SPEAKER_01: i lived in china uh 18 19 years ago uh for a couple of years and i was always predicting back then that hey once these chinese companies figure out how to do branding they're going to take over the world yeah because they make they make the product and then i slap my brand on the thing

SPEAKER_03: and mark it up 5x and i get all the more they can learn ux ui design i always said this about israeli you know that's what these companies are that's what's happening right now this week

SPEAKER_06: in startups is brought to you by miro helps take ideas from in your head to out there in the world with its ability to democratize collaboration and input sign up for free at miro.com startups curotech are you one of those companies that knows you need to be using ai but you're not even sure where to start well then you need curotech they are ai experts and they're offering twist listeners an ai strategy roadmap tailored to your business for five thousand dollars that's 50 off the normal cost just for telling them we sent you check out curotech.com twist and get five thousand dollars off and ketone iq is a clean energy boost without sugar or caffeine get 30 off your first subscription order of ketone iq at hvmn.com twist all right everybody welcome back to this

SPEAKER_09: week in startups fan favorite is back on the program ryan peterson is the ceo and co-founder of flexport

SPEAKER_11: back on the show for the second time you've seen him on the all-in podcast two or three times speaks at the all-in summit he was last on this podcast this week in startups on episode 1169 back in february of 2021 that was peak pandemic days and that was 700 episodes if you can imagine lots happened since then he stepped down as ceo and became the executive chair in march of last year we'll get into that then in july announced he was going to be a partner at founders fund and then in september he retook the reins as ceo apparently to get costs and things under control and we're going to get into everything and more today welcome back to the program ryan peterson thanks for having me

SPEAKER_12: back what wow it's been did you say it's been 700 episodes since 700 that can't be right you know

SPEAKER_14: it is you know what happened was yeah you know i always wanted to try being like howard stern

SPEAKER_16: uh and have my own daily show and uh you know over the last couple years podcast gets popular the ads sell out and i just told the ad sales team well if you sell out all the ads for three months

SPEAKER_17: i'll add a day and it went from two days one day a week two days a week three days a week four days a week five days a week and six days a week and then i realized that we did all in and it was seven days a week and i realized you know what be careful what you wish for in life my entire life became doing

David Friedberg: podcasts and it was exhausting and so now i'm back down to four days a week for this week in startups

SPEAKER_21: one all in five a week five days one hour a day and you know i do this instead of having lunch

SPEAKER_22: and getting fat right it's like a better deal uh other people go have lunch and i just do a podcast so

David Friedberg: um just to remind everybody what does um flexport do what is the business of flexport how do you make

SPEAKER_25: money for your customers uh well flexport's a global logistics company and we we use technology to make that easier better cheaper for companies to ship cargo anywhere in the world from wherever it's made deliver to the end customer in over 100 countries and that you know what that looks like is we actually our technology it lets you place orders to your factories uh factories acknowledge those orders they become users too that's one of the coolest parts about flexport is that every time we get in a u.s company that's where we started but we're now all over the world but if we get a u.s company on

SPEAKER_00: average we get 18 of their factories to become users too and so they're receiving orders through the

SPEAKER_27: system and then placing bookings to get the cargo picked up and shipped whether it's by air or ocean including some cross-border trucking across canada mexico and then delivery and then last year we

SPEAKER_25: bought shopify logistics and that's the last mile arm so now we have fulfillment centers doing e-commerce pick and pack uh delivering both to retail stores and to customers houses all over the united states

SPEAKER_29: this is something i wanted you to explain to me um so in a way are you software and a marketplace so the

David Friedberg: software is what people pay you for but then there's a marketplace to get those logistics and the

SPEAKER_32: deliveries going is we're really closer to like a logistic service provider from a business model

SPEAKER_27: standpoint the way customers think about us it's like you're paying us to move cargo around the world to ship your packages we use technology to make ourselves much more efficient and reliable lowering the cost for the customer and then giving them much better user experiences to do things like planning how much inventory to have uh getting that the data needs to flow in parallel at the end of the day supply chains are about the flow of goods the flow of data and then the flow of dollars and we now have offerings for all of those things including financing products to help you buy inventory compliance products that's part of the data is like clearing customs getting things delivered so it's really a managed service is closer to that there are marketplace like dynamics and that we work with on the asset owning side we have 400 000 trucks in our mobile apps uh we've got all contracts with all the ocean carriers and airlines warehouses other customs brokers like these are kind of supply side vendors um but the customer doesn't really think about that as a marketplace

SPEAKER_33: they buy from flexport and it's on us to get the right providers and lined up got it so i wanted to ask

David Friedberg: you about this i think you called it pack and ship from china to america oh from china to the u.s yes because there are a series of new websites that have gotten very popular some people are not aware of them other people are obsessed with them i think timu uh t-e-m-u ali express which is part of alibaba sheen which is clothing s-h-e-i-n you see these as some of the top apps in the app store and you wonder like who's using these it turns out it's very popular amongst kids who are on a budget uh and i just did this myself as a test and i think tick tock now has the ability to they have tick tock shopping and so uh i was looking at laura piana shoes because chamath is into these shoes and laura piana sent the besties some shoes at the all-in summit and they gave people in the vip bags like a something from laura piana and i saw people um promoting knockoffs of these like three or four thousand dollar shoes so as a goof i bought the twenty dollar versions of them i kid you not they came two days ago in a plastic bag it's the worst quality i've ever seen on a pair of shoes uh like and they smell terrible like they smell like they're painted was it 20 bucks 20 bucks i think it was 25 bucks for what were laura piana rip off of their like twelve hundred dollar loafers and you know if you put them next to each other you would obviously know the difference maybe if you didn't put them next to the other ones but what is this new phenomenon of people selling knockoff products

SPEAKER_45: or pick is that pick and pack uh and well things going directly from china to u.s customers yeah so

SPEAKER_27: the industry term for this is actually called a section 321 clearance and that's a section of the

SPEAKER_49: u.s customs regulations uh which allows you to not pay customs duties if you if the goods are worth less than 800 got it then you don't pay customs too and now the trick to doing this is that each

SPEAKER_00: individual product has to be already consigned to you the end consumer to buy it um and so that means you've got to be able to be efficient and like you're fulfilling that unit from china or could be from mexico a lot of people are doing this in mexico and canada now uh but you're crossing the border one item at a time now they'll bundle lots of these into a freight shipment so you still get the

SPEAKER_51: low cost of freight um but you're clearing those goods and avoiding customs duty so with the cup with the trump tariffs you know which biden has continued uh i think we got to now call

SPEAKER_52: them the biden tariffs or just the new tariff regime that we have um that that that can be really significant you know 20 25 percent savings on that by um but uh and so that's that's what's happening

SPEAKER_27: there is fundamentally is like avoiding customs duties it's huge right now um in q4 it was about 50 of all the air freight flying across the pacific was e-commerce parcels generally broadly e-commerce

SPEAKER_11: parcels so what's happening logistically is somebody in the united states orders one of these products you know listen i'll say they're lower quality whatever but just putting that aside they order

SPEAKER_58: something direct from a factory that a marketer in china has put on a u.s commerce site and they pack it up they put a label on it and then how does it get to my house from a directly from a chinese factory it's

SPEAKER_14: being packed yeah labeled in china correct yeah it has to be labeled at origin so it gets labeled there

SPEAKER_27: um it gets flown over on freight including a lot of this is flying on flex sports uh freight freighters um gets handed off to what cleared customs uh and then handed off to a last mile provider and that

SPEAKER_25: could be ups it could be usps it could be you know whoever's offering the best rates um and so that's who's delivering it to your door so it's a kind of end transaction how is this economically

SPEAKER_29: feasible is what i'm trying to figure out what's the economics of this because i i don't think there were shipping costs or the shipping costs were de minimis on this yeah i don't um you know

SPEAKER_51: it's hard to say you know different customers have different business these companies have different business models they're like hey maybe they're not making money at 20 but i don't know those shoes

SPEAKER_52: might only cost two dollars to make jason i think that's what i don't know yeah i haven't seen them

SPEAKER_60: yet but um what would it cost somebody to prepare shoes like that on an airplane to the united states

SPEAKER_24: and then do the last mile price of price of air freight's about five bucks a kilo how much do you think those things weigh kilos to 2.2 pounds might weigh a pound right so maybe maybe under a pound yeah

SPEAKER_69: so it's like two dollars he says for the air freight wow last mile could be a couple bucks uh might

SPEAKER_71: only cost you five or six dollars door to door uh on the freight side of things it used to be worse

SPEAKER_00: you know wish was doing this in a big way um remember which now it used to be worse in the sense that um the u.s government until a few years ago trump closed this loophole the government was

SPEAKER_51: actually subsidizing it was called e packet and it was like this weird customs um it was a weird postal treaty and china was considered a developing world country and so to like promote development there

SPEAKER_53: you could ship something cheaper from china by usps than you could from like north carolina to new york

SPEAKER_52: it was like cheaper to fly it from china to new york um they closed that it was pretty much a loophole they closed that uh because you know there's no reason for the government to be subsidizing this

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David Friedberg: to sign up for free this was all i think created because of amazon third-party sellers in some way you know kind of in in accepting in americans minds that there are these knockoff products or you know

SPEAKER_58: similar two products that you can buy for a lot cheaper yeah well amazon's been lobbying um quite

SPEAKER_53: a bit to close this loophole because it kind of it hurts amazon's business you know what's the point of having this like really impressive network of fulfillment centers all over the us if you're not going to use them you just bypass the whole thing and fulfill out of china um so they've been doing quite a bit of lobbying which is uh you know a public record um to close it it's it it originates actually

SPEAKER_00: in the rules as an individual if you're traveling internationally you come home you don't have to

SPEAKER_53: file a formal customs entry and 800 is the threshold you remember that next time you're

SPEAKER_82: buying something if it's below 800 bucks you're good you don't have to deal with all the paperwork and extra um duties you still have to declare it on the back of that little piece of paper but you

SPEAKER_00: won't have to pay any customs duties once you get above 800 now you're like oh man you got to file an entry and um it'd be a lot more painful so that's where it originally comes from and then um it's called a type 86 clearing i guess i probably knew it out too much for this but the the ability to do this like at scale where you can clear like 10 000 of them at once because if you have to pay a customs

SPEAKER_53: broker to do a customs entry well we charge like 100 bucks for that so that'll kill your whole i can't charge you 100 bucks for a customs entry on a 20 pair of shoes so but there's this manifest clearance it's called where you do 10 000 of them at once yes it's 100 bucks for all the type 86 yeah yeah that's type 86 but section 321 is the section of the customs regulations that creates this law this ability to do this um it's a very interesting phenomenon it's like kind of taking the world by storm it's like 30 to 50 percent of the air freight market depending on the time of year um which

SPEAKER_52: you know up from kind of i don't know what i haven't seen the trend on what it what it was historically so i need to go study that a little bit more but i remember being very surprised when i learned it was like now 50 of the market in certain weeks and quarters it's just extraordinary

SPEAKER_93: to think about this infrastructure that's been built over whatever it is i don't know less 50 years or 100

David Friedberg: years of a factory in china somebody makes something there it goes to some depot which then goes to an airport which then flies across the world lands somewhere in the united states and then goes to some depot again i guess and then gets delivered and it costs five bucks or 250 a pound yeah well

SPEAKER_94: that's that's what's very different about this is like you know if you were to ship a fedex package

SPEAKER_27: from china probably cost you 60 70 bucks to get the same and so it's sort of avoiding that by paying

SPEAKER_53: bulk wholesale air freight rates if you ship it with flexbor you know fly it on our side we have 747 so

SPEAKER_00: we fly it in and then it lands in chicago or la and there we have trucks that literally pull out next to

SPEAKER_53: the um next to the plane get loaded right on the truck it doesn't even go inside a building it just gets put right on the truck and then shot down the road to ups and ups delivers to the last mile so

SPEAKER_51: it's a it's a pretty cool product i had like mixed feelings about this whole thing i'm like hey what

SPEAKER_53: are we doing like flying this stuff up and then i then i realized like actually flexport is pretty uniquely positioned to benefit from it because we have air freight customs and with our shopify

SPEAKER_96: logistics acquisition we have great contracts for the last mile delivery uh so it's made us a major

SPEAKER_58: player in this kind of e-commerce logistics so this gets rid of this idea of i don't know if it's called drayage or a fulfillment center like amazon has where you would order a hundred pairs of these shoes put them in a warehouse somewhere somebody would order them then you would ship them this is factory to to consumer correct yeah or your fulfillment centers in china effectively uh instead

SPEAKER_00: of in or in mexico or canada you know you don't have to fly it you could do this on ground shipping where you put it up in mexico canada we'll see there's a lot of efforts to lobby to get this to go away

SPEAKER_51: uh for sort of obvious reasons i mean if you're gonna have tariffs like why uh not you know what's

SPEAKER_00: the point of this but there's also lobbying efforts to say hey you know you should be able to do this

SPEAKER_53: out of a bonded out of a free trade foreign trade zone which is a bonded warehouse in the united states uh like flexport has foreign trade zones that we operate that are legally technically not inside the commerce of the united states but you're not allowed to do this clearance from one of those

SPEAKER_105: and send it out uh so there's there's all kinds of lobbying going on right now there's a there's a bill

SPEAKER_00: um in front of congress that we're monitoring all this stuff but i don't have all the details in my

SPEAKER_107: head but there's one bill out there that would eliminate it um for shipments from china but allow it

SPEAKER_37: from other countries there's another bill that would raise the threshold instead of low no sorry lower the threshold so instead of being 800 bucks it has to be below 200 bucks

SPEAKER_53: which would you know limit the number of products the types of products that could be uh imported in this fashion so yeah it's pretty contention and then there's a lot of different business models too where timu for example is a marketplace so it's like lots of different factories sending stuff they consolidate it and then send it to you shane is much more um kind of like make their own brand design their design their products yes kind of own it let more first party and less third party although i think they have some third party aspects to it as well so that

SPEAKER_51: that is kind of bypassing the amazon fulfillment centers or the flexport fulfillment centers we now have a bunch of these as well um i i don't know you know i don't know how to feel about it like flexports pretty well positioned to do well in that world we we want to be it's interesting because like

SPEAKER_53: i if it's going to last forever then i got to invest and go hey let's go build some fulfillment centers in canada and mexico and be really great at it but if congress is going to change the law

SPEAKER_111: and make it go away overnight and like i'm you know less less excited to go do that it also uh creates

SPEAKER_22: a bunch of issues around the quality and safety of these products and you know trademarks and i

David Friedberg: intellectual property because the people who are selling in china let's say or you know pick another country they might not have the same standards for safety etc and they're selling direct to a consumer whereas if it goes through amazon amazon picks up some liability yeah

SPEAKER_120: uh well i think amazon's marketplace they avoid the liability as well so it's kind of similar there's a

SPEAKER_51: lot of third parties you know a lot of counterfeit issues cut sellers will tell you on amazon as well

SPEAKER_71: but it's um you're still subject to the same rules and regulations for importing goods it still has to

SPEAKER_00: be counterfeit still illegal um it does create some complexity for us on the compliance front to make sure that we are dialed in like you know i there's compliance for counterfeiting which is important

SPEAKER_124: but uh compliance for dangerous goods for batteries in particular to not sort of fire on an airplane 10 times more important in my view right like a thousand times more important um just because

SPEAKER_53: people's lives are at risk um and so yeah it's it's dialing in those compliance processes to make sure that everybody understands like here's what the rules are that you need um i don't want to bore the audience but material safety data sheet to like validate that there's been drop testing on the batteries and yes all that all these types of things need to be done to before you can put up um

SPEAKER_126: before you can put a battery on an airplane yeah i mean we had all kinds of weird stuff happen with

SPEAKER_21: batteries on airplanes it's an interesting segue i mean i had this away bag that they put a built-in

SPEAKER_11: battery pack where you can plug in your phone to your you know roller when you're getting on a plane i came on the plane the woman's like oh is that one of the new ones with the battery pack i was like yeah she's like oh you can't bring it on the plane and i was like yeah that was a setup

SPEAKER_132: that was a setup she asked me like she was personally interested in my away bag and they changed that

SPEAKER_71: but that was a weird one yeah yeah that one's you know that one always surprises me because well obviously they built the product for travel so they should have sold that but if it's in the

SPEAKER_133: passenger compartment you are allowed to have battery but they still make you take it out of the suitcase it's like it's kind of weird yeah i get why you're not allowed to put it under there's

SPEAKER_111: underneath because there's no one there to like monitor it and make sure it doesn't go

SPEAKER_00: it's a very serious issue now you can have a battery fire if it's designed the right way the battery will sort of like collapse in on it so the fire will collapse in on itself and not spread it's like an elaborate you know engineering process and that's why it's important that you

SPEAKER_140: do these things professionally and not have like random amateurs trying to do so there is an

SPEAKER_141: interesting topic that's at work right now with these 737 maxes i don't know if those are the planes

SPEAKER_21: you fly but you saw the the door come off we got 747s but yeah that's crazy and you know my friends guy dayton um from earthlink and boingo fame he just wrote a blog post about this about just training of pilots he's a pilot uh close friend of mine and they're really having challenges now with the number of pilots available and they're training and are they getting enough hours and it turns out they're pushing them to put a lot of hours not in the simulator but into like

SPEAKER_95: you know cesta 172s and the training and stuff like that tell me is is there are there issues right now around flying stuff around the globe is that and you're you starting to see that with pilots

SPEAKER_22: shortages and uh safety with planes um there have been a lot you know all these airlines sort of a

SPEAKER_25: self-created problem they they laid all their pilots off during covet um a lot of them did and they've had to rehire and then you definitely see it like much younger pilots like trying to find you

SPEAKER_49: know training random in fact it's i'm very proud we've had like six or seven flexport employees in asia

SPEAKER_53: who were doing freight forwarding work which is like working with factories to get documents

SPEAKER_148: coordinating shipments shipping stuff that have become pilots for major airlines wow i i just found this out i was in asia two weeks ago and i was like oh yeah this guy left here he's now pilot at

SPEAKER_49: cafe pacific i was like really what that's so cool uh yeah a lot of opportunities been created there

SPEAKER_00: what i heard from the team there was that a lot of the um the experienced pilots got went to the

SPEAKER_25: middle east a lot of the middle eastern airlines were still hiring and and attracted away a lot of the pilots out of the asian airlines who had shut down completely and the middle eastern airlines kept operating or else they had deeper pockets or whatever so um and they're growing a lot so yeah

SPEAKER_27: interesting um dynamic but i don't think it's creating it hasn't been a big challenge uh that that hits us in the freight world i just like hear about it anecdotally okay you've seen sunday

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SPEAKER_153: c-u-r-o-t-e-c dot com slash twist let's get the update on what's going on in the red sea you you came

SPEAKER_21: on all in the other week and talked about it a little bit and then i've been watching you on twitter man you shared one graphic of people going around is that cape horn at the at the end of uh no no

SPEAKER_160: that's uh cape of good hope cape horn is south america cape of good south america and good hope

David Friedberg: is that the one good hope yep cape of good hope which by the way is one of the most dangerous turns

SPEAKER_51: you can make around a continent yeah yeah i mean the southern southern ocean is pretty crazy especially my understanding is that the winner is i've never been down there but i think the winner is way worse

SPEAKER_25: um so we'll see it's right now it's summer down there um yeah uh so we'll see if that i i do i have

SPEAKER_53: heard you know it's not it's non-trivial to send container ships through those waters in the winter

SPEAKER_25: um so hopefully this gets resolved in the next six months but um people are just electing to take the

SPEAKER_158: long route right now just to avoid the possibilities yeah in some large way somewhere between 90 and 95

SPEAKER_00: percent of the container ships are routing around the red sea wow about 30 percent of all container ships flow through the suez regularly throughout their journeys uh so it's a huge disruption to global

SPEAKER_25: trade to go around it takes 20 to 25 percent longer um it's really you know we talked about this on the

SPEAKER_00: on the all-in pod but it it's a real challenge to the american-led order like post-world war ii

SPEAKER_53: where we said like hey we're going to patrol this freedom of the navigation anybody can trade with anybody else we'll have this globalized world peace and harmony and anybody can you know anybody can do business with anybody else as long as you're not part of the soviet block or something that was kind of the the post-world war ii american-led order and if all of a sudden you know the u.s navy sends a carrier strike group to the red sea and it's still not enough to keep it open for navigation and they're

SPEAKER_52: still able to hit ships with missiles you're kind of like huh mike what is that it does make you think

SPEAKER_22: about the united states's role and uh in terms of being the global police officer and people being scared of pissing off the united states you know and if we don't serve that function then who is and

David Friedberg: i know for america we there's a lot of people in america who maybe don't want to be the world cop

SPEAKER_01: but then if we're not when a lot of people around the world who don't want us to be the world cop too like we don't make a lot of friends when we go invade these countries a lot of european countries

SPEAKER_53: are like no stop doing that you know so and and the suez really benefits europe and china and asia much more than the united states i mean we barely use it we use it for shipments from india like indian subcontinent middle east to the east coast uh that's the that's the route where the suez would be the fastest way to to deliver where you go through the red sea across the mediter the suez across the mediterranean across the atlantic ocean and hit the u.s east coast but if you're going anywhere from china to the u.s east coast you're better to go across the pacific and through the

SPEAKER_00: panama canal yeah from china to the west coast obviously you just go straight across the pacific so we're it's an interesting role for the united states like should we go patrol the ocean on behalf of european countries who like they themselves don't seem to want to send their navies down there to do it other than france it's very interesting right now france has got their navy in the red sea and only protecting french ships uh and the french ships keep going through that's you know i said 90 to 95 percent the ones that keep going are the french ones and it's a very it yeah and it's really like a

SPEAKER_179: return like before world war ii this is how trade worked was like your navy existed for this purpose

SPEAKER_01: that's why you traded with your colonies like you had colonies out there and you traded with your

SPEAKER_111: colonies and you had a navy to protect your ships and make sure no pirates or foreign navies you know

SPEAKER_158: captured them kind of every man for themselves kind of approach right like i hope not i hope not you

SPEAKER_51: know i think um the argument the counter arguments are like well why should the us do this if it's not if it benefits europe more and leave it to that it's sort of like well it's not a zero-sum world and the

SPEAKER_184: u.s benefits from global prosperity and you know rising tide lifts all boats like everybody else everybody being better off is good for america even if relatively they're more better off than we are

SPEAKER_186: but quite literally in the sense of rising tide lifts all books i mean you would think that this is

SPEAKER_56: an area where the united states france and china and india could collaborate these are all major trading

David Friedberg: partners manufacturers consumers this would be a great opportunity for xi jinping and biden or you know whoever to just get together and say you know what yeah we all have an interest in making sure that this route stays open and defending ships because we're sellers you're buyers why don't we put some you know uh ships from china and the u.s in that straight and say yeah you can't you can't attack

SPEAKER_189: commercial ships sorry yeah that's why i don't think this is gonna last that that long you know

SPEAKER_124: like the rational brain says hey there's too many interests aligned here too many superpowers even

SPEAKER_53: india like last week um sent their special forces their navy because there was a ship that had been

SPEAKER_99: um hijacked or basically taken over by pirates off the coast of somalia and it was indian sailors on board it was indian owned and the indian special forces went on board and cleared the ship yeah clear um but that's kind of interesting right like that's you would normally think that's the role of

SPEAKER_53: the united states navy but the indian navy stepping up so yeah we might like everybody i like everybody

David Friedberg: stepping up and being part of it and having a dialogue about this because you know when you have bad actors um it's good for them to get a united front from and hear from different voices like hey

SPEAKER_21: this behavior is not going to be acceptable we're gonna we're gonna stop it i'm curious what markets you know you keep hearing and you have your finger on the pulse of this that you know some people are

David Friedberg: moving factories out of china i tried to explain this on all in i kind of got a little i think chamoff laughed at me some other folks were like yeah uh apple's never going to make the iphone in

SPEAKER_11: india and sure enough apple's making the iphone in india and they're making more recent versions of it from what i understand so is india and vietnam are those two areas specifically i think also indonesia

SPEAKER_199: becoming you know major players in terms of more advanced manufacturing and you're seeing more shipping

SPEAKER_51: coming out of those areas now yeah absolutely vietnam a huge winner lots of manufacturing lots of manufacturers shifting out of china um and it has been for like 10 15 years for the low end kind of where it's just about labor arbitrage because china is not the cheapest mexico has a mexican labor

SPEAKER_92: cost is now about half uh of chinese a chinese labor like dollars per hour that you pay to the workers and i don't know if that's productivity adjusted probably not and then of course the tariffs have

SPEAKER_00: impacted been a very real and impacted businesses and a lot of decisions and then some of it's just brand like companies just don't feel as good about the chinese brand as they did yeah um and so yeah you see that vietnam's the biggest winner so far well vietnam big country as it is is like less than

SPEAKER_49: 10 of the population of china yeah it's a hundred million or so right yeah really weak infrastructure i

SPEAKER_00: mean there's the two biggest uh cities um are hanoi and ho chi minh they're not connected by a freeway i mean it's like red light stop light the whole way you know between these two mega urban centers vietnam does benefit they have um great rivers and a lot of the ocean can take a lot of the container shipping

SPEAKER_51: actually flows on the rivers because the trucks the roads are so bad um and so we do a ton of barge shipping in vietnam bringing it out of the country down to the uh to the coast and put it on a container ship there um but it's um it just doesn't really have the infrastructure it's happening

SPEAKER_53: fast they're building that freeway as we speak they're uh but yeah big factories there samsung apple lots of these major companies have huge factories and especially around hanoi uh north vietnam um and hindi as well so and then mexico is the other big the other biggest winner right now but it's kind of there is no other china it's like a lot of other countries kind of coming up at once this is a long-term pattern though you know it used to be you go to taiwan and korea and japan

SPEAKER_96: for cheap manufacturing yeah and then they become more advanced and china has become more advanced and manufacturing has moved to for the cheap stuff has moved to cheaper places but shaman's also kind of right like for really high-end electronics high-end manufacturing like apple's still the best you can hear tim co talk about why apple like for manufacturing the high the best products in the world is

SPEAKER_11: still china's the best place to do it yeah um although just the fact that they i think got the because

SPEAKER_21: it used to be they made like the the maybe four or five generations ago in india but now they move the 14 or 15 i think is now being made there so it's super fascinating and yeah really interesting uh vietnam ranks highly 19th of 141 countries in terms of linear shipping connectivity however the efficiency

SPEAKER_93: of seaport services ranks 83rd according to the world economic forum yeah yeah it was pretty bad man

SPEAKER_03: yeah so their ports are terrible but they do have tons of rivers so that means potential

SPEAKER_51: have great it's a lot of the roads that are bad um but even even like rivers you know i was just

SPEAKER_25: meeting with the largest i was in um singapore a couple weeks ago and i met with the largest logistics company in vietnam the owner flew over to meet with me because we're big partners uh we have a jv with them and they um they do they own four bar they own four river ports so they're doing this barge shipping they run all these barges on the rivers and he was explaining to me how you know the shape of

SPEAKER_01: these boats like we make them bigger like how can we get more volume throughput he's like well we can make them longer but we've already hit the length of what's legal so we're like trying to convince the government to make it longer i was like why don't we make them taller he's like well there's 200 bridges ah you know along the way you can't go any higher and like they're not you know if you're gonna make every bridge higher like you're talking you might as well make a better freeway or something

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SPEAKER_22: races let's uh pivot the discussion to this ceo drama uh you decide uh that you were going to become a

David Friedberg: venture capitalist you were going to hand over flexport let's take that first decision this is a very hard decision for a founder to make why did you make that decision to hand the reins over to begin with because usually i see that hey man people are burnt out or they feel like hey maybe i you know there's somebody better than me to for the next phase hey maybe zero to one i'm this creative person scaling i need somebody maybe who's a little more boring but is obsessed with scaling so let's start

SPEAKER_11: with that first chapter there why did you make that decision that you wanted to try not being the ceo

SPEAKER_233: of the company you co-founded yeah um there are separate decisions by the way that being the vc came

SPEAKER_234: much later was not pre-planned um so it wasn't like the allure of being a vc no no no no um it was

SPEAKER_235: it really was that of like i want just the best for flexport and i think flexport has a huge lead

SPEAKER_00: in technology in our industry like it's an old school industry it's been around for thousands of

SPEAKER_99: years we're the only freight forwarder in the top 100 freight forwarders in the world there's only one that was founded after netscape was invented in 94 the web browser and that's flexporter like

SPEAKER_53: we're the third largest in the us and so we have a big lead on tech but i said i think it's kind of i don't know comparing yourself to the it's not it's not the bar that i want to clear being the best at tech in the freight forwarding industry right which i would like to be as as good as amazon like or as good as google like i don't think we're reaching that level so on the one hand want to go faster in building technology uh and two is i do think amazon's the best logistics

SPEAKER_96: tech company in the world um still i can say that even though i aspire to be that with flexport it's like amazon it's i can't explain we're better than amazon at building logistics technology

SPEAKER_00: um and so when i had the opportunity i was looking for a an operator and to help me on both

SPEAKER_01: those areas like tech and operational rigor efficiency reliability metrics like can you quantify it

SPEAKER_53: can you put in all the processes to dial it in and i just look at amazon it's just finding it to be so

SPEAKER_51: amazing right and so i was looking for a partner um one of the things i'll do when i'm trying to recruit an exec is uh talk to investment bankers um because they know a lot of people and they want

SPEAKER_53: they all want to do flex sports ipo so i just kind of like put the word out there hey here's the profile i'm looking for a lot of people go to headhunters i like to headhunters a lot of money and you know the bankers like they got they want to make this they're trying to jockey for position for our

SPEAKER_240: ipo they want to do you a solid this is a really good favorite they can do for you right like so

SPEAKER_00: so i had a banker kind of put gave him the spec i told him hey here's what i'm looking for he's like oh you should hire dave clark i was like come on man he's the ceo of amazon like retail consumer

SPEAKER_247: business like don't be crazy i could hit yeah and so he yeah exactly and he's like i might be open

SPEAKER_51: to it let's talk to him and turned out he was um and so it was very opportunistic because i was really trying to hire like a ceo uh and i kind of caught a whale and it became pretty apparent that i

SPEAKER_53: you know just talking to him and getting to know him and his experience it was like really see him

SPEAKER_111: like working yeah and it worked for me as the chairman of the board but like working for me as ceo like what would i own what am i responsible for what am i going to be better and more experienced and

SPEAKER_53: which decisions would i own so i made it it made the decision like i thought he'd be better at building the tech running the operational side of things um and then dialing it in to so where we could you know be the most reliable efficient and therefore affordable logistics company

SPEAKER_21: world so yeah it was really just down to like make flexport better and then it quickly went sideways you had him in there for a year or so you weren't happy with the performance the board wasn't happy

David Friedberg: to the extent you can go into it uh maybe you could talk about when you just realized uh i need to

SPEAKER_11: come back and i made a mistake in leaving or i made a mistake in hiring this person or both i don't

SPEAKER_254: know what you conclusion you came to there but it did get a little spicy publicly uh obviously yeah it

SPEAKER_255: was a little unfortunate i mean very unfortunate the um you know well one of the things that happened

SPEAKER_99: which was really unfortunate and annoying was that um journalists kind of dug up a bunch of drama that

SPEAKER_00: didn't exist uh i'm shocked and then really turned it up and made it worse uh made it like created drama out of thin air so they told they interviewed somebody like some former employee um who told him all this stuff about dave that wasn't true like actual allegations there were some allegations of like fraud i mean it was in this article and say claiming all these things uh and said it was from a source close to flex board and told and then called dave and told dave oh this was i i think it was someone

SPEAKER_11: that he fired who didn't like him well this and this is important for people to understand when you're the boss and you have to fire people or layoffs for cause not for cause or you beat competitors or

David Friedberg: somebody doesn't a vc doesn't get an allocation you just start building up these people who have

SPEAKER_124: resentment towards you fair journalists operate you know they're always going to find somebody disgruntled somebody out there with some story and like you know maybe there's a half truth to it but in this

SPEAKER_265: case it was completely fabricated and then told dave it was someone close to the company

SPEAKER_00: right so they weaponized it dave then thought i was the one saying bad things about him and he's like

SPEAKER_268: oh they're gonna make these allegations against me we're at war and started attacking the company

SPEAKER_269: it's just like spiraled and we never you know we were very careful to go back and look like we never

SPEAKER_53: said bad things about him like never there were these allegations weren't true there was a decision made by our board that like hey we do have to change direction of the company um we've got to pivot pretty hard towards profitability dave was going big dave was like all out there let's conquer the world we have a big lead on technology yeah in a massive multi-trillion dollar industry got a great balance sheet let's go after it like let's go dominate this industry hired 800 software engineers we grew our software tech team from like 400 to 1300 wow in a year in like nine months we've been you know going really big and the board made this decision they're like hey this isn't the right path we've got to get we've got to build towards profitability which means we have to cut costs

SPEAKER_00: um we also need to maintain flexports like very entrepreneurial culture of customer like intimacy

SPEAKER_53: like how we meet with customers and grow with the customer and how we build the culture of our team um and that's a very hard job for a hired ceo to do to both be like i'm cutting costs and i care about the culture a lot yeah and it was just like kind of clear that this would be a better role for the founder to go all right yeah i gotta cut costs sucks better let people go but i genuinely and people know me at flexport i've got enough people that believe in and that understand me and my love for the company and and for the people of the company to say like yeah genuinely do care about the culture even as i do yeah it's a really hard challenge to be saying i'm gonna cut costs and invest in the culture i'm gonna improve quality like on time performance and operational efficiency all

SPEAKER_243: these things while cutting costs like these are these transitions thing for a hired ceo to do

SPEAKER_22: transitions are like this are never easy and this occurred during uh a market uh collapse yeah

SPEAKER_49: this will happen during yes and then one 22 23. there was definitely some aspect of it that's related um the the freight the price of freight came down about 90 80 to 90 um but that's we knew

SPEAKER_00: that was gonna happen you know it was in our forecast it happened faster it happened about six months

SPEAKER_53: faster we had kind of like drawn it as like a smoother curve but like at the end of the day it wasn't the deciding factor like it was much more just looking at our business and just taking a clean look at like what's growth look like are we hitting our growth targets like what are the customer experiences what's the customer feedback like what do we need to do um we had we hired a lot

SPEAKER_01: of people probably hired too fast like takes a while to get people in we have a very complex business

SPEAKER_53: to get hired a lot of big leaders out of amazon uh great people but it just takes time to like get

SPEAKER_99: to know a new culture a new company a new industry these although we're on logistics it's quite different um they're in consumer logistics you don't have to talk to the customer they're not really

SPEAKER_53: doing sales aws side does sales but the amazon side is like its own flywheel we're yeah you're not

SPEAKER_21: not getting on a call and taking complaints or getting product requests from your customers at amazon they're just yeah signing up for prime and they're done yeah you know i make sure to talk to at

SPEAKER_53: least one customer every day like the last my first 90 days back in the job i talked to 100 did video calls 130 customers in 90 days so like it was uh well 90 days less 90 days is includes the weekends

SPEAKER_254: right yeah so you're doing two or three calls a day with customers yeah there were some days i was doing

SPEAKER_00: eight or ten i mean i was it was it was deliberate i was trying to really get out there send a lead from

SPEAKER_53: the front send that signal to our teams like hey i really care about the customer well also i wanted to document everything like what do we need to do how do we win what do these customers need to see from

SPEAKER_96: us uh and we've been really acting on that feedback over the last really since i got back in the job

SPEAKER_128: such a great technique to just email a customer and say can we talk about your experience with our

SPEAKER_11: product do a quick zoom would really appreciate it uh and a lot of a lot of founders i find don't do this they get disconnected from it and it's almost like the machine tries to pull you away from getting this direct feedback you know you know the customer support team's like we got this boss the sales

SPEAKER_14: team and the customer success team's like don't worry we'll send you a report they almost try to block

SPEAKER_292: you from having it's a very hard thing to do to be a leader of a large organization and live in reality

SPEAKER_111: and find out what's really happening because people want you know reality might look bad if you're the person owning that problem like well i don't want to tell my boss about this terrible thing that yeah

SPEAKER_53: happening under my watch um so yeah talking to customers directly talking to frontline employees directly shadowing them doing the work yourself like seeing what that looks like those are just crucial and then the other one is just like build your own financial model uh of the business that's

SPEAKER_111: simple enough for caveman whatever level of sophistication you may have for me it's kind of caveman level of for uh financial modeling i do have an nba but i'm like financial modeling caveman

SPEAKER_53: skills uh but it's my model is better honestly because i understand it it's not as i can play with it there's only three or four assumptions that really matter and i go okay this is what really matters from a financial perspective here's what really matters from a customer perspective here's what really

SPEAKER_294: matters from the frontline employees perspective and that's kind of all you really need to leave this

SPEAKER_95: is something i i did for a long time when i was on airplanes and they didn't have pre-internet days is i would build models of my media businesses okay we have 10 blogs at weblogs inc okay we got in

SPEAKER_22: gadgets making this much money it's got this cost we're doing this many blog posts and i just say how

David Friedberg: many blog posts do we need to do to have a hip blog what do we need to pay people how much traffic does each blog post get uh how many ads how many impressions what's the cpm what's the remnant inventory with i just would build like a little model in an excel document and boy does it like help you build this mental model and having the ability to just take out a moleskin and or you know do it in an excel and build it from the bottom up yourself and really think about the assumptions

SPEAKER_21: just creates clarity just like writing creates creates clarity for a person yeah or if you are

SPEAKER_11: playing a chess game and you do a recap of your chess game and you have to explain every move like

SPEAKER_16: chess.com will replay the game for you and tell you when you made mistakes all of a sudden you become

SPEAKER_148: a much better player of the game yeah distilling it down to something very simple like you're not

SPEAKER_53: outsourcing that to your finance department of course the finance department needs to build a more complicated model that factors in all the different segments and different things but like

SPEAKER_99: uh i just like to be super simple and i can understand there's probably three or four variables that really matter and then go okay for each of those what are the three or four things we're

SPEAKER_25: going to do to get the number to where we need it to be and uh yeah it's very eye-opening yeah uh so

SPEAKER_22: uh it got messy you came back you listened to all the customers you got the company right size bill

SPEAKER_21: gurley and brad gerson we did a little podcast last week on this weekend startups little round table and we're talking about ipos when's the right window to ipo they're kind of of the thought you know you know when you get to that 100 million 200 million which i understand you guys are you know somewhere in that

David Friedberg: zone you know getting public earlier and getting that discipline is a good thing you've probably gotten i don't think you've ever taken a company public so what's the advice you've gotten on when you should go public the earliest advice the later advice staying private longer because it seems like there's a lot of varying views on this staying private longer getting public earlier well in general

SPEAKER_99: you know it's very hard to give generic advice on these things every every company is different um so i'll tell you how we think about flex war is yeah we'd like to go public as soon as as soon as we

SPEAKER_00: have one i'd like to be profitable or like real line of sight to profitability we have that right now but

SPEAKER_53: i don't think we have uh enough credibility of our own like one is credibility to the investment community our investor community of hitting our results we've not we've not hit we've had a couple bad quarters where we missed pretty badly what we thought we were going to hit so like getting to where we're like hey we reliably like we can forecast the business um and that that's a discipline that

SPEAKER_124: we're putting in the right systems and processes so there's a maturity there that we should have by now

SPEAKER_53: but we're behind on where we should be in predictability yeah and like of course the freight market we're never gonna be able to predict the ups and downs of the freight market i mean look the red sea just spiked freight rates like 3x like um covid and that stuff but there's a level of like even

SPEAKER_00: within what should be predictable that we improve our processes um and then yeah we'd like to be we'd like to be a profitable customer company um i've got the whole team geared right now to try to get that done this year like end of the year not not going public but be profitable for the quarter in q4

SPEAKER_53: and then for the full year next year uh in 2025 that's got to be inspiring for folks yeah i hope so

SPEAKER_312: you know i don't think getting profitable is the most inspiring goal that you can pick in the world to be honest like it is for me as the founder i'm like yeah i don't know doesn't it make people feel

SPEAKER_11: safe or like this is a real business this isn't one of the crazy companies i would think that for

SPEAKER_316: the right team members we're driving that right we're driving that right now and i hope everybody at flexport is out there is like yeah all in on that goal but not not everyone in the world

SPEAKER_111: thinks like you and me so i'm not sure everybody in the world is like profit profit profit you want to have a some level of higher calling of what we try to do around helping customers and serving you know serving the wider world but definitely you don't get to do any of that if you're not in a profitable business so and then my view is hey once we're profitable we've got a degree of predictability you got the right compliance processes and sarbanes oxley and all the other stuff that goes in the ipo process and go public as soon as you can so um but uh we're not thinking about it that much we're thinking all day all day about the profitability working a lot of hard

SPEAKER_00: work um our business is much harder much more complicated than most businesses because on a given flexport transaction you're moving and can let's just say an ocean freight container we also do air freight we do like parcels and everything else but just take a ocean freight container

SPEAKER_53: on a single transaction moving that container from vietnam what i was just mentioning down the river port on a barge putting it on ocean carrier clearing customs delivering it clear customs pick it up with a truck

SPEAKER_00: maybe bring it to a warehouse translate it maybe bring it up put it on a rail then take it off clear customs take it to a warehouse unload it then put it on a truck there's insurance there's a bank that's doing a wire transfer for the customer there's like 8 10 you can have 18 vendors literally on this transaction and they're billing us we've got to capture their bill make sure they build us the

SPEAKER_53: right amount make sure they actually provided the service that they were supposed to provide that their bill is not in some way wrong uh then that we actually build the cut you know added that through correctly and then charge the customer the right amount and made to make money uh and the margins are

SPEAKER_111: pretty thin in global logistics like it's not google adwords like you've got to really dial those

SPEAKER_00: processes so uh you know in the helter skelter days of just growing 16x in a year you don't always have

SPEAKER_53: every single process dialed on all these things so that's kind of the maturity level that we're at right now is putting in dialed in processes for these things making sure you're the right controls the right audits all that stuff um level of maturity that's needed if you want to be go be a

SPEAKER_208: public company so we're working our butts off right now to get it done yeah and you talk a little

SPEAKER_251: bit about the global workforce and what you're seeing in that regard you are a truly global

David Friedberg: business and one of the trends i'm seeing in startups and listen you're a much more mature company now but you still have that startup ethos i'm seeing a lot of folks saying you know what in america it's too hard to hire too hard to inspire maybe there's on the margin some entitlement here or there and there are other places where people really want work really need work maybe uh more commitment

SPEAKER_21: maybe uh more affordability so so how are you thinking about building out this global team and where you're putting talent and where you're seeing talent emerge that really makes an impact

SPEAKER_53: in your company yeah and we're super global pretty much from day one the nature of flexport

SPEAKER_25: the curse and the beautiful thing about the business um yeah we've got um employees in 40 different offices around the world and uh and then some contractors and more um doing kind of like bpo

SPEAKER_69: data entry some of these service uh back office type processing stuff great audit and stuff like that

SPEAKER_179: um the wage disparities are pretty crazy honestly it's one of these things it's kind of hard to get your

SPEAKER_00: head around where you pay you know hundreds of thousands of dollars in the us and 20 000 bucks in asia not for the same work but like hey if it's one tenth the price uh you could have three people doing it like yeah yeah this is a mistake to just go chase things based on labor alone like that's companies have done that for years you get this call center that's on the other side of the world

SPEAKER_25: and it's just like i don't know we never will outsource like customer support or even offshore customer support like i want that to be close to the customer there's a lot of value to culture the culture of being in the market close to your your the same culture as your customer uh believe in that um i think americans are amazing at customer service globally like just

SPEAKER_53: like pretty friendly awesome people yeah like we have this idea of tipping yeah you know we don't

SPEAKER_82: tip our freight forwarder but like we tip our waiters and you could you get better customer

SPEAKER_52: service from a waiter in the us i'm like well you know how they solve this in china is they just assign a waiter to your table who just stands next to your table the whole time yeah they're like

SPEAKER_339: we're gonna make sure that this service is elite service is really good tying you to the table

SPEAKER_49: you're table 10. um so yeah there's a different ways around it um software engineering is very interesting you know a lot of what we do is pretty basic like web forms and databases and like you know

SPEAKER_53: some of what we do is more sophisticated ai and machine learning algorithms machine learning some really interesting data science algorithms and planning and some of that stuff um but you know we're finding people are really good at this at our engineering sites in asia and and uh amsterdam has

SPEAKER_51: been a great site for us as well wow um the dutch the dutch government has a great um kind of incentive program might be the way to frame it but like a way to attract you to come to the country

SPEAKER_53: yeah um and uh so we've we've participated there we've got a nice setup we've been in amsterdam as our european headquarters uh almost since yeah year two or something in the company so yeah it's

SPEAKER_51: definitely something you study more and more but we're very cautious not to just go and outsource just to find lower factor costs you want to go like hey where's the talent really map yeah you want to follow the talent and then what you're trying to do it's a uh you know i'm not a remote

David Friedberg: work proponent i said that was exactly where i was going next because a lot of this you know global workforce seems to be at least in startups they're saying well people don't want to come to the office in the us and i'm managing somebody in the us who's working for 150 000 a year as a full

SPEAKER_22: stack developer or sales person but they're in this like low-cost place and they don't come to an office

SPEAKER_292: and we try we tried it it didn't work we're we're back to the office uh there's some resistance to that

SPEAKER_52: but uh but you know i'm the ceo so we're not doing it um and it's going to be in office most of the time default like it was before you don't need to be you know the police on this stuff but like the the default assumption is you come to the office and do your work like if you need to be at home for a good reason like we're a reasonable people but um yeah no if your kid's sick your kid's sick if uh

SPEAKER_354: yeah sure miss daycare it's all good but yeah yeah totally and like we're you know i tell our

SPEAKER_51: especially our parents like hey we're global logistics business it's global logistics is 24 7

SPEAKER_00: 365 like it doesn't take christmas off like the ships are still moving the planes are moving

SPEAKER_49: um and so we expect like it's a hard job because you know the earth is round and you've got to get

SPEAKER_53: stay up late to talk to someone on the other side of the world and we ask a lot of our people

SPEAKER_49: but with that comes like it doesn't mean you have to work 15 hours a day but you might go home early spend some time with your kids in the afternoon and then go work three hours uh yeah if you're

SPEAKER_359: dealing with the middle east or china yeah you might be doing 10 to 2 a.m a lot of jobs are like

SPEAKER_49: that and so hey you know like it that doesn't mean i need you to come to the office every

SPEAKER_53: time you do a phone call or something but uh but we've just found people are so much more productive in the office it's so much better for culture now there's another way to run a company which is all remote um but if you're doing that you know it's not guys that look like you and i want to live in lake tahoe jason that are going to hang out and uh make 250 grand a year going skiing four hours a day and then do you know go back to two two hours a day yeah two hours and then go back to the job

SPEAKER_00: like it it's going to be geniuses in the developing world who cost one tenth the way you cost yes um

SPEAKER_190: and come you know the winners in that i think there'll be very interesting companies that are

SPEAKER_00: built on this model who are going like let's figure out how to find the hidden talent in these countries

SPEAKER_365: are there people who have like you know rockstar they would have gotten a what's sat 1600 on the sat

SPEAKER_21: and you know they're in bangladesh or they're sri lankan or they're pakistan or india and they're

SPEAKER_366: just like unappreciated talent pools yeah and those people out there and they're watching this show

SPEAKER_49: probably they're studying youtube they're learning to code i think there's kind of two models one is like you're in person you're working your butts off as like a team that's going hardcore and the

SPEAKER_53: other is oh we our labor cost is one tenth as much and our team is okay we only have 80 of the culture and the drive and the you know but at one tenth the cost you could probably build something interesting there but it's not our business our business is global logistics like the strong expectation is wealth you know you're going to be in person and often at the port or the warehouse or doing some work like touching the freight making sure that things get coordinated and our business is very complex you know as mentioned it's 18 transactions but there's a lot of coordination has to happen it's cross-functional it's cross-disciplinary that's you just got to have

SPEAKER_25: relationships uh it can't just happen on zoom everything pre-scheduled meetings yeah so yeah i

SPEAKER_22: know this is becoming a big industry because i keep seeing requests for like deal i don't know if you know that company del for like hiring contractors remote all these companies are now abstracting

SPEAKER_21: how to do contractor payments around the world and one startup was dealing with a group of folks and like we want to be paid in cryptocurrency and you're like okay how do we pay you in cryptocurrency in your country like is that even legal or whatever and it's like yep just please use you know this platform i don't know if it was deal or remote or plane there's like all these providers that are now doing this abstraction for you take the talent get them paid and quickly has a product for that now too yeah so all of them are kind of figuring that all out and they wouldn't have those products they wouldn't be solving those problems with software and operations if there wasn't demand for it so

SPEAKER_378: oh it's huge man and like you know i mean my business uh my businesses before flexport were

SPEAKER_25: not venture backed they're bootstrapped profitable businesses and so we did all of our software

SPEAKER_380: development uh back office work in the philippines and we've been doing that since the late 90s

SPEAKER_53: and uh that you know when you're not venture backed it's not necessarily a choice like all you can afford is a couple engineers at a much lower price and yep and you manage them really tightly to get

SPEAKER_111: the quality that you want and you've got to do the design yourself and be all over it and make sure

SPEAKER_00: it's good and like yeah um so yeah that's uh and i think there's there's a real space in the

SPEAKER_53: ecosystem for those businesses i think it's pretty cool having run a venture backed business like just a different kind of discipline that comes with it uh yeah being a bootstrap business like much more and and i think that venture businesses are new world that we're in will benefit from

SPEAKER_93: skills of being way more if you can be more cash efficient at the early stage you can maintain the

SPEAKER_21: cap table you need less capital and maybe you can go faster right and you can be faster and lighter and we're seeing that now i'll see companies that we're looking at angel investing in and i'm like

SPEAKER_11: you have 12 employees they're like yeah i'm like what do you spend every month and they're like we're spending 70 and i'm like 6 000 an employee they're like oh no no it's like 4 000 employee but we have servers and we've got this other thing we're doing or do some paid marketing like wait how are you spending 45 000 per employee oh we have like two people in the us we got 10 people offshore for this amount 12 000 a year to 40 000 a year and oh i get it right and so there's like yeah it's it's

SPEAKER_00: it's how good you know it's very hard to recruit it's not you just go and just hire people because

SPEAKER_53: they're cheap like you have to really still put in the good processes identify the talent they don't have the same culture of entrepreneurship and aggressive like not every job can be done there and they you know you have to work really hard to find the right talent but they're definitely out there yeah yeah and putting in the good processes to identify that talent so um yeah it's a bit of both we're doing that as well like we have quite a lot of people offshore we've got 600 people in asia another

SPEAKER_99: five or six hundred contractors in asia and latin america yeah latin america coming on strong as well

SPEAKER_186: some great universities in south america latin america and yeah just incredible developers coming out of

SPEAKER_21: some schools there and people are starting to pull them together and then i saw one company i would say which it is but they're basically taking pools of business process people skimming the top two percent of them then putting them through training and then having them do business functions so it's kind of like you were saying like there's some diamonds in the rough there and then if you put them through

SPEAKER_22: us-based training for let's call it you know management type processes they're going to get better and

SPEAKER_71: better uh well i think that's that's one of the opportunities that's out there is like you know people have done offshoring for like 20 years like we're not talking about anything new no but they

SPEAKER_00: tended to just like send out like almost like a body shop of people just like do data entry and treat it like almost like a mechanical turk like hey i don't talk to these people i just give them work and it gets done i think there's a big opportunity to go hey let's actually onboard them through the zoom calls two slacks you have them on zoom our tools our process like put them in a sauna cool yeah do

SPEAKER_401: it notion have them on coda have them doing project management and teach them those next generation

SPEAKER_226: skills what's the difference smart people are smart people i haven't seen someone really nail this because it's a different level of like rigor you know maybe it's um kind of interesting what's it um

SPEAKER_00: what's the git lab it's been like this fully remote company i haven't checked in with how they're with what they do but it's interesting how the fully all remote companies also don't just gravitate towards like well don't you just immediately go towards the lowest cost labor function but they don't necessarily they still have tons of people in the us and so it's an interesting point like it's not just the cheapest labor you've got to get the the team skill and the culture and all these other things together but over the next 20 years you're going to see that you know even the rise that we're talking about tying it back together to the e-com companies like i lived in china uh 18 19 years ago uh for a couple of years and i was always predicting back then that hey once

SPEAKER_01: these chinese companies figure out how to do branding they're going to take over the world yes because they make they make the product and then i slap my brand on the thing and mark it up 5x

SPEAKER_03: and i get all the more they can learn ux ui design i always said this about israeli

SPEAKER_04: they're starting to do it you know that's what these companies are that's what's happening right now

David Friedberg: i always says about israeli companies i would meet an israeli company like this company's got the most amazing technology and then they would tell me the name of it and the domain name would have a dash in it and be a dot org and i'm like yeah who did the branding on there so like who cares about branding i'm like consumers yeah corporate people everybody cares about branding apple microsoft you ever see the logos and the design of these websites like the branding's a thing so yeah 20 years ago i started

SPEAKER_190: to predict that that's going to happen and what i thought would have to happen and this is what

SPEAKER_53: happened is that generation would have to grow up who really speaks english and has a more global mindset to become the leaders of the companies yes because 20 years ago when i was living in china they had people who spoke english on the team like doing sales or customer you know relationship

SPEAKER_00: they weren't the ceo and they're not gonna their english was not good enough right to like do the marketing and do the branding and the brochures but they weren't gonna tell the boss my english is

SPEAKER_01: not good enough because he'll fire them yeah so their branding was terrible right but then once that guy becomes the ceo he can go hey my english is not good enough i know because i speak english but not good enough let me go get the pros let me build this is a brilliant thing about singapore they had

SPEAKER_420: this like incredible leader i've been watching his videos on youtube yeah yeah yeah legal on you and

SPEAKER_22: um at some point he was just like english is the language in singapore that's it we're done we we want to be you know we want to be the leaders in asia uh and singapore just made this decision to have english as their language i understand it and um once they made that jump and people got over it they

SPEAKER_21: really became uh super powerful and yeah you're definitely seeing uh you know increased design when i was in the middle east there's been a whole generation there now who are our age you know

David Friedberg: 40s 50s who went to western schools based upon scholarships so uae qatar uh a kingdom of saudi arabia all these countries had kuwait these scholarship programs for the nationals to go to any school in

SPEAKER_11: the west could be oxford could be michigan could be harvard whatever they could get into plus get a stipend and get paid to go and have their housing paid for and um when i've been spending time in the

SPEAKER_22: middle east i'm meeting folks and like oh yeah no no i went to you know this school i went to fordham i went to you know the school in michigan i went to you know school in hawaii whatever it is arizona

SPEAKER_11: not all just ivy league and they've just got a whole generation there who now have gone back and are running businesses venture firms lps private businesses and they're just incredibly they're more worldly obviously than americans uh because they've they've been educated for a decade and lived in the west and then gone back to their countries and that's why you're seeing them modernize so quickly over there because those people are like yeah i want to have what i had when i lived in america or when i lived in london we need that here in our country and then they build those businesses in riad or doha or yeah it's interesting you know it's one of the interesting

SPEAKER_99: things about flexport and how we work is that we'll actually onboard local we call them local heroes but it's like for example i was talking about the one in vietnam it's the largest logistics company

SPEAKER_49: vietnam but they're only in vietnam who a great ceo speaks english really well he's very global experienced uh but they have local capabilities local assets so we onboard them to our technology

SPEAKER_53: uh we get therefore the best service locally at a low cost because they're good at hiring locals and managing that they're good at local relationships that are needed and we give them

SPEAKER_99: the tech the global brand this guy wouldn't you know they don't have the sales force all over the world to go sell the western brands and bring it so that's a big part of how flexport works is

SPEAKER_53: actually empowering these kind of local companies that do great service in the small in these

SPEAKER_96: markets and we get to meet a lot of these great entrepreneurs and you're right a lot of them are educated in the west or spend time that came back to their home country yep and actually a lot of flexport teams in these countries are like that too like our head of korea lived in texas for

SPEAKER_111: like six years a korea guy but he lived in texas running sweet doing sales for a forwarding

SPEAKER_432: company he knows korean barbecue and texas barbecue yeah exactly he's a superpower that i mean right

SPEAKER_17: there two best barbecue you can get uh all right listen ryan peterson it's great having the program

SPEAKER_22: you're always so honest uh continued success and if you want to work for a great leader and a great company uh flexport maybe they're hiring maybe they're not i don't know uh selectively what is hiring you're trying to keep them be more efficient we always have roles um we're definitely we're

SPEAKER_53: definitely focused big time on profitability and dialing it in and um not in not in the hiring sprees that we've been in the past but yeah selectively there's definitely there's definitely some interesting jobs especially in asia we're expanding uh we launched in uh malaysia thailand

SPEAKER_437: vietnam korea i'm really interested in seeing a world i've been to korea but i haven't been to

SPEAKER_22: vietnam singapore i haven't been to that region i was just every now and then i don't know if you ever do this go on google maps and just kind of look at that region and it's just indonesia and singapore or vietnam it's also fascinating to me at least island chains and they kind of hook up with australia

SPEAKER_441: eventually and you're yeah google earth is my favorite uh product in the world if i was not uh not an entrepreneur i tried to go get a job at google earth man it's such a cool product

SPEAKER_22: yeah just like and i was looking at the i don't know if you're tracking what's happening in northern saudi arabia neom you know the neom project and they're building this huge city and you know that's

David Friedberg: by i guess some of these um pathways and ports and everything a lot of ports around that area and

SPEAKER_124: then that part of the yeah they're trying to make it a big port you know coming back again to the red sea it's like well if the red sea is cut off from trade that's not going to work out so yeah i do think

SPEAKER_199: saudi is going to want to beautiful oceans and everything and scuba diving and gorgeous vistas and

SPEAKER_11: it's just like totally undeveloped and now they're like you know what we're going to build hong kong or you know whatever they're building there whatever you qualify it as and they're moving

SPEAKER_14: fast and they're going to put like 500 billion dollars into this it'll probably work i mean you

SPEAKER_255: know china's got a big track record of doing this like hong kong itself the brits did that yeah there

SPEAKER_53: was no city there shanghai wasn't a city that was built by the brits shenzhen and then and then china built shenzhen overnight built a new city you put special economic zone free trade zones you set it

SPEAKER_111: up the world will come so yeah that'll probably work and it's in a great place you know yeah it's

SPEAKER_448: right on as long as the red sea is open for navigation you can get to italy greece you know europe in a couple of hours on a flight you can get to india from saudi in a couple of hours on a flight

SPEAKER_21: i mean that's one of the really interesting things about dubai and that whole region if you're going to

SPEAKER_93: asia if you're going to europe if you're going to africa india yeah it's the center of the world

SPEAKER_49: it's the downside i still i still am a big believer in building companies in san francisco there's something special about the people here yeah but man we're the edge of the earth like we are getting

SPEAKER_455: here is you want to go anywhere it's like in the pacific ocean it's like spin google earth open you'll

SPEAKER_457: see it like half of the earth is is the pacific ocean it's very far very hard to get anywhere from san

SPEAKER_17: francisco so that's great for security you know pretty hard to do a land attack on america the

David Friedberg: atlantic and pacific and we've got basically we're complaining about the borders we've got two borders folks it's not really that hard southern border northern border pretty hard to get into the other one a little easy to get into this other one i think we just take it for granted you know how

SPEAKER_462: um hard it is to get here you know it's you can't just no america's geography is just like

SPEAKER_99: unstoppable there's a great um youtube video like from one of my favorite channels called real life

SPEAKER_53: lore oh uh called why why america's geography is so on point and it is just like it'll blow your mind about how blessed we are from a geography our geography is so good that like we no matter how

SPEAKER_111: hard we screw it up try to screw it up with politics we still can't seem to screw it up so

SPEAKER_164: yeah no i mean to have two giant oceans on either side of us and then the middle of the country is

David Friedberg: empty like you fly over this country and you're just like

SPEAKER_469: we have 300 million people we could have three but it's full of the farmland you know mountains

SPEAKER_304: trees i mean it's unbelievable the river network is you know i was mentioning vietnam how they have a big advantage having river network for doing navigation of freight movements but the

SPEAKER_52: united states has more navigable rivers than all the other countries in the world combined

SPEAKER_00: yeah and and just really contrast yeah and and the mississippi river is just incredible the network that goes and it connects to the great lakes and then all the way up to canada yeah um and you compare that to mexico they don't have a single navigable river in the entire country

SPEAKER_52: wow so we're very blessed too close to the equator yeah too mountainous and yeah too dry it's too mountains um so we're just very blessed geographically uh we got canada melting all the water

SPEAKER_111: totally yeah it rains a lot over in the east coast and we don't think about that that much because you're like rivers whatever but we use we use it like crazy in logistics like all the green shipping out of the

SPEAKER_00: midwest is going down we're the biggest food exporter in the world that's why oil exports are flowing down these rivers like tons of ore and products flowing in the rivers we used to have that really like if

SPEAKER_479: you look at napa yauntville petaluma all of those areas north of san francisco they used to bring the

David Friedberg: butter the cheese the milk down all of these um you can look it up online and they still have it with the napa river and all these inlets petaluma river they would just take barges down with milk cheese whatever

SPEAKER_199: into san francisco then san francisco to the rest of the country in the world but it's what allowed

SPEAKER_49: um the united states to become like industrialized at the east coast cities could because normally you

SPEAKER_00: know if without the river network you'd have all those great plains but how could you get the food there from there to the east coast like you can't food can't travel on the back of a horse the horse

SPEAKER_111: not eat all the food you know it can go about 100 miles before it eats all the food that's not

SPEAKER_487: required calorie efficient model it just won't work for grain or whatever you need ships uh and so the

SPEAKER_111: fact that we had that river network flow down out of new orleans and up around florida and up to the east coast like that's what allowed america to develop and we're just very blessed on that and it's not obvious like you sit there at home and go america it's like it's not just about culture a lot

SPEAKER_420: of its geography and it gets very underrated yeah i mean i think i've heard that geography is destiny yeah a lot of it is destiny all right listen uh second time i'll try to end the show third time

SPEAKER_22: it's so great to talk to you ryan no it's hard i mean we always hit some pivot point and just another idea another idea another idea uh continued success with the company congrats at being back in

David Friedberg: the uh in the driver's seat and wish you good luck on this very important 2024 for you and the team

SPEAKER_22: get profitable get fit and uh who knows maybe 2025 uh be trading the stock i appreciate it thanks for

SPEAKER_292: having me back on the show you know i've been listening to this show since uh 2008 or something

SPEAKER_455: so i'm glad to see you some grinding man it's like i love it how many episodes you've done i mean it's

David Friedberg: like 1900 of this and 160 of all in so it's over 2000 now and i just look at it as this would have been

SPEAKER_130: like you and i having a drink right we just would sit there and just oh let's talk about america let's talk about saudi let's talk about neom let's talk about outsourcing and then i leave this what people

David Friedberg: don't understand is i took the myers-briggs uh which is like um astrology for men that's what we call it and i was like 94 and 100 extroverted on two times i took the test in 20 years which means i get

SPEAKER_11: out of this conversation i have all these notes i've written down i feel like my battery's full after talking to entrepreneurs investors people who are building in the world it's the greatest gift in the world that i get paid with the advertising on this program uh to just share stories with the world you know and millions of people watch it and man it feels great and i and i get a lot out of it

SPEAKER_500: yeah all right well thanks for having me here all right i'll talk to you soon good luck to the team and

SPEAKER_11: we'll talk to you soon