This Week in Startups - Flexport CEO Ryan Petersen on “going big” with $1B funding round, insights from scaling globally, lessons from the pandemic | E1169

Episode Date: February 3, 2021

Check out Flexport: https://www.flexport.com FOLLOW Ryan: https://twitter.com/typesfast FOLLOW Jason: https://linktr.ee/calacanis

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Twist and checkout.com. With checkout.com, your business can innovate, adapt to your markets, and make smarter financial decisions faster. If your business takes payments online, you need checkout.com. Learn more at checkout.com slash twist. Hey, everybody, welcome to this week in startups. These are the Lake Tahoe episodes. I decided to take a vacation.

I decided on Saturday. that the ski report was seven feet of snow. Got the kids. Last minute, made a trip to the mountains, skied four days in a row, right after I do this pot, I'm going to go out, two more hours of fresh powder. And I got to tell you something, if you're feeling a little bit down, if you've been having a hard time in the pandemic, two things. One, get out there and crush some fresh pow-pow or go for a hike, do something in nature. I am telling you it is amazing. And then number two, the vaccines are working. There is so much hope. Johnson and Johnson single shot, keep it in a refrigerator super effective. And in Israel, all the people have gotten the shots,

none of them are dying. And like 0.015% are even getting COVID. And they're not even getting hospitalized. They don't even know they have it. Great days are coming. It's going to be an amazing 2021. You've got to just hold on everybody. So if you're feeling blue, if you're feeling down, it's totally natural. Go talk to a friend. It's a public service announcement. Go get some nature, okay? Talk to a friend, get some nature. You know, be positive. Just read the vaccine.

Go to our world and data and read the vaccine data every day, and you will feel great. My parents got the vaccine. Cannot wait to see my mommy and daddy again. They're coming out to San Francisco in the Bay Area to spend some time in March, and I haven't seen my mommy and my dad, whatever. But I haven't seen my mommy since February. And I'm getting off a clempt here, but I'm going to get to see my mommy again. And I'm really excited because she's in New York.

so I can't wait to see you, mom and dad too, but you know, mom especially. I love my dad too. It's a complicated relationship, as you can imagine. And by the way, on a serious note, there's been some tragedies over the last year. And if you are feeling despondent and you feel like things are not going to get better, go get professional help, take your closest friend, hold their hand and just say, I'm not right right now. I need help. I have a lot of friends in my circle who've had some dark times right now. And there is no shame in going and asking for help. And life is beautiful and there is so much to look forward to. So please stay in the game. Whatever you do, you got to stay in the game. So if you feel despondent, I'm no expert on this, but I can tell you

one thing. There are people out there who love you and go find them and then go get that help, okay? Because we need you in the game. All right, that's my end of my public service announcement. I'm really excited about today's guest because it's going to hit on so many notes. He's a tremendous entrepreneur. His company's done fantastic. But really, I'm so excited because he found a really big problem after working on a small problem. My guest today was working for his big brother. He was importing motorcycles or something. And he just got super frustrated. And so all this pain and suffering with trying to get his product from China on shipping containers into America. And he lost the paperwork, bringing his motorcycles here. And then his motorcycles were in

drayage. They were basically locked in and he had to pay a thousand bucks a day or something crazy like that. And he was in the debt spiral trying to get his motorcycles. And he realized, you know what? Why does this entire industry of shipping containers run on paper? There's got to be a better way. And that moment is always magical for founders. And I'm really excited to have him on the pod. His name is Ryan Peter said, you know the company. Flexport. Welcome to the pod. Thank you. Jason. It's awesome to be here. Yeah. You and I have traded no. and you've been a long-time fan of the pot, I understand, you told me? Long-time listener, first-time caller.

All right, all right. So what did you think of the Nix Performers Tonight versus Sacramento Kings? What do you think? Trade Julius Randler or give him the extension. I love talk radio. So you founded Flexport in 2013. I gave a little preamble about the pain and suffering you had, working with your brother on that motorcycle import.

Tell us a little bit about that moment in time when you had the idea for Flexport. And then let's go into what Flexport actually does. So founded Flexport in 2013 officially. I mean, that's what we call our founding date. I've actually found business plans that I wrote. I'm not like a business planner, but like a one-pageer or even like a little Excel model from 2008. And I started working on this for a long time. It took me years to like get a customs brokerage license or a heavily regulated space

to get learned enough about the industry to actually do something. So I was the only employee of Flexport for four years before we were. were founded. So sometimes it's an overnight decade long overnight success. I did. I worked for my older brother and his college roommate and his business partner for a long time, guy named Michael Canco. We built a business buying motorcycles in China and selling them both through the internet. We were big vendors, big sellers on eBay Motors. We sold a few things on Amazon. And actually, one of the things that happened to us was when we were selling on eBay Motors, we would often buy too much of the product and crash the price because it's kind of an auction. And then all of a

sudden we'd be stuck with all this inventory that we couldn't liquidate. So we built a pretty innovative network selling these motorcycles through live car auctions, like where dealers go. And when a dealer buys your car, they don't sell, you know, you sell your car to the Tesla dealership when you buy a Tesla, they're taking that car and selling it at some auction, get rid of it. So we got licensed car dealers. We were like distributing motorcycles all over the country through these things. So we're entrepreneurial venture. We never called it a startup.

Like we, yeah, we had websites and built stuff and we're pretty good. You were kind of like Tom Cruise at the beginning of Rain Man where he's like flipping a bunch of Ferraris in a factory. It's kind of get a quick flipping. We definitely learn the pain. And like I have so much respect for all of like sports customers who are building their businesses, building the dream, like importing stuff, finding a product, making a brand, trying to make a name for themselves, it's so hard to stand out. And especially like if you don't

control your downstream distribution, you're selling on eBay or on Amazon, you're kind of just like this commodity thing. And you don't control upstream if you're just buying it from some factory in China or wherever. So it's a hard business. I got a lot of respect for people that do physical products, goods and try to make a business out of it. And I suffered all the pain that you could imagine of entrepreneurship. And when we think about a company like say FedEx and logistics, UPS, DHS, those companies. They tend to do smaller packages, you know, generally stuff people can pick up or maybe put on a wheelbarrel or something, and they control things from pickup to drop off, right? It's one system. They have their own automation. They don't need anybody else's help. But then anybody else who's

shipping stuff, how many people would touch if I ordered, you know, 100 bicycles from China or 10,000 this week in startups, you know, mugs or something. And it came, how many people actually touched that? And how much of the cost of items, you know, these containers, what does it cost to ship a container like that from China to the Long Beachport? I'm curious. Yeah. Well, that's the right. That's the right analogy. I mean, if you think about FedEx, we're all familiar with it is a consumer brands. We don't know it. We use it ourselves. And it is. It's controlled end to end by one company, one system, therefore one IT system, right, one backbone for all the managing all the data and connecting all the parties. In the freight world, there's no company that could do that end to end.

You would have to, if you just think about how big you would have to be, because a container ship, now the big ones are carrying 10,000 truckloads on them. So when that truck arrives, you need to have 10,000 truckers waiting. And you've got to have a ship going between every port and every other port kind of every day, right? All of a sudden, you're employing just tens of millions of people and truck drivers, and it's like, no one wants to do that. It's, you can't really run a business that big. And so instead, you get, you work as a brand and he's a ship's on and you work with a freight forwarder.

And that's what flexport is. We're coordinating that complexity for you, uh, from door to door. So your question was how many parties would be involved or how many hands might touch it. I, I think there's around on a typical transaction, 10 companies will be involved, door to door. Um, you can have as many as 18 or 20. I mean, once you add brokerage layers and middlemen and all. these things. And you want to just think about it. Okay, you've got a brand, let's say,

that's buying products internationally. Pick your favorite consumer, direct-to-consumer brand. Well, these guys are buying, so there's one company. They're buying it from a factory. That's two. They got to connect. I got to send a truck to that factory and pick it up. We're going to bring it to a warehouse and consolidate in a container with other people's cargo or put it on an airplane. You're going to mix it. I think that's four. I think we're up to four. I got the warehouse, right? And I got to bring from the warehouse to the port. So there's another truck. The port itself.

I need a customs brokerage to get it out of the country. I'm at seven. I haven't even left the country. I haven't even left the origin country. Still on the ground. So that would double it, right? Because I got to do the mirror image on the other side. Oh, boy.

Yeah. There's a bank here because a bank is making the payment. And like there's all kinds of paperwork that you need to say, hey, these conditions have been satisfied so you can release the cargo. And that's the paperwork that you're alluding to. There's like a title. and the default in international trade. There's a name for a bill of lading.

What does lading mean? That tells you about this industry. Laying is old English for loading. It's a Viking language, right? We're talking like this is like Middle Ages stuff, right? Wow. And so, lady, yeah, L-A-D-I-N-G. I'm pretty sure that's where it comes from is like old English, Viking language, Viking English.

I wonder where the term Dreyage comes from. You know that term too, right? Dreyage is port trucking. So Dre, I believe, is also like an old English term for loaded, for haulage, for hauling something. Incredible. I think so. It's kind of fun. One of the fun things actually about this industry is there's all these code words, acronyms, you know, bill of lading, but also X works, F-O-B.

There's a million of them. We have one of the heaviest traffic portions of Flexport site from an SEO perspective is our glossary, just like teaching people all these words are. And my original hypothesis, they're actually useful. They're like, you know, allow you to speak in shorter sentences and feel cool. L-T-L-T-L-T-L-T-L-C-L-C-L-L-C-L. There's tons. Well, my working hypothesis is that these are all rookie detectors. Like if I'm talking to you and you ask me what's F-CL, I'm like, oh, all right, I'll teach you, but the price is going up right now.

Yeah, yeah. And that was like my biggest, I had two big frustrations when I was a customer of these companies. And the first was, I'm a technologist at heart. I grew up using computers nonstop. My dad and my brother, both computer programmers, and they taught me a lot about programming. And what I would see, like, there's no software here. There's no, what am I doing? Like, you've talked about it in the intro, these paperwork, emails, phone calls.

I'm like, where's my software? Where's my analytics? Where's my data? Teach me what's going on. Where's my communication ability? So one was tech, but two, and I think just as important and something that's really made Flexport. And that's just like a culture of customer obsession that completely is missing.

They see customers as either if they own assets, like you're just here to fill my ship. You're not, my ship is not here to serve you. You're here to put containers on my ship. I'm doing you a favor. Yeah. Or they just benefit from the information asymmetry and try to make as much money as they can. Right. A freight forward or, you know, there's some big ones, but there's also thousands of small ones.

And the freight forwarder is just basically, it's just a guy with a phone and and a, and a Cadillac, right? It's like, okay, it's a good way to make a living, but you're not, it's a hard business to scale because it's a lot of people. All right. When we get back from this quick break, I want to know what role you play, and I know that you've built a software layer. And I want to know how you charge for your software and how you make money as a company, because my understanding is you've had tremendous revenue growth. And in 2020, you doubled revenue to $1.27 billion. We'll see if that's true when we get back on this big assertives.

Ah yes, if you want to build a website or an online store or you want to do a conference or maybe you've got some really creative project you want to do or maybe just a portfolio. There is only one place for you to go. I literally was on the phone with a founder who was like, how do I make something beautiful? And she was like going to spend $35,000. I kid you not on a website with modest functionality to some crazy agency. And I said, hold on. show me the scope of work. She shows me the scope of work. I said, you realize Squarespace is

better than this. And Squarespace is literally going to cost you 1% of what they're asking for for the next couple of years. Squarespace makes beautiful websites. That's all you need to know. And they have tons of templates that are all responsive. You get to be part of the Squarespace ecosystem, which is constantly improving. You can blog and publish content. That's obvious. Promote your business. Sell products. And they have all these beautiful templates by world-class designers that work on all devices. They also put a ton of energy into SEO, search engine optimization. Plus, you get the free and secure hosting, 24-7 award-winning customer support. And of course, they added e-commerce. We decided in 2020 to make the best use of the pandemic. We were locked up

in our houses. And I looked and I said, you know, there's all these companies not getting funded. We started something called Remote Demoday.com. I said to everybody, I want the website up in 24 hours. They had it up in minutes. And then we just had to write the copy. We got it all up online. and it has played a huge part in that. We actually purchased the Remote DemoDay.com domain right on the site. Go to Squarespace.com slash twist for a free trial. And when you're ready to launch,

use the offer code twist and you'll save 10% off your first purchase of a website or domain. Please use the promo code twist so they know that I sent you. All right, you guys have been asking for a long time to have Ryan Peterson on the pod. And here he is.

His Twitter handle is Types Fast. T-Y-P-E-S-F-A-S-T. How fast? 100 words a minute. I did 20 words a minute. So you typepracer. com. I mean, one of my favorite sites.

I don't know. You're kidding. I love type racer. It's so fun. I'm in that range too. I'm in like 100 range, but I do massive amounts of spellings, spelling errors.

My mom types faster than me, actually. Did you take typing in school? Were you part of the last generation who had typewriter? Yeah, I did it at school, but actually my mom made me take it way before school. Like she was always pushing on manual typewriters. Mavis speaking. No, never on manual.

I'm not that. Oh, okay. So when I went to junior high school, which was, I guess like, yeah, early 80s, 80s, 82, 83, we had manual typewriters. And then when I went to high school, they had computers

and we went over to computers. But I was the fastest with these really slow typewriters. And what I learned was the QWERTY system. You know, top of your keyboard is QW, E, R, T, Y, that's why it's called QWERTY,

the ASDF and all that stuff. Do you know how they designed the placement of the keys? Yeah, to slow you down. To slow you down because the biggest problem with typewriters was they would, the hammered,

would fly up and two hammers would go up if T and H were right next to each other, you know, or H and E or whatever the close words are, or A and R or R and E, whatever, you know, if you're too close together, bang, they would get stuck and you had to then pull the hammers down and disconnect them. It's pretty crazy. So it's the power of standards. And if you set a standard, you have to be real careful that you do it right. And actually, there's a really interesting story from the shipping industry. Our industry about standards is where governments are often the one setting standards, but they don't necessarily know like what's really being used. So take one example that's the most famous standard in shipping is the 40 foot container. So like all these ocean containers

are 40 foot. The idea is genius. You can have the same container go on a ship, go on a truck or a train. Great idea. However, if you notice, trucks are 53 feet long. So every time you move a container, you're losing 13 foot. That truck driver could be carrying 13 feet more volume if they just picked a 53 foot. standard for the ship. Oh, my Lord. But now the whole world's on that standard. You can't change it. It's just like the QWERTY keyboard.

Oh, my Lord. I always dream about switching to whatever that faster one is than QWERTY. And I never do it because I'm like, oh, God, this is like learning a new language, starting from zero again. What I learned in the last year is that Google Docs, tools, go to tools voice typing. Yes. I'm writing like three times faster than I ever have before. It's awesome.

Because you talk into it. I just talk into it, way more natural. Yeah. I download a dragon and I'm always impressed with how good dragon is, but I always forget to use it. And the software is a little janky, but it's, it's like maybe 20% better than Googles.

But it's, it's pretty amazing how this far this has come. I wish there was just one really good one on mobile. And I haven't found a really great mobile one where I can just pop up the app while I'm driving or something, leave it open, take a note. And I do sometimes like,

Hey, Siri, take a note and then I say something. And it's never right. It's always like 80%. Siri's terrible. Otter is pretty good on mobile for recording and transcribing otter. Like the animal otter. But it doesn't have a great editing interface.

And Google Docs doesn't have it mobile yet. It's only on desktop or on. I downloaded Otter AI. And the idea was with that, you can see it with your calendar. And then you record every meeting and then it makes a transcript. And it was pretty good. And you can then send the transcript. It works pretty well on mobile.

But it doesn't let you edit it. I'm like the whole point here is I'm kind of right. They need to take Otter and they need to make Otter editor a simpler version. a simpler version of it that just creates documents with the Otter conversation stuff and take out all the other croft.

This is a message to Otter AI, CEO. Somebody clip this and forward it to them and have her or he or they please fix this. Okay, how do you make money? How do you charge for your software?

Do you do it by the load people are sending? Do you do it? Is your customer the people shipping? Is it the people who run the boats? Who is your customer? We make money off transactions. So, and there's a lot of different kinds of transactions flowing through our system.

So you can think I was starting to describe that end-to-end that we manage for a customer. And really, it starts with a purchase order. Like a brand is buying something from their suppliers. And so we have a system where we onboard companies. We get all their product library in here. Here's all your skews. Like you can actually do this automatically from Shopify or whatever your e-commerce engine is. Pull in all your product library.

We attach that to, by the way, compliance data. Like you've got to clear customs. So you need to know how these things are classified. and all the documents if there's safety and reg stuff, we pass that purchase order to your factory. And so that's one transaction that we flow through is the transactions of these purchase orders. The factory then converts that and make a product for you.

They come into the app and signal, come and pick it up. And then we'll schedule and coordinate the full delivery door to door. So that's the next transaction is the freight movement. It's got to clear through customs twice, wants to leave a country and wants to come into a country. So that's customs brokerage. And then of course, yeah, each of those moves can be purchased a la carte. So like just by trucking, just by ocean, we prefer to do the whole end to end,

but you could just do customs with us or just different things. So that's those are the core revenue streams. Insurance, cargo insurance actually a pretty big business for us. We provide insurance and we require insurance. You just don't want to be shipping stuff without it. And so cargo insurance is too much drama, right? Like if you don't have the insurance, everybody starts. pointing fingers. If there is insurance, everybody is nice and calm and relaxed.

Yeah, totally. It takes the emotion out of things. And there's been a lot lately. Like we've had three big accidents. The world has had three big accidents this year with containers falling off of ships. What? Yeah, because what's happened, the crazy stuff has happened in our industry this year in the last year is the, there's so much shipping happening. We grew 30% Q4 2020 over Q4 2020. Not Flexport. Flexport doubled. The world shipped 30. percent more stuff. This is not like a tech startup, man. You're like shipping 30 percent more containers. There's not 30 percent more ships. So what they had to do was load all the ships all the way up to the top. And then storms hit and stuff falls off the side. So we had three. The stuff just sinks to

the bottom of the ocean, correct? Yeah, it sinks. I don't know if we've revealed this. My comp. I hate me. A hundred containers fell off. Crazy. And, and you know, like, I mean, I feel terrible. It sucks. But there's not a lot I can do when the container falls off the side of the ship. it's not our fault, but you want to have insurance for that purpose. And then our last revenue stream, and we'll keep adding more. Like one of the cool things about Flexport, it's really a platform business. And so, you know, you have your customers. You're managing these transactions.

There's a lot of other services that you need on these transactions. One of the most important ones is financing. You mentioned that story earlier about the death spirals that I've experienced where you didn't have the paperwork lined up and you couldn't get your products out. And that has happened where I lost the paperwork. And that's just idiocy. And that should never happen because it should be digitized. But another reason that you can't get your containers picked up from the port, when your containers arrive, you only have seven free days.

And another, the most common reason is you haven't paid your factory. And when I was an entrepreneurial hustler, like not venture backed, I did that for like 15 years, just trying to run a business, not a venture capital thing. And we would often start selling the products while they were on the ocean, get cash and then use that cash to pay the factory for them because we didn't have any money. And if that went wrong and your goods arrived, you only have seven free days and now you're in a death spiral because the reason you can't unlock the goods is you don't have any money. And you're getting charged $1,000, $250 and whatever it was to get it out. So trade finance is a massive problem, especially for fast growth businesses, being able to buy this inventory and get good terms.

So we have a group called FlexSmart Capital that does inventory loans to customers on our platform. Actually, one of my favorite things here is like the capital product, we have a huge advantage because a bank, banks don't like to make inventory loans for inventory on the water because under ancient maritime law, older than the U.S. Constitution, like we're talking old law, English law, the freight forwarder has first lien. So if you default and you go bankrupt, I have title to the goods as flexport, as the freight forwarder. So banks don't like to give you inventory loans because they don't have security. title. And so there's a great opportunity for us to come in and provide great financing. We know a lot about you. We're shipping the stuff. We're seeing your margins because we're clearing customs and seeing your wholesale price. Getting to know you, do you pay us on time? Do you pay your vendors on time? Are you good people? Right? We can really get to know these customers.

If somebody were to use your suite of products to ship a container full of stuff, what would you make on that if they used your whole suite of products? $100, $1,000, $1,000? What would your take be? typically you'll make like a couple hundred bucks on a container you know maybe maybe only a hundred it's kind of a commodity the port to port part by the time you add some trucking you're making like 200 insurance a pretty good product you might make another hundred trade finance you can make a thousand bucks wow i mean it's just a reminder to all of us like wall street's making all the money we're suffering out here blue collar land and like wall street's making said to explain what that is there's basically a concept called factoring or just advances you can give it a lot of

loan, but you're shipping some product. You need to finance it somehow. If you had $10,000 worth of motorcycles on a container, and you were going to sell them for $20,000, let's say, and they said, you know what? We'll finance that for you for $500 or $1,000. It would be 5 or 10%, but you might take it, right? Because you're going to make all that money and you don't have the money to put out. Exactly.

But it actually, if you think about it as part of your profit, if you were going to make $15,000 or $20,000, it might be $5,000 or $1,000. 10 or 20% of your profits. And if you think about for the person loaning it, what's their duration of these loans, 60 days? Yeah, it's 30 to 90 depending on what the customer wants and what's the right fit for the business. And they're making 5% typically on the spread, 10%. You probably won't make 10%.

But when it comes to an IR basis, it starts to get above that, right? Well, yeah, that's what I was thinking. Yeah, if it's 5% on six months and you compound that six times, I mean, it's a big number. It can be a great business. And it really is value add. Like one of our early customers for the. this product was had landed this purchase order to sell. They made like phone accessories and they landed a deal with T-Mobile stores. So this is a deal that they're going to make 200 grand on,

but only if they get delivered. Yeah. And so they didn't really care that they have to pay, you know, like it's not about interest rate here. It's like, am I enabling them to make the 200 grand or not? Like it's a binary thing. Right. They could never even take advantage of the opportunity. In a way, it's like their seed capital. When we get back from this break. And a bank's going to take you months of paperwork. It's like, hey, this is a hot deal. I got to get these goods to T-Mobile or I lose the deal. I don't have time to go through paperwork and everything. Yeah. And you're uniquely qualified to assess these because you've watched, I don't know, how many transactions in the last seven years, but it's got to be a very significant number of transactions. And with that particular

company, like this was not a brand new company to us. Like, we've done deals for them. We see these are legit people. They got a good business. It's working. Let's help them out. So it's a big advantage that we have. And there's no customer acquisition costs. Like banks spend a ton on marketing and sales teams and stuff. And it's like, hey, we know these people. We're here. Like, let's help them out. Okay. So you were going to come on the pod last year, but you got caught up in the pandemic and this craziness. I want to know some of the, how the pandemic impacted your business and what insights you know about this pandemic based on watching the amount of shipments. Did it go up? Did it go down? And what did you learn? And I know you did some special projects during the pandemic that, you know,

you basically stopped doing press and put your head down and worked. I want to hear all about those. get back on this week in startups. The new year is here. It's 2021 and you got a fresh start for your business. You're probably thinking, my God, we had a great 2020. We're profitable. We got a little money in the bank. It's time to expand. It's time to build out the team. Well, we're doing that here at launch. This weekend startup is doing so well. All in Podcasts doing so well. We need a second producer and a third video editor. We're hiring a community manager. Things are going gangbusters. Where do we find the most qualified candidates, LinkedIn jobs, obviously, duh. We love using LinkedIn jobs at launch because we can manage all of our job postings and contact candidates from a single

view. It's all streamlined into one simple screen, just how we like it. And whether you're shifting your business hours or hiring more remote employees, one thing that remains unchanged is the importance of having the right people on your team. You're only going to go as far as your team will take you. When your business is ready to make that next hire, LinkedIn jobs can help by matching your role with qualified candidates so you find the right person quickly. And those are the two things you're looking for, speed and quality. Speed and quality. You want that position filled by a high quality person yesterday. And that's what LinkedIn jobs is going to help you do. And all this works from your mobile phone, no matter where you are. So go to LinkedIn.com slash twist and you can post your first job for

free nothing to lose. LinkedIn.com slash twist to get a free job posting. Once again, LinkedIn.com slash twist to get a free job posting right now. Terms and conditions do apply because they're giving you that free job posting. Okay, let's get back to this amazing episode. Welcome back. Welcome back to this week and startups. Ryan Peterson is here. He's types fast on the Twitter. He's engaged on Twitter. He's, I don't know if he's addicted, but like all CEOs and investors, he spends a decent amount of time there interacting, correct? Yeah, I've been scaling it back a little bit. Trying to get my adrenaline from my dopamine rushes from creating instead of consuming. But yeah, I'm on there.

It's like, I find it's like the new gladiators like arena. It's just chaos all the time. And you go on there for like 15 minutes, then all of a sudden you're sucked into a 15-hour debate. It's just like earlier today, I was on CNBC talking about the Robin Hood, Stonks, you know, et cetera, GameStop controversy and like literally Barstool Sports clips it and, you know, dunks on me and now it's thousands of millennial traders dunking on me and it's just, oh my God,

my entire life gets sucked into it. You're brave man. Being very founder-friendly, I saw your interview supporting your company. So good job. Well, it's, it is a tough thing to do, you know,

I mean, there's a good side conversation. I mean, when you're an investor in a company and it hits scales, there are inevitably going to be with scale. When you make a mistake, it leaves a big footprint. It leaves a bigger dent, right? Like if you make a mistake now at Flexport,

and I'm sure there have been many, you know, in year one of Flexport, a mistake might be a 10K mistake. Year 10, it might wind up being a $20 million mistake. Who knows? And the ramifications when you hit scale get bigger. And if you're the leader in the space, well, gee, everybody then wants your comment on it,

and you are the target and you have more responsibility, right? You're becoming the leader in your category. I think you are the leader now. If you're the leader, well, of course people are going to have higher expectations of you. The reason people were disappointed in Uber or Facebook, you know, or, you know, Tesla with self-driving accidents, whatever it is, you know, when these crises happen and they're going to happen and they're going to happen in the real world, Airbnb with people trashing apartments, you remember that one? Like the law of big numbers is something bad is going to happen when you build an at-scale service. and then what is the job of the investor to hide during that? People are going to come to me.

If the founders are okay with me talking and they've already talked, I will comment on what they said. If the founders say, we don't want you talking about it. I'll say fine. If they do want me talking about it, fine, I'll engage,

but I'll always engage only after the founder has made their statement. I don't want a front run the market. I'm not doing it to get, you know, press for myself. I've got plenty of press. The reason I'm doing it as an investor is to support the founder. And my idea with Robin Hood or Uber, when they had their problems or any other company that has problems is my job is to be a sounding

board and to be supportive. You must have had some crises at some point. How do you feel about your investors talking about your company? We haven't had that happen yet, but I do agree with you that missteps are kind of inevitable. And they match. There's so much higher stakes. Like when we benefit as a technology company, as I think we're better at our competitors than at user experience, but it's storytelling, at sales, at marketing and getting the word out about our business and what we do differently. So we benefit from that. Like, press is going to cover us and they don't cover our, what I think are pretty boring competitors. But when we mess up, they're also going to cover that. And when our competitor messes up, like, you really don't care. It's not going to get in

the press. People are like, what company? Do they have a webpage or their web pages from 1998? So, you know, you've got to take the go with the bad. And, um, no, but try not to be. mess out. You're walking a tight road. Yeah. And then in terms of investors talking about your company, I mean, nobody ever talks about this issue. But it is when I was a founder. I really didn't like my investors talking about the company, unless it was like in a positive, you know, basic kind of way. But when it came to strategy or a crisis, you really need to coordinate that because, you know, early on, people would ask me my opinion about something that happened at Uber, you know, God forbid, you know, or tragically, somebody dies in an Uber, gets hit by a car or something.

And that's going to happen if you're in the real world. You know, then if an Uber investor, says something, like the Uber investors who said they don't agree with, you know, Uber's position on X. There were so many stories. Cape War Capital, you know, is disappointed in Travis. And I was like, and I told Mitch and Freda, like, can't we do this quietly? And they're like, no, we have to make a public statement. And I was like, all right, I understand. I took a different approach. I'm ride or die. I'm not, you know, I'm not criticizing them for it. I understand they had to make it because they're a social justice explicitly, you know, a fund. And when non-justice is going on, they need to comment.

But what is your philosophy with investors talking about you? Does that piss you off? No, it's never happened to be honest. So I wouldn't want to comment on a hypothetical because I just don't even know what I would think about it. It depends what they say, I guess. I love my investors. So I don't think I'd have any problems.

Also, then taking credit for a founder's success, I'm always very... That's pretty silly. That's pretty silly. It's like having been on the other side of the table, it's like we all know the investors are not in the Flexport office. 90 hours a week getting it done. You know, like they might come. They may work hard at times and they get credit for the investment, but they're not.

That always pissed me off. There was one investor. I wouldn't say which name, but, you know, they basically started calling him the third founder of this high profile company because all, I mean, literally was on a press tour because the founder didn't like to do press and this person's on a nonstop press tour. And I'm like, it just feels lame to me. It just feels lame. Like I would just say, yeah, great company, great founders.

You should talk to them. I mean, I love all my investors. I've had great investors and good support. You have. They've always been really supportive. I mean, we've just been winning for a long time. So, you know, you really see what people are made up when you start losing. So we'll see, we'll see if they, you know, we have a bad year or two.

We'll see how we'll see how that might change. But so far everybody's been great. That is an incredibly, incredibly insightful comment. When you're winning, everybody's champagne and caviar and high fives and go team. And then you like trip up or there's a mistake or there's a near death experience for the startup. And man, do you see who loses their shit? real fast. And a lot of investors get really nervous and skittish, especially those like first time

funds or, you know, principals or associates or whatever, you know, venture partners who haven't had a win yet. They just aren't losing their mind that their investment might get, you know, tanked. And it's like, we're also very lucky. Like, founders fund has been my main investor. Oh, great. They let our A round, our B round. They've participated in every round in major ways. And they're just like, it's in the name, right? They're just very founder friendly. we today we've raised 1.35 billion dollars and the board is me and one person from founders fund and one person from soft bank and it's just like and I outvote them so I control the board of the company it's a very small group we just we can make decisions we move fast so there's not like

even if some one of the smaller investors was like started to act weird I'd you know it'd be okay I wouldn't I wouldn't let it get to me so tell me about having soft bank in that mega round you did Well, they've been great. And I'm, you know, it's like, how much did they put in a billion dollars or something crazy? They put in like 700 million. There was a billion dollar round. We had pro rata. One of our big investors is SF Express, which is the FedExpress.

And they also participate in a big way. So overall, the round was a billion, but they did 700 of it. And it's been great. And like, we're, there's a couple things. Like, I'm a student of history. You can see some of my books behind me here. And I just look at the long run. of like financial markets and history over thousands of years.

Yep. And I just saw this like a couple of years ago and it's still going on. I don't predict the future. I have no idea. But it's a pretty rare environment where you can raise that kind of capital to bring your dream to life. And I just saw that. And I mean, our board actually, before Founders Fund, or sorry, before SoftBank joined,

the board really said, hey, you don't need to raise that much money. Like raise $2.15 million. We'll come back in two years and raise some more money. Was there suggestion? I was like, no, like, this is my life's dream. The money's here. We're going to bring it. I want 10 years of capital.

I don't know on what time frame we're going to be successful, but as long as we don't die, we're going to win. You are so smart, Ryan. I can't tell you how many founders I know, whether it's early stage or later stage, they get cute. And some huge deal is put in front of them. And they don't take the capital down. And 2008.com bust and the 94 crash and the 87 crash before that, like if you're a student of history, like you and I are, these runs tend to last a decade or so, and the down markets tend to last,

you know, whatever it is, four to eight, I'd say two to eight quarters of like down market and then the slow build up. If you can raise at the top of the market at a great valuation from great investors and sit on that money and deploy it intelligently and be a good steward of capital,

you should do that. Because you never know what's going to happen. You know, we had to answer some internal questions. Like, hey, it's a lot of dilution. I mean, we sold almost, I think it was like 30% of the business that we sold.

And which is pretty crazy, for a series D to sell 30% is a lot of dilution. But I don't care about dilution. I care about price per share. Right. The number of shares that I own and everybody else owns did not go down. Like you own the same number of shares. So it's what you care about is price per share and control of the business.

Right. And so as long as I have control of the business and the price per share goes up, everybody's winning and we got more cash to go and invest in the business. On a percentage basis, I didn't really care about dilution. And I care about do I have enough money to go win. When I see somebody do what you did, I always think very smart, number one, number two, it's kind of putting your D round and your E round together, or your D, your E and your pre-IP round together. So sometimes the market will be, you know, so,

I want to say frothy, but it'll be so dynamic. There'll be so much capital looking to be deployed into great businesses that the best businesses will have the opportunity to raise two rounds at once. Mazel Tov, do it, bank it, and don't do something stupid with it. It's not like you raise a billion and you're like, got to spend it in the next 18 months. It's like, no, you don't. You can sit on it and think about the interest and, you know, the payments you're going to be getting off of a billion dollars in your coffers. Like, it's going to be significant.

And it's just such a smart thing when we get back after this quick and final break. I teased about what you learned in shipping, but we got sort of sidetracked with a softbank discussion, which was a great one. Let's answer that question when we get back on this week of startups. Do you have a business that accepts purchases or orders online? I bet you do. You're listening to This Week at startups. And if so, have you ever had a digital transaction not go through? Of course, the answer is yes. So that's called a false decline in the industry. That's an industry term. A false decline. And this is what happens when an online

purchase is declined, but it should have been accepted. How frustrating is that? You're right there. You have the ability. It's a layup. You're going to put the ball in the basket. But no, you miss the shot. And this is often the result of technical, financial, or fraud scoring reasons. Well, last year, wait for this. U.S., UK, French, and German false declines were over $20 billion with a B dollars, according to our friends at checkout.com. Go visit checkout.com, and you will see how you can resolve this issue. It's a total no-brainer. Here's my associate presch doing a free test account at checkout.com.com slash twist. So if you go to checkout.com slash twist, they're going to give you a free account, and you get to see

checkouts' amazing dashboard. And see here how, how. easy it is to deploy a checkout.com payment gateway onto, let's say, a Squarespace website, a beautiful Squarespace website. There it is. Boom. Checkout is crucial for growing companies. They're going to allow you to get that granular understanding of how cash flows in and out of your business, and they're trusted by brands like Samsung and Adidas and many more. Go ahead and checkout. Checkout.com slash twist. Welcome back to this week. It's startups. Ryan Peterson is finally here. He's from Flexport. Go to Flexport.com. They're hiring. Looking for great people. What's the culture like over there? I say it's very entrepreneurial. We really try to empower people to go and build

stuff and we keep launching new products and adding things. We're very global. We're in, we have people in eight countries. We ship to 109 countries. Flexport as a company, well, I counted a couple of years ago. We need to go back and do like a more formal count. But at the time we did it, we spoke 60 languages as a company. So it's like really multicultural. It kind of feels like the United Nations when we're on our video chat. How many employees now? Just over 2,000 employees now. What's that like? What's that like? What's that like? like when you do it all hands and you've got a billion dollars in the bank and 2,000 employees, do you ever like go, wow, it happened?

Of course. Yeah, of course. It's so heavy. It happens slowly. It keeps up on you. And when I started the company, I was always like, I didn't need to do it. I had started a successful tech company before Flexport selling data about international trade and that's profitable and that we still own.

We bootstrapped it. And I didn't need to start a new company, but I really wanted to solve this problem. And as I was doing it, I was like, I'm only going to do this. if I can just be myself. I don't have to be a fake person at work. It's a, it's a fraud. It's like it's too hard to keep it up. And I've got a good job of that.

But it's getting harder and harder as you get bigger and bigger because people only see a tiny slice of you. Right. No, they see you in one meeting or one lunch table conversation or one thing. And like, it's very easy. The human brain kind of fills in the void. If you, if I only see this one piece of you, I'm going to apply that to you. Like, I know you now.

The brain. So I have to be a little bit more reserved. And I'm kind of a goofy person sometimes. So, like, making sure I'm not overdoing it. And I don't know. But I think that's helped me a lot, you know, being authentic. Like, it's relatively easy for me to go and do all hands and stuff. And my last all hands I presented, I talked about how that Harvard professor,

the chairman of the astronomy department, insists that there's aliens out there. And we don't know how much time we have left. So we got to start getting stuff done here before that, you know, before they come back. Like, you know, try to have some fun. We're not serious. So you believe aliens are out there? look man he's the chairman of the astronomy department at harvard so i'm not a science denier i i love it yes i mean how could there not be aliens on a statistical probability you know with this many

planets and this many you know this many goldilocks own planets it's just an inevitability i mean the only real question is can can they can we reach each other in this vast expanse of space and that is a really interesting question i think um My mind is open to the possibility, let's say. Of course, of course. I put it 100%, I put at 99 plus percent probability that they exist. I put it at greater than 50% probability that they are aware of us. Oh, wow.

Now, if they visited us or why would they bother? I mean, I think for somebody who could be aware of us, by definition, they would find us quite boring, right? Like, if we could see across the galaxy and have eyes on all these planets, we'd probably be looking down and be like, wow, look at all those monkeys or, wow, look at all those, like, you know, frogs. Like, we probably look like frogs to them. It's not super interested.

I'm not super, they wouldn't find us super interesting. Certainly not enough to travel across the galaxy for 100 years or 10 years or whatever their technology made it possible to do. It does apply to flexport, though. Let's make sure we have a long-term vision of intergalactic shipping. Actually, you know what? It sounds crazy. But what we figured out on this planet about shipping will apply in some ways to,

shipping to our moon base and shipping to Mars. Absolutely. I don't know if that billion dollars will get you there, though. What did you learn about during this pandemic? Because you were, you obviously have eyes on China and we're in almost all certainty the coronavirus started. I mean, it's possible it didn't start there, but it's probable it did. Certainly the biggest outbreak started there. So when did you become aware of COVID? When did you realize it was going to be a global multi-year or at least a year of market disruption or seriousness? Yeah. I think we did see it earlier than most companies because we have boots on the ground.

We have 300 employees in China, it's worth 300 employees in China, plus in Hong Kong and throughout the region. And so we saw, first off, we actually do a lot of freight out of Wuhan, which is where it originated. Is that because Wuhan is where all the pharmaceuticals are made? It's just because we ship out of a lot of places. So we pretty much pick a city in China. We probably ship a lot out of there. And so we saw this happening.

We have a group called flexport.org. And flexport.org does humanitarian logistics. We ship for all kinds of NGOs, for even really for any government agencies, hospitals, disaster relief has been our focus. One of the focuses of that group is like anytime there's an earthquake or anything like that. So our flex4.org group was the first to be like, hey, are, we're working with this nonprofit in hospital, a nonprofit in China medical group, and they need masks. And we have got three, they have got 350,000 masks that they sourced and they need help shipping it to Wuhan. And so

flexport.org did that. We donated the freight and got them 350,000 masks. That was in January of 2020, like pretty early on. We were actually activating our resources. And I remember this because we traded emails or DMs or something. So you were literally engaging two months before we went on lockdown here in shipping PPE. Yeah, before there was ever a case in the United States, we were already shipping masks. I mean, it was kind of awkward because we shipped a whole bunch of masks from the United States to China, and then we found out we don't have any masks in the United States. So it's my bad.

And then so things really started to heat up. And, you know, we went on lockdown at the same time. I mean, maybe a week or two before city of San Francisco officially sort of lockdown, lockdown, meaning starting to work from home. But one of the things that we realized early on was actually there's a lot of masks in the world. China had ramped up production really fast. And there were tons of masks. U.S. hospital networks, we were hearing left and right, there's no masks.

In fact, my neighbor is on the board of supervisors, which is like the city council in San Francisco. And I saw her walk in the dog and I asked her, hey, how's the city doing? Do they need masks? What's going on with the fire department, the hospitals, etc. She's like, actually, you know what? We are short on masks. We're going to need them. Can I introduce you to the procurement group?

And we, the next day, we were able to deliver, we had a partner in the United States, and we were able to deliver 80,000 masks to the city of San Francisco, London Breed, the mayor, gave us a shout out, et cetera. So it was like, okay, that kind of turned us into a bit of a magnet once the mayor tweeted about us, once people started saying, hey, Flex Sports Capable getting masks, everyone else who needed masks, which is kind of all the hospitals and cities in the United States, started reaching out to us. at the same time, we had a huge network in China that produces masks of philanthropists,

people like Joe Tsai, Alibaba, former CEO, we're working with him, a whole bunch of different groups. And to get masks, and we suddenly saw this imbalance here. There's masks over there, but no one knows how to get them over here. I was like, well, we're pretty good at that. One of the things that we realized is that the U.S. hospital network doesn't do their own supply chain management. They're used to having goods delivered to them at their warehouse. They don't go out and source and manage shipping. And all of a sudden, they needed to. And they're not experts. They don't have the global logistics procurement expertise. So we were able to onboard.

We onboarded dozens of hospitals around the United States, actually around the world and made it really easy because our shipping tools are like easy to use, even for a non-shipping expert. And connect, they had actually done a good job sourcing stuff. One of these is UCSF. And Mark Banyoff had done an amazing job with Salesforce of finding the masks in China, we were able to help them with managing the logistics, understanding the compliance, getting good to clear through customs, FDA registration is a whole lot of stuff that goes into that, even for a UCSF, like hasn't dealt with that before. Where we really got creative and I'm really proud of our company is on the supply of air freight. So 50% of all the world's air freight flies in the belly of a passenger

plane. And all of those, of course, were grounded because of the pandemic. Right. So we went out. And so this caused the price to spike like crazy. All of a sudden, what's normally a $4 per kilo from Asia to the U.S. went to $21 a kilo. Wow. All the masks are trying to, and another PPE are trying to force through a smaller pipe, right? We got very creative. And we called up the airlines and said, hey, you got all these grounded passenger planes. I need them. And we leased 75 passenger flights.

filled the belly of cargo of mass, the seats, the overhead bins. I saw a picture of that. Maybe I could ask producer Nick to throw that in here. And the video, so we just said, hey, let's get these things. You literally put boxes in seats. Yeah. Oh, my Lord. 75, 75 passenger planes.

And we just just started shoveling this stuff in, shipped over 450 million units of PPE last year to a hospital networks all over the, all over the world, five continents, NHS in Europe and the UK. That's got to make you feel great. Like when you put your head in the pillow at night and you do something like that, how well do you sleep, man? I was so proud of our company because it wasn't my idea to go get go charter passenger plane.

Someone was like, hey, we did this. I was like, we can do that. That's amazing. Shout out to whoever did that. Who's, yeah, Neil Jones saw our head of air freight. Meo. Creative called in some calls, made some deals like the next thing we know. We're playing.

And it's good for the airlines too. I mean, they're out of, they want to put these pilots back in the air. You know, they want to keep the business going. We paid them for, you know, good money. You save jobs. You save lives. All because of Neil. And we got Arnold. Well, a lot of people, Susie who runs flex or I know.

It was like team effort. Neil's idea. We got to give Neil that. I just wanted to take a second. Like in these big companies, somebody will have a great idea. And you need to stop for a second. We all do. I'm not saying you specifically. But a founder needs to stop for a second and say, who had this fucking great idea? And just pointed out.

Neil had that great idea. Yeah. A lot of awesome stuff. You know, another great idea was, hey, we have flexport.org. We actually have a fund for flexport.org where people can donate. And I think it's one of the highest impact forms of philanthropy because normally when you give to a charity or nonprofit, they got to spend like 30% of that money going to raise more money and administrative overhead and stuff.

Yeah, they're higher fundraising companies. I've been on the board of a nonprofit. And like we get these pitches. Like give us 40 cents on the dollar, 30 cents on the dollar, plus $5,000 a month retainer. And you're like, what do we wind up getting at the end of the day, you know? Yeah. And when you donate on dot org, this is a good pitch for that, is 100% of that money goes

to moving something in the world. So there's no waste. And like we can show you what you shipped and what we moved. We already had this fund. It had never raised any money, but we had gone through the administrative stuff well before the pandemic. Like in mid-2019, we set it up with like this good idea that, hey, you know, for the next time there's a disaster, it'll be there. And so we were prepared. We turned that on. We launched a

GoFundMe. It was one of the top five GoFundMe's last year. We got Edward Norton was a huge hero for this. He went on the Tonight Show. He got Arnold Schwarzenegger involved. Tons of celebrities. Arnold actually delivered one of our shipments of Mass to Cedar Sinai. I'm back. I'm back and I have it here for you. Can you imagine you're working at Cedar Sinai and Arnold Schwarzenegger shows up as their delivery guy with a bunch of masks? So it was awesome. I'm so proud of us. And like, normally our company, I'm not saying it's boring. I think it's one of the most fascinating problems in the world, like global logistics, trade.

Yeah, but you're not running clubhouse and you don't have shipping cardboard boxes. Yeah, you don't have Drake in the room right now with 1,400 people listening. Right. I get it. Yeah. But we get to feel like, hey, we really had a big impact. We're really like doing something that matters for the world. So it was awesome for the whole company to energize behind.

What happened during the pandemic in terms of the resiliency of our, shipping infrastructure. What did we learn about that? Because everybody, you know, basically started stockpiling stuff. People had extra time and started spending money on e-commerce. So my e-commerce investments have all skyrocketed consumer subscriptions because people were looking for something to do or needed to buy something or became preppers or some, you know, amount of like, you know, maybe I should keep two or three cases of X, Y, and Z in the garage just in case. What happened? Did your business go through the roof during the pandemic? Did he freeze or did it do both? It did both. So the first two months, all the factories shut down in China. Right. So for the moment, we were staring at the abyss

because it was like, whoa, okay, all the revenues going on. With 2,000 employees getting paid. It was horrifying. And you didn't know, like, not, I don't know a single economist who predicted like economic growth of trade would increase. Like, that's not in the model. Yeah, that was not on the top of the list. Yeah. And so we freaked out. It was very scary. I mean, first of all, we had this battle cry of like, hey, forget the business, forget all that stuff. Like, let's get masks to our hospital network. Like, we owe civilization a duty. Civilization owes these people a service. Like, you can't go, you can't ask someone to go into a hospital without a mask on in the middle of COVID. Like, that's absurd. And I, I thought we were really facing like borderline civilizational

collapse. Like, the nurses in Oakland went on strike because they didn't have mass. And I, I feel for them. I'm like, I wouldn't want to go work there either. And a lot of these brave people did anyways. I mean, it's incredible what they did. So that was actually a great rally and cry for us to be like, hey, don't worry about the performance of our shipping. Like, we got a higher call right now.

Then what we saw was exactly what you're describing is people who are locked in their homes and can't go out and spend money at bars and restaurant and travel, just buy more stuff. Like, we need things. It's like, you got to get your dopamine somehow. And so buying things was like the way to do that. Yep. And so the growth in the second half of the year, global trade actually, in, I mentioned this earlier, but in Q4 2020 was 30% higher, or U.S. imports, I should say. Our exports declined quite a bit, but U.S. imports went up by 30%.

Yeah. And like, this is a physical good. It's not easy to scale something like that. So I would argue like the shipping infrastructure was remarkably resilient, all things considered. You got people who are having to work in warehouses and at ports and, you know, take risks around getting this disease. So all things considered did pretty great. There were certainly instances.

Like I think the medical supply chain had a giant wake-up call that you shouldn't run just in time inventory on life-saving equipment. Like let's have some stockpiles of this stuff. It's cheap. This is such a really important point. We optimized as a species and as a planet so that when a new iPhone comes out or Air pods, whatever it is, you can get them in, you know, you put your pre-order in, you know, right after the announcement at the Steve Jobs keynote or, you know, the Apple keynote. And then it

ships from, directly from China with your label on it. And this, they don't have to keep a ton inventory. And that was Tim Cook's big gift, right? Like he was, he was a savant at supply chain and just in time. For drugs and PPE and things that we need, water, you know, chlorox wipes, we got to keep these things on in stock. Both at our houses. at the distributors in factories everywhere. We cannot do that. Let me end on since I got you warmed up and we're now in the final couple questions here

and we're going to have you back on because you've been a great guest. I want to talk to you more about stuff. The relationship with China has always been, you know, I don't want to say challenged. It's been actually wonderful for the last X number of years that we've actually engaged each other. And we've gotten to know each other.

and there's been a lot of upside to that. There's this Golden Arch's rule that I guess Thomas Freeman came up with and the world is flat or whatever his book was. I forgot the name of it, where if you have McDonald's in two different countries and they both have McDonald's, they don't go to war with each other. It's like never happened. So this engagement has been great, but there have been some rough parts in the last couple years and it feels like there's a little bit of tension.

In the NBA, you know, Darry says, you know, we're going to fight for human rights or just an innocuous retweet or something, whatever he did, you know, saying he stands by Hong Kong. All of a sudden, the NBA is kicked out of China and then we're making movies and the ending of movies is being impacted by what the Chinese government thinks, TikTok, etc. But we need to figure out this relationship. So what can you tell us, as somebody who has a working relationship with China about what you hope for the two. countries and what you believe is the path forward with regards to our view on human rights, their view on human rights, our view on democracy, their view on a society that is, it's called the Chinese Communist Party, the CCP. Like, these are two different styles of country working together, sharing some form of overlapping

capitalism. What do you think of it and how should we look at it? What do you know that we don't? I think that it's incredibly important to understand other cultures. I actually lived in China for two years when I was 25 and 26 years old. I learned Chinese. I spent three hours a day studying Chinese. I learned a lot about Chinese culture. And I'll tell you that Chinese culture is the most different than from Western culture that I've encountered. I want to keep meeting more people and go up to the north of Norway or whatever and meet the reindeer farmers.

I'm sure there are other people. Yeah, we'll leave that possibility out there. I don't know. But of all the cultures I've encountered by far the most different. And I would encounter this every day that I was there where I'm just like, I would just see the world in a fundamentally different way than the people around me. They're far more group oriented than we are. We love to be proud of our individualism and our, we're proud of who we are as an individual. I see myself first and foremost as an individual, not as a member of a group, a family, etc. It's like that's a Western mindset. And the Chinese is like the first thing is being part of a group.

and it's just a really different worldview. And I think it's hard because we're so proud of our culture. We're so proud of being individual. And it is very hard for someone who's only been exposed to one way of seeing the world to actually just understand a different way of seeing the world. And China has a really, really violent history, thousands of years, but really for the last kind of 150, 200 years, going back to the Opium Wars. And a little bit before that where the Qing Dynasty had started to become

less stable and a lot of warlord warlordism stuff that you can't imagine i mean chinese civil war i mean i've read some of it it was pretty pretty brutal the chinese civil war took place at the same a chinese civil war they don't call it that it was like the tai ping heavenly rebellion i forgot the name of that exactly took place at the same time as the u.s civil war we talk about the u.s civil war is like the most bloody thing of all time 500 000 people americans died in the civil war. 25 million people died in that war in China. Unbelievable.

Right? And so we're not used to that world. And so we want to apply our lens of saying like, hey, you should have, you should embrace our values. You should embrace these things. But we don't know what that leads to in China. And I think it's a little dangerous for us to just like try to impose that. So I say first and foremost, what you said in the beginning is true.

It's like, we've got to understand each other. We've got to find mutual beneficially, mutual benefits. mutual beneficial exchange, trade is a great path towards getting the business communities uniting at least that, hey, let's have peace, let's have harmony, let's have good relationships here so we can mutually benefit from doing business together. And then of course, we need to understand their history and have a lens. I mean, the opium wars, the U.S. government, United States, and there wasn't a government, but U.S. companies did 20% of all the opium that was shipped in to China during the opium generate.

I mean, we literally forced their ports open at the force of a gun and insisted that they take our drugs. Imagine if the Mexican cartel came with gunboats into San Francisco and said, no, you're going to take our heroin. Like, well, then we would stay for that. We'd be pissed off for like 150 years too. Now we have fentanyl, right? And so these things are, you know, what they say, history doesn't repeat itself.

It just rhymes. Like, there are rhyming things here. And getting to know each other. And it's something that Americans need to understand is. the idea that we would have a bunch of day traders and, you know, take on hedge fund, like, and that anybody could be president. Like, there is a structure in China where you respect the authority of the country and you respect the hierarchy and that is a good thing and tranquility and respecting your elders.

Whereas we're rugged individual as we think about ourselves, not, and that's championed, right? We have this kind of concept. And they've had that system for thousands of years. And so I think it's a little dangerous to come in here as like, interventionists and say, oh, we're going to change this. And like, we've seen what happens in the Middle East when we say, hey, we're going to come in here and change this. And you're like, what's the new thing that you're going to put in place?

And it's not even possible when you think of the scale of China. I mean, China's 1.4 billion people. And we do that is that an eventuality that nobody would want to see is, you know, the United States and China having any kind of a conflict would be destabilizing to a point of insanity. I mean, I think China's biggest challenge. I mean, I don't think people look at China as being so powerful and large and, you know, perhaps unstoppable.

I think China has a lot of issues they need to handle. Like, they don't have the safety nets that we have. They have people moving into the middle class at an alarming rate, which is awesome. But it also means they're getting used to a lifestyle and there's no unemployment. There's no safety net there. And it's very tenuous. They need to fight for every dollar and every factory versus Vietnam, India, Pakistan, Sri Sri Lanka and other countries that I think you can tell us that the average hour, I believe in

China is $4 an hour now. And it used to be a dollar just like 15 years ago. And there's other countries that it's $2. Yep. Inflation is real. Job inflation, salary inflation, which is great for them, except it makes them less competitive and jobs are going to flow away. If all they are is these low end.

Who is surging the most outside of China? Which country is a huge growth market? Cambodia, a lot of Southeast Asia, Philippines and Indonesia have been in growing a lot, especially in trade. Like tariffs have had an impact and companies are shifting their, they're sourcing to other countries. Latin America is going to do really well. It's closer to the U.S.

Same time zone. But China has a lot of problems. It's really challenging. You know, in Chinese agricultural inputs, they have to put five times more fertilizer per hectare than the U.S. does, where we have these great, great planes. Like, we take it for granted how amazing geography is. If there was, if there was only a company that could coordinate trade to make it super

efficient, this could be mutually beneficial, where we have these great fertile fields and they are needed food. We love our gadgets and, you know, our iPhones. I mean, this, we should be aiming for some harmony here and, you know, really working with bending towards human rights on both sides. And I don't want to make a false equivalency here. I think China's, you know, obviously further behind on human rights than the United States is. But we still have work as the United States to get where Denmark is or some other more advanced countries where they don't have the death penalty, they don't have solitary confinement and other human rights violations that are, you know, particularly acute that we need to work on here in the United States. So this has been an amazing discussion. I really appreciate you taking the time

to come on the call. I know that you've been on quite a tear. I'm assuming IPO, maybe 2021. Must be a lot of people knocking with the fact. A lot of conversations. You know, it's pretty exciting. We try not, we want to be a company that has our own independent view of like, what are we worth. What's the right thing to do? I don't, you know, we raise that money so we don't have to. We have almost 10 years of capital in the bank. Like, we don't need to do anything. But wait a second. Which is kind of when you want to strike. It's like, I don't have to do anything. I can do whatever I want. So we'll see when the right timing is. You just said before, Ryan, and I always listened to my guess, you did say before that if the opportunity is there,

you don't know when the opportunity might not be there again. So you want to take advantage of that moment. You did that with the billion. I would think you'd want to do that with the IPO window, which is looking for quality companies. I mean, they're looking for companies like yours. How many SPACs contact you every week? I mean, it must be insane. Two or three per week, yeah. Is that, what do you think of the SPAC movement,

direct listing, or traditional IPO? Any thoughts on that? You must be monitoring it. I'm not an expert. I've looked at it a little bit. You know, the thing that I don't understand in a traditional IPO is that you're not allowed to do forward-looking projections or you have to do it by like the bank kind of like

prices that into your price and they take your model and translate it in some weird way to a price like and it seems like you know you're a startup investor how would you invest without being able to look at the future and like makes no sense itch and the vision and like what are you going to do i like these direct listings i like the spacks and what i understand about the spacks is every point is negotiable in terms of like the carry their their warrants and all that stuff so in your case as somebody who's incredibly strong and has that dry powder you're going to dictate what you want to do. And then in terms of direct listings, you don't need to raise additional capital. So the direct listing like Spotify did becomes particularly workable for you. Anyway,

this has been amazing. I wish you great success. Congratulations. Thank you, Neil, and the team that did the incredible mitzvah for society with the PPE. It really means a lot, I think, to humanity. And, you know, I know the tech press is just obsessed with all the mistakes we make. And late stage journalism loves to dunk on tech. But go to flexport.org and maybe write a fucking story about that once in a while. This goddamn tech press is like, anytime anybody trips and falls are like, oh my God, you fell. Let's talk about all your broken teeth. And like, then tech does something beautiful like flexport.org. And I don't know, did you ever get any phone calls about that from the press? Does anybody ever cover it? No, of course not. And this is the beef that I have

with the tech press right now. The tech press used to, maybe they were kid gloves. That's fair. They were enthusiastic about what we did maybe 20% more enthusiastic. But now they're probably 100% too pessimistic. There's great things going on. I would love for the New York Times to just put a cover story about flexport.org for once to just counterbalance the 10 times when tech screwed up, right? I mean, it would just be a fair thing to do a feature story on flexport.org. I'm putting that out there for Washington Post, New York Times, Kara Swisher, CNN. Somebody write that feature story about tech doing something just absolutely phenomenal. We're going to keep doing that for the next few decades. There's always going to be more crises and things.

So hopefully there's a good chance for a story about that. Congrats on everything. And we'll see you all next time on This Week in Startups.