At 7:30 a.m. Wednesday morning, mimosas started flowing at Convoy’s headquarters in Seattle. It was not a celebration. After months of desperate attempts by Convoy to raise money or find a buyer, employees were ordered to stop taking new orders and cancel existing shipments. The startup, which had raised more than $1 billion from backers ranging from Jeff Bezos and Bono to Fidelity and T. Rowe Price, had run out of money and was about to shut down.
Although the caravan was often praised As the “Uber of trucking,” the $800 billion U.S. market has proven to be extremely difficult to disrupt. Building a profitable business involves dealing with volatile trucking rates while closing short-term spot deals for customers and long-term contracts – dynamics that leave little margin for error. Convoy, led by co-founder and CEO Dan Lewis, a leader affiliated with Amazon but with no experience as a trucking executive, couldn’t figure out how to play the game.
The closure of Convoy, which wiped out equity investors who had pumped $900 million into the company, marks the biggest collapse of a once-high-flying startup in recent years, amid a contraction in venture funding that has left many loss-making startups struggling to survive. It also highlights investors’ past willingness to pour money into companies despite management’s lack of industry experience and questions about their business model.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”