Acquired - Convoy (with CEO Dan Lewis)

0:00All right, I just checked and the waveform does spike in clip when I scream like that. So we will 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 you? I'm Ben Gilbert I'm David Rosenthal. And we are your hosts. Let's talk about trucks, 18 wheelers, semis, 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. You might think

1:13They should be able to just have their boss or coworker figure it out across multiple trucks and coordinate. But get this, 90% of trucking companies have six or fewer trucks, and 97% have fewer than 20 trucks. There are over a million independent trucking companies or carriers, as we'll call them tonight, in the United States alone. So enter convoy.

1:35Today we are going to 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. We're almost as big as Convoy. Yeah, this was like a sick dose of perspective. When we were doing the research, David and I realized that this 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 see, you know, close to a thousand person company and acquired, well, on its way. All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired. LaGoura, the agentic operating system that is redefining how the world's best legal teams work.

2:32Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Lugora 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. They embedded inside a massive law firm.

2:58for 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. Lugora's bed 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.

3:27And 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 70% of the time LaGora now has over a hundred thousand lawyers on the platform from 1200 legal teams in 50 countries and crazily they went from one million to a hundred million in ARR in about 18 months truly insane numbers and that is the real test

4:20Plenty 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 logora.com slash acquired and just tell them that Ben and David sent you.

4:41Now 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 free trial.

5:08Of 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, you know, when I look at David and like that didn't make any sense, can we delete that in post?

5:38Anyway, with all that on to Convoy. Woo, on to Convoy. Hang on, dude. So, when Ben and I started thinking about doing this crazy thing and 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.

6:07And that was Convoy and its founder and co-founder and CEO Dan Lewis. Not only because, as Min mentioned, it is, I think, as we speak the highest value to start up in the Pacific Northwest, having raised a whopping $668 million in total capital. But more so, because I think its story illustrates a really important new theme and tech that we haven't talked as much yet about on the show. But I think it's going to 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, 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.

6:53Obviously, Convoy is at the vanguard of this, but they're not alone. There's FlexPort out there, which folks might have heard of. Rig up in oil and gas, even our own portfolio company at Wave Quotapro, which does this in the scrap metal industry. And I think we're going to 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. Go up to join us. Come on up, Dan. 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 want to ask, first, can you tell me about that? We'll actually start a hundred years before your birth. Can you give us a quick high level overview to set the stage for our audience of, there are many companies in the trucking space. What exactly does Convoy do? You connect existing truckers, not autonomous truckers, people who are driving rigs today with people that want to ship stuff.

7:59That's right. So Combo 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 and 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. So they work through middlemen, typically brokers or large asset-based carriers that also run a brokerage on the side.

8:28That's extremely fragmented. The participants in the middle are trying to, as individuals, maintain relationships with truck drivers, and shippers, and connect the dots. So any individual person only sees a minuscule piece of the pie can't really identify all the opportunities, optimize the system, and figure out what's going on. So what Convoy does is we're replacing the traditional brokerage model. We're aggregating that long tail, and we're getting them all into the same platform, all into the same technology stack.

8:57so 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, helps shippers get trucks more flexibly and faster, helps truck drivers get jobs that are more convenient to where they're located what they want to do, and effectively like just creates a more productive trucking system. So to your point about not just building software kind of replacing the system, that's what we're doing with technology. So, okay, to rewind.

9:26You grew up here in Seattle, birthplace of Amazon, long before Amazon was built. What was your family like? What was your journey that ended up in this? David, we are going deep. All right. So my family is born and raised in this area. My dad went to UW.

9:46Well, 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 supplies distribution company out of his garage in Ravenna. 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 did Biology for the Washington State. I have other ones that work for the ferry department, a cousin of mine. You know, it 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. I just happened to grow up at a time when it was flourishing and Microsoft was coming on the stage and it kind of got me interested in tech early on. Yeah, so you went to Yale. You were liberal arts major at Yale, and then importantly for the story, you joined a consulting firm after

10:38graduation. Well, we're some of the like projects you worked on. You're at Oliver Wyman, right? Yeah. And Oliver Wyman does a lot of work with logistics-based industries, airlines and the lake. Like, you know, 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. So I did learn a lot about supply chain logistics when I was working there.

11:03I worked for the Panama Canal for a little while. I lived in Spain, and I worked for Welling Airlines. We did a bunch of other projects with airlines, some projects with Boeing, actually. There were 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 kind of bugged me for a long time in my life, to be honest. I remember even in high school and junior high, 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, kind of jealous of the person that found that one thing that they really love and they're like super deep in it. And I kind of was wondering maybe I could just pick something. And I never was able to just settle on one thing.

11:48So consulting really fit me I did 26 projects probably over you know four years or so and But I kept wondering when am I gonna figure out that thing that I really love and I bounced around I did lots of different things marketing product management engineering related work And it wasn't until I started a company 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 very quickly get something off the ground. That was a skill I think that I came from consulting initially. Dan, did you find that you were great at that, but not as operational as you would 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. They can definitely tell you how to solve your problem. When it comes to doing it, it doesn't work. Was that your experience or?

12:38Yeah, it's a really good question. When I first started, I don't think I recognized, but that actually was the case in consulting. Like, I thought that I understood things, 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, that was all operations. So actually, like, when I was in Spain, I was running a procurement...

12:58project for seven months, and it was end-to-end designing all of the specs for how we're going to do maintenance for aircraft engines, APUs working with 30 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 in a lot of other stuff as 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 neat and potatoes kind of projects operationally minded.

13:27I then went pretty far away from that, though, to be honest, after consulting in the tech, and I didn't do that again for a while. After four years of this, you come back to Seattle, which is now, so what year are we in now when you joined Skydeck? When I joined Skydeck, 2007. Okay, so tech is a thing, you know, commonly 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 You know, you're working in logistics at airports. I'm gonna go back into the tech world and join a, join a crazy new startup. Yeah, and to, for people who aren't from Seattle, the way to think about this, Amazon is in one building at this point. Yeah, yeah. So, Sky Deck was in the Bay Area. I actually didn't leave right away. What I did, and this is something about how I just got into startups, I always wanted to do something in tech. Like, when I was 10, my dad worked for US West.

14:23or the local phone company, he brought home like an IBM XT I remember. Really kind of, you know, DOS 3.0. And 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. You know, wanted to figure out how to optimize the computer so I could play more video games. And got online, you know, very early on. So like the library system and started teaching myself all that stuff. So I kind of was really interested in tech early on.

14:49Got away for a while, but that's how I made money in college. I made money building websites for the Athletics Department. I did a lot of IT support and help people back then to make 10, 15 bucks an hour just to have some money in college. So it was sort of something I developed early. And then when I was consulting, I was like, I want to go back into tech. I kind of had this bug.

15:07And 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, we're looking for more technology experience. So I think it really was part of, you know, in a lot of ways, you guys today, a kind of way share a lot of heritage with Uber. And I think 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 operational you know know how into into the startup world but yeah back then that was that was like not normal and I hustled like I 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

15:55who else they knew in this 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 all my notes in my meetings with them.

16:20And then I realized after 10 or 20 meetings, every meeting I went into, I knew more about the space than the person I was talking to, 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, a venture capital fair. But yeah, I tried early, and that didn't work out. But that's how I met Pound Skydeck. So I actually like, networked my way in while trying to start my own thing.

16:47Met this group, they had founded a company in New York called Vindigo, which was the early mobile app developer for brew handsets running on Verizon. Had some success doing that, moved that Silicon Valley to build this new company, I was compelling and basically somehow convinced them to hire me. They were all engineers and they're like, why would we hire you?

17:09Consultant. Was I decked? Also focused on, like, brew handsets. No, not that time. It was pre-IOS. I just came out right in 2007. I started this company in May 2007. So they were thinking about how do we, you know, social networks and the social graph was the big thing back then. And mobile, like location-based services, they kind of are very early. So they were thinking, hey, you have all this data in the phone bill. It's like someone's social graph.

17:36Can we let you unlock that and combine that with, like, your email and context? All your text messages and phone records and start to combine your context. All of a sudden, you can see your real social graph. And is there a way to monetize that or to plug that into other systems that are being built at that time? And the big reveal is this company ends up becoming higher, right?

17:59It went through a whole bunch of stuff. Which is a spam call blocking service now. They actually did that. They had a call system specifically designed to help you identify if someone was calling that you didn't want to pick up. They got it pretty far actually, and they had a partnership with Google, and then Google kind of shut it down and built it. They basically said, you can't do this anymore in Android. You can't get access to the phone record. So we shut that down, and then they had something similar come up.

18:28You have this startup experience with these crazy pivots. You end up coming back to Seattle, then our fault for not realizing it was with Skadek, but coming back to Microsoft. So your first journey now, you gone from consulting, startup, big tech company. What did you learn in Microsoft? And I was very lucky to get a job in Microsoft at the time. It was 2008. I got back to Seattle. I left my job in the summer of 2008. Went on around the world trip.

18:57Wow. That's a good time. Back in October 2008, while I was gone, watched a mutual and out of business, so my bank and out of business, I had left a bunch of stock, you know, most of my money in stock at the time in Ersoxon, I wasn't really paying very close attention to it. So most of that was gone. I didn't have a job because I'd quit my job. I thought I was going to start working with some of the partners from the management consulting for my binat as a contractor, but 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

19:27Black bottle in Belltown, got him Fritz Landman. Yeah. Cause I got into college with, and he was at Microsoft at the time and I was like, hey, what should I do?

19:36It's kind of looks pretty bad out there. He's like, I don't know. I had a text message from somebody pretty high up at Microsoft saying, we are hiring no more consultants like starting next month. So I was like, I guess that's not going to be an option. I just did the thing I did back when I was looking at Scatic. 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, got no interviews, couldn't get an interview from Amazon, couldn't interview from anybody at the time. Because the market was such a rocky state.

20:03And fortunately, I knew some people at Microsoft through Fritz, who gave me a shot at an interview and I got a product manager job there. And you hadn't been a product manager at Skydeck, okay? I had not been a product manager at Skydeck, but I basically was, because we were so early, I just thought like one. So I was able to get through the interview. I want to give that context because like, that was a point where you imagine, you know, I grew up in Seattle, you know, went to England more, local school, somehow ended up at Yale. There's a story around that.

20:33worked really hard for five years, was really frugal, saved, and then in 2008, made that one decision was kind of offline for a few months, and came back to Seattle basically with nothing. No job, no money, and didn't place a live. So, I have seen that side of it, and I didn't panic, I just knew I could work hard and find a job, but I think I have a lot of respect.

20:59Going through seeing 2000, I graduated in 2003, so I went through the 2001. There were very few jobs that I was graduating. Again, really struggled to get that first job. Works really hard. A lot of friends and mine took a long time to get those jobs. 2008, so I feel like I've been through a couple of these really hard periods, which I think made me really value the opportunities that I've had. And so when I got that job of Microsoft, I was like, Very proud of it and very excited about the company. I grew up in Seattle, you know, looking at Seattle Times, reading about Microsoft. 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. Which this is a unique Seattle thing. So I didn't grow up here and like nowhere in the US has reverence for Microsoft like Seattle does. I mean, if you grow up here, it is like

21:47There's so much giving back to the community. It created so much wealth for the community. It puts Seattle on the map in a lot of ways. And like, in Ohio, you know, I was like, oh, well, yeah, those are the bad computers. Like. Yeah. I didn't, of course, you ended up working for Microsoft for many years. So, you know, hey. Yeah. Yeah. But you're right, that was kind of the foray into Seattle for me. And so I was.

22:12You know, I didn't take anything for granted because I realized we're in a world of plenty right now. We were just talking about how much capital is available. Convoys been able to raise a lot of money. You know, everyone that's graduated in the last 10 years has only lived in an environment where everything's up into 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 just, it's made me never take for granted anything we're doing.

22:40don't rest and feel like we're there. 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 face in terms of getting there. So 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 Majorona, great product idea, didn't end up realizing its vision, gets acquired by Google.

23:10And then you were head of product there, is that right? Yeah, I was head of product. I mean, it was a pretty small product. I did a lot of stuff, like marketing products, planning, like a bunch of different things, sort of jack-of-all trades, I think, in that experience. And so how long did you stay at Google? And then, because the team, Adrian moved down to Mountain View, right? And then did you stay in Seattle? And is that how you ended up at Amazon? That's right. So the company was acquired in 2011.

23:37I remember correctly, or 2010, 2011. And ultimately, the entire team moved down to the Bay Area to join the Machine Intelligence Group. And I learned an incredible amount at Wavy. I decided I didn't want to move to the Bay Area. And so I was working remotely for Google for a while. I was looking at several options in Seattle to join some of the teams here.

24:00I just decided I didn't want to be part of a remote office at that time. I think Google has actually scaled pretty significantly since then. But I remember going down 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 I won't say the person's name. But I remember they were like, you know, we just have a love hate relationship with our remote offices. And I was like, oh, what's the hate park? I was like, okay. He's like, yeah, you know, we like to keep a lot of the planning and a lot of the

24:28figuring things out down here. And then we have some satellite teams up there that kind of execute on specific pieces. I was like, 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. Someone I had networked with early on when I was doing Wavy.

24:53I reconnected with them. They were at Amazon and was really inspired by the team they built the organization they were building so I went that's what went to Amazon. Dan if you ever had a job that you applied for that you like apply and they're like I hope they get back to me without like having a relationship with someone there. Have I ever gotten a job or have any of the jobs that you've ever held have been from like a job portal. I think so there are two.

25:17Actually, my freshman year internship, the internship I had after freshman year, I think I applied to an online posting. I joined a company called PR.com in Seattle, which is acquired by Wagner Edstrom. And so very 1999 name PR.com. We did PR for tech companies. I didn't even really know how to be an intern. I think I just like.

25:41went on vacation once for a week, and they were like, just tell us. I was like, oh, okay. Like I was out of them. And then the other time was I applied to some, not a job or but companies came to Yale looking for candidates and there was like, you know, some companies on campus recruiting. So I went that channel. But after that, no. After that, it's always been through the relationships that I've built. And I very often hire, if...

26:07I 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 thinking. That's great. I have sent out a lot of applications where I didn't get anything. You and me both. I was trained. I got that job I mentioned out of Yale. I think I got that in the spring. I sent a lot of resumes out and applied to a lot of places. I had taken my junior year off and went to Chile. So I became fluent in Spanish. And the summer before and after it worked for my family's delivery business. So I didn't have the post sophomore, post junior year, strong internships. And coming out in 2003, again, tight job market, I didn't have like, I could do it, but I didn't have the story, so the traditional channel didn't really work for me. And then back again in 2000, and over time, it applied to different roles, and again in 2008, when I was applying, like I just didn't work at all. So I think 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 go down that path.

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28:53All right, so Wavy happens, you end up at Amazon. I want to ask one question on Amazon before moving on to the founding 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? There are A lot of other companies do, I think, that do a good job of responding CEOs. I think one thing that Amazon does is that it expects a lot of ownership from the people that are in the role, and it kind of has a culture of assigning a single threaded leader or a person who's ultimately responsible for the outcome of the thing, at least in my experience. And that design,

29:42puts you in a position where you feel responsibility across multiple functions, even if you don't own all those functions. And I think that that sort of cross-functional leadership at many levels of the company and strong push towards ownership is really important. And I think you see that both on the business side and on the technology side. 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. But the experience we had was that they had been expected to own more 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. I think that probably attracts people that want that and then trains people in how to think that way. So then you can slot into those opportunities. Is there a pro-activity and a hustle that doesn't exist at other bigger companies? Is that part of it or is that sort of overly mythologized?

30:38You know, I have 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 that's definitely, there is a distinction that's true on that. And so I'll give you the example. When I got to Amazon, 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 going to build a team, go do some research.

30:58In this general scope of the world figure out what Amazon should be doing and why and I wrote five six pages in my first two and a half months I pitched them to the leaders six pages of course being the canonical Amazon document which I know powerpoint six right a doc so I wrote five or six you know four or five docs 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 Who are you reporting to at the time?

31:27Gunning Michael Dordey and then his skip level Sebastian Gunningham who was actually on that list as well the CEO of Actualist because now the co- CEO of WeWork, which is a whole different industry strategy. He was creating this area for this to happen so that was really the fact that that can exist in a company is pretty inspiring. And then what I realized after I've been there for a while was 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 a storyline around it and demonstrate some early value, they can go build a team around it.

32:09And data wins. So if you want to, I remember there's an example that, you know, ask a question and get an answer on Amazon. That's a feature that exists on Amazon. You can ask a question on a product patient, other customers or manufacturer will answer that. That product was developed by someone else in the same organization that was part of, and I kind of was, it works on that a little bit, but it wasn't, you know, I didn't directly develop that. That was originally given a thumbs down by leadership.

32:34But the team said, okay, fine, we're gonna figure it out, and they went 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 person who had said, no, it's 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 a team out of it and they built it. And so that sort of internal culture of funding, good ideas, and if people do the research and put the hustling to figure it out, funding that,

33:02has created obviously a very broad range of businesses and products that Amazon has created, and a culture of kind of starting new things. So I think that's probably unique, actually, the range of things they're doing. So you leave Amazon to start a company. Are you writing six pages and was Convoy originally a six-pager? Was that the format in which you thought about new businesses? I didn't do it that way. Convoy is a combination of influence from many different companies, actually.

33:29I wouldn't say just Amazon. There are a couple things we took from Amazon that we thought were really important, but we've taken from a lot of experience we've had. Convoy, the original experience coming out of Amazon was a lot of research. I wrote a document, but I wrote, I wrote like, I didn't think about it. It wrote like different forms of documents to capture and structure my thoughts. But it was again, 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 going to be. I was like, logistics seems really interesting. And one of the things was,

33:58You know, I kind of had this moment of Amazon where I was like, it looks like the supply chain just won. And the feeling was, okay, when online, I told the story maybe once before, but not very often, 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?

34:18or 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 email. People want those things, right? 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 order it online, be lazy.

34:44and I can be procrastinating in order the last minute. And so what happened was people changed their behavior. You started waiting to order two days in advance if you're a prime customer because you could. And once you waited until two or three days left, 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 procrastinated. So you always wait. So we would wait until last minute. Once that kicked in,

35:12massive shift of business to Amazon, especially for prime customer, effectively a monopoly over the purchasing in that time frame. When I saw the data and understood the impact of that, I was like, wow, the supply chain just dominated. That is why people are shifting their behavior. 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 procrastinated by online from Amazon, right? Super powerful. All these other businesses started reacting to that.

35:40And I was like, okay, I got to figure out something in supply chain. I talked to other investors in Seattle, Haudi Partovie with somebody I spent some time with early on, who wanted me to kind of look into 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 in trucking I uncovered. But that was just through talking to people. Just hustling and getting out there to truck stops. So I think All of these threads of your background kind of come together here with Convoy. So even before you land on, you know, you talk to Hadi and you land on trucking within logistics and then the specific marketplace idea within trucking, one thing you guys did that I never see any other companies do is you recruited your team before you had the company. So you and Grant, Grant, you're co-founder. Did you guys meet at Amazon? Grant was not my team at Amazon, yeah.

36:33But you had five engineers that were part of your team, even before you had landed on the idea for Convoy, right? Talk us through how you thought about that. I learned about this back when I was trying to get the job at Skydeck. I have a strong technical background, and I know a lot about developing software now, but I'm not a software engineer. And so I realized, at least in my perspective, and some of the investors in here 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 kind of have to check three boxes. You have to have an idea that they can at least understand and believe it's compelling and believe it has the right dynamics that it could return on the, you could return on the investment, right? It can be that kind of an idea. The second is you have to be a personality, an individual that is compelling to them. Because, and I think a big part of that is, hey, they want to believe that you're going to do the work, you're going to hustle, you're going to commit to it, you're going to get it done, you're going to be smart and thoughtful about your approach.

37:32And you have to convince hundreds of other people over the next few years that what you're doing is worth it. So you've been really persuasive. I've heard you talk about this before. Many entrepreneurs can check boxes one and two. Exactly. I couldn't check box three of build it. 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 knew enough about the ecosystem that I wasn't going to be able to track the investors that I wanted and the supporters if I was, that was my strategy for development. It's 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 wanted to take and as you take doing a startup, I actually want to minimize my risk and getting this thing going. And so what I did is I had a sense of some of the ideas that I wanted. 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 grand.

38:27Right? So Grant and I 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 at Amazon, who were, 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, whichever one let's do it. That's incredible. And so then I was like, okay, and I'm pretty confident, and that was what I needed. And then I put together the pitch deck,

38:56and we started building it on the side. We started setting up the development environment, getting, deciding what we're going to build, building some of 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. Then that brought some of the engineers in. UW actually was where we started the company. The table, I've heard you talk about the table. Was the table here at UW? The table was here at UW. Wow. So tech stars.

39:24Has their office here at UW in the old law school library and or you know, that's where that's where was so 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 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 maveron for a while. I knew some of the maveron partners. And they kind of gave me that access and let me kind of get my feet on the ground and hug me a place to start working in some infrastructure. So I did all my research there. And then I went to them and said, I'm sorry, I'm doing a B2B idea. Because the only thing that's good to me, yeah. And they were like, oh, okay.

40:06And I was like, so I'm going to get you out. No, they were there. 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 library. And it was so perfect. 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 coming in now and had this great feeling. It had to start up feeling before we started.

40:36So I had three of the five at that point. They wanted to do it. And what we did is we just invited other people to come work with us. Because we had other people. This is such a great thing. We were like going to do a company hack. It was on my team at Amazon. It's quit. He's like, I'm going to start my own gaming-related thing. Yeah, sure. And it was great. No, I mean, he was here here laughing at that. Because I was like, great idea.

40:58Come 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. And then we would kind of get to know them. And then ultimately, we got some little attraction like, oh, this is interesting. We kind of recruited the other two folks from there. Not everyone joined. Some people decided not to. And a lot of people weren't interested at the time. But that was kind of how we got it going. And that was the beginning. And then once we got funding, then we went and got our own spot. So Seattle, I would just say just to Be really clear, the ecosystem in Seattle helped. We didn't have funding in those first two locations, and they gave us a chance to get our feet on the ground in a great environment, which was compelling. That's awesome. Did they thought it occurred to you that, yeah, it's going to help us raise money. Yeah, it's going to help me feel more confident about this enterprise I'm starting, but holy crap, we're hiring five engineers, and we don't yet know. We haven't gotten any signal from customers that we're building anything remotely right.

41:57That's true. Well, when you put it that way. Partially because I didn't know, so I had, 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 hung a lot of truck stops. A lot of truck stops. I did all that stuff. So, and those were fun. I remember I told this story, but, you know, the first shipper I walked into, I walked in panicked.

42:24asked where the bathroom was, because it gave me a warehouse bathroom where I was left. Like, I didn't know what to say. I was like, OK, that didn't work. So back to my car. And maybe you just not see your material. The first truck stop I went into, same kind of thing I went in there, and I looked at all the people sitting there having lunch individually at each table by themselves. Everyone turns and looks at me and I walk, and I'm dressed not like the truck driver.

42:45And it 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 learned a lot in some of the companies along the way. What I found was most ideas I'd ever had in my life, including the location-based services, like data research one and maybe 10 others. That's a really bad idea. The truth enabled diapers. Really bad ideas. 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.

43:15So I got really strong positive feedback from the industry that I had never experienced before and I never thought about something else. So I didn't know but I knew there was a problem. Like I was really sure there was a problem. People were hungry for something to be better. I didn't know how to solve it. And so that was where we kind of started and we brought in those folks. The best part is we did all this without ever incorporating.

43:38So we were just, 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, maybe there's legal reasons not to do that probably, but 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 folks part time at that time. And then we started the company once someone told us they wanted to fund.

44:07and 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 were first starting, which was a bad idea. Really bad idea. Do you still get a lot of mail like for? I get a lot of phone calls, so I need to change the phone number. So I do a lot of customer support when I pick up for truck drivers. Or if they're looking at 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.

44:36But it was really funny. So Drew Houston from Dropbox, I think I've ever told him this, was the first one, we were gonna close, and it was over a day, and he was like, oh, we gotta close. And I think that we set, our first bank camp was Silicon Valley Bank, we realized we had to incorporate. So we got, you know, we actually, our member was like, I'll turn Monday into invest. That was the, he was gonna invest, he was getting, well, he was ready to wire, like before everybody else, like, can I wire?

45:00I was like, oh, hold on, we're having some bank issues. Let me get back to you. Sorry, I didn't mean to throw you under the bus on that one. But the issue's being we've reached out to them yet. The issue being we haven't set up the account. But what we did is we reached out to an attorney. I won't mention who it was. It was like on a Monday.

45:22And they were like, great, we'll do it. And it was, I had an attorney that I knew pretty well, but my co-founder reached out and he was taking care of that. So I didn't even thought about it, but we were running so fast that week. And I was like, oh, who'd you reach out to and he's like, okay, sounds good. Let's get this started and set up. And then the person just didn't call us back. They were just quiet for two days. And we called them like, oh yeah, I'm on it. I'm on it. I'm like, no, you said you'd do it tomorrow. Okay, we're done.

45:45Two-day contract, we're not working anymore. I called someone I'd worked with, actually, at Wavia Neek from Orrick, who was the only attorney I'd ever worked with in this context, who I really liked, and he got it turned around like 24 hours, and then we opened a bank account and got her money. I think the learning from that is like, don't worry about getting all the trappings of the startup, I would say. Like all the things that kind of, on paper, designated that there's the startup, just spend all your energy on, is this the right business?

46:13Right? 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 IP assignment, like it's having a thing that exists in the world that didn't exist before that customers want. It's 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 truckers and shippers, how did you get the initial liquidity for this to happen, right? Because it's one thing. It's like, oh, hey, join my marketplace as a shipper. You can ship stuff. And it'll be great. And I promise to get there on time. And you've got one trucker that's like 100 miles away. How did you bootstrap this? Yeah. And there are people, I think there are a few people in the audience that have more long-term first-hand knowledge of this than I do. So the way we originally bootstrapped it was, when we made a mistake, we thought truck drivers would be compelled by our amazing vision.

47:09You know, we thought the great 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, and then we raised again in July or seed round, and then we launched at the end of August. How much did you raise in May in July? I think it was like a million, a million, like a million half in July, something like that. We built the app just for Android initially.

47:38a web experience and a pricing model and matching model. And then we went to market. This was the basic bare bones right of an experience. And we took this app and we went and showed a bunch of truck drivers. I remember going back to the truck stops 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. You can go look up those trucks. Look up who are these local truck drivers, all these smokes. We didn't even know where to find them. Even though there are online directories we discovered later and there's way more efficient ways to do this. Driving down the road, taking pictures of trucks and driving by and then posting to Slack is not safe. But we felt like it was important. We went to warehouse and took pictures of trucks coming in and out.

48:29or truck stops. And we were just talking to people and so we developed this local network of maybe some trucks to call and then we just went trucks and asked them. And nobody was interested. We completely bombed. And this was a big part of the, I meant to cover earlier, but a huge part of the thesis that I imagine is you're building up this business plan and ultimately use it. Well, the truck drivers, but truck drivers have smartphones now. Like these are the days when this 2015, everybody has a smartphone, truck drivers, they were never going to touch software, they were never going to install a desktop in there.

48:59Like, but now they have a smartphone, they have a computer. They were just getting smartphones with them. Yeah. Right then. They're thinking about, which, completely, rightfully so, I want to get some work. We were realizing brokers are not, 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, something will create a brokerage. They will go to a shipper.

49:26And say, hey, I'm a broker. I can do your work for you. The shipper says great. Here are these 25 loads to do. And is it hard to get a broker's license? Is this a big hurdle? It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license. It's not hard to get a broker's license

49:54They go get trucks to do the job, the trucks complete the job, the shipper pays the broker, the broker disappears. Never pays the truck drivers. That happens, or they don't pay them what they deserve. The whole idea of this middle man that controls payments on both sides, and it's kind of...

50:10It's a zero-sum game where they're trying to pay the broker. The carrier is little as possible to make the maximum front and every job. The truck drivers don't always love that, right? So coming in as a new broker, well, 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. That's right. And then the truck driver really...

50:37Here 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's 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. It's not fully believable by someone who...

51:00who is used to load boards, which are effectively Craig's list, 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? In her box, oh, great, hold on, let me just double check to make sure it's still available. Hey, Shipper, I can do it for 9.50, right? Because they don't have the load yet. So they're kind of playing both sides. This happens, and so then truck drivers don't always assume that when they see a load post on these traditional load boards, it's a real load.

51:28It could be a phantom alert, right? So that's the environment you're walking into. We're discovering this, we realize the truck drivers don't fully trust this notion. We're brand new, our MC number, our official motor carrier numbers are brokers, a day old. So like, who are you? So it was hard to get them on. So what happened was nobody would go on, and then we said, okay, we realized that tactics, the flywheel will not start spinning if we start with supply. So we went to the... And the orthodoxies you're building, Mike, but he's got to start with supply. That's right. Exactly as we thought. So and we're like, you got to supply ready for the demand.

51:57because Uber's model was ahead of a car ready because you're gonna need the car in five minutes, right? What we realized was we could get a freight from the shipper and it doesn't pick up for 24 to 48 hours. Maybe 72 hours. So what we actually figured out was the best way to build the flywheel was not to go start with supply. 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. Great. It's waiting for you in the app. Then you go from a 0% conversion to like 95% conversion, where if the truck driver wants that job, they're going to download the app to get it, right? So that ended up flipping it and making it go faster. Then the secret sauce, the success factor for Convoy was about how rapidly we could onboard and evaluate a new carrier.

52:46So it was about speed of carrier onboarding became the most important thing because effectively the clock's ticking once you take the job from the ship, 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, get them to sign our agreement.

53:01and do the job in 24 to 40 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 B2B marketplaces, it's about money. It's like, I have money. Like, I have a job. And I will get you the money as soon as possible. Like that.

53:26And so the other thing that you guys did, it was pretty early on, right, is 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, again, the flywheel works in our world, not only do you need the driver to do the job, they need to download the app and use the app. And so a lot of work has gone into, make that app as simple as possible. But we needed 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 paperwork to the app, then we can pay you really fast. And so it created an incentive for them to use the technology, which then reduced our costs and gave us the data we needed to run our business. So effectively, if I could pay the carrier 30 days before they're used to getting paid, the cost for me to finance that is a lot less than the benefit that I get from a carrier using my technology platform from

54:23the data that I collect, the operational efficiencies that come from that, the visibility, and the network that I build. And so that was effectively a cost of growing the network faster. There's this interesting sort of famous venture capital question that is why now, you know, what?

54:38People have tried this business before and 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 the broad adoption by everyone who drives a truck wasn't until the 2014, 2015 era. And once that happened, not only could you get them to upload this stuff, but you could passively collect location data and just know like, hey, where are the loads? I don't have to We don't have people calling and saying, have it gotten there yet? You just know. That's why it's important that they use the app. That's what's cool. But it's not enough. You're just like, oh, all the pieces are there. There are companies out there that are basically installing smartphone guts on trailers at this point, right? You can sell software and try and be like, oh yeah, it's better. The industry should do this. Or you could...

55:27you 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, right? Yeah, exactly. That was the, you could build software. And we could have built this software and sold it to brokerages. We kind of thought about that. There were two big reasons 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, maybe that will drive their behavior, but it's probably not going to really drive massive behavior changes, and they're going to dictate what they want from you, so you'll kind of build to their expectations and needs, they ultimately own it. The analogy is those flywheel apps in taxis. That wasn't what took over the world. Yeah, that's right. And we wanted to be in that position. We wanted to be the principal and the transaction. We wanted the relationship with both sides.

56:23So we could not only improve the efficiency of the marketplace, we could go upstream into each of their businesses and solve their problems. Because ultimately that leads to a bigger total business opportunity. And we don't think this ends with truckload freight. We're thinking now about it. We've already built a Transpiration Management System, a TMS software solution for medium shippers to use.

56:45that 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 do the same thing on the other side. So we can build out and out by only that relationship. And that's free, right? That trucking management system software. Yeah, that's free for medium and for medium and small shipper. So that serves as your top of funnel for the.

57:05the 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. It'll provide all these benefits to you. Is that how you think about that? Yes, it's still early, but there are a lot of actually larger companies using it too. We have companies doing 15,000, 20,000 modes a year that are using it. Is the right analogy here, Amazon Marketplace? This is...

57:28It could move in that direction at some point. That would be effectively really creating like a marketplace for other brokers as well. Today, we're not doing that. When a company is using that, that TMS, it's a shipper. It's a company that's shipping freight, right? The company that's actually purchasing the shipping service. All right, listeners.

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59:23So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out ServiceNow.com slash acquired and tell them that Ben and David sent you. All right, so Dan, I want to take us in a little bit of a different direction and kind of not catch us up all the way to today, but talk about some of these milestones in the company. Convoy has grown absurdly fast.

59:45in revenue, in fundraising, and headcount, and every observable metric. Like, it is outpacing the traditional start-up. 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 the... Anyway. How you made those decisions, the trade-offs involved in making those decisions, it just fascinates me that it is so aggressive.

1:00:12I think from the very beginning of the company, we believe that speed was a feature of a company. We thought a lot about our values, who we want to be as a company, 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. We believe that, as you said, 2014-2015 was when truck drivers started getting smartphones. And prior to that, this isn't possible because you can't mail a truck driver a piece of hardware that they're going to install on 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, we realized it was a really 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 from which was very fast, we started hacking on it in March.

1:01:09Incorporated the company April first not on purpose, but like it's it's been fun There's a couple things that we've now built around that we again, you know raise raise the money in kind of April this time frame and kind of chill I think a little bit and then So I guess would have been April me incorporated we raise money and then we built it like I said launch it in August in a private kind of beta environment 20 or 30 customers Announced to the world in October and then raised our our series a in November and closed in December so it was very fast first year And that's where he was a $16 million dollar round from Greylock. That's correct. Which now, like, oh, $16 million series, that seems reasonable. That was very large. That was very, very large. And very fast. It was very large. And again, that came back to the theory of we're going to try to go fast. We need to align around the capital that will allow us to go fast. Because we've felt like we've seen so many smartness. This was also in the earlier days of many of these shared economy and like other sort of ride-charing type services where

1:02:06People 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 hindsight, but at the time, we're like, no, we're not sure, but we need to go fast. We don't want to find out too late that this act that speed was really important. So, we built that, we built it quickly and we determined that was going to be a big factor. Is that because you thought, okay, competitors are going to see this. Competitors, yeah, it's going to do it. We thought people were going to get into it and we felt like we, it was, yeah, these operators don't come along very often.

1:02:35A technology changed that unlocked the potential to build this business and drivers adopted that at this time. So 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 2006-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. 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 catch the F up.

1:03:28which was the way we thought about it. We just said we're behind. We don't know who we're behind right now, but we assume we're behind. Let's go fast. 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 and the category. Of the independent startups, I would say the most notable brand, we were able to have more options when it came to fundraising because there weren't others that were ahead of us that had already raised from these investors. And we were able to build a strong brand and relationship with shippers, carriers, ecosystem partners, the industry, et cetera. Or right now, I still think we're a long ways away 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 it's really important. You can't keep the same.

1:04:18Mindset forever, you have to shift and evolve based on 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. I love 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 help us understand sort of the exponential nature of those next few years. For the first, I think eight quarters or so, we were doubling.

1:04:46Volume every every quarter approximately and that's like gmv like the amount of the number of shipments we're doing we looked at his shipments shipments number of loads that was Probably not exactly that but it was we doubled for quite a while double. I mean aren't doing that right now. It's sort of we reached the size of that's very that'd be very very difficult You know, but we've grown we've more than doubled over the last couple years each year and so that has been very aggressive and It's challenging because if you're trying to grow your business at that scale 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 it at that speed. And I've just said this before, but it feels like we're a four-year-old that looks like an eight-year-old.

1:05:28Because the outside world often looks at us and people that join from other companies are 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 several name brand, you know, Fortune 100 companies now in the country. So we've really gone way beyond niche. But internally, we're four years old. And so to build this in four years and the infrastructure in the systems, they're just not all there. And sometimes we,

1:05:57I think we hold ourselves to an unreasonable bar in that respect. And I actually encourage our team sometimes to not even push us to get there. Like you actually want to be sometimes a little bit less developed because you can move faster and be more flexible. You don't want to look like a 10-year-old company when you're four years old. You want to be four years old. And so that's something that's really important. There's two, I think really important strategic decisions in this feed into this mindset of.

1:06:25grow 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? More or less. Whatever trucking we could get.

1:06:44Yeah, exactly. We weren't sure exactly which category to just. We were taking several different categories. 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 decision about scaling. It was kind of like, you know, if you use the analogy of like a consumer marketplace like a Yelper and Uber, you had like one city that was working. And then there's the canonical question of like, well.

1:07:06What do you do next? Do you expand nationwide? Do you go to one other city? Do you do another? And 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 early. How did you think through that? Because it wasn't obvious, right? You could say like, expand nationwide, but never means we need to have supply nationwide of all these trucks. And we can't do to serve our shippers really, really well. How did you do that so quickly?

1:07:35So 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 the greater Seattle area where a shipment would pick up and drop off in the same location the driver's home that night, or it's a point-to-point Seattle, the Sacramento, Sacramento, Phoenix, for example. And so the marketplace develops at that level.

1:07:57And one of the challenges we encountered early on was we kind of had to decide, are we going to be super local focused? And there's a category of it'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. They sleep at home every night. And so we could have focused specifically on local. And we did that for a while. Then we started realizing that most of the dollars, most of the companies that are really in need of help.

1:08:23have 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 the shipments I have to 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 around these lanes, right? 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.

1:08:51And as soon as you start thinking about, we're going to 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 driver is 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 going to exit your platform and getting them back so hard. They're going to get to St. Louis and they're going to be like, all right, we'll go back to my traditional broker. San Francisco or Oakland or something from Seattle. And so we did local for a while, but we started to have opportunities outside of that. And we realized we

1:09:20We had to kind of have a controlled slide. So we couldn't just go national at first. But we had to really think about corridors and parts of the country where we could develop that flywheel. 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 operate nationally, right? So like you winning a bunch of carriers helps you with shippers in St. Louis and helps you with the shippers in Boston and helps you with shippers in.

1:09:49big carriers operate locally. But if you're bringing on these three to five truck carriers, do they operate, I'm sorry, nationally like that. There's all of them do all of this. There's there's ratios like all of them do all those things. So there's regional carriers too. Maybe they're out for a week, right? And so you can kind of start putting that. So you're right. What we had to do was say, we're not going to have no, like we're going to have some leakage. Like a carrier will come into our network and maybe they'll leave the high five corridor.

1:10:16And that's OK. We're not going to chase them. We're not going to go develop those other markets. Enough of them will stay there. We can't do supply and demand nationally at the same time. So we focused on the Northwest. And then we actually went kind of some West coast. And then we went to Texas. There's a story on that where Unilever reached out and said, hey, we're doing this 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?

1:10:43And I remember- It's the only one right to answer that question. That's an amazing thing to start up to get. Yeah, so I was really confused as to why they called this. Because we were doing very local, like hyper-seattle shipments kind of up and just in that area at the time. And I remember- I remember you guys announcing this deal. I was sitting across from this kind of Lauren Seeks who's been at convoy from the beginning. I remember just literally doing a hell marry past 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 unilever. Because I was like, well, I think I said something like,

1:11:11We would be willing to work with you guys, but we need all your freight on the west coast. Whoa. Just because I'm like, I don't know, I'm going to aim my day off. You got nothing to lose. That's pilot that. And the person thought, I think I was probably half serious, but they could not even rationally believe I may have been serious, so they just laughed and thought it was funny.

1:11:32And then I was like, ah, I like, yeah, 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 get back to your location, but maybe it'll be California, maybe Texas. And they ultimately asked us to start off in Texas. I'm like, okay, this is interesting. Texas is a very heavy local freight market. So it kind of fit our...

1:11:55Emot a little bit and we went down there and we started with them in Texas because they ship from city in Texas to other cities and we told them we're only gonna do local 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 and so we We said we're only gonna do Drive-An at the time it was only flap it and drive in but we really were only doing drive-An so for them we're only gonna drive in shipments We're only gonna do local drive-An shipments and we're only gonna do shipments that are not like that are within this time frame

1:12:25Like, you have to give us this much notice. And we kind of said, if you want to work with us, we're not going to extend ourselves into something we don't know how to do yet. And we're building this network. And the way we thought about our network, someone very, you know, wise early on said, 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. That is the least fragmented marketplace.

1:12:50So you will, in the most quick, the fast-minute or 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. There's some bleed over between regional and local and regional long haul, but effectively, those are different carrier segments. And because you have different equipment types, because you think, so we said to Unilever and others, we're only going to operate in this bucket.

1:13:14You draw the buckets up. They're growing 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. 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 what 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

1:13:43Going to broaden. All right, so one more scale question that I have for you or scaling question that I promise I'm done. So we're in this interesting time in startups in the capital ecosystem where people are starting to favor unit economics over growth. And I'm curious your perspective on that general transition, but as it applies to convoy, I'm curious about over the last four years, 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 two probably prominent reasons why we've done that is we have 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 and therefore we have to

1:14:34We 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 get the people into the company and ensure that we offer like an A plus level of service.

1:14:50We'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 and to end and provide that account management and 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 over investing, I would say, or investing heavily in that at different periods. And when things started to like crack, we might grow too fast in rows. We're not doing that slow it down and then reinvest in that. So that was one.

1:15:20The second is developing the flywheel, and the way freight works is there's no such thing as the price of the, there's no known price of the truck. So, for a job from Seattle to Portland, you might have one truck that's willing to do that job tomorrow for $400, and one truck that's willing to do it for $900. You know, maybe even less and more. For very different reasons. One really doesn't want to do it, one really wants to do it. So the market's kind of made every day. If I take five shipments today, And I have five trucks in my network already. I can probably service all those shipments with the right economics and pretty efficiently because I already have the trucks in my network. But if I want to grow my network, I'm going to say to the shipper, give me 10. I only have five trucks. I need to go get five more trucks that are less convenient located that I don't know yet. And I'm probably going to have to pay more to get them on my platform. 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,

1:16:19We would bring on more demand that we had supply to cover and then use that demand to bring in more supply in each of those. So it's getting to 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 adwords for the demand. For you guys, you're like, let's use sales to onboard a bunch of demand. And then that'll attract the supply. That's right. And there's different balances as the market shifts back and forth. But so we in those shipments, for example, we would not have great unit economics, but it's actually the number.

1:16:48It's ironic. You don't get a bulk discount on truck and you get a bulk surplus. Because 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. Because you're buying a variable cost product that goes up with the amount you use. If you have 10 trucks, those trucks are going to be, imagine those trucks in order for cheapest and most expensive. You're going to 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 job. For the individual truck driver in that moment, for that shipment. 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. There's a dozen other things, but that's one of the investments we made.

1:17:47So you could sacrifice unit economics for a long time to make sure you have 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, you're like, look, the spread between that one truck and that one shipment that has amazing, you cannot 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.

1:18:17Exactly. That's the long-term thesis. There's a lot of new ones behind that, but that's effectively how it works. 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 build the brand and the technology and the infrastructure in parallel with the business. Those are all upfront investments where they can help in terms of your growth. Fundamentally, those are the primary drivers, making sure you do a great job for your customer.

1:18:46It's worth investing early on when you're building your reputation and your brand in a traditional industry as an outsider screwing that up early means you don't have a chance in the future and then being able to grow your flywheel quickly and building density on your lanes is 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 investments. Thank you. David.

1:19:14Do you want to move right into tech themes? Do we want to catch us up to today in some capacity? Well, so today, where would you say you guys rank in terms of brokerages within the industry? Obviously, you were 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 about $600 billion a year.

1:19:43in the US, and that includes private fleets and for hire, but we're kind of weak and compete with all that. The largest broker in the country, the largest truckload kind of freight brokerage is doing about $10 billion a year in truckload freight. And then there's another five to 10 that are between $3, maybe $2, $3 and $10 billion. 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 20, you know, top top, maybe 15.

1:20:13So we're pretty significant. That's pretty great. And all these other companies are decades old. For folks who are new to the show, we do a section after this history in facts called What Would Have Happened Otherwise, where if this is a traditional acquired episode and we're talking about a transaction that happened, it's usually what?

1:20:33If that transaction didn't happen, what if big code didn't buy little code? 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 Where you would be today? 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 shippers. I'm curious if there's like a data mode here, beyond just the marketplace liquidity. Like have you, by sort of rushing into this and being an early player, what other things has it allowed you to do that otherwise if you were, you know, say,

1:21:14300 people today or something and able to service the amount of volume on your platform that that amount would give you, then, you know, what would you be giving up? 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, we wouldn't be able to define the future unless the major players in the industry viewed us very credibly and we're using our service.

1:21:42So 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, are looking to Convoy for what's the future, and we're kind of defining it. Like we're creating a category digital for right now, we're describing what that is, we're telling that story. And I think that you had to make a bet to be in a position where you were at scale, you mattered in the industry.

1:22:10And you were one of the first to do that. If you're not one of the first, no one's gonna look to you for the story about what's happening. And so it's a lot harder for the folks that are a few below to influence what's going on. And in a big way, these sales, you know, you're making sales on both sides. You're selling the shippers on your platform and you're selling the truckers on, you know, being a part of it. On taking the loads, like, There's an immense amount of trust there, like you're convincing them ahead of actually demonstrating value. So it's sort of like you need to have, you need to be busy in this particular instance because you need them to be very receptive to working with you. 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.

1:22:58And I have a lot of respect for the companies that are doing this. It's a very, very difficult industry. It's a hard job being a truck driver's hard running a trucking business is hard. It's a thin margin complicated business and it's hard to differentiate and do it as a traditional broker carrier. But there was definitely a sense early on of, yeah, combo is doing this but it's not really different. No one's going to really take it that seriously. And I remember early on being told by our customers and by analysts in the industry that our competitors were basically saying, you know, combo just gets the freight that nobody else wants.

1:23:28I remember this narrative, too. Yeah, I almost kind of picking up some of the scraps out there. And, you know, I remember hearing, you know, sitting and listening in and people didn't know I was there. Yeah, some computers don't match freight, you know, people match freight. Right. It just doesn't happen. And ironically, computers matching freight is like an amazing use of computers. It's a very good use of computers. And again, I don't think that they didn't recognize totally. But it's sort of what you want to say because it's the right thing and they don't have it yet.

1:23:56And there are some just really big challenges for them to get there. So I think being in the position when we were gave us a chance to kind of 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 every time a truck shows up at a location, when did they show up? How long did they wait? How long did they take to get loaded? How did they rate the facility? What was their experience?

1:24:27That particular shipment, how is it tender 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, in this city, is doing better during this shift than that one, right? And you should be changing your tendering practices because when you tender in the morning, the trucks are more expensive. And like, They've never had data like this before. No one's done that. We started that, and we started a lot of things, and the idea of an instant price, you can instantly get a price that is committed to, and you can see what capacity is to an API. It's not going to get haggled on the phone like this is the price. You start to get to say, this is what the future should look like, and that's when the ad vanishing early, and others can quickly mimic that, and we haven't invented all of the things, but actually we have been very inventive, and we've been the leader in new

1:25:18design. And I think it gives us a chance that our shippers and folks that are making kind of the calls in the industry and influence it matters. Perception is reality in a lot of these things, where if you're at a conference and the conference organizers are a famous freight analyst or a transition analyst from a big bank, it's up and says, we really think digital freight works are the future for this reason. That starts to make it kind of a reality. It comes to self-filling prophecy, because then all the shippers are like, oh, then we should probably start buying into this. You need that perception momentum early on. 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. And David, we're full blown in playbook now, but this is totally one of mine. In a lot of ways, perception is reality with the market, with your customers. And I think I've said this on the show before, but one of the best definitions of a startup is from one of my colleagues at Pioneer Square Labs, Mike Galgon. He pointed out to me that

1:26:11A startup is very frequently just like getting and scrapping and biting to something that it doesn't yet deserve, whether it's a hire, whether it's a customer, you're not there yet, but you're really trying to create the perception that you're there, and it's this interesting self-fulfilling prophecy fly we all love. Once you actually do get that resource and that person joins your team, that customer commits to you, then you kind of are there.

1:26:36And then you can leverage that to the next rung. And I mean, it sounds like you guys have codified this in the Convoy flywheel, but that is the business for you guys. And it is every decision you make. So early on, you're talking about a job. And I'm like, well, I don't know if it's going to work. Should I join? I'm like, I don't know. If you join, you're half the company. So it'll be up to you. It's not like you're joining a thing that has a potential. That's some good jujitsu. That's like a potential, right? I mean, it was hard to hire early on.

1:27:05like convincing someone to leave a job that the biggest- Except for the five people that followed you independent of whatever your idea was. That's right. I mean, that was- We're not, I mean, you know, we talked about some of this scope, but you're right. We had some- but that's also- that was hard. That was trust built up over a year totally, right? I remember trying to convince a lot of people to join Convoy, and it was interesting. We'd used the- in any tactic and the tactic of like, well, you get to build this and all these different things, but the economy has been doing really well. So a lot of-

1:27:33big companies have also had very strong stock value appreciation over the last 10 years. And so oftentimes the pitch to the startup ads is like, you know, we're going to have, we'll have faster appreciation. But when Amazon is doubling, you know, every year, then it's like, You got to move faster than as well. Your stock price has to appreciate faster than it was on stock price. It definitely has, but that's cooled off too. 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. I turn to remember who this person was exactly. But I remember, I was like, well, here's how much we think your convoy stock would be worth.

1:28:10And they were like, well, I'm doing the math and I think Amazon will be worth $8 trillion in three years. And I was like Seattle problems. Why? Well, if you look at the last couple of years of their stock price appreciation or whatever it was, the time when they were using, it was like the exact right time. You have to start working back from GDP. Yeah, but I was kind of like.

1:28:31I was like, I felt so compelled to convince this person that's sort of physically impossible. And you can't apply like a growth rate to a company that's scaled. It's like that. It happened for, like that rate happened for maybe a lot of people. Did you convince the person? Did you make the hire? This is a while ago. I'm trying to remember if that person, if that exact conversation turns into the hire, I believe they did.

1:28:52But that was, I mean, I need a better answer for that. But that was good. But 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, no, you can't. Please don't do this. Please don't make this decision believing this will be an eight trillion dollar company. Like, that's not a thing. And so, but it was hard. And that just emblemized like the issue of that perception, right? So, so what I did early on was, There were a lot of taxes we used to try to convince I'm going to do it. But before that was the thing, I remember drawing what I would do is I would take a piece of paper. 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 no one really knows. They'd just say it's something like 30, 40, or even more. And I'm like, OK, great. And here's your earnings. That's like the y-axis. And I'm going to draw a curve that shows how much money you'll be making every year. And your total wealth accumulation

1:29:46from your salary, or like what you expect to make here. And you know, beginning you're making about this much, it'll probably go up pretty steeply at some point and it'll kind of flatten off a little bit. It's generally like a, you know, salary curve. And if you add up that 30, the area under the curve is your earnings in your life. And I'm like, I'm actually really like a farmer consultant here. It's like, if you integrate your salary, you will get exactly what it worked. And I was like, look, I was like, just this one year, it's going to come down a little bit.

1:30:15And then they'll go back up if we don't like if it doesn't work out and you're leaving after a year because this didn't didn't work for you like then that's the area of your job. We were talking to your co-founder at this point in preparation and he was like you're a ward for working in a failed startup in this environment is you get a better job. Yeah, yeah So that was exactly that 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 your line goes up a little bit. Yeah, you get a higher level of Amazon when you go back. Yeah. And so, yeah, I mean, it was a lot of... I mean, hiring is hard. We've had success, but man, it is everybody knows. It's hard to hire effectively. Yeah. All right, David, anything else for the playbook? Yeah. Well, real quick, my playbook. What I'd love to do, I mean, we'll work on this in future episodes, but because of this...

1:30:59B2B Marketplace is so different and new, and you guys are at the Vanguard. I tried to codify, like, what are some principles of curious view? Like, say yes if you agree or no, but to drive success in a B2B Marketplace, I think one of the best is demand drives supply. If you're bringing the money, you can align incentives in a market and get people to adopt a new technology that otherwise would be really hard. Like a GWIS feature isn't going to compel a trucker to download an app.

1:31:27That's one, two, timing is super important. I think what you guys did with getting truckers paid to use the app within a day, 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 really, like what you said about those early days when people were haters were talking about compoy 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, you can take the scraps from the industry, but because you're building a technology company in 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 companies will take you seriously to drop any scale on the lanes that they care about. So you can use whatever you get to kind of get the carrier base going, and then translate that into

1:32:22a virtual network. And because we plug all the trucks and do our technology platform, as we scale, we effectively have this partnerships that lead to this virtual fleet, which we have visibility into and a direct connection with, which gives us capabilities that feel like it's a more like first party network for the shipper. That's a really powerful combination. And then the last one, which we didn't have time to get into today.

1:32:48I also find it really interesting in these markets is you're saying price is not set. These are not efficient markets. Ultimately, your big goal is if you guys can be efficiently setting price in a way that nobody else can, then you've just completely aggregated the industry. That's my last one. That's a really good transition into grading. 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, lots of other great options to invest that capital. In these ones where either it's a near-term acquisition or there's no transaction that happened with Convoy, going public or selling or anything like that, the way that I think we're going to do this is

1:33:42Grade 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? You know, I think David put in here. What's the scenario where it could be a C- where those things don't come true and what are the factors there Dan you home to 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 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 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 on those transactions and for me to get to an A-plus I think

1:34:40Only after reading a bunch about your business for the last month and then talking to you today, I think it's going to be, 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, 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...

1:35:09running a money, like the end game for every startup. Am I capturing it well? 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 really about making those truck drivers more productive. That's actually this comes down to you. So it's the empty miles we talked about.

1:35:30So convoc can significantly reduce empty miles. Well, and that's why price is hard, right? Because it's worth different, same job is worth different things for different people. 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 with ideal locations to maybe a triangle or a round trip with the ideal appointment times. And we found that carriers will take that job for a significantly lower price than they would have taken each of the jobs in combination to be out of 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. And when we do that, and we actually saw the carriers that do that run empty about 19% of the time that are, you know, if they're really plugged in the common way doing the batching system today with our current density of batching, the ones that don't run empty about 35, 36% of the time. Well, and so just when you look at the impacts on the environment,

1:36:28You're reducing emissions from using batches by about 45%. Like you're reducing empty mile emission about 40% which is massive. That directly also translates into lower costs for the truck. The actual small truck company spends less money to do the jobs because they're driving fewer empty miles. You know trying to reduce weight times all these things. So we view it as let's knock down the waste. Let's go after empty miles unnecessary weight times, you know loading and unloading times and just find ways to reduce those. And if we can do that quickly plus add more volume into that like lower the waste and add more volume then we're creating a better cost structure and then we're in an advantageous position and we have options and getting that in place at scale with the capital we have is the key. Awesome. David, anything else? Dad. I think that's right. All right listeners. Now is a great time to talk about one of our

1:37:24favorite 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.

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1:38:09So 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 this journey with us. For folks who listen to a lot of episodes, I think you'll be like, oh yes, about how long it usually takes. For folks who came tonight expecting a 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.

1:38:38OK, good boy. And we haven't done carveouts 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 for the acquired annual holiday party that is former convoy alum. So Vincent Shane from Mystery have created something incredibly cool. I think it's mystery.sh for anyone who wants to try it out. And you basically can set a time.

1:39:06say some of your preferences of the things you like to do and the things you might want to do that day or night and then random things happen to you and like let's show up and they take you places and you get fed and then like you don't know how to make it happen. You choose the people you do 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 went fencing last night. Who would have thought we'd go fencing? It was super awesome. It was amazing. So if you're looking for like new things to do in your life, I highly recommend mystery.

1:39:36Like this. It was blast. Awesome. Hi. Listeners, thank you so much. We hope you enjoyed 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, that is glow.fm slash acquired. Thank you so much to Dan. And all of you here live with us. This has been such a new and awesome experience for us. So thank you.