Flexport’s plan to build a freight empire with its $110M raise | Hacker News Reader

Flexport’s plan to build a freight empire with its $110M raise

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63 pointsjseliger20 comments

My main issue with the product was pricing. For example, they quoted me to ship a load for ~$1700 USD that only cost me ~$1300 USD to ship with my own FedEx company account. That kind of pricing delta is not sustainable. They might get a few kickstarter customers that don't know any better. But, if they are going to sustain that valuation, they'd better figure out how to get pricing that sounds good to clients that know what is going on. [Edited pricing].

What kind of load? My understanding is that they really specialize in loads that would be far too large for FedEx. Think shipping containers.

My experience was a large air shipment. Can't remember the exact details but probably on order of 100 cartons at 10KG each.

spot on. I think bobjordan has nailed it. Why can't people like Raubacher see this point. As brilliant as Raubacher, Mehta, and Petersen are, not to mention Founders Fund and Susa Ventures, they just don't take the time to see it from the little guy's perspective.

Is that their normal use case though? Why would you hire any freight forwarder to do nothing beyond what FedEx does? Aren't there more complicated logistics problems they ostensibly solve?

For international air-shipments, many times Fedex is just booking space on commercial carriers that they don't own, just like any other freight forwarder. So at that point, it mainly boils down to whichever freight forwarder has relationships + negotiated pricing + know how to get your product from point a to b with the best mix of cost/quality/service. Fedex isn't always the best, that's why UPS/DHL/any-other-forwarder exists. Air shipments are a major part of the supply chain. Any major forwarder is going to offer some air service. So that must fall in their normal use case.

I guess it's little too much overblown ... As a professional importer as you may sound. Airfreight unlike ocean freight ridiculously varies for instance you can ship the same load for $2/kg and if you choose EK Emirates they may charge $3/kg. I am not saying you are wrong. You would have paid more than with FEDEX also at this point I am not sure what Origin and Destination were involved .. was it an international shipment? China to US?

But I also feel they need to give customers options of pricing choice in their dashboard... It normally tends to be via one Airline only. And it does result in confusion... Traditionally freight forwarder offer at least 2-3 airlines options with varying pricing, routes and transit times ... For a good insight you should have mentioned actual transit times comparison for both services too.

However I do humbly disagree with you giving an impression that are kinda not hardcore guys they are beast ... And I have been in this industry for the past 20 years. Yeah they do need to improve pricing options in their dashboard... And very quickly. They should give customer 2-3 options based on slower faster and service reliably of air and ocean carriers.

What are the real risks to their business? So they need to own the shipping containers, planes etc?

That the competition aren't really dinosaurs.

I looked up a company mentioned in the article "Expeditors". It is a logistics service company so pretty close to what Flexport wants to be. It spends ~$500 million a year on dividends and share buybacks, so it has lots of resources to invest in new technology and could then apply that to all of its existing relationships.

The space is actually really crowded and relationships matter more than they should.

Flex can’t charge a premium and die without the volume. Freight is a cost center. The absolutely largest buyers will use in house or demand lowest rates, small guys cant afford high rates.

Also owning equipment is righ risk low reward.

Also owning equipment is high risk low reward.

The industry is already at the stage where the cost of financing is a competitive disadvantage. They're on the right track with vertical integration. But they'd need partnerships with manufacturing and finance to make things really work. Do they have those?

the Facebook part makes total sense. If I have 100k worth of stuff in china just sitting there, I'd very much like to click "like" on the cat video the guy in china who could move my shipment up in the queue just posted.

If they build a good product/organization, I think they have a nice takeout by Amazon or Walmart in their future.

They can do a lot better than that. Shipping is such a backbone of 21st century that an amazon or Walmart acquisition would be kinda underwhelming.

Yeah, I can see that as well. In short, well executed I like their payoff matrix across a number of eventualities.

Sort of like an AWS for logistics.

They will be $10 billion in few years. Afterwards they will be beyond acquision. Given they keep the same pace and hardwork. They could be more valuable than Uber period. It's because they have positioned themselves in this unique situation they are based outta SF they have good VC and good hardcore freight team. It's unique and I don't see why they can't be $100 billion company given the scope of this industry and so far they have been doing everything good that paved the way for $100 billion valuation ultimately... Perhaps in a decade but they are getting there.

> "...Money’s sexy I guess"

The founder really summed his sole motivation right there. This is a mercenary company that could have been created by a hedge fund.

Unlike Amazon, no one would want to work at Flexport except people focused entirely on money, and those aren't the best people.

This company is another (still rare) example of 1999 style VC investing. It will either flip or implode within a couple years. See: Zenefits

The founder has been doing import/export for a decade, maybe he likes the industry and is just making a joke.

> Unlike Amazon, no one would want to work at Flexport except people focused entirely on money, and those aren't the best people.

I'm a dev at Flexport, and it's pretty funny to hear I chose it for the money (Not my most lucrative job offer by a long shot). Personally, I work there because I find the challenge of mapping the complexity of an industry as consequential as global freight into tractable software to be deeply satisfying. YMMV, of course.

Businesses are in the business of making money. It's the founders job to ensure that they make money.

Also, quoting just "Money's sexy I guess" is taking this entirely out of context. You quoted a specific section to make it sound like this is a money grubbing founder. The whole quote refers to whether or not the freight business is "sexy".

“I don’t know if it’s sexy or boring. Wall Street’s pretty [redacted] boring to me, moving money around. Money’s sexy I guess”.

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