This #DealMemo is inspired by Aaron Batalion’s Medium post. I realize Flexport is past Series A and is not really ground floor now. But I loved the idea and wanted to put down some thoughts. Everything that follows is based on publicly available information.
Learn more about Flexport.
Very strong C-suite, 2 out of 4 CxOs have relevant industry experience. CEO is a serial entrepreneur. Rest of the leadership team consists of regional heads (presumably for Hong Kong and Amsterdam) as well as a seasoned customs broker w/ 25 years of experience.
I did do some LI sleuthing and noticed that they recently transferred a Logistics Manager from SFO to NYC, who is also the first operations hire into the NYC office. The second layer of the team looks good overall and there are a bunch of folks w/ logistics chops.
I noticed that a lot of folks have been promoted to senior roles from within, always a good sign for any company. This team can create magic in the Logistics-as-a-service (LaaS) space.
Flexport is a licensed freight forwarder for the internet age that uses people and software to manage the complexity of international trade.
Let me try to unpack this one liner.
A freight forwarder, is a person/company that organizes shipments for individuals or corporations to get goods from the manufacture/producer to a market, customer or final point of distribution. International freight forwarders have additional expertise in preparing and processing customs documentation. Information typically reviewed by a freight forwarder includes the commercial invoice, shipper’s export declaration, bill of lading and other documents required by the carrier/country of export, import, and/or transshipment.
Yes, if you have never been in the logistics industry or managed a global supply chain you wouldn’t know. But logistics is as complex as it can get. The best companies in the world are still trying to figure this out and often times run a heavily bandaged process.
Finally, I firmly believe that complementarity between software and humans is the path to building a great business. Doctors need to marry clinical understanding with an ability to communicate it to non-expert patients. Software might be able to do one or the other, but they can’t combine them effectively. Better technology in medicine won’t replace professionals; it will allow them to do even more. So too in logistics. Flexport has got it right.
The global logistics market is roughly 10% of global GDP.
The Transportation sector has grown at 7% every year since 2011 and is expected to generate $3.8T of revenue in 2016.
The US accounts for > 40% of this global sector.
As of last April Flexport had more than 100 staff and had grown its revenue by 25% each month since it was founded in November 2013.
The biggest impediment to growth will be regulation/compliance. That means slowing down your salespeople when they’re closing a deal to ensure compliance gets priority. But the company is well aware of this and that is why an overwhelming majority of their customers are put on a wait list immediately after signing up.
Why will Flexport win?
- Strong team
- Great idea
- Vibrant market
- Solid traction
There is a huge market pull for a LaaS platform provider to help navigate this complex process. By taking away the grunt work from companies (telephone calls, fax/email, EDI, ASNs, etc) and their supply chain managers Flexport is well poised to help unlock immense value in an industry that has remained surprisingly low-tech and difficult to navigate.