Sitting down with Karl Siebrecht, co-founder and CEO at FLEXE
As ecommerce has taken root, consumer buying expectations have changed — especially around fulfillment. One of the businesses that has been core to delivering on those new expectations for enterprises and startups alike is FLEXE, the on-demand warehousing business that brings an AWS-like approach to fulfillment with its two-sided marketplace. Redpoint invested in FLEXE in 2016, and it’s grown leaps and bounds ever since.
Ryan Sarver sat down with Karl Siebrecht, co-founder and CEO of FLEXE, to share his insights on timing, growing a software business with great people at the core, and rapid scale.
The interview has been lightly edited for clarity.
Ryan: Karl, thanks for having me. Really appreciate you taking the time to sit here and talk about FLEXE. I remember back in 2016 when you first came into the Redpoint office and we had that first meeting. I remember leaving the meeting and saying, “I am super excited about this and we need to go win this deal.” So thank you for letting us be your partner along the way; it’s been an amazing journey so far.
Karl: Happy to do it.
Ryan: Over these three years I’ve gotten to know you pretty well. And I think one of the things I’ve really been most impressed by is your ability to create a company that has such energy and ambition, while you are able to stay super cool and balanced and have such focus on the company. How do you balance those two things in your own personality and the way you lead?
Karl: I think the balance thing is just part of who I am. I’ve been described as kind of unflappable. I’ve had a lot of experiences in my life that have been full of pressure. And I just think it’s one of the things that I can manage well. The passion comes frankly from the idea of FLEXE, I believe in it so deeply. I didn’t come up with the idea myself, but as soon as we heard about it, I felt like there was no way this won’t exist in the world. And that’s where the spark of enthusiasm comes from, because there’s just a better way to do this. And we’re the first to the starting line to go do it. And that just energized me every day.
Ryan: That’s awesome. Can you share a bit about the origin story? FLEXE wasn’t your idea, but can you share more about how it came together.
Karl: So I spent 15 years in Ad Tech…
Ryan: Reformed Ad Tech guy?
Karl: Exactly. Reformed Ad Tech guy. The reason that’s relevant is A) when I started there, it was very, very early on in that industry. Most people wouldn’t have called it an industry. It was kind of a laughable thing. And B) we spent years building different variants of a two-sided marketplace in Ad Tech. We were bringing together suppliers of services with buyers of services connected by software platform, so super familiar with the business model. And C) the third reason why it’s relevant is we got a front-row seat to the rise of ecommerce, trying to drive customers to shopping carts. So when the idea for FLEXE came around, I understood two-sided marketplaces, connected by software platforms, and I understood ecommerce, and putting those two things together just again made FLEXE jump off the page to me and feel like the biggest no-brainer.
Ryan: So that brings up the concept of on-demand warehousing and I don’t think everyone knows that idea. So maybe talk a little bit about what that means for FLEXE and in the industry.
Karl: Well, warehousing and the whole logistics market, in general, has historically been an asset-based business, meaning people buy or lease or sign long-term contracts for trucks and buildings. And over the last 10 years, particularly with the rise of ecommerce, it started to transform into a software business. Most notably led by what Amazon has done, which has basically converted the value creation in the industry from asset management to software and software development and innovation. And what we’ve done at FLEXE has been able to ride on that and turn logistics capabilities into services that are available through a software platform. So effectively converting it into Logistics-as-a-Service.
“And what we’ve done at FLEXE has been able to ride on that and turn logistics capabilities into services that are available through a software platform. So effectively converting it into Logistics-as-a-Service.”
Ryan: Let me go back a little bit to kind of the founding story. So you guys are just getting going, you’re in Seattle, it’s you and the two other co-founders. Talk about some of those early challenges that you guys start to build a business and build a team and take that vision you have and turn it into a reality.
Karl: Yeah, lots of challenges early on and still today, right? There’s always a new challenge. In the early days, what was particularly challenging is that we had this very clear vision for how things should work. But we’re operating in a very old-school industry, logistics and supply chain. I sometimes laugh about it as the world’s largest cost center. In the U.S., there’s $1.6 trillion of spend, which is over 8 percent of GDP. And historically, if you were a supply chain exec, you’d be successful if you didn’t break stuff, you didn’t lose stuff, and you saved a couple points of expense on the P&L. And with the rise of ecommerce, logistics is now turning into a growth thing.
In other words, if you can’t ship your product to consumers fast enough or cheap enough, you lose the sale. The consumer just leaves your shopping cart, and by the way, you spent a ton of money to get them there, they abandon it, they go somewhere else where they can get fast free shipping. And so the underlying urgent need is there for a lot of companies, but it’s still the operators in the space are old-school and generally somewhat resistant to change.
So here FLEXE comes along. We’re this tech company based in Seattle with a new idea for a better way to operate, but it’s hard to convince people to take the risk to try that better way.
“So here FLEXE comes along. We’re this tech company based in Seattle with a new idea for a better way to operate, but it’s hard to convince people to take the risk to try that better way.”
Ryan: It parallels when you talk a little about this change in the industry from an old asset-based thing where you had to be great at managing assets to just having to be great at the software layer. Obviously parallels a lot from data centers to AWS. Do you see this playing out in the same way kind of in the industry and the supply chain that things will move to opex, or how do you see that parallel and how do you see the future of supply chain coming?
Karl: Yeah, we absolutely see that parallel. I think that’s one of the best metaphors for our business. There’s about a dozen of them, but I think through the lens of the customer, where is the value in FLEXE? It’s very much similar to the value in Cloud, what AWS invented, relative to a data center.
It’s taking assets and fixed costs and converting them into that capability as a service. Plug in once to AWS, scale-up sort of infinitely, and be able to toggle your volume and pay per unit as you go. And so that’s relevant for startups who don’t know how to forecast their business and don’t want to invest in fixed costs and infrastructure. It’s also relevant for big enterprises that have different business needs that are a better fit for an AWS or a cloud model than more of a classic data center model.
We see the same thing playing out in logistics. It’s just we’re about 12 years behind the cloud. We believe that big enterprises — — we have customers from Walmart, to Proctor and Gamble, Walgreens, FritoLay — they will continue to adopt the flexible, sort of on-demand model more and more, it’ll become an increasing share of their wallet, similar to high-growth ecommerce startups, where customers of ours include Casper, and hims, and Lime Bike.
They’ll plug into FLEXE and it will become increasingly effectively their entire logistics capability, again, available on-demand and variable cost only.
Ryan: One of the things I’ve really respect about you too is your ability to hire and recruit and retain amazing people. You recently brought on Dave Glick from Amazon, he was there for 20 years and managed all of their logistics and supply chain technology. Deirdre Runnette, who was head of people from Zulily, joined to be your GC and Chief People Officer.
Talk a little about your philosophy and how you think about hiring. We’d just love to hear what you’ve learned over the years to help you to become such a good hirer and manager.
Karl: Well, I guess my philosophy is hire great talent.
Ryan: Easier said than done.
Karl: Exactly. How do you do that? I think for us it’s been a combination of… Look the business, it’s a great business and a phenomenal opportunity, as I’ve already discussed. And the other thing is we have been very purposeful in building the culture that we have. We want people who opt-in fully to the magnitude of this opportunity. As I’m interviewing, I want someone who gets as excited about this opportunity as I am. You’ve got to believe because it’s going to be a lot of hard work. So that’s part of it.
And then part of it is just being authentic. I am who I am, I lead the way I lead, and I try to encourage the people who have joined the team to show who they are in the interview process so that we get people who are opting in with eyes wide open. And when they come to FLEXE they’re excited about the opportunity and we have a good feel, they have a good feel that they’re going to be a great fit and they know exactly what they’re getting into.
Ryan: I know when I talked to our candidates, that it’s one of the things that jump out. Obviously they’re excited about the business or they wouldn’t be doing this, but they also look to you as a leader, as someone they really want to work with, who empowers their team and gives them good visibility into what’s going on and how they’re going to be.
As you think through the future of the business, you’ve hit on a little bit of the software delivery model. How do you see enterprises and customers and the mix of customers changing over time?
Karl: Right. Going back to the AWS or the cloud metaphor, that category is now about 25 percent of total IT infrastructure, right? And on its way to 30 percent in a couple of years. I don’t know where that caps out, is it 50 percent, is it 80 percent, who knows? Again, if you did the similar math in logistics, there’d be a couple of zeros after the decimal point, but there’s no way we’re not heading on that same trajectory, because effectively a cloud-based logistics solution is the right answer for a lot of use cases of big companies, and maybe for the entire needs of a smaller company. So I think the share continues to grow.
The other element that is super important here is just as the way the cloud developed, where it started with S3 in that very basic, almost commodity services, and now over 15 years has evolved into AWS having over 140 services. They’re starting to get very, very, very sophisticated because the capabilities that a Google or a Microsoft or an Amazon can build into their platform, at scale, start to surpass what any given company could build on their own.
That’s one of the values of a common software platform business. And again, we see the same thing playing out here. The fact is, we work with a lot of great customers, a lot of great logistics service providers, most of whom can’t hire the engineering talent that we can hire. Because we’re fundamentally a software platform business. We can attract leaders like Dave Glick and others on the team because they know that they can build a platform that can be scaled and used by not just one or two companies, but thousands of companies and really, a big swath of the whole ecosystem.
Ryan: You hit a little bit earlier on how challenges evolve over time as the company matures, and some of the early day challenges. What do you see as the biggest challenges you’re facing today and also as we look to further down the road?
Karl: The way I think about the challenge changing is this great book, The Goal by Eliyahu Goldblatt. And it’s all about finding the bottleneck, and it’s set in a manufacturing plant. But it’s one of the favorite business books I’ve ever read because that applies to almost everything I see. And it applies to building a company, too. You asked about what were some of the challenges in the early days, they were different than they are now. But you find the bottleneck, you put as many resources in as you can, you hire the right people to solve that bottleneck. You solve it, you celebrate for like half a second and then you figure out what the next bottleneck is and move through. So it’s been that way for six years.
“But you find the bottleneck, you put as many resources in as you can, you hire the right people to solve that bottleneck. You solve it, you celebrate for half a second, and then you figure out what the next bottleneck is and move through.”
I’d say our current challenges are all around scaling up processes, and making that transition from a team of 50 — where if you have the right talent and enough people collaborating and working hard, you can get a lot done — to 150. When you go to 150, you still need great talent and you still need hard work, but you’ve got to have process to make things run smoothly, and we’re right in the middle of that transition. That’s one of the reasons why it’s so important to bring in other senior leaders who have seen this path, this chapter of scaling to help us navigate through that.
Ryan: So you’re a multi-time CEO and executive, and this is your first time founding a business. When you look back at early Karl and his executive trajectory, what are the things you know now that you would love to go tell him back then? And maybe more broadly, any advice for founders and people just getting going in their careers?
Karl: I think a lot of what I lean on today, I learned very early on. I was in the Navy for four years, and when you join the Navy as a junior officer, it’s a very humbling experience, because generally speaking, you don’t know anything. You’ve kind of been to school, classroom school, but you haven’t really been to school, on a ship. And so that was a very informative experience for me, being put in charge of a team when you don’t really know anything. And so what you learn really quickly is you’ve got to lean on the people on your team, build trust, build relationships and build credibility, so that you can actually add value as a leader and help make decisions, or make tough decisions, but make them informed.
And along the way, I feel very fortunate to have learned from other mentors who I’ve worked for and I’ve applied that to where we are today.
Ryan: Talk a little about that founder journey. Obviously, there are some really exciting moments and they can be some of the highest of highs, but they’re also can be some of the lowest of lows. How do you manage that personally and how do you deal with stress? Do you have a routine or anything that you do to manage that whipsaw?
Karl: Yeah, one of the quotes I love is, “The days can be long, but the years are short.” So there have been a lot of stressful days, but I try to keep everything in perspective. Again, having served in the military for a while, you know, there’s stress at a startup but it’s not like the stress that a lot of other people deal with on a daily basis in other types of jobs. So I think that perspective is really important.
I also think it’s super important to try to remember to enjoy the journey. The journey can be very long for one given company, but certainly over the course of a career. And that to me is really, really helpful, to be able to step out and remember this. It’s building the thing that is much of the fun.
Then the final thing is just to practice gratitude and appreciation. I find that in the middle of a stressful situation, to be able to stand back and put it into perspective of what else is going on in your life and things that I personally am thankful for, that really helps. That really helps in its element.
“I find that in the middle of a stressful situation, to be able to stand back and put it into perspective of what else is going on in your life and things that I personally am thankful for, that really helps.”
Ryan: Love that. Speaking of being able to have the opportunity to work with some great founders and mentors over your time, what other founders or businesses do you admire and look to now as an inspiration for you want FLEXE to stay and become?
Karl: I really admire Amazon — obviously not the only person in the world to feel that way — but truly, the business geek in me just has such a deep appreciation for that company and how they’ve been able to continue to innovate at massive, massive scale. I mean, being here in Seattle for the last 20 years, I’ve had close to a front-row seat and of course lots of people who work there, and just when I feel like there’s no way they can keep doing it, they come again with another big innovation and it just feels like there’s this pipeline and they’ve got much more to come.
So the ability to scale, people-wise, to scale in terms of the different business units that they’ve spun up, it’s just amazing. And keep the energy and keep the culture. I think in many ways it’s the most amazing company that’s ever been created.
Ryan: Yeah, I love that. Ready for rapid-fire?
Karl: I’m ready.
Ryan: First thing you do in the morning?
Karl: Get out of bed quickly, so that I convince myself I’m wide awake and had enough sleep.
Ryan: Yoga, meditation, running?
Karl: Exercise, always.
Ryan: Always. Favorite book?
Karl: The Origins of Wealth. It’s a mashup between the Wealth of Nations and On the Origin of Species. It’s fantastic.
Ryan: Interesting. That’s right up my alley. I might have to get that one. Favorite restaurant?
Karl: Ooh. There’s a restaurant called the Willows Lodge up on the Lummi Island. It’s really, really remote and hard to get to and totally worth it.
Ryan: Sounds great for the next board meeting.
Karl: Yeah. Yeah.
Ryan: What’s one thing you believe in that most others would disagree with you on?
Karl: I believe that great software companies can and often need to be built with people, and not just software.
Ryan: What was the first concert you went to?
Karl: Van Halen.
Ryan: And there we have it! Thanks, Karl!