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Trucking startup Convoy closes operations with no buyer

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Re: Trucking startup Convoy closes operations with no buyer

#291

Post by bombcar »

kepano wrote: post #259

It's the same story over and over (Deliverr, Flexport, Amazon, Shopify, etc) 1. the entire ecomm supply chain got way ahead of their skis during the pandemic thinking boom times would never end 2. no matter how good your software is, supply chain is cutthroat — a motivated low-tech salesperson can always undercut you 3. margins are razor thin, so if you're subsidizing prices with VC money to buy growth you can easily…

The other reason we'll see it in these businesses first is it's entirely measurable - did you get the shipment where it needed to go without destroying it?

Nothing else matters beyond that and the price. And it's entirely fungible - nobody cares if it's UPS or FedEx or some random truck that delivers stuff to Walmart or whatever.

The only way they had a chance was getting their APIs so ingrained in companies they couldn't switch, and companies are rightly suspicious of that.

Re: Trucking startup Convoy closes operations with no buyer

#292

Post by gwbas1c »

infrawhispers wrote: post #4

From a friend: Everyone was laid off with no severance or benefits. The CEO put all the blame on a lender in order to explain why there were no severance packages. This sucks because they took it upon themselves to offer staff retention bonuses earlier this year to keep people around after the earlier layoff.

> The CEO put all the blame on a lender in order to explain why there were no severance packages.

Even Elon Musk famously claims that Tesla got dangerously low at times.

I've been through two acquisitions that could have gone this way. (But didn't.) It's really "par for the course" in the startup world.

Re: Trucking startup Convoy closes operations with no buyer

#293

Post by sangnoir »

JumpCrisscross wrote: post #260
sangnoir wrote: post #254

Earlier quoted context omitted.

> You don't know it's doomed. It's swell when people gamble with employees well-being on the miniscule odds of a miracle. And even better idea is to offer severance, and those employees with the same appetite for risk can get additional options from the folks who leave. That'd be a win/win, except for the leadership who would rather gamble using other peoples chips but keep most of the winnings. > Everyone who lost t…

> It's swell when people gamble with employees well-being on the miniscule odds of a miracle You don't know the odds ex ante ! Again, they would have been roundly criticized if they'd prioritized severance (which means more for the highly paid) and preferred stockholders over their rank-and-file common holders. > Unemployment benefits don't come anywhere close to tech salaries! They take time to process You're arguin…

> You don't know the odds ex ante!

No, you can simply choose your cut off time for a hail-mary at 2 months of runway, rather than 0 months of runway. Leaders don't have to rundown the clock (and bank balance) to 0 - they may choose to, like they did in this instance.

> You're arguing for special treatment of well-paid tech workers over e.g. truck drivers

Again, no. I'm arguing against your suggestion that the Convoy folks without severance are going to be alright because they have unemployment. I hope none of them are on H-1B visas as they just lost all control to when their clock starts ticking.

> The solution is to not work for a start-up

This is a false dichotomy. There are plenty of startups led by people who do right by their employees; I have worked with some before of them, and I will not hesitate to work with them again in the future because I trust them not to screw me over like this.

Re: Trucking startup Convoy closes operations with no buyer

#294

Post by wutwutwat »

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.

I wonder what golden parachute (severance) your ex-ceo took home

Re: Trucking startup Convoy closes operations with no buyer

#295

Post by in_cahoots »

jt2190 wrote: post #105
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)

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)

You’re off by a factor of 10: it’s $260 million, not $26 million. So that’s 13k employees using your conversion rate.

Re: Trucking startup Convoy closes operations with no buyer

#296

Post by __coaxialcabal »

moralestapia wrote: post #5

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

1.1B in NOLs. How does this not become a $200MM acquihire by UPS pre-bankruptcy? I’m asking because I would assume that the tax mitigation could be an asset and feel like I am missing something. I am not an accountant, but would love for one to explain why bankruptcy is the best choice.

Re: Trucking startup Convoy closes operations with no buyer

#297

Post by [deleted] »

dicriseg wrote: post #270
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…

How did they burn that much cash in a year?

[deleted]

Re: Trucking startup Convoy closes operations with no buyer

#298

Post by [deleted] »

adamredwoods wrote: post #161
WisNorCan wrote: post #113

Earlier quoted context omitted.

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...

So Convoy's UVP was based all on price? Wouldn't the CEO/COO have seen this before rapid expansion?

[deleted]

Re: Trucking startup Convoy closes operations with no buyer

#299

Post by quickthrower2 »

itsoktocry wrote: post #183
bart_spoon wrote: post #86

Earlier quoted context omitted.

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.

> 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. This might be true, but personally I'd rather the company try to remain a going concern.

In the limit this means go insolvent/bankrupt and not pay out to creditors such as lease, caterers, cloud services. Finish with unpaid taxes and wages.

Re: Trucking startup Convoy closes operations with no buyer

#300

Post by JumpCrisscross »

webdood90 wrote: post #276
JumpCrisscross wrote: post #236

Earlier quoted context omitted.

> What good is buying one extra month for a doomed company? You don't know it's doomed. Plenty of companies have turned around while running on fumes. This is fundamental to start-ups. > month is more valuable to individual employees who can use it to look for new jobs Everyone who lost their jobs at Convoy is eligible for unemployment. The same unemployment most workers get when they're fired. Perhaps the discussion…

> Perhaps the discussion should be around improving this benefit for everyone? Red herring You're participating in mental gymnastics to validate what is essentially poor leadership. Why?

> to validate what is essentially poor leadership

We don't have enough information to know if it was reckless leadership. If the CEO had an email from a reputable lender saying we'll have funds in your bank account in two weeks, it would have been irresponsible for him to shut down the company to pay off creditors, preferred shareholders and severances.

I'm not advocating for the CEO. Just against condemning him while in the maelstrom. More fundamentally, there is a thread through this discussion which essentially holds that tech workers--we're highly paid!--should have post-termination benefits others don't.

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