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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

#451

Post by mardifoufs »

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…

It's weird since prices haven't really changed for customers. I thought freight going down by 70% would have an impact on pricing but I guess it was a smaller part of the total price than I originally would've believed?

Re: Trucking startup Convoy closes operations with no buyer

#452

Post by idiotsecant »

cma wrote: post #359
ditonal wrote: post #328

Earlier quoted context omitted.

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…

> Imagine if all the SWEs at all these VCs backed companies went on strike unless the laid off Convoy employees got six months of healthcare (it would have been in the initial employment contract). Congress made secondary strikes illegal a long time ago. Maybe it would still be OK since that wouldn't technically be cross-industry; I'm not sure.

Ok, so it's illegal. Now what? Strike anyway.

Re: Trucking startup Convoy closes operations with no buyer

#453

Post by JumpCrisscross »

FireBeyond wrote: post #441
JumpCrisscross wrote: post #417

Earlier quoted context omitted.

Clawback is one year for insiders, 90 days for all others [1]. We're describing something closer to simultaneity, where "the debtor enters into a severance agreement simultaneously with an employee’s termination" [2]. This is precedented for clawback, and would almost certainly be litigated given the number of employees involved. TL; DR The moment you find the business insolvent, it belongs to your creditors. Many co…

In [1], it'd be hard for a trustee to argue that making severance payments to rank and file employees is not something "made in the ordinary course of business" (which is a statutory defense against clawback). Your reference in [2] refers to an executive, an "insider", which is exactly what I said - that there is precedent against allowing such payments to insiders (hence the one-year clawback window). I still can't…

> it'd be hard for a trustee to argue that making severance payments to rank and file employees is not something "made in the ordinary course of business"

Typically in exchange for value and in Chapter 11, where you’re trying to preserve asset values.

> can't find any cases where unsecured creditors have successfully injuncted a bankrupt company from making severance payments

Senior unsecured. Higher priority than employee claims.

> mediators who were handling part of the bankruptcy proceedings

Mediation is voluntary. In the Toys ‘r’ Us bankruptcy, the original equity was wiped and creditors took over. They may have owned both debt and equity. But they were acting qua former creditors.

I’m not going to argue who would win. What I will say is the creditors would sue. There would be months of litigation, not a smooth transition to handing the firm’s last cash to employees. (Different picture had they never issued debt.)

Re: Trucking startup Convoy closes operations with no buyer

#454

Post by adriand »

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…

> Convoy had no exits because their only potential acquirers are in the same industry and are also getting completely crushed.

Some great insights here and you clearly know the business. I’m curious about this last statement however. Just how badly are other players doing?

Uber Freight just announced a major overhaul on a foundation apparently provided by their acquisition of Transplace [1]. There seem to be a number of synergies between Convoy and Uber Freight although I may be naive about that. In any case, I’m curious about your view on Uber Freight and whether they are viable or simply playing the long game based on deep capital reserves, and why you think they didn’t acquire Convoy (if that even makes sense as a possibility).

1: https://www.freightwaves.com/news/uber-freights-new-solution...

Re: Trucking startup Convoy closes operations with no buyer

#455

Post by paulddraper »

drewcoo wrote: post #446

We normally talk about the risk burden of founders (we're all either founders or will be soon, right?). We don't often talk about how everyone involved in a business takes on risk. This is a great example of all the employees risking being cut off from funds and health care. Those employees won't be lionized for "learning from their mistakes" when they get a new (better paying?) job, will they? Those employees also d…

> most founders are wealthy or backed by wealth

Back that up

Re: Trucking startup Convoy closes operations with no buyer

#456

Post by idiotsecant »

slt2021 wrote: post #369
ditonal wrote: post #328

Earlier quoted context omitted.

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 ne…

You're taking a remarkably short sighted position here. Blacksmiths and cobblers were once highly in demand workers as well. Do you really think writing code is such a special beautiful skill that it's immune to the same forces of automation?

Software development is a trade skill, like any other. We're in a very brief window of time where it's a very lucrative skill to have. Don't expect that to last forever. When that stops being the case you'll want something between you and the harder facts of life that you might have had the privilege of ignoring for a while. There's a reason people bled and died to make these organizations. The moment it's possible the capital class will grind you into a fine paste and sell you in tubes to make a few extra percent on the quarterly financials.

Re: Trucking startup Convoy closes operations with no buyer

#457

Post by pasttense01 »

moneywoes wrote: post #116
duxup wrote: post #94

Earlier quoted context omitted.

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.

Exactly, I'm very curious as to what was their edge

It's basically the same as Uber vs taxi companies [and Uber Trucking is a similar company to Convoy]. So traditional freight broker companies have a huge number of brokers who handle issues between shippers and carriers manually (on the phone constantly) while Convoy was going to automate this. So theoretically Convoy would have lower costs (not having to pay all these brokers) while at the same time it would provide better service (for example instant computer response vs hours for a broker to get back to you). This theory didn't work out.

Re: Trucking startup Convoy closes operations with no buyer

#458

Post by slt2021 »

sangnoir wrote: post #384
slt2021 wrote: post #369

Earlier quoted context omitted.

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 ne…

Here's a point by point rebuttal: 1. Hollywood unions disprove this 2. Hollywood unions (SAG, DGA) disprove this 3. Unions don't mean you can no longer negotiate. DiCaprio still does 4. One upside: Unions represent members who are no longer able to work 5. Hollywood unions have some pretty specialized folk and it works well for them As an individual - you only bargaining chip is your ability to do work. If you lose c…

You skipped the downsides of hollywood unionization:

Cost of hiring increases and there are fewer gigs around. Unionisation adds nontrivial transaction costs, so there will be fewer opportunities for new entrants, and fierce competition among existing workers for shrinking number of gigs.

For example look at how women actors get their cast roles with harvey weinstein studio - did union protect them from sexual predators?

Look at average unionized actor - very few are making big bucks, most are just surviving and have other day jobs.

UAW workers are still at the mercy of their employers, and are only dragging their companies down, while non-unionized automakers are taking over market share.

I am totally fine that my bargaining chip is my ability to work - it is the only austainable way. Otherwise there will be a lot of useless dead weights who dont contribute to the topline, and leech off of bottomline. (There is already unemployment for this use case).

Look at NYC MTA - all unionized and completely inefficient, unionisation can only work in monopoly situation.

Tech in the other hand is high growth particularly because all monopolies are being attacked by more flexible and lean startups.

Hollywood is not growing at all, while big tech is carrying the whole world

Re: Trucking startup Convoy closes operations with no buyer

#459

Post by oldtownroad »

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…

There’s no obligation to run a company into the ground. If a company reaches a point where the end of its runway is in sight, and the company decides to let employees know that the company will be out of money in 2 months, to give employees time to start looking for options… that’s allowable and not some sort of theft from creditors.

Many companies are open with employees about the state of the business.

If you have less than 3 months runway and little prospect of any fundraising, tell your employees. You don’t need to steal money from creditors (?) to pay severance, you just gotta do your best to not blindside people who have rent to pay.

Re: Trucking startup Convoy closes operations with no buyer

#460

Post by slt2021 »

idiotsecant wrote: post #456
slt2021 wrote: post #369

Earlier quoted context omitted.

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 ne…

You're taking a remarkably short sighted position here. Blacksmiths and cobblers were once highly in demand workers as well. Do you really think writing code is such a special beautiful skill that it's immune to the same forces of automation? Software development is a trade skill, like any other. We're in a very brief window of time where it's a very lucrative skill to have. Don't expect that to last forever. When th…

I am not at the mercy of my employer or capitalist class for that matter.

And I will be the first one to automate my job and reap the benefits of automation myself.

This is the way of life - if you cannot adapt - those more flexible, more adaptable, smarter, younger, hungrier - will eat your lunch.

There is no way any tech union can enforce monopoly, because there will always be new entrants ( ew grads) and offshore workers and immigrants willing to take the job, if union workers decide to strike.

In fact, I will be the first one to create outsourcing and offshoring consulting company to help companies fight unionisation.

This is the way of capitalism, the way of life. Smarter, faster, nimbler will get larger piece of the pie.

If union is willing to get $xxx mln in labor costs from a company, I will happily help this company fight unionisation for a fraction of that - to drive unions out of business while pocketing the profits by myself

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