- The CEO and founder of Convoy, Dan Lewis, discusses his background in supply chain and technology and how it led him to start a trucking marketplace.
- He talks about the inspiration he gained from observing the shift in behavior caused by Amazon's fast delivery service.
- Lewis explains his process of researching and gathering information before starting Convoy, including reaching out to people in the trucking industry and visiting truck stops and warehouses.
- One of the key insights he gained from his research was the lack of trust between parties in the industry, leading to a focus on building trust, transparency, and visibility in Convoy's services.
- Convoy addresses the trust issue by offering guaranteed prices and real jobs to truck drivers, providing transparency and consistency in pricing and job opportunities.

Convoy, a trucking marketplace, ensures that all posted jobs are real and offers guaranteed upfront pricing, quick payment to drivers, and automated detention payment. They initially struggled to attract truck drivers but gained traction by offering real jobs and using each job as a marketing opportunity. They expanded their operations based on customer demand and focused on serving specific geographies and popular freight lanes. They started in the Pacific Northwest and gradually expanded to other regions of the United States.

- Convoy focused on building supply in regions with high freight volume
- Initially, Convoy had to push back on expanding to new areas to maintain focus on specific lanes and markets
- Eventually, Convoy expanded nationally to meet the needs of their national customers and truck drivers
- Convoy used technology to automate transactions and matching in the marketplace
- Convoy started with a small team of 30-40 people, primarily engineers, and quickly grew to over 200 people in less than 3 years
- The CEO's role shifted from being a visionary recruiter to focusing on product development and business growth
- Convoy went through different stages of fundraising to support their growth.

- The speaker discusses their experience raising a Series A round of funding from Greylock in 2015
- They spent time building relationships with customers, including Unilever, and expanding their business on the West Coast
- In 2017, they focused on strategic business development and forming deep partnerships
- The speaker's role evolved from "doer in chief" to "company builder in chief"
- The company recently codified their mission statement and core values to maintain consistency as they scaled
- They have a thorough interview process to ensure cultural fit and assign interviewers different values to assess candidates
- The speaker stopped interviewing every candidate after around 150 employees but still meets with new hires to listen to their thoughts and plans.

- The CEO of Convoy, Kyle Moffitt, emphasizes the importance of one-on-one meetings with new employees to understand their goals and build trust.
- Moffitt shares two key lessons learned from hiring mistakes: trusting instincts when something feels off culturally and using written exercises to assess candidates' writing skills and ability to structure information.
- Moffitt suggests asking unconventional questions during interviews to gauge candidates' attitudes and reactions to unexpected tasks.
- To assess if someone can scale to the next level or role, Moffitt advises considering their ability to hire someone as good or better than themselves for their current position.
- Moffitt believes that attracting senior executives to a startup is about selling the opportunity to build something bigger and empowering them to take on a significant part of the CEO's job.
- Moffitt addresses the tension that arises as a company scales and suggests involving early hires in decision-making and empowering them to represent the company's culture, history, and mission.

- Early employees in a scaling company may feel less transparency due to less information flow.
- Creating a way to share more information is important to address this challenge.
- Convoy values the "know why" value, where employees are involved in things beyond their job and have visibility into the company's strategy.
- Convoy shares a lot of information with the whole company every week to keep early employees feeling connected and informed.
- Early employees act as champions of the company, explaining and sharing information with their peers.
- It is important for employees to view their job as more than just completing tasks, but also understanding the mission and culture of the company.
- Ground-up approach is necessary for fostering this mindset, rather than a top-down approach.

- Dan Lewis, CEO and founder of Convoy, started the trucking marketplace after being inspired by Amazon's fast delivery service.
- Convoy focuses on building trust, transparency, and visibility in its services, offering guaranteed prices and real jobs to truck drivers.
- They initially struggled to attract truck drivers but gained traction by offering real jobs and using each job as a marketing opportunity.
- Convoy expanded its operations based on customer demand and focused on serving specific geographies and popular freight lanes.
- They used technology to automate transactions and matching in the marketplace.
- The CEO's role shifted from being a visionary recruiter to focusing on product development and business growth.
- Convoy went through different stages of fundraising and formed deep partnerships.
- They recently codified their mission statement and core values to maintain consistency as they scaled.
- Convoy has a thorough interview process and emphasizes the importance of one-on-one meetings with new employees.
- They believe in involving early hires in decision-making and empowering them to represent the company's culture, history, and mission.
- Convoy values transparency and shares a lot of information with the whole company every week to keep early employees feeling connected and informed.

Dan Lewis - https://twitter.com/daniellewis - is the CEO and Cofounder of Convoy - https://convoy.com/

Convoy matches shippers with freight carriers, which helps the trucking industry run more efficiently because currently, over 40% of the trucks on the road are empty.

Anu Hariharan is a Partner at YC Continuity - https://twitter.com/anuhariharan

Read the transcript here - https://blog.ycombinator.com/dan-lewis-ceo-of-convoy-on-the-future-of-freight

Thank you so much, Dan, for joining us on the podcast today.

So Dan Lewis is the CEO and founder of Convoy.

Dan, I wanted to start with your background, primarily because now you're building a trucking marketplace.

And so I was curious, what did you do and how did you arrive at this idea?

Yeah, so it really comes back to a combination of background in supply chain and technology.

My family run a mom and pop off supply company, you know, distributing off supplies all around the Puget Sound in Washington.

And every summer my job was to drive big sprinter vans delivering stuff.

So I learned a lot about the idea of warehouse operations and delivering, but it wasn't really something that I thought, man, I'm gonna go build a company and do this.

And then after school, I ended up doing a lot of work in transportation and technology.

I worked for the Panama Canal for a while.

I ended up living in Spain doing management consulting, thinking a lot about outsourcing of maintenance and parts distribution, did similar work with some airlines and companies in the United States, and then shifted over and started working in tech.

Actually, my job in college was building websites for the Yale Athletics Department, which was a great job.

You know, I got 10 bucks an hour and I could work from my dorm room.

But that kind of led to an interest in technology and then after college and after doing some consulting, I was at Microsoft for a while and a handful of other technology startups and bigger technology companies.

And 1 of the things that I saw at Amazon that kind of inspired me was, I realized that when I was growing up, we used to go to the store to buy stuff.

And we would buy it the same day that we wanted it.

You can decide the day you want it, if you want to get it or not.

And then online shopping came around and you had to choose, do I want to go to the store and get it today Or do I want to buy it 7 days in advance?

And then it was 5 days and then 3 days and then 2 and then 1.

And Amazon really took hold and started lowering or raising the bar for delivery and making it faster and faster.

And all of a sudden with Prime, the decision between do I want it really soon and do I want to buy it online, wasn't a conflict anymore.

And Amazon really started taking over in retail.

And it was really that that caused me to think, okay, so the supply chain's winning.

It's not the location of the store, it's not the ambiance, how nice the sales staff is, how easy the parking is, all that stuff.

It's the fact that I can get it really fast.

And that was driving massive shift in behavior.

And we looked at a lot of different companies out there.

I was looking to a startup in general and I decided to leave Amazon and go pursue this.

When I was looking at transportation, a lot of the companies were last mile.

So delivering Instacart or Postmates or DoorDash or Uber Rush or Google Shopping Express, all these different companies that were doing that, there were not a lot of companies focusing on the middle mile, getting everything in the right place so that you could do that same day delivery.

And that was the initial, it was my background, but kind of the inspiration that led to thinking, let's go build a logistics company.

Gita Gopinath And 1 of the things I know, having talked before, is you actually worked on even flushing the idea out a lot more before you started building it.

Can you talk about that process and what work did you do to really understand, okay, this seems interesting, but is this real?

And when did you actually get convinced that you are going to go build this?

Brian Fitzpatrick I was liking what I was doing at my job, but I had this, you know, I really wanted to go start a company and I have 2 kids and, you know, my wife's at home with the kids and everything like that.

So I was like, okay, if I'm gonna take this risk and walk away from my job, I better know what I'm doing.

And so, And I think because I had done consulting, I didn't really know another way to do it.

I was like, well, I have to go do a bunch of

And before we decided what to build, we spent weeks full time kind of out in the field researching.

So what I initially did was a bunch of online research to figure out kind of what the general space looks like.

I wrote to probably a hundred different people, maybe a third of them from my background, you know, people I knew from previous jobs related to supply chain that I could talk to about trucking.

2 thirds of them are people I just found on LinkedIn, and just wrote to them or just called them.

Dacuyan All of them in transportation, trucking.

Could be brokerages, warehouses, truck drivers.

And growing up, we always hosted foreign students and foreign families in our house.

He ended up running a trucking business with his family and his brothers out of Eastern Washington.

So he was actually the first call that I made.

And he was talking to me about how he drove a truck delivering produce from Washington to Florida and some other runs as well.

But I started to do a bunch of phone calls.

And then I went out in the field and I was like, well, I have to go talk to people because that's the fastest way to learn and to make sure I don't make a big mistake.

And I remember, it's kind of funny, I remember 2 things.

I wanted to look professional, but I also wanted to fit in.

So I bought a bunch of gift cards and I went to truck stops and I wasn't quite sure how to engage people at first.

So I went inside and looked around and went back and sat in my car.

I was like, okay, I gotta think about how I'm gonna do this.

And the easiest person to go talk to was somebody who was like filling the tires with air, you know, so I went over and talked to that person and then started having more and more conversations at these truck stops and learning more and more.

I didn't want to, you know, I was kind of like trying to gather as much information as I could.

Did the same thing in warehouses, just walked into a bunch of warehouses, got kicked out of the Whole Foods warehouse.

I think the door was not supposed to be open.

I just walked in and started talking to people and they were like, what are you doing?

But over 6 or 7 weeks, all that research and those phone calls and people just want to talk to you about what they're doing, you know?

I put them together and then had a lot of detail and tons of quotes and anecdotes and real examples to back up kind of the theory that you get from the data that's online.

And when we took that to investors, that was different.

And I hadn't realized how unique that was until after I did it.

I thought that was normal, but then after I did it, I realized Not every potential founder goes and does that level of research before they start proposing their idea.

And what were some of the 2 or 3 big learnings for you from that research in terms of how you decided to launch Conway and what pain points to solve?

Kyle Liermann Yeah, I think the first thing I learned was 1, people in the industry were super open and interested in talking and interested in improving things.

So it was very welcoming in that respect.

A quick aside is that coming from a tech background and from a consulting background, I was always used to setting appointments or putting something on the calendar.

And in trucking, you just pick up the phone and call.

I remember so many times I'd try to set an appointment with someone, they're like, no, no, no, just call me.

But probably the biggest insight we had early on was trust.

There was a lack of trust between parties in the industry.

And people generally get along, but there wasn't like a deep seated trust that shippers were confident brokers weren't taking advantage of them.

In fact, shippers often felt like brokers and some of their transportation parties weren't reliable, or they had issues, or they didn't trust the pricing.

And brokers also felt like, when they were working with trucking companies, that they didn't get the respect they deserve for all the work.

The trucking companies felt like they were not necessary.

And truck drivers would constantly tell me that they felt like brokers weren't looking out for them.

And that larger trucking companies weren't looking out for these smaller, smaller guys and that they wanted someone they could count on.

They wanted someone who would treat them fairly and more transparently.

So there was kind of a lack of data, lack of transparency, and just that led to kind of some mistrust between the parties And honestly, everybody, you know, the shipper's trying to get the best rate possible, the trucking company's trying to get the best rate possible, and the broker or the 3PL in the middle is trying to do the same thing on both sides.

And so everyone is trying to negotiate all the time.

So it does breed a little bit of mistrust.

So we realized, you know, the first thing was, let's build a lot, let's focus on building trust.

Let's focus on bringing transparency, consistency and visibility into pricing, and visibility into where the trucks are, which answers a lot of questions.

1 of the areas that raised some lack of trust was that shippers often didn't know where the truck was.

And trucking companies and truck drivers wouldn't always honestly report exactly where they were.

So there was a trust issue on both sides, not just on the driver, but also the shipper side.

That's right, well shippers, yeah, That's right.

They didn't always feel like they were getting a full straight story.

And I think that's pretty normal when you have a big industry and a lot of different parties involved and a lot of negotiating involved every day.

And so all the parties were kind of a little bit, a love-hate relationship was how 1 of them described it to me.

And how is Convoit today, you think, solving that trust issue on both sides?

So when we have a job that we're going to offer to the truck drivers in our community, our partners, We figure out which trucks or which carriers this job is best for and we offer it to them.

And it's guaranteed that there's a real job behind that.

1 of the things that was common in the industry is that sometimes brokers and 3PLs or even big trucking companies would post jobs online that weren't actually jobs they had yet.

They'd post them to try to get a price, to figure out what the truck would do it for, and then they can take that price and go back and try to get the actual job.

We don't put jobs up that aren't real jobs.

And that was important and a guaranteed upfront price.

We're not going to go back and ask you to pay you less later.

And so there was pricing confidence and real job confidence.

They're also used to being stiff sometimes and worried about not getting paid.

And so we paid them very quickly so they would have confidence the convoy was actually respecting them.

On the other side with shippers, all the trucks that run loads for convoy use the convoy app.

And so that provides real-time visibility for the shipper to understand where the load is.

And when the truck's arriving, it provides, and actually another good example there is If a truck shows up at a facility and it's delayed, typically more than a couple hours in the industry, that truck is going to expect to get what's called detention payment for being delayed.

And the truck's going to say they arrived earlier and the shipper's going to say, well they arrived later because they don't want to pay.

And so what we can do with that real-time visibility is solve problems like that.

We actually built something that's pretty new in the industry, it's sort of automated detention.

We just track it and we pay the driver, and they can just do it right from the app.

So they don't have to go through an arduous process of trying to get that.

Yeah, so on the trucker side, you do it with guaranteed pricing up front and a real job and quick pay, versus on the shipper side you're giving them tracking info and even helping solve for delayed shipments.

And solving for just, if you know when it's actually there, you can see where it is, you can get time stamps that are real, it answers a lot of the debates.

So let's go back to year 1 of Convoy, because a lot of our audience are actually early stage startups.

And 1 of the big questions they often have about a marketplace, because yours is a marketplace.

You have truck drivers and shippers on the other side.

So the first question most of our viewers often have is, how do you bootstrap a marketplace?

And so How did you guys go about doing it?

How did you find your first few truck drivers and your shippers?

We thought, we went out and did so much research that I had a pretty good list of truck drivers and a pretty good list of shippers right at the beginning.

And so we thought, okay, we'll go talk to a bunch of truck drivers and get them signed up.

And then we'll go to shippers, you know, start start bringing loads into this marketplace and start developing it as a broker.

To be honest, we went out and talk to a bunch of them.

And they're like, well, do you have any loads yet?

As much as they loved the idea, it's vaporware.

For them it was like this new company, never heard of us before.

And they also, as I mentioned, didn't have a lot of trust.

So they were kind of skeptical of who's convoy.

They're not going to download map and start using it.

They're busy and they're looking for their next load right now.

So then we switched over and went to shippers and we spent a lot of time again building trust and that's where we could sit down with the companies that ship freight.

Some early customers were print shops, for example, and you go talk to them and figure out what is it you guys need, what are your pain points, and they'd tell us, and we'd say, okay, we can do this

And so we were able to get some shipments from them.

And because those loads don't have to pick up for 24, 48 hours, from the time they're offered to us, we had time to take that job and turn around and go find a truck.

So we actually used every single job as a marketing opportunity.

And we used that job to go find a truck, offer them the job.

They'd say, yep, wanna do this work for you?

We'd say, great, download the app and it'll show up inside the app.

And it was the right kind of way to get them to start engaging with us through a real job.

And then to get the job and complete it, they would have to use the app.

And that was fine for them as long as it was a real

That then started building some buzz, especially in kind of the Western Washington community where we got started.

And then truck drivers would tell their friends and we started getting more on And we built some referral programs early on, once we had a few truck drivers that trusted us.

And it was pretty small initially, but honestly it really came down to getting the job and using that as a marketing opportunity to get a truck to sign up for the marketplace, versus trying to get supply before we actually had any action going.

Usually it's true for them, the supply always goes to where demand is, at least initially.

So Did you start off in Pacific Northwest, is that right, because in Seattle?

Kyle Lierman Yeah, we started off in the Pacific Northwest doing straight truck work, so box truck deliveries around like Western Washington, as well as some full truckload deliveries.

And honestly, I think we did up to about 150 miles when we first started.

And the idea was in trucking, you have local truck drivers.

They typically don't run more than 250 miles in 1 way because they want to get home that night.

And they don't have maybe a bed to sleep in their cab.

So we focused on the local folks initially.

And the advantage there was that when you're trying to build a marketplace, you're trying to build density, right?

You want to have a dense number of suppliers and buyers in that particular market.

So because we focus just on jobs within a couple hundred miles of Seattle, every truck driver that we signed up was available the next day for another job because they lived in that region and they slept in that region every night.

And so therefore we were able to get a higher density of truck drivers quickly in that region and start seeing the marketplace take shape and start learning how the business worked.

We are just about nationwide now to be honest.

Parts of the South and Southeast are where we're starting to expand into now.

But we operate out of all the major metros right now.

And we think of the world kind of metro to metro.

We Think about it in terms of the shipping lanes that exist.

So let me ask you this, because it's interesting, it's always interesting to see how marketplaces scale.

It's very widely established that Uber and Lyft went city by city, right?

Because there the riders are requesting for rides within the city.

Airbnb was all about travel, so 1 of the things they did very early was, you know, they went after all the high tourist cities, right, New York, London, rather than just doing US, they just did global cities that had a lot of tourist traffic.

How did you decide market number 2 after Pacific Northwest, or even from local to regional?

We always thought about what's the minimum viable footprint to serve our customers.

And initially, we serve both trucking companies and shippers, but initially the folks that were giving us jobs and loads that we could take to go get truck drivers on the platform are shippers, and we had to really understand what they needed.

So initially, as I mentioned, we focused just in the Northwest and we thought about 2 different ways to expand.

1 was to take kind of the initial services that we offer, so the types of trucking that we supported, which at that time was a drive-in, you know, full truckload drive-in as well as flatbed, and expand that into more geographies and more lanes, or instead stay in the same geography and add more types of trucks.

And most of our customers that we had to date were much more interested in us to expand to new geographies with them than offering additional types of trucks, because most of them, we were already servicing the types of trucks that they needed.

And so we decided, okay, if that's where our customers are looking for us to expand, that will help us expand, because it'll give us more freight and more volume in business as we expand.

And so we essentially looked at, you know, where did our existing customers want to run freight next?

And that's how we started thinking about expanding.

So sort of, you know, what is the minimum viable footprint for a customer where I can feel like I'm really servicing them as a partner.

And that's challenging in freight because I think you're right, in a lot of marketplaces it's a specific local geography and everybody stays in that geography.

Whereas in trucking, 1 company based in Seattle or based in Portland might ship to 100 other cities.

Another company might ship to 90 cities with 60 overlapping with that other 1.

So you kind of have to look and see what are the most popular common freight lanes of your customers, and where do they want to start shipping with you next.

And that's a really healthy way to start expanding into new geographies.

So that's how we initially started going more broadly, was through our customers' desire for us to service them on additional lanes.

When did you first expand out of Pacific Northwest?

How long were you in that 150 mile local zone before you said, hey, I think we have product market fit, let's expand?

You know, I think we were probably operating in that zone for probably 4 to 5 months.

And then we, so I mean the exact progression, which I'm happy to share, was Western Washington, Washington State.

I remember drawing like the zones on the map, you know, like we're going to allow shipments to work in this zone, like using like a map and trying to draw it, because Washington has some really remote areas.

Then we did Washington, Oregon, and Idaho.

And then we kind of did the I-5 corridor going down to LA.

Then we started doing the western 7 states.

So we really started to expand in the same contiguous area.

And in each of these different regions that we went into, we thought a lot about different major highways and corridors, and the major lanes where freight runs, and that's really the key is to understand sort of where most of the volume's gonna be coming, and making sure you're building a lot of supply there.

And it has been, honestly, probably 1 of the things, if you're people that are building marketplaces now, that was the most challenging part of this was our customers were constantly asking us to go to new areas.

And for good reason, they were excited to work with us and they wanted what we were offering in all of their distribution centers around the country, for example.

See all Y Combinator transcripts on Youtube

Dan Lewis, CEO of Convoy, on the Future of Freight