Flexport CEO Ryan Peterson on AI product launches, de minimis chaos, and why he won't buy warehouse robots yet

follow these guys on X because uh they said uh and Connor can you let Ryan in he is in the waiting room let's see first ever video guest so he's in the waiting room here we go Ryan how you doing up got man I'm traveling right wear a tuxedo to join you guys you're looking good you look good too fantastic I like the zip up it looks comfy where are you right now I'm in Dallas Texas nice uh can you give me the breakdown on the announcement kind of the Cadence what this means for the company just break it down yeah so we we launched uh earlier this week we launched about 20 AI products basically stuff that we built over the last six months we moved to this model where we every six months just do a big drop try to kind of drop a little bomb uh it comes from a principle in physics where the maximum energy transfer happens when you take something really really hot you put it in a place that's really really cold and we feel like Freight industry in general is like that so you want to just gather a whole bunch of hotness and drop it all at once was there any push back when you kind of pitched this to the team or was everyone kind of like oh yeah we already know the Brian chesky uh kind of like talk that you were referencing and and we we're in we're bought in people liked it a lot no no push back because I think a lot of our Tech teams feel a little frustrated that they don't get enough support from marketing or they build this thing and people don't pay attention and never gets any buzz and it's all feels a little incremental when you look at it a little bit by bit um the pushback that I was expecting to get would have happened over the last month because there's uh there's nothing like a deadline to get people to work hard I remember um yeah like some good business advice actually is the way to get people to work on nights and weekends is not to ask them to work nights and weekends it's just give them a deadline that can only be met if they work on nights and weekends so I think some of the stuff we shipped over the weekend like right before the launch yeah yeah I was going to say it's the same thing with sales like it's hard to know if a sales rep is actually good unless they're you know competing on a team uh with other people you know their other peers right uh one of the things I thought was interesting I I think that early stage companies can struggle sometimes when they end up dropping like three major announcements on one day because uh if you're just like starting to like build that brand and audience I think it can be um you can end up wasting a handful of announcements by uh you know dropping them all at once versus spreading them out but I think at the scale uh that Flex ported at it makes a ton of sense to you know do this sort of keynote sort of approach yeah it could be that it could be also earlier stage companies don't know what's going to work and need to iterate more and be more like evolutionary and at our scale we sort of know what the thing needs to be and Sh business itself works as is so customers ask for these and you're B just paying down like a backlog of like the most common requests right yeah and like we're not really holding much back like a few of these things kind of soft launch or already in production and live over the last couple months but like we never did any Fanfare or marketing or packaging of it up uh but definitely a bunch of stuff was like barely shipped on time kind of team grounded out over the last few weekends and working you know burning the midnight that's great though it's got to feel got to feel like very inspiring to the team and very like just like everyone's on the same page AG now everyone's on the same Cadence everyone has the same like pop and champagne at the same time because like we all hit the same goal basically yeah I recommend it to companies I think yeah it's an interesting caveat maybe some early stage companies want to like build more of a success compounding motion of little wins and constant launches and stuff uh there's a lot of there's aot there's probably something to that as well but we saw such good results from packaging it it's definitely a new rhythm going forward how how are you pitching flexport now kind of at the highest level in terms of like the long-term vision and how how how how did these new uh releases kind of like fit into that narrative or like the the high level story you're telling about flexport it it's always been a really challenging thing because we can do a lot of things for a lot of different use cases for different audiences at the at at its core what we're trying to do is run this full end to end from Factory floor all the way to customer doors and retail stores I like that it Rhymes uh being able to everything on that full end to end transaction and then including placing orders back to those factories to replenish we want to make that as as simple and reliable as a light switch like that your Logistics just kind of works you take it for granted you go back to focusing on your brand or focusing on your product which is what you should spend all your time on as a product company and like the logistics piece is just automatic it's pretty automated it's reliable it's cheap yeah uh and lots of options to get the products where they need to go and we're also um Flex for capitals become a really instrumental part of our business where we do inventory financing for people so you're like also shouldn't have to worry about that compliance Capital insurance for the products y so but yeah it's a it's a very big ambitious Vision because the world's big we gota be able we ship product to and from 147 countries last year yeah uh that's a lot of different surface area you mentioned um trying to get to a place where you know like an e-commerce business can basically with one click get on flexport and then be fulfilling through you know Nordstrom's France e-commerce system can you break down a little bit more of like what that will look like and what what are what are the barriers like why is that difficult yeah and that is a big part of the vision too is like we Logistics right now is your cost center yeah we want to make it a growth engine we want to be like hey you know you've got this awesome Logistics platform you can sell in more markets whether that's geographies yep or more channels different retailers marketplaces um and yeah it's it's hard because these retailers all have their own very specific requirements for how you label the goods like Nordstrom wants it appear as a Nordstrom package even even if it's shipped by flexport or the brand so yeah you've got to get that custom they want it to run on a Nordstrom shipping label yep makes sense not a flexport shipping label they want some cases they want special hang tags that say nordstrom.

com or whatever and it slips stuff so youve got to do for each retailer on board them in that way and then when that's on the digital side where what we call Drop Shipping where you're selling on nordstrom.

com if you're selling to Nordstrom or really any of the big box retailers they also have huge requirements for how you deliver pallets to them like the label has to be a certain number of inches above the ground and has to arrive at this time and if you miss those things they they have a call it chargeback they they they they like thousands of dollars for and the other challenge is compliance across all these different product categories right which is a whole other beast in terms of uh I I understand uh I've invested in a number of consumer Brands and and just dealing with that level of complexity and especially a lot of 3pls are not super sophisticated and there's real you know finds associated with sort of not doing these things correctly one question I had is around you know entering sort of fulfillment uh and being a player there from every my sense is that nobody loves their their 3pl or their filment provider and so that's a huge challenge I'm sure you've been super intentional coming into that how are you sort of focused on um you know making uh is it is it possible to make a fulfillment product that Brands like truly truly love right because everything could be going great for years and you have a small issue and it's so critical to the business that it can it can be very challenging what's been your approach there definitely our goal is to become you know the most loved vendor you have in all your Logistics act we've done that in the freight forwarding TI although we've had our ups and downs lately our NPS score has been through the roof so 72 NPS last and last time we measured it last month so we definitely know what to do what flexport did differently than the Fulfillment business we required from shop by Logistics we were very Enterprise focused our Tech teams meet with customers constantly and solve Tech problems and then we are also more than a tech company we're a service provider and so if the tech can't do it like we're still going to get it done and I think that's something that we've had to kind of learn teach new tricks to this business that we acquired now I'm really proud of them for the last nine months at least they've just been like our Tech teams have been meeting with the customers non-stop closing gaps like taking feedback solving the problems we definitely still have work to go but the the the cycle time of like taking their feedback implementing it is really good like these customers feel like they have a custom Dev shop even though we don't build custom software for people uh it's been a mess lately so um I don't know how close you guys have follow but a huge amount of um e-commerce is fulfilled from Mexico dutyfree into the us if it's under $800 there's no taxes that was 30% of all the big Shopify Merchants were doing that uh and it went away the Mexican Government shut that program down on December 19th and then like totally no one saw that coming everyone thought Trump was gonna shut it down no one thought Mexico was gonna shut it down didn't make any sense they kind of brought it back but then they like haven't given the Importer licenses to these companies so so it's not really brought back so flexport fulfillment we doubled our Revenue in the first what is today February late February so the first two months of this year we've already doubled the revenue of that big business unit that we acquired from Shopify wow but has not been without hangup like we our team my whole leadership team I was there last weekend working whole leadership team is basically living at our warehouse in San Bernardino right now because we're taking all this inventory out of fulfillment centers in Tiana and trying to inbound it and none of it's proper a lot of it's not properly labeled imagine right you're like taking it all out of this Mexican fulfillment center throwing it in boxes and shipping it to us and like the people labeling these boxes didn't care that much about the comp you know labeling and compliance well so many there's so many landmine if this is like one of the most uh uh crisis prone borders in the entire world right between Mexico and the United States uh you got to be so careful around so many different things to make sure uh that you know everything that you're doing is is you know not not and there's the whole you know Dynamics with the cartels down there that try to get involved in some of these more traditional businesses so um so is so that Mexico thing that you just mentioned that's separate from the Teemu D Minimus change that's going yeah Mexico color on that can you own thing and and like it's possible that it's related it's possible that Trump they were trying to do Trump a favor or something and Clos this down not not really clear to me why they would do this because they say on the surface it's to protect Mexican textile workers jobs M and kind of create a barrier to entry so that like you would Source in Mexico instead of in Vietnam or something but uh been a best CH separately CH Trump actually first Biden's CBP did this Customs um and Border Protection back in September I want to say announced they previewed hey this 321 de Minimus program for goods made in China is going to go away but it was very vague it was sort of when that would be implemented or how Trump on in his first week made the executive order to shut the program down and then in his second week he brought it back yep but no one thinks it's back for good like we're sort of um in this limbo stage right now but it's making it really hard for companies to plan and now that is just targeting goods made in China yeah but I don't know everyone's like oh I'm fine I produced my goods in Vietnam I just don't know that the Trump Administration is going to see the world that way I think that you I I would predict and I don't have any evidence for this but my intuition tells me I would predict some tariffs on other countries besides just Vietnam that a lot of these people think they have a safe haven for their products but maybe we'll wake up to a roote Awakening what is the uh what is the global footprint of flexport look like now I mean it's a big company you said 146 147 countries or something do you have offices people warehouses in all these places like no not in all of them we have offices in 15 countries and then adding five more five more in the next uh 12 month as fast as we can we're we're uh we're launching so it's a big um so that's why you're traveling all the time yeah I went to 19 countries last year and and some of them twice so I don't think I left the United States last year TR the world's big place Sean you gotta get out there it's not that bad I enjoy it yeah uh talking about the news uh this morning there was some news around the the port deal uh and specifically around automation like what can you speak to on that front what should uh you know there was a lot of push back people being you know uh obviously a wage increase uh and then uh on top of that uh Banning uh some of these companies from uh rolling out automation that would that would threaten uh jobs uh what is what's going on there what's your take on on the most recent news pretty ridiculous to ban Automation and a port uh just putting America at a competitive disadvantage the reality is you're not at this table you have carrier the the the port operators and the ocean carriers on one side of the table these are the employers and then you have the Union on the other side and they're negotiating neither of them cares that much about automation because if if there's no automation it's sort of like a non-proliferation treaty hey cool we don't have to spend money on automation as long as our competitors don't either like it's we're all Level Playing Field here the people who ler you and all of us who buy who use the ports who ship stuff uh consumers will have to pay more for everything and I don't know by the same logic like we would we should all be farming with with sticks instead of you know just dig a hole with a stick and put a seed in the ground so I think it's very stupid I'm sure the union will want to come after me for that they're doing the right thing for themselves by the way they should represent their interest that's their job as a union so I don't criticize what they're doing but my stance is very Pro Robotics and automation I'm obviously we're technology company so yeah yeah broadly I mean there's been a lot of uh heat around the humanoids robotics space and just robotics broadly where where do you see flexport itself leveraging uh some of this Tech and uh I'd love uh I'd love to get your take on just the humanoid form factor generally is that something that you see being integrated you know across um you know all the different physical touch points of the flexport business or do you think there's a better you know form factor you know it's not obvious to me that humanoids are going to be the right form factor for like 3pl and filment for example um though definitely not obvious the whole thing is it's I'm very much Wai and see it's the humanoids are making enough progress that it's really causing me to second guess how much I want to spend on catbacks in a big automated system right now in a fulfillment center because you know three years from now I want to have this the life cycle on that investment probably like 10 15 years at least right not hopefully it can pay back faster than that it would have to before we invested but like it's gonna it's got to last that long I'm not going to replace it and I could just totally imagine I have this like giant expensive system that three years from now is just obsolete because progress in humanoids or other types of Robotics so it's kind of interesting one of these Cycles where you're like if it's improving that fast then you definitely can't in it yeah it's crazy the future one is gonna be way better yeah well it'ss are good in that sense because they're modular you can buy one at a time instead of like well the concern we've talked about this before the concern with humanoids is just if if humanoids depreciate at the rate that the model 3 does are they viable Investments right you're just like sinking dollars into these things and then the next year it's like well you know I could have invested 50 Grand into training this human who's going to be like better at their job and all this stuff and I invested in this robot now it's like just not even uh you know effective hard for them to clear is so high too I mean workers are very like on an IQ basis like they're pretty smart they got amazing dexterity in their fingers they run around they've got agency they're not that expensive like there's a lot that bar is going to be really high for them to clear yep for sure so we're I'm we're still like pretty manual in our fulfillment now we're digital in the sense that like we scan everything in and out and like a lot of you can't screw this up technology but the actual pick pack and parcel you know putting this putting in the box is pretty manual and I I the bar is so high to to to clear so we're kind of happy with that uh well it's 11: we'll let you get out of here unless you want to lecture us on uh JFK uh otherwise hope you have a great day did you see that I did a TV interview yesterday and I was on the air to talk about ports and they were like in the back room waiting in the in the green room or whatever and they're like our next story is JFK assassination but first we got to talk about ports and the end of my interview like can I just stay let's talk to AFK yeah well uh where can the listeners uh uh what's a good starting point to get into the JFK lore okay great well I'm here in Dallas okay uh which obviously is D Plaza is where he got shot and if you are ever in Dallas you gotta go down to D Plaza right at the scene of the crime there's this guy this fat guy in sweatpants he sits right there all day every day and he will tell you everything you give him 20 bucks he sells like this little magazine 20 bu he'll give you a tour going behind the bushes and be like oh the mafia was right here on this bridge and like he will give you the whole layout of how it all went down so I highly recommend Dallas uh so you just got to go to the source you're not even recommending a movie or a book it's just go to Dallas and get the tour I like it correct this