While managing the supply chain for his brother's import company, Ryan Petersen had one key frustration with the freight industry. "Your stuff goes through all these handoffs," he says. "You have no idea where it is, or how much you're going to pay for it." So he founded Flexport, which lets businesses track their cargo online in real time. Today, online eyeglasses retailer Warby Parker, sneaker company Allbirds, and paper manufacturing giant Georgia-Pacific all use Flexport to transport their goods, as do thousands of Amazon merchants. The company has scored more than $300 million in funding, and moves about 100,000 shipping containers per year, many of which pass through the Port of Los Angeles. Most of Petersen's competitors have been around for decades. He says that gives Flexport a leg up in a digitized world: "It's a really hard endeavor to take an old operating model and try to migrate it onto the internet." Here, Petersen talks about what makes his company different from other logistics providers, besides landing at No. 8 on this year's Inc. 5000, with $224.8 million in 2017 revenue. --As told to Kevin J. Ryan
Flexport emerged from a problem I saw in my first business. We were trying to make quality products at scale in Asia and sell them on the internet in the U.S. That's challenging enough, and then we discovered getting products delivered is one of the hardest parts of the business. There's very little transparency--it leaves customer in dark. That's where the idea for Flexport came from.
Starting it took time, however. Freight forwarding is a highly regulated industry. First you have to get licensed by the Department of Homeland Security. That required an FBI background investigation on myself personally, which took two years. We were founded in 2013 when we got our license. Then we had to find the right talent, and we had to learn about the industry personally. Our first outside funding came from Y Combinator, and then Google Ventures. It took three and a half years to get revenue. It's a very complex industry that requires lots of expertise. It's been a nonstop learning process.
For freight to move around the world, there are multiple handoffs. You've got a factory in China, a trucking company in China, a warehouse in China, then the port, customs agencies, ocean carrier. Then mirror that for when it arrives: customs, ports, warehouses, trucks in the U.S. That's a lot of different companies that have to come together. In the old world, you would occasionally get an update via an email, a phone call, an actual piece of paper. What we do that's so different is provide visibility and control, via the web, over your products that are being shipped. It's our goal to give customers much more of an understanding of where products are, how much they're going to pay, and where those items will be delivered. We're putting the importer back in control of their inventory while it's on the move.
Technology is our big advantage. Out of the top 25 freight forwarders in the world, almost all were built before 1994. They're just not internet-native companies. They're having to adapt these legacy systems to the modern age.
To date, we've raised $300 million. Five thousand companies travel the transpacific trade lane from China to the West Coast, and we're closing in on the top 10. We need to grow six times our size to be No. 1. That's our goal.
Businesses are really hard to run as it is. You shouldn't have to worry about getting your products from your factories to your warehouses or to your end customers--that should be automatic. So that's our mission: to make global trade easy for everyone.
Editor's note: Flexport tied with GForce Life Sciences for No. 8 on the 2018 Inc. 5000. It was listed incorrectly in the print edition.