First Time Founders with Ed Elson – ft. Ryan Petersen of Flexport | The Prof G Pod with Scott Galloway

Intro

In this episode of “The Prof G Pod with Scott Galloway,” Scott Galloway speaks with Ed Elson and Ryan Petersen, the founder of Flexport, about the challenges and successes of being a first-time founder in the supply chain management industry. They discuss the importance of vision, determination, and surrounding oneself with talented individuals. They also delve into the role of technology in modernizing the supply chain and the value of storytelling in business.

Main Takeaways

Building a Billion-Dollar Company

• The key elements to building a billion-dollar company include having a vision, incredible grit, determination, perseverance, irrational passion, surrounding oneself with talented people, articulating the vision to attract the right human and financial capital, executing well, and timing.

The Significance of Supply Chain Management

• The Suez Canal incident and COVID-19 lockdowns have highlighted the vulnerability of the supply chain, leading to increased consumer prices.
• Supply chain management is antiquated, relying heavily on physical paperwork and traditional record-keeping, resulting in poor data quality and low efficiency.
• Flexport, a supply chain management and freight forwarding platform, addresses the challenge of moving cargo internationally.

The Complexity of Global Trade

• Global trade accounts for 47% of global GDP, emphasizing the significance of freight forwarding in moving goods around the world.
• Global trade involves complex coordination from door to door, often involving 15 or more companies, multiple governments, banks, and insurance companies.
• Flexport aims to bring structured data to the process, connecting people through software and APIs, as well as through legacy technology like EDI and human interfaces.

The Role of Flexport as a Middleman

• Flexport acts as a software middleman in global trade, coordinating complexity and simplifying the process for customers.
• Unlike middlemen who simply buy low and sell high, Flexport adds value by coordinating complexity and simplifying the world for its customers.
• Flexport acknowledges the value of being a middleman in the industry, adding value to the process.

Founding and Scaling Flexport

• Flexport’s founder, Ryan Petersen, was involved in a previous logistics shipping company, Import Genius, before founding Flexport.
• The company initially started by importing motor sports products and automating outbound trucking processes.
• Petersen’s original pitch for Flexport was “Turbo Tax for Customs Paperwork,” focusing on simplifying the process of importing goods using the internet and software.
• The company’s key decision for scaling the business was the organizational structure, built as a team of teams or “squads” that serve customers.
• The company’s customer obsession ethos is a point of differentiation in the space, valuing the customer where others don’t.

The Power of Storytelling and Customer-Centricity

• Storytelling is crucial in various aspects of business, from investors and shareholders to recruiting talent and self-motivation.
• Tech can enhance compliance and provide an opportunity to excel in heavily regulated industries.
• Flexport’s CEO emphasizes the importance of staying grounded and living in reality as a revered leader.
• Flexport encourages openness and transparency through channels like AskExec team on Slack and weekly town halls.
• Building a customer-centric culture and identifying talent within the team through customer feedback is crucial for leadership development and promoting from within.

The Journey of a First-Time Founder

• First-time founders often make sacrifices, especially in mental health and personal relationships, to be successful.
• Building a successful company requires significant focus and often comes at the expense of personal relationships.
• The founder’s value system is centered around learning and problem-solving through starting a company.

The Role of Money and Valuations

• Money comes from solving genuine problems, not just inventing technology.
• Valuations are based on future cash flows, making them inherently unknowable.
• Flexport strategically raised funds despite being profitable and projecting revenue declines, which puzzled investors.
• The CEO emphasizes the importance of staying focused on increasing future worth rather than getting distracted by valuations and others’ opinions.

Summary

Building a Billion-Dollar Company

Ryan Petersen, the founder of Flexport, shares the key elements to building a billion-dollar company, including having a clear vision, incredible determination, surrounding oneself with talented individuals, and executing well. These factors, combined with timing and irrational passion, contribute to substantial growth and success.

The Significance of Supply Chain Management

The Suez Canal incident and COVID-19 lockdowns have exposed the vulnerability of the supply chain, resulting in increased consumer prices. Traditional supply chain management relies on physical paperwork and outdated record-keeping methods, leading to poor data quality and low efficiency. Flexport, a supply chain management and freight forwarding platform, addresses these challenges by leveraging technology to modernize the process of moving cargo internationally.

The Complexity of Global Trade

Global trade plays a significant role in the global economy, accounting for 47% of global GDP. However, it involves complex coordination among numerous companies, governments, banks, and insurance companies. Flexport aims to bring structured data to the process, connecting people through software and APIs, as well as legacy technology like EDI and human interfaces, to simplify the complexities of global trade.

The Role of Flexport as a Middleman

Flexport acts as a software middleman in the global trade industry, adding value by coordinating complexity and simplifying the process for customers. Unlike traditional middlemen who simply buy low and sell high, Flexport’s focus is on streamlining the world of global trade through technology and exceptional customer service.

Founding and Scaling Flexport

Ryan Petersen, the founder of Flexport, started his entrepreneurial journey with Import Genius, a logistics shipping company. He then founded Flexport with the vision of simplifying the process of importing goods through technology. The company’s organizational structure, built as a team of teams or “squads,” has been crucial in scaling the business and providing a high-quality customer experience. Flexport’s customer obsession ethos sets it apart in the industry, valuing the customer where others don’t.

The Power of Storytelling and Customer-Centricity

Storytelling plays a vital role in various aspects of business, from attracting investors and talent to motivating employees. Flexport’s CEO emphasizes the importance of staying grounded and living in reality as a leader. The company fosters openness and transparency through channels like AskExec team on Slack and weekly town halls. Building a customer-centric culture and promoting talent from within based on customer feedback are key to Flexport’s success.

The Journey of a First-Time Founder

First-time founders often make sacrifices in personal relationships and mental health to build successful companies. The founder’s value system is centered around learning and problem-solving through entrepreneurship. While building a company requires significant focus, it is essential to find a balance and prioritize personal well-being.

The Role of Money and Valuations

Money comes from solving genuine problems and providing value to others. Valuations in the business world are based on future cash flows and are inherently unknowable. Flexport strategically raised funds to strengthen its balance sheet and acquire assets, despite being profitable and projecting revenue declines. The CEO emphasizes the importance of staying focused on increasing future worth and not getting distracted by valuations and others’ opinions.

Conclusion

Building a billion-dollar company in the supply chain management industry requires vision, determination, and the ability to navigate complex global trade dynamics. Flexport, with its customer-centric approach and technology-driven solutions, has successfully modernized the industry. The company’s founder, Ryan Petersen, emphasizes the importance of storytelling, customer-centricity, and staying grounded as a leader. While the journey of a first-time founder comes with sacrifices, it can lead to significant success and personal growth.