The Freight Pod
The Freight Pod is a deep dive into the journeys of the transportation and logistics industry’s brightest minds and innovators. The show is hosted by Andrew Silver, former founder and CEO of MoLo Solutions, one of the fastest-growing freight brokerages in the industry. His guests will be CEOs, founders, executives, and leaders from some of the most successful freight brokerages, trucking companies, manufacturers, and technology companies that support this great industry. Andrew will interview his guests with a focus on their life and how they got to where they are today, unlocking the key ingredients that helped them develop into the leaders they are now. He will also bring to light the fascinating stories that helped mold and shape his experiences.
The Freight Pod
Ep. #44: Ryan Petersen, Founder & CEO of Flexport
In this captivating episode, Andrew sits down with Ryan Petersen, CEO of Flexport, for an insightful and candid conversation about leadership, personal growth, and business. Ryan shares his journey of self-discovery, discussing how he reevaluated his values after a challenging period in China and the profound impact of mentors like Tony Robbins on his life and leadership style.
The discussion delves into Flexport's operational processes challenges, including the impact of COVID-19 on their Net Promoter Score and the subsequent reorganization to improve quality and customer satisfaction. Ryan emphasizes the importance of customer obsession, highlighting Flexport's use of AI to analyze both employee and customer feedback to drive improvements. He also discusses the company's unique position in the industry, leveraging custom-built software and a worldwide network to provide innovative solutions in logistics.
Throughout the interview, Ryan offers valuable insights on balancing technology and traditional forwarding practices, the importance of attracting top talent, and the potential for AI to revolutionize the logistics industry. He shares personal reflections on leadership, and specific changes he has made to have a positive impact on his health and decision-making. The conversation concludes with a discussion of Flexport's recent acquisition of Convoy and its plans to integrate this technology to expand into new markets and improve efficiency in domestic trucking operations.
***Episode brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services.***
Follow The Freight Pod and host Andrew Silver on LinkedIn.
*** This episode is brought to you by Rapido Solutions Group. I had the pleasure of working with Danny Frisco and Roberto Icaza at Coyote, as well as being a client of theirs more recently at MoLo. Their team does a great job supplying nearshore talent to brokers, carriers, and technology providers to handle any role necessary, be it customer or carrier support, back office, or tech services. Visit gorapido.com to learn more. ***
A special thanks to our additional sponsors:
- Cargado – Cargado is the first platform that connects logistics companies and trucking companies that move freight into and out of Mexico. Visit cargado.com to learn more.
- Greenscreens.ai – Greenscreens.ai is the AI-powered pricing and market intelligence tool transforming how freight brokers price freight. Visit greenscreens.ai/freightpod today!
- Metafora – Metafora is a technology consulting firm that has delivered value for over a decade to brokers, shippers, carriers, private equity firms, and freight tech companies. Check them out at metafora.net. ***
Hey listeners, before we get started today, I want to give a quick shout out and word to our sponsor, our very first sponsor, rapido Solutions Group, danny Frisco and Roberto Acasa, two longtime friends of mine, guys I've known for 10 plus years, the CEO and COO respectively, and co-founders of Rapido Solutions Group. These guys know what they're doing. I'm excited to be partnering with them to give you a little glimpse into their business. Rapido connects logistics and supply chain organizations in North America with the best near-shore talent to scale efficiently, operate on par with US-based teams and deliver superior customer service. These guys work with businesses from all sides of the industry 3PLs, carriers, logistics, software companies, whatever it may be. They'll build out a team and support whatever roles you need, whether it's customer or carrier, sales support, back office or tech services. These guys know logistics. They know people. It's what sets them apart in this industry. They're driven by an inside knowledge of how to recruit, hire and train within the industry and a passion to build better solutions for success. In the current marketing conditions, where everyone is trying to be more efficient, do more with less near shoring is the latest and greatest tactic that companies are deploying to do so, and Rapido is a tremendous solution for you. So check them out at gorapidocom and thank you again for being a sponsor to our show, a great partner. We look forward to working with you To our listeners.
Speaker 1:That's it. Let's get the show on the road. All right, welcome back to another episode of the Freight Pod. I'm your host, andrew Silver. I am joined today by Mr Ryan Peterson, ceo of Flexport. Ryan, welcome to the show. How are you doing?
Speaker 2:Hey, it's great to be here. Thanks for inviting me.
Speaker 1:I'm doing great. So I'm going to be honest with you. This is the most nervous I've been coming into any of my podcast episodes and I'll get over it quickly, I think. But I don't typically do much research going into these. I've had plenty of great guests and I generally just like to have a nice conversation, but I have a character trait I don't know you can call it. There's a flaw at some points and I'm grateful for it. At others, I am hyper competitive and I'm also a hyper achiever. So it's very hard for me to look at something and not think of it in the context of a winner and a loser, and I certainly am not thinking of it with respect to you and I, but more so.
Speaker 1:You've been on a lot of podcasts. I mean you most recently were on my first million, which I actually listened. I had some back issues yesterday, so I got a massage and as I walked in, the lady was like you know, there's some spa music playing and I was like, would you mind if I put this on instead? As she's, it's just you on this podcast. I have a weird mental image. Yeah, a little bit, um, but in any case it's it's. The challenge is I. I look at this and I'm like, okay, I have to, I have to have a better conversation with him than all these other people have had yeah, so, as weird as that sounds, you know, it's like, as you were talking about, like someone who's like obsessive over, you know, finding love.
Speaker 1:It's like I'm like I'm going to have the best conversation with him.
Speaker 2:That's not creepy at all.
Speaker 1:Yeah, it's not creepy at all. Um, so I it's just like that hyper competitive nature and then it's like, okay, if I don't do this, well, I'm a, I'm a complete screw up, or it's the imposter syndrome of like, do I even deserve to be having the conversation? So, in any case, I enjoyed doing the research. I'm an ADHD guy, so it's always last minute and procrastinated. So I've gone through like six of these podcasts in the last 24 hours.
Speaker 1:My wife is here with me and she actually we were laying in bed last night listening to the Dynamo Ventures, one you did maybe at the beginning of the year, and one of the things she said to me was she's like you two are very similar people and this is kind of weird for me to listen to.
Speaker 1:The thing that actually I think most related to her was from your my First Million podcast talking about the stadium rule, and I don't know what you called it, but I don't know. You know, I think there are a number of reasons my wife fell in love with me, but one of the reasons that I think she thought I was like a smart person was when I first took her to a Bulls game. And as we walk into the area where you go into the United Center and she's like, okay, let's get in line. Walk into the area where you go into the United Center and she's like, okay, let's get in line. I'm like no, no, no, don't get in line here, keep walking. It's like you never get in the first line. You see, it's where everyone goes and they just stand there and if you just walk a little bit further, you'll find a way faster entrance.
Speaker 2:It's crazy. I did it at the Cal, stanford. There was another way I saved. I saved me and my friends 45 minutes.
Speaker 1:They were so impressed it works like a charm. And there's another entrance. I'm curious can you extrapolate that, pull that out and talk more about, like, how that applies? And I've never thought about it in other areas of life until you I heard you say it. First of all, I never heard anyone else talk about it other than the people I've shared it with. Uh, so that was that I was actually getting the massage and I kind of looked up like what the hell? But talk about that for a minute for me, will you?
Speaker 2:Well, just, you know humans are, we're memetic people. We imitate others. That's like it's actually a superpower that we have. Like animals aren't good at imitating one another, so they sort of like have the amount of intelligence and skills that they're born with and they don't add more. Humans are the way that we learn is we find someone else who's doing something, we see what they're doing and we copy it, and that is like allowed us to build civilization, everybody's building on the standing on the shoulders of giants, or like learning from others, but as a major, as a couple of major downsides like.
Speaker 2:One is herd mentality. You sort of just copy people blindly um and and um and. Two, is that, uh, well, imitation if everybody does the same thing, sort of lame. You get like drones, uh, that aren't really thinking for themselves. That that's like bad in and of itself.
Speaker 2:And then I guess the worst part of it is that when we have a competition, for you get a lot of rivalry over scarce resources, like if there's only one of something and everybody wants it, you get mixed and you have fights and violence and sort of a big core of human nature. Where you get a lot of this violence from is the fact that we're memetic, that we copy one another, and there's no avoiding it, I think. Actually, you can hack yourself on certain instances to go to be a contrarian or to, yeah, find a better entrance to the stadium. But, um, on some level you are a memetic, you are an imitator. It's like part of the nature.
Speaker 2:So it's really important, I think, to find good role models and, like, imitate people who, like, consciously choose who are you going to imitate, so you become like them rather than like imitating. Uh, there's another aspect of this like you sort of become very similar to the people that you spend most of your time with. Yep, there, you can consciously sort of choose who you're going to spend your time with and make sure that those are people who uplift you and compel you to do bigger and better things with your life. Um, there's a lot of ways to use this, but it's a, I think, profound knowledge, knowledge that, uh, we are imitative creatures.
Speaker 1:We'll talk, then, about, just for a second, a role model of yours, given that you just walked us down that path.
Speaker 2:Yeah, well, actually I path. Actually I got this line of thinking. I learned about it from Peter Thiel, who took it from Rene Girard. He's the philosopher that developed this memetic theory. It's called. If you're interested in that, there's a great book called Wanting that my friend, luke Burgess wrote actually about this. It's a wonderful book. He takes Rene Girard's books, which are quite dense, and makes it kind of like the Malcolm Gladwell version that you and I could understand.
Speaker 1:That's what I need. You say dense, I get a little scared.
Speaker 2:Fantastic book Wanting. By the way, a role model of mine that I've had for many, many years is Tony Robbins, who also is a teacher, that if you want to learn anything or develop anything you need to pick a role model as like get a good coach, get someone who's done it before, no reason to reinvent the wheel. I was lucky enough to discover a Tony Robbins book when I was 25 and it really kind of changed my trajectory and I went to one of his seminars and walked on fire like 20 years ago. So big Tony Robbins fan.
Speaker 1:So talk about that. What about? You know you're 25 years old and what about Tony Robbins? Kind of struck you or what was the impact that it had on you? That kind of course corrected or set you on the path that you were looking for there for a year, over a year I'm uh.
Speaker 2:I had some like bad incidents with people I thought were my friends and turned out it's kind of like like I went home for a few weeks back to the us andi came back and they'd like thrown all, thrown away all my stuff and like just kind of disrespected me. It was like whatever it's truly it doesn't matter. By the time it was like pretty down on my life. Um, I've been drinking too much alcohol and I was just like at a low point in life and I told my dad about this and my dad actually recommended this book called Awaken the Giant Within by Tony Robbins. So I got it's like Reddit. It's got a lot of exercises. Tony Robbins has a lot of frameworks in there to help you do better in life. Probably the most important Tony Robbins framework is that you can program your brain for what gives you pleasure and what gives you pain. Like fundamentally, that's what our brains do is seek out, avoid pain and seek pleasure. Like your brain is kind of simple, but you do have the ability to consciously kind of rewire what you associate pain and pleasure with and, if you're not doing it, consciously kind of rewire what you associate pain and pleasure with, and if you're not doing it consciously, it's probably just happening to you. You're going about life like doing things that aren't good for you or and we all have some bad habits, but, um, but if you can kind of consciously program that to make sure you're getting what you want, so I did like this big exercise, cause I wasn't getting what I wanted. I was suffering, um, around my values, like what do I care about in this world? What kind of life do I want to live? What do I value? I hadn't I'm not 25 like partying in china, like I. I hadn't really taken the time to do that, but I got that from tony robbins, that super useful exercise for anybody. Every company needs this and companies do it. Um, these days, good companies take the time to set that up, but, uh, but a lot of people don't bother for themselves.
Speaker 2:That is even more important, um, and I realized that up until that point in my life, when I was 25, my number one value in the world was adventure. I hadn't consciously chosen that, but like that's what I was into. Man, I was like I'd been to, uh, I'd lived in like five countries by the time I was 25, spoke five languages. Like it just was like always like hitchhiking around South America or you know, like in China at that time. This is pre-iPhone, so like I'm on my own, I don't have a smartphone. Like I'm you got to talk Chinese if you want to get anywhere, and there were. So it was. It was all about adventure for me and I realized that that was like also leading to be some of my problems, cause, like someone who's having a lot of adventure probably doesn't have like really deep loving relationships. Cause I'm off chasing thing Like so no wonder I'm getting friends who are like treat me like crap, like I barely know these people Like so it's so I don't know.
Speaker 1:This is all resonating with me. You know I almost sent you an episode of my podcast to to listen to and I was like he probably don't want to listen to me, my nonsense for 37 minutes. But I did a, an episode by myself that I called just do it and I reflected on my life and, I think, a critical flaw of my approach to life early, you know, you talk about kind of the pursuit of pleasure and resistance or avoiding pain and like to me that almost sounds like the root of addiction and where a lot of people go and drinking. My twenties was a combination of. I worked hard in my twenties but I also drank too much, I partied too much and I gambled too much. I mean I just it was my life and I convinced myself when I was 18 that you know, my life could be, my personal life could be in disarray as long as I was busting my ass professionally and I was successful and like I had this massive flaw in thinking that, like, as long as I had professional success, all of these other issues didn't really matter and that carried with me throughout my twenties. And it's interesting because, as you talked about values and how a lot of people walk through life not even remotely understanding what their values are, because they're just kind of, you know, reacting or just kind of moseying around.
Speaker 1:I guess I was one of those people I even talked about that on that where I was like I don't know that I could clearly define my values and it's something that, frankly, it took getting fired from my business that I had started and sold but was still very much involved in and it had been a big part of my identity.
Speaker 1:It took getting fired for me to finally kind of take a step back and be like dude. Getting fired for me to finally kind of take a step back and be like dude this is not the life you want. You know you pursued this professional stuff and you hit the milestones. You know you sold a business. You're, you know, the big hotshot you wanted to be. But you still feel empty inside to an extent, as I felt empty inside and like the last year and a half I've been way more introspective and I've done a lot of work with a coach, with a therapist, to like really start to define the life I want to live and understand myself in ways that I kind of hadn't. So I guess all of these things you're talking about are really interesting to me and resonating. I didn't see.
Speaker 2:Yeah, you mentioned that. No, most people don't go take the exercise or write down and figure out what their values are. Even fewer will go consciously try to change those values and recognize, hey, I'm valuing things that aren't getting me what I want. It's creating pain in my life and knowing that, hey, you can actually sit there and consciously choose the value, like sort of design. You got to understand what gives you pain and pleasure on some level. But you can change these things. You do have some ability that your brain's malleable. You can change this. And so I like reoriented myself around learning. I've since done it again with my wife, after I got married, to make love the top priority. But like learning was always ever since Did you say make love or love.
Speaker 2:Love, family love that was the joke. Love, love, family love that was the joke. Um, but, uh. But learning has always been like you know, ever since that tony robbins incident or tony robbins experience, uh, reprogramming myself to make learning and adventures are formal learning. It's a great way to learn. I probably learn more going around the world, traveling than I ever did in school, right like times 10, um, but uh, but it didn't lead to long-term lasting relationships and so, yeah, but orienting myself around learning was really a game changer. I went off and read like I don't know I mean, at this point I don't count but that one year immediately after, I read 55 books or something, and like big ones too, like the Wealth of Nations, and I was in China, china, kind of sometimes bored blood downtime, I would just crank through books um, was that an easy thing to do, like, like orienting around, learning some people it's hard.
Speaker 1:You know, learning is not an easy thing. To just pick up and, and you know, become, make a big part of who you are. Was that a challenge that? Or? You know you naturally learning was easy for you and you're a curious guy, so it was more about just pointing your attention towards it um, I'm naturally curious person.
Speaker 2:I can't say, you know, I don't know how everybody's brains works. I I've always been enjoyed just like I get dopamine from learning but um, but uh, but reading I wasn't like a big reader. Um, like I'm one of these guys made it through high school would just like read the cliff notes and wing it on the test, figure it out.
Speaker 2:Yeah, yeah, um you know, I mean I did good enough in school. I went to uc, berkeley and stuff, but I wasn't. It was really that, um, it was that tony robbins experience oriented on learning, and then I discovered an essay. There's a speech or an essay, uh, by charlieer called the Art of Worldly Wisdom. I want to say is the title of the essay.
Speaker 2:If you're looking for it online it's Munger. Munger is Warren Buffett's business partner and that essay is all about. Well, his general concept framework is that in any discipline there's two or three big ideas. He says that there's two or three big ideas that carry 80% of the freight for the entire discipline. That's actually his line in the essay.
Speaker 2:Each discipline you're like 80 fluent to talk to the experts and you know, never feel dumb again and be wise. That's a what he calls worldly wisdom is when you've done that for all of the discipline you know and you can. It's arbitrary how many disciplines. You think there are a few hundred, though there's not like infinite.
Speaker 2:Yeah, you're talking 500, 600 big ideas in the world that if you understand them, you're just like incredibly swiss army knife, dangerous kind of have a lot of mental models to be able to and and most creativity in my experience, so like most creativity comes from taking like a mental model or a concept from one discipline and turns out it's useful over here. Uh, in those people in that area hadn't thought of it before. They're sort of the art of being a generalist and so that set, that essay, set me off to be like oh yeah, I'm gonna go learn this stuff today. You know, never felt like was particularly interesting, but if there's two or three big ideas in that whole area, like okay, let's go learn the two biggest ideas from these things, um, so that's a useful framework that kind of set me off on a decade or two of just going hardcore on learning everything I could about everything.
Speaker 1:And talk about how that applies to our industry. I mean, what's interesting to me is I've learned a little. I've never been big on forwarding or known much about it, and most of the extent of what I know now is a product of listening to you talk about it in the last 48 hours. But there seem to be quite a few similarities between my domestic freight brokerage world and your freight forwarding world, especially when you look at the landscape of competition, the legacy players and how they behave, how they interact with their customers. And I'm curious, like if you were to apply some of what you took from Munger's essay to our industry, what connections would you make?
Speaker 2:Yeah, I mean a big, by the way. I'm the opposite. I'm learning fast. We acquired Convoy, so we're learning fast everything about domestic and seeing there are a lot of similarities. There's a lot of differences that are kind of fundamental to the nature of the barriers to entry, which leads to there's a lot more carriers and brokers than there are in trucking than there are in international, especially the carrier side. I mean there's only 10 ocean carriers of any scale. It might be similar to kind of LTL world, but it's just like not that many networks because of the barriers to entry and the economies of scale that come from it.
Speaker 2:But anyways, how would that apply? Well, first off, just being able to bring things from the software development world into freight forwarding is just like that's our core competitive advantage. What we've done differently than everybody else is say, hey, we can build software to make these experiences better. I think bringing things from marketing world from that this industry is kind of cold, frozen, doesn't do a lot, ignored, to their own fault. I mean it's a fascinating world, like great little global logistics or trucking international, everything. It's just like the circulatory system for the world economy If you're not capable of spinning that to tell stories that are compelling for wider audiences, then, like you're kind of bad at it, why, I don't know.
Speaker 2:It's like industry is fascinating. We're always in the news, not just we're not. There's're always in the news, not just we're not. Twice more times than there's our industries in the news, it's relevant. You can pick up every single day's wall street journal and you'll be like there's some story that we as great transportation logistics professionals have like a perspective on that's unique, interesting, different. So we've been able to kind of bring that I don't know what you say. You're borrowing that from. Maybe that's tech marketing, maybe that's just like viral internet marketing content stuff, but bringing that to an industry and and like in physics, you have this concept that um for maximum energy transfer, you want to take something that's really, really hot and put it in a space that's really, really cold, and it's like you'll get huge amount of energy transfer when you do that okay and legit, like that's kind of a useful framework, is like as industry is kind of stale and boring and so if we can take things that are really hot and like, that could be okay.
Speaker 2:the way that we discuss or the, the way that we generate, I mean, hype is like maybe a negative connotation but generate interest in the space. Content wise Could be design, like we want to be like world class in design, user experience, even relative to software companies. But if you bring that to an industry that's been like stale and boring, it doesn't have any design or care about it. And similarly, like logistics is one of the advantages that Flexports had is that this old industry and we have to be respectful of the heritage but the companies have been around so long that most of the founders are gone. You know Fred Smith just recently stepped. I think he's still the chairman, but he's no longer running FedEx, for example, and talk there's just not many underled companies.
Speaker 2:And then you have to look okay, who are the types of people that rise the ranks in big companies In a logistics industry? They tend to be highly rational, logical, empirical thinkers who are doing, you know, I mean, logistics is mathematical on a lot of levels so the people who are the best to rise up the ranks are going to be the logical thinkers who use a lot of reason and kind of work their way up the ladder. Um, that doesn't lead to like well, they're not risk takers right, I mean you're typically especially the big legacy players, the.
Speaker 1:The next guy up is typically someone who's just going to keep carrying us forward where we are, and it's those mathematicians who are just like okay, these are what the numbers say, so we should do this.
Speaker 1:And in a stale industry where it's kind of always just been the way it's been, there's a lot that you can get from a marketing perspective in terms of just interest from new and exciting ideas. But also, I think we'll both agree that at the end of the day, as much tech as you throw at the organization or in the industry, it's like really good, talented, hardworking people that make all of this work for companies like yours, for companies like mine, and those kind of people. They don't fall in love with the next guy up who got promoted, who've been here for 25 years. They like the kind of crazy idea we're coming in and we're doing something different and like we're going to take this industry by storm and we're going to rip out the roots of how you know other people have thought about it. We're going to attack it this way and people like that, Right, I mean if you're a senior exec promoted into the role, why take the risk, man?
Speaker 2:The board could just scapegoat you at any minute and fire you Exactly.
Speaker 2:If you look at the individual incentives and you know you either get like committees that can't agree on anything or or a leader who's not ready to take risks and do stuff, and and then, yeah, it's a great point of like you know, and then, yeah, it's a great point of like you know what kinds of. It is all about the talent. It's about the people and who do they want to follow, what attracts them to a company? And then I would add to that that can you get people this industry has not been high profile to attract top talent out of school it tends to be. We meet people who worked in logistics. They never can tell you how they got into it. They sort of backed into it. They met somebody at the gym. Next thing you know they're 20 years later, they're a senior exec. But like it's not.
Speaker 2:Like the pipeline for top talent has always been like Goldman Sachs or McKinsey or Google or something like that, and we've shown, hey, like actually this is a great place to come and learn the world of business and have an impact and build tech and learn all this stuff. So I think that's been a big competitive advantage for us. We have to definitely need to experience people you know and we got. We've hired a lot out of the industry. They're awesome, but we've also introduced, like gotten, new types of folks who it wouldn't have considered logistics in the past.
Speaker 1:Well, I think an interesting point you make. There is for sure. I mean, a number of things you said were spot on. I mean, when I think about most of the people I know in the freight brokerage world, they have no idea how they got here and in often cases they couldn't find a job doing what they wanted to do and all of a sudden they realized I can actually make way more money doing this weird thing no one else has ever heard of. If I just can communicate effectively and I am willing to work hard, and those two things are.
Speaker 2:I know why they stay, by the way because it's an awesome industry, it's addictive, it's fascinating, but they don't know why they got there.
Speaker 1:Yes, exactly, and I think the other thing you said that's really interesting is that the notion of bringing in top talent, pairing it with experienced people. If I were to tell you why, I think the closest comparison to our industry or to the freight broker's world for your business would probably be like the digital freight brokers that came to rise starting around 15, 16, 17 and had their time period the next seven, eight years, but the ones that failed the reason I believe they did in a lot of cases is not a strong enough or strategic enough pairing of the really experienced people with the really smart people and letting those two work in a cohesive tandem that lets you make decisions that are rooted in accountability to the customer over innovation. Innovation is great, but if you're not accountable to the customer while you're innovating, you don't have a business for very long and you burn trust faster than you can build it, and it just it's. It's a reason why digital freight broker was like a bad word in in the freight brokerage world for a while.
Speaker 2:Yeah, I think that's right. I think I didn't. Um, I, this is one benefit we had and and I'd maybe this comes back to your original question hey, how do you apply these like worldly wisdom types of things, ideas to this industry? Is that I've been good at relating to all kinds of people and you know I'll sit with the engineers and geek out on like architectural design code, like what the product is, the software needs to do, and then go drink with I used to, I don't drink anymore but then go drink whiskey in a bar in hong kong with the air freight guys and you know, try to to get some better rates. And then sit with the old school forwarders and the customs compliance people and like there's a lot of different personalities, cultures, ages.
Speaker 2:You know our first five employees. I think the average age of Flexport was like I mean, I don't remember One guy was 70, maybe employee number six was 70. I don't remember how old our first employee was, but she was in her 50s for sure. I mean it was like always need that mix of uh.
Speaker 1:That's where the dynamism comes from in this business so you mentioned relating to all different types of people. I think being a naturally curious person probably is is helps that for sure. Can you talk about, like what you think? What other characteristics of yours do you think make that special sauce work, where you can sit down with the engineers and then be in hong kong having a beer with or a whiskey with the air freight guys and and that they're drawn to you? I mean, what of makes? How do you get to that as someone, as a leader, if you get what I'm saying, I don't know.
Speaker 2:I was lucky. I mean I had a lot of success early in my career working for my older brother and building companies together and I think we attracted top technical talent early to Flexport because I had started. I started importgeniuscom, which is pretty successful not by venture capital scale standards or anything, but it's quite a profitable business that my brother and I and another business partner started, michael Kanko industry before I started Flexport and I left that company where I was the CEO, even though I mean it was going well, it was a good company, but I just like was in love with the idea of Flexport, um, and so some of our early hires were like, oh, you left like this like successful, very profitable business. In order to start this thing, uh, you must really be all in, you must be committed to make this work. And so I got, and I come from a family my dad's a software engineer.
Speaker 2:He wrote his first code for the um nsa in 1973, before microsoft, before. I mean I always give him shit because he should have been rich, but he uh, he's just like a government coder for the government. But you know, he's writing code to like analyze Soviet defending and stuff in the 70s. So my brother and I always got like hand-me-down computers. We always had like the best computer because it was his computer from the year before. So we were sort of born into the tech world. But I had this adventurous spirit and so I traveled around the world and got got to meet. I lived as an exchange student, um, when I was in middle school, which is really insane like I was 13 years old, living with a family in spain without my parents that was by choice, or they were just kind of like I don't know why they asked and they didn't want to deal with you anymore.
Speaker 2:I was old enough to consent to this but I did want to do it but they were good with it and I kind of suffered actually there again because I was lonely and too young and didn't speak Spanish yet, and I learned there what it was like to kind of be an outcast there, what it was like to kind of be an outcast, and then that kind of helped me a lot with relating to people who are. If I see, if I I've always been someone who, like if I see someone who's on that, who's not involved or like is shy or looks awkward out I'll like, yeah, I'll try to bring them into the circle or something, and I think a lot of software engineers are kind of like that.
Speaker 2:So I had a good gift for like making people feel comfortable and welcome and building kind of a culture like that in the company. And then we always were some of the first employees were like old school freight hands, um, right forwarding hands and then we just built like a really cool camaraderie, early days of self, like people with very different backgrounds, and we were kind of tying it all together, having fun yeah, I think that all makes sense and especially, something that resonated with me was your comment around kind of for one like leaving a successful position.
Speaker 1:That was like a winning position and to start something new. Um, that kind of notion of being all in it's. It's something that just drives other people Like someone else sees that and they're. Naturally there's something very magnetic about it and you want to, you want to be around it, you want to be a part of it.
Speaker 2:You got to maintain it for years and years and years. That's the, you know, that's like. The challenge of leadership is like people you got to be the most all in person at the company, outwork everybody, be more committed, you know, do whatever it takes. And that's a lesson I kind of learned the hard way. I wasn't that. There was a year or two that where I was like not as all in as I need to be. The last I came, you know we could talk about it, but I hired a CEO for FlexPort and we had six months where we overlapped as co-CEOs and then six months where he was the CEO and I was the chairman and I came back. That was about 14 months ago and the last. I don't know if I led this company the way I have for the last 14 months, for the prior eight years before that, 14 months for the prior eight years before that like, oh my goodness, we need the biggest company on planet earth right now, like the energy that I've been bringing in and commitment and stuff I want to ask.
Speaker 1:I want to ask about that because there's something that I want to relate to first. So you know my business. We started it in July of 2017 and we were, you know, one. I think the only companies that grew faster than us were Uber and maybe Convoy, and Uber had hundreds of millions that were thrown at the problem to do what they were doing. We didn't have that. We barely had any money the first two years and then we had a couple million behind us, but our revenues grew substantially. And 2021, I think, just like you guys, we were peaking 2021, I think, just like you guys, we were peaking, I mean, our business. We did $5 million in the back half of 17, $40 million in 18, $125 million, or $130 million in 19, $275 million in 20, and then $625 million in 21. Oh, wow, that's a nice trajectory. Yeah, and it was about that point.
Speaker 1:So I was 27 when we started and I was really hungry, really driven and wanted to take over the freight brokerage world. I mean, like that was the mission. We wanted to create the best experience in transportation for our employees, first and foremost, and then our drivers and shippers, because ultimately, the employees are the ones who do that. So if you don't make the best experience for them, there's no chance the drivers and shippers are getting the best experience.
Speaker 1:But there was a point I don't know when it is, I couldn't distinctly tell you what day it was or what event created it but we started getting a lot of awards. We got a lot of cultural awards for top workplaces, stuff like that, where we were far and way ahead of competitors. We were number 40 or something on the Inc 5000. My partner and I got Entrepreneur of the Year awards for EY and there was a point where my ego took the wheel and in doing so the drive dissipated and the focus dissipated and I just I lost myself in that business and you know, I eventually got fired and you know the why there is by the acquiring something I got by the acquirer.
Speaker 1:They bought us, but the plan was not for us to go anywhere. I mean, the deal was structured in a way where the enterprise value was $450 million. They paid us $215 up front, or they paid us $235 up front and then $215 was aligned to an earn-out over the years 23, 24, and 25.
Speaker 2:Yeah.
Speaker 1:And so I should still be working there. And if the business does well, I could get paid. And the business says we got fired in march of 23, um, and I only know I'm no longer involved at all. I don't talk to people a lot of people still there but I freight caviar, who's a kind of meme, these guys who are in our space. They posted something about molo recently that said they've lost money for five consecutive quarters. Well, I was fired the sixth quarter ago, so it's not exactly looking like the earner's going to pay whatever.
Speaker 1:I've gotten to a place where I'm comfortable with that. I'm over it. But I bring it up because I just am curious. If, for you, you guys raised a billion dollars and saw an $8 billion valuation at one point, I mean at some point I would struggle with that and I, or at least I, would probably get distracted. I'm curious if any of what I'm talking about resonates. Or for you, it was something else that was kind of getting in the way of you being like the very charismatic all-in guy that kind of kept the troops moving in the right direction. And you know, just talk about that if you don't mind.
Speaker 2:Yeah, you know I've always been super committed by the mission of Flexport. We want to make global, we want to make it so easy commerce and trade that there's more of it Like that's just compelling. I think that we're deep believers that when two people trade with each other two businesses, two people they're both made better off and there's new wealth created in the world. And that's the source of all the wealth in the world specialization and trade and commerce. And so I've always been all in on that. I think we grew. We hit some hard times. One of the things that happened was COVID was like really good and really bad for us. Covid and I mean obviously COVID was all bad, but like COVID's issues on supply chain was a real boon for us. We became quite profitable. We grew like crazy but we, our operations started to break down, um our ability to deliver on customer success.
Speaker 2:Before the pandemic, flexport had a net promoter score in the 70s. A net promoter score is like I don't know if I'm familiar with that, but like it means I am a. Nine or a is plus 1. You ask customers, how likely are you to refer us to our friend? 9 or a 10 is plus 1. 0 through. 6 is minus 1. So a 6 is minus 1. If you get a 6 and a 10, that's a 0 net promoter score. It's like a brutal metric right and 7 and 8 counts as 0. So two 7s, two 8s, that's a 0. A Um, so two sevens, two eight, that's a zero. Six and a 10, that's a zero. So we had a 77.
Speaker 2:I mean, people loved us. They went down to 17 during the issues with $20,000 containers and 128 transit times and like the $20,000 containers actually understated, because that's just the price of shipping a container door to door. It ignores the price of the attention and demurrage. If you don't return the container on time, you don't pick it up on time. And there were so many issues with people's warehouses being full that they couldn't take the container and unload it and return it. So they're racking up charges and like blaming us and it became really ugly and some of the joy. It wasn't just that, the joy wasn't there. I mean, I love solving problems but I started to feel like man, I'm not good enough at this operational piece. Operations is about doing the same thing every day a little bit better and my personality is you blamed yourself were real people, operational, like dialed up operators, processes to go, and I didn't have enough good frameworks for that.
Speaker 2:I've never had a job, and certainly not a job in this industry. I've been an entrepreneur I mean, I made pizza at Domino's when I was in high school, but I never had like a real job and so I was like I just was feeling like man, am I the right leader here? Was feeling like man, am I the right leader here? Um, and so, yeah, I did get a little bit down on my ability to execute and my plan was to hire a coo, someone who's just like right hand. I wasn't trying to leave the company I never. I just wanted like a really good right hand who just loves this kind of statistical process control. We deming toy Toyota production system, like Donahue manufacturing system, whatever Koch Industries.
Speaker 2:There's a lot of great cultures of like process improvement that I wanted to try to find someone from. And then I sort of caught a whale with the Amazon CEO and I convinced myself that and I can't blame anyone but myself I convinced myself that he would be better at the CEO job than me, and so I wasn't like running but myself, I convinced myself that he would be better at the CEO job than me, and so I wasn't running from anything. I stayed as the executive chairman. But there's something about being the founder of the company that nobody's going to ever very hard to replace a founder. It's just like the level of commitment, deep knowledge of all the people and where the bodies are buried, how the thing got the way. It is all the decisions, the culture, the processes. So, yeah, it turned out not to be a good fit. The board asked me to come back after just about six months where I was the chairman.
Speaker 1:And for you when you got back, how do you get your arms around the thing again, Like, how do you figure out what we need to do? I think I remember when you came back seeing and I think this makes sense that you spent a lot of time in front of customers yeah, which is always listen. That's what I used to do is, if I was unsure of anything, I just started talking to our customers. If I was leery, if I was worried about our service or the way we were taking care of customers, I just started calling them and asking them what the hell was going on. And then let that lead me to whatever, internally, I needed to look at.
Speaker 2:Yeah, and at that point we were big. So we are big, Like we're the third largest American freight forwarding company, top 10. I think we're the number five on the Asia to US trade lane, which is the world's biggest in terms of number of containers moved and also air kilograms moved. So in 10 years we became one of the biggest companies in this whole industry and, by the way, the only one in the top 100 globally and I haven't gone further down the list than that Founded after Netscape was invented, the web browser in 94. There's a lot of great companies in this industry. Our competitors are pretty good at a lot of stuff, but they're not tech companies.
Speaker 1:Just not a lot of big new ones.
Speaker 2:Yeah, not international, the best thing. You've had to refrain your company and a lot of other good ones, but the barriers to is high and in a global piece, um, so anyways, uh, we, it's a lot to go talk. I can't talk to all the customers, um, of course. But I came back and I I knew there was a few simple priorities and I just there's such a value in focus. Um, one was we. We obviously had to lower our costs.
Speaker 2:One of the mistakes we made was just we went way too hard and so it was the COVID hangover. We just had like we were flush with cash, business had been profitable. We were like, let's go triple down on tech and just win on tech. And we hired way too many software engineers and expensive, and we just couldn't afford it. So we had to do a layoff there and cut fixed costs. Software was a big, big expense. We still had more. By the way, we still have 400 software engineers in the company even after the cut. So it wasn't like you can do a lot. It was 400 software engineers, but we had to cut our costs, fixed costs especially. We didn't cut any people who were facing customers. It was all the cost cuts had to come out of non-customer facing roles. So it was basically like finance, hr, legal tech, where almost all the costs came out of.
Speaker 2:Two was we had to really upgrade our quality and we had in pursuit of efficiency. So one of the most valuable pieces of tech that we built at Flexport is this workflow engine. So on an international shipment, door to door, there's something like 108 tasks on an ocean freight in our system that have to be completed by a human. Today, I mean actually now it's 88 because we've automated 20 of them in the last six months. But there's 108 tasks in the system for an ocean freight standard container and that's great. We built great workflow software. It makes our people efficient, high quality and make sure that you don't forget stuff to do when you do it on time and everything like that.
Speaker 2:But the mistake that we made was we had made it, we were organized. One of the things that let us grow is we were organizing pods. We call it a squad, but I think in trucking brokers often called a pot. So it's a dedicated team of operators that are owning that customer's freight. They're doing the operations and the account management and the sales and it customs compliance. It's a cross-functional team that does all of the work for that customer and it lets you behave like a small business even as you grow. And then when you get bigger, you split the squad. You know you can serve more customers.
Speaker 2:So that was how we were always organized. And then, in pursuit of efficiency, what we did during the period when I wasn't CEO is we broke it into that one operator did each task over and over again across everybody's shipments and efficiency like oh, you'll be really good at doing the same thing over and over and over again. Well, one, employee engagement went way down. No one wants to do that. Two, there was terrible quality because you know like 50 off this customer and no one's owning it when something goes wrong, which always does it.
Speaker 2:Global logistics, like stuff's always happening. So we immediately I knew we had to go reorganize back to the old way of working, like a squad dedicated to the customer, sitting together cross-functionally in the region. Don't worry about costs, like putting this in the low cost location, like put it in the city, where the customer is. I'm not saying we don't worry about costs, but like much more important is quality. And so that was obvious. We had to go re-emphasize quality.
Speaker 2:And then the third piece was our union economics. We had gone, like our take rates, like the markup above our costs, had gone way, way down during just a six month period, and it was all. We didn't raise prices. Our freight audit systems had broken. We weren't doing a good job holding our vendors accountable. They were billing us too much. They were billing us too much. And so the net of that, well, just dramatic turnaround. We went from burning I'm not going to show the numbers here because we're working on the big announcement the day we turn profitable, hopefully soon but just a night and day, massive, massive turnaround. And yeah, so it was kind clear like I never left the business. I was close enough to it that I knew what to do. Some of the stuff like needed to have some more courage, probably doing some hard decisions, and but we got it done, that's great.
Speaker 1:I mean, it feels almost like that example of switching away from what that new model you went to, where one person did this task and this person did this task and whatnot. It feels like a decision that might have been made by someone who wasn't necessarily from the industry. It's from the fulfillment.
Speaker 2:You see it in e-com fulfillment it's not possible to have. You're not going to have a person take the customer's order, unload the truck, put it on the shelf, pick it off the shelf, bring it back. You would never organize that way in fulfillment. We have an e-com fulfillment business now and it's not organized that way. But it makes sense. You break everything into little parts and you kind of treat people like robots and that's the Amazon fulfillment world for you.
Speaker 1:It's the right way to organize that business, but it just doesn't work in b2b global logistics forwarding yeah, and and I'm curious for for you, as, as you know, the business is turning around now um, how do you think about, like, where you go from here, like, especially with respect to technology and automation? I think I remember, I think I saw maybe it was a tweet that you were crediting Elon for a number of things, but one of his points was like automate as much as possible, or nearly everything. And I'm curious how you think about automation with respect to what you can automate that versus what you need. You know high quality, people involved in, and, like, when you know quality is at risk. If you automate right, you want to reduce cost as much as possible, and so you're going to look at all these avenues to do it. But when you remove the human from X, is there a risk that quality diminishes and then we're back to a place of customers being unhappy and us not growing our business anymore and not being profitable. Blah, blah, blah.
Speaker 2:Yeah for sure. No, actually, in Elon's process, which we use at Flexport, automation is the last resort. You don't automate anything until you've run the first five steps. First four steps of the process. And so step one is challenge the requirements, just be like. Who said we need to do this? Why? Which person, which individual person is requiring us to do this step? What law are we following? What regulation, what rule, why? Who designed it this way? Really question it, deleting steps of processes. Then you simplify and optimize a process, then you work on accelerating the cycle time and then you automate as the last step.
Speaker 2:And I think we've made a lot of mistakes over the years where you try to automate first and you automate stuff that's not ready. You haven't clarified things, you're not, you don't understand the process well enough. Automation can make you brittle because it's hard to change. Like you know, the iPhone is still made by hand. It's not that Apple can't afford robots to make the phone, it's just that they're constantly changing the design to make it slightly, even within the year. You know there's a new one every year, but every month or two they're like oh, we should tweak this circuit, you know, move this thing around. Well, if you had to retool all the machines like versus. Hey, in a couple hours you can retrain the people how to do it. Um, so there's a lot of benefit to having people do work rather than tech, rather than automation. Um, in many, many cases now there's a lot of r boring stuff that people don't want to do, aren't good at, like we now our tech for extracting data out of documents. Ocr type tech costs us a penny, no, a tenth of a penny or less. It keeps going down to get all of the data and the quality is higher than a human being if you have to pull data out of documents.
Speaker 2:So what we've done in that workflow engine that I was describing, where you have these like chunk it down into steps, turns out those steps are simple enough that now automation is pretty straightforward and easy and relatively risk-free. But you still have to go customer by customer and configure it and make sure that actually this customer delivering to this location. It would not break their SOP if we automate the process and turn it on one customer at a time when you automate something. But we're right now, because of AI, we've made these processes simple enough. These workflow steps, like, if this is a custom web form that AI can do a lot of these tasks and we're automating 1% of them a week.
Speaker 2:We did, of the 108 tasks, we automated four of them in the last. Well, let's see, we went from 16 tasks automated to 24 in the last eight weeks, like for a month basically, and so we're just kind of chunking it off and then, if the automation fails, you have to have good detection that hey, it didn't do the thing it was supposed to do. A human picks it up and we have like. So it's like you have a percent of tasks that are automated and then a success rate of the automation and then a percent of customers that it's even applied to. So, after it all, you sell a lot of people in jobs, and that's just in the operations jobs, to say nothing of all the other work. Like one of my theses has always been if you actually fully automated everything, you would need more people that you'd have more salespeople, more engineers, more account managers, more finance people trying to track the number. You'd be massive, like you'd need so many people that manage the whole thing.
Speaker 1:That's an interesting way to think about it.
Speaker 2:I'm trying to visualize that it's probably not true for the civilization as a whole, but it is in the long run. You create new jobs like the, the. We used to dig holes with our hands, you know, or with a stick, so I mean, it's a.
Speaker 1:I heard you recently say something along the lines of um, in looking at who you're competing with, you were talking about ai, and it's like you know why would I want to go start a business that's just directly in ai?
Speaker 1:because then I have to go compete with the smartest people in the world versus you know competing in our world, where you know in a lot of cases they're short-sighted people is probably the right way to think about a lot of the decisions that are made by legacy players in our space. And I'm just curious for you as you think about like your business has been known as, like the tech forward player in the space. Ai is coming and like we're here in a lot of cases, is coming and like, or here in a lot of cases, and it seems like the rate at which it's going to be applicable and the impact is going to have is like exponentially growing. Is there a concern at all that, like the, this technology is democratized across the industry and allows for other players to catch up, or like, how do you then stay ahead of the curve, knowing that all of this is coming?
Speaker 2:Totally. I'm paranoid about it. I think it's a revolution that's going to happen in logistics. Logistics is probably the industry that's going to be most susceptible to applying these things. If you just look at what AI is good at, so many of the so many of our use cases are just like square down the fairway. This is just very good at email communication. I often joke freight forwarding should be freight email forwarding and like ai is really good. That's what it does is a text generation engine. Like it's good at predicting the next word in a sentence. It's very good at reading text and replying to it. It's very good for doing boring things like pulling data out of off of websites and web scrapers, extracting data from documents, route planning, optimization You're going to see almost everything and I think you know the world of AGI and like true human-level intelligence. Maybe that makes all of us irrelevant in flight forwarding and global logistics.
Speaker 1:I mean, maybe you just like, don't worry, I refuse to think about that.
Speaker 2:I don't, you know, that would be kind of cool. We can all just become gardeners or something. I don't know. That I don't you know, that'd be kind of cool. We can all just become gardeners or something, I don't know. But I don't really worry about that. But I do worry that other people will apply this stuff faster than us and especially like in the last year, we had a lot of distractions doing like reorgs and new CEO, a lot of leadership changes that I had to make and a lot of stuff like that. I'm pretty paranoid that we didn't make as much progress as we should have. In the last six months we've been going hardcore and the results are incredible.
Speaker 2:In how we apply AI. I think we have a big advantage over legacy freight forwarders and other logistics companies in that we make almost all the software that we use to run our business, all the tools we make ourselves, and so we control the code base for it. We could just add AI anywhere in that end-to-end phase that we want and we're taking free all the way. The way Flex4 works you place orders to your factories through our system. We generate logic for how to consolidate those orders. So, across multiple factories, generate logic for how to consolidate those orders. So, across multiple factories, we can maximize utilization of the containers. Place the booking on our contract or your own contract. If you're a large company, you sign a contract with an ocean carrier directly or another air freight provider. We manage the execution of that contract. Though. To place the booking, get it onto the ship or the plane, track it all the way to the door clear customs on both sides right. Get it onto the ship or the plane, track it all the way to the door clear customs on both sides right and deliver all the way to the warehouse and then route it into last mile networks for home delivery and delivery to stores. So it's like a full end to end all the way from the factory to your customer's door, anywhere on that journey.
Speaker 2:If we see a place where AI could optimize anything, we just go do it. We put it in our own code goes live within a week, whereas if you're like some AI geniuses of which there are many attacking logistics now by great companies, you might have the same solution. First of all, you don't get the visibility into what the problem set is. You got to go beg some legacy provider to try to integrate into some old school tms that they don't own, that they buy. That's like. This is like a lot of cases it's not even possible. Like well, I don't run the code, like I just buy the software. How can I add this ai code? So then you have to like, put hacks of, like be a chrome extension or something. I don't know how they're going to do it. Um, and by that time we should have already run through four or five iteration cycles, or 100. I mean, maybe they never get there.
Speaker 2:So I think we're in a very unique position. We have the scale as one of the largest providers in the world, the scale of data and the breadth from a horizontal. We cover the whole end to end. So we can have distribution models to train the data, distribution, to just push it live nobody permission is required and just go live. So we're having massive impact right now. Uh, even, and like we don't, in some cases we make our own machine learning models and things. But even just taking ai models foundational models from open ai, from, uh, anthropic, we use all of them.
Speaker 2:Basically, it was always a negotiation of who's going to give us the best prices, but we've seen, yeah, huge gains from this. So I'm like more bullish. I had told the automation story for like the first ideas of Flexport and I had like stopped selling the automation story because it was so hard. But now, all of a sudden, with AI, it's like oh, actually, this is working, we can start, and on some level, all you have to believe is that your automation will make you cheaper than everybody. And if you're cheaper than everybody, you're the biggest in the world and we want to be the cheapest and the best. We try to tell both those stories, but either of those stories would be sufficient probably to make you a massive, massive company. I think we can be both, but yeah, man, I really.
Speaker 1:What resonates is the combination, the having the scale of data that you have. You know there are others who have that, but they likely don't also have all of their own technology.
Speaker 2:And the talent to go implement it. You know and understand these things, yeah, I mean, and that's too what these people want to work on too.
Speaker 1:I mean technology and the talent to go implement it. You know and understand these things, so yeah, I mean, and that's too what these people want to work on too. I mean, that's how you're going to attract the top talent is give them, you know, apply the latest and greatest in technology and ai and and and putting it into this kind of system.
Speaker 2:That's a really attractive opportunity that would yeah, weekly data stats to train things, and. But I'm still paranoid man Paranoid one that other companies these are smart people with more resources than us in a lot of cases, with a lot to lose and a lot to gain if they get it right. So not like I think we're going to be monopolists or be the only people figuring this stuff out. The prize is too big. And I'm also paranoid that, just like smart people smarter than us come into this space. You know, if you were starting from scratch, how would you do it with it?
Speaker 1:with an ai world, like we have tech debt of our own, like legacy code that's 10 years old now, uh, and so you got to be super paranoid and and like use that to motivate the team yeah, see, that that's another thing I've thought about, not with respect to your business, but just businesses in general that are building big, expensive software, and the idea that you've spent five, 10 years building all this stuff and now someone's starting from scratch with a blank slate and way better technology available to them at a way cheaper price. And it's like how do you? You're, you almost you're ahead, but you're kind of catching up because or you have to catch up because of the tech that you have and kind of the clunkiness, so to speak, of this big thing. Yeah, it's tech. We have.
Speaker 2:We have tech debt. We have large company problems. You're big, you're bureaucratic, you got to coordinate with a lot of people. Two guys in the garage, you know, can run fast as hell. Our industry is such that I genuinely believe in our core defensibility of competitive advantage because you've got to have a worldwide network to move freight in. We ship freight to and from 147 countries. We've got contracts, all the major ocean carriers, airlines and network of people and process all over the world to execute these transactions so like. I think that makes it really. That's why we're still. We haven't seen a lot of clones, the clones that we have seen in flexport. They're like we'll be the flexport for europe or flexport for latin america, but like flexport is bigger than them in europe.
Speaker 1:So we're the part of europe, not that our quickest office in the world is amsterdam, so you know, I know you're not a big believer in moats, but I will say you know, this conversation kind of pivots in my mind. To you know, one way to be to defend your business is to make sure your customers love you. And you know, if your customers love you, you at least are always in the conversation. If someone comes in with just a completely new solution that you don't have, it's hard to keep your customer. But if you've always taken care of your customer for years and someone comes in and is offering a penny cheaper because they were able to build it a little bit cheaper, you're at least having a conversation before you're losing that business.
Speaker 1:So I want to talk a little bit about your. I guess it would be your leadership style or kind of how you think. I know you've talked about being customer obsessed, which is which is something that I used to talk about myself, and I'm curious what does that look like, operationalized, and especially, how does that? You know in? You talked about that NPS journey from 70 to 17,.
Speaker 2:And then you know back up to 49 last month, so we're grinding back.
Speaker 1:I saw you're grinding back. I heard you talk about that on the Operators podcast with the Simple Modern CEO and he raved about you guys Even when you were seven. He said even when you were 17,. It was like you guys had a cold and everybody else had something way grosser. And you know so. But in any case, I am curious, though talk to me about the nature of customer obsession how you operationalize that in your business, especially in a big business where you're trying to make change because that's gotta be hard.
Speaker 2:Yeah, we've got to leave from the front. You you said earlier is right, talk to the customers yourself. I try to talk to them. I mean my first month back. My first month was like all restructuring and reorg. My second month this was like last October, so just over a year ago I did 100 video calls with customers and a bunch of in-person in a month. It was just like back to back to back to back. Get a feel for it. What's really happening out here.
Speaker 2:Now I do, I need some scale in it. So I talk, I do a lot of customer events where I can get 30 minutes in person with 10 different customers in an evening. 10, 30 minutes each Yep and that. So a lot of customer in person. That way where I get some scale in it. Tons of video calls in person. That way where I get some scale in it. Tons of video calls. Video calls are amazing. I travel as much as anybody probably in this world. Um been at 18 countries this year and I'm going up four more. Uh, on friday after thanksgiving I'm leaving for asia, the. So get out there and meet people, because it's not just customers I gotta meet. I gotta meet the ocean carriers, the governments like Like, there's a lot.
Speaker 1:All your stakeholders.
Speaker 2:Whatever it might be, investors, so go in person. There's no substitute for it. Lots of video calls but again like okay, I've got thousands of customers, I can't meet them all, so we've got to have. Nps is not actually a great. It's good, like it's hardcore. I liked it.
Speaker 2:It's like really hard to have a good NPS score. It's like setting a very high bar for the team but on some level the customer doesn't care about their NPS. Like it's not a metric that the customer cares about, it's a metric I care about. But the customer is like they care about their on-time performance, the accuracy of their invoices. They care a lot about schedule accuracy if the stuff arrived the way it was supposed to arrive. They care a lot about price versus index, versus indices.
Speaker 2:So we make sure we have really good customer metrics in place for every single customer and then rolling up into squads, into geos, into the country and then globally, you sort of get this fractal roll up of the customer metrics. So that's the key is just like do you have good metrics and then good escalation channels for those things to surface? My favorite new one is actually using AI for this. So we have teams write up. We have teams write up what's happening with their customers and we put this into a rag, into an AI, like into an LLM, and it summarizes it all for me. Just find out what's going on. I couldn't read every single, can't read every single Salesforce record of every conversation, but I can get the summaries.
Speaker 1:Is it giving you themes or it's you're getting?
Speaker 2:just a really clean summary of of each one, or it's being like no themes. It's like here's the patterns, here's what we're seeing across the customer base.
Speaker 1:Give me an example, like what's something that you've seen in this process that was, you know, indicative of necessary change and oh, you fix it.
Speaker 2:Oh, I mean things like you know our process for returning containers to the port, like we've had too many detention charges in this region this month, or I mean it's just like kind of awesome what it could be. I don't want to crap on ourselves publicly with like what our churn reasons are, what's causing churn? But yeah, it's like you can ask it that what's causing churn. But yeah, it's like you can ask it that what's causing churn. It'll tell you. Okay, our relationship managers turnover there's a good like that's probably the number one cause of churn is someone leaves the company and you don't have a little smooth handoff to the next person dialing that process. Um, another big one is just they never really took hold. Like it really shouldn't count as churn if you don't get to like 10 to 15 shipments with us Like you took a spot one-off shipment.
Speaker 1:That's where the threshold.
Speaker 2:Like we really see, our churn rate goes dramatically down if you can get to 15 shipments. So a lot of what we need to do is get people to getting to 10. How do I actually make sure it really takes hold? Also because our software, our platform, is not as useful like you just want to ship one one thing one times, like cool, like an email is probably fine for that. It's when you have a bunch of stuff simultaneously moving that you're trying to keep track of that.
Speaker 1:Suddenly the software is way more valuable yeah, because I was going to say in some cases it's it's the customer, it's not you. In some cases the customer is someone who's always you know. They have one-off shipments every month, every three months, and they're always just looking for the cheapest price and you're bidding against however many providers and you won one time. But just because you didn't get it the next time doesn't mean that was a churn and you should be offended by it or or disappointed by that result, right?
Speaker 2:yeah, here I'm actually pulling up the rag. What else does it say? That we need to be better at develop strategies for handling price sensitive structure? Uh, customers, yep, that'll always do it. That was the exact.
Speaker 1:That was the exact example.
Speaker 2:I gave you a little bit of robust win-back strategy. So it's like awesome. Oh, the other thing that I've done with this what does a RAG stand for? I forget what is a RAG. Oh yeah, retrieval, augmented Generation. This is basically a way to make your own rule, your own custom LLM large language model, like OpenAI, but for a specific set of documents. So you put them into a rag and it'll summarize and give you context and let you ask questions of it.
Speaker 2:So we do an employee engagement survey where all the employees at Flexport 2,000 of us now can leave comments. I always reread all the comments but it's just like hard for the brain to process and synthesize and find patterns, whereas the AI is really, really good at that. And then I asked one question. My favorite question in the survey that I put in is what's something important that you know about Flexport that you don't think our CEO knows? It's like kind of amazing. They'd be surprised, I know. I know. I feel like I know 80% of what they say, but that 20%, you know it's also kind of scary.
Speaker 2:Nothing thankfully nothing came through that was compliance-related, but a lot of stuff. You're like, ah, the front line. You always got to talk to the front line and hear what they got to say. So I try to meet with all of our teams. That's why I'm traveling. We have so many offices around the world over 40 offices so I try to go get front line and you can't as a leader.
Speaker 2:This is a really good management lesson that I got from Brian Chesky, the CEO of Airbnb. He's a friend of mine that you you got to manage the work and not manage the people. That you got to your job as a leader is like being involved in the key decisions. Work like making sure that the work product is good. You're not a psychologist, we're not here and my team needs to be this thing. I don't want you to be like a team leader, psychologist and keeping everybody happy. No, we're going to manage the work and make sure the work product's really good, and it's very hard to do that unless you're touching the work and getting involved and talking to the front lines and developing information and intel sources within your company and outside your company to tell you what to deal with.
Speaker 2:Like. You can't just go through your leaders. They're, they're gonna it's like the human nature. They're gonna not tell you everything that you need to know. They not even. Not even because they're deceptive. It's just like human nature. They don't, they don't feel like they should burden you with these things where they're like you got to get out.
Speaker 2:So every time I go to one of our offices which is all the time I come away usually with like 10 pages worth of notes. I just take out a Google doc and I get people to just like you know and I. One of the lines I'll use is just like hey, you know? Cone of silence, like, can I trust you? Like, tell me, tell me what I should know. Yeah, unload on me, you know. And I just like all right, cool, and then I go solve those problems for them. It's not, um, and, and I think people know they trust me to the set because they know I'm I'm not no one get fired. I'm not looking to find people you know manage them out or something. I'm just looking to solve problems. And it's hard to create that. It's, it's not really scalable. I'd love to well, I'm encouraged by the AI of like, if I can just get the thing you know find better paths to surface this stuff so that it can be actioned.
Speaker 1:It's interesting because I'm so curious about this, because I was a leader that was very people-focused, I think, like yourself, but I don't think my style was remotely scalable and what I was really interested in because I think you know, when we were acquired we had about 600 employees and then we took over their existing brokerage, which was another 300 plus employees. We got to about a thousand before I was booted out the door and, yeah, I can joke about it now, but in any case, I I can joke about it now, but in any case, I used to, every six months, just open up my calendar for like two, three weeks and it was chaos to try to navigate this. But I said anybody who wanted a half hour of my time, you could have it and it was a really good way to be very in tune with what the front lines wanted and I think the people who took advantage of it loved that I offered it. It was not remotely scalable and I was I'm going to talk to you.
Speaker 2:I don't want every rando with complaints. You have to be careful not to make complaining the way to get CEO attention.
Speaker 1:Yeah, it also created chain of command issues, I don't worry that much about that the chain of command.
Speaker 2:If they don't like it about that, people the chain of command, they don't like it, they gotta know. Hey, my company man, I built this thing. I'm for sure gonna be here in 10 years. I don't know who else is gonna be with me that's a good point.
Speaker 1:I didn't. I wasn't brash enough to say that.
Speaker 2:It was more like the vps were like I don't like that you're talking to this guy because then he thinks he can come to you instead of going through me and I'm like I'm just trying to help people, though I don't run, look, I mean, yeah, you can slag me and talk to me and stuff, but I'm much more like let me go find people and see what I want to learn and talk to whoever, and and I always, and then usually what I'll do almost in in pretty much every case, is I'll go back to the leader and go hey, you know, I talked to these folks on your anybody. It's just like here I've helped you gather more information and I do it in a way that respects whatever was someone. If someone wanted to be something confidential or something, I'm not trying to violate that. But hey, here's some problems that I think we can go solve to help that, I might say, genuinely try to help that person that I spoke to and help the leader.
Speaker 1:So another piece of this that I think is important with customer obsession is obviously quality, and I think to get quality, culture is a massive piece of that, and I want you to talk a little bit about culture and kind of how you've kind of engineered the culture at Flexport. One thing I definitely want you to touch on is the notion of transparency, because it's something that I have is as forefront of my style as anything, and it seems like it's a big part of yours as well, and I'm just curious about how you think about culture in general, how you've engineered it, and then, you know, weave in some of the transparency notion in there yeah, um, I mean, ultimately, culture is the the thing that allows you to win.
Speaker 2:you mentioned earlier I guess that you heard me say that on some podcast I don't really believe in moats or something. It's sort of a provocative statement. But I also like to call back the military analogy. It's like, well, moats didn't really work. They invented artillery and we don't use moats anymore. So you find a way around the moat under the moat, something. The moat is not the moat, something Like the moat is not the best analogy in the world.
Speaker 2:I think culture is much better, as it is a defensibility mechanism for a company, like the ultimate thing if you have the best people working within the best culture, you probably will out-compete your rivals. Now, what is the goal of a culture? I'm very clear about that. The goal of Flexports culture is velocity, and I remind people who haven't taken a physics class in a while that velocity is different from speed. Velocity has a vector, it has a direction, and so to maintain velocity in a crazy world like we're in, you know we've had in the last five years. We've had port strikes, tariffs, natural disaster, who the war? Uh, in, you know, the red sea has been cut off, regulatory changes you got to start measuring your carbon. I haven't even mentioned cogrid and everything that happened there. So, like the world's changing out from under you, we basically write annual plans every year, like of q4, and then we like throw them out by march, it seems like, because something has happened the only way this works.
Speaker 2:If you have a culture that's really good at changing directions and maintaining speed through the turn, it's at velocity, um, agility and um. So I I think there's a handful of principles or foundational things that help a company maintain velocity and ultimately, again, that's the cultural foundation that you're trying to build. One is like a real sense of purpose, like people are really committed to why we do what we do, that we believe in the value creation that we do for customers, for our own team, for our shareholders of which our team is all shareholders even our vendors have to win for society. We genuinely believe what we're doing is good. You're getting fulfillment from this. You're learning, building your capabilities, growing, having that sense of purpose, because this shit it kind of sucks.
Speaker 2:Sometimes there's a reason they call it work Like it's it sucks and bureaucracy or other BS that the world's throwing at you. There's a lot of reasons that you might give up and you got to push through that friction. Clausewitz is a military historian, the most famous one probably besides Sun Tzu, and he calls friction in war is like this inevitable thing, this fog of war, this friction that comes about. I think what is his definition is friction is that which makes the easy difficult, the seemingly easy difficult, and the difficult becomes impossible and like.
Speaker 2:It feels like business can be like that, like why is it hard, like what is going on, and you're constantly bogged down by friction. It's the nature of business and so you got to have a sense of purpose to overcome that. Two is you got to have real focus. This is something that Plex Sports has been kind of bad at historically because we try to do it all. Our business model is like massive surface area, going every do it one stop shop from door to door, like really providing that end to end service. Spread the team thin, you don't get as much done. You can do anything you want, but you can't do everything. So getting the team to align and focus and kind of concentrate resources on a set of priorities and saying no to lots of stuff, that's a key aspect. So purpose, it's focus, it's building trust, and this is the one that, like, we kind of really eroded with all the leadership changes that I put their company through. That you got to.
Speaker 2:People have to trust the leadership. Leadership has to trust the front lines Departments got to trust each leadership. Leadership has to trust the front lines departments got to trust each other. It's one team, we're all in it together. How do you um at when?
Speaker 2:So rebuilding that trust and this is where you mentioned, transparency is a big way to build trust. It's like be honest, be open, show everybody that, show your problems, be real, um, be authentic, be vulnerable. Be vulnerable, like you saying, I got fired, probably, you know. It's like one of the ironies of the world is that people think that if you um share bad things about yourself, people won't like you. But it's the opposite if you share the worst fact about yourself, people are like I trust this guy more, I like him, um, and so, yeah, being vulnerable, uh, being humble, practicing candor, like being honest with people and giving feedback. But in order to do that, people have to be open to feedback and open to living in reality, being humble, not thinking. Try not to be. Uh. It's funny because our industry like often is like oh, these guys are so arrogant. I'm like not really. We just like are good at like finding interesting stuff and talking about it, but if you actually beat us, we're pretty humble. Admit our problems.
Speaker 2:I think a really important aspect of culture is your decisions, how you make decisions, decision rights Is it clear who has authority to make? What kinds of decisions? Is it going to a committee? Is it just dying? No decisions are getting made. Everybody knows what to do. No one can do it. A lot of are there a lot of fights, so those fights get resolved. Is that, is it the senior most person? Or is the senior person just absolving themselves of responsibility and letting people who don't have experience make the bad decisions? Like, um, you can tell a lot about a company's culture just by sitting in on some meetings and seeing, like what happens here. Who talks like how does it run?
Speaker 1:um, so I think, what, what is, what is that? What is the ideal structure in your mind look like for that? Because especially, the bigger you get, the more bureaucratic it tends to get, and the bigger fucking, the worse it gets is typically how it is totally, and I'm just curious how you navigate, that. You have 2 000 people and I'm sure you want to, if velocity is what you're talking about, not ad nauseum but like you know, as the central focal point then, like, bureaucracy can't be tied into that everywhere.
Speaker 1:So how do you think?
Speaker 2:totally well, and one of the one of the most important things I ever had here, because I started flex work because I don't want to be part of some bureaucracy Like I can't work in a job in a company and be bureaucratic Like I would kill myself. So I knew that that's not what I wanted. But it turns out the CEO being I hate bureaucracy more than anyone else Turns out that that is not enough to keep bureaucracy out of your company. It'll show up, might make it worse, you know. Know, because you got to be willing to go in there and own it.
Speaker 2:So developing like there's a lack of process as often as not creates bureaucracy where, like no one knows how to do anything or make a decision or get something done and like the place like is just like I feel like that's what happens in the government, like it's not so much that they have too much process there's probably some of that but also just like there's no way mechanism to get something done, so nothing gets done. I don't know, I don't have experience, I should say, but the so that was my one of the big mistakes I made early on. That I corrected years ago but that I learned early on. I felt like whoever's closest to the problem should just be the one making the decision and like like that works when you're pretty entrepreneurial, like really empowered, decentralized, like it was awesome to work here at that time but it led to a lot of problems of like lots of people think they're close to the decision. So you like got multiple decisions getting made that are different and like not aligned. You get people making two different.
Speaker 2:Yeah, like choosing two different software tools or two different systems that like we should just pick one. So like being more tops down, you can't be all that's a pure bottoms up nature. Uh, you got to be bottoms up, like the team can make decisions and leadership can make decisions. Uh, having the right level, clarifying what are the areas of responsibility, who can make what decision, is a key aspect for this and doing that. The org chart should be the way this is done and so the way you have an organization chart, we use a framework called RAPID for decisions. It comes from Bain actually.
Speaker 2:RAPID is like an acronym for who's going to play what role in the decision, and so the R is the recommender Anyone can recommend a course of action. The D is the decider. The D is the most important person. So asking who's the D the first and most important question. You're going to change something, you want to do something. Ask over and over again who's the D, until you find them. And if you find two people who think they're a decision maker, they're both wrong. It's wherever they meet in the org chart. That person becomes the decision maker, which is often me, and then I can delegate and say no, you're the decision maker. And then we got to write that down in areas of responsibility. In the future, when a decision like this comes up, we said that person was the D.
Speaker 1:So are there like slacks or you get whatever communication channel you use, so one person is sending another person a message tomorrow.
Speaker 2:Are you the d in this case? Yeah, ideally, we have lots of that going on um what we also just do. We have a weekly business review so we bring top I forget how many people are on this call, it's probably 75 people or something. Key leaders come in for two hours every week to review and we go through every person's business and their metrics and what's going on. Those are good for them there to like discuss topics weekly Monthly business review for each business unit. So I do about 20 of those where it's a deep dive into the business unit what's happening, that are at my level 20. There's lots more at lower levels. So there's lots of forums on a very regular basis for people to just surface these things and troubleshoot them and get to the answer.
Speaker 2:We don't have too many. I want to have more. This is not a perfect system by any means. I want to get more people escalating, make it more acceptable. You sort of feel weird bringing something to the court of justice and having me make the decision. So I gotta like reward people and celebrate them when they do that. Yeah, but but yeah, decision making is just like critical the rapid. By the way, the r is the recommender. I said that d is the decision maker, I is input. So like anybody can provide input. You don't want to slow everybody down but like sure get lots of input. But just clarifying that for the d or the decision maker makes life so much easier for them because they don't have to please all these people. They're like hey, they're just an eye, you took their input, but you don't have to listen to them.
Speaker 2:You show the system, but you don't have to do it, and that's very different. If you didn't clarify that and decisions will go way too slow. If you're trying to make everybody happy and it's kind of a jerk thing to do to be like let me ask you your opinion, then I just completely ignore it. But if I ask you and I tell you hey, you're an input on this decision, you, you? When you don't get your way, you're like, cool, well, they ask my input at least well, a good d will do their job to, I think, communicate to the eye.
Speaker 1:Hey, I appreciate your perspective. The reason I'm choosing to do correct the the other thing is because I'm confident that xyz, whatever, totally, totally and then um, a.
Speaker 2:The a in rapid is who has to agree for this decision to go forward? Uh, you're not allowed to put anybody in the a? Um. So unless it's legal or compliance or legal compliance or finance, like you need budget for it or you're like worried it might be against the law or something, I'm like cool, then you can put one of those departments in, but otherwise you just have two d's. If you put an a in there on everything you're like well, that defeats the purpose.
Speaker 1:So but if you can't put someone in the a, or is there someone who's naturally in a like?
Speaker 2:if it's related, leave it blank.
Speaker 1:One at a time, leave it blank. Oh, let's leave it blank, okay, and how about the P?
Speaker 2:And the P is who's going to perform the decision once made, and sometimes it's the D, sometimes it's the R, sometimes it's someone else that needs to be told you guys are doing. That's the framework. It's nice. Rapid can be used. We can get five of us and dinner where you know you can use it for anything. Um, the uh, you don't really need to type this up. But then when it's the d can request hey, you know what? I'm not really sure.
Speaker 2:The course of action. Go write me a memo, go write me a summary. You can ask somebody their input, like give me some options, give me a proposal, and then we'll do a like sit down and, you know, go through it and we do these monthly business reviews. So there's usually like key decisions and rapids that need to get if we need to make decisions on a, on a given business unit or something. So that's the, the fourth pillar. I said purpose, focus, trust, decision-making and then learning, like you should build a culture to be high velocity. It's got to be everyone's committed here to like getting better, constant improvement, upgrading ourselves, learning about the world, being curious, treating mistakes like they're, because you're ultimately trying to run really fast loops like launch something. See what happens, learn, do again. Uh, and so if you, if you lose that learning thing, you're going to be very disoriented um towards reality yeah, that makes sense.
Speaker 1:And then let's just jump from there into your leadership style, because I'm curious about you as a leader, as someone who's been doing this at this one company now for 10 years, but you've been in on an entrepreneur for it seems like 20 or so.
Speaker 1:Um, you know, you're 45 today, I think 45 I'm 44, I think 44 44, my bad, uh, it's the one thing I screwed up in my research, I guess. But you're 44 and um, I'm 34 and I just think where I was at 27 when I started the business versus where I am now has changed quite a bit. I'm curious, like how have you evolved as a leader over the years, and what are kind of like your guiding principles to your style?
Speaker 2:Yeah, I would say I've got a lot better a lot of things. I probably got worse at stuff that I don't know about, but I got a lot better at a lot of things. I probably got worse at stuff that I don't know about, but I got a lot better at being more top-down. I think I had this notion again coming back to that idea of whoever's closest to the problem should decide it. I was wrong about one fundamental thing in culture, which was big companies are these top-down bureaucracies and the people at the top don't know what they're doing and they're making too many decisions and we got to set the people free and you'll run so much faster. And there's an element of truth to that because big companies are too bureaucratic and tops down. But it turns out that the reason they're that way is because, if you do the opposite, it's like chaos and an equal batch of problems that are maybe worse, and what you actually need is a balance between these two things.
Speaker 2:And you know, in the biological analogy here, like your human body, you have a nervous system and an immune system and like an organism that's all top down will like die of disease because it doesn't have like the local cells don't just like attack problems when it sees them. They can't. The brain can't know about all the problems and tell everyone what to do all the time. It won't work. Whereas an immune system can like the local cell, that the individual, the team, the decentralized org can just like see a problem and attack it, but it lacks any kind of focus of direction, it doesn't have a brain, it can't move anywhere. It's just like sit there and still and attacks problems in isolation. So if you can balance those two and I think I was like all immune system in the beginning, because it was like a rejection of corporate hierarchies, even though I'd never been part of one, I just read about it and look at it and think about what that must be like to work in a big company.
Speaker 2:I knew it wasn't for me. So I I'd become much more like willing to make decisions, have courage, not have to please everybody. Um, have a having a point of view, make a decision, um, not try. Yeah, more tops down, more of a nervous system added to the mix. So it's probably the biggest transformational change that I made. I've always had high energy. I'm not someone who needs to outwork everybody, but I do. I've been weighing over the years, but lately I'm definitely the hardest working person in the flight sport. I think I can say that. I'm definitely the hardest working person at Flag Sport. I think I can say that. I don't think anyone's going to deny it.
Speaker 1:I mean, I think when you're trying to transform an organization like you are right now, that's a really critical piece to getting buy-in from everyone else. You're saying, hey guys, we screwed up, we made some decisions that put us in a spot that we don't love. We got to fix this. If you sit in your ivory tower and say, go fix this, go do that, and you're flying around to vacation there and vacation there, you're not getting the results you're looking for. If you're head down like I'm not getting up until we fix this problem, and then when I fix this problem, I'm going to fix the next problem, where we're going to fix the next problem, people will jump in with you and they want to be a part of that transformation. So I think I would guess that played a big role in why you've seen some such a turnaround and you know the the positive impact that you have.
Speaker 2:Yeah, and yeah, I just built good relationship. A lot of people. They trust me to tell me problems and know that I'll help them solve them, um, try to. The problem is I'm only one person. I can't be the only mechanism by which that happens, right? So it's like, how do we get them feeling that comfort level with every leader in the company and the ability to just like surface stuff and get it action and solve?
Speaker 2:So some current, current obsession of mine how do we impose all those principles I just said are great in theory. How do you bring them to life? Make sure it's always happening that way? Actually, like driving that velocity, I do feel that we're too slow, we got to go faster and and that's the job of leadership at the end of the day, is like be the energizer bunny. That getting people to go. Like humans are kind of innately willing to sit on their ass if they don't get a leader to drive them. Uh, coming back to where we started, the conversation around memetics, right, like can you get them to see a role model, see me as a role model in others and go all right, let's follow? Like people will imitate that behavior if it's set the right tone. And yeah, so that's the big part of my job.
Speaker 1:And you've talked a lot about kind of organizational leadership and a lot of the conversation has been around the business and your role in it and whatnot. I'm curious specifically for you as someone who's as curious as you are and seems to be a very good learner. Can you talk about like specific work you've had to do on yourself where you've had to say like, hey, I want to improve this aspect of how I am, and like what that work looked like and you know how it went about?
Speaker 2:um, probably like well, I already mentioned like reprogramming my values, like 20 years ago or something, but actually more recently, probably about five or six years ago, is when I quit drinking alcohol.
Speaker 2:Um, and that was a I I was, I loved, I used to love to drink, uh, and I don't think I was ever like someone from the outside wouldn't be like this guy has a drinking problem, but the problem is the CEO who likes to drink, is that everybody always wants to have a beer with the CEO Four or five nights a week. Someone will ask you and if you think that's good for culture which maybe it is, like it's good to have relationships with a lot of people, and people tell you stuff when you're out for a beer that they wouldn't tell you normally. So it felt like good culture. But next thing, you know like and I didn't really notice this until, um, I started to have some real sleep problems, uh, that were related to alcohol. Like I would have if I, I wouldn't be able to sleep, and not even like drinking a lot, just a couple beers would be enough to. I couldn't sleep.
Speaker 1:uh, well, and is that waking up a couple times, or it's only getting five hours, or what does that look like?
Speaker 2:yeah, and that's only getting four or five hours of sleep, like. And then the real problem wasn't the sleep per se, it was the next. I would have 48 hours of anxiety, like fear, oh my god, like, oh, something's wrong. Um, this psychological deep-seated, and that was the thing that was crippling to me. And then, what I realized, I was able to put a pattern together like, oh, it's like the alcohol is leading to this anxiety, the I think the alcohol led to. Lack of sleep, was led to anxiety or some. It was all connected system here. It was definitely the alcohol triggering it. And I realized it.
Speaker 2:And I remember one day being like, uh, someone asked me to get a drink. I was like, yeah, let's go. Just like just said yes, I'm sitting there with a beer in my hand, going like this is going to cause me 48 hours of anxiety. And I drank it anyways. And that was the moment I was like, oh my God, I got a problem, like I know this is going to make me suffer and I'm still willing to do it. And so I that was like enough pain, like recognition, like, oh my goodness, I must have like an alcoholism issue here. Then I quit drinking and it was only then that I noticed how often I was saying no to people asking me to have a drink, that it was many days a week and out with dinner.
Speaker 2:I go to Asia a lot. They love to drink over there, different business settings, it's like expected. Now I have to tell them I have like liver problems and stuff which I actually do. I think I have like a liver problem. That was like causing me not to metabolize the alcohol properly which is leading to the alcoholism Sorry, not to the alcoholism to the anxiety, possible alcoholism, I don't know and that was a big kind of like pivot point for me was like recognizing that I had a problem, even though, like no one else would have seen that problem about me. I don't think.
Speaker 2:I didn't make it on alcohol. It wasn't obviously causing me issues to the external world but it was like internally to health.
Speaker 1:Yeah, it wasn't like a classic, like it wasn't what people would typically think a drinking problem would look like, where it's like you're getting obliterated and making a fool of yourself and things like that.
Speaker 1:I think I'm in a similar camp and I've I've just naturally, in the last six months, just stopped. I haven't completely cut it, but I've. It's like I'll have a beer here or there. I just have lost interest in it in a lot of ways. Yeah, um, and it's just been a pursuit to I don't know. I'm just. I'm in a place where I'm just constantly trying to better myself because I don't have shit else to do. I don't have a company I'm running.
Speaker 2:Uh, I, I'm really it's actually a pretty good test of who you're hanging out with and if they're good influences on you, cause no one, no one cares if you drink or not.
Speaker 2:Yeah, and if you do, they're in a social anxiety scenario a lot of people are at, even at a party. No one's paying attention to whether you're drinking or not. Just hang out, and then what you'll find out is like, actually people aren't as interesting as they think they are when they're drunk, so you don't want to hang out that much, uh, because I'm not having as much fun as they think they are yeah, so there's this club in chicago that we went to a lot.
Speaker 1:Uh, it was right by our office in the west loop. Bandit is what it's called my dog. I actually named my dog after this club. Uh, I met my wife there but basically, uh, she thought I was a fool.
Speaker 1:The first during the six months of our due diligence, as we were selling, I was drinking a lot and I only ever saw my wife, or she was not even my wife and she was not even a friend at the time. But I would only see her on friday nights and I would start drinking at the office at like noon on friday and so by friday night I was actually like obliterated at the bar at 10 o'clock when she'd see me in any case. I don't know how I got down this path, but what I meant to say is I went a few months ago to this club with a bunch of old co-workers and I wasn't drinking and all of them were. And and is you're the sober guy standing with 15 people? First of all, you're like this is not very fun, uh, just to be in the club at that point, uh, and they're all hammered and just falling over themselves and like we missed blah, blah blah and just talking nonsense. But I, I can relate to that and it's, it's.
Speaker 2:I don't know. You gotta find. You know you gotta find something else to replace it with. That's one of other tony robbins, other licenses like first of all, associate massive pain with the thing that you want to stop doing and run your head about how about, if I don't quit drinking, it's gonna ruin my life? I'm gonna. I'm gonna envision yourself in the hospital with all the people you love coming to visit you. Like you could.
Speaker 2:You gotta create the mental image and make yourself quit. I didn't have, I didn't have a big problem of addiction that level, but that's, that's the technique. And then you gotta find something else to replace. You're getting pleasure from it. So how do you find something else that you can get pleasure from that replace that source of pleasure in your life? And it could be like working out, exercising, hanging out with smart friends of yours, going for nerding out with people who are just not drinkers but just more interested to talk to you. You've got to find other ways to replace the benefit you were getting from a bad habit ways to replace that, the benefit you were getting from from a bad habit.
Speaker 1:What's a weird answer to that? That I don't know if it's. What I've been spending a lot of time doing is like trying to understand myself at a level I've never understood myself. And it's it's various books like I'm reading this one right now radical compassion. Uh, tara brock, I think it's her name or how does, how does pronounce her name? Um, and it's because I've always been a reactive leader in in a negative way and struggled to manage my emotions when being reactive. And she's got this methodology reign for navigating challenging emotions, especially around like anger and such and, and you know, a lot of the shame I've carried around.
Speaker 1:My leadership style over the years is rooted in situations where you know customers are unhappy with us. I react to the situation. I come down on an employee in an angry way and then I'm regretting it and feeling terrible about it later and it just anger has played a role in my life that I'm just unhappy with. And now it's like I'm spending all this time again because I'm jobless largely. Um, I help my dad a little bit with his stuff, but I'm largely jobless and a podcaster.
Speaker 1:But, um, this rain, rain methodology. It stands for recognize, allow, investigate, and it's like you can let. Anger is okay to have, but it's about recognizing. It's there, allowing it to be there, investigating, like how do I, how am I feeling it? Like physically, and then there's a nurture aspect.
Speaker 1:I'm not that far in the book to fully describe that piece, but what essentially he's saying is like you can have these complex emotions and not let them have the wheel, so to speak. But my whole thing now is like just trying to deeply understand who I am and like what are the things that have shaped me into the person I am today and how do I become a better person and how do I become a better leader? Because I'm itching to get back into building a business and like from the ground up I miss it more than anything in the world. Back into building a business and like from the ground up I miss it more than anything in the world and I've got this terrible non-compete that's like preventing me from touching. I can't touch the industry largely other than does it go away when they fire you.
Speaker 1:That's what I stopped nope, not when you've got the earn out sitting there. That supposedly could hit that.
Speaker 2:Yeah, that's not on that topic that you say uh, I, I can't recommend enough. Uh, awaken Giant Within. But there's a particular chapter in there around pain and pleasure. Because the problem with that method, without knowing anything about it, is that if it's an anger problem, it's almost by definition. You don't have the logical. You could have all the logical thoughts in advance about this, but anger just comes in that moment.
Speaker 1:In the moment.
Speaker 2:Yeah, how do you control it? But like, anger just comes, it was like in that moment. Yeah, how do you control it? And being able the idea of tony robbins is programming your brain to like really wiring it to go okay, what do I? You're getting some pleasure from the anger.
Speaker 2:Uh, and if you can instead position it as pure pain, that when you feel anger, you know you're like associating pain with it. You're telling yourself and what a lot of you do in exercise is like play these movies in your head of like all that, write down all the worst things that could happen because of your anger problem, and then like magnify those times a hundred and play the movie and visualize it and listen to the sounds of it all and and like, get yourself to that. I don't know anything about anger in particular, but like with anything that's giving you that you want to change a bad behavior. That that's the um. Neurolinguistic programming is what he called. That's what it's called as a field. Try to like really program your brain to respond in the right way okay, awaken the giant within is the name of the book.
Speaker 2:It's a great book. I love it. People think it's easy because it's Tony Robbins, but I love the guy.
Speaker 1:No, I like that. I'll buy the book and I'll let you know what comes with that process. So before we run out of time, I do want to spend a little bit of time on. You guys have made a couple acquisitions lately, in the last however long. One of them, specifically Convoy, I think, is very relevant to this show and the domestic freight brokerage industry. Talk a little bit about that deal, why you chose to do it. Let's start there.
Speaker 2:Oh yeah, well, Flexport a we're an international freight forwarder is our roots, uh, moving cargo from origin anywhere in the world 147 countries this year to and from 147 countries. Uh, we do small amount of domestic trucking before convoy acquisition. Um, and where we did it was only because a customer is asking us to do it. That's a good international customer. And we were very clear like, hey, we may not be the best at this, not our bread and butter. We're going to care more, we're going to do more, but we might not be the cheapest or the best, but if you like us enough and the one-stop shop and the value prop, happy to solve a problem for you, like, let's go. So we have a small business doing that. We acquired Shopify Logistics, which also had a small business doing trucking, and then, but like it's a natural, like you want to be this one-stop shop that can do all the things. So it was a natural, was always interested in it, wanted to be able to cross sell that service, but was not focused on.
Speaker 2:It was, I think dan was, I think convoy was running a process to sell themselves. I mean, they were running a process, but we had for a while and we had, I'd been really clear with dan, like, hey, not, you know, we're not going to be have the budget for it, we're not going to be interested, not going to be, we're not going to waste your budget for it, we're not going to be interested, we're not going to waste your time. His process turned upside down and failed and it went bankrupt. And I read about it in the newspaper, like everybody else in Freight Waves I think. I was like, oh crap. So I called Dan because he's a friend of mine and he has this beautiful fiancee, now wife. So I called him and I and I was like dude, did she dump you? And he thought it was a really funny. I've met her, she's great priorities, you know. Like, uh, I'm sorry.
Speaker 2:I'm sorry, dan, I'm sure you're thinking about what matters I'm sharing too much, but I think dan appreciated I was reaching out to him as a friend, you know, and he's like no, you know we're good, so hey who cares man, it's just business.
Speaker 2:But you watch, it's okay. Um, and then we started talking about, uh, like I mean I know a little bit more of the backstory of convoy but I can't go into all of it, but um, but he was just like look, the bank owns it now. If you want to buy it, they're gonna sell the assets. You should call them. So I called them and they gave me a price and I was like done, and we got it done at a very, very attractive price, at an offer I couldn't refuse, kind of price, and like literally it was just like, wow, best deal of my life. So this is like the best M&A transaction of all time. It's going to go down as one of those. And part of the way we got done is because the bank wanted someone who would just make the decision and wire the money, with no diligence. And again, coming back to the thing earlier founder-led business, there were a couple other potential suitors, but they already have to run it through committee and get board approval and I was able just to say yes and we wired the money the next day. We just got it because I could make a decision, and so we now what we didn't have a perfect strategy for this. It all happened very quickly.
Speaker 2:Clearly we didn't have a perfect strategy for how to integrate it, what we were going to do, and we didn't know I, I, I did you know. It wasn't like literally a phone call and then to say there was little bit of process. I took, I went through all the. I'd known Condoy, I'd known Dan pretty well, I'd known the tech was, was leading for the industry or some of the best tech out there. I didn't have that much of a picture of it, I hadn't gone deep, but I just had this sense of it. So then I went through much of the tech and I'm not a domestic truckload guy, but it was like probably 60 of the 120 slides were about compliance, fraud, detect, fraud, prevention, security, all this stuff. I was like, oh man, why do we spend so much time on that? Because in the international business there's not nearly as much, it's not nearly as rampant, there's a small number of players.
Speaker 1:You're, your freight's not getting stolen off the ocean. It's not getting stolen off. Yeah, exactly.
Speaker 2:So that was one thing that jumped out at me, too was they had this convoy for brokers product, which is the ability for a convoy that has over 400,000 drivers using a mobile app More than they could keep fed. You need these guys to open yours up every day and be in the first place, and they didn't have enough freight. And I think, even if they'd been super, even if they had 10 times more revenue I don't know they could have kept 400,000 drivers active every single day, being the number one source of loads for them. So it became clear that this Convoy for Brokers project was really working. It was only about a year old, but it was really crushing. Convoy for Brokers product was really working. It was only about a year old, but it was really crushing. Convoy for Brokers is where other brokers can plug in to that asset, to that base of carriers 400,000 drivers, 80,000 carriers plug it into the TMS and then those drivers can bid on their loads and be sort of like an automated carrier sales team, and if they win the load, then, by definition, they save you money and they earn a cut, we earn a cut and so we made the decision to go all in on that and we actually haven't brought in a convoy selling FTL. We haven't brought that part of the business back. We brought convoy for brokers back in a big way and I think, the logic there being, if I can get, we have right now 17 trucking brokers, ftl brokers, signed up for it. So it's still small but our goal is to get over 100 by the end of next year to keep these drivers hungry, to keep attracting more and more drivers, have it be the place and be neutral and not have the conflict that Convoy actually had because they were an FTL broker. We're not an FTL broker. It doesn't fill FTL a tiny bit for some of our customers, but even the tiny bit that we do, we actually have other brokers serving them and so I think the way you'll see us bring this back when we do start selling FTL at large is that the brokers who come on to convoy for brokers and use our supply side base, sort of carrier network that we have, will be able to sell FTL also to the FlexBorder national customers and sort of have like a true technology platform there where you've got some demand, you've got a lot of demand flowing in Every international container becomes one or more truckloads downstream. Basically um and then and and our customer base like ships, a lot of fdl that we don't touch today and then have this long tail driver network. So that's how we're bringing it back. It's um, yeah, it's gone like from an roi standpoint, return on invested capital just like tremendous deal.
Speaker 2:Very proud of the tech that we brought over their top. We couldn't bring enough. They have a great engineering team. We only had budget and allocated enough budget to bring over the top kind of like 45 or so of the software engineers. I think by the time they shut down they had like 250 still around there. So we brought over kind of the top ones that the leadership team really wanted to bring on Right now. We also gave them our FlexFort Trucking org. Now we've merged the two Because we do trucking for drayage port trucking, airport trucking. So Convoy you'll see us bring some of the Convoy tech into owner operators coming into the drayage market at some point. Challenging to do. But that's going to be also a big part of the ROI case.
Speaker 1:Yeah, so I mean, this is something that I have thrust myself into the conversation of with respect to a competitor, bro uh uber and, and their launching of a very similar product their broker access product just a few weeks ago, and it caused quite a while.
Speaker 2:They just made an announcement. I didn't see that.
Speaker 1:They've been doing it for a while yeah, they just announced it and I kind of came out shortly thereafter and said this is, this is kind of a sticky place to be, because in a lot of ways it feels like a double brokering product. It's close to it if it's not it, but there are more overarching concerns around as a broker, giving or sourcing your capacity from a direct competitor and not your customer, not knowing. I mean, there's just so much about it. That's just kind of ugly and I think it's wise that you guys are not planning to do that.
Speaker 2:Yeah, we've made it neutral explicitly. I do think that's a big part of what sets us apart when people talk to us and to Uber about these two different things, like the fact that we're not an FTL broker and we just have this neutral platform. And we do aspire to be able to offer FTL, but we're going to have it be the brokers doing it and we're very transparent already that the and there's not double brokering here, because we're just the technology platform and the contract is between the broker and that carrier directly and by export or convvoy is the technology enabler, but there's not actually a trucking brokerage. That is us in between the two. And then when we do go sell FDL to our core customer base which we aspire to do, but it'll just be the broker's name. They'll see who they're buying it from, They'll service them.
Speaker 2:We want to build tools so that the transaction's happening here, but we'll integrate with the TMS of the broker, as we already do, but we'll integrate the demand side too and you'll have a relationship with that broker. Our fee has to be small enough that it's not worth cutting us out to go. You know, and if you do, then you should do that because that's a decision you want to make. That's good for your business, but that keeps us honest that we can't take it. That's good for your business, but that that keeps us honest that we can't take. It's not like we're going to make a broker kind of margin on top of all the other brokers, it just wouldn't work.
Speaker 1:I mean as a as a pure technology platform with access to capacity that, frankly, a lot of brokers would struggle to otherwise find. This is a new solution that I think a lot of brokers can consider, and reasonably consider, that may add value to them, because, if there's one thing, the capacity is really good.
Speaker 2:I mean, these owner-operators are entrepreneurs who want to do a great job. They're just too expensive to work with. You have to go through DAT and there's a lot of fraud and things like that. But just like you're not going to call some random guy with a truck and expect him to show up, but it might be fraud, there's all kinds of stuff. So the fact that we run every single truck through six background checks on every single load, every carrier goes through six background checks on every load to double check everything that's live, we would have to use our mobile app. It has to be open during the entire journey so if they veer off the expected route, it sends a notice to security right away. We've had no fraud whatsoever, like no theft, for like two years running. So the tech that piece of the tech is what really really makes it stand apart is the security to fraud prevention and then just accessed, like you said, like low friction access.
Speaker 2:And then you get this competitive bidding dynamic of multiple on average I think it's six different carriers bidding on each load. So we can't we're filling right now we're filling 10% of loads. So the way it works is a broker comes on board, we integrate with their TMS lightweight pretty quick to do. Then we will bid. It was sort of carrier sales your carrier sales team keeps going try to try to cover the load, but if they can't, or while in parallel art, we're bringing offers and right now we're winning about 10 of them. Um, we think we can win 20 over time. But on those 10, like kind of by definition, we gave the broker money otherwise yeah, it's a win.
Speaker 1:it doesn't have to be%, it doesn't have to be some big number.
Speaker 2:The fee is much less than the savings because it's built in and you wouldn't have let us win if we weren't. It's a simple win-win. It does take some degree of setup on the outside. We've got to go into the TMS and it takes like a week or so to integrate, but it's not a big deal. Yeah, it's not a big deal.
Speaker 1:Yeah, I mean, I think one thing that the convoy group didn't get enough credit for Dan, especially with his team. But it's like they built some really exceptional technology and you know it gets if you're 30,000 feet zoomed out and don't know the details. It just looks like a company that raised a shit ton of money and failed, and you know there's some truth to that part. But it doesn't. It doesn't consider that there are a lot of things that I guess you are the ultimate winner of and you get to keep the, the benefit of what was built without having to have lost all the money.
Speaker 2:But the tech is sick, like it's the best in the industry and I, you know, we've got people from Uber Freight who said the same thing and others. So the tech, the tech is really, really strong. The team is amazing, like Dan built a really good technology team. I think you're right what you said earlier, like my view of it is like almost two products in tech led and not enough. Kind of Midwest steak dinner, great brokerage, like you got to go take the customer out to dinner.
Speaker 1:Midwest steak dinner right here Exactly. Not enough of this.
Speaker 2:Kind of a West coast product and tech company in a Midwest steak dinner industry. But we were trying to build up that tech platform and Flexport's pretty good at the sales aspect and, and you know, sit down and take people to dinner and go break bread and figure things out. So I think it's a good fit for us. But yeah, it's a, I would argue, actually their tech team.
Speaker 1:I mean, I'm just so impressed by the guys that came over guys and girls, it's just like an awesome team yeah, and I think there's also benefit that you didn't allocate enough budget to taking more of them, because there are a lot of good new businesses that are going to come up out of this probably those folks. My brother himself probably started one with the um, yeah, ryan, yeah so there and there's, there's plenty of others that are getting up and going, so yeah um, well, listen, it's been we've.
Speaker 1:I got you for two hours and and I you know, I had two goals here. One was to really get to know you, the person, and the other was to get to know your business, and I think, and I feel like I've we've we've accomplished those. So, um, I don't know if this was the best, but but, uh, I enjoyed it and, uh, I I really appreciate you coming on the show.
Speaker 2:My, my pleasure. Thanks so much, man. I appreciate you having me on Great to get to know you guys. I get to know you a little bit and, uh, I like, I appreciate you being vulnerable. You know, it was like I think people will like. That's all you got this week and we'll see you next time.
