Convoy (with CEO Dan Lewis)

0:00 Alright, I just checked and the waveform does spike and clip when I scream like that, so we'll try not to do that anymore for the sake of everyone home. Welcome to season five, episode nine. The home stretch. Of Acquired, the podcast about great technology companies and the stories behind them. We are coming to you live today from the University of Washington. Audience. Can we hear ya?

0:45 I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Let's talk about trucks. Eighteen wheelers.

0:56 Semaize The long haul guys. One out of every four of these that you see on the road. is completely empty. Truckers finish a job and then pick up the phone to find their next load, which could be a state or more away.

1:12 You might think They should be able to just have their boss or co-worker figure it out across multiple trucks and coordinate. But get this. Ninety percent of trucking companies have six or fewer trucks. And ninety seven percent have fewer than twenty trucks. There are over a million independent trucking companies, or carriers, as we'll call them tonight, in the United States alone.

1:34 So enter convoy. Today we are gonna talk about this company, which has only existed unbelievably for four and a half years, and their ambitious plans to make it easy for any truck driver to find a nearby load, transparently see what they'll get paid. And do it all as you would expect. Right on their smartphone. We've existed for four and a half years too.

1:54 We're almost as big as Convoy. Yeah, this is this was like a sick dose of perspective. When we were doing the research, David and I realized that the Convoy was started between the time that we had lunch and talked about doing the show and when we actually started the show. It's freaky to to see, you know, close to a thousand person company and acquired uh uh well on its way. All right. Listeners.

2:20 Now is a great time to talk about a new partner of ours here on Acquired, Lagora. The agentic operating system that is redefining how the world's best legal teams work. Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do. operate with obsessive customer focus.

2:55 They embedded inside a massive law firm. For months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review where you Drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legor's Bet Here is interesting, since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

3:27 And they recently launched Lagora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And Lagora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Lagora numbers essentially speak for themselves. When they have a head to head pilot with their top competitor, they win seventy percent of the time. Lagora now has over a hundred thousand lawyers on the platform from twelve hundred legal teams in fifty countries. And crazily, they went from one million

4:11 In about Eighteen months. Yeah. Truly insane numbers. And that is the real test.

4:19 Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at Lagora.com/slash acquired. And just tell'em that Ben and David sent you. Now, listeners, if you want to go deeper on company building topics, or you just want to support the show, you should become an acquired limited partner. We have a second show where we get into the nitty-gritty with expert operators and investors, like the CEO of Webflow and partners at Benchmark, Emergence, and other great venture firms. You can become an LP by going to glow.fm/slash acquired or by clicking the link in the show notes, and all new listeners get a seven day

5:06 Free trial. Of course, there are tons of ways to be involved with the show. You can join the Slack available at acquired.fm, rate us on iTunes, and we always appreciate any shout outs anybody wants to give on Twitter or the social media platform of your choice. Or in person. Or in person. This is like really crazy doing the show and like looking up and seeing people and like You're gonna hear all the parts where we say um, which we always cut. You're gonna hear like

5:33 You know when when I look at David and I'm like that didn't make any sense. Can we delete that in post? And Um Anyway, with all that On to convoy.

5:44 Well. On to convoy. So When Ben and I Started thinking about doing this

5:52 Crazy thing. I'm planning for our first independent live show here in Seattle. This is actually our second live show. Our first was thanks to our friends at Geekwire. There was only one company and one entrepreneur that we wanted on the show. And that was Convoy and its founder and C co-founder and CEO Dan Lewis. Not only because as Min mentioned, it is, I think as we speak, the highest valued startup in the Pacific Northwest, having raised a whopping six hundred and sixty eight million dollars in total capital. But more so, um

6:24 Because I think its story illustrates a really important new theme in tech that we haven't talked as much yet about on the show, but I think it's gonna shape many of the next generation of great technology companies. And that's Taking all the lessons in tech from Previous generation companies like Amazon, where Dan worked, uh, Airbnb, Uber DoorDash, all of them that were focused on consumer driven businesses and using that same tech to disrupt super large, super old school B2B industries. So Obviously Convoy is at the vanguard of this, but they're not alone. There's FlexPort out there, which folks might have heard of, uh Rigup and oil and gas, even our own portfolio company at Wave Quota Pro, which does this in the scrap metal industry. And I think we're gonna see a lot more of this in the coming years. So we are super, super excited to have Dan Lewis, co founder and CEO of Convoy. Up to join us. Come on up, Dan.

7:23 Hi, I'm on. Perfect. Before we dive into the typical acquired history and facts and go back to ten years before your birth and all that. I wanna ask uh first. Tell me about that. We actually start a hundred years before your birth, but Can you give us a quick high level overview to just set the stage for our audience of there are many companies in the tracking space. What exactly does Convoy do? You connect

7:53 existing truckers, not autonomous truckers, people who are driving rigs today with people that want to ship stuff. That's right. So Convo is a digital freight network. And if you think about how trucking works As we mentioned earlier, it's extremely fragmented. The average trucking company has three trucks. So you have A bunch of mom and pop trucking companies on one side and a bunch of companies that want to ship freight on the other side. The Mom Pop companies don't have a way to go source that business directly. They don't have a sales and marketing team and operations team.

8:21 So they work through middlemen, typically brokers or large asset based carriers that also run a brokerage on the side. That's extremely fragmented. The participants in the middle are trying to, as individuals, maintain relationships with truck drivers. And shippers. So any individual person only sees a minuscule piece of the pie. Can't really identify all the opportunities, optimize a system.

8:45 Convoy does Is We're replacing the traditional brokerage model. We're aggregating that long tail.

8:53 And we're getting them all onto the same platform, all onto the same technology stack. So that we can learn about them, know where they are and then Optimize their routes. Keep them efficient, keep them productive, fewer empty miles. reduces a ton of waste in the system.

9:06 helps shippers get trucks more flexibly and faster, helps truck drivers get jobs that are more convenient to where they're located and what they want to do, and effectively like just creates a more productive trucking system. So to your point about Yeah. not just building software kind of replacing the system, that's what we're doing with technology. Yeah.

9:24 So Okay to rewind. You grew up here in Seattle. Birthplace of Amazon. Long before Amazon was built. What was your family like? You know wha what what was your journey that ended up in this? David, we are going deep.

9:40 Yeah, so my family is uh Born and raised in this area. My dad went to UW? We I grew I lived actually when we were building a house in Northgate, I lived in Ravenna for like a year as a kid. So I was very local. My grandfather started a mom and pop kind of office supply distribution company. out of his garage in Ravenna.

9:58 Uh my dad and uncle worked with that for a while, still doing that kind of stuff today. So kind of small business family, but not really a tech family. I have relatives in Seattle that, you know, did Biology for the Washington's for Washington State. I have other ones that work for the ferry department, a cousin of mine. You know, uh manages one of the fire stations in Seattle, you know, a lot of kind of different local jobs. But not so much directly in the tech industry growing up.

10:22 Um I just happen to grow up at a time when it It was flourishing and Microsoft was coming on the stage and it kinda got me interested in tech early on. You were a liberal arts major at Yale. And then Importantly for the story, you join a consulting firm after graduation. What were some of the like

10:41 Projects you worked on. You were at Oliver Wyman, right? Yeah. W and Oliver Wyman does a lot of work with logistics based industries. Airlines and the like, like You know, w what did you learn there, both in terms of exposure to some industries that would come in helpful later for Convoy, but also The skills that you learned. Yeah.

10:59 So I did learn a lot about supply chain logistics when I was working there. Um I worked for the Panama Canal for a little while. I lived in Spain and I worked for Welling Airlines and we did a uh a bunch of other projects with airlines, some projects with Boeing actually. So there are a lot of different logistics problems that we were working on. In terms of skills I think the thing that was the most impactful for me in consulting and it's something that kinda bugged me and for a long time in my life, to be honest.

11:23 I remember even in high school and and and junior high, like I did a lot of different things. I was always the kid that did Like seven different activities, you know, sports, student government, tried this hobby, tried that hobby, wanted to learn this thing. And I never really went deep, and I remember thinking at one point kinda jealous of the person that found that one thing that they really love and they're like super deep in it. And I I kinda was wondering maybe I could just pick something.

11:46 And I never was able to just settle on one thing. So consulting really fit me. I did twenty six projects probably over you know four years or so. And but I kept wondering when am I going to figure out that thing that I really love? And I I bounced around, I did lots of different things, marketing, product management, engineering related work. And it wasn't until I started a company

12:04 that I realized the thing that I was actually really good at and that I had trained myself to do over and over. was to very rapidly understand new spaces. And be able to start things and kick things off and like very quickly get something off the ground. That was the skill I think that I I came from from consulting initially. Dan did you find that you were great at that, but not as operational as you would like? Like the knock on people that start in consulting or spend too much time in consulting is always like, Oh yeah, they're the smartest person in the room, like they can definitely uh tell you how to solve your problem, but like when it comes to doing it, it it doesn't work. Like was that your experience or

12:38 Yeah, it's a really really good question. When I first started, I don't think I recognized but that that actually was the case in consulting. Like I thought that I understood and then I realized I was just doing the strategy portion. Because you went right from consulting to a startup, right? Well the latter half of consulting though was all operations. So actually Like when I was in Spain I was I was running a procurement project for seven months.

13:00 And it was end to end designing all of the specs for how we're gonna do maintenance for aircraft, engines, APUs, working with thirty different vendors on a six month procurement process and getting in all the details of finance and operations and logistics. So that's when I realized that I was learning that for the first time and a lot of the other stuff with strategies. I feel like I had the benefit towards the latter part of my consulting career. Of really getting into the weeds. And working on some really meat and potatoes kind of projects.

13:25 operationally minded. I then went pretty far away from that though to be honest, after consulting into tech, and I didn't do that again for a while. After four years of this. You come back to Seattle. Which is now year are we in now when you joined Skydeck?

13:39 When I joined Skydeck. Two thousand and seven. Seven. Okay so Tech is a thing. You know, Conway hasn't been started yet, but so the Seattle startup market isn't quite what it is today. What prompted you, other than perhaps wanting to come home To

13:55 You know, you're working in logistics at airports. I'm gonna go back. into the tech world and join uh join a crazy new startup. Yeah, and and and to for people who aren't from Seattle, the w the way to think about this is Amazon is in one building at this point. Yeah. Yeah. So Skydeck was Skydeck was in the Bay Area. I actually didn't leave right away. What I what I did, and and this is something about how I just got into startups.

14:18 I always wanted to do something in tech, like when I was ten, my dad worked for um US West. Or you know the phone the local phone company, he brought home like an IBM X T, I remember. You know, a really kind of DOS three point zero. And I just I just kind of learned how to use it. It became I taught myself a bunch of things on there. I started with basic and just taught myself a bunch of really simple things. Wanted to figure out how to optimize the computer so I could play more video games. And got online, you know, very early on to like the library system and started teaching myself how all that stuff works. So I kinda was really interested in tech early on.

14:48 Got away from it a while, but that's how I made money in college. Like I I made money websites for the athletics department. I did a lot of IT support and helped people back then did make, you know, ten, fifteen bucks an hour Just a So it was sort of something I developed early. And then when I was consulting, I was like I wanna go back into tech. I kinda had this bug.

15:06 And I didn't know how to quite get back in there because most tech companies and startups look at consultants. You know, and aren't that interested, at least back then. I mean, especially in Silicon Valley, a lot of the early stage ones were looking for folks with more technology experience. So I think it really was part of, you know, in a in a lot of ways. You guys today can't we share a lot of heritage with Uber. And I think it was it was them that really were like, Oh yeah, no, we're gonna hire a bunch of people from Goldman, we're gonna hire a bunch of people from McKinsey and bring that

15:35 operational know-how into into the startup world. But yeah, back then that was that was like not normal. I remember Taking vacation from Oliver Wyman for like a week and a half. And all I did was network. I just wrote a list of everyone I wanted to meet and then found ways to meet them and then would ask them

15:54 who else they knew in the space. And I started working on the startup ideas. I would just take time off to work on startup ideas. And I had this idea for location based services like data research company and surveys company. So I started diving really far into that, wrote a whole business plan, met maybe 40 or 50 people And never decided to do it. But I realized really quickly the power of networking and information. I would have lists of people that I would write down and and and all my notes and my meetings with them. And then I realized after ten or twenty meetings Every meeting I went into I knew more about the space than the person I was talking to.

16:27 And I could introduce them to all these new companies. So it became like this information broker role. I finally networked my way into Skydeck. It should have been an associated adventure capital affair, but um yeah I I tried early and that didn't work out. I that's how I met Pan Skydeck. So I actually like networked my way in while trying to start my own thing.

16:47 met this group, they had founded a company in New York called Vindigo. Which is the early like mobile app developer for brew handsets running on Verizon. Oh, had some success doing that, moved out to Silicon Valley to build this new company, I was compelled and and and like basically somehow convinced them to hire me. Like they were all engineers and they're like, Why would we hire you? You're this

17:08 You're this Was Skydeck also focused on like brew handsets? No at that time. It was pre- Um IOS. IOS came out right in two thousand seven. I started this company in mid two thousand seven. So they were thinking about How do we

17:23 You know, social networks and the social graph was the big thing back then, and mobile, like location based services kind of very early. So they were thinking, hey, you have all this data in the phone bill. It's like someone's social graph. Can we let you unlock that and combine that with like your email and contact and start to all your text messages and phone records and start to To um and can buy your c your contact, so all of a sudden you can see your real social graph, and is there a way to monetize that or or to plug that into other systems that are being built at that time? And the big reveal is this company ends up becoming Haya, right?

17:57 I mean It it went through a whole bunch of stuff. Yeah. Yeah. Which is a which is a which is a spam call blocking service now. They actually did that. So had a call system specifically designed to help you identify if someone was calling that you didn't want to pick up. Um they built it, they had a uh they they got it pretty far actually, and they had a partnership with Google. And then

18:19 Um Google I kinda shut it down and built it. They basically said you can't do this anymore on Android, you can't get access to the phone records, so we shut that down and then they they had something similar come out. You have the start up experience. These crazy pivots.

18:32 You hand up Coming back to Seattle then. But um coming back to Microsoft. Yeah. So your first journey now, you gone from consulting startup, big tech company What did you learn at Microsoft?

18:46 And I was very lucky to get a job at Microsoft at the time. It was two thousand eight. I got back to Seattle. I Леф май самер в Тутазанет. Went on a round the world trip. Wow. Came back in October 2008. While I was gone, Washington Mutual went out of business, so my bank went out of business I had left a bunch of stock, you know, most of my money in stock at the time and or stock, and I wasn't really paying very close attention to it.

19:09 Um so most of that was gone. I didn't have a job because I'd quit my job. I thought I was gonna start working with some of the partners from the management consulting from I've been at as a contractor before to get my feet under me when I got back to Seattle. That was no longer available when I got back. So I remember meeting a friend of mine at

19:27 Black bottle in Belltown. Yeah. And he was at Microsoft at the time and I was like, Hey, what should I do? Like It's kinda looks pretty bad out there. He's like, I don't know. And he like had a text message from somebody pretty high up at at Microsoft saying, we are hiring no more consultants like starting next month. So I was like, I guess that's not gonna be an option. I just did the thing I did back when I was looking at Skydeck, I just hustled again and did a meeting every, you know, five or six meetings a day, networked, created my list, tried to find a job.

19:55 got no interviews, couldn't get an interview from Amazon, couldn't interview from anybody at the time. Um because the market was in such a rocky state. And fortunately I I knew some people at at Microsoft through Fritz. Who gave me a shot at an interview and I got a product manager job there. So you hadn't been a product manager at Skydeck, right? I had not been a product manager at Skydeck, but I Basically was'cause we were so early.

20:18 I just thought like one. So I I I was able to g go through the interview. I want to give that context'cause like That was a point where you imagine you know I I I grew up in Seattle, you know, went to Ingamore, local school. somehow like ended up at Yale. There's a story around that.

20:33 Um Work really hard for five years, was really frugal saved. And then in two thousand eight, like made that One decision was kind of offline for a few months. and came back to Seattle basically with nothing. No job, no money.

20:46 Um and did a place to live. So Like I have seen that side of it, and you know, I didn't panic, I just knew I could work hard and find a job, but I think I have a lot of respect. going through seeing 2001, I graduated in 2003, so I went through the 2001. There were very few jobs when I was graduating. Again, really struggled to get that first job.

21:06 Worked really hard. A lot of friends of mine took a long time to get those jobs. Thousand eight. So I feel like I've been through a couple of these really hard periods. Which I think made me really um value the opportunities that I've had. And so when I got that job at Microsoft, I was like

21:21 very proud of it and very excited about the company. I grew up in Seattle, you know, looking at Seattle Times reading about Microsoft growing up. I remember looking at their stock price when it was like printed in the newspaper, like so intrigued by this growing company as a kid. So it was like a dream for me to get a job there. Wh which this this isn't unique Seattle thing. So I didn't grow up here. And like

21:40 Nowhere in the US has reverence for Microsoft like Seattle does. I mean if you grow up here, it is like there's so much giving back to the community, it created so much wealth for the community. It it put Seattle on the map in a lot of ways. And like in Ohio, you know, I was like Oh well uh yeah those are the bad computers. So you know. But you're right, that was that was kind of the foray into Seattle for me. And so I was you know, I I I didn't take anything for granted because I realized There we're in a world of plenty right now. We were just talking about how much capital is available. Convoy's been able to raise a lot of money.

22:22 You know, everyone that's graduated in the last ten years has only lived in an environment where everything's up and to the right effectively. And I've lived through two other cycles now, and one I was again, you know, just out of college when I was later. But I think that's just It's made me never take for granted anything we're doing, and I I

22:40 Don't rest and feel like we're there. Like I'm just like, we gotta build a really healthy, sustainable business and hurry, and we're taking a big swing. So the more money you raise. And the bigger the opportunity you go after. the more challenges you're you face in terms of getting there. So

22:57 Microsoft then you're like I'm gonna go back, do the startup thing again. Wavy. Another startup. We were investors when I was at Madonna.

23:05 Great product idea, didn't end up realizing its vision, gets acquired by Google. Yeah, I was I was at a product. I mean it was a pretty product. I did a lot of I did a lot of stuff, like marketing products. Planning like a bunch of different things. At Google and then And then was it that the'cause the team Adrian moved down to Mountain View, right? Yes. And then did you stay in Seattle and is that how you ended up at Amazon? That's right.

23:33 So the company was acquired in two thousand and Eleven. If I remember correctly. Or in twenty ten, twenty eleven. And ultimately the entire team moved down to the Bay Area to join the machine intelligence group.

23:45 And I learned I learned an incredible amount at Wavy. I just I didn't want to move the barrier. And so I was working remotely for Google for a while. I I was looking at several options in Seattle to join some of the teams here. And

23:59 I just decided I didn't want to be part of a remote office at that time. I think Google's actually scaled pretty significantly since then. But I remember going down to the Bay Area once to meet some of the leadership of the team that I may have been joining. There were two or three options in Seattle. And I distinctly remember sitting down with them And the I won't say the person's name, um, but I remember they were like you know We just have a love hate relationship with our remote offices. I was like, Oh what's the hate part? Okay. He's like, Yeah, you know, we like to keep a lot of the planning and a lot of the figuring things out down here and then we have some satellite teams up there that kind of execute on specific pieces.

24:33 That sounds fine if you're in maybe engineering. What I wanted to do was very different than that. So That was actually the thing that caused me to not stay at Google. I was like I don't really want to have that experience where I'm kind of supporting a remote office. I want to be in the thick of it. I looked at several different companies at that time.

24:49 networked with early on when I was um doing wavy I reconnected with them, um they were at Amazon. and and was really inspired by the team they built and the organization they're building, so I went. I swim to Amazon. Dan, have you ever had a job that you applied for? That you like apply and then you're like, I hope they get back to me without like having a relationship with someone there?

25:09 Have I ever gotten a job or find a job? Have any of the jobs that you've ever held ever been from like a job portal? I think so. There are two. Actually, my freshman year internship. The the internship I had after freshman year. I I think I applied to an online posting. I joined a company called PR.com in Seattle, which was acquired by Wagner Edstrom. And so very nineteen ninety nine name, PR dot com. We did PR for tech companies.

25:36 Uh I don't even really know how to be an intern. I think I just like it. Went on vacation once for a week and they were like, You're supposed to tell us. I was like, Oh, okay. Like I was I was kinda out of them. Um and then uh the other time was I applied to some uh not a job board, but companies came to Yale looking for candidates and there was like you know some companies on campus recruiting. So I I went that channel. But after that, no. After that it's always been

26:01 through the relationships that I built. And I Very often higher. you know, I reach out to a lot of people and I do a lot of personal sourcing and that's always been a big part of my my thinking. I have sent out a lot of applications where I didn't get anything. Oh yeah. I was trained. Like I I got that job I mentioned out of out of out of Yale. I think I got that in the spring. I I sent a lot of resumes out. And applied to a lot of places.

26:26 I had taken my junior year off and went to Chile. So I became fluent in Spanish and I and the summer before and after I worked for my family's delivery business. So I didn't have like the Post sophomore, post junior year strong internships. And coming out in two thousand three, again, tight job market. I didn't have like I

26:44 could do it, but I know the story so the traditional channel didn't really work for me. Um and then back again in two thousand and you know over time applied to different roles. And again in two thousand eight when I was applying, like that just didn't work at all. So I've I think I'm when I've mostly been looking for roles. I've been in situations where that just didn't work. And that's why I've kind of trained myself to not really

27:03 Go down that path. All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI first world, that doesn't hold up anymore.

27:24 Yep, your risk surface changes every week now. A vendor turns on an AI feature or someone writes in a new model without telling IT And your posture is different than it was last week, let alone at your last audit. Banta's own research found that around seventy percent of companies have this quote unquote shadow AI running with no security review at all. Right.

27:46 And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's governance, risk, and compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

28:07 In half. Which is exactly why more than sixteen thousand companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake. All stay audit ready and catch the risks that crop up between audits across every vendor. Every AI tool. The whole environment.

28:25 And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get$1,000 off Vanta at vanta.com slash acquired. That's V-A-N-T-A.com slash acquired for a thousand dollars off. And just tell them. That Ben and David sent you.

28:53 Alright, so Wavy happens, you end up at Amazon. I want to ask one question on Amazon before moving on to the founding of of Well you founding companies, and then we'll get to Convoy. Recently Amazon has sort of been dubbed the CEO factory, and we've seen data of all these great CEOs at big fast growing companies that have come out of Amazon. What is it in your mind that creates that?

29:15 There are A lot of other companies too, I think that that do a good job of spawning CEOs. Um I think one thing that Amazon does. Ізпек алов онерші. From the people that are in the role

29:29 And it kind of has a culture of assigning you know, a single threaded leader or a person who's ultimately responsible for the outcome of the thing, at least in my experience. En en that design puts you in a position where you feel responsibility across multiple functions, even if you don't own all those functions. And I think that

29:48 that sort of cross functional leadership at many levels of the company. And strong push towards ownership. Is Really important, I think you see that both on the business side and on the technology side.

30:00 When I was at Wavy we tended to bias towards hiring a lot of engineers from Amazon. And of course there's great engineers at every company. Бовірис вин мор. of the the end to end aspect of their system. versus just one piece. And I think I saw the same thing on the product and business side as well.

30:20 I think that probably attracts people that want that and then trains people in how to think that way. Yeah. So then You know, you can slot into those th those opportunities. Is there a proactivity and a hustle that doesn't exist at other bigger companies? Is that is that part of it, or is that sort of overly mythologized? You know, I I have I've only worked at several and I didn't spend as much time at Google, but I have been at Microsoft and others. And I think there that's definitely there is a distinction that's that's true on that. And So I'll give you the example. When I got to Amazon

30:50 And this is not maybe the typical role, but I didn't have a team. They just said, look, you're a person who's gonna build a team. Go do some research. In this general scope of the world, figure out what Amazon should be doing and why. And I wrote five six pagers in my first two and half months. I pitch them to the leader of the six pages, of course, being the canonical Amazon.

31:13 Five or six, you know, four or five docks actually that were each different business ideas. And I pitched them and I got funding for three of them. And then over the next you know two or three months I went out and hired the teams. And you were reporting to at the time. Uh a guy named Michael Doherty and then his skip level was Sebastian Cunningham.

31:30 who is actually on the um That list as well, the CEO factory list for who's now the co CEO of We Work, which is a whole different info strategy. Whole different thing. So that was really The fact that that can exist. In a company is pretty inspiring. And then what I realized after I'd been there for a while was

31:55 The planning process encourages people To come up with new ideas. and pitch those ideas and if they get the pitch, if they're able to build consensus and and a storyline around it and demonstrate some early value. They can go build a team around it. And data wins. So if you're if you want to I remember there's a an example that buy you know ask a question, get an answer on Amazon. That's a feature that exists on Amazon. You can ask a question on a product page and other people other customers or manufacturers will answer that.

32:21 That product was developed by someone else in the same organization that I was part of. And I I kinda was It works on that a little bit, but it wasn't you know I didn't directly. Develop that. That was originally given the thumbs down by leadership.

32:34 But the team said, okay, fine, we're going to figure it out. And they went and emailed a bunch of customers, asked them questions, and came back and said, Actually, if you email customers and you ask them questions, they will answer them at this rate. And then the the person who had said no is like oh I thought they wouldn't. Turns out they will. Go do it. Right. So someone just said, I don't agree with you, I'm gonna go show you the data, and I got it, they got a team out of it, and they built it.

32:54 And so that that sort of internal culture of funding good ideas and and if people do the research and put the hustle into figure it out, funding that has created obviously a very broad range of businesses and products that Amazon has created. And a a culture of kind of starting new things. Probably unique, actually, the range of things they're doing. So you leave Amazon to start a company.

33:16 Are you writing six pagers and was Convoy originally a a six pager? Was that the format in which you thought about New businesses. We did I didn't do it that way. And Convoy is a a a combination of influence from many different companies, actually. I wouldn't I wouldn't say just Amazon. There are a couple things we took from Amazon that we thought were really important, but we've

33:33 we've taken from a lot of experiences we've had. Convoy the original experience coming out of Amazon Was a lot of research. I wrote a document, but I wrote doc I wrote like I didn't think about it. I wrote like different forms of documents to s capture and structure my thoughts. But it was again.

33:48 I need to talk to a lot of people. Like let's find the problem. And I didn't really know exactly where the problem was gonna be. I was like logistics seems really interesting. And and and one of the things was You know, I kinda have this moment at Amazon where I was like, it looks like the supply chain just won. And the the feeling was okay. Um when online sho and I I told this story maybe once before, but not very often.

34:07 When online shopping started, you had to decide. Am I gonna go to the store and buy it? Last minute Which means I get to procrastinate, which people love to procrastinate. Or I have to buy it online five to seven days in advance before I need it, which means I can be lazy, but I can't procrastinate. So you have to be lazy or procrastinate. And that's like two really strong human conditions that people really want to do. And this goes back to my cognitive science and go.

34:30 Um people want those things, right? Yeah. And you had to decide. And then Amazon Prime comes out and all of a sudden it's two days. So all of a sudden I can Ordered online.

34:42 Be lazy. And I can be procrastinate in order to the last minute. And so what happened was People change their behaviour. You started waiting to order two days in advance if you're a prime customer because you could. And once you waited till two or three days left, you can't do it.

34:55 Where else are you gonna buy it? No one else delivers in that time frame. So the secret was being faster than everyone else and creating that rhythm. It wasn't about the exact two days. It's two days was faster than everybody, so you'd wait and then you would order because everybody procrastinates. So you always wait. So we would wait till last minute. Once that kicked in

35:11 massive in shift of business to Amazon, especially for Prime Customer, effectively a monopoly over like the the purchasing in that time frame. When I saw the data and kind of understood the impact of that, I was like wow, the supply chain just dominated. Like that is why People are shifting their behavior.

35:28 They can't see it, they can't touch it. It's not about the location of the store, the parking. It's about Two day delivery making me procrastinate and buy online from Amazon, right? Super powerful. All these other businesses started reacting to that. And and I was like, okay, I gotta figure out something in in supply chain. I talked to other investors in Seattle, Hadi Partovi was somebody I spent some time with early on, who who wanted me to kinda look into into

35:50 Trucking specifically in supply chain. I was looking at several parts of supply chain. I then took direction, started diving into supply chain the trucking aspect a lot more, and there are three or four interesting businesses and trucking I un I uncovered. But that was just through talking to people. Yeah. You know, just hustling and getting out there to truck stops and and and I think All of these threads of your background kinda come together here. with Cowboy. So even before you land on you know you talk to Hobby Hadi and you land on trucking within logistics and then the specific marketplace idea within trucking. One thing you guys did

36:20 Yeah. I never see any other companies do is you recruited your team before you at the company. So you and Grant Grantel you're co founder. Did you guys meet at Amazon? Grant w was on my team at Amazon, yeah. But you had five engineers that were part of your team even before you had landed on the idea for Convoy, right? D talk us through how you thought about that. I learned about this back when I was trying to get the job at Skydeck. I wasn't an I I I have a strong technical background, I and I know a lot about developing software now.

36:50 But I'm not a software engineer. And so I realized, at least in my perspective, and I and and some of the investors in here can can decide if this is right or wrong, but as a trying to get seed funding, what I learned and felt early on was You kinda have to check three boxes. You have to have you have to have an idea that they can at least understand and believe is compelling and believe it has the right dynamics that it could return on the you could return on the investment, right? can be that kind of an idea. The second is

37:18 You have to be a personality, an individual. that is compelling to them. Because and I think a big part of that is A, they wanna believe that you're gonna do the work, you're gonna hustle, you're gonna commit to it, you're gonna get it done, you're gonna be smart and thought about your approach. And you have to convince hundreds of other people over the next few years.

37:35 That what you're doing is worth it. Yeah. Cool, that I've heard you talk about this before. Many entrepreneurs can check boxes one and two. Exactly. I couldn't check box three of Building. Yeah. I couldn't build it myself. And I didn't believe that I could go outsource that to like a contractor to build my idea. I n I knew enough about the the ecosystem that I wasn't gonna be able to attract the investors that I wanted.

37:58 And the supporters, if I was that was my strategy for Development. So I'm like, I need to get the best engineers around the table, otherwise I might not be able to raise seed funding. And as much risk as I want to take and as you take doing a startup. I actually wanted to minimize my risk in getting this thing going. And so I what I did is I I had a sense of some of the ideas that I wanted.

38:18 I knew I needed a strong technical co founder who knew how to build a startup. So I spent time trying to find that person. And then that was Grant. Right. So Grant and I uh decided to do this. Then I went back to the team I'd worked with at Wavy, some of the people there, and some people I'd worked with in A at Amazon.

38:35 who are who some of them were there and some of them weren't there anymore. And I started just planting the seeds and the ideas, and I got a few of them to say I'll do it. And actually a few of them said I'll do it. Independent of the idea. Like there's two or three ideas.

38:48 Whichever one, let's do it. That's incredible. And so then I was like, Okay, now I'm pretty confident. And that was what I needed. Then I put together the pitch deck And said There were and we started kind of building it on the side.

38:59 We started Um setting up kind of the develop the development environment, getting deciding what we're gonna build, kind of building some of the the building blocks of actually getting an app developed, things like that, getting some of these things structured and organized, and started doing a bunch of research. And then that brought some of the engineers in. UW actually uh was where we started the company. Uh the table I've heard you talk about the table was the table here you died. You dub. Wow. So uh tech stars

39:24 has their office here at UW in the old law school library. And or you know that's where that's where it was. Uh, Chris DeVore let us sit at one of the tables. Actually, to go all the way back. So we started there, I guess I should say. Like that's where we actually kind of like Once we knew we were gonna do this.

39:38 We went there before that to be totally Seattle to give all the context like Maveron reached out to me and said, Hey, we heard you're gonna do this. We want to give you an office to work out of. And so I went down and worked at a Mavron for a while, and I knew some of the Mavron partners, and they were really they kind of gave me that access and let me kind of get my feet on the ground, give me a place to start working in some infrastructure.

39:57 So I did all my research there. And then I went to them and said, I'm sorry I'm doing a B to B idea. 'Cause they only invest to the consumer, yeah. And they're like oh, okay. And I was like, so I'm gonna you're out. I should probably leave. But I they were they were great. They were really supportive. And then Chris was like, well, you guys can just use one of our tables, because we're not using our tables, we're between classes. So we sat at the table in that in that library and was it was so perfect.

40:25 Because what ended up happening is we were in this fun, dynamic environment, a lot of energy in that room, a lot of people were You know We're coming in now and it had this great feeling, it had a start up feeling before we started. So I had three of the five at that point. They wanted to do it.

40:40 And what we did is we we just invited other people to come work with us. This is such a great thing. He's like, I'm going to start my own like Gaming. related thing. Yeah, yeah, yeah, yeah. And it was great. No, I mean the laugh at it, because I was like, great idea. Come work on it sitting next to us at this table. So he just started hanging out there. And then we just started adding people to this table.

41:05 And then we would kinda get to know them and then and then ultimately they we got some little attraction like oh this is interesting so we kind of recruited the the other two folks from there. Not everyone joined, you know, some people decided not to, and a lot of people weren't interested at the time. Um, but that was kinda how we got it going. And And that was the beginning. And then once we got funding, then we went and got our own spot. Be really clear like

41:28 The ecosystem in Seattle helped. Like we didn't have funding in those first two locations and they gave us a chance to kind of get our feet on the ground in a great environment, which was compelling. That's awesome. Did did it did the thought to you that like It yeah, it's gonna help us raise money, like yeah, it's gonna help me feel more confident about this enterprise I'm starting, but like Holy crap, we're we're hiring five engineers and we don't yet know like we're not not pre product market fit, like we haven't gotten any signal from customers that we're building anything remotely right. Uh that's true.

41:59 Well when you put it that way. Partially'cause I didn't know ex So I had I as I mentioned, I went out and talked to a lot of other brokers. I went out and talked to a lot of shippers. Yeah, you notoriously hungry. A lot of truck stops. A lot of truck stops. I did all that stuff. So and those were fun. I remember I've told this story, but You know. The first shipper I walked into I walked in.

42:23 Panics. asked where the bathroom was because they like gave me a warehouse bath went to the bathroom and left. Like I didn't know what to say. I was like, okay, that didn't work. So I went to my car. Maybe you're just not CEO material. The first truck stuff I went to, same kind of thing. I went in there and I I looked at all the people sitting at their you know having lunch. individually at each table by themselves. Everyone turns and looks at me when I walk in, I'm dressed not like a truck driver. And went back to my car and thought about it again. So I you know my clipboard and Starbucks gift cards were effective, but not in that moment. But I but I learned a lot in some of the companies along the way, what I found was most ideas I had ever had in my life, including the Location based services like Data Research One and maybe ten others. I had some really bad ideas.

43:06 All sorts of stuff. You know, this one actually Every time I shared it with somebody from the industry. They were excited about it and felt like it was necessary. So I got really strong positive feedback from the industry that I had never experienced before and I ever thought about something else.

43:21 So I didn't know, but I knew there was a problem. Like I was really sure there was a problem and people were hungry for something to be better. I didn't know how to solve it. And so that that was where we kinda started and we brought in um Those folks. The best part is

43:35 We did all this without ever incorporating. So we were just we like we knew that was important, but we were very much let's avoid the trappings of a startup. Let's just start building it. So we had the kind of maybe there's some legal reasons not to do that probably, but we had it we were like working out of these different offices. We were kind of getting people to sign up. To work with us, we built our you know, we built our pitch deck, we were out pitching investors. You know, we were working on the code with with folks part time at that at that time.

44:03 And then we started the company once someone told us they wanted to fund. And then we need a bank account. So we're like, oh we have to have a bank account that you can fund because I can't just give them my I use my phone number, my home address when we're first starting. Which was a bad idea. Really bad idea.

44:18 Um do you still get a lot of mail like for I get a lot of phone calls too. I need to change the phone number. um customer support when I pick up for truck drivers. Or they're looking next, someone's like, I didn't get paid yet. I'm like, Okay, I'm working on it. But yeah, so that was like that was the origin But it was really funny, so Drew Houston from Dropbox

44:39 Like everybody we we were gonna close and it was like over a day and he was like, Oh we gotta we gotta close. And I think that we we set we know our first bank out was Silicon Valley Bank. We realized we had to incorporate. So we got you know, we actually I remember it was like a month. He was gonna invest. Well, he was ready to wire like before everybody else. Like, can I wire?

45:00 I was like, oh, hold on, like we're having some bank issues. Let me get back to you. And and I remember Sorry, I didn't mean to throw you under the bus on that one. But um issues being we haven't reached out to them yet. Yeah, the air cover. Uh the issue being we haven't set up the account. Um But what we did is we uh We reached out to an attorney. I won't mention who it was, it was like on a Monday. And they were like, Great, we'll do it. And it was I had an attorney that I knew pretty well, but my co founder did reach had reached out.

45:28 And he was taking care of that. So I didn't even thought about it was we were running so fast that week. And and I was like, Oh who'd you reach out to and told me he's like, Okay, sounds good, let's get this started and set up. And then the person just didn't call us back for like they were just a little bit. quiet for like two days and and we called them like Oh yeah I'm on it I'm on it I took you know like no you said you would do it tomorrow. Okay, we're done. Like Two day contract, we're not working anymore.

45:46 I called um uh someone I'd worked with actually at Wave Veneque from Oric. who was the only attorney I'd ever worked with in this context, who I really liked. And he got it turned around like twenty-four hours, and then we opened a bank account and got our money. I think the learning from that is like don't worry about getting all the trappings of the start up, I would say. on paper designate that there's the startup.

46:08 Just spend all your energy on Is this the right business? Right. Because none of that stuff really matters unless you have the right business. Right. The startup isn't the legal entity in the payroll system and the I IP assignment, like it's having a thing that exists in the world that didn't exist before that customers want. That someone's interested in or that someone's willing to fund to figure out if people will be interested in it. Yeah. This business that you're triangulating on that becomes convoy. of a marketplace of

46:35 Chuckers. And shippers. How did you get the initial liquidity for this to happen, right? Because like it's one thing to say, like, Oh hey, join my marketplace as a shipper, you can ship stuff and it'll be great and I promise I'll get there on time and you've got one trucker that's like a hundred miles away. How did you like bootstrap this? Yeah. And there are people I think there are few people in the audience that have more long term firsthand knowledge of this than I do even. So the way we originally bootstrapped it was

47:03 Well we made a mistake. We thought truck drivers would be compelled by our amazing vision. You know, we thought the the great like design of our app and the vision of our ability to help them would compel them to download and use our app. We worked really fast. So we raised Money in May.

47:23 And then we raised again in July our seed round. And then we launch at the end of August. How much did you raise in May and July? I think it was like a million in May, a million in May and like a million and half in July, something like that. Okay. We built the app.

47:36 Just for Android initially. A web expérience And a pricing model and match model. And then we went to market. So it's the basic bare bones, right, of an experience.

47:46 And we took this app and we went and showed a bunch of truck drivers. I remember going to bun back to the truck stops and and completely safe about this, but everybody in the company when they saw a truck Would take a picture of the side of the truck and put it on a slack channel. So we like this slack channel the side of trucks, because everybody has their like MC number and DOT number and look up who are these local truck drivers. All these smokers. We didn't like even know where to find them, even though there are online directories we discovered later, and there's lots of there are way more efficient ways to do this. Like driving down the road, taking pictures of trucks you're driving by, and then posting to Slack.

48:19 is not safe but we felt like it was important. So we like literally just went to like warehouses and just took pictures of trucks coming in and out. Or truck stops. Just we didn't and we were just talking to people and so we we developed this local network of maybe, you know Some trucks to call and then we just went trucks and asked them, and nobody was interested. We completely bombed. And I think it's and this was a big part of the we meant I meant to cover earlier, but a huge part of the thesis, I imagine, as you're building up this business plan to use it. Well the truck drivers use it, but but truck drivers have smartphones now. Like these are the days when you know this is twenty fifteen.

48:53 Everybody has a smartphone. Truck drivers, they were never going to touch software. They were never going to install a desktop in their trucks. But now they have a smartphone. They have a computer. They were just getting smartphones then. Yeah. Right then. They're thinking about Which completely rightfully so. I want to get some work. We were realizing brokers are not

49:11 Love, hate relationship. I also heard that from truck drivers about brokers, right? There are a lot of Kind of shady fly by night brokers. There are a lot of very respectable, great ones, but people like here's the thing that'll happen. This is you know happen. Someone will create a brokerage. They will go to a shipper. And say, hey, I'm a broker. I can do your work for you. The shipper says, Great.

49:29 Here are these 25 loads to do. And is it hard to get a broker's license? Like is this is this a big hurdle or something. Any single person. This is why there's a million. You can go get a broker's license. And they're you know most brokers are totally legitimate and do a great job. But sometimes a broker will do this. They'll go get work. From a shipper.

49:50 Maybe the super pays is gonna pay them for twenty loads, right? Twenty grand in total revenue. They go get trucks to do the job. The trucks complete the job, the shipper pays the broker, the broker disappears. Right, never pays the truck drivers. That that happens. And or they don't pay them what they're deserved. So the the whole idea of this middleman that kind of controls payments on both sides. And it's kind of

50:09 It's a zero sum game where they're trying to pay the bro the carrier as little as possible to make the maximum spread on every job. The truck drivers don't always love that, right? So coming in as a new broker. Well, and that's the that's the worst case scenario. But even in a good scenario, you're an individual broker. You're a human, right? You're thinking, how many trucks do I know? How many shippers do I know? You're trying to coordinate those trucks. And then you've got the payment issue, right? Like you're getting paid by the shippers. But you're not getting that money right away. And then the truck driver like He or she is driving the load, right? And then they're like, Well I just worked. I need my money. I need to get paid. And the broker is like, Well, I haven't gotten paid yet. Exactly. That also happens. So there's a lot of discrepancies around how much how much you actually want to pay them. It's complicated. So basically that's a situation where the truck driver doesn't always trust the broker. A brand new broker on the scene that says they have this app that's magically going to give you freight when you open it is not fully believable by someone who

51:00 who is used to load boards which are effectively Craigslist and brokers say I have a load The broker doesn't actually have the load. They just post it, so truck drivers will call them and say, Yeah, I want the load. Oh great, how much are you willing to do it for? Eight hundred bucks. Oh great, hold on let me just double check to make sure it's still available. Hey shipper, I can do it for nine fifty. Right? Like'cause they don't have the load yet. So they're kinda playing both sides. This is this is this happens, and so then

51:23 Truck drivers don't always assume that when they see a load post on these traditional loadboards that it's a real load. Could be a phant, right? So that's the environment you're walking into. You're we're discovering this, we realize the truck drivers don't fully trust this notion. We're brand new, our MC number, our our official like motor carrier numbers of brokers a day old. So like who are you? So It was hard to get them on.

51:43 So what happened was nobody would go on. And then we said, okay, we realize that tactics, the flywheel will not start spinning if we start with supply. And the orthodoxy is your building marketplace gotta start with supply. That's right. Exactly. So and we're like you got the supply ready for the demand. Because Uber's model was they had to have a tr a car ready because you're gonna need the car in five minutes, right?

52:01 What we realized was We could get a f freight from the shipper. And it doesn't pick up for twenty four to forty-eight hours. Maybe seventy two hours. So the what we actually figured out was the best way to build the flywheel was not to go start with supply.

52:15 It was to get demand. Take each individual shipment. go to the supply and say I have a shipment for you Do you want it? Yes, real shipment I'm in.

52:26 Great, it's waiting for you in the app. So then you go from a zero percent conversion to like ninety-five percent conversion, where if the truck driver wants that job, they're gonna download the app to get it, right? And so that ended up flipping it. And making it Go fast. So then what the secret sauce the success factor for Convoy Was about how rapidly we could onboard and

52:44 And um evaluate a new carrier. So speed of carrier onboarding became the most important thing because effectively the clock's ticking once you take the job from the shipper, you we had to go get a new carrier into our platform, sign them up, train them to use the app, get them to download it, do the paperwork. You know, get them to sign our agreement. And do the job in twenty four to four hours. That became the like secret sauce for building the brokerage. And that's how we got the flywheel going. Well, I think that's what's so cool about you guys and these B2B marketplaces is again, you think about the consumer driven companies, it's about how can I satisfy the product need of the consumer as quickly as possible. In these B to B marketplaces it's about money. It's like

53:21 I have money, like I have a job. And I will get you the money as soon as possible. Like that can drive and so the other thing that you guys did pretty w it was pretty early on, right? Is you instituted we will pay you within a day of delivering the load, right? That's right. How did you make that happen? So that idea came out of um Again, the flywheel Works in our world not only do you need the driver to do the job.

53:42 They need to download the app and use the app. And so a lot of work has gone in to make that app as simple as possible. But we need them to use it. And one of the best ways to get them to use it was to say If you use it throughout the job and you upload the

53:56 Paperwork to the app. Then we can pay you really fast. And so it created an incentive for them to use the technology. Yeah. Which then reduced our costs and gave us the data we needed to run our business.

54:08 So effectively If I could pay the carrier thirty days before they're used to getting paid. The cost for me to s to finance that. І зала лес

54:18 Then the benefit that I get. From a carrier using my technology platform from The data that I collect The operational efficiencies that come from that, the visibility, and the network that I built. And so that was uh effectively a cost of growing the network faster. There's this interesting sort of famous venture capital question that is why now?

54:37 You know, why people have tried this business before, people specifically have tried building a digital freight brokerage before. And so why now? And it is such a clear and present answer of of course smartphones came out in 2007, but like the broad adoption by everyone who drives a truck wasn't until the twenty fourteen, twenty fifteen era. And once that happened, Not only could you get them to upload the stuff, but like you could passively collect location data and just know like, hey, where are the loads? Like do I don't have to we don't have to have people calling and saying like has it gotten there yet? Like you just know. That's right. Yeah. Yeah. And that's why it's important that they use the app. And I think that's what's cool. But that it's not enough. You're just like, Oh, all the pieces are there. There are companies out there that are like basically installing smartphone guts on trailers at this point, right? Like you can sell software and try to be like oh yeah, like it's better, like the industry should do this. Or you could you could You know, create incentives like you guys did to make it economically better for participants in the ecosystem to do that. And the way you do that is you actually create a full stack company. Yeah, exactly. That was the You could build software.

55:40 And we could have s built this software and sold it to brokerages. We kind of And there were two brias we didn't do that. One is We really wanted to do something transformative. And it's very hard to change an industry by selling a software product to the person running the industry.

55:58 Maybe that will drive their behavior, but it's probably not gonna really drive massive behavior change and they're gonna dictate what they want from you. So you'll kinda build to their expectations and needs they ultimately own it. The the analogy is those flywheel apps in taxis. You know, like that that wasn't what took over the world. Yeah, that's right.

56:16 Um And we wanted to be in that position. We wanted to be the principal in the transaction. We want to have the relationship with both sides. So we could not only improve the efficiency of the marketplace We could go upstream. into each of their businesses and solve their problems.

56:30 Because ultimately that leads to a bigger total business opportunity. And we don't think this ends with truckload freight. Right. We're we're thinking now about it. We've already built a transportation management system, a TMS software solution for medium care medium shippers to use. that they can run all of their freight on. So they can actually book their loads on Convoy and book their loads on any other trucking company via Convoy's platform. And that starts to give us a bunch of other minutes. We can do the same thing on this side. So you can build out and out by owning that relationship. And that's free, right? That trucking management system software? Yeah. It's free for medium ship and for medium and small shipers. So that serves as your top of funnel for the the shipper side where, hey, you may not be using Convoy today in the traditional way that everyone else uses it. Here's some free software, you know, it'll provide all these benefits to you. Is that how you think about that?

57:15 Yes, it's it's it's still early, but there are a lot of actually larger companies using it too. We have companies you know doing fifteen, twenty thousand loads a year. That are using it. Uh this is It it could move in that direction at some point. That would be um effectively really creating like a marketplace for other brokers as well.

57:35 Today we're not doing that. That TMS, it's a shipper. It's a shipper. It's a company that's shipping freight, right? A company that's actually purchasing the shipping service. All right listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is uh no longer the hard part.

58:00 Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like the risks Are real. Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why Service Now built the AI control tower. Yep, AI control tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with

58:32 Any AI, not just theirs. Every device on your network, every permission across every system. Every AI agent visible and secure in one place. And ServiceNow can do this because they've spent more than twenty years building the operational backbone of the enterprise, the workflows, governance, approval, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security. ServiceNow already runs more than a hundred billion workflows annually and trillions of transactions for more than eighty five percent of the Fortune five hundred. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

59:14 And in a future, that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is Who's managing them all? So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale. Go check out service now.com slash acquired and tell'em that Ben and David sent you. Alright, so Dan, I want to take us in a little bit of a a different direction and kinda um not catch us up all the way to today, but um talk about some of these milestones in the company. Convoy has grown absurdly fast.

59:44 Like in revenue, in fundraising, and headcount, and every observable metric, like it is outpacing the the traditional startup. I mean what you're four and a half years in. So can you talk about some of the points where you made the decision to put the foot on the gas And Sorry for that.

1:00:01 Anyway how you made those decisions, the tradeoffs involved in making those decisions. It just fascinates me that it is so Aggressive. You know, I think from the very beginning of the company we believed that speed was a feature of a company.

1:00:17 Like there's a we ha we've thought a lot about our values, who we want to be as a company. Um you know, how do you create foundational values that lead to the experience you want to have as a business and Speed was always one of them. Um we believe that as you said, two tausent fourteen, tausin fifteen was when truck drivers. Started getting smartphones.

1:00:36 And prior to that, this isn't possible. Because you can't mail a truck driver a piece of hardware that they're gonna install in their cab four states away when the job picks up in a day or two, right? It's just not a feasible thing. When we felt like the window opened.

1:00:50 We realized it was a really c good idea. There were other people looking at the space. And we wanted to move really quickly. So we did decide early on that this was going to be a feature of the company and we were going to try to push ourselves. So in year one, I mean I'll just walk you through the year one time frame, which was very fast. We uh you know started hacking on it in march. Incorporated the company April first.

1:01:11 Not on purpose, but like it's it's been fun. Uh there's a couple things that we've now built around that. We again, you know, raised raise the money in kind of April, this time frame in kind of July, I think a little bit. And then um So I guess we would have been April and we incorporated, we raised money. And then we built it like I said, launched it in in in August. uh in a private kind of beta environment with twenty or thirty customers.

1:01:31 um announced to the world in October and then raised our our series A in November. and closing in December. So it's very fast first year. And that series A was a sixteen million dollar round from Greylock. That's correct. Which now like oh sixteen dollar series A seems reasonable. That was like very large. And very fast. We need a line around the capital that will allow us to go fast because We we felt like it we've seen so many of these markets. And this was also in the earlier days of many of these shared economy and like

1:02:02 And like other sort of ride sharing type services where People saw how speed mattered and the first mover was able to get in a very advantageous position. It's not exactly the same in B2B and in this in in in hindsight, but at the time we're like, no, we don't we're not sure, but we need to go fast. We don't want to find out too late that this speed was really important. So We built that. We built it quickly and we we

1:02:23 determined that was gonna be a big factor. And is that'cause you thought okay, competitors are gonna see this. Yeah, these opportunities don't come along very often. A technology changed. That unlocked

1:02:39 The potential to build this business. Um and drivers adopted that at this time. So there are really it was a it was an open window for this massive business to be disrupted. There have been a lot of companies, Coyote Logistics is a very innovative company that came along in two thousand six ish. Several others have attempted to do innovative things as well. They just didn't have the smartphone. And it turns out with a transportation service and location where location is so critical. You couldn't completely disrupt it without that.

1:03:06 And so that was why we're like hey, speed's gonna matter. So we really worked really hard. It made it one of our values is always have a sense of urgency. We made a bunch of decisions along the way to do that, even in the code. If one of our engineers was gonna build something and was gonna do it in a relatively hacky, unsustainable way, but it was for speed early. They would comment it out with CTFU. Which was

1:03:26 Catch the F up. Wh which was the way we thought about it. Like we're we just said we're behind. We don't know who we're behind right now, but we're thinking we're we assume we're behind. Let's go fast. We we wanted to do that and in hindsight I think it was the right call. We were able to kind of help design the industry in the category. were of the independent startups

1:03:45 I would say the most notable brand. We were able to have uh more options when it came to fundraising'cause uh there weren't others that it were ahead of us that had already raised from from these investors. And we were able to build a strong brand and relationship with shippers, carriers, ecosystem partners, the industry, et cetera. Well right now

1:04:03 I still think we're a long way away from you know from success. But we have the opportunity now. to be the company that really disrupts this. And we wouldn't have had that if we would have gone slower. Now we need it like now it's really important. You can't keep the same uh mindset for ever you have to shift and evolve based on

1:04:22 the conditions of the business and the environment you're in. But that was the right mindset for the environment we were in, the business we were going after for those first four years. that first few milestones. Give us some more along the lifetime of the company, whatever you're willing to share, whether it's employees or customers or revenue or whatever, but like help us understand sort of the exponential nature of those next few years. For the first like I think eight quarters or so, we were doubling volume every or every quarter approximately. And that's like GMV, like the amount of number of shipments we were doing. We looked at it as shipments. Shipments. Number of loads.

1:04:53 That was Probably not exactly that, but it was we we doubled for quite a while. I mean we're not doing that right now. It's sort of we reached the size where that's very that'd be very, very difficult. Yeah, but we've grown, we've more than doubled uh over the last couple of years, each year. And so that has been very aggressive and It's challenging because as you if you're you're trying to grow your business at that scale.

1:05:13 And you're trying to maintain your culture and your identity, and you're trying to hire efficiently and maintain the same kind of bar. It's very difficult to do at that at that speed. And and I've just said this before, but I I you know it feels like we're A four year old that looks like an eight year old. Um because the outside world often looks at us

1:05:31 And people that join from other companies is then like, well, you're this company that has a pretty notable name now, you've raised a lot of money, you've grown to be pretty significant, you have a national presence, you have all these big customers relying on you. You know, we're the biggest trucking company for s several name brand, you know, Fortune 100 companies now in the in the country. So we've really gone to way beyond niche. But internally we're four years old. And so to build this in four years in the infrastructure and the systems, they're just not all there. And sometimes we I think we hold ourselves to a an unreasonable bar in that respect, and I actually encourage our team sometimes to

1:06:02 to not ex not even push us to get there. Like you actually want to be sometimes a little bit less developed'cause you can m move faster and be more flexible. You don't want to look like Uh. 10-year-old company when you're four years old. You want to be four years old. And so that's that's something that's really important. There's two, I think, really important strategic decisions in this.

1:06:22 That feed into this mindset of grow and scale fast. that I want to ask you about. The first one is Back in the early days in the seed round leading up to the series A, you were operating only in one corridor, right? One product one type of trucking in one corridor in the Pacific Northwest, right? Whatever trucking we could get.

1:06:44 Yeah, exactly. We weren't sure exactly which category to just we were taking several different Because there are a bunch of categories in trucking of different types of loads. And then there's also geography. And then you guys had to make a a decision about scaling. It was kinda like, you know, if you use the analogy of like a like a consumer marketplace like a Yelp or an Uber, you had like one city that was working. And then there's the canonical question of like well What do you do next? Do you expand nationwide? Do you go to uh one other city? Do you do another? And like for you guys, I think the question was, do we expand to other types of products of trucking or do we expand nationwide? And you eventually made the decision to expand nationwide, right? Pretty pretty early. How did you think through that? Because it wasn't obvious, right? You could say like expand nationwide, but now means we need to have supply nationwide of all these trucks and we can need to serve our shippers really, really well. How did you do that so quickly?

1:07:35 So It's it's the marketplace works on a lane level. So a lane is either a metro we call a lane in our world is either a metro. It's like this the greater Seattle area. where a shipment would pick up and drop off in the same location the driver's home that night.

1:07:49 Or it's a point to point. Seattle to Sacramento, Sacramento to Phoenix, for example. And so the marketplace develops at that level. And one of the challenges we we encountered early on was we kinda had to decide are we going to be super local focused? And there's a category factor that's very local. They actually don't drive more than a couple hundred miles in one direction because they want to get home every night.

1:08:11 And so we could have focused specifically on local. And we did that for a while. Then we started realizing that You know, most of the dollars, most of the companies that are Really in need of help?

1:08:23 have more complicated supply chains than just shipping locally. So some of the shippers that we were working with locally are like this is helpful But what's really painful for me are these shipments I have that go between different geographies. And I need your help there. And we start talking to some bigger companies and they're like, well, I really need your help in this part of the country or on these lanes, right?

1:08:42 And so it was important to be very disciplined about what we did and didn't do early on. But we kind of let the customer lead us a little bit early to understand what the opportunity was. And as soon as you start thinking about we're gonna support this lane, now you need a truck driver that's willing to drive a little bit further outside of that local area. And when the truck drivers in that next location, if you want to think about how you keep them engaged with your platform, well you might need another job for them. Otherwise they're gonna exit your platform and

1:09:07 They're gonna get to St. Louis and they're gonna be like, All right, I'm gonna go back to my traditional broker. San Francisco or you know, Oakland or something from Seattle. And so you know, we did local for a while, but we started to have opportunities outside of that and we realized We We had to kinda have a controlled slide. So we couldn't just go national at first, but we had to really think about corridors.

1:09:26 And parts of the country where we could develop that flywheel. Um but you had once you went beyond local, you had a national network effect, right? Because these truckers, once you went beyond local, they were the carriers. They they operate nationally, right? So like you winning a bunch of carriers helps you with shippers in St. Louis and helps you as shippers in Boston, and helps you as shippers in big carriers operate locally, but if you're bringing on these three to five truck carriers, do they operate I'm sorry, nationally like that?

1:09:58 All of them do all of those things. But like all of them do all those things. So there's regional carriers too. Maybe they're out for a week. Right. Yeah. And so you can kinda start focusing on that. So you're you're right. What we had to do was say we're not gonna have no leak, we're gonna have some leakage. Like a carrier will come into our network. And maybe they'll leave the high five corridor? And that's okay, we're not gonna chase them, we're not gonna go develop those other markets. Enough of them will stay there.

1:10:20 We can't do supply and demand n nationally at the same time. So we we focused on the North West. And then we actually went kind of some west coast. And then we went to Texas, there's a story around that where Unilever reached out and said, Hey, we're doing this um pilot with some of the new companies and you guys just announced yourselves. We were about to start with these other two. Do you guys want to try it too?

1:10:42 And I remember that. That's an amazing thing for a startup to get. Yes, I was I was really confused as to why they called us. And I remember uh I was sitting across from this guy named Lauren Seeks, who's been at Convoy from the beginning. I remember just literally doing a Hail Mary Pass in the room. I was like, Okay, here we go. And I was like, I'm gonna say it. And so I didn't know what to say to the to to Unilever, because I was like, Well, I I think I said something like We would be willing to work with you guys, but we need all your freight on the West Coast. Whoa.

1:11:16 Just because I was like, I don't know. You got nothing to lose. Like I think I was probably half serious, but they like could not even rationally believe I may have been serious. So they just laughed and thought it was funny. Um and then I was like, ah I like

1:11:33 Yeah, that's where where do you guys want us? But like really? But okay. And so I was still learning at that point. And they said, okay, we'll just we'll get back to a location, but maybe it'll be California, maybe it'll be Texas. And they ultimately asked us to start off in Texas. Okay, this is interesting. Texas is a very heavy local freight market. So it kinda fit our Mmo a little bit. And we went down there and we started with them in Texas. And we told them we're only going to do local.

1:12:02 Hm. So one of the hard things we had to do, and this is very important again for a startup, know who you want to be in your and how to sequence. We said We're only gonna do Dry van at the time it was only flatbed and dry van. But we really were only doing drive in. So for them, we're only going to do drive in shipments.

1:12:18 We're only gonna do local drive end shipments. And we're only gonna do shipments that are not like That are within this time frame. Like you have to give us this much notice. And we kinda said if you want to work with us. We're not gonna extend ourselves into something we don't know how to do yet.

1:12:30 And we're building this network and the way we thought about our network, someone very you know wise early on said, built when you're building a marketplace or network You want every single piece of demand that comes in that marketplace to apply to all of your supply. Like the ideal world is that every demand opportunity could be serviced by all of your supply.

1:12:47 That is the least fragmented marketplace. So you will in the most quick the the fast manner possible reach liquidity in that marketplace. So we looked at it and said, What are all the dimensions that split supply? And because you have carriers that are local, regional, and long haul, Those are different.

1:13:03 There's some bleed over between regional, local, and regional and long haul, but effectively those are different. Carrier segments. And because you have different equipment types, so we said to to to Unilever and others, we're only gonna operate in this bucket. You draw the buckets up there burning through this, and we can't break that because if we do We won't be able to give you the experience you're looking for.

1:13:21 And every other broker in the country goes to them and says, I can handle you nationwide tomorrow. Because what they're doing is picking up the phone and calling a bunch of trucking companies And not requiring them to use technology, not having to build a network just saying will you do the job. Whereas we required We had to get the driver to use the tech. And to build this flywheel and try to have this automated matching. So we had to really concentrate early on. That was a very important lesson and not.

1:13:43 Going to broad. All right, so one more scale question that I have for you, or scaling question, then I promise I'm done. So we're in this interesting time in in startups in the capital ecosystem where people are starting to to favor unit economics over growth. And I'm curious your perspective on that general transition, but As it applies to to convoy, I'm curious about over the last four years, what are the ways that what are the ways in which you've said, okay, this is a good time to give on unit economics so that we can grow, and what levers did you use to do that? So the the two probably prominent

1:14:19 We have a a customer. That customer wants to ramp In a time frame that we could not reasonably do. with the support services that we have today.

1:14:31 Афови. We have to expand the team, like all dimensions of the team, could be building capacity with truck drivers, could be providing customer service, could be account management. We have to scale those. Faster and ahead of the growth. And train and get the people into the company.

1:14:46 And ensure that we offer Like an A plus level of service. We're a tech broker from Seattle with a very little very short track record. If someone's gonna make a bet on us. They're looking for us to fail on the non-technical aspects like service and support and really making sure it works end to end and provide that account management and the support, right? So we need to be great at that. Because they're gonna assume that's gonna be our weak spot. So one was overinvesting, I would say, or investing heavily in that at different periods, and when things started to

1:15:13 Like like crack we might grow too fast in roads, we're not doing that, slow it down and then reinvest in that. That was one. Mm-hmm. The second is Developing the flywheel. And the way freight works is there's no such thing as the price of the the there's no known price of the truck.

1:15:29 So for a job from Seattle to Portland. You might have one truck that's willing to do that job tomorrow for four hundred dollars and one truck that's willing to do it for nine hundred dollars. Yeah. May maybe even less and and more. for very different reasons. One really doesn't want to do it, one really wants to do it.

1:15:44 So the market's kind of made every day. If I take five shipment today. And I have five trucks in my network already. I can probably service all those shipments. With the right economics.

1:15:56 And pretty efficiently because I already have the trucks in my network. But if I wanna grow my network, I'm gonna say to the shipper, give me ten. I only have five trucks. I need to go get five more trucks that are less conveniently located that I don't know yet, and I'm probably gonna have to pay more to get them on my platform.

1:16:11 But that's the way to get them on the platform. And so In order to drive density into our lanes and build the marketplace. We would bring on more demand that we had supply to cover. And then use that demand to bring in more supply in a in each of those. So again, it's the reverse of the traditional marketplace, like, oh, you're going to invest like let's onboard a bunch of supply, and then when the demand you know, we'll run add words for the demand. For you guys, you're like, let's use sales to onboard a bunch of demand.

1:16:37 And then that'll attract the supply. That's right. And there's you know there's different balances as the as the the market shifts back and forth. But so we w in those shipments, for example, we would not have great unit economics. But it's actually the number. It's ironic. Th it's like not you don't get a bulk discount in trucking, you get like a bulk surplus. Cause the more jobs you take. Any broker The more jobs they take on a given lane on a given day. spends more per average to cover them.

1:17:01 Because you're buying a variable cost product that goes up with the no the amount you use. If you have ten trucks Those trucks are gonna be imagine those trucks in order from the cheapest to most expensive. Yeah. Oh. You're gonna try to get the cheapest truck first. So if I take one job And I get the cheapest truck in my network for that job. I have covered it at the maximum spread, but every additional job I take, the next best truck would be less efficient for that job. It's effectively a worse and worse product market fit for that individual truck. For the individual truck driver in that moment for that shipment.

1:17:29 But that's how you build supply. And then once you get enough, then you have a healthy ecosystem where you have a lot of trucks, you get the data to where they are. You can then start to efficiently match a job to a truck. better than the traditional industry player can who's just calling around. And so that's the investment you make in building this. Right. There's a dozen other things, but that's One of the investments we made So you could you could sacrifice unit economics for a long time to make sure you have like

1:17:52 Tons and tons of carriers, truckers that are constantly using the app, tons and tons of shippers that trust you all the time so that at some point in the near future where you're like, look, the spread between that one truck and that one shipment that has amazing unit economics for us and finding that place where it's really expensive for us and we don't make much of a margin, if anything at all, it just keeps pushing that further and further out because there's much more liquidity on the platform. And there's a lot of um obviously there's a lot of nuance behind that, but that's effectively how it works.

1:18:25 And you know we're making a bunch of other investments. We have a big product, data science engineering team, we have all these other functions that we're building to kind of build the brand and the technology and the infrastructure in parallel with the business. And those are all upfront investments where you kind of They they give you they can help in terms of your growth. But fundamentally that's those are the primary drivers.

1:18:43 Making sure you do a great job for your customer. It's worth investing early on when you're building a reputation and your brand in a traditional industry as an outsider. Screwing that up early. Yeah. And then being able to grow your flywheel and and and building density on your lanes.

1:19:01 It's very important for And we have all the data now that shows when you do that, here's what happens. Like the world looks better. So we can justify those those investments. Thank you. Okay.

1:19:13 David. Do you want to move right into tech themes? Do we want to like catch us up to today in some capacity? Today. Where would you say you guys rank in terms of Brokerages within

1:19:26 the industry, uh to obviously you're a tech enabled brokerage, but give us a sense of scale for where you're at within the industry and how penetrated you guys think you are thus far. We're still a fraction of the total trucking market. The truckload market is, you know about six hundred billion dollars a year. in the US.

1:19:44 And that includes private fleets and for hire, but we're kind of we can compete with all that. The largest broker in the country. Largest truckload kind of freight brokerage is doing about ten billion dollars a year. And then there's another

1:19:56 five to ten that are between three, maybe two two, three, and ten billion dollars. So that's the ecosystem of pure brokers. There's a lot of large carriers that also run brokerages. We would probably be in about the top twenty. Yeah, top top

1:20:11 Maybe fifteen. Well. Uh we're we're pretty significant in the point. And all these other companies are. Decades old. Yeah. Cool.

1:20:21 For folks who are new to the show, we do a section after this history and facts called What Would Happened Otherwise, where if this is a traditional acquired episode and we're talking about a transaction that happened, it's usually What If that transaction didn't happen? What if Big Co didn't buy Little Co? I think it's interesting here to dive in a little bit of like, what if you guys grew at a like normal startup pace? And like

1:20:43 w where you would be today, uh what if that risk didn't pay off? You told us a lot about it, but the way that I would kind of describe it is like Number one, there's numerous people who could have beat you to the punch on having a whole bunch of supply and a whole bunch of demand truckers and and shippers. I'm curious if there's like a data moat here beyond just the marketplace liquidity. Like have you by sort of rushing into this and being an early player, w what other things has it allowed you to do that otherwise if if you were, you know, say three hundred people today or something and able to service the amount of of volume on your platform that that that amount would give you, then you know, what what would you be giving up?

1:21:23 Let's say that we had grown slower. We hadn't really gone national. We wouldn't have a chance to write the story. About what's gonna happen. And the reason is that you can't really

1:21:33 It's you we wouldn't be able to define the future unless the major players in the industry View us very credibly and were using our service. So the largest shippers in the country, many of them are now using convoy. A lot of the biggest ecosystem partners the events and sort of influencers within the industry.

1:21:51 are looking to convoy for What's the future? And we're we're kind of defining it. Like we're creating a category, digital freight network, we're describing what that is, we're telling that story. And I think that Like you had to make a bet to be in a position.

1:22:06 Where you were at scale, you mattered in the industry. And you were one of the first to do that. If you're not one of the first. No one's gonna uh look to you for the story o about what's happening. And so it's it's it's a lot harder for the folks that are a few. Below

1:22:21 to influence what's going on. And in a big way, these sales they're you know, you're making sales on both sides. You're you're selling the shippers on your platform, you're selling the the truckers on, you know, being a part of it. on taking the loads like There's an im immense amount of trust there. Like you you're convincing them ahead of actually demonstrating value. So it's sort of like you need to you need to have you need to be buzzy in this particular instance because you need them to to be very receptive to working with you.

1:22:49 That's right. And we were again, you know When we first started I remember going to a dinner with a bunch of traditional industry trucking companies. And I have a lot of respect for the companies that are doing this a very, very difficult industry. It's a hard job being a truck driver is hard, running a trucking business is hard.

1:23:05 It's a thin margin complicated business. And uh it's hard to differentiate and and do it as a as a traditional broker or carrier. But there was definitely a sense early on of Yeah, convoy's doing this, but it's not really different, and no one's gonna really take it that seriously. And I remember early on um being told

1:23:21 by our customers and by analysts in the industry that our competitors were basically saying, you know, Convoy just gets the freight that nobody else wants. Yeah, picking up some of the scraps out there. And you know, I remember hearing you know, sitting and listening in and people didn't necessarily know I was there. Computers don't match freight, you know, people match freight. It just doesn't happen. Ironically, computers matching freight is like an amazing use of computers. It's a very good use of computers.

1:23:48 And again I don't I I don't think that they didn't recognize it was coming, but it's it's sort of what you want to say because it's the right thing and they don't have it yet. And there are some just really big challenge for them to get there. So I think You know, being in the position

1:24:02 when we were gave us a chance to Write the rules a little bit and be the first to come up with some of the models, like the free quick pay model, the guaranteed detention model. The idea of providing data and insights back to your customer. So collecting data about what's happening

1:24:19 Every time a truck shows up at a location, when did they show up? How long did they wait? How long did it take to get loaded? How did they rate the facility? What was their experience? That particular shipment, how is it tendered to us? We can correlate data across all these experiences and go back to our customers and say, You know, this particular facility is underperforming other facilities in the region from your competitors that are competing for trucks. And this facility

1:24:40 in this city is is doing better during this shift than that. Mm-hmm. Right. And you should be changing your tendering practices because when you tender in the morning, the trucks are more expensive. They've never had data like this before. No one's done that. So we kind of started that. And we've we've started a lot of things, and the idea of a an instant price. You can instantly get a price that is committed to and you can see what capacity is through an API. Right. It's not gonna get haggled on the phone like this is the price. So sort of

1:25:04 you know, you start to get to say this is what the future should look like, and that's one of the advantages of being early. And you know, others can quickly mimic that. And we haven't invented all of the things, but actually we have been Very inventive. We've been the leader in in new

1:25:18 Design. And I think it it gives us a chance But you know, our shippers and and folks that are making kind of the the call in the industry and and and influence is matters, like perception is reality in in a lot of these things, where if you're at a conference and the conference organizers or a a a famous freight analyst or a you know a a transition analyst from a big bank gets up and says, you know, we really think digital freight works are the future for this reason. That starts to Make it kind of a reality, right? It becomes a self-filling prophecy because then all the shippers are like, Oh, well, then we should probably start buying into this. You need that perception of momentum early on.

1:25:49 And if you don't go fast and you don't get there quickly You don't really get to contribute to that as much. Yeah. And and David, we're full blown in playbook now, but this is like totally one of mine is like in startups. I in a lot of ways perception is reality with with the market, with your customers. I think I've said this on the show before, but one of the best definitions of a startup is from uh one of my my colleagues at Piner Square Labs, Mike Galgon. He pointed out to me that A startup is very frequently just like

1:26:14 getting and and scrapping and biting to something that it doesn't yet deserve, whether it's a hire, whether it's a customer, you know revenue. Like you're you're not there yet. But like you're really trying to Create the perception that you're there. It's this interesting self fulfilling prophecy flywheel of like Once you actually do get that resource and that person joins your team, that customer commits to you, then like you kinda are there. And then you can leverage that to the next rung. And it I mean it sounds like y you guys have codified this in the the convoy flywheel, but like that that is the business for you guys. And it is every decision you make.

1:26:47 Early on You're talking about a job. And like, well I don't know if it's gonna work. Should I join? I'm like I don't know, like if you join, you're half the company. So like it'll be up to you. Like when it's not like you're joining a thing that has a jiu jitsu. Right, I mean and and it was hard to hire early on.

1:27:05 Like convincing someone to leave a job that the Except for the five people that followed you independent of whatever your idea was. That's right. I mean that was you know, we've talked about some of the scope, but you're right. But that's also that was hard. That was trust built up over years. Totally. Right. I remember trying to convince a lot of people to join Convoy. It was interesting, we had used the

1:27:25 In any tactic in the tactic of like well, you get to build this and all these different things. But but the economy was has been doing really well. So a lot of big companies have also had very strong stock value appreciation over the last ten years. And so oftentimes the pitch that the startup has is like, you know, that we're gonna have we'll have faster appreciation. But when Amazon is doubling our thing for you know every year, then it's like That's like a message. Your stock price has to appreciate faster than Amazon's stock price. Yes, it definitely has, but that's cooled off, too. So like but during certain phases it gets harder and easier based on how well the alternative is growing. And I remember talking to somebody that I was trying to convince to join, and I I I try to remember who this person was exactly.

1:28:05 Um but I remember I was like, well here's how much we think your convoy stock will be worth. And and they were like, Well, I'm doing the math and I think Amazon will be worth eight trillion dollars in three years. And I was like Seattle problems. Why? They're like, Well, if you look at the last couple years of like their stock price appreciation, or whatever it was, the time frame they were using. It was like the exact right time you have to start working back from GDP. Yeah, no. But I was kinda like

1:28:31 I was like I I just I felt so compelled to convince this person that's sort of physically impossible and you can't apply like an a growth rate to a company that scale that's like that. It happened for like that rate happened for maybe. Did you convince the person? Did you make the higher? This is a while ago. I'm trying to remember if that person if that exact conversation turns into the higher. Um I believe they did. Possibly. Um But that was I w I need a better answer for that. But that was um But I I just remember I remember the conversation so vividly and it was over the phone so it wasn't like an easy like one to land, but I was like, No no, you can't, please don't do this. Please don't make the decision believing this will be an eight trillion dollar company. Like that's not a thing. Yeah. And so and so how is it but it was hard, and that just emblemized Like um

1:29:11 The The issue of That perception, right? So so what I did early on. was There were a lot of tactics we used to try to convince him to join, but early on before that was a thing.

1:29:22 I remember drawing what I would do is I'd take a piece of paper And I would And the x axis was someone's career. And I'd be like, year zero. And I was like, How many years do you think you want to work? And like no one really knows. So they just say something like thirty, forty, whatever.

1:29:35 And and I'm like, Okay, great. So and here's your earnings. That's like the y axis. And I'm gonna draw a curve. that shows how much money you'll be making every year and like your total wealth accumulation from your salary or like what you expect to make here.

1:29:48 And you know the beginning you're making about this much, it'll probably go up pretty steeply at some point, it'll kinda flatten off a little bit. Generally like a you know a salary curve. And if you add up that thirty the the area under the curve is your is your earnings in your life. And I'm like I'm actually. Exactly. But it worked. And I was like, look, I was like just This one year? It's gonna come down a little bit.

1:30:14 And then it'll go back up if we don't like if it doesn't work out and you're you leave after a year'cause this didn't didn't work for you, like then that's the area of your We were talking to your co-founder Grant this morning in preparation, and he was like your reward for working in a failed startup in this environment is You get a better job. Yeah. Yeah. So that was ex exactly right. So If you take that little dip, you either get like the bump from convoy working. Or you have this really interesting, compelling experience, and you get then your your line goes up a little bit. Yeah, you get a higher level of Amazon when you go back. Yeah, I mean it was a lot of

1:30:46 It's h I mean hiring's hard. We've had success, but man, it is everybody knows. It's hard not to hire effectively. Yeah. All right, David, anything else for the playbook? Yeah. Well, real quick, my playbook w what I'd love to do, I mean, we'll work on this in future episodes, but because of this B2B marketplace is is so different and new, and you guys are at the vanguard. I tried to codify like What are some principles? I'm curious if you like nod say yes if you agree or or no, but the to drive success in a B2B marketplace, like David is Demand drives supply.

1:31:15 If you're bringing the money, you can create you can align incentives in a market and get people to adopt a new technology that otherwise would be really hard. Like a G Wiz feature isn't gonna compel a trucker to download an app. That's one. Uh two, timing is super important. Like I think what you guys did with getting truckers paid to use the app. uh within a day, like that's game changing for the industry. And so if you can change cash flow timing and we're seeing this in other companies, that can be a huge driver of growth. So that's two. Three I I really w like what you said about Those early days when people where haters were talking about combo and they were like, You guys only take the jobs that nobody wants. Well it's like if you take those jobs that nobody wants

1:31:55 You can You can take the scraps from the industry, but because you're building a technology company and a holistic marketplace, you can then aggregate the supply out of that. And then get to a point where really, really quickly, you have a better cost structure for the jobs that everybody wants, right? And the and the companies will take you seriously. You're operating at scale on the lanes that they care about. So you can use yeah, you can use whatever you get to kind of get the carrier base going. Um and then translate that into

1:32:22 A virtual network, and because we plug all the trucks into our technology platform. As we scale We effectively have this this you know partnerships that that lead to this virtual fleet. Which we have visibility into And a direct connection with

1:32:37 Which gives us capabilities that that feel like like it's a it's a more like first party network for the shipper. Yeah. Yeah. And and then the last one which we didn't have time to get into today, but I also find it really interesting in these markets is you're saying like price is not set. It's not these are not efficient markets. And so ultimately like your big goal is like if you guys can be efficiently setting price in a way that nobody else can, well then you've just like completely aggregated the industry. So that's my that's my last one.

1:33:07 That's a really good transition into grading. So again, on a traditional acquired episode we would grade if big co buying little co was like the right use of capital. And in some cases you've got Instagram and oh my God, you couldn't have parked capital anywhere better. And in other cases, you know lots of other great options to to invest that capital. In these ones where

1:33:30 Either it's a near term acquisition or like there's no transaction that's happened with Convoy, you know, going public or s or or selling or anything like that. We're gonna do this is grade what the A plus sort of future scenario is for the company. Like what are the things that have to be true in order for Convoy to create and capture a ton of value in the world. And what's the scenario where it's a lower grade? I you know, I think David would put in here what's the scenario where it could be a C minus where those things don't come true and what are the factors there?

1:34:03 Dan, you homed in on something Earlier. that was this this concept that I really didn't understand before about every single in an inefficient marketplace with low demand and low supply on it.

1:34:16 There really is only like maybe one truck and one shipper for which you can be profitable on a transaction. Or maybe and then like you you grow to two or three or four. And if you have all the trucks and everyone who's shipping freight on your platform, then like My gosh, you can handle a ton of volume and be profitable.

1:34:34 on on those transactions. And For me to get to an A plus. I think On only after like reading a bunch about your b your business for the last

1:34:43 you know month and then talking to you today. Can you widen that gap? faster than your company consumes capital. It's basically like can you create enough slots enough matches between trucker and freight.

1:34:59 Where each one of those transactions is above some certain bar of how profitable they need to be And do all the volume. before some You know.

1:35:08 Run out run out of money. Like the end game for every startup. Am I am I capturing it well? Like do you is that how you think about it? And is that how you think about like Here's the spread of scenarios in our future. Yeah, and so a big part of it is getting all the trucks on board. And it's it's really about making those truck drivers more productive. That's actually what this comes down to. So it's it's the empty miles we talked about.

1:35:30 So Convoy can significantly reduce empty miles. Well and that's why price is hard, right? Because it's worth different uh same job is worth different things to different people. We just took we launched something this year called batching. You can take two or three jobs together. Our system will identify these jobs and look at all the possible combinations and automatically stitch together multiple jobs. And then offer it to carriers.

1:35:50 with ideal locations to come maybe a triangle or a round trip. Um with the ideal appointment times. And we found that carers will take that job For a significantly lower price than they would have taken each of the jobs in combination if you add them up as individual, and that's because we're creating efficiencies and making that carrier more productive. So that's the kind of stuff we have to figure out.

1:36:09 And when we do that, and we actually saw the carriers that do that. Run empty about 19 percent of the time, that are you know, if they're if they're really plugged into the convoy and doing the the the the batching system today with our current density of batching, the ones that don't. Run empty about thirty five, thirty six percent of the time. Wow. And so Just when you look at like the impact on the environment.

1:36:28 Um, you're reducing emissions from using batches by about forty-five percent. Like you're reducing empty mild emissions about forty five percent, which is massive. that directly also translates into lower costs for the truck. The actual small trucking company spends less money to do the jobs'cause they're driving fewer MT miles. you know, trying to reduce wait times, all these things. So we view it as Let's knock down the waste.

1:36:48 Let's go after empty miles. Unnecessary wait times you know, loading and unloading times and just find ways to reduce those. And if we can do that Quickly

1:36:59 Plus add more volume into that like Lower the waist and add more volume. Then we're creating a better cost structure. And then we're we're a in an advantageous position and we have options. And getting that in place at scale.

1:37:11 with the capital we have is is the key. Awesome. David, anything else to add? I think that's right. All right listeners.

1:37:20 Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI powered experiences at scale. Yep. In the crazy speed of today's AI world. Shipping fast is just table stakes now.

1:37:42 It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next. This is where StatsIG comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed. to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. Wow, listeners, thank you for going on

1:38:22 this journey with us. For folks who listen to a lot of episodes, I think you'll you'll be like, Oh yeah, it's about how long it usually takes. For folks who came tonight expecting a uh commute to work podcast. It's been longer than that. Thank you for bearing with us. Yeah. Do you want to do carve outs? I have one I want to do. Okay. Go. And and we haven't done carvouts in a bunch of episodes because we've been jammed for time. And mine is a very cool app that is based here in Seattle that David and I used last night.

1:38:50 for our the acquired annual holiday party that is former convoy alum So Vince and Shane from Mystery have created something incredibly cool. I think it's mystery.sh for anyone who wants to try it out. Um and you basically can Yeah. say some of your preferences of the things you like to do and the things you might want to do that day or night.

1:39:11 And then random things happen to you. And like lists show up and they take you places and you get fed, and then like you don't know how to make it. They don't like send random people to you. Correct. So we chose to do this with each other. Correct. So Dave and I like went fencing last night. Who would have thought we'd go fencing? And it was amazing. you're looking for like new things to do in your life. I highly recommend mystery. Likewise, it was a blast. Awesome.

1:39:38 I've Listeners, thank you so much. We hope you uh you enjoyed uh the episode. If you haven't subscribed, you can at acquire.fm or in the podcast player of your choice. If you'd like to become an acquired limited partner, uh that is uh uh glow.fm slash acquired. Thank you so much to Dan. Yeah. Such a a new and awesome experience for us. So thank you.

What you see above is a preview of the first minutes. One unlock costs 10 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.