Flexport Alleges Ex-Employees Misappropriated Source Code to Launch Competing Startup
Starting a startup that directly competes with your previous employer can be fraught with challenges and legal risks. Recently, a notable case involving logistics unicorn Flexport and its former employees who launched a rival company, Freightmate AI, has brought these risks to the forefront. This article delves into the details of the lawsuit and the implications for both companies.
Flexport’s Lawsuit Against Freightmate AI
Flexport has initiated legal action against two former employees, alleging that they misappropriated sensitive company information to establish Freightmate AI. The lawsuit claims that the former employees, including COO Yingwei Zhao and CEO Bryan Lacaillade, engaged in unethical practices to gain a competitive edge.
Allegations of Document Theft
According to the lawsuit filed in a California court, Flexport alleges that:
- Zhao downloaded over 70,000 confidential documents from Flexport.
- He attempted to conceal his actions by using Incognito Mode to copy a list of more than 1,000 Flexport customers.
- Zhao reportedly transferred Flexport’s source code from GitHub to a USB drive.
Flexport asserts that these actions were premeditated and directly contributed to the establishment of their competitor, Freightmate AI.
Freightmate’s Response
A spokesperson for Freightmate disputed Flexport’s claims, stating their intention to vigorously defend against the allegations in court. They acknowledged possessing some files from Flexport but maintained that these files were “inadvertently retained” and not utilized in any wrongful manner.
The Stakes for Flexport and Freightmate
Flexport argues that the recent growth claimed by Freightmate would have been “virtually impossible” without the alleged stolen information. As a result, they are seeking:
- Unspecified damages
- An injunction to prevent Freightmate from using the purportedly stolen data
In the competitive world of logistics, the outcomes of such legal battles can significantly impact business operations and reputations.
Background on Flexport and Freightmate
Flexport, headquartered in San Francisco, reached a valuation of $8 billion during a funding round in 2022. Recently, they secured an additional $260 million in funding from Shopify in 2023.
On the other hand, Freightmate, based near Seattle, raised $5 million in a seed funding round led by Fuse Capital in January 2025, following an undisclosed pre-seed round led by Wischoff Ventures.
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