Hey, how's it going? This is Craig Cannon, and you're listening to Why Combinator podcast. Today's episode is with Ryan Petersen. Ryan is the founder and CEO of Flex Port. Flex Sport is a freight forwarder built around an online dashboard. They were part of the Y C winner 2014 batch. You can find Ryan on Twitter at types fast. Alright, here we go. Brian Peterson. Thanks for coming in for the podcast. Let's start with a brief explanation of what Flex port is because many people might not

know what a freight forwarder is. Yes, well, Flex one is a freight forwarder first and foremost, and that means we help businesses ship cargo around the world. We're also a technology company, so we use technology to give companies more visibility and control over their freight at a lower price. We used technology to automate a lot of the labor free forties. Really interesting. We were all used Thio. The analogy that people want to go towards is like a FedEx or UPS, which your parcel shippers and devastating parcel and frayed is actually a very simple one. It's like, Is the product too heavy for the driver to lift up and put in the truck, and the moment it is now it's freight. Yeah, and it needs a whole different network to move it.

It can't go through the same trucks. The conveyor belts are too narrow for freight for pallets. And and what fundamentally happens that's different is in the parcel business. It's from end to end, one company, and therefore they can have, like scanners at its mode that can add it snowed in the network. They can give you that nice user experience with the milestone selling where stuff is in the freight world because of the size, there's no company big enough to keep it in their own network from door to door, You would actually be the biggest company world by far. You'd have to have a port leaving every port going to every other port every day, right. You have to have a ship rather leaving every port going every other port you need the same for airplanes, and then when that ship arrives, remember that these big container ships now you need 10,000 trucks to meet the ship, so you would need 10,000 trucks in every port every day they just couldn't do it.

It would be too big. So what a freight forwarder does in the freight network is you're moving this rate as a relay race being handed off from a trucking company in China, to the warehouse to another trucking company, to a port to a notion carrier right door and then the mirror image on the other side, door to door. That process is a looks like a bunch of unstructured data being handed off in a relay race. And so what's different about Flex Borders were taking all that data, structuring it, creating a platform so that each of those parties can get what they need to do their job or give us what we need to pass to the next party in the

chain. What's an example? Customer. So it's kind of contextualized this for

someone. One of our bigger customers is Georgia Pacific. We also have so knows as a customer, so we ship all the speakers. Georgia Pacific is the biggest paper company in the world, but we also I think, the best way to ship stuffed Amazon. So we have about 2000 merchants that cell on Amazon that use us,

and they're going to record Amazon warehouses or what are

they doing? Okay, so probably about 10% of export shipments get delivered to an Amazon warehouse. And that way, we have small companies doing that as well as big companies that sell

through Amazon. And you were selling through Amazon 10 years ago. 15

years ago? Yeah, 10 15 years ago. Actually, Back in my day, eBay was a bigger plateau. Times on Amazon introduced the third party seller. I remember I was one of the first people to sign up for it. And I thought it was amazing that for 40 bucks a month I could become an Amazon merchant and add products to their catalog.

This full on you could just with the photos everything.

Don't You can still do that. But I could just Yeah, I couldn't make up. I'm sure you can still way saw the book. But I would just make up my own brand name and created. I thought it was amazing. Like, Wow, my Amazon is live

is legit. That's were the margins. The same back then.

I think they were higher, used to capitalism works and they're sort of people see someone making profit where they shouldn't and then other people pile in until the profits are gone. And that was probably that was the problem. Our business was importing motorbikes from China as well as electric scooters. Way we the scooter mania that's happening out so fascinating for me because 15 years ago my brother and I and our other business partner, Michael Kenko, we were importing electric scooters almost the same form factor, similar price point. And in fact, I saw one for sale on eBay Mexico like a month ago, just checking out to see what happened to our old brand that we invented. And there's a one for sale for 195 bucks on eBay in Mexico. Maybe these things hold value better

than this'll is like a classic Silicon Valley story, right where people find something that's good. But not until the market is ready for it. Will it really take off? It also obviously required smart foreign. I

think you needed the smartphone, and so I even tweeted about this. I'm like, If only I would have invented the iPhone, I could be rich with your business I had on so

so obviously the scooter thing didn't work out or just kind of was fading. You decide to do something

else right? It was a tough business. I lived in China for a couple of years, actually, is a business. It went along for a while. We never considered it to start up. We were never trying to, like, change the world. It was like a couple of guys trying to earn a living on we. I move to China, live there for two years running supply chain for that business and then kind of used my story as an entrepreneur with international experience. I speak five languages and told that story to get into business school. I wasn't making a lot of money. Fact. The year before business school,

I only made $17,000 which I'm almost certain was the lowest of Owen, who was trying to make money. I'm sure there's some business School students weren't trying, but I was trying are succeeding and I thought business school would be a path for me toe at least have some sort of backup plan in life and I could get a job. Yeah, I never really had a job in my whole life. I've worked for Domino's pizza making pizza when I was 15 and that's more or less it.

Did you graduate with that? I did. Yeah. Yeah. Do you feel that that affected your decisions? I mean, obviously you're working for yourself

now, but, um, it I didn't let it. I did affect my decisions, but I was determined. So I went to business school. I graduated about 100 $40,000 a I was pretty determined. I knew that. Like, I looked at my classmates and I could tell that I was a little bit different than them. Like, I've never had a job. I'm an entrepreneur. And I looked at the recruiting cycles and processes and the types of jobs that were available to NBA's. I just knew I would be bad at them is claiming that I was too good for them. It was I'm not good enough.

I would you admire me? Have you hired me to do this management job? I'm not. I'm not cut out for it. And so what I did to manage the debt was actually I got a bunch of part time jobs, so I one of them was writing case studies for U. S. So I wrote I wrote the first published business school. Okay, study about African company s. So I went to Nigeria and wrote a case study about a tech company in Africa, and that was paying me, like, 40 bucks an hour. And it was quite flexible, so I could,

like, work a few hours a day on that. I also had a job teaching the G Matt, which pays 100 bucks an hour. And then I got a job like I started a little s e O consulting firm to help businesses with their search engine presidents S O had three totally flexible on my schedule

jobs. So Okay, so I've been in experiences like this before. How do you manage your time? Such that you give you give your best energy to your business that you want to start rather than like, letting all these other projects consume all of your time and energy.

Well, so I didn't know what business exactly I was gonna D'oh! And so I just need to make sure I had some money and and then free out. Make sure I I'm kind of obsessive so I'll have. I'll make time for for hacking on things and creating things. But I would I had three or four different businesses going at the same time. Ideas plus my And they're what's a business? It was just a website, and I'm trying to drive traffic and see if anyone signs up. Okay,

so the Oh, so it was mostly just like landing pages for

ideas. Yeah, that's what I would do is create landing pages and then see if anybody buys. What were the ideas? Well, a couple of them have merged, so one of them was an e r p for importers that would manager inventory. And then we tell you freight, which is actually kind of what flex points be coming on. One of them was it online customs brokerage and freight forwarder that became flex for it. Um, we've had it. I so many dumb ideas they're not really worth talking about. Not because I'm embarrassed, but I don't remember the any important ones. But I had a few on dhe, you know,

influx for what became full export. And actually, by the way, this is years and years. I'm always doing this. I still have some Brandon projects, like a sock bankruptcy dot com. So if you run out of stocks, you just declares bankruptcy will send you 50 packs of size. I, that's my form of entertainment is like create a little landing agency. If anyone comes in buys, I

think I'm going to do the same thing I am. So all the T shirts I where I had custom made. But there's like I basically tricked the company that made them the first time in tow, ordering me like a test run. And I only ordered, like, 10 or 20 and I'm gonna eventually wear all of them out. So I think I'm just going to do a bulk order and have, like, medium gray t shirt dot com.

Just like so. Yes, I I think there's a misconception that entrepreneurs were just like huge risk takers. But I see myself quite the opposite is like I wanted to see that there's real traction. People want the thing that I'm gonna d'oh. In fact, that was many years later. My first business out after business school is called important genius dot com, and it's a search engine for shipping manifests, helping anytime you import something. The shipping manifest is a public record. It tells you who imported the product who sold it so you can look up any company and see all their factories. You can look up any factory seal their customers used by hedge funds. But it's really used by importers. Amazon merchants who were trying to research factories over Yes,

well, isn't that the concern? If Amazon starts paying attention to where people are making stuff and they just make their own Amazons doing that, they as they get into shipping,

right? Yeah, they already just do it. That's how they look at their sales data and then be like which which product should decline. Go make an Amazon basics version of that product. They have, like 400 different brands. Now that you don't even realize you're Amazon competing with your platform, I think platform should be neutral. And so the idea that you compete with your vendors to me you've got a business is to keep its all of its major stakeholders happy. Yeah, and your vendors air one of your key stakeholders. If you don't treat them like you have to be the counterparty of choice for your vendors, and Amazon doesn't. That's the one mistake I would say that they make like It's the company I respect the most in the world. But you don't seem to respect their vendors and that to me it's not sustainable. Unless you keep your six stakeholders as a business or your customers,

you pay you money, your vendors, your employees, your investors, regulators and then the communities where you operated on and you have. So you have six stakeholders. And if you can keep all six of those, you got to be the counterparty of choice for all six. You gotta get yourself in their head and be like, What do those companies those partners want? You keep all six happy. That's the definition of winning. Nobody loses. It's like and it's like you're playing poker you've got and you know everybody's hand. If you can see through their eyes, you won't lose on DDE. So when you see a business that's like failing on one of those, whether often it's the regulator of the community or the employees excited about. But can't your vendors are too important to alienate down?

Interesting point. So would you would you bet against Amazon at this point? No. And I What do you think happens?

Well, I think that they could be there already enormously successful now a cz for like their stock, Whether it's over value and I don't have an opinion. I am sold by Amazon stock two years ago when I bought a house and I literally I was crying out. Maybe not literally, but I was like, This is the dumbest thing I've ever done. Why am I selling the stock? My houses of 10% in my Amazon and Amazons up like four acts? I was right. I wouldn't bet against the company. I do think, however, if EMS on winds and they seem to be winning, then there's only one global Mega Corp that makes everything I'm like. We all have two choices. You want the black version of the white version of your product.

And that is exactly what philosopher in Germany in the 18 sixties predicted would come to be is that there's one Global Mega Corp and the proletarian must overthrow it and take it back. And I don't want to live in that world, you know. So I think there's I see a big part of exports. Role is enabling empowering all the other brands in the world all the other great makers and creators to make products and have the infrastructure to compete and thrive in names on world. Yeah, I have

been seeing a lot of friends start thes e mean they're not necessarily small scale companies, but they're all kind of going for that premium angle, right? So they're not selling on Amazon. They're sawing through their own e commerce site. Are you seeing more of that

on Fleck Sport? About 10% of our shipments are bound to Amazon, and probably more than that are sold via Amazon because some people do fulfillment, not using Amazons fulfillment, even though they're sold on. I don't know that Sharon's, if anything, Amazon taking Maurin Maur market share from from the world of e commerce.

Let's let's do an M B a question before we go further into uh, so Matt Suss HQ asked what you're important takeaways from Columbia Business School, And would you encourage other entrepreneurs to do

the same? Yeah, so I think here in Silicon Valley, we have a bias, not we, I I deny the spice. I love NBA's. We've hired a lot of great yeah, people NBA's. But there's a bias, certainly in the founding founders of adventure community against, like founders. And you think NBA's don't make great founders or something, and that's probably true, but it's a sample bias like the average person going T o M B A. To do a business school degree is not a great founder. They're meant to be a middle manager.

But if you take someone who's a good founder and they spent two years studying business full time, surely that would make you better at business like, but it's the average person going in is not cut out for that, but it doesn't mean that there's nothing to do with the business school degree. Thank you. Having a business degree has helped me immensely in understanding the principles of accounting and revenue recognition and, you know, like real basic fundamentals Finance cap Table's discount rating, this kind of cash flow, these air like core principles of a modern business person and let you throw Ivan helped me tremendously now worth the 140 k in debt that I graduated with, probably not, so I tend to recommend business school to people who were rich and like your family's gonna pay for it so that it's a great experience. But like if you're gonna graduate 140 K and Dad, it's pretty brutal. It'll really limit your future opportunities. And I hate to see people make life choices because they're in debt.

Yeah, and they need to make you know, it's kind of I don't like to live with permission from other people, much less like some bank that I have to decide what job I'm gonna get based on some anonymous financial institution and lent me money. That's

kind of crappy. Yeah. I mean, if you need a kick in two or three grand a month, like a lot

of people can't start coming in, That's a huge amount of money, right? And so, especially after tax. So I think, um, it's I think it's very important for people have a pretty good plan, like I didn't have a great plan, but I worked one out and everything about this. If you Google like N b a debt Brian Peterson, it's on the Internet somewhere about howto what I did, which was find these part time jobs and generate some income while I was so that I could I I don't know. Time frames, like even flex port. I don't know what time frame will be successful, but I know that if we stay in,

the fight will win. And you just want to make sure you set yourself up in a way that you can't lose because you're in the fight in perpetuity and like, you'll just keep finding new hack. So I didn't know what business I was gonna make successful, but I knew that I would do it. And if I was long as I could make those debt payments, Yeah, make my rent. And like, affords Theun II, then buy myself an indefinite period of time to experiment.

Right? And so what was the point at which cause you, the idea of flecks were kind of was in a holding pattern for, like, three years? I think you said until you were approved for a certain license. At what point did you commit to doing Flex Port? When did you know it was gonna happen?

March 31st of 2013 is when we were granted a license by U s department, Homeland Security, Customs and Border Protection. And so I started working on the idea in, like, 2010. Yeah, thanks for that. There was three years They're waiting for the government to any FBI background

check any income at that point, No revenue. And

you read It was out of business yet I was still working on my previous business. And for export was a side project going. Then, after three years, finally got granted the license and made it a full time job. Like basically, the next day

s. Oh, there is a question than about your first service from Tyler Hodge on. Yes. How did you get your 1st 3 clients?

The earliest customers for Flex Port. We got the Google AdWords and S CEO and just sign ups. People just finding us on the Internet signing up for the service. Yeah, in fact, pre launch. So when I was still experimenting and I built the landing page that is now for the service, that is not it is not for export. And we had not yet launched at anything. We hadn't received a license yet. I was just figuring out what would people by the service if it exists, It was just a marketing page website. And we are Foxconn signed up. Makes the I find phone. Cargill signed up like one of the biggest ad companies in the world. And then one day, Saudi Aramco signed up National Oil company of Saudi Arabia signed up for my fake website.

I'm like, Oh, man, this is a big company. I need to get this license, so

Oh, man, that's so Did you jump the gun and just start e mailing them?

No, I did it because I wasn't a license. I was just like, an experiment in things like, I don't know. I didn't know how to do the business. I was just saying it would people by the service if it exists again, I I I'm not a big risk taker. Was just like, I don't want to start this hard business. People

are gonna want it. Yeah, and so how did you How did you verify that people actually wanted it, E. I mean, they're giving you their email, but that doesn't necessarily mean that you Well,

I I knew. So I flex word emerged out of. Yeah, I had this business selling shipping manifest dated, but that actually evolved and emerged out of a business that my brother and I and our same business partner, Michael Kenko, ran buying scooters and buying products in China. And I had felt the pain first hand of freight forwarding that there's this information, asymmetry and the forward or global trade kind of a black box. And the freight forwarder knows how it works and you don't and they use that against you. They use that to make money off you. And so I had been I had felt the pain first hand of this whole industry back in early two thousands when I was still selling stuff on eBay. And so I knew from first principles from having experience that it was a good idea. I didn't know that big companies had the same problem, right? So when they started signing up was like, Oh,

this is even bigger than I thought. But I already kind of knew just from first firsthand experience that this was an ugly industry, and that and that software could make it better. It was kind of like this, the only riel principle that I had, I didn't know that much about the underlying problems. I had never been a freight forwarder, so I had only seen the tip of the iceberg. That's customer facing as a problem. I didn't know why. The reasons why the forwarders acted the way they did Andi other parties involved. So But it was enough to set us off on the track and say, Hey, let's go. My hypothesis is simply like software could teach the importer more about this, but it documents are needed, etcetera.

Totally. But at that point, So you're Are you a competent programmer or cause you're a solo founder, right? Yeah. So what? What the product even look like? So three years, you get your license scene, What do you do? Three

years? Got the license, immediately hired three rails developers. And so I admit money in previous business and was able to hire some programmers. And I was kind of first PM. Yeah, and had some programmers working for me.

And so you just build it out from there. Were you thinking about bringing in your brother a separate business partner? Toe co

founders. So my my brother, actually, and I really like sort of biological analyses. Analogies in business. I think that I think of business as a your O. R. Each business is kind of an organism in an ecosystem in the competitive environment around it and needs to buy and sell from its vendors. Just like organism used to find find sources of nutrients out there in the wild. Right? And so in the evolutionary tree of Flex, 40 kind of goes back to import genius dot com, which is this data service for global trade. And before that, the importing business that we ran together. And I think at the import genius stages is taking public record, making them searchable on selling subscriptions.

The tree kind of forked. And so my brother, who was my co founder there, left before me. It even and started a company taking public data So way had found this public data found interesting ways to make it useful and make money off it, he said. What other public date is out there and found the building permit? For every remodeling project and every construction project? The United States is a public record, and so wear the permit so that licenses for the contractors. And so he built this search engine for contractors that shows you dynamic profiles of their work and went, Oh, I see and got into y C with that. So he actually did y see before me. One year prior is called Build Zoom kind of the Flex board of remodeling and and and so he had left to do that. I tagged along with him,

came to Palo Alto. He was in Y C. I lived in the apartment, was helping him. I snuck into I see a couple of times in salt Paul speak and like it was like I want to do I see on DSO kind of following in my brother's footsteps, as I always have. I came and did it, but wear kind of spiritual cofounders. Helping each other with our

business is in the way. Okay, and so at what point do you guys? Are you based in New York at that point, or you full on moved to California. I moved

to California to start for export. I and I think that was one of the better things I've done. Import genius. I started in New York and then moved to Arizona when we put a call center in our sales sent service center in place. And, um, I didn't want Flex Port. I didn't think that we could stand out. We don't want to be a freight forwarder. Were a technology company, that it's making freight better with technology. And I thought that story would be hard to recruit the talent and the capital in Arizona. Yeah, but in Silicon Valley is part of why I see it makes sense. So we think we liked what could only be found in Silicon Valley. We'll see if that's true and 10 years from now. But I think that's still

true today. Do you hire most of your engineers here? All of them. All of them. Okay, because they're they're a bunch of questions about you guys being all over the world. So just one is Ah, maroon cuckoo. Rana asks. What's your strategy for rapidly hiring the best talent in so many different global hubs? Because you guys have five officers

know we're in 11 off. 11 were all over the world were in two offices in Europe, Hamburg in Amsterdam. Okay, we're in Send Jen and Hong Kong and China and then got a five officers plus warehouses in the US we have three warehouses. We have a 7 47 We have our own plane. Our shows you for hiring talent is, well, what we look for. We like flex for it, as my my c o my business partner calls it an insecure overachievers is our is our profile. We want people who are like, really hungry, but but humble, and they want to prove something to the world, and they're super smart, but they don't necessarily realize how great they are on. But that's that's been a great formula for us. It's hard to identify, but

I heard this on multiple occasions from people who are saying, like, kind of like the state school mentality versus, like, you know, going to Colombia, for example, that you find the smartest kid from like u Mass, and they don't even know that they're a diamond in the rough. Yeah,

I mean, we're happy to hire you, confined these people at the top schools, too, around the world. You know, I don't know how different it is in everywhere we do hire local recruiter of recruiting people, but we don't. We like to have a very decentralized work structure. I think it's very entrepreneurial, I think. Rather I think entrepreneurs get more done and they're better. So rather than having one recruiting team here that's totally specialized in expert in each function, I'd rather have a generalist Recruiting. Reporting to the head of that office in tag team like that would be better than even the best recruiter who's totally specialized in one function, like sales sitting in one place. I'd rather have entrepreneur with a recruiter paired up will do better than like a totally specialized recruiting organization. So that's the way we tried to organize. And I think that's true for most functions.

And then culture was due to bring a few people over to start

a new office. Yeah, well, always said. Now we try to send eight people to a new office and launch it and get them to actually move there. Oh, wow for a year, for wherever, hopefully forever. Although I don't think there is forever in the modern world, we get people. We really encourage generalists and and that requires rotations. With its geographic rotation moving to a new office or rotation to a new function within the Orcs way, love to encourage people to move, try different jobs, and part of that is launching new offices. What? It would have been some

challenges in scaling because you said your 400 sf running a 50 worldwide man. Yeah, would have been the challenges and scaling toe almost 1000 people,

the the core challenges of flesh sport and they never go away today. So we've had epic product market fit since before we even write like Saudi Aramco. That's great for export has never had a problem with demand. People want what we d'oh we're we're creating a better way and cheaper way to ship Freight, which is a trillion dollar industry, is literally logistics is 12% of global GDP. 12% of every dollar made by every person on planet Earth is goes into logistics. And and it's, I think, much of the back pressure against the rest of the economy is the fact that this industry, which is the circulatory system for global trade, is an ambition. So all the other companies, therefore made inefficient because their circulatory systems got a lot of cholesterol in it, and so we've never had a problem demand what we have a problem fulfilling that. Actually, doing a good job like operations is hard,

logistics tough, and so it's getting product Market is epic. That gives you the market demands that you respond, that you hire enough talent to do it, that you and the people will come because they are attracted to that growth in the product market fit. So the remaining problems were all almost all culture, closely related compliance, following all that is very regulated industry. A lot of people, not from the industry. With that teach them all the rules. Make sure you have good checklist and processes that to avoid ever breaking them and then just the complexity of the network, the business that we're building like, How do you make sure that we can keep things simple to find? This is a whole culture related, Yeah,

defining decision rights. Who's allowed to make? How do you keep people out of each other's way? How do you resolve conflicts in the company? Have

you been just, you know, talking to other entrepreneurs reading books like what's been the most influential thing

for you and all these books? I read books. I read a book every week, at least let's get Ah well, my favorite book in the world is called Origin of Wealth, which is about the evolution in biology and business. Actually think this will be controversial in some circles here in Silicon Valley, but one of my favorite business books in the last five years is a good profit by Charles Coat Kind of Cook Brother Industries, of course, but is an incredible book about about the role of business in society and how to define culture within a company, and then to find decision rights and allow people to make to move fast and be what he calls a principled entrepreneurs. They get all your employees to have principles and be entrepreneurial, but our culture is. Our biggest challenge is the company. The my definition of culture of good culture is that you have engaged team members like that. Everybody there is engaged with their work, and what engagement means is you're getting more out of your job.

Then you're putting in. It's very high bar to clear. Yeah, but you to do it. It's compensation, of course, but you get pretty quickly. We're all on the hedonic treadmill and get used to that. So then it's Do you feel like you're creating value at work? Do you like the people that you're working with? Are you learning? Do you see a career path of their opportunities for you to grow? Um, I'm sure there's some intangible things, too. Like, what's your office? Environment is a comfortable ET cetera, but they tend

to matter less to. I did see those room phone boxes that you did. You help start that. Are you like

one room? Yeah, I started a company. May I help to start a company that makes funders? The officers got get room dot com. I named it fun Bruce dot com and bought the domain for the company. Way also owned. But they like, Oh, it's too generic. They fancy your name, but I really like the fun boost dot com. Just think office's air too loud at 100 degree, and so every office needs a phone booth where you can go make a quiet phone calls that we made those and way sell them on that website.

How how are you actually measuring this? What was the metric you didn't say? Engagement, but it's like getting more out of your job than you put in. Yeah, How do you measure that?

Well, it's This is why culture so hard to scale because it's done. It's not a formula, and it's done through conversation. It's done through great management, greatly leadership. But management, like talking to the people, caring about them, listening to their challenges. And you can't do that. I can't do that 350 people. So you've gotta have great managers up and down the chain is a lot of training. A lot of what? Understanding people. What do they want? What are they trying to get? Are they getting it on? And that's why culture is really hard to scale because the more people you have, the more equations you have to keep

track of. How many direct reports do you recommend having for an average person?

Average person should not have a thing for the average manager. I don't know, maybe eight. You want to be able to meet with each of your reports for an hour a week in a one on one and beyond. If you're doing more than eight hours, it's 20% of your time right there for a week. It's more than that. It's probably not not good. Okay, Scaling that culture is just like the key challenge of any business once you get product market that the world of demanded of you. And I think one of the things I've been well, I've been fortunate that fleck sport in that I had never been a freight forwarder. So there was never, never a moment it flex port where I could tell everyone

what to do. Oh, yeah, I never knew

like you should do this. You should do that. And so at no point did the company ever depend on what Ryan told people to dio. I knew that global trade is an ex credibly important that thing in the world. In fact, I think it's the trade is the thing that separates us from the animal kingdom that we were. We figured out how to trade and therefore all the collective learning that goes into that. If I make a product, I know all the ideas that go into that product I'm exchanging with you, giving you my ideas. This is what allowed humans to defeat all the other hominid species because we could work together effectively and specialize, and they couldn't. Yeah, so it's really in. The human experience is intricately related to the rise of humanity, and and nothing in the last 50 years lifted more people out of poverty than the opening of adoption of free market economic policies in the East, in particular in China and India and other places.

And and yet trade is still too hard. You're talking about the most possibly the most important trend on in the world economy, and its anyone who's tried to do it will tell you it's a nightmare. And so that was my guiding principle was like, Here's something incredibly important humanity that's way too hard. Let's attract a bunch of super smart people, show him the problem, help them organize themselves and let them make the decisions. And that that's that's really helped us now. It took five years from the first time I had the idea to the first dollar of revenue was five years, four years of which it was just me and no other employees. And so we had I known everything about logistics, and I've been afraid for her. I think we've had revenue in the first year we got license right away. We would have gotten to some scale much faster, but it would have depended on me and stop scaling because it would have been like,

you know, the train, the director trying to tell you want to do instead of like the grandpa saying like, Well, let's see if I can help us organize and, you know, like teaching the lessons of my career instead of and that's a much better place for a company to try to scale long term, to build a culture is like a leader like that. So I think my naivete around forwarding actually turned out to be a good thing in the long run, because I can focus on culture, on recruiting on or design instead of on telling people what

to do, right? Yeah. I mean, you could, if you were coming from the industry, have all these preconceived notions that may have set you up for failure if you didn't realize. But are many of your employees freight industry veterans?

About 20%. We try to. We try to hire one out of every five or six people from the industry. We think we need that expertise, my principles five or six people because, like most teams should have five or six people on it. And I want one person in the room has done it before, but not too, because then they'll gang up on. Do you want one to make sure you're not thinking really stupid decisions, but you don't want to, because then they'll form a coalition and convince people that they must do it that way. And it's like rather just, like, hear the voice. They're often right, but not always. Okay, cool. You want to challenge

those assumptions? Let's let's do some Twitter questions you have. I mean, you were. You're the first podcast guest toe proactively. Answer all of them way. Got some good stuff. So I'm curious about this last one first page, just e. Molly asks. How's the trump policy on foreign trade affected your business

for? Yeah, it's tough to see our customers get wrapped up in it. We've had a lot of it was. Only about 2% of our shipments were affected by the first round of tariffs by commercial invoice value, So about 2% of our total shipments got slapped a 25% tariff on them. So it's not really material for us yet as a business. And yet if you're one of those 2% it's super material we've had. We had a company, um, makes an air purifier. Great company. Female entrepreneurs have been our office. Hang out with us down like, you know, sessions teaching our team about their business and stuff. They got hit with this,

and it's like it's brutal. You know, you're like millions of dollars of extra charges that totally out of their control. And these supply chains, especially for electronics, can't move like south China is where you're gonna produce that stuff. There's not infrastructure and subcontractors and other vendors to make consumer electronics outside of this engine. Guangdong Province. Just not, and you can't go to another country. Yeah, so that's brutal. I hate anything bad for our customers. I hate on fleck sports perspective. I think one we've got to be the best, and I think we are in responding to that because we have a database within five minutes and one sequel Query were able to tell every customer exactly who who's affected how much.

What is this gonna do to you were. I think it lets us differentiate from our competition and then help them plan around it right now. Our business, It's August. Our business grew 50% in the last two weeks, which is crazy because we're a big business already, but right and we're not getting too excited because we think a lot of that. Their new tariffs coming. And we think a lot of that business that we're seeing now there's a huge surge for August is not supposed to be a time of year when your business goes on fire. Yeah, it's closer to the holiday season, but we think a lot of businesses are actually pulling their imports forward to import the stuff before the tariff get slapped on it. So we will see how it plays out. We're not getting too excited. Growth.

This is sort of a tangential question, but I heard you mentioned on another podcast the holidays and shipping prices. Can you go over that? Because I was fascinated, he said. Was like at some point there's a 10 X increase on freight and

particular Okay, well, it's one of the reasons I love this industry is because it is so tied. Trade is so deep in the economics and you have you have supply and demand balances on all these things. And it, afraid in particular, is a fascinating one because an airplane 50 people don't realize. But 50% of all the air cargo in the world has actually moved on passenger plants. In the belly of the passenger plan is why they have a luggage for you because they have an opportunity costed. They put someone else's car go in there if they don't put your bag and that that's a really interesting situation that you don't often see where the supply for the market of air freight is actually totally disconnected from the demand. It is connected to the demand for passenger tickets, and so that's gonna always lead to fundamentally imbalances in the air freight markets. And what will happen here. Free is a quite a seasonal business. It's it's run. The economy runs on Christmas air freight on average about five times more expensive than ocean freight. So right before Christmas season is you wantto bring everything in and get it in and sell it.

And if you don't get it in those two week period, you might never sell it, so it's worth it to fly over, even if it's five times more expensive. Okay, now, the moment that that plane is full, which which happens every November in every October, really planes get full. Now, the price goes to whoever's got the highest marginal value out of that last kilo of space, which tends to be which company is making the most for rectangle about this size if they're willing. You know, if you make 600 bucks on an iPhone, I think their margin I've seen the breakdowns that make, like,

400 bucks or something. According that I supply company. Um what? It costs a buck to ship it. Do you really care if it costs my box to ship it? So so all of a sudden, the price could go crazy. Yeah, And the price. This is classic economic theory. The price set in the market is goes to the marginal value of the last person. Whoever's willing to pay the most air freight market will spike every kind of cute, for it just goes out of control. So so

that that growth that you guys are seeing right now are these pre existing customers these air new customers signing up? Is it everything's

pre existing preexisting new new customers for us, our customer base is so big now that a new customers it's not. It does not really material in any given period. It takes a long time to build up a base. We have, like, about 3000 paying customers now. Okay,

because we were talking before recording about your your outbound sales. And there was another related question. S o power decal Us. How do you poach clients from legacy providers? And just in general, in terms of your revenue? Like I'm curious about how how the sale cycle works for you. How happens?

S O Flex forgot to $200 million in revenue without having a marketing team. Um, and that was done. That was a great lesson for me because I consider myself a growth hacker in a marketer. And that was the one area the business, right? Didn't go out and hire people better than me. Yeah, soon enough yet to do with the job. I thought because you were just blogging. Logging. Really? I didn't do much. I just thought that I knew this space and so I didn't invent. It's really silly. It's a good lesson for you as an entrepreneur. You gotta like,

take yourself out of the things. Yeah, and that was the last one I removed myself from. Reflects. Port is in 98% outbound sales, mate. Maybe it's 95% outbound sales model like we build lists of companies importing things happens that I started the business that has all the list of people report and and we call them and we show them our value proposition. And so how we poach customers from legacy clients to show them we're gonna give you more visibility and control over your freight of international freight at the same price point. And so, at some point, as long as you trust that we're not scammers, yeah, at some point, that becomes irrational. Not if it's better servicing price, and eventually we will be better and cheaper.

We often are, but not always. That's it. It's irrational not to move your business as long as you can trust us on. This is there's a lot of compliance involved these air complex processes. You're running a supply chain. You are turning over your circulatory system for a new to a new provider. So it's It's not without risk and the sale cycles not easy by any means. But if weaken, you know, prove that we're not gonna totally screw up your business and you'll get more visibility. Where is my stuff? When is it gonna arrive? More data? What you've shift were the single best view into all the economic activity inside your own company. Yeah. How

did you create trust like that in the beginning? Because I could. I mean, it's not just these legacy customers working with legacy providers. It's across the whole. This whole industry's kind of arcane. How did you? I mean, I guess you have this license, But how did you project that? Like confidence Toe, say, like, Oh, you can trust

us. We'll make it happen. I don't know. We had read smart people, great early sales, entrepreneurial sales and every entrepreneur Neal needs. An entrepreneurial sales person usually has the entrepreneur themselves, but you gotta have that and a lot of it's underrated will think a lot in Silicon Valley, where we think it's just about engineering talent and who's the best engineer, and they forget that you've gotta have someone. What? Entrepreneurial sales is very different than regular sales. Regular sales. You want to get to know as fast as you can. So you stop wasting your time and get the next person who will say yes. If you want to get to know within five minutes. Ideally,

yeah, that's great. If someone hangs up on your cool, I could go to the next one. Entrepreneurial cells is the opposite. You want to get to? Yes. If you're saying yes, I will ship with you if and then What's that? If statement and you don't promise it, you just get now You can bring that back to your product and engineering teams and say these guys will ship with us if we can. Yeah, and 95% of the time, it'll be absurd. And you can't

do it. Well, this is a huge challenge that breaks a lot of businesses. They end up building all these like custom features for every quote, big client. But all of a sudden, the big client is now like your tiny client. Yeah, and it just eats him up

totally. And so we we would we would get Yes, if from. And we would always get a Yes, but yet 99 95 to 99% of time or something even he couldn't do it. Didn't, wouldn't. D'oh! Right. So you have a little discipline of what you're gonna do it. Make sure it's something that, yes, this makes sense. This will make sense for lots of our customers. This is on our road map. Anyways, let's pull it forward.

And so we did that for the head of supply chain for a major watchmaker, and we went down White boarded it with him, showed him he white boarded it for us. This is what I want from my dashboard. I want to see all my shipments, anything that's gonna be late by at least 24 hours. I wanted to turn red, and I want to know why. And if there's any action I need to take, I want that to be elevated in this in the system. Show me what I need to dio talk to fix it. That's brilliant. That's cool. A month later, we came back and this was when I knew we had a good company cause I was on vacation, and usually when I go on vacation and neurotically check my e mail the whole time.

But on this vacation I was in a Caribbean island with no service, and I just was like, I'm out. I came back and they had built this gone down there. Talk to this guy, built the map, do what he wanted. Yeah, and I came back in like our whole user interface was different. It was like, that is a good company, like, willing to just change the whole product when they see us out. Millions. This is the right thing to do. And we went back down to meet the client again,

and he said You all turned me into a computer programmer. I've got a ship freight with you. So then he said, yes, if I will ship with you if you can get me this price at that time, that price was half of what we were paying, so we couldn't do it. But we now have a target, and we could go back to the ocean carriers and say, I will bring you the world's, you know, one of the world's largest watchmakers as a customer. If you can get me this price, which is a market price, we just weren't bang market pricing because you were too small, too small and didn't know people in relationships.

But now we're like, Okay, I'll give you the market price. And so it took a couple of months ago back and won his business. And then it's kind of like lots and lots of those cycles. We won't build custom software for anybody. But if your idea is normal is like something that we something reasonable build reasonable and it's good and makes good for all of our customers will do

it right because you guys still compared to, like, the biggest freight forwarders. What's your relative size?

We're now we. Last month we passed FedEx and panel Pena, which we're now number 17 0 out of about 20,000 freight forwarders in the world in four years. So and that's, um, we are still 1/5 of the largest ray on the Trans Pacific, which is Asia to us. Now. The largest in the world only has 2% market share, so we it's not enough to be number one, I think. Then you we don't want to get to number one and then stole out like they did. Our goal is to get to 20 or 40% market share. If you do that, you're the biggest company in planet. Yeah, like full stop like bigger than Saudi Aramco.

You figure they stalled out. Why?

Lack of technology that it's all people. You know. The biggest has 2% share in 60,000 employees. And so if they want to go to 20% share and they don't have any technology driving scale efficiency, what do you end up with is 600,000 employees and these are knowledge workers thes air. Not these air troubleshooting consultants. They're not Foxconn factory worker Soling instructions. So they just reached the limits of what a human organization can

scale toe. Where do you see automation in the next? You know, like obviously like I know it most directly from container ports. But where do you see automation having the largest effect in your in your business?

Um, for us, automation is often about delegation. It's about getting the work to the right person to do it. So the forwarder is kind of the coordinating layer in this relay race of unstructured data and their job today and our teams jobs have to go out and get the data and then put it into our system. Much what you need to do is build interfaces. All those companies can directly pass it to whether it's through our e p. I were on our Web interface, and so it's it's delegating that task instead of our team doing it. Let's have the customer D'oh! Give us right now our customer calls the our employees. It might have to call a customer, asked for some documents, then put it into our system, right? I don't want to create automation tools to make them better at calling costume right? I want to create a great interface so that that customer just automatically uploads it themselves and makes it more pain free.

So that's like pretty specific to our industry, which is this relay race of unstructured data. Um, there's a great paper that I read about industries that are most susceptible to automation and freight forwarding was the number one on the less it was like 99% of the work should be that would be better done by software It's like academic paper. Do you agree? I don't know. It's pretty hard. There's a lot of human intelligence and tribal knowledge and things, but even that should be unlocked. Like our competitors know more things than us. If 60,000 employees, like have tons of expertise, the biggest one was found in 18 90 somewhere in that building. They know how to ship cargo using telegrams and steal the ship's time, too, you know?

Yeah, depressing. And But we need unlock that it's living in people's heads on. What you want to do is put it into databases and make it instantly queria ble so your customers can get the answer to whatever question they want instantly, like having to find the right expert and talk to them on the phone.

So do you. When you talk about like, all of these entrepreneurial ideas you have on the side, do you have other ideas boiling in your head all the time? First for okay, because there was always

recruiting founders and if great, we've had a few great people leave flex board, not too many. Most people stayed forever, but I got a few great people leave, and I'm always trying to convince them to, like, do one of my ideas with me on the side thing is with me. I don't have time. I spend a maximum like the phone. This company. They hate me to kick me off the board because they kicked off the force because I have no time to spend on it. I'm all in on flex for, but, um uh, yeah, I have a lot of good business ideas, most of which will work. I'm now I now know from the foundry SatCom is crushing it. They make so much, even though I see you rejected them

even nuts because, yeah, this is a question that I love. And I mean, so many people do at y c do the same thing that to the extent that I think it should be like a page on your book face profile the network where it's like these Air Ryan's like white whale ideas. Like if he tries to convince you to, like, pivot your company into this like you are forewarned. But yes, someone else asked Jason Yannis, ask if your weren't operating flex port and had to source a new idea to work on.

Where would you start? Yeah, I always start with water pains. You experience again in that slept blindness article, Paul Graham slept. Blindness is, um a slap is a Yiddish word for an arduous journey. And so slept. Blindness is where your conscious brain won't actually allow you to think about a problem. It's like there's no possible way I could sell this from It's too big of a problem. I'm not gonna go there and that training yourself toe a lot, let yourself get annoyed by the annoying things in life like that's something I'm people know me Well, no, I just, like, complain about bullshit all the time. Like what the hell is why does this company eight money so bad a ll the time?

Yes, I'm someone who lets myself get frustrated by that and then keeps lists of like, wow, I could make a ton of money if I just solve this problem. And so what's the question that Paul Acid it's one of Peggy's essay is called Schlep Blind is highly recommended. And the question that he says is, rather than asking, what problem should I solve? What company should I start? You should say, What problem do I wish someone else would solve for me? And then that's probably a good idea. If there's not enough people like you, then that's a good idea so that I would ask that question. What is the problem? And so example,

the office phone booths. I think offices are way too loud, and I get really annoyed by all the people talking. I want a quiet place, and I also like privacy when I talk on the phone. So I wanted a quiet room. I hired guys on Craigslist to make phone boost for me. They were terrible. They were hot. You would sweat. They were dark was like, kind of creepy in there. And you know that Flex port? We had people in those Bruce all day. Every day they would come out sweaty. It was people would make fun of it,

and yet it was used all day. I'm like, if the product is this bad, yeah, and people are still using it. This is a good thing. So I got I pulled together some team members of the founders of that company and said, Hey, let's make this thing super cheap, flat pack so you can assemble it cool. So it's not too hot. Cool. Temperature wise. Yeah, look good. And boom.

They're selling millions of dollars with the biz. So it's It's fine. That annoyance in your life and the flex board. It's, well, most of the good businesses that I have today. We'll just be offshoots of flex port. Cargo Insurance is a great new business. We now have a business that makes loans to our customers trade finance loans for any anything to buy inventory, which we secure with the inventory.

That's that. They already,

yeah, if you if you don't pay us back, I'll just sell. Your stuff is incredible. Started my career, so yeah, but it's always about finding what you know. It's not something that's annoying you. You got to really talk to your customers and what's what's in the way. You talk to potential customers,

right? And, yeah, just another lake because, yeah, you've done all these lending pages. How are you talking to your customers at the time? You know, like, were you putting money down on, you know, like AdWords Facebook as of the time and then just e mailing them to see if they're really interested or you're just good at, like, creating the landing

page. Um, 10 years ago, when I first started doing these landing pages for Flex Border eight years ago, I was CEO was different. Easier, I think. And I would like I knew how it worked. And now I don't know that much about how to rank and go for things. But we were pretty good at ranking for key words and would get traffic that way. Our first customers reflects poor twirl Google AdWords customers. But that was like once I had a product to sell. Okay,

because I think this is like such a common challenge for people where they're like, Oh, man, See say they are particularly attuned to the problems in their lives. And then it's like, How do I like launch in a way where I can validate in, like, the risk this venture, whatever it might be? And, you know, you can only do it thio such an extent. But I'm just wondering if you have pro tips.

I it takes some sense like some people have. You got to not believe your own B s and make sure that other people agree with you that this is good. And like so, the phone boosting, for example. I had that idea, and I'd seen it. I built some really crappy ones. Like with a carpenter I hired on Craigslist. I told you I knew it was a good idea. And I just talked about it all the freaking time at parties. Okay. And everybody I ever talk, it was like, Yeah, I will buy five of those. I mean, I could probably sell five Busta Y C right

now if I walk in, we have ones in their terrible. They smell weird. They're hot.

So you got everyone I've ever talked to? Who has the startup would buy one of these. And so there's only so long you can go before you, like everybody wants to buy this product. And eventually one of my friends. So I did. What I see with was like, Ryan, let's do that business. I want to do it like, Okay, I'll put in money. I will spend a maximum of five hours total, have a really important company to run. But, um, yes, success compounds to like, I don't think I could have just spun that up on the side if I wasn't. Of course, you flex

port. Similarly, like when you were getting started like you had the cash around to hire developers,

which came from my previous Exactly. And I think, uh, I actually spoke once on a fundraising panel at Y. C, and they've never invited me back because I think I was too real. And I was like, Look, if no investors want to invest in your business, that's your fault. You should do a different business like there's lots of businesses that don't need any investor money, do that and then earn the credibility success compounds like buildup. You know, use your own money to fund it because there's plenty of businesses like I started consulting firm to help people with SC. I promise you people will pay you to do that if you, you know, like go find a way to make money in this world and not don't wait for investors to give you permission to start a business.

It's kind of a lame way to live. And I I hate that when founders were like, Oh, if only this investor would give me money, then I would make it my full time job. Just pick

a different idea, totally. It's one of the biggest downsides of the VC industry as as exists right now. It's created all of these, like thought leaders around businesses that have that require venture capital funding. And it's like pigeonholed people to create businesses that need it. And therefore, if they can't figure out how to be the darling in the startup VC, mind, their business will never

work in success compounds. You know, I did start ups and we never called him started. We're just trying to make totally for 10 years before I raise my first venture capital dollars and all right, you know what The first thing about venture capital until I got into icy and even then, you know, And so I think that that is a It's a bit toxic. Now I know that people in why's he should raise money and go do that so I know why. My advice is controversial to people, but at the same time, it's like Also, investors want to invest in things where they're like, this guy's gonna do it with or without me, totally like she's got this. I better invest now before she runs off and makes it, you know, like

that's the best case area where there's so much foam. Oh, listen, Ryan's making money hand over fist like he doesn't need me at all. Therefore, that's the best possible investment cause they're trying to de risk.

Now you don't want to be a faker, but like on someone, you've got to believe that you're going to do this with or without the investors. And then I'll suddenly investors a lineup.

Totally way. We're almost out of time. But you've now been doing flex port for quite a while. We have a lot of early founders that listen to this podcast. What would you tell yourself at the beginning? What are the biggest lessons learned?

You know, one of the most interesting lessons learned, and I used to say this wasn't useful, but I think more and more I think it is is the degree to which six s compounds and the reason I say that? I used to think that's not useful because like, Well, what does it say if you're successful and you were gonna do that anyways? But as I've reflected Maur on it, I Actually, it's an extremely important lesson, because if success compounds well, we know the nature of compound interest and it means you should save small amounts of money and put it in your bank account and let it compound. Yeah, and that that speaks very much too agile Development methodologies, customer development, Getting that, Yes,

if getting the little winds that they matter much more than it seems because they're gonna compound on themselves and that, you know, the way it looked in flex ports cases like a decade of small winds and successes that got us into y Combinator y Combinator got us Google Ventures to invest, which got us our CTO, which got, you know, sort of like this, which got built the product that got the customers. And it's just that eventually you can unlock these crazy Lollapalooza effects of Ofcom pounding success. Yeah, but it it does speak to like being agile, getting small winds, celebrating them as Ugo instead of trying to make this master plan for the future. Let it evolve, let it go with, like,

little winds at a time that the humanity could not have existed at the Big Bang, we would have been killed under the pressure, right? And like, you need to, like, sort of slowly evolved the thing, and eventually you'll get where you want to be. Also, dearest, things like venture capital is quite risky. These people need a return. Never take debt unless you're profitable. Right? Like these air, you gotta live up to your expectations of all those six times kinds of stakeholders.

And if your investors are getting screwed by something you're doing, that is not gonna work. So don't raise more money than you need to, like, make sure everybody's winning in the process except your competitors and then your gold

golden. All right. If people want to follow you online,

where should they go? Uh, well, I don't know if that's a good idea. My twitter is fast.

All right.

Thanks, man. Okay, thanks a lot of things for me. All

right? Thanks for listening. So, as always, you can find the transcript and video at blogged out. Why? Combinator dot com And if you have a second, it would be awesome to give us a rating interview wherever you find your podcast. See you next time.