The Rise of Ryan Petersen
How Flexport's Founder Built an $8B Industry Disruptor
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For the last decade, Ryan Petersen has been working on modernizing a massive, yet archaic, industry.
His company, Flexport, was last valued at $8B and competes in the multi-trillion dollar global logistics industry with companies that have been around since the 1800s.
And, as you’ll soon read about, Ryan has chosen his own path to success.
Sure, like many other founders he went after solving a personal pain point, but unlike many others, he decided to do it in an industry that accounts for more than 10% of the entire world’s gross domestic product.
His ambition, while in a different industry, is reminiscent of the unrelenting ambition of Sam Altman I previously wrote about. And, like Sam, he’s a prolific angel investor.
Along the way in Ryan’s journey, Flexport has grown into one of the world’s most influential companies, not just in their core business, which did $3.3B in revenue in 2021 and was projected to do $5B in 2022, but with their impact arm, Flexport.org, which I’ll also dive into a bit in this piece.
Ryan has quite the story.
Let’s get to it.
Growing up in Bethesda, Maryland, Ryan was put in what I would say is the perfect environment to become an entrepreneur - being surrounded by other entrepreneurs.
His mom, as Ryan would describe in an interview with Garry Tan, is one of the world’s leading experts on food safety and had employed around 100 PHds when he was in high school.
His dad was a computer programmer who taught Ryan to write code.
And his brother, David?
An entrepreneur as well.
Ryan would join David after graduating from Berkeley in 2002 to work with him on his business buying motorbikes from China and reselling them online.
In 2005, Ryan moved to China for two years to source products.
This experience would be invaluable.
In 2007, while getting his MBA at Columbia Business School and working intently on paying off student loans, Ryan had a business idea take off:
I scored in the 99th percentile on the GMAT, the business school entrance exam, which qualified me for a lucrative part-time job making $100 per hour teaching others to ace the test. In running my previous e-commerce business, I had learned a lot about search engine optimization, online marketing, and web development. I was able to find two clients for SEO consulting to bring in even more flexible hourly income.
At the time I graduated, Columbia was investing heavily in CaseWorks. I managed to land a contract for $40 per hour to write a case about a Nigerian company called Computer Warehouse Group. With three different sources of flexible hourly work lined up, my financial position was reasonably secure. I was now free to run a bunch of startup experiments. And instead of running against the clock, hoping I could attract venture capital for an idea before I went broke, I now had time on my side.
Fortunately, one of my ideas hit almost before I graduated: ImportGenius, a search engine for international shipping manifest data, blew up when we detected the iPhone 3G in our data before Steve Jobs announced it. The company would go on to generate tens of millions of dollars in revenue and employ more than 50 people around the world during my seven years at the helm.
There are two important pieces to highlight from this particular time in Ryan’s life.
First, Ryan started ImportGenius with his brother and their friend Michael Kanko without raising any venture capital and it would eventually grow into one of the largest providers of data to the import/export industry.
Second, the year before business school, Ryan only made $17,000.
I bring those two things up because at that time, Ryan didn’t really know what venture capital even was, he simply focused on building a business that would solve a problem. He also is a strong believer in paying off student debt as fast as possible so you have flexibility as an entrepreneur, hence the three jobs during his MBA.
Post-business school, Ryan continued to work on ImportGenius, and he offered up an insightful comment on the time in this interview with Y Combinator:
I don’t know timeframes. Even Flexport, I don’t know what timeframe we’ll be successful, but I know that if we stay in the fight, we’ll win. You just want to make sure you set yourself up in a way that you can’t lose because you’re in the fight in perpetuity. And you’ll just keep finding new hacks. I didn’t know what business I’d make successful, but I knew that I would do it. As long as I could make those debt payments, make my rent, and afford some food, then I’d buy myself an indefinite period of time to experiment.
Stay in the fight.
Preach, my guy.
And yes, ImportGenius would go on to do tens of millions of dollars of revenue, but it also led to the behemoth of a company he’s running today.
Ryan started and ran businesses for 12 years before raising any venture capital.
In 2014 that would all change.
After following his brother, David, to Y Combinator in 2013 for his company, BuildZoom, Ryan decided to apply to the famed startup accelerator as well for the winter 2014 batch.
He got in.
And remember how he had previously been running ImportGenius for a number of years prior?
Well, the revenue from that company allowed him to hire 3 engineers to start building Flexport prior to YC.
In fact, Ryan actually had the idea for Flexport as early as 2008 and started the company in 2010, waiting for the necessary license approvals needed to transport goods across the U.S. border, which took until March 2013.
As part of the W14 batch, Ryan also joined the subject of my last feature and another stellar founder, Ooshma Garg, founder of Gobble!
Thanks to @harris, @typesfast and @bizradio111 for a great segment abt @gobbleinc and @flexport today :) http://t.co/u1Vr6ji1iW
— Ooshma Garg (@ooshma)
Aug 5, 2015
After going through YC, Ryan raised a seed round for Flexport that included Reddit’s co-founder Alexis Ohanian who was working at YC at the time, YC’s current President and CEO Garry Tan, and a number of other top investors.
He had the funding and support he needed, so what came next?
Acquiring Early Customers
Going through YC in 2014, Flexport wasn’t yet making money, but they already had demand.
Years prior to launching Flexport, Ryan created a landing page to test the idea, something he often did for different business ideas, calling it his form of entertainment.
And what happened?
He got Foxconn (Apple’s biggest iPhone maker), Cargill (One of the largest companies in the world, and Saudi Aramco (Also one of the largest companies in the world) to sign up.
Clearly, there was a need for what Ryan would offer.
Also, getting a company to enter their email on a landing page is much different from having them become paying customers.
So how exactly did Ryan build trust with customers in the early days?
In an interview with YC, Ryan mentioned how a key to acquiring early customers was having an entrepreneurial sales process.
Instead of trying to get to a “no” as fast as possible as with a regular sales process, with entrepreneurial sales, they were trying to get to a “yes, if” as fast as they could.
In other words, they were figuring out what was most important to customers, then they’d build the product based on which ideas from those insights had longer-term potential.
Sure, most of the ideas they got from customers didn’t make sense for them to develop, but a small percentage did.
They got in front of these customers with Google Adwords and SEO and, after going through their sales process, companies paid them for every transaction.
In an interview with Jason Calacanis, Ryan described just how many transactions are part of the shipping process and it includes everything from the purchase order to moving freight to coming into and leaving a country. It also includes shipping insurance and even trade financing, something they’d eventually add.
They’d end up doing $2M in revenue in 2014.
With that progress, they were on to their next round of funding.
In August 2015, Ryan raised a $20M Series A led by Peter Thiel at Founders Fund and including other investors such as Google Ventures, Bloomberg Beta, Susa Ventures, First Round Capital, and Felicis Ventures.
At the time, they were already working with some of the world’s fastest-growing brands in multiple industries.
Here’s how they described what they were offering customers:
Flexport is a global freight forwarder and an enterprise software company. Each of our clients gets a dedicated team of logistics managers that works tirelessly to move their products, while keeping their Flexport account up to date with accurate data. Companies use our powerful online dashboard for a variety of logistics services – including freight quoting, booking, real-time shipment tracking, customs compliance, cargo insurance, supply chain visualization, analytics, and scenario planning.
All of our services are backed by an in-house team of fully-licensed Customs brokers and trade compliance experts who help our clients comply with both the letter and spirit of all relevant trade laws.
This was the start of a phenomenal growth streak for Flexport, as they would go on to grow 15,911 percent from 2015-2018.
By June of 2016, they’d have more than 700 customers and be moving freight to and from 64 countries.
And then, in September of the same year, they announced a $65M Series B, valuing the company at more than $300M.
They’d open offices in Amsterdam, New York, and Hong Kong to continue their growth.
A Pivotal Year
2017 was a notable year for Ryan and Flexport for a variety of reasons.
In October they announced a $110M Series C, valuing the company at $910M and allowing Ryan to double down on a strategy that was working.
The company had grown to more than 500 employees in nine offices around the world and came off of a 3.7x growth in revenue in the previous year, doing more than $220M in revenue in 2017.
They’re shipping about 7,000 containers per month for customers at this time and taking a 15% cut of the average $2,000 cost for doing so.
A TechCrunch article outlined the advantage Flexport had at this time over its competitors:
Tracking everything with paper leads its older competitors to see clients individually. Flexport wholistically analyzes all its data to optimize shipping routes and simplify relationships with ports, truck drivers and anyone else that touches a container. That’s allowed it to shave off five days of travel time for moving less than a container full of goods.
Now it’s opening its own “cross docks” — warehouses where it can temporarily store clients’ goods until it can batch their transport with other shipments going to the same place. That way it’s always moving full containers with maximum efficiency. Flexport already has cross docks in Hong Kong and LA, but Petersen foresees having a global network.
In 2017 they also launched their impact arm, Flexport.org, something Ryan is incredibly proud of, and that was started in response to the middle east crisis.
I’ll tell you about its impact shortly.
Finally, Flexport started Flexport Capital as a sort of “buy now, pay later button for global trade” as Ryan describes it.
Flexport Capital would end up growing 10x in 2021 and in 2022 they’d raise a $200M credit facility specifically for this.
As big of a year as 2017 was for Ryan and Flexport, we’re going to fast-forward to 2019, when they land an investment that changes the game completely.
BIG Money & Beyond
It’s January 2019.
Ryan meets with Masayoshi (Masa) Son, CEO of Softbank, the biggest player in the venture capital industry with a fund of more than $100B.
After a 45-minute meeting, Masa agrees to invest.
By the time this round of funding was closed, it would indeed be a $1B total investment and value Flexport at $3.2B.
But it came with pushback from investors, who wanted Ryan to target closer to $250M with this raise and were concerned with dilution.
Ryan wasn’t phased:
We sold I think it was like 30% of the business. Which is pretty crazy for a Series D to sell 30% is a lot of dilution. But I don’t care about dilution. I care about price per share. The number of shares that I own and everybody else owns did not go down. You own the same number of shares. So what you care about is price per share and control of the business. And so as long as I have control of the business and price per share goes up, everybody is winning. And we got more cash to go and invest in the business. On a percentage basis I didn’t really care about diliution. I care about do I have enough money to go win.
However, the massive round of funding did change how Flexport operated:
We raised a $1B Series D round and immediately lost discipline, started overspending, everybody could hire as many people as they wanted, didn’t have budgetary control, our burn went crazy and we then spent another two years paying the consequences of needing to tighten belts, having hiring freezes… it’s a really bad instinct, but I don’t know how to overcome it.”
Ryan would at least in part figure it out and Flexport’s revenue would continue to grow:
2019 - $670M
2020 - $1.3B
2021 - $3.3B
Then, in 2022, the year they’re the number one company on CNBC’s Disrupter 50 List, they project to do $5B in revenue, and Ryan raises $935M to value the company at $8B.
He also decides to bring in a new, incredibly experienced, CEO, charting a new chapter for Flexport:
Dave Clark (@davehclark) officially starts on Sep 1, 2022 to become the CEO of Flexport and a member of our board. We will be Co-CEOs for six months after he joins. I'll then step into an Executive Chairman role and Dave will continue to be Flexport’s CEO.
— Ryan Petersen (@typesfast)
Jun 8, 2022
As Ryan mentions in the Twitter thread, the opportunity ahead for Flexport is enormous, and his only fear is not taking full advantage of it.
On March 1, Dave Clark officially took the sole role of CEO. We’ll see where they go from here!
Just like I did with my newsletter on Melanie Perkins, the founder of Canva, I wanted to highlight some of the amazing work Flexport has done on the humanitarian front, through Flexport.org.
This work was a big reason I wanted to write about Ryan and Flexport. Not only are they disrupting an industry, but they’re also showing other companies how you can leverage your expertise to do good in the world.
I love this aspect of Flexport.
In 2020, when COVID hit, Flexport ended up shipping 450 million units of PPE all over the world.
Thanks to Neel Jones Shah, global head of Airfreight at Flexport, they had the idea of leasing passenger planes that were sitting empty to deliver PPE where it was needed.
Through a GoFundMe campaign, they also raised more than $8M to help frontline workers.
At one point, they have a full-time team of 25 in China sourcing PPE for their relief efforts.
When the war in Ukraine began, Flexport again stepped up:
If you'd been wondering where to donate to help the Ukrainians, this is it. Ryan runs a logistics startup, and his humanitarian efforts are startup-level efficient. You can be confident that he'll ship the right stuff, quickly, and that it will end up in the right hands. https://t.co/usA3QJOauQ
— Paul Graham (@paulg)
Mar 4, 2022
These are the type of examples I think need to be showcased in the world.
Entrepreneurs are problem solvers and there sure are many problems in the world that need to be solved.
In each edition of the Just Go Grind newsletter, I like to include a few more quotes at the end from my research into the founder who is featured, sharing their wisdom.
On the benefit of naivete:
I’ve been fortunate at Flexport in that I had never been a freight forwarder, so there was never a moment at Flexport where I could tell everyone what to do… so at no point did the company ever depend on what Ryan told them to do.
My naivete around forwarding actually turned out to be a good thing in the long run because I can focus on culture, on recruiting, on org design, instead of telling people what to do.
One of the key misunderstandings of entrepreneurship is that it is all about daring founders risking everything to change the world. My story is the opposite; I designed my life such that I could not fail, even as some of my business experiments did. That is not the only way to start a business, of course, but for a would-be entrepreneur with a lot of debt, it might be the most responsible.
Success compounds. Successful people become even more successful. This seems like trivial knowledge, because on the surface all it tells you is that you should be more successful, which you were going to do anyway. But this is not trivial at all. It’s profound. Because it says that you should go for small wins. Like an engineering team developing software using agile methodologies, you should always have a working system that you can iterate on in your life. Going for a big, giant win is not how success develops: It’s about long term commitment to daily improvement. It means finding something you can do today to create value for somebody else and, as soon as possible, finding a way to capture a portion of that value for yourself. Ironically, when investors see that you’re going to build the thing with or without them, they get more excited to back you. But most founders should ignore the world of VCs and just find things they can build without them. The alternative is to sit around waiting for permission from some investor before you can build your business. Nothing could be more lame.
On scaling a company:
Hatred of bureaucracy is not enough to keep bureaucracy away. You also need good process, good systems, great people, and clear strategies to keep the company moving fast and being agile. I think that’s one of our great challenges that I’m obsessed with learning about at Flexport now because I don’t want to end up like these other companies where they are kind of like stuck in molasses and can’t execute. And I’ve seen it, we’re definitely moving slower than we were 6 years ago when it comes to product development and new things, you keep adding complexity to the mix and slow down. So I’m super focused on what we can do to make people run faster, what do we need to learn, what’s the skill set, what’s the tech debt we need to pay down to make that happen.
And more on scaling from that same interview above:
As I’ve gotten to scale, I realize the reason those exist is to enable you to move fast. You’ll actually get more bureaucracy from not having any process and policies and standards than you will from having too much.
On raising venture capital:
Talk about your ideas all the time. If the people you talk to aren’t banging down your door to buy the thing you’re imagining, it’s not a great idea. In every business I ever founded—I’ve started 4 companies with valuations above $50M, with Flexport now at $8B—whenever I would mention the idea in casual conversation, people would beg me to start the company so they could buy the thing. If that isn’t happening to you, then your idea probably isn’t good enough, and your friends or family aren’t telling you that because they’re being nice. You should be getting lots of successful “if-then” statements, where people commit that they would buy from you if the product did XYZ. If that isn’t happening, keep innovating. Don’t fall in love with one of your ideas until this happens. I had dozens of ideas—and still do—that I thought would work.
And by the way, if your idea requires venture capital but VCs aren’t giving you money, that’s also your fault. Pick an idea that doesn’t require VC. I did startups for 12 years before raising my first dollar of venture capital, including 4 years working on Flexport before taking on any outside investment. There are tons of ideas that don’t need VC. Maybe they can’t be trillion dollar companies, but that’s okay. If you are successful building a smaller scale business, that success will continue to compound until eventually investors will be lining up at your door to back your next thing.
Thanks for reading! Let me know on Twitter what you thought about this edition of Just Go Grind. If you found this valuable, please consider subscribing and sharing it with a friend 😊
And if you enjoyed this profile, take a look at the first four - Sam Altman of OpenAI, Melanie Perkins of Canva, Tope Awotona of Calendly, and Ooshma Garg of Gobble.