Flexport CEO Says The Company Is Not Going Public Soon

Yesterday, the Flexport CEO was interviewed by WSJ who set out a few ambitious milestones for the company:

* Profitability by end of 2024 or early 2025, but with no specific plans.

* No plans to sell Flexport, ever.

* It eventually wants to be a Wall Street darling and throw off cash.

First of all -- early 2025? Might be the "first half of never" in this economy, where profitability is at a premium.

Wall Street darling? Sounds like a case of FOMO. Envy is not a good look for a business needing to make tough decisions.

Second, I would be more likely to believe that someone with the stature of Dave Clark could have raised money than Flexport could return to profitability without tanking the company at this stage.

Third, where does this leave the Flexport fulfillment business acquired from Deliverr? Many third-party and even fourth-party logistics/fulfillment businesses are growing, and rapidly, because they have focus and know who they are.

Reliable fulfillment takes infrastructure and investment. Investment requires either growth and a healthy cap table, or the ability to throw off profit -- neither of which Flexport has.

While I understand that Deliverr never had an asset-heavy approach, it also has never proven it can manage an asset-light profitable growth strategy post-pandemic. To be clear, about the only difference between Deliverr and Flexport is the timing of Harish Abbott's sale of Deliverr. That's it.

The likelihood of Flexport returning to profitable growth and ever going IPO in its current form is extremely low. Here's why:

* If you have a logistics business, you have logistics margins. If you primarily have a software business, you have software margins. If you have a lending business, you have margins based on prevailing interest rates.

The future of Flexport is essentially a lending business at this point. There is no place inside a restructuring Flexport to incubate and revitalize a flagging fulfillment business.

* Can we say the quiet part out loud? Shopify didn't sell Deliverr because its services were growing and successful. Full stop.

If the Deliverr part of Flexport is ever going to succeed - which, didn't Flexport CEO just say it was the future of the company? - it needs a founder's ability to edit, or it needs to be sold off, or both.

Either way, there is just about zero case for a failing Shopify cast-off fulfillment business succeeding inside of a shrinking Flexport anytime soon. With or without Shopify's endorsement.

The sooner Flexport comes to terms with this, the faster it can improve or restructure. For Shopify's part, despite Shopify CEO's endorsement of the Flexport CEO, it may be time to cut the cord on the partnership and move to a more general approach. In Shopify's Buy With Prime partnership, they admitted as much as well.