Why Remote Work is White Collar Fraud

losing. Why? Be I don’t a loser. We just like to you never win enough. Right? Like, you I’ve already won, and yet I still am like I don’t feel like I won by any standard of what I set out when I started the company. Like, I’ve won. My first and only financial model that I made for myself for the business got to 1,000,000 of revenue. Right?

I’m not very organized. So Are you not? No. And, like, I feel like making a good model requires you to, like, organize your stuff.

Oh, great. Alright. So we’re gonna do I get to pick the charity? What are we gonna do? Sure. What’s your charity? My mom’s got MS. Oh, that’s great. I’ll go do that next I’ll it to an MS charity.

her.

Do I still answer the question? No. I don’t answer.

Well, VC your show is called twenty Minute VC, so what’s the hot take on venture capital? The nature of the job is simply that it’s just such a good job. If someone who likes to have a job, what would be the attributes? Like, pays really well, you basically don’t have a boss, once you’re like a partner, like some level of seniority, have no boss, pays well, you don’t have to be anywhere on any given day, kind of not a fixed schedule, and it’s very hard to measure if you’re good or not, on any reasonable timeframe.

You can’t get fired. These are pretty good attributes of a job. So, like, therefore And security.

Yeah. So you have to if you are a partner now if you run the fund, that’s one thing. But if you’re like a partner that doesn’t own the fund, you could get fired. So you don’t have infinite job security. So your whole thing has to be, how do I avoid getting fired? You can do this in reverse or invert the problem, and you go, well, how would you get fired as a VC? Okay, like, scandal. Sure, avoid that. And you can’t allow everyone else who works at your firm to think you’re dumb or doing bad things, like doing stupid deals.

They don’t know it can be bad deals like that or they can be great deals. You can be doing great deals. But if people think they’re bad deals, you might lose your job. So therefore, Okay, I need everyone. You’re going to get consensus, right? And you’re also going to channel check all your deals. You’re going to like check with your competitors. There’s a lot of collusion in VC. VCs are constantly talking to each other, in part because they need to make sure that they don’t step out on the edge and do something that their own partners are going to think are dumb.

Like, have a feeling that most VCs actually collude more with competitors than with their own partners, because they need to spot check their deal and make sure it’s good before bringing it to the other partners to make sure that they’re not seen as being dumb.

Oh, yeah. Okay. Good. Yes. He’s see, I think founder’s fund Keith was at founder’s fund for a while. There there’s a few funds that avoid this type of behavior somehow. Or some people are just born into it with a contrarian

When I started as an entrepreneur, it was kind of Now it’s like everybody’s becoming an entrepreneur, but I started doing companies in the early 2000s, late ’90s, even with my older brother. I I guess at that time, it was less mainstream to start a company. And we weren’t in Silicon Valley. We weren’t we didn’t call ourselves like tech startup. We didn’t raise venture. We were just hustling to make money. And one of my tricks actually was I moved to China when I was 25 years old for this company.

My And rent was $120 a month for a two bedroom apartment in a nice part of a second tier city. But it was like a nice And so I knew, like, that actually gave me a lot of permission to be an entrepreneur, which was kind of crazy, doing crazy stuff, because I knew I could live off of if I could make $500 a month, could survive. And I knew I could always make $500 a month. So, like, I could do a startup, I could take risks because I’m like, worst case, like, I lived in a nice apartment, in a nice town.

I had a good quality of life. My total OpEx was, $250 a month. So it gave me permission, yeah, to take some risk. But it’s the opposite. I’d have to be I was relatively rich. Right? Or, like, relatively secure.

how you know money is amazing because the more you have, the more you want. You can never satiate the human desire to that

I mean, I I haven’t been that motivated by money. I I’m more into, like, power. I wanna do big things.

Yeah, But it’s you know, you gotta forget the past and the future. And, like, the future’s not written, so you can go make it. If Flexport would have raised today, what do you think you’d raise at? I don’t know. I really don’t know. I think this year, we’re going to get to basically breakeven. We’re on run rate to do about $450,000,000 of revenue, net revenue. Breaking news here. I haven’t shared that, but $450,000,000 of net revenue. What’s your growth rate? Last year was three fifty. 350%?

No. Dollars $350,000,000 last year. So what is that? 100, about almost 30%. So you’re doing 30% now. You

And I think we’ll do 600. I mean, goal is to keep going 30% every year for ten years. Think the big question and then beyond. But the big question for most startups, I think you have two things that you have to ask. Actually, got this from Paul Graham, where he said, every startup, if you see like a hockey stick growth curve, then there’s two questions you need to ask. Like, are they doing some kind of hack that’s unsustainable and going to stop working? Number one. And two is, is the market big enough for it to keep going?

And if the answer is like, no, there’s no hack. Like, this is genuine growth. And two, the market is really big. The thing will just keep going. Right? And I think Flexport is like that. Like the market well, there’s no hacks. It’s actually a grind. Like, we’ve got salespeople out there in the field, like, calling on businesses and going around the world. And then the market’s enormous. We’re still less than 1%, point 1%.

I don’t think about it at all for Flexport. The word exit implies that I’m like gonna stop working at the you know, that I’m exiting. So I don’t think of it in that term. IPO would be Do you wanna take the company public? Yeah. We intend to go public. And I don’t know what the valuation is or should be or will be. It’s sort of like, well, but if we can just keep growing, you just draw the math out. But when do you think you should go public then?

I’d like to be a nicely profitable, making a few 100,000,000 of EBIT, and then we’ll go public. So it could happen in a couple of years. It should, the way that things are going right now. We should be able to get there. And like, you know, maybe it’s not don’t I know what it will be worth. And, like, the market kind of sets that at the end of the day. And and if it’s undervalued, okay. Like, as long as you’re generating a lot of cash, then you could if you’re really undervalued and you just buy your own shares back, and, like, maybe that’s a good thing.

Do think you should underprice on IPO day so you have the pop? You’re Or like, you should price to perfection? People focus so much on this. Like, I I don’t understand it. Like, of course, you’re gonna focus on your price and whatever. But people there’s this concept of, like, an IPO window that investment bankers and founders talk about. It’s like, oh, the window’s closed. You can’t go public. And, like, because the price won’t be there. But you’re like, well, what if you went public and then your price went down?

Is that better? I mean, it’s the same thing, isn’t it? So I don’t quite understand that dynamic. Like, I’m an operator, run a good business, like make it super profitable, have it grow. And like, don’t compare yourself too much to Anthropic or these AI companies that are we’ve been around for fifteen years, and there’s companies that are getting to our revenue in eighteen months. So you’re like, I think envy is a very bad is it one of the seven deadly sins?

As long as I’m allowed to use OpenAI and Anthropic, then I don’t mind at all. Like, they deserve it. These things are just incredible, miraculous products. What I worry about is that they cut us off and that we can’t use it anymore. If I can’t use OpenAI, we’re all going to go back to being just idiots we were two years ago. Like, if I you know, I need this stuff. Like, we’re so dependent on it, both personally. And then, like What do you need it for most?

It’s a ton of business logic. Like, lot of rules. Because every serve we’re an enterprise logistics company. We help businesses manage their cargo shipping around the world. Every business is unique and has their own process and their own, oh, we need this data and this format moved into this ERP system. Like, we want you to notify us. Some companies want to be notified ten days in advance of their container arriving at their warehouse and some seven. And like they really care about that. And they spend so much money that you have to do what they say.

So a lot of our tech is like this big rules engine and you get all these if then type statements of and it becomes very unwieldy. At the end of the day, it can’t really keep up, and you end up with people managing some of this business logic. Well, the agents can just do it.

It does a lot, and we’ve gone a long ways with that. We’ve but but agents can go all the way. Like, we think we can automate the full end to end. And this is you’re building your own? We’re using OpenAI. We’re using Anthropic. We’re gonna increasingly use open source models to save money, but also because we don’t today have a budget constraint on our Anthropic contract. Did you see that article the other day? It’s like we spent $500,000,000. I thought that was sort of fake. We don’t have a budget on our contract.

Yet last Thursday, I woke up. I don’t know when we’re gonna air this, it was like a few days before the end of the month. It said your organization has reached your limit for the month, which it’s not true. Like, something went wrong in their side. But I had this, like, shot this moment of, like, oh, man. What if they just decide one day to, like, cut us off and say no? And I actually think this is a realistic scenario where they

5,000,000 a year or something, ramping pretty fast, though. Like, it’s doubled in the last few months.

Did I say I said 5,000,000 a year, right, and not a month a year?

We’re not even close to that, but there’s a world where becomes I mean, it has to at some point, it’s very interesting.

Yeah. We do see ourselves automating a ton of the work and taking it away with You have to, right? I mean, at five, I better save 5,000,000 a year in labor cost or make my product way better, which we are finding ways to make the product way better.

100%. But it’s possible that the price comes way down, deflation. And it’s also possible that we move a lot of workflows on open sourcers, because if it’s good enough, like for our coding agents and for actually developing product, we probably always want the frontier model. But if you’re just automating a workflow, if the open source one that’s basically free can automate it, then there’s diminishing returns to frontier LLMs. And there’s diminishing returns also just doing it. Once I’ve automated all the work, I don’t want to keep spending the money.

I had the agent’s work. I should probably stop. Now, I’ll keep spending money on code and things that improve our product and our surface area that our customers interact with, but we have a lot of manual processes. Once they’re automated, I should stop spending the money on Anthropic.

Oh, there’s a realistic scenario that they decide that the compute that they have is more valuable for training superintelligence than it is for letting customers use it. And they stop you know, it cuts off.

true in those businesses. Our business has just tons of manual operations with humans, like, forwarding email. We call it freight forwarding. I often say it should be called freight email forwarding. It’s like people passing PDFs around and moving data between enterprise systems. There’s just, a huge amount of human labor. And I think that most of the economy looks like that, not like Uber, a which highly automated business. Although, I don’t know why they have, like, tens of 30,000 more employees because pretty automated. Right? Like, I don’t quite get that.

We’re hiring a lot of salespeople, and we’re expanding a lot in new markets. But I think you’re gonna see a shift from people that today do operations, kind of manual work that I was describing earlier into, okay, the work style is gonna change. And if the people are not able to make that shift, then we’re gonna have to rebalance into much more customer facing account management, sales, kinda like, alright, how do you because I think that’s

can get. There’s just like a lot of mass that you want out there in the field. I mean, think about our business. We’re global trade platform for global trade. There’s every business on the planet that needs to ship something anywhere. There’s a lot of boots on the ground that you want to just to interface with those companies out there. And there’s a limit to how many relationships a human can have. I think you can probably use AI and use other techniques to double that ratio or something.

But there’s some limit to how many relationships you can maintain. And it’s a relationship’s game at the end of the day, sales. And so I’m somewhat skeptical. This is an interesting question, though. Like, Yelp has 3,600 salespeople calling on restaurants. Wow. It’s actually a pretty good business. I think they haven’t grown that much, but they print cash. And, like, 3,600 salespeople if Yelp can have 3,600 salespeople, like, I feel like we should

No, it’s not true. You can do it without that, but your business is better. But if you can get that level of integration know, the freight industry was the original FTEs. They just weren’t engineers. Were just but one of the big tech companies that runs Hyperscaler, let’s call it, one of our direct competitors, 130 full time employees that work at that company that have badges that show up to work every day that run their logistics for them. And we cannot crack the door at that place.

Won’t say their name, but we cannot get our foot in the door, because all the decision making is done by our competitor. I think it’s an insane what an insanely great competitive advantage and positioning to have at, so I’m jealous. And I don’t know where you find but they’re not software engineers. These are just like logistics people. If you can get that same thing and just deeply embed yourself into the process workflow of a company, it’s so valuable. It’s not easy to do. And like, it’s not easy to find in the FTE model to find good FTEs who will know what to do, show up and do a good job every day and stay in the job and not have to turn over.

Yeah. Actually, speaking of the so it’s quite common in our industry where you have these forward deployed they’re not engineers, like I said. Forward deployed logisticians or something. They’re on-site. We had this huge customer win, one of our biggest ever. And I was like, Wow, this is great. But I had heard that our competitor has one of these forward deployed logisticians and runs their RFP, runs their process for choosing a freight forwarder, they always choose themselves. I’d heard about it and was like, wow, this is idiotic.

Why do they do this? It’s a great business.

we won. And I was like, wow, what happened? And I found out the competitor had been acquired by another one of our competitors, and they did a huge layoff, and they fired the person. And she got hired by the company, and then they chose us to get back at them. So Wow. Never underestimate kind of corporate incompetence. What’s your largest customer? Like, not name, but size. I spend about $150,000,000 a year, the biggest one. We don’t have too many like that, but we have probably a dozen that spend over 50,000,000 and then a long tail.

Wow. Yeah. Logistics is expensive. It’s 11% of GDP. And they don’t have to be that big of a company. That’s the thing that I will often have to educate investors on, is logistics is a much bigger market than software. So, for example, a typical medium sized company will spend, call it 5% of their revenue. Companies spend about 5% if they’re physical goods companies, they’ll spend like 5% of their revenue on logistics. They’re not spending 5% on any software. At scale, our price point is similar what you would spend on Oracle or something for a comparably sized company.

It actually lasts. Like

You see cost come down at least. Yeah. I don’t know that you’re gonna see a huge revenue scaling of this. I mean, by the way, our competitors like us and others that are scaling, that are serving data center companies, that part of the business is growing like crazy because the data centers have to be built.

We switched back and forth. We’re using Codex too. In fact, yeah, Codex won us over. They stole Sam stole my heart two months ago when he said you can have two months free. That was, like, thirty days ago, so we switched everything to Codex. So you switched everything to Codex? The engineers can choose both. What do the engineers choose? I think there’s still more there there’s still more habit formed on Claude, but they use Codex. We’re Cursor users. We use everything. As an enterprise, we’ve been more Gemini because we’re Google Doc centric, and so it’s, like, really nice how baked in it is in Notebook LM and these things, but all of our employees have Claude access as well.

Oh, I can only invest in one? Why? Why can’t I invest in both?

At the same price? Let’s do same price. Yeah. Same price. I think I’m going Anthropic. No offense because Sam’s a friend of mine. Because the enterprise business? Yeah. The enterprise business seems great. And the team, I think there’s a lot of value of, like, this cohesive team that’s been together forever, and OpenAI has had ups and downs, and people have left. And it’s been hard to keep the whole team in place. And there’s just so much value in, like, founders that love each other, and no one quits and the talent density, etcetera.

So but OpenAI has, like, people that sleep on it. I would invest in both. Right? Like and I have I would do as much as I could into either of them. You invested in Anthropic? Yeah. Well done. No. But not, like, early. I’m not like What price did you do it at? No. It’s like 600 or something. It was already it’s already it already ran away, so I’m not gonna make much money off that. Doing it at 600 is not bad. Well, like two months later, I got my it wasn’t very long ago.

I just recently How much did you do? It’s it’s my finances are private, but not that much. I don’t have that much money. Do you worry about open source? And when I said Worry about as a threat to Anthropic? Yeah. Not I don’t care. That would be great.

No, but your question was, do I worry about that? I don’t care. I mean, Anthropic Go to zero, I don’t care. I didn’t put an amount of money that matters for me. So on my personal basis, and if AI and intelligence becomes really cheap, that’s, like, much better for the world and for for me.

Not really. I I don’t know how they work, like, how they can stay competitive on some level. But if they’re open source, open source. Like, who cares where they’re from? We can use them.

over it. Do you do you sleep over China? Not really. I mean, I think I I’ve lived in I lived in China for a few years, and I speak Chinese passively. Not really well, but I could have a conversation. And so I feel like I know China better than most. It’s not a high bar. For sure. Yeah. On some level, I think that these that China and The US, there’s, like, a huge amount of mutual dependence there that is underplayed. And I think that there’s a lot the the interests align are much more aligned than people give credit.

And all this there’s so much saber rattling and so many people, like, trying to sound I don’t if they’re trying to sound smart or tough or something, but they’re casually throwing around, like, war between China and The United States without realizing that, like, such a thing would be a nuclear war, and you’d all be dead. And I so I don’t I I think that the odds of that happening are, like, pretty low. I don’t I don’t really believe that these countries are gonna suddenly start shooting nukes at each other.

And yet if you if you have war between these two

Well, remember when Obama went there, they didn’t even open the they didn’t roll out the red carpet. They didn’t bring up the stairs to the air force one. He had to, like air force one has its own stairs, but it’s, like, they’re not very good. They’re sort of awkward. You had to climb out the bottom of it. So

Yeah. Exactly. But they’re both my fault. Well, at least the first one was definitely my fault. Our Flexport Series B round, we were like a hot company. A VC came in and tried to preempt our round and offered us, for our scale and where we were, what were great terms. I think at that time it was like 50 on 100,000,000 valuation or something. Like this was in 2015, want to say 2016. It was pretty early in our journey. We were founded in 2013. So it was like they were good terms.

And I was very happy with the terms. And yet the VC wasn’t that famous or well known. They’re good. They’re a good firm. I’m not going say they’re they don’t need to be starting fights. But I decided and this is where I screwed up. I decided I could get the same or better terms from a better known investor. And so this was like on a Thursday. And I spent Friday and the weekend hustling, trying to like pitching a whole bunch of investors. But I had no I was being preempted.

So I had no data room or deck or anything that you would need to do a fundraise. And I think the word must have got back to this investor because he coached CBI I basically never talked to him again. He definitely didn’t show up with an actual term sheet. And then now I’m in the midst of a fundraise, where I’ve set this artificially high price, and I wasn’t fundraising, but you can’t turn off the fund I don’t know. We didn’t need money then, but we were going to need it within a year.

And so it was just like this very awkward position. Founders Fund was our investor at that time. They’d led the Series A. So first mistake, I should have just called Founders Fund day one and said, Hey, will you do this round? But like, I thought I was hot. Eventually I did call Founders Fund and told them, Yo, here’s what I screwed up. Like, I tried to raise money, failed. I did have an offer, but the best offer I got from my process that I ran post was like a 275,000,000 valuation instead of 500.

And I went to founder, I just told him everything. It’s like, here’s how I screwed this up. Best offer I got was $2.75, but the firm wants board control. So if you’ll just do it without taking the control of the board, you guys can have it. And Peter just offered 300 instead of $2.75, which wasn’t as good as my 500, but he didn’t need to do that. I told him

Yeah, they have. Founders Fund led our A, our B, participated in the C or D and led our E. How much of the companies do they have? They probably I had to go look at the latest cap table. Probably like almost 15% or something, maybe 12. There’s been some dilution, so

Any big lessons from Peter? Man, he’s sort of an enigma. Just amazing how far in the future he’s able to look and be right. The number of predictions that he’s made well out there just kind of blow your mind. That’s not unique insight for me, but that’s one of things that amazes me. Actually, of the things I love personally about Peter is that I feel like most people I talk to talk too slow. And Peter does not. And if you accelerate your speech with him, at least when Peter and I talk to each other, I think we talk like two times faster than when we talk to other people, and there’s never a moment where he’s, like, doesn’t

When fundraising?

No. Maybe. It depends. That was the worst. I hate fluff when people don’t get into it. Should you? No. Maybe. It depends. I’m trying to think, like, over the years, I kind of would always just take the highest price. Brian

That I disagree with. It could be quite uncorrelated, like the best brand name investor could pay more than the second best sometimes. It’s very hard to give generic fundraising advice. I think it’s very dangerous. Like, each if a founder asks me for advice, I’m like, you know your situation much better than I do. So it’s like, you have to be careful on that.

Yeah. That’s the next thing I was gonna say is like with that caveat, you probably will get a bet. Like, the fact that we’re a founders fund company has made so many other investors want to invest in Flexport and like You

Yeah. Well, and employees have the hardest time because they only get to pick one at a time. Right? Like, one company. I don’t

we basically moved away from San Francisco as a result. Like, our team in San Francisco is maybe 4% of the company’s based in San Francisco, even though that’s where we’re founded and where I’m based. Why is that?

Cost and loyalty.

Yeah. And like our customers aren’t there. So I don’t need a big sales team in San Francisco. You know, we need to be everywhere, not just in San Francisco. So I think we maybe overdid it though. Like five years ago, had 800 people in San Francisco. And right now we’re down to about 75. And actually, I’m looking around being like, my leadership team is too distributed. I want more talent in San Francisco. So I’m probably gonna start pushing more of our employees like, hey. You should come move back to San Francisco.

I just got our CFO to move to San Francisco. It’s made the business much better. Leadership

Well, I got I say I say it’s white collar fraud. I have a three year old and a five year old. The idea that I could do any work at my house is like a total fantasy. Like, come on. You kidding? And, like, I have a bigger house than most employees do. Like, I actually do have a private office I close the door on. It doesn’t matter. Like, there’s no work getting done at that house when the children are around. And the kids come home, like, when does school end?

Three p. M? Like, your workday needs to keep going. So I think I’m highly against it. But we’re five day a week in office as the baseline assumption at our company. And I made the mistake during COVID of going remote and letting it stay remote for way too long. And so I think our culture suffered as a result. Was it difficult to bring it back in? Difficult for the people who don’t work here anymore.

Yeah. I was just you gotta do what you wanna do. I mean, I think that all the bad things that have happened at Flexport were when I didn’t do what I wanted to do and was trying to was I you don’t wanna ever be afraid of your employees, first of all. The employees don’t want that either. They want a leader who’s going to go in the direction that they believe in. Even if they disagree, they want to follow a good leader. And if they opt out, that’s fine.

They can opt out. There’s a lot of good jobs. Think that also the idea that work from home is going to benefit highly paid employees is sort of a total fantasy. Work from home done correctly, you should be hiring the world’s greatest geniuses. There should be a labor arbitrage here where you’re finding really, really smart people who make a lot less money because of the way that our economy is structured, where some countries just have a lower purchasing power. And you can hire people like my brother has an assistant who has like off the charts IQ in The Philippines and makes like $500 a month or something.

I don’t know what he’s paying the person out, but like that’s who’s going to benefit from a work from home environment. It’s not the guy who’s making $2.50 ks a year and lives in Jackson Hole and wants to go skiing for four hours a day. Like that is there’s too much of that. Also, like, company like, look, your podcast is better if we’re in person. Sure. Way better. It’s the exact same with every meeting that you have. I struggle. And we struggle because we’re still even even if we’re in office, we’re distributed.

We have 40 offices. We need to be in every country. So I struggle personally, and my team all knows this. I struggle with paying attention in, like, video meetings.

bad. Like it’s the nature of our business. So I do want more of our talent to come back to us. Google has this new product, haven’t used it yet. They built this like, I think HP is marketing it for them called the Dimension. Oh, the holograms. People have used it, It’s amazing. I

But they’re like $250,000 each, then you need one. You can afford it. No. But I need one in every office.

40. 40? Growing. Yeah. Oh, yeah.

It gets a little crazy. Right? That’s a lot. And we need to have an office in every country on earth. So and then that’s only one person at a time.

For different reasons. Marketing and enterprise marketing, the moment something works, it stops working because the competitors will copy it. And so it’s like, it’s all about creativity and originality. And like, how do you get creativity and originality in B2B enterprise marketing? And if you are creative, like, you probably kind of become a founder if you can do good storytelling and creative ideation in the marketing storytelling angle. So if you find a good marketer in B2B, you really want to lock them in. So it’s been a that’s a hard one to hire for.

And also, to do that, to do like successful B2B marketing and stand out. Like, it’s one thing, oh, I just make good sales decks for the team and like, okay, fine. Like, that’s some baseline stuff, but you’re not going to differentiate or move bend the curve on a company’s success. You have to be doing kind of crazy stuff. Most crazy ideas are bad ideas. So you’re it’s like being an investor. Like, you wanna do crazy things that happen to also be good ideas. Like, it’s that narrow intersection.

Which also don’t denigrate enterprise brand, which is even harder. Yes. And, like, as an employee, as a it’s so hard to take that risk because you’re like, I don’t know. If I do something crazy and it blows up, I get fired. Why take the risk? So it’s very, very hard to find a marketer that’s not part of the founding team or somehow you have to give, as a founder, you’re if not the one coming up with these crazy ideas and trying things, like you have to protect the team and let them, you know, the leaders there and let them know, like, I want you to experiment.

Because if it’s not crazy, it won’t work, or it has to be very expensive. And most startups can’t afford that. So it’s the big benefit that like a big brand has, is they can just do really expensive stuff. It’s expensive as a feature in enterprise marketing, because it’s like you wouldn’t spend a lot of money on something, promoting something if it wasn’t good, so it must be good. What’s the most expensive thing you’ve done marketing wise?

No. I mean, a million dollars, sure. We do, like, a conference that costs maybe a little bit more than that, customer conference. Do you find them effective? Yeah. Yeah. Yeah. For sure. Events, like, events works all day. And by the way, don’t have be that crazy to do events. B2B marketing is events marketing to some extent. And, like, that’s, like, plain vanilla. But by the way, don’t need to go hire a CMO to run events. Like, conferences are kind of hard to pull off. But, like, normal events, like, hey, host a dinner.

Like, you don’t need marketing at all. Like Yeah. Yeah. Just have

You probably go through these phases, right? I mean, I think the thing that you cannot have is them being like union representatives of your employees. They’re not. They’re there to represent the company, and therefore the CEO. And so if there’s, if you don’t have that as a CEO, like a trusted HR leader, and you feel like the HR leader is more on the side of the employees than on the side of the company, then there’s a problem. There have been periods in my company’s history and like the industry in general, where you’re like, didn’t have the right HR leadership that wasn’t focused on the business outcome.

But the employees are the company, and the company is the employee. Everything else is a fiction. We’re just like just a fake brand name here with a bunch of people that are building the company or serving the customer. So the the word HR is kind of wrong because they’re not humans are not a resource that you can mine and take out of the earth. Like, you have to give back to the employees and have a two way relationship.

Some. Not those names in particular. But, yeah, some. And I think the negotiation that we’re going to have with Salesforce should be a lot different than the last one. Because I think selling SaaS to tech companies is going be a tough business because we can build stuff ourselves. And Salesforce Salesforce is great, although most of our people don’t like Salesforce. How much do spend on Salesforce here? A few million. A few million? Yeah. It’s expensive. Yeah. So it’s on it’s on the list of candidates for that.

Yeah. Yeah. So I suspect that we’ll be replacing a lot of these things. And and I think a lot of what’ll happen is you’ll just shake them down. I don’t know about Salesforce. Salesforce Slack is also gonna be a great turn out to be a great acquisition because, like, that’s pretty sticky. Nobody wants to replace build their own Slack. I could see a situation where you go, hey, we’re cutting Salesforce, they just raise their rates on Slack.

Yeah. Definitely want to be in big markets too. But I mean, I think, coming back to our earlier thing about SaaS, I think there’s going to be a lot categories where you say, for example, there’s one or two pieces of software that we fully replace and killed it, more every few weeks. But there’s going be a big category where you take like, one of the things I’m having our procurement team doing is make the PowerPoint case study of the one of the SaaS that we did replace and how we did it and how long it took.

And then just go down the list of all the other SaaS vendors that we have and say, hey, look, this is what we did because the vendor didn’t reduce our rates. So I need you to reduce your contract rates or else I’m just gonna have to vibeco, you know, replace you guys. And Question one, what is that reduction, do you think? I think you get,

That’s why I don’t want to have to do it for a lot. In some cases, it might be a bluff. I couldn’t do it for all of them. Like, and I don’t want to dedicate that much of our engineering resources to replacing SaaS. Like, I want to replace work, like expensive labor, and I want to build our product to make it way better. So I don’t I wanna, like, focus on our core business with our engineering talent and, like, not Do you worry about security? Yeah.

Constantly. Paranoid. Almost all of our competitors have had major hacks in logistics. Like, it’s been a major target area for cyber, and there’s been a lot of, like, ransoms.

Yeah. I’ve done really well as an angel investor. I I used to do a ton of it, early days of Flexport. So I I started this company called importgenius.com that throws off a lot of cash. It’s a nicely profitable business. So I actually started as an angel investor while I was in Y Combinator because I realized I I had inside access. I was kind of like a Was it

It wasn’t obvious who was great. It was obvious who was terrible, though. And I think if you could eliminate the bottom half, like, you’re doing pretty well inside of a YC bet. What was the bottom half doing that the top half? You just talk to the people and be like, I don’t know, a good person. And they didn’t see me as an investor, I’m their peers, I could get the real story. So I invested inside of my own badge. I invested in 13 of the 50 companies or something like that.

No. There was a few good outcomes there. Algolia, I was an investor in that. But I missed Cruise. Cruise was in my batch. You get

out of Algolia?

Yeah. I did. I sold my shares in Algolia a while ago. Well done. Fantastic. So I made money on that one. You missed Cruise? Yeah. And I’m friends with Kyle. Why? I don’t know. It’s just like it was too crazy. Like, he was just, like, throwing this camera setup on the roof of his Honda Civic or no. His I forgot what car he had, Acura or something. I was like, this is not legit. It’s not a thing.

Maybe. Yeah. So what are my best angel investments? I was well, actually Bitcoin, early Bitcoin. Sold that. Don’t don’t kidnap me. I don’t have any Bitcoin anymore. But I made money on Bitcoin. I was the first investor in Rippling. Put a big check into that. Did really well. Are you revengeful? No. I’m personally not. But I think that investing in founders who are have a who are pissed at somebody and, like, wanna get back at them, like, same with Rippling. It’s aria I never met before, but, yeah, I don’t know if he was wrong.

Rippling? Yeah. Parker? Parker, Zenefits, a a 16 z. They fired him. I never got that vibe whenever. Yeah.

I’m just trying to get it.

Rippling. I think, actually, it’s a great I have a great thesis around, like, founders who have been wronged. Second time founders who feel like they were wronged the first time around would be, like, great investment thesis.

Yeah. I have a there’s a few people who I should be way more like, who have wronged me, but I, like, totally black them out and don’t care. I don’t know why. It

be better for What was the

we

No. I’ve never had one of those. Really? I had a lot that seemed like they went well and then they never invested. The number of investors who ghosted me, by the way, after the pitch, the vast majority, I would say, where I pitched them, it seemed great. And then it’s just like never hear from them again. That would be the majority of investors I ever

PG, his advice to founders was always, you should hear the no, but ignore the why, because the odds of them telling the truth multiplied by the odds of them being correct are so low that you’re just like very little signal in what investors tell you about no. You should

many founders out there are, like, actually secretly hate you because you tell them something that they didn’t wanna hear. It’s probably non zero.

overall experience with VCs have been incredibly positive. Yeah. Including those who’ve passed, have become friends and, like, people that I hang out with, and there’s no there’s no ill will at all, but have way more negative experiences than positive. Like, not to say that they weren’t positive experiences, but, like, I I think you said earlier you enjoy pitching investors. I like pitching, but I don’t like hearing no or getting ghosted or whatever. Have you ever had a terrible one where like they

me. Never an investor. That’s pretty Literally fell asleep, though.

Like, throw throw throw a What did I do? It was, like, seven or eight years ago. The guy just fell asleep. They’re now we we ended up winning them over. There it was a sales pitch, so they weren’t a customer. Yeah. It was a prospect. I’m terrified of what the capacity is. Just The the worst one, I’ve only I let I walked out of one investor meeting, not, like, in a huff. I left my partner there, my co founder or, like, my the president of Flexport.

He stayed behind. And I said I had to take a phone call, and I just never came back. Why? They they kept telling me that the market size was too small, and it was like the third pitch. And, like, after this first two, I thought we’d overcome this. Like, we presented some we found some BCG market sizing report and, like, shared it with them. And it was like, And if you need BCG to convince them, just

100%. And it was like the third pitch, and I thought we were going to move to term sheet. And instead, they had brought their own report that showed how the market size was only for Flexport was only $6,000,000,000 And I was just like, actually, my partner had the best line. He was like, Oh, so it’s smaller than the market for USB cables. And it became obvious to me that these and I said, I don’t think in BCG reports. Like, it wasn’t me that got the BCG report.

Someone else did. I was like, Just look object for the rest of your day. I want you to, like, look around at everything that you see and just ask yourself, how did it get here? I’m like, that’s our market size.

It’s tricky because if you’re doing something very unique

Maybe. Yeah. They mostly bet on me. They didn’t they had never invested in this market before. That’s for sure. Peter, you know what? I met Peter. Sam Altman introduced me to Peter. Sam was one of our earliest investors, and he invested me to Peter to get advice. It was a classic thing. Everyone loves his book, right? Zero to one is such a great book. And so Sam introduced me, and that book has six or seven, I can’t remember, think there’s like six questions to decide if you’ll change the world.

This is like an incredible startup that you should ask. And on five of the six questions, I felt like Flexport knocked it out of the park, best possible answer. But then one of them is, is it a small market? Because his whole thesis was, you should have a market that’s small enough that you can be a monopolist. And when I went to whiteboard with him and hang out with him, I’m like, well, I want to know, should I make myself like, I can make this a small market.

I’d be like, oh, we’re going to dominate logistics versus hardware companies in Silicon Valley or something, but it’s kind of fake. The market’s actually really big. And he stopped me, he’s like, Look, don’t be too dogmatic. It’s okay to have a big market. And then a few

done? I I did so many, so, like, the vast majority didn’t do well. Like, 200? Yeah. Something like that. Wow.

Well, I didn’t for a long time, but at some point, I had to clean it up when I was getting married and going through that exercise. What? Of doing, like, a will and Yeah. Exactly. Eventually, you wanna clean this up. Much better if you track it from the beginning. I would say probably it’s super power law world. And actually, this is an interesting thing for founders to understand is once you see the world from the perspective of the angel investor, you realize that we really don’t care.

Even a three x, like if you take my spreadsheet, and this investment made three times the money. Like, the founder is very proud, like, Hey, I made you three times your money. But if I remove that and make it a zero, it has zero impact on the bottom line of the fund, like zero relative impact on the IRR, because I have a couple that are 1000x or 500x, so they strictly, completely dominate everything else. So you don’t care, like, about the ones that failed. And when I write a check as an angel investor, I would just mark it to zero.

I don’t care. I just assume that it’s a zero. And then that way, I don’t worry if it fails. What

Yeah. Yeah. I don’t even want the investor updates. It’s fine, dude.

Yeah. I mean, if it’s your life’s mission and you’re calling, then, like, great. Never give up. Never there.

There’s that there’s what I was saying earlier of, like, how much they’re a circular rumor mill. You know, like, when I was doing one of the rounds of funding we were doing, and I was pitching this investor, and I think I was on, like, the third meeting. I’m not one of these people who like, Oh, you never talk to associates. Maybe I should be, but I think it’s kind of a loser way to live your life. I never had this attitude, like, shouldn’t ever talk to the junior people, mostly because I’m not a dick, but also I just assume that those people someday will become, like, partners, and they’ll remember that I was cool.

I don’t know. But I was, like, on the third meeting with this fund, and I was still talking to the not the junior person, but I wasn’t at the final decision maker yet. And so I told the guy, I was like, Hey, I’ve decided to go in a different direction here. This isn’t going to work out, and I’m going to raise you know. And within an hour, I got phone calls from like three other funds, who I hadn’t picked a different investor. I just was like trying to let this guy off the hook.

And within an hour, got all the funds that I was still talking to called me like, hey, what happened? I heard you picked a lead. And like the amount of rumor mill and collusion that happens in VC, founders have no idea. It’s like this create and you can use it to your can work against you or can you use it to your advantage. You’re looking for an outlier who will value you more than everybody else. So that collusion does not work to your advantage unless they’re all hyping you up and saying, Dude, this is the best company ever.

crazy. Yeah, exactly. That’s what I was getting at before. Because

Well, and I also think founders should basically never share their metrics, which I’ve done on the show, so I don’t care anymore. But you should never share your metrics. No offense to your kind of past. I don’t need to raise any money ever again. But the you should never share your metrics because what you want to do when you pitch a VC is you want to cherry pick whatever metric looks the best and pitch that as the important metric for your firm. But once you’ve shared a metric, you’re now committed to that being the metric.

And who knows? Maybe you couldn’t make that one go up hockey stick style, but

Least? Yeah. Oh god. When you’re losing a lot of money, Flexport said. We we’ve been on the hero’s journey. Right? If anything is straight up into the right, by the way, is pretty boring. Not as an investment, great. It’s wonderful. But, like,

But I don’t even mean as investor. As investment, of course, you want things to just go up into the right and never come down. But as a story of, like, what’s compelling to the human like, Snap story will be infinitely more compelling if they figure it out and start growing and going like hockey stick again than it would be if it never stopped and it was hockey stick. You’d be like, wow, what happened here? Like, that the human brain loves the story, the hero’s journey where you gotta go to hell and come back.

Like, if it’s just always good, like, that’s not fun. So we

zero to hero is not good enough. You wanna go zero to hero and then take a fall and come back. So we need to cancel you and then the comeback. It’s different, a little bit different in enterprise because you have competitors. So, like, in our case, if we have a negative news story, like, literally no one will read it. And our we don’t have scandals. It’s just like, oh, such and such. Like, I once had a Bloomberg article about us where we lost a package for a customer, one single parcel.

I remember this. It was one parcel. It was quite a scandal. And it was a newspaper. I mean, Bloomberg’s not a print, but it was front lead of the story that Flexport, we used DoorDash to do the delivery. One parcel. By the way, the story did not mention we delivered 40,000,000 parcels successfully, but we lost one and we gave her a full refund before the story ever came out. And that became a scandal of sorts. Nobody would care. Nobody would read it, except we have competitors.

And the competitors will take your bad news and send it to your customers and stuff. So it actually can hurt in enterprise, it can hurt your business, negative news stories, even though it’s not the story itself. It’s like your competitors are kind of low life looking for dirt. One in 40,000,000. So, I probably mean, lost more than one, but the story was about one. You dig. And and actually, it’s an interesting story that we use DoorDash for logistics. People don’t think about that. But if you DoorDash has a bit of a problem there because DoorDash’s quality is better than others, or it’s as good as, like, a FedEx or UPS.

But when you use FedEx and the package doesn’t get delivered, people are like, yeah, it happens. It’s FedEx. But when you use DoorDash and it doesn’t get delivered, they’re like, why did you use DoorDash? Like, what’s wrong with you, company? Like DoorDash is for food delivery. Why did you it’s something they have to overcome because their quality is

fine.

Never meet your heroes. I’ve met most of the great founders. Do believe

Depends. You know, also, you wanna meet people who are, like, at your level or see you as a peer and wanna actually engage in a dialogue with you. If you’re meeting somebody and they’re, like, unhappy to be at dinner with you, they don’t care about you and don’t ask you questions or learn from

He’s so curious. Yeah. Yeah. Some some of them are like this and some are. I I find it somewhat uncorrelated. Like, certainly, they were like that on the way up. Some people get to the top and then stop being curious, and then they’re you know, probably their returns or their impact after that will slow down is my theory.

But

you beat some people

Well, it’s a picking game, I guess, and you only get one bet. Right? So make sure you get the right one. My wife is a when I met her, she was a journalist, actually, at Bloomberg. And I still could have killed that Bloomberg story even though these were her peers that she worked with for years. I mean, it was crazy even then. But That was a risky move. I know. Yeah. Fuck. I didn’t talk to journalists. It was. It was a bit in fact, someone one of my investors at Founders Fund told me, dude, you need to either marry this woman or break up with her, but you cannot be dating her.

No. He’s right. Great advice. So I married her. And then she had to quit, in part because of me, because she got assigned to cover SoftBank, who’s my investor. And I was like, No. Can’t do it. Sorry. And she she knew that she it was not a good fit. What’s it been like having SoftBank? I love Masay.

Yeah. Yeah. Of course. How was it? I love him. He’s just like a big larger than life. Was it in person? Yeah. Yeah. I think definitely in person. I’m trying to remember if I also met him first on video. No. It was in person. Can you just take me to this? I

I mean, I don’t I can’t say I, like, love him that much interpersonally. We’re not friends or anything, but I’m just a big fan of Masayoshi Son, right? Where did you meet? How did it go? I met first time I met him would have been at his house in Woodside, California, which is like it’s very nice, let’s say. You can look up the zest imate. You’re like, oh, this is gonna be fun. The Zillow estimate. How long was the meeting? Probably, like, actually pretty short, maybe an hour or so.

Considering the size of the check, I thought it was surprisingly short meeting. He has this painting of Napoleon behind him, and I wanted I didn’t end up finding one. I was trying to buy a painting of the the Duke of Wellington to send it to him. Right? Who, of course, defeated Napoleon, but as a troll, but I never found a good one that it was worthy of the of the prank. It’s a bold move as well. Oh, yeah.

after he invested, I was gonna send him that as a gift. He he’s very bold. You know? I I don’t I he wanted me he pushed us to go, hey. Be cheaper than everybody because we raised a billion dollars from them. So

Yeah. Well, they led the round of billion. Yeah. And he was like, whatever the price of freight is, you just be 10% cheaper than everybody. And then if someone matches you, you just be 10% cheaper than that, which is like a terrible strategy. I did not do that. We would have burned so much money. But he was very aggressive. Just wanted to push you to go bigger.

And he’s very connected too. Like, he was able during the meeting to call, like, Foxconn, get him on the phone, be like, hey. What do think of this thing? Like

Well, he had this guy next to him call. I’m like or WhatsApp. I forgot. I think it was a This must be the weirdest

I was I don’t remember. I don’t get nervous on that kind of thing.

I get nervous when I have to give a talk publicly, and it’s very time bound, because I’m, like, kind of long winded. I don’t and then I don’t I can’t memorize anything. So I don’t prepare like, I usually will just go speak off the cuff, and I’m a good public speaker, basically a good public speaker, but I I can’t, like, memorize. So, like, actually, my the most nervous I ever was was the Y Combinator pitch because I only had two minutes.

Do. As measured by when I tell my sales team I’m gonna do less of it, they always push me to go do more press. Like, they say that it helps them get deals and close deals and stuff. But it’s it’s one these things. I think it was Steve Martin who said, like, he went on The Tonight Show. He went on every late night show that would have him. And then he would go around West Hollywood, walk around Hollywood, and nobody would recognize him. Like, is in the early days.

And then, you know, so you couldn’t tell, like, if it was having an impact. And then after, like, five years of that, he was, like, the most famous comedian in America. Everybody knew him. He couldn’t go anywhere, but he couldn’t pinpoint it to, like, any one thing. So it’s been a bit of my I only learned that recently. That wasn’t, like, driving me to go try to do more press or anything. But, generally, I think being famous has helped Flexport a lot. And we’re way more famous than, like, we should be given that we’re, like, the tenth largest freight company.

I couldn’t name many of them. Yeah. Exactly. I mean, you you could, like, expedite no. You don’t know some of them. Maersk is, like, a famous company. I know Maersk. Yeah. Yeah. Yeah. They’re a monster. They’re big. Yeah. They’re a lot bigger than us. But I I probably I think Flexport gets more we’re more likely to be cited in the press on a story about supply chain than they are despite them being much bigger.

Well, you need to have a great wife, who’s a great mom, so you have a good partnership. The kids will be pretty natural. You’ve got millions of years of evolution. It’ll be great. Great to finally care about someone besides yourself. Chemical wash of just, like, true love that is you can’t get it anywhere else. So Does it change perspectives? For sure. Yeah. But, like, I get a lot of meaning from my work. Truly, like, I just genuinely love what I do. It’s a real mission for me.

My life’s work is building Flexport. But a lot of people don’t have that. And I was always, like, kind of confused because, like, most people I meet don’t have a sense of purpose about their work like I do. And I’m like, how do these people function? Like, I don’t know. How do you get through life? You notice as soon as you have kids, like, you will get I get more purpose from that than I could from Flexport. And so that’s the vast majority of human beings should get their purpose from their family, from their life.

I was

Yeah. They should just have kids, and then they’ll be solved. That will be solved. That problem will be solved instantly. But if if you get a lot of purpose from your work, then you can have the opposite problem of, like,

For the last decade, I didn’t wanna compete on price, and I wanted to be the premium provider in logistics and thought it would be bad to compete on price. And now I’m, like, pretty convinced that we need to be the low cost leader and just go so hard at lowering our costs that if you’re cheaper, you just take all the market. And I think I was maybe lying to myself because it was too hard to automate the work and too hard to become the low cost provider and are we’re smaller than some of the big peers, so they buy freight cheaper than us and stuff.

And I think I was lying to myself and it’s like, no. You need to be the cost leader, and we have to figure out everything we can to be the cost leader. Masayoshi like, was like, just sell under your cost.

I don’t think our Flexport’s board needs anybody. The board is, like, mostly there to represent the interests of our the investors and make sure we’re doing a good job, not, like Okay. But

I’m just glad that my board doesn’t screw with us. My board has been, like, very supportive of us, of me in particular. I don’t really want a more active board. They’re not super active in the business. They’re not, like, telling us what to do. They don’t help that much, but they don’t ever hurt. And, like, I would much rather have that than, like, a really helpful board. I don’t think there’s a risk of the board firing me. Someone who’s really smart and thinks they’re smarter than me might fire me.

Oh, I really would love to sponsor this football club in Hamburg called Saint Paulie. Why? They’re the second team in Hamburg. And the first team my great grandfather was a sailor from Hamburg, first of all, so I’ve got, like, a personal history there. I don’t know if that team was around back then, but the first team is owned by Klaus Michael Kuhne, who’s the owner of our direct competitor, Kuhne Nagel. And I just love the idea that we would take the second team and beat him, and he would be like, oh, those kids.

These damn kids. Here they come again. So just more of a troll than anything else. And their logo is a pirate. They’re like I don’t know their logo, but they’re kinda like they’re like kind of like a leftist communist oriented club. I think they would kinda hate us if we tried to buy.

Yeah.

We got to hit our numbers. We got grow like crazy. Then this automation via AI, like, we we we’ve got about probably, like, a 100 core workflows that are costly that we’re building AI agents for right now. And, like, five of them are live and working and saving us money and 95 that are under development. And I need I need at least, like, 80% of those to come to life and, like, actually have the impact. Otherwise, we’re just spending money