Trucking startup Convoy closes operations with no buyer • Hacker News Board

Re: Trucking startup Convoy closes operations with no buyer

#341

Post by pc86 » Thu, Oct 19, 2023, 10:06 PM UTC

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.

What about 2 months before that? 2 months earlier still? Another 6? They raised $260M a year ago and it sounds like an extraordinarily capital-intensive business.

It's pretty easy to say "oh you should have done this differently" with almost zero actual knowledge of the situation or experience.

Re: Trucking startup Convoy closes operations with no buyer

#342

Post by gumballindie » Thu, Oct 19, 2023, 10:08 PM UTC

umeshunni wrote: post #339

gumballindie wrote: post #274

Earlier quoted context omitted.

> consumer spending has shrunk Part of the reason being that workers have been ordered back to offices, meaning a significant portion of their income is spent on commute and eating out. Crazy how damaging rto is to everything around us.

Most of the reason is that asset prices (and thus wealth has shrunk), inflation is higher, so people are buying less and there's no Fed dropping money from helicopters.

Indeed, but add travel expenses and the cost of living in crowded cities and eating expensive food and you’ve got a cashflow crisis. Remote work is the single biggest economic boost the economy can get without the government printing money. Not to mention higher productivity.

Re: Trucking startup Convoy closes operations with no buyer

#343

Post by signatoremo » Thu, Oct 19, 2023, 10:08 PM UTC

shafyy wrote: post #267

tejohnso wrote: post #194

Earlier quoted context omitted.

Tesla wouldn't exist if Elon had shut down at the 2 month dire point. At least, I recall him saying they were at one point about 2 days away from bankruptcy. Not surprising though, that Elon would be in the same camp as this Convoy CEO, not likely to shed too many tears over worker concerns.

And Elon hasn't been known to exaggerate greatly or lie, so this must be true.

Who knows if it was two days away from bankruptcy, but Tesla and SpaceX were very close to running out of money in 2008:

https://www.businesstoday.in/amp/technology/news/story/elon-...

Also where were you during 2017, 2018 period when the doomsayers (aka TESLAQ) predicted the same so often? So much so that this tweet became famous?

https://x.com/elonmusk/status/980566116614291456?s=46&t=yN2X...

Re: Trucking startup Convoy closes operations with no buyer

#344

Post by pc86 » Thu, Oct 19, 2023, 10:09 PM UTC

quickthrower2 wrote: post #299

itsoktocry wrote: post #183

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. 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.

I'd always rather see employees get payouts on shutdown compared to companies, especially things like billion/trillion-dollar cloud companies and commercial real estate.

That being said if you're burning $30M+ every month in the current financial market I really hope you cancelled all your catering contracts a long time ago.

Re: Trucking startup Convoy closes operations with no buyer

#345

Post by pc86 » Thu, Oct 19, 2023, 10:10 PM UTC

avalys wrote: post #169

bart_spoon wrote: post #127

Earlier quoted context omitted.

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.

If you can still operate the business for another 8 weeks, there's a chance that things will still work out, and it's pretty pessimistic to preemptively shut it down because you assume you're going to fail. Pessimists don't generally find themselves in the role of founder/CEO of a startup in the first place.

Especially when you're only doing it so you can pay your employees 8 weeks' severance when the alternative is 6 or 8 weeks' pay while working.

Re: Trucking startup Convoy closes operations with no buyer

#346

Post by signatoremo » Thu, Oct 19, 2023, 10:11 PM UTC

sangnoir wrote: post #244

WisNorCan wrote: post #121

Earlier quoted context omitted.

It is interesting to see that employees of Convoy aren't saying bad things about the CEO. But people on the outside who don't know the CEO are saying bad things. Usually it is the reverse.

Selection bias - Convoy employees who didn't like the CEOs approach didn't stay employees for long.

OTOH who stayed until the end for nothing is often more bitter

Re: Trucking startup Convoy closes operations with no buyer

#347

Post by beambot » Thu, Oct 19, 2023, 10:14 PM UTC

tejohnso wrote: post #194

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.

Tesla wouldn't exist if Elon had shut down at the 2 month dire point. At least, I recall him saying they were at one point about 2 days away from bankruptcy. Not surprising though, that Elon would be in the same camp as this Convoy CEO, not likely to shed too many tears over worker concerns.

I know of two companies with >$1B exits that were running on fumes when they turned it around. One had 3 days of runway remaining; one had 16 hours to get a wire in to make payroll. Today these companies employ thousands.

FedEx famously (allegedly) came down to a hand of blackjack in Vegas to make payroll & avoid bankruptcy.

Re: Trucking startup Convoy closes operations with no buyer

#348

Post by adam_arthur » Thu, Oct 19, 2023, 10:18 PM UTC

ska wrote: post #225

adam_arthur wrote: post #207

Earlier quoted context omitted.

I wasn't speaking to that point... excessive operating expenses are clearly a management failure. I was contending that this shutdown is not likely simply "through no fault of their own" People who can't asses fair value of a business from a discounted cashflow perspective shouldn't be running a company. It's usually financially ignorant people like this that lead the business down a dark path. The prior round valuat…

GP said > Lot of talented folks in Seattle and beyond who'll be looking for new gigs. Which you took issue with and suggested the failure was counter evidence. That was pretty clearly about the technical team that was just let go, so that idea doesn't hold much water. Beyond that, the mere existence of failure doesn't mean that the plan wasn't reasonable; you need a lot more data to determine if the mgmt team was fun…

I was replying to your comment, and your response was much more general and invited other discussion. You should reread it if you need a refresher.

Aside from that fact, how about discussing ideas rather than pedantic back and forths over he said she said? Not interested in that kind of discussion

Re: Trucking startup Convoy closes operations with no buyer

#349

Post by JumpCrisscross » Thu, Oct 19, 2023, 10:21 PM UTC

toomuchtodo wrote: post #51

fourseventy wrote: post #45

Earlier quoted context omitted.

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

Good management manages the treasury so those funds are available during a wind down. If you run out of runway and the bank account is empty, with nothing to provide workers who are getting term'd, you fucked up. (have co-owned a business where we made folks whole for pay the owner skipped out on during the failure, asset acquisition, and their onboarding with us; plan ahead and you can do the right thing, fail to pl…

> Good management manages the treasury so those funds are available during a wind down

Given Convoy's margins and operational leverage, I'm not sure it was this simple. Legacy freight brokers who have been doing this a long time are being caught surprised. They may have thought they had months of runway that rapidly collapsed to weeks.

We need stronger unemployment benefits. Barring a public solution, severance ensconced in employment contracts is next best. Convoy had nine figures of debt. Depending on the covenants, it may not have been able to hadn't over cash at windows to employees in the form of a novel severance package.

Re: Trucking startup Convoy closes operations with no buyer

#350

Post by cheriot » Thu, Oct 19, 2023, 10:23 PM UTC

dboreham wrote: post #192

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 a company is shutting down, it obviously can't provide severance Not really true. The company is owned by its shareholders, and they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance, or they may divide the funds among themselves. If there are no funds, they can choose to invest more to pay severance. Obviously they're unlikely to want to do that, but it's n…

Employee claims supersede equity and debt holders. The question is whether the company shuts down with money in the bank or keeps running until it's out.

People should remember the board and CEO for screwing over employees.