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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

#361

Post by Larrikin »

busterarm wrote: post #309
Larrikin wrote: post #308

Earlier quoted context omitted.

Why is it a requirement to have "skin in the game"? What does that even mean? The risk to an employee at a company that got $250 million should only be accepting options that could be worthless in lieu of a portion of salary. There absolutely does not need to be any risk of losing healthcare, lacking severance, or any other loss of benefits. Founders want you to believe this but it doesn't have to be true.

The risk of joining a venture backed startup is that no new money comes in and there is no exit and you are out of business in a matter of weeks, like what happened here. This is constantly looming over your head and used to be something understood by startup employees before the era of zero interest free money and "startups are kewl". Any money raised got spent, otherwise they didn't need to raise it. The trade off…

You keep insisting that a startup operating out of a garage with employees that all know each other requires the same risk profile as an at peak 1500 employee company with a quarter of a billion dollars in funding.

The only people who insist this must be true are founders that want to unload as much of the risk on their investors and employees as possible so that they themselves carry little to "skin in the game"

Re: Trucking startup Convoy closes operations with no buyer

#362

Post by clutchdude »

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.

At some point, during a monthly accounting reconciliation, someone should have piped up and said "Unless $ revenue comes in the next months, we will be unable to fund personnel/payroll in months." .

Re: Trucking startup Convoy closes operations with no buyer

#363

Post by michaelt »

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.

> 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?

I've heard it said that every boss of a failed company will tell you that they almost got a last minute investment, or almost made a big sale, or almost got acquired, if they'd only had an extra week or two it'd have all been different.

Of course that could be wishful thinking - or a sign that in the final days they were offering fire sale prices.

Re: Trucking startup Convoy closes operations with no buyer

#364

Post by teachrdan »

busterarm wrote: post #327
conjecTech wrote: post #321

Earlier quoted context omitted.

None of those factors are unique to this business. Somehow adults at thousands of other companies are able to handle this situation reasonably despite also having to pay rent and taxes. I'm sure very few of the people whose continued work they were depending on for a sale would have stayed this long if they realized they were going to be treated like this. Actions and comments like this are how you kill an ecosystem.

If your company is multiple funding rounds in and lays off two thirds of its employees in a day, you should be putting your applications out before the close of business day if you're in a situation where you need to make ends meet. Just because you remained does not mean that your job is secure. This is strictly common sense. Also I've had a pretty long career and I don't know of any company in this situation who pa…

I don't doubt that you've had "a pretty long career," but I wish you had spent a moment Googling before posting this take. I immediately found an example of a 250-person company paying employees severance after deciding to shut down operations. If it's possible at 250 employees, it's possible at 500.

https://www.hollywoodreporter.com/business/digital/inside-qu...

Re: Trucking startup Convoy closes operations with no buyer

#365

Post by BobaFloutist »

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...

"It worked once" is a very results oriented approach.

If you look only at people who won the lottery, you'd have to be an idiot not to spend all your money on lottery tickets. How many times has someone done this and lost all their money, screwed over thousands of people, and never been heard of again? We don't know, because they aren't famous, but my suspicion is it's a much more common outcome.

Re: Trucking startup Convoy closes operations with no buyer

#366

Post by FireBeyond »

JumpCrisscross wrote: post #337
hluska wrote: post #315

Earlier quoted context omitted.

You responded to that with even more mental gymnastics - this time a ‘reputable lender’ who will jump in with an emergency loan then run off. Then you’ve thrown in another red herring claiming this thread argues that tech workers should have more options. Nobody said anything close. Rather, the argument is that letting your company run down to zero is irresponsible.

If the hypothetical of terms on the table for a loan is a red herring, so is the supposition that management had months of visibility into their demise. Convoy wasn't a pure software business. It didn't operate on massive gross margins; it was operationally (and financially) levered. Decades-old trucking companies are going down unexpectedly; I'm not sure why HN 's armchair executives figure they could have called th…

At least two ex-Convoy employees have posted in this thread saying they are "extremely unsurprised" that this happened, and could see it coming.

Handwaving away things like you have doesn't add value - many of us have worked at startups, and the warning signs are common and repeated. A handwaving dismissal along the lines of "plenty of companies have turned things around at the last moment, running on fumes, so it would have been irresponsible for Convoy to do anything but run it to zero!" is disingenuous, fatuous or both.

Re: Trucking startup Convoy closes operations with no buyer

#367

Post by floxy »

__coaxialcabal wrote: post #296
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.

Why would UPS be interested? They just sold of their freight division to T-Force in 2021.

Re: Trucking startup Convoy closes operations with no buyer

#368

Post by killingtime74 »

duxup wrote: post #94
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…

I'm confused as to what Convy "had" anyway. Was it largely spot rates, a bid board, and lots of small carriers? Customers easily could just get rates / carriers elsewhere and walk from Convoy? No other services making income keeping customers around? Rates are pretty fluid in logistics, very strange that they would rely on that alone if that was the case.

Them shutting down indicates there was no edge

Re: Trucking startup Convoy closes operations with no buyer

#369

Post by slt2021 »

ditonal wrote: post #328
JumpCrisscross wrote: post #260

Earlier quoted context omitted.

> 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…

So tired of companies that raise hundreds of millions from some of the wealthiest and most powerful people in the world trying to pull the “we’re a startup” card. You’re not two dudes eating ramen in a garage and you don’t get to use that image to excuse your shitty behavior. Also tired of the “other people in poverty are exploited even worse! You asking for basic labor protections shows your lack of empathy for them…

I was with you until you mentioned unions.

tech is fundamentally incompatible with unions for several reasons:

  1. it will drive down the wages and give power to just another bureacracy
  2. Union participation does not differentiate between highly skilled (and sought after) tech worker, from mediocre tech worker who gets by using copilot and chatgpt
  3. I dont need union to negotiate with company on my behalf - I can negotiate by myself just fine
  4. If startup goes bust - I can easily find a job at another startup, probably will even get a pay raise - just because my skills are highly sought after and in demand. There is literally zero upside for me that union can do
  5. I dont want to share my specialist employee's power with faceless union burearacy
I know what it means to be a union worker - and trust me, it will never gonna work in software engineering

Re: Trucking startup Convoy closes operations with no buyer

#370

Post by clutchdude »

mrcwinn wrote: post #305
dboreham wrote: post #192

Earlier quoted context omitted.

> 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…

>choose to invest more to pay severance Deploying capital into something that literally has no return just doesn't make sense. You're also ignoring the reality that most capital comes in at the start. It doesn't come in at the end. That's an irrational investment. Would you buy a house that's burning down in the interest of the current homeowners? Could a company receive funds at the end? Legally, sure, maybe (maybe…

> That's a very ineffective use of capital and those types of decisions are worse in the end for the economy

Disagree - it frees those employees to begin working for more productive companies sooner rather than drag them through "you are fired with no provisions for healthcare. Good luck and don't get sick during the donut period."

- yes, it's an special qualifying trigger for the exchanges but you are asking someone navigate this in short order(likely end of the month or less than two weeks)

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