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Flexport will lay off 20% of the company starting Friday, leaked memo says
- dannyw 3y agoI've seen so many Flexport is hiring on HN over the past few months. Interesting how a lot of VC companies seem to be mega-hire mode, only to flip the switch to layoffs.
- dtech 3y agohttps://archive.ph/XVjfM https://archive.ph/XVjfM
- hef19898 3y agoBurried in Petersons mail is one nugget every B2B start-up needs to take to heart: >> It's clear that our customers want us to be a profitable company they can rely on to solve important problems in their supply chain. An endless stream of VC money allowing you to sell dollars for dimes does not achieve that. Also, I had a feeling that Flexport might run into problems one day, when Softbank invested, Softbank being such a harbinger of problems its only saving grace is setting Saudi money on fire. Also also, Flexport is the most impressive comoany coming out of YC if you ask me. All they have to do, is to aim being the next Schenker, Kühne & Nagel, XPO... instead of being the "global trade disruting tech thing" and they'll be fine.
- braza 3y ago> Also, I had a feeling that Flexport might run into problems one day, when Softbank invested, Softbank being such a harbinger of problems its only saving grace is setting Saudi money on fire. Also also, Flexport is the most impressive comoany coming out of YC if you ask me. All they have to do, is to aim being the next Schenker, Kühne & Nagel, XPO... instead of being the "global trade disruting tech thing" and they'll be fine. One very underestimated aspects of the logistics business is trust. Specifically trust in your carrier/forward-freight/etc company. The least thing that you as a SME and/or a BigCo. wants is to have one of the companies that deliver your physical goods (that implied some manufacturing and other resources in advance) being carrier for some unstable company[1] in terms of cash with financiers (e.g. Venture Capital) that characteristically has the reputation to make it or fail. [1] - Of course airlines and some other companies has those two issues, but differently than most of VC business, in some cases the government and/or the market will come for a bail out.
- Closi 3y agoI think this is an interesting point - I work in supply chain and commonly when tendering companies will say things like: "We have been profitable for 20 years straight" Being profitable in SCM is a sales point, being unprofitable is a risk.
- anonzzzies 3y ago> "We have been profitable for 20 years straight" I don't know why this is more of a thing for other fields as well. I like my suppliers to be profitable for decades. All the new and shiny is ... well, new and shiny. Long term, I want stability, not new and shiny.
- ChainOfFools 3y agoI have a close non-business connection to a reasonably large Intermodal carrier that serves the rails and the ports in the northeast US, and featured very prominently on their website page header is the number of years that they have been in continuous operation. Fluffy promises of service or growth or expansion are either completely absent from their corporate Identity material or buried on second and third tier links away from the simple and straightforward proof that they have quite literally delivered, for the past two plus decades.
- jacquesm 3y agoSoftbank is the VC worlds' equivalent of the kiss of death.
- hef19898 3y agoWhich raises the question why they are not involved in the eVtol sector, doesn't it?
- jacquesm 3y agoMaybe give them a hint ;) Also: AH is in Flexport as well, so that's two of those long shot investors.
- hef19898 3y agoI'm out of the eVtol stuff now, so they can talk to Softbank themselves ;-) Just wondering if Softbank not investing in something means the thing has actual potential or it is so far beyond hope even Softbank avoids it. Flexport is intersting, on the one hand they have a solid future in the freight forwarding and 3PL sector. On the other hand they attract investors by selling themselves as tech disruptors. Not sure if that mix doesn't create quite some tension down the road, that go beyond 20%+ layoffs.
- jacquesm 3y agoI definitely think there is a market for their services but the silly money approach won't play well in the logistics world where everybody else is running as lean and mean as they can. It's a world that I've had some business in (but years ago), your typical manager/executive in that world is very much feet-on-the-ground and a shaky promise that you are going to be in business a year or two out would already make some class of customers doubt about about whether this is the right time to bet on you. Ironically, Flexport could do very well as a lean business, but I'm not so sure if it can succeed under competitive pressure if they don't get their house in order quickly.
- throw0101c 3y ago> An endless stream of VC money allowing you to sell dollars for dimes does not achieve that. It depends on who your customers are: if you're consumer-facing then perhaps an acquisition (with or without an IPO first) is just fine as you may be rolled into other product offerings. Also, if consumer-facing, clones may pop up (even open source), so if you go broke then folks can perhaps transition somewhere else.
- rchaud 3y ago> aim being the next Schenker, Kühne & Nagel, XPO... instead of being the "global trade disruting tech thing" But that's the entire game. Being "tech-only" is attractive due to the magical thinking that drives its valuations, particularly in stodgy, capital-intensive industries like logistics and real estate (WeWork). Companies like Schenker have tens of thousands of employees too, some unionized and some not. Startup companies aren't equipped to handle things like organized labour strikes.
- martypitt 3y ago> With more than $1 billion in net cash, following this change, Flexport is now in a great position to take advantage of the opportunities in front of us to return to profitability as soon as the end of next year. This feels like a tone-deaf statement to make in an email laying off 1 in 5 of your company. "We're letting you go, but look how much cash we have!"
- bagels 3y agoThe message is for the stock market, they're talking past the laid off people. I hope the have a more appropriate message for them.
- kgwgk 3y agoWhy would the “stock market” care? It explicitly talks about reassuring costumers.
- jacquesm 3y agoIt cares because: running out of cash is a bad idea for any company and running leaner says that you will have more runway. Whether or not it will be enough runway as perceived by that very same stockmarket will determine your share price. If there are no buyers for your stock the price will drop like a stone, so this is both a message to current shareholders 'don't sell, we'll make it' and potential buyers 'sellers are missing out on a great deal, you should buy our stock'. Of course this is more impactful if you are publicly listed (which Flexport isn't). But it will impact their ability to raise money, at what valuation that will happen and how existing shareholders will be diluted. It may all not work and they may still go bust but that's their current messaging in ELI5 mode. It may also be that Flexport - in spite of earlier messaging - is quietly planning an IPO. I think that would be a fairly stupid move at this stage but who knows. https://www.cnbc.com/2022/05/17/we-can-be-one-of-worlds-biggest-companies-amazon-freight-rival-says.html#:~:text=Flexport%20investor%20David%20George%2C%20a,EBIT%20positive%20year%20in%202021 https://www.cnbc.com/2022/05/17/we-can-be-one-of-worlds-bigg.... Another audience for these messages is their customers: if it turns out that Flexport's future is insecure they may well take their business elsewhere or stop considering using Flexport. That can reduce their runway even quicker.
- chrisbolt 3y agoRelated: https://news.ycombinator.com/item?id=37863776 https://news.ycombinator.com/item?id=37863776
- robbiet480 3y agoThe letter sent to employees is at https://www.flexport.com/blog/flexport-ceos-note-to-employees/ https://www.flexport.com/blog/flexport-ceos-note-to-employee...
- siva7 3y agoThat’s not the letter. Take a look at the date of the blog…
- DragonStrength 3y agoThe date is yesterday about layoffs happening today?
- geuis 3y agoPlease delete this. I (I meant this comment, not the original post) @dang
- gadders 3y agoMeh. I think Flexport proved what their word was worth when they rescinded loads of employment offers. Not an ethical company to deal with.
- matdehaast 3y agoTo be fired in the latest layoff a few weeks later.... Not sure what you want them to do?
- Cenk 3y agoDon’t make employment offers and then rescind them? Seems pretty obvious
- michaelt 3y agoOften established businesses that find themselves in a precarious financial situation will announce a hiring freeze several months before resorting to layoffs. It's a much easier decision than laying people off, and much easier to reverse, so it can be taken a lot earlier. And you'll get a modest but relatively painless reduction in headcount due to attrition, if the rest of the job market is buoyant. It also means, if layoffs are needed a few months down the line, there isn't anyone being laid off on the day they join the company. Of course, there are some situations where this doesn't work so well - for example, if employees will interpret the hiring freeze as a sign layoffs are inevitable they might suffer months of sleepless nights worrying if their neck will be on the chopping block.
- matdehaast 3y agoAFAIK there was a hiring freeze mandate from the board and the previous CEO ignored this. Hence was fired... The new CEO had to rectify the situation. Its a horrible situation but at the end of the day, it was going to happen
- seydor 3y agoDoes flexport have an edge or are they an also-ran in their sector? shipping companies have their own advanced systems already
- htrp 3y agoThe value of flexport has always been in the 1 stop shop nature of the platform.
- quickthrower2 3y agoThe "slow burner" version of this is company is Australian company https://www.wisetechglobal.com/ https://www.wisetechglobal.com/ which at 25 years old and is bootstrapped (for the most part) to a unicorn.
- hef19898 3y agoFlexport is offering actual forwarding and logistics services, Wisetech global only the software needed to run those services. That being said, CargoWise one is actually one of my top recommondations when it comes to logistics software. Cloudbased, reasonable pricing, all tue necessary functionalities available out of the box, great customs integration worldwide (including other trade compliance things like embargoes), providing instant transparency and trackong across multiple compabies if your partners also use CargoWise (they just open the database of / for your partners for your shipments), covers air / sea land trabsportation and warehousing, has automatic access to the global tracking data for air and sea freight... The only eeakness, if you want to call it that, is in specialized warehousing solutions (multi-box articles come to mind). But then I never went deep enough to find out howuch customized development can be done. Worst case, you link a specialized WMS, CargoWise interfaces are good as well.
- throwawaysleep 3y agoLots of people who will regret having worked hard for them tomorrow.
- gigatexal 3y agoSo much for those recurring flexport hiring posts then on HN. I hope those laid off land on their feet at even better gigs.
- strangesmells02 3y agoTheyve been advertising theyre hiring on HN for years lol
- guappa 3y agoI used to work at a startup that kept hiring people until it got shutdown. One person worked there for 2 weeks before getting fired. Another hadn't even started yet. I knew it was going down but since they were still hiring I thought I had all the time in the world to find something else.
- strangesmells02 3y agoCrazy how much money these companies have to just be able to keep hiring and hiring then just cut 20% suddenly.
- local_crmdgeon 3y agoI worked somewhere that hired a new Head of Eng, who moved there FROM INDIA, to lay her and 2/3rds of the company off the next day. Was insane.