Convoy raises $62M from Bill Gates and other luminaries to transform trucking

https://www.geekwire.com/2017/convoy-raises-62m-bill-gates-luminaries-transform-trucking-industry-technology/

by howsilly • 9 years ago

204 96 9 years ago

geekwire.com

spcelzrd• 9 years ago

That doesn't seem like a lot of money, especially for a capital intensive industry with notoriously low margins.

2_listerine_pls• 9 years ago

notoriously low margins.

Some of those trucking companies take 10%. What are you talking about?

nevir• 9 years ago

Freight brokerages typically have margins around 15%

https://www.quora.com/What-kind-of-margins-can-non-asset-bas...

jobu• 9 years ago

Shipping is only capital intensive if you intend to own the trucks, trains, or ships. Convoy appears to be more of a middleman between owner-operator truckers and shippers or manufacturers.

The problem is that many (most?) of the truckers that own their own rig are middle-aged and older, and getting them to use technology like this may be an uphill battle:

“I think they’re relying too much on computers,” said Brian Larocque, a new driver based out of Connecticut.

jbeales• 9 years ago

Yes on both. I work in tech that services the trucking industry. Getting drivers, (and dispatchers, actually), to truly trust a computer is difficult. They use a lot of apps, but trucking's got a strong culture of self-reliance, and people working in trucking probably care more about single points-of-failure than DevOps do, relying on Convoy would be a pretty big single point of failure, so they'll have to prove themselves worthy of the trust.

However, 82 million should get them there. That's a ton of money to build a business with no capital costs. The big risk for them is the incumbents deciding to move quickly - most of them have the cash, so if they realize their business model is threatened by Convoy, they'll move quickly, and be supported by their existing cash flow.

rootedbox• 9 years ago

Coyote already does this. Got bought by UPS for 1.8 billion 2 years ago.

Also Amazon, and Uber are working on competing products. So that 62m might not go so far.

Mutinix• 9 years ago

Bezos is one of the investors.

remarkableboard• 9 years ago

I've been fortunate to learn about Convoy and speak with employees involved recently. Convoy is the real deal and making this Uber for Trucking idea work. They're backed by Bezos, Reidman, and many other high profile investors. If any company were to crack the 800Bn trucking market, Convoy is looking like the one.

aresant• 9 years ago

Walmart just lightly threatened carriers & owner operators that if they work for Amazon they can expect lower priority from Walmart in the future (1)

Walmart presently represents ~14% of the total capacity of one of America's largest carriers - Swift transport - and likely similarly important elsewhere. (2)

Obvious outcome down the road is that one of these behemoths snaps up a convoy / other plays in the space to secure capacity.

But would they rather buy an "asset light" business like Convoy, that has no actual trucks / drivers / or control, or will they be more interested in an "asset heavy" carrier that has technology / driver / and trucks?

(1) http://www.dcvelocity.com/articles/20170627-wal-mart-warns-m...

(2) http://www.zerohedge.com/news/2017-06-28/it-begins-walmart-w...

projectileboy• 9 years ago

Kind of tangential to the discussion here, but Walmart's threats are empty. Amazon is currently constrained by trucking capacity, and would gladly swallow up more.

acangiano• 9 years ago

I have said it before, and I think it applies here, Amazon is becoming Walmart far quicker than Walmart is becoming Amazon.

mv412• 9 years ago

I do think Walmart is paying attention to this.

amelius• 9 years ago

I'm wondering if "Convoy" could ever become a trademarked name, since it is so generic.

jahewson• 9 years ago

https://en.m.wikipedia.org/wiki/Convoy_(1978_film)

kreutz2• 9 years ago

I was under the impression YC Continuity existed for the sake of investing in later stage YC companies. Convoy is not YC company. Is YC Continuity just a generic fund now?

elmar• 9 years ago

Y Combinator raising $1 billion for new fund

https://news.ycombinator.com/item?id=14820629

kreutz2• 9 years ago

Good to know. I did not see that news.

mkoryak2• 9 years ago

I used to work for startup called OpenMile in 2012. We were trying to do pretty much the exact same thing. We might have been too early, but it was hard. We had the tech, but the trucker and other brokers were not very tech savvy. The margins were low and there was too much hand holding.

Best of luck to them.

mv412• 9 years ago

How far did you get? Were you delivering shipments?

mkoryak2• 9 years ago

we were a high tech broker. yes we did loads, but we could never figure out how to set good margins.

phrogdriver• 9 years ago

I used to work at a startup called Trusker doing the same thing, I can't give your comment enough up votes on 1. not very tech savvy, 2. margins were low, 3. too much hand holding and I would add 4. a 1200 mile trip between commercial locations with weird hours and instructions is nothing like the intracity taxi markets.

hourislate• 9 years ago

This type of system already exists. Their are plenty of exchanges where truckers or trucking companies can get matched with a load or pickup work.

I don't understand what makes this so transforming?

prodmerc4• 9 years ago

Deep pockets.

hyperpape• 9 years ago

I don't know about the load boards themselves, (of which there are many), but there are a lot of companies in the logistics space. $62 million isn't that much.

Not saying whether they'll succeed, but saying deep pockets will do it doesn't make sense, IMHO.

frandroid• 9 years ago

Next up, they will hit up on the idea of dedicated roads for truck convoys; also, a single engine to pull them all; and finally, the creation of roads with steel rails to put the trucks on.

prodmerc4• 9 years ago

I don't know why you think they want trains, but they're likely to move to self-driving trucks, just like Uber.

ourmandave• 9 years ago

I would agree, but I think the problem with trains is you have to load and unload the containers onto railcars.

I've seen UPS and FedEx semis pulling 3 short trailers on interstates. I assume they're only limited by current regulations on weight and length.

ams61102• 9 years ago

Triple trailers are only legal in some states and turnpikes.

kbart• 9 years ago

Trains are very efficient when you need to move huge volumes between industrial centers, ports, metropolises etc. but we still need trucks for the end mile or else good luck laying tracks to every country shop out there.

jessaustin4• 9 years ago

Travel by interstate sometime, and you'll note that "end mile" trucking is a tiny fraction of the total. Of course this is because of the vast subsidies that truck freight enjoys.

If we get the self-driving thing figured out, I expect that last-mile freight will use fewer actual trucks than are used today. Rather, the typical robofreighter will be quite small. Every time I receive a truck freight delivery, the trailer is basically empty. They use a big tractor-trailer rig because they have to hire a driver anyway, and sometimes they have enough freight to fill the trailer.

prodmerc4• 9 years ago

"We don’t think there are any other companies that have taken the same approach"

I distinctly remember a service/app with the same purpose in Europe in 2013.

There's Cargomatic and mentioned by mkoryak, OpenMile. And probably others. Money will definitely help here, though.

mv412• 9 years ago

Yep, we launched one:

https://cargofone.com/en/

Money helps, but it isn't the only thing.

DenisM• 9 years ago

Can I pick your brain? Sooo grateful I will be... email in profile

prodmerc4• 9 years ago

Well, add Cargofone to the list.

The one I remember, though I can't for the life of me remember it's name, was operating around Benelux, mostly Belgium, France and Netherlands.

The truckers I knew mostly used it to find nearby matches for return trips (so they don't make a return trip empty). I don't know what happened to them.

mv412• 9 years ago

Yes, similar systems do exist. My team made one of them:

https://cargofone.com/en/

In some ways, it's more challenging than building "an Uber", once you get into different cargo and body types, document management, insurance, etc. We launched in Russia first, and not being able to do electronic signatures added a set of challenges.

In any event, glad these investments are happening. Trucking is badly broken, especially in the US.

pnathan2• 9 years ago

Trucking is badly broken, especially in the US.

why do you say that?

mv412• 9 years ago

According to friends in the business:

- hard to make money - people work too much and sleep too little - various abuse by trucking companies

For a more methodical analysis - USA Today did a piece a month ago:

https://www.usatoday.com/pages/interactives/news/rigged-forc...

relaunched• 9 years ago

I owned a trucking company and my family owned a freight brokerage business.

Trucking is a hard lifestyle, especially over the road. The job is physically demanding and there are a lot of ways to do it wrong.

Owner / operators and small trucking companies are, in some cases, like sharecropping. You don't make premium money, that's taken off the top through a series of intermediaries / brokers. You have to buy sub par equipment, because it's cheaper. You can't pay your drivers as well and often times, you do so in cash, which eventually bites you. And to boot, the business is very capital intensive. If your customer pays you in 30 days, and you run coast to coast, it could costs you 1100 gallons a week (3000 per week) and you don't get paid for 5 weeks (15000). Add to that cost of maintenance, insurance (650-800 per month - physical damage, liability and cargo), truck and trailer payment ($2000 per month for something newer, but not new, that you wouldn't mind living in or), you have to eat, your cell phone, oil changes ($150 per 15-25k miles) and the 1.25-1.35 per mile you earn, doesn't go all that far. But don't worry, if you need an advance on your shipments pay, for fuel, someone will give you up to 50-60% of your cash, maybe even a little more, for 1-2% or more of all the money you're due. And if you want to get paid faster than 30 days, you can get paid a day or 2 after you deliver and turn in the paperwork, for another 1-2% of the total amount you are due.

One truck shops or small companies can't service the needs of most shippers, so shippers choose big trucking companies or 3pls to manage their transportation. By the time a little guy touches a Bill of Lading / rate confirmation, the shipment can be double or triple brokered, each hand passing paper taking 10% off the top.

On top of that, there's huge theft. Gangs steal tires, cargo, trucks and drivers sometimes choose to transport drugs along with whatever you're asking them to haul...if you are in the business long enough, the stories are epic.

adventured2• 9 years ago

Trucking is badly broken, especially in the US.

I'd like to see this supported, particularly the "especially" part, given the extraordinary scale of hauling going on in the US via trucking. The economic facts on the ground in the US overwhelmingly disagree with you.

If it's so broken, and the US economy relies so much on it, how is the US GDP per capita so high? Both can't be true. It's either functioning well, leading to the high reliability and predictable delivery times we see today, assisting the US in having the most powerful economy on earth, or it's badly broken (where is the supporting economic evidence?).

semi-extrinsic• 9 years ago

There are several ways trucking could be badly broken but still consistent with your statements:

a) Say today, company X sells a thing for $100, of which $15 covers shipping cost, $15 is profit and $70 is what they paid their middleman for the thing. Suppose further that shipping cost could be reduced to $11 just by properly managing trucking, increasing the profit margin by 27%. These are of course made-up numbers, but just because a business is successful doesn't mean there are no inefficiencies left.

b) It is well known that certain jobs take a huge toll on the people doing these jobs, causing early burnout, physical and/or mental health problems up to and including suicide, etc. E.g. drone pilots, people working with social media illegal content filtering have been covered in the media recently. If trucking causes lots of health issues, it's not just "badly broken" in the human compasdion sense, it also leads directly to reduced national economic output (with a 2x multiplier, you're taking away a taxpayer and adding an additional user of Medicaid/whatever).

someguydave2• 9 years ago

I would give another example: the US government subsidizes trucking (especially long distance trucking) to a much greater degree than freight railroads through building and maintaining highways. All things being equal the marginal cost of shipping via freight rail should be lower given its higher fuel efficiency.

Symbiote• 9 years ago

You may be surprised, but:

"There are also more trucks operating in Europe than there are in the United States, with 63 trucks per 1,000 people in the EU — compared to only 21 trucks per 1,000 people in the United States." [1]

The USA uses long distance rail freight far more than Europe, where the railways are full (i.e. at capacity) with passenger rail. That's in spite of much stricter controls on driving time.

(I think there's also a fair amount of water transport in Europe. When I moved house from England to Denmark, my belongings were transported on a ship across the North Sea.)

[1] https://www.theglobalist.com/america-and-europe-keep-on-truc...

pg_bot2• 9 years ago

Speaking as the son of a trucker who spent a summer helping my dad negotiate and optimize his freight rates and schedules, the freight brokerage business is not one I would consider getting into. There is also a ton of competition in the freight brokerage space and the problems associated with shipping are due to poor warehouse management and unreliable truck drivers.

Unlike hailing rides in a taxi, manufacturing and shipping generally holds a regular schedule. If you build a reputation as someone who always shows up on time, you can make a lot of money as a truck driver (more than most programmers). After building a good reputation you cut out the broker and work with the manufacturers directly. All you need to do is find two manufacturers in a high paying industry, (pharmaceuticals, chemicals, specialized plastics) whose pickup and dropoff points are near one another and you can be set for years.

Most poorly run warehouses can be backed up for 4-6 hours before you can begin unloading. Most standard contracts allow 2 hours from the point of arrival to fully unload your truck. We would negotiate our billing like a lawyer. For any additional time after that grace period we would charge in hourly blocks at over $100 per hour. Companies try to abuse their power by wasting the time of drivers by not paying them to sit idle at their warehouses. Amazon and Walmart are notorious for these practices.

I think there is a lot more money to be made using technology to run a high tech fleet of trucks than there is a freight brokerage company. Trucking is an information game for sure but there is too much competition in the freight brokerage space and you can be easily side stepped by savvy truckers.

mv412• 9 years ago

I feel that for most companies playing in this space, freight brokering is just a transitional step. It can't work long-term, just like Uber can't be viable without self-driving cars.

However, it's the best way to understand how the industry operates - if you're serious about disrupting it.

irishasaurus• 9 years ago

This really is the other side of the automated trucking coin. This way they can build enough of a network to start brokering freight for autonomous trucking companies and hiring short distance truck drivers, much like pilot/captains in shippng.

mcguire2• 9 years ago

I was left asking, what is the real difference between Convoy and any other freight broker? The collect more data? I thought IBM was already in that business.

mv412• 9 years ago

How's IBM in that business?

IBM has a few initiatives in transportation + blockchain (Maersk, also trucking in Brazil).

Anything else?

michaelbuckbee• 9 years ago

One interesting thing that Uber/Lyft/similar did in terms of markets was make it much simpler for people to track and view the reputation of a particular driver - which shapes behavior.

I wonder if something like Convoy would do similar -> rapidly highlight the unreliable truck drivers. Allow a good truck driver to carry their reputation from manufacturer to manufacturer, etc.

baillon• 9 years ago

There's another side to that, too: Highlighting shippers that are unreliable or hostile to drivers. E.g. shippers or facilities that have disorganized staff, incur egregious waits, etc.

Waterluvian• 9 years ago

What's the cause of "unreliable truckers"? Is it that their ability to be on time is unreliable because of uncertainty in the travel time and traffic, or that the humans themselves do their job unreliably?

pg_bot2• 9 years ago

Both of those cause truckers to be unreliable. You can also include accidents, and delays at other facilities.

IgorPartola• 9 years ago

Why is it advantageous to a warehouse to have the trucker sit idly by for long periods of time?

Angostura• 9 years ago

I guess, it gives you extra free storage and workflow contingency. You tell the trucker you need them early. If they turn up early and you happen to have the stuff ready early great - you have some warehouse space freed up. If you're late however - no biggy - the transport is available to take it, immediately, effectively in demand when it is effectively ready. Maximum flexibility, zero additional cost.

flamedoge• 9 years ago

it's not? it may be a case of incompetence instead of malice.

Paul-ish• 9 years ago

“Like I said, I would rather have [the brokers] go through all of the headaches than me. It’s bad enough what we are dealing with out here on the roads than to be worrying about that.”

This seems to imply that there is something traditional brokers do that Convoy is now putting on the driver. Does anyone know what that is?

mkolodny• 9 years ago

"Uber for trucking"... Uber already has an Uber for trucking [0][1]. And it's doing very, very well.

[0] https://www.wired.com/2017/05/uber-freight/ [1] https://medium.com/official-uber-freight-blog/uber-freight-l...

WisNorCan3• 9 years ago

It looks like Convoy started far before Uber [0] and Uber has been trying to catch-up to Convoy. I wouldn't believe what Uber says.

[0] https://www.geekwire.com/2016/greylock-leads-16m-round-deman...

mv412• 9 years ago

Uber for Freight only officially launched last month. Check their app reviews (both iPhone and Android), more than 1/3rd are one star, citing various issues.

What makes you think they are doing very well?

malandrew2• 9 years ago

Just checked both apps in the iOS store and Android Store.

On the iOS Store, 4 stars out of 5 based on 31 reviews for all versions. Not enough reviews for current version. Only 4 are 1-star reviews. That's 12.9%, not 33%.

On the Android Store, 3.4 stars out of 5 based on 139 reviews. 53 are 1-star reviews, so 38%. Many of the 1-star reviews were Uber haters and people complaining about low rates. The latter I expect to become the norm once technology streamlines the industry, whether its Uber, Convoy or some other company that does it. Only a few 1-star reviews actually report a bad experience with the app that isn't related to rates.

Based on both stores, 30% are 1-star ratings, so it's about 1/3 1-star reviews across both stores. I really wish the app stores made an effort to cull obvious haters and fanboys so that only legitimate reviews were left. People gaming app store reviews are just hurting the people who would derive the most utility from choosing the best application for them.

For comparison, Convoy Driver in the Android store has 4.1 stars based on 51 reviews. In the iOS store it has 4.5 stars based on 12 ratings. Several of its 1-star reviews make the same complaint about the same low rates.

Both Uber Freight and Cargo Driver each have 10,000-50,000 installs in the Android Store, and the fact that Uber Freight has 2.6x the number of Android and iOS reviews based on only 1-month of operations versus almost 2 years seems very solid to me. Convoy's first review in the Android store is from all the way back in October 2015.

47• 9 years ago

A bit of tangent, But i am in the market for the Software that Convoy and CargoFone are building. We have our own FT, LTL and Final Mile Carrier network. We have negotiated custom rates with them.

What i am looking for the Software service through which i send Orders and get updates from these Carriers.

Is there a solution like that out there?

mv412• 9 years ago

Let's chat. Contact info in profile.

edorsey• 9 years ago

I'm in charge of Product at Freightview (https://www.freightview.com). We work exclusively with companies that have existing rates setup. Would be glad to chat.

jzisk32• 9 years ago

Not exactly sure if we have what you want but we have a cloud based order management system. We receive your orders and then route them to the appropriate facilities for shipping. We can also integrate with Carriers for rates. Check out www.snowfalltech.com or email me at jzisk@snowfalltech.com. Thank you, Jeff Zisk, CEO

WisNorCan3• 9 years ago

I would assume YC, Greylock and others have wide access to deals and have many opportunities to invest. Knowing how VCs operate I am assuming that they looked at the top companies in the sector before deciding on this company and teams.

It seems like several companies have tried to go after this market with technology, but Convoy has the best backers and most momentum. I wish them the best of luck!

losteverything• 9 years ago

I just wish they could find a way to get Mallomars to the stores in the summer

sd_mikey• 9 years ago

https://auptix.com has a platform that optimizes LTL. They've been up and running for a while and have good volume.

pissedycfounder• 9 years ago

YC companies beware. YC "Continuity" will come talk to you to learn the ins and outs of your business and then go fund a non-YC competitor. The whole idea of the fund was to use it to support YC companies at the next stage but now they're funding companies like Convoy that compete with YC companies like Flexport, while using their access to the YC businesses to do diligence. That's fine, normal investor behavior, but you can't treat YC like trusted insiders any more (prob never should have).

WisNorCan3• 9 years ago

“Flexport is a licensed freight forwarder that uses people and software to manage the complexity of international trade.”

Do these companies really compete? It doesn’t seem like Convoy is focused on international trade. It also doesn’t seem reasonable that if YC funds one company in transportation (or healthcare or some other big sector), they can never fund another one in that sector.

jamiequint• 9 years ago

Flexport and Convoy are completely different businesses. Did this actually happen to you or are you just making up drama?

malandrew2• 9 years ago

While Convoy Driver app has slightly better reviews than Uber Freight in both app stores (iOS 4.5 stars vs 4.0 stars, Android 4.1 stars vs 3.4 stars), both Uber Freight and Cargo Driver each have 10,000-50,000 installs in the Android Store and Uber Freight has ~2.6x the number of Android and iOS reviews.

The number of installs and reviews for both is especially remarkable because Uber Freight has only been available for about a month, while Convoy Driver has been available for about 1.5 years now.

edoceo• 9 years ago

Ages ago Microsoft purchased another company called Convoy, the product was merged to NT4SP6 and Windows 2000 as the Network Load Balancing component.

sanxiyn• 9 years ago

China seems to be ahead here, for example see https://www.bloomberg.com/news/articles/2016-12-22/china-s-u...

real-hacker• 9 years ago

No one talks about self-driving trucks like Otto? Truck drivers' life won't be easier.

DonHopkins2• 9 years ago

On the topic of the transforming and optimizing the future of trucking, just last night I watched a so-bad-it's-good movie called "Space Truckers", which was mentioned in the "Crapularity Hermeneutics" paper and that I had to see for myself:

"(This scenario has countless precursors in popular science fiction, including for example Stuart Gordon’s 1996 movie Space Truckers in which the protagonists transport square pigs that have been genetically modified to make more efficient use of limited spaceship cargo capacity.)"

http://cramer.pleintekst.nl/essays/crapularity_hermeneutics/

https://en.wikipedia.org/wiki/Space_Truckers

wodenokoto2• 9 years ago

And here's the trailer for Space Truckers [1], truly looks like a B-movie that isn't willing to admit it.

[1] https://www.youtube.com/watch?v=IerJF2xKwuo

DonHopkins2• 9 years ago

I was hilarious, but I don't think they were prepared to admit it was a comedy, either.

Convoy raises $62M from Bill Gates and other luminaries to transform trucking

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