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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

#421

Post by stuaxo »

revel wrote: post #412

There are some really profound misunderstandings of how bankruptcy and credit work in this thread. Creditors are ranked by seniority and get paid out in order by seniority. Equity is below every creditor and has been completely wiped out. Companies are not allowed to take cash or sell the furniture to pay out employees. That money is legally owed to creditors and attempting to stiff them is theft. I'm sorry to those…

I've worked in the UK for Glu Mobile, who were taken over by EA and all the UK and US staff let go.

The US staff had to just go. I got my last month's pay + about 6 to 8 weeks.

Re: Trucking startup Convoy closes operations with no buyer

#422

Post by paulddraper »

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…

Technically true, but no one is going to make a zero ROI investment.

Severance for companies with an ROI are one thing. Severance for a failed company is quite another.

Re: Trucking startup Convoy closes operations with no buyer

#423

Post by stuaxo »

sangnoir wrote: post #226
JumpCrisscross wrote: post #204

Earlier quoted context omitted.

> they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance If they can do this, they can pay salaries another month. Making a go/no go call at the edge is difficult. It sounds like Convoy thought it was getting a loan that didn’t come through. Put another way: if the CEO shut down the company while loan negotiations were in place, it would have zeroed out the commo…

> If they can do this, they can pay salaries another month If leadership decides to use the remaining funds on salaries rather than severance - then they should be judged on that! What good is buying one extra month for a doomed company? That month is more valuable to individual employees who can use it to look for new jobs

This is why you need laws.

In other countries they would have to pay the salaries.

Re: Trucking startup Convoy closes operations with no buyer

#424

Post by busterarm »

teachrdan wrote: post #364
busterarm wrote: post #327

Earlier quoted context omitted.

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...

Quibi was also a ludicrous company that gave streamers multi-million dollar up-front no-milestone deals and then shuttered.

They absolutely cratered within six months of launch.

I wouldn't use them as an example of how to competently operate a business. They literally gave all of the investors' money away. They operated more like a charity than a business and if I were one of their investors I'd have been suing.

Re: Trucking startup Convoy closes operations with no buyer

#425

Post by batmansmk »

revel wrote: post #412

There are some really profound misunderstandings of how bankruptcy and credit work in this thread. Creditors are ranked by seniority and get paid out in order by seniority. Equity is below every creditor and has been completely wiped out. Companies are not allowed to take cash or sell the furniture to pay out employees. That money is legally owed to creditors and attempting to stiff them is theft. I'm sorry to those…

All official information mentions “shutting doors” and “winding down” and not necessarily a bankruptcy. For instance, in the same space, Shone just returned part of the equity to the investors, paid comp to the execs for a full year, and us, employees, got jackshit.

Re: Trucking startup Convoy closes operations with no buyer

#426

Post by paulddraper »

conjecTech wrote: post #321
busterarm wrote: post #281

Earlier quoted context omitted.

They raised $260 million and had at their peak 1500 employees. Think for a moment how far $260 million gets you when you have 1500 tech employee salaries in Seattle to pay. Plus operating expenses. Don't forget to add 15.3% for payroll tax. Median software engineer compensation in Seattle is 219k. Infrastructure and office space isn't free either. Seattle office space averages $43/sqft and the average employee space…

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.

> Somehow adults at thousands of other companies are able to handle this situation reasonably despite also having to pay rent and taxes.

Are these thousands of successful companies? Or failed companies?

> Actions and comments like this are how you kill an ecosystem.

Sorry.

Re: Trucking startup Convoy closes operations with no buyer

#427

Post by busterarm »

Larrikin wrote: post #361
busterarm wrote: post #309

Earlier quoted context omitted.

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"

If you're operating in the red and funding pools dry up, there is no difference. That's the point.

The only things that matter are cash on hand, burn rate and your ability to raise new money. Convoy's cash on hand was tiny, its burn rate was enormous and its ability to fundraise was zero.

Re: Trucking startup Convoy closes operations with no buyer

#428

Post by paulddraper »

batmansmk wrote: post #425
revel wrote: post #412

There are some really profound misunderstandings of how bankruptcy and credit work in this thread. Creditors are ranked by seniority and get paid out in order by seniority. Equity is below every creditor and has been completely wiped out. Companies are not allowed to take cash or sell the furniture to pay out employees. That money is legally owed to creditors and attempting to stiff them is theft. I'm sorry to those…

All official information mentions “shutting doors” and “winding down” and not necessarily a bankruptcy. For instance, in the same space, Shone just returned part of the equity to the investors, paid comp to the execs for a full year, and us, employees, got jackshit.

> paid comp to the execs for a full year

IDK if Shone did things the most intelligent way, but the general story is not uncommon.

Shareholders/creditors have a mess if the CEO and CFO walk out the door for their new job; it is financially beneficial for them to liquidate assets and shut the door.

Shareholders/creditors don't have a mess when the engineer and a product manager walk out the door to their new job.

That's how the logic works.

Re: Trucking startup Convoy closes operations with no buyer

#429

Post by omginternets »

compiler-guy wrote: post #410
busterarm wrote: post #317

Earlier quoted context omitted.

Fortunately most employers are waking up to the fact that they don't want to hire the types of employees who are prone to put a gun to their head. They're shitty coworkers too.

That's an odd way to describe "negotiating the best deal they can find."

It's beyond odd. If we take him at his word, it follows that only the likes of Bezos are allowed to benefit from an open job market. I am at a loss for what the parent post is even trying to say.

Re: Trucking startup Convoy closes operations with no buyer

#430

Post by User23 »

revel wrote: post #412

There are some really profound misunderstandings of how bankruptcy and credit work in this thread. Creditors are ranked by seniority and get paid out in order by seniority. Equity is below every creditor and has been completely wiped out. Companies are not allowed to take cash or sell the furniture to pay out employees. That money is legally owed to creditors and attempting to stiff them is theft. I'm sorry to those…

Unless the law has changed, in California back pay is senior to everything except tax debt. And the company officers are personally liable for it.

It should work that way everywhere. Executives need to be incentivized to do layoffs while there’s still cash for it. Defrauding employees is a terrible evil.

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