Sent Items #144: Thursday, September 7, 2023

BREAKING NEWS!

I felt that a Sent Items was worthwhile given last night’s news about Dave Clark abruptly leaving Flexport.

While Sent Items is not TMZ for logistics (should it be?!), there are many interesting storylines that have widespread consequences for logistics and fulfillment that I thought were worth sharing and speculating on.

Things started with Dave’s very emotional post on Twitter/X:

Key line: “I came to Flexport to do big things and that’s where I believe we were headed. Today, Ryan and I discussed his desire to return to focusing on growth in the core freight business”

In simple language this means:

1. Dave was blocked from being able to do “big things”, i.e. build “port to porch” supply chain logistics

2. “Return to focusing on growth in the core business”, i.e. eliminate all “side quests”, focus on profitability

Then an hour later we heard from Ryan Peterson:

This is all so strange. It is clear that Dave was fired by Ryan and Flexport. I’ve learned when folks don’t email with “This will be my final week at the company…” it means they were canned. Period. Ryan’s quip about “...especially if he runs for Governor of Texas”, which the WSJ reported (link), is also just a bit facetious.

This feels very abrupt. Ryan would have had a CEO replacement if he had time - as of yesterday he was still a VC at Founders Fund (link). Though it never seemed like he was a Venture Capitalist at heart.

What is surprising to me is how quick this change was made. Only 3 months ago Flexport closed the sale to acquire Shopify Fulfillment/Deliverr in exchange for 13% equity interest in Flexport. Now it seems that acquisition will be written down to $0. I’m personally hoping that Harish Abbott and Michael Krakaris pull a Dave Portnoy and re-purchase the company for $1. Wouldn’t that be a fun twist.

So what changed in the last few months? Is it that Dave Clark actually wants to run for Texas governor? That was a strange admission to the WSJ. I think living in Texas would be a good first step on the journey to becoming Governor, but I’ve seen crazier things…

Here’s my hunch:

Last week’s announcement (link) of the tie-up between Shopify and Amazon has MUCH to do with Dave’s abrupt departure.

Shopify’s announcement that Merchants can choose to offer Buy with Prime directly within their Shopify Checkout feels like the nail in the coffin for Flexport’s aspirations of “port-to-porch”.

Flexport’s acquisition of Deliverr/Shopify Fulfillment was meant as a way for Dave to rebuild what he designed at Amazon. His goal was to build an FBA/Prime experience for everyone else. Shopify’s announcement that they are essentially enabling Amazon to offer its famous Prime experience native in Shopify checkout means there is no place for Flexport to build something similar with any clout. Hence the desire for Flexport to return to their origins in freight.

Keep in mind Shopify sold their fulfillment business to Flexport in exchange for a 13% stake. Shopify doesn’t lose this, but Flexport has something that is mostly worthless, hence my earlier point that I’d love to see the founders re-purchase for $1 😁 A real FU to the Flexport team.

I have one other curiosity:

While I applaud Flexport’s admission of defeat on B2C logistics, and the decision to focus on their core competency, freight is just another commodity. It’s not surprising that Dave is disinterested in this. Flexport is little more than a pricing platform, a boiler room of sales folks brokering trades. A fine business I suppose, but Dave Clark built Amazon Logistics and presumably has aspirations to build something of that magnitude once again. Managing pricing software is not that.

Feels like there’s much more to the story that will unfold in the coming days…

- Matt

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