Ryan Petersen - Where There Is Mystery, There Is Margin [Founders Field Guide, EP. 22]

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Clients of the asset management may maintain positions in the securities discussed in this podcast. Will i guess. Today's ryan peterson founder. And ceo of flex flex board is a technology platform for global trade. In this conversation ryan takes us through the fragmented world of international shipping and we dive deep into the history and inefficiencies of this system we also cover shipping containers were standardized. How new protocols get adopted internationally and the challenges of doing business in the no-man's-land of international waters. Ryan is the type of entrepreneur. I enjoyed talking to the most. He has an incredible domain knowledge high energy and his tackling enormous global problem. I hope you enjoy my conversation. With ryan peterson ryan. I think a neat place to begin this conversation just for those unfamiliar with flex port is to ask you what the business does. And then i'm going to ask you how you encountered the problem that flex port originally designed but i just as a basic overview for the listening audience. What do you do in. The world is a platform for global trade and for tech enabled global trade services effectively. What we do is coordinate. All these really complex transactions to move goods around the world we live in a world where anybody on earth can trade buy or sell things with any other person on earth regardless of what country. They're and where they are in. The world is sort of like sometimes say to do for adams with the internet. Did for this right now. It's just like a super messed up. World find a friend who's ever tried to ship something to another country. They will tell you. It's like a black box. It's really confusing. And it's not about free trade. I mean there's good reason why the regulations and even tariffs in some cases. But it's more about pain. free trade. Make this simple. Ultimately we think trade is fundamentally good for the world and the fact that it's really inefficient and high friction is creating back pressure that holds back almost every other industry china overcome that high value service that we provide in providing a lot of services around trade and that's freight transportation customs compliance in brokerage clearing goods across borders cargo insurance. We have a trade finance group that provides inventory financing to the customers on the arms. How did you first encounter this world. We're your user of infrastructure and frustrated with it. What was the entree graduated from college. I worked for my older brother. Who's also an entrepreneur and really the best entrepreneur. I know is taught me a lot. We were importing had a brand of motorcycles. Actually our supplier was a company called jelly. Which is the chinese car company. That bought volvo. It's now become famous company but this was in two thousand and two way before they bought volvo and. I didn't even know that made cars at that time. We were buying their motorcycles and selling them both through the internet outlets like ebay motors and then would happen with ebay. Motors is crash. The price pretty quickly does not a very liquid market there. And we'd end up with like container loads of stuff that we couldn't sell and we built up a network to sell those motorbikes used car auctions. We're selling brand new chinese motorcycles through car auctions until distributed them all over the country and so that's when i discovered the world of freight forwarding. Which was this. It really felt like every freight forwarder was out there to rip me off of these old companies no technology. They're pushing paper. The turns out the actual pieces of paper were serving his titles to our motorcycle cargo. If i'd lost that piece of paper what would happen. Was you'd have to dry compound fees like every day at the port past seven days. You own hundreds of dollars in fees if you're not the piece of paper just like in a vicious cycle number one was lack of tack. Why pay per serving his titled merchandise in the international trade in the two thousands. And that's still true by the way is still the default for global trade and then second. Was this like ethos. There is no customer obsession. It was black box in this information. A symmetry forwarders always no more on. What's going on than the orders. Exporters in the world and they use that to their advantage to make money. And you'd always get hit with weird fees that no one told you about and stuff. So i just felt like those two things combined was just a huge opportunity to create a great business. I want to hear a little bit about the number of steps from something leaving manufacturer or something and arriving at a customer's door. But i think it's helpful just to orient people in the universe for you to describe the difference between parcel and freight and y. Those are different universes. The difference is super simple. Parcel is just small and light and afraid is heavy. And i think the threshold is around one hundred kilos. Depending on the network. I mean the threshold is determined by the parcel carriers. What can fit in those ups and fedex trucks and now amazon. What can fit down there. conveyor belts. How heavy is it. Can the driver lifted up. Once it crosses that threshold it goes into the world of freight. so that's the fundamental differentiator. Now why are they so different or the parcel world. You can have an end to end network. It's all the same company it's all fedex from door to door a fedex. Driver picks it up. Puts it in a fedex. Truck puts it on a fedex plane fedex agents the customs it's all fedex from door to door in the freight world no companies big enough to do that themselves. Just the scale of these industries is really really remarkable. The modern container ships carry. Twenty thousand t. E. us or more t you is a twenty foot equivalent units cutback half truckload a forty foot. Is the standard container so half a truck lawsuit. Ten thousand trucks need to meet that ship when it arrives at the port and of course you have multiples Ships arriving every day every port needs to be connected to every other port in the world every day to run the modern world. No company is that big to have ten thousand trucks every single port everyday or hundred thousand trucks and so what you get is a federation of companies and the role of what's called a freight forwarder. It's sort of like antiquated businesses. That coordinate that. I often call them free. E mail forwarders. They're just pushing paper around making phone calls. And yet you'll have as many as eighteen companies involved in a single transaction from door to door. It's a really complex network. Global trade is like half global gdp. And it's run on these very antiquated systems. I think probably fedex. Ups together if you look at their market cap. It's like a couple of hundred billion dollars something like that. Sounds like if everything was publicly traded. And you could add up the market cap of all the businesses in this ecosystem. It would be some multiple of that. Is that fair. Yeah well if you cut the whole ecosystem off the finance side of trade which is another whole massive area and really interesting and important. The acid owners plus the coordinating layer is several trillion dollars. Just a coordinating layer. This old companies called freight forwarders. That's probably a trillion dollars in market cap. So when you first encountered this tell me if this analogy is off. Because i don't wanna stretch too thin. But it almost sounds like it's so fragmented there's so many pieces that have to coordinate the flex port sort of becomes like a protocol almost like a standard almost visa mastercard. So that each bank doesn't have to have links to each other. They can just link to mastercard and then linked back out is that a fair analogy sort of the protocol model apply to physical goods. Yeah exactly and that's exactly what's different about four dente freight forwarders that we are building. That protocol layer. We are data interchange later to allow these companies to come together and transact create standards and create in some cases user. Interfaces but i think at scale you'll see more and more people using our api's other than the user interfaces bigger companies want to really automate these transactions and smaller companies. It's much more like. How do i make this super simple so anybody can come and do it. What does it look at the very beginning. So how did you attack a really big complex fragmented space with a first product or customer. The very beginning we started as a customs brokerage you can think of a customs broker. I probably shouldn't go too far into this analogy. But it's kind of like a lawyer you get charged with a crime you can represent yourself in court going to represent someone else have to pass the bar and that's a bit like customs broker like if you want to import something you could just import it and you file some paperwork and you're fine as an individual or a company to do that but if you want to do it on behalf of somebody else you need to be a licensed customs broker hard process yet to pass a background investigation and takes probably a couple of years to get licensed as a customs broker. What you're doing is helping companies to transact and clear their merchandise through customs. It is a very good business in my view because is where all the data sits. You want to clear something through customs. You've got to provide customers all the commercial invoices packing lists. The bills of lading does that title for the merchandise. A traditional customs broker tends to be someone who just takes that data. Keys it in the us. Custom system france. The document puts it in a file cabinet for record retention and moves on generate. Some cash is a nice little lifestyle. Business what we do differently. What we did from the start differently was like. Let's take all that data. Digitize it gives people analytics let them see. They're importing give them trends. Make sure that data stored in the cloud for compliance purposes forever and start to automate these transactions. Actually the first time. You do a transaction with us through customs. It's probably a little bit more costly because we're digitize structuring. The data making sure that it's accurate but the second time you clear customs on the same product. It's really like an automated one. Click operation first business that we lost a customs brokerage and sort of the crown jewels. Still today affleck's sport as a business because this is where all the data sets and this is where you build a relationship people say like old school freight forwarding world. They always say you date your forwarder but you marry your customs. Broker 'cause know it's compliance. This is like really. It's not as something that you take lightly and so built that and then from there you see every transaction and you're able to extend your services then we from a technology platform started there and then we added transportation services you can buy. Aaron ocean freight were now. The third largest american company by ocean freight container moves organized competing with those traditional legacy freight forwarders air freight transportation port and airport trucking. We added cargo insurance. Which is really great part of our business and then trade finance. And you'll see us. Keep adding new services that are needed for global trade. What were some of the darkest parts of this world when you first came to it and started building flex port where there was the most leakage waste graft was sort of the dark side of the shipping world which is seems wildly. Opaque a lot of its. I think part is the most broken and it's still pretty broken. We're trying to fix it. We're working pretty hard. Sometimes some problems are systemic in a single agent. Can't fix them on their own. But the one that seems the most broken to me and it's really causing problems for the whole world is contracts in ocean freight are not enforced in any direction. And so it's like what does a contract if it's not going to be enforced. It's a repeat game theory's kind of enforce the year after biz on like. Did you do what you said you were gonna do. Last year and a thing and the lack of the enforceable contract to some really bad behaviors on average thirty percent of all the ocean container bookings that are placed with ocean. Carriers are cancelled. they don't show up. You have a book to show ratio seventy percent if you're an ocean carrier and you're going to go bankrupt if you sale at seventy percent full you've got to be at least eighty five percent full. Probably i don't know what the exact number depend on the vessel in the carrier but sort of like percent up the rest jobs to the bottom line but below eighty five percent. You're gone bankrupt. So if you're notion carrier what do you do. You must overbook your ship. Now if i'm booking freight and if you're not flex or if you're a traditional freight forwarder or a big customer that rate you're gonna place to bookings because you know that ship is overbooked. And you don't wanna be what's called rolled that's like getting bumped when you find a passenger plane so you double book so you have this terrible vicious cycle that transact and it leads to whenever karo rolled probably another week before it arrives so now we're having a stock too much inventory. You're carrying all these safety stocks. You can't get the kind of quality quality in the sense of like repeated predictable results from system. Instead it's like really stick casting and all over the place and so this is one of the biggest problems we've we've gotten the industry average roll rate pre pandemic and pre all the craziness. I think we'll work through that. There's problems right now if we want to talk about we can. But pre pandemic the industry average roll rate was eight percent fleck. Sports platform has managed to get our role rate from the same ocean carriers down to two percent because they see that. We're using data to be much more predictable. We're not playing these games. When we place a booking we in for one hundred percent book to show rate and you never would probably get to one hundred percent but we're much higher than the industry average of seventy and they reward us with more predictable transit times. You can sort of heal the system that way. Yeah that's probably the most broken because a lot of broken things though. It's a fascinating world when you peel the onion back. How much has the technology itself changed or the pieces of the logistics network those container ships. You'll get a picture of one from the however long lago looks pretty much the same. What have you learned about the potential. If reducing roll rate is one way to create more efficiency in the system. And then i want to talk about like what those efficiencies might mean but are there other areas of this that can get better in the atoms piece of all this and the atmosphere for sure. There have to be now. We don't spend that much time on. It were much more in the data interchange layer and i think there's tons of optimization there too but in adams just as an outsider. Looking at it. I guess i'm a little bit different than a pure outsider. Definitely an interested outsider. The shipping container. I think revolutionized the world. I would argue that. In the last fifty years no invention did more to lift people out of poverty worldwide than the shipping container reduce the cost of shipping things globally by something like ninety five percent which has enabled this huge boom export economy. Mean a lot of it's free market economics and better governance developing world but a huge amount of it is like well you can ship anything anywhere and you can put your supply chain globally and it'll be even cheaper and faster and lower. Carbon is a lot of reasons that ocean freight is awesome. But it hasn't changed much. The one thing we did was double the size of the ships which is a real efficiency. We're still unloaded containers. One or maximum two at a time off a ship. It takes eight hours downloaded containership. You've got three hundred million dollar assets sitting there for eight hours like why. what are we doing. Couldn't we get smart. I'm like crazy thicker. I'm like what if we just turn the ship upside down and dumped them all out and there's gotta be some radical thinking on how to unload the ships faster. That would be one that. I'd love to say one that takes place inside of the ship inside the container. So inside of a shipping container pre shipping container the way that the ships were loaded by the way guys hole and stuff onto the ship. I mean it was really backbreaking labor. You had cranes and then they would rope everything inside the ship so it'd be like tied down so it wouldn't fall over well that's kind of how the inside of the containers looks today. It's like everything's kind of manually loaded and roped off and literally tying ropes so that the stuff won't fall over if it's not full what's really broken. There is at the unloading moment. The person who loads the freight has no connection shares. No information pretty much whatsoever with the person who's gonna unload the freight out of that container. So in the world of less than container load freight this is when you're consolidating multiple customers freight in the same container. The prison unloading it. I've got six different customers loads in here. Who's free is. Who's the way that they get it as they get a piece of paper which has a list of all the shipments that are on that and then each one has a field called marks and numbers and the marks numbers feel does like what are the marks and numbers on the outside of the cardboard boxes. Detective style like. I had this. Is that load and fly human judgment. Like where should i put it inside. His warehouses loaded. That seems like an obvious area for a really smart innovative company that come around and build like a smartphone clift. it's not even about human labor saving. I'm not that into robots that save labor forklift. Drivers don't cost that much especially in developing world. You're not gonna make a lot of money replacing that with a robot. it's too expensive. The reason the iphones still made by him. But you definitely want to reduce the error rate of those. Humans allow the data exchange. Okay what am i. Loaded container into the container and then when unload it. What is it and this forklift should just know that. And where should. I put it in the warehouse. So i think there's a lot of fertile ground for things like that loading docks unless interested in replacing labor. I'm more interested in. How do i. Augment that labor. With data i see the box of one of my favorite books on your bookshelf. Which tells the story of the shipping container. What about that idea is most powerful to you if you had to summarize why you think that's such a world changing invention or standard. What is it like. What's the magic that is the key word is the standard sort of like what she did for. The internet is like set a standard so that we can exchange in this case atoms with each other and make uniform across the world so that everybody can agree on that you can build all your logistics assets. haven't done it for planes and they won't but ships trucks and trains line on the same single standard super powerful allowed like i said a massive reduction in the cost of freight and i think there's a couple of interesting things about that one. It was invented by an outsider. The guy who invented the shipping container was a trucker. He's like why. Can't i just put my truck on the ship like wait. What have i just unloaded this truck and put it on the ship that work so i thought that was really interesting. It's often and outsider comes into an industry and sort of sees it. It's hard to understand the system when you're inside the system. The second and really important thing to understand is that the standard was done wrong. It's a bit like your keyboard. It's the wrong standard. It's like intentionally made to be slow in the court case because of typewriters in this case it wasn't intentionally chosen to be wrong. It was just government. Set the standard. And they don't understand what it'd be very careful when he's at the centre. Why does the forty foot container wrong. Well the united states trucks are fifty three feet long so every time you move a container by truck you're losing thirteen feet of space ratios just off. You could get a thirteen percent while thirteen over forty. You could get a pretty significant efficiency improvement from your network if we had all aligned on a fifty three foot standard or whatever the longest allowable safe truck container would be but once it set. You never going to change the whole world to a new standard to be fascinating. It would cost billions or trillions of dollars to start a company that fifty three containers as standard on ocean rails also fifty three foot so it was like a builds chips that are fifty three foot but the government the way they set that standard was they saw that there was this thing emerging shipping container. Everyone agreed we should standardize. This would be awesome. They did like a committee. There were two companies running containers neither of at forty foot containers at that time. They did not involve them in setting the standard. They created the standard and then they said we will subsidize shipbuilding if you use the standard. Everybody adopted it and that became the standard. I love the idea the outsider. How do you think about that for flex. Port is there an ideal ratio of insiders with domain knowledge to first principles outsiders just approaching the problem with fresh eyes. I don't know if there's an ideal ratio there's certainly a equal that you want to maintain. And i think we go for is like twenty percent. I think you wanna have like five or ten max. Ten person teams. And so you want at least one person on that team to know how it's done so you at least know what reality is today but not two or three because they'll team up in like convince everybody and be the loudest voice in the room. And you'll do it that way. That's kind of my working model is like make sure someone knows how it works. But then there's lots of people asking why bunch of times and challenging wire planes different. Maybe the same standardization won't happen in planes. What's different there. You're really about focusing. On arrow dynamics in the shape of the plane there are containers in air but every plane is different slightly. Different in the arrow dynamics is going to drive that rather than just like a standard rectangle the air containers rounded to fit the contours of the plane plus shipping containers. Just heavy. you don't want to fly those things around right. So is the north star in all of this like if you think about the potential opportunity for impact of improved efficiency or technology in shipping space. Generally speaking is the way that it just ultimately manifests more selection and cheaper for consumers like is that sort of the right way to think about it that if you do a great job building flex board ultimately will cost end users less consumer goods and services or goods in this case is actually. I'm very inspired by amazon. And i think if you look at what bezos laid out his wall. We don't know what's going to change the world but we know what's going to be the same and people are gonna want cheap stuff. They're going to want lots of selection. They're gonna want shipping. And i think ultimately as we succeed we're going to deliver those three things to the consumer we do. We try to work backwards from that. Our customers are trying to compete with amazon. And say live and thrive instead they need to be able to offer that to the end consumer sort of building everything to enable that so that our customers sort of businesses of the world can do that. There's a couple of ways that that manifest itself like right now. That coordination layer these old companies called freight forwarders. Let's take their l. So you get a hundred dollars in of that. Seventy dollars goes to the underlying asset owners. So you got thirty percent take rate of thirty percent. Twenty percent is going towards labor costs and ten percent is going to. This is a really well. Run one of that twenty percent. I mean that's just like a huge overload in tax on the world economy. Logistics is ten percent of gdp. So that's the cost saving side of things and that's just a pure logistics costs. There's also financing costs. Every shipment is working capital its inventory and transit at sitting there. It's just cash tied up on the water or in the air. And so if you can speed that up transit time in working capital two sides of the same coin if i can run your logistics thirty percent faster. I've reduce your inventory. Balanced by thirty percent and midge business. A lot better right from a working capital return on investment capital implant. So that's another way that you lead to lower costs and these days. It's about to our shipping. Two hour delivery is like the standard amazon is setting out there. At least in metro major metros and that is a really complex system the old world sears catalog world you just have one distribution center one fulfillment center in memphis or something and serve the whole country and you get a three week or seven day delivery time. If you wanna hit two hour delivery you need to have a little micro fulfillment center in every neighborhood. And that is a really hard problem for the existing supply. Chains just aren't made for that. They're running on the paper. Their phone calls or calling needed ship this many containers. You need to be able to optimize 'cause now you're talking about too much inventory in all these local sites and you go bankrupt too little. You're the customer buys from somebody else. So it's how you help. Brands meet those promises to the end. Consumer that's going to be the big differentiator so it's more products. Cheaper products more selection and faster shipping in that chain. He said as many as ten to twenty different companies might be involved in getting something for me to be in the forwarding world who is making all the money when you showed up to the prophets tend to pool in the same places over time. We'll sort of the stack when you came to it in terms of who made the most money. The most margin of my favorite quotes is out. Where there's mystery there's margins by peter kaufmann who's the author of poor. Charlie's almanacs one of my favorite books. I think there's a lot of mystery and we're still peeling it back. It's one of the fun things about working in this industry is you're like that's how that works like we're making money there and we thought we were. We thought we were buying directly from the source and there's a middleman and a lot of that goes on and it makes it interesting. Pure support ocean freight. I think everybody can agree. It's a commodity. It's like the most commodity thing in the world is a rectangle moving between two places. You you only have price in transit time and maybe a quality metric reliability from there. You're not gonna make a lot of money doing that. But it is like the bulk of the ben from the customer spending a lot of money on this. They care about it. They're gonna put through a process to get a good price etc the margin it comes from the complex coordination. It comes from the customs clearances. It comes from the insurance wherever you taking risks finances really interesting one just the end to end. Coordination is where the margin's gonna sit in one of these businesses. Lot of information asymmetries in where somebody knows what's going on and you don't is where they're going to make money whereas that it's gonna be emerging markets is going be countries and cultures. Where you don't have the right experience you hire the right team to figure things out. That's what makes it such a fun adventure. As a business building a platform in this area is like we gotta go figure these out and learn these markets and added conversations. Hire the people that know allowed where the money is made and unravel the mystery and defined all the margin. You've mentioned the finance side a few times. What is the most interesting thing you've learned about the finance side of trade it is that under ancient maritime law older than the. Us constitution the freight company. Has i lean in the event of a default if a company goes bankrupt a customer who is shipping freight we as a freight transportation platform as the intermediary. There get paid back. I and that is really fertile ground for building an interesting financing business because the four attributes have a great finance business. It's sort of low cost to capital cheaper customer. Acquisition underwriting advantage through some kind of data or understanding risk and then fourth is collections. as a company. You actually have three of those for you. Don't have a cost of capital advantage. But you do have collections. As i just mentioned yet i lean and possession of the merchandise. So it's not hard to collect given underwriting advantage because we're seeing as a customs brokers. We're seeing the wholesale price of what you're buying this stuff for and you're seeing trends. Is this business growing really fast. They pay their vendors on time. Do they pay their afraid providers on time and the customer acquisition while they're already our customer the way our system works as you place orders to your factory through the system to can think of it like pay later button for global trade. I was really delighted to discover that some of the great finance institutions of the world started freight companies. It's american express was a freight business. Wells fargo was a freight business. Lehman brothers was like a trading freight business. I shouldn't call brothers one of the great financial blow up. I guess when you go into that world and it's a natural right it's like okay. There's money flowing one way and goods flowing the other. So it's sort of a natural fit to be in the flow of those financial transactions and provide working capital for businesses to grow. It sounds like the ocean is just like an interesting place. You mentioned this old maritime law. You mentioned the lack of enforcement of contracts. How should we think about law the ocean at a high level. There's a macro risk. Here is will the united states navy continue to ensure safety of freedom of navigation. It's something that the us said after world war two was like. Hey no more of this nonsense. Anybody can trade with anybody. We're going to provide that global security blanket and allow for this world that we live in. Will the us continue to do that. And i think that's the giant question mark for everybody. We did it originally in the cold war to like make sure everybody was allied with us and the us doesn't need as trade as much as all the rest of the world does. I think it's beneficial for us and zero-sum game so we all win by having that but that's my view it. I'm not sure that it's shared by everybody. Congress or everybody else. The ocean is sort of the wild wild west. You're a no-man's-land. And the regulatory bodies are really inscrutable. To an extent the official regulatory body for the oceans is called the international maritime organization. I m oh and their biggest area right now of emphasis is gonna be well. It's safety so they've done stuff around ensuring safety of sailors and things like this but second is carbon reduction there are some things in the pipeline that they're pushing through. I can't get a straight answer from people like do they really have enforcement or is it just a governments that subscribe but if one government subscribes to their regulations than like sort of everybody needs to comply with their pushing some pretty aggressive timelines through in terms of carbon reduction for the fleets. I look at a guy. I don't realistically. I don't see how they can achieve to reduce that and so that's going to have a big impact of like if it can't actually be done what you do. For example in twenty twenty three every ocean container ship needs to reduce their carbon output by thirteen percent. Not the fleet the ship. And it's just like okay. What did you do the way you do. It is by the way to go slow but if you go slow now you just need more ships. And you haven't reduced the net carbon on a per-share basis you. Have you have more chance. I feel bad to the regulators like i you solve some of these problems. Somebody second order effects. What percent of the original problem. If you were focused on the digitisation of this weird email Paper and pencil very manual process. What percent penetrated are you. How much is there left to do. Just on the digitisation of information flows in freight-forwarding. I think less than halfway. We have a huge runway roadmap for many many years of just persisted. There's no silver bullets or relentless this feature saves fifteen minutes of labor costs for whether it's for our own operators but it's increasingly for third parties like the way our business works is that we have software that over one hundred local forwarders worked operate in one hundred plus countries relentlessly trying to improve their operating costs because that becomes our end cost. We look at the system. Wide labor costs. Not just our own headcount. I think we have a huge amount of runway just from relentless chipping away at things. I try to remind our team like focusing on the cost of labor and on a transaction. It's a bit like when the telegraph was invented. Looking at the labor costs that that resulted from worse back writers for sure you saved a lot of labor. You improve your message transit time. That's not really. What's so special about the telegraph. Even though it's incredibly powerful what happens with the teller ups you get this. Emerging property wants the network. Has everybody connected. All of a sudden you unleash this insane. Amount of potential for new types of messaging experience for what's ultimately what's up. What's happened the beginning when there's only two people on it. I'm saving you money on. Sms costs what everybody's here as signed up. All my friends are there. And i've got friend groups and there's means going around emergent properties. We have not yet unlock those emergent properties but we have signs of them. That are nason and really promising. My belief is that the emergent property that you'll see is much more like a private beat amazon once everybody is here every time we get a. Us company on boarded were on average on morning. Four point four of their overseas suppliers as users. they're exporters it's sort of a manual process. I gotta go one by one and onboard them and teach the onboard their entities in their product libraries and their users and their network locations different warehouses and factories. But that's a one time thing per entity at scale there's a future moment that unlocks when you sign up like. Oh although those guys are here because somebody else on boarded them. We're seeing these industry. Clusters or rehab that density in taiwan for example. We have like all these bicycle manufacturers. We have like everybody and so if you're a bicycle manufacturing sign up reflects what it's like. Oh my factories are already here. And you'll see us industry by industry and like get that geographic clustering in that network effect. And i think that you're going to unlock something really special. There were companies can start trading with each other in a seamless way similar to. What's you start messing with each everybody's here. I didn't have to teach them how to use it. Yeah i love the idea. i guess. Technology generally that as you reduce friction in crete standards non-linear like weird emerging property. Start to happen taking like even one step further than that. Because i'm not quite sure. I follow the potential magic of the sort of direct connection. What's an example of what that might unlock if everyone was on flex board in a perfect state five ten years from now give us a flavor of what that might mean for example. Let's say you're brand. You and i sit together. We're like hey love lululemon yoga pants. But i can make this thing a little bit better for my body type. I don't we we make up a brand right now. The amount of friction. That would go from that idea to getting it manufactured and creating a brand or two incredibly hard problems. I don't think we're gonna solve that. But everything else in between should be automatic and taking that brand global and saying like okay which countries do. I want to be in one click. I'm hooked up to all of the fulfillment centers that are going to be relevant in that market. I'm able to clear customs and get it into the country. I'm able to optimize. Inventory flows. So that when i'm getting an order from a customer flexible automatically places the right amount of orders to your factory to get the right amount of goods in stock and deliver them and i'm to cash out and just focus on making an amazing product super hard at scale and building a brand with customers and having those customer relationships and all this other stuff like bureaucratic shipping departments. And how do i finance added. How do i clear. Compliance like everything should just automatic. And you're able to just take any brand global almost a one click operation. That's the vision that we're building towards. I do think it's like a decade long thing and and one of the jobs that we're doing attorneys like how do we sequence that. It's sort of all encompassing. It's permission to build everything so we need to make sure it's like no this year. We're doing this and we're going to be really good at it next year. We're going to do that and sort of sequence it a little bit better for our teams in for the outside world. Understand the business what we're doing. So maybe even think about it. Like the effect that the internet's had with will call permission less innovation on top in the world. Bits the end just explodes of stuff. That's being tried and experiments new products. Whatever you reduce friction like the end blows up. This might be a part of that happening in a physical world. Yeah and create huge opportunity. One for entrepreneurs might people and it's always been big big part of what we do democratize access to these things and global trade is just like. It's this weird black box and big companies have been the ones that have the resources to understand it and solve it the expertise right instead of participate in it and entrepreneurs have been cut off from that so i think we can really the playing field there which is awesome second. Big companies are getting circles. Run around them. By these direct to consumer ecommerce companies then was all run on flex for all of them will if they knew about us and spend some time to get into what we do. But i don't wanna see these big legacy brands. That are conic fail. The retail apocalypse for me is super sat. And when you see a retailer go under. It's not just the towards the rest failed. Which is that would make. Every all of us have settled because our childhood dream was to get a trip to toys r. us right like what the hell out of business but when twitter is not just them and their employees that suffer and their dusters there's dozens and dozens of brands that just sold thirty percent of their product through that channel. That are also now gonna probably fail because they weren't built for this lean infrastructure econ directors consumer one so building that allowing these companies to thrive. How do you create lots of opportunity for lots of experimental niches products. They try things out. Every there's gonna be a product for everybody were also unique and have our tastes and want to be able to. There's a brand appeals directly to you and that's awesome right in there should be a flourishing of brands and there should be infrastructure to make that super easy so people can experiment. It's a bit like in old days when you're doing tech startup series. A had to raise all this money just for servers. And like if you're doing a hardware product you're raising all this money and hiring all these people just for the infrastructure of shipping stuff and doing purchase order management and optimization hiring. Mba's did you excel models. For how many units should i buy based on my demand forecasts and like a lot of this stuff should happen. You can focus on what matters making an awesome high quality product at scale there should be this infrastructure that's awesome and easy and a bit like a utility when you flip the light switch in your room there. You're actually controlling power plant in real time. There's a power plant getting a little bit hotter just for your light. Switch you just pumping out more luxury for you but when you place an order on an e commerce site. That's not what's happening in real time. All these things happening is like no like someone's modeling and excel file like one more order and then emailing it somewhere else valuebill. That sounds great infrastructure for commerce. A lot of that is obviously software. I think i've seen flex for planes flying early. Lose few of them at love counting at my house like the number of trucks that come that our amazon branded now with their new logistics network. How do you think about capital deployment capital allocation cataracts into some of the physical aspects of this longer term. I hate owning assets and we will not owned assets what we do occasionally do a sign long term leases on assets. And that's done based on looking at our forecasts and knowing what our volumes are and then we'll make a commitment to make sure we get the capacity we need we have to seven forty sevens right now but they're not are seven forty sevens. That are run by major air. Cargo airline what we do is basically signed a three year lease that we commit to flying three flights a week each with those planes. We're willing to make bets where we know. Look i know. I'm gonna feel this and it's a good return on capital but it's not like the return on capital that you get from software. It's much more like hey the only way to get access to the capacity that we need to support our growth is to use the balance sheet. It's not like a high risk endeavor. They're sounds like a well-considered decision to say a bit more about why you hate owning assets like is it just a return on capital story. Talk me through that primarily. It's a return on capital. I mean we look at it but it's not a doug medic thing like as you see it we've made some commitments where it's the right thing to do for the end customer and where it's going to do something dramatically different for the customer experience unlocked growth. Unlock transit time. Another example is today. We run five houses around the world that we have another fifteen that run our software and that's my preferred model to things that we got from running the warehouses ourselves. I was learning. We're in their learning. What's off for these warehouses. Need to run. We don't do stories like freight in consolidating shuffling it and sending it back out. Ideally twenty four hours the infrastructure. It's a really crappy business running a warehouse. I mean it's kinda like you rent a box. You hire some blue collar workers and you try to make a big on the spread their therefore there's this software there's like no investment in it and especially not for what we need which is cross docking. There's a fair amount of software. For pick and pack for e commerce fulfillment. But when you're just running these consolidation network. We didn't see it by run ourselves. We're able to shave three days off transit time on a l l less than container load shipment and again transit time is working capital fight cut three days on a twenty day journey at a pretty material impact on the working capital of our customers and then we built software and now we have third parties running that software. And i'm hoping not to run a lot of warehouses that much rather have anybody can rent a warehouse hire some workers and we give them a playbook software and customers that's my preferred model for interacting with assets like build software for the asset owners. That makes them better at their job. I'm sure that building this business has involved a lot of travel a lot of conversations a lot of different cultures etc. I think you speak like five different languages. one lessons. Have you learned about building a business that requires global coordination. What are the key things that you think other entrepreneurs will encounter and maybe you can save them some time or or make them aware of landmines. Will you just have to go out there and talk to people. You're not smart enough. Speak languages because i have fun in language classes and like messing around with people and not. Because i'm like so smart. I spent a lot of time a lot of hard work on it. But you gotta go out and talk to the customers and vendors and the ecosystem and mt to the real world is not following your logic you get a bunch of super logical genius in a room in a whiteboard and like i promise. You won't figure out how the world works. Because it's not structured that way you'll come at things with these very naive and dogmatic stances that will make you everyone allergic to talking to you in working with you. Because you're you think you're so smart and you have all the api's but like nobody wants to use that. So god to go out there and talk to people i forgot. Okay how does it work. Is it worked. What's your problems really. Ask questions empathetic listener and then come back with solutions. That hopefully solve the most important problems that you discover. I think that's what stood flex for the part that we didn't see ourselves as like this software company. That is just going to build these protocols and everyone's going to follow suit. I think we build it and they will come is not true instead. We saw houses a customer company. We're here to solve customer problems. Let's go whatever. Solution is required. And if that means calling truckers like we've called truckers for a couple years until we built software for the truckers to onboard them and now we have a mobile app. We have four thousand truckers that we can dispatch software. We don't have to talk to them. They're just like they're at the port when the containers arrive but for a while we did it by hand and then we learn what needs to be automated. What how does this process worked in. We got credibility with the truckers once. I'm fifty percent of your business like you probably gonna use the software that i build you. We had to get that credibility we did one point. Three billion in gap revenue last year. We have the credibility with the asset owners. Like oh they want a piece to that even the ocean carriers two years ago like i don't wanna work with these folks now they're like. Oh wow you doubled your revenue year over year. Like i need that. What piece of the dna of your culture. How the business works. Would you most like to export and see other businesses adopt. It's probably that it's that willingness to go out and you can get your hands dirty not be so ivory tower. You've got all the answers. Here more cross multidisciplinary thinking more people from tac willing to go out and do sales and how those customer conversations and those vendor conversations more people from sales learning the technology world. I really think that's where huge amounts of values created when you share ideas between disciplines and learn from each other and like go out and have mental models that are broader than just within your own discipline. That's something we tried to see a big fan of generals at a lot of people that know a little bit about everything. They really underrated in the world. There's too many specialists out there. There's two things you mentioned earlier. That i'd love to get your take on. One is kobe. I guess generally speaking the other is the us navy. Patrolling supply lines in the ocean of peter's hannah as a major concern where the us is in a privileged position because relatively small percentage is important of what matters to us. But if you're much more connected higher import country like this could be a disaster. How do you think about this. Global supply chain issues in light of covid and in light of the policing of the oceans. What's draws the spectrum of what might happen. I love heads. Willingness to make a prediction which all the time on including like super specific link. The price of copiers going up. I promise you need to go back to all these things like. He does which i love. I think what he gets wrong. It's not a zero sum game just because the us does relatively better as the world falls apart but we still go down. That's not a win like it's better to support the system even if it benefits other people more than us that sum game mindset. i disagree with. I wouldn't want to debate him because he's really smart and accent disagree with that premise. From the start of his argument on covert is really interesting. I think global pandemic is going to hit everywhere. Nobody can predict how plays out the second and third order effects are so strong that nobody could have predicted. A bunch of things that happened after covid hit so for example the fact that china is the most resilient and manufacturing is the best in china the place where it started is like who could have predicted that that it would actually benefit chinese production. Where the pandemic i. Nobody said that. In the beginning everyone like china's screwed Zero economists predicted that kovic would lead to a thirty percent increase in us. Import volumes of products are volumes. Mike container will not flex boards. Were doubled over your nationwide the voyager up thirty percent. That's freaking crazy. In hindsight we can find a reason for it. We're all ben. Franklin rational human can find a reason for anything. They wanna do ex post. It's like oh yeah of course if you lock humans in their apartments and they can't go outside and spend money on restaurants and travel and services. They're going to buy more stuff. Because you need your dopamine make sense in hindsight but nobody predicted that imports would surge in the stock market. Go up. that's one conclusion. I think we can draw like hey. Let's stop believing so much in the expert forecasts and then from a supply chain standpoint. I think it will all go back to normal in a year or so like we talked to people who lived through sars in early two thousands in hong kong yet eighteen months of utter panic and people thinking the world is coming to an end and and then after eighteen months. It was like everyone forgot that happening. I kind of think that's what will play out once. Vaccines are ruled out. I'm not downplaying cove at all but like once vaccines are out and i do think life will go back to normal. But there's a long term secular shift here. There's a couple. I i've already mentioned which is supply. Chains are much more granular. You're going to be wanting to ship. Smaller quantities of shifts more downstream locations to get closer sort of like edge cashing in the internet terms like get your products close to the end consumer and then as more products you therefore. You need a lot more data. Those are for sure going to happen. And that's worldwide not just in developed markets. Second is you are recognizing it's not even aside from the pandemic but there's all kinds of disruptions that can happen. There's a black swan everyday in the world of earthquake or natural disaster. Political uncertainty having a single source for any given product is a real risk. That i think is now more front and center for people because of covid where your supply chain shut down for a couple of weeks or months and you couldn't get product that's a longer term trend. It was already happening. Because of labor costs in china going up but you're gonna have more and more diversification on the supply side of where to locate your factories. Some it'll be moving closer. I think latin america will have a lot more production than it has mexico and other central american countries. That are close to the us market but southeast asia's going to be a big beneficiary of trained and that's a longer term trend. I don't think is maybe it's more on people's minds because a kobe but only driven by covid. There was a really interesting story in the early days about you testing demand. I think with like a website. That wasn't yet necessarily tied to the actual service but a great way says like sort of a bat signal to see if something was valuable picky. Tell that story briefly and just talk more. Generally about poking and prodding around potential demand like the idea of geniuses and a whiteboard do not a business make tell that story. I loved it. Well i think there's a myth that entrepreneurs these crazy risk-takers and i'm not i. Embrace uncertainty to agree. That normal people would find really unhealthy. Psychologically but i'm not a risk taker. I think there's a little bit difference. They're like. I don't want to do something and commit unless i'm fairly certain that there will be something good on the other end. Like i'm not gonna go all in on my hunch. Let's put out some experiments and see how the world reacts and then double down the things that are winning a double down again and again. That's my approached entrepreneurship. Let's try a lotta stop. I've tried so many failed businesses that you will never hear about because they were just stupid ideas but some stupid ideas really take off and the world's much more irrational than you think logical thinkers really overrated like you need people are willing to try crazy stop because the logical idea everyone else already thought of. It's already exposed whereas the illogical irrational one a startup customs brokerage this highly regulated. Pretty irrational. so yeah i built a site. I used to be pretty good at like getting sites to rank highly. Go google changes and i haven't stayed up with space but i would get online sign ups. I was getting three hundred companies to sign up for my sight before we had the capabilities to do the job just to see if that company existed. Would people sign up. I got foxconn signing up. Saudi aramco signed up for my company. I do anything i was like. Oh my god. I hadn't heard of saudi aramco to be honest like fifteen years ago. Twelve years ago i didn't know about them and i was like sis sided affect what he's company in the world so they're not customers of ours. We don't ship oil but it was like a sign that wait a minute what i thought i was building. The original idea that had i was testing was like hey for amazon merchants and ebay sellers turbo tax importing. Then i saw these mega corporation sign up. I'm like oh. There's a demand here in the enterprise that i never knew about something we do. Well it's export is. Let's try things. Let's let's have like let at thousand flowers bloom and see which ones are actually going to grow into tall trees and then pour water on those but the hard part is killing the the experiments that aren't working. What have you learned about the two sides of that. 'cause i love the idea in concept to experiment and double down but requires too hard things experimentation and then killing three things killing the ones that don't work and doubling down in terms of process management of letting flowers bloom. What have you learned about doing that effectively. You can develop these ideas from a theoretical standpoint and the theory that you're working off here is darwin's theory of evolution. Sort of diversify selected. An amplify is the algorithm of evolution. And that makes a lot of sense but the select part natural selection meets killing the losers that is not going to happen on its own came out ever met wonderful myopic like i love darwinian theory. Let's apply it in business and we'll get this very creative company if you don't build processes for the kill part and the select part you know. What are we actually going to do. You will end up with everybody. Running every direction in no alignment in your organization. What that looks like is a bureaucracy. Where like nobody can get anything done. And nobody works well together and had to learn that the hard way as we scale that you really as a business if you wanna maintain that creativity you do need to provide a vision. So that people know. Hey we're going in this direction. All the experiments need to aligned with that tourism frameworks for like. What are we going to focus on now provides focus and direction allow experimentation but like create guardrail so that people aren't going off and doing their own crazy things so it's more process than i was comfortable with. In the beginning i always saw processes like the sign of a bureaucratic boring corporation but bureaucracy can either come from to process too many rules and reporting obligations in managers down micromanaging but just as often it comes from a lack of process that leads to nobody can get anything done. It's kind of like some aspects of government. I assume is like it's less. There's too many rules just like nobody knows who's in charge and can't do anything getting that balance. Right is the key. And i do think that that's similar to evolution pleads right at the edge of order and chaos where a lot of creativity happens. You're china like keep your company right on that line. I love the idea of the standardization of the container. The protocol concept idea of lucien. What other models have been valuable to you as you think about building this business that might also be helpful to other entrepreneurs. Good understanding of history's probably one. That super underrated in the technology world. Especially right now like everybody thinks that we're crazy different time and nothing like this has ever happened before these specs and capital markets in l. This is like actually go look at history and this happened every single time there was a new technology invented although like always going back to the canals and then the railroads and then the telegraph and the telephone always happens. I don't want a bobble per se but those increased asset valuation. They can last for like twenty or twenty five years but then there's always a technology that comes along and so how do you reinvent yourself. for example. The railroad's huge bubbles that railroad vessels very very early days made a lot of money and then after that not much there. Railroad guys invented the telegraph. And they didn't think it was useful. They only used it to improve their own operations amazon. Show genius like this because they invented. Aws and then realize like oh it's useful for other people. I don't know if as knew that analogy going into it or not. But i mean i think there's some good mental models from history that are it's not a mathematical model is just like oh patterns that repeat and you should be aware of them and not act like none of this has ever happened before i also think that entrepreneurs underrate capital allocation. And how important it is to not waste money and to really think about what every dollar of cash you have a lot of choices of what to do with it. You can pay your employees more. You can give it to your customers. You can pay your vendors more. You can pay dividend. You can do retained earnings. You can use it for charity. You have lots of options for every dollar and be really conscious about where those dollars should flow. And what's the optimal use that in an and there's ways to align all of those stakeholders on some level or sort of adversaries because they all compete for the dollar. But i think the ticket to get in them. All line is probably in equity and retained earnings like lower. Your salary give you more equity. Use that cash to reinvest in compound generate wealth and i've at least aligned my employees shareholders in his way. What's been the hardest earned lesson. I guess for capital allocation your primary job. I guess person running the business. But i'll just opened up to the whole business. The hardest earned lesson in the flex per journey so far one of my darkest hours actually came from a fundraising challenge. Flex sport has raised a lot of money. And we've always been looked from the outside is like oh we're really fundraising i've actually had failed utterly in fundraising in our series b. Round i had an investor. Tell us that he was gonna invest. An investor shall go nameless in this forum. But tell us he was going to give us a term sheet on monday. It was like a thursday for fifty on five hundred million. Which at the time would have been amazing terms and we were like alice awesome. I should have just said yes. And no doubt like made him give him a document and inside it. I thought i could do better. Maybe i'll get a better terms out there called up the top of the world and was like. Hey i got this offer like we wanna talk was not prepared was not fundraising thinking. I would just charm some people into investing no data room. Nope dak like nothing. I've really figured out what happened. But he never made the term sheet. I think he found out that i was shopping. It and got fended or something so he never showed up now. I'm gonna fundraise without planning to be in one at a pitch a lot of investors as fast as i could and they all passed or gave me offers over way too low at so there's a couple of one. We got bailed out by peter thiel who had done our series a round. He stepped up and gave us better terms than anybody who giving us didn't need to. We could master terms. I would've taken anybody. Give us better terms. So having an investor who believes in you got balaji. Who's like aligned. Spend more time with them. Get to know your investors. Make sure therefore you don't play games with investors like be prepared really good lessons the other. One is look at her intuitive. Is that damore. Investors you invite to a fundraise to a pitch the lower the prices. I think counterintuitive but it makes sense if it was an auction that was free market classical free markets more industrials you'll find an outlier. That's willing to pay more. But that ignores the fact that there are feedback loops in what's called gossip between investors which leads to regression to the mean so the more people you invite the more likely you are to end at an average price instead of an out liar. The best fundraise. I did probably was with softbank where they invested a billion dollars and i only had one investor in that conversation said of trying to run this process and so i learned that lesson the hard way like one of like tree investors really as partners and make sure your values are aligned. And that they're really stoked and emotionally connected to your business and not in some kind of an auction. We don't live in a free market economic growth and believing that you do. It will cost you a lot of pain in a positive sense. What is most exceptional. About peter and masan. I just think that they're radical contrarian takers who don't really care that much people say about them or at least they pretty good at letting on like they don't care they have their own unique views of the world and they're willing to make bold bets on that they got skin in the game they're not just like thinkers who make predictions and then they'll do anything about it which is like there's too many people like that and the world. They're willing to stand up. I don't agree with them on everything. Certainly but i respect the fact that they're willing to put their name out there and take risks under their own name. This impedes case. I think moscow has got the returns over on the long the actually do really well as agent but he won't topped. Irs founders. That look at me. It's just remarkable. I'm privileged to be part of it as we step back and look at this amazing enormous yet. It's still pay of that. You've you've been operating in if you were lifted out a flex port for some reason and you could build flex board. What other part of this ecosystem would you attack. Where do you think of. There's the most opportunity to build great businesses to improve the system. The one that strikes me as a huge potential. We have a good business in this area but has massive potential. It'd be really game. Changing industry at least is cargo insurance. And it's an ancient industry. The romans invented cargo insurance thousands of years ago. Cargo insurance today does not underwrite the risk that they take. What does it insurance company. That doesn't underwrite risk like. Isn't that the point looking at the rest. They don't they don't have time or money is just too expensive to analyze the transactions and look at what's shipping and whereas shipping shipping. What time of year like all these data attributes that are relevant so it costs the same to ensure a shipment of something super breakable as does ensure this steel rods it's just a percentage of the invoice value. Because if you were to take the shipment and look at the documents and analyze by the time you pay the analysts the difference between the two would go away so they just instead. They charge a high price as i think. There's a huge potential there for as we structure all this data and applied machine learning to go like build a smarter model cargo today. We don't today. We just make margin off cargo insurance and add it to the products and we use an underwriter and they take the risk. But i think in the future as we build more data sets here. You're going to be able to do really interesting stuff. In what looks like a very broken english and then prototype that. So here's an. Api we can provide cargo and shipping. The thing is as you give us these data attributes and we can underwrite the risk and provide you a good rate going back to where we started with this idea of the visa or mastercard protocol concept that you're creating this set of standards that allow for less friction in a system if other entrepreneurs to tackle a protocol like problem by which i mean create those standards and then proliferate them through the system. What have you learned there about. What's important for standard creation itself. What makes for a good standard for standards. You got to get people to use it and so it's really a hard problem like a cold star. Get a network lit up. I mean i think. The people doing crypto right. Now are the ones trying to figure out how to do this. Can you create a network that rewards the early participants in rewards by reality. That's not a pyramid scheme in some way. Like how do you build that network. Our approach is quite different which was go a business in the business and get big almost fifteen billion dollars worth of merchandise that we ship last year as a one billion gap revenue for the business. Now you're in a position to start throwing your weight around a little bit and maybe influence the standards even there. I'm like i don't know if people will adopt one of the sanders. We'd like to create is for ports for airports. There codes the three digit codes. Every airport has a code imports. There's no codes the shanghai port. Actually there's two ports in their three hours drive away from each other. They're both called shanghai port and there's no there's no term universally agreed upon against international maritime organization the un or some regulatory bodies should create that. I don't want sit around waiting for them. And like maybe we could create that standard and get everyone to agree to it so that would be like the lowest hanging fruit. I mean kind of a big difference. If you go to the wrong court now you have to drive. Three hours sucks for the truck driver. Was that space. I really would love to create a standard. But i'm not claiming i know how to do it. How do i get really diverse set of stakeholders with different interests to agree on something. That's just like obviously we should all just agree on the language for this. I'm not trying to make money off the standard of just like avoid stupid mistakes so it might even be thinking about it a little bit wrong that like standard standardization is about designing some elegant thing. Just like the shipping container not perfectly designed. It's more just getting people to agree that that is the thing. That's more a marketing problem. That's the key in all these international standards setting bodies. My friend chairs the commission setting standards for hydropower and so he spends all of his time flying around the world that we did pre covid going to meetings trying to get everyone to agree. I was like oh my god. it's so bureaucratic. Would it be better if some big company to said like we're awesome like us our standard. It's right and people will be like. Yeah look at it. it's right. I'll use it and i i'm more of a free markets guy than a government committee because i've seen what happened with shipping container. What have we not talked about that. You care a lot about in the world or are spent a lot of your time learning about. I think there's a huge opportunity for these systems to be used for ways. That are not obvious to help. The world in disaster relief humanitarian logistics even nonprofit organizations that decent pretty interesting work some of waste a lot of money but some of them do really good work. They get treated by the current. These old companies called freight forwarders. They get treated as like a prophets one because they're rookies and they don't know what they're doing easy way to take advantage of make extra money to. They're trying too hard things in life. You make money doing things not easy. Thanks and they're trying to ship things into a crisis zone into a disaster. Just hit a war going on. That's a really interesting. Here's people that are doing super important. Work for humanity getting ripped off like worse than the rest of us which are already getting ripped off adding. that's a really interesting fertile ground for innovation and we have a group called flex dot org that was actually born out of the syrian refugee crisis. When i was reading new york times article about this. And i was like man. This is fucked up like couldn't we send some merchandise to help these people in need like they're living in refugee camps. Their homes have been bombed out. Like what can we do here. And i just naively was like we have an agent network so we had these companies all over the world that run our software. Wait a company in syria in aleppo and i just emailed it local agent there that represented flexible even though we'd never shipped anything connected with them and i said hey. We want a shipping container to this refugee camp in aleppo. I forget where it was exactly. And he's do you have the destination address and he didn't ask. Are you sure there's a war going on. I was like oh we didn't have doing that. Because there's all kinds of considerations like is it really go to the rebels or the al-qaeda we didn't end up doing it. We shipped to refugee camps in turkey and jordan instead but it was like this eye opening thing like oh you could just do something. You don't have to sit around waiting for governments to solve these problems and the fact that he wrote back like what's the destination address blew my mind and actually was frustrating. Flex dot org is like. Oh we have these capabilities. We can do things that are kind of superpowers. I think a lotta companies. Probably have that if they go look and you'll find that it's good for business as well which you shouldn't apologize for because it'll make you want to do more of it. What have you learned about creating synchronicity inside your business. So that everyone understands what the priorities are and the complex web. You're managing release the next and final question which is like if you think about flex for ten or fifteen years from now and continue to be successful marching towards that vision. How do you balance that. Like create near-term synchronous. So people know what to do but also oriented towards something interesting and exciting. I am learning so fast and furiously about this. Because i think it's one of the most important challenges that faces company. I gotta get product and once you do. You really need to figure out what's the balance between short and long term thinking. Somebody's will really good at this zealand. Musk where he calls his shot and says we're going to mars and this year. We're going to do this next year that next year. That in like eventually we're going to go into the galaxy and explodes like that's long-term thinking but with like really good sequencing our version of that we're going to build that network described. We're any company can sell anything. Any human in any anywhere in. The world has all connects together all the logistics and trade service providers or here financial capital markets are all connected in anybody can go over there. Okay what's the sequence this year. We're going to automate ocean by ninety percent yesterday. We launched our order management products that you can place orders to any factory through the system and so it all has to tie that state. I sort of synthesize this from a process. Amazon calls up one opie to planning one and two they do it twice a year where they have teams right down what they're gonna do for the next. Actually they do like a five year plan but then updated every six months and we kind of combine that with the salesforce calls it v. to mom and that's their planning process and we synthesize those added a bunch of dna and we call it charters. Every team reds their charter. It's probably a little bit too heavyweight today still but it's designed to get every single team to like document. Here's what we're going to do how it aligns to the company vision and mission. Here's the other teams that we depend on your the risks that we think we're gonna face. Here's the talent that we're going to need along the way and then get everybody now. There's one hundred and three those and they're publish. Everybody can read them and now you can see what everyone's working on. There's a lot of value in that. Also because i think in companies. Everybody believes that their team is the only team. That's working really hard when you look and go. Oh crap like everybody's working hard. I think that gets a morale-boosting everybody gets inspired to go perform and support the team. It's an evolving process. We got a little bit better this year than last i think amazon is really well. We're not at their level but we want to keep iterating on that process. What are you most excited about for. The future just open ended question. Well i mean. I think that i want to live in a world where everybody has access to opportunity in texas. We can just live forever and be healthy and some of this amazing stuff. Gino mixing stuff. That i don't understand like thank goodness for all those people. I hate that. I'm getting older. And more wrinkled every year. Well look at old photos of the families of. I'm like so. I know i don't know anything about that. The healthcare is the most important aspect of the frontiers that i wanna see pushed. I think it was that cantor that introduced us another person building a fascinating protocol business. And ever since. I've just really enjoyed learning about flex port and learning from you. I so appreciate your time today. I the same closing question for everybody which is to ask. What is the kind of thing that anyone's ever done for you. Obviously my kind of thing for me is my mother. Took care of the new infant and seeing how much work goes into keeping this baby alive and remembering that happened to me too. And i'm so blessed honestly it's a good way good lens to look around the world and you see people struggling out there in the world remember that. Wow there was a moment when they were a little baby and they wouldn't be here if someone hadn't really cared for them. And i think it's a good moment to have some empathy and recognize. The human struggle is real so awesome ryan. Thanks so much for your time. Today had a blast. Okay thank you to find. 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