On Wednesday morning at 7:30 a.m, the mimosas started flowing at Convoy’s Seattle headquarters. It wasn’t a celebration. After months of Convoy trying desperately to raise cash or find a buyer, employees had just been ordered to stop taking new orders and cancel existing shipments. The startup, which had raised more than $1 billion from backers ranging from Jeff Bezos and Bono to Fidelity and T. Rowe Price, was out of money and about to shut down.
Though Convoy had been frequently hailed as the “Uber for trucking,” it turns out that the $800 billion U.S. market is incredibly difficult to disrupt. Building a profitable business involves navigating volatile trucking prices while inking both short-term spot deals for customers and longer-term contracts—dynamics that leave little margin for error. And Convoy, led by co-founder and CEO Dan Lewis, a leader with an Amazon pedigree but no experience as a trucking executive, couldn’t figure out how to play the game.
Convoy’s shutdown, which wiped out the equity investors that poured $900 million into the company, marks the most extreme downfall of a once-high flying startup in recent years, amid a contraction of venture funding that has left many money-losing startups struggling to survive. It also puts the spotlight on investors’ past willingness to pump money into companies despite management's lack of experience in the industry and questions about their business model.
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