Trucking startup Convoy’s cofounder explains edge over Uber Freight

Rachel Premack: First of all, what’s your first move with this new raise? 

Dan Lewis: I think the first thing we’re going to do is double down on what we’ve been doing. 

We’ve realized that, as we’ve gone further and further into the industry, a couple of things have happened. 

One is that over the last year, this has definitely gone from being more of a niche solution in the freight industry, to being mainstream. We’ve been around operating for under four years, and we’re already winning some of the largest contracts from some of the biggest shippers in the country. 

We’re seeing different areas of waste that we’ve been digging into and trying to identify. We’re seeing those really become clear and so we’ve realized we can build a bigger R&D team, invest in additional technology and we can actually really quantify and measure the investment of that and the return of that because the areas where we’re able to reduce unnecessary waste in the system are so obvious.


Convoy’s app had 4% of truck brokerage downloads, according to an Oct. UBS study.
Bastiaan Slabbers/NurPhoto via Getty Images

What’s fun is when you get to the scale where we’re at now, we have a very active business in the United States and we are able to really see the effects of anything we build at a pretty big scale. 

When we identify areas of waste and we start to work on them, we see it take hold pretty quickly now. Shippers get higher quality, we reduce the cost structure, we eliminate a lot of waste, help truck drivers get more jobs done. There’s so much room for improvement that it’s kind of hard for us to see an end to the level of investment we can make from a technology perspective in capturing that right now.

And so, part of this is about continuing to scale the business but also really investing in a lot of technology. There’s several new businesses we’re investing in at the same time. 

Convoy is matching its brokerage might with an expanded suite of software solutions for shippers and carriers

Premack: What other areas are you looking into, outside of trucking?

Lewis: Well, within the trucking world, still.

So our core service is, Proctor and Gamble says, “Convoy, I need you to move ten loads a week on this lane from Dallas to Oklahoma City.” We agree to do that and we are on the hook to make sure that freight is moved successfully, on time, with high quality and everybody ends up getting what they need at the end of the day. So, we’re responsible for that happening.

As we’ve been growing we’ve been building things that kind of go beyond that basic loop and one that we announced recently was called Convoy Connect. That’s a transition management software package. Medium and small shippers use spreadsheets, Post-it Notes, Excel, to organize and manage all of their shipping. 

trucks trucker

Scott Olson/Getty Images

They can now use this free online TMS system from Convoy to manage all their shipping whether that freight is moving on Convoy trucks or it’s moving on their existing trucks that they work with, they can just run it all through our system.

That’s the example on the shipper’s side. On the carrier side, we’re building software and tools that help each of the participants run their whole business in addition to using Convoy as their best solution to get trucking capacity to move their freight, if that makes sense. It lets them run their trucking operation. It lets them run a basic trucking operation through Convoy. 

A lot of our larger shippers, they’re using TMS systems — JDA, Oracle’s OTM, BluJay, MercuryGate. For those larger ones that are more enterprise-grade that encompass several different transportation systems, pretty complex operations, we plug directly into them with the APIs that we built, and that system is called Convoy Now. We announced that a few months ago and it’s a suite of APIs that plug into all the existing systems.

Read more: Oracle is joining Amazon and Uber in the race to digitize the ‘antiquated’ $800 billion trucking industry

There’s a bunch of companies out there that just can’t afford those. They’re smaller, they don’t have the time, energy or money necessarily, one of those three, to buy one of these big systems and install it so they just need a lightweight solution to take them from the, as I mentioned, the Excel, Post-it Notes, whiteboards, to an online system and that’s what we’ve given them, but that’s not going to work for a lot of our customers, a lot of them are going to be using the bigger ones and we’re going to plug in there.

These new software offerings drive efficiency across Convoy’s network, Lewis said

Lewis: Now, in that core trucking service, there’s an incredible amount of waste and inefficiency that we’re removing and I don’t know if we ever said this to you before but our company mission is to transport the world with endless capacity and zero waste. 

That comes back to that core trucking system, which is, every shipper out there today, they want to truck when they need it, where they need it, at a fair price, reliably and consistently, and that, to them, is endless capacity. 

They can’t plan everything. They don’t know next week, exactly which days they’re going to ship to each of their customers and what orders are going to come in and how it’s all going to come together. That’s pretty fluid and they need to have a partner that can be reliable and reactive.

The flip of that though, is this waste. (Shippers) run a long, pretty complicated RFP process where they work with a hundred different carriers and brokers and assign them to lanes, so if one doesn’t come through, the next one comes through. 

They double-book docks and warehouses and then trucks end up waiting for hours for their appointment, or they don’t have efficient appointment times. Or, they pay for dedicated capacity because they can’t predict how much truck capacity they’re actually going to need. They have all these inefficiencies that they’re running in order to get that endless capacity.



So looked at it and said, okay, that’s the North Star for freight. That’s the ultimate mission we’re all going to get to accomplish here and the problem we’re going to get to solve is endless capacity with zero waste. What that really means is, let’s give our shippers the best possible access to the capacity they need when they need it and let’s do it without and unnecessary waste. 

Reducing waste is this beautiful, magical thing because it improves the service experience. You’re not playing telephone, you’re not misinterpreting things, messing things up over the phone. You’re fast, the computer’s going to respond instantly.

You end up reducing just waste and that waste is cost in the form of having to pay that truck driver to wait around or drive extra miles. So it’s this win-win, and that’s the core business. That’s what we’re doubling down on investing in with all this funding.

Convoy has offices in Seattle and Atlanta. And Lewis said Convoy might open a third sales-focused office in the near future — likely in a freight hub.

Premack: What about new offices? For example, what kind of value has the Atlanta office been providing for Convoy?

Lewis: Atlanta’s been fantastic. We recently hired a site director in Atlanta who had formerly worked at Amazon and Walmart, doing operations. I think the office is up to about 200 people now, and so it’s a really significant and important part of our business. 

I do expect we’ll actually be going into additional markets as well over the next year and some of this funding will be to expand further in that area but I think that sort of investment we would make either in Seattle or Atlanta if we didn’t go to a different location, but I do think we’ll end up opening another office as well, at some point.

Premack: With that other office, would that be kind of more of a sales-focused office or something that’s more on the engineering and products side?


Bastiaan Slabbers/NurPhoto via Getty Images

Lewis: If I was comparing the two, I would say probably more on the sales, account management, operations side. However, I think where we’d go next there’s a good chance we’d also think about engineering there too. I don’t think it would just be one.

Premack: Would you consider opening in Chicago any time soon?

Lewis: I’ll consider everywhere. Chicago is an attractive market. On the one hand, it has a concentration of freight talent as a concentration of companies in the freight industry and so the pro of that is that you’re in the mix. 

The con of that is just that everybody is doing the same thing there and everyone is going to be competing for the same thing. So we can look at those pros and cons. But Chicago is definitely an interesting market. 

‘Love problems, not solutions’: Why Lewis looks at Blockbuster’s failure to keep trucking

Premack: Obviously Convoy’s been around for quite a few years, but it seems like there’s more and more digital freight brokerages. I probably get a new digital freight brokers startup PR pitch in my email several times a week. 

What is the secret for Convoy in that you guys are actually able to have a successful freight brokerage? Obviously, you guys are one of the first, but what else would you say is the edge that Convoy has above all of these other newcomers to the space?

Lewis: What we talk about is more the way we’re thinking about ourselves is a digital freight network. We think that’s really the right model and the right way to think about where this industry goes forward. You look at many industries and it’s really about developing these networks that can help power the participants in industry.

There are several things I think that have made a really big difference for Convoy. 

One is our culture. We have built a really strong fast-moving innovative culture. We have a really great set of values. We have them in every single room. We have a clear perspective on what is the business model we’re applying. We have a flywheel that we have built our operations around and that’s, again, in every single room and everyone, we talk about it all the time. And so, I think that our culture is one big part of that.


Convoy’s Dan Lewis at a recent conference.
Courtesy of Convoy

The second is, one of our values is called, “Love problems, not solutions.” 

Think Blockbuster. Blockbuster was obsessed over its solution for entertainment. Turns out, the problem was entertainment. The solution is not a VHS tape. The solution is, whatever the latest technology can offer that’s best for entertainment.

The solutions come and go, the problems are evergreen. What that’s allowed us to do is say, when we were starting this company, the problem we were trying to solve is, “How do we build a company that can reduce waste, move people to this technology-based system and transform freight — get freight to this new place where it just works better for shippers, carriers and everybody?”

Lewis has worked at Amazon, Microsoft, and Google — but Bezos’ mega-retailer was the most influential for the Yale graduate

Premack: I’ve written a bit about former Amazon people who create their own startups and other sorts of things. Both you and your other co-founder are from Amazon. 

A lot of people who used to work at Amazon have a very entrepreneurial, experimental kind of approach to how they solve problems, and in that they try to look at the customer instead of looking at the other peers in their space. How would you say that your time at Amazon has influenced how you run Convoy?

Lewis: Yeah. I’ve taken things from each of the companies I’ve worked for. I’ve worked for several large tech companies — Amazon, Microsoft, Google. I could look at each of them and I could say, this is something I took.

The majority of that, if I were to add them all up, they came from Amazon. Amazon had more influence over some really smart ways to go about building a company and they did some things that people thought were different so certainly we have taken some things from them. 

I think the model for the leadership principles — we call them our company values — we use them in a very similar way. 

We wanted to have a different culture but (we kept the idea of an) actual list of values with descriptions and using those for interviews, using those for peer reviews, having those in every single office in our building. On every wall, there’s a stack of them. People use them in discussions all the time. 

amazon office

Elaine Thompson/AP

Making them it front-and-center and part of the company is a good way to scale because it keeps people aligned.

Another one is the cultural aspect of diving deep. The leaders at Amazon track metrics of every team. Many companies roll their metrics up and the senior leaders just track a handful. There, it’s like the exact metric that a 25-person team is working on. 

I thought was really smart because it creates accountability, but it also creates a sense of connection and ownership of like, “I’m part of this. I’m part of driving what matters to this company.” 

Read more: Why Alphabet just led a $185 million investment round in a trucking startup

The obsession over customers is really smart. That comes back to love problems, not solutions. Solutions are going to come and go, keep focusing on your customer and understanding what they want or what they need, truly. 

If that’s your North Star, you’ll keep changing what you’re building to meet that need, versus getting so fixated on what you’ve already built and trying to convince everybody that’s the right thing, which is what some companies stumble around.

Convoy’s biggest risk is ensuring strong talent comes to the startup

Premack: Going back to Convoy again, what would you say is the number one hurdle in building the company out and increasing its scale even more?

Lewis: When I think about the biggest risk, I tend to come back to people again. 

I think that hiring great people, building a strong culture, having strong internal communications so that people understand what we’re doing, the direction we’re going and why we’re doing it and know the why behind something — which is another one of our values — you have to know why you’re doing it to feel connected to it, that’s so critical. 

In my business, one year from now, two years from now, there will be things that we’re facing we can’t predict today. We can’t hedge against those things by having a plan today because we don’t even know what’s going to happen.

Read more: A 4-year-old trucking startup achieved a major victory in fixing one of transportation’s biggest inefficiencies — and it’s a huge win for truck drivers

The only way you can really hedge against those things is by hiring really good people that are good at solving problems, thoughtful, have good judgment, and are able to act quickly with a set of values that give them confidence they’re doing the right thing. You’ve got to build that machine and that’s how you hedge against future risk. 

I get asked a lot by investors, what is the biggest risk to the business? I’m like, well, I can tell you what it is today and I would tell you we are solving it but I know there’s going to be ten others over the years, and the way to hedge against that is incredible people and culture. 

Underpricing has become a massive conversation point throughout the digital freight-brokerage industry. Lewis says Convoy prices lower because of its tech advantage.

Premack: Overall, people are talking about how the digital freight marketplace startups are underpricing some of the competitors on the, some would say, traditional side of freight brokerage. Where does Convoy stand on that? How do you figure out how to price Convoy’s loads?

Lewis: It’s based on efficiency. Let’s take an example real quick. There are three big areas of waste on a given shipment. 

How far does the driver have to run empty? Do they have to come from a 150 miles away, 250 miles away, or 20 miles away, to pick up that load, and when they’re done, how far do they have to drive empty to the next thing or back home?

The second is, when they get to the location where they’re picking up or dropping off, how many hours do they wait for their appointment time? And then, when they’re there, how long are they loaded and unloaded? 

More than 50% of the time spent on average are when the driver is not productively driving a full truck or a truck that’s loaded. For us, is a huge amount of efficiency that we can create. 


MIAMI, FL – NOVEMBER 29: Tractor trailers roll along the highway on November 29, 2017 in Miami, Florida.
Joe Raedle/Getty Images

As we improve on those things, we lower our rates because we are able to lower the price of running the business, running the system.

I think there are some others that lowered their rates significantly more aggressively than we did over the past year. There have been kind of the grow at all costs model in a lot of different businesses, but ours is not that. 

Ours is, identify waste, reduce waste through batching, through appointment optimization, through the Convoy Go program, which has preloaded trailers, like just checking these things off and as we have more volume on a given lane or in a given market, of a different part of the country, we see those things get better and better.

The average price for a truck goes down, not because we’re undercutting pricing in trucking, but because the driver is running fewer empty miles and waiting less time for their appointments. They are able to do more jobs and be more productive. 

When we’re able to do that, we can pass some of that along to our customers. We actually do that and we have a lot of data now showing the efficiencies we’re capturing.

I don’t think it’s sustainable for anyone to simply lower their prices without also lowering the cost structure and reducing waste and finding efficiencies in the business in automating things. You have to do those things otherwise you can’t actually sustain a lower cost structure. I’m assuming some companies are taking that path of simply lowering prices without actually yet having a lower cost structure.

Convoy on its financial outlook

Premack: Right now, is Convoy profitable or do you see a path for profitability?

Lewis: We definitely see a path for profitability. In some of our lanes, we have great economics. 

The freight industry is profitable and it has been for decades. There are over 10,000 brokers that offer, effectively, the same economics. So, when we start to get into in our top 100 lanes, for example, we have better-than-industry economics. We’re able to buy trucks at a more competitive rate than the rest of the industry. There are a lot of markets that Convoy has where we have really healthy economics. 

Convoy created a plan for increased profitability almost two years ago — a pivot from merely bumping revenue numbers

Premack: When do you see Convoy becoming profitable?

Lewis: I don’t have a specific time frame I can share right now, but we have it conquered internally. 

We know we have a plan and we know what that looks like to get there so we’ve been investing in that since early 2018. That’s when we changed our business model to specifically focus on not just growing the top line of the company but to also concentrate that business onto a set of lanes.

(Note: A Convoy representative shared with Business Insider after this interview that Convoy maintains profitable lanes in Los Angeles, Dallas, Chicago, and other top markets.)

So we said, our metric was, let’s have top line growth, let’s grow the size of the company, but over time, an increasing percentage of that business has to be concentrated on mature lanes where we have better economics in the industry. 


Joel Page/Portland Press Herald via Getty Images

We forced ourselves to grow in a healthy way by concentrating our business on these lanes where we end up having really healthy economics. That was a change we made about a year and a half ago.

You have a bunch of drivers using your technology. They’re looking for these batched jobs, these combined jobs. We build systems to optimize the appointment times, to find the right truck to reduce empty miles so we lower the cost in that space of acquiring trucking capacity and that’s the playbook, that’s the model. Waste is our biggest competitor. If we reduce waste from where we are today, it’s an incredibly successful company. And so, that’s what all of our teams are focused on right now.

Premack: That definitely makes sense because I feel like it’s easy to say, “We’re building density,” but you actually can’t just build density all across the US in a few short years.

Lewis: Yeah, that’s right. We’ve seen sometimes people will announce numbers where you’re like — if those numbers are true, each of your carriers is doing less than one job per year.  

App downloads isn’t as relevant today, it’s not about that. It’s about active, engaged participants efficiently using your system and creating efficiencies.

We think about it long term. We’re like, okay, we’re going to work with this company for years. How do we create a network? How do we not just grow top lines? 

truck driver


There are companies out there that focus on top line growth at all costs. They want to show big numbers and they want to get there as quickly as possible and we’ve seen, in some cases, that doesn’t actually lead to the right outcomes. 

It’s about how are you growing your business in a way that’s going to lead to a better business that’s actually truly differentiated. It’s not about the number of shipments, it’s about them being concentrated on specific lanes, and then reducing waste in those lanes. We measure that as a company metric, which is how much waste needs to be reduced in each of these areas. That’s a specific business decision to go that path.

If our business was, let’s take any freight we can get, there’s tons of freight going from random point A to random point B, which we could make a profit on because the shipper would pay us, we would go find a truck like a traditional brokerage and we’d make a spread and we’d could have more employees and a bigger Chicago office, like you mentioned. We could have all these people doing this and we could grow faster from a top line perspective, but nothing would be different. We would, in five years, wake up and look just like all the traditional trucking companies and brokerages that exist today.

And so, top-line growth is actually, sometimes counter to building a healthy business in freight or building the right business. It all matters, it’s all important. We care a lot about it, but it’s not everything.

Lewis says his company has only one other competitor — Uber Freight

Premack: And then one last question before our time is up, it seems just like from my reporting, it looks like Uber Freight is probably your biggest competitor. The company that has as much scale as Convoy has. Both of you are also talking about improving lives of truck drivers. 

Considering Uber Freight does have more brand recognition, how is Convoy trying to set itself apart from Uber Freight?

Lewis: In the spirit of moving the world from traditional to new solutions, I think they are the other competitor. We don’t really see others when we’re talking to our customers and going to their events and stuff. They’re the primary other competitor that we would see in the space. 

We’re both trying to shift hundreds of billions of dollars worth of freight from this old world to the new world. We have a lot of customers that have given us feedback as to where we’re different, so we get that feedback all the time.

I think the biggest area is investments in data and technology. When we first started the business, the very first shipments we ever did were automatically matched and priced via algorithms in our system and run through the technology.

We’ve grown with that as the expectation and we’ve put a huge amount of effort into automatically matching our freight by having all the carriers plugged into our platform. We believe it’s how you reduce waste. That’s how you’re going to solve this problem.

Uber Freight

Travis Kalanick/Twitter

They took more of a traditional approach. They started started in 2016. By the end of 2017, they had a very large, 500-person operation in Chicago and in San Francisco at that point. 

I think the biggest difference was they took more of the, “Let’s grow the top line as fast as we can and build a very large traditional brokerage to start and then, over time, let’s transition that to be more of a technology business.”

We started as a technology business, really focused on efficiency and waste reduction as a solution.

It’s all we do as a company. All the best people at Convoy work on trucking and this mission I just kind of went through. That is kind of the DNA of the company. 

It’s spread between multiple parts of Uber, trying to figure out who they are today, and then it started historically and for several years was a very manual operation that is now applying more technology under the current regime. But that wasn’t the history, so that still plays out in a lot of our customers that have had that experience and have come back and said, hey, that’s the thing we see that’s most different between you guys.

But our biggest competitor is, this sounds cheesy, but it’s waste. If we eliminate that, we will create a great business and our customers and carriers will be really happy.

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