At the end of a recent biweekly all-hands meeting, approximately 430 Flock Freight employees — affectionately known as “Flockers” — were told to check their email accounts to see if they were going to survive a second round of layoffs four months after more than 60 workers were fired in December.
Flock Freight confirmed to FreightWaves that in all, it had “parted ways” with 45 employees — or about 8% of its workforce — on April 10.
“It felt like a gut punch because we weren’t given any reason why we were being let go,” said one former employee. “A lot of us are angry, but I think the majority of us are just really sad.”
After the latest round of job cuts earlier this month, Flock Freight, headquartered in Encinitas, California, said it has 387 employees remaining at the company: 216 people in California, 65 in Chicago and 106 remote workers.
Co-workers said another 12 were laid off in late March, a number the company adamantly denies.
Oren Zaslansky, CEO and co-founder of unicorn startup Flock Freight, which is valued at over $1.3 billion, said the layoff “decision was deliberate and required us to create leaner teams.”
“After conducting an audit of our sales, tech and customer success teams, it was determined that a reorg was necessary and would add significant efficiencies across the company,” Zaslansky said in a statement to FreightWaves. “Flock is in the best financial health we’ve ever been in after seeing record highs in margin and acquisition in Q1, and we remain committed to building an even stronger, more sustainable supply chain by fundamentally changing the way freight moves in this country.”
However, in interviews with some current and former Flock Freight employees, who spoke with FreightWaves on the condition of anonymity, they said the actual number of employees laid off since January is much higher than the numbers provided by company officials.
PitchBook, an online resource tool for analysts, private equity and venture capital investors, puts Flock Freight’s official employee count at about 630 workers as of Jan. 31. This would indicate the digital freight company had slashed its workforce by nearly 39% instead of about 8% based on the numbers Flock Freight provided.
“We can’t provide our sources, unfortunately, but I can confirm these numbers are accurate and updated regularly,” said Amy Warmenhoven, public relations specialist for PitchBook, in a statement to FreightWaves.
A Flock Freight spokesperson claims PitchBook’s employee count isn’t accurate but failed to provide a different number, except to reiterate the total she previously shared.
“We have never had more than 600 employees,” the company said in a statement to FreightWaves. “PitchBook’s numbers are wrong.”
A freight unicorn
Founded in 2015, Flock Freight has raised more than $399 million, including receiving a $214.6 million cash infusion of Series D funding in a deal led by SoftBank Investment Advisers on Oct. 20, 2021. The funding raise with Flock Freight was announced one day before another SoftBank-backed unicorn, WeWork, a global coworking startup, went public through a special purpose acquisition company after canceling its initial public offering in 2019. The Japanese-owned investment firm pumped $17 billion into WeWork, which was once valued at $47 billion but is now worth around $9 billion.
Since the start of the COVID-19 pandemic, which highlighted inefficiencies throughout the supply chain as consumers moved away from brick-and-mortar stores to using e-commerce platforms, VC-backed firms poured billions of dollars into FreightTech disruptors like Flock Freight.
However, some current and former Flock Freight employees claim the company’s proprietary technology, designed to provide shippers with faster and more cost-effective options to ship its freight, has not lived up to its initial hype.
“In the beginning, we were all excited to work for a well-funded technology company, work in the freight industry and help save the planet at the same time,” one former Flock Freight employee told FreightWaves. “Some of us were drawn to work there because the company promised a better work-life balance and unlimited time off, which is rare in the freight brokerage industry.”
Zaslansky urged his employees to refer to Flock Freight as a technology company and not to use the “B word,” meaning brokerage, yet some ex-Flockers said the company’s TMS technology lagged years behind “the industry standard” used by other digital and traditional freight brokerages.
“I can’t say enough good things about the people who worked at Flock, although many are gone now, that actually understood the freight industry and believed we could make a difference with the product if top management would have listened to our concerns,” the former employee said.
Instead, ex-employees said they watched highly respected industry veterans, many coming from legacy brokerages or competing digital freight-matching platforms, who voiced concerns about ongoing service failures and the inability to retain top-tier shippers and carriers — and were silenced and often fired.
“In the beginning, we had some real bulldogs here with tons of freight experience under their belts and believed that Flock could stand out among other companies doing pretty much the same thing we were doing if we spent more money to fix technology issues that led to service failures,” a former Flock employee said.
A former employee said Zaslansky and Flock Freight promised shippers with partial loads that “typically go the less-than-truckload route” a better option if they moved their freight using Flock’s proprietary technology.
The big draw for shippers, Zaslansky said, was Flock Freight’s promise that its freight was “never going to see the inside of a terminal.”
“We’re going to guarantee what we call a hub-less experience. We’re going to move it as part of a truckload,” Zaslansky said in an interview with Alejandro Cremades, co-founder of Panthera Advisors, an investment banking and consulting firm, and host of the DealMakers podcast.
In Zaslansky’s interview with Cremades in 2020, when he had raised nearly $70 million before receiving the cash infusion from SoftBank one year later, he promised his sophisticated software could “consolidate or aggregate virtually in the cloud using very sophisticated software … all that volume and sell you part of a truck.”
“The benefits are the LTL industry — and these are just points of fact — have an 80% on-time pickup. The truckload industry that I bring to the table has a 98% on-time pickup. The LTL industry has a 55% on-time delivery. The truckload industry has a 98% on-time delivery,” Zaslansky said. “The LTL industry has a 3% to 4% damage rate. The truckload industry has a fraction of a single percent damage rate.”
Compared with the LTL industry, Zaslansky said that “transit times are anywhere from 25% to 50% faster in the truckload industry.”
“There’s no loss and theft. You can’t lose things. Things don’t get stolen. I’m bringing a much higher quality, what we call mode of transportation,” he told Cremades. “I’m guaranteeing pickup, delivery, transit time, lost theft, zero damage for — initially, the idea was for a slightly lower price point than anybody else could offer, and we’d use our technology in order to deliver that solution.”
However, former Flock employees, said they received countless calls from shippers that couldn’t find their freight or that it had been put on a railcar.
“If there was a problem with that first partial, it caused delays with every other piece of freight in that truckload,” the ex-employee told FreightWaves. “It’s hard to tell a customer you have no idea where their freight is.”
While Zaslansky sold shippers on Flock Freight’s promise to mitigate their carbon emissions by using the company’s proprietary software to pool partial shipments of freight with full truckloads, ex-Flock employees said while the company’s mission to reduce its carbon footprint in shipping was noble, it was unsustainable given the company’s service failures and the current freight environment.
“We didn’t have enough freight to successfully create full pools of freight, which is a big reason [Flock Freight] is far from profitable,” an ex-employee told FreightWaves.
A current employee said about eight weeks ago at the companywide all-hands meeting, Zaslansky advised the workers to “get our sh-t together because we only have six months of runway left to survive if the company didn’t get more funding.”
While current and ex-employees claim the messaging inside the company is that Flock Freight’s cash burn is unsustainable, Zaslansky and the executive management team reportedly blame the employees for the alleged failure, claiming they “don’t care about the planet or you would be selling more freight.”
Pat Dillon, CFO of Flock Freight, said employees’ concerns about running out of funding are “incorrect.”
“We are very transparent with our employees. We tell them about what our cash balances are, which is a nine-figure cash balance, and our cash burn is very manageable, and it’s progressively getting smaller and smaller, and that we have a clear runway to profitability,” Dillon told FreightWaves. “The risk in sharing that information, which we do, including at all-hands meetings, is that it could be misinterpreted, innocently, or could be purposely tried to be misconstrued or used against us. But we generally have a philosophy of transparency around our financial condition with our employees. So the categorization that we don’t have a runway through the end of 2023 is completely false.”
Prior to feeling the financial pressure after having a “blank check a while,” Flock employees claim Zaslansky would make a point of talking about companies that were doing layoffs because of mistakes he said they made six months earlier.
However, they claim Zalansky’s attitude changed around October.
“He came to us in the all-hands meetings and said we’re failing as a company because we were failing to profit and things of that nature,” the employee said. “We basically had to ship partials as full truckloads so often to keep our sustainability promise to the customer.”
Despite claims by ex-employees that the company was “eating the costs by shipping partial loads as full truckloads,” which they claim led to layoffs, Flock Freight denies the allegations.
“Flock Freight continues to see robust year-over-year growth in revenue and has a clear line of sight to profitability,” the company said in a statement. “We believe our margin profile is a standout among the freight tech players and has the ability to be the highest in the industry.”
CEO uses ‘public shaming’ to motivate employees
Some current and former Flock Freight employees said they never knew what to expect when Zaslansky spoke on camera or in person at the biweekly all-hands meetings.
One former employee described Zaslansky as Uncle Rico, who relived his glory days playing high school football in the 2004 movie “Napoleon Dynamite.” However, instead of football, Zaslansky shares stories from his time playing men’s volleyball at Long Beach State in the 1990s.
Current and ex-employees said he is fond of retelling one particular incident involving one of his former volleyball teammates to “inspire his sales team and referring to this guy as mentally weak.”
While some at Flock Freight’s all-hands meeting appeared to support what Zaslansky referred to as his “inspirational sales talk about cutting ties with weak teammates,” others say they were horrified by some of his speeches over the years.
One ex-employee said Zaslansky’s overall message to his workers at Flock Freight was “not to uplift those who were falling behind, but to publicly shame them.”
“He told this story about how his college volleyball coach challenged the whole team to run a mile in under six minutes to finish out their preseason workouts, but this one guy didn’t finish under six minutes multiple times so the whole team had to continue to run it with him. Instead of encouraging this player, who never completed the run in under six minutes, Zaslansky said the coach made an example out of this guy and made him quit the team,” the former employee, who didn’t want to be named for fear of retaliation, told FreightWaves.
Zaslansky recently recounted the story of the shunned ex-teammate in The Logistics of Logistics podcast with Joe Lynch. In the episode, “The Flock Freight Story with Oren Zaslansky,” he admitted he wanted to “tear him [his ex-teammate] to pieces” and never trusted him or spoke to him again.
“He [Zaslansky] is so proud of this story … and I know others within the company have heard it multiple times as a ‘motivational speech,’” the ex-Flock employee told FreightWaves. “Some of us, who played team sports either in high school or college, said his speech stunned them.
“Only a true narcissist believes they are the only person on the whole team that is capable of winning,” the former Flock employee said. “Maybe in his [Zaslansky’s] mind, he could serve the volleyball, dive under the net, return the serve and run back over and hit it again and keep the game alive without his teammates. If he truly believes this, he’s delusional. “
After the initial shock of losing their jobs after working at Flock Freight for two years, some former employees said being fired from the digital freight company “is the best thing that’s ever happened to them.”
“Looking back, I would describe my time at Flock Freight as a toxic dumpster fire,” one ex-employee told FreightWaves. “I feel bad for those who are still stuck in it and I mean, it was definitely a great life lesson to kind of take a look at how things shouldn’t be and definitely trusting your gut when you think something’s off.”
Zaslansky declined to be interviewed for this story.
This is a developing story.
FreightWaves’ Joe Antoshak contributed to this report.