that way then you should be able to grow really fast and not and break the law of large numbers and continue to grow really fast i sort of wonder if we're at this moment in history because of like the power of software that the natural size of firms might actually change you know there's this uh professor named kos and his ideas like companies grow to a certain size and then the internal costs of communication become too great and

then that's how big companies end up being that sort of butts up against like what you're describing or what you know our friend parker conrad at ripling talks about where it's like hey we can have compound startups if you know if we can decentralize and give the right type of autonomy and then have the right rules between those units it's a team of teams yeah but if you talk to parker he'll tell you how important it is to get the data model right and have and and like allow teams to work so that they don't because you do at the end of the day if you're not coordinated and the teams aren't connected at all it's like well why have a company you might

as well have to spin it out and have 26 separate companies uh so you you do need to have an architecture that allows them to still communicate to each other um and probably the most important document in the technology industry history is that jeff bezos's api memo where you said like every team must public you know communicate with each other via apis yeah and it seems like overkill for a small startup and you'll it's funny you'll go through this resistance period where people just don't want to do it because a small company it doesn't let you down

you have to set it up and like not go to the database but build a service in between and and yet if you don't do that you become a bureaucracy where no one can do anything yeah and it's not just on the tech side on the business side too it's like give people clear ownership let them run fast set clear goals have a process and i used to say like there's no good word in the english language for bureaucracy it's like bureaucracy is just a bad word right and yet like the good word is probably process like yeah okay there's got to be some set of standards

and when i was starting out like i'm a pure like entrepreneur never did venture capital like i said before for my first 11 years i i thought process was like really corporate and i don't want anything to do with any of that stuff that's why i'm an entrepreneur i don't want to work for a corporation yeah that like has all these policies and processes and stuff but as i've gotten to scale i realized oh like the reason that those exist is to enable you to move fast like you'll actually get more bureaucracy from not having any process and policies and standards

then you will from having too much it's like there's a there's a line between the edge between order and chaos right and you want to be right on that line and and that because your company is always changing as it grows staying on that line is like incredibly challenging you can easily tip over into too many services and too many policies and processes uh just as easily as you can of having none of these and uh it actually makes it really fun yeah to be like obsessed with like how do i

stay on that where is that line at any moment you're never on the line right you're like always figuring out that you're on one side of the other well so one of the things you mentioned earlier was like having a team of teams but then that's also driven by like sort of the same vision has the flexport vision changed at all or has it been like very consistent like sort of a straight line from your mother's work in public safety to you know to hear like how you know how do you think about the vision and how do you get people to run in the same direction like that one of the things i love about flexboard is that the vision does keep expanding yeah and getting more we keep

learning constantly and getting more inspired and realizing whoa actually we could do something even bigger than we thought of so like i'd be lying if i said like oh i dreamed all of this from day one that you would have this like utility scale infrastructure where everybody can just place orders and it all just flows and and you know kind of what we're trying to do today in the beginning honestly my our vision when i applied to y combinator was i want to be turbo tax for customs and make it super simple to clear a product through us customs and we didn't i didn't have time to think about all this stuff in fact i used to think like planning that far in the future was

a sign of you're gonna fail like just focus on what can you do for the next six to nine weeks or something like that and do one thing really well i guess yeah and like try to do it you know we had a we had a clear product market fit almost from the start because i knew what the problem was so i knew that there would be demand if i could start to solve it and but the more you learn and the more customers you talk to and the more vendors you talk to the more you realize like how kind of screwed up the world is in this space they're like oh actually we can do bigger and bigger it keeps expanding i hope that becomes true for the next if you talk to me in five years

you're like oh you know what i figured out this whole other thing that we could do that we haven't dreamed of yet um i think i have more than five years worth of vision outline for our team today probably 10 and be planning beyond that's a little crazy given that we're all going to be connected directly to our brain with ai or something by then but um but yeah it's it's one of the fun things about flex four you just keep expanding the vision i think that's really common i mean there's a misconception that you sort of you know wake up from a haze and you're like this is it and this is the vision and then

generally the story is actually oh well here's this thing that i know that i can solve and then once you solve it and people really like it it sort of expands and expands yeah and and like probably if a founder is too certain of exactly what the vision is and what the product is going to look like and how it's all going to work they're probably wrong like the world is super messy and like you've got to get out there and iterate i think and this is i used to have a real challenge with this is like i don't know exactly what division when i was first starting out

and you'll you will hear it like y combinator an eminent guest speaker will come and tell you hey you need to have a vision you need a mission statement you need to have clear company values you need all these things and like first off i heard all that and i'm like that sounds like really corporate like we're just gonna hack we're gonna execute we're going to iterate be agile change pivot whatever you want to call it it was only as you start to realize like okay here's a product market fit we've talked to enough users it's very clear what you need to do they've given you feedback a lot of if this

than that statements like if you had this then i would buy yeah uh to where you go okay we now have like five to ten years worth of roadmap okay now you really actually do need these things especially as you get to scale and you can't do it via osmosis not everybody can talk to me and my core team of leaders to know exactly what the strategy is you need to write it down you need to start having values that people can commit to even if they haven't spent a lot of time with me to understand my personal values i mean thankfully we did it before we got that

big i did get enough people teaching me these lessons but once you have i would say like once you have a layer of managers between you and all the employees and you're not directly you need to start writing these things down to clarify for people what they're doing because it doesn't doesn't happen through force of personality at scale like you need to have clear codified uh set of standards now the downside risk is if everything in your culture is codified and written down then it's kind of like you might become a culture of rule followers yeah totally yeah you don't want that either so it's

like always a balance in how do you uh where do you end up on that line yeah i think from series a to series b people die on the uh not will not being willing to do enough process to because it was corporate yeah and then maybe at the b to the c or the c to the d that's when you die for the other thing of like only rule followers and you can't you can't like add new things i never knew i knew what the problem was i didn't know how to solve it customs was pretty complicated like i didn't know how to do all the different forms and

rules and regs and everything and freight forwarding is still like there's no one on planet earth who knows all the freight forwarding yeah it's one of the fun parts like you're constantly peeling layers the onion every country is a little different all these nested relationships and things so i because i had never been a freight forwarder or a customs broker i'd only experience the problem on the customer side then i could not when i was starting flexport tell everyone what to do i didn't know what they should do i was like hey i know that there's a problem here i kind of have an outline of what the

solution would feel like if it existed but how to make it work i didn't know and so we built we went very slow like i actually worked on flexboard for four years before i ever raised venture capital for it oh wow before i ever went to y combinator i was the only employee for four years whereas like if i had known all those things and had all the licenses myself out of like i hired a team told everyone what to do we would have gotten much further in the years one through what's further than years one through four we didn't get any revenue until year five or something uh but then it would be dependent on me and

my own knowledge and my ability to tell everyone what to do yeah which i never did like we really from day one because i couldn't do that i didn't know what we should do i still kind of don't i'm like we got but i do know the problem is i know the vision is i can get really smart people on the team you know how to know which is possibly more important and just how to empower people right like how do we get awesome people on the team who can then say okay yeah go run solve the problem please like i'm not going to tell you how to do it i'll tell you what the problem is why it matters how it fits into the bigger picture vision and that that i think has been a key to

our scaling is that early days because i couldn't tell everyone i'm not licensed as a customs broker i actually failed the customs brokerage exam by one question so i i don't i don't know how to do all this stuff right but i can tell you why it matters why it matters that we're compliant why it matters that we do know how to do these things so then other people who are more qualified than me can solve each of the problems and that that's i think i've that a lot of entrepreneurs fall into where they can't let go and i'll tell you an example like i consider myself kind of good at um marketing like you could say i get pr

and uh twitter like this kind of like if i had to get a job somewhere would probably be in the marketing department somewhere of some company yet i think because of that we've like never really properly built a proper enterprise marketing muscle i don't want to offend anyone at flexport but on the marketing team but they probably agree like i meddled too much i'm like i kind of know too much about that and it becomes the least developed part of the company is i think that you see that a lot because you have to let go in order for it to truly be you have to let go and let and empower people and let

them run and i probably in the area that i think i'm good at i'd probably hold flexport back and i think a lot of that's the biggest do that in their in their company and yet if you're good at something your company you know you need to go do it so i'm not it's not an easy answer to say hey i mean it sounds like on the product development side like knowing how to know and then having a process and having a culture that makes that happen that's like one of the key innovations for sort of this stage of flexport going from here to 80 or 800 billion dollars really

yeah and what is the process for how do you allocate resources in the company how do you set priorities you can do anything you want but you can't do everything you know so what are you going to do not do how do you do budget assign budget used to be like this terrible word to me it sounds so corporate right capital allocation sounds cooler yeah i mean i can't say as someone who funds a lot of very very early stage people yeah a lot of people like how do i learn how to do this and actually that's part of the reason why we really like to fund people who work for you in

the past because that's where you learn so i mean flexport is hiring it's like so flexible is always hiring i think we've built a great talent yeah like engine that people are poaching are people at least eight companies have come out of flexport flexport employees have gone and become venture backed done venture back startups some of which we've funded ourselves it's hard though because the people who know how to do these things have a lot they're well paid equity a lot of them are not not just at flexport like take amazon like a great

people at amazon make like millions of dollars a year yeah even walmart a vp at walmart makes over a million dollars a year i wish i wish more kids knew that they all want to be professional basketball players like that's possible but like being a vp at walmart is probably doable for a lot of people and this wasn't totally true five years ago six years i mean i feel like it's a much more recent thing that you know tech companies because they have so much more gross margin and they always had like this insane like half a mil to several million dollars in earnings per employee sort of thing

going on they could have always given people this much money and then the war for talent in the last sort of five years has actually made it such that you can't you know it's great actually i think it's great i think it's all good yeah but it's very hard for an early stage startup and one that's going through a series a series b to actually attract the talent that knows how to do at scale and they may not need that talent oh yeah yeah up front and yet like oh if you had it someone who could tell you the processes and the systems and avoid the tech debt and the organizational debt by just

getting things right in the beginning you'd be so much better i think about this a lot like our cto now if i would have hired him five years ago would be so much better but five years ago i couldn't hire him you know he was he came from amazon where he ran global logistics technology like he wasn't going to join the early stage unproven company so you have to constantly be upgrading team adding new talent and then and then finding ways one thing i don't think we're that good at but finding ways that like look you might have to bring in outside talent but how do you make sure that the existing people still feel like cool i can still own something i still have an important

role even if you hire a boss for me that's a it's been sad to watch people who like can't get there and like look i gotta hire your boss i love you some of them still feel like you know the human ego is a real thing and yeah leveling is a very hard thing super hard yeah and i it's very sad for everybody because like if all the great people who have left flexport over the years had never left guess what our company would be worth twice as much right now and then they would have made a lot more money probably than whatever they've gone on to do i think about that a lot it's like yeah it's a it's a never-ending effort but i

think you should take a moment and just sort of look back i mean when we first met it was really that much earlier moment which is like just you know getting the first i mean granted like you've been around and you've like learned a lot about the market but it was such an early day and then here we are like you're some real percentage of global gdp yeah well i think we're one percent of u.s trade now containerized ocean freight it doesn't count oil and all these other things which are pretty big so uh but one percent of all the containers coming in which means like

every single ship that enters the united states a container ship will have flexible cargo on it when i joined yci was the only um i was one person in wesley solo founder i think i had three engineers in the philippines that i'd been paying for myself and yeah that's what i met you was way back in yesterday so yeah it's definitely been a ride well thank you for sharing this story and i think we're just going to continue to see flexport grow into that 800 billion juggernaut that's the goal man thanks for supporting us over the years too initially has been a great ambassador

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