Speaker 1I say it's white collar fraud. I have a three-year-old and a five-year-old. The idea that I could do any work at my house is like a total fantasy. Like, come on, you're kidding. I think the negotiation that we're gonna have with Salesforce can be a lot different than the last one. I think selling SaaS to tech companies is gonna be a tough business because we can build stuff ourselves. Revenge and patriotism is a great investment thesis. There's a lot of collusion in VC. Like I have a feeling that most VCs actually collude more with competitors than with their own partners.
Speaker 2This is 20 VC with me, Harry Stebbings. Now I've done 3,000 shows. The best guests have two things. They have high IQ and they do not give a shit. Our guest today is a longtime friend of mine, Ryan Peterson, founder of Flexboard. He's been on many shows before. I don't think he's ever had a conversation as open and honest as this. I think the friendship allowed for a much more authentic and transparent discussion. Where we touched on everything from Chinese open source models, is the CCP a risk? Why remote work is like white collar fraud? And so much more. Ryan was incredible. And this also goes to show why doing shows in person is 10X better than remote. Ryan in studio, this is one you cannot miss. But before we dive into the show today, meet Ava, the first autonomous AI BDR built by Artisan to run your entire outbound on autopilot.
Speaker 3Hey, Jason Lemkin from Sastr here. Artisan is S tier. We've replaced our entire outbound sales team with Artisan. I believe we've sent over 50,000 highly customized emails to Artisan. The open rate is twice what it was with humans. And they click on it. 100K deals day after day.
Speaker 2Ava sources leads from over 250 million contacts, enriches every prospect with intense signals, then writes and sends personalized multi-channel outreach, self-optimizing over time. When a lead replies, she handles objections and books meetings straight into your AE's calendars without any human input. Artisan is backed by Y Combinator and has raised $36 million to build the first truly autonomous AI BDR. Hire Ava, the AI BDR. And get $300 in credits when you sign up at Artisan.co/20VC. That's A-R-T-I-S-A-N.co/20VC. While Artisan scales your outbound motion, Granola turns every call into clean notes. When I'm not recording the world's greatest fricking podcast, I'm probably in meetings. Pitch meetings, board meetings, LP meetings. I can't get enough of them. When all the meetings are over, I look at my notes and they make no sense to me. Illegible scribbles. That's why I use Granola. Granola is the AI notepad for people in back-to-back meetings. I say back-to-back 'cause it makes me feel busy and special. So I jot down rough notes like many do. And in the background, Granola transcribes and turns them into really clear, useful notes immediately after the meeting ends. And I've been using Granola for months and my favorite feature is chatting to my notes. No one else will chat to me these days. And I can ask it anything. And it trawls through every meeting I've ever had and finds the answer. What was the valuation of it? What was the start-up that pitched me last week? Who on my team said they would share the memo? And even coaching and tips, like how can I ask founders better questions when they're pitching me? All the best operators I know use Granola to help them get more done. So if you're in a lot of meetings, trust me, this is a really good tool for you. It takes seconds to set up, connects to your calendar, works on any meeting platform. Head over to granola.ai/20VC and get three months free with the code 20VC. That's granola.ai/20VC with the code 20VC. That's two zero VC. Once Granola turns the conversation into clear notes, Finn turns that clarity into better customer support. As AI agents become more common in customer experience, teams often end up juggling multiple siloed tools for every job. Well, Finn was built to change that. It's a single unified agent that works across your entire customer experience from service to sales to success and beyond. Finn is the agent making perfect customer experiences possible for thousands of customers. It's powered by custom models, trained on years of real customer interactions, so it understands the nuance and complexity of customer service better than any other agent. That means faster resolutions, more consistent support, and just better experiences for every customer. It's also designed to be fully self-manageable, so you can easily improve and adapt it as your business evolves. No third parties required. Leading companies like Gamma, Asana, DoorDash, and Crypto.com already use and love Finn to deliver better customer service and customer experiences. So for a limited time, you can get $500 a month in Finn credits. For your first three months, learn more at finn.ai/20VC. - You have now arrived at your destination. - Ryan, I cannot wait for this. Dude, we've done this a couple of times remote, but I feel it's much more special in person. We're gonna get to remote work, but remote interviews are not as good as in person, dude. So thank you for being here. - Yeah, it's great. - Dude, I wanna start on what motivates you more? I'm finding this really interesting. It's either the fear of losing or it's the thrill of winning. Which one is it for you?
Speaker 4- Interesting question. Probably the fear of losing.
Speaker 1- Why? - I don't wanna be a loser. You never win enough, right? Like I've already won and yet I still am like, I don't feel like I won by any standard of what I set out when I started the company, like I've won. My first and only financial model that I made for myself for the business got to 1 million of revenue.
Speaker 2Like we did over 2 billion last year, so. - I hate Excel models, I'm terrible at it. When I open up Excel, it says sign in or register. And I'm just like, I'll leave it for someone else.
Speaker 4- I'm not very organized, so. - Are you not? - No, and like, I feel like making a good model requires you to like organize your stuff. - So today's rule is we're gonna play a game.
Speaker 2Now you've done shows before. Every single question that I ask has to be a question that no one else has asked before. - Okay. - And if I ask a question, that someone has asked before, you have to tell me, and I will donate $100 to a charity. - Oh, wow.
Speaker 5- Oh, great, all right, so we're gonna, do I get to pick the charity? What are we gonna do? - Sure, you can. - What's your charity? - My mom's got MS. - Oh, that's great. Okay, we'll do the MS charity. - I like to give it to an MS charity. - God bless her. - But that's the deal, okay? - Okay.
Speaker 2- So these questions could be fucking weird or interesting.
Speaker 1- Do I still answer the question? No, I don't answer. I just go $100.
Speaker 2- No, you just go bang, bang. - Great. - But if you lie, you pay $1,000. - Oh.
Speaker 4- So if it's a hard question.
Speaker 2- All right, so I get out of any question just by paying $1,000. - Yeah, actually, it's not a bad deal. That was a bad start, Harry. You should've rethought your rules. The first one I wanted to ask is, when we were chatting before, you said about the nature of VC jobs and why it means that inevitably, the way that VCs jobs work is they end up as herd animals. Why did you think that was something interesting we should discuss?
Speaker 1- Well, I found it, you know, VC, your show's called 20-Minute VCs, so what's a hot take on venture capital? - Yeah. - The nature of the job is simply that it's just such a good job. If someone who likes to have a job, what would be the attributes? Like, pays really well, you basically don't have a boss. Once you're like a partner, like at some level of seniority, you have no boss, pays well, you don't have to be anywhere on any given day, kind of not a fixed schedule, and it's very hard to measure if you're good or not on any reasonable timeframe. You can't get fired. These are pretty good attributes of a job. So like, therefore,
Speaker 2- And security. - Yeah, that's a big part. - Like, you have fund fees for 10 years. - Right. - And not only can you not get fired, but like, dude, I run a media company, you run a company. Revenues can go down, they are not certain. You know, fund fees are legally structured.
Speaker 1- Yeah, so you have to, if you are a partner, now, if you run the fund, that's one thing, but if you're like a partner that doesn't own the fund, you could get fired. So you don't have infinite job security. So your whole thing has to be, how do I avoid getting fired? Like, so, you know, you can do this, you can do this in reverse, or invert the problem, and you go, well, how would you get fired as a VC? Okay, like, scandal, sure, avoid that. And you can't allow everyone else who works at your firm to think you're dumb, or doing bad things, like doing stupid deals. They don't know it can be bad deals, or they could be great deals. You can be doing great deals, but if people think they're bad deals, you might lose your job. So therefore, okay, I need everyone, you're gonna get consensus, right? And you're also gonna channel check all your deals. You're gonna like check with your competitors. There's a lot of collusion in VC. Like, VCs are constantly talking to each other, in part 'cause they need to make sure that they don't step out on the edge and do something that their own partners are gonna think are dumb. Like, I have a feeling that most VCs actually collude more with competitors than with their own partners, 'cause they need to spot check their deal and make sure it's good before bringing it to the other partners to make sure that they're not seen as being dumb.
Speaker 2So that's where you get the herd behavior. - I love Keith Reboy, who says that actually, he likes to sense check his deals with friends. And if they don't think that his deal is stupid or crazy, he's not doing his job right.
Speaker 1- Oh yeah, okay, good. Yes, he's, see, I think Founders Fund, and Keith was at Founders Fund for a while. There's a few funds that avoid this type of behavior somehow. Or some people are just born into it with a contrarian bone and they're, you know, but.
Speaker 2- Do you think you can only do stupid or crazy shit because you have money now? - Me personally? I don't have that much money. - But you don't need money. - No, I have enough, I have enough. - Yeah, yeah. - Like when you're paying rent and school fees and it's like, oh God, fingers crossed. But I think that richer investors make better investors. Like Sequoia are focused on upside maximization. How big could this be? They are not fearful of LPs coming back for their next fund. They're not fearful of deployment speed compressing so they elongate it. They just invest in what they think can be mega companies.
Speaker 1- When I started as an entrepreneur, it was kind of, like now it's like, everybody's becoming an entrepreneur, but I started doing companies like in the early, late 2000s, late 90s, even with my older brother. i mean i guess at that time it was less mainstream to start a company and we weren't in silicon valley we weren't we didn't call ourselves like tech startup we didn't raise venture we were just hustling to make money and one of my tricks actually was i moved to china when i was 25 years old for this company and my rent was 120 a month for a two-bedroom apartment in a nice part of a second tier city but it was like a nice and so i knew like that actually gave me a lot of permission to be an entrepreneur which was kind of being crazy doing crazy stuff because i knew i could live off of if i could make 500 bucks a month i could survive and i knew i could always make 500 bucks a month so like i could do a startup i could take risk because i'm like worst case like i lived in a nice apartment in a nice town i had a good quality of life my total op-ex was like 250 a month so it gave me permission yeah to take some risk but it's the opposite i'd
Speaker 2have to be i was relatively rich right or like relatively secure what's your number what's that mean what's your number basically means what what's the number that you had in your head of like ah once i have this i'll be happy so like for me it was always like 20 million dollars with the rationale that you have five percent interest you make a million bucks a year for doing nothing a million bucks here is more than enough for anyone who's adjusted you know mentally well this how you know money is amazing because uh the more
Speaker 1you have the more you want you can never satiate the human desire it's infinite because i don't
Speaker 2no no like of course you want more but like i only buy trainers i would much rather have more convenience than more money i mean i haven't been that motivated by money i'm more into like power i want to do big things that's really interesting you know there's uh there was a question that my girlfriend asked me the other day and she said if you lost 90 of your money how much of your self-worth and self-esteem would you lose in percent what would you say maybe you're more adjusted than me i said i'll go down 90 percent no idea but mine is like my work is directly correlated to the financial outputs that you have like candidly if you are a general in the army your success in your profession does not correlate to your financial statement at the end of the day i'm a venture capitalist yeah the clue is in the name if you're good you make bank
Speaker 1if you're not you don't yeah but it's you know you gotta forget the past and the future and like the future is not written so you can go make it if flight sport would have raised today what do you think you'd raise that i don't know i really don't know i think this year we're gonna get to basically break even we're on run rate to do about 450 million dollars of revenue net revenue breaking news here i haven't shared that but 450 million of net revenue growth rate last year was
Speaker 4350 so 350 percent no 350 million last year so what is that 100 about almost 30 percent during
Speaker 130 you said 450 yeah and i think we'll do 600 i mean the goal is to keep going 30 every year for 10 years but the big i think the big question and then beyond but the big question for most two things that you have to ask. Actually, I got this from Paul Graham, where he said, every startup, if you see like a hockey stick growth curve, then there's two questions you need to ask. Like, are they doing some kind of hack that's unsustainable and going to stop working? Number one. And two is, is the market big enough for it to keep going? And if the answer is like, no, there's no hack, like this is genuine growth. And two, the market is really big. The thing will just keep going. Right. And I think Flexport's like that, like the market, there's no hacks. It's actually a grind. Like we've got salespeople out there in the field, like calling on businesses and going around the world. And then the market's enormous. We're
Speaker 2still less than 1%, 0.1%. When you extrapolate that out, you said 450 to 600, and then you can be 750. And do you worry about the constraining exit landscape? Like when you look at IPOs today, dude, unless you're mega scale, you don't want to go out. With the greatest of respect, strategic buyers are less present than ever before. And then you've got buyout firms, which are running for the market. And that's because the medallions and the Coopers and the Anaplans of the world are all looking pretty precarious right now. Do you think that's a concern that should be felt?
Speaker 1I don't think about it at all for Flexport. The word exit implies that I'm like going to stop working at the, you know, that I'm exiting. So I don't think of it in that term. IPO would be... Do you want to take the company public? Yeah, we intend to go public. And I don't know what the valuation is or should be or will be. It's sort of like, well, but if we can just keep growing, you just draw the math out. But when do you think you should go public then? I'd like to be a nicely profitable, making a few hundred million of EBIT and then we'll go public. So it could happen in a couple of years. It should, the way that things are going right now, we should be able to get there. And like, you know, maybe it's not, I don't know what it will be worth. And like the market kind of sets that at the end of the day. And if it's undervalued, okay, like as long as you're generating a lot of cash, then you could, if you're really undervalued and you just buy your own shares back and like, maybe that's a good thing.
Speaker 4Do you think you should underprice on IPO day so you have the pop? Or are you like,
Speaker 1you should price to perfection? People focus so much on this. Like, I don't understand it. Like, of course you're going to focus on your price and whatever, but people, there's this concept of like an IPO window that investment bankers and founders talk about. It's like, oh, the window's closed. You can't go public. Or like, cause the price won't be there or something. But you're like, well, what if you went public and then your price went down? Like, is that better? I mean, it's the same thing, isn't it? So I don't quite understand that dynamic. Like, you know, I'm an operator, run a good business, like make it super profitable, have it grow. And like, don't compare yourself too much to Anthropic or these AI companies that are, we've been around for 15 years and there's companies that are, getting to our revenue in 18 months. And you're like, I think envy is a very bad, is it one of the seven deadly sins? Like you certainly should avoid it.
Speaker 2Do you worry about the concentration of value to a few companies? When you look at eight companies making up 85% of year to date gains in the stock markets, and then you look at Anthropic and Open AI, do you worry about that concentration of value to smaller and smaller number of names?
Speaker 1As long as I'm allowed to use Open AI and Anthropic, then I don't mind at all. Like, they deserve it. These things are just incredible, miraculous products. What I worry about is that they cut us off and then we can't use it anymore. If I can't use Open AI, we're all going to go back to being just idiots we were two years ago. Like if I, you know, like I need this stuff, like we're so dependent on it, both personally and then like. What do you need it for most? It's a ton of business logic, like a lot of rules because every, we serve, we're an enterprise logistics company. We help businesses manage their cargo shipping around the world. Every business is unique and has their own process and their own, oh, we need this data and this format moved into this ERP system. And we're like, oh, we need this data and this format moved into this ERP system. And we're like, oh, we need this data and this format moved into this ERP system. And we're like, we want you to notify us. Some companies want to be notified 10 days in advance of their container arriving at their warehouse and some seven. And like, they really care about that. And they spend so much money that you have to do what they say. So a lot of our tech is like this big rules engine and you get all these if-then type statements of, and it becomes very unwieldy. And at the end of the day, it can't really keep up. And you end up with people managing some of this business logic.
Speaker 2Well, the agents can just do it. And RPA couldn't do that before, because I thought that was the promise of people who don't know robotic process automation. I thought that was kind of the promise of RPA that was meant to be fulfilled.
Speaker 1It does a lot. And we've gone a long ways with that. But agents can go all the way. Like, we think we can automate the full end to end. And this is you're building your own. We're using OpenAI. We're using Anthropic. We're going to increasingly use open source models to save money, but also because we don't today have a budget constraint on our Anthropic contract. Did you see that article the other day? It's like, we spent half a billion dollars. I thought that was sort of fake, but we don't have a budget on our contract. And yet last Thursday, I woke up, I don't know when we're going to air this, but it was like a few days before the end of the month. And it said, your organization has reached your limit for the month, which I don't, it's not true. Like something went wrong in their side, but I had this like shot, this moment of like, oh man, what if they just decide one day to like cut us off and say no. And I actually think this is a realistic scenario. Was the expense much more? It's not that
Speaker 4much money for us. It's not. How much is it? I think we're spending like probably like 5 million
Speaker 1a year or something ramping pretty fast though. Like it's doubled in the last few months. We
Speaker 2have a guy named Brandon at McCorn. He said he spends more on Anthropic or no, he spends more on
Speaker 1OpenAI, whichever one. Did I say, I said 5 million a year, right? Yeah, not a month, a year.
Speaker 2He spends more on models and compute than he does on salaries by far. I thought that was really
Speaker 1interesting. We're not even close to that, but there's a world where that becomes, I mean, it has
Speaker 2to, at some point, it's very interesting. It has to for the valuations to be justified. So right now, Benioff said that he spends 300 million a year on Anthropic for his team, which works out to 3.8% of developer salaries. For the trillion dollar valuations to be justified, you need to be in the 18 to 20% range. We still need to see quite a movement. Yeah. We do see ourselves like automating
Speaker 1a ton of the work and taking it away with, you have to, right? I mean, even at five, like I better save 5 million a year in labor costs or make my product way better, which we are finding ways to
Speaker 4make the product way better. Do you think you're spending 20 million a year on Anthropic in five
Speaker 1years? Yeah. I mean, I don't know about Anthropic, but on LLMs. But it's possible that the price comes way down, deflation. And there's, it's also possible that we move a lot of workflows onto open sourcers, because if it's good enough, like for our coding agents and like for actually developing product, we probably always want the frontier model. But if you're just automating a workflow, if the open source one that's basically free can automate it, then I don't, there's diminishing returns to frontier LLMs. And there's diminishing returns also to just doing it. Like once I've automated all the work, I don't want to keep spending the money. Like I had the agents work, like I should probably stop. Now I'll keep spending money on code and things that improve the product. I'll probably improve our product and our surface area that our customers interact with. But you know, we're pretty manual. We have a lot of manual processes. Once they're automated, like I should stop spending the money on Anthropic.
Speaker 2I was a terrible interviewer. I interrupted you. You said that, you said there was a realistic scenario that.
Speaker 1Oh, there's a realistic scenario that they decide that the compute that they have is more valuable for training super intelligence than it is for letting customers use it. And
Speaker 4they stopped, you know, just cut us off. And we all just come back to being idiots. At that point, do you not think governments need to stop?
Speaker 2Maybe, yeah. Do you not think actually that you're extrapolating it a bit far given the fact that I can't even do fucking clips on AI right now? Like, this is my point, like. Not yet. No. So you're seeing Uber and Microsoft come out saying, yeah, the productivity gains are kind of questionable.
Speaker 1I think that's probably true in those businesses. Our business has just tons of manual operations with humans like forwarding email. We call it freight forwarding. I often say it should be called freight email forwarding. It's like people passing PDFs around and moving data between enterprise systems. There's just like a huge amount of human labor. And I think that most of the economy looks like that, not like Uber, which is a highly automated business. Although I don't know why they have like tens of thousands, 30,000 more employees because pretty automated, right? Like I don't quite get that.
Speaker 4You said the team is 2,000? Almost. Almost 2,000. 2030, four years time. How big is the team then? It might be about the same.
Speaker 1We're hiring a lot of salespeople and we're expanding a lot in new markets. But I think you're going to see like a shift from people that today do operations, kind of manual work that I was describing earlier into, okay, you've got to, the work style is going to change. And if the people are not able to make that shift, then we're going to have to rebalance into much more customer facing account management, sales, kind of like, all right, how do you, because I think that's the future is just like.
Speaker 2Do you know one thing in the future is super contributors? And I don't see people talking about this enough. Zab from ClickUp said this in his post, which we chatted about before, but he essentially said he was cutting people so he could pay the super contributors 10x more. You don't need more salespeople. You need more fucking amazing salespeople who leverage AI, outbound AI tools, inbound AI tools, pipeline tools, forecasting tools to be the next great sales leader that leverages AI. No? I certainly want as many of those people as you can get.
Speaker 1There's just like a lot of mass that you want out there in the field. I mean, think about our business. We're global trade platform for global trade. There's every business on the planet that needs to ship something anywhere. There's a lot of boots on the ground that you want to just to interface with those companies out there. And like, there's a limit to how many, how many relationships a human can have. And I think you can probably use AI and use other techniques to like double that ratio or something, but like there's some limit to how many relationships you can maintain. And it's a relationships game at the end of the day, sales. And so I'm somewhat skeptical. This is an interesting question though. Like Yelp has 3,600 salespeople calling our restaurants. - Wow. - It's actually a pretty good business. I think they haven't grown that much, but they print cash and like 3,600 salespeople. If Yelp can have 3,600 salespeople, like I feel like we should have more
Speaker 2than that. - I interviewed the founder of Invisible, which is another data provider. And he said that you can't do enterprise without a fully fledged FDE model. Do you think that's true working with some of the biggest companies?
Speaker 1- No, it's not true. You can do it without that, but your business is better. But if you can get that level of integration, you know, the freight industry was the original FDEs. They just weren't engineers. They were just, but one of the big tech companies that runs like hyperscaler, let's call it, has one of our direct competitors has 130 full-time employees that work at that company that have badges that show up to work every day that run their logistics for them. And we can not crack the door at that place. I won't say their name, but we can not get our foot in the door because all the decision-making is done by our competitor. I think it's an insane, what an insanely great competitive advantage in positioning to have at, so I'm jealous. And I don't know where you find, but they're not software engineers. These are just like logistics people. If you can get that same thing and just deeply embed yourself into the process workflow of a company, it's so valuable. It's not easy to do. And like, it's not easy to find in the FTE model to find good FTEs who will like know what to do, like show up and do a good job every day
Speaker 4and like stay in the job and not have the turnover. You also have like a question of like, do truly great engineers want to be FTEs?
Speaker 2It's not often as close to the pure art of solving engineering problems that they want or great engineers want. It's challenging.
Speaker 1Yeah, actually speaking of the, so it's quite common in our industry where you have these like forward-deployed, they're not engineers, like I said, they're forward-deployed logisticians or something. Like they're onsite. And we had this recent, we just had this huge customer win, one of our biggest ever. And I was like, wow, this is great. But I had heard that our competitor has one of these forward-deployed logisticians, like, and runs their RFP, runs their process for choosing a freight forwarder. And they always choose themself, which I'd heard about. It was like, wow, this is idiotic. Like, why do they do this? It's a great business.
Speaker 2Totally. Today I'm going to choose me. Yes.
Speaker 1And we won and I was like, wow, what happened? And then I found out the competitor had been acquired. By another one of our competitors and they did a huge layoff and they fired the person and she got hired by the company. And then they chose us to get back at them. So.
Speaker 4Wow. That never underestimate kind of corporate incompetence. What's your largest customer? Like not named by the size.
Speaker 1Spend about 150 million a year. The biggest one. We don't have too many like that, but we have probably a dozen that spend over 50 and then a long tail. Wow. Yeah. Logistics expensive. It's 11% of GDP. So people spend, and these aren't, they don't have to be that big of company. That's the thing that I will often have to educate investors on is like logistics, a much bigger market than software. So for example, like a typical, like a medium sized company will spend, call it 5% of their revenue. Companies spend about five, if they're physical goods companies, they'll spend like 5% of their revenue on logistics. They're not spending 5% on any software. You know, maybe like at scale, like our price point is similar to what you would spend on Oracle or something for a comparable, probably size company. Actually less like.
Speaker 2But then you would say that we are not seeing the productivity gains in logistics that we are seeing in software creation. Because if we were, you'd be seeing revenue scaling in logistics, like you have done for a cognition or a cursor.
Speaker 1You see costs come down at least. Yeah. I don't know that you're going to see a huge revenue scaling of this. I mean, by the way, our competitors, like us and others that are scaling, that are serving data center companies, that part of the business is growing like crazy because the data centers have to be built.
Speaker 2The data center economy is fucking wild. It's wild. Yeah. When we go back to the teams, the codecs themselves. I am intrigued. You said about the use of Anthropic. Have you always used Anthropic? Or has that been a switch?
Speaker 1We switched back and forth. We're using Codecs too. In fact, yeah, Codecs won us over. They stole, Sam stole my heart two months ago when he said, you can have two months free. That was like 30 days ago. So we switched everything to Codecs. So you switched everything to Codecs? The engineers can choose both. What do the engineers choose? I think there's still more, they're still more habit formed on cloud, but they use Codecs. We're cursor users. We use everything. As an enterprise, we've been more Gemini because we're Google Docs centric. And so it's like a really nice outbaked in it is and Notebook LLM and these things. But all of our employees have cloud access as well.
Speaker 2You're able to invest in OpenAI or Anthropic. OpenAI is whatever, 900 and Anthropic is a trillion. So there's slight difference on price. Yeah. But you can only invest in one. Which one do you invest in?
Speaker 1Oh, I can only invest in one? Why?
Speaker 4Why can't I invest in both? Because I'm forcing you to choose. It'd be easy if you could choose both.
Speaker 1At the same price? Let's do same price.
Speaker 4Yeah, same price. I think I'm going Anthropic.
Speaker 1No offense, because Sam's a friend of mine. Just because the enterprise business? Yeah, the enterprise business seems great. And the team, I think there's a lot of value of this cohesive team that's been together forever. And OpenAI has had ups and downs, and people have left. And it's been hard to keep the whole team in place. And there's just so much value in founders that love each other, and no one quits, and the talent density, et cetera. But OpenAI has people that sleep on it. I would invest in both, and I have. Do as much as I could into either of them.
Speaker 2You invest in Anthropic?
Speaker 1Yeah. Well done. But not early. I'm not like-- What price did you do it at? No, it's like $600 or something. It was already-- it already ran away. So I'm not going to make much money off that.
Speaker 4Doing it at $600 is not bad. Well, two months later, I got my-- it wasn't very long ago. I just recently-- How much did you do? My finances are private, but not that much.
Speaker 1I don't have that much money. Do you worry about open source? Worry about as a threat to Anthropic? I don't care.
Speaker 2I'll be great. I don't know, dude. If you think about what you just said earlier, actually, which is a lot of the usage from frontier models can be moved over time for more mundane tasks to open source models, which we both agree on. That massively maims the market for the core providers.
Speaker 1Yeah.
Speaker 2If we only use them for the most frontier advanced tasks, and everything else we can just push to open source or older models, their core business is much smaller than you think.
Speaker 1No, but your question was, do I worry about that? I don't care. I mean, Anthropic go to zero. I don't care. I didn't put an amount of money that matters for me. Right. On a personal basis. And if AI and intelligence becomes really cheap,
Speaker 4that's much better for the world and for me. Do you worry, given the majority of open source models
Speaker 2are Chinese?
Speaker 1Not really. I don't know how they work, how they can stay competitive on some level. But if they're open source, they're open source. Who cares where they're from? We can use them.
Speaker 2Well, because you're essentially feeding data back to the CCP, would be the fear, from Keith Rabaugh and others. And then actually, CCP-funded open source models are powering the majority of early stage Silicon Valley companies. And that essentially is giving a window into Silicon Valley for China. Yeah. It's pretty interesting. I don't personally spend a lot--
Speaker 4I don't really sleep over it. Do you sleep over China?
Speaker 1Not really. I mean, I think-- I lived in China for a few years, and I speak Chinese passively. And not really well, but I could have a conversation. And so I feel like I know China better than most. It's not a high bar. For sure. Yeah. On some level, I think that China and the US, there's a huge amount of mutual dependence there that is underplayed. And I think that there's a lot-- the interests are much more aligned than people give credit. And all this-- there's so much saber rattling, and so many people trying to sound-- I don't know if they're trying to sound smart, or tough, or something, but they're casually throwing around war between China and the United States without realizing that such a thing would be a nuclear war, and you'd all be dead. And so I think that the odds of that happening are pretty low. I don't really believe that these countries are going to suddenly start-- shooting nukes at each other, and yet if you have
Speaker 2war between these two powers like that's what it would be so i loved it when trump landed in china and they played ymca oh they did yeah and there's this there's a video of trump and you can see he's kind of like a little child as a party desperate to dance but not allowed to uh bad protocol yeah yeah and it's just brilliant why the mca playing in the background well i remember when obama went
Speaker 1there they didn't even open the uh they didn't roll out the red carpet they didn't bring up the stairs to the air force one he had to like air force one has its own stairs but it's like they're not very good they're sort of awkward you had to climb out the bottom of it so oh wow i did not
Speaker 2know that yeah you can look it up and when i think about china i sadly these days think about a mutual friend of ours keith reboy given his very open concerns around china and it goes to something you said to me before which was going back to kind of venture and fundraising how you kind of fluffed or fucked up two funding rounds very humble of you and how founders fund bailed you out of them i don't actually know this story they're both different stories and they ought to be rather embarrassing if you did the same mistake yeah exactly the first time
Speaker 1but they're both my fault well at least the first one was definitely my fault so our series flex board series b round and we we were like a hot company we we were getting a vc came in and tried to preempt our round and offered us what for our scale and where we were what what were great terms i think it was at that time it was like 50 on a 500 million valuation or something but like this was in 2015 i want to say 2016. pretty early in our journey we were founded in 2013 so it was like they were good terms and i was very happy with the terms and yet the vc wasn't that famous or well known they're good they're a good firm i'm not gonna say their name they don't need to be starting fights but i decided and this is where i screwed up i decided i could get the same or better terms from a better known investor and so this was like on a thursday and i spent friday and the weekend hustling trying like pitching a whole bunch of investors but i had no i was being preempted so i had no room or deck or anything that you would need to do a fundraise and i think the word must have got back to this investor because i he coached cbi basically never talked to him again he definitely didn't show up with an actual term sheet and then now i'm in the midst of a fundraise where i've set this artificially high price and i wasn't fundraising but you can't like turn off the fundraiser i don't know it wasn't we were gonna need to we didn't need money then but we were gonna need it within a year and so it was just like this very awkward position and no and founders they they'd led the series a so first mistake i should have just called founders fund day one and said hey will you do this round but like i thought i was hot and like yeah eventually i did call founders fund and told him yo here's what i screwed up like i tried to raise money failed i did have an offer but the best offer i got from my process that i ran post was like a 275 million valuation instead of 500 and i went to founders fund i just told him everything it's like here's how i screwed this up best offer i got was 275 but the firm wants board control so you know i'm not if you'll just do it without taking the control of the board you guys can have it and peter just offered 300 instead of 275 which wasn't as good as my 500 but he didn't need to do that i told him
Speaker 4he could have it at 275 and he offered 300 what's been your biggest lesson from working with peter
Speaker 1they've invested several times in you yeah they have uh founders fund letter a or b participated in the c or d and letter e how much of the companies they have they probably had to go look at the latest cap table probably like almost what 15 or something maybe 12 there's been some big lessons from peter man he's sort of an enigma just amazing how far in the future he's able to look and like be right the number of predictions that he's made like well out there just kind of blow your mind that's not unique insight for me but that's one of the things that amazes me actually one of the things i love personally about peter is that i feel like most people i talk to talk too slow and peter does not like and if you accelerate your speech with him at least when i when peter and i talk to each other i think we talk like two times faster than when we talk to people and there's never a moment where he's like doesn't understand what i'm trying to say
Speaker 2i care a lot about word to value ratio you know the people who take a very long time to say quite a simple message and you're like just say the fucking thing drives me crazy yeah should you
Speaker 1always take the highest price when fundraising yeah no um maybe it depends um that was the worst
Speaker 4i hate fluff when people don't get to it should you know maybe it depends i'm trying to think
Speaker 1like over the years i kind of would always just take the highest price
Speaker 2but then brian chesky says don't ever take the highest don't ever that i disagree with that it
Speaker 1could be quite uncorrelated like the best brand name investor could pay more than the second best sometimes like that's very hard to give generic fundraising advice i think it's very dangerous like each founder asked me for advice i'm like you know your situation much better than
Speaker 2i do so it's like you have to be careful on that no i disagree totally and with the greatest of respects i actually think there is generic advice which you should listen to which is like tier ones yeah they will help you get the next round unwaveringly yeah that's the next i was
Speaker 1going to say is like with that caveat you probably will get a bet like the fact that we're a founders fund company has made so many other investors want to invest in flexport and
Speaker 2like you consistently underestimate how team members think about vcs and the importance of vcs to joining a company as a decision the amount of great operators who you're like well they wouldn't be i'm so i don't mean this rudely dumb or naive enough to just join a company because of a vc do just join a company because of a vc they'll go oh it's a sequoia back company oh it's a
Speaker 1founders fund back i mean it must be hot yeah well and employees have the hardest time because they only get to pick one at a time right like one company i don't know silicon valley right now
Speaker 2do you find that hard the hopping that seems so prevalent today more than ever so it seems like
Speaker 1there's a lack of loyalty for sure and we basically moved away from san francisco as a result like our team in san francisco is maybe four percent of the time we moved away from san francisco as a result of the companies based in san francisco even though that's where we were founded and where i'm based why is that is that because of cost or loyalty or cost and loyalty retention of good
Speaker 2people was has always been really hard and an acquisition and respectively you're fighting against open ai anthropic and some of the hottest companies on the planet as great a business as you
Speaker 1are you're not as sexy yeah and like our customers aren't there so i don't need a big sales team in san francisco you know we need to be everywhere not just in san francisco so i think we maybe overdid it though like six years ago five years ago i think we maybe overdid it though like six years ago i had 800 people in san francisco and right now we're like down to about 75 and actually i'm like looking around being like my leadership team is too distributed i want more talent in san francisco so i'm probably gonna start pushing more of our employees like you should come move back to san francisco i just got our cfo to move to san francisco it's made the business much better
Speaker 2so leadership team distributed you said remote work is what dot dot dot can you help me fill
Speaker 1in the statement here well i got i i said i say it's white collar fraud i have a three-year-old and a five-year-old the idea that i could do any work at my house is like a total fantasy like come on you're kidding and like i have a bigger house than most employees do like i actually do have a private office i can close the door on it doesn't matter like there's no work getting done at that house when the children are around and the kids come home like at when the school and 3 p.m like your work day needs to keep going so i i think i'm highly against it but we're five day a week in office as the baseline assumption at our company and i made the mistake of going remote and letting it stay remote for way too long and so like i think our culture suffered as a result was it difficult to bring it back in difficult for the people who don't work
Speaker 2here anymore but a lot of founders are sitting in the seat today going mad i want to bring it back i want in person i know the value of in person but i don't want a revolt when i say i'm sorry
Speaker 1what advice would you have to them yeah i just gotta do what you want to do i mean i think all the bad things that have happened at flexport were when i didn't do what i wanted to do and was trying to be it was i you don't want to ever be afraid of your employees first of all like the employees don't want that either they want a leader who's going to like go in the direction that they believe in even if they disagree like they want to follow a good leader and if they opt out like that's fine there's they can opt out like there's a lot of good jobs i i think that also that the idea that work from home is going to benefit highly paid employees is sort of a total fantasy work from home done correctly you should be hiring the world's greatest geniuses there should be a labor arbitrage here where you're finding really really smart people who make a lot less money because of the the way that our economy is structured where some countries just have a lower purchasing power and you can hire people like my brother has an assistant who has like off the charts iq in the philippines and makes like 500 bucks a month or something i don't know what he's paying the person out but like that's who's going to benefit from a work from home environment it's not the guy who's making 250k a year and lives in jackson hole and wants to go skiing for four hours a day like that is there's too much of that also like company like look your podcast is better if we're in person sure way better it's the exact same with every meeting that you have like i struggle and i we struggle because we're still even even if we're in office we're distributed we have 40 offices we need to be in every country so i struggle personally and my team all knows this i struggle with paying attention in like
Speaker 2video meetings i don't actually really do zooms anymore because i just a find that the quality of interaction is so low yeah and b find i'm so disengaged i know it's bad it's bad and yet like
Speaker 1it's the nature of our business it's just the nature of our business it's just the nature of our business so i do want more of our talent to come back to sf google has this new product i haven't used it yet they built this like i think hp is marketing it for them called the dimension oh the holograms people have used it said it's amazing i like the sound of this but they're like 250 000 bucks each and then you need one you can afford it no but i need one in every office how many offices do you
Speaker 2have 40. 40. growing yeah oh yeah you can't afford it it gets a little crazy right that's a lot and
Speaker 1we need to have an office in every country on earth so and then that's only one person at a time i do
Speaker 2back to the exact you said before that we should touch on like why you should never hire i think was that you should never hire execs was it most startup yes yeah and i just consistently i saw this the other day with this founder and i just it's one of the really fast growing company and they hired the cmo from one of these big logoed companies and i go to the cmo's twitter they don't have twitter cmo doesn't have twitter and it's like the most enterprise cmo ever
Speaker 4and i'm just like oh marketing is the hardest thing to hire for too marketing in hr well pause why is marketing in hr the hardest to hire for for different reasons um marketing in enterprise
Speaker 1marketing the moment something works it stops working because the competitors will copy it and so it's like it's all about creativity and originality and like how do you get creativity and originality in b2b enterprise marketing and if you are creative like you probably kind of become a founder if you can do good storytelling and creative ideation in the marketing storytelling angle so if you find a good marketer in b2b you really want to lock them in and so it's been it's been a that's a hard one to hire for and also to do that to do like successful b2b marketing and stand out like it's one thing oh i just make good sales decks for the team and like okay fine like that's some baseline stuff but you're not going to differentiate or move that bend the curve on a company's success you have to be doing kind of crazy stuff most crazy ideas are bad ideas so you're it's like being an investor like you want to do crazy
Speaker 4things that happen to also be good ideas like it's that narrow intersection which also don't make a great enterprise brand which is even harder yes and like as an employee as a it's so hard to
Speaker 1take that risk because you're like i don't know if i do something crazy and it like blows up i get fired like why take the risk so it's very very hard to find like a marketer that's not part of the founding team or like somehow you have to give as a founder if you're not the one coming up with these crazy ideas and trying things like you have to protect the team and let them you know the leaders there and let them know like i want you to experiment because it if it's not crazy it won't work or it has to be very expensive and most startups can't afford that so it's the big benefit that like a big brand has is they can just do really expensive stuff it's expensive as a feature in enterprise marketing because it's like you wouldn't spend a lot of money on something
Speaker 4promoting something if it wasn't good so it must be good what's the most expensive thing you've done marketing wise well we don't we don't have money to waste uh on marketing so you've never spent like a million dollars on big logos big brands
Speaker 1no i mean a million dollars sure we do like a conference that costs maybe a little bit more than that customer conference so that's find them effective yeah yeah for sure events like events works all day and by the way you don't have to be that crazy to do events b2b marketing is events marketing to some extent and like that's like plain vanilla but by the way you don't need to go hire a cmo to run events like conferences are kind of hard to pull off but like normal events like hey host a dinner like you don't need marketing at all like yeah just have your sales
Speaker 4guy call the people and give them a budget for it
Speaker 2so i basically was doing i was prepping for a show with adam from applovin he's like oh i fucking hate hr and every great ceo hates hr and like a complete dick that i am i thought i'd front run his show and take every great ceo hates hr and i'll tweet it myself oh my god i got killed by everyone for this tweet which was essentially adam's words which i agree with and i think he's right and credit to adam he's amazing do you agree every great ceo hates hr you probably go through these
Speaker 1phases right i mean i think the thing that you cannot have is them being like union representatives of your employees they're not they're there to represent the company and therefore the ceo and so if there's if you don't have that as a ceo like a trusted hr leader and you feel like the hr leader is more on the side of the employees than on the side of the company then there's a problem there have been periods in my company's history and like the industry in general where you're like didn't have the right hr leadership that wasn't focused on the business outcome but the employees are the company and the company is the employee everything is the company we're just like just a fake brand name here with a bunch of people that are building the company or serving the customer so the word hr is kind of wrong because they're not humans are not a resource that you can mine and take out of the earth like you have to give back to the
Speaker 2employees and have a two-way relationship they're not but agents are resources sure that you mine and agents will in large part replace humans and so the really interesting job function that could be created is like agent resources that is a good idea i honestly yeah it's like nine nine six is being replaced by zero zero seven which is you know midnight to midday seven days a week which is your new agent timeline do you buy the sas apocalypse and what i mean by that is you said earlier that you've built agents for a lot of workflows have you ripped and replaced salesforce
Speaker 1cooper you name it and built your own sas tools some not those names in particular but yes um and i think the negotiation that we're going to have with salesforce can be a lot different than the last one because i think selling sas to tech companies is going to be a lot different than the last one because we can build stuff ourselves and salesforce salesforce is great although most of our people don't like salesforce how much you spend on salesforce a year a few million a few million yeah it's expensive yeah so it's on the it's on the list of candidates i just did a show
Speaker 2with fraddick curative i don't know if you know this guy fascinating guy loved him built a business a health insurance business in san francisco sold five billion dollars of covid test kits during covid oh wow and then obviously covid no longer such a problem and now he's into a health insurance business that does north of a billion in revenue amazing amazing guy and they spend 600k a year in salesforce and he replaced it with an inbuilt tool to three weeks
Speaker 1yeah yeah so i suspect that we'll be replacing a lot of these things and i think a lot of what will happen is you'll just shake them down i don't know about salesforce salesforce slack is also going to be a great turn out to be a great acquisition because like that's pretty sticky nobody wants to replace build their own slack i could see a situation where you go hey we're
Speaker 4cutting salesforce and they just raise the rates on slack i don't know so i
Speaker 2actually incubated a company which is a slack competitor yeah it's a direct slack competitor built for the aih and it's kind of actually predicated on a kind of idea of alex rampell from andreessen he says you want to be in markets which is greenfield bingo which essentially are markets where there's a huge amount of net new customers created every single year in other words you don't want to exist in markets where there's static market entrance and actually our market is every new startup that's ever created if you're creating a company do you want to go slack and salesforce or do you want to have an amazing what's the best thing that makes sense
Speaker 1which i thought was interesting yeah definitely want to be in big markets too but i mean i think a category coming back to our earlier thing about sass i think there's going to be a lot of categories where you say for example there's one or two pieces of software that we fully replaced and killed it and and more every few weeks but there's gonna be a big category where you take like one of the things i'm having our procurement team doing is make the powerpoint case study of the one of them and how we did it and how long it took and then just go down the list of all the other sass vendors that we have and say hey look this is what we did because the vendor didn't reduce our rates so i need you to reduce your contract rates or else i'm just going to have to vibe you know replace you guys and question one what is that reduction do you think i think you get like 20
Speaker 4out of almost everybody okay we'll see that we'll see no no i think that's i think that's very fair actually do you worry about maintenance yep that's why i don't want to have to do it for a lot in
Speaker 1some cases it might be a bluff i couldn't do it for all of them like and i don't want to dedicate that much of our engineering resources to replacing sass like i want to replace work like expensive labor and i want to build our product and make it way better so i don't i want to like focus on our core business with our engineering talent and like not do you worry about security yeah constantly paranoid almost all of our competitors have had major hacks in logistics
Speaker 4like it's been a major target area for cyber and there's been a lot of like ransoms i'm not going
Speaker 2personal finances but i didn't know before we walked in the park about the angel investing if you're comfortable sharing what have
Speaker 1been some of the best angel checks yeah i've done really well as an angel investor i i used to do a ton of it early days of flexport so i i started this company called importgenius.com that throws off a lot of cash it's a nicely profitable business so i actually started as an angel investor while i was in y combinator because i realized i had inside access i was kind of like a
Speaker 4was it really obvious who was great and did your beliefs
Speaker 1on who was great turnout to be correct it wasn't obvious it was great it was obvious it was terrible though and i think if you can eliminate the bottom half like you're doing pretty well inside of a yc
Speaker 4badge what was the bottom half doing that the top half would you just talk to the people and be like
Speaker 1and they didn't see me as an investor so i you know i'm their peer so i could get like the real story so i invested inside my own batch i invested in like 13 of the 50 companies or something like that and there was a few good outcomes there algolia i was an investor in that but i missed cruz cruz was in my bag did you get out of algolia yeah i did i sold my shares in algolia a while ago
Speaker 4well done fantastic i made money on that one you miss cruz yeah and i'm friends with kyle why i
Speaker 1don't know it's just like it was too crazy like he was just like throwing this camera set up on the roof of his honda civic or no it's africa what car you had at acura or something i was like this is
Speaker 2not it's not a thing it's not legit um you know the crazier the thing the more i'm like i need to do that yeah because if i don't get it i'm probably missing it because i don't have the money to do it yeah because if i don't get it i'm probably missing it because if i don't get it i'm probably missing it yeah because if i don't get it i'm probably missing it because if i don't get it i'm probably missing it if i don't get it i'm probably missing something maybe yeah so uh one of my best angel investments
Speaker 1um i was well actually bitcoin early bitcoin sold that don't don't kidnap me i don't have any bitcoin anymore but uh i've made money on bitcoin i was the first investor in rippling put a big check into that did really well are you revengeful uh no i'm personally not but i think that investing in founders who were have who are pissed at somebody and like want to get back at them like same with um rippling dario i never met before with um rippling dario i never met before but yeah i don't know if he was wrong yeah but yeah i don't know if he was wrong yeah but yeah i don't know if he was wrong yeah parker parker zenefits a16z they fired him parker parker zenefits a16z they fired him parker parker zenefits a16z they fired him i never got that vibe when oh yeah rippling i think actually it's a great i have a great thesis around like founders who have been wrong second time founders who feel like they were wronged the first time around would be like
Speaker 4great investment thesis revenge and patriotism is a great investment thesis revenge and patriotism is a fantastic one do you have a chip on your shoulder not really yeah i have a there's a few
Speaker 1people who i should be way more like who have wronged me but i like totally block them out and don't care i don't know why it might be better for what was the single best investor meeting that
Speaker 2you had where they didn't invest oh none of them i mean those are none of them there was never an investor meeting where like i don't know it was with i'm just making up alfred lynn and he was just super insightful and smart on the future of the industry me my business and i was like god no i've never had one of those
Speaker 1really i have like a lot that seemed like they went well and then they never invested and the number of investors who you "ghosted" me by the way after the pitch the vast majority i would say where i pitched them it seemed great and then just like never hear from them again that would be the majority of investors i
Speaker 2ever this is where i like also the fact you know i i'm in the no camp so i just said i'm really sorry if we invest yeah i just don't didn't didn't believe that you were good enough i'm i'm not going to you and say that the market's not good enough or big enough yeah it's all crap but by the way if you're giving any reason you're pretty unique most people just like just never say no but you know it's kind of rude and personal but like i'd rather just be honest i just didn't think you told a very compelling story and you were a bit dry no i'm being serious it's good but at least then you can take away okay
Speaker 1tell a more compelling story yeah fair which is always the case right um pg his advice to founders was always you should hear the no but ignore the why because the odds of them telling the truth multiplied by the odds of them being correct are so low that you're just like very little signal in what investors tell you about no you should definitely hear the no though they pass so and by
Speaker 2the way especially when they're multi-stage funds when there's absolutely no reason for them to ever kill optionality like i want you to think that i'm amazing because in case you do inflect i want you
Speaker 4to come back yeah i wouldn't have any founders out there like actually secretly hate you because you tell them something that they didn't want to hear it's probably non-zero like honestly a lot but i
Speaker 2also think that they're not the best founders yeah who cares but i think if you if i actually said to you dude i actually liked you i just didn't think you told a very interesting story about the future of logistics that excited me i think you probably go i need to get better at telling stories by the
Speaker 1way my overall experience with vcs have been incredibly positive yeah including those who've passed and become friends and like people that i hang out with and there's no there's no ill will at all but uh i have way more negative experiences than positive like not to say like they weren't positive experiences but like i think you said earlier you enjoy pitching investors and i i like
Speaker 4pitching but i don't like hearing no or or getting ghosted or whatever so have you ever had a town one where like they fell asleep or they were like they were like they were like they were like they were like they were like they were like they were like yeah uh no i've had a customer fall asleep on yeah uh no i've had a customer fall asleep on yeah uh no i've had a customer fall asleep on me never an investor that's pretty literally fell me never an investor that's pretty literally fell
Speaker 2me never an investor that's pretty literally fell asleep down i'm like oh what do you do do you sleep down i'm like oh what do you do do you sleep down i'm like oh what do you do do you wake them up like
Speaker 1wake them up like wake them up like what did i do it was like seven or eight what did i do it was like seven or eight what did i do it was like seven or eight years ago the guy just fell asleep uh years ago the guy just fell asleep uh years ago the guy just fell asleep uh they're now like we ended up winning them they're now like we ended up winning them they're now like we ended up winning them over it was a sales pitch that they over it was a sales pitch that they over it was a sales pitch that they weren't a customer he was a prospect i'm weren't a customer he was a prospect i'm weren't a customer he was a prospect i'm terrified of what the competitors did terrified of what the competitors did terrified of what the competitors did the worst one i've only i let i walked the worst one i've only i let i walked the worst one i've only i let i walked out of one investor meeting not like in out of one investor meeting not like in out of one investor meeting not like in a huff i left my partner there my a huff i left my partner there my a huff i left my partner there my co-founder or like my the president of co-founder or like my the president of co-founder or like my the president of flexport he stayed behind and i said i flexport he stayed behind and i said i flexport he stayed behind and i said i had to take a phone call and i just had to take a phone call and i just had to take a phone call and i just never came back never came back never came back why they they kept telling me that the why they they kept telling me that the why they they kept telling me that the market size was too small and it was market size was too small and it was market size was too small and it was like the third pitch and like after this like the third pitch and like after this like the third pitch and like after this first two i thought we'd overcome this first two i thought we'd overcome this first two i thought we'd overcome this like we presented some we found some bcg like we presented some we found some bcg like we presented some we found some bcg that showed how the market size was that showed how the market size was that showed how the market size was only for flexport was only six billion only for flexport was only six billion only for flexport was only six billion dollars dollars dollars and i was just like actually my partner and i was just like actually my partner and i was just like actually my partner had the best line he was like oh so it's had the best line he was like oh so it's had the best line he was like oh so it's smaller than the market for usb cables smaller than the market for usb cables smaller than the market for usb cables and it became obvious to me that these and it became obvious to me that these and it became obvious to me that these and i said i don't think in bcg reports and i said i don't think in bcg reports It's like, it wasn't me that got the BCG report. Someone else did. I was like, just look at every object for the rest of your day. I want you to like look around at everything that you see and just ask yourself, how did it get here? I'm like, that's our market size. Like, I don't think.
Speaker 2So I always say to founders, if you need to educate an investor on the market, they're not the right investor for you.
Speaker 4It's tricky because if you're doing something very unique and different, or like in our case, like. Do you think any of your investors bet on you because of the market? I don't think they did.
Speaker 2I think they probably bet on you because of the.
Speaker 1Maybe. Yeah, they mostly bet on me. They didn't, they had never invested in this market before. That's for sure. Peter, you know, I met Peter. Sam Altman introduced me to Peter. Sam was one of our earliest investors and he invested me to Peter to get advice. It was a classic thing because everyone loves his book, right? It'd be zero to one. It's such a great book. And so Sam introduced me and I, that book has six or seven. I can't remember. I think there's like six questions to decide if you'll change the world. Or if like, this is like an incredible startup. That you should ask. And on five of the six questions, I felt like Flexport knocked it out of the park. Best possible answer. But then one of them was, one of them is, is it a small market? Because he, his whole thesis was like, you should have a market that's small enough that you can be a monopolist. And when I went to whiteboard with him and hang out with him, I'm like, well, look, it's, I want to know, like, should I be, should I make myself like, I can make this a small market. I'd be like, oh, we're going to dominate like logistics for hardware companies in Silicon Valley or something. But like, it's kind of fake. Like. The market's actually really big. And he like stopped me and he's like, look, it's, don't be too dogmatic. It's okay to have a big market, you know?
Speaker 2And then a few weeks later, he emailed asking if he could invest. So my biggest mistake is when I focused on market at all. All of my biggest mistakes investing have been actually not really like, you know, losing money. It's been turning down great companies, but because I thought that I was smarter than the market. Oh, this market shit. Oh, this market shit. How many angel investments have you done?
Speaker 4I did so many. So like the vast majority didn't do well. Like 200? Yeah, something like that. Wow. Do you track them? I have a Google sheet. Yeah, I know. I've just made one.
Speaker 1Well, I didn't for a long time, but at some point I had to clean it up when I was getting married and going through that exercise. What, of doing like a will? Yeah, exactly. Eventually you want to clean this up. Much better if you track it from the beginning. I would say probably it's super power law world. And actually, this is an interesting thing for founders to understand is once you see the world from the perspective of the angel investor, you realize that we really don't care. Even a 3X, like if you take my spreadsheet and this investment made three, three times the money, like the founder is very proud. Like, hey, I made you three times your money. But if I remove that and make it a zero, it has zero impact on the bottom line of the fund, like zero relative impact on the IRR, because I have a couple that are a thousand X or 500 X. So they strictly, completely dominate everything else. So you don't care like about the ones that failed. And when I write a check as an angel investor, I would just mark it to zero. I don't care. I just assume that it's a zero. And then that way I don't worry if it fails.
Speaker 2What do you think? Founders don't know about the VC? Mindset that they should do. I think that's really valuable because I also see and this actually does pay me, which is like a really noble founder mindset, which is I'm going to give five to ten more years of my life to grind out a one and a half X and I'm just like, don't, I don't mean that callously or flippantly. I'm not being flippant with VC LP money, but just your time and my time.
Speaker 4Yeah. Yeah. I don't even want the investor updates. It's fine, dude. Yeah. Like, it's okay. Yeah. I return 0.6 X is better.
Speaker 1Yeah. I mean, if it's your life's mission and your calling and like,
Speaker 2I'm like, great, never give up to like investors.
Speaker 1There's that, there's what I was saying earlier of like how much they're a circular rumor mill, you know, like when I was doing one of the rounds of funding we were doing and I was pitching this investor and I think I was on like the third meeting. I'm not one of these people who like, oh, you never talked to associates. Maybe I should be, but I think it's kind of a loser way to live your life. I never had this attitude that like, you shouldn't ever talk to the junior people, mostly because I'm not a dick, but also I just assume that those people someday will become like partners and they'll remember. That I was cool. I don't know. I, I, I, but I was like on the third meeting with this fund and I was still talking to the, not the junior person, but I wasn't at the final decision maker yet. And so I told the guy, I was like, Hey, I've decided to go in a different direction here. This isn't going to work out and I'm going to raise, you know, and within an hour, I got phone calls from like three other funds who I hadn't picked a different investor. I just was like trying to let this guy off the hook. And within an hour I got the, all of the funds that I was still talking to called me like, Hey, what happened? I, you, I heard you picked a lead. And like the amount of rumor mill and collusion that happens in VC founders have no idea. It's like this create, and you can use it to your advantage. It can work against you, or it can use it to your advantage. Like it you're looking for an outlier who will value you more than everybody else. So like, you know, that collusion does not work to your advantage unless they're all hyping you up and saying, dude, this is the best company ever.
Speaker 2This is so not in my interest at all. But that's why I always say to founders don't like test the market. Don't like dip your toe in with one or two meetings because the associate WhatsApp groups are so malicious where if you meet me and I don't think you're great, I promise you, they put you in the weekly roundup, which they send out because they're exchanging currency. Oh yeah. They need to give to get. Yeah, exactly. And so I'm putting you in my weekly update where I said, Ryan, only at a million ARR, not growing that fast, not a compelling sales round. And these are within a firm or these are cross firm? They're cross firm. It's crazy. Yeah, exactly.
Speaker 1That's what I was getting at before.
Speaker 2Cause again, we're all associates and we're all in the, I need to bring deals to the firm business. And so they all send weekly roundups of who they've met.
Speaker 1That's crazy that they're sharing that externally.
Speaker 2Oh shit. Yeah. Their firms probably don't know, right? No, no, no, no, no, no, no, no, no, no. But remember they're more in, but this is almost a good article actually. But the associates are more in business with that class than they are that firm.
Speaker 4Well, and they're trying to get ahead within the firm and by showing that, you know, they don't bring dumb
Speaker 2deals because they've they've referenced it my competition is not the other associate at x firm it's the other associates in my firm and so if i can get ahead it's like the f1 drivers which is why the perniciousness is actually very real because then do you know what the others go oh well ryan's only at a million there are not interesting either don't need to meet him
Speaker 1that i do i see that well and i also think founders should basically never share their metrics which i've done on the show so i don't care anymore but you should never share your metrics no offense to your kind of past yes i don't need to raise any money ever again but the uh you should never share your metrics because what you want to do when you pitch a vc is you want to cherry pick whatever metric looks the best and pitch that as the important metric for your firm but once you've shared a metric you're now committed to that being the metric and who knows maybe you couldn't make that one go up hockey stick style but now you you're committed i remember colin matild i think
Speaker 2it was colin i think it was uh from joe colin front french founder yc partner , now i believe awesome woman and she always told me that you want to raise when you're really confident just because like confidence emanates oh yeah when were you least confident
Speaker 1recently yeah oh god when you're losing a lot of money uh like sports have we've been on the euro's journey right if anything is straight up into the right by the way is pretty boring
Speaker 2not as an investment great it's wonderful but like as a human story it's pretty hard to see any company i i've tried to think about this before snap was pretty up into the right continuously i mean just a couple of years ago it was just a couple of years ago it was just a couple of years ago it's been a up and down but it was pretty continuously linear up into the right not many
Speaker 1others have been but i don't even mean as an investor as an investment of course you want things to just go up into the right and never come down but as a story of like what's compelling to the human like snap story will be infinitely more compelling if they figure it out and start growing and going like hockey stick again than it would be if it never stopped that it was hockey stick you'd be like wow what happened here like that the human brain loves the story the hero's journey where you got to go to hell and come back like if it's just always good like that's not for you
Speaker 2dude social media posts the absolute bang is a zero to here i started in my bedroom with no dollars and now i'm you know sitting here with even zero to hero is not good enough you want to go zero to
Speaker 1hero and then take a fall and come back so we need to cancel you and then the comeback it's different a little bit different in enterprise because you have competitors so like in our case if we have a negative news story like literally no one will read it and our so we don't scandals just like oh it's such inside like i once had a bloomberg article about us where we lost a package for a customer one single parcel and we lost a package for a customer and we lost a package for a customer
Speaker 4i remember it was one parcel it was quite a scandal and it was a newspaper i mean bloomberg's
Speaker 1not a print but it was a it was front lead of the story that flexport we used doordash to do the delivery one parcel by the way they did the story did not mention we delivered 40 million parcels successfully but we lost one and we gave her a full refund before the story ever came out and that became a scandal of sorts nobody would care nobody would read it except we have competitors and the competitors will take your bad news and send it to your customers and stuff so it actually can hurt in enterprise it can hurt your business negative news stories even though it's not the story itself it's like your competitors are kind of low life uh looking for dirt one in 40 million so i mean we probably lost more than one but the story was about one you dick and and actually it's an interesting story that we use doordash for logistics people don't think about that but if you doordash has a bit of a problem there because um doordash's quality is better than others or it's as good as like a fedex or ups but when you use fedex and the package doesn't get delivered people don't want to use doordash they don't want to use doordash for like yeah it happens it's fedex but when you use doordash and it doesn't get delivered they're like why did you use doordash like what's wrong with you company like doordash is for food delivery why did you it's something they have to overcome because their quality is actually fine
Speaker 2i think tony robbins said this once but it's like how fast appreciation turns into expectation is extraordinary and it's like you know before you're like hey we didn't expect to have wi-fi on the flight but now we've got starling and you're like wow that's amazing and then you get expectant of link and then the down is so bad what did be a massive appreciation now you're like i expect this yeah which entrepreneur do you most want to have a dinner with that you haven't had a
Speaker 1dinner with never meet your heroes i've met uh most of them are great founders you believe they
Speaker 2never meet your heroes yeah they know well i don't i don't buy that analogy i've met some of mine and they are heroic yeah yeah maybe i'm still idealistic depends you know also you want to meet
Speaker 1people who are like at your level or see you as a peer and want to actually engage in a dialogue with you if you're meeting somebody and they're like unhappy to be at dinner with you and they don't care about you and don't ask you questions or learn do you know what i found the more amazing
Speaker 2the people the more interested they are i've been fortunate enough to have like you know a sit down with charlie munger yeah i was so curious oh really yeah yeah i i one of my dearest mentors would never want to be named down here but it's like one of the founding fathers of one of the
Speaker 1greatest firms and he's so curious yeah yeah some some of them are like this and some are i find it somewhat uncorrelated like certainly they were like that on the way up some people get to the top and then stop being curious and then they're you know probably their returns or their impact after that will slow down it's my theory but you beat some people on the absolute top who
Speaker 2don't care final two for you and they are more personal but i hope it's okay for me to ask but it's general wisdom for me moving forwards when you think about like winning but also winning at marriage any tips on how to like continuously have a great marriage and dude you've been through some rocky patches in terms of the business how to sustain marriage through hard ups and downs oh well it's all it's a picking
Speaker 1game i guess and you only get one bet right so make sure you get the right one uh my wife is a when i met her she was a journalist actually at bloomberg and i still couldn't kill that bloomberg story even though these were her peers that she worked with for years i mean i'm uh it was crazy even then but that was a risky move i know yeah i don't talk to journalists uh it was it was a bit in fact uh someone one of my investors at founders fund told me dude you need to either marry this woman or break up with her but you cannot be dating her no he's right it's great advice so i married her um and then she had to quit i in part because of me because she got assigned to cover uh softbank who's my investor
Speaker 4and i was like no can't get to it sorry and she she knew that she it was a not a good fit what's it been like having softbank i love masa but like do they how did you pitch math yeah yeah of course
Speaker 1like a big larger than life was it in person yeah yeah i think definitely in person i'm trying to
Speaker 4remember if i also met him first on video no it was in person can you just take me to this i love massa i love gambling i just love the guy how was this where was it i mean i don't i can't say i
Speaker 1like love him that much interpersonally we're not friends or anything but like i'm just like a big fan of masa sure where did you meet how did it go i met first time i met him would have been at his house in woodside california which is like it's very nice let's say uh you can look up the zine estimate you're like oh this is going to be fun the zillow estimate uh how long was the meeting probably like actually pretty short maybe an hour or so considering the size of the check i thought it was surprisingly short meeting he has this uh painting of napoleon behind him and i wanted i didn't end up finding one i was trying to buy a painting of the um the duke of wellington to send it to him right uh who of course defeated napoleon but as a troll but i never found a good one that it was worthy of the prank it's a bold move as well oh yeah it's a risky i'll just leave after he invested i was going to be like i'm going to be like oh i'm going to be like oh i'm going to be like oh i'm going to send him that as a gift um he's very bold you know i don't he wanted me he pushed us to go hey be cheaper than everybody because we raised a billion dollars from them so he's like billion from him yeah well they led the round of a billion yeah and he was like whatever the price of freight is you just be 10 cheaper than everybody and then if someone matches you you just be 10 cheaper than that which is like a terrible strategy i did not do that we would have
Speaker 4burned so much money but he was very aggressive he just wanted to push you to go i like the mental ethnicity there it's different to most ambassadors yeah and he's very connected too like he was able
Speaker 1during the meeting to call like foxconn get him on the phone be like hey what do you think of this
Speaker 2thing like what in the meeting yeah yeah it's like live are you serious well he had his guy next to
Speaker 1him call and like there or whatsapp i forgot i think it was this must be the weirdest thing like
Speaker 2due diligence in process and you're like oh do i like thumbs up thumbs down you do not want
Speaker 1to up you must have been nervous i was i don't remember i don't get nervous on that kind of thing most nervous in the flexport time i get nervous when i uh have to give a talk publicly and it's very time bound because i'm like kind of long-winded i don't and then i don't i can't memorize anything so i don't prepare like i usually will just go speak off the cuff and i'm a good public speaker basically a good public speaker but i i can't like memorize so like actually my the most nervous i ever was was the y combinator pitch because i only had two minutes
Speaker 2i find tv most nerve-wracking because it's like you have like five to seven minutes and they're like so ryan let's join you for is trump wrong on and you're like no no intros no in and out and they don't want to help you out like and they don't want to help you out and they just want the seven minute i'm gonna get you i've gotten pretty good at tv i think i'm like do you think you having a big personal brand matters to the enterprise value of flex yeah i do as measured by when i tell my
Speaker 1sales team i'm going to do less of it they always push me to go do more press like they say that it helps them get deals and close deals and stuff but it's one of these things i think it was steve martin who said like he went on the tonight show he went on every late night show that would have him and then he would go around west hollywood walk around hollywood and nobody would recognize him like this is in the early days and then you know so you couldn't tell like if it was having an impact and then after like five years of that he was like the most famous comedian in america everybody knew him he couldn't go anywhere but he couldn't pinpoint it to like any one thing so it's been a bit of my i only learned that recently that wasn't like driving me to go try to do more press or anything but generally i think being fit famous has helped flexport a lot and we're way more famous than like we should be given that we're like the 10th largest freight company i couldn't name any other yeah exactly i mean you could like expert uh no you don't know some of them mersk is like a famous company i know musk yeah they're a monster they're big yeah they're a lot bigger than us but i i probably i think flex for gets more we're more likely to be cited in the press on a story about supply chain than they are despite them being
Speaker 2much bigger final one then we'll do a quick fire you mentioned two kids five and three year old any big lessons on parenting i love kids it's really important i'm a good dad you just sent me down imagine i'm your younger bro dude you should know this uh well you need to have a great
Speaker 1wife who's a great mom so you have a good partnership the kids will be pretty natural you've got millions of years of evolution it'll be great great to finally care about someone besides yourself it's like a chemical wash of just like true love that is you can't get it anywhere else so does it change perspectives for sure yeah but like i get a lot of meaning from my work truly like genuinely love what i do it's a real mission for me i like my life's work is building flex for it but a lot of people don't have that and i was always like kind of confused because like most people i meet don't have a sense of purpose about their work like i do and i'm like how do these people function like i don't know how do you get through life you notice as soon as you have kids like you will get i get more purpose from that than i could from flex for and so that's the vast majority of human beings should get their purpose from their family from their life i would
Speaker 2feel incredibly lucky i watched the social network and i saw peter tlm vast on facebook and that's how i ever found out about venture capital really when i was 13 i lived in london venture capital is not a thing and so that was how i found that movie yeah cool um uh and i've only ever wanted to be a vc and like this is my whole life and being and i always feel terribly sorry for people but especially young people who like don't know what they want to do with that yeah they should just have kids
Speaker 1and then they'll be solved that'll be solved that problem will be solved instantly but if you get a lot of purpose from your work then you can have the opposite problem of like oh like you still
Speaker 2got you got to be a great dad i want to do a quick friday because i could talk to you all day so what have you changed your mind on most in the last 12 months for the last decade i didn't want to
Speaker 1compete on price and i wanted to be the premium provider in logistics and thought it would be bad to compete on price and now i'm like pretty convinced that we need to be the low cost leader and just go so hard at lowering our costs that if you're cheaper you just take all the market and i think i was maybe lying to myself because it was too hard to automate the work and too hard to become the low cost provider and are we're smaller than some of the big peers so they buy freight cheaper than us and stuff and i think i was lying to myself and it's like no you need to be the cost leader and we have to figure out everything we can to be the cost leader massey was like he was like
Speaker 4just fell under your cause like i don't believe in that uh who do you not have on your board that
Speaker 1you'd most like to have on your board magic wand i don't think our flex sports board needs anybody uh the board is like mostly there to represent the interests of our the investors and make sure we're doing a good job not like okay but who's wise counsel would you like to have you want to join
Speaker 4the board that's how you're angling that's how you're angling that's how you're angling that's how i mean listen i i think i'd add a lot to the board personally but i it needs to be your decision
Speaker 1ultimately i'm just glad that my board doesn't screw with us my board has been like very supportive of us of me in particular i don't really want a more active board they're not super active in the business they're not like telling us what to do they don't help that much but they don't ever hurt and like i would much rather have that than like a really helpful board i don't think there's a risk of the board for me i don't think there's a risk of the board for me i don't think there's a risk of the board for me i don't think there's a risk of the board for me i don't think there's a risk of the board firing me someone who's really smart and thinks they're smarter than me might fire me penultimate
Speaker 2one what sports team do you not sponsor that you would most like to sponsor oh i really would love
Speaker 1to sponsor uh this football club in uh hamburg called st paulie why they're the second team in hamburg and the first team my great-grandfather was a sailor from hamburg first of all so i've got like a personal history there i don't know if he i don't know if that team was around back then but uh the first team is owned uh by claus michael kuhne who's the manager of the club and he's the owner of our direct competitor kuhne nagel and i just love the idea that we would take the second team and beat him and he would be like ah those kids these damn kids here they come again so just more of a troll than anything else and their logo is a pirate they're like i don't know their logo but they're kind of like they're like kind of like a leftist communist oriented club i think
Speaker 2they would kind of hate us if we tried to buy it yeah maybe maybe i didn't know that um because they wouldn't be that expensive but if they are totally uh also it's sports is a tough business yeah i don't want to own any teams final one what has to happen in 2026 for you to consider it a successful year we got to hit our numbers we got to grow like crazy
Speaker 1and then this automation via ai like we we've got about probably like a hundred core workflows that are costly that we're building ai agents for right now and like five of them are live and working and saving us money and 95 that are under development and i need i need at least like 80 percent of those to come to life and like actually have the impact otherwise we're just spending money
Speaker 2not getting much back for the ai dude it's been so great to have you in person thank you so much doing it also on a sunday of all time so i really appreciate it dude and it's really special to meet you in person properly yeah it's great to be here but before we leave you today meet ava the first autonomous ai bdr built by artisan to run your entire outbound on autopilot hey jason lemkin
Speaker 3from sastr here artisan is s tier we've replaced our entire outbound sales team with artisan i customized emails to artisan the open rate is twice what it was with humans and they close
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