The Future of On-Demand Warehousing with Karl Siebrecht of Flexe

Karl 00:35

Yeah, hey, it's great to be here, Justin. Excited for the conversation.

Karl 00:48

It's still a party. Yeah, exactly. A party of sorts.

Karl 01:03

Yeah, that's right. Yeah, in 2013, I was in fact, was a housewarming brunch kind of thing. I had, I've been an entrepreneur pretty much all my career. Had been a part of starting some tech companies or joining others that were early stage and going. through the process, helping to drive the journey to scale and everything else. And so I had done this with a few companies earlier in my career, for the first 15, 20 years of my career. Had a moment on the beach after a company was sold and after sort of like... catching my breath a bit, was starting to think about, you know, what should I do next? Definitely wanted to, you know, have the edge, the entrepreneurial edge was going to work at something small. And I was at this party and mentioned this to a guy who said, I've got an idea for you. I'm like, all right, well, yeah, let me get some more orange juice and we'll have the conversation. But it turned out that it was the idea that this company, Flex, was built around.

Karl 02:13

And it was this very clear and relatively simple problem statement that he shared. he, this was, now a good friend, is built a company. in the, as a retailer, in the home barware segment. So shakers, know, swizzle sticks, the little bags that you bring your wine to the dinner party in. And he was several years into this journey, it was going really, really well. All the product was designed in-house, manufactured in Asia, brought across through the port of Seattle Tacoma, because he's based in Seattle, and then distributed nationally.

Karl 03:00

And, you know, doesn't take a... Anyway, the warehouse was near HQ and there's a lot of benefit from that, but it's kind of a terrible place to have a single distribution node in the US when you're distributing nationally. But his simple statement was this. He said, look, warehouses are fixed.

Karl 03:23

meaning I have to lease a building for several years. He said, you know, I ask for one, they laugh at me, they counter with five, and depending on the market conditions, you know, if I land on three, I feel pretty good, years. And he said, the reality is my business is so dynamic that it is a complete mismatch. I don't know how fast I'm gonna grow. If I land the Whole Foods account,

Karl 03:48

for my gift bags, I'm gonna grow like 800 % next year. You know, if I land something else, you know, I'm gonna grow 120. And if I don't land those, I might be 60. Plus he was seasonal. So warehouses are fixed, businesses are dynamic. And he said, look, the solution I've... attempted was I have a buddy, you know, who has a different business, who's got in the same boat. And it turned out we were having this conversation and he was long on space. He had just leased a new building, anticipating growth over the next three, four or five years, had tons of underutilized capacity, which he didn't love. Here I was jammed to the rafters. I'm thinking about, you know, how can I augment, bridge me to, you know, some future state? And we said, well, hey, how about you take some of my inventory?

Karl 04:39

And he did that. And on the one hand, it was this kind of elegant situation because he didn't have to commit to another box of capacity. And the other guy got incremental cashflow, but operationally it was, it was super difficult, right? Cause there's no system for one company to handle somebody else's inventory and the economics and the billing and the inventory controls, all those things. But this is what he shared with me. That was a longer version of the story than I typically tell, but that it boils down to like warehouses are fixed. Businesses are dynamic. If you can figure out a way to aggregate a massive amount of underutilized capacity, because there is, because a lot of people have gotten the big box and they haven't grown into it yet.

Karl 05:28

Always, always, if you can aggregate that and make it operationally accessible, and then you can offer it on more flexible terms, I think this is a big idea. So anyway, that was the genesis of what became Flex.

Karl 05:53

Yep.

Karl 06:30

Yeah, for sure. mean, look, you know, after that idea, you know, the first thing, the first thing you do is go talk to people who are in the industry. I had never worked in logistics. I had worked in digital marketing and yeah. So, so I want.

Karl 06:48

I wanted to talk to both shipper side and, you know, we're based in Seattle. had a lot of, former client relationships on the marketing side with big companies around here. Eddie Bauer, Starbucks, you know, Nordstrom's, a bunch of Seattle based companies. I would call my. Correct. Correct.

Karl 07:07

So, you know, call my marketing contact. Hey, could you introduce me to somebody in supply chain? And they're like, I don't know if I know anybody in supply chain, know, they, you know, finagle and I get some coffee meetings with the, with shippers brands, retailers. And then on the three PL side, I literally was just kind of Googling three PLs in the local market. Introduce myself. Hey, could I buy you coffee? You know, go down south of Seattle to Kent and, and Puyallup and the places where the warehouses are and talk to them.

Karl 07:37

them. And you know, I didn't know anything. So I said, Hey, here's this idea. Just give me your feedback. Is this is this dumb? Is it? What do think? And

Karl 07:47

Exactly. And what I basically heard from both sides were a ton of questions. Well, how would you how would you work? How would the contract work? How would how would you guarantee, you know, a quality service like who's going to be handling my stuff? You know, and just at the time, yellow legal pads of questions taken notes, taken notes, taken notes. And I literally at the end of every meeting after people had who knew this business. said two things. One, this is definitely a problem, both for the 3PL side, because operating at a high utilization is one of the biggest drivers of profitability. On the shipper side, it's like, yeah, there are supply chain disruptions. think things, our forecasts are wrong. Certainly our two, three year forecasts are wrong. So this is a problem. I have a bunch of questions for how problems you'd have to solve, if you figured out, call me. And having been in on.

Karl 08:51

Having been an entrepreneur pretty much my whole life, I'm like, okay, I'm going to step into this challenge. And it has been a journey. It's been a lot of tech that needed to be built to solve a lot of these problems that we heard, including a very fast and light, fast to deploy WMS so that the shipper side can plug in once, can integrate with one system and then work with any number of different 3PLs out there and they're just distributed network, right? They can tap into this marketplace of unutilized capacity, but they can have centralized control. Tools that look a lot like marketplace tools, you know, a way to sort of find potential options. We have a finder tool out there and you can kind of look around in the network to see what kind of capacity is out there. Pricing estimation. How should this stuff be? This is kind of a spot market for warehousing. How's the pricing?

Karl 09:51

work, how can I learn more about what I should be paying, what I would have to pay. So pricing intelligence, market index types of capabilities, and then marketplace. like, okay, so how do we match shippers, and not just a shipper, but the scope of need, the specific scope of need? Do I have 10,000 pallets, 5,000 pallets? What is it, food grade? What does it have? handling requirements, what's the throughput, what's the unit of measurement, scope can get very, very, very complex. So tech to sort of understand what the scope is in order to match it to any one of, you know, what's now 800 different 3PLs in our marketplace that have something like 3000 facilities in total. Like how do you do the matching? How can we add some value?

Karl 10:47

Nobody ideally wants a middle man.

Karl 10:53

Right? You know, nobody wants a middleman. So the only way you exist is if you add value to both sides. So a lot of that value that we create is through technology and our technology platform and then unique data that helps bring transparency and insight to this service.

Karl 11:23

Yeah. Totally. It was. It was actually the guy that had the idea. It wasn't a theoretical idea.

Karl 11:34

We did our diligence. I had two co-founders who were both engineers, software engineers. And we said, you know, let's go give this a try. We've learned enough to know that there's a problem out there. Can we build a solution that solves it? That's the thing. So we went back to the guy who had the idea, said, hey, if we build this, will you buy it? And he said, look, here's what my Q4 is looking like. I need capacity, and I don't have great options. You built something, yeah. And we literally did. I think we incorporated in August and we started generating revenue in October.

Karl 12:15

And so, you know, so that's the demand side. had a customer who had a need. So then the next part is, how did you find a warehouse? We, you know, it's scrappy as scrappy can be. You you go down to, you know, South of Seattle and, you know, you cold call and you find people who are willing to.

Karl 12:35

Absolutely, absolutely. And we find this company and who's in the holiday novelties business. Specifically, the biggest category is Halloween costumes. They're one of the largest retailers of Halloween wholesalers, really. They have their own retail pop-ups, but they wholesale to the biggest retailers in the world.

Karl 13:02

You can imagine, they had 330,000 square feet in Puyallup, south of Seattle. You can imagine what that looked like in late September and what it looked like by October 15th.

Karl 13:19

wild, right? And so we found this company, this guy, and we walk in and the inventory is just, they're all outbound trucks. It's just leaving. This is like early October and this thing is just draining. And the first meeting we say, hey, what are you going to do? What's moving in? And he's like, well, we've got what would be next. Easter, can't remember what it was, or something several months from now. And the basic pitch was, you want to make some incremental cash?

Karl 13:59

Yeah. You know, the second time we went down there to meet, it was almost empty and there wasn't much labor in the building. You didn't need it at that point. The people were skateboarding around. That was long skateboards. And long story short, said, yeah, let's try it. So we get the guy who has the need, match it together. We had a very, very simple initial version of our WMS, which is literally just pallet in, pallet out. Scan in, scan out. There was no break, you know, break bulk of the pallets. It's very simple profile. And it went great.

Karl 14:31

It went great. so, you know, before that inventory had even left, he's like, well, you you're to bring me more customers? Like I got a lot of space. So it started the flywheel of building up demand. And then, you know, of course you talk to the next customer who's like, yeah, this is great. Can you help me in LA? Cause I have a need in LA too. And they're like, now we're talking, right? You know, and then Chicago and then, mean, on and on and on.

Karl 15:00

That's how we got started.

Karl 15:18

That's right. That's right.

Karl 15:37

Yep. Yep. Yeah. Yeah. Current state of the union is, uh, we, we, we, it's been a journey. We've had periods of, um, you know, after we got this flywheel growing, we started to see going. started to see real growth, um, in kind of 20, I think in 2016, 17, we signed our first, what we would call enterprise shippers, which was our target. Big retail.

Karl 16:13

Exactly. So big retailers, big CPGs, food and bed, many fact, you know, industrial, big, big, customers who all of them, what we learned is almost every, basically every business has some dynamic or uncertain part of their overall enterprise. And what we've learned is that the solution, the ideal solution is to have this mix of fixed capacity, i.e. lease a building, operate it yourself first party or work with a contract logistics provider, you know, both on a long-term lease. You know, you need that. Absolutely. That's where you get efficiency. That's think of that as like your base load, but you also need this flexible layer as a compliment to that. We learned that in just shipper after shipper after shipper, there were use cases, seasonality, supply chain disruption, a forecast that we thought was gonna be X and it wasn't, you can go on and on and on. New product launch, oh, we did some M &A, it always happens. so.

Karl 17:19

Keep going. COVID, know, all these disruptions. And so we had some really great growth. We went from just pure pallet in, pallet out to adding different units of measure. So distribution, so case level distribution, e-commerce, each level distribution and grew really nicely. And then COVID hit. Of course, those were.

Karl 17:46

Yeah, yeah, you do. Yeah, absolutely. And COVID hits. And so there's this moment of like, okay, what's going to happen? And within a couple of weeks, what we realized is that the behavior became pull forward inventory, because there's risk. It's like the macro B2B version of consumers buying toilet paper, stocking up and particularly retailers stock up on inventory. And guess what? There was a very, very, very strong demand for overflow warehousing. And so our business went from from growth to crazy growth. Massive tailwind for our business. We had raised a lot of capital in that time. Interest rates were close to zero. There was a lot of investors who were trying to put their money to work. So we raised a lot of capital, hired a ton of people. and served this massive need. As we knew ahead of time, we hadn't experienced it yet. We sort of knew that logistics generally was a cyclical business. And as a spot equivalent, a spot provider in a cyclical market, we are hypersensitive to cycles. So we started to feel, I basically, yeah.

Karl 19:07

Exactly. So we started to feel the tailwind. It's like a tide, you know, there's an end tide and then there's this quiet period before it starts going out. There's a tailwind and then it was still and we're like, okay, I think we got to batten down the hatches. And the headwind started to build, right? We were on the other side of the cycle and it's been super tough.

Karl 19:33

for a business. You I've been through cycles before, you know, one of the things that if you if you're disciplined as a business leader, one of the decisions you often have to make is to lower the OPEX, lower your expense profile, which which basically means you've got to let people go. And we've gone through that journey a couple of times and it's super painful. We've lost some great people. Yeah.

Karl 19:58

Super painful, but it's part of building a business, right? Had we not done that, we wouldn't have a massive balance sheet still. We have gone through that cycle and we're coming through it stronger because we've protected our cash. We've been able to sort of pick our spots and where do we want to continue to innovate? And the other thing, which is a sort of a silver lining of that tough period is it drives focus, right? It drives focus in particular for us in how to build our tech stack to scale even better. know, in a time where we kind of capital was free and the labor markets were, you you could hire as many, we hired great people. We could kind of throw people at this, at the demand surge. and knowing it wouldn't scale, but we'd get to that later.

Karl 20:58

And then you go through the headwinds and you're there and you got to do it. And that's what we've done. And it's kind of like necessity is the mother of innovation or invention. If you've heard that phrase, well, necessity is like we have got to control our expenses because revenue growth has slowed and it's forced us to be kind of more innovative on where we want to invest. So things that I've mentioned about, you know,

Karl 21:25

really smart and now of course AI assisted enabled tools like for very sophisticated for scope capture and pricing estimation and bringing. the types of insight and unique data to the market to bring transparency to this whole category, if that makes sense. So those are the types of investments we've made that are paying off really, really nicely for us. So we've kind of been through that cycle and we're in probably the strongest position we've ever been in as a business. And we've got a ton of cash in the bank so that we can play offense again, just in terms the pace of innovation and we get more problem statements from customers. could you do this? Could you do that? Of course, not all of them are aligned with our strategy, but those that are, can lean in and be very aggressive at building those quickly.

Karl 22:38

now.

Karl 23:01

Yeah, back to normal.

Karl 23:35

Yeah. Yeah, it was a ride. And the sort of continue, so how has that gone, right? Over the past few years and what are the implications of our business or what have we seen and witnessed and been a part of? Well, you know, as you said, like during COVID, everyone needed extra capacity. We were very helpful for many, many, many, companies in that endeavor. At the same time, developers said, wow, look at this warehouse, but you know, this is growing. It's time to buy land, pour concrete and build warehouses.

Karl 24:19

a of new capacity starts being developed. 2020, 2021, 2022 is a ton of new capacity coming on. And by 2023, end of 2022, interest rates go from basically nothing to it's ticking up. And the whole party's over, the economy starts to shift, right? Businesses...

Karl 24:47

get more cautious. They've got too much inventory. So now they're not bringing in, they're not creating as much. At the same time, more capacity is coming online. The economy is slowing down. So you look at vacancy rates, industrial vacancy rates in the US from kind of almost near an all time low. to just climbing, climbing, climbing, climbing, and I haven't checked very recently. I mean, it's 8%, something like give or take, couple of times.

Karl 25:24

Yeah, it's wild. So vacancy rates are close to, maybe not an all-time high, but a high for the last 10 plus years and in some markets all time, right? And you know, I'm an economist hobbyist, certainly no genius, but when supply is plentiful, what happens to prices? Typically prices go down. What has pricing done in industrial leases?

Karl 25:53

It has climbed up, climbed up, and it's sort of stayed high. So think about that. Tons of supply has come on, but it's still like square foot rates are high. What is going on? Well, it's a very, very sticky market.

Karl 26:11

Pricing is very, very sticky and not as sensitive to supply and demand as in other industries. We've got fuel today. It's very different. It's because the term of the economics, the lease duration is long. Right? So that is very highly correlated to the stickiness of the price. Okay. So at the same time, all this capacity comes on, prices stay stubbornly high. Guess what the price in the spot market for warehousing has done. So there are deals to be had.

Karl 26:48

because there's a massive amount of underutilized capacity in the market right now. So one of the, you people ask me like, what's a misconception people have about, you know, your business? And it was like, people think, it's a spot thing. It's, I gotta have to pay a premium and I don't really want to pay a premium. There's a middle man. I'm going to have to pay extra. Like, it's just not true. It, depending on where we are on the business cycle, I can promise you at the height of the COVID.

Karl 27:16

Yeah, like, I'm gonna have to pay extra because there's a middleman, there's all this stuff and it's a spot market. And it's like, actually, no, certainly in this part of the business cycle. Because there's a lot of folks who are paying their lease every month. They call the landlord and like, hey, can I get out of my lease? Sorry, no.

Karl 27:39

Yeah, sorry, no. But if you find demand... to bring in and drive your utilization up, your economics can look right and it's a sort of marginal cost type of analysis. So anyway, that's what's going on in the market today and back to my conversation about the tools we built on our discover.flex.com, one of the tools we built is a little ROI calculator. If I have a fixed option of like I can go get a two year, three year sublease and pay this much or I could pay

Karl 28:14

in an on-demand basis, depending on how my volume actually comes in relative to what my forecast says. It's like, am I going to save money? You know, what's the better alternative? I just buy fixed or should I buy flexible? And what has to be true where one wins over the other? Because the reality is depending on your situation, depending on the scope of your need, one or the other is the better tool, right? Flexible is not always the best by any stretch and fixed is definitely not always the best. to the shipper, as we said, you know, like what you need is both a fixed baseline with, you know, scaled ability to flex on top of that. And that's what, you know, that's what our, that's what our most mature customers, just what they do. And let me just take a beat to draw a comparison here to freight. You know, there's a freight market.

Karl 29:14

Yeah, right. So transportation is two thirds of logistics costs in total. Warehousing is 10%. So warehousing is this tiny. piece of the total cost to move goods from point of origin to point of destination. Two thirds of its transportation, 10 % is warehousing, about 20, 25 % is inventory carrying costs. This is the CSCMP state of the market study that comes out every year. So warehousing is this tiny little bit, relatively speaking. There you go. Yeah, absolutely, absolutely. So in the freight market, just focus on trucking.

Karl 29:55

There has been a very liquid, scaled, high quality spot market in freight for about the last 50 years. The freight market, transportation, trucking market deregulated in the early 80s. this kernel of what's become a spot market started to develop. fast forward to today, and even over the last 20, 30 years, every single shipper in the world knows there's a spot market for freight and most of them in their every planning cycle they make decisions how much of my next year's freight do I want to contract? in a nine or 12 month contract and how much do I want to leave available for spot, leave myself some flexibility. And every year, that's just part of the planning process. That doesn't happen except for our customers. It doesn't happen on the warehousing side because people don't really understand that there is a liquid, scalable, high quality equivalent in warehousing.

Karl 31:03

So this, to me, it's the same shipper. have the same, you know, it's like pick a shipper. have, they're, they're, they're tapping into spot market because they have seasonality or they anticipate supply chain disruptions, or they have parts of their businesses that are right. All those same reasons. So the same dynamics exist in the warehousing side, because the goods come, you know, through the box, you know, out into a freight lane into another box. yeah, yeah.

Karl 31:30

So anyway, this is how we think about the potential for this market. Freight and spot freight is somewhere between, it's around 15 % of the total freight market in a typical year. During COVID tailwinds, was like 25%, 30%, 35 % of the market for the same reasons that we discussed on the warehousing side. And then on the backside of that spike, it was probably single digits. And it's normalizing now a bit. But call 10 to 15%. That's our belief is what the flexible warehousing market will be as well.

Karl 32:43

Yeah.

Karl 32:54

Yeah.

Karl 33:19

you. Yeah, that's exactly right. So we are 100 % asset light, meaning we do not lease a building and then carve it up and sublease or sell it to multiple shippers. The asset version of the solution, it makes tons of sense on the one hand because just as we discovered, the demand is there. The shipper demand is there.

Karl 34:06

It very well could be, but here's the thing. You you remember WeWork? You know, very infamous, you know, tech disaster kind of tech company. And why was that? I mean, I'm not, I'm an armchair quarterback here, but look, it's pretty obvious. They would lease, they would buy long and sell short.

Karl 34:28

They were leasing buildings, sometimes 10, 15, 20 years, and then selling short. So if they can't keep utilization high, the economics just frankly don't work. Yeah.

Karl 34:43

And so they were subject to the uncertainty, the volatility, the cyclicality of the industry. When you have a long duration on an asset, that's just the way that works. if you look over 13 years, we've asked the question many, many, many times. And board members, we've had debates like, should we start to lease some buildings? And we'll still have an asset light bit, but we're going to lease some buildings too. And each time we've been in it.

Karl 35:13

Exactly. That's exactly right. It's resist the temptation. And we're so thankful that that's been the move for a couple of reasons. One is because we'd be sitting around with a bunch of underutilized space, would be a problem. But two, it's one of these like burn the boats. We are not going down that path. We have to make the asset light model work really, really well.

Karl 35:41

And so to some of your questions like, well, who's handling the goods and how can we ensure quality and how can we vet providers because we work with, you know, arm's length partners. How can we vet them? What does vetting look like? How do we build trust?

Karl 35:56

for shippers that this is a high quality. They're basically going to get the job done high quality at a fair price with transparency. How do we build that if we don't control the delivery of the service? Those are hard problems to solve and that's what we've been doing.

Karl 36:20

Yeah. Yeah.

Karl 36:28

No, mean, literally it comes, it's, a, it is basically the core part of our tech stack. You know, I'll take it from again, the shipper side. There's this process that, I think I have a need. So they'll go through this journey of assessing, procuring, and operating, right? Assess. think, or I know I'm going to have a seasonal peak. What are my options?

Karl 36:53

I'll talk to, hopefully, almost always, I'll talk to my broker, hey, is there a seasonal thing? Could I just get it for the seasonal peak? And maybe there's inventory out there, maybe there's not. I'm gonna call my incumbent 3PL, hey, can you help me with my seasonal peak? What are my other options? I've heard this guy told me there's this company out there, Flex. me go, what's that all about? How does that work? So there's this assessment phase. We have built tools to help people, guide people, free tools, guide you through that so you can understand our model, understand our value prop, understand what's available, what it might cost you, this ROI calculator I mentioned. So these are tools to help folks in the assessment stage. And then they're like, yeah, I think I want to go forward. I want to get some, you know, kind of run an RFP of sorts. I want to get some bids. And we have built tools to help find in our network, the best fit operators. Cause the other thing I would do. That's right.

Karl 37:53

That's right. And as we've been in this business longer and longer, we now have operating history on these operators and we have relationships with operators. So we know which operators are.

Karl 38:07

that you know, incremental revenue. So we can help with the procurement stage as well. Again, bringing value in that stage, help collect competitive bids, help the shipper understand the pros and cons of the different bids. And then if they say, great, I want to move forward with this one, then it's about operating. So this goes to the other part of the tech stack, this fast and light WMS, which is like, great. You can integrate with us, or if it's a simple profile and you don't even need to integrate, We just do a CSV upload. It's whatever the customer needs, but if you integrate with us, then the second one, the third one, the fifth one, the 25th one, you're already integrated. So we help bring kind of a consistent.

Karl 38:54

That's right. Well, and then coming back to the quality and the trust, it's like, well, here's, you know, every day you're watching your KPIs. How are they tracking across the different operators? And importantly, you know, like in the physical world, stuff just can go wrong. Stuff does go wrong. The truck didn't show up on time. And one of the big areas of quality is just like, okay, so that KPI was missed that day, but how well did the operator respond to that and step in to help solve the problem. And this is another, it's harder to track in a KPI and in a digital metric, but it's really, really important. That's the quality of the operators. do they care deeply about the customer's business? And you want to find those operators and we have found those operators and we keep adding to the network. So that's how we do it, right? Kind of to your Airbnb thing, like no one wants to show up, you know, in an Airbnb that looks really good on the web.

Karl 39:54

website and then you show up and there's cats in the garbage in the back of the kitchen or whatever it is. So how do we solve the equivalent problem but in a B2B setting for again some of the biggest retailers and CPGs with the highest quality standards in the world. The fact that we have this portfolio of shippers is the evidence that we have

Karl 40:24

figured out how to solve this problem. Yeah, yeah, very high standards. Yeah. Well. Yeah. Yeah. So what are the objections we hear? One is like, are you a competitor of mine? You know, kind of, I want to work directly with the shipper. I don't want a middle man. Yeah, exactly. So that's a, that's a, an objection we hear. The second is like, well, I don't want to use your WMS. I already have a WMS. In fact, I have two or three and I don't want a fourth.

Karl 41:06

So what's our answer? Well, the first one is like, look, do you want to work with Nike or not?

Karl 41:17

If you want to work with Nike, yeah, yeah. If you want to work with them directly, you're certainly welcome to put your hat in the ring. But you know, it's not like a, both can be true. Go win your direct clients, you know, and if you want to work with additional clients and get additional revenue, then we can help you with that. And if that doesn't...

Karl 41:42

feel comfortable to you, peace. Because there's like thousands of other 3PLs out there. So that has never been a problem for us. To the second one, I don't want to use your WMS. I've already got it. Like, well, look, it's already integrated with the customer.

Karl 41:59

You don't have to pay anything incremental for it. And it's really easy to use. So, you know, so that hurdle is one that we almost, pretty much almost always get over. And again, if the operator's like, no, I don't want to do that, and we're like, okay, peace, you know, we'll work with the other guy. There's plenty of supply out there. Because it's a fragmented market. There are the very big, you know, leaders that have, you know, five, seven, maybe up to the largest maybe 10 % share. But behind that, it's very, very fragmented.

Karl 42:45

Yeah. Yep.

Karl 43:36

You know, our journey is, we think of it in two bits. Bit one is AI to help make the products that support our solutions, you know, our service to the customers better. So it's AI in our products, if you will. And then there's just AI in our business to help, you know, operational efficiency, to help us, you know, either drive efficiency or provide a better experience, know, employee experience. And man, you know, the journey is still very, very early on. I think in the long arc of this technology, it's very early on. But just some, love, the reason I'm an entrepreneur is because I love building stuff. And now this has created an opportunity for everybody inside the company to be an entrepreneur and to build stuff. No matter, you work in finance, you work in operations, you work in, there's opportunity to sort of rethink your job and then get in there and take it.

Karl 44:37

It's great. It's great. It's great. And then in our products, you know, there, there are a number of just ready-made use cases that are a very good fit for the technology. Things like marketplace capabilities. How can I again, collect a lot of unstructured data in scoping and do that very, very efficiently. Like, you know, no one wants you to send them over a spreadsheet with like 200 rows to tell us what your scope is. Right. So building. a solution that can be very elegant around, you know, tell me a little bit of information and I can help assist that creation along the way and make it painless for the shipper side and then take that material, combine it with what we learned from other similar scopes and tune it. Pricing, we talked about, we have a ton of, I mean, a decade of proprietary data around bidding and price acceptance of bids. for short-term engagements, like by far more than anyone else on the planet. And we can now use AI to generate more insight from that data and help be smarter about giving guidance pricing to shippers, giving guidance pricing to operators. operators didn't like, it's not a scaled common thing to say, how much should I price this short-term project? Maybe I price it equivalent to what my lease rate is. I provide a premium, maybe I provide a discount. How's anyone else doing this? And again, to be able to bring some pricing intelligence to offer guidance. Everybody's free to bid whatever they want.

Karl 46:21

Totally, totally. ultimately every operator, hey, you're free to bid whatever you want. Bid high, bid low, bid whatever. And the shipper is free to sort of pick which is the best fit, the right price, location. And we are a facilitator of that transaction. And AI can really help us do that even better, faster, and just be more robust by taking advantage of the unique data that we have.

Karl 46:57

Thank Yeah, so it's just discover.flex.com and it's kind of think of it as a branch of our kind of main presence on the web at flex.com, f-l-e-x-e.com. And yeah, have at it and anyone who has feedback, send it because we're iterating on this very, very frequently.

Karl 47:44

Yeah, likewise, Justin. really appreciate it. Take care.