My First Million - Unicorn Founder on Unseen Arbitrages, the Paradox of Wealth + Charlie Munger Wisdom ft. Ryan Petersen

Episode Date: November 11, 2024

Episode 648: Shaan Puri ( https://x.com/ShaanVP ) talks to Flexport founder Ryan Petersen ( https://x.com/typesfast ) about playing both games: bootstrapping a startup to millions and raising venture capital to build a multi-billion dollar company.  — Show Notes:  (0:00) Import Genius (5:36) Paul Graham's superpower (9:34) Data-as-a-service framework (13:51) Charlie Munger's worldly wisdom (19:45) Prioritizing adventure (24:09) The paradox of wealth (28:51) Charlie Munger's student experiment (31:00) Negotiation masterclass (37:23) Inside Founders Fund (43:16) Being in a crowd v following a crowd (46:29) Highs and lows (48:52) "You can just do things" (50:16) Unseen arbitrages (53:00) $50M Phone booths — Links: • Flexport - https://www.flexport.com/  • Flexport on X - https://x.com/flexport • ImportGenius - https://www.importgenius.com/  • Schlep Blindness - https://paulgraham.com/schlep.html • Poor Charlie’s Almanack - https://www.stripe.press/poor-charlies-almanack  • Founders Fund - https://foundersfund.com/  — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

All right, today we're talking to Ryan Peterson. Ryan's an interesting guy because he started out, working in a pizza shop, bootstrapping his own company to millions of dollars. And now he runs Flexport, which is a multi-billion dollar company. So he's kind of done both sides, the big Silicon Valley game, as well as the bootstrap, make something out of nothing, form of entrepreneurship. And we talk about three things. The one big lesson he learned when he became friends with Charlie Munger,

what Charlie Munger really taught him. Number two is a master class in negotiation. So things that he learned about negotiation back when he was in business school that still help him today. and the paradox of wealth. So why chasing money, well, money is great and you want to make money. And he says money is great too,

but how instead of chasing money directly, you should do something else instead. He calls this The Paradox of Well. So enjoy this episode with Ryan Peterson. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off on a road. Let's travel.

Okay, today you have the Silicon Valley success story. So you've got Flexport, this like behemoth of a company, multi-billion-dollar company went through YC. You did the Silicon Valley. You won the Silicon Valley game, which is great. And I live in Silicon Valley. I like that.

I spent 10 years trying to win that game. The other side of it, though, that's, I think, a lot more relatable is you were, you know, working at Domino's Pizza as a team. You flipped scooters from, you know, on eBay. You then built Import Genius, which is a bootstrap company that I think had kind of like real EBITA. Like, I think you were making millions in EBITA along the way, right? No, I still am.

still am. It's still a good business. Exactly. So you've done both, right? You've done the bootstrapper game. You've done the flipper game. And then now you've done the big, you know, Silicon Valley disruptive game. And so I think that's cool that you did them and not just that you did all those things, but one sort of led to the other. Is that right? Like the scooters led to Tapeor or Genius, which led to ultimately flexport. Yeah, I think that definitely drawing the lines backwards, you can make that pattern really easily that really the scooters. I was working for my older brother and his business partner, Michael Canco, and we had a lot of frustration with freight

forwarders and customs brokers. And we had a lot of frustration with binding good factories. Those were kind of the two big problems that we saw. I have this econ business that has over I started it kind of right before or right during COVID. Basically, we launched right after COVID. And we've now done over, I don't know, 50 million in revenue. But I would not have found my factory had I not used import genius. And I remember, I was like, I'm kind of like a shortcut taker in general. So I was like, okay, either I can go on Alibaba and I could try every single supplier on here, try to find a good one, or I could go to whoever I think has the best quality

and just try to reverse engineer who is their factory, who is their supplier. And actually, I remember like buying the $99 or $199. I don't remember what it was, like import genius subscription. And then actually there was somebody in your chat team that did the search for me because it wasn't showing up initially. And they went back like further in the records, 12 months, 15 months ago. And they found one manifest. And so if people don't know how this works,

what you guys did was basically you took public data about the shipping manifest. And then you organized and structured it. So you could see for any business, who's their supplier and for any supplier who are all the businesses they work with. Is that right? Is that the right way describing it? Yeah, that's what Import Genius does. It's still, we haven't raised prices much either.

It's still about the same as you said 99 or 199. We might raise it a tiny bit. But importgenius.com is the business that I started. And, you know, if I mean, you mentioned Alibaba because that's, I started that business out of frustration. I was living in China for a while, and I would use Alibaba to find a factory. That would show up at the factory,

and they weren't expecting people to just show up. And it would be like fake factory, like he's just a middleman. Right. You know, or like one time I did give him a couple of advanced days, but I showed up and they were like very clearly like faking it. Like this was not a bunch of guys in a warehouse with no equipment or anything. So yeah, it was frustration for that.

I think it'd been poor genius kind of like the, organic search results like Google you know if it was all ad words you that's kind of like what Alibaba is like people paying for price men etc um Alibaba.com is of course

the original business was B2B searching for factories but that that's not what drives their market cap their market cap is driven by Tao Bao and Alipay and all these other products right um but yeah the original business is like finding factories I think import genius is a much better way to do that I do think that my brand is around

seeing problems that somehow other people just kind of take for granted and they're blind to in some way that they just sort of accept it as, oh, that's just reality. And then actually getting really curious about it and looking at what could you do to solve it? And that's where import genius came from. That's where Funchport came from. And that's sort of that same problem. It's annoying. I'm kind of annoying in that way. Like, when I go to a restaurant, I'm like doing bottleneck analysis on the cashier? Like, what would I do to like, you know, get the traffic flowing faster through this place? I can't help it. What does Paul Graham's word for this schlep-slip blindness, right?

He's got an essay. Yeah, I usually point people to that essay on Paul Graham's essays called Schlep blindness, which is this idea that you're kind of blind to the biggest problems in the world. Paul has a good quote about you. I found in my research. This is the Mickey Blush section. All right. So it says Paul Graham, founder of Y Combinator says,

Ryan is what I call an armor piercing shell, a founder who keeps going through obstacles that would make other people give up. A, do you think it's true? And B, why do you think Paul thinks that about you? I don't know if it's true. I do work really hard and don't give up easily. Paul and I've had a great relationship for a long time. He's seen me since the very early days. I met Paul when I was before I even, I had started Flakesport, but barely.

My brother did Y Combinator the year before me. We were renting a house. Actually, it used to be Max Leibchon's house because we used to get his mail. I don't know how long before. It wasn't been a long time before because it wasn't a very nice. It was like a little apartment. Pre-paid bell house. It was like before you got rich.

But we were renting this apartment and it was near a dog. It was there a park where Paul would take his kid, George, who's now older when it was. And we would take my dog there to play. So we'd just like run into Paul. And my brother was in YC at the time. So we got this striking up conversation. So Paul's seen me since like Flexport was just an idea, basically. He's been a great advisor for us, said nice things, a lot of people.

What did Paul help you with? Because I've asked people this a couple of times, and I feel like everybody's got a great Paul Graham story of like there was a, you know, there's these like crucible moments in every startup or there's these moments of uncertainty. And Paul either brings either a certain level of confidence or clarity or a question or a bit of advice that was helpful early on. Do you feel like there was one of those for you? I think Paul's got his superpower is like not, he only sees what's possible and like how valuable or big could this thing be if everything works. and he ignores every other outcome that's possible. And that is probably the right way to do seed investing, you know, in a power law world to find like that.

And so he always saw it Flicksport really worked. The outcome is so outsized and enormous given the industry size and importance. Then, and then he could help us sell that story to other investors to candidates. He would send emails early days to like top engineers saying, really great things about us, quotes like the one you've mentioned, to different press and stuff like that. He's also been a really big supporter of FlexSport.org,

which is our humanitarian relief logistics division that helps nonprofits doing refugee camp logistics or other sorts of disaster recovery logistics. He's donated billions of dollars to us there and helped us get the word out about all that stuff. So he's a huge supporter of Flexport. That's amazing. Yeah, I always think about like the,

The first believer, I think everybody has this person who believes in you more than you believe in yourself for a period of time. And it's sort of like a short loan. It's like a short term loan that you can get of conviction and is very helpful to an entrepreneur. And it's actually very helpful to be that person, especially once you have a little bit of success as an entrepreneur, you now can lend a little bit of conviction to other people you believe in when they don't really have it. Yeah, I mean, Paul's job is hard. Well, he's retired now, but the job of being a YC partner, leader of YC's just super hard.

A lot, most of those people are going to fail, so you have to kind of delude yourself. If you really want to say, only focus on what could happen, well, it's probably not what's going to happen in most of the cases. That's very hard psychologically, I'm sure. Yeah, maybe he needs another essay that's like Schlep blindness, but it's on the investor side. It's like, you know, fail, fail blindness. It's like the ability to easily forget

with import genius. You took publicly available data. You structured it. You made it into a useful business that generates millions of dollars of your profit. It seems like your brother also did that same business model, right, in a different space with BuildZoom. Can you explain maybe what is the underlying, you know, framework of how to think about business ideas like that that might succeed? It seems like there's a pattern that there's multiple ideas like that.

Yeah, Bill Zim was born out of the frustration of finding a contractor. Bill Zim is my older brother, David's company, one of his companies. And he was my co-founder with Import Genius and my boss. for a while and you know, I was sort of my mentor in startup world. Building was born out of the frustration of finding a contractor to work on your house. And underlying,

it is this public data set of building permits are largely public record, but hard to access. And we had a lot of experience of doing that with import genius. So I built the search engine on building permits and lets you look up any wherever you are. Any house, you can see who the contractors were that worked on it, which is pretty useful as a homeowner.

By the way, as a tool, see who built the problem. If you have a problem, go find that person. They probably can help you with it. But also, you're doing due diligence on contractors, be able to talk to the actual homeowner who worked, like, who worked with them, making sure that the reviews are actually for people that hire this contractor. Like, there's a great data set out there.

So they built a nice little business on top of that data set. I think that government data is a big opportunity. The government has tons of public records on all kinds of. of stuff and no real incentive to organize it in ways that are particularly useful. It makes it hard to build defensibility onto these businesses because other people can, if it's public record, other people can access the data too. So you have to get distribution or build some kind of a network effect on top of it. Like in Build Zeebs case, it's like reviews that you're layering onto this.

And sort of brand is always the ultimate network effect that you can build onto it. but, you know, I think people overthink defensibility a little bit. Like, how could you have defensibility? You're a startup. Just like, if it was defensive, how could you possibly do it yourself? Yeah, we did an episode recently on,

I was like, I found this app that's called Oasis. It's a water quality tracking app. So basically like how much, how much forever chemicals are in your water. Oh, yeah. It's this kid who did the same thing. He basically was like, He lived in, I think, Minnesota where they had like clean water. He drank tap all the time.

He moved to L.A. Start drinking tap water. It tasted funny. He got a little bit sick. He's like, oh, man, I wish I could figure this out. Turns out every city has their own testing data that's publicly available. Turns out that you can request from every bottled water company, their reports as well. So then he created this app that basically presented to the consumer.

And then he goes viral on TikTok with these like kind of like fear based. Like, did you know that blah, blah, blah. But you can check this using this. app and he's built a, you know, a thriving business on this thing. I think he's at like 50K MRR and he's just a kid in his 20s. It's not the most defensible thing. You got to get this to RFK Jr., man. He'll be old. That's right. But I think it's kind of amazing that you could do this, taking public data and making that happen. Yeah, brand and network effect distribution, getting users, getting people loyal to it, ex and high velocity. Yeah, I remember I got in a

fight on Twitter like five years ago with some guy talking about moats and i i was just making a play on word saying well you know the moat turned out to be not that useful once someone invented artillery right right we don't use a moats like what are you going to put alligators to defend your business so i was talking like actually you know you don't really want to hide behind some walls like the real ever ever since the blitzkrieg in like 1940 1939 whatever we'd learned that high velocity attack is the way to win, not like sitting behind defensive walls. Right. And I don't know.

Some investor got really upset with me that I didn't believe in MOTS. Of course, you know, I'm just making a play on words. Right. Well, you wrote in here something that found pretty interesting. I didn't know you were friends with Charlie Munger. And speaking of Mote's, Buffett Munger famously talked about how defensibility and Mote's are super important. Can you tell the story?

How did you become friends with Charlie Munger? Yeah, RIP. Friendly with Charlie Morgan, let's say. I had dinner at his house seven or eight times before he passed. I went to his 99th birthday party last year, actually. I'm a huge fan of, he has this essay, which I think every young person should read, especially young people trying to figure their way through the world. He's called the Art of Worldly Wisdom.

Yeah. Definitely, if you go go worldly wisdom, Charlie Unger, you'll find it. I actually found it on Paul Grimm's. website, I believe PG published it to the Ycombinator website at some point. And I had read it when I was young and feeling uninspired or like trying to figure things out, what should I do with my life? And the essay basically argues that there's in every discipline, like biology or chemistry or whatever the discipline, you know, you can define a number of disciplines however you want, sort of, but somewhat arbitrary, but to say there's a few hundred disciplines in the world.

and that in each one, there's two or three big ideas that carry 80% of the freight. If you know those two or three big ideas, you kind of will get 80% of that whole discipline. Like in biology, it's probably like Darwinian evolution and something to do with genetics, which are obviously related. But like, if you can get those two or three big ideas, you'll have enough biology to be dangerous. Right. And that you can learn these ideas by going to really. the textbook. And so if there's only 300

disciplines and two or three ideas, you're like, okay, I've got to do about 600 to 1,000 ideas that if I could learn them, I'd be like what Munger calls worldly wise. It's an interesting concept that set me off on a journey of, I'd probably read hundreds of books as a result of that.

And so... Searching for the big ideas in every space. Yeah, I'm like, what are these disciplines? And like, disciplines I don't really really that I found boring. Well, like, okay, whatever, I'll just go find. I still learn the top ideas from it. No, I'm not saying I'm succeeded. There are some disciplines I just can't bring myself to.

And by the way, his essay isn't just saying there are these ideas. He actually lists a bunch of them. So he's like, for example, things gravitate tours, winner take all. Therefore, it pays to be number one or number two or just be out. And then he gives example, right? So he'll give, the essay isn't just the concept that these ideas exist. He gives a bunch of examples. Yeah.

And then they're, you know, he thought some like mental models. So you build these mental models from one discipline. It turns out they're often applicable in another, and that's where a lot of the good ideas can come from. And a lot of innovation comes from applying an idea. Like Richard Feynman's a great example of this, famous business. He spent like two years as a biologist and like I did some groundbreaking work in biology just because he took ideas from physics that people hadn't really thought of frameworks

and applied it in biology. Right. Anyways, I was very inspired by Munger for many decades, really, Sillium. And I was at a point. party at one of my investors' houses, and I was just talking to this older guy. Neither of us knew anybody at this party or didn't know many people. And he asked me what my favorite book is. And I started talking about poor Charlie's Almanac, which is a great book that Stripe just reprinted,

by the way. I told him that book is my favorite. And he started telling him why. And I told the story of the worldly wisdom and how I was living in China. I was bored out of my mind sometimes. And so I bought all these books and just started reading books like hours a day, every day. and he let me talk for a long time before he's like, yeah, I know that book really well. I wrote that book. And it turned out the guy I was talking to as a guy named Peter Kaufman who wrote the book, Poor Charlie's Almanac.

He's like one of Charlie Munger's best friends. And he just thought, got such a kick out of me telling him so much about how great his book was. He brought me to Charlie's house for dinner. And many times we came friends with a few other of Charlie's friends. They got invited to lots of dinners. And Charlie, I remember when I first told him about what Flexport does, he was like, oh, this is, that's great. You have a great business because the key to success is dumb competition. And he started ranting about all of his experience working with freight companies.

And I also think that's a great little tagline too. It's like, remember, you know, when you're trying to think of what business to do, all these guys doing AI startups. Like, I think applying AI to some old school frozen industry is a great idea. but just going straight head in, head on against other AI geniuses is like a recipe. Like, who wants to compete with people that's more like. You rather compete with knuckleheads wherever you can.

Yeah, exactly. That's a very simple principle. Like in poker table selection is like probably the most important decision you make. So everyone thinks poker's about like, you know, the bluffs and the advanced betting strategies or whatever it is. And a huge amount of your success comes down to which table did you choose to sit down at. If you chose to sit down at the fish table, you're going to do pretty well.

And that one decision was the most important decision you could have made. If you sit down with all the sharks, well, good luck. It doesn't matter how good you are. You're probably just going to bash your head against the wall for a while. That's why I don't play poker. When you met this guy, I like how you said, you were at a party and you're like, we both didn't know anybody. There's this like alliance of the outcast that happens.

I don't know if you've heard the story about Ben and Jerry's, but they asked Ben, how'd you meet Jerry? And he goes, well, they go, were you guys friends immediately? Because they've been friends for a long time. goes, no, he goes, we just were in the same PE class and we had to run the mile and both of us hated running. So we were the only two guys walking. And eventually, if you're just walking at the back with one other guy, eventually you'll start talking. And he's like, that was the foundation of Ben and Jerry's also. I want to ask you about this, you said you moved to China.

What was the thought process that got you there and what did you get out of doing that? It was 2005. It was clearly booming. It seemed like the future. We were. We were. at that time I was working for my brother. We had this scooter company buying dirt bikes and road, we say scooters, but off-road vehicles, doing buggies, all kinds of cool motorsports products. And we were buying everything from China,

but not like they were buying everything off the internet. No one had been to China. Right. And during college, I lived in South America. I lived in Chile and Brazil. And I speak Spanish and Portuguese. So I was like,

if anyone could learn Chinese, I could probably, learn Chinese. I learned these other two languages, which was very naive. So I saved up a little money and just like moved there. Did you plan to be there for a while? Did you buy a one-way ticket? What was the, what did you tell yourself going in? I don't know. I didn't have an exit plan. I was just going to learn Chinese and learn about Chinese culture and history and economics and what's going on in the boom. What's your tip if somebody's in their 20s and they're, they're kind of intrigued by this, like the adventure path? What would you tell them?

Like, how would you tell them to think about this now that you've done it? Well, I think it's really about your values, you know, and really introspecting. You can select your values too. Well, a lot of people just kind of go through life without thinking about this. I did. And my value, without knowing it consciously, my number one value in life until I was about 25 or 26 was adventure. And I just wanted to, like, try all kinds of stuff. And go all over the world.

And remember, this was pre-Iphone. So it was, like, pretty adventurous. Like, I didn't have GPS in my pocket or translation apps or anything. I mean, I just had to, like, figure stuff. out walking around, asking people for directions and hoping they'd be nice to me, which they were. But it was definitely an adventure. And so at that time, that was my value was like chasing adventure. That's not for everybody. But if it is like, it's pretty easy to achieve, go into cheap places. It's a lot less adventurous these days. I mean, you show up, you call, now you go to China,

you call Uber or D, D,D, I guess. And you got Google, you got maps, you got translation apps. It's like, it's a little too easy. I once rode my bicycle from China to Vietnam. And no map. The map we had was all wrong, which is worse than no map almost. And we just had to figure it out. We slept at people's houses at certain times. Like, it was like, yeah, old school adventures.

I think back to my question about why Paul Graham called you, you know, an armor piercing shell who just, you know, who figures things out. I think this is where you get the reps in, right? Like it doesn't start the problem solving and confidence that I'm going to figure things out doesn't just start the day you incorporate your, you know, your startup in Delaware. It starts by getting a bunch of reps earlier in life, maybe. I think learning a foreign language in that country is extremely valid. It's not a good ROI from like, you probably won't make any money off of this, especially now with chat GPT. It's incredible. I can do live translation into every app and every language.

I mean, but like the humility of like, people everyone thought I was a freaking idiot I mean it was like I couldn't speak um and like you know bus drivers think I'm an idiot uh and having that over and over and over again every day is pretty good for your ego and your humility and also for relating to other people like in your country and when you went there so you're like I'm going to go I'm going to learn the language I'm going to travel eat um but you're a business junkie like you said something I saw in the research which was like, you know, I was like, oh, this guy's my kind of people. You go, my form of entertainment is making a landing page one night and sending some traffic and seeing if people click to buy, right?

So did you, were you kind of scheming and dreaming about business while you were there? What was, what were you doing on the business side while you were? Yeah, so we were sourcing all of our products from China. And so I was like, I would go to factories, find like evaluate quality management. Shepants. I would, I do a little of everything, make websites. We do marketing, customer service. Was that, was that scooter business any good? make any money doing that? What was the result? It was pretty good for like, you know, you made salary, like W2 level income that was above all my, all of our friends at the time, but not like change your life kind of income. Right. You know, this podcast, the title of it is called My First

Million. And one of the things I, at the beginning, the premise of the podcast was always going to be, let me bring people on and ask them how they made their first million. And that's, that's where it started. I ended up pivoting to something else and we kept the name because when something gets popular, change the name's a little risky. But I still do like the question of like, when you did make your first million, what changed? Because I view money as a tool to improve the quality of your life.

And I think it's very easy to slip into money is this kind of measuring stake or just think this thing you accumulate over time. And so I'm curious for you, once you kind of had a win, probably during the import genius days where, okay, you've made some like real money that you freeze up your time. How'd you use it?

And how did it feel? And what was your mindset, during that time. Can you share anything like that? Because I think that's where a lot of people want to get to or they're just at who listen to this. And I think that would be pretty relatable for the year. First thing I did when I started making money was paying off all my student debt.

Okay. That felt great. I invested it wisely. Put a lot in the wealth front index fund investing. Bought a couple of like real estate gas generating real estate properties. I made some stupid decisions too. I once invested in a nightclub that failed. that was stupid.

But it didn't change much. First off, people who tell you that money's not important or won't. I don't believe these studies that say like, oh, like, you know, you stop. At 75-cares. It stops improving your life at a certain point. I'm certain that that can't be replicated. You know, most of these psychology studies turn out to be not, there's a replication crisis in psychology.

And I'm certain that that's one. And, like, you know that money is great because the more. more people have the more they want. It must be great. Right. Must be amazing. Can't get enough of it. Wait, could you say more about this paradox of wealth?

Because I saw you write down this idea. I want to read you a line from this and just kind of hear you talk about this. So here's what you wrote. You wrote paradox of wealth, focusing on making money will cause you to make less money. Nobody wants to give money to people who are too focused on money. They perceive them as greedy and self-interest to try to avoid them. They give money to people who add value for them. It is fine to want money.

It's great, in fact. Money is one of the best things in the world, but it's a paradox. The more of it you want, the less of it you get. So hack your brain instead focusing on the things that are upstream of making money. What's upstream of making money? Yeah, I think upstream making money is solving problems for people at the end of the day, which means learning. You have to build your skill set up so you can learn.

Upstream of that is learning what the problems are and the developing a set of skills and capabilities to let you solve them. Salespeople can suffer from. or they can be great. Like great salespeople are really consultative, like good at asking questions, good at diagnosing problems, understanding what their product or their firm can do

to solve that problem. And, you know, you bring those together. You win. Everybody wins, creating win wins. But the perception of a salesperson is a pusher that I'm going to make you, I'm going to try to get you to buy something you don't want or need.

There's a lot of bad salespeople that aren't like. Which is a bad salesperson. Yeah. But that's the image that most people have when they think of salespeople. And you know, true because we can't even call people a salesperson. Account executives. Because sales is such a bad word. Yeah, we had to rebrand it. We had to go aoli instead of Mayo. There's only a couple of this may have changed. I think it did. In fact, a few years ago when I looked into it, there were only

three universities in the United States that offered a major in sales. Wow. You know, like, it's part of everybody's job. It's like probably 10% of all the jobs in the whole world are sales. explicitly and then everybody has to sell their ideas. And we've, yeah, kind of been wrongly scapegoated as though this was like a terrible profession when in fact they're the key driver of every company, even tech, so many good tech companies fail with good technology because they can't ever learn how to sell it, get customers. And then there's companies where the tech is just, they'll even have tech and they're just good at selling. So, yeah, I think hacking the brain, I used to say things are correlated with money,

but I think it's better to go upstream and actually causing the generation of wealth. And the more you can study that, then you'll get lots of wealth. And I don't think it's bad to want money, but you just have to realize, like, it might cause you to get less. It's a bit like love, by the way.

Someone's obsessed with finding a girlfriend or husband or something. It gets kind of creepy. Like, you know, work on yourself instead. Yeah, that's a great one. There's a great story about Buffett. I don't know if you heard this one where he goes to a classroom. And there's a bunch of kids sitting there and he says, all right, let's play a game.

And he basically says, I want you to point to one person in this classroom. You could choose any classmate, not yourself, but somebody else. And you get to get 10% of their earnings for the rest of their life. Write down on a piece of paper, the name of the person you're picking and why. And so, have you heard the story before? I don't want to bore you. It's not going to surprise you, but like, it's not going to surprise you, but like it's interesting.

I think it makes the point well. So he everybody writes down the name. And then he brings it up. He's like, you know, okay, who here? Just raise your hand. Did you pick the person with the best grades? And nobody raises their hands. So there's already that tells you something, right, about school.

And what we think is the valuable thing versus what everybody intuitively in their gut knew is the valuable thing. He says, okay, did you just pick the person with the highest IQ and a couple people raised their hands? Did you pick the guy who could throw the football the farthest? Nobody raises their hands. hand. And so then he finds, starts asking, he's like, what qualities did you pick? And basically, that's where, you know, it came down to some version of the following characteristics that Buffett

ultimately used for picking people, which is, you know, he talks about like energy. So it was people who are really, they're really obsessed with things, really into things. When they get, when they put their mind to a project, they just never stop. They just never give up. They just kind of have an endless energy towards something. Another one was like integrity, right? Because if this person is going to act out of bounds, then, you know, owning 10% of their, future if they're in jail is not going to do me much good, I got to have somebody who's going to play by the rules and play by the law. They know what rules to break and what rules not to break. And then the last one was intelligence, which was somebody who's good at figuring

things out specifically. So not your grades or just your raw IQ, but somebody who tends to figure things out. And he's like, great. So now you have the formula of what you need to be. If that's what you would pick and others, that's what you need to be. And that's sort of reminds me of the paradox of wealth, which is like, if you put 100 people together, you're like, all right, who's going to be the wealthiest? I think intuitively, we would know it's not the person who's going to just like sort of only chase money and try to just extract as much money as they could out of some system.

It's probably not going to work as well as somebody who does the things you talked about. Speaking of school, I took a negotiations class once, and it was one of my favorite classes. Everyone should try to get into one of these things because the way you do and work is you're always wanted to take this. I don't want to go to business school, but I'd love to take a negotiation class. Yeah. You're given like a case study where both parties read this.

document. You have slightly different rules to play. And then you negotiate with each other under those conditions. But what's amazing is that in a class, there's 30 other pairs, if there's 60 people in your class, there's 30 other pairs of 15, whatever, however many people, doing the exact same thing. So you can compare yourself how you did against other people in the same seat as you. And that was over almost 20 years ago. It was very interesting because I've seen in touch a lot of these people. And you can track the people who are the best negotiators in a classroom environment or not the most successful. Because they're very good. extracting too much in a one-off negotiation, but that's not how life works.

Right. In life, there's repeat games. Like, you got to let the other guy win. You got to, you know, if you just took advantage to someone, like, they're never going to want to do business with you again. Guess what? Like, you're not going to do that well. So it's kind of an interesting, like, long, longitudinal study that someone could

deal on these things. I worked with my dad for about nine months and working with your dad's an interesting experience in a bunch of different ways. But one of the things, you actually get to see. your dad in a new context. I got to see my dad at work. And one of the things that I asked other people at work, I go, what's my dad good at? What's his strength? And they all said, you know, he's a good negotiator. He's a great negotiator, but he's a little too tough. And I, okay, interesting. Because I asked strength and weakness, and they kind of said the same thing.

So I got into the situation where it was one like high stakes negotiations. Basically, like the future of the company was like kind of up for grabs. And somebody had leverage. Somebody else had leverage. We all sat down to this table. And my dad, I did one thing really great, which was he was like, we didn't really like the options on the table. And he's like, oh, okay, cool. I'll always go with the third option then. No. I was like, no what?

Like, what's your counter? He's like, no counter. No. And he's like, basically in a negotiation, he's like, I was like, well, how are you going to explain this? He's like, oh, it's not about explaining. In a negotiation, the more irrational person tends to win. The more stubborn party wins because the other person will just realize this person's irrational. So I just have to play by their rules.

So he was super stubborn to you. And he won. At the end, they took a break. They's kind of like, okay, let's go break before we kind of come back and finalize. And I asked this other guy who was kind of the arbitrator sitting there. I said, what do you think? And he goes, I think you took too much. And my dad kind of smiled.

He took that as a point of pride. And I sort of was like, what do you mean by that? He's like, you were at a poker table and you tilted the table and all the chips went towards you. There's no way this deal gets done, eventually gets done, right? Because they have nothing to gain. You've taken everything away from them. So they have nothing to gain out of this transaction.

Today, they feel forced, but soon they'll just realize, ah, this is not even, I don't have to do that. I'd rather not. And that's exactly how it played out. And I learned a lesson sort of at my dad's expense about in a negotiation, you sort of both sides need to leave a little wanting. Or even if you take too much, you sort of need to give back at the end in order for something to be sustainable, or especially if you're playing a repeat game,

where have you had, you know, negotiation in your life since then, right? because it's just not a everyday thing. It's a once-in-while thing. Oh, man, we run a global logistics company where we have to procure ocean freight and air freight, and then we have to sell air freight and ocean freight. Okay, maybe it's a daily thing for you. Trucking, custom services, everything else that we do on the end-to-end basis.

So there's a huge amount of negotiation. I think one of the big opportunities we have in this industry is, I think the industry is very short-term focused and transactional, almost mercenary. And some of these things you have to kind of go with the industry. You can't change everything about the industry at once, but being able to play the long game and say, hey, we're going to make tons of money by building trust with people

and showing them where the profit pools are and not taking too much of it and figuring out how do we create the right win-win scenario. It's a good framework actually for evaluating any company. There's six stakeholders at the table for every company. You have your customers, you have your vendors, which in some cases don't matter. much, but for us, they matter a lot. You've got your employees, your investors, you have regulators,

and you have like the communities where you live and operate. And so you've got these six stakeholders and you've got to create a win-win. And it's a very simple way for each of them, they need to win in an ideal scenario. And you can go through almost any company and say, okay, let's score them A through F on for each one of those things. Very rare to find a company where every single party's winning. Somebody's usually, you know. So what's the goal? Is it mostly A's but nothing below a C?

What's the, what are you trying to do? But where you have something that's bad, like you've got a lot of risk. And that's no good, right? It could all come to a stop. Like, especially if that, like, the regulators are not happy.

Communities are like, I don't know, protesting you, trying to run you out of town. I think, like, Airbnb's, a good example. I think it's a great company. Guests pretty much love it. The homeowners definitely love it and making free cash off this unused asset. Investors done really great. The employees seem really happy over there. The regulators, they not thrilled in some cases. They manage it. Sometimes they like it because it generates tax remnants. Communities, I don't know, I don't want people throwing a party in the house next door to mine.

And so that's an area for them as they have this framework. Okay, where should we emphasize what are we doing? And they have. They look at this. I don't know. They use that exact framework, but they certainly are going, okay, let's ban partying. What else can we do to make neighbors like us more, right? And so it's a pretty simple framework.

I think someone's looking for a job at a company. They should definitely take the time to score each company they're considering on this framework or investor is the same way. Because if everybody's not winning, then the thing might not be sustained. for the long term. And all the good returns as an investor come by holding for a very long time and letting the compounding machine run. Yeah, the risk accumulates. It may not be a problem right now, but it's accumulating.

Yeah. Eventually, that's a powder keg. You are also a partner at Founders Fund, right? Yeah, a venture partner. A venture partner at Founders Fund. Your LinkedIn says, looking for a generational company to back. How's that going? Great.

I mean, that's why I've been very loyal part of the. the Founders Fund Network for a while. They were our first Series A investor. They lent our A and our B and participated, I think, in every other round that we've done, basically. And when they asked me to join, it was kind of no-brainer for me. I mean, it took me a little while. I said no-a-buner, but the only fun that we consider it joining,

because I think they're really unique in their refusal to follow the herd and to think for themselves. But I joined actually full-time as a general partner. Then I came back to Fletchport. I took about six months where I was the executive chairman. And then I realized I had to come back and be the CEO again at Fletchport. And so I kind of scaled my role way back at Farnerschuan, but I'm still part of the team. You said like they're unique in how they do things.

I've interacted with them a bunch too and felt that. But I'm always interested, like, what's the cause of that effect? So like what is an example of something that they do differently on the input side that leads to the output of being, you know, sort of independent thinkers or contrarian or willing to make bets that others don't. Well, a lot of it just comes from Peter being refusing, like he's just like, that's his whole life thesis is that people are memetic and they will chase the same outcome, the same goal, the same object, the same memetic desire. Everybody wants the same thing. And if you can avoid that as a huge arbitrage opportunity, if you can go look where other people are looking.

and so a lot of it just comes, I would say probably, it's just from Peter, but they've really trained it into the team. How does that manifest itself? It's a very high-paying job. Fowler's actually has a vendor compensation structure. It's almost all tied to the outcomes, the performance. But like a lot of VCs just make super huge. You'd be surprised how high the salaries are at a lot of VCs.

So they make a lot of money in a job that can't really be measured except on a 10-year time horizon. And even on that, it could be. luck. And so, and you don't have like an overseeing, like a boss breathing down your neck. Like, you can do it from anywhere, kind of. Nobody's, every time I email a VC, they seem to be in France. So it's a, it's a job that like is kind of a dream where you just, so what's the incentive structure there for? Like, just don't get fire. And it's hard to fire you for performance, because it takes a long time for these things to mature. And again, it could be love. So the way you get fired is by everybody consensus agreeing that you're doing dumb things.

It's not by doing dumb things. It's by having a consensus form around you that this guy's making dumb decisions. We got to fire. And there are a lot of cases where funds fired someone who, it turned out a few years later, had been their best guy, but they didn't know it. So therefore, the way to avoid getting fired in VC, again, this is not Founders Fund. That is what I like about them, that they're very different. But the way to avoid getting fired is to be, well, to double check everything you do with other VCs.

Right. To make sure everybody agree. And you don't want to do it internally because then you look like you got no opinions. And you can't operate. So you do it with all your buddies at all the other VCs. So it's just a collusion, massive collusion racket on per, like there's no, the incentives are just structured sense that everybody's talking to everybody to double check and make sure. And then that leads to regression, herd mentality, regression to the mean.

it leads to people not wanting to take a lot of risk, which is just lame, it's just lame, right? Venture capital should be all about risk-taking, but it's not, often it's not. And I think Founders Fund's very good at not participating in those things. They don't really go to conferences. The conference they do do is called Hereticon. It's like literally about heretical ideas

that you're not allowed to say out loud. That's probably the most unique conference. Most people probably don't know what it is. Can you explain what Heretcon is? And then maybe some examples of what a talk at Hereticon might be about. It's Hereticon is idea, but most conferences, people on stage are like, you can't say anything that's not fitting the mainstream narrative. Right.

And Hereticon, the idea is that you come up into the stage and say something that would like get you canceled or some heretical idea. The definition of heretic. Again, they don't publish the talks online. I don't say because of the nature of it all. But I'm working on, I'm going to do a talk if I can make maybe next year, I'll try to do a talk. The definition of heretic.

A person holding opinion at odds with what is generally accepted. I texted a bunch of friends who went. I said, hey, what was the best thing? And they were like, well, like, you know, somebody gave this talk. Like, my belief in the probability that aliens exist has, like, has like actually meaningfully changed based on X talk. Or this person gave this talk about, you know,

the conspiracy around X, Y, Z. And it just sounds fascinating. It sounds like, you know, one of the few conferences where I would get there early. and stay late. Yeah, which is like the market great idea. Like,

don't just follow the herd. And they're not trying to like just reference check every deal. They'll put their neck out there, make some crazy beth. What's amazing, and I didn't haven't yet figured out is how they have such an amazing track record

because I don't think just yoloing it. They're very good of picking founders, I think. Right. There's no formula for it because people are unique. But it's, it is a really interesting. And they're writing,

they're very big fun these days. and they write large checks with conviction, but without being like spreadsheet monkeys who are just, you know, it's not all... Of course, they do diligence and analysis and stuff, but they're much more built on who the founder is and what they're all about. Right. Before you came on, I sent this doc to every guest,

and one of the questions I asked is like, what are three strong opinions or life philosophies you live by? So one is related to what we're talking about. You have this quote from Emerson. It says, the great man is he who in the midst of the crowd keeps with perfect sweetness, the independence of solitude. And you had some examples under this.

Can you talk about that, what that means to you and what are some examples? Well, there's some great, very practical examples that you can use in your life and you'll be able to see that this is true. Okay. And literally related to crowds. And next time you are entering a stadium, watch, your brain will want to just follow the people mindlessly into the stadium. But if you were able to snap out of that and go, wait, let me think for myself right now.

These people have no idea. Most of them have never been to this stadium before. They don't know where the entrance is. Right. There's always another entrance that nobody's lined up for, and you can just walk right in. Always. Like, or a parking, I'm a big skier. Whenever you go to the ski resort, there are these guys that are like waving parking attendants.

And their job is to park all the cars. But their job is not to park your car as close to the mountain as you could be. Like there's not a thousand spaces right next to the chair left. So they're going to point everybody to where there's a thousand chairlift. spaces, which like for sure you're going to have to take some kind of shuttle. Right. It'll take you an hour to get to the ski lift. But if you just ignore that guy, I mean, I don't want to be rude and figure out

way to do this. It's not like breaking the rules or whatever, but go straight to the front. And there will be a spot right next to the chairlift because somebody leaves. Somebody's always leaving. And so, yeah, you can apply this at the very practical level of like moving your own body around when there's large groups of people and watching the herd mentality play out. it's very difficult often for people to do like people are terrified of public speaking for good reason like for thousands of tens of thousands of years if you were standing in front

a large group of other humans they were probably about to kill you you're either their leader or they were going to kill you something bad's going to happen this should be of course it's terrifying and learning how to become their leader is not instinctual I think it maybe for certain sub-cru, you know, certainly not for me. It took me a long time to get practice, some degree of just practicing to not feel terrified in front of groups and then to enjoy it.

And like, I don't think leaders are terrified. They love the crowd. Or like, but even Bruce Springsteen says he still gets nervous when he goes and plays. And then he has to like hack his brain to believe that that's like energy he can harness to give the fans what they want. Yeah.

Like you've mentioned a couple of things like just like that Bruce Springsteen, the mindset, hacking your mind. Are you big into mindset? I think any founder is a, it's very hard for people to understand what a roller coaster it is emotionally and how painful. Like the lows are pretty low. And the high and the low can come in the same day. You get a punched in the face constantly.

And yeah, you can get pretty down. You need to have release mechanisms and hacks and ways to get yourself back up. because it's not, it's certainly not for everybody. Can I tell you a little hack I do that maybe, maybe it's useful for anybody out there. So I have a Slack channel called literally highs and lows. And what I do is that anytime there's a high or a low, I'll go post it there.

And the beautiful thing about it, because of the Slack channel, you could just scroll up and realize, you're like three months ago. Oh yeah, I remember that felt like kind of the end of the world. That felt really bad. And now it's like a stubbed toe.

It's like, do you remember how your last stubbed toe felt? Is this like a private channel? Is this for your shelf? It's me and my co-founder. So we do this and I do this and across every business I have. And so whether it's a high, and then I go back and I get humbled immediately by a low. I'm like, okay, don't get too high on your own supply here. Or it's a low currently.

And I'm like, well, I've already gone through. If you just scroll up, I've already conquered a bunch of mountains like this before I've dealt with this. I'll be fine. And it's like an immediate like kind of perspective machine. And it's not even like somebody else perspective. It's like I also was in the same channel three months. go saying the same thing, crying wolf basically about this high or this low, and neither are as good or as bad as they seem in the moment.

It's, yeah, I like that. I might try that. But it's very hard for a non-founder to appreciate how difficult that it. My wife is a former journalist, tech reporter, in fact. Oh, nice. Her watching my ride firsthand, watching is the wrong word, participating in it, has really kind of, I hope she's like, man, I wish I would have known this side of the thing when I was writing about techcom.

You know, understood. Because, you know, I think tech reporters are, um, they all reporters play a very important function of like holding the powerful accountable. But like founders are not that power. We're kind of suffering through. Like, you know, we're up against some very powerful forces in the world. Like we feel like we're the ones like trying to, you know, speak truth to power and fight for the other guy and stuff.

And then the narrative within the media has been like, oh, the tech that, you know, the founders are the ones that we have to hold accountable. You're like, what about this like multi-billion dollar trillion, almost tens of billion dollar mega corporation that I compete with? Like, I'm kind of pathetic sometimes. I mean, we beat them every day. But like, sometimes they're better than us in certain things. And like, we're trying to get better. We get better what's faster than they do. But we're not always the best.

We're starting out, like especially as an early stage founder. You have another one of the life philosophies that was simple. It had no extra words. So I kind of want you to hear, I kind of want to hear your explanation of it. You said, you can just do things. What does that motto do for you? Oh, I don't know. I think there's this idea that you need somebody's permission to do. I mean, you should have, it's why, by the way, a law class is useful for people if you're in undergrad to try to get like into a basic class. A law class? Yeah, law. Like, don't break the law. But you should have an understanding with. legal and what's not. China GPG is pretty amazing for this. But in general, like, it's not illegal. You can just do it. And there's a lot of things that people are expecting. You know, we come up through this, like, education system where it's everything's

gated and you can't get to 12th grade math until you finish 11th grade math or whatever. And you don't get to go to college unless you get these grades and stuff. So within the institutions of the world, like, yeah, there's, you can't just do things. You have to follow the rules. But, like, in the real world, that's not how it works. Like, there's no bond. like waiting to tell you what you can do. A lot of people believe that they have to raise venture capital

to start a company, for example. And we're like, well, maybe you should think of a different idea that doesn't need any money and just do it. And that's what we did. And we raised VC after 10 years of doing companies without. Right. Yeah, you don't need to have like the victim mindset. You have a, on the YC application,

there's this question about like what, I mean, the YC application is not long either. So if the question's on there, it must have some value. There's only like seven questions on the whole application. And it was a, what's an example of a real world system that you've hacked? Meaning like, kind of like this. Like you could just do things or not following the crowd, finding the side door into something. I asked my friend, my friend Sheel, who I think invested in Flexport early on, I go,

hey, I got Ryan on the podcast today. What's a good Ryan's story from early days? He goes, oh, there's a bunch. He gave me one. He goes, he bought AdWords for. or the keyword Uber promo and just put his own promo code there and just got a bunch of cheap Uber rides for himself that way. Is that true?

Did you do that? I got, I became Uber's best customer lifetime probably because I did. I got like $10,000 in Uber credits by doing that. And then I treated Uber like it was free because it was free for me for a while. And I've probably net out, netted out to spending like, I bet you that, you know, I spent way too much. The hustle was wins.

as a result. Yeah, that was a good hack. I didn't come up with that. I copied it from a friend, but you know, what's funny is I had two friends that did that, and I never, it never occurred to me to also do that. Right?

Like, I just assumed it was done because other people had done it. I do think they kind of shut it down. I'm not sure it was even bad. Like, I think I paid for Google's Adverts campaign, or Uber's Adverts campaign for them. We had this dude call into the podcast once, and he's a guy in India.

And what he was doing was he realized there's an arbitrage where Uber, had this like credit, like kind of, you give credits to somebody and then you'll get credits, right? That was the kind of like the PayPal, give 10, get 10 type of model. But what they didn't do was they didn't account for geographic differences at the time. So he would just get a bunch of people in India to sign up. He'd give them, you know, $10 of Uber credits, which is like a big deal. And they would sign up and they would take a ride.

And a ride in India is really cheap. And he would get $10 of credits and he would sell it to Americans. And so I bought thousands of dollars of credits off this guy. And I wrote really, really cheap because you could buy. like five grand of credits for like $1,000 because this guy was farming them in India basically. And this worked for years and he called into the podcast. And he was like literally in like a small apartment in rural India.

And he was like, it's amazing. I make, you know, like, but I forgot what it was like $15,000 a month, which is more than like my entire village makes basically doing this. He goes, I don't know how long it'll last. That's why I'm still living here. I'm just saving it up for now. But eventually they'll close this loophole. And when they do, you know, that'll be a sad day.

But it was amazing to see that. that loophole, that hack. Yeah, I definitely spanned through the credits pretty quick and then just became Uber's biggest customer for a long time. Now I'm mostly riding my bike and I stopped riding Uber to work. One thing I find fascinating is you have a side hustle. And I find this interesting when entrepreneurs have these like side things that just work right off the bat.

You did this one about phone booths, like phone booths and companies. Could you just quickly tell this story? Because I think it's kind of inspiring. Yeah, well, unfortunately, it closed down. They sold the company and I didn't make any money. I think it was kind of mismanaged, to be honest. Okay, fair now. We basically, it started at Flexport.

We never had enough conference rooms. And so I made, I got these carpenters on Craigslist to make a couple of phone booths out of, just like Wood, built a phone booth in our office at Flexport. And put like a lot of foam padding in there to make it somewhat soundproof. And they were terrible, the ones I made myself on Craigslist, because I didn't put, we put a fan, but not enough. ventilation. So you'd come out of this thing just dripping and sweat. And yet people were in there nonstop using it. I was like, if the product's this bad and yet everybody wants to use it, there's like something here. Yeah. So my friend Henrik, who's the founder of Air Help, really ran with this idea. I should give him all the credit. He built it into a company.

I kept talking about it. This is another thing to do is talk about your business ideas at parties and stuff. And if everybody wants, every time I talked about this idea with donors, they'd be like, I want to buy five of them. It was like, oh man,

I should just start this company. I've got like a waiting list to buy the stuff. So we made like these really nice Swedish design. And now that the companies failed or been sold, I can tell you the IPs, the secret here, the intellectual property was we didn't, we put three fans in that thing.

The genius. The genius hack. So I was doing like 50. $50 million in sales. $50? Yeah. We're selling thousands of them and somehow we couldn't make money. I was very frustrated.

We hired a CEO. Just the unit economics wrong or the overhead was the problem? Yeah, you had too many people on the team, spending money on PS. I'm not sure what happened. I'm a little pissed about it because it's like, dude, you're selling $50 million of the phone was you should make $10 million in profit at least. Like the high margin. All right.

Somebody should reboot this idea and just do it. Do it without the mismanagement. I believe so. Now, it might have become very competitive space. there's a lot of people at the time. There was no good cheap phone booth out there trying to make, like I think we sold him for like $3,000. But you can make a phone booth for $1,000.

Like, come on, it's not that hard. So. Yeah, I think in the you could just do things category, I'm going to put this in there. I think somebody can just do this again. Yeah, feel free to run with that one because that company didn't work. They sold to somebody. But I think the founder had ambition to be like a billion dollar unicorn company

instead of like, dude, let's, let's sell this thing to Staples for $50 million and like be happy. Right. Exactly. Ryan, thanks for coming on, man. This has been fun.

I'm a user of Flexport. I use it for my ecom biz. You've helped me forward a bunch of freight. Here's how I know you've helped me. I still don't know what freight forwarding really is. And we've done, you know, tens of millions of a year in revenue.

And that's the beauty of it. I don't have to know. I just know that our shit gets taken care of. It's a low price. It's the easiest to use tool. So thank you for making that happen. Thank you for import genius also, because I would have never found my supplier had I not use that.

Where should people follow? you and find out more. I'm on Twitter, my handle on X.com slash typesfast is my handle. And go to flex4.com. If you're at ecom business or you run any kind of logistics, you need to ship things from anywhere to anywhere. We started in freight forwarding, which is, well, I joke it should be called freight email forwarding.

Sean is passing emails around the world to get a container or some air freight move. But last year, we acquired Shopify logistics and now we do direct-to-consumer fulfillment it all the way to the door as well as like distribution into Amazon, FBI, handling that problem with like getting appointments and managing all of that. So helping brands solve problems in their supply chain is what we're all about. There we go. By the way, your handle is types fast and I love it. Your brothers is types faster.

Ultimate big brother move for him to do that. Well, it's true. He does type fast for the means. All right, Ryan. Thanks so much, man. Thank you. I feel like I can rule the world. I know I could be what I.

I want to. I put my all in it like no days off. On the road, let's travel, never looking back.