Unicorn Founder on Unseen Arbitrages, the Paradox of Wealth + Charlie Munger Wisdom ft. Ryan Petersen

All right, today we're talking to Ryan Peterson. Ryan's an interesting guy because he started out working at a pizza shop, bootstrapping his own company to millions of dollars. And now he runs Flexport, which is a multi-billion dollar company. So he's kinda done both sides, the big Silicon Valley game as well as the Bootstrap, make something out of nothing, form of entrepreneurship. And we talk about three things. The one big lesson he learned when he became friends with Charlie Munger, what Charlie Munger really taught him. Number two is a master class in negotiation. So things that he learned about negotiation back when he was in business school that still help him today. And the paradox of wealth, so why chasing money?

Well, money is great and you want to make money and he says money is great too, but How Instead of chasing money directly, you should do something else instead. He calls this the paradox of wealth. So enjoy this episode with Ryan Peters. I feel like I can rule the world, I know I can be what I want to Okay, today you have the Silicon Valley success story. So you've got Flexport.

This like a behemoth of a company, multi billion dollar company, went through Wece C. You did the Silicon Valley you won the Silicon Valley game. Which is great. And I live in Silicon Valley. I like the yeah, I'm I Spent ten years trying to win that game.

The Other side of it though that's I think a lot more relatable is You were You know. Working at Domino's Pizza as a teen, you flipped scooters from, you know, on eBay. You then built Import Genius, which is a bootstrap company that I think had.

Kind of like real EBITDA, like I think you were making millions in EBITDA along the way right. I still am, still am. It's still a good business. Exactly. So you've done both, right? You've done the bootstrapper game, you've done the the flipper game, and then now you've done the the big you know, Silicon Valley disruptive Disruptive game. And so I think that's cool that you did them and not just that you did all those things, but one sort of led to the other. Is that right? Like the scooters led to import genius, which led to ultimately Flexport.

Yeah, I think they're definitely drawing the lines. backwards you can make that pattern real easily That um really the scooters. I was working for my older brother and it and his business partner, Michael Kanko, and we Had a lot of frustration with freight forwarders and customs brokers.

And we had a lot of frustration with finding good factories. Those were kind of the two big problems that we saw. I have this econ business that um Has Over li I started it kind of right before or right during COVID, basically. We launched right after COVID.

And We've now done over I don't know, fifty million in revenue, but I would not have found my factory had I not used import genius and I I remember. I was like I'm kind of like a

shortcut taker in general. So I was like, okay, I either I can go on Alibaba and I could try every single supplier on here, try to find a good one. Yeah. I could go to Whoever I think has the best quality and just try to reverse engineer who is their factory, who is their supplier. And

Uh actually I remember like buying the ninety nine dollar or one hundred ninety nine dollar, I don't remember what it was, like import genius subscription. And then actually there was somebody on your chat team that did the search for me because it wasn't showing up initially. And they went back like further in the records twelve months, fifteen months ago, and they found one Manifest and people don't know how this works. What you guys did was basically you Took

d public data about the shipping manifests. And then you organized the instruction is so you could see for any business, who's their supplier, and for any supplier, who are all the businesses they work with. Is that right? Is that the right way of describing it? Yeah, that's what Import Genius does. It's still it's still we haven't raised price as much either. It's still about the same as you said, ninety nine or hundred ninety nine. We might raise it a tiny bit, but um import genius.com Is the business that I started in You know, you m if why don't you mention Alibaba'cause that's I started that business out of frustration.

I was living in China. For a while. And I would use Alibaba to find a factory. I would show up at the factory and they weren't expecting people to just show up. And it'd be like fake factory, like he's just a middleman. You know, or like one time they I did give'em a couple of the advanced days, but I showed up and they were like very clear like faking it. Like this was not

Bunch of guys in a warehouse with no equipment or anything. So yeah, it was frustration for that. I I think it's been poor genius kind of like the Organic search results. Like Google, you know, if if it was all ad words, you'd y that's kinda like what Alibaba is, like people paying for pricement, et cetera. Um

Alibaba.com is of course The original business was B to B Searching for factories, but that That's not what drives their market cap. Their market cap is driven by Tao Bao and Alipay and all these other products. Right. Um

But yeah, the original business is like finding factories, I think Important is a much better way to do that. I do think that my brain is around seeing problems that somehow other people just kinda take for granted. And they're blind to in some way. that they just sort of accept it as oh that's just reality. And then actually getting really curious about it and looking at what could you do to solve it in

That's where genius came from. That's where much where it came from and that's sort of that same problem. It's annoy I'm kind of annoying in that way, like When I go to a restaurant I'm like doing bottleneck analysis on the cashier, like what would I do to like you know, get this get the traffic flowing faster through this place. But um yeah, I can't help it. What what is Paul Graham's word for this? Slep Slepblindness, right? Sleep blindness. Yeah, I usually point people to that essay on on Paul Graham's essays. Called Slept Blindness, which is

This idea that you you're kinda blind to the biggest problems in the world. Paul has a good quote about you, I found in my research. This is a f this is the make you blush section. All right. So it says Paul Graham Founder of My Combinator says Ryan is what I call an armor piercing shell, a founder Who keeps going through obstacles that would make other people give up.

A, do you think it's true, and B, why do you think Paul thinks that about you? I don't know if it's true. We we work we I do work really hard and don't give up easily. Um Paul and I have had a great relationship for a long time as he's seen me since the very early days. I met Paul when I was before I even I started Flag Sport, but barely. My brother did Y Combinator the year before me. We were renting a house. Actually it used to be Max Lepshin's house because we used to get his mail.

I don't know how long before it must have been a long time before because it wasn't a very nice it was like a little apartment pre-paid house. It was like before you got rich. But uh We were renting this apartment and it was near a dog Was there a park where Paul would take his kid George, who's now older when he was

And we would uh we would Take my dog there to play. So we just like run into poll and my brother was in Y C at the time, so we got to striking up conversation. So Paul's seen me since like Flexport was just an idea, basically.

He's been a great advisor for us, said nice things to a lot of people. What uh what did Paul help you with? Because I've asked people this a couple of times and I feel like everybody's got a great Paul Graham story of like there was a you know, these there's these like crucible moments in every startup, or there's these moments of uncertainty and Well, either brings either a certain level of confidence or clarity or a question or a bit of advice that was was helpful early on. Do you do you feel like there was one of those for you? I think Paul's got his superpower is like not he only sees what's possible and like How valuable or big could this thing be if everything worked? And he ignores every other outcome that's possible.

Yeah, That is probably the right way to do seed investing, you know, in a power law world to find like the And so he always saw If Flexport really worked, the outcome's so outsized and enormous given the industry size and their and importance.

Then and and then he could help us sell that story to other investors, to candidates. He would send emails early days to like top engineers thing. Really great things about us. quotes like the one you mentioned to different Press and stuff like that.

He's also been a really big supporter of Flexport.org, which is our um humanitarian relief logistics. division that that helps nonprofits doing refugee camp logistics or other sorts of disaster recovery logistics. He's been He's donated millions of dollars to us there and helped us get the word out about all that stuff. So he's Yeah, a huge supporter of Flexport.

That's amazing. Yeah, I always think about like Uh The first believer. I think everybody has this person who uh believes in you more than you believe in yourself for a period of time. And it's sort of like a it's like a short loan. It's like a short term loan that you can get of of conviction. And um is very helpful to an entrepreneur. And it's actually very helpful to be that person, especially once you have a little bit of success as an entrepreneur. You now can lend a little bit of conviction to other people you believe in.

When they when they don't really have it. Yeah, I mean Paul's job is hard. Well, he's he's retired now, but the job of being a Y C partner or leader of Y C is just super hard. Lot most of those people are gonna fail. So you have to kinda delude delude yourself. Uh if you really want to say only focus on what could happen, well that's probably not what's gonna happen in most of the cases. That's very hard psychologically, I'm sure. Yeah, maybe he needs another essay that's like schlep blindness, but it's on the investor side. It's like uh you know uh fail fail blindness. It's like the ability to f easily forget um with import genius. You took publicly available data, you structured it, you made it into a useful business that generates millions of dollars a year of profit. It seems like your brother also did that same business model. Right, in a different space with build Zoom. Can you explain maybe

What is the underlying, you know, w way framework of how to think about business ideas like that? that might that might succeed.'Cause it seems like there's a pattern that there's multiple ideas like that. That yeah, Build Jim was born out of the frustration of finding a contractor. Build Jim's my older brother, David's company, one of his companies. And he was my co founder with Import GS and and My boss for a while and yeah, he's sort of my mentor in startup world. Uh

Builds in with boring out of the frustration of finding a contractor to work on your house. And underlying it is this public data set of building permits are largely public record. But hard to access. And we had a lot of experience of doing that with import genius. So we built a search engine. on building permits and lets you look up any

Wherever you are. Anyhow, so you can see who the contractors were that built on that that worked on it, which is pretty useful as a homeowner, by the way, as a tool. See. Who buy problem, if you have a problem, go find that person. They probably can help you with it. Um

But also You're doing due diligence on contractors. No, you know, being able to talk to the actual homeowner as she worked. Like who worked with them, making sure that the reviews are actually for people that hire this contract or like There's a great data set out there.

So they built they built a nice little business. On top of that data set. I think that government data is a big opportunity. The government. has tons of public records on all kinds of stuff and no real incentive to

organize it in ways that are particularly useful. It it it makes it hard to build defensibility onto these businesses'cause other people can if it's public record, other people can access the data too. Um So you have to get distribution. Or build some kind of a network effect on top of it, like in Build Zoom's case, it's like reviews.

That you're layering on to this and And sort of brand is always the ultimate network effect that you can build onto it, but No, I think people overthink T. Defensibility a little bit. Like how could you have defensibility? You're a startup. Just like you know, if it was defensible, how could you possibly do it yourself? Uh

Yeah, there we we did an episode recently on a uh I was like, I found this app that's called Oasis. It's a water water quality tracking app. So basically like How much how much, you know, forever chemicals are in your water. Oh yeah.

This it's this kid uh it's this kid who did the same thing. He basically was like He lived in, I think, Minnesota, where they had like clean water. He drank tap all the time. He moved to LA. Start drinking tap water. It tasted funny. He got a little bit sick. He's like, Oh man, I wish I could figure this out. Turns out Every city has their own testing data that's publicly available.

Turns out that you can request from every bottled water company their reports as well. So then he created this app that basically present it to the consumer and then he goes viral on TikTok with these like kind of like fear based, like did you know that blah blah blah, but you can check this using this app. And he's built a you know a a thriving business on this thing. I think he's at like fifty K Mr and he's just a kid in his twenties. It's not the most defensible. Junior man, he'll be.

That's right. But I I think it's kind of amazing that you could do this taking public data and make making that happen. Yeah, brand and network effect distribution, getting users, getting people loyal to it, X and T high velocity. Yeah, I got I remember I got in a fight on Twitter like five years ago with some guy Oh talking about moats.

And I I was just making a play on words saying that well Yeah the moat. Turn out to be not that useful once someone invented artillery. Right, right. We don't use emotes. Like

What you gonna put alligators to defend your business? So I was talking Like actually, you know, there th you don't really want to hide behind some walls, like the real ever Ever since The Blitzkrieg in like nineteen forty Nineteen thirty nine or whatever, we learned that like high velocity attack is the way to win, not like sitting behind defensive walls.

Right. And uh I don't know, some investor like got really upset with me that I didn't believe in moats. Uh Well of course, you know, it's I'm Just make it a play on words. Right.

Well you You you wrote in here something that I found pretty interesting. I didn't know you were friends with Charlie Munker. And speaking of moats Buffett Munger famously talked about how defensivity and motes are super important. Can you tell the story? How did you become friends with Charlie Munker? Yeah, on R I P um

What Oh, I don't know fr friendly with Charlie Morgan would say. Uh I I had dinner at his house seven or eight times. Um before he passed. I went to his ninety ninth birthday party last year actually. I I I'm a huge fan of he has this essay which I think every young for every person should read, especially young people trying to figure their way through the world. Called um

He's called the Art of Worldly Wisdom. Yeah. Definitely if you go Worldly Wisdom Charlie Munger, you'll find it. I actually found it on Paul Gramps website. I believe P G published it to the My combinator website at some point. And I had read it when I was young and

feeling uninspired or like trying to figure things out. What should I do with my life? And the the the essay basically argues that There's a In every discipline. Like biology or chemistry or whatever the dis there's a you know, you can define number of disciplines however you want, sort of, but somewhat arbitrary, but just to say there's few hundred disciplines in the world.

And then in each one there's two there's two or three big ideas That carry eighty percent of the freight. If you know those two or three big ideas You kinda will get eighty percent of that whole discipline like in biology, it's probably like Darwin, you know, Darwinian evolution and Something to do with genetics, which are obviously related, but like you can get those two or three

Big ideas, you'll have uh w enough biology to be dangerous. Right. And that you can learn these ideas by going to read the textbook. And so if there's only three hundred disciplines in Three two or three ideas, you're like, Okay, I've gotta do About six hundred to a thousand ideas.

Then if I could learn them I'd be like what Munger calls worldly wise. It's an interesting concept. That Set me off on a journey of I've probably read hundreds of Books as a result of that.

And so the big ideas in every space. Yeah. I'm like what are these disciplines? And like b disciplines I don't really that I found boring, well like, okay, whatever, I'll just go find I still learn the top ideas from it. Um No, I'm not saying I've succeeded. There's some disciplines I just can't bring myself to By the way, his essay isn't just saying there are these ideas. He actually lists a bunch of them. So he's like, for example

Things gravitate towards winner take all. Therefore it pays to be number one or number two, or just be out. And then he gives example, right? So he'll give he g the essay isn't just the concept that these ideas exist. He gives a bunch of examples Yeah. And then they're they're th you know, he thought of some like mental models. Do you build these mental models from one discipline, it turns out they're often applicable in another, and that's where a lot of the good ideas can come from. Um and a lot a lot of innovation comes from applying an idea. Like Richard Feynman's a great example of this. Famous businesses. He spent like two years as a biologist and like I did some groundbreaking work in biology just'cause he took ideas from physics that people hadn't really thought of frameworks and applied it in biology.

Right. Anyways, I I was very inspired by Munger for many m you know, decades really. Sillium. And I

was at a party at one of my investors' houses, and I was just talking to this older guy. Neither of us knew anybody at this party or didn't know many people. And I'll he asked me what my favorite book is. And I started talking about Poor Charlie's All in the Knack, which is a great book, uh that Stripe just reprinted reprinted, by the way. I I told him that book is my favorite. And he started telling him why and I told the story of the you know worldly wisdom and how I was living in China, I was bored.

out of my mind sometimes. And so I bought all these books and just started reading books like hours a day, every day. Um and He let me talk for a long time before he was like, Yeah, I know that book really well. I wrote that book. Uh and it turned out the guy I was talking to is a guy named Peter Kaufman. Who wrote the book Poor Charlie's Almanac, he's like one of Charlie Munkers

Best friends. And he just thought Got such a kick out of me. Telling him so fast about how great his book was that he brought me to Charlie's house for dinner and Many

Many times we became friends with a few other of Charlie's friends, they gotten been ball invited to lots of dinners. And Charlie, I remember When I first told him about what Flagsport does, he was like Oh, this is That's great. You have a great business because the key to success is dumb competition. And he started ranting about like all of his experience working with freight companies.

And I I I I I also think that's a great little tagline too, is like remember, yeah, when you're trying to think of what business to do. All these guys doing AI startups like Make sure I I think applying AI to some old school frozen industry is a great idea, but just going straight head in Head on against other AI geniuses as like a recipe, like who wants to compete with people that's more like

You rather compete with knuckleheads wherever you can. Yeah, exactly. That's a very uh simple principle. Like in poker, table selection is like Probably the most important decision you make. So everyone thinks poker's about like, you know, the the bluffs and the advanced betting strategies or whatever it is. And a huge amount of your success comes down to which table did you choose to sit down at. If you chose to sit down at the fish table, you're gonna do pretty well. And that one decision was the most important decision you could have made if you sit down with all the sharks. Well,

Good luck. It doesn't matter how good you are. You're you're probably just gonna, you know, bash your head against the wall for a while. That's why I don't play poker. When you met this guy, I I like how you said you're at a party and you're like we both didn't know anybody. There's just like Alliance of the outcasts that happens. I don't know if you you've heard the story about Ben and Jerry's, but they they asked Ben, you know, Ben, how'd you meet Jerry? And he goes Well, they go, Were you guys friends immediately?'Cause they've been friends for a long time. He goes No, he goes, We w we just were in the same PE class and they had we had to run the mile and both of us hated running. So we were the only two guys walking.

And eventually, if you're just walking at the back with one other guy, eventually you'll start talking. And he's like, that was the foundation of Ben and Jerry's also. I wanna ask you about this you said you moved to China. What was the thought process that got you there and then what'd you get out of doing that? Um It was two thousand and five.

It was Clearly booming. It seemed like the future We were at that time I was working for my brother. We had the scooter company buying dirt bikes and road we say scooters, but off road vehicles, doing buggies, all kinds of Cool uh motorsports products. Uh and we were buying everything from China, but not

Like they were buying everything off the internet. No one had been to China. Right. And during college I lived in South America. I I lived in Chile and Brazil. And I learned s I speak Spanish and Portuguese. So I was like I can

If anyone can learn Chinese, I could Probably learn Chinese. I I learned these other two languages, which was very naive. Um So I saved up a little money and just like Move there. Did you plan to be there for a while? Did you buy a one way ticket? Wha what was the

What'd you tell yourself going in? Uh uh I don't know. I didn't have an exit plan. I was um just gonna learn Chinese and and learn about Chinese culture and history and economics and what's going on in the boom. W what's your tip if somebody's in their twenties? And they're They're kind of intr intrigued by this, like the adventure.

Path. What would you tell? Like how would you tell him to think about this now that you've done it? I I think it's it's really about your values, you know, and and really Introspecting. You can select your values too. Well a lot of people just kinda go through life without thinking about this. I I did. And I my value without knowing it consciously, my number one value. In life until I was about twenty five or twenty six was adventure and I just wanted to like

Try all kinds of go all over the world and Remember this is pre-iPhone, so it was like pretty adventurous. Like I didn't have GPS in my pocket or translation apps or anything. I mean, I just had to like figure stuff out. Walking around asking people for directions and Hoping they'd be nice to me, which they were.

But it was definitely an adventure. I I I And so at that time that was my value was like chasing adventure. That's not for everybody, but if it is like it's pretty easy to achieve going to cheap places. It's a lot less adventurous these days. I mean you show up you call Now you got the China call Uber or D or D, I guess, and uh You got Google Trans you got maps, you got translation apps. It's like Too easy. Um

I I once rode my bicycle from China to Vietnam. And No map. The map we had was all wrong. Which is he worse than no map almost? And we just had to figure it out. We slept at people's houses at certain times, like it was

Like yeah. Old school adventure. called you, you know, an armor piercing shell who just fig you know, he figures things out. I I think I think this is where the you get the reps in, right? Like it doesn't start The problem solving and confidence that I I'm gonna figure things out doesn't just start the day you you incorporate your, you know, your startup in Delaware.

It starts by getting a bunch of reps, uh, earlier in life, maybe. I I think learning a foreign language in that country is extremely val it's not a good ROI from like you probably won't make any money off of this. Especially now with Chat GPT, it's incredible. I can do live translation into every app. And every language. I mean um But like The humility of like

Everyone thought I was I mean it was. Like I couldn't speak. Um And like you know, bus drivers think I'm an idiot.

Uh and having that over and over and over again every day. Is pretty Good for your ego and your humility and also for relating to other people like in your country. And w when you went there, so you're like, I'm gonna go, I'm gonna learn the language, I'm gonna travel, eat Um

But you're a business junkie. Like you said something I saw in the research, which was like, you know. I was like oh this guy's My kind of people you you go, my form of entertainment is making a landing page one night and s sending some traffic and seeing if people click to buy, right? So did you Were you kind of scheming and dreaming about business while you were there? What what was what were you doing on the business side while while Yeah, so we were we were sourcing all of our products from China. And so I was like I would go to factories

Fine. Like evaluate quality, man manage shipments, do I would I do a lot of everything, make websites, we do marketing, customer service. Uh was that scooter business any good? Did you make any money doing that? Or what was the result? It was Pretty good for like You know, you made salary like l sal like W two level income that was above all my f all of our friends at the time, but not like

Change your life kinda income. Right. Yeah, this podcast, the title of it's called By First Million, and one of the things I At the beginning, the premise of the podcast was always gonna be, let me bring people on, ask them how they made their first million, and that's that's where it started. It ended up pivoting to something else and we kept the name'cause when something gets popular, changing the name's a little risky. But I still do like the question of like when you when you did make your first million

What change because I view money as a tool. to improve the quality of your life. And I think it's very easy to slip into Money is this kind of measuring stick or just things this thing you accumulate over time. And so I'm curious for you, once you kinda had a win. Ma probably during the import genius days were okay, you've made

S some like real money that giv you frees up your time. How'd you use it? And how did it feel? And what'd you what was your mindset, you know, during that time. Can you share anything like that?'Cause I think that's where a lot of people wanna get to or they're they're just at who listen to this and I think that would be Pretty related. First thing I did when I started making money was paying off all my student debt.

Okay. That felt great. I'd I'd bestate it wisely, put a lot in the wealth front. Index fund investing bought a couple of like real estate cash generating real estate.

properties. I made some stupid decisions too. I once invested invested in it. Nightclub. That failed. That was stupid. But uh it didn't change much Well first off, people would tell you that money's not

Important or Well I I don't believe these studies that say like oh like you know you stop It stops improving your life at a certain point. I'm certain that that can't be replicated. You know, most Most of these psychology studies turn out to be not there's a replication crisis in psychology, and I'm certain that that's one. Um And and like

You know that money He's great. Because The more people have, the more they want. Mm-hmm.

Must be great. Right. Must be amazing. Enough of it. Um Wait, can you say more about this paradox of wealth? Because I saw you write down this idea. I want to read you a line from this and and just kind of hear hear you talk about this. So Here's what you wrote. You wrote Paradox of all, Focusing on making money Will cause you to make less money. Nobody wants to give money to people who are too focused on money.

They perceive them as greedy and self interested, try to avoid them. They give money to people who add value for them. It is fine to want money. It's great, in fact. Money is one of the best things in the world, but it's a paradox. The more of it you want, the less of it you get. So hack your brain into instead focusing on the things that are upstream of making money. What's upstream of making money? Yeah, I think upstream making money solving problems for people at the end of the day.

Which means learning. Yeah, build your skill set up so you can learn upstream of that is learning what the problems are and and the developing a set of skills and capabilities. So what you solve them Salespeople can suffer from this or they can be great. Like great salespeople are really consultative, like Good at asking questions, good at diagnosing problems, understanding what their product or their firm can do.

to solve that problem and you know, you bring those together, you win, yeah, everybody wins. Cranny win wins. Um but the but the perception of a salesperson is a pusher that uh I'm gonna make you I'm gonna try to get you to buy something you don't want or something like that. Which is a bad salesperson. Yeah. But that's the image that most people when they think of salespeople. And you know this is true because We can't even

A salesperson. Yeah we had to rebrand it. We had to go AL instead of mayo. This may have changed. I think it did. In fact, it a few years ago when I looked into it, there were only three universities in the United States that offered a major in sales. Wow. You know, like it's part of everybody's job. It's like probably ten percent of all the jobs in the whole world are sales direct explicitly, and then everybody has to sell Their ideas. Um and we've

Yeah, kind of been wrongly scapegoated as though this was like the terrible Professionally. When in fact they're the key driver of every company Even Tech comp so many good tech companies fail with g with good technology because they can't

Ever learn how to sell it. Get customers and then there's Companies with where the tech is just They do have tech and they're just good at selling. So Yeah, I think lacking the brain

I used to say things are correlated with money, but I think it's better to go upstream and actually causing Right. Uh and the more you can study that Um Then you'll get lots of wealth. And I I don't think it's bad to want money, but you just have to realise like Yeah.

It it it might cause you to get less. It's a bit like love, by the way. Someone's obsessed with l finding a Girlfriend or Husband or something, like it get kinda creepy, like You know, work on yourself instead.

Yeah, that's a great one. There's a great story about Buffett. I don't know if you heard this one where he goes to a classroom. And there's a bunch of kids sitting there and he says, All right. Let's play a game. And he basically says, I want you to point to one person in this classroom. You could choose any classmate.

Not yourself, but somebody else. And you get to get ten percent Of their earnings for the rest of their life. Write down on a piece of paper the name of the person you're picking and why. And so uh have you heard the story before? I don't wanna bore you. Yeah, but maybe surprise you, but like

It's it's interesting. The first it I think it makes the point well. So he Everybody writes down the name. And then he brings it up. He's like, you know, okay, who here, just raise your hand. Did you pick the person with the best grades? And nobody raises their hands. So already that tells you something, right? About school and what we think is the valuable thing versus

What everybody intuitively in their gut knew is the valuable thing. He says okay. Did you just pick the person with the highest IQ and a couple of people raised their hands. Did you pick the guy who could throw the football the farthest? Nobody raises their hand. Um, and so he then he finds starts asking what qualities did you pick?

And basically that's where You know, it came down to some version of the following characteristics that Buffett ultimately used for for picking people, which is You know, he talks about like energy. So it was it was people who were really They're really obsessed with things, really into things. When they get the when they put their mind to a project, they just never stop. They just never give up. They just kind of have an endless energy towards something. Another one was like integrity, right? Because if this person

is gonna act out of bounds, then you know, owning 10% of their future if they're in jail is not gonna do me much good. I gotta have somebody who's gonna play by the rules and play by the law. They know what rules to break and what rules not to break. And then last one was intelligence, which was somebody who's good at figuring things out specifically. So not your grades. Or just your raw IQ, but somebody who tends to figure things out. And um He's like, great. So now you have the formula of what you need to be. Like if that's what you would pick in others, that's what you need to be.

And there's that sort of reminds me of the the paradox of wealth, which is like if you put a hundred people together, you're like, All right. Who's gonna be the wealthiest? I think Intuitively, we would know it's not the person who's gonna just like sort of only chase money and try to just extract as much money as they could out of some system. It's probably not gonna work as well as somebody who does the things you talked about. Speaking of school, I I took a negotiations class once. And it was one of my favorite classes.

Um, everyone should try to get into one of these things. The way you do it worked is your I've always wanted to take this. I can't wanna go to business school, but I'd love to take a negotiation class. Yeah. They're g you're given like a case study where both parties read this document. You have slightly different roles to play. And then you negotiate with each other. under those conditions. But what's what's amazing is that in a class There's thirty other pairs if there's sixty people in your class. There's thirty other pairs or fifteen women or however many people. Um

Doing the exact same thing. So you can compare yourself how you did against other people. In the same seat as you. And that was over almost twenty years ago. It's very interesting'cause I've seen it touch a lot of these people. And you could track the people who are the best negotiating a classroom environment were not the most successful.

Mm. Because they're very good at extracting too much in a one off negotiation, but that's not how life works. Right. In life there's repeat games like you gotta let the other guy win. You gotta You know, it's a I if you just took advantage of someone like they're never gonna want to do business with you again, guess what? Like

You're not gonna do that well. A light like long longitudinal study that someone could do on these things. I worked with my dad for about nine months and working with your dad's an interesting experience in a bunch of different ways. But one of the things you actually get to see your dad in a new context. And I got to see my dad at work. And one of the things that I asked other people at work, I go, What's my dad good at? What's his strength? And they were all said Um You know

He's a good negotiator. He's a great negotiator. But he's a little too tough. And I th Okay, interesting. That's uh cause I asked strength and weakness, and they kinda said the same thing. So I got into the situation where It was one like high stakes negotiation. Basically like the future of the company was like kind of up for grabs. And somebody had leverage, somebody else had leverage. We all sat down at this table. And

My dad did one thing really great, which was he was like We didn't really like the options on the table and he's like, Oh, okay, cool. I'll always go with the third option then. No. I was like, No what? Like what's your counter? He's like, No counter. No. And he's you know he's like basically in a negotiation, he's like um I was like well how are you gonna ex you know explain this? He's like oh it's not about explaining in a negotiation the more irrational person tends to win, the more stubborn party wins because the other pro person will just realize

This person's irrational, so I just have to play by their rules. So he was super stubborn and he and he won, and at the end they took a break. They're kinda like, Okay, let's go Break before we kinda come back and finalize. And I asked this other guy who was kind of the arbitrator sitting there, I said Uh what do you think? And he goes.

I think you took too much. And my dad kinda smiled, he took that as a point of pride. And I sort of was like, Well, what do you mean by that? He's like He's like you you were at a poker table and you tilted the table and all the chips went towards you. There's no way this deal gets done. eventually gets done, right? Because

They have nothing to gain. You've you've taken everything away from them. So they have nothing to gain out of this transaction. Today they feel forced But soon they'll just realize, ah, this is not even I don't have to do that. I I'd rather not. That's exactly how it played out. And I I you know, I learned a l lesson sort of at my dad's expense about In a negotiation you you sort of Both sides need to leave a little wanting. Or even if you take too much, you seem to need to sort of need to give back at the end, um, in order for something to be sustainable, or especially if you're playing a repeat game.

Where have you had, you know, negotiation in in in your life since then, right?'Cause No, it's just not a not a not a everyday thing. It's a it's a once in a while though. Oh man, we run a global logistics company where we're We have to procure ocean freight and air freight and then we have to sell air freight and ocean freight. Custom services, everything else that we do on the end to end basis. So There's a huge amount of negotiation. I think one of the big opportunities we have in this industry is I think the industry is very short term focused and

Transactional almost mercenary. And some of these things you have to kinda go with the industry. You can't change everything about the industry at once, but being able to play the one game and say, Hey, we're gonna win We're gonna make tons of money. by building trust with people And showing them where the prospect pools are and not

Not taking too much of it and figuring out how do we Um create the right win win scenario and not I think it's a good framework actually for evaluating any company is kind of there's six stakeholders. at the table for every company. You have your customers

You have your vendors, which in some cases don't matter that much, but for us they matter a lot. You've got your employees. Your investors You have regulators and you have like the communities where you live and operate. And so you've got these six stakeholders.

You gotta create a win win. And it's a very simple way For each of them they need to win. In an ideal scenario. And you can go through a almost any any company and Say okay.

Let's score'em. A through app. On For each one of those things. Very rare to find a company where every single

Parties winning. Um Somebody usually you know. So so what's the goal? Uh is it mostly A's and but nothing below a C? What's the trend? But where you have something that's bad, like you've got a lot of risk in That's no good. Right. It could all come to a stop. Like if the especially if that like the regulators are not happy. Communities are like, I don't know, protesting you, trying to run you out of town, like

I think it like Airbnb's a good example. I think it's a great company. Yes. Pretty much love it. The the um homeowners definitely love it. They're making free cash off this unused asset. Vesser's done really great.

Uh the employees seem really happy over there. The regulators not drilled in some cases. They manage it. Sometimes they like it'cause it generates tax revenue. Communities. I don't know, I don't want people throwing a party in the house next door to mine. And so

That's an area for them as as they have this framework, okay, where should we emphasize What are we doing? And they have. They they look at this. I don't know they use that exact framework, but they certainly are going Okay, let's ban partying. What else can we do to make neighbors like us more, right? Like Uh, and so it's a it's a pretty simple framework. I think someone looking for a job at a company they should definitely take take the time to score each company they're considering on this framework or investor is the same way.'Cause it

It you know, if everybody's not winning then the thing might not be sustainable for the long term. And all the good returns as an investor come By holding for a very long time and Letting the the the compounding machine run. Yeah, the risk accumulates. Uh it may not be a problem right now, but it's it's accumulating. Yeah. Eventually that's a powder keg.

You are also a partner at Founders Fund, right? Yeah, a venture partner. Venture partner founders fun. Uh your LinkedIn says looking for a generational company to back. Um How's that going? Great. I mean I founders fund I've been very loyal part of the Founders Fund network for a while. They they were our first

Series A investor. They let our A and our B and participated, I think, in the every other round that we've done basically. And uh When they asked me to join it was kind of no brainer for me. I mean it would take me a little while I said no a bunch of times. I shouldn't say no brainer, but The only fun that we can send her joining'cause I think they're really

Unique in their Refusal to follow the herd. Um And to think for themselves. But uh I I joined actually full time as a general partner and then

I came back to Plexport. I I took about Six months where I was the uh chair executive chairman And uh then I realized I had to come back and be the CEO again at Flexport. And so I kind of scaled my role way back at Bonish one, but I'm still part of the team. You said like, you know, they're unique in how they do things. I've I've interacted with them a bunch too

And felt that. But I'm always interested, like what's the cause of that effect? So like what is a example of something that they do differently on the input side that leads to the output? Of being Uh you know, sort of independent. thinkers are contrarian or willing to make bets that others don't.

Well, a lot of it it just comes from Peter being Refusing like he's just like that's his whole life thesis is that people are mimetic and they Will chase the same outcome, that same goal. The same object, the same

Mimetic desire. Everybody wants the same thing and if you can Avoid that. There's a huge arbitrage opportunity if you can go Look where other people are looking. And

So a lot of it just comes I would say probably just from Peter But they've they've really trained it into the team. How does that manifest itself? It's a very high paying job. Faggers one actually has a vendor compensation structure. It's almost all tied to the outcomes, the performance.

But like a lot of PCs just make Super huge. You'd be surprised how high the salaries are. Yeah. At a lot of V at other VCs. Um, so they make a lot of money. In a job that can't really be measured except on a ten year time horizon. And even on that, it could be luck.

And so And and you don't have like an overseeing like a boss breathing down your neck, like you can do it from anywhere, kinda. Nobody's every time I email a V C they seem to be in France.

It's it's a It's a job that like is kind of a dream. Where you just So what's the incentive structure there for? Like Just don't get fired.

And it's hard to fire you for performance'cause it takes a long time for these things to mature. And again, it could be luck. So the way you get fired is by everybody consensus agreeing that you're doing dumb things. It's not by doing dumb things. It's by having a consensus form around you that this guy's making dumb decisions. We gotta fire it. And there are a lot of cases.

Where Fon's fired Someone who, it turned out a few years later had like been their best guy. But they didn't know it. So therefore the way to avoid getting fired in V C Yeah, this is not founders. This is what I like about them, that they're very different.

But is it the way to avoid getting fired is to be Well to double check everything you do with other VCs. Right. To make sure everybody agrees. And you don't want to do it internally because then you look like you got no opinions. And you can't operate. So you do it with all your buddies at all the other VCs.

So it's just a collusion, massive collusion racket on per like there's no the the incentives are just structured. Such that everybody's talking to everybody. To double check and make sure And then that leads to regression to herd mentality, regression to the mean. It leads to

People not wanting to take a lot of risk. Which is just a lame is is just lame, right? Like Venture capital should be all about risk taking. But it's not Often it's not.

And Think Founders Found's very good at not Participating in those things. They don't really go to conferences. The conference they do do is called Hereticon. It's like Literally about heretical ideas that you're not allowed to say out loud.

That's probably the most unique conference. Most people probably don't know what it is. Can you explain what Hereticon is and then Maybe some examples of what a talk at Hereticon might be about. It's Hereticon is a deah, but uh most conferences people on stage are like you can't say anything that's Not fitting the mainstream narrative. Right. And Hereticon, the idea is that you come up into the stage and say something that would like get you canceled or

Some heretical idea. The definition of heretic. Yeah, they don't publish the talks online, I don't think, because of the nature of it all. But I'm I I I I I'm working on I'm gonna do a talk if if I can make Maybe next year I'll try to do a talk. I have no idea. The definition of heretic, a person holding opinion at odds with what is generally accepted. I texted a bunch of friends who went I said, Hey, what was the best thing? And they were like, Well, like

Yeah, somebody gave this to I like my belief in the probability that aliens exist has like has like actually meaningfully changed based on X talk or This person gave this talk about, you know The conspiracy around XYZ. And um it just sounds fascinating. Sounds like the you know, one of the few conferences where I I would Get there early and stay late. Yeah. And it they're not trying to like just reference check every deal, they'll put their neck out there.

Make some crazy bet. What's amazing and I didn't haven't yet figured out is how they have such an amazing track record because I don't think just YOLOing it in a They're very good at picking founders, I think. Um There's no formula for it because people are unique, but It's it it it is a really interesting

And they're writing they're very big fun these days and they write large checks. With conviction, but without being like spreadsheet monkeys who are just You know, it's not all then of course they do a d due diligence and analysis and stuff, but there's a they're much more built on Who the founder is and what they're all about. Right.

Before you came on, I asked uh I in the I sent this like doc to every guest and I one of the questions I asked is like, what are three strong opinions or life philosophies you live by? So one is related to what we're talking about. Yeah, this quote from Emerson says The great man is he who in the midst of the crowd keeps with perfect sweetness the independents of solitude. And you had some examples under this. Can you talk about that? What what that means to you and what are some examples?

Well, there's some great very practical examples that you can use in your life and you'll be able to see that this is true. Okay. And literally related to crowds. And next time you are entering a stadium What your brain will wanna just follow the people mindlessly into the stadium. Well if you were able to snap out of that and go, Wait, let me think for myself right now.

These people have no idea. Most of them have never been to the stadium before. They don't know where the entrance is. Right. There's always another entrance that nobody's lined up for, and you can just walk right in. Always like Or parking. I'm a big skier. Whenever you go to the ski resort. There are these guys that are like waving parking attendants.

And their their job is to park all the cars. But their job is not to park your car. As close to the mountain as you Could be. Like they're not like there's not a thousand spaces right next to the chair left. So They're gonna point everybody to where there's a thousand chair list spaces.

Which like for sure you're gonna have to take some kind of shuttle. Right. Yeah, it'll take you an hour to get to the ski lift. But if you just ignore that guy, I mean I don't want to be rude and figure out a way to do this, it's not like Breaking the rules or whatever. But Go straight to the front and there will be a spot right next to the chair lift'cause somebody leaves. Somebody's always leaving.

And and so yeah, you can s you can apply this at at the very practical level of like You moving your own body around When there's large groups of people and watching the herd mentality Play out. It's very difficult often for people to do, like people are terrified of public speaking.

For good reason. Like for thousands of tens of thousands of years. If you were standing in front of large group of other humans They were probably about to kill you. You're either their leader or they were gonna kill you. Something bad something bad's gonna happen. This should be of course it's terrifying. Uh and learning how to become their leader.

Is not instinctual. I think it maybe for certain subcre you know, certainly not for me. It took me a long time to get. Practice. Uh Some some degree of just practicing. Uh To not feel terrified in front of groups and then to enjoy it. And like

I don't think leaders Are terrified. They they love the crowd. Or like But even Bruce Strengt Bru Springstring says he still gets nervous when he goes and plays And then he has to like hack his brain to believe that that that's like energy he can harness to give the fans what they want. Yeah.

Like you've mentioned a couple of things that just like that Bruce Springs, the mindset, hacking your mind. Are you big into mindset? Uh I think any founder It's a It's very hard for people Mm.

understand what a roller coaster It is emotionally. Um and how painful like the lows are pretty low. And the and the high and the low can come in the same day. You get punched in the face constantly.

And uh yeah, you can get pretty Down you need to have release mechanisms and Packs and ways to get yourself back up. Uh 'Cause it's not it's certainly not.

Not for everybody. Can tell you a little hack I do, um that maybe maybe is useful for for anybody out there. So I have a Slack channel called literally Highs and Lows. And what I do is that anytime there's a high or a low, I'll go post it there. The beautiful thing about it because it's a Slack channel, you could just scroll up and realize like three months ago

Oh yeah, I remember that felt like kind of the end of the world. That felt really bad. And now I I don't think it's like a stub toe. It's like Do you remember how your last dub toe felt like is this like a private channel just for yourself? It's me and my co-founder. So we do this and I do this in across every business I have. And so whether it's a high, I rem and then I go back and I get humbled immediately by a low, I'm like, okay, don't don't get too high on your own supply here. Or it's a low currently and I'm like, Well, I've already gone through if you just scroll up. I've already conquered a bunch of mountains like this before I dealt with this. I'll be fine. And it's like an immediate like

kind of perspective machine. And it's not even like somebody else's perspective, it's like I also was in the sl same channel three months ago saying the same thing. Crying wolf basically about this high or this low. And um neither neither are as good or as bad as they seem in the moment. It's yeah, I I like that. I might try that. But it's it's very hard for a now that a non

Founder to appreciate. How difficult that is. My my wife uh is a former journalist tech reporter, in fact. Oh nice. Uh Watching my

Ride firsthand. Want to use the wrong word, participating in it. Um has really kind of I o she's like, Man, I wish I would have s known this side of the thing when I was writing about Tick Company. Understood, like 'Cause you know, I think tech reporters are Um they

All reporters play very important function. Like holding. The powerful accountable. Well, like founders are not that powerful. We're kinda suffering through, like you know, we're we're up against some very powerful forces in the world. Like we feel like we're the ones like trying to Yeah, speak truth to power and

Fight for the little guy and stuff. And then mean time the the narrative within the media has been like, Oh, the tech the you know, the founders are the ones that we have to hold accountable and be like, what about this like multi billion dollar trillion almost Tens of billion dollar mega corporation that I compete with. Like I'm I'm kinda pathetic sometimes. I mean we we we beat them every day, but like sometimes they're better than us at certain things. And like we're trying to get better. We get better what's faster than they do, but we're not always the best. We're starting out, like especially as an early stage founder.

You have another one of the life philosophies that was simple. It had no extra words. So I want kinda want you to hear kinda want to hear your explanation of it. You said You can just do things. Wha w w what does that motto s do for you? Oh, I I don't know. I think there's this idea that you need somebody's permission to do I mean You should have it's uh why, by the way, the uh a law class is useful for people if you're in undergrad take try to get like into it.

Basic class. A law class? Yeah, the law. Like don't break the law. But you should have an understanding of what's legal and what's not. Chad GPG's pretty amazing for this. But in general, like it's not illegal, you can just do it. Uh

And there's a lot of things that people are expecting Yeah, we come up through this like Education system where it's everything's gated and you can't get to it. twelfth grade math until you finish eleventh grade math or whatever, and you don't get to go to college unless you get these grades. It's so within the institutions of the world, like yeah, there's You can't just do things. You have to follow the rules. But like in the real world, that's not how it works. Like

There is no Boss like waiting to tell you what you can do. believe that they have to raise venture capital to start a company, for example. And we're like, Well maybe you should think of a different idea that doesn't need any money and just do it. And that's what we did and we raised V C after ten years of doing companies without

Right. Yeah, you don't need to have like the victim mindset. You have um You there on the Y C application, there's this question about like what I mean the YC application is not long either. So if the question's on there, it must have some value. There's only like seven questions on the on the whole application. And it was uh it's what's an example of a real world System that you've hacked.

Meaning like a kind of like this, like you could just do things or not following the crowd, finding the side door into something. I asked a friend, my friend Sheil, who I think invested in Flexport early on. I go, Hey, I I got Ryan on the podcast today. What's a good Ryan story from early days? He goes, Oh there's a bunch. He he g he gave me one, he goes. He

Bought AdWords for the Keyword um Uber promo. And just put his own promo code there and just got a bunch of cheap Uber rides for himself that way? Is that true? Did you do that? I got I I became Uber's best customer lifetime probably because I did I got like ten thousand dollars in Uber credits.

By doing that. And then I treated Uber like it was free,'cause it was free for me for a while. And I probably net out net it out to spending like I bet you the you know, I I spent way too much. As a result. Um yeah, that was a good hack. I didn't come up with that. I copied it from a friend, but uh You know what's funny is I had two friends that did that and I never it never occurred to me to also do that. Right? Like I just assumed it was done because other people had done it and uh I do think they kinda shut it down. I'm not sure I'm not sure it was even bad. Like I think I paid for Google's AdWords campaign for or uh Uber's AdWords campaign for them, so

We had this dude call into the podcast once and he's a guy in India. And what he was doing was he realized there's an arbitrage where Uber. Had this like credit, like kind of um you give credits to somebody and then you'll get credits, right? That was the the the kind of like the PayPal, give 10, get 10 type of model. But what they didn't do was they didn't Account for geographic differences at the time.

So he would just get a bunch of people in India to sign up. He'd give them, you know, ten dollars of Uber credits, which is like a big deal. And they would sign up and they would take a ride. And a a ride in India is really cheap, and he would get ten dollars of credits and he would sell it to Americans. And so I bought thousands of dollars of credits off this guy and I rode really, really cheap, because you could buy like five grand of credits for like a thousand dollars. Because this guy was farming them in India, basically, and this worked for years and he called into the podcast and he was like

Literally in like a small apartment in rural India. And he was like, it's a m he's like, I make, you know, like what I forgot what it was, like fifteen thousand dollars a month, which is more than like my entire village makes, basically. doing this. He goes, I don't know how long it'll last. That's why I'm still living here. I'm just saving it up for now. But eventually they'll close this loophole and when they do, you know, that'll be a a sad day. But uh it was amazing to see that that loophole, that hack. Yeah. I I definitely uh sped through the credits pretty quick and then just became Uber's biggest customer for a long time. Now I now I'm mostly ride my bike and I stopped riding Uber to work.

One thing I find fascinating is You have a side hustle. And I f I find this interesting when entrepreneurs have these like side things that just work right off the bat. You did this one about phone booths like phone booths and companies. Could you just quickly tell this story? Cause I think it's kind of inspiring. Yeah, well, unfortunately it closed down. Uh they sold the company and I didn't make any money. Uh I think it was kind of mismanaged, to be honest. Uh we we basically

It started at Flexport. Um We never had enough. Conference rooms or Uh and so I made Oh I got this carpenter's on Craigslist to make a couple of phone boosts out of.

Just like Wood built a phone within our office at Flexport. And put like a lot of foam padding in there to make it somewhat soundproof. And they were terrible. The ones I made myself on Craigslist. Because I didn't put uh we put a fan, but not enough. Ventilation. So you'd come out of this thing just

Dripping in sweat. And yet people were in there nonstop using it. I was like if the product's this bad and yet everybody wants to use it. There's like something here. Yeah. So my friend Henrik, um, who's the founder of AirHelp. really ran with this idea.

G should give him all the credit. He built it. And to a company. Uh I kept talking about it. This is another thing to do is like Talk about your business ideas at at a parties and stuff. If everybody wants I would every time I talked about this idea with founders, they'd be like I wanna buy five of them.

It was like, oh man, I should just start this company. I've got like a waiting list to buy the stuff. Um so we made like these really nice Swedish design. And now that the company's failed or been sold, I can tell you the IP's the secret here. The the intellectual property was we didn't we put three fans in that. The genius. The genius hack.

So we're doing like fifty million dollars in sales. Fifty. Yeah. We're selling thousands of them and somehow we couldn't make money. I was very frustrated. We hired a CEO Does the unit economics wrong or the overhead was the wrong? I'm not sure what happened.

I'm I'm more pissed about it'cause it's like dude you sell fifty million dollars with the phones, you should make Ten million a profit, at least. Like the high margin All right, somebody should reboot this idea and just do it. Do it without the mismanagement. I I believe so. Uh now they might have become very competitive space, like there's a lot of people at the time there was no good cheap phone booth out there. Trying to make like I think we sold them for like three grand.

But you can make a phone booth for a thousand bucks. Like come on, not that hard. Oh. So I think I think in the uh you could just do things category, I'm gonna put this in there. I think somebody could just do this again. Yeah, feel free to run with that one because that company didn't work. They sold to somebody, but I think the founder had ambition to be like billion dollar unicorn company instead of like let's

Let's sell this thing to Staples for fifty million dollars and like be happy. Right. Exactly. Ryan, thanks for coming on, man. This is this has been fun. I'm a user of FlexPort. I use it for my ecom biz. You've you've helped me forward a bunch of freight. I I here's how I know you've helped me. I still don't know what freight forwarding really is and we've done, you know Tens of millions of uh yeah, a year in revenue.

And that's the beauty of it. I don't have to know. I just know that our shit gets taken care of. It's a low price. It's the easiest to use tool. So thank you for for making that happen. Uh thank you for import genus also, because I would have never found my supplier had I not used that. Where should people follow you? Uh and and find out more. I'm on Twitter my uh handle. On x.com slash types fast is my handle. Uh and go to flexboard.com if you're a econ business.

Or you run any kind of logistics, you need to ship things from anywhere to anywhere. We we started in freight forwarding, which is Well I joke it should be called freight email forwarding, Sean like passing emails around the world to get a container or some air freight moved. Uh, but last year we acquired Shopify Logistics and now we do Direct to consumer fulfillment.

All the way to the door, as well as like distribution into Amazon, FBA, handling that problem of like getting appointments and Managing all of that. So um Helping brands. Solve problems in their supply chain is what we're all about.

There we go. By the way, you're Uh your ha handle is types fast and I love it. Your brother's is types faster. Ultimate big brother move uh for him to do that. Well it's true, he does type faster than me, so I think all right, Ryan, thanks so much, man. Thank you. I feel like I can root Well I know I can be what I want to

I'm put my law in it like my days off On the road less travel never looking back

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