Ryan Petersen: Why Velocity not Speed is Most Important in Company Building | E1081

1. 0:00 – 0:55

   Intro

   1. RPRyan Petersen0:00

      All data comes from the same place, which is the past. But if the future looks different from the past, your data's completely useless. The biggest risk to raising too much money, is you just lose discipline. I've never seen a company successfully raise a bunch of money and not start spending it in ways that aren't actually very smart. My advice would be like, if you raise a lot of money, you should immediately, the next day do a ... (beep) The goal of a culture is to drive velocity. You gotta have trust. Which means people doing what they say, putting the issues on the table. We have an open channel in our Slack instance, where anybody can ask the leadership team a question. And I think that builds trust. We're in an interesting moment right now where globalization is in question of like whether or not we just produce everything domestically.

   2. HSHarry Stebbings0:37

      How do you think about the future for trade with China?

   3. RPRyan Petersen0:39

      China has a few advantages that we don't have. China believes in-

   4. HSHarry Stebbings0:43

      Ryan, I am so excited for this. I can't believe how long it's been since our last show. I was, I was young when we last did a show. So thank you for joining me today.

   5. RPRyan Petersen0:53

      Oh, my pleasure. Thanks for having me back,

2. 0:55 – 7:09

   Career Beginnings and Background

   1. RPRyan Petersen0:55

      man.

   2. HSHarry Stebbings0:55

      Not at all. But I want to start with a bit of a weird one, but I find it actually quite informative. Think back to when you were young, you and your bro growing up. What did you want to be when you were growing up, Ryan?

   3. RPRyan Petersen1:05

      Oh, wow. I don't think I ever had, uh, that many ambitions. I don't remember, to be honest.

   4. HSHarry Stebbings1:12

      (laughs) Did you didn't have-

   5. RPRyan Petersen1:12

      Did someone tell you? Did my brother tell you what I wanted to be? I don't remember.

   6. HSHarry Stebbings1:15

      No, I'm just always fascinated by it, but I think it's always indicative. Did you know that you would be successful?

   7. RPRyan Petersen1:21

      No, I don't think so. I spent a lot of my time learning languages when I was younger and I liked adventure, you know, I wanted to get out there. My favorite, uh, kids book was always Curious George.

   8. HSHarry Stebbings1:34

      (laughs)

   9. RPRyan Petersen1:35

      Wanted to get out there and see what's happening in the world, go on some adventures, cause some trouble. So, yeah, so I did, you know, I lived in, lived in like five countries before I was 24 or something. Uh, learned how to speak Spanish, Portuguese, Chinese, little French.

   10. HSHarry Stebbings1:50

       (laughs)

   11. RPRyan Petersen1:50

       But, uh, it was all just in the spirit of adventure. I don't think I had like longer term ambitions until I got into working for my brother and doing business.

   12. HSHarry Stebbings1:56

       In the spirit of adventure, that takes you to China and reselling scooters, motorbikes. How does that lead to Flexport with your bro?

   13. RPRyan Petersen2:05

       20 years ago, early 2000s, we, my brother ... I started working for my brother when I graduated from college. And we built this company buying motorcycles, off-road vehicles, dirt bikes, ATVs, dune buggies, and selling them through the internet. And it was really a technology company, like we didn't market ourselves that way, but it was before Shopify and Stripe and we had to build our own inventory management systems and accounting. And it was in the browser, like in the late '90s, early 2000s, um, so, you know, we should have built like a software company and sold the software. Instead, we kind of sold these motorcycles. But we learned a ton about import/export and about how difficult it was to work with the freight forwarding and logistics companies of the world. Both because of a lack of technology, like fundamentally, I mean, 20 years ago there was just nothing. The, the trucks, trucking side, we could 20 years ago log in to platforms and get rates, uh, and we built a lot of automation around that. But the, the inbound side, the import of containers and air freight, like just nothing. We couldn't get anything. And then two, I felt like the freight forwarding industry just really didn't, it wasn't easy to work with. They didn't want to see the world through my eyes and help me as an entrepreneur to build my business. There's a lot of arcane terminology, kind of code words, acronyms, and i- i- now my working model is these are rookie detectors so they can figure out whether or not I know anything. And if I can't, they can charge me a lot of money. Um, but we wanted to build a company that kind of like makes it simple to understand import/export, helps you, and we want to make money, but we'll do that by helping you grow your business. Um, and, and using technology to make things easy. So yeah, it really came out of like a frustration as a customer of feeling like, man, these companies are like, they make a lot of money, they're good businesses, but they just aren't very easy to work with. Uh, and both tech and a culture of customer engagement can make it a lot better.

   14. HSHarry Stebbings3:49

       No, I, I, I totally get that. Sometimes sounds like quite a lot of tech founders to be honest. (laughs) Um, I do have to ask, you know, I, I spoke to many of our mutual friends before the show and they said ask about the time slightly away from being CEO, and your reflections on that time. You were CEO for so many years and then you had a little bit of time away. How did you use that time and how did you reflect on your life and Flexport in that period?

   15. RPRyan Petersen4:16

       I wasn't really away, I was the chairman of the board for Flexport, so I was less involved. I was more of a board member. I would say I spent a lot of time, well, I did spend a lot of time with my family. I've got two young kids, um, and a wonderful wife. So I spent a lot of time with my family. Uh, I think the, the time to reflect and really think about the business from first principles as an investor was really valuable. I became an investor, I joined Founders Fund as a partner, uh, and which is like one of the top VC funds in the world. And, and so I looked at a lot of businesses and I started looking at Flexport from the mindset of an investor rather than a founder. I think that was actually really healthy to kind of step back and look, and look at the P&L, look at the business model, think a little bit more clearheaded about where we are. You, you know, you're in the business every day, it's a little bit hard to step back.

   16. HSHarry Stebbings4:58

       Did you see it differently when you looked at it as an investor through that lens?

   17. RPRyan Petersen5:02

       Yeah, I did. I did. I think, um, looking at it from my sort of a balance sheet perspective, return on assets, return on capital, return on invested capital. How do you think about, uh, what kinds of return on capital do you want to generate? How should you reinvest profits? How do you generate profit and then reinvest it in ways that compound? Uh, yeah, more like an investor's hat rather than a founder where you're just like build, build, build, solve problems and build. And the investor can take a step back and like look at the company without even looking deep into the company just by reading the, the income statement and balance sheet. And those are kind of things like founders need to do way more often, is like really live in reality and, and sit down with their business and look at it the way an investor would look at it.

   18. HSHarry Stebbings5:39

       Did you take those reflections into how you act as CEO today? Like have you kept that lens and applied those reflections into how your action plan is today?

   19. RPRyan Petersen5:51

       For sure, yeah. I mean, I came back to the company about, say, two months ago. First thing, you know, I come back with basically three things. Now I'm not saying, oh, I come back as an investor. I do, there are some aspects of what I'm doing right now that feel a little bit like private equity. I'll come in and, you know, run a tight ship. We cut 27% of our costs already in my first five weeks. Uh, we've got a roadmap to, to get the company profitable by next year, by the end of next year without raising prices for our customers. So that's super important. But that's not the most important thing I'm doing actually. The most important thing I'm doing right now is actually, as-... not, not something an investor would do. It's really about the culture of the company, and driving a culture where our leadership, starting with me, but all of the people in leadership at the company are way more in tune with our customers and with the people that serve the customers. Like, spending way more time on the front lines, um, getting to know the customer, getting to know the problems that customers have, whether that's a problem with how we operate, but more often it's a problem out there in the world of supply chain, and how do we solve that? And then, I can't meet all the customers. I've done 115 customer calls in the first eight weeks on the job. Um, try to do four or five every single day. The, um, I can't meet all the customers, but I can meet all the teams that are meeting the customers and synthesize that feedback, and make sure we're actually addressing all the key issues that are, that are out there. And so, yeah, that's, that's, uh, that's probably the most important thing I'm doing, even though it gets more headlines, hey, I'm cleaning up by cutting costs and stuff

3. 7:09 – 11:11

   Customer Interaction Lessons

   1. RPRyan Petersen7:09

      like this.

   2. HSHarry Stebbings7:09

      When you look at those 115 calls, what have been your biggest lessons from doing them?

   3. RPRyan Petersen7:13

      Well, customers really like Flexport. They l- they want us to succeed. They love our vision, they love what we stand for, they love our people. And they love, they love our products. They've given us a lot of feedback of areas of, like, oh, you know, the biggest things in logistics are on-time performance, cost, eh, and accuracy of data. And they've given us a lot of feedback of areas that you're like, "Hey, you guys need to do better on this or that thing." And it's great, 'cause it lines up with exactly our roadmaps and where we're focused on, so that's been, like, confirmatory. But I learn something in every call. The other things I learn is how much customers like Flexport Capital. Flexport Capital is our, our inventory financing product. We finance the inventory as it's traveling through logistics networks. Uh, and customers who use that are super happy with Flexport 'cause we're giving them money and financing their business, which isn't surprising. But they also become more profitable too, so it's just, like, a huge win-win. They become stickier. You know, we help them grow, they grow more. That was a little surprising. I didn't know how the cap- capital c- I hadn't spent enough time with all the Capital customers, but they, they definitely stand out as being happier customers.

   4. HSHarry Stebbings8:13

      We're gonna unpack quite a lot of what you just said there. I, I do want to start more around you and your leadership, actually, Ryan. And it's something that I want to start with-

   5. RPRyan Petersen8:20

      Sure.

   6. HSHarry Stebbings8:20

      ... which is quality versus efficiency. Can you talk to me about how you view the two and the relationship between quality and efficiency?

   7. RPRyan Petersen8:28

      Yeah. You know, I don't know if this is true for every company in the world, but it is, it is the absolute truth in logistics, is that almost all inefficiency comes from bad quality. Very practically, what does bad quality mean? It means something was late, it was shipped to the wrong address, you used the wrong customs classification code, or you cleared it through customs when it should have traveled through that country without clearing customs onto the next country. Call that an in-bond shipment. A mistake like that will cost you all your efficiency gains for the month. And, you know, one mistake, 'cause it takes weeks to unwind things, and the penalties, and the ... And you can't, you can never quantify the lack of loss of trust that a mistake like that will, will bring to your customer. It's very ironic that the more a company in logistics focuses on efficiency, the less efficient, uh, efficient they'll get. And the more they focus on quality, the lower their costs will be, the mo- the more efficient they'll be. Uh, it's not, it's counterintuitive, it's not obvious at all. Although, if you read a lot of literature of, um, you know, the great American business philosopher is W.E. Deming, um, and he's known as, like, the grandfather of quality or something like that. And if you read his stuff, you're like, yeah, none of this is surprising. That's been known, and it's like the heart of Toyota production system, uh, it's the heart of, like, a lot of different, uh, philosophies on how to drive quality. The Goal is my favorite, sort of, business book, and it's all about theory of constraints and driving, um, driving quality so that you don't have to do rework and eliminate waste as you go. Um, and so yeah, it's like our obsession right now is on-time performance, accurate milestone data, making sure the invoice, what we charge you is very close to what we originally quoted you. Ideally matching it, although things happen in the world. Uh, yeah, so that's our obsession right now, is driving quality.

   8. HSHarry Stebbings10:02

      Ryan, do you think that the best CEOs are the best resource allocators? It's commonly said as a, kind of a g- throwaway phrase. Do you think the best CEOs are the best resource allocators?

   9. RPRyan Petersen10:11

      I think there's, uh, so many different kinds of CEOs out there. If you, if you look, like, over the long run, 50-year period or something, the, the CEOs who have the best returns in the stock market have been really good at resource allocation, meaning, meaning they, they really understand when their stock is, uh, overvalued or undervalued, and if it's undervalued, they buy their own stock. If it's overvalued, they issue stock and buy other companies. And they have, they're very in tune with how to w- buy and sell in the public markets, other companies doing M&A, or being very smart. And that's a, that's a, that's a pure form of resource allocation within a public company. In a private company, it's way less important, I think. Uh, in private company, it's much more, yeah, I guess you can say resource allocation across teams, and okay, do I want to put headcount into this or that? I don't think that's the most important thing in private companies, though. It's usually like, do you have a great vision? Can you attract the best talent? Uh, and can you just, like, execute? Can you actually deliver results against your vision? I don't, I don't know if that's really resource allocation. So, it's probably different public versus private.

4. 11:11 – 14:48

   Decision-Making Strategies

   1. RPRyan Petersen11:11

   2. HSHarry Stebbings11:11

      I think you learn a lot from wins and losses, right? When you look at your resource allocation decisions, the investments that you've deliberately chosen to make, what have been your best resource allocation decision, and what's been your worst, and what were the takeaways when you reflect on them?

   3. RPRyan Petersen11:25

      I know it was part of resource allocations. We- we've raised, uh, we've raised capital twice where we did very large rounds of capital at what felt like the peak of a bull market, and wanted to put money in the bank so that we can ride out and have a fortress balance sheet to ride out any storm that comes, so we did that. The first time, uh, was in 2019. And it turned out, the bull market continued, uh, a- and, you know, you can't predict these things, but we raised a billion dollars in 2019. And then in 2022, we raised $984 million. That turned out to be true, like, that we were kind of at the peak of the bull market, and that balance sheet serves us very well today that we have a billion dollars in cash, and we're in a place to execute and not be too concerned, overly concerned about the, the, you know, there's a f- recession in freight right now, and capital markets for tech companies have come down quite a bit since then. And we have a fortress balance sheet to protect us and insulate us from those problems. But if you call that resource allocation, I sort of do, 'cause you're now in a place to protect the company and have cash so you can continue to allocate through the cycle. We've done a limited amount of M&A. We acq- we acquired Shopify Logistics. Um, I'm very, very proud of that deal. I think it's incredibly powerful to now be able to go end-to-end, uh-... all the way from factory to consumer stores, and we deliver into retail stores, like do distribution to other Amazon- other marketplaces like Amazon FBA, uh, Walmart Fulfillment Service, but also Costco, Target, Macy's, Nordstrom. We can d- we can deliver to retail stores now. And so being able to really go all the way end-to-end, we're the only platform in the world that does that seamlessly in one tech place. It's a little too early to say if that's, like, great resource allocation or not. I think it will, I think we'll look back in a few years and say that was incredible.

   4. HSHarry Stebbings12:58

      Before we discuss the, the flip side, can I ask you a blunt question? Do you feel the weight of the valuations raised up? Obviously it was a, a bull market and prices were high. Do you feel the weight of last round price?

   5. RPRyan Petersen13:09

      Uh, no, I don't. I think, um, because the reason is, I- I- I've told my team after every round that we'd done, this is not our evaluation. This is a moment in time, a group of people with a view of the future. And, you know, because the value of any company at any time is the, well, it's the net present value of the future cash flows discounted by some, you know, risk rate, uh, of whether or not that's gonna come true, and what, you know, what the best opportunity cost is. And the future is inherently uncertain. We have no idea what the futures gonna look like. Everybody has their own view. And so our valuation is sort of, like, you take all the probable possible futures out there, you assign a probability outcome each of them, and you collapse that distribution curve down, and you get a, you get a price. You know, another way to say that is, like, hey, there's, when we were worth eight, when we, our valuation was marked at $8 billion, uh, you could say, well, we're never worth... We, I, I literally told our team this the next day, we're not worth $8 billion. There's a some probability chance that we're worth, we're gonna be worth 800 billion, and some chance we're gonna be worth 80, and some chance we'll be worth nothing. I mean, and our job as a, as, here as employees is not to sit here and think about our valuation and hope that it goes up. It's to go make it more certain that those probabilities that we want come true. And so, you know, it doesn't matter what the current price is of the stock. Like, we just gotta go execute and make the more ou- the, the outcome we like more, which is being worth 800 billion someday. I mean, we're a platform for global logistics. Like, global trade is 47% of GDP. That's a big number, you know? If you can be the platform for that, you can be worth trillions of dollars. So like, who cares what our valuation is right now according to some outsider who doesn't even own Flexport stock and writing an analyst opinion on it? Like, that is not how we're gonna run this business.

5. 14:48 – 19:44

   Scaling and Financial Challenges

   1. RPRyan Petersen14:48

   2. HSHarry Stebbings14:48

      When you, when you put on the ambassador hat, you're like big Tom tick. (laughs) Um, I, on the flip side, what was the worst resource allocation decision? What was a mistake that you allocated resources to that you shouldn't, and how did that change your perspective?

   3. RPRyan Petersen15:02

      Oh, well, you know, the Flexport is, over, over the last decade, capital raising came easy to Flexport. I mean, we had zero interest rate. Flexport's a really good bet. We get, we raised a lot of money. I think that that money in, it, I've never seen a company, and I've tried this, and I've raised as much money as almost anybody. I've never seen a company successfully raise a bunch of money and not start spending it in ways that don't, that aren't actually very smart. It's the biggest risk to raising too much money is you just, like, lose discipline and you start spending money. This was true, um, by the way, from day one. We raised a $20 million series A. At the time it seemed like a ton of money. The next day, or like within a week, we had a conference coming up, like a, where we were exhibiting at a trade show or something, and I immediately purchased a shipping container and transformed it into a booth and spent like 50,000 bucks on this thing. And like, I don't know if that was a good or bad decision, but like I definitely wouldn't have made it two weeks prior when we didn't have the 20 million bucks in the bank. It's like the money wants to spend itself. And so that's the ultimate risk. And you can sit here and go, "Oh, we're not gonna spend it. We're gonna pretend we didn't raise it." But you would be, as a founder, the first person ever to, to succeed in that. Um, now I think my advice would be to a founder who's raising a lot of money, and my advice to my former self would be like, if you raise a lot of money, you should immediately the next day do a hiring freeze and don't hire anybody for 90 days, and go, "Look, money's not gonna solve our problems. We're gonna solve our problems." And so over-hiring in general has been our biggest mistake. And, and then we've had to let people go. We've done layoffs, and it's, it's terrible for the culture. And so yeah, that's definitely the worst capital allocation is over-hiring. Yeah, we hired great people too, by the way. It's just like we couldn't afford, we didn't have the cost discipline in place. And, and a lot of that is because we raised money too easily.

   4. HSHarry Stebbings16:40

      I always say, like, actually get a separate bank account, put it in the separate bank account. Forget that you have that bank account. And I have this fight with Parker Conrad always online. I tweet it and he just, like, goes for me. (laughs) I love Parker, so I'm saying that lovingly. But he's like, "Too much money never killed a company. It's a VC-ism. You know, the more money, great." And I'm like, "No, it encourages ill discipline and, you know, imprudent spending."

   5. RPRyan Petersen17:05

      Well, look, I, I actually agree with Parker, but I can play both sides of it.

   6. HSHarry Stebbings17:09

      (laughs)

   7. RPRyan Petersen17:09

      I can be nuanced. Because I do think, I do thi- look, I raised a lot of money. I think that was a succe- I said it was the best example of capital allocation I did was raise a lot of money at the peak; however, it does lead to bad habits. Uh, and, and both these things can be true at the same time. Uh, and, and it, you know, imposing that discipline is totally possible, but you have to be living in reality, looking at your P&L every day, looking at your team, looking at the salaries of your team. I think a lot of what I've done that was a mistake was, like, when you do performance reviews, you can't just do a performance review without also looking at the team's salary, uh, with the team member salary. We let go of a lot of amazing people a few weeks ago. We, we let go of about half of our engineering team. We now, we grew our engineering team this year from 450 software, uh, team members, product and engineering team members, to 1300. It was super aggressive. And then we reined it back in when I came back as CEO. Like th- that was led under the prior CEO. When I came back in, I reined it in to now we have about 650 people, which is more than we've ever had. So again, that was a mistake. We over-hired. But we let go of a lot of great people, including some people I would love to keep on the team, but at the salary levels that they were making, and that's our fault. We overpaid people. But we had to let, we had to let good people go. And I feel terrible about it, yeah.

   8. HSHarry Stebbings18:22

      Yeah, you feel the weight of responsibility when you over-hire 'cause it's one of those tough ones where, like, it's on you as the employer.

   9. RPRyan Petersen18:27

      Of course.

   10. HSHarry Stebbings18:27

       Yeah.

   11. RPRyan Petersen18:27

       Oh, of course. And that's on me. Even though I was not the CEO, I was the chairman of the board. I approved the hiring plans.Um, and so yeah, we screwed up on that. I think we have a lot of cash. You know, we have a billion dollars in cash. We have, um, a product roadmap that we think can really transform the way global trade is done, and global logistics, and we were in a hurry to execute against that roadmap. And we wanted to go build it all, and we weren't living enough in reality of like, okay, it's fine. We're the leaders in technology and freight forwarding by far. Like, if you look at the freight forwarding companies in the world, Flexport's now the third-largest of the American companies and top 10 globally. And if you look at the top 100 providers of global freight forwarding services, customs brokerage and freight forwarding, we're the only one founded after the web browser was invented in '94. Like, we compete against companies that were literally founded in the 1800s. When you think about it, th- they know how to... Somewhere in that building, they knew how to ship freight using Morse code because the telephone hadn't even been invented, much less the internet. I'm not worried that we won't be the leader in technology. And it's okay if it takes us a couple more years to build out everything on the roadmap, and I think that was a mistake. We were like trying to deliver everything in one year, and we don't need to have that pressure. It's like, hey, just sequence things, build the quality, do it right, and, and we'll get there.

6. 19:44 – 25:47

   Strategic Business Principles

   1. RPRyan Petersen19:44

   2. HSHarry Stebbings19:44

      Well, there's another common trope which is like speed is the single biggest determinant of success in startups and company building. Do you believe-

   3. RPRyan Petersen19:51

      Yeah.

   4. HSHarry Stebbings19:51

      ... that's true? Or given what you just said, is speed actually not as important as people maybe suggest?

   5. RPRyan Petersen19:56

      Oh. Well, I think, uh, you have to be very careful with your definitions here, because I don't think speed is the most important. I think it's velocity. And if you remember your physics, velocity has a vector. It's speed in the right direction. If you go in the wrong direction, you're gonna land terrible, uh, and so sometimes the highest velocity thing you can do is stop and do... and go nowhere.

   6. HSHarry Stebbings20:16

      (laughs)

   7. RPRyan Petersen20:16

      'Cause if you're, if you're velo- if you're speeding in the wrong direction, that's negative velocity, and that's really bad. Um, and so that's the key is being agile, being able to change direction, 'cause the world's chaotic. The world's got a... Especially in logistics. Like we've seen crazy stuff. COVID and, um, you know, you had bankruptcies of shipping carriers, and then you had them make hundreds of billions of dollars five years later. You've had terrorists. Uh, all... Uh, we've seen everything. And so you have to be very nimble as the world changes to be able to change direction without losing speed. That's a very ha- ha- te- hard thing to do, so.

   8. HSHarry Stebbings20:47

      Do you know when you're going in the wrong direction? Do you know early? Is it apparent?

   9. RPRyan Petersen20:52

      Not always. Um, I think that's, that's... Like, that's the art of leadership, I suppose. You know, I really like Bezos' concept here of, like, the one-way door and the two-way door and being re- being re- able to move very, very fast as long as it's easy to change direction and come back, that often that's the case, and you should go really, really fast 'cause it's fine. Sometimes it's a one-way door, you can't come back, and so then you better be real careful not... It's okay to go the wrong direction as long as you can change course and, and be nimble, right? But if it's a one-way door type, uh, type one decision, then you got to... That, those are decisions that need to be made by senior people with a lot of judgment to avoid mistakes. Uh, otherwise, it's fine to go fast and make mistakes, like...

   10. HSHarry Stebbings21:30

       The only thing I think with that is like so, so few things are one-way door. Like we were talking-

   11. RPRyan Petersen21:35

       Correct.

   12. HSHarry Stebbings21:36

       ... before, we were talking beforehand about, you know, children and egg freezing, which will get taken out of this. Editor note, take out.

   13. RPRyan Petersen21:42

       (laughs)

   14. HSHarry Stebbings21:42

       Otherwise, I'm fucked. But, like-

   15. RPRyan Petersen21:44

       (laughs)

   16. HSHarry Stebbings21:44

       ... kids are (laughs) a one-way door, but, like, so few is actually a one-way door. Key hires, not. Um, strategic in countries, not. Products, not. Uh, uh, is there really one-way doors?

   17. RPRyan Petersen21:59

       Well, uh, a one... Spending money, you can't get the money back. So thinking about capital obligation and making sure you don't blow the money, uh, so things that cost a lot of money, that's a one-way door. Although we found in logistics that, uh, it's, uh... Well, I think General Patton said it's, it's not, not how high you climb, it's how high you bounce after you fall. And so-

   18. HSHarry Stebbings22:18

       (laughs)

   19. RPRyan Petersen22:18

       ... a lot of our best customer relationships are people that we royally screwed up with five years ago, but it's how do you respond in that moment. Do I, does the CEO give them a call and apologize and make things right? Do you take care of them? Do you, do you pay the extra money? You know, do you... That's n- That's ultimately a value system 'cause your values don't really count unless you're willing to give up money for it. Otherwise, it's just word on the wall. If you don't show up and you don't really handle things well, that could be a one-way door. I mean, you can... I have people that I don't interact with anymore and I won't do business with because tha- of the way they behave. There's, there are one-way doors out there, but I agree with you in general. Like most things are two-way doors.

   20. HSHarry Stebbings22:52

       I'm glad after seven years you forgave me, Ryan. Yeah. It's a thrill to be back. (laughs)

   21. RPRyan Petersen22:56

       (laughs)

   22. HSHarry Stebbings22:57

       Um, now I, I want to ask. I, I spoke to so many of your friends and they... All of them literally said I had to ask you about Roman Empire, your lessons from-

   23. RPRyan Petersen23:06

       Really?

   24. HSHarry Stebbings23:06

       Yeah. And like how you think about like Roman Empire and its actual like relationship to culture and cult followings and how it impacts-

   25. RPRyan Petersen23:17

       No.

   26. HSHarry Stebbings23:18

       ... humanity culture.

   27. RPRyan Petersen23:18

       I'm, uh... Uh, to be honest, I'm more of a fan of the, uh, the ancient Greeks and the ancient Egyptians than the Romans, but, uh, but, uh, I do like ancient history.

   28. HSHarry Stebbings23:25

       How does ancient history then impact your thinking on company building?

   29. RPRyan Petersen23:28

       Uh, I don't know if it does. I think it's more of a hobby, to be honest. I really enjoy, uh, the work of, uh, one author in particular. His name is Will Durant. Will and Arielle Durant-

   30. HSHarry Stebbings23:36

       Uh-huh.
7. 25:47 – 29:13

   Flexport's Operational Model

   1. RPRyan Petersen25:47

      Well, I, I can't speak to every, uh, every kind of company. There's so many unique businesses out there. But it, but it is, you know, in our business, it's an end-to-end offering. So what, the way that Flexport works is companies come onto our platform, they place orders to their factories through Flexport by purchase orders, buying goods. Those factories become users. The average importer of goods is onboarding 18 factories, and then those factories become users. They place bookings. They say, "Okay, the cargo is ready on this date." Uh, we send a truck out there and across 100, over 100 countries. Send a truck, pick it up, export, clear it out of that country, put it on a ship. So we've got to have contracts with all the ocean carriers and airlines across the world, clear it through customs, truck picks it up at the airport or the port, either direct- delivers it directly to the customer, puts it on a, um, sometimes we put it on a train actually and skip the truck. Sometimes we do a barge. In Europe, a lot of barge shipping, in China too, and go up the Rhine River. Uh, sometimes we'll bring it to a warehouse, unload the container, put it on a dry van, on a regular truck, deliver it, bring it to another warehouse. We then deconsolidate it and ship it to customer stores or into retail stores. So it's an incredible amount of complexity, as you can imagine. I haven't even mentioned there's a bank that's financing that transaction, whether it's Flexport Capital. Uh, there's a, someone doing the payments, you know, the wire transfer. There's an insurance company doing cargo insurance, uh, and then there's returns. There's a, it's a, it's a very complex network. So if you try to run this where all, each leg is just only thinking about themselves in isolation, you're very likely to screw something up, uh, because a, a mistake, a change in China at the origin or in Vietnam, and a delay there, I've got to replan everything downstream because, you know, the truck's not going to be ... The, the, the truck now has to be rescheduled a week later, uh, three weeks later. Silos are incredibly dangerous in logistics, and yet there's no possible org chart that could solve this. People who work in simpler businesses, they want, they, they, they try to solve these problems with an org design that says, "Okay, everybody, you know, these people report to me." But the only person, only this, one person can have everybody in that network that I described reporting to them, and then they become a bottleneck. Now, the, A- Amazon's done a good job with the API memo. Bezos is trying to solve this with the everybody should communicate with APIs and we don't want to have any meetings. That's correct. We're developing in that direction. But in the meantime, before you have everything being API of everything, every team talking to everybody by APIs, you just have to sit down and collaborate. You have to read each other's plans. You have to line up, make sure that, you, you know, the hand-offs are seamless, that each team ... 'Cause we, we're organized as each of those legs is a team, but they gotta pay attention to what's upstream and downstream of them.

   2. HSHarry Stebbings28:24

      Ryan, how many direct reports do you have?

   3. RPRyan Petersen28:26

      Uh, right now, I have 15.

   4. HSHarry Stebbings28:28

      Is that not too many?

   5. RPRyan Petersen28:29

      Uh, for our business, it's the best way. I've had, I've had as few as six. Uh, it turned out much better to have more and, uh, get more collaboration, but I don't want to have a 15-person meeting unless I just need to tell everybody something. We don't make decisions with all 15 people in the room. It's not like we sit down and, you know ... 'Cause if you did, everybody would ... I think I did the math on this, and everyone would talk for five minutes or something, four minutes. That's not a very useful meeting. If everybody talked equally, which obviously they wouldn't, but, um, no.

   6. HSHarry Stebbings28:53

      (laughs)

   7. RPRyan Petersen28:53

      So we, what we do instead is we grab, uh, four or five, six people for whatever the topic is that we need, and we'll just go deep. And not just those six people who report to me, but some usually, uh, a layer down from the technology org, someone from the front lines who understands the issue, and that's where we, you know, we make decisions in, in small groups like that, not, not with all 16 people.

8. 29:13 – 36:33

   Corporate Culture Insights

   1. RPRyan Petersen29:13

   2. HSHarry Stebbings29:13

      Speaking of making those decisions in small groups, culture is so important for it, that people feel able to talk to you, that they're not scared to, that they can discuss the hardest things. I've been bad, actually, at culture-building. By being young, I kind of always thought friendship was the way to build companies, which is the worst thing ever. What have been your biggest mistakes on culture?

   3. RPRyan Petersen29:32

      Um, yeah, I think trying to be popular is a big mistake. Um, you have to do what's right, not what's popular in the company. And sometimes you do things that are unpopular, uh, but if it's the right thing to do, you gotta do it. The goal of a culture is to drive velocity. We were talking about velocity before, speed in the right direction. You gotta have a great mission. To do that, you gotta have a great mission and purpose. Why are we here? Uh, you know, Flexport's mission is to make global commerce so easy, there will be more of it. Like, I think that's inspiring. Like, let's increase GDP for the world. Let's help people, help create opportunity and get richer, help our customers solve problems. Like, this is inspiring. It's fun. Um, we get to learn a lot too. Like, w- logistics is your kind of a backstage pass of the world economy, what's happening in all the world's companies, however they run, help them with their problems. So having a sense of purpose so you actually know we're all rowing in the same direction, absolutely crucial for a good culture. It's like, sounds cliché, but you can't do enough of it. Two, is you've got to have trust, which means people doing what they say, not talking crap behind each other's back, putting the issues on the table, a culture where you, you're not gonna get scorched because you cr- where, where you criticize somebody. For example, one thing I do for this is that we have an open channel in our Slack instance where anybody can ask the leadership team a question. And I may, I praise people who ask hard questions.... who criticize us. I mean, I think that's awesome. I prefer ... I like courageous people. Uh, and I think that builds trust.

   4. HSHarry Stebbings30:52

      What's been the hardest question?

   5. RPRyan Petersen30:53

      Oh, we get ... Oh, we get questions, a lot of questions about, um, you know, we, we laid people off. So you're obviously gonna get a lot of tough questions when you do something like that around benefits and salary, and, "Did you think of this thing?" Or, "We really reduced the size of this team. Does that mean you don't value this team?" Things like that are tough questions, so. But I respect that courage. Imagine being an, a small ... Uh, uh, a small is the wrong word, sorry. Junior person in a company not, not been around very long, and challenging this global CEO publicly in front of everybody. That's awesome. Like, that's courageous. So much better. There's this anonymous social network that's like the terrible, all the cowards go there and just talk trash. Like, you're obviously a coward if you're allowed to talk in public and o- ask an open question, but you're too cowardly to do it, and you post on the anonymous social networks. I, I think that builds trust. I think having things like that where you can just answer questions. I'm not afraid of any question. I don't always have the best answer, but I'm not afraid of it. I live in public and be authentic, uh, the only way I know how to do it. So a sense of purpose, a sense of trust. Um, I think, um, using intuition is really important for culture. Like, it can't be all data. Data, data is overrated, in my opinion. Data's valuable, but data's too slow, and often it's inaccurate, and most humans are not actually using data the way they pretend to use data. Most people know what they want to do, and then they use data to justify what they were gonna do anyways. Uh, and you can always find some data to back up your case if you're certain. I respect that. I think people who have good judgment can make decisions, move fast. Data's also very slow. You know, it takes a long time to get the data you want, and you often need to move faster than that. And data has one major drawback, which is that all data comes from the same place, which is the past. And like, if the future looks different from the past, your data's completely useless. People who use intuition, you gotta blend data. I'm not saying data's bad. Like, a big part of what we do is provide better data about supply chains. But you've got to have high judgment people interpreting data saying, "Is this actually right?" I mean, a number of times I've been shown some data and then been like, "But what about this?" I'm like, I, you know ... The ... In- instantly I can debunk reports on data. So using intuition is key. Um, a culture of learning is really key, like ho- honoring mistakes, not, not, not scorching people who make a mistake, and constantly trying to learn and get better. These are, like, all really important aspects to building a high velocity culture where people can, you know, build trust and go fast and, and execute, um, on that mission.

   6. HSHarry Stebbings33:17

      A lot of what you just said is predicated on actually having the right people on board as well. You know, they have to want to learn. They have to bluntly be honest and genuine people. I, again, have made many hiring mistakes. What are some of the biggest hiring lessons you have that you wish you'd known when you started or in the earlier years?

   7. RPRyan Petersen33:35

      Don't hire outside people. Uh, I rather much ... I don't hire senior executives. I think in almost all ca- ... I'm not ... Look, that's not a blanket rule. I ... We've hired a lot of great senior executives at, at Flexport over the years, and, and a lot of them are doing amazing work for us. But it's so much higher risk than promoting from within, um, and, and so much better. You get to know people. You get to really get bought in, that they believe deeply in your mission, they've built credibility and respect, and stretch people and promote people from within. I think that ... I didn't do enough of that over the years. I think, uh, trying to pursue in blind pursuit of growth and, and, and hitting our goals and being global and taking over the world and it, it ... Bringing our vision to life, you need help. And you turn externally instead of going, "Hey, I'm at ... I've actually got amazing people at Flexport." Like, we have ex-Flexport people who are in key roles, like, way more senior at amazing companies than, than they were doing at Flexport, and we didn't promote them, and they left and did better things somewhere else. And like ... So I, I, I think, uh, spending more time with your customers and more time ... Be in the presence of your people, and more time with the front lines so you can identi- ... Like, the key job of leadership is identifying talent within your company. Ex- externally, yes, but like, it's so much better if you can get internal folks and promote them. The problem is, like, companies are in a hurry, you know, and we want to achieve things really fast, and it's kind of a shortcut to go hire senior people from outside.

   8. HSHarry Stebbings34:59

      How do you know when a stretch is a stretch too far?

   9. RPRyan Petersen35:02

      Uh, you've got to try it. I mean (laughs) ...

   10. HSHarry Stebbings35:04

       (laughs)

   11. RPRyan Petersen35:04

       You know what? I, I don't know if it's a tragedy. It is a tragedy because it's, um ... When that happens, the people tend to leave the company inve- ... And I think a, a great culture should be able to go, "Hey, you know what?" Like, if you could really do this the right way ... Uh, we haven't figured this out, but I would love to. It's like, "Hey, we stretched them, didn't work out. Let's bring them back to a role that, that matters." But egos and compensation and other factors being what they are, it tends to be when you stretch people too far, they leave the company. And that, and that stinks because, uh, we've lost a lot of great talent. And if I just think about all the great people who have left Flexport over the years, if they were still here, we'd be like, 10 times a better company. If you're out there, come back. We'd love to have you.

   12. HSHarry Stebbings35:42

       My honest reflection on people management is, like, being a CEO is the worst thing ever because great people you'll permanently worry will be leaving because they're so good, average people you permanently worry that they're not good enough, and bad people you permanently worry that you should have got rid of them last week. Do you agree with that? (laughs)

   13. RPRyan Petersen35:59

       I think it's an ... it's an incredible job being a CEO of a company. If you believe in the mission and you love what you're doing, you know, and you're executing against the vision, it's an incredible job. Uh, but it's not an easy job, and it's not necessarily fun. I mean, it's ... People look from the outside and think like, "Oh, I'll, I'll be an entrepreneur. I'll be the CEO," and like, it's, it's really tough, man. I mean, it, it is not an easy thing to do for, for the reasons that you said and, and many others. But hey, that's, that's why you ... That you ... You know, that's why we do it because we want to ... We believe deeply in what we're trying to achieve. And I, I, I don't ... I'm kind of unemployable. I don't want to work for somebody else. I want to go

9. 36:33 – 41:59

   Leadership and Management

   1. RPRyan Petersen36:33

      build stuff.

   2. HSHarry Stebbings36:33

      (laughs) Your brother told me you're unemployable. Uh, no. (laughs) Your, your, your wife, though, asked the question. You said there about kind of the mirage of entrepreneurship. Your wife said, "What's the biggest misconception people have of Flexport today?"... versus what it is, really.

   3. RPRyan Petersen36:51

      Uh, well, there's been a lot of... Uh, you know, Flexport's been in the news a lot lately. Um, we had a CEO transition. The demand for scandal and drama is way higher than the supply in this world, and the media has been really sensationalizing some stuff. There was a story about Flexport that I will not point people to because I don't want to give it any attention 'cause it was utter crap. But it was a whole article. Flexport delivered 33 million packages to consumers' homes on, that's what we're on track to do this year. And one package got lost, and they wrote this whole, this mainstream media publication wrote an entire story where the first four paragraphs are about a lady whose package got lost. And I feel bad for her. I'm sorry. Like, we lost the package. We genuinely, we screwed that up. We reimburse her in full. But like, one out of 33 million, I mean, that is like... You know, this is people trying to sensationalize and, and stir up drama. Or like, that same article claimed that one of our biggest customers was really unhappy with us. Literally, the customer went on the record telling them that's not true. "We were very happy with Flexport." And they didn't publish that.

   4. HSHarry Stebbings37:52

      No, no, no.

   5. RPRyan Petersen37:52

      They wrote, they wrote two s- they wrote that we have sources saying that they're not happy, but like, the source of the company told you that that's not true. So, the, the media wants to drive these narratives about Flexport as if we're a mess or something when, in fact, if you come hang out with us or you're one of our customers, you know like, we are high energy. Our culture is stronger than it's ever been. We're really well financed. We have almost a billion dollars in cash. We're gonna be profitable next year. But like, if you read an article about Flexport today, it would be like, "Oh, this company's in a difficult p- position," or something. So, I don't know. That's part of why I want to come on podcasts and like, tell the story directly because the media, once you... And I, you know, I've talked to these people and told my story, and then they just don't publish any of that. They publish sensationalist stuff, so.

   6. HSHarry Stebbings38:34

      You said it earlier, you said you can use data for whatever your end is. (laughs) And so-

   7. RPRyan Petersen38:39

      Yes.

   8. HSHarry Stebbings38:39

      ... if there, if there's any data that suggests it's not in line with your story, well, that didn't get that data, uh-

   9. RPRyan Petersen38:44

      Exactly, exactly, exactly. And by the way, the media's been good to Flexport over the years. I'm not like, I'm not a huge critic of the media. But in the current moment, people are liking to tell the sensation, and that's what drives clicks or whatever metric they're looking for. But over the years, the media's been good to us and like, been part of our success is get the story out and attract customers and talent. And so, I think we'll get back there. We just gotta go do a good job.

   10. HSHarry Stebbings39:03

       I, I, I totally get you and (laughs) agree. It does seem like a harsh piece. Speaking of kind of like, in the media, the world is a more nerve-wracking place than ever in many ways. I spoke to Bryan Singleden before this, and he said there's nothing he loves more than talking to you about, bluntly, the state of the world, and how you see kind of macro geopolitics today. And I'd love to ask, when you think about kind of geopolitical macro, how do you think about the future for trade with China?

   11. RPRyan Petersen39:28

       Well, China has a very unique manufacturing capability that you can't replace easily. You know, people will love to say, oh, we, and there, tare- the United States government's doing their best with imposing tariffs on, on imports, uh, coming from China. Companies with simple products, like, think apparel, et cetera, are moving that away from China, one, to avoid the duty, but Chinese, uh, the Chinese economy's done so well that their labor prices have gone way up. You know what, the average, uh, hourly wage in Mexico is now cheaper than in China.

   12. HSHarry Stebbings39:55

       For sure.

   13. RPRyan Petersen39:55

       So, if you're just looking for cheap labor, and that's great for China, right? Like, good for them. Like, they're making more money as a, uh, you know, their population. So, China's no longer the cheapest manufacturing site in the world, but it's the best manufacturing. Like, they are the highest quality, highest competency in manufacturing. So, if you're doing electronics, you're doing anything sophisticated, or not anything, but a l- a lot of the really sophisticated forms of manufacturing, China's the best place to buy things. Um, so I don't think that's gonna go away. I think people will always be shifting away from higher c- labor costs to cheaper labor costs. And tariffs, they're gonna do what they can to optimize against tariffs. I think, in general, there's global... It's a, we're in an interesting moment right now where globalization is in question. Like, whether or not we're gonna continue to do trade globally, or will we just produce everything domestically? Are there gonna be more boundaries, more nationalism, uh, more maybe regional trade? And that's a, that's a... We're at a moment in time where that looks like a big, interesting debate. But I would point to the long, you know, talking about history, that global trade has grown 4% annually, uh, since the Mongol invasions in around 1200 AD. Now, I mean, it looks, you know, 4% doesn't sound like much, but when you put 4% on a 800-year curve, it's a phenomenal hockey stick like Silicon Valley's never seen. Uh, and I would predict that that'll continue because it's innate in the human species. With specialization, and trade is like one of the main things that separates us from the animal kingdom. Adam Smith wrote this. I've never seen a dog trade a bone with another dog. We see animals, uh, eh- exhibiting all kinds of other behaviors, language, and tool use, and other stuff. But trade is not something that they do. And trade is fundamentally what the building block of civilization because it allows specialization, it allows gains, it allows wealth creation. So, humans want to trade with each other. Now, governments will try to stop things. There will be special interests that may wanna block trade. But left to their own devices, humans will trade more and more and more. Uh, and so I, I would predict that that's what's gonna happen because, uh, we always find a way.

   14. HSHarry Stebbings41:47

       They will trade more and more and more. I'm just really intrigued. Do you think that will be globalized trade or nationalized trade?

   15. RPRyan Petersen41:53

       I think it'll be globalized trade. I think, uh, first of all, the ship is an incredibly efficient way of moving things around

10. 41:59 – 49:18

    Global Trade and Environment

    1. RPRyan Petersen41:59

       the world, far more efficient than any other, you know, land-based transport. In fact, uh, you know, I, I, I, I've had this blog post that I want to write about how Fiji water is the most environmentally friendly water. It gets criticized all the time. There you go. Because ocean freight is so carbon neutral that by getting it and shipping it from Fiji to the West Coast of the United States, it emits way less carbon than running a truck from the Rocky Mountains to the West Coast. You know, there, there's a lot of reasons. And ocean freight is cheap. It's reliable. The fact that you can ship a TV across the world for a few dollars is just a remarkable feat of engineering and, and human ingenuity. Now, war is a big risk. I have no w- no way to understand the risk of, of, of war and, and what that can do to trade. Civilization...... and therefore, trade depends on peace. We take it for granted. We've lived in this great period of peace for most of our lives. There's, uh, at least in the United States and the Western world. The wars that have existed have been largely removed from us in the daily impact, thankfully. But if that changes, yeah, of course trade is at risk. And so we, we take, there's a lot of black swans that can happen, but even more is that, you know, World War II seemed like the most catastrophic thing that could ever happen, and if you look at the graph of GDP or trade, you barely notice the blip, uh, if you look at a long run.

    2. HSHarry Stebbings43:12

       To what extent is planning even valuable in your business? When you have COVID, when you have Ukraine, when you have, you know, global conflicts that just throw the world into chaos?

    3. RPRyan Petersen43:24

       I think it was Eisenhower who said, uh, "Planning is invaluable. The plan- the plans are useless, but the exercise of doing planning is incredibly valuable." To think strategically, to take a moment back and step back and think about what you're doing and why you're doing it, um, that's a very valuable exercise, but you have to be very adaptable when the world changes. And probably that's a, a strength and a weakness of mine. I'm very good at changing direction, probably change direction too easily also, and so having some firm view of where you're going is really important.

    4. HSHarry Stebbings43:50

       Can I, uh, uh, we- way before we discuss, uh, uh, parenting, which I do have to discuss because I think it's fascinating and helpful for me. Question, would you be long China? China have so many problems from, you know, population decline, manufacturing decline, reversion away from urbanization. Would you be long China or short?

    5. RPRyan Petersen44:08

       You know, I- it's very hard for me to do macro-type stuff like that. I think that Chinese- China has a few advantages that we take, that we don't have. Chinese- China believes in China. Chinese people believe in China. A half of Americans hate, hate America. I think that's a huge advantage to have as a civilization to believe that what you're doing is, that you're part of something that's bigger than yourself and trying to support your country. You know, we lack that these days in America, um, and that's a huge advantage to have. They're incredibly industrious people. They're working. They are hungry. They want success. They work six days a week. I- a lot of people don't realize that. I lived in China for two years. They work Saturdays. We don't work Saturdays. You know, that's a bit extreme, but most Chinese people work six days a week. What- w- how much more productive would you be working that extra 20%? You know, they're industrious, they're hard-working, they're intelligent. They have a lot going for them. Their leadership is incredibly smart. They have some demographic challenges that are beyond my scope to understand because, you know, people are like, "The population's declining." Not, China's not the worst in this by any means. There's, uh, there's western countries, Italy and Korea, uh, and other countries that are declining faster, but I always think, like, "Well, but isn't it better if you have fewer people to share the resources?" I don't know. I don't know how to think about that, but they still have way more people than we do in the United States, so I'm not, like, a macro investor by any means. I always, I, I did study a lot of economics. I always found macroeconomics to be impossible, and I think people who pretend to understand it are probably wrong. I don't make big, you know, civilization-level predictions like that, but I- I- I lived in China for a few years. I have immense respect for Chinese culture, Chinese people, Chinese food. Uh, there's a, there's a lot to love about China.

    6. HSHarry Stebbings45:33

       Do interest rates hit double digits, do you think? Some people suggest we're just at the start. Some people suggest they won't go higher, we'll see easing. Where do you sit?

    7. RPRyan Petersen45:42

       Oh, I'm not g- I'm not the right guy to ask about interest rates. I don't know, man. It's like, if they do, the United States government's gonna be in a lot of trouble. We can't pay our debt at 10% interest. They're gonna have to keep printing money, and then you have an inflationary cycle which then makes interest rates go even higher, so seems pretty ugly.

    8. HSHarry Stebbings45:57

       Okay, before we move into a quick fire, I'm going to ask something about you do have direct experience and you will be able to lend some wisdom. Parenting, okay? You are a CEO of a, you know, 1,000 plus... How many, how many people work at Flexport now?

    9. RPRyan Petersen46:10

       2,500.

    10. HSHarry Stebbings46:12

        2,500.

    11. RPRyan Petersen46:12

        Employees, yeah.

    12. HSHarry Stebbings46:13

        Can you tell me how do you still be a great father and be CEO of a 2,500-person company? What do you know now that you wish you'd known when you had kids?

    13. RPRyan Petersen46:23

        Well, it's love is the, you know, my most important value, so I love my children so much that I want to get home and make sure I get time to spend time with them before bedtime and hang out with them every night, uh, and see them in the morning too, so... I've got a three-year-old and a one-year-old. Uh, my, especially my older daughter, my one-year-old, like, you know, she hasn't, hasn't started learning how to talk or anything yet, but my three-year-old is like, is just a little ball of energy, so I- I love playing with her and I make time for that, and, um, yeah, then I work more in the evenings after she goes to bed and I get up early and work, and that- that- that's fine. I mean, I think I can work, I work as hard now as I ever worked in my life. And I just have to de-prioritize some other stuff.

    14. HSHarry Stebbings46:59

        Did having kids change you?

    15. RPRyan Petersen47:00

        It's, yeah, it's like a chemical wash that flows over your whole body, filling you with love and, and respect for the universe and, like, understanding. Also a great way to understand your own parents, your relationship with them, like, remember, like, all the stuff that they went through that I'd never even thought about, but as I go through it, I'm like, "Oh my goodness, they had to deal with this." Like, "I must have been a little brat," or like think of them, but in the end they taught me in flashbacks, you know. Like, oh my God, I remember reading Curious George as a kid and now I'm reading it to my daughter, or... Yeah, all the different, a lot of flashbacks and a lot of, like, thinking back on my, reflecting on my own childhood that's really, really, really profound.

    16. HSHarry Stebbings47:36

        Can I ask you, uh, uh, you know, you have CEO hat, you have father hat, you have husband hat. The husband hat as well you got to keep up. How do you retain romance and retain prioritization of relationship when you're managing 2,500 people, reading Curious George, holding one-year-old?

    17. RPRyan Petersen47:54

        Well, I have the greatest wife in the world. My wife is, uh, kind of the chief of staff of my life. Uh, she's been incredible advisor for me on all things. And by the way, I was criticized in the media before, but my wife's a former reporter, so I'm, like, well in tune with how the media works, and, uh, she's a great, like, communications director, helping me, um, you know, understand how to behave, how to get the media to, like... Well, I was building Flexport well before I met her, and she's always known that Flexport's my baby, and that, you know, was serious priority for me, and that I'm very fortunate to find a, a woman who wanted it, like, knew that and signed up for it and wants to help me in every way, and I- I don't know, I'm so... I never take her for granted.

    18. HSHarry Stebbings48:31

        Does she have a sister? (laughs)

    19. RPRyan Petersen48:34

        (laughs) She has a wonderful sister married with, married with kids.

    20. HSHarry Stebbings48:38

        That bit gets taken out too, guys. Hoot, hoot, hoot. (laughs) Uh, final one, Ryan, before we do a quick fire. You're a very secure dude. You're just very kind of content and happy in yourself when I speak to you, which is quite rare considering the CEOs that I speak to.

    21. RPRyan Petersen48:53

        Interesting.

    22. HSHarry Stebbings48:53

        What's your biggest insecurity in leadership today?

    23. RPRyan Petersen48:56

        No, I do feel very secure. You know, part of it is, um, I, uh...I mentioned I lived in China for a few years. I was super broke, making no money, and I was living really well. It was, like, the best couple of years of my life at that time, and it really ... a sense of adventure and fun. This was, uh, 17 year- 17, 18 years ago. And, uh, I realized I don't

11. 49:18 – 1:03:07

    Personal and Business Insights

    1. RPRyan Petersen49:18

       need a lot to succeed and be happy. Like, I was like, I made $17,000 one year, and it was, like, one of the best years of my life. And I was trying to make money, by the way. I wasn't like, "Oh, I don't need." But I was, like, trying to make money and, and I didn't make a lot of money, but I was very happy, and I ate well, and I had friends. And that's given me a lot of car- you know, uh, it, it has allowed me to take risks in my career. And I've started multiple successful companies, not just Flexport but ImportGenius, uh, Room.com. I- I started a lot of businesses, uh, invested in, you know, over 100 companies and done really well as an investor. So I, I, I, like, no matter what happens, I'll be fine because I can be poor and happy. It's not about making money. And so, it, like, gives me a sense of security that I'll be fine. My wife, my wife's not going to leave me if we, if we lose money. We'll, we'll do it together, and it'll be fine, like, so ...

    2. HSHarry Stebbings50:01

       Does money make you happy?

    3. RPRyan Petersen50:03

       Well, money can, money can solve problems, and problems can make you unhappy. So yeah, money can definitely contribute to happiness if it can get ... if it can make problems go away. There's simply a, a place where, you know, you ... Uh, money is very funny 'cause humans are mimetic. Uh, we copy each other. We want more. And so you have to be very careful of who your role models are and who you imitate, and be careful not to hang out with people who have way more money than you 'cause you'll, you'll aspire to do things that you can't afford, uh, and spend money on stuff that won't actually make you happy. Uh, and so picking your role models I think is one of the most ... And, and just your friends, who you hang out with, one of the most important things, uh, in life. And yeah, so ma- you know, money alone definitely is, if that's all you're after, definitely a recipe for misery. That's, that sounds cliche, but it's true. But it, but, but if you, if you know what you want in life, money will definitely help you get there faster, help you solve problems and o- overcome obstacles and things like this.

    4. HSHarry Stebbings50:55

       You mentioned your success investing. I spoke to Chad before, and he said literally right before, and he asked, "Why do you love investing in rebels or people with messy pasts, where something's gone wrong in previous companies?" Why do you love that?

    5. RPRyan Petersen51:09

       Revenge is a really powerful motivator, uh, (laughs) in life. You want (stutters) yeah, you want people who are motivated and driven, and if someone feels like they've been wronged, there, there's a couple benefits. One, they're going to be incredibly driven to go solve the, you know, to go have a comeback story. Two is they're probably going to get passed over by other investors, and that's a, that's what you need. Like, you need a contrarian opinion, and you have to be sure that they didn't, they were not, like, they didn't have a moral, ethical failing. Or if they did, it was something that minor that can be forgiven, you know, that didn't really hurt other people. Maybe they broke some rule or something, but, like, didn't, there weren't, there, there weren't cr- innocent people were not harmed. And then i- in that case, if you can get really comfortable with that and they're really talented and other people aren't willing to invest in them, then that's like a perfect storm for, for finding a great founder.

    6. HSHarry Stebbings51:56

       Enter Parker Conrad. (laughs)

    7. RPRyan Petersen51:58

       I've got a, I've got a, I've got a list of people that back that, match that profile, and, uh, and Parker's one of them. Yeah, I think Parker was wrongly scapegoated and run out of town at Zenefits, and then he, and he proved it by going to build Rippling into a business that's much bigger and better than Ze- Zenefits ever was in the exact same space. I'm sure that the investors who did that regret it, and, and, uh, and that's fine. Parker is a, you know ... Parker's not that, uh, doesn't care per se. He just wants to go execute.

    8. HSHarry Stebbings52:26

       Has angel investing changed how you are as a CEO?

    9. RPRyan Petersen52:29

       Say, yeah, uh, probably. It b- it helped me a lot to understand the, the VC world and how it works. Probably helped me with some of our fundraising, having a little bit of perspective being on the other side of the table, understanding the game more, being, being, having fr- uh, you make friends with other investors and can learn more about the, the VC world and how to, how to navigate it. But I, I think net-net, no, I don't know if it has because it's also taking up time. I don't spend a lot of time. I haven't spent a lot of time on it, but, you know, it's inevitably going to take up some time. I do it not, not because it can help me at point ... I, I actually quit ma- angel investing a while ago, uh, basically. I'll do it a little bit here and there if it's a friend of mine or something. But the reality is any time spent away from Flexport is probably net-negative for Flexport. I may as well spend all my time on Flexport if I want to make Flexport more successful. Hey, life is not all about money or one thing. Like, I enjoy it. I, I like learning. I like making friends with other founders. I benefit from those relationships in ways that are hard to predict. And, and certainly 10 years ago and f- 12 years ago when I started angel investing, I had, I don't know. Who knew what, what I was doing? I'm just trying to get out of here and have fun.

    10. HSHarry Stebbings53:28

        Who knows what VCs are doing? Not them. (laughs) Uh ...

    11. RPRyan Petersen53:32

        (laughs)

    12. HSHarry Stebbings53:33

        I'm just kidding. We have theses. Um, fi- I'm gonna do a quick fire round with you. So I want to start, uh, with a question. What concerns you most in the world today? When you look at the landscape, what concerns you?

    13. RPRyan Petersen53:44

        War, violence, mob violence, uh, the scapegoating of innocent people, and, uh, civilians being c- caught up in the consequence, and yeah, violence.

    14. HSHarry Stebbings53:56

        Has managing teams got harder with the rise of woke society?

    15. RPRyan Petersen54:03

        Managing teams is always hard. Dealing with people who are not focused on the company's mission and have their own missions that are separate from a company's mission is incredibly frustrating because there's a million organizations in this world, one for every possible topic that you want to drive. And so finding people at Flexport who are focused on anything other than making Flexport successful at work is, like, really, really frustrating. I don't care what you want to focus on outside of work at all, what your politics are, what your cause is. I think that's awesome. People should have passion to do stuff, but, like, that's not what Flexport's all about. At the company during the day, like, let's just talk about our problems are hard enough. We got to make global commerce easy. We got to ship cargo in every corner of the world. Like, this is hard enough. We don't, we can't solve other people's challenges outside of that.

    16. HSHarry Stebbings54:50

        Remote work versus work in office. What are your thoughts there?

    17. RPRyan Petersen54:54

        I think re- remote work is very, very difficult to achieve, build a company culture. I think individuals can succeed. I'm incredibly productive working-... oh, in my house with, there's no distraction. I'm an incredibly productive individual contributor. But great things get achieved by teams, and teams don't really form over video conferencing. T- Teams form when you get together and you collaborate and you have dialogue and, like, you capture emotion, body language, and context, and you jam and you stay up late, and it's not constrained by the 30 minutes of our video call, like. And that just doesn't happen on remote work.

    18. HSHarry Stebbings55:32

        And what was one of your core things? Learning. And when you and me do a presentation together and we leave and get a coffee afterwards, I say, "Dude, I didn't like the way that you presented that, and I think we could have done it differently in this way." That's a good idea.

    19. RPRyan Petersen55:45

        Uh-

    20. HSHarry Stebbings55:45

        You don't have that in your

    21. RPRyan Petersen55:46

        And the spontaneity of it, man. Like, I'm walking around. Last, we do ... And I, it, we're, Flexport is struggling to get team members to come back to work right now, and I wasn't, uh, you know, it wasn't our focus the last few months, but it's absolutely my focus right now. I'm, I'm pretty frustrated by p- people at Flexport who don't want to come into our offices.

    22. HSHarry Stebbings56:02

        I'd just let them go, though.

    23. RPRyan Petersen56:03

        We're, we're, we're starting to do that, and treat it as performance management, but we, we're setting some new policies around this in the, in the coming weeks. But, um, it is a performance management issue. Now, there's certain people for exceptions, and people who are outstanding track records of performing at home and in individual contributor jobs. But if you're, you wanna be part, if you wanna ... I've, I've told this team over and over again, "If, if you want to succeed at Flexport and get ahead, you should come to the office." But even just last week, I, you know, I do a weekly town hall i- at whatever office I'm in, and just take questions. I s- share what's on my mind, uh, and then, and then take questions from the team. Um, and after these town halls, I'll c- just hang out. I had a guy come up to me last week and just tell me, "Hey, uh, you know, we have this opportunity to, like, get $2 million extra profit if we just do these three things differently." And I was like, "Who have you told about this?" He's like, "Nobody." I'm like, "Oh, uh, you know, if we weren't in the office together, like," (laughs) "we would lose $2 million right here. Let's go." You know? And, and I, and I ... There's countless things like this of just, like, getting people in the office so that information can flow freely and solve problems. By the way, I think remote work can really work, but it's not gonna benefit the people who think ... Like, it's not gonna be people making $250 k- thousand a year hanging out in Jackson Hole. It's gonna be geniuses in the developing world making, you know ... Who, all of a sudden, there's an arbitrage. You can find incredibly smart people all over the planet and pay them one, 100th or one 10th, whatever GDP is. I mean, the, look at the GDP in the Philippines or something, and there's tons of geniuses over there. And so you could build a great company of remote work, but it's not gonna be the people who are advocating for remote work inside these companies in the United States. Like, if I'm, if I'm remote, why am I gonna pay someone 250K in San Francisco to be remote? I'll, I'll go find someone in a cheap location. So I, I don't think the people who are advocating strongest for remote work actually know what they're advocating for, because it, they're gonna end up in a world without a job, 'cause someone ... They're now competing globally with geniuses all over the developing world.

    24. HSHarry Stebbings57:53

        What have you changed your mind on in the last 12 months? So, one for me is, like, I used to think first-time founders, the naivety, the excitement was so important. Actually, fuck that. First-time founders make so many stupid mistakes. Yes, there are the one-in-a-millions, and you have to always be open to them, but generally speaking, your net 80% good quality is from serial entrepreneurs.

    25. RPRyan Petersen58:15

        You know, I had this idea of this, um, go after these business units that could work in isolation and run really fast. I think that works for a lot of companies, but as I was describing, that doesn't work at Flexport. We have to be an end-to-end. We have to deal with a little bit more process. Uh, process is probably the, the only, the closest we have to a good word for bureaucracy, and there's a, there's a healthy amount of that that, like ... Actually, a lot of the true bureaucracy, um, in companies comes from, um, a lack of process or people can't get anything done and they don't know how it works. But putting in a little bit of process and putting in more of an end-to-end view, making people write the same thing twice in two different teams, planning documents, making people spend a little bit more time in a meeting to understand another team's objectives, uh, and not, and not have this envision that, like, oh, we can just run really fast and ignore everybody around us. Um, that just doesn't really work in our industry.

    26. HSHarry Stebbings59:05

        Uh, no, I, I, I agree totally. Uh, penultimate one. Favorite warlord, general or emperor, and why?

    27. RPRyan Petersen59:12

        Definitely Napoleon. The reason why, he's a very interesting mind. First of all, uh, you know, won, like, 38 battles or something. 38 and 1, I forget his record. He's a pretty, pretty great, uh, general. Rose through the ranks, came up through the gr- you know, from the grass, uh, grassroots, came up. Uh, and, uh, incredibly well-read as well. Like, you know, u- the Egyptology is basically created because Napoleon wanted to invade Egypt, uh, to, to cut off the British Empire's access to India. And, uh, while he was there, he brought all these scientists and, like, you know, that's where we got, uh, the Rosetta Stone and the understanding of the (laughs) ... de- decoupling of the hieroglyphics. And then he wrote the law code, the Napoleonic Code, which is basically the law of the land in half of Europe today, all the way till now, reorganized everything. Yeah, Napoleon's incredible. Um, there's a great book called The Mind of Napoleon, which is out of print. It's like $200 on eBay. Uh, and it's just full of, all it is, is his quotes. And he has a quote on every subject. And half of them will appall you in the modern world, but I find those to be the most fun. Uh, and half of them are just like, "Man, this guy's an actual genius." But yeah, it has a nice index in the back so you can look up any subject and see what Napoleon thought.

    28. HSHarry Stebbings1:00:20

        Final one for you, Ryan. It's 2023 now, soon to be 2024. Where are you in 2033? Are you still CEO of Flexport, and where's Flexport then?

    29. RPRyan Petersen1:00:29

        Definitely still CEO of Flexport, and hopefully, hopefully, you know, the rest of my life, uh, can s- can stay in the seat, and health willing, I love this job. I never, I never wanted to leave the job. I just thought Dave would do a better job than me. Uh, and so I'm thrilled to be back and, you know, executing. 2033 is ... Man, it's hard to predict We're basically an incumbent. We're the third-largest provider of international forwarding services in the United States, so we have incumbent-level data, but we have the technology stack and the team that can actually go and ex- and implement. One- one of the things we've done is break a con- a shipment. When you ship a container from door to door, we broke it into these discrete tasks, like a work item, uh, that- that get completed. And we're finding out that once you chunk it down into something that simple, that AI can complete the tasks. Uh, and so we're- we're- like almost every couple weeks, we're implementing something that used to take hours or days and, uh, getting it down to minutes. I think we'll actually see that- that AI's- we're going to be a huge beneficiary of that. Uh, labor in the forwarding layer of global trade is 10% of the cost of shipping things internationally. Not the labor of the people driving the s- the- the cars, the trucks, and the- the ships and the planes, but the labor of the coordination layer of handing off the documents. I- I often joke it should be instead of freight forwarding, it should be freight email forwarding. And so labor on that forwarding layer is 10% of the cost of shipping things. And we're seeing that AI can just do tons of these tasks. And it doesn't mean that you'll have less people working at Flexport, by the way. 'Cause if you're really successful in automating things, you're going to need more people. You're going to have more salespeople, more engineers. You're going to take over the world and- and employ even more people. And that's a real fallacy. I mean, that would be like arguing that, uh, the invention of the plow is going to eliminate jobs and we should all just still be using, you know, sticks to- to dig u- uh, holes to put seeds in the earth and grow our own food. Like, that's an argument as old as time, and it's silly. Like, AI is going to create way more jobs than it destroys. But if you make everything 10% cheaper, we're gonna have a world of abundance. So, I think we're- that's- that's where I like to see us in 2033.

    30. HSHarry Stebbings1:02:53

        Ryan, I've loved doing this. Thank you for my wide-ranging conversation, from parenting to the future of trade and China in between. You are a star, and I've loved doing this.

Episode duration: 1:03:08