Trucking startup Convoy's cofounder explains edge over Uber Freight - Business Insider

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Convoy just got another $400 million to fight Uber Freight for control of the digital-freight market. Its ex-Amazon cofounder revealed to us the next steps for the $2.75 billion company's quest to dominate truck brokerage.

I think the first thing we're going to do is double down on what we've been doing.

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. 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.

There's a bunch of companies out there that just can't afford those.

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.

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.

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?"

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

Underpricing has become a massive conversation point throughout the digital freight-brokerage industry. Lewis says Convoy prices lower because of its tech advantage.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?It's based on efficiency.

MIAMI, FL - NOVEMBER 29: Tractor trailers roll along the highway on November 29, 2017 in Miami, Florida.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. 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.

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. 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.

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.

 

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