Flexport's Ryan Petersen: Reflections on Leadership from 13 Years Leading Flexport

Oh, my pleasure. Thanks for having me back, man.

Oh, wow. I don’t think I ever had that many ambitions. I don’t remember, to be honest. Did someone tell you did my brother tell you what I wanted to be? I don’t remember.

No. I don’t think so. I spent a lot of my time learning languages when I was younger, and I liked adventure. You know, I wanted to get out there. My favorite kid’s book was always Curious George. Wanna get out there and see what’s happening in the world. Go some go on some adventures, cause some trouble. You know, I lived in five countries before I was 24. Learned how to speak Spanish, Portuguese, Chinese, little French. But it was all just in the spirit of adventure. I don’t think I had, like, longer term ambitions until I got into working for my brother and doing business.

Yeah. So twenty years ago, early two thousands, my brother I I started working for my brother when I graduated from and we built this company buying motorcycles, off road vehicles, dirt bikes, ATVs, dune buggies, and selling them through the Internet. And it was really a technology company. Like, we didn’t market ourselves that way, but it was before Shopify and Stripe, and we had to build our own inventory management systems and accounting. It was in the browser, like, in the late nineties, early two thousands. So, you know, we should have built, like, a software company and sold the software and said we kinda sold these motorcycles.

But we learned a ton about import, export, and about how difficult it was to work with the freight forwarding and logistics companies of the world, both because of a lack of technology twenty years ago. There was just nothing. The trucking side, we could, twenty years ago, log in to platforms and get rates, and we built a lot of automation around that. But the the inbound side, the import of containers and air freight, like, just nothing. We couldn’t get anything. And then two, I felt like the freight forwarding industry wasn’t easy to work with.

They didn’t wanna see the world through my eyes and help me as an entrepreneur to build my business. There’s a lot of arcane terminology, kind of code words, acronyms. And now my working model is these are rookie detectors, they can figure out whether or not I know anything. And if I can’t, they can charge me a lot of money. But we wanted to build a company that kind of, like, makes it simple to understand import, export helps you. And we wanna make money, but we’ll do that by helping you grow your business and using technology to make things easy.

Really came out of, like, a frustration as a customer of feeling like, man, these companies are like, they make a lot of money. They’re good businesses, but they just aren’t very easy to work with. Both tech and a culture of customer engagement can make it a lot better.

I wasn’t really away. I was the chairman of the board for Flexport, I was less involved. I was more of a board member. I would say I spent a lot of time well, I just spent a lot of time with my family. I’ve got two young kids and a wonderful wife, so I spent a lot of time with family. I think the time to reflect and really think about the business from first principles as an investor was really valuable. I became an investor. I joined Founders Fund as a partner, looked at a lot of businesses, and I started looking at Flexport from the mindset of an investor rather than a founder.

I think that was actually really healthy to kind of step back and look and look at the p and l, look at the business model, think a little bit more clear headed about where we are. You you know, you’re in the business every day. It’s a little bit hard to step back.

Yeah. I did. Looking at it from a balance sheet perspective, return on assets, return on capital, return on invested capital, how do you think about what kinds of return on capital do you wanna generate? How should you reinvest profits? How do you generate profit and then reinvest it in ways that compound? Yeah. More like an investor’s hat rather than a founder where you just, build, build, build, solve problems, and build. And the investor can take a step back and, like, look at the company without even looking deep into the company just by reading the the income statement and balance sheet.

And those are kind of things, like, founders need to do way more often, really live in reality and and sit down with their business and look at it the way an investor will look at it.

For sure. Yeah. I mean, I come back to the company about two months ago. And first thing, you know, I come back with basically three things. Now I’m not saying, oh, I come back as an investor. There are some aspects of what I’m doing right now that fuel a little bit, like private equity of coming and, you know, run a tight ship. We cut 27% of our costs already in my first five weeks. We’ve got a road map to to get the company profitable by the end of next year without raising prices for our customers, so that’s super important.

But that’s not the most important thing I’m doing, actually. The most important thing I’m doing right now is actually as not something an investor would do. It’s really about the culture of the company and driving a culture where our leadership starting with me, but all of the people in leadership at the company are way more in tune with our customers and with the people that serve the customers, like spending way more time on the front lines, getting to know the customer, getting to know the problems that customers have, and how do we solve that.

And then I can’t meet all the customers. I’ve done a 115 customer calls in the first eight weeks on the job trying to do four or five every single day. I can’t meet all the customers, but I can meet all the teams that are meeting the customers and synthesize that feedback and make sure we’re actually addressing all the key issues that are that are out there. And so, yeah, that’s probably the most important thing I’m doing even though it gets more headlines. Hey. I’m cleaning up, cutting costs and stuff like this.

You Yeah. Know, I don’t know if this is true for every company in the world, but it is it is the absolute truth in logistics is that almost all inefficiency comes from bad quality. And very practical, what is bad quality? It means something was late. It was shipped to the wrong address. You used the wrong customs classification code, or you cleared it through customs when it should have traveled through that country without clearing customs on to the next country. A mistake like that will cost you all your efficiency gains for the month.

You know, one mistake because it takes weeks to unwind things and the penalties and the you can never quantify the lack of loss of trust that a mistake like that will bring to your customer. It’s very ironic that the more a company in logistics focuses on efficiency, the less efficient they’ll get. And the more they focus on quality, the lower their cost will be, the the more efficient they’ll be. It’s counterintuitive. It’s not obvious at all. Although, if you read a lot of literature of you know, the great American business philosopher is W.

E. Deming, and he’s known as, like, the grandfather of quality or something like that. And if you read his stuff, you’re like, yeah. None of this is surprising. It’s, the heart of the Toyota production system. The goal is my favorite sort of business book, and it’s all about theory of constraints and driving quality so that you don’t have to do rework and eliminate waste as you go.

Over the long run, fifty year period or something, the the CEOs who have the best returns in the stock market have been really good at resource allocation. Meaning, they they really understand when their stock is overvalued or undervalued. And if it’s undervalued, they buy their own stock. If it’s overvalued, they issue stock and buy other companies. They’re very in tune with buy and sell in the public markets, other companies doing m and a or being very smart. And that’s a pure form of resource allocation within a public company.

In a private company, that’s way less important, I think. In private company, it’s much more yeah. I guess you can say resource allocation across teams. Do I wanna put headcount into this or that? I don’t think that’s the most important thing in private companies, though. It’s usually like, do you have a great vision? Can you attract the best talent? And can you just, like, execute? Can you actually deliver results against your vision? I don’t know if that’s really resource allocation. So it’s it’s probably different public versus private.

Yeah. Well, I don’t know if it’s part of resource allocations. We’ve raised capital twice where we did very large rounds of capital at what felt like the peak of a bull market and wanting to put money in the bank so that we can ride out and have a fortress balance sheet to ride out any storm that comes. So we did that. The first time was in 2019, and it turned out the bull market continued. And, you know, you can’t predict these things, but but we raised a billion dollars in 2019.

And then in 2022, we raised $984,000,000. That turned out to be true, like, that we were kind of at the peak of the bull market, and that balance sheet serves us very well today that we have a billion dollars in cash, and we’re in a place to execute and not be too concerned, overly concerned about you know, there’s a recession in freight right now and capital markets for tech companies have come down quite a bit since then, and we have a fortress balance sheet to protect us and insulate us from those problems.

But if you call that resource allocation, I sort of do because you’re now in a place to protect the company and have cash that you can continue to allocate through the cycle. We’ve done a limited amount of m and a. We apply we acquired Shopify logistics. I’m very, very proud of that deal. I think it’s incredibly powerful to now be able to go end to end. We’re the only platform in the world that does that seamlessly in one tech place. It’s little too early to say if that’s, like, great resource allocation or not.

I think it will think we’ll look back in a few years and say that was incredible.

No. I don’t. The reason is that I’ve told my team after every round that we’ve done, this is not our valuation. This is a moment in time, a group of people with a view of the future. And, you know, because the value of any company at any time is the well, it’s the net present value of the future cash flows discounted by some, you know, risk rate, whether or not that’s gonna come true and what, you know, what the best opportunity cost is. And the future is inherently uncertain.

We have no idea what the future’s gonna look like. Everybody has their own view. And so our valuation is sort of like you take all the probable possible futures out there, you assign a probability outcome to each of them, and you collapse that distribution curve down, and you get a price. But when we our valuation was marked at $8,000,000,000, you could say, well, we’re never worth we I I literally told our team this the next day. We’re not worth $8,000,000,000. There’s a some probability chance that we’re worth we’re gonna be worth 800,000,000,000 and some chance we’re gonna be worth 80 and some chance we’ll be worth nothing.

I mean and our job is here as employees is not to sit here and think about our valuation and hope that it goes up. It’s to go make it more certain that those probabilities that we want come true. And so, know, it doesn’t matter what the current price is of the stock. Like, we just gotta go execute and make the the outcome we like more, which is being worth 800,000,000,000 someday. I mean, we’re a platform for global logistics. Like, global trade is 47% of GDP. That’s a big number.

You know? If you can be the platform for that, you can be worth trillions of dollars. So, like, who cares what our valuation is right now according to some outsider who doesn’t even own Flexport stock and writing an analyst opinion on it? Like, that is not how we’re gonna run this business.

Over the last decade, capital raising came easy to Flexport. I mean, you had zero interest rate. Flexport’s a really good bet. We raised a lot of money. I’ve never seen a company, and I’ve tried this, and I’ve raised as much money as almost anybody. I’ve never seen a company successfully raise a bunch of money and not start spending it in ways that don’t that aren’t actually very smart. It’s the biggest risk to raising too much money is you just, like, lose discipline and you start spending money.

This was true, by the way, from day one. We raised the $20,000,000 Series A. At time, it seemed like a ton of money. The next day or, like, within a week, we had a conference coming up, like, where we were exhibiting at a trade show or something, and I immediately purchased a shipping container and transformed it into a booth and spent, like, $50,000 on this thing. And, like, I don’t know if that was a good or bad decision, but, like, I definitely wouldn’t have made it two weeks prior when we didn’t have the $20,000,000 in the bank.

It’s like the money wants to spend itself. So that’s the ultimate risk. And you you can sit here and go, we’re not gonna spend it. We’re gonna pretend we didn’t raise it, but you would be, as a founder, the first person ever to to succeed in that. But my advice would be to a founder who’s raising a lot of money, my advice to my former self would be like, if you raise a lot of money, you should immediately the next day do a hiring freeze and don’t hire anybody for ninety days and go, look.

Money is not gonna solve our problems. We’re gonna solve our problems. And so overhiring in general has been our biggest mistake, and we’ve had to let people go. We’ve done layoffs, and it’s it’s terrible for the culture. And so, yeah, that’s definitely the worst capital allocation is over hiring. And we hire great people too, the way. It’s just like we didn’t have the cost discipline in place, and and a lot of that’s because we raised money too easily.

Well, look, I I actually agree with Parker, but I can play both sides. I think there’s nuance. Because I do think I do think look. I raised a lot of money. I think that was a six I I said it was the best example of capital allocation I did was raise a lot of money at the peak. However, it does lead to bad habits. Both these things can be true at the same time. Imposing that discipline is totally possible, but you have to be living in reality, looking at your p and l every day, looking at your team, looking at the salaries of your team.

I think a lot of what I’ve done that was a mistake was, like, when you would do performance reviews, you can’t just do a performance review without also looking at the team’s salary with the team member salary. We let go of a lot of amazing people a few weeks ago. We let go of about half of our engineering team. We now we grew our engineering team this year from 450 software team members, product and engineering team members to 1,300. It was super aggressive, and then we reined it back in when I came back as CEO.

We have a lot of cash. You know, we have a billion dollars in cash. We have a product road map that we think can really transform the way global trade is done in global logistics, and we are in a hurry to execute against that road map. We wanted to go build it all, and we weren’t living enough in reality of, like, okay. It’s fine. We’re the leaders in technology and freight forwarding by far. Like, if you look at the freight forwarding companies in the world, Flexport’s now the third largest of the American companies and top 10 globally.

And if you look at the top 100 providers of global freight forwarding services, customs brokerage and freight forwarding, we’re the only one founded after the web browser was invented in ’94. Like, we compete against companies that were literally founded in the eighteen hundreds. And so I’m not worried that we won’t be the leader in technology, and it’s okay if it takes us a couple more years to build out everything on the road map. And I think that was a mistake. We were, like, trying to deliver everything in one year, and we don’t need to have that pressure.

It’s like, hey. We just sequence things, build the quality, do it right, and and we’ll get there.

Oh, well, I think you have to be very careful with your definitions here because I don’t think speed is the most important thing. I think it’s velocity. And if you remember your physics, velocity has a vector. It’s speed in the right direction. If you’re going the wrong direction, you’re gonna lie. This is terrible. And so sometimes the highest velocity thing you can do is stop and do and go nowhere. If your speed in the wrong direction, that’s negative velocity, and that’s really bad. That’s the key is being agile, being able to change direction because the world’s chaotic.

The world’s gonna especially in logistics. Like, we’ve seen crazy stuff, COVID, and you’d have had bankruptcies of shipping carriers, and then you had them make hundreds of billions of dollars. Five years later, you’ve had tariffs. We’ve seen everything. And so you have to be very nimble as the world changes to be able to change direction without losing speed. That’s a very hard thing to do.

Not always. I think that’s the art of leadership, I suppose. You know, I really like Bezos’ concept here of, like, the one way door and the two way door. Being able to move very, very fast as long as it’s easy to change direction and come back. Often, that’s the case, and you should go really, really fast because it’s fine. Sometimes it’s a one way door. You can’t come back. So then you better be real careful not it’s okay to go the wrong direction as long as you can change courses and and be nimble.

Right? But if it’s a one way door type one decision, then you gotta that those are decisions that need to be made by senior people with a lot of judgment to avoid mistakes. Otherwise, it’s fine to go fast and make mistakes.

Well, spending money, you can’t get the money back. So if you get back capital allocation, making sure you don’t blow the money. So things that cost a lot of money, that’s a one way door. Some relationships. Although, we found in logistics that I think general patent said it’s it’s not not how high you climb, it’s how high you bounce after you fall. And so a lot of our best customer relationships are people that we royally screwed up with five years ago, but it’s how do you respond to that moment.

Does the CEO give them a call and apologize and make things right? Do you take care of them? Do you do you pay the extra money? That’s ultimately a value system because your values don’t really count unless you’re willing to give up money for it. Otherwise, it’s just word on the wall. Even though it’s relationships but if you don’t show up and you don’t really handle things well, that could be a one way door. I mean, have people that I don’t interact with anymore and I won’t do business with because of the way they behave.

There are one way doors out there, but I agree with you in general. Like, most things are two way doors.

To be honest, I’m more of a fan of the ancient Greeks and the ancient Egyptians than the Romans, but I do like ancient history.

I really enjoy the work of one author in particular. His name is Will Durant. Will and Ariel Durant, actually, husband and wife team. Although Will wrote the first five books. There’s 11 books in the series. They’re like about thousand pages each, and it’s the whole history of civilization. So I basically read those books. I read one of his books and then someone else every and I alternate back and forth. I’ve read I’ve read the whole series, like, four or five times. And the reason I like him is that what he does is is synthesis.

It’s a type of history where you study all all aspects, not just military or political, but art, culture, science, religion, manners, morals, fashion, everything that we know about about a civilization as an interconnected web. And I think it’s actually a really interesting way to think about companies because we are very cross functional. If you’re only focused on product or engineering or sales or one aspect of a company, you’re really gonna miss the collective whole of how these things interconnect. It’s not so much about the history.

It’s about the way of writing history that I find really relevant for companies is that if you can when you write your, for example, your annual plans of what is the team gonna build, sometimes you have to duplicate. You have to write the same thing twice. But I wanna see what is the finance team doing and what is the sales team doing, and do these actually interlink. And is the tech team building the right product to support both of those things and vice versa? Right? Are they selling the product that the tech team’s building?

It it takes extra work to go through and make sure all this stuff interlinks. But it it’s quite contrary, by the way, to an Amazon mindset. But in Amazon world, you sort of, like, have a business unit that just goes hard and doesn’t have to pay attention to all the other business units. And I actually far prefer the the cross functional collaboration and teams coming together and reading each other’s plans and making the plans really transparent to as many people as possible. Because if you don’t have that synthesis, then how are you gonna know that you’re especially in our business where it’s an end to end logistics offering.

It’s very difficult to do that in a world where people are just thinking about one leg of a shipment or one department in a company.

You know, in our business, it’s an end to end offering. The way that Flexport works is companies come onto our platform. They place orders to their factories through Flexport, buying purchase orders, buying goods. Those factories become users. The average importer of goods is onboarding 18 factories, and then those factories become users. They place bookings. They say, okay. The cargo is ready on this date. We send a truck out there across a 100 over a 100 countries. Send a truck, pick it up, export, clear it out of that country, put it on a ship.

So we’ve gotta have contracts with all the ocean carriers and airlines across the world, clear it through customs. Truck picks it up at the airport or the port, delivers it directly to the customer. Sometimes we’ll bring it to a warehouse, unload the container, put it on a dry van on a regular truck, and deliver it, bring it to another warehouse. We then deconsolidate it and ship it to customer stores or into retail stores. So it’s an incredible amount of complexity as you can imagine. So if you try to run this where each leg is just only thinking about themselves in isolation, you’re very likely to screw something up.

A mistake, a change in China at the origin or in Vietnam and a delay there, I’ve gotta replan everything downstream because, you know, the truck now has to be rescheduled a week later three weeks later. Yeah. Silos are incredibly dangerous in logistics, and yet there’s no possible org chart that could solve this. People who work in simpler businesses, they try to solve these problems with an org design that says, okay. Everybody you know, these people report to me. But only this one person can have everybody in that network that I just described reporting to them, and then they become a bottleneck.

So you have to build a company. Amazon’s done a good job with the API memo. Bezos has kinda solved this with the everybody should communicate with APIs, and we don’t wanna have any meetings. That’s correct. We’re developing that direction. But in the meantime, before you have everything being API of everything, every team talking to everybody by APIs, you just have to sit down and collaborate. You have to read each other’s plans. You have to line up, make sure that the handoffs are seamless, that each team because the way we’re organized is each of those legs as a team, but they gotta pay attention to what’s upstream and downstream of them.

now, I have 15.

For our business, it’s the best way. I’ve had this view of six. Much better to have more and get more collaboration, but I don’t have a 15 person meeting unless I just need to tell everybody something. We don’t make decisions with all 15 people in the room. We grab four, five, six people for whatever the topic is that we need, and we’ll go deep. And not just those six people who report to me, but some usually layer down from the technology org, someone from the front lines who understands the issue, And that’s where we make decisions in in small groups like that, not not with all 15 people.

Yeah. I think trying to be popular is a big mistake. You have to do what’s right, not what’s popular in the company. Sometimes you do things that are unpopular. But if it’s the right thing to do, you gotta do it. I think the best thing to do in a culture like, what the goal of a culture is to drive velocity. We’re talking about velocity before. Speed in the right direction. You gotta have a great mission. To do that, gotta have a great mission of purpose. Why are we here?

You know, Flexport’s mission is to make global commerce so easy, there will be more of it. Like, I think that’s inspiring. Like, let’s increase GDP for the world. Let’s help people create opportunity and get richer. Logistics is your kind of a backstage pass of the world economy. What’s happening in all the world’s companies? How are they run? Help them with their problems. So having a sense of purpose so you actually know we’re all rolling in the same direction, absolutely crucial for a good culture. It’s like, sounds cliche, but you can’t do enough of it.

Two is you gotta have trust, which means people doing what they say, not talking crap behind each other’s back, putting the issues on the table, a culture where you’re not gonna get scorched because you criticize somebody. For example, one thing I do for this is we have an open channel in our Slack instance where anybody can ask the leadership team a question. And I may I praise people who ask hard questions who criticize us. I mean, I think that’s also I prefer courageous people, and I think that builds trust.

What’s been the hardest question? Oh, we get we get questions a lot of questions about, you know, we we laid people off. So you obviously gonna get a lot of tough questions when you do something like that around benefits and salaries. Did you think of this thing? Or we really reduced the size of this team. Does that mean you don’t value this team? Things like that are tough questions, though. But I respect that courage. Imagine being a junior person in the company not have not been around very long and challenging this global CEO publicly in front of everybody.

That’s awesome. Like, that’s courageous. So much better. There’s this anonymous social network. It’s like the terrible all the cowards go there and just talk trash. Like, You’re obviously a coward if you’re allowed to talk in public and op ask the open question, but you’re too cowardly to do it, and you post on the anonymous social networks. I I think that builds trust. I think having things like that where you can just answer questions. I’m not afraid of any question. I don’t always have the best answer.

Well, I’m not afraid of it. I live in public and be authentic. The only way I know how to do it. So a sense of purpose, a sense of trust, using intuition is really important for culture. It can’t be all data. Data is overrated in my opinion. Data is valuable, but data is too slow, and often it’s inaccurate. And most humans are not actually using data the way they pretend to use data. Most people know what they wanna do, and then they use data to justify what they were gonna do anyway.

And you could always find some data to back up your case if you’re certain. I respect that. I think people who have good judgment can make decisions, move fast. Data is also very slow. You know, it takes a long time to get the data you want, and you often need to move faster than that. And data has one major drawback, which is that all data comes from the same place, which is the past. If the future looks different from the past, your data is completely useless.

But you gotta have high judgment people interpreting data saying, is this actually right? I mean, the number of times I’ve been showing some data and then been like, but what about this? And, like, instantly, I can debunk reports on data. Using intuition is key. A culture of learning is really key. Honoring mistakes, not scorching people who make a mistake, and constantly trying to learn and get better. These are, like, all really important aspects to building a high velocity culture where people can build trust and go fast and and execute on on that mission.

I just don’t hire outside people. I rather much don’t hire senior executives. Look. That’s not a blanket rule. I we’ve hired a lot of great senior executives at at Flexport over the years, and and a lot of them are doing amazing work for us. But it’s so much higher risk in promoting from within. And so much better, get to know people, you get to really get bought in that they believe deeply in your mission, they build credibility and respect, and stretch people and promote people from within.

I think I didn’t do enough of that over the years. I think in blind pursuit of growth and hitting our goals and being global and taking over the world and bringing our vision to life, you need help. And you turn externally instead of going, hey. I’m I’ve actually got amazing people at Flexport. Like, the key job of leadership is identifying talent within your company. Externally, yes, but, like, it’s so much better if you can get internal folks and promote them. The problem is, like, companies are in a hurry, you know, and we wanna achieve things really fast, and it’s kind of a shortcut to go hire senior people from outside.

Oh, you guys are right. I mean, it is a tragedy because when that happens, the people tend to leave the company. And I think a great culture should be able to go, hey. You know what? Like, if you could really do this the right way, we haven’t figured this out, but I would love to. It’s like, hey. We should actually didn’t work out. Let’s bring them back to a role that matters. But egos and compensation and other factors being what they are, it tends to be when you stretch people too far, they leave the company, and that stinks because we’ve lost a lot of great talent.

And if I just think about all the great people who have left Flexport over the years, if they were still here, we’d be, like, 10 times better company. If you’re out there, come back. We’d love to have you.

It’s an incredible job being a CEO of a company. But it’s not an easy job, and it’s not necessarily flawed. I mean, it’s people look from the outside and think, like, oh, I’ll be an entrepreneur. I’ll be the CEO. And, like, it’s really tough, man. I mean, it it is not an easy thing to do for the reasons that you said and and many others. I I don’t know. I’m kind of unemployable. I don’t wanna for somebody else. I wanna go build stuff.

You know, Flexport’s been in the news a lot lately. We had a CEO transition. The demand for scandal and drama is way higher than the supply in this world, and the media has been really sensationalizing some stuff. I mean, there was there was a story about Flexport that I will not point people to because I don’t wanna give it any attention, but it was a whole article. Flexport delivered 33,000,000 packages to consumers’ homes on that’s what we’re on track to do this year. And one package got lost in this mainstream media publication where an entire story where the first four paragraphs are about a lady whose package got lost.

I feel bad for her. I’m sorry. Like, we lost the package. We genuinely we screwed that up. We reimburse her in full. But, like, one out of 33,000,000, I mean, that is like you know, this is people trying to sensationalize and and stir up drama. Or, like, that same article claimed that one of our biggest customers was really unhappy with us, but, literally, the customer went on the record telling them that it’s not true. We were very happy with Flexport, and they didn’t publish that. They wrote that we have sources saying that they’re not happy, but, like, the source of the company told you that that’s not true.

So the the media wants to drive these narratives about Flexport as if we’re a mess or something. When in fact, if you come hang out with us, our culture is stronger than it’s ever been. We’re really well financed. We have almost a billion dollars in cash. We’re gonna be profitable next year. But, like, if you read an article about Flexport today, it would be like, oh, this company is in a difficult position or something. So I don’t know. That’s a part of why I wanna come on podcast is, like, tell the story directly.

So

Exactly. Exactly. Exactly. And by the way, the media has been good to Flexport of Viewers. I’m not, like, a huge critic of the media, but in the current moment, people are liking to tell the sensation, and that’s what drives clicks or whatever metric they’re looking for. But over the years, the media has been good to us and, like, been part of our success is get the story out and attract customers and talent. And so I think we’ll get back there. We just gotta go do a good job.

Well, China is a very unique manufacturing capability that you can’t replace easily. The United States government’s doing their best with imposing tariffs on imports coming from China. And companies with simple products, like, think apparel, etcetera, are moving that away from China. One, to avoid the duty, but the Chinese economy has done so well that their labor prices have gone way up. You know what? The average hourly wage in Mexico is now cheaper than in China. For sure. And that’s great for China. Right? Like, good for them.

Like, they’re making more money as a population. So China is no longer the cheapest manufacturing site in the world, but it’s the best manufacturing. Like, they’re the highest quality, highest competency in manufacturing. So if you’re doing electronics, you’re doing anything sophisticated not anything, but a lot of the really sophisticated forms of manufacturing, China is the best place to buy things. So I don’t think that’s gonna go away. I think people will always be shifting away from higher labor cost to cheaper labor cost and tariffs. They’re gonna do what they can to optimize against tariffs.

I think in general, it’s a we’re at an interesting moment right now where globalization is in question like, or not we’re gonna continue to do trade globally or will we just produce everything domestically or there gonna be more boundaries, more nationalism, more maybe regional trade. We’re at a moment in time where that looks like a big interesting debate, but I would point to the long talking about history that global trade has grown 4% annually since the Mongol invasions in around twelve hundred AD. 4% doesn’t sound like much, but when you put 4% on a 800 curve, it’s a phenomenal hockey stick like Silicon Valley’s never seen.

And I would predict that that’ll continue because it’s innate in the human species. With specialization and trade is, like, one of the main things that separates us from the animal kingdom. Adam Smith wrote this. I’ve never seen a dog trade a bone with another dog. We see animals exhibiting all kinds of other behaviors, language, and tool use, and other stuff, but trade is not something that they do. And trade is fundamentally what building block of civilization. It allows specialization. It allows gains. It allows wealth creation.

So humans want to trade with each other. Now governments will try to stop things. It will be special interest that may wanna block trade, but left to their own devices, humans will trade more and more and more. And so I would predict that that’s what’s gonna happen because we always find a way.

I think it’ll be globalized trade. I think, first of all, the ship is an incredibly efficient way of moving things around the world, far more efficient than any other, you know, land based transport. I’ve had this blog post that I wanna write about how Fiji water is the most environmentally friendly water. It gets criticized all the time because ocean freight is so carbon neutral that getting it and shipping it from Fiji to the West Coast of The United States emits way less carbon than running a truck from the Rocky Mountains to the West Coast.

And ocean freight is cheap. It’s reliable. The fact that you can ship a TV across the world for a few dollars is just a remarkable feat of engineering and and human ingenuity. Now war is a big risk. I have no no way to understand the risk of of war and what that can do to trade. Civilization and, therefore, trade depends on peace. We take it for granted. We’ve lived in this great period of for most of our lives, at least in The United States and the Western world.

The wars that have existed have been largely removed from us in the daily impact, thankfully. But if that changes, yeah, of course trade is at risk. And so we there’s a lot of black swans that can happen, but even wars that you know, World War two seemed like the most catastrophic thing that could ever happen. And if you look at the graph of GDP or trade, you barely notice the blip.

Yeah. Well, I think it was Eisenhower who said that the plans are useless, but the exercise of doing planning is incredibly valuable. To think strategically, to take a moment back and step back and think about what you’re doing and why you’re doing it, That’s a very valuable exercise, but you have to be very adaptable when the world changes. And yeah. Probably, that’s a a strength and a weakness of mine. I’m very good at changing direction. Probably change direction too easily also. And so having some firm view of where you’re going is really important.

China has a few advantages that we don’t have. China believes in China. Chinese people believe in China. Half of Americans hate America. I think that’s a huge advantage to have as a civilization to believe that you’re part of something that’s bigger than yourself and trying to support your country. You know, we like that these days in America, and that’s a huge advantage to have. They’re incredibly industrious people. They’re working. Are hungry. They want success. They work six days a week. I a lot people don’t realize that.

I lived in China for two years. They work Saturdays. We don’t work Saturdays. Most Chinese people work six days a week. How much more productive will you be working an extra 20%? You know, they’re industrious. They’re hardworking. They’re intelligent. They have a lot going for them. Their leadership is incredibly smart. They have some demographic challenges that are beyond my scope to understand because, you know, people are like, oh, there’s the population’s declining. China’s not the worst in this by any means. There’s Western countries, Italy, Korea, other countries that are declining faster.

But I always think, like, but isn’t it better if you have fewer people to share the resources? I don’t know. I don’t know how to think about that. They still have way more people than we do in The United States. So I’m not, like, a macro investor by any means. I always I I did study a lot of economics. I always found macroeconomics to be impossible. I think people who pretend they understand it are probably I I I lived in China for a few years, I have immense respect for Chinese culture and Chinese people, Chinese food.

There’s a lot to love about China.

I’m not the right guy to ask about interest rates. I don’t know, man. It’s like, if they do, The United States Government’s gonna be a lot of trouble. We can’t pay our debt of 10% interest. They’re gonna have to keep printing money, and then you have an inflationary cycle, which then makes interest rates go even higher. So it seems pretty ugly.

Well, love is the, you know, my most important values. Love my children so much that I wanna get home and make sure I get time spend time with them before bedtime and hang out with them every night and see them in the morning too. So I’ve got a three year old and a one year old, especially my older daughter. My one year old, he’s like, you know, she hasn’t started learning how to talk or anything yet, but my three year old is, like, just a little ball of energy.

So I I love playing with her, and I make time for that. And and then I work more in the evenings after she goes to bed, and I get up early and work, and that’s fine. I mean, I I work as hard now as I ever worked in my life.

Yeah. Of course. It’s yeah. It’s like a chemical wash that flows over your whole body, filling you with love and respect for the universe and, like, understanding. Also, great way to understand your own parents, your relationship with them. Like, remember, like, all the stuff that they went through that I’d never even thought about. But as I go through it, I’m like, oh my goodness. They had to deal with this. Like, I must have been a little brat. And, like, flashbacks, you know, like, oh my god.

I remember reading Curious George as a kid, and now I’m reading it to my daughter. A lot of flashbacks and a lot of, like, thinking back on my reflecting on my own childhood that’s really, really profound.

Well, I have the greatest wife in the world. My wife is the kind of staff of my life. She’s been incredible adviser for me on all things. And by the way, was criticizing the media before, but my wife’s a former reporter, so I’m, like, well in tune with how the media works. And she’s a great, like, communications director helping me, you know, understand how to behave. So my wife and I, like, we’re we’re super in tune with each other.

I was building Flexport well before I met her, and she’s always known that Flexport’s my baby and that, you know, was a serious priority for me and that I’m very fortunate to find a a woman who knew that and signed up for it and wants to help me in every way. And I I don’t know. I’m I never take it for granted.

Oh, no. I do feel very secure. You know, part of it is I mentioned I lived in China for a few years. I was super broke, making no money, and I was living really well. It was, like, the best couple of years of my life at that time. Had a real sense of adventure and fun. This was, seventeen or eighteen years ago. And I realized I don’t need a lot to succeed and be happy. Like, I was, I made $17,000 one year, and it was, like, one of the best years of my life.

And I was trying to make money, by the way. I wasn’t like, oh, I don’t need I was, like, trying to make money, and I didn’t make a lot of money. But I was very happy, and I ate well, and I had friends. And this allowed me to take risk in my career. And I’ve started multiple successful companies, not just Flexport, but ImportGenius, room.com. I started a lot of businesses, invested in, you know, over a 100 companies and done really well as an investor. No matter what happens, I’ll be fine because I can be poor and happy.

It’s not about making money, and so it’s, like, gives me a sense of security that I’ll be fine. My wife’s not gonna leave me. If we lose money, we’ll we’ll do it together. It’ll be fine.

Well, money can solve problems, and problems can make you unhappy. So, yeah, money can definitely contribute to happiness if it can make problems go away. It’s very funny because humans are mimetic. We copy each other. We want more. And so you have to be very careful of who your role models are and who you imitate. And be careful not to hang out with people who have way more money than you because you’ll aspire to do things that you can’t afford, spend money on stuff that won’t actually make you happy.

And so picking your role models, I think, is one of the most and and just your friends who you hang out with, one of the most important things in life. Money alone definitely is if that’s all you’re after, definitely a recipe for misery. That sounds cliche, but it’s true. But if if you if you know what you want in life, money will definitely help you get there faster, help you solve problems and overcome obstacles and things like this.

I think revenge is a really powerful motivator in life. You know what? You know People are motivated and driven, and if someone feels like they’ve been wronged, there’s a couple benefits. One, they’re gonna be incredibly driven to go have a comeback story. Two is they’re probably gonna get passed over by other investors. That’s what you need. Like, you need a contrarian opinion, and you have to make sure that they didn’t have a moral ethical failing. Or if they did, it was something that minor that can be forgiven, broke some rule or something, but, like, there were innocent people who were not harmed.

And then in that case, if you can get really comfortable with that and they’re really talented and other people aren’t willing to invest in them, then that’s, like, a perfect storm for for finding a great founder.

I’ve got a list of people that I’ve backed that match that profile, and then Parker’s one of them. Yeah. I think Parker was wrongly scapegoated and run out of town at Zenefits, and then he and he proved it by going to build rippling into a business that’s much bigger and better than Zenefits ever was in the exact same space. I’m sure that the investors who did that regret it, and that’s fine. Parker doesn’t care per se. He just wants to go execute.

It helped me a lot to understand the the VC world and how it works. Probably helped me with some of our fundraising, having a little bit of perspective, being on the other side of the table, understanding the game more. Having for you make friends with other investors and can learn more about the VC world and how to how to navigate it. But I I think net net, no. I don’t know if it has because it’s also taking up time. I haven’t spent a lot of time on it, but, know, it’s inevitably gonna take up some time.

And I do it not because it can help me at a point. I actually had quite an age agent investing a while ago. Basically, I’ll do it a little bit here and there if it’s a friend of mine or something. But the reality is any time spent away from Flexport is probably net negative for Flexport. I mean, I spent all my time on Flexport if I wanna make Flexport more successful. But, hey, life is not all about money or one thing. Like, I enjoy it. I I like learning.

I like making friends with other founders. I benefit from those relationships in ways that are hard to predict. And and certainly, ten years ago twelve years ago when I started angel investing, I I don’t know. Who knew what what I was doing? I’m just trying to get out here and have fun.

War. Violence. Mob violence. The scapegoating of innocent people and civilians being caught up in the consequence of, yeah, violence.

Yeah. Definitely. I I think managing teams is always hard. Dealing with people who are not focused on the company’s mission and have their own missions that are separate from a company’s mission is incredibly frustrating because there’s a million organizations in this world, one for every possible topic that you wanna drive. Finding people at Flexport who are focused on anything other than making Flexport successful at work, really, really frustrating. I don’t care what you wanna focus on outside of work at all, what your politics are, what your cause is.

I think that’s awesome. People should have passion to do stuff, but, like, that’s not what Flexport’s all about. At the company during the day, like, let’s just talk about our problems are hard enough. We gotta make global commerce easy. We gotta ship cargo in every corner of the world. Like, this is hard enough. We can’t solve other people’s challenges outside of that.

I think remote work is very, very difficult to achieve build a company culture. I think individuals can succeed. I’m incredibly productive working in my house where there’s no distraction. I’m incredibly productive individual contributor. But great things get achieved by teams, and teams don’t really form over video conferencing. Teams form when you get together and you collaborate and you have dialogue and, like, you capture emotion and body language and context and you jam and you stay up late and it’s not constrained by the thirty minutes of our video call, like and that just doesn’t happen on remote work.

with us in person. Now there’s certain people for exceptions and people who are outstanding track records of performing at home and in individual contributor jobs. I’ve told this team over and over again, if if you wanna succeed at Flexport and get ahead, you should come to the office. But even just last week, you know, I do a weekly town hall at whatever office I’m in. I share what’s on my mind and then take questions from the team. And after these town halls, I’ll just hang out.

I had a guy come up to me last week and just tell me, hey. You know, we have this opportunity to, like, get $2,000,000 of extra profit if we just do these three things differently. And I was like, who have you told about this? He’s like, nobody. I’m like, if we weren’t in the office together, like, I would lose $2,000,000 right here. Let’s go. You know? And there’s countless things like this of just, like, getting people in the office so that information can flow freely and solve problems.

By the way, I think remote work can really work, but it’s not gonna be people making 250 k thousand dollars a year hanging out in Jackson Hole. It’s gonna be geniuses in the developing world making you know, who all of a sudden there’s an arbitrage. You can find incredibly smart people all over the planet and pay them one hundredth or one tenth whatever GDP is. I mean, look at the GDP in The Philippines or something, and there’s tons of geniuses over there. And so you could build a great company of remote work, but it’s not gonna be the people who are advocating for remote work inside these companies in The United States.

Like, if I’m remote, why am I gonna pay someone 250 k in San Francisco to be remote? I’ll go find someone in a cheap location. So I I don’t think the people who are advocating the strongest remote work actually know what they’re advocating for because they’re gonna end up in a world without a job because they’re now competing globally with geniuses all over the developing world.

One of the things I changed my mind about you know, I had this idea of go after these business units that could work in isolation and run really fast. I think that works for a lot of companies, but as I was describing, that doesn’t work at Flexport. We have to be an end to end. We have to deal with a little bit more process. Process is probably the closest we have to a good word for bureaucracy. There’s a healthy amount of that that, like actually, a lot of their true bureaucracy in in companies comes from a lack of process when people can’t get anything done and they don’t know how it works.

But putting in a little bit of process and putting in more of an end to end view, making people write the same thing twice in two different teams, planning documents, making people spend a little bit more time in a meeting to understand another team’s objectives, and not have this envision that, like, oh, we can just run really fast and ignore everybody around us. That just doesn’t really work in our industry.

He’s a very interesting mind. First of all, you know, won, like, 38 battles or something. Thirty eight and one. I forgot his record. He’s a pretty great general. Rose through the ranks. Came up from the grassroots. Incredibly well read as well. Like, you know, the Egyptology is basically created because Napoleon wanted to invade Egypt to cut off the British Empire’s access to India. And while he was there, he brought all these scientists and, like, you know, that’s where we got the Rosetta Stone and the understanding of the decoupling of the hieroglyphics.

And then he wrote the law code, the Napoleonic code, which is basically the law of the land in half of Europe today all the way till now. There’s a great book called the mind of Napoleon, which is out of print. It’s, like, $200 on eBay, and it’s just full of all of this is his quotes. And he has a quote on every subject. And half of them will uphold you in the modern world, but I find those to be the most fun. And half of them are just like, man, this guy’s an actual genius.

It has a nice index in the back so you can look up any subject and see what Napoleon thought.

Definitely still see a Flexport, and, hopefully, you know, the rest of my life can stay in the seat, health willing. I love this job. I never wanted to leave the job. I just thought Dave would do a better job than me. And so I’m thrilled to be back and, you know, executing. 2033 is man, it’s hard to predict with all with what’s happening with AI and everything else in the world. You know? I don’t I don’t really believe in predicting that far out, but one thing I definitely wanna still be the CEO of Flexport, and I do believe global trade is here to stay.

And I think, actually, what we’re seeing is that Flexport is incredibly well positioned to use AI and to implement it because we’ve structured all the data at global trade. We’re basically an incumbent. We’re the third largest provider of international forwarding services in The United States. So we have incumbent level data, but we have the technology stack and the team that can actually go and and implement. One of the things we’ve done is break a con a shipment. When you ship a container from door to door, we broke it in into these discrete tasks, like a work item that get completed.

And we’re finding out that once you chunk it down into something that simple, that AI can complete the tasks. And so we’re almost every couple weeks, we’re implementing something that used to take hours or days and take getting it down to minutes. I think we’ll actually see that AI is we’re gonna be a huge beneficiary of that. Labor in the forwarding layer of global trade is 10% of the cost of shipping things internationally. Not the labor of the people driving this the cars, the trucks, and the the ships, and the planes, but the labor of the coordination layer of handing off the documents.

I I often joke it should be instead of freight forwarding, it should be freight email forwarding. And so labor on that forwarding layer is 10% of the cost of shipping things. And we’re seeing that AI can just do tons of these tasks. And it doesn’t mean that you’ll have less people working at Flexport, by the way. Because if you’re really successful in automating things, you’re gonna need more people. You’re gonna have more salespeople, more engineers. You’re gonna take over the world and employ even more people, and that’s a real fallacy.

I mean, that would be like arguing that the invention of the plow is gonna eliminate jobs, and we should all just still be using sticks to dig holes to put seeds in the earth and grow our own food. Like and that’s an argument as old as time, and it’s silly. Like, AI is gonna create way more jobs than it destroys. But if you make everything 10% cheaper, we’re gonna have a world of abundance. That’s where I like to see us in 2033.

My pleasure, Harry. Thanks for having me on. Talk to you soon.