[wooly_bully]

(Ex-)Convoy engineer here. No mystery as to why this happened, sudden tight market and low available capital demolished us. External reasons given in the article were the same we knew and couldn't do anything about considering that none of the M&A options materialized.

Detailed the shutdown on a call at 8:30am Pacific this morning. CEO said there'll be no severance or healthcare.

Lot of talented folks in Seattle and beyond who'll be looking for new gigs.

[emgeee]

Dang, no severance or healthcare is really brutal and signals to me they probably should have called it earlier.

[thaumasiotes]

> Dang, no severance or healthcare is really brutal

When NCC Group fired me, they gave me zero days notice and no severance.

They did emphasize that my healthcare would stay good through the end of the month, but they didn't seem to have realized that I would be unlikely to find that useful after being fired on October 31.

[robocat]

Probably to fix that would need legislation specific to start-ups.

I would hope most employees know that is a significant risk of working at a startup?!

But yes, harsh, regardless of how predictable.

[mywittyname]

At least nobody will be around to fight against unemployment claims.

[dpflan]

Given that you were in the company and presumably have an idea of how the company functions: where did the funding go? $260M gone in 1 year?

"Convoy, which raised $260 million in a funding round last year that valued the business at $3.8 billion, on Wednesday told employees in an email that it would stop accepting shipments until further notice and that it was rescheduling or canceling existing loads." (wsj)

[WisNorCan]

They got caught in the same thing that happened to Flexport and others in the freight industry.

Price per shipment cratered -> Revenue cratered. (They make a % of each shipment) -> Losses spiked up. (Because they had fixed cost)

Flexport had a burn run rate of $600M a year. Convoy had less burn but also less in the bank.

https://www.theinformation.com/briefings/flexport-revenue-dr...

[iterminate]

>1,000 employees means a burn rate in the hundreds of millions per year just on the costs of having employees, $260m burned in a year sounds about right for a company of that size.

[jt2190]

According to Bloomberg they had a headcount of 1500 at their peak, so assuming that USD 1000000 gets you 5 employees for a year, USD 26000000 would get you 1300 employees for a year. (That’s a lot of hand waving on my part but overall the amount of money burned doesn’t seem mysterious)

[noahtallen]

So many variables, but it's easy to spend $260M in 18 months at a decently sized company. If they have 1200 employees, that's about $12k per employee per month. So you could easily spend that much just on salary + benefits for software developers in Seattle.

[zonkerdonker]

I'm curious as well, that's an astoundingly high burn rate for a 500 person logistics company. Wonder if there were outstanding debts

[dpflan]

Thanks for the comments, indeed, people costs reign supreme.

[NetOpWibby]

I used to work for an IoT startup several years ago. We were a small team and focused on attracting big clients for big money. I realized the danger in that once I learned one of our long-standing clients had been paying us for years for a solution that wasn't in operation.

No one else thought it important to try and get developers using our product to reduce our reliance on big players and well, here we are. My last check was paid out from the CEO's personal bank account.

Certain spaces are exciting to work in because you can clearly see a need but sometimes the stars don't align for you. I hope the Convoy team (sans leadership) lands on their feet. Q4 is the worst time to find jobs.

[bdcravens]

Absolutely terrible. Tiny companies NOT backed by some of the richest men in the world give more when they wind down.

[jahewson]

I get your point but to free up cash for the employees he’d have to bail out all the other creditors first. Not a good precedent to set.

[boringg]

Please elaborate with examples

[duxup]

I'm confused as to what Convy "had" anyway.

Was it largely spot rates, a bid board, and lots of small carriers?

Customers easily could just get rates / carriers elsewhere and walk from Convoy?

No other services making income keeping customers around?

Rates are pretty fluid in logistics, very strange that they would rely on that alone if that was the case.

[drewrv]

Obviously it didn't pan out, but you could think of Convoy as an aggregator of small carriers. A big shipper doesn't want to deal with 1,000 small carriers but they can deal with Convoy, and Convoy deals with the small carriers.

Convoy could interface with large companies as though they had a large fleet of drivers and trucks. That "fleet" wouldn't require paying for benefits to employees, maintenance or fuel on the truck, and could scale up or down based on demand.

I would have guessed that the network effects of getting this kind of marketplace going would be the hard part. It makes me think that a big mistake in leadership was made.

[psunavy03]

Everyone in startup world wants to come in and "hack" 3PL until they realize 3PL is a weird, complicated thing even if it's got a bunch of legacy players on legacy software. It's more or less like this: https://xkcd.com/1831/

[moneywoes]

Exactly, I'm very curious as to what was their edge

[killingtime74]

Them shutting down indicates there was no edge

[faefox]

"As I just shared on our call, I think the world of you."

Just not enough to offer any severance or healthcare. #TruckYeah!

[fourseventy]

The company is shutting down because they ran out of money... where do you think this magical severance pay is going to come from?

[camhart]

Former employees should apply for unemployment benefits. Convoy likely paid into an unemployment insurance program (its normally mandatory).

[bloopernova]

> CEO said there'll be no severance or healthcare.

That should be illegal.

How much are the executives making from this?

I'm really sorry you're in the middle of this. I hope you can find a better job soon.

[bradleybuda]

What makes you think the executives are making anything from this? It's a startup, it ran out of money, it failed, there is nothing left. Joining a startup is risky.

[renewiltord]

How much are the executives making from a shutdown? They're probably losing all the value of their options. If they're founders they're losing everything they didn't sell in secondary which means they're taking the biggest hit to their net worth.

[toomuchtodo]

Best way to get impacted talent connected to opportunities? Opt in spreadsheet link available?

[wooly_bully]

Talent board link: https://coda.io/d/Talent-Board-2-16_dpUo3fTL8Ev/Candidates_s...

[hintymad]

Any insights on how effective the CEO and the executives were? I'm very curious how successful executives from big companies like Amazon function in a startup.

[joneholland]

The COO was fired as the CEO of Expedia after a very short and disastrous run after Dara left to go run Uber.

[spieswl]

Good luck and my condolences

[tapatio]

You guys should spin up an identical service that's lightweight, turn a profit from day 1.

[f6v]

I hope everyone saw the writing on the wall and started looking for job 3 month ago.

[moneywoes]

What happens to the customers? Are there any business lines that were in their infancy worth exploring?

[xxpor]

How can there be no healthcare without a bankruptcy filing? Isn't COBRA mandatory?

[dragonwriter]

COBRA isn't employer-paid healthcare, its an ex-employee option to pay for the previously-employer-offered plan, while the employer offers a plan to current employees.

If there are no more company operations and no current employees, there is also no plan and no COBRA.

This could also be an issue if a company restructured so it didn't have to offer employees health care because of size or everyone being part time or whatever: COBRA doesn't guarantee that there is a plan from your former employer, it just gives you a right to pay for it yourself if there is, for a certain period of time.

[nevir]

C̶O̶B̶R̶A̶ ̶i̶s̶ ̶m̶a̶n̶d̶a̶t̶o̶r̶y̶,̶ ̶b̶u̶t̶ ̶t̶h̶e̶ ̶p̶e̶r̶s̶o̶n̶ ̶l̶a̶i̶d̶ ̶o̶f̶f̶ ̶h̶a̶s̶ ̶t̶o̶ ̶p̶a̶y̶ ̶f̶o̶r̶ ̶i̶t̶

…if the company still exists (see comments above and below)

[vogt]

>CEO said there'll be no severance or healthcare.

Classy. Learning a lot about how certain people treat their employees during these last couple of admittedly insane years. Good for future reference, I guess - though not much solace now. I feel for the employees.

Edit: Wow, more responses than I thought! I admit that the tone of my comment was too reactionary, but my opinion stands. I won't modify the original comment but instead will add this quote from Dalton Caldwell, YC Partner:

"So what happens if you have less than three months of cash? It's important to face the issue head on and account for your liabilities and the scenario of shutting down your company.

In many cases, <2 months is the point of no return. If you are in this state it is immediately necessary to lay off your employees and give them severance, pay down your obligations, and use your remaining cash for shutdown costs. If you don't do this and instead end up with zero cash and outstanding payroll, tax or other obligations, things will get Very Bad." [1]

Convoy raised $1.1b including a $260mm Series E almost exactly a year ago.

[1] https://www.ycombinator.com/library/3Z-advice-for-companies-...

[benced]

Ex-Convoy employee here: if a company is shutting down, it obviously can't provide severance. It's not a matter of class or not.

[busterarm]

Startups are not established businesses. They are inherently risky ventures.

If you want to be coddled and showered with benefits, go join a Fortune 500. Startups are not for you.

[TedDoesntTalk]

Isn’t this standard for startups that shutdown?

[jrockway]

Severance is basically marketing for future hires. You hope, as a company, you will be around in a few years and will be hiring again. If all the employees laid off during tough times get severance, then the company can say "even if we hit tough times, we have a track record of doing the right thing", which is attractive to future employees they are attempting to attract. Since the company is dead, their reputation doesn't matter.

[jghn]

In the 2001 DotCom downturn a friend worked at a company where they were informed that the paycheck they had received the prior month was the last payment they'd get. So not only no severance, etc but they also worked a few weeks gratis.

[MaxHoppersGhost]

Ah yes, won't someone think of the software engineers who are making 3x-6x the median household income of Americans.

[nilram]

My favorite start up, with regard to cashflow, was where the CEO would tell us at every company meeting how many months of cash we had in the bank at our current burn. They pissed me off in other ways, though, and I never heard how they treated people when they finally shut their doors.

[actionablefiber]

What’s the “Very Bad” scenario? Limited liability stops being limited?

[climatekid]

Wonder how big of secondaries the founders took

[dicriseg]

How did they burn that much cash in a year?

[rdl]

Is there a website/etc for employee hiring?

[hintymad]

Any early signs that the company was in trouble?

[josh_carterPDX]

Your argument would be wrong. Just because a company fails doesn't mean it was a team devoid of talent.

[ska]

> I'd argue the business failing is a strong counterpoint to that assertion.

That statement is pretty naive. There are plenty of things that can kill a startup without them having done anything specifically wrong at any level, let alone at the level of technical team.