E82: All-In Summit: Claire Cormier Thielke on China + Q&A with Flexport's Ryan Petersen
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We're really excited to have care with us. Come on, not care. Do you here, right? What are you? well.

What will we be talking about today? We're going to be talking about china. You know, just as everything has been all spicy.

yeah, just again where we're trying to make today about just easy breezy topics that, you know the most easy things to manage. So we armand's ukraine. Let's go to china. sure. Please welcome cleare.

eg.

man.

We open sources to the fans.

And this.

We are going to actually keep this pretty a political today and maybe talk a bit about the parts about china that are less discussed in the highlight in the headline. And Jason reached out and he said he wanted to really understand what we're some, some problems. And I wanted to see salt that we wanted to see salt.

So on a property developer and greater china for hours for the largest private real estate firm in the world. And we have an incredible greater china team. I know I see this folks in the front.

They're like we are issue. I can't possibly spot her in there. so. So we have a team that is working across beijing, 上海， 深圳， 东莞 and hongkong， and we get to work really across the real estate spectrum. So we built the Greenness skyscraper in in china.

We built to the first international departments in the country and are doing some really interesting innovative projects like a hongkong. We bought a distress tell that we're turning into really a new kind of living collaboration, living that's super technology enabled, uh, for a Young population there where the average White color Young person IT takes them twenty years of salary to be able to buy an apartment. So we get to approach these problems that are not unique to our part of the world, that often the solution is a combination of east meets west.

So back to kind of what's the the problem? Well, we're sitting right now in miami, a place that is super exciting, thanks to a lot of the things that are happening right here that have been hyped by a pretty awesome maybe, what do you do? We ve got on twitter, and he talked all of us about what this city had to offer.

IT had the ingredients that had universities. IT had upward trajectory. IT had Young people looking to collaborate. And the day that we want to be right, we want to be sitting together and awesome spaces like this, a exchanging ideas with other interesting people. That's how you do cool stuff.

And so as property developers, we think, how do you create spaces where people want to be their best right, collaborate with others and build a Better futures? So that's a lot of jargon. But what does that actually mean back to the problem? Well, first, these ingredients are pretty clear.

And teach a class at stanford on this called who owns your city. And the students usually pick IT up in the first ten minutes. It's is a place that has pretty good infrastructure.

Can I get a job? Can I afford to live here? And is there are cool cultural stuff that keeps IT from being to blanks within? You know, you say, okay, well, cities can learn from each other, right? You can just take those ingredients and apply.

And that's what's agree job of here. But we are living in a time where the east and west have never been more divided, right? And building a city building, building really hard. It's it's like the most extreme version of hardware.

So as a property developer, if we spend our time really thinking about what are the big macro trends, what are startups focused on, where do they want to be because our spaces need to be relevant for fifty, seventy, one hundred years, and we can't pick up our building and move IT somewhere else. And so you try to take the arbitration, what's working in one part of the world, and try to apply that to another and solve problems. That's where you find great returns, but it's also where you build places that are going to be relevant for folks.

And so just a couple examples up here behind me so know we talked about the living chAllenges. Uh, so for folks to be able to to be able to afford a place to buy, but the concept of rental apartments, so like multi family, if anyone lives in a multi family building with one lm ord, that isn't totally a thing. In greater china, 对， people are left to have rent from an individual landlord, pay a deposit that's enormous, cross for a cost prohibitive and get a quality of the product that, that really is not up to what they would expect.

And so taking a very was kind of western concept and applying IT in a place that technologically is probably about ten to fifteen years ahead in terms of what that average user is used to. okay? They're used to unlocking a door with their phone.

Their we chat is their ID. It's the way they meet new people. They can physically shake hands on.

We chat to introduce themselves to a friend. It's where they keep their coupons. Ds, it's how they pay their rent.

It's how they pay their taxes. And summer gards, right? We don't have that in america, but you're like me. You live in greater china, you do.

And so how do you combine those things together to create something that doesn't exist? You see up behind me a logistics building, but it's actually six stories high, something we're developing. IT is a giant almost like a refrigerator that a high rise super tech enabled.

And that's because they're got a lot of people. That building will be sitting within a forty five minute driving radius to forty five million people. And yet china only has a quarter of the cold storage capacity for capital that the us.

does. okay. IT doesn't take a genius to see that this trajectory is you know lower left to up or right.

And so again, you're taking this concept of east meets meets west building up here just behind me is is in shanghai is about a million foot tower. You have a lot of those is here in the united states, big fancy office buildings. You know what? People used to go to sit their computers and do work.

But this one is very different from one that you may have walked into earlier this week. This entire building is on we chat, can interact with the building. On we chat, you can interact with the landlord, can interact with your other tenants, uh, you can have chance encounters or organized a yog trip in the afternoon with the people with the space using this digital interface.

So in a way, it's really combining the way we live right now. We live in a physical world, but so much of our ideas sharing, our collaboration is happening in the air, right in a digital experience that we can see. And so it's another combination of this east meets s west.

And so what becomes a problem and an opportunity? The problem when you sit in middle of this world, like my team, is the honor to do, uh, is you see that there are all of these opportunities for us to be able to share this really the best of what the west has to offer with the innovation that's happening on the ground in china. But IT is so hard to talk about in this very divided world.

And so we d like to take the positive side and saying, we're living in this world of, like magic, Larry, and how can we make each other Better? So I thought i'd used just a few minutes and they will hang out with the best to es to to maybe share uh, a story that that maybe i'll haven't read so much about so that you get the benefit of knowing a little bit about what's happening over there. And you can see an example of where sort of east meets west, and that collaboration can make us all Better.

So up here is that gentleman all will probably recognize this stung shop in your famous for ready to opening up of china. And he was an experimenter. We had this vision of what china could be and he saw what the importance of the physical world, the physical infrastructure, what a role that could play uh in to enable the economy to jump further.

And so the picture to the other side is schenz en, which in one thousand nine hundred eighty was barely a fishing village that had about fifty eight thousand people, very few paved roads and ung shopping. He was from sichuan, so we really understood what he was like to not be from the big city. And so he declared red to a special economic zone, special economic zones.

So jg took you, and that meant that I would be this place to experiment with bits of capitalism, with free trade. Saturn, so what is IT today? Well, first, there's that same road alone progression just a few years after was declared a zone.

And then up here behind me is what that looks like now. Shen is over twelve million people. The average age is twenty nine. Um it's really the tech hub of china. So companies like D J, I, which makes seventy percent of the world's drones, they call this area home and and just within this area, if you were to go shortly from where this picture is taken, you'll have two of the world's five biggest ports by toni.

Okay, so how do you take that head start and turn t IT IT to something further? Will they took a lesson out of the book of the west, and they created something called the greater bay area. It's like, yeah, okay, you guys get IT.

And so what is the greater way area? Well, IT is a collection of nine cities on the mainland side are some of which may be familiar tune. Guys, social is mentioned. And guangdong, 广州， about eighty million people, places like too high to remember.

And several years ago there was this thing about china building the longest bridge in the world and runs like, where is that in jui? And then so nine cities on the china side and then long kong and macao and together, this this area, it's about the size of caught west Virginia today has a GDP that sitting right around canada and south korea. Okay, about one point seven trillion in twenty seventeen.

They declared red. This great rather bay area named and IT was there to really back up a lot of the investment, Frankly, that had already started to join these cities together to create a super region. So in that super region, they spent about three hundred billion to build infrastructure to further connected its.

So within just four years, they built two thousand miles of speed rail, like high speed trains. And we have like a little new one from here that goes up for lottery. Al texas is gonna one in the year twenty ninety.

And so, so what does that mean? That means that I can walk out of my office with my teammates in ong kong, which is right to that big, serious wheel thing that everybody recognizes. I can take one stop on to metro and thirteen minutes on the speed train.

I could be in chinen en, or I could keep on going, and I could access about twenty three thousand miles of high speed trains and get to beijing, get to you further than guangzhou, get to western in china. IT is amazing and IT is happening so quickly. And that number will soon be forty thousand as they continue to build. But it's not just speed trains. These are inter connected nodes with further metro, right with transcontinental development on top of the meetings of these trains.

So back to the so what so we know that if you take cool people, put them in cool places and you give them an opportunity to interact, well, what can you do? So this area, again, the size of west Virginia now, with seventy million people who are all quite Young, and get back to the ingredients, we talked about what sort of Fosters innovation. Well, they've incentivized universities to put additional campuses here.

And these are the best universities in china's so chinua fudan saa. They funded further wife science. They funded further tax increment zones. To encourage business is to come and set up nodes of activity focused on areas of. Somewhere we talked early about one thousand nine hundred and eighty, there are fifty eight thousand people in all of shinjin.

So just between twenty ten and twenty twenty and one small neighbor od on the western inside of engine, they failed fifty eight thousand patents. It's pretty amazing. And that shouldn't be scary.

That should be exciting. guys. This is where we get innovations, is how we get Better back to the magic.

And Larry, right? Thank you. Yes, you can clap for that in ret. So what does that mean for us? What does that mean for folks who are sort of getting to work in this instal space in between getting to live within IT you up here now behind me, I have i'll clear the visual for you.

It's furthers connecting, showing these metro lanes, these two buses that that are leading to these speed trains that done here. That's hong kong island. And and this takes you through a bit of the bay area before you get out to the rest of of china.

Well, why does that matter? It's because these things layer together. Okay, so china's e commerce percentages about twenty five percent of the overall retail here, it's about fourteen percent.

Again, all with smart. We can see where this is going. So you can take some notes on the preview and see what things and trans may be coming here in china, about eighty five fish percent.

Their transactions are mobile here, that's barely thirty percent. Where is that going? How is that work? And you can see what's happening.

Another is you can look at trends that are just part of the world there that haven't made IT here. And you sit there like, wow, what a chance to iterate. So the example the arrogant will stick with, with shopping and and retail is social shopping.

So this idea of streaming while shopping, that's layer with a full experience. And imagine what I can do again, if you layer that on top of this watch out platform. We are just talking about a place where I can go and I could make a new friend right now, you, by looking at you, showing my phone into you, putting them together so we can introduce a product, introduce electra concept together.

Imagine what we can do. Islam likes we chat. He was just talking about yesterday. So the point is that we all have this opportunity to really, you know, again, the headlines can be exciting, that can be crispy, but to look beneath them and to take an opportunity to further connect with the people.

Because, again, those folks who are hoping on these trains for, you know, probably equivalent about forty five cents to get on the public transit here, going round and exchanging ideas. These people, most of them are not politicians, right? Most of them are not big world, global leaders.

Their folks who were trying to to create something for themselves, to create something for their children, build a Better world, right? So we're really all on the same team. So with that, bring the best sees out, I guess, going out to get these spicy all right .

center stage .

for you right here.

We're in the middle seat or well done, well done.

Be nice guys.

Be of course, well sexy in here. So of course will be nice. It's kind of by default and meet our a right Peterson from flex sports here. You guys, right, right.

right? We follow each other.

What do we as americans not understand about our rival? And what does arrival most not understand about us? In your estimation, having Operated in both countries for so long, you know.

the term rivals. And interesting when I say love sports analysts and came from the track and field world myself.

there in the olympic guys.

clear was injured. Clearly, I I used .

to go running sometimes .

kind of fast at the olympics.

But you know, your job in the sport is to find the person who is Better than you in some ways. And maybe they're strong where you're weak. You're weak where they're strong. You find each other and you you shore up together. And I think that is what becomes so clear when you know live there, when you live on the other side of the world.

But maybe we're born here or you know know i'm a minority so I maybe always lived in interstitial space personally uh or even our team, our team is very representative of modern china. People from really every province there, really across the the education bracket, highly trained engineers, but who might be quite Young to focus their sixties, who have really seen china evolve. And so I do think the thing that can get missed is almost that concept like we talked about that as for rivals and they're not monoliths as amErica is not a monolithic and we can take the best of each other.

So we're best of rivals in .

a way we go said.

is a model for the century for CoOperation between the two nations that's enhancing above.

I think it's happening and interprets, I really think IT is. So when I look at against Younger people, um the products that they use or the things that the Young tech entrepreneurs in china are working on versus here, they approaching a lot of the same problems, right? So on the social side now looking at doing and what made IT so catchy, right?

What IT is for us.

it's tiktok. It's tiktok. And back to that one about you know cheat codes and na preview, you know doyen was popular years ago and and so now remember first looking at the at the APP being like, well, this is very catchy and there's effectively no difference .

between three and right mander influences as well .

as speak IT or well, you will never confuse me for 我 有 很多 工作 要 做， 不 you？ And good bye.

And so when you do business in china, do to conduct in english, are you going duct to main order?

yes. So with the team, we work fully across what's appropriate because we also work in home kong or its continues. But all of my and they go out about full team. Everything in full team is in Mandarin. We do have a large part of our team at only functions within Mandan.

So when you're a, for example, like, you know, you showed some of these buildings, the idea that came to me is this is a massive coordination problem that's almost impossible in the united states, which is if you have this idea like this living, breathing, monolithic building that is connected via the internet, IT probably be fifty organizations in the united states that would have to have to say or want to say.

The perception that we get is there is individual that can effectively make that right decision in china, whether it's at the city level or at the state level. Is that how it's really like, like when you guys have super ambitious ideas? Is there one place you go to and then IT just kind of all gets decided? Or is IT just like here where it's messy?

So so it's kind neither actually. And this is that that takes the the best of both, which is at a local level. So you have you know, a local, we have a party secretary, you have a block leader, and ultimately goes all the way up to you, the big guy.

But china does this amazing thing. They have a five year plan they call IT. The five year plan last year was the fourteen five year plan. And that sets KPI and areas of focus for the entire country. And those are things around carbon neutrality, education and culture, senior agriculture, industry.

And it's a lot like before you guys who are run in companies setting goals and how are you you going to get there? What's the road map? But that filter is all the way down. And so at a local level, those kp eyes for the local leader are you how did you make your district Greener? How did you increase revenue from higher quality services and technologically advance this company?

What happens if you don't achieve IT? Like you get fire, you get kicked out of the party? Like what is the mechanism .

of reward? Well, well, it's quite high accountability. And so if you perform very well within that system as a leader and you can move to higher and more advanced .

post with the city becomes right.

So yeah, so from a from a block to a bigger city to a higher up to .

a high career, but so elated, right?

And so that creates a very interesting set of opportunities. And so to put IT to maybe A A tangible example, uh, is so for the things that you are really great for communities like park space or building a building that Green, the last building that I showed up there is right, is right on top of the metro and is next to a natural history museum.

And we needed to work with the local government to ensure that we were relating to the area properly creating, like leaving IT Better than we found IT. We look at projects where you can do the project unless you show that it's going to be Green and additive or restore historic buildings in the area. There's a real handshake there that I firmly believe create Better outcomes. I know our team would say the same thing.

So what's gonna en with the capital markets for your business with ever drone day? And like some of these big kind of property developers that have had major debt problems, and if you seen that already growing over and you want to send the work very well, you probably are able to navigate this. But the foregone capital and other investors like might group everybody in the the same block and gets scared off.

sure. So certainly we get a lot of questions. Um but it's another one where that the headlines out four seasons, you know inside the country, certainly the built environment construction and the real thing industries, if you combine that all together, you're got about twenty seven percent of the economy if you include the full integrated stack.

One of things in five year plan is to diversify away from from that and away ah but is you ever granted and the other developers um the real focus at the local in the higher level is to help the regular people uh get good on their deposits and ultimately to get the homes that they were promised. So it's very interesting for developers like us and acquisitions people. As for some of those smaller developers .

who gotten into trouble, that is the wrong word, has been characterised in the U. S. Media that the chinese government had to step in short of the baLance sheet, make sure ever grand wouldn't defauts on some .

of the I think there was a concern that there would be an entire meltdown of the full chinese economy, which is not what we feel on the ground. And I think, if anything, it's created a set of opportunities to really level set. This is especially on the being sector. Um it's really accelerated some policies to make IT easier to to build to create rental housing um which treats more access, which therefore maybe takes away some of the pressure on the condemned um system um you there for for the debt markets to create a space that is um maybe taking on projects that are appropriate for the system a little bit. Again, more diversification and developed in the right places in the right markets.

When we look at the relationship between the united states and china, we've had three, four, five hundred million people come out of object poverty on the planet because of this great engagement. I know that's a term, but i'll call IT the great engagement. We started using their factories.

We started making iphones there. This has created despite all of the hand ringing about the relationship, and all the various issues on both sides are less suffering in the world. absolutely. And so there is something that I think we don't recognize sometimes, is that people who are living for under a dollar a day, three or four, five hundred million of them are now gone. And and that leaves similarities in africa and southeast asia that we still need to do that work, which paradox sick or ironically, IT, seems like china is doing in africa.

What i'm curious about is what you're seeing on the ground with their middle class, which to me seems analogous to what we went through in the thirties, forties and fifties, this establishment of a middle class, which then established that education and and prosperity for the decades to come in, and specifically for the bombers and genets. So so tell us about that middle class that's emerging. We hear about IT, yeah, but how many of them are there? And quality, timely, what do they want from life?

Yeah will be in in a word, it's incredible. right? Like again, I talk about infrastructure so much because you see IT up there, right? China's only as urbanized.

The us. Was about one thousand hundred and fifty. So we read a lot about these today today. So we read a lot about .

these solar trains.

right? And so that leaves this incredible consolidation of people to cities and Younger, Younger people to cities. It's a demographic Spark that, that maybe gets talked about a little bit less. Also, if you look at the change that that person you're talking about has seen in their lifetime.

So they went from a rural lifestyle, Frankly, most of them, and something of a village setting that had not changed in decades to this future world that in many ways can only be imagined in in movies. And so I think I sort of struggle to put IT into terms as they asking, what? What do they want? What are they looking towards? And I say, to use a personal example, right? I'm a lucky girl in the world.

I get to live in this amazing place and work with this incredible team. And you know, yet, you know, my parents, you graduate in a fully segregated world. The elder people, when they were growing up, we're not just slaves.

They were the slaves that we talk about on june teeth, the ones in galveston who walked across the bridge and followed railroad tracks to houston, texas. right? That's amazing.

That is amazing. And so I think when a generation or collection of generation sees that amount of change, what they want is special. They are grateful. But what do they want? They want to be able to build and create and be .

people themselves. Yeah, I have a question. Japan in the eighties had a moment where everything came together for that country. Great population growth, great economic growth. Great systems like kazan and all of this other stuff that they would export.

And the headlines in the eighties was japan was taking over the united states, or japan was gonna p the united states. But really one of the biggest things that he had working against IT was a demographic wave, right? And you had massive negative birth rate that is really compounded japan's stagnation. China is on the precipice of this because this one china policy, I think the staff that I saw, which is stunning, is there's one point two billion people in china, one point four by twenty one hundred, it's going to be around six hundred million. If that's true.

The point is just there's just there's a real issue yeah um is there something in these five year plans around how to become sort of more culturally integrated with the rest of the world, meaning how do you use immigration as an sample to subsidize some of the negative birthrate? Do you teach english more so that you're more integrated into the world economy? All of these things, we just talk about that.

So first, I think that the urbanization trend of folks consulting to the cities really can't be overstated um just in the way that IT shift sort of how how the country will work in what on the ground. You know it's still relatively early days, but when we look at things like belt and rose, as I walk around beijing, and I compare IT to when we first started there, when we were working with capital partners there, I see a lot more Brown faces .

really going to the .

universities around beijing. Now these are seeing what .

belt road is for folks who maybe haven't heard the term.

yeah yeah, so many places you guys can read about IT and before I forget talking about. So sort of just know everybody love this recommendations here. So if you haven't read dolius latest book on changing world order or there's actually a great you read IT so you've got to to read and listen to your best days.

There's also very good a very good illustration of IT 打 起来。 Um but you do do read that because you chinese been a major participant in the global south. So short version of about and road is a working really across a set of countries from south, south east asia and africa, bringing in infrastructure and kind of what that sounds like, roads, roads, ports, airports.

It's set a really building out this network for that part of part of the world. And I think what gets sort of bumped over on that is I think things like, like this. So folks coming to china to be educated, the number of folks on the african continents now learning chinese. And again, I think this is something that is exciting. At the end of the day, the opportunity to to further exchange, to lift more people out of poverty, to create further infrastructure and claris .

hoping you would stay with us and be a beste for and whose the next speaker you be willing .

to help us into iran, I would be honor. Oh yes, switch cheese. okay. Ah you and .

you're .

the gassy I like IT, I like IT, so give IT .

up for care now ran congratulations. Cnbc does their top innovator private company awards every year and you made is at the top fifty list today. I didn't check which ranking you got, but being on the list and in itself is is a big win. Where do they call IT disruptors .

less disrupter fifty? And my view of these lists, you should never share list about your company unless your number one and we are number one this morning.

You truly helped us navigate, I think, the the chAllenge of us as basis and the audience understanding supply chain, we appreciate that even on the show twice, I think .

pology I was uh film in the interview for that during a palmer stock this morning yes.

I but when .

palmer and I woke up this morning, we're writing our speeches together and said, you know what we are going to say? What do you have some feelings .

like seems to be a team .

and this is turning into therapy .

now I don't know anything that I just so nice things about people I got. I couldn't think of a single person who do I want to give this to us? Like, I like everybody.

So tell us you've going to do to talk.

right? You do to talk for a couple minutes.

What he can talk for marry you are a little bit about.

we're seeing. So first of what fox board is where a global logistics platform, we help businesses of all sizes, ship products all over the world, from many world in the world to any world in the world. We do a lot of business in china. Probably about half of all of .

our volumes come out of the I know that if you're looking for one.

if you need that have something.

we'll do some business after this. And so we see a lot. We sort like a front row, back stage pass to the world economy of what's really happening unfolding been a crazy few years.

We to give you context of flex port started in twenty first revenue in two thousand fourteen. We did two million dollars in revenue that year. We're on track this year to do five billion dollars in revenue. So from very and this time period is I assume it's .

always .

like this in this industry. I have only been in the business for about eight or ten years here. But just to take you through that time line, in twenty fifteen, there was a port strike on the west coast and you couldn't import anything in the united states for like three months total pending.

Um by the way, that might happen again july first. They're contracted, they negotiate to back is up for renewal on july for us. So we might talk about that twenty sixteen, there were so much excess capacity of ocean shipping, so many extra ships were purchased, that the Price of ocean fraide hit the lowest in all of human history, was like six hundred dollars to ship a container.

This passion, twenty thousand box in two thousand and sixteen. So we go to these booming cycle. That's an asset business that will happen twenty, seventeen and eighteen and nineteen.

Our president would launched a new tar war every couple of months, and you couldn't predict anything. A twenty, twenty, a pandemic hits. You couldn't have anything for a couple of months out of china.

We were like they were really hard. Europe o vid, shutdown, factory shuttle, all the purchase orders ever been thought the great depression was coming. Cancel all the purchase orders.

Then I turned out the opposite happened. When was this crazy boom? And you couldn't put anything because the ports were overcrowded.

IT went from twenty and twenty and took about five days to ship container from like when the goods are ready, when the factory raised their hands, I say, come and pick up these goods to right now it's about one hundred and twenty days. So doubling or more than doubling the transit time. Um and IT is just incredibly hard Operate in this environment if you were trying to run a business.

And so we're we've had to learn how to navigate through chaos as flash for it's like kind of welcome IT at this point. Um we found that it's problem IT might actually good for our business. We china not to talk about because it's so bad for our customers and has been hard to fulfill the customer promises.

But if you put yourself in the shoes of those customers, so like a direct consumer e commerce business, and we ship for a probable eighty and ninety percent of the hot new d to c brands. A lot of ipos recently, a lot of a lot of really cool, hot new brands. They're going through a almost a perfect storm right now in in like a really, really bad way, like the movie of her first orm um because ocean front rates are sky high, meant in this ten twenty thousand dollars a ship container.

Rule of dom long term is like two grain. So really, really elevated cost warmer announced really high costs this morning. And it's so it's not just small companies, but walmart announced their costs were through the roof from supply chain in their stockings ell ten percent today, wiping off forty billion dollars market cap this morning.

Um so so IT hits companies of all sizes, but these d to c brands got a double when me because apple last he was last year when they changed their practice y rules and their customer acquisition models. And instagram, facebook, facebook all these things stops working. And so at the same moment you're cacked IT stops working.

You can acquire customers, you split ing cost through the roof and then add to that, the consumers are now starting to come back to conferences like this, go back to the restaurants and the clubs and doing the travel. And during the pandemic, everybody just bought stuff. You ve got to get your dopamine e from somewhere, and everybody was just buying good. So that is like a triple. When I for these companies, i'm incredibly worried about the whole d to c brands, the whole data c space, the d to c space.

But you saw IT and like I think I was ratio that just announce her laying off twenty .

five percent of their election of those amazon dtc friends, bring them together and trying to have some economies of scale. no. But when your supply endure, demand both get ten ex ed in the wrong direction, it's game over. I don't know it's game over.

but it's definitely changed the rules of the game. The reality is what people are going to buy stuff. There can be successful. There are can be some winners.

There can be .

brand at Price. Well, so you're saying you're pieces that you're making. Me the statement that you're making today is he were seeing real significant risk to d to c companies because of this confluence of issues right now. And this could be a big threat to a lot of businesses, particularly in an environment with venture funding. Oh.

it's just easier to not do .

anything that might be easier to not do anything. So what does that mean? How do you manage this? And fundamental one of the problems that that that comes about in earth as supply has been writing about the famous PHD paper from, like the sixties, or something called the bull IP effect and a ball wep, if you, you like, crack a whip.

The end of that whip is moving incredibly fast. It's a bit like that in supply chains because you have imperfect information. And so that people do in demand planning are living one system. They're selling goods. They're looking at this data, chat, people producing stuff to a different system.

How long is they taking to produce things that's getting longer, the transit times getting longer, this data, living across all these different domains and becoming very, very hard for a brand to make a decision. How many goods should we buy? When should we buy them? So how much we want to have in stock? How do we avoid being way over stock? And then where we're seeing right now, these warehouses are overflowing and um people can.

So what change is that? Like what breaks IT open? So you know, I can.

China pino didn't exist in two thousand and fifteen now, eight hundred million plus right users. But IT was technology that broke IT open. I what's to the break out moment .

to solve this exact, actually china, one of the company is to watch A S H E I N. This is chinese, kind of like the news, ara, that a is taken over the world that think they're going to do twenty billion dollars in revenue this year. Fast fashion, fast fashion, they're launching a thousand school a day, a thousand new skills that day, all like AI generated. And then if people ordering up, yeah they produce IT and it's like.

really incredible. You're think of robot says, make these skills.

This is where this shirt is from.

And IT going to be a to be sorry, sorry.

tell us so sorry this year you .

so is literally a shirt from shin. But but yes, so if ZARA so ZARA seeing something on a runway terming that that trend will hit and then they can have IT in stores, I think with them like eight or nine days, something you know pretty ild. Ah SHE ends have about us close to instantaneous as you can get so very fast moving skills at sort of hyper speed fashioned. They like, they're like for minor IO.

but they're predicting that this puppy shirt is going to be like women .

are to go for it's a fly shirt, I agree.

And and I think one of one of the key things here is, is the transit time of how long is to take you from when the things is made to when he gets to the customer. Because if IT IT stretches out the way IT has right now in ocean, freak market was taking forever. If that takes three months, four months, five months s six months, i've send you've place these orders and then the demand went away because people started to go in a nightclubbers instead of buying their gardening equipment.

And so the title you can make that and he does make to spending a little bit more on logistics, where you traditional procurement person and logistics only thinks about like i'm just going to buy the cheapest free I can ever buy because they don't understand that your goods in transit are just money, that taking a different forum for a period of time and money has a cost to IT. And if you're sitting there and six months, it's already expensive because you got to pay interest on that. This opportunity costs.

What else can you do with the money? But now that costs is got ten much or because at the time the goods arrive, maybe nobody wants them. We saw that with Christmas where you know you import. Christmas is a classic that you import Christmas stuff and january its worthless.

At what Price do people just find all the ways, whether it's you established domestic three d printing or you buy a fleet the planes or like there's gotta a work because like I saw this image, I think maybe you tweet IT of this entire massive traffic jam, basically trying to get the ships even into china because the cover in nineteen lockdowns are so strict. But that's also exacerbated .

all of but and last year, walmart, to me announced, are spending ten billion dollars vertical ized their supply chain and building up their own infrastructure for moving good.

You think a lot of companies do this? Uh, much easier said than done yeah um you ve seen at least a few with the big box retailers want to say home people, costa and number these guys of said he we're going to charge her, maybe target amazon, of course, go charter their on ships, go solve the problem. There are way it's really hard to do, run these things at scale and Operate.

IT looks good at the powerhouse inside live. When you have to get down to IT, it's really hard. So there are big capex play here, ryan, for the next decade, I think like a big capital equipment, hard as I play.

So the world's ocean Carriers, that's what we call the people that on the ships have actually ordered twenty five percent more ships, increase the fleet by twenty five percent over the next three years. wow. So IT could be ugly the other way real quick. You have too many ships and body ending in money. I mean, like it's a similar sort.

But anyway, ryan said the best. The problem is you can't forecast demand accurately for these long lead time categories that are highly capex intense or mining or whether it's chipping. How do you make a five hundred million dollar capex decision for a business demand cycle that's five years into the they're .

all they're taking profit heads and saying, we have to make this investment because we need the security. We need redundancy. I mean, one more than that, right? They were optimized. A tem doesn't look the way that mining, for example.

deals with this, which is really interesting as they get these companies to sign up what's called take or pay agreements, right? And so they can actually smooth out the demand CER five or six in the take pain means i'll do a deal that says, OK, i'm going to rip the lifting out of the ground. You take IT or you pay for IT. I don't care what you do, but i'm going to get the revenue assurance. I need to go to wall trees to get money.

We've started see those sign for the first time. So we have three year contracts. What was the first ever to sign a multi year contract where we commit pay, whether or not whether or not we ship anything, we're we're going to pay up, right? Yeah OK, take your pay. And U S, A little bit airfare. What's up there will remember, uh, fifty percent of all the worlds airframe flies in the value of passenger planes, way less people traveling to and from asia and their words, yeah, fifty percent that was which is all scary when you think about .

like what's under .

the belly of that a second and good controls on that. But but you never know it's so and and he seemed to be not so sure um you know you work in any industry long enough. You started a question whether everything perfect.

So we've actually got ten passenger planes that we've least and will keep doing more that are not flying any passengers. We're just filling them with free. We started doing this in the pandemic, playing masks. But their seats s at the top. There are still seats in some of them.

Some we gripped out the seats like, cast away. Got the big plan. Yeah, this step.

if you want to go to asia, i've got seven, eight, seven, nobody yon there could be a private place.

but exactly that. This is why you've seen the rise of logistics real estate as a deeply institutional asset class because that math that you talk about, the algorithm is determining what is ordered, how long with IT sit and how fast to people want. If that takes infrastructure on land to be able to get this.

And coming to the question of the assets is play here, probably, yes, because most of wall street IT has been trained. They've gone to all of the same business schools and everybody d's been trained that like terrible get them off your books, don't Carry them.

Do this is what happened over and get you know going into last year and every and everyone you know, it's still the trend and almost everywhere until somebody like tmc comes along and says, you know you don't want assets, intel like, fine, we will build the fabs another four hundred and billion dollars because they're willing to have assets on the books. But it's a different investors and have our an equation and they can they can get a Better uh, share value. And I got question around that.

A the harder question for me to answer, and I know that there's so much questions out there at at the same question, anytime someone to ask me is flexible of our company or a logistics company, are you going own assets or not own assets? yes. And you know, I think the correct answer is to ask the investor which one they'll give you a higher multiple for and then just say that try to figure out you're talking to with IT.

IT is on some level. You maybe other answer is that kind of buddoo is like you can't do logistics without the tech. You can do the work without.

I think you're bringing up something today. The problem with the capital markets is actually that IT is very balkanized. So meaning, you know, let's just say you take a company public like yours.

The problem that you'll have in the public markets is that there are folks that you'll go to in that room that understand sas software, understand margin structure of a software business is set up. And then there's folks over here who run the industrial's business and folks over here who run consumer. The problem is those three folks don't talk.

They have three completely different conceptions of what a good businesses. And the problem for you will be, and i'm not forecasting this for you to be, is that you can get orphant in any one of these groups. And now of a some of the capital markets could be totally shut for you.

This is a very important point that you're bringing up. The the thing that I think we need to change is like the capital people that control the money flows, do you need to have a little bit more than open mind? sure.

It's true that you've love in ninety percent of march in business, but IT is also true in the T. S. M. C case. You'd rather have a business doing twenty percent on five .

hundred billion dollars. well. And if we look true that we also have some examples of amazon, the market seems to have worked out this business that's very factory and asset heavy in delivering goods to us and the cloud.

Even amazon like, look, amazon got to escape for lossy on less than a billion dollars of investor capital. The problem is if ryan, for example, decides, hey, i'm going to go actually vertically integrated by an entire feet of ships that's probably attend to twenty billion dollar lar capex cycle over ten years, and you think about replacement costs, IT may make a ton of sense actually.

right? I wonder when amazon cap expenses for those server started to hit.

He's thinking that but the capital markets want to you to own .

a filter ships.

You're really we're not going to do that. I don't think there's two place. Fundamentally, your bow wep effect means the data can flow and people can make decisions optimates.

Because the data trapped in multiple places, you don't know how to run an efficient supply change because you don't know how many trucks do I need when the ship arrives. Like actually even not even like long term of the enforces forecasting how many ships, but like literally that ship is going to arrive. How many trucks should I dispatch? When should I dispatch them? Like there's two ways to solve this problem. One is to own the asset and the other is to create a data network affects such that the asset owner benefit is enough from putting IT on your platform, your machine learning, your your algorithms are helping that make more money from their .

asset they want to tell you or you can invest.

And a poverty simply don't need to manage many people. Life is easier if you can solve the data machine learning problem.

We look alibaba and alibaba and testing done into china, like there is a medal of being able to go time now. So logistics warehouse, the pushes as stupid .

as IT sounds you having purchased a shipping company and putting IT over here to your point, Claire is saying here's the little thing we bought. It's a bunch of ships. Its its own baLance sheet. And then here's the really great this. But we have this little subsidy area over here is a potential middle ground.

What makes for less work for one business? There's like a million strategies and ways to play out. And i'm i'm not a big believer in like predicting the future. And you know you want to have a vision to know where you're going, but I think be sort of .

flexible yeah what in the name we .

talk about a culture life, what's the goal of? What's the goal of a company's culture? And elland talks to about the goal of a company.

The purpose is like we've got to create valuable products and services for fellow humans, right? But the goal of your culture is how you maximize your famos y in that direction. And velocity is a very important word, because we forget a lot, like one of people forget that velocity is different from speed.

If you remember your physics, he has a direction. You got to know where you're going. And sometimes going really, really fast is actually negative.

Vio city, could you go on the wrong way? And so how do you say edge? All the was going to throw all kinds of chaos at you being in able be able to change like we don't know exactly the strategy.

I don't have everything as as we rap peer question for both you and clear, which is china has big before you .

do your rap question. Can I just, can I ask him to, can you tell us the audience about what you did during the U. K. crisis? It's just just like thirty seconds about.

I didn't go there like antony, crazy man, but what? So we started this group in two thousand seventeen conflicts, work that work to do humAnitarian relief, shipping, really at that time, the crisis with syria, and trying to help refugees, and was really a simple ideas, like, like, we got all the stuff here. We know they need stuff at the refugee camps.

What if we shifted? There seem like a radical idea. We maintained a database of partner, so we have agents that we can Operate on beale of flexibility in over one hundred and twenty countries.

And at that time, I simply emailed our syria partner, who was literally based in the epo, where a lot of this destruction was happening, and I failed. I said he, we'd like to ship a container to this refugee camp down there. And he was like, sure.

What's the address where you want to ship IT? And I was like, wait that easy. Like, I thought this was like, and they realize you could do that.

And we didn't ship in this year because we don't know who's going to end up. And so we ship to refugee camp s in turkey and Jordan. So we've been doing this now for five years， shipping to over fifty different countries any of any time of hurricane uh, earthquakes but uh or a war.

I mean, so when we saw this happening in ukraine, we immediate kick into high gear. The first work to work team has about twelve ll time people. And we have a model where employees that fight where can serve john to that.

We've had about sixty people working on this. In this case, use that we offer a prob ono shipping because we shipping is expensive. Uh, we can't just eat the full cost.

We are profitable, but not enough to really solve the worlds problems by yourself. So we created a go fund campaign partner with action culture milk unis actions in early investor in flex sport. And we raised twenty five million books to pay for shipping to deliver goods. Yeah.

thank you.

But the way you didn't ask and all of our investors.

a lot of great people, you even the best, and said, hey, it's forty four hundred dollars a container, was at the number forty two or forty IT depends words.

Three trains mean for export. We shift nine ambuLances from jur into ukraine. I thought we wouldn't the ship into ukraine because it's orzo IT.

Turns out most, I don't know, most but huge percentage of european and truck drivers or ukrainian and they ever just like stopped to go and do this. So right? So we deliver nine ambuLances that cost like our antenna. So unction deliverances.

I reply back to him and I said, no problem and he said, he mentioned on the pockets as in no problem, I donated forty four hundred dollar container and then you want said, oh, I donated the plane .

that twelve containers went on he did so was the .

flex on a flag perfect for was like a multi lier flex so and then .

I just nobody, this has not got much attention, but uri milstein, an early flex for investor, just donate one hundred million dollars. Wow, two. Yes.

you're really putting pressure .

on their side of this are part.

Everybody does .

what they can. And IT is amazing model where but by the way, over sixty thousand people don't a little love. Select the final question .

for you too. We had this great moment where, you know, we engage china, we build the match iphones, amazon basics and whatever is any issues and and IT raised in the standard of living for a lot of people. We understand chinese doing this now and they're doing IT in africa and some other places.

What are you seeing in terms of that relationship how china is like because towards other countries to become uh, producers of goods and and and they're kind of now becoming incredibly influential. What's they're intent and how is that going clear? Maybe you could .

start it's a big question um but I think it's this is a long term play. We're all in this for a long term play and whether you you take maybe the the spicy review around your resources and protectionism versus one that's marched around progress.

And as we may have an increasingly vocal ized, the eastern west, the ability there to control the the bigger piece of their own supply chain, but the end result, as your sort of saying, is you look at places like news air, right? The average mother there is having six children. You have a very Young global south. And the important thing is that they are fed, they're closed and that they have an upward trajectory. And so that .

people living in abject poverty will probably end in our lifetime. The only places that won't end is in places with dictators. What are you seeing in terms of the the shipping containers? Because you must see shipping containers increasingly leaving certain ports, various china sort of exporting production to and what are the up in coming production areas? You know.

there's really interesting trans going around around labor costs in china. The reason people went there over the last forty years, the onus was like cheap labor. And but over time they became quite certificate.

They really learn how to manufacturer things, especially electrics. If you want to make all I try to prety much, have to make them in insurgent. The greater battery, as he called IT you.

So, and that's but stuff this just for cheap labor, because that's not no longer about cheap labor. This is a whole supply chain ecosystem of components. And other thing, this is just cheap labor.

Two years ago, mexico became cheaper than china in labor costs, a huge shift. And now mexico doesn't have the manufacture turing capacity. They don't have the skills, says they don't, but they'll build IT. Now people will respond to that trend as long as IT takes one hundred and twenty days to ship stuff from china to the us and we cake, this sort of out brands are going to a respond to shipping closure to home. Um so that is a trend that you're going to see more and more of um if the delays stay the way they are. Um I think china's big chAllenge is, is if if they become labor cost to expensive, how do they keep moving up the value chain and this is what they're made in in china, twenty twenty five things is like we've got a they're got to make more and more sophisticated products .

because I can't just be about .

my service yeah that's a huge chAllenge in very few. If anyone's really done IT, no one's on at that scale because of the bigger country .

in the world. Japan Carry done in with IT comes to mind. And then they'll become entitled in .

one of retire at fifty five up. And my favorite answer that was suck. Although tell me from shopping, I told me he lifted this line.

His employees were asking him about the four day work week, and he was like, well, no, I do think we should do some experimenting around many days a week we work. So, but we're going to start with the six day work like china does. And IT will try the four day work .

week later this and generate. Please tell me thinking.

thank you. I am fair.

Well done .

with rainman give IT.

And said we open sources to the fans and just got crazy with.

We should all just get a room and just have one big huge org because they're just like sexual attention. And we just need to .

release what your B, B.

what your B, B.

good we need to get.