Big names investor was for years eyeing Convoy. Now the company has Jeff Bezos as well as Salesforce CEO Mark Benioff on board for the growth.
What Is Convoy and the Becoming Story
“Uber of trucking” described by some, Conoy uses a digital platform to match trucking companies, truck drivers and shippers. Founded in 2015 by former Amazon executives Dan Lewis and Grant Goodale, the company brings solution for the fragmented trucking market through a mobile app.
Research found with truck drivers collectively racking up 93 billion highway miles in the U.S every day, 40% of the trips are made with empty trailers. This trucking business worth hundreds of billions of dollars. However, the market is mostly made up of small trucking companies, with 91% of companies having six trucks or fewer.
What Convoy does is it take all those jobs, put them in a platform and help them found their match. In other words, the company uses data-driven software to match big customers, like GE and Home Depot with small truck companies. Which significantly reducing empty miles and reducing waste in the system so that everyone can benefit. “When it’s that fragmented it’s hard to make everything work efficiently,” Lewis, Convoy’s CEO, told CNBC, promising this is the ultimate solution, “higher productivity is the key to higher earnings.”
A past In the Logistic Industry and How Do I Know This Is the Right Idea
Before Convoy, Lewis was playing many roles in many industries from a consultant to a tech executive at Amazon. Especially, on the logistic field, the experience at Oliver Wyman has given him many insights to grow better at Amazon and now here at Convoy. Let’s hear more from this!
The founder recalls, he worked for the Panama Canal for a while and move to Spain to serve for the Vueling Airlines. He did a bunch of other projects with airlines, some with Boeing actually, thinking about everything from parts distribution, to how do you optimize in airports. There are a lot of different logistics problems that he had got to work on and learn from.
With that exposure, he realized this massive industry. There’s trillion of dollars spent on this in the United States every year. But with so little great mind to apply great technology on. So, before have any ideas on the specific niche he should tackle, Lewis started reaching out to Hadi Partovi and Ali Partovi – who are also the earliest investors. And just like that with different ideas they have the first craft of the business. Lewis recalls he had spent about six weeks after he left Amazon just to do essential guerilla research.
At the time, the founder had a couple of different business ideas to sleep on but decided to go into warehouses and truck stops. He started spending time with truck drivers and have hundreds of conversations.
Lewis admits before Convoy, he had had many other ideas going up, but every time he tells anyone it just getting a little bit worse. But with this one, every time he had a conversation, it felt better and better and just better.
How Does My Company Make Money?
Apparently, Convoy is a techy broker – the company does it the same way that traditional brokers make money, which is take a portion of the job. Lewis explains brokers today take between 15 to 40 percent. It really depends on the type of job, but most of the time, brokers would help providing the customer support, making sure everything goes correctly end-to-end. What Convoy does would be the same but a little less portion, lower price, and higher quality service thanks to the smart technology.
My First Step on Finding the Very First Customers
What Convoy is doing is bootstrapping a marketplace, with truck drivers on one side and shippers on the other. So, in the first year it would take a lot of effort for people to know of and believe in something that new. How did the company manage on that aspect? On the very first user?
Lewis remembers it was a naïve expectation of him. As he and the team had done so much research as well as having a pretty good list of truck drivers along with shippers. Lewis thought all he needs to do is go down the street and have them signed up and start bringing loads into the marketplace after the talk with shipper. However, it turns out, drivers were not interested that much. There would be no business at all if Convoy have not got any loads. Drivers are busy people looking for their next load, so there was no attempt on downloading the app. Next time, the team came down with some loads and since then actually used every single job as a marketing opportunity. Giving along with building trust.
Why I Never Take Anything for Granted?
As the company start scaling from day 1 to day present, how was that experience all about and what does the successful $400 million in fund raising mean to Lewis?
Lewis claims by the end of year one, they are already about 30 to 40 people. The company grew relatively quickly, but the funny thing is just as the time the team need the first seed checks, Lewis found out he had not even had a bank account open yet. He has all the staff focus only on researching and did not worry initially about incorporating or getting the name set up. All they trying to solve is upfront business math. “How do you get customer data? How do you understand what to go build?” just like that they put together a great story of a healthy business and went on raise many rounds, it just happened relatively quickly like that.
Even with a good stage the company is maintaining, its founder said you should not take anything for granted. Even though Convoy has been able to raise a lot of money, but it is a world of plenty right now. Everyone that is graduated in the last 10 years has only lived in an environment where everything is up into the right effectively.
The founder remembers it was two cycles he has lived through. Everybody started off building a really healthy, sustainable business and hurry, taking a big swing. The more money you raise and the bigger the opportunity you go after, the more challenges you face in terms of getting there. It’s a harsh joy but the reward for hard working is more work. But as you are an entrepreneur you are going after something of yourself, therefore, in term of working, it is all about self-actualizing and developing. Hope that meaning finds you well!
A Big Mistake That I Learned a Lot From?
Been revolving around the data and customers for, Lewis claims one of the mistakes he made was neglecting the actual contracting process and freight well enough.
The company at first, got into many troubles but then he has the team deeply involved in and reengineered it all. Turns out the contracts are not really hard contacts like in most industries. That particular nuance really impacts price, how you engage with them and how you manage that contract throughout the year.
It’s an advantage to come from outside the industry because you can disrupt things and you have to figure it out from the beginning, but what Lewis would encourage anybody to do is build a team outside the corners of your disrupting. Have a fresh start from the traditional path is a great way to earn new insights, especially with business that is aiming at revelation making!
The Entrepreneurship Call, You Have to Check These Boxes
Lewis shares he learned this back when he was trying to get a job at Skydeck. The founder has soon developed a strong technical background, he knows a lot about developing software even though he is not a software engineer. Because he realized, to get seed funding you have to check three boxes.
You have to have an idea that they can at least understand that it has the right dynamics and that you could return on the investment. That kind of an idea is the first thing to start with.
Second, you have to be a personality, an individual that is compelling to them. A big part of that is they want to believe that you are going to hustle and actually have your hand in the work. You are the one that get it done, not any staffs. You are going to be smart and thoughtful about your approach, and most of all, hundreds of other people over years coming to you would all recognize what you are doing is worth it.
And the third, is also the one he could not check it himself. He could not build it himself, just with enough knowledge about the ecosystem. So, you need to get the best engineers around the table, to compensate that hole, and in other to see your seed funding comes true.
When and What Is the Right Value for My Company?
As the company about to pass 150 people, Lewis started to think more about how it is growing, because there are different sizes of company where culture starts to change, and you need new mechanisms – a new way for people to stay connected and in touch. That’s when Convoy’s values make most impact, how company grow is exactly the same way human does!
When it gets bigger, the mental part, what is inside their head every day waking up for work that matters the most! The company’s values at this stage play a strong role in represent who you were as you started to get bigger and align many stages to the same path of growth.
So, how did Convoy team and its founder come up with those values in the first place?
Lewis shares he once had a chance to chat with Jeff Bezos on how he did it with Amazon, Bezos share it was until a year in, and about a hundred people, he then thinks about codifying a belief. So, Lewis knows it’s time for Convoy!
Lewis had his co-founder and the engineer team sat around just to recognized they do not really know who they are yet. So, he decided to think about what they want to be and write it down. Just like that!
Lewis also shares one of many Convoy’s values that he is proud to nurture. It is “knowing why,” to the founder it is an important quality all his employees have got to get through, because without knowing why, you cannot act independently, you will always have to go back and ask for the next step if you don’t have that context upfront.
And values like that have represented a lot about where the culture is developing. If you are trying to build consistent values throughout the company, it’s important to start early and be thoughtful about it!
An Extremely Challenging Question in Hiring
Mentioning the most important question when it comes hiring, what is the right way to assess someone that can and is ready to scale to the next level?
Lewis shares as he has been going around and talk with leaders everywhere, this is quite a conversation many struggled with. But here is how Convoy’s founder approach this.
The most important indicator is hiring, so if someone wants to get to the next level or ask you how they can get there, how can they scale with the company as it gets bigger. These are some essential questions you should consider opening this conversation.
“Can you hire the person that is doing their job right now that is as good and better? Can you convince that person to come and join Convoy and work for you?” And if they can, that’s how not only your staff but also your whole company scale.
To Lewis, as you bring in the people that can help you scale by building a team that helps you step up to the next level. And if you can’t hire those people, if you can’t recruit and attract them and they are not ready to work for you, then maybe that’s an indicate that you are not at that next level yet.
Dan Lewis Tells Tale of Amazon – the CEO Factory
As an ex-Amazon executive, how did the company effect Lewis’s journey with Convoy as we are seeing great CEOs at big fast-growing companies that have come out of Amazon. From the executive of executives, what is it from Amazon that has created this?
It’s not only Amazon, but other companies are also doing a good job of spawning CEOs. At Amazon, Lewis recalls it expects a lot of ownership from people that are in the role. The company practice a culture of assigning a single-threaded leader or a person who is ultimately responsible for the outcome of the thing, according to Lewis. That engine would put you in a position where you feel responsibility across multiple functions even if you do not want to own all those functions. All that has built in employee a cross-functional leadership at many levels of the company and a strong push towards ownership.
More specifically, is there a proactivity that does not exist at other bigger companies?
Lewis not sure about Google, but as he had worked at Amazon. There is a distinction at Amazon, when he first arrived at the company, he did not have a team. The company just told him that he has to build his own team, do some research, in that general scope of the world, figure out what Amazon should be doing and why. Lewis remembers writing pages of different business ideas in the first 2 months and pitched them to the leadership team.
It’s the planning process encourages people to come up with new ideas and pitch those ideas. As long as you are able to build consensus and a story line around it and demonstrate some early value, you can go build a team around it. And data wins.
Amazon has created a culture of starting new things. And that’s how the myth got spread!
The Bottom Lines
Founded in 2015, Convoy does solve an existing problem by replacing the traditional brokerage model with a more advanced structure. Convoy was found not because its founder was driving trucks or shipping crates, this is a different story of a creative on his journey looking for existing problems, struggling between ideas and finally the right answer just dawns on him.