Leaders in Supply Chain and Logistics with Radu Palamariu Podcast Artwork Image
Leaders in Supply Chain and Logistics with Radu Palamariu
#22: Sanne Manders COO of Flexport
August 14, 2018 Radu Palamariu
This is episode #22 and I am happy to have with us today Sanne Manders, COO of Flexport. A couple of words on Flexport, which is one of the fastest growing 3PL in the world. In just five years Flexport has distinguished itself as the leading software-powered freight forwarder, helping more than 15,000 companies deliver their goods to customers worldwide. Sanne joined Flexport in 2014, soon after the company’s start. As COO, he is responsible for operations, procurement, and carrier relations across all modes of transportation. Before Flexport, he was at Boston Consulting Group, the global management consulting firm, leading customer relations in logistics and supply chain practice, working across worldwide assignments. He also sits on the advisory board of PortXL, which is the accelerator of the Port of Rotterdam. How did Flexport achieve a 15k client portfolio in 4 years? How did Flexport raise a total of 300 mil USD in venture capital? How do plan to reach the scale of traditional players in the industry? How do you use NPS (net promoter score) as a KPI for growing the business? How much does it help an entrepreneur to have a background in consulting?

Episode Transcript

Speaker 1:0:00Hello and welcome to the leaders in supply chain podcast. I am your host, Dr Palomar, you global supply chain practice for Morgan Phillips Executive Search. Today I'm delighted to have with a Salamander's CEO of Flexport, uh, just a couple of wins on textbook, which is one of the fastest growing three pl in the world. And in just five years they have distinguished themselves as the leading software power, frightful, helping more than 15,000 companies deliver the goods to customers worldwide. Signed, joined flexport in 2014 very soon after the company started. And as the chief operating officer, he's responsible for operations, procurement, data carrier relations across all modes of transportation before flexpod, bcg, the global management consulting firm, leading customer relations in logistics and supply chain practice across the world. While the timeless, he also sits on the advisory board, the Port Excel, which is the accelerator of the port of Rotterdam. Sinai. It's a pleasure to have you with us today and thank you for joining us.

Speaker 2:0:56Well, thank you very much. So, very pleased to be here.

Speaker 1:0:59Super. Maybe, maybe let's start by talking a little bit about, um, about, uh, flexport giving some context to our audience and maybe if you can share with us what is currently the main pain point that flexport is solving and how do you feel in disrupting the freight and logistics industry?

Speaker 2:1:16Yeah. So, so flexport ace as a freight forwarder and customs brokers and freight forwarding and customs brokerage, does it, managing the complexity of global supply chains. Um, and you know, if you're looking into supply chains, there are a lot of, a lot of problems. Um, first of all, it's an industry which is still a lagging in technology adoption. Um, you know, I always make the joke it's still pre netscape and as a result, personal march, structured data and the industry and if you're lacking structure data, um, both the customer experience, which means visibility, transparency, can I just have a rooms I'm viewed on my supply chain, that's a, that's missing, but it's also what's also missing is the, uh, a higher degree of automation, which basically reduces your cost to serve. It reduces human error. Uh, it just speeds up everything. So we're working basically on two things.

Speaker 2:2:11One is our customer experience, so that's all about visibility is analytics and we're talking about coastal or reducing the cost for shipping doesn't mean doing close to the coast, the containerized transport, it is too close to the coordination. If you're looking at freight forwarders, they charge roughly 20, 25, you know, the, the, the leading players in the world, even 35 percent margin to scheduled out at that transaction that's coordinate that transaction and a lot of that money goes into the inefficiency to make sure that the human to human, let's say a relay race, it keeps on running am by bringing data you can actually replace that human to human relay race where the machine to machine reducing human error and also reducing costs.

Speaker 3:3:02Yes. Basically I think that brought us to the next question and you gave a bit of context. People based, a lot of coordination between the coordination between different humans have a lot of mistakes and I think that visibility that a lot of companies, uh, appreciate. Um, but maybe we can talk a little bit about digitalization, digitalization, because it will take the traditional.

Speaker 2:4:01It's a very hard question to answer, but let's take it. Let's stick for a minute to step back. This is, this is a very hard industry. Typically if you're moving a product from a factory, let's say in China to a customer in the US that between seven and 15 and then I'm not only talking about asset owners muscle, talking about customs brokers, talking about the insurance company, purchase order management, etc. Etc. Right? So it's a complEx network overload, different stakeholders, those stakeholders, all these different systems, they use different standards. So it's very hard to say like, oh yeah, let's just create a blast for a then align stakeholders, those stakeholders works for 200 years in a specific way. So by coming in and say like, we're going to do everything different vested interests aren't open to change. Um, so it's a haRd industry and it's a hard industry to change.

Speaker 2:4:59So also to give, you know, older players that are out there and existing already for 50 to 200 years, a lot of credibility. They managed oldest complexity in a world where there was no internet, right? So they have very strong processes, they have global cooperation models, et cetera, et cetera. But that comes out. That comes at a cost, right? If you're looking at the top players in the world today, employee, 50,000 people, well they have two, three percent market share. So if you want to get it gets you a company that has 20 percent market share you have. So I or another 450,000 people, right? Not many. Not many companies have been successful. And honestly speaking, I think there are only two companies in the world of employee that many people. And I'm not sure whether that's successful because one of them.

Speaker 2:5:45So you have to look at, you know, how do I grow from an industry which is so fragmented but has inherently so much scale to an industry which is much more efficient. I can be an essay, 10 x the size or a company that can be 10 exercise with the same amount of people and then to raise, to consolidate as industry historically is this makes the problem only worse because all those companies that get together even have, you know, it's different system requirements, different processes. It takes them ages to align those things. I know of all of the freight forwarders, they started implementing sap in 2008 and somebody told me that they might be already with their first version in 2018. We were founded in 2014. Right? so the other students saying, uh, and that's the reason is that because they have so many different systems, so many different operating companies that work differently, it's very hard to standardize even within that company. So the other approach is that technology approach and basically starting greenfields and say like, okay, um, what is it, what it should look like, um, and, and, and, and build from there. And of course we believe in that technology approach where, where historically the industry has believed in him in a consolidation approach.

Speaker 3:7:04To your point, you've seen a lot of that, right? So I mean, we've seen bigger big acquisitions. We've seen the tnt fedex on the express side, we've seen a dse acquiring uti and there's been a lot of other companies in the us. So I think there's been a lot of the consolidation model as an example, very successful model. Um, and I guess the way the industry is not the way that you plan to do things, but I'm just wondering, let's say network perspective also, this guy's a deeply a network business is a network business. It's a relationship to, in terms of your providers business and this incumbents have solid, big networks to reach that scale because that takes time. I don't know if technology can help, but obviously there's still a time, a time to build the capabilities.

Speaker 2:8:14Yeah, exactly. And this is, and this is of course the race that we're running and it comes back again, it comes back to your previous question. You know, when are these guys catching up? Um, well, they have a lot of advantage. They have a, they have a headway on the us in terms of network and in terms of uh, having built a mature company that has all the hr processes and stuff like that, right? They've been around for 100 years, you know, we've been around for four years, so they had a lot of ways in terms of network experience. Um, they also have a lot of hats and wins and that is trying to change your legacy systems into, into, into, into modern technology. And this is the race were running network and experienced. They asked technology and you know, both have to work really hard and there will be a winner take all markets.

Speaker 2:9:07But I do think iS currently there, the end game might be the out of those 50. Yes, there will be definitely a couple of them that already established players that's half reinvented themselves, you know, so more doing a really good job there. Um, so, and we see them as good competition and we have to get your whole network. So then getting back to networks say debt disadvantage, there were a couple of things. Number one, you can move pretty fast. Um, so, you know, we are a very adaptive company. We move very, very fast. So we're now 10 or 11 offices, which we opened in, in, in, in four years. Same for the warehousing footprints. We're moving very, very fast. Number two, um, you don't always have to use a fully owned model, right? You can also partner with companies, um, in a way that's, you know, day owned, the ss, um, but we define the prOcesses.

Speaker 2:10:12So that's, for instance, what we do on the trucking side. I'm on the trucking side, we don't own any assets, but what we do own is the software that the ssr working through that's working companies that we work together with, we bring a lot of value to them and in return they install our sulfur so all of a sudden we have actually a lot of advantage in terms of cost to serve and they have a lot of the advantage because we bring them more business, but we give them more visibility on what's coming. For instance, you know, our trucking companies in la, no so many days out, um, how many containers are coming down. We don't look demond day before so you can actually create ways to collaborate with other parties, um, that are so beneficial that you can grow your network a quicker.

Speaker 3:10:59And I went to a couple of years ahead, 10 years ahead of organization trying to just name the top three, right? Some of them are all of them to do that. And I think ryan, 25, there's only $25, billion in revenue. So the top three or five we managed to get to that digital adoption. Do you see flex for still having a unique selling

Speaker 2:11:54proposition? It is a very good question. And, and, and it comes back, you know, what is competitive advantage and this is where competitive advantage you segments, let's say minimum bar and then everyone competes. And I honestly think that the interesting part of the future of this industry starts after digitization because you can only do advanced functionality if you've digitized, right? People talk about ai, people talk about blockchain, honestly speaking, all these things are not relevant if you don't have digital data. so we're now going through this faisal digitizing data, making sure that, you know, the human to human relay race or is, is, is, is, is structured digital data. So it's a real digital transformation, uh, which now helps for the customer experience over time will help but it, you know, but those things are things where others can get shop as well. But you know, if you have to have digital infrastructure, you can also start talking about optimization.

Speaker 2:13:01A ultimize issue currently in freight forwarding is ronald spreadsheets or it's run by germans or people that don't have many models running in the background running on big data. well then all of a sudden you open a whole pandora box optimization, right? Great example. That is why do people use so much full container loads? Well, it's because they don't trust the last thing comes in or lowe's, unless less than container load is actually a better products because you can reduce working capital. You get much more equal flowing your supply chain. Oh, if you have much better processes, if you have better visibility, if customers are under control because you know much better and what's going on, lcl, uh, all of a sudden becomes an attractive product to reduce working capital. Well, desecrate supply chain as well. So that's the next phase is optimization. And then there is a phase which is called loads of violence.

Speaker 2:13:52We're actually using so far is making most of the decisions as long as it's within the guard rails. So that actually means that's a lot of people all over logistics teams sitting at our customers will have a job which is not keeping the ship and flows, but thinking about the future, they can stink about how can I actually run my supply chain next year and in five years instead of instead of firefighting for the whole day and regal siding spreadsheets. So the interesting part is yet still to come and that will define competitive advantage in the future. A competitive advantage right now is a better user experience and a lower cost. And I, I want to ask you, this has been handling the bulk to the ceo in the shipping industry. Um, and I think they have, similar to remind was saying that trying to build this

Speaker 3:14:52software platform, kind of a wonderful software. Why didn't you chose the other the other way around, right? The other author where you become a software company.

Speaker 2:15:21Yeah. This is a very, very fundamental choice we made in the early days for ads, ads as haven mate. But I can speak for choice that we make. So if you're looking at the freight forwarding industry, um, do, do a root cause, the root of the problems, is that his favorite based industry? Yeah, and if you, if paper, then always the next party and the chain will have to read the message interpreters and then craft a message for the next part and remains that you moved to human relay race. Okay. When we were looking at it, you know, this leads to a poor user experience, um, you know, supply change remaining in the dark and it leads to a high. So we were like, you know, if you put a layer on top of the industry, which basically says, you know, now we're creating software where freight forwarders can work together your goals over the industry and that's the lack of structure data. So we said, you know, we have to take the hard approach and pull gray and schools that the approach we have to take the hard approach to this business doing the arg look to really create something which is outstanding on the user experience ankle.

Speaker 2:16:40We're very happy that we took that choice. Although it's a harder way to grow in the harder way to scale because if we're measuring our customer satisfaction, which we do, an nps, uh, we have 100 point lead over the industry and I am sure if you only approach, we would never have gotten there because you'd get the little bit of the problem of garbage in, garbage out the data if you're so far only. And we are actually, if the data is no, there are teams created a and therefore you get actually high cool ta. And then as a result, high quality house. So this was a very, very fundamental choice in the early days. Um, and you know, he's, the future going to be like this. I don't know, um, because it might be that at some point in time data is very, very good owners and old barns and shame deliver excellent data might not meet as a managed service approach anymore. Um, that said, and this is also one of the things that you mentioned before, this is a relationship business. So yoU also want to have a human interfaces.

Speaker 2:17:47Facebook also didn't replace the human interface. It actually enhanced human relation, it's actually enhanced or human relation and that's also what we are doing. Our technology should enhance the human relationships. So that's, you know, our account managers are focused on making your company better instead of running transactions. Um, and, and, and, and that's the way how we look at it. I'm, and that kind of leads into the, that the biggest challenge is attracting new clients and new clients make a decision to switch freight-forwarder, um, uh, typically already happy with their current because they've been asking the same questions for many, many years. I will have visibility and preferably on an sku level, right? Real time analytics, I will tie he integrations, et cetera, et cetera. I will suffer. So mostly that's what we, that's what we deliver, you know, we might not be answering all their questions for, we're answering a lot of questions that are a current provider offering.

Speaker 2:19:25So we have a lead there. We have a lead in what I say to the customer experience. Um, that said, you know, you're asking me what is our biggest challenge? Well, we are growing every year. We grew two and a half, three x in the last few years. This year we're expecting to grow two x. Well, our company is 40 years old, so it actually means that I have to grow a new customers what I grew in the three years before the numbers are just becoming dome. Um, I just have to acquire a lot more new customers, which means having, you know, the salesforce in place, having the marketing in place, having two seats on the streets, having to lead, lead a lined up for me. So it's just a numbers game which makes it, makes it harder and harder. And this just what every big company has, you know, it becomes harder to grow the same percentage as the year before we actually create a new new flexport every year.

Speaker 2:20:19Uh, and that's the hardest state if I'm looking at, you know, why you do customers sometimes say no to us. Um, and that's typically when we're competing for bigger for bigger businesses. and that's then against the incumbents. So of bigger folders in the world. Sometimes they don't dare. Yes, we are the new kids, a liberal and, and it's, it goes back to a little bit until the old wisdom, you've never be fired for hiring ibm. Um, and, and, you know, we're fighting against that and you know, we have to establish our burns and those every one dare to make a decision to work with us and that will become less and less of a problem. You've got to earn the trust and bigger and bigger companies are trusting us. Um, uh, but you know, most everybody will be, some people will see it as a leap of faith and you have to give them more time

Speaker 4:21:18in one of the big promises and contracts and have enough capabilities to negotiating rates with carriers.

Speaker 2:22:02Pretends to be a global offering every country on the planet. But the reality is that I say no to quite a bit of business because I know that I might not be the best partner to, um, I know what I'm very good at. I'm very good at the transpacific. I'm very good at the transatlantic and um, I'm pretty good at, at asia to europe. I also know where my competitive, uh, how, how I procure and how competitive I am. Um, if I look at the transpacific, for instance, we know that we are to number 18 right now or containerized transpacific, well, we were number 10,004 years ago. So, and you know, around number 18, the procurement skills procurement's a curve, starts flattening out. We might be there as the procurement power of the number one, but are not very far off, right? We can offset that by accepting lower margins on the air side. I also that I'm also ballpark in the same, in the same league. Um, and of course our investments in our own capacity in the last year we signed a longterm lease on the seven four slash seven. I'm on. La has helped a lot insecure in that capacity and, and becoming a bigger player,

Speaker 4:23:22more specific, a more specific questions related to asia pacific in particular with a lot of different countries. And how can you, how are you able to assure logistics companies in terms of the complexity of all disgusting regulatory compliance issues?

Speaker 2:23:44Yeah. Yeah. So, so, so, so it's very clear if we don't know if there are jurisdictions where we're most familiar with, it's easier not to accept a business then to go into the unknown, right? So saying there's so much good business out there that is a relatively easy to say no to business where you're unsure or where you think it smells right. So that's a very clear role. You know, we're under american jurisdiction, um, and the american jurisdiction in how to operate a abroad is very strict in terms of fcpa but also fmc. So, so, so we're taking that very seriously. I think the way we've approached it, and it's actually very funny if you, if you look at the history of flexible, we've hired our compliance people probably before anyone else. Um, so our current, we are higher. Number two was a compliance person, um, our current, our current compliance team and that means our general counsel and our deputy general counsel are both paypal.

Speaker 2:24:50Paypal's, that's where they know how to walk in multiple jurisdictions around the world and we've empowered them. It's very specific capabilities. So I oughta capabilities have some seek capabilities, moc for China capabilities. So we've covered all the modes of transportation but very specific knowhow and then have a world class team that came from bay bell that is running basically our global compliance function, dental, customs, compliance. We have another, um, I'm a world class team, uh, that has cumulative lift a formally a 100 years of experience or something like this, uh, into leadership alone and talking about the, talking about the latest around the funding from sf express courier company in China for the next couple of months. yeah. So There was for the next couple of months I, I hopefully do a little bit longer with them.

Speaker 2:25:55It's, it's a little bit longer than a couple of months. Um, so it's not that the deacons, the money that came from us, if express is specifically to the partnership with fsa, sf express rights, we see sf express just like a dsd or a founder's phones as well to all of our investors in the company. The advantage with sf express is that they have also other ways to work with them. They're in those financial backer, but they're also a strategic partner and we deployed our capital just as if they are financial backer, but we're also doing things together. Um, so I mentioned already are freighter a day or one of our anchor clients on our frazer rice. There are many more plants who works with them around physical infrastructure because they're the biggest, biggest, multiple, probably the biggest logistics player in asia. So they have a lot of physical infrastructure that we can leverage where you can leverage their capabilities in general, will do.

Speaker 2:27:04Most of it goes into take a technology developments, right? And we don't, um, we don't believe that, you know, people think that we subsidized rates, we've never done this or money goes into technology development ngos in building our infrastructure. So building a warehousing for brands, making an investment in a freighter, you know the phrase in the first two, moses, I'm going to break even because you have to build up that capability. Things go wrong. You have to build up the volume. I'm strategic investments with a relatively short payback periods on the infrastructure side and then a lot of longterm investments on our technology side.

Speaker 4:27:47I'm just thinking a little bit from the journey, from a flexible, as you mentioned, crazy numbers really from 10,000 to trade lanes.

Speaker 2:28:04if you were to reflect a little bit

Speaker 4:28:09thinking of embarking on the, on the

Speaker 2:28:12have their own startups, what are some of the key takeaways for you? What are some of the key lessons that you've learnt in this? For years? Yeah, I wasn't. The most important lesson is relentless focus on the customer. Nice. You can invent a swiss army knife, but if nobody buys it, nobody buys it. Right? So it's better to focus on the customer and have something very specific for a smaller customer sites and work from there like a swiss army knife, but I work from there. I'm listening to your customers. For instance, feedback loops, measuring customer success, um, that, that desk, that's less than you got to sell before you have. You earned the right to invest. Right? And of course it goes a little bit hand in hand, but don't think you get, let's say, I think in total right now, there's $300,000,000. Don't think you get $300,000,000.

Speaker 2:29:11Um, of course you have a great plan, right? You have to show that the customer really wants to buy you. So it's a relentless focus on the customer. That's number one. Of course, building a team that's also your primary interest in his industry, building the right teams, bringing a diverse, um, set of capabilities together of builders and the burners, but also all of industry expertise. I already mentioned compliance. Um, but it's also, if you're looking at the heads of our modes of transportation, you know, our head of the former chief operating officer of delta airlines, scarborough, his name is neil jones shop. My head of ocean freight is the head of the former head of karuna normal pricing departments for the trans pacific ocean freight, nereus fullscope. So bringing the right capabilities on board, um, and, and also putting that in a mixed, that they're all challenging in shorter bites.

Speaker 2:30:09You don't want to rebuild the industry to have industry expertise and then at the same time technologists and other people that challenged the status quo and bring that all together into a mix that wants to create the future. Uh, so that's, I would say that's lesson number two. Lesson number three is, is also just luck and timing. We knew that's at the moment we got into the market. When you look at the ocean, a capacity tpb soda transpacific eastbound, then also supply surplus. So prices were low. Um, everyone I was treated equal. The big players didn't have that much pricing power. Um, I'm, I'm, I'm in favor currently that's shifting to a more balanced market is which the sulfur regulation coming in in 20, 20. We think actually it will be much more, um, um, um, uh, markets where there's more demand than supply. Well, you know, we knew that this periods that we were working in those four or five years.

Speaker 2:31:16So you have to establish yourself in those four or five years as, as a big player because when the market turns and it becomes a, a supply constrained market, then all of a sudden the big players do have a much more bargaining power than the smaller ones. So we had this grace periods and we used it to grow up to the top 20 and we think actually we will be growing copa. So close to a number 10, um, within let's say the next six to nine on that lane, that lane commandment, any global the biggest. Yeah. Yeah, we are. I think we are now roughly a in the top 50 global if you're looking at revenues and we still have a little work to do also number one,

Speaker 4:32:16this is a recurring theme or getting the right people on board and they find it a bit deeper because you did mention things like wanting to reinvent the industry and work together and create something better for myself on a certain attributes or characteristics that you tend to specifically.

Speaker 2:33:04Yeah. And, and, and those attributes are also changing over time. Um, you know, we're in the early days, we wanted to have problem solving skills, people, puzzle and, and, and the extra mile to where now you also wants to have leadership and managerial skills. Look, right now what I'm looking for a high on my list, you have to risk that you're challenging the status quo industry experience depending on the role, but I would say let's say in 50 percent of all rules that we hire full. You need to industry experience, but the other 50 percent probably need a functional expert expertise. So for instance, by handle pricing given gone from the, um, from, from, from, from the industry, but she came from a pricing backgrounds in there and she dealt with very similar problems in a very different industry show. She brings a lot of capabilities there. Um, collaboration.

Speaker 2:34:08Um, the company is by now a close to 800 people so you know, how to manage people and how to set them up for collaboration. Very important. Um, important characteristic. And I would say the last one, it's an adaptive mindset. Embracing change, what you see from people that's come from a bigger established companies is that they think in fixed veterans, um, you know, that's when they're heading boardman's right now. They should have that department forever or had a bigger departments. Well, we're changing the organization structure of the company every year, almost by design, just because we want people to have that adaptive mindsets. The world is changing very quickly. React to change very quickly as well. And so don't get stuck into your pets. Don't try to defend your empire, you know, try to constructively basically destroy everything every year and build it up from scratch. Um, because I don't, you know, if I look at him, you know, at bcg probably I've seen 400 companies in my life, uh, and, and you know, the difference between good companies, bad companies and great companies is not the problem. Say have they all have the same problem. So it's the willingness to address them and the willingness to address them is to embrace the change.

Speaker 4:35:26That's an excellent point. And again, we're dealing with all sorts of companies, adaptation mode, unless you had that flexibility, versatility and desire, we need to change. You don't have the more established they are, they want to protect those jingles and then there's just doesn't work. So interesting. Do you have that day if you have it almost as a culture in flexible of a distraction than rebuilding every year. And then it kind of forces people to get into the, um, into that mindset. And I'm defined to use an analogy because I'd been personally for 10 years in Singapore and when I came in Singapore, I was shocked that the movie had been to Singapore and asia in general. It's shocking rhythm of development from, from europe. But now after, after having lived here for 10 years, it seems like natural. And then I go back to you seems so slow, right? So, uh, after a while you kind of, it helps people to get used to the new blood that comes into the new reality so you can have this vehicle and that in itself, this is a unique selling proposition, right? your country's propositioning. It's done, right?

Speaker 2:37:06Yeah. And it's also something that is very hard to keep going. Maybe it can be, you know, we went out four years old in the early days, that's tremendously and I brought a lot to the company and at some point they get stuck in their ways. What do you do? Right? Are you going to say like, hey, you know, the party is over, or are you going to say like, hey, we have to redefine your role, you know, these are issues you have to have all the time because, um, because if you lose your adepts adaptability, you can move fast anymore. And then you know, you have to risk that you become, you know, one of the established players. And you know, as, as jeff basles always says, it's always day one, right? It's never a day two, it's always day one,

Speaker 4:37:59just from what I'm seeing personally. Again. And again, culture is hard to maintain for sure. Cheap. I'm constantly keep yourself on the toes when we're hiring people, not to let them become complacent. Number one, focus. But again, if you managed to do that consistently and they fall into the struggle, so hard to replicate your competitors to replicate this is the hardest thing. That's why it's so important.

Speaker 2:38:49Yeah, for the cornerstone of their two cornerstones, of our culture that are to replicate. It's that fast moving. But that's adaptability. Um, I think that's very hard to replicate, especially in an in government's rights if you ask your engineers to show up, but a suit and tie every day, I'm not sure where you're going to get the best engineers. Um, so, so, so, so, so we, onCe we have to, it's moving fast. That means breaking stuff, you know, you move so fast that you breaking stuff and that's okay because if you didn't break stuff, you didn't try anything. Um, so that's, that's a part of our culture, a very important part of our culture is a nsr value. NumBer one, it's empowered a customer and we've designed our whole organization towards the customer where you see in most of the companies that we're competing with, they have a sales department, they have an, a, uh, an operations department or maybe even an ocean of air operations accustomed.

Speaker 2:39:53So Trucking and what we've said this, you know, we have to the customer, so every customer, a key account management team that has all the functional capabilities in it, it has sales, account management, operations and customs. So in that little team, anyone can serve the customer, anyone can answer the customer's questions as it gets extremely specific, but for 95 percent of all the questions, you get the answer from the person you have on the telephone instead of that you are getting passed on 15 times, etc. Etc. So seeing that organization, 90 degrees towards the customer is very hard for others to replicate because they have been set in their ways for many, many years. Uh, they want to keep it running. Or functionally, you know, all these functional silos have their own kpis that don't necessarily align. No sales wants to sell as much. Responsible operations is cheapest, full civil, we have said no, they're all a cross functional teams reporting basically to the customer and having multiple in minds and that's net promoter score, customer satisfaction, and that aligns the incentives, um, and aligns the incentives to where's the customer? And that's our second cornerstone of culture

Speaker 4:41:08promoter score. It's actually something that the. Tell us a little bit.

Speaker 2:41:32Yep. There is no perfect. I'm a customer satisfaction index or score, right? So you have to use multiple surveys, etc. But no customer wants to feel a pulse check that we understands. What does the customer think at any moment in time. So net promoter score is a great way to do that. Net promoter score does is actually an ask one question, how likely would you recommend to somebody else? And you get scored it a zero to a 10, which means that a nine and a 10 is a promoter as zero to six is a detractor. They don't like it, they don't recommend you. And a seven and an age is what they call a passive. Um, so if you summarize the nines in a tense and you detract from the zero students, six and divided by the total, you get what they called a net promoter score.

Speaker 2:42:25This is a score which goes between minus 100 and plus a hundred and the standard of excellence that's 50. So everything above 50 is considered excellent. We've set our internal goal at the standard of excellence. We need to be 50 plus. And the reality is that we're roughly, you know, depends a little bit too on the weekend. We're measuring it all the time, but it's always high fifties, mid sixties. Somewhere there in between is our net promoter score. We measure it by key stakeholders, you know, whether you are somebody who's working in the warehouse, whether you are paying our bills or whether you're a primary stakeholder or a cfo, we're measuring that old. The reality is all about 50 and, and, and, and, and that's very goes. So then how do you get the data for the rest of the industry? That's a little bit harder, right?

Speaker 2:43:12I know there's one other Florida that's actually internally measures net promoter score. We have a few people working from there with us so we know what their net promoter scores and there is some, there are some data out there from neutral platform stuff measuring that promoter score. They say to the industry as a roughly minus 35 and the best in class people aren't happy. Typically we even had a tagline, sn was for online marketing, which was, yes, you can love your phrase Florida because that's so uncommon. Right? And then the best in class players that are around zero. so when we say 50 point lead over to best in class players, uh, hundreds over the average industry, um, pencil. So the reason why we're know why we can double our customer accounts every year because you know, the vitality of death, people just tell each other, right? They start with curriculum. They are, I've never come across it. So the other, the other industry companies

Speaker 3:44:33way to go as a consultant in the shipping and logistics industry. Then I ended up with was the, was the history behind.

Speaker 2:45:00Yeah. The story is actually very simple. Um, so ryan and I went to school together. we went to columbia business school back in 2008. Uh, so that's how we got to know each other and we became friends there and we even started a business together. Then we're supposed to have a totally unrelated space, but we got to know each other really well. And what we did know is that we have a very complimentary skill sets and as a result we empower each other and we never step on each other's toes because ryan is at, at, at, at, at all our things that I am. And I could never be. Ryan and ryan could never be So mad when ryan was really at the early days of flex boards. Um, and he was in the startup accelerator. We were chatting about it. I told him, you know, hey, I actually do have a lot of experience about this because I never talked about bcg because it's always confidential.

Speaker 2:46:03You can talk about your customers, but I know a lot about his industry. So can I help you a little bit? Because I think this is, you know, I've been looking at this industry and this needs a massive, massive transformation, digital transformation, so I know actually probably certain extends what to do here. So I started helping him out on the sides and at some point could leave of absence, um, and that leave of absence into a, uh, because I, I actually flew out to san francisco and the deal was, you know, I'll help you with flexport, um, but you have to show me san francisco or silicon valley to get inspired and we work on the business. And then at some point he told me it would be crazy to let you go. We have to do this together. Um, and um, you know, he didn't have to convince me at that moment in time anymore.

Speaker 2:47:00I was like, I have to put my money where my mouth is and get out of the advisory role and do it myself. A lot of people thought that that was crazy because I was very close to the partner or the partner position at bcg. Um, but it's uh, you know, I was like, you know, this, this is too much, you know, proving yourself, what's your preaching you have to do and it's probably the harder way to do it by bus, but it's all sort of fun way to do it and that's still how I think about it. So much more fun way to do it.

Speaker 3:47:38Tell us because I, like, I, like I, like I've had on the board board members and senior executives from established companies like yourselves come a long way in a very short span and the pattern of people coming from a consulting background, did that play a part in your success and to something else maybe?

Speaker 2:48:08Oh, absolutely. And you know, if I will do everything all again, I, I will do the consulting track again. I'm, I'm, I'm conSulting a tissue, uh, number one, um, you see a lot of dIfferent companies and you see where companies, why people are companies are successful and wider arnold successful. that's number one. Number two, I work specifically in supply chain and logistics. So I also got a lot of domain expertise out of it. Not like doing it, but by observing it and it's all levels of the company, right? I reorganized a distribution centers, but I also spent time in boardrooms and even connected those two rights because sometimes the problem is actually a problem old on the workforce and you have to connect those things. The third thing is it's just a career accelerator. You see so much of the training is so good going every three months or every six months for a total new experience that is just setting you up for, for accumulating a lot of experience in a very short period of time.

Speaker 2:49:22Well, my short period of time became 12 years. um, but I enjoyed every, every, every year over those 12 years. And I learned that every year a home there. So I think, you know, it makes you very well rounded, which is different. Is operating a business, operating a business in terms of let's say being a people leader at bcg. They also gave me a little bit exposure to decile. Of course you're managing your own teams, but I also had other roles and career, a career, a career developments, which, which is more people management, but it is very different to operate a real business and the consulting business in that sense. I go to the soft landing because when we started we were just a few people which just looks very much like a consulting team. Um, and, and, and by now, and it was the intellectual challenge of a consulting team. How are we going to actually do this? We got this bag of moNey and give a great idea, you know, how are we going to actually do it? Um, and, and, and, and, and learn over time, uh, yeah, now we're 800 people, but I also brought the luxury that I can actually hire a experience, does help me managing business. ANd in the last four years I also learned a toll.

Speaker 3:50:36Final question. If you have an advice to somebody that wants to, maybe they have an exciting career in some ways to join a startup will start becoming an entrepreneur, becoming an entrepreneur. Advice to somebody I've been wanting to join a startup or wanting to set up something on their own. What would that be?

Speaker 2:51:09Starting on your own. Keep in mind, it's not sexy. It's, it's very, very hard work and a lot of existential questions in the beginning. At some point that becomes a real existential questions, uh, disappeared, but it's a hard journey as much harder than joining a company. I have to say that you have to be on top of your game and it's a high performance culture. We should Absolutely, but starting your own business. It's asking a little bit more from you than that even. So it's not glamorous. It's just hard work and persistence. I'm joining. It depends on the stage of the company. It's if you are join an early stage company. Uh, the interesting thing is that you can do, you know, your role is very wide and undefined and you can learn where are you going to add value and grow into different roles. Um, if you joined a little bit later stage, then it's more stable.

Speaker 2:52:15They're more managers in place that's going to teach you things. You get a more dedicated role, so, but still you have the advantage of a startup that you can rotate quickly. it's fast moving, so you're learnIng, you're learning much more than it does establish where you are by definition or by, you know, people, people, operations practices have to stay so many years in a job before you can actually think about a next day. Um, it's a super interesting ioma, I almost call it an mba, right? To joining a startup is almost an mba because you get exposed to so many different things. Um, so yes, I would highly recommend a lot of people to start to join a startup. They have to think twice because it's also a, you need to think how you're going to win and very often experience in the domain or experience in managing a business in general is necessary to be successful. You always hear the stories of entrepreneurs that just started out of school, but if you're looking at the reality is the more seasoned people in, in general that have successful

Speaker 3:53:24facebook really, people look at it and say, yes, in theory you can. there is a between 30 to 40 years old that have a level of experience and can make it as entrepreneurs because they have some practical experience under their belt. So yeah. Thank you for reinforcing that point.

Speaker 2:54:16Yeah, it's just out of school is that you don't have any commitments right at that moment in time. Don't hAve a house. They typically not married, they don't have kIds. Right. So at that moment in time are very low, so you have more time to experiments where people have already had a couple of jobs. There are opportunity costs of starting a business is, it might also be a self selection, better better plants, otherwise they don't do it. So they started with better. They have more experience. So if things go south or go north to actually manage that, manage that. So that trajectory

Speaker 1:54:59and a pleasure. Thank you so much for being with us, sharing with us and, and, and uh, and um, basically imparting some of the, the trenches story that you've had of flexport issue. A lot of, a lot of continued growth, continued growth and development than we will be, um, will be watching the flexible. Then it's growth further and the, and the. Hopefully we'll get you something.

Speaker 5:55:21Yeah. Thank you very much for inviting me. Thank you for listening to a podcast. If you liked what you heard, be sure to follow us on [inaudible] dot com slash podcast. For all the show notes, links, and extra tips covered in the interview, make sure also to subscribe to our email list to get the news in the nick of time. If you're listening through a streaming platform like itunes or stitcher and you like what we do, please kindly review and give us five stars so we can keep the energy flowing and get more people to find out about our podcast. I'm moSt active on linkedin, so do feel free to follow me to stay tuned for all latest articles as well as future guests for the podcast. And if you have any suggestions or any other idea, please feel free to write to me. I respond to all and also please make sure not to miss our next episode where we will be having a few other c level and top leaders in supply chain joining us. Stay tuned.

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