Flexport founder Ryan Petersen realized that if he wanted to seriously advance his supply-chain management and logistics startup, his leadership team would need a drastic overhaul. So, he came up with a clever solution: He bartered the company's IPO with a bank, promising the lucrative underwriting gig in exchange for scouting someone to take his place as CEO.
His plan worked. Petersen stepped down from the chief executive role (after a six-month transition period as co-CEO) in March, handing the reins to someone who knows a thing or two about taking a business to the next level—23-year Amazon veteran and former CEO of Amazon's worldwide consumer division, Dave Clark.
Flexport has not yet announced official plans for a public offering, but speaking at Fortune's annual Brainstorm Tech dinner in San Francisco on Tuesday, Petersen explained how he turned excitement about the company's potential IPO into the ultimate recruiting tool.
"Whenever I want to hire an executive, now that we're kind of a big company, there's a lot of banks that want to do our IPO. So I like to turn the bankers into recruiters and make them work for it," Petersen said on stage.
Knowing that the kind of executives with the right combination of skills and experience don't typically apply for the CEO gig on LinkedIn, Petersen recounted how he called up the head of "one of the big banks" and described the type of person he was looking for. "I told him that if he did this, if I close this deal, he could do our IPO. No bake-off, you just got it. And he became the world's best recruiter."
The creative proposal paid off—so much so that Petersen was in disbelief when the banker came back with Clark's name.
"I laughed at him. Literally, I was like, 'Don't waste my time,'" Petersen said. "And it turned out that Amazon had this leadership transition, the CEO of AWS had taken over as the new CEO of the overall group, and Dave's open to looking around, and thought my business was the perfect fit for him."
And it was no small gig at the time. Petersen tweeted that the company had ballooned in size during his reign, roughly 2,500 times to be precise. Flexport grew its revenue from $2M in 2014 to $3.3B in 2021, Petersen wrote on Twitter, and forecasted that it would reach $5B in revenue by the end of 2022. The Wall Street Journal reported that the firm raised $935 million in February 2022, valuing the business at $8 billion. Like many other companies, Flexport benefited greatly from the COVID-19 lockdown and house-bound people's inclination to order a lot of goods online.
Echoing tweets from when he announced the change, Petersen shared some of his reasoning Tuesday around his decision to move into the role of executive chairman. He believed only someone of Clark's caliber, with a wealth of experience in the industry and the advanced skillset necessary to take on the task, could fully realize Flexport's potential.
Since the leadership change was announced, a lot has changed. Shipping demand has slowed, and Flexport was forced to lay off 20% of its global workforce, or more than 600 workers. The company is looking to move on "from being a freight forwarder selling a trip for your shipment from point A to point B to offering solutions for your overall supply-chain challenges,” Clark told the Wall Street Journal.
Despite the macroeconomic hurdles, Petersen explained at Tuesday's dinner (which comes ahead of this year's Brainstorm Tech conference in Park City, Utah), he deeply believes that succession was necessary for the future of Flexport. Better yet, Clark's move to the firm so happened to attract some new Amazon recruits too.
"It's a bit risky because it's a lot of new folks, but they've all worked together before; they like each other, strong team, and they know logistics better than anyone," Petersen said. "Technology and logistics, that combo, we just can't find it out there. So we're just really beefing up the leadership team."
