This episode features Ryan Petersen, the founder of Flexport, discussing his journey from bootstrapping a small business to building a multi-billion dollar logistics company. Petersen shares insights on the “paradox of wealth,” the value of unconventional business strategies, and the lessons he learned from his mentorship with Charlie Munger.
Topics: Entrepreneurship, Logistics, Business Strategy, Wealth, Mentorship, Supply Chain, Startups
Introduction [00:00]
Sam Parr: All right, today we’re talking to Ryan Petersen. Ryan’s an interesting guy because he started out working in a pizza shop, bootstrapping his own company to millions of dollars, and now he runs Flexport, which is a multi-billion dollar company. So he’s kind of done both sides: the big Silicon Valley game as well as the bootstrap, make something out of nothing, form of entrepreneurship. And we talk about three things: the one big lesson he learned when he became friends with Charlie Munger, what Charlie Munger really taught him. Number two is a masterclass in negotiation. So things that he learned about negotiation back when he was in business school that still help him today. And the paradox of wealth. So why chasing money, while money is great and you want to make money, and he says money is great too, but how instead of chasing money directly, you should do something else instead. He calls this the paradox of wealth. So enjoy this episode with Ryan Petersen.
Silicon Valley Success and Early Hustles [00:52]
Sam Parr: Okay, today you have the Silicon Valley success story. So you’ve got Flexport, this like behemoth of a company, multi-billion dollar company, went through YC. You did the Silicon Valley, you won the Silicon Valley game, which is great. And I live in Silicon Valley, I like, you know, I’m I spent 10 years trying to win that game. The other side of it though that’s I think a lot more relatable is you were, you know, working at Domino’s Pizza as a teen, you flipped scooters from, you know, on eBay, you then built ImportGenius, which is a bootstrap company that I think had kind of like real EBITDA. Like I think you were making millions in EBITDA along the way, right?
Ryan Petersen: No, I still am, still am. It’s still a good business.
Sam Parr: Exactly. So you’ve done both, right? You’ve done the bootstrapper game, you’ve done the flipper game, and then now you’ve done the, the big, you know, Silicon Valley disruptive disruptive game. And so I think that’s cool that you did them and not just that you did all those things, but one sort of led to the other. Is that right? Like the scooters led to ImportGenius, which led to ultimately Flexport?
Ryan Petersen: Yeah, I think they’re definitely drawing the lines backwards, you can make that pattern really easily that, um, really the scooters, I was working for my older brother and it and his business partner, Michael Kanko, and we had a lot of frustration with freight forwarders and customs brokers, and we had a lot of frustration with finding good factories. Those were kind of the two big problems that we saw.
The Origin of ImportGenius [02:08]
Ryan Petersen: I have this e-com business that, um, has over I started it kind of right before, right during COVID, basically, we launched right after COVID, and we’ve now done over, I don’t know, 50 million in revenue. But I would not have found my factory had I not used ImportGenius. And I I remember I was like, I’m kind of like a shortcut taker in general. So I was like, okay, I either I can go on Alibaba and I can try every single supplier on here, try to find a good one, or I could go to whoever I think has the best quality and just try to reverse engineer who is their factory, who is their supplier. And uh, actually, I remember like buying the $99 or $199, I don’t remember what it was, like ImportGenius subscription. And then actually there was somebody on your chat team that did the search for me because it wasn’t showing up initially, and they went back like further in the records, 12 months, 15 months ago, and they found one manifest. And so if people don’t know how this works, what you guys did was basically you took public data about the shipping manifests, and then you organized and structured it so you could see for any business, who’s their supplier, and for any supplier, who are all the businesses they work with. Is that right? Is that the right way to describing it?
Ryan Petersen: Yeah, that’s what ImportGenius does. It’s still it’s still we haven’t raised prices much either. It’s still about the same as you said, 99 or 199. We want to raise it a tiny bit, but um, importgenius.com is the business that I started. And you know, you funny you mentioned Alibaba because that’s I started that business out of frustration. I was living in China for a while and I would use Alibaba to find a factory. I would show up at the factory and they weren’t expecting people to just show up. And it would be like fake factory, like it was just a middleman, like [inaudible] you know, or like one time they I did give them a couple of advanced days, but I showed up and they were like very clearly like faking it. Like this was not what you guys in a warehouse with no equipment or anything. So yeah, it was frustration for that. I think ImportGenius kind of like the organic search results, like Google, you know, if it was all AdWords, you that’s kind of like what Alibaba is, like people paying for placement, etc. Um, alibaba.com is of course the original business was B2B searching for factories, but that that’s not what drives their market cap. Their market cap is driven by Taobao and Alipay and all these other products. Right. But yeah, the original business is like finding factories. I think ImportGenius is a much better way to do that.
The Paradox of Wealth [04:23]
Ryan Petersen: I do think that my brain is around seeing problems that somehow other people just kind of take for granted and they’re blind to in some way that they just sort of accept it as, oh, that’s just reality. And then actually getting really curious about it and looking at what could you do to solve it. And that’s where ImportGenius came from, that’s where Flexport came from, and that’s sort of that same problem. It’s annoying, I’m kind of annoying in that way, like when I go to a restaurant, I’m like doing bottleneck analysis on the cashier, like, what would I do to like, you know, get this get the traffic flowing faster through this place. But, um, yeah, I can’t help it.
Charlie Munger’s Wisdom [05:08]
Sam Parr: Paul has a good quote about you. I found in my research. This is a this is the make you blush section. All right, so it says, Paul Graham, founder of Y Combinator, says, “Ryan is what I call an armor-piercing shell, a founder who keeps going through obstacles that would make other people give up.” A, do you think it’s true? And B, why do you think Paul thinks that about you?
Ryan Petersen: I don’t know if it’s true. We work we I do work really hard and don’t give up easily. Um, Paul and I have had a great relationship for a long time. He’s seen me since the very early days. I met Paul when I was before I even I’d started Flexport but barely. My brother did Y Combinator the year before me. We were renting a house. Actually, it used to be Max Levchin’s house because we used to get his mail. I don’t know how long before it must have been a long time before because it wasn’t a very nice it was like a little apartment. Pre-paid house. It was like before he got rich. But uh, we were renting this apartment and it was near a dog. It was there a park where Paul would take his kid, George, who’s now older, but when he was and we would uh, we would take my dog there to play. So we would just like run into Paul and my brother was in YC at the time, so we got this striking up conversation. So Paul’s seen me since like Flexport was just an idea basically. He’s been a great advisor for us, said nice things to a lot of people.
The “Armor-Piercing Shell” Mentality [06:23]
Sam Parr: What uh, what did Paul help you with? Because I’ve asked people this a couple times and I feel like everybody’s got a great Paul Graham story of like there was a, you know, these there’s these like crucible moments in every startup or there’s these moments of uncertainty and Paul either brings either a certain level of confidence or clarity or a question or a bit of advice that was was helpful early on. Do you do you feel like there was one of those for you?
Ryan Petersen: I think Paul’s got his superpower is like not he only sees what’s possible and like how valuable or big could this thing be if everything works and he ignores every other outcome that’s possible. And that is that is probably the right way to do seed investing, you know, in the power law world to find like the Right. And so he always saw, if Flexport really worked, the outcome is so outsized and enormous given the industry size and their and importance. Then then and then he could help us sell that story to other investors, to candidates. He would send emails early days to like top engineers saying, really great things about us. Quotes like the one you mentioned to different press and stuff like that.
The “Slap Blindness” Concept [07:28]
Sam Parr: He’s also been a really big supporter of flexport.org, which is our um humanitarian relief logistics division that that helps nonprofits doing refugee camp logistics or other sorts of disaster recovery logistics. He’s been he’s donated millions of dollars to us there and helped us get the word out about all that stuff. So he’s yeah, a huge supporter of Flexport.
Sam Parr: That’s amazing. Yeah, I always think about like the the first believer. I think everybody has this person who uh believes in you more than you believe in yourself for a period of time and it’s sort of like a it’s like a short loan. It’s like a short-term loan that you can get of of conviction and um it’s very helpful to an entrepreneur and it’s actually very helpful to be that person, especially once you have a little bit of success as an entrepreneur, you now can lend a little bit of conviction to other people you believe in when they when they don’t really have it.
Ryan Petersen: Yeah, I mean Paul’s job is hard. Well, he’s he’s retired now, but the job of being a YC partner or leader of YC is just super hard. There’s a lot a lot most of those people are going to fail, so you have to kind of dilute dilute yourself. Uh, if you really want to say only focus on what could happen, well, that’s probably not what’s going to happen in most of the cases, but uh, that’s a very hard psychologically, I’m sure.
The “Can You Just Do Things” Philosophy [08:37]
Sam Parr: You have another one of the life philosophies that was simple and had no extra words. So I want kind of want you to hear I kind of want to hear your explanation of it. You said, “You can just do things.” What what does that motto do for you?
Ryan Petersen: Oh, I I don’t know. I think there’s this idea that you need somebody’s permission to I mean, if you should have it’s a why by the way, the uh a law class is useful for people if you’re in undergrad, take try to get like into a basic class. A law class? Yeah, law. Like don’t break the law, but you should have an understanding what’s legal and what’s not. ChatGPT is pretty amazing for this. But in general, like it’s not illegal, you can just do it. Uh, and there’s a lot of things that people are expecting, you know, we come up through this like education system where it’s everything’s gated and you can’t get to the 12th grade math until you finish 11th grade math or whatever, and you don’t get to go to college unless you get these grades. It’s not so within the institutions of the world like, yeah, there’s you can’t just do things. You have to follow the rules. But like in the real world, that’s not how it works. Like there’s no boss like waiting to tell you what you can do. A lot of people are believe that they have to raise venture capital to start a company, for example. And like, well, maybe you should think of a different idea that doesn’t need any money and just do it. And that’s what we did and we raised VC after 10 years of doing companies without. Right. Yeah, you don’t need to have like the victim mindset. You have um you the on the YC application, there’s this question about like what I mean the YC application is not long either. So if the question’s on there, it must have some value. There’s only like seven questions on the on the whole application. And it was uh it’s it’s what’s an example of a real world system that you’ve hacked, meaning like a kind of like this, like you could just do things or not following the crowd, finding the side door into something. I asked a friend my friend Sheel, who I think invested in Flexport early on, I go, “Hey, I got Ryan on the podcast today. What’s a good Ryan story from early days?” He goes, “Oh, there’s a bunch.” He he gave me one. He goes, “He bought AdWords for the keyword um Uber promo and just put his own promo code there and just got a bunch of cheap Uber rides for himself that way.” Is that true? Did you do that?
Ryan Petersen: I got I I became Uber’s best customer lifetime probably because I did I got like $10,000 in Uber credits by doing that. And then I treated Uber like it was free because it was free for me for a while. And I probably netted out netted out to spending like I bet you that, you know, I I spent way too much on Uber. The hustle was worth it. As a result. Um, yeah, that was a good hack. I didn’t come up with that. I copied it from a friend, but uh, You know, what’s funny is I had two friends that did that and I never it never occurred to me to also to do that. Right? Like, I just assumed it was done because other people had done it and uh, I think they kind of shut it down. I’m not sure I’m not sure it was even bad. Like I think I paid for Google’s AdWords campaign for or Uber’s AdWords campaign for them, so. We had this dude call into the podcast once and he’s a guy in India and what he was doing was he realized there’s an arbitrage where Uber had this like credit like kind of um you give credits to somebody and then you’ll get credits, right? That was the the the kind of like the PayPal give 10 get 10 type of model. But what they didn’t do was they didn’t account for geographic differences at the time. So he would just get a bunch of people in India to sign up, he’d give them, you know, $10 of Uber credits, which is like a big deal. And they would sign up and they would take a ride and then a ride in India is really cheap and he would get $10 of credits and he would sell it to Americans. And so I bought thousands of dollars of credits off this guy and I rode really, really cheap because you could buy like five grand of credits for like $1,000. Because this guy was farming them in India basically. And this worked for years and he called into the podcast and he was like, literally in like a small apartment in rural India and he was like, it’s a he’s like, I make, you know, like, I forgot what it was, like $15,000 a month, which is more than like my entire village makes basically doing this. He goes, I don’t know how long it’ll last. That’s why I’m still living here. I’m just saving it up for now. But eventually they’ll close this loophole and when they do, you know, that’ll be a sad day. But uh, it was amazing to see that that loophole, that hack. Yeah, I I definitely uh spent through the credits pretty quick and then just became Uber’s biggest customer for a long time. Now, now I mostly ride my bike and I stopped riding Uber to work. One thing I find fascinating is you have a side hustle. And I I find this interesting when entrepreneurs have these like side things that just work right off the bat. You did this one about phone booths, like phone booths in companies. Could you just quickly tell this story because I think it’s kind of inspiring.
Ryan Petersen: Yeah, well, unfortunately, it closed down. Uh, they sold the company and I didn’t make any money. Uh, I think it was kind of mismanaged to be honest. Uh, but we we basically it started at Flexport. Um, we never had enough conference rooms or uh, and so I made a I got these carpenters on Craigslist to make a couple of phone booths out of just like wood, built a phone booth in our office at Flexport and put like a lot of foam padding in there to make it somewhat soundproof. And they were terrible. The ones that I made myself on Craigslist, because I didn’t put uh, we put a fan, but not enough ventilation, so you’d come out of this thing just dripping in sweat. And yet people were in there non-stop using it. I was like, if the product’s this bad and yet everybody wants to use it, there’s like something here. Yeah. So my friend Henrik, um, who’s the founder of AirHelp, really ran with this idea. I get, should give him all the credit. He built it into a company. Uh, I kept talking about it. This is another thing to do is like, talk about your business ideas at parties and stuff. And if everybody want I every time I talked about this idea with founders, they’d be like, I want to buy five of them. And they were like, oh man, I should just start this company. I’ve got like a waiting list to buy this stuff. Um, so we made like these really nice Swedish design. And now that the company’s failed or been sold, I can tell you the IP, the secret here. The the intellectual property was we didn’t, we put three fans in that thing. That’s the genius. The genius hack. So it was doing like $50 million in sales. 50? Yeah. We’re selling thousands of them and somehow we couldn’t make money. I was very frustrated. We hired a CEO. Just the unit economics wrong or the overhead was the problem? No, we had too many people on the team, spending money on BS. I’m not sure I’m not sure what happened. I’m I’m a little pissed about it because it was like, dude, you’re selling $50 million in the phone booths, you should make $10 million in profit at least. Like, there’s a high margin. All right, somebody should reboot this idea and just do it. Do it without the mismanagement. I I believe so. Uh, now it might have become very competitive space. Like there’s a lot of people at the time there was no good cheap phone booth out there. Trying to make like I think we sold them for like three grand. But you can make a phone booth for a thousand bucks, like come on, it’s not that hard. So, yeah, I think I think in the uh, you can just do things category, I’m going to put this in there. I think somebody could just do this again. This is where I’m going to put this in there. Yeah, feel free to run with that one because that company didn’t work, they sold to somebody, but I think the founder had ambition to be like billion dollar unicorn company instead of like, you know, let’s let’s sell this thing to Staples for $50 million and like be happy. Right. Exactly. Ryan, thanks for coming on, man. This is this has been fun. I’m a user of Flexport. I use it for my e-com biz. You’ve you’ve helped me forward a bunch of freight. I I here’s how I know you’ve helped me. I still don’t know what freight forwarding really is and we’ve done, you know, tens of millions of you know, a year in revenue and that’s the beauty of it. I don’t have to know. I just know that our shit gets taken care of. It’s a low price, it’s the easiest to use tool. So thank you for for making that happen. Uh, thank you for ImportGenius also because I would have never found my supplier had I not used that. Where should people follow you uh and and find out more? I’m on Twitter, my uh handle on x.com/typesfast is my handle. Uh and go to flexport.com if you’re a e-com business or you run any kind of logistics, you need to ship things from anywhere to anywhere. We we started in freight forwarding, which is well, I joke it should be called freight email forwarding, Sean. Like you’re passing emails around the world to get a container or some air freight moved. Uh but last year we acquired Shopify Logistics and now we do direct to consumer fulfillment all the way to the door as well as like distribution into Amazon FBA, handling that problem of like getting appointments and managing all of that. So, um, helping brands solve problems in their supply chain is what we’re all about. There we go. By the way, your at your handle is typesfast and I love it. Your brother’s is typesfaster. Ultimate big brother move uh for him to do that. Well, it’s true. He does type faster than me, so I can’t argue with that. All right, Ryan, thanks so much, man. Thank you.