Sitting in the first few rows of attendees was Clark, the man he’d ousted just a year into the job. Petersen was surprised that he showed up, according to people with knowledge of the matter. Days earlier, Petersen had excoriated Clark, alleging he’d secretly expanded the company’s headcount and taken on unnecessary leases without Petersen or the board’s knowledge. On X, formerly known as Twitter, Petersen wrote, “Strategic Plan, Day 1: Make better decisions!”
With Clark sitting a few feet away, Petersen struck a different tone.
“I think we’re going to look back and go, ‘Wow I’d probably do that all over again because of the progress that we’ve made,'” Petersen said, in an interview on stage.
Doing it over again would seem to suggest hiring Clark wasn’t a bad decision. Petersen went even further, personally commending Clark for orchestrating the $1.3 billion purchase of Deliverr from Shopify, picking up supply chain technology for last-mile deliveries. That deal was announced in May.
“I’m very, very lucky because I wouldn’t have had the courage to go and do that acquisition, but I give all the credit in the world to Dave Clark,” Petersen said. “There’s no one probably in the world who would be better at running that last mile e-com fulfillment network. Personally, I don’t have any experience and I would’ve been pretty intimidated to try and go pull that off.”
The mixed messaging from the 43-year-old Flexport founder underscores the dysfunction surrounding the sudden firing of Clark, who previously spent 23 years at Amazon and built its mammoth logistics network on the way to becoming one of Jeff Bezos‘ top deputies. It’s also indicative of a bigger challenge facing Flexport, whose software is designed to simplify the process of transporting goods. The company was valued at $8 billion by private investors in early 2022, just as the economy was turning and the 10-year tech bull market was coming to an end.
As a high-valued company backed by powerful VCs, Flexport has been trying to simultaneously operate in Silicon Valley startup growth mode while also restraining expenses to reflect the new economic realities and to cope with supply chain bottlenecks.
This account is based on conversations with people close to Clark and Petersen. They requested anonymity to discuss confidential interactions. Their perspectives have been corroborated by internal documents and communications reviewed by CNBC.
Petersen has publicly said Clark overspent, overhired and overpromised, something his allies echoed to CNBC. He burned through cash and kept Petersen in the dark about key financials and an ambitious expansion into providing end-to-end supply chain tools for small and medium-sized businesses. People close to Petersen pointed to a number of previously unreported incidents that eroded his confidence in Clark.
But documents viewed by CNBC and sources close to Clark undermine those claims. They show that Clark, who arrived when the company was struggling to bill customers and track containers, worked closely with the board and Petersen to implement decisions that Flexport now suggests were ill-advised.
Evidence to support Flexport’s claims of financial mismanagement is lacking, raising questions about whether that narrative was put forward to justify Clark’s exit.
A Flexport spokesperson rejected that characterization.
“Ryan Petersen returned as CEO in order to restore Flexport’s culture of customer engagement, and drive the growth and cost discipline required to return the company to profitability,” the spokesperson said in a statement.
Get IPO ready
Clark arrived last year as the perfect hire for a tech startup trying to disrupt the age-old logistics industry. He’d built Amazon’s logistics unit into a juggernaut that rivaled carriers like UPS and FedEx.
Since 2021, Petersen had been seeking a replacement for Flexport’s then-operating chief Sanne Manders, in part to address what several ex-employees described as lingering issues with the company’s troubled billing processes. Fixing that was Clark’s job.
Petersen and Clark worked together as co-CEOs for the first six months. In March, Petersen transitioned to executive chairman.
The co-CEO arrangement would free Petersen up to do what he loved – “getting beers with customers,” in the words of two former Flexport employees. Clark, a self-described “builder at heart,” was at the wheel.
Among Clark’s goals was to help Petersen prepare Flexport for an IPO, something the company had discussed doing within a two- to three-year window, according to a person familiar with the matter and documents viewed by CNBC.
“There’s a perfect complement of skill sets,” Petersen told Forbes in June 2022. “Mine are much more creative, zero-to-one founder time, and Dave is the supreme executor and a legend in the supply chain world.”
Buying Deliverr was meant to be the first step in turning Flexport into a more full-scale logistics service for its customers.
Shopify had acquired Deliverr in May 2022 for $2.1 billion. But the e-commerce software company was getting hammered by Wall Street as its pandemic pop faded. By January 2023, CEO Tobias Lutke knew he needed to get rid of Deliverr. Around that time, Lutke first approached Petersen to float the possibility of a deal, according to a person familiar with the matter.
Petersen told Clark he should engage with Shopify’s team, according to a person with direct knowledge of the negotiations. Initial talks fell apart, but resumed when Flexport executives learned that Shopify was about to execute deep cost cuts and was eager to sell Deliverr.
Clark and Petersen flew to Miami to meet with Shopify’s leadership. As a transaction was nearing, Clark, who had a reputation as a deft negotiator, got Shopify, which was already an investor in Flexport, to sweeten it with $40 million in cash and the framework for a $260 million convertible note that could help Flexport on its path to an IPO, according to an internal document analyzing the deal.
The sale would be announced alongside Shopify’s first-quarter earnings report on May 4.
“We did not change the terms of a deal or rush it just to have it line up with an earnings call,” Shopify said in a statement. With Flexport, “we are tightly mission-aligned to ensure the success of our merchants, which is why we chose to deepen our partnership with them earlier this year.”
The night before the announcement, Petersen appeared at a “Tech Talk” at Flexport’s Bellevue, Washington office to pitch the “Flexport vision” to hundreds of people. An attendee asked Petersen whether Flexport would ever get into last-mile logistics.
Petersen paused, glanced at his watch, and said to keep an eye on the morning news, according to a Flexport employee who witnessed the exchange and by a person who was told independently.
The comment alarmed Clark and Flexport executives, who were concerned that Petersen had disclosed material non-public information about a publicly traded company, according to people familiar with the matter.
Petersen didn’t respond to calls or messages from CNBC, and the company declined to make him available for an interview. A Flexport spokesperson didn’t respond to CNBC’s question about whether Petersen was aware of concerns about his statement at the event.
Clark’s first quarterly board meeting as sole CEO was June 1. His second was Aug. 31, days before he was forced out.
The board was made up largely of investors who were betting on the founder. It included Founders Fund’s Trae Stephens, who had helped start defense-tech firm Anduril Industries, and Michael Ronen, who left SoftBank in 2020. Andreessen Horowitz was represented by Bob Swan, an operating partner at the firm and former CEO of Intel.
For much of the summer, Clark had pushed then-CFO Kenny Wagers and his financial planning and analysis team to realign Flexport’s year-end and 18-month forecasts, according to a person close to the situation.
The reasons were obvious. At the beginning of 2022, it cost around $14,500 to move a single container across the Pacific. By late 2022, prices of ocean freight from Asia to the U.S. West Coast were down 90% from a year earlier, due largely to weakening global demand. Because Flexport makes money by charging fees for the transportation of goods, the company’s business was getting hammered.
But Wagers and Stuart Leung, a Flexport finance executive and a close Petersen ally, were reluctant to pare back forecasts, frustrating Clark, who felt those projections were overly optimistic.
Wagers and Leung did not respond to CNBC’s interview requests.
Clark ultimately prevailed, but the revised forecasts distressed Petersen. Clark, Petersen and Wagers met in Texas in mid-August to fine-tune the forecasts.
A source close to Petersen told CNBC that the meeting went poorly for Clark because a so-called “whistleblower” — identified as a senior finance executive — stepped forward shortly before it began and told Petersen that the numbers being presented were “not real.”
The source referred to the senior finance executive as a whistleblower because of the information he disclosed to Petersen about Clark.
Documents seen by CNBC and conversations with people with direct knowledge of the board meeting make it clear that there were no substantiated whistleblower actions or allegations of financial impropriety.
Flexport’s spokesperson told CNBC in a statement: “There was no whistleblower nor was there any financial misconduct. Any allegations to the contrary are completely false.”
On Sept. 15, shortly after CNBC spoke with the Petersen source, legal counsel for Clark sent a cease-and-desist letter to Flexport. The letter, viewed by CNBC, instructed the company to preserve and retain all communications involving Clark’s departure. The letter disputes the existence of a whistleblower and lists specific allegations as false and defamatory, including Petersen’s claims that Clark was an unfit CEO because he overextended the company’s lease obligations.
Five hours after the letter was sent, the source close to Petersen contacted CNBC and asked to retract their statements and all details related to Clark’s firing or about the so-called whistleblower. CNBC declined to retract his statements.
Petersen has since deleted several of his posts criticizing Clark.
The letter cited two documents that had been presented to the board. Both were viewed by CNBC. The first was a pre-acquisition financial analysis of the Deliverr deal, and the second was a review of Flexport’s first-quarter numbers. The Deliverr analysis was presented by the co-CEOs to the board for their approval and was shaped by multiple prior board meetings.
Clark’s camp suggested that other factors may have led to the abrupt firing.
For example, politics.
Days after Clark was ousted, Petersen sent him a message — seen by CNBC — blasting one of his key female executives for wasting her days at the company on “far left-wing political activism.” The executive is a registered Republican.
Stephens, the Founders Fund partner, also shared his contempt for that executive weeks prior to Clark’s departure, a person familiar with the board told CNBC. Stephens did not respond to CNBC’s request for comment.
Petersen is also a venture partner at Founders Fund, the firm started by Peter Thiel, who was a prominent supporter of President Trump’s 2016 campaign and more recently bankrolled Senate candidates in Ohio and Arizona. Many of Thiel’s closest confidantes at Founders Fund and elsewhere in the venture industry are outspoken conservatives.
Petersen’s sole public political contribution in 2023 was to a Democratic political action committee associated with Senator Joe Manchin of West Virginia. He doesn’t talk much about politics on social media or in interviews.
Clark has donated to candidates on both sides of the aisle. Upon his departure, The Wall Street Journal reported that he was considering running for governor of Texas, but two people familiar with his thinking say it’s not happening anytime soon.
Flexport told CNBC that an employee’s politics are not relevant in personnel decisions.
“Ryan Petersen does not care at all about anyone’s political or personal affiliations. That is their business,” the spokesperson said. “It is inappropriate for any employee to spend an excessive amount of time during work hours on activities unrelated to their role.”
A person familiar with the female executive said her non-corporate endeavors were largely related to charitable organizations.
Clark has largely remained silent since he was forced to resign on Sept. 5, though in private he’s expressed frustration at how his former team was being treated by Flexport, according to people close to him. Many of his allies at Amazon who joined him at Flexport were summarily fired by Petersen shortly after his departure.
On Sept. 13, Flexport’s chief legal counsel Chris Ferro contacted Clark. Ferro told him that his resignation a week prior had not been accepted, according to a person familiar with the conversation.
Instead, Ferro told Clark that Flexport’s board met the day after Clark resigned and voted to fire him for cause, the person familiar said. Ferro said the board minutes didn’t yet reflect why Clark had been fired, the person said.
Ferro allegedly told Clark that Flexport would be willing to give him a block of 2 million shares — worth millions of dollars — if he signed a separation agreement that included non-disclosure and non-disparagement clauses.
Clark declined, the person said. Shortly after Flexport reached out with the offer, Clark took the stage at the same supply chain conference in Phoenix that Petersen spoke at earlier in the day.
He didn’t hold back.
“The only thing I really regret from the past year was I sort of picked the wrong founder,” Clark said. “Basically, it was a place of extending my reputational halo to a group that, in my opinion, didn’t deserve it. Largely, because about half the team was let go last week on Friday, the most brutal non-severance packages I’ve ever seen in my life. It was about as disrespectful a way as humanly possible.”
On top of the public relations fallout from the Clark saga and any legal wrangling that may follow, Flexport faces staffing turnover and a growing threat from Clark’s former employer.
Flexport recently ousted Wagers as CFO and lost its human resources chief. More layoffs are expected soon, sources said, after the company cut 20% of its staff in January.
On Sept. 12, almost a week after Clark was fired, Flexport executives convened in Seattle to launch an end-to-end supply chain service that would allow sellers to move their products from factories to customers’ doorsteps through integrations with major online marketplaces.
The project was spearheaded by Parisa Sadrzadeh, an executive vice president at Flexport who Clark had poached from Amazon’s logistics unit.
Earlier in the day, and just up the street from Flexport’s event, Amazon had unveiled a strikingly similar service in front of approximately 2,200 attendees at its annual Accelerate seller conference. Flexport had planned to have a booth onsite but was told it couldn’t be an exhibitor, which some staffers suspected was due to the competing supply chain products, according to a person familiar with the matter.
Flexport discussed securing exhibit space at Accelerate months earlier but didn’t meet all the requirements to participate, and its launch wasn’t mentioned in those conversations, Amazon said.
Flexport’s event was underwhelming. In a conference room, about 50 people looked on as Sadrzadeh debuted Flexport’s service and then introduced Petersen, who spoke for roughly 20 minutes, according to Burak Yolga, co-founder of a digital freight forwarding company who was in attendance.
“Flexport announced pretty much the same thing that Amazon announced,” Yolga said in an interview. He said he left after about a half hour.
The company paid rapper Nelly $150,000 to perform at the event. But in the days leading up to the launch, Petersen opted to squash the performance because the optics were bad after his post about rescinding job offers, a person familiar with the matter said. Despite canceling the event, Flexport still paid the artist.