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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

#541

Post by macmccann »

adriand wrote: post #454
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…

Uberfreight is also doing very poorly. From my understanding the Transplace acquisition was somewhat of a merger/UF trying to get out of only the 3PL business and Uber is just trying to get UF's losses off their books. There are not as many synergies as you might think due to the way freight brokerages and their deals with shippers+carriers work. One reason UF didn't acquire Convoy: it only makes sense for a brokerage to acquire another brokerage if they can get more customers (shippers) from that acquisition. But most customers of UF are also customers of Convoy, and are splitting their loads amongst multiple brokers to diversify risk and commoditize brokerages. So if you're a shipper giving 20% of your business to Convoy and 20% to Uber Freight, you won't turn around and give 40% of your business to UF now that they've acquired Convoy, you'll just go find another broker to give your business to.

Re: Trucking startup Convoy closes operations with no buyer

#542

Post by friendzis »

booi wrote: post #521
friendzis wrote: post #516

Earlier quoted context omitted.

It's not the way it is calculated. All payments attached to employment contract are wages, be it regular salary, bonuses, vacation pay or severance. Say the contract defines severance of 1 month for each full year worked capped at 3 months: at the moment contract reaches 1 year anniversary, the employee should be owed 1 month worth of severance upon contract termination

I've worked in the sf tech industry my entire career and my employment contracts have never included guaranteed severance. I've seen severance being paid out to fellow employees but afaik it is done as courtesy and wasn't legally required. Are you European? Maybe it's different there.

> my employment contracts have never included guaranteed severance

My assumption was that we would not be talking about "unpaid severance" if there was no severance defined in the first place.

> Are you European? Maybe it's different there.

Generally severance is not legally mandated, but can be mandated under some specific circumstances, e.g. no-notice termination. Usually it is similar to US: either defined in collective (union) agreement or part of termination contract.

Re: Trucking startup Convoy closes operations with no buyer

#543

Post by dalbasal »

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…

What you are saying is true, but that doesn't mean a lot of underhanded "games" aren't played.

"Nobody is getting rich off failure; if everyone were to walk away there'd be nothing left and therefore nothing to recover and distribute. It's bad for everyone, but the alternative is worse."

Here's one such game. Executives, who enjoy information asymetry, and leverage can parlay this into one final earning event. Threaten to leave the company in disarray, unless they're paid. Coordinated, it's hard to say no to.

Imagine if the top 5-10 execs at an otherwise ok startup coordinated a demand to double their pay/stock or everyone walks tomorrow. They time the move using inside knowledge of cash flow, making the demand irresistible.

I'm not suggesting an alternative, but that doesn't mean a corpse isnt a feast for some.

Re: Trucking startup Convoy closes operations with no buyer

#544

Post by shiroiuma »

hinkley wrote: post #466
chadash wrote: post #439

Earlier quoted context omitted.

Just to clarify your point about paying out employees... in what sense do you mean that? Some quick googling says that when a company goes into Chapter 7, employees become creditors for their unpaid wages, which means that they are at least in the same boat as other creditors (although it seems like they might sometimes be prioritized).

You will rudely discover that the landlord gets paid their early termination fees and any back rent before the employees see a single cent. Unfortunately I had to learn this the hard way (as in I was lied to and assumed they were still going to pay us, and then the payroll money went poof)

That sounds like bullshit (i.e., it shouldn't be this way, I'm sure you're correct). Being a landlord should entail a certain amount of risk: you're betting the tenant will be able to pay the rent, so you need to be careful choosing tenants, especially if they're companies, and moreso if they're companies with risky finances.

Why should employees be prioritized below a property speculator?

Re: Trucking startup Convoy closes operations with no buyer

#545

Post by shiroiuma »

paulddraper wrote: post #428
batmansmk wrote: post #425

Earlier quoted context omitted.

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'…

Maybe they need something in bankruptcy law that requires the executives to stick around, at low pay, to do their jobs and unwind the company. After all, they're the ones who made it fail. Why should they be allowed to walk away?

If a regular individual declares bankruptcy and then doesn't bother doing any of the required paperwork and legal stuff, saying the court needs to pay them top dollar for their time, things will not go well for them.

Re: Trucking startup Convoy closes operations with no buyer

#546

Post by eru »

vidarh wrote: post #529
eru wrote: post #498

Earlier quoted context omitted.

Leisure and comforts like the eight hour workday are what economists call a 'normal good'. https://en.wikipedia.org/wiki/Normal_good > In economics, a normal good is a type of a good which experiences an increase in demand due to an increase in income, unlike inferior goods, for which the opposite is observed. When there is an increase in a person's income, for example due to a wage rise, a good for which the demand…

"Will want to" yes. But it was not being offered until after that extensive union activism despite decades of demands. To the point that people died for it. May 1st is the international day for labour demonstrations because of the US union fight for the 8 hour day. The demand long preceded a rise in income allowing people to risk walking over it, or be able to afford to offer to take less pay for less work. It took d…

Different income levels between countries already suffice to explain most of the variation we see in things like actual provided worker safety etc.

History of union activism is an explanatory variable that doesn't add much to the mix, and if anything is rather contradictory and noisy in the end.

Re: Trucking startup Convoy closes operations with no buyer

#547

Post by eru »

slt2021 wrote: post #501
eru wrote: post #493

Earlier quoted context omitted.

I want to agree with you, but: > it shows that you have zero experience in automation, because no high value job is fully automatable. That's sort-of a tautology. What used to be a high value job can become a lower value job with some automation, and then be automated completely later. Up to about a hundred years ago, many reasonably well-off people in the US and Europe used to have domestic servants. Those jobs coul…

When stakes are high you are not going to ask a robot. When you have serious health condition or legal problem - you will find youself the best doctor/lawyer and seek their counsel. Google search or chatgpt wont gonna cut it. Same with tech - if you create a startup with big ambitions - copilot and chatgpt wont gonna cut it for your product. and I see no mechanism for union to provide any value to tech workers. Hell,…

Oh, I wasn't arguing in favour of unions. I was arguing against your specific point about specialised jobs.

Re: Trucking startup Convoy closes operations with no buyer

#548

Post by vidarh »

eru wrote: post #546
vidarh wrote: post #529

Earlier quoted context omitted.

"Will want to" yes. But it was not being offered until after that extensive union activism despite decades of demands. To the point that people died for it. May 1st is the international day for labour demonstrations because of the US union fight for the 8 hour day. The demand long preceded a rise in income allowing people to risk walking over it, or be able to afford to offer to take less pay for less work. It took d…

Different income levels between countries already suffice to explain most of the variation we see in things like actual provided worker safety etc. History of union activism is an explanatory variable that doesn't add much to the mix, and if anything is rather contradictory and noisy in the end.

Given we can look back at history and see direct causal links between industrial action and subsequent improvements, there is no way to take this seriously.

I have no doubt you're right that it correlates neatly with different income levels, but I find it comical that you think that addresses the issue.

I also note that you claimed working hours as a normal good whose demand would rise with income but ignored the point that the demand far preceded the economic ability to bargain for it with money, and that the demand was not constrained by lack of money. The notion that it fits your description at all is bizarre.

EDIT: I'll also note that after having had time to skim the article you linked, it does not appear to even attempt to make an argument aligned with yours. The author very specifically points out significant confounding factors, such as whether or not unions resistance in the specific given conditions affected productivity negatively or hindered productivity improvements.

A union certainly can make a wrong tradeoff - Indian unions prioritised keeping the intensity of the work down, at the cost of reducing their then-future ability to demand higher incomes. But they were only able to have that negative effect on future wages because their activism had a substantial effect on working conditions and by extension productivity.

That their goal was short sighted does not change that if anything it is a demonstration of the substantial impact unions do have.

That there is a risk that a too successful union can end up having an adverse effect by accident is nothing new either - it's if anything one of the historical conflicts within the labour movement in terms of outlook on the approach between seeing it as about conditions at individual workplaces or tied to local concerns vs. inherently a political and society-wide and international concern.

Re: Trucking startup Convoy closes operations with no buyer

#549

Post by kortilla »

sangnoir wrote: post #254
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…

> 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…

Don’t join a fucking startup if you can’t handle it shutting down at any given moment.

If you want employment stability join a profitable company or the federal government.

> That'd be a win/win, except for the leadership who would rather gamble using other peoples chips but keep most of the winnings.

It’s a startup! You’re there to try to make the options work out as an employee as well. I would 100% rather ride to the end with any chance that it will take off.

They failed to get a loan in time, it’s not like they knew it was a fantasy that could never work out. They had a viable business and got caught in counter-party risk.

Re: Trucking startup Convoy closes operations with no buyer

#550

Post by kortilla »

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…

Raising lots of money doesn’t mean it’s a sustainable business. I don’t think you know the colloquial definition of startup in Silicon Valley.

Raising millions doesn’t mean making millions either. If you took a bunch of investor money and just paid it all out to your employees and closed up shop that’s a misappropriation of funds.

> 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

Why would they do that? I’m not going to go on strike because other employees are incapable of understanding the risks of joining an unprofitable company that is default dead. If you want 6 months of paid healthcare, quote it and demand it as a signing bonus before you start.

Startups blow up. It’s your responsibility to prepare for it. Established companies blow up too. Sometimes you even just get fired because you suck.

SWEs have zero excuse to not have saved enough money to pay for cobra for six months if things fall apart.

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