Flexport CEO: Two Questions Every Founder Needs to Ask

Harry Stebbings 0:00 You said remote work is... Can you help me fill in the statement here?

Ryan Petersen 0:04 Uh, well, I got- I, I say, I say it's white collar fraud. I have a three-year-old and a five-year-old. The idea that I could do any work at my house is, like, a total fantasy. Like, come on. You're kidding.

Harry Stebbings 0:14 Our guest today is a longtime friend of mine, Ryan Peterson, founder of Flexport. He's been on many shows before. I don't think he's ever had a conversation as open and honest as this, where we touched on everything from Chinese open source models, is the CCP at risk, why remote work is like white collar fraud, and so much more.

Ryan Petersen 0:31 I think the negotiation that we're gonna have with Salesforce is gonna be a lot different than the last one. I think selling SaaS to tech companies is gonna be a tough business, 'cause we can build the stuff ourselves. Revenge and patriotism is a great investment thesis. There's a lot of collusion in VC. Like, I have a feeling that most VCs actually collude more with competitors [chuckles] than with their own partners.

Harry Stebbings 0:48 Ready to go? [upbeat music] Ryan, I cannot wait for this. Dude, we've done this a couple of times remote, but I feel that it's much more special in person. We're gonna get to remote work, but remote interviews are not as good as in person, dude, so thank you for being here.

Ryan Petersen 1:12 Yeah, it's great.

Harry Stebbings 1:13 Dude, I wanna start on what motivates you more? I'm finding this really interesting pattern. It's either the fear of losing or it's the thrill of winning.

Ryan Petersen 1:22 Hmm.

Harry Stebbings 1:23 Which one is it for you?

Ryan Petersen 1:25 Probably the fear of losing.

Harry Stebbings 1:26 Hmm. Why?

Ryan Petersen 1:27 I don't wanna be a loser.

Harry Stebbings 1:29 [laughs]

Ryan Petersen 1:29 Well, it's like the wi- you never win enough, right? [laughs] Like, you- I've already won, and yet I still am like, I don't feel like I won. Uh, but by any standard, if I- what I- by any standard-

Harry Stebbings 1:40 [laughs]

Ryan Petersen 1:40 ... of what I set out when I started the company, like, I've won. My, my first Excel f- uh, I've- my first and only financial model that I made for myself for the business got to one million of revenue [laughs] right? And like, we d- did over two billion last year, so.

Harry Stebbings 1:57 I hate Excel models. I am terrible at it. When I open up Excel it says sign in or register, and I'm just like, "I'll leave someone else to do it."

Ryan Petersen 2:04 I'm not very organized, so.

Harry Stebbings 2:05 Are you not?

Ryan Petersen 2:06 No, and like, I feel like making a good model requires you to, like, organize your, organize your stuff.

Harry Stebbings 2:12 So today's rule is we're gonna play a game. Now, you've done shows before. Um, every single question that I ask has to be a question that no one else has asked before.

Ryan Petersen 2:24 Okay.

Harry Stebbings 2:25 And if I ask a question that someone has asked before, you have to tell me, and I will donate $100 to a charity.

Ryan Petersen 2:35 Oh, wow.

Harry Stebbings 2:36 [laughs] I told you.

Ryan Petersen 2:38 Oh, great. All right.

Harry Stebbings 2:38 I'm very, uh-

Ryan Petersen 2:38 So we're gonna... Do I get to pick the charity? What are we gonna do?

Harry Stebbings 2:41 Sure, you can-

Ryan Petersen 2:41 And what's your charity?

Harry Stebbings 2:42 Um, uh, my mom's got MS. I would-

Ryan Petersen 2:44 Oh, that's great

Harry Stebbings 2:44 ... uh, like to give it to-

Ryan Petersen 2:45 Okay, we'll do that charity

Harry Stebbings 2:45 ... an MS charity.

Ryan Petersen 2:46 God bless her.

Harry Stebbings 2:47 But that's the deal, okay?

Ryan Petersen 2:48 Okay.

Harry Stebbings 2:49 So these questions could be fucking weird or interesting.

Ryan Petersen 2:51 Do I still answer the question? No, I don't answer, I just go $100.

Harry Stebbings 2:54 You, you, you... No, you just go bang bang.

Ryan Petersen 2:55 Great.

Harry Stebbings 2:57 But if you lie, you pay $1,000.

Ryan Petersen 3:00 Oh.

Harry Stebbings 3:00 [laughs] So if it's a hard question-

Ryan Petersen 3:03 All right. So I can get out of any question just by paying $1,000.

Harry Stebbings 3:05 Yeah. [laughs] Actually, it's not a bad deal. [laughs]

Ryan Petersen 3:07 [laughs]

Harry Stebbings 3:08 That was a bad start, Harry. You should have rethought your rules. Um, the first one I wanted to ask is, when we were chatting before you said about the nature of VC jobs and why it means that inevitably the way that VC's jobs work is they end up as herd animals. Why did you think that was something

Harry Stebbings 3:26 interesting we should discuss?

Ryan Petersen 3:27 Um, well, if that i- you know, VC, y- your, your show is called 20 Minute VC, so what's a hot take on venture capital?

Harry Stebbings 3:33 Yeah.

Ryan Petersen 3:33 Um, the, the nature of the job is simply that it's just such a good job. Uh, it pays really well. Like, if you were listing, if you were listing, like, okay, what... If someone who likes to have a job, what, what would be the attributes? Like, pays really well. You basically don't have a boss. You're, once you're, like, a partner or, like, at some, some level of seniority, you have no boss. Pays well. You don't have to be anywhere on any given day. There's, like, kind of not a fixed schedule, and it's very hard to measure if you're good or not on any reasonable timeframe. So, like, you can't get fired. Pretty, these are pretty good attributes of a job. So, like, therefore-

Harry Stebbings 4:10 And security.

Ryan Petersen 4:11 Yeah, that's what I mean. You can't get fired.

Harry Stebbings 4:12 You know, fund fees f- for 10 years.

Ryan Petersen 4:14 Right.

Harry Stebbings 4:14 And not only can you not get fired, but, like, uh, dude, I run a media company, you run a, a company. Uh, revenues can go down. They are not certain. You know, fund fees are, are, are legally, you know, structured.

Ryan Petersen 4:24 Mm. Yeah. Yeah, so, so you have to, if you're in a m- if you are a partner... Now, if you run the fund, that's one thing, but if you're, like, in, a partner that's doesn't own the fund, you could get fired. So you don't have infinite job security. So your whole thing has to be, "How do I avoid getting fired?" Like, so, uh, you know, you can do this in reverse or invert the p- invert the problem and you go, "Well, how would you get fired as a VC?" Okay, like scandal [laughs] sure, avoid that. And you can't allow everyone else who works at your firm to think you're dumb or doing bad things, like doing stupid deals. They don't know. It can be bad deals. Like, yeah, or they could be great deals. Uh, they, you, you could be doing great deals, but if people think they're bad deals, you might lose your job. So therefore, okay, I need everyone cons- you're gonna get consensus, right? And if you're, you're also gonna channel check all your deal- you're gonna, like, check with your competitors. There's a lot of collusion in VC. Like-

Harry Stebbings 5:19 Yeah

Ryan Petersen 5:19 ... VCs are constantly talking to each other, in part 'cause they need to make sure that they don't step out on the edge and do something that their own partners are gonna think are dumb. Like, I have a feeling that most VCs actually collude more with competitors [chuckles] than with their own partners, 'cause they don't want their... They, they need to m- spot check their deal and make sure it's good before bringing it to the other partners [chuckles] to make sure that they're not seen as being dumb. So that's where you get the herd be- behavior.

Harry Stebbings 5:44 I love Keith Rabois, who says that actually he likes to sense check his deals with friends, and if they don't think that his deal is stupid or crazy, he's not doing his job.

Ryan Petersen 5:55 Oh, yeah. Okay, good. Yes, he's, he... See, I think Founders Fund, and Keith was at Founders Fund for a while. Either there's a few funds that avoid this type of behavior somehow, or some people are just born into it With that contrarian bone in their, you know, butt

Harry Stebbings 6:08 Do you think you can only do stupid or crazy shit because you have money now?

Ryan Petersen 6:13 Me personally?

Harry Stebbings 6:14 Mm.

Ryan Petersen 6:14 I don't have that much money. [laughs]

Harry Stebbings 6:17 [laughs]

Ryan Petersen 6:17 So, um-

Harry Stebbings 6:19 But you don't need money. I don't, you know

Ryan Petersen 6:22 No, I have enough, I have enough

Harry Stebbings 6:23 Yeah

Ryan Petersen 6:23 Yeah, yeah

Harry Stebbings 6:24 Like, when you're paying rent and school fees and it's like, "Oh, God, fingers crossed." Like, I think that richer investors make better investors.

Ryan Petersen 6:32 Mm.

Harry Stebbings 6:32 And you're like, "Mm, what?" Like, Sequoia are focused on upside maximization. How big could this be? They are not fearful of LPs coming back for their next fund.

Ryan Petersen 6:41 Mm.

Harry Stebbings 6:41 They're not fearful of deployment speed compressing, so you know, they, they elongate it. They just invest in what they think can be mega

Harry Stebbings 6:49 fucking companies.

Ryan Petersen 6:50 When, when I, um, when I started as an entrepreneur was kind of... Like, now it's like everybody's becoming an entrepreneur, but I started doing companies, like, in the early 2000s, late '90s even with my older brother. Uh, it was, I mean, I guess at that time it was less mainstream to start a company, and we weren't in Silicon Valley. We weren't, we didn't call ourselves, like, tech, startup. We didn't raise venture. We were just hustling to make money. And one of my tricks actually was I moved to China when I was 25 years old for this company, and my rent was $120 a month for a two-bedroom, uh, apartment in a nice part of a second-tier city, but it was, like, a nice... And so I knew, like, that actually gave me a lot of permission to be an entrepreneur, uh, and to, which was kind of being crazy, doing crazy stuff, because I knew I could live off of... If I could make 500 bucks a month, I could survive. Uh, and I knew I could always make 500 bucks a month. So, like, I could do a startup. I could do, I could take risks 'cause I'm like, worst case, like, I lived in a nice apartment in a nice town. I had a good quality of life. My total OPEX was, like, $250 a month, like, so it gave me permission, yeah, to take some risk. But it's the opposite. I'd have to be, I was relatively rich, right? Or, like, relatively secure.

Harry Stebbings 8:04 What's your, what's your number?

Ryan Petersen 8:06 What's that mean?

Harry Stebbings 8:07 What's your number basically means what's the number that you had in your head of, like, "Ah, once I have this, I'll be happy."

Ryan Petersen 8:14 Oh.

Harry Stebbings 8:14 So, like, for me it was always, like, $20 million, with the rationale that you have 5% interest, you make a million bucks a year for doing nothing. A million bucks a year is more than enough for anyone who's adjusted [laughs] you know, mentally.

Ryan Petersen 8:26 Well, this is how you know money is amazing, because, uh, the more you have, the more you want. You can never satiate the human desire. It's infinite.

Harry Stebbings 8:33 Do you find that? 'Cause I don't.

Ryan Petersen 8:34 No?

Harry Stebbings 8:35 Uh, no. Like, of course you want more, but, like, I only buy trainers. Like, I would much rather have more convenience than more money.

Ryan Petersen 8:44 Yeah. I mean, I, I haven't been that motivated by money. I, I, I'm more into, like, uh, power. [laughs]

Harry Stebbings 8:51 [laughs]

Ryan Petersen 8:52 I wanna do big things.

Harry Stebbings 8:53 That's really interesting. You know, there's, uh, there was a question that my girlfriend asked me the other day, and she said, "If you lost 90% of your money, how much of your self-worth and self-esteem would you lose in percent?" Uh, maybe you're more adjusted than me. I said I'd go down 90%. [laughs]

Ryan Petersen 9:10 [laughs]

Harry Stebbings 9:10 No, I do, but m- mine is, like, my work is directly correlated to the financial outputs that you have, like, candidly.

Ryan Petersen 9:17 Mm.

Harry Stebbings 9:18 If you are a general in the army, your success in your profession does not correlate to your financial s- statement at the end of the day. I'm a venture capitalist.

Ryan Petersen 9:27 Yeah.

Harry Stebbings 9:27 The clue is in the name. If you're good, you make bank. If you're not, you don't.

Ryan Petersen 9:31 Yeah, but it's, you know, you gotta forget the, [laughs] forget the past and the future and, like, the future, y- y- the future's not written, so you can go make it.

Harry Stebbings 9:40 If Flexport were to raise today, what do you think you'd raise at?

Ryan Petersen 9:43 I don't know. I really don't know. Uh, I think this year we're gonna get to basically break even. We're on run rate to do about f- $450 million of revenue, net revenue. Sh- breaking news here, I haven't shared that, but $450 million of net revenue.

Harry Stebbings 9:59 What's your growth rate?

Ryan Petersen 10:00 Last year was 350, so...

Harry Stebbings 10:03 350%?

Ryan Petersen 10:04 No, $350 million last year. So what is that?

Harry Stebbings 10:06 Okay, so-

Ryan Petersen 10:06 100, about almost 30%.

Harry Stebbings 10:08 Doing 30% at, you said 450.

Ryan Petersen 10:10 Yeah. And I think we'll do 600. I mean, the goal is to keep going 30% every year for 10 years. But the big, like, I think the big questio- and then beyond, but the big question for most startups, I think you have two things that you have to ask. Actually, I got this from Paul Graham, where he said there's two, every s- startup if you see, like, a hockey stick growth curve, then there's two questions you need to ask. Like, are they doing some kinda hack that's unsustainable and gonna stop working, number one, and two is, is the market big enough for it to keep going? And if, if the answer is, like, no, there's no hack, like, this is genuine growth, and two, the market is really big, then the thing will just keep going, right? Um, and I think Flexport's like that. Like, the mark- there's no hacks. It's actually a grind. Like, we've got salespeople out there-

Harry Stebbings 10:55 Yeah

Ryan Petersen 10:55 ... in the field, like, calling on businesses and going around the world, and then the market's enormous. We're still less than 1%, .1%.

Harry Stebbings 11:03 When you extrapolate that out, you said 450 to 600, and then you can be 750, and do you worry about the constraining exit landscape? Like, when you look at IPOs today, dude, unless you're mega fucking scale, you don't wanna go out.

Ryan Petersen 11:18 Mm.

Harry Stebbings 11:19 With the greatest of respect, strategic buyers are less present than ever before, and then you've got buy- buyout firms which are running for the hills because the Medallias and the Coopers and the Anaplans of the world are all bluntly looking pretty precarious right now.

Ryan Petersen 11:34 Mm.

Harry Stebbings 11:34 Do you think that's a concern that should be felt or no?

Ryan Petersen 11:38 I don't, I don't think about it at all for Flexport. Um-

Harry Stebbings 11:40 Yeah.

Ryan Petersen 11:40 I, the word exit implies that I'm, like, gonna stop working at the c- you know, that I'm exiting, so I don't think of it in that term. IPO would be-

Harry Stebbings 11:48 Do you wanna take the company public?

Ryan Petersen 11:49 Yeah, yeah, we intend to go public. Um, and I don't know what the valuation is or should be or will be. Uh-

Harry Stebbings 11:53 Yeah, yeah

Ryan Petersen 11:54 ... it's sort of like, well, but if we can just keep growing, you just draw the math out.

Harry Stebbings 11:58 But when do you think you should go public then?

Ryan Petersen 12:01 Uh, I'd like to be a nicely profitable, making a few hundred million of EBIT, and then we'll go public. So it could happen in a couple years. It should. Like, the way that things are going right now, we should be able to get there. And, like, you know, maybe it's not I don't know what it will be worth, and like the market kind of sets that at the end of the day. And, and if it's undervalued, okay. Like it was... As long as you're generating a lot of cash, then you could... If you're really undervalued and you just buy your own shares back and like maybe that's a good thing. Uh, so-

Harry Stebbings 12:25 Do you think you should underprice on IPO day so you have the pop or are you like you should price to perfection?

Ryan Petersen 12:31 People focus so much on this. Like I, I don't understand it. Like on, not on th-well, of course you're gonna focus on your price and whatever, but people... There's this concept of like an IPO window that investment bankers and founders talk about. It's like, "Ah, the window's closed. You can't go public" or like 'cause the price won't be there or something. But you're like, well, what if you went public and then your price went down? [laughs] Like is that better? I mean, it's the same thing, isn't it? Um, so I don't quite understand that dynamic. Like I think you just run... You know, I'm an operator, run a good business, like make it super profitable, have it grow, and like don't compare yourself too much to Anthropic or these AI companies that are for 15 years, and there's companies that are getting to our revenue in 18 months. So you're like, I think envy is a very bad, uh... Uh, is it one of the seven deadly sins?

Harry Stebbings 13:17 Yeah, it is.

Ryan Petersen 13:17 Like you certainly should avoid it.

Harry Stebbings 13:19 Do you worry about the concentration of value to a few companies when you look at eight companies making up 85% of year-to-date gains in the stock markets, and then you look at Anthropic and OpenAI? Do you worry about that concentration of value to smaller and smaller number of names?

Ryan Petersen 13:34 As long as I'm allowed to use OpenAI and Anthropic, then I don't mind at all. [laughs] Like they deserve it. They're, there's, these things are just incredible, miraculous products. What I worry about is that they cut us off and then we can't use it anymore. And like if I can't use OpenAI, we're all gonna go back to being just idiots we were two years ago. Like if I [laughs] you know, like I need this stuff. Like we're so dependent on it, both personally and then like we've put it into so many of our processes.

Harry Stebbings 13:58 What do you need it for most?

Ryan Petersen 13:58 It's a ton of, um, business logic, like a lot of rules because every enter- we serve... We're an enterprise logistics company. We help businesses manage their cargo shipping around the world, and every business is unique and has their own process and their own, "Oh, we need this data in this format moved into this ERP system." Like, "We want you to notify us." Some companies wanna be notified 10 days in advance of their container arriving at their warehouse and some seven, and like they really care about that, and they spend so much money that you have to do what they say.

Harry Stebbings 14:29 Yeah.

Ryan Petersen 14:29 And like some... So a lot of our tech is like this big rules engine, and you get all these if/then type statements of... And it becomes very unwieldy, and at the end of the day, it can't really keep up, and you end up with people managing some of this business logic. Well, the agents can just do it.

Harry Stebbings 14:43 And RPA couldn't do that before?

Ryan Petersen 14:45 We-

Harry Stebbings 14:45 'Cause I thought that was the promise of... And for people who don't know, Robotic Process Automation, I thought that was kind of the promise of RPA that was meant to be-

Ryan Petersen 14:51 It's-

Harry Stebbings 14:52 ... fulfilled.

Ryan Petersen 14:52 It, it, it does a lot, and we've gone a long ways with that. We pro- but, but agents can go all the way. Like we think we can automate the full end to end.

Harry Stebbings 14:59 And this is you're building your own?

Ryan Petersen 15:01 We're using OpenAI. We're using Anthropic. We're gonna increasingly use open source models to save money, but also because we don't today have a budget constraint on our Anthropic contract.

Harry Stebbings 15:11 Did you see that article the other day? It was like we spent half a billion dollars-

Ryan Petersen 15:14 I thought that was sort of fake. I thought that was sort of fake.

Harry Stebbings 15:15 I was like, are you fucking kidding me? Ha-

Ryan Petersen 15:17 We do not have a budget-

Harry Stebbings 15:18 Half a billion?

Ryan Petersen 15:18 We don't have a budget on our contract, like and yet, um, last Thursday I woke up and like they were like, "Oh, y- " Well, I think, I don't know when we're gonna air this, but it was like a few days before the end of the month, and it said, "You've, your, your organization has reached your limit for the month." Which I don't... It's not true. Like we, something went wrong in their side. But I had this like shock, this moment of like, oh man, what if they just decide one day to like cut us off and say no? And I actually think this is a realistic scenario where they-

Harry Stebbings 15:47 Was the, was the expense much more... We'll go back to-

Ryan Petersen 15:49 It's not that much money for us.

Harry Stebbings 15:50 It's not?

Ryan Petersen 15:51 No.

Harry Stebbings 15:51 How much is it?

Ryan Petersen 15:53 I think we're spending like probably like $5 million a year or something. Ramping pretty fast though, like it's doubled in the last few months.

Harry Stebbings 16:00 We, we, we released a show, uh, with Brandon at McCaw, and he said he spends more on Anthropic or... No, he spends more on OpenAI, whichever one.

Ryan Petersen 16:08 Did I say, I said $5 million a year, right? Yeah, not a month, a year.

Harry Stebbings 16:10 Yeah. No, he spends more on models and compute than he does on salaries by far. I thought that was really interesting.

Ryan Petersen 16:17 We're not even close to that. But, uh, but I... There's a world where that, that becomes... I mean, it has to at some point, there's very interesting-

Harry Stebbings 16:24 Dude, it has to for the valuations to be justified. So right now, Benioff said that he spends $300 million a year on Anthropic for his team-

Ryan Petersen 16:31 Mm

Harry Stebbings 16:32 ... which works out to 3.8% of, uh, developer salaries.

Ryan Petersen 16:35 Okay.

Harry Stebbings 16:35 For the s- for the kind of trillion dollar valuations to be justified, you need to be in the 18% to 20% range. So we, we still need to see quite a movement.

Ryan Petersen 16:44 Mm. Yeah. I mean, we do see ourselves like automating a ton of the work and taking it away with... Uh, y- you have to, right? I mean, even at five, like I better save $5 million a year in labor cost-

Harry Stebbings 16:55 Yeah

Ryan Petersen 16:56 ... or make my product way better, which we are finding ways to make the product way better. But there comes a point also diminishing returns.

Harry Stebbings 17:00 Do you think you'll be spending $20 million a year on Anthropic in five years?

Ryan Petersen 17:04 Yeah. Yeah, probably. I mean, I don't know about Anthropic, but on LLMs.

Harry Stebbings 17:08 100%.

Ryan Petersen 17:08 Um, but it's possible that, uh, price comes way down, deflation, and there's... It's also possible that we move a lot of workflows onto open source just because if it's good enough. Like the, uh... For our coding agents and like for actually developing product, we probably always want the frontier model. But if you're just automating a workflow, if the open source one that's basically free can automate it, then I don't... There's diminishing returns to frontier products.

Harry Stebbings 17:32 Totally. Totally.

Ryan Petersen 17:32 And there's diminishing returns also to just doing it. Like once I've automated all the work, I don't wanna keep spending the money. Like I [laughs] had the agents work. Like I should probably stop. Uh, now I'll keep spending money on code and things that improve our product and our surface area that our customers interact with. But once the, once, uh, you know, we're pretty manual. We have a lot of manual processes. Once they're automated, like I should stop spending the money on Anthropic.

Harry Stebbings 17:56 I was a terrible interviewer. I interrupted you. You said that, you said there was a realistic scenario that...

Ryan Petersen 18:01 Yeah. Uh, oh, there's a realistic scenario that, um, they decide the compute that they have is more valuable for training super intelligence than it is for letting customers use it. And they start, you know, just cut us off. And we all just going back to being idiots

Harry Stebbings 18:19 At that point, do you not think governments need to step in?

Ryan Petersen 18:22 Maybe, yeah.

Harry Stebbings 18:23 Do you not think actually though you're extrapolating it a bit far given the fact that I can't even do fucking clips on AI right now? Like [laughs] th- this is my point, like-

Ryan Petersen 18:31 Not yet.

Harry Stebbings 18:32 No.

Ryan Petersen 18:33 They can't do your-

Harry Stebbings 18:34 And you know, you're seeing Uber and Microsoft come out saying, "Yeah, the productivity gains are kinda questionable."

Ryan Petersen 18:39 Yeah. I, I think that's probably true in, in b- like those, in those businesses. Our business has just tons of manual operations with humans, like forwarding email. We call it freight forwarding. I often say it should be called freight email forwarding, 'cause it's like people passing PDFs around and moving data between enterprise systems. And there's just like a hu- a huge amount of human labor. And I think that most of the economy looks like that, not like Uber, which a highly automated built business. Although, I don't know why they have like tens of thous- 30,000 more employees because it's pretty automated, right? Like, I don't quite get that.

Harry Stebbings 19:14 You said the team is 2,000?

Ryan Petersen 19:16 Almost.

Harry Stebbings 19:16 Almost 2,000.

Ryan Petersen 19:18 Yeah.

Harry Stebbings 19:18 2030, four years' time, how big is the team then?

Ryan Petersen 19:21 It'll, might be about the same. We're hiring a lot of salespeople and we're expanding a lot in new markets, but I think you're gonna see like a shift from people that today do operations, kind of manual work that I was describing earlier, into, okay, you've gotta... The work style is gonna change. And, and if the people are not able to make that shift, then we're gonna have to rebalance. But like, into much more customer facing, account management, sales, kinda like, all right, how do you... Because I think that, that's the future is just like people-

Harry Stebbings 19:50 Do you not think the future is super contributors? And I don't see people talking about this enough. Zab from ClickUp said this in his post, which-

Ryan Petersen 19:57 Mm

Harry Stebbings 19:58 ... uh, we, we chatted about before. [laughs] Um, but he ba- essentially said he was cutting people so he could pay the super contributors 10X more. You don't need more, eh, salespeople. You need more fucking amazing salespeople who leverage AI, outbound AI tools, inbound AI tools, pipeline tools, forecasting tools to be the next great sales leader that leverages AI.

Ryan Petersen 20:25 Certainly want as many of those people as you can get.

Harry Stebbings 20:27 Yeah. [laughs]

Ryan Petersen 20:27 Um, there's just like a lot of mass that you want out there in the field. I mean, our... Think about our business. We're global trade, platform for global trade. There's every business on the planet that needs to ship something anywhere. There's a lot of boots on the ground that you want to just to interface with those companies out there. And like, there's a limit to how many relationships a human ha- can have. And I think you can probably use those t- use AI and use other techniques to like double that ratio or something. But like there's some limit to how many relationships you can maintain. And it, it's a relationships game at the end of the day, sales. And so I'm, I'm somewhat skeptical. Yeah. It is an interesting question though. Like Yelp has 3,600 salespeople, um, calling on restaurants. It's actually a pretty good business. I think, uh, they're, they haven't grown that much, but they print cash. And like 3,600 salespeople, if Yelp can have 3,600 salespeople, like

Ryan Petersen 21:17 I feel like we should have-

Harry Stebbings 21:18 I interviewed the founder of Invisible, which is another data provider.

Ryan Petersen 21:21 Mm.

Harry Stebbings 21:21 Um, and he said that you can't do enterprise without a fully fledged FDE model. Do you think that's true working with some of the biggest companies?

Ryan Petersen 21:29 No, it's not true. You can do it without that, but you, your business is better, but I, I, if you can get that level of integration. You know, the freight, freight industry was the original FDEs. Uh, they just weren't engineers. They were just d- but I met, uh... I mean, one of the big tech companies that runs like a hyperscaler, let's call it, um, has, one of our direct competitors has 130 full-time employees that work at that company, that have badges, that show up to work every day, that run their logistics for them. And we cannot crack the door at that place. I won't say their name, but we cannot get our foot in the door because all the decision-making is done by our competitor. I think it's an insane, what an insanely great competitive advantage and positioning to have that, so I'm jealous. And I don't know where you find... But they're not software engineers. These are just like logistics people. Um, if you can get that same thing and just deeply embed yourself into the process workflow of a company, it's so valuable. It's not easy to do. And like, it's not easy to find in the FDE model to find good FDEs who will like, uh, uh, know what to do. Like show up and do a good job every day and like stay in the job and not have the turnover and-

Harry Stebbings 22:41 You also have like a question of like do truly great engineers wanna be FDEs? It's not-

Ryan Petersen 22:45 Yeah

Harry Stebbings 22:45 ... often as close to the pure art of solving engineering problems that they want or great engineers want. It's challenging.

Ryan Petersen 22:51 Yeah. The actually, speaking of the, um... So a different-- It's quite common in our industry where you have these like forward deployed, they're not engineers like I said, they're like forward depl- deployed logisticians or something. Like they're on site. And we had this recent, we just had this huge customer win, one of our biggest ever. And, um, I was like, "Wow, this is great." But I had heard that our competitor makes their, has one of these forward deployed logisticians, like, and runs their RFP, runs their process for choosing a freight forwarder, and they always choose themself.

Harry Stebbings 23:23 [laughs]

Ryan Petersen 23:23 Which I'd heard about and was like, "Wow, this is idiotic." Like, "Why do they do this?"

Harry Stebbings 23:27 It's a great business. [laughs]

Ryan Petersen 23:28 Totally.

Harry Stebbings 23:29 Like today I'm gonna choose me. [laughs]

Ryan Petersen 23:31 Yes. And we won, and I was like, "Wow, what happened?" And then I found out-

Harry Stebbings 23:34 You dogged. [laughs]

Ryan Petersen 23:35 ... the competitor had been acquired by their, by another one of our competitors, and they did a huge layoff, and they fired the person, and she got hired by the company, and then they sh- chose us to get back at them. So-

Harry Stebbings 23:50 Wow

Ryan Petersen 23:51 ... never, uh, underestimate kinda corporate incompetence and-

Harry Stebbings 23:55 What's your largest customer? Like n- not name, but like size.

Ryan Petersen 23:58 Uh, spend about 150 million a year. The biggest one.

Harry Stebbings 24:02 100-

Ryan Petersen 24:02 We don't have too many like that, but we have probably a dozen that spend over 50, and then a long tail.

Harry Stebbings 24:10 Wow.

Ryan Petersen 24:10 Yeah. Logistics is expensive. It's 11% of GDP. So people spend com- and these aren't, they don't have to be that big of company. I think that- that's the thing that I will often have to educate investors on, is like The logistics have much bigger market than software. If you, for example, like a typical, like a medium-sized company will spend, call it 5% of their revenue. P- companies spend about five-- If they're physical goods companies, they'll spend like 5% of their revenue on logistics. They're not spending 5% on any software. You know, maybe like at scale, like we, we... Our, our price point is similar to what you would spend on Oracle or something for a comparably sized comp- but actually less like-

Harry Stebbings 24:51 But then you would say that we're not-

Ryan Petersen 24:52 Oracle would be less

Harry Stebbings 24:53 But then you would say that we are not seeing the productivity gains in logistics that we are seeing in software creation, because if we were, you'd be seeing revenue scaling in logistics like you have done for a Cognition or a Cursor.

Ryan Petersen 25:05 You see costs come down at least. Um, yeah, I don't know that you're gonna see huge revenue scaling of this. I mean, by the way, our competitors like us and others that are scaling, that are serving data center companies, that part of the business is growing like crazy because there's data center, all this physical... The data centers have to be built.

Harry Stebbings 25:21 The data center economy is fucking wild.

Ryan Petersen 25:23 It's wild, yeah.

Harry Stebbings 25:24 But when we go back to the teams themselves, I am intrigued. You said about the use of Anthropic. Have you always used Anthropic or has that been a switch?

Ryan Petersen 25:33 Uh, we switch back and forth. We're using Codex too. In fact, uh, yeah, Codex, uh, won us over. They stole-- Sam stole my heart two months ago when he said, "You can have two months free." That was like 30 days ago, so we switched everything to Codex like [chuckles] -

Harry Stebbings 25:45 So you switched everything to Codex?

Ryan Petersen 25:46 The, the engineers can choose both. Uh, our-

Harry Stebbings 25:48 What do the engineers choose?

Ryan Petersen 25:50 They w- they choose, um... I think they're still more, they're, they're still more habit-formed on Claude, but, um, they use Codex. We- we're Cursor users. We use everything. Um, as an enterprise, we've been more Gemini, uh, 'cause we're Google Doc centric, and so it's like really nice how baked in it is and NotebookLM and these things. But, um, all of our employees have Claude access as well.

Harry Stebbings 26:13 You're able to invest in OpenAI or Anthropic. OpenAI is whatever, 900, and Anthropic's a trillion. So there's slight difference on price.

Ryan Petersen 26:23 Yeah.

Harry Stebbings 26:23 But you can only invest in one. Which one do you invest in?

Ryan Petersen 26:26 Oh, I can only invest in one? Why?

Harry Stebbings 26:28 Yeah.

Ryan Petersen 26:28 Why can't I invest in both?

Harry Stebbings 26:29 Because I'm forcing you to choose.

Ryan Petersen 26:30 Oh.

Harry Stebbings 26:30 It'd be easy if you could choose both. [chuckles]

Ryan Petersen 26:32 At the same price? Let's do same price.

Harry Stebbings 26:34 Yeah, same price.

Ryan Petersen 26:35 I think I'm going Anthropic. No offense, 'cause Sam's a friend of mine, but...

Harry Stebbings 26:40 Just 'cause the enterprise business?

Ryan Petersen 26:41 Yeah, the enterprise business seems great. And the team, I think there's a lot of value of like this cohesive team that's been together forever, and OpenAI's had ups and downs, and people have left, and it's been hard to keep the whole team in place, and there's just so much value in like founders that love each other and no one quits and-

Harry Stebbings 27:01 I totally get that

Ryan Petersen 27:02 ... the talent density, et cetera. So...

Harry Stebbings 27:03 Do you worry about-

Ryan Petersen 27:04 OpenAI has like people sleep on. I would invest in both, right? Like, and I have, uh, I would do as much as I could into either of them.

Harry Stebbings 27:11 You invest in Anthropic?

Ryan Petersen 27:12 Yeah.

Harry Stebbings 27:13 Well done.

Ryan Petersen 27:13 No, but not like early. I'm not like, uh, I-

Harry Stebbings 27:15 What price did you do it at?

Ryan Petersen 27:16 No, it's like, I forget. 600 or something. It was already, it was already, it already ran away, so I'm not gonna make much money off that.

Harry Stebbings 27:23 Doing it at 600 is not bad.

Ryan Petersen 27:25 Well, like two months later, I got my... It wasn't very long ago. I just recently-

Harry Stebbings 27:28 How much did you do?

Ryan Petersen 27:29 That it's, it's... My finances are private, but not that much. I don't have

Ryan Petersen 27:33 that much money.

Harry Stebbings 27:33 Um, do you worry about open source? And when I said worry about-

Ryan Petersen 27:37 Uh, worry about it as a threat to Anthropic?

Harry Stebbings 27:38 Yeah, well, no, I-

Ryan Petersen 27:39 I don't care. Uh, that'd be great

Harry Stebbings 27:40 ... no, I say I... I don't know, dude. If you think about what you just said earlier, actually, which is a lot of the usage from frontier models can be moved over time for more mundane tasks to open source models. Yeah? Which we-

Ryan Petersen 27:54 Yeah

Harry Stebbings 27:54 ... both agree on. That massively maims the market for the core providers.

Ryan Petersen 27:58 Yeah.

Harry Stebbings 27:59 If we only use them for the most frontier advanced tasks-

Ryan Petersen 28:03 Yeah

Harry Stebbings 28:03 ... and everything else we can just push to open source or older models-

Ryan Petersen 28:06 Yeah

Harry Stebbings 28:06 ... their core business is much smaller than you think.

Ryan Petersen 28:08 No, but your question was do I worry about that? I don't care. I mean, Anthropic go to zero, I don't care. It's, I didn't put ano- an amount of money that matters for-

Harry Stebbings 28:15 Okay

Ryan Petersen 28:15 ... for me. So on my personal basis. And if, and AI and intelligence becomes really cheap, that's like much better for the world and for me.

Harry Stebbings 28:21 Do you, do you worry given the majority of open source models are Chinese?

Ryan Petersen 28:24 Um, not really. I, I don't know how they work, like how they can stay competitive on some level. Um, but if they're open source, they're open source. Like who cares where they're from? Like we can use them.

Harry Stebbings 28:36 Well, 'cause you, you're essentially feeding data back to the CCP would be the fear-

Ryan Petersen 28:41 Mm

Harry Stebbings 28:41 ... from Keith Rabois and others, and that actually CCP-funded open source models are powering the majority of early-stage Silicon Valley companies, and that essentially is giving a window into Silicon Valley for China.

Ryan Petersen 28:54 Yeah. It's pretty interesting. I don't, I don't personally spend a lot... I don't lose sleep over it.

Harry Stebbings 28:59 Do you lose sleep over China?

Ryan Petersen 29:01 Not really. I mean, I think... I, I've lived in, I lived in China for a few years.

Harry Stebbings 29:04 Yeah.

Ryan Petersen 29:04 I and I speak Chinese passively, and not, not, not really well, but I could, uh, have a conversation. A- and so I, I feel like I know China better than most, most, uh, it's not a high bar.

Harry Stebbings 29:16 For sure. Yeah.

Ryan Petersen 29:18 On some level, I think that these, that China and the US, there's like a huge amount of mutual dependence there that is underplayed, and I think that there's a lot... The, the interests align, are much more aligned than people give credit, and all this, these, uh, the, th- there's so much, um, saber-rattling and so many people like trying to sound... I don't know if they're trying to sound smart or tough or something, but they're casually throwing around like war between China and the United States without realizing that like such a thing would be a nuclear war, and you'd all be dead. And, and I, so I don't... I, I think that the odds of that happening are like pretty low. I don't, I don't really believe that these countries are gonna suddenly start s- shooting nukes at each other, and yet if you, if you have war between these two powers, like that's what it would be. So...

Harry Stebbings 30:03 I loved it when Trump landed in China, and they played "Y.M.C.A."

Ryan Petersen 30:07 Oh, they did? [chuckles]

Harry Stebbings 30:07 Yeah, yeah, yeah. And there's this, there's this like video of Trump, and you can see he's kind of like a little child at a party desperate to dance, but not allowed to. [chuckles] Uh...

Ryan Petersen 30:15 Bad protocol.

Harry Stebbings 30:16 Yeah, yeah, yeah. And it's just brilliant, "Y.M.C.A." playing in the background.

Ryan Petersen 30:19 Well, r-remember when Obama went there, they didn't even open the, uh, they didn't roll out the red carpet. They didn't bring up the stairs to the Air Force One. Yeah, they're like Air Force One has its own stairs, but it's like s- they're not very good. They're sort of awkward. You had to climb out the bottom of it, so.

Harry Stebbings 30:32 Oh, wow.

Ryan Petersen 30:33 Yeah.

Harry Stebbings 30:34 I did not know that. [laughs]

Ryan Petersen 30:35 Yeah, you can look it up.

Harry Stebbings 30:36 And y- when, when I think about China, I, I sadly these days think about a, a mutual friend of ours, Keith Rabois, [laughs] uh, given his very open concerns around China. And it goes to something you said to me before, which was going back to kind of venture and fundraising, how you kind of fluffed or fucked up two funding rounds, very humble of you, and how Founders Fund bailed you out of them.

Ryan Petersen 30:57 Mm.

Harry Stebbings 30:57 I didn't actually know this story.

Ryan Petersen 30:59 They're both different stories, and they are-

Harry Stebbings 31:02 Thank God, it'd be rather embarrassing if you did the same mistake twice, wouldn't it?

Ryan Petersen 31:04 Uh, yeah, exactly. Um, the first ti- but they're both my fault. Uh, well at least the first one was definitely my fault. So, uh, our ser- Flexport Series B round, and we, I, we were like a hot company. We, we were getting... A, a VC came in and tried to preempt our round and offered us what, for our scale and where we were, what, what were great terms. Uh, I think it was, at that time it was like 50 on a 500 million valuation or something. But like this was in 2015, I wanna say, 2016. It was pretty early in our journey. We were founded in 2013. So it was like they were good terms. Uh, and I was very happy with the terms, and yet the VC wasn't that famous or well-known. They're good, they're a good firm. I'm not gonna say their name. I don't, don't need to be starting fights. But, uh-

Harry Stebbings 31:52 [laughs]

Ryan Petersen 31:52 ... I, I decided, and this is where I screwed up, I decided I could get the same or better terms from a better known investor. And so this was like on a Thursday, and I spent Friday and the weekend hustling trying to, like pitching a whole bunch of investors, but I had no... I was be- being preempted, so I had no data room or deck or anything that you would need to do a fund raise. Um, and I think the word must have got back to this investor 'cause I, he ghosted me. I basically never talked to him again. Uh, he definitely didn't show up with an actual term sheet. And then now I'm in the midst of a fund raise where I've set this artificially high price, and I wasn't fundraising, but you can't like turn off the fundra- I don't know. It wasn't, we were gonna need to m- we didn't need money then, but we were gonna need it within a year, and so it was just like this very awkward position and no... And Founders Fund was our investor at that time. They'd, they'd led the Series A. Uh, and so I should have gone, first mistake, I should have just called Founders Fund day one and said, "Hey, I wanna raise, you know, will you do

Ryan Petersen 32:57 this round?" But like I thought I was hot sh- hot and like... Yeah, eventually I did call Founders Fund and told them, "Yo, here's [laughs] where I screwed up. Like, I tried to raise money, failed."

Harry Stebbings 33:05 What did they say?

Ryan Petersen 33:06 Best offer, I did have an offer, but the best offer I got from my process that I ran post was like a 275 million valuation instead of 500. And I went to Founders Fund, I just told them everything. It's like, "Here's how I screwed this up. Best offer I got was 275, but the firm wants board control. So if you'll just do it without taking the control of the board, you guys can have it." And, uh, Peter just offered 300 instead of 275, which wasn't as good as my 500, but he didn't need to do that. I told him he could have it at 275, and he offered 300.

Harry Stebbings 33:38 What has been your biggest lesson from working with Peter? They've invested several times in you.

Ryan Petersen 33:43 Yeah, they have. Uh, Founders Fund led our A, our B, participated in the C or D, and led our E, so.

Harry Stebbings 33:50 How much, how much of the company do they have?

Ryan Petersen 33:51 They probably, I'd have to go look at the latest cap table, but probably like almost about 15% or something, maybe 12. There's been some dilution, so.

Harry Stebbings 33:58 Okay. But any big lessons from Peter?

Ryan Petersen 34:01 Just amazing, uh, how far in the future he's able to look and like be right. The number of predictions that he's made, like well out there, just kind of blow your mind. That, that's not unique insight from me, but that's one of the things that amazes me. Actually, one of the things I love personally about Peter is that, uh, I feel like most people I talk to talk too slow. [laughs]

Harry Stebbings 34:20 [laughs]

Ryan Petersen 34:20 And Peter does not. Like, and if you accelerate your speech with him, at least when I, when, when Peter and I talk to each other, I, I think we talk like two times faster than when we talk to other people, and there's never a moment where he's like, doesn't understand what I'm trying to say.

Harry Stebbings 34:32 I care a lot about word to value ratio.

Ryan Petersen 34:34 Yeah.

Harry Stebbings 34:34 You know the people who take a very long time to say quite a simple message, and you're like, "For fuck's sake, just-"

Ryan Petersen 34:39 Yeah

Harry Stebbings 34:39 ... just say the fucking thing."

Ryan Petersen 34:41 Drives me crazy.

Harry Stebbings 34:41 Yeah. I'm with you. Should you always take the highest price?

Ryan Petersen 34:45 When fundraising?

Harry Stebbings 34:46 Yeah.

Ryan Petersen 34:47 No. Um, maybe. It depends. Uh... [laughs]

Harry Stebbings 34:52 [laughs] That was the worst. I hate fluff by people who don't get to it. Should you? No. Maybe. It depends.

Ryan Petersen 34:58 Maybe. I, oh, I'm trying to think, like over the years I kind of would always just take the highest price [laughs] and then like if I'm-

Harry Stebbings 35:02 Yeah. But then Brian, Brian Chesky says, "Don't ever take the highest price."

Ryan Petersen 35:05 Don't ever? Mm.

Harry Stebbings 35:07 Yeah.

Ryan Petersen 35:07 That I disagree with. Uh, it could be quite uncorrelated, like the best brand name investor could pay more than the second best sometimes. Like, it's hard to advise. Uh, uh, it's very hard to give generic fundraising advice. I think it's very dangerous. Like each, if a founder asks me for advice, I'm like, "You know your situation much better than I do." So it's like you have to be careful on that. Um, but I-

Harry Stebbings 35:26 No, I, I disagree totally.

Ryan Petersen 35:28 Yeah.

Harry Stebbings 35:28 Actually, and with the greatest of respect, I actually think there is generic advice which you should listen to.

Ryan Petersen 35:34 Sure.

Harry Stebbings 35:34 Which is like tier ones are worth it, take a discount.

Ryan Petersen 35:37 Yeah.

Harry Stebbings 35:37 They'll help you get the next round unwaveringly.

Ryan Petersen 35:40 Yeah, that's the next thing I was gonna say is like-

Harry Stebbings 35:41 Uh, with-

Ryan Petersen 35:41 ... with that caveat, you probably will get a be- like the fact that we're a Founders Fund company has made so many other investors want to invest in Flexport and like it creates-

Harry Stebbings 35:50 You consistently underestimate how team members think about VCs and the importance of VCs-

Ryan Petersen 35:56 Mm

Harry Stebbings 35:56 ... to joining a company as a VC.

Ryan Petersen 35:57 Mm.

Harry Stebbings 35:58 The amount of great operators who you're like, "Well, they wouldn't be," I'm so, I don't mean this rudely, "dumb or naive enough to just join a company 'cause of a VC," do just join a company because of a VC.

Ryan Petersen 36:09 Yeah.

Harry Stebbings 36:09 They'll go, "Oh, it's a Sequoia-backed company. Oh, it's a Founders Fund-backed company. It must be hot."

Ryan Petersen 36:13 Yeah. Well, and, and employees have the hardest time because they only get to pick one at a time, right? Like one company.

Harry Stebbings 36:20 In, in Silicon Valley right now I think it's-

Ryan Petersen 36:21 You can hop around. Well, that's why I said one at a time

Harry Stebbings 36:23 ... yeah. [laughs]

Ryan Petersen 36:24 Um, and, uh-

Harry Stebbings 36:25 Do you find that hard?

Ryan Petersen 36:25 So they need that signal.

Harry Stebbings 36:26 Do you find that hard, the, the hopping that seems so prevalent today more than ever?

Ryan Petersen 36:32 Yeah.

Harry Stebbings 36:32 It's like it seems like there's a lack of loyalty.

Ryan Petersen 36:34 For sure. And we- We basically moved away from San Francisco as a result. Like, we- our team in San Francisco is maybe 4% of the company's based in San Francisco. So even though that's where we were founded and where I'm based, um, I sort of, I think w- maybe we overdid it.

Harry Stebbings 36:49 Why, why is that? Because of cost or loyalty or?

Ryan Petersen 36:50 Like we c- cost and loyalty. Uh, retention of good people was, has always been really hard and-

Harry Stebbings 36:56 And the acquisition. I know respectfully you're fighting against OpenAI, Anthropic, and some of the hottest companies on the planet. As great a business as you are, you're not as sexy.

Ryan Petersen 37:05 Yeah. And, and like our customers aren't there. So I don't need a big sales team in San Francisco. It, uh, you know, we need to be everywhere, not just in San Francisco. So I think we maybe overdid it though. Like, uh, six years ago, s- five years ago I had 80, 100 people in San Francisco, and right now we're like down to about 75. And actually I'm like looking around being like, "My leadership team is too distributed. I want more talent in San Francisco." So I'm, I'm like push- I'm probably p- gonna start pushing more of our employees like, "Hey, you should come move back to San Francisco." I just got our CFO to move to San Francisco. It's made the business much better, so.

Harry Stebbings 37:40 Leadership team distributed. You said remote work is what? Dot, dot, dot.

Ryan Petersen 37:46 [laughs]

Harry Stebbings 37:46 Can you help me fill in the statement here?

Ryan Petersen 37:48 Uh, well, I got, I, I say, I say it's white collar fraud. I have a three-year-old and a five-year-old. The idea that I could do any work at my house is like a total fantasy. Like come on, you're kidding. And like I have a bigger house than most employees do. Like I actually do have a private office I can close the door on. It doesn't matter. Like there's no work getting done at that house when the children are around. And the kids come home like at, when does school end, 3:00 PM? Like your workday needs to keep going. So I, I think, um, I'm highly against it, but we're five day a week in office as the baseline assumption at our company, and I made the mistake during COVID of like going remote and letting it stay remote for way too long. And so like I think our culture suffered as a result. Our-

Harry Stebbings 38:31 Was it difficult to bring it back in?

Ryan Petersen 38:33 Uh-

Harry Stebbings 38:33 That's the fear that-

Ryan Petersen 38:33 Difficult for the people who don't work here anymore. [laughs]

Harry Stebbings 38:37 [laughs] But a lot of founders are sitting in the seat today going, "Man, I want to bring it back. I want in-person. I know the value of in-person, but I don't want a revolt-

Ryan Petersen 38:49 Yeah

Harry Stebbings 38:49 ... when I say I'm sorry." What advice would you have to them?

Ryan Petersen 38:52 Yeah. You just gotta do what you want to do. I mean, I think the, all the, the bad things that have happened at Flexport were when I didn't do what I wanted to do and was trying to like be- was I- you don't want to ever be afraid of your employees, first of all. Like the, the employees don't want that either. They want a leader who's gonna like go in the direction that they believe in, even if they disagree. Like they want to follow a good leader and if they opt out, like that's fine. There's, they, they can opt out. Like not everyone, you know, and there's a lot of good jobs. I, I, I think that, um, also the, the, the idea that work from home is gonna benefit highly paid employees is sort of a total fantasy. Like work from home done correctly, you should be hiring the world's greatest geniuses. There should be a labor arbitrage here where you're finding really, really smart people who make a lot less money because of the, the, um, the way that our economy is structured, where some countries just have a lower purchasing power.

Harry Stebbings 39:45 Sure.

Ryan Petersen 39:45 And you can hire people. Like my brother has an assistant who has like off the charts IQ in, in the Philippines and makes like 500 bucks a month or something. I don't know what he's paying the person now, but like y- that's, that's who's gonna benefit from a work from home environment. It's not the guy who's making 250K a year and lives in Jackson Hole and wants to go skiing for four hours a day. Like that is, uh... And, and I, there's too much of that as, as, so and also like comp- like look, your podcast is better if we're in person.

Harry Stebbings 40:15 Sure. Way better.

Ryan Petersen 40:16 It's the exact same with every meeting that you have. Like I struggle on, I, we struggle 'cause we're still, even, even if we're in office, we're distributed. We have 40 offices. We need to be in every country. So I struggle personally, and my team all knows this. I struggle with paying attention in like video meetings.

Harry Stebbings 40:33 I don't actually really do Zooms anymore-

Ryan Petersen 40:35 Mm

Harry Stebbings 40:36 ... because I just, A, find that the quality of interaction's so low.

Ryan Petersen 40:39 Yeah.

Harry Stebbings 40:40 And B, find I'm so disengaged. [laughs]

Ryan Petersen 40:42 I know it's bad. It's bad. And yet like it's the nature of our business. So I do want more of our talent to come back to SF. Um, I need to find... Google has this new product, I haven't used it yet, but I'm, they built this like, I think HP is marketing it for them, called the Dimension.

Harry Stebbings 40:56 Oh, is that the hol-

Ryan Petersen 40:56 It's like the holodeck.

Harry Stebbings 40:57 Oh, the holograms.

Ryan Petersen 40:58 People who have used it said it's amazing, but they're-

Harry Stebbings 40:59 I quite like the sound of this

Ryan Petersen 41:00 ... but they're like 250,000 bucks each and then you need one.

Harry Stebbings 41:04 You can afford it.

Ryan Petersen 41:05 No, but I need one in every office.

Harry Stebbings 41:07 Well, how many offices do you have?

Ryan Petersen 41:08 40.

Harry Stebbings 41:09 40?

Ryan Petersen 41:09 And growing. Yeah.

Harry Stebbings 41:10 Oh, you can't afford it. No, that's-

Ryan Petersen 41:12 It, it gets a little crazy, right? [laughs]

Harry Stebbings 41:13 That's a, that's a lot.

Ryan Petersen 41:14 Yeah. We need to have an office in every country on earth, so.

Harry Stebbings 41:16 Oh.

Ryan Petersen 41:17 And then that's only one person at a time.

Harry Stebbings 41:19 I do wanna ask, just going back to the execs. You said before, uh, to me that we should touch on like why you should never hire, I think it was that you should never hire execs.

Harry Stebbings 41:27 Was it?

Ryan Petersen 41:28 Most startup fou- yes.

Harry Stebbings 41:29 Yeah. And like I just consistently see, I was with the other day with this founder and he just, it's one of the, a really fast growing company, and they hired this CMO from one of these big logoed companies.

Ryan Petersen 41:39 Mm-hmm.

Harry Stebbings 41:39 And I go to the CMO's Twitter. They don't have Twitter. CMO doesn't have Twitter.

Ryan Petersen 41:44 Yeah. Yeah. It's a miss.

Harry Stebbings 41:45 And it's like the most enterprise CMO ever. And I'm just like, "Ugh."

Ryan Petersen 41:51 Marketing is the hardest thing to hire for too. Marketing and HR. Um-

Harry Stebbings 41:55 Well, pause. Why is marketing and HR the hardest to hire for?

Ryan Petersen 41:59 In enterprise marketing, the moment something works, it stops working because the competitors will copy it. And so it's like, it's all about creativity and originality and like how do you get creativity and originality in B2B enterprise marketing? Like, and it's, and if you are creative, like you probably kind of become a founder if you can g- do good storytelling and creative idea- ideation in, in the marketing storytelling angle. So it's, it's... If you find a good marketer in B2B, you really wanna lock them in and, uh, and get it great. So it's been, it's been a, that's a hard one to hire for. Um, and also To do that, to do like successful B2B marketing and stand out. Like, it's one thing, oh, I just make good sales decks for the team-

Harry Stebbings 42:45 [laughs]

Ryan Petersen 42:45 ... and like, okay, fine, like that's some baseline stuff, but you're not gonna differentiate or move, bend the curve on a star- on a company's success. You have to be doing kinda crazy stuff. Most crazy ideas are bad ideas, so y- you're... It's like being an investor. Like, you wanna do th- crazy things that happen to also be good ideas. Like, it's that narrow intersection.

Harry Stebbings 43:05 Which also don't denigrate enterprise brand-

Ryan Petersen 43:08 Yes

Harry Stebbings 43:08 ... which is even harder.

Ryan Petersen 43:09 Yes. And like as an employee, as a... It's so hard to take that risk-

Harry Stebbings 43:13 Mm

Ryan Petersen 43:13 ... because you're like, "I, I don't know. If I do something crazy and it, like, blows up, I get fired. Like, why take the risk?" So it's very, very hard to find, like, a m- marketer th- that's not part of the founding team or, like, somehow... You have to give, as a founder, if you're not the one coming up with these crazy ideas and trying things, like you have to protect the team and let them, you know, the leaders there, and let them know, like, "I want you to experiment." Because it, if it's not crazy, it won't work, or it has to be very, um, expensive, and most startups can't afford that. So it's the big benefit that, like, a big brand has, is they can just do really expensive stuff. And it's, uh, expensive is a feature in enterprise marketing, 'cause it's like you wouldn't spend a lot of money on something, promoting something if it wasn't good, so it must be good.

Harry Stebbings 44:01 What's the most expensive thing you've done marketing-wise?

Ryan Petersen 44:04 Well, we d- we don't have money to sp- to waste, uh, on marketing, so

Harry Stebbings 44:10 But you've never spent like a million dollars on big logos, big brand?

Ryan Petersen 44:15 No. I mean, w- a million dollars, sure. We, we, we do, like, a, a conference that costs maybe a, a little bit more than that, um, customer conference. So that's-

Harry Stebbings 44:24 Do you find them effective?

Ryan Petersen 44:25 Yeah, yeah, yeah, for sure. Events like... Events works all day. And by the way, you don't have to be that crazy to do events. B2B marketing is events marketing to some extent. And like that, that's like plain vanilla. But b- by the way, you don't need an exec- you don't need to go hire a CMO to run events. Like-

Harry Stebbings 44:39 [laughs]

Ryan Petersen 44:39 ... conferences are kinda hard to pull off, but, like, normal events like, "Hey, host a dinner," like you don't need marketing at all. Like-

Harry Stebbings 44:45 Yeah, yeah, yeah

Ryan Petersen 44:45 ... just have your sales guy call the people and give him a budget for it.

Harry Stebbings 44:48 Uh, so I basically was doing... I was prepping for a show with Adam from AppLovin, and he's like, "Oh, I fucking hate HR, and every great CEO hates HR." And like a complete dick that I am, I thought I'd front-run his show and take every great CEO hates HR, HR, and I'd tweet it myself. Oh my God, I got killed by everyone for this tweet, which was essentially Adam's words, which I agree with, and I think he's right, and credit to Adam. He's amazing. Do you agree every great CEO hates HR?

Ryan Petersen 45:17 They, you probably go through these phases, right? I mean, I think the thing that you cannot have is them being like union representatives of your employees. They're not. They're there to represent the company and therefore the CEO. And so if there's, if you don't have that as a CEO, like a trusted HR leader, and you feel like the HR leader is more on the side of the employees than on the side of the company, then there's a problem. There have been periods in my company's history and, like, the industry in general where you, like, didn't have the right HR leadership that wasn't focused on the business outcome. Um, and but the employees are the company, and the company is the employee. Uh, everything else is a fiction. We're just like, just a fake brand name here with a bunch of people that are building the company or serving the, the customer. So the, the word HR is kind of wrong because they're not, humans are not a resource that you can mine and take out of the earth. Like, you have to give back to the employees and have a two-way relationship.

Harry Stebbings 46:14 They're not, but agents are resources [laughs] -

Ryan Petersen 46:17 Sure. [laughs]

Harry Stebbings 46:17 ... that you mine, and agents will in large part replace humans. And so, like, the, the really interesting job function that could be created is, like, agent resources.

Harry Stebbings 46:25 Uh-

Ryan Petersen 46:25 That is a good idea

Harry Stebbings 46:26 ... I, honestly, yeah. Um, it's like 996 is being replaced by 007, which is, you know, midnight to midday, seven days a week-

Ryan Petersen 46:34 Oh, I get it

Harry Stebbings 46:34 ... which is your new agent timeline. Um, do you buy the SaaS Apocalypse? And what I mean by that is you said earlier that you've built, uh, agents for a lot of workflows.

Ryan Petersen 46:44 Mm.

Harry Stebbings 46:45 Have you ripped and replaced Salesforce, Coupa, you name it, and built your own SaaS tools?

Ryan Petersen 46:52 Some. Not those names in particular, but yeah, some. And, and those are, those are, uh... I think the negotiation that we're gonna have with Salesforce is gonna be a lot different than the last one, 'cause we are, I think selling SaaS to tech companies is gonna be a tough business 'cause we can build stuff ourselves. And Salesforce, Salesforce is great, like, although most of our people don't like Salesforce.

Harry Stebbings 47:16 How much do you spend on Salesforce a year?

Ryan Petersen 47:17 A few million.

Harry Stebbings 47:18 A few million?

Ryan Petersen 47:19 Yeah. It's expensive, yeah. So it's on the, it's on the list of candidates for-

Harry Stebbings 47:23 And then it's... 'Cause I just did a show with Fred at Curative. I don't know if you know this guy. Fascinating guy. Loved him. Built a business, a health insurance business in San Francisco. A fucking wild story. Don't know if you know this business.

Ryan Petersen 47:34 Mm-hmm.

Harry Stebbings 47:34 Sold $5 billion of COVID test kits, uh, during COVID.

Ryan Petersen 47:38 Oh, wow.

Harry Stebbings 47:38 Uh, and then obviously COVID, yeah, no longer such a problem. Uh, and now he's pivoted into a health insurance business that does north of a billion in revenue. Like amazing, amazing guy. Uh, and they spent 600K a year on Salesforce, and he replaced it with an inbuilt tool that took three weeks.

Ryan Petersen 47:53 Yeah, yeah, yeah. Um, so I suspect that we'll re- be replacing a lot of these things. And, and I think a lot of what'll happen is you'll just shake them down. I don't know about Salesforce. Salesforce, Slack is also gonna be a great, turn out to be a great acquisition 'cause, like, that's pretty sticky. Nobody wants to replace, build their own Slack. Um, and I could see a situation where you go, "Hey, we're cutting Salesforce," and they just raise their rates on Slack.

Harry Stebbings 48:15 I don't know. So I, we actually incubated a company which is-

Ryan Petersen 48:20 A Slack competitor?

Harry Stebbings 48:20 Yeah, it's a direct Slack competitor built for the AI age.

Ryan Petersen 48:23 Okay, yeah.

Harry Stebbings 48:23 And it's kind of actually predicated on, uh, a kind of idea of Alex Rampell from Andreessen, who says you wanna be in markets which is greenfield bingo, which essentially are markets where there's a huge amount of net new customers created every single year. In other words, you don't want to exist in markets where there's static Market entrance

Ryan Petersen 48:43 Mm-hmm

Harry Stebbings 48:44 And actually, our market is every new startup that's ever created. If you're creating a company, do you wanna go onto, like, Slack and Salesforce, or do you wanna have an amazing-

Ryan Petersen 48:53 What's the best new thing?

Harry Stebbings 48:53 ... AI first messenger

Ryan Petersen 48:54 That makes sense

Harry Stebbings 48:55 Which I thought was interesting

Ryan Petersen 48:56 Yeah. Definitely wanna be in big markets too, but the... I, I mean, I think, like, how did... We're coming back to our earlier thing about SaaS. I think there's gonna be a, a lot of categories where you say, for example, there's one or two pieces of software that we fully replaced and killed it, and, and more every few weeks. But there's gonna be a big category where you take... Like, one of the things I'm having our procurement team doing is make the PowerPoint case study of the one of the SaaS that we did replace, and how we did it, and how long it took

Harry Stebbings 49:25 Do you worry about-

Ryan Petersen 49:25 And then just go down the list of all the other SaaS vendors that we have and say, "Hey, look, this is what we did because the customer... The, the vendor didn't reduce our rates. So I need you to reduce your contract rates, or else I'm just gonna have to, Vippco, you know, replace you guys." And-

Harry Stebbings 49:41 Question one, what is that reduction, do you think?

Ryan Petersen 49:43 I think you get, like, 20% out of almost everybody.

Harry Stebbings 49:46 Okay.

Ryan Petersen 49:46 We'll see, though. We'll see.

Harry Stebbings 49:47 But no, no, I think that's a, I, I think that's very fair, actually. Do you worry about maintenance?

Ryan Petersen 49:52 Yeah.

Harry Stebbings 49:52 And what... Yeah.

Ryan Petersen 49:53 That's why I don't wanna have to do it for a lot. Some cases it might be a bluff. I couldn't do it for all of them. Like, and I don't wanna dedicate that much of our engineering resources to replacing SaaS. Like, I wanna build, I wanna replace work, like expensive labor, and I wanna build our product and make it way better. So I don't... I wanna, like, focus on our core business with our engineering talent, and, like, not-

Harry Stebbings 50:13 Do you worry about security?

Ryan Petersen 50:15 Yeah.

Harry Stebbings 50:15 Yeah.

Ryan Petersen 50:16 Constantly. Paranoid. Almost all of our competitors have had major hacks in logistics. Like, it's been a major target area for cyber, and there's been a lot of, like, ransoms.

Harry Stebbings 50:26 I'm not going into personal finances, but I didn't know before we walked in the park about the angel investing. If you're comfortable sharing, like, what have been some of the best angel checks?

Ryan Petersen 50:39 Yeah, I've done really well as an angel investor. I, I used to do a ton of it.

Harry Stebbings 50:43 Yeah.

Ryan Petersen 50:43 Um, early days of Flexport. So I, I started this company called importgenius.com that throws off a lot of cash. It's a nicely profitable business. So I actually started as an angel investor while I was in Y Combinator, uh, because I realized I, I had inside access. I was kind of like a-

Harry Stebbings 51:01 Was it really obvious who was great, and did your beliefs on who was great turn out to be correct?

Ryan Petersen 51:05 It wasn't obvious who was great. It was obvious who was terrible, though. And I think if you can eliminate the bottom half, like, you're doing pretty well inside of a YC batch.

Harry Stebbings 51:11 What were the bottom half doing that the top half weren't?

Ryan Petersen 51:14 You just talk to the people and be like, "Oh, this guy-

Harry Stebbings 51:16 You knew

Ryan Petersen 51:16 ... the person, nah." And they didn't see me as an investor, so I, you know, I'm their peer, so I could get, like, the real story. Um, so I invested inside my own batch. I invested in, like, 13 of the 50 companies or something like that. And there, there was a few good outcomes there. Algolia, I was an investor in that. But I missed Cruise. Cruise was in my batch.

Harry Stebbings 51:32 Did you get out of Algolia?

Ryan Petersen 51:33 Yeah, I did. I sold my shares in Algolia a while ago.

Harry Stebbings 51:36 Well done. Fantastic.

Ryan Petersen 51:37 So I made money on that one. Um, but, uh-

Harry Stebbings 51:40 You missed Cruise?

Ryan Petersen 51:41 Yeah.

Harry Stebbings 51:41 Why?

Ryan Petersen 51:41 And I'm friends with Kyle. I don't know. It's just like it was too crazy. Like, he was just, like, throwing this camera s- set up on the roof of his Honda Civic or no, his A... I forget what car he had, Acura or something. I was like, "This is not, uh, legit."

Harry Stebbings 51:54 It's not a thing.

Ryan Petersen 51:55 It's not legit. Um...

Harry Stebbings 51:57 You know, the crazier the thing, the more I'm like, "I need to do that."

Ryan Petersen 52:02 Yeah.

Harry Stebbings 52:02 Because if I don't get it, I'm probably missing something.

Ryan Petersen 52:05 Maybe, yeah. So, uh, what are my best angel investments? Um, I was... Well, actually Bitcoin, I... Early Bitcoin. Sold that. Don't, don't kidnap me. I don't have any Bitcoin anymore. But, uh, uh, I made money on Bitcoin. Um, the... I was the first investor in Rippling. Uh, put a big check into that. Did really well.

Harry Stebbings 52:24 Are you revengeful?

Ryan Petersen 52:26 Yeah. Uh, no, I'm personally not, but I think that investing in founders who are, have a, who are pissed at somebody and, like, wanna get back at them, like Rippling. Dario I'd never met before, but yeah. Uh, I don't know if he was wronged.

Harry Stebbings 52:39 Rippling?

Ryan Petersen 52:40 Yeah.

Harry Stebbings 52:41 Parker?

Ryan Petersen 52:41 Parker Xenophons.

Harry Stebbings 52:43 No, I never-

Ryan Petersen 52:43 A- A16Z, they fired him

Harry Stebbings 52:44 ... I, I never got that vibe when I met-

Ryan Petersen 52:46 Oh. Yeah, okay. All right, yeah.

Harry Stebbings 52:48 [laughs] Did he get-

Ryan Petersen 52:49 Rippling. Um, I think actually it's a great... I have a, a great thesis around, like, founders who have been wronged. Second time founders who feel like they were wronged the first time around would be, like, great investment thesis. Revenge and patriotism is a great investment thesis. [laughs]

Harry Stebbings 53:04 Revenge and patriotism is a fantastic one. Do you have a chip on your shoulder?

Ryan Petersen 53:09 Not really.

Harry Stebbings 53:10 Yeah.

Ryan Petersen 53:10 I have a... There's a few people who I should be way more, like, who have wronged me, but I, like, totally blocked them out and don't care. I don't know why.

Harry Stebbings 53:17 What was the-

Ryan Petersen 53:17 It might be, it might be better for, like, supportive bias

Harry Stebbings 53:19 What was the single best investor meeting that you had, but they didn't invest?

Ryan Petersen 53:24 Oh, the, none of them. I mean, those are-

Harry Stebbings 53:26 None of them. There was never an investor meeting where, like, I don't know, it was with, I'm just making it up, Alfred Lin, and he was just super insightful and smart on the future of the industry, me, my business-

Ryan Petersen 53:36 Mm

Harry Stebbings 53:36 ... and I was like, "God-

Ryan Petersen 53:37 No

Harry Stebbings 53:37 ... what a shame we didn't get them."

Ryan Petersen 53:38 No, I've never had one of those.

Harry Stebbings 53:40 Seriously? [laughs]

Ryan Petersen 53:41 [laughs]

Harry Stebbings 53:42 Really?

Ryan Petersen 53:42 I had, I had a l- like, a lot that seemed like they went well, and then they never invested. And, uh, the number of investors who ghosted me, by the way, after the pitch-

Harry Stebbings 53:49 Really?

Ryan Petersen 53:49 ... the vast majority, I would say. Where I pitched them, it seemed great, and then I just, like, never hear from them again.

Harry Stebbings 53:54 Okay, I go, I go, I go-

Ryan Petersen 53:55 That would be the majority of investors I ever pitched

Harry Stebbings 53:56 ... ah, this is where I, like, also have, you know... Sure. I, I'm in the no bullshit camp. So I just say, "I'm really sorry if we invest early."

Ryan Petersen 54:03 Yeah.

Harry Stebbings 54:04 Like, I just don't, didn't, didn't believe that you were good enough. I, I'm, I'm not gonna bullshit you and say that the market's not good enough or big enough.

Ryan Petersen 54:12 Yeah.

Harry Stebbings 54:12 It's all crap.

Ryan Petersen 54:13 But by the way, if you're giving any reason, you're pretty unique. Most people just, like, just never would say anything.

Harry Stebbings 54:18 No, but, you know, it's, it's kind of rude and personal, but, like, I'd rather just be honest. I just didn't think you told a very compelling story and you were a bit dry.

Ryan Petersen 54:25 [laughs]

Harry Stebbings 54:25 No, I mean, seriously.

Ryan Petersen 54:26 It's good. It's good.

Harry Stebbings 54:26 Do you, do you mind? Well, but at least then you can take away, okay, tell a more compelling story.

Ryan Petersen 54:31 Yeah, fair. Which is always the case, right? Um-

Harry Stebbings 54:33 Yeah

Ryan Petersen 54:34 P- PG said his advice to in- founders was always, "You should hear the no, but ignore the why," 'cause the odds of them telling the truth multiplied by the odds of them being correct are so low that you're just like very little signal in what investors tell you about no. You should definitely hear the no, though, like they pass, so.

Harry Stebbings 54:50 Uh, and by the way, especially when they're multi-stage funds, when there's absolutely no reason for them to ever kill optionality.

Ryan Petersen 54:58 Mm.

Harry Stebbings 54:58 Like, I want you to think that I'm amazing because in case you do in flight, I want you to come back.

Ryan Petersen 55:03 Yeah. I wonder how many investors, I wonder how many founders out there, like, actually secretly hate you 'cause you tell them something that they didn't wanna hear. It's probably non-zero.

Harry Stebbings 55:11 Like, honestly, a lot.

Ryan Petersen 55:13 Yeah.

Harry Stebbings 55:13 But I also think that they're not the best founders.

Ryan Petersen 55:15 Yeah. Who cares?

Harry Stebbings 55:16 But I think if y- if I actually said to you, "Dude, I actually liked you, I just didn't think you told a very interesting story about the future of logistics-"

Ryan Petersen 55:23 Yeah

Harry Stebbings 55:23 ... that excited me," I think you'd probably go, "I need to get better at telling stories."

Ryan Petersen 55:28 I, by the way, my overall experience with VCs have been incredibly positive.

Harry Stebbings 55:31 Yeah.

Ryan Petersen 55:31 I- including those who've passed, have become friends and like, you know, part, like people that I hang out with and there's no, there's no ill will at all. But, uh, I have way more negative experiences than positive. Like, not, not to say that there weren't positive experiences, but like, I think you said earlier you enjoy pitching investors, and I, I m- I like pitching, but I don't like hearing no or, or getting ghosted or whatever, so.

Harry Stebbings 55:54 Have you ever had a terrible one where like they fell asleep or-

Ryan Petersen 55:57 Yeah. Uh, no, I've had a customer fall asleep on me. Never an investor.

Harry Stebbings 56:00 Oh, that's pretty, that's pretty [laughs]

Ryan Petersen 56:01 Literally fell asleep. [laughs] And I'm like, "Oh, shit, what do I do?"

Harry Stebbings 56:03 What did you do? Did you wake them up? Like, thr- throw, throw a pen at them?

Ryan Petersen 56:06 What did I do? It was like fi- it was like seven or eight years ago. The guy just fell asleep. Uh-

Harry Stebbings 56:12 [laughs]

Ryan Petersen 56:12 They're now a c- we, we ended up winning them over. It, it was a sales pitch, so they weren't a customer yet. It was a prospect. Uh-

Harry Stebbings 56:17 I'm terrified of what the competitive set is. [laughs]

Ryan Petersen 56:19 [laughs]

Harry Stebbings 56:19 Must've been.

Ryan Petersen 56:20 Um, no, the, the worst one, I've only-- I le- I walked out of one investor meeting. Um, not like in a huff. I left my partner there, my co-founder, or like my, the president of Flexport, he stayed behind, and I said I had to take a phone call, and I just never [laughs] came back. Um-

Harry Stebbings 56:37 Why?

Ryan Petersen 56:38 They, they kept telling me that the market size was too small, and it was like the third pitch where, and like after this first two, I thought we'd overcome this. Like we presented some, we found some BCG market sizing report and like shared it with them, and it was like... [laughs] And then-

Harry Stebbings 56:53 If you need BCG to convince them, just don't bother.

Ryan Petersen 56:56 I know. 100%.

Harry Stebbings 56:57 Yeah.

Ryan Petersen 56:57 Um, and it was like the third pitch, and I thought we were gonna like move to like term sheet, and instead they like had brought their own report that showed how the market size was only for our, for Flexport, was only $6 billion. And I was just like... Well, actually, my partner had the best line. He was like, "Oh, so it's smaller than the market for USB cables." [laughs] And, uh, it became obvious to me that these... And I, and I said, "I don't think in BCG reports." Like, I d- uh, it wasn't me that got the BCG report. Someone else did.

Harry Stebbings 57:27 Mm.

Ryan Petersen 57:27 I was like, "Just look at every object. For the rest of your day, I want you to like look around at everything that you see and just ask yourself, 'How did it get here?'" And like, "That's our market size." [laughs] Like, I don't think in-

Harry Stebbings 57:38 So I always say to founders, "If you need to educate an investor on the market, they're not the right investor for you."

Ryan Petersen 57:45 Yeah. It's, it's tricky because, uh, if you're doing something very unique and different or like in our case, like-

Harry Stebbings 57:50 Do you think any of y- your investors bet on you because of the market? I didn't think they did. I think they probably bet on you 'cause of you.

Ryan Petersen 57:56 Maybe. Yeah, they mostly bet on me. Um, they didn't, they had never invested in this market before.

Harry Stebbings 58:01 Mm-hmm.

Ryan Petersen 58:01 That's for sure. Pete, uh, Peter, you know, I met Peter, Sam Altman introduced me to Peter. Uh, Sam was one of our early, earliest investors.

Harry Stebbings 58:09 Mm.

Ryan Petersen 58:09 And he invested me to Peter to get advice. It was a classic thing 'cause I, everyone loves his book, right? Zero to One.

Harry Stebbings 58:16 Yeah.

Ryan Petersen 58:16 It's such a great book. And so I, uh, Sam introduced me and I had s- that book has six or seven, I can't remember, I think there's like six questions to decide if you'll change the world, or if like this is like an incredible startup that you should

Ryan Petersen 58:31 ask. And on five of the six questions, I felt like Flexport knocked it out of the park, best possible answer. But then one of them was, one of them is, um, "Is it a small market?" 'Cause he, his whole thesis was like, "You should have a market that's small enough that you can be a monopolist." And when I went to whiteboard with him and hang out with him, I'm like, "Well, look, it's, I wanna know, like, should I be, should I make myself like I can make this a small market?" I'd be like, "Oh, we're gonna dominate like logistics for s- hardware companies in Silicon Valley or something." But like it's kinda fake. Like the market's actually really big. And he like stopped me and he's like, "Look, it's, don't be too dogmatic. It's okay to have a big market," [laughs] you know. Uh, and then a few weeks later, he emailed asking if he could invest, so.

Harry Stebbings 59:15 So my biggest mistake is when I focused on market at all. I, all of my biggest mistakes investing have been actually not really like in, um, losing money. It's been turning down great companies.

Ryan Petersen 59:26 Mm.

Harry Stebbings 59:26 But because I thought that I was smarter than the market. Oh, this market's shit. Oh, this market's shit.

Ryan Petersen 59:30 Oh, man.

Harry Stebbings 59:31 How many angel investments have you done?

Ryan Petersen 59:32 I, oh, I did so many, so like the vast majority didn't do well.

Harry Stebbings 59:35 Like 200?

Ryan Petersen 59:36 Yeah, something like that.

Harry Stebbings 59:37 Wow.

Ryan Petersen 59:37 And, and like-

Harry Stebbings 59:38 Do you track them?

Ryan Petersen 59:40 I have a Google sheet. Yeah, I track them.

Harry Stebbings 59:42 Do you? I, no, I've just made one.

Ryan Petersen 59:43 Well, I didn't for a long time, but at some point I had to clean it up when I was getting married and, uh, going through that exercise.

Harry Stebbings 59:49 What of doing like a will and... I just need one for a will.

Ryan Petersen 59:52 Yeah, exactly. Well, eventually you wanna clean this up. Uh, much better if you track it from the beginning. Um, the, I would say probably it's, it's super power law world. And actually this is an interesting thing for founders to understand, is w- once you see the world from the perspective of the angel investor, you realize that we really don't care. Even a 3X, like if you take my spreadsheet and this investment made three times the money, like the founder's very proud, like, "Hey, I made you three times your money." But if I remove that and make it a zero, it has zero impact on the bottom line of the fund. Like zero relative impact on the IRR because I have a couple that are 1,000X or 500X, so they comp- strictly completely dominate everything else. So you don't care, like, about the ones that failed. And when I write a check as an angel investor, I would just mark it to zero I don't care. I just assume that it's a zero. And then, and that way I don't worry if it fails.

Harry Stebbings 1:00:42 What do you think founders don't know about the VC mindset that they should do? I think that's really valuable 'cause I, I also see, and this actually does pay me, which is like a really noble founder mindset, which is I'm gonna give five to 10 more years of my life to grind out a one

Harry Stebbings 1:00:57 and a half X.

Ryan Petersen 1:00:58 Mm.

Harry Stebbings 1:00:58 And I'm just like, "Don't." I, I, and I don't mean that callously or flippantly.

Ryan Petersen 1:01:02 Yeah

Harry Stebbings 1:01:02 ... I'm not being flippant with VC LP money, but just your time and my time.

Ryan Petersen 1:01:06 Yeah, yeah. I didn't even want the investor updates.

Harry Stebbings 1:01:08 It's, it, it, yeah

Ryan Petersen 1:01:08 ... it's fine, dude.

Harry Stebbings 1:01:08 Yeah, like it's okay.

Ryan Petersen 1:01:09 Yeah.

Harry Stebbings 1:01:10 Like return 0.6 X is better.

Ryan Petersen 1:01:13 Yeah. I mean, if it's your life's mission and your calling, then like great, never give up, never quit.

Harry Stebbings 1:01:17 No, but also the ability to like-

Ryan Petersen 1:01:18 Um

Harry Stebbings 1:01:18 ... investors.

Ryan Petersen 1:01:20 You know, um, the, there's that. There's what I was saying earlier of like how much they're a circular rumor mill. You know, like when I was doing, uh, one of the rounds of funding we were doing and I was pitching this investor, and I think I was on like the third meeting. I'm not one of these people who like, "Oh, you never talk to associates." Maybe I should be, but I think it's kind of a loser way to live your life. I, I, I never had this attitude that like you shouldn't ever talk to the junior people, mostly 'cause I'm not a dick, but also I just assume that those people someday will become like partners-

Harry Stebbings 1:01:49 Senior, yeah

Ryan Petersen 1:01:49 ... and they'll remember that I was cool. I don't know. I, I, I, uh, and um, but I was like on the third meeting with this fund and I was still talking to the, not the junior person, but I wasn't at the final decision maker yet. And so I told the guy, I was like, "Hey, I've decided to go in a different direction

Ryan Petersen 1:02:06 here. Like we're not, this isn't gonna work out and I'm gonna raise..." You know. And they, within an hour I got phone calls from like three other funds, who I hadn't picked a different investor, I just was like trying to let this guy off the hook. Uh, and within an hour I got the, all the funds that I was still talking to called me like, "Hey, what happened? I, you w- I heard you picked a lead." And like the amount of rumor mill and collusion that happens in VC, founders have no idea. It's like this cra- And you can use it to your adva- It can work against you or can u- use it to your advantage. Like it, you're looking for an outlier who will value you more than everybody else. So like you don't, that collusion does not work to your advantage unless they're all hyping you up and saying, "Dude, this is the best company ever."

Harry Stebbings 1:02:49 This is so not in my interest at all. But that's why I always say to founders, "Don't, like test the market. Don't like dip your toe in with one or two meetings," because the associate WhatsApp groups are so pernicious.

Ryan Petersen 1:03:00 Mm.

Harry Stebbings 1:03:00 Where if you meet me and I don't think you're great, I promise you they put you in the weekly roundup, which they send out 'cause they're exchanging currency.

Ryan Petersen 1:03:08 Oh, yeah.

Harry Stebbings 1:03:08 They need to give to get.

Ryan Petersen 1:03:10 Yeah, exactly.

Harry Stebbings 1:03:10 And so I'm putting you in my weekly update where I say, "Ryan-"

Ryan Petersen 1:03:13 Oh, wow

Harry Stebbings 1:03:13 "... only at a million ARR, not growing that fast. Not a compelling sales rep."

Ryan Petersen 1:03:17 And these are within a firm or these are cross firm?

Harry Stebbings 1:03:19 They're cross firm.

Ryan Petersen 1:03:20 It's crazy. Yeah, exactly.

Harry Stebbings 1:03:21 Exactly.

Ryan Petersen 1:03:21 That's what I was getting at before. It's like-

Harry Stebbings 1:03:22 'Cause again, we're all associates-

Ryan Petersen 1:03:24 Yeah

Harry Stebbings 1:03:24 ... and we're all in the I need to bring deals to the firm business.

Ryan Petersen 1:03:27 Mm.

Harry Stebbings 1:03:27 And so they all send weekly roundups of who they've met and seen.

Ryan Petersen 1:03:30 That's crazy that they're sharing that externally.

Harry Stebbings 1:03:32 Oh, shit. Yeah.

Ryan Petersen 1:03:32 Do their, do their, their firms probably don't know, right?

Harry Stebbings 1:03:34 No, no, no, no, no, no.

Ryan Petersen 1:03:35 Yeah, you'd get fired for that. Yeah.

Harry Stebbings 1:03:36 But remember, they're more in b- this is almost a good article, actually, but the associates are more in business with that class-

Ryan Petersen 1:03:44 Yeah

Harry Stebbings 1:03:44 ... than they are their firm.

Ryan Petersen 1:03:45 Well, and they're trying to get ahead within the firm and by showing that-

Harry Stebbings 1:03:47 That's it

Ryan Petersen 1:03:48 ... you know, they don't bring dumb deals 'cause they've, they've referenced it. They've-

Harry Stebbings 1:03:51 My competition is not the other associate at X firm, it's the other associates in my firm.

Ryan Petersen 1:03:57 Yeah, yeah, yeah.

Harry Stebbings 1:03:57 And so if I can get ahead-

Ryan Petersen 1:03:58 It's like the F1 drivers, huh?

Harry Stebbings 1:03:59 Which is why the perniciousness is actually very real.

Ryan Petersen 1:04:02 Mm.

Harry Stebbings 1:04:03 Because then do you know what the others go? "Oh, well, Ryan's only at a million ARR. Not interesting either. Don't need to meet him."

Ryan Petersen 1:04:08 Yeah.

Harry Stebbings 1:04:09 That I do, I, I see that.

Ryan Petersen 1:04:11 Well, and I also think founders should basically never share their metrics, uh, which I've done on the show, so I don't care anymore. But, uh-

Harry Stebbings 1:04:18 [laughs]

Ryan Petersen 1:04:18 ... you should never share your

Ryan Petersen 1:04:19 metrics until-

Harry Stebbings 1:04:19 No offense, dude, we're kind of past that age. [laughs]

Ryan Petersen 1:04:21 Yes, I don't need to raise any money ever again. Um, uh, but the, uh, you should never share your metrics because what you wanna do when you pitch a VC is take, you wanna cherry pick whatever metric looks the best and pitch that as the important metric for your firm. But once you've shared a metric, you're now committed to that being the metric, and who knows, maybe you couldn't make that one go up, uh, hockey stick style, but now you c- you're, you're committed.

Harry Stebbings 1:04:45 I, I remember Colleen Matild, I think it was Colleen. I think it was. Uh, from do you know Colleen? Um, a front, French founder, YC partner now, I believe. A awesome woman. Um, and, uh, she always told me that you wanna raise when you're really confident just 'cause like confidence emanates.

Ryan Petersen 1:05:03 Oh, yeah.

Harry Stebbings 1:05:05 When were you least confident raising? [laughs]

Ryan Petersen 1:05:06 Least? [laughs] Oh, God, when you're losing a lot of money. Uh, Flexport's had... Y- we, we've been on the hero's journey, right? Y- y- you're, uh, if everyth- anything that's straight up and to the right, by the way, is pretty boring. Not, as an investment, great, it's wonderful, but like as a human story, that's-

Harry Stebbings 1:05:21 It's pretty hard to see any company. I, I've tried and think, to think about this before. Snap was pretty up and to the right continuously. I mean, post-IPO it's been a-

Ryan Petersen 1:05:30 Right

Harry Stebbings 1:05:30 ... up and down, but it was pretty continuously linear up and to the right. Not many others have been.

Ryan Petersen 1:05:36 Yeah. But I don't even mean as an investor. As, as an investment, of course, you want things to just go up and to the right and never come down. But as a story of like what's compelling to the human, like Snap's story will be infinitely more compelling if they figure it out and start growing and going like hockey stick again than it would be if it never stopped and it was hockey stick. You'd be like, "Wow, what happened here?" Like that, the human brain loves the story-

Harry Stebbings 1:05:57 Sure

Ryan Petersen 1:05:57 ... the hero's journey where you gotta go to hell and come back. Like if it's just always good, like that's not fun. So we-

Harry Stebbings 1:06:01 Dude, social media posts, the absolute bangers are zero to hero. I started in my bedroom with no dollars and now I'm, you know, sitting here with Ryan Peterson.

Ryan Petersen 1:06:08 Yeah, but even, even zero to hero is not good enough. You wanna go zero to hero and then take a fall and come back. So we need to cancel you and then the comeback. It's different, a little bit different in enterprise because you have competitors. So like in our case, if we have a negative news story, like literally no one will read it. And our s- we don't scandals, it's just like, oh, such and such. Like I once had a Bloomberg article about us where we lost a package for a customer. One single parcel.

Harry Stebbings 1:06:32 I remember this.

Ryan Petersen 1:06:33 It was one parcel.

Harry Stebbings 1:06:34 It was quite a scandal.

Ryan Petersen 1:06:35 And it was a newspaper, I mean, Bloomberg's not a p- print, but it was an, it was front Lead of the story that Flexport, we used DoorDash to do the delivery. One parcel. By the way, they did-- the story did not mention we delivered 40 million parcels successfully, but we lost one, and we gave her a full refund before the story ever came out. Like, and that became a scandal of sorts. Nobody would care, nobody would read it except we have competitors, and the competitors will take your bad news and send it to your customers and stuff, so it actually can hurt. In enterprise, it can hurt your business, negative news stories, even though it's not the story itself. It's like your competitors are kind of lowlife, uh, looking for dirt

Harry Stebbings 1:07:14 One in 40 million

Ryan Petersen 1:07:15 So I mean, we probably lost more than one, but the story was about one.

Harry Stebbings 1:07:18 You dick.

Ryan Petersen 1:07:19 And, and actually it's a interesting story that we use DoorDash for logistics. People don't think about that. But if you-- DoorDash has a bit of a problem there because, um, it, DoorDash's quality is better than others or it's as good as like a FedEx or UPS. But when you use FedEx and the package doesn't get delivered, people are like, "Yeah, it happens. It's FedEx." But when you use DoorDash and it doesn't get delivered, they're like, "Why did you use DoorDash? Like, what's wrong with you, company? Like DoorDash is for food delivery. Why did you..." It, it's something they have to overcome, um, because their quality is actually fine.

Harry Stebbings 1:07:50 Well, it's, uh, I think Tony Robbins said this once, but it's like how fast appreciation turns into expectation is extraordinary. And it's like, you know, before you're like, "Hey, we didn't expect to have Wi-Fi on the flight, but now we've got Starlink"

Ryan Petersen 1:08:04 I need Starlink.

Harry Stebbings 1:08:04 And you're like, "Wow, that's amazing."

Ryan Petersen 1:08:06 Yeah.

Harry Stebbings 1:08:06 And then you get expectant of Starlink, and then the down is so bad.

Ryan Petersen 1:08:11 Yeah.

Harry Stebbings 1:08:11 What did be a massive appreciation, now you're like, "I fucking expect this."

Ryan Petersen 1:08:15 Yeah.

Harry Stebbings 1:08:16 Which entrepreneur do you most want to have a dinner with that you haven't had a dinner with?

Ryan Petersen 1:08:22 Never meet your heroes. I've met, uh-

Harry Stebbings 1:08:24 No

Ryan Petersen 1:08:24 ... most of the great founders.

Harry Stebbings 1:08:25 Do you believe the never meet your heroes?

Ryan Petersen 1:08:27 Yeah, they ne- well-

Harry Stebbings 1:08:28 I don't, I don't buy that analogy. I've, I've met some of mine, and they are heroic.

Ryan Petersen 1:08:32 Yeah.

Harry Stebbings 1:08:33 Yeah. Maybe I'm still idealistic.

Ryan Petersen 1:08:35 Depends. You know, also, I don't think, uh, the-- You wanna meet people who are like at your level or see you as a peer and wanna actually engage in a dialogue with you. 'Cause if you're just like, I, I, I-- If you're meeting somebody and they're like unhappy to be at dinner with you and they don't care about you and don't ask you questions or learn-- wanna learn about you-

Harry Stebbings 1:08:52 Do you know what I've found? The more amazing the people, the more interested they are. I, I've been fortunate enough to have like, you know, a sit down with Charlie Munger.

Ryan Petersen 1:09:00 Yeah.

Harry Stebbings 1:09:00 He was so curious.

Ryan Petersen 1:09:01 Oh, really? Yeah.

Harry Stebbings 1:09:02 Yeah. I, I, uh, one of my dearest mentors would never want to be named on here, but it's like one of the founding fathers of one of the greatest firms on in to- today.

Ryan Petersen 1:09:11 Mm.

Harry Stebbings 1:09:11 He's so curious.

Ryan Petersen 1:09:12 Yeah, yeah.

Harry Stebbings 1:09:13 About life.

Ryan Petersen 1:09:13 Some, some of them are like this and some aren't. I, I find it somewhat uncorrelated. Like certainly they were like that on the way up. Some people get to the top and then stop being curious, and then they're, you know, probably their returns or their impact after that'll slow down is my theory. But you meet some people on the absolute top who don't care.

Harry Stebbings 1:09:30 Final two for you, and they, they are more personal, but I hope it's okay for me to ask, but it's general wisdom for me moving forwards. When you think about like winning but also winning at marriage, any tips on how to like continuously have a great marriage? And dude, you've been through some rocky patches in terms of the business. How to sustain marriage through fucking hard ups and downs?

Ryan Petersen 1:09:52 Yeah. Oh, well, it's all, it's a picking game, I guess, and you only get one bet, right? So make sure you get the right one. Uh, my wife is a-- When I met her, she was a journalist actually at Bloomberg, and I still couldn't kill that Bloomberg story even though-

Harry Stebbings 1:10:06 I remember

Ryan Petersen 1:10:06 ... these were her peers that she worked with for years. I mean, um, uh, it was crazy even then. Uh, but it was very b-

Harry Stebbings 1:10:13 That was a risky move.

Ryan Petersen 1:10:15 I know, yeah.

Harry Stebbings 1:10:15 Fuck, I don't talk to journalists. [laughs]

Ryan Petersen 1:10:18 Uh, it was. It was a bit... In fact, uh, someone, o-one of my investors, uh, at Founders Fund told me, "Dude, you need to either marry this woman or break up with her, but you cannot be dating her." [laughs]

Harry Stebbings 1:10:28 No, he's, he's right. [laughs] That is great advice.

Ryan Petersen 1:10:31 So I married her. Um-

Harry Stebbings 1:10:33 [laughs]

Ryan Petersen 1:10:33 And then she had to quit. I, uh, in part 'cause of me, 'cause she, she got assigned to cover, uh, SoftBank, who's my investor, and I was like, "No, can't, can't do it, sorry." And she, she knew that she, it was a not a good fit.

Harry Stebbings 1:10:46 What has it been like having SoftBank?

Ryan Petersen 1:10:48 They're,

Ryan Petersen 1:10:49 uh... I love Masa.

Harry Stebbings 1:10:50 But like do they-- How-- Did you pitch Masa?

Ryan Petersen 1:10:52 Yeah, yeah, of course.

Harry Stebbings 1:10:53 How was it?

Ryan Petersen 1:10:54 Uh, I love him. Uh, he's just like a big, larger than life-

Harry Stebbings 1:10:57 Was it in person?

Ryan Petersen 1:10:58 Yeah, yeah. Uh, I think, uh, definitely in person. I'm pr- trying to remember if I also met him first on video. No, it was in person at-

Harry Stebbings 1:11:04 But can you just take me to this? I love Masa. I love gambling. Masa's like-

Ryan Petersen 1:11:07 I just love the guy

Harry Stebbings 1:11:08 ... how was this? Where was this?

Ryan Petersen 1:11:10 I mean, I, I don't, I can't say I like love him that much interpersonally. We're not friends or anything.

Harry Stebbings 1:11:13 No.

Ryan Petersen 1:11:13 But like I'm just like a big fan of Masa the, the figure-

Harry Stebbings 1:11:15 Sure. So tell me how, like where did you meet? How did it go?

Ryan Petersen 1:11:18 I met at-- First time I met him would've been at his house in Woodside, California, which is like, it's very nice, let's say. [laughs] It's-- You can look up the Z estimate. You're like, "Oh, this is gonna be fun." The Zillow estimate.

Harry Stebbings 1:11:32 How long was the meeting?

Ryan Petersen 1:11:33 Probably like, actually pretty short. Maybe an hour or so.

Harry Stebbings 1:11:36 Okay.

Ryan Petersen 1:11:36 Um, considering the size of the check, I thought it was surprisingly short meeting. He has this, uh, painting of Napoleon behind him. [laughs] Um, and I wanted-- I didn't end up finding one. I was trying to f-buy a painting of the, um, the Duke of We-Wellington to send it to him, right? Uh, who of course defeated Napoleon, but-

Harry Stebbings 1:11:55 Sure

Ryan Petersen 1:11:55 ... as a troll, but I never found a good one that it was worthy of the, of the prank.

Harry Stebbings 1:11:59 It's a, it's a bold move as well.

Ryan Petersen 1:12:00 Uh, yeah. [laughs]

Harry Stebbings 1:12:01 It's risky. I would just leave it.

Ryan Petersen 1:12:02 Long after he invested, I was gonna send him that as a gift. Um, he, he's very bold. You know, I, I don't, I... He wanted me-- He pushed us to go, "Hey, you know, drop your... Be cheaper than everybody." 'Cause we raised a billion dollars from them, so it's like-

Harry Stebbings 1:12:17 You raised a billion from them?

Ryan Petersen 1:12:18 Yeah. Well, they led the round of a billion, yeah. Uh, and he was like, "You-- Whatever the price of freight is, you just be 10% cheaper than everybody. And then if someone matches you, you just be 10% cheaper than that." Which is like a terrible strategy. I did not do that. We would've burned so much money. But he was very aggressive. He just wanted to push you to go bigger-

Harry Stebbings 1:12:39 I like the mental elasticity though

Ryan Petersen 1:12:42 I mean, he-

Harry Stebbings 1:12:42 It's different to most investors.

Ryan Petersen 1:12:44 Yeah. And he's very connected too. Like, he was able during the meeting to call, like, Foxconn, get him on the phone, be like, "Hey, what do you think of this thing?" Like...

Harry Stebbings 1:12:52 What, in the meeting?

Ryan Petersen 1:12:53 Yeah. [laughs] Like, live.

Harry Stebbings 1:12:54 Are you serious?

Ryan Petersen 1:12:55 Well, he had his guy next to him call and, like, they're... Or WhatsApp, I forget. I think it was a, a text message.

Harry Stebbings 1:12:59 This must be the weirdest thing, like due diligence in process.

Ryan Petersen 1:13:02 Yeah. [laughs] It's live. Like, "What do you think?"

Harry Stebbings 1:13:02 And you're like, "Oh, shit, do I, like, thumbs up, thumbs down?"

Ryan Petersen 1:13:05 Yeah.

Harry Stebbings 1:13:05 You do not wanna fuck up. You must have been nervous.

Ryan Petersen 1:13:09 I was... I don't remember. I don't get nervous on that kind of thing.

Harry Stebbings 1:13:13 When have you been most nervous in the Flexport time?

Ryan Petersen 1:13:16 I get nervous when I, uh, have to give a talk publicly and it's very time-bound, 'cause I'm, like, kinda long-winded. I don't u- and then I don't, I can't memorize anything, so I don't prepare... Like, I usually will just go speak off the cuff, and I'm a good public speaker. Basically, a good j- public speaker. But I, I can't, like, memorize. So, like, actually my, the most nervous I ever was was the Y Combinator pitch, 'cause I only had two minutes, and two minutes you need to, like-

Harry Stebbings 1:13:43 I find TV-

Ryan Petersen 1:13:44 ... memorize your speech

Harry Stebbings 1:13:45 ... I find TV most nerve-wracking 'cause it's like you have, like, five to seven minutes and they're like, "So Ryan, let's join you for is Trump wrong on..." And you're like, "No, no intros, no in and outs."

Ryan Petersen 1:13:56 Right, and they're, and they don't wanna help you out. Like-

Harry Stebbings 1:13:57 And, and they don't wanna help you out, and they just want the seven minute of whatever you got.

Ryan Petersen 1:14:01 Yeah. I've gotten pretty good at TV, I think. I'm like-

Harry Stebbings 1:14:04 Do you think founder brand matters?

Ryan Petersen 1:14:05 Yeah, I do. Um, and I've... I, I, as measured by when I tell my sales team I'm gonna do less of it, they always push me to go do more press. Like, they say that it helps them get deals and close deals and stuff. But it's, it's one of these things, I think it was Steve Martin who said, like, he went on The Tonight Show. He went on every late night show that would have him, and then he would go around West Holly- walk around Hollywood and nobody would recognize him. Like, this is in the early days. And then, you know, so he d- he couldn't tell, like, if it was having an impact. And then after, like, five years of that, he was, like, the most famous comedian in America. Everybody knew him. He couldn't go anywhere. But he couldn't pinpoint it to, like, any one thing. So it's been a bit of my, uh... I, I only learned that recently. That wasn't, like, driving me to go try to do more press or anything. But, um, generally, I think being famous has helped Flexport a lot, and we're way more famous than, like, we should be given that we're, like, the 10th largest freight company.

Harry Stebbings 1:15:02 I couldn't name many others.

Ryan Petersen 1:15:03 Yeah, exactly. I mean, you, you could. Like, expe- uh, no, you don't know some of them. Maersk is, like, a famous company.

Harry Stebbings 1:15:09 I know Maersk, yeah. Yeah, they're a monster.

Ryan Petersen 1:15:12 They're big, yeah.

Harry Stebbings 1:15:13 Fucking big.

Ryan Petersen 1:15:14 They're a lot bigger than us. But I, I probably, I think Flexport gets more... We're more likely to be cited in the press on a story about supply chain than they are, despite them being much bigger.

Harry Stebbings 1:15:24 Uh, final one then we'll do a quick fire. Y- you mentioned two kids, five and a three-year-old.

Ryan Petersen 1:15:28 Mm-hmm.

Harry Stebbings 1:15:29 Any big lessons on parenting? Like, I love kids.

Ryan Petersen 1:15:31 Yeah.

Harry Stebbings 1:15:32 It's really important that I'm a good dad. If you just sit me down, imagine I'm your younger bro, yeah, dude, you should know this.

Ryan Petersen 1:15:38 Uh, well, you need to have a great wife who's a great mom, so you have a good partnership. The kids will be pretty natural. You've had millions of years of evolution. It'll be great. Great to finally care about someone besides yourself.

Harry Stebbings 1:15:53 [laughs] I, I don't know, man.

Ryan Petersen 1:15:54 It's very natural.

Harry Stebbings 1:15:55 I, dude, I'm super-

Ryan Petersen 1:15:56 And like, it's like a chemical wash of just, like, true love, uh, that is... You can't get it anywhere else, so.

Harry Stebbings 1:16:03 Does it change perspectives?

Ryan Petersen 1:16:05 For sure, yeah. And I, but, like, I get a lot of meaning from my work. Like, truly, like, I just genuinely love what I do. It's a real mission for me. I... Like, my life's work is building Flexport. And but a lot of people don't have that, and I was always, like, kinda confused 'cause, like, most people I meet don't have a sense of purpose about their work like I do. And I'm like, "How do these people function?" Like, I don't know. How do you get through life? You, you notice as soon as you have kids, like you'll get, I get more purpose from that than I could from Flexport.

Harry Stebbings 1:16:34 I-

Ryan Petersen 1:16:34 And so that's the vast majority of human beings should get their purpose from their family, from their life, from their kids.

Harry Stebbings 1:16:39 I would feel incredibly lucky. I watched The Social Network and I saw Peter Thiel invest in Facebook, and that's how I ever found out about venture capital.

Ryan Petersen 1:16:45 Really?

Harry Stebbings 1:16:45 When I was 13. And I lived in London. Venture capital is not a thing.

Ryan Petersen 1:16:48 Mm.

Harry Stebbings 1:16:49 Um, and so that was how I found out.

Ryan Petersen 1:16:50 From that movie?

Harry Stebbings 1:16:51 Yeah.

Ryan Petersen 1:16:51 Cool.

Harry Stebbings 1:16:51 Um, uh, and I've only ever wanted to be a VC, and, like, this is my whole life and being.

Ryan Petersen 1:16:56 Mm.

Harry Stebbings 1:16:57 And I always feel terribly sorry for people, but especially young people, who, like, don't know what th- they want to do with their life.

Ryan Petersen 1:17:03 Yeah. They should just have kids and then they'll be sol- that'll be solved.

Harry Stebbings 1:17:06 [laughs]

Ryan Petersen 1:17:06 That problem will be solved instantly.

Harry Stebbings 1:17:07 They, they should not because London is expensive.

Ryan Petersen 1:17:08 But if you get a lot of purpose from your work, then you can have the opposite problem of, like, oh, like, y- uh, you still got, you gotta be a great dad. Like, it's not worth, you know...

Harry Stebbings 1:17:17 I wanna do a quick fire, dude, 'cause I could talk to you all day. So what have you changed your mind on most in the last 12

Harry Stebbings 1:17:23 months?

Ryan Petersen 1:17:23 For the last decade, I wanted to be... I didn't wanna compete on price, and I wanted to be the premium value, premium provider in logistics and thought it would be bad to compete on price. And now I'm, like, pretty convinced that we need to be the low-cost leader and just go so hard at lowering our costs that... Ex- if you're cheaper, you just take all the market. Uh, and I think I was maybe lying to myself because it was too hard to automate the work and too hard to become the low-cost provider, and our- we're smaller than some of the big peers, so they buy freight cheaper than us and stuff, and I think I was lying to myself and it's like, "No, you need to be the cost leader," and we have to figure out everything we can to be the cost leader.

Harry Stebbings 1:18:02 Uh, who do you not have on your board that you'd most like to have on your board? Magic wand.

Ryan Petersen 1:18:07 I, I don't, I, I don't think our Flexport's board n- needs anybody. Uh, the board is, like, mostly there to represent the interests of our inve- the investors and make sure we're doing a good job, not, like-

Harry Stebbings 1:18:17 Okay

Ryan Petersen 1:18:17 ... driving the company.

Harry Stebbings 1:18:17 But whose wise counsel would you like to have?

Ryan Petersen 1:18:20 You wanna join the board? Is that what you're angling?

Harry Stebbings 1:18:23 I, I mean, listen, I, I think I'd add a lot to the board personally-

Ryan Petersen 1:18:26 [laughs]

Harry Stebbings 1:18:26 ... but I, it needs to be your decision ultimately.

Ryan Petersen 1:18:29 I'm just glad that my board doesn't screw with us. Like, I am... My board has been, like, very supportive of us, of me in particular. I don't really want a more active board. They're not h- super active in the business. They're not, like, telling us what to do. They don't help that much, but they don't ever hurt. And like, I would much rather have that than like a really helpful board. I don't think there's a risk of the board firing me. Someone who's really smart and thinks they're smarter than me might fire me.

Harry Stebbings 1:19:02 Penultimate one, what sports team do you not sponsor that you would most like to sponsor?

Ryan Petersen 1:19:07 Oh, uh, I really would love to sponsor, uh, this football club in, uh, Hamburg called St. Pauli.

Harry Stebbings 1:19:13 Why?

Ryan Petersen 1:19:14 They're the second team in Hamburg, and the first team-- My great-grandfather was a sailor from Hamburg, first of all, so I've got like a personal history there. I don't know if he, I don't know if that team was around back then, but, uh, his, uh, the first team is owned, uh, by, um, Klaus-Michael Kühne, who's the owner of our direct competitor, Kühne + Nagel. And I just love the idea that we would take the second team [chuckles] and beat him, and he would be like, "Ah, those kids, these damn kids, here they come again." Uh, so just more of a troll than anything else. And their logo is a pirate. They're like, kind of like a leftist, um, communist-oriented club. I think they would kinda hate us if we tried to buy it. [laughing]

Harry Stebbings 1:19:56 [laughing] Yeah, maybe, maybe. I didn't know that. Um, 'cause they wouldn't be that expensive. But if-- Yeah, and totally. Uh, also sports is a tough business to make money in.

Ryan Petersen 1:20:03 Yeah, yeah. I don't wanna own any teams.

Harry Stebbings 1:20:04 Uh, final one. What has to happen in 2026 for you to consider it a successful year?

Ryan Petersen 1:20:09 We gotta hit our numbers. We gotta grow like crazy, and then this automation via AI, like we, we, we've got about, well, probably like 100 core workflows that are costly that we have AI-- that we're building AI agents for right now, and like five of them are live and working and saving us money, and 95 that are under development. And I need at, I need at least like 80% of those to come to life and like actually have the impact. Otherwise, we're just spending money and not getting much back for the AI.

Harry Stebbings 1:20:38 Dude, it's been so great to have you in person. Thank you so much today, and also on a Sunday, uh, of all times. So I really appreciate it, dude, and it's really special to meet you in person properly.

Ryan Petersen 1:20:47 Yeah. It's great to be here.