Flexport is a modern freight forwarder that uses technology to structure and organize data in the shipping process. They specialize in shipping goods to Amazon warehouses and work with both small and large companies. The founder, Ryan Petersen, started the company as an online customs brokerage and freight forwarder. He emphasizes the importance of creating products with real traction and believes platforms should remain neutral. Flexport's first three clients were acquired through Google Adwords, SEO, and sign-ups on their website before the company launched. Petersen discusses the challenges of being a solo founder and the importance of great management and leadership in scaling culture. The Trump policy on foreign trade has affected Flexport's business, but they have been able to respond quickly. Flexport poaches clients from legacy providers by offering more visibility and control over international freight at the same price point. Automation is a focus for Flexport, with the goal of eliminating manual tasks and making industry knowledge accessible to customers. Petersen suggests starting new business ideas by identifying personal pain points and talking to customers. Derisking product ideas and seeking validation are crucial in the venture capital industry. The biggest lesson learned at Flexport is the compounding effect of success.
What is a freight forwarder?
A freight forwarder is a company that helps businesses ship their products by coordinating the movement of freight between different parties. They act as intermediaries between the shipper and the various parties involved in the shipping process. Flexport is a modern freight forwarder that stands out by using technology to structure and organize the data involved in this process, providing visibility and control to each party involved. They specialize in shipping goods to Amazon warehouses and work with both small and large companies.
Selling electric scooters on eBay 15 years ago
Selling electric scooters on eBay 15 years ago was a fascinating opportunity, but eventually faded.
Key points:
- Being one of the first Amazon merchants was exciting
- Imported electric scooters from China
- Witnessed the scooter mania at the time
- Business eventually declined
- Entrepreneurial experience led to business school
Ryan’s business school experience
Ryan Petersen, founder of Flexport, graduated from business school with $140,000 in debt and took on multiple part-time jobs to manage it. He started an SEO consulting firm and tested out various business ideas through landing pages. One of his ideas was an ERP for importers. In a YouTube video, Ryan discussed how Flexport began as an online customs brokerage and freight forwarder. He also mentioned his other projects, such as sockbankruptcy.com and mediumgraytshirt.com. Ryan focuses on creating products with real traction and expressed concerns about Amazon using sales data to clone products. He believes platforms should remain neutral.
- Ryan graduated from business school with $140,000 in debt
- He took on multiple part-time jobs to manage his debt
- Ryan started an SEO consulting firm and tested out various business ideas
- One of his ideas was an ERP for importers
- Flexport started as an online customs brokerage and freight forwarder
- Ryan also worked on projects like sockbankruptcy.com and mediumgraytshirt.com
- He focuses on creating products with real traction
- Ryan expressed concerns about Amazon using sales data to clone products
- He believes platforms should remain neutral
Amazon competing with their vendors
Amazon's dominance in the e-commerce market is leading companies to seek alternative strategies to compete. Some are choosing to sell through their own e-commerce sites rather than on Amazon, while others are using alternative fulfillment methods. However, the speaker expresses concern that if Amazon continues to dominate, it will lead to a lack of diversity and competition in the market. He believes that treating vendors well and being the preferred counterparty is crucial for long-term sustainability. The speaker sees his company, Flexport, as empowering other brands in this landscape.
Matt Susk asks - What were the most important takeaways from Columbia Business School? Would you encourage entrepreneurs to pursue a MBA?
The most important takeaways from Columbia Business School and whether entrepreneurs should pursue an MBA:
- Having a business school degree can be beneficial in understanding fundamental business principles.
- However, there is a bias against MBAs in the Silicon Valley startup community.
- The average MBA student may not make a great founder.
- Pursuing an MBA can result in significant debt, limiting future opportunities and forcing individuals to make life choices based on financial obligations.
- It is recommended to have a solid plan to generate income while pursuing an MBA to mitigate the burden of debt.
- Ryan Petersen, founder of Flexport, emphasizes the importance of staying in the fight and setting oneself up for success.
- Petersen waited for three years for government approval before committing to Flexport as a full-time job.
Tyler Hogge asks - How did you get your first three clients at Flexport?
Flexport's first three clients, including Foxconn, Cargill, and Saudi Aramco, were acquired through Google Adwords, SEO, and sign-ups on their website before the company had even launched. The founder, Ryan Petersen, created a marketing page to gauge interest in the service and was surprised when major companies signed up. He believed software could improve the freight forwarding industry and was confident in his abilities as a solo programmer.
Being a solo founder
Being a solo founder can be challenging, but it is possible to build a successful company on your own. Ryan Petersen, the founder of Flexport, shares his experience and insights on being a solo founder in the tech industry. Here are the key points:
- Initially, Ryan hired programmers and acted as the first project manager for Flexport.
- Ryan's previous experience with his brother as a co-founder helped him understand the importance of having a support system.
- Moving to Silicon Valley was crucial for Flexport's success, as it provided access to talent and capital.
- Flexport is a technology company focused on improving freight forwarding through technology.
- All of Flexport's engineers are hired in Silicon Valley, highlighting the importance of being in a tech hub.
Overall, being a solo founder requires determination, resourcefulness, and the ability to leverage the advantages of your location.
Varun Khurana asks - What's your strategy for rapidly hiring the best talent in so many different global hubs?
Flexport's strategy for rapidly hiring the best talent in their global hubs includes looking for "insecure overachievers" who are hungry, humble, and smart. They prefer a decentralized work structure and encourage rotations to foster a culture of generalists. The challenges they face include encouraging employees to try different roles and launching new offices.
Challenges of scaling Flexport
- Fulfilling high demand for services
- Dealing with complexity of logistics industry
- Ensuring compliance with regulations
- Managing cultural aspects of company (decision-making, conflict resolution)
Some of Ryan’s favorite books
The most profound aspect of Ryan Petersen's favorite books is the exploration of the evolution and biology of business in "Origin of Wealth" and the discussion of the role of business in society and defining culture within a company in "Good Profit" by Charles Koch.
Key points:
- "Origin of Wealth" is Ryan Petersen's favorite book, delving into the evolution and biology of business.
- "Good Profit" by Charles Koch explores the role of business in society and provides insights on defining culture within a company.
- Petersen emphasizes the importance of culture in his own company, highlighting the significance of engaged team members, value creation, enjoyable work environment, growth opportunities, and comfort in the office.
- Petersen briefly mentions his involvement in starting a company called Get Room, which sells phone booths for offices.
Scaling culture
Scaling culture in a business is a key challenge after achieving product-market fit. The speaker emphasizes the importance of great management and leadership in fostering a positive culture. He suggests that a manager should ideally have around eight direct reports to effectively meet with each employee on a regular basis. At Flexport, the speaker never had the authority to tell people what to do, and the company's success was not dependent on his instructions. The speaker highlights the significance of global trade in human development and the role it plays in collective learning and specialization. Trade has been instrumental in lifting people out of poverty, particularly in China and India.
- Challenges of maintaining a strong company culture as the company grows in size
- Importance of great management and leadership in fostering a positive culture
- Difficulty of personally connecting with and understanding each employee as the company expands
- Ideal number of direct reports for a manager to effectively meet with each employee
- Flexport's success without the speaker's authority to tell people what to do
- Significance of global trade in human development and collective learning
- Role of trade in lifting people out of poverty, particularly in China and India
Jassim Ali asks - How has the Trump policy on foreign trade affected your business so far?
The Trump policy on foreign trade has affected Flexport's business, with about 2% of their shipments being affected by the first round of tariffs. Flexport has been able to respond quickly to these changes and provide their customers with information on how much they will be affected. Despite the current growth in their business, Flexport is cautious as they believe the surge is due to businesses pulling their imports forward before the tariffs are implemented. The policy has also had an impact on the air freight market, leading to imbalances and spikes in prices during the holiday season. Flexport, a modern freight forwarder, has faced challenges in outbound sales due to the policy.
- About 2% of Flexport's shipments have been affected by the first round of tariffs
- Flexport has been able to respond quickly and provide customers with information on the impact
- The current growth in Flexport's business is attributed to businesses pulling imports forward before tariffs are implemented
- The policy has led to imbalances and spikes in prices in the air freight market, especially during the holiday season
- Flexport has faced challenges in outbound sales due to the policy.
PowerDecal asks - How do you poach clients from legacy providers?
Flexport, a modern freight forwarder, poaches clients from legacy providers by offering more visibility and control over international freight at the same price point. They build lists of companies importing things and reach out to them, showcasing their value proposition. Flexport aims to create trust by proving that they will not disrupt the client's business and by providing more visibility and data on shipments. The sales cycle is not easy, but as long as the client trusts Flexport, it becomes irrational not to move their business.
- Flexport offers more visibility and control over international freight at the same price point
- They build lists of companies importing things and reach out to them
- Flexport aims to create trust by proving they will not disrupt the client's business
- They provide more visibility and data on shipments
- The sales cycle is not easy, but as long as the client trusts Flexport, it becomes irrational not to move their business.
Automation in freight forwarding
Automation in freight forwarding, specifically in the context of Flexport, is focused on delegation and getting the work to the right person. The goal is to build interfaces that allow customers to directly upload data, eliminating the need for manual tasks like calling customers for documents. Freight forwarding is considered highly susceptible to automation, with 99% of the work being better done by software. Flexport aims to unlock the industry's tribal knowledge and expertise by putting it into databases, making it instantly accessible to customers.
Jason Yannos asks - If you weren't operating Flexport and had to source a new idea to work on, where would you start?
Ryan Petersen, CEO of Flexport, suggests starting with personal pain points and frustrations to generate new business ideas. He emphasizes the importance of finding problems that many people can relate to and solving them. Petersen also highlights the significance of talking to customers and potential customers to identify their needs. He shares his experience with using landing pages and Google AdWords to attract customers for his business, Flexport.
Derisking product ideas
Derisking product ideas is crucial in the venture capital industry. The speaker highlights the need for validation from others and warns against believing one's own hype. He shares his experience of receiving positive feedback for his phone booth idea, which led him to pursue the business. The speaker advises entrepreneurs to start businesses that don't rely on investor money and emphasizes the importance of making money independently. Seeking validation and building credibility are key, as investors prefer entrepreneurs who can succeed with or without their funding.
Biggest lessons learned at Flexport
The biggest lesson learned at Flexport is the compounding effect of success.
- Saving small amounts of money and letting it compound is crucial.
- Agile development methodologies and customer development are significant.
- Flexport's success was built on a decade of small wins and successes.
- Investment from Google Ventures and Y Combinator were significant milestones.
- De-risking ventures and ensuring all stakeholders benefit is important.