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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

#141

Post by ska »

hipadev23 wrote: post #122
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…

[flagged]

> I'd argue the business failing is a strong counterpoint to that assertion.

That statement is pretty naive. There are plenty of things that can kill a startup without them having done anything specifically wrong at any level, let alone at the level of technical team.

Re: Trucking startup Convoy closes operations with no buyer

#142

Post by adastra22 »

bart_spoon wrote: post #127
adastra22 wrote: post #99

Earlier quoted context omitted.

A startup will never survive long enough to close the next round with that logic.

Of course they will. What is the magic that separates success from failure that apparently only magically appears within the last 4 weeks with operating capital in the bank? Move your time tables up by 4-8 weeks, including funding raises and closing operations, and none of this is an issue.

According to what’s been said, they were chasing opportunities that they thought would finalize within that timeframe. 4-6 weeks ago they had good leads for closing a deal in 4-6 weeks. None of those happened to pan out this time, but every startup has been at a point like this where runway is coming up short. This is normal and expected operating conditions.

Re: Trucking startup Convoy closes operations with no buyer

#144

Post by dpflan »

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)

Thanks for the comments, indeed, people costs reign supreme.

Re: Trucking startup Convoy closes operations with no buyer

#145

Post by adaml_623 »

WisNorCan wrote: post #113
dpflan wrote: post #66

Earlier quoted context omitted.

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)

They got caught in the same thing that happened to Flexport and others in the freight industry. Price per shipment cratered -> Revenue cratered. (They make a % of each shipment) -> Losses spiked up. (Because they had fixed cost) Flexport had a burn run rate of $600M a year . Convoy had less burn but also less in the bank. https://www.theinformation.com/briefings/flexport-revenue-dr...

I thought Flexport was still hiring a month or two ago

Re: Trucking startup Convoy closes operations with no buyer

#146

Post by sroussey »

bart_spoon wrote: post #127
adastra22 wrote: post #99

Earlier quoted context omitted.

A startup will never survive long enough to close the next round with that logic.

Of course they will. What is the magic that separates success from failure that apparently only magically appears within the last 4 weeks with operating capital in the bank? Move your time tables up by 4-8 weeks, including funding raises and closing operations, and none of this is an issue.

No, when you are in the fog of war/fundraising, it can be very difficult to decide between 100% let everyone go, verse some other percent where everyone keeps their jobs. Very much depends on the circumstances.

If no one was picking up their calls and it was obvious, then sure.

Not much is really that clear though.

In my tiny case a while back, I wiped my liquid savings to get me employees some time. Can't do that with over a thousand employees though!

Re: Trucking startup Convoy closes operations with no buyer

#147

Post by rootsudo »

pxx wrote: post #140
bart_spoon wrote: post #98

Earlier quoted context omitted.

If things are so dire today that they have no money and must shutdown immediately, they were dead in the water 6-8 weeks ago anyways. The company isn’t going to be miraculously saved during that time, so just take the cash you used to pay your employees to rearrange chairs on the sinking ship, call it 2 months early, and pay out their severance/health care during that time while they look for new jobs.

The company can certainly be saved in a period of months. FedEx supposedly had less than a week of jet fuel opex remaining when the founder decided to try to win the missing money by gambling. https://www.google.com/amp/s/www.businessinsider.com/fedex-s...

Yes, the bet it all on black and see if Lady Luck is on your side hope.

What if they did and lost it all 6 weeks ago? What would that signal instead?

Re: Trucking startup Convoy closes operations with no buyer

#148

Post by robocat »

emgeee wrote: post #21
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…

Dang, no severance or healthcare is really brutal and signals to me they probably should have called it earlier.

Probably to fix that would need legislation specific to start-ups.

I would hope most employees know that is a significant risk of working at a startup?!

But yes, harsh, regardless of how predictable.

Re: Trucking startup Convoy closes operations with no buyer

#149

Post by h2odragon »

thegginthesky wrote: post #74

I work for one of their competitors and I can empathize with them. My thoughts goes to all the employees and their families. The Freight business is collapsing after an unrealistic high during the pandemic. Since April 2022, revenue per load has decreased to about 70%, this means less ways to generate a profit under the same headcount. We also saw a decrease in volume as companies overstocked and consumer spending ha…

> consumer spending has shrunk to less than 50% of what it used to be

and you're in a position to be concerned with the accuracy of your numbers, i assume.

CNN Tuesday: "US retail sales rose in September for the sixth-straight month"

https://www.cnn.com/2023/10/17/economy/retail-sales-septembe...

... id be interested in your thoughts on the apparent conflict of viewpoint there.

Re: Trucking startup Convoy closes operations with no buyer

#150

Post by fullshark »

legitster wrote: post #131

What would a buyer have even been purchasing in this scenario? A bunch of talented employees? Cool, they are all on the market anyway. A bunch of tiny commodity contracts? Why? A pile of code? Is it particularly hard to recreate? Valuations are having a big wake-up call across the industry. While a company can be more than the sum of its parts, VC-backed tech companies have really struggled in industries where unit-e…

Probably patents mostly, perhaps around some novel hardware the buyer wants to utilize.
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