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Trucking startup Convoy closes operations with no buyer

bloomberg.com

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Re: Trucking startup Convoy closes operations with no buyer

#101

Post by fidotron »

tempsy wrote: post #29
fairity wrote: post #23

And so it begins. A large wave of unprofitable startups that raised in 2021/2022 are going to fail at becoming profitable and be forced into fire sales or bankruptcy over the next 12 months. The capital constriction really started in Q3 2022. Here's a graph: https://techcrunch.com/wp-content/uploads/2023/03/Screenshot... If I had to guess, bankruptcies like this peak sometime next year since many of these companies w…

Yes feels like we've seen surprisingly few shutdowns.

A huge part of modern startup culture is to put on a happy face in all situations to project an aura of confidence.

Cynics would call it fake it until you make it, but for many businesses if they don’t look secure they will find it harder to get new customers in order to survive.

Re: Trucking startup Convoy closes operations with no buyer

#102

Post by nunez »

bastardoperator wrote: post #68
dragonwriter wrote: post #47

Earlier quoted context omitted.

COBRA isn't employer-paid healthcare, its an ex-employee option to pay for the previously-employer-offered plan, while the employer offers a plan to current employees . If there are no more company operations and no current employees, there is also no plan and no COBRA. This could also be an issue if a company restructured so it didn't have to offer employees health care because of size or everyone being part time or…

Cobra is such a huge slap in the face too for most people. We know you just lost your income as of today, but do you wanna buy this health insurance plan for 3K a month?

If my understanding is correct, the idea behind cobra is to use it just-in-time for healthcare operations that are more expensive than the monthly premium, ie a $25k surgery + $15k hospital stay

Re: Trucking startup Convoy closes operations with no buyer

#103

Post by x0x0 »

moralestapia wrote: post #5

1.1B USD in funding! I'd definitely want to know more about how things came to be like this.

1500 employees on an average of $100k pa is approx $195m dollars in salary, taxes, benefits, etc. If you have a bunch of engineers and that average is more like $150k, it goes even faster.

They raised $260m in April 2022.

Re: Trucking startup Convoy closes operations with no buyer

#104

Post by duxup »

nevir wrote: post #67
Mistletoe wrote: post #36

From another article: "Between the lines: The shipping and logistics markets have turned south since the pandemic era's boomtimes." I think what you mean is this business makes no sense when interest rates aren't zero and investors aren't looking for places to stuff money. >The trucking marketplace gained a lot of buzz a few years ago, raising over $670 million from top investors like Jeff Bezos, Bill Gates, Capital…

My navel-gazing take (as a very early Convoy person): It is really hard to get the kind of exponential efficiency gains in this space that a 'blitzscale'-focused startup needs in order to really succeed. Trucking is an industry that relies heavily on relationships (trucker broker, broker shipper, broker facility, etc), and you're not going to change that (required for true automation) without already being at an absu…

Yeah that relationship is important and no reason any given trucker, carrier, broker can't just offer lower rates and suddenly you're out of the picture.

You gotta offer more than just a rate...

Re: Trucking startup Convoy closes operations with no buyer

#105

Post by jt2190 »

dpflan wrote: post #66
wooly_bully wrote: post #11

(Ex-)Convoy engineer here. No mystery as to why this happened, sudden tight market and low available capital demolished us. External reasons given in the article were the same we knew and couldn't do anything about considering that none of the M&A options materialized. Detailed the shutdown on a call at 8:30am Pacific this morning. CEO said there'll be no severance or healthcare. Lot of talented folks in Seattle and…

Given that you were in the company and presumably have an idea of how the company functions: where did the funding go? $260M gone in 1 year? "Convoy, which raised $260 million in a funding round last year that valued the business at $3.8 billion, on Wednesday told employees in an email that it would stop accepting shipments until further notice and that it was rescheduling or canceling existing loads." (wsj)

According to Bloomberg they had a headcount of 1500 at their peak, so assuming that USD 1000000 gets you 5 employees for a year, USD 26000000 would get you 1300 employees for a year. (That’s a lot of hand waving on my part but overall the amount of money burned doesn’t seem mysterious)

Re: Trucking startup Convoy closes operations with no buyer

#106

Post by iterminate »

dpflan wrote: post #66
wooly_bully wrote: post #11

(Ex-)Convoy engineer here. No mystery as to why this happened, sudden tight market and low available capital demolished us. External reasons given in the article were the same we knew and couldn't do anything about considering that none of the M&A options materialized. Detailed the shutdown on a call at 8:30am Pacific this morning. CEO said there'll be no severance or healthcare. Lot of talented folks in Seattle and…

Given that you were in the company and presumably have an idea of how the company functions: where did the funding go? $260M gone in 1 year? "Convoy, which raised $260 million in a funding round last year that valued the business at $3.8 billion, on Wednesday told employees in an email that it would stop accepting shipments until further notice and that it was rescheduling or canceling existing loads." (wsj)

>1,000 employees means a burn rate in the hundreds of millions per year just on the costs of having employees, $260m burned in a year sounds about right for a company of that size.

Re: Trucking startup Convoy closes operations with no buyer

#107

Post by adastra22 »

Johnny555 wrote: post #82
bradleybuda wrote: post #42

Earlier quoted context omitted.

What makes you think the executives are making anything from this? It's a startup, it ran out of money, it failed, there is nothing left. Joining a startup is risky.

What makes you think the executives are making anything from this? It's a startup, it ran out of money, it failed, there is nothing left. Joining a startup is risky. Because the executives (almost) always make sure that they are compensated before the fall.

Not when a company shuts down like this. If they did, the investors would claw it all back through the courts. The founders and executives walk away from this with $0.

Re: Trucking startup Convoy closes operations with no buyer

#108

Post by [deleted] »

benced wrote: post #72
vogt wrote: post #55

Earlier quoted context omitted.

>CEO said there'll be no severance or healthcare. Classy. Learning a lot about how certain people treat their employees during these last couple of admittedly insane years. Good for future reference, I guess - though not much solace now. I feel for the employees. Edit: Wow, more responses than I thought! I admit that the tone of my comment was too reactionary, but my opinion stands. I won't modify the original commen…

Ex-Convoy employee here: if a company is shutting down, it obviously can't provide severance. It's not a matter of class or not.

[deleted]

Re: Trucking startup Convoy closes operations with no buyer

#109

Post by tshaddox »

fourseventy wrote: post #45
faefox wrote: post #40

Earlier quoted context omitted.

"As I just shared on our call, I think the world of you." Just not enough to offer any severance or healthcare. #TruckYeah!

The company is shutting down because they ran out of money... where do you think this magical severance pay is going to come from?

Are you suggesting they would also not pay out the final payroll, because of course they would never shut down unless they had literally used their last dollar?

Re: Trucking startup Convoy closes operations with no buyer

#110

Post by [deleted] »

bart_spoon wrote: post #86
benced wrote: post #72

Earlier quoted context omitted.

Ex-Convoy employee here: if a company is shutting down, it obviously can't provide severance. It's not a matter of class or not.

If things are dire enough to close up shop now, they probably were dire enough to close up shop 2 months ago, and you can use the cash to give your employees some runway for finding new employment.

[deleted]
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