A new Seattle startup has raised $2.5 million from an impressive group of investors to change how shippers connect with trucking companies.
Convoy today announced the funding round, which was led by Code.org founders Hadi and Ali Partovi. Other participating investors include Bezos Expeditions — the investment arm of Amazon.com CEO Jeff Bezos — Salesforce.com CEO Marc Benioff, Expedia CEO Dara Khosrowshahi, Dropbox CEO Drew Houston, former Starbucks President Howard Behar, KKR CEO Henry Kravis, eBay founder Pierre Omidyar via Omidyar Technology Ventures, and several others.
Founded in April, Convoy is using technology to create more efficiency in a $800 billion U.S. trucking industry that has largely remained unchanged for decades, explained Convoy CEO Dan Lewis.
“The problem we are solving is around local and regional access to trucks on demand,” Lewis told GeekWire.
Convoy’s on-demand service matches trucking companies with shippers that need to move freight, like pallets of steel, for example. The startup has built a smartphone-based, Uber-like system that lets truckers find jobs in a matter of minutes without the traditional legwork — and monetary cut — required when using a broker.
On the shipper side, Convoy’s online portal offers immediate access to pricing information — which is calculated instantly based on distance, weight, and other variables — and available trucks, all of which are pre-approved by Convoy, licensed by the government, and carry cargo insurance. The company also provides customer service to ensure that shipments are completed.
The service lets both truckers and shippers book orders on short notice and track the location of containers in real-time. Lewis noted how this wasn’t possible until a majority of truck drivers owned smartphones and GPS technology was robust enough to operate smoothly outside of urban areas.
“The window opened up a couple years ago when the smartphone became the free phone, and now almost all drivers have them and are comfortable using GPS when they drive,” explained Lewis, who was most recently a general manager at Amazon. “Now we can have that connected technology-driven network of truck drivers that makes everything efficient.”
Here’s how the traditional process works today. If you’re a company needing to ship freight 100 miles away, you’d call a handful of trucking companies to set something up. Or, you’d hire a broker, who would talk to drivers, negotiate prices, make sure trucks were available, and set a pickup and drop-off schedule.
Lewis said that some brokers make up to 250 calls per day.
“The system is running on phone calls,” he added. “That is a lot of complex information to transfer over the phone. The broker takes a healthy cut for offering that service, for finding the right truck, and managing things when they go wrong.”
Convoy essentially automates that broker’s labor with technology, which it says helps both shippers and truckers save time and money. The company itself makes money by taking a percentage of each transaction.
“The beautiful thing about this is that we are going to make money the same way people are already making money in this industry — we’re just giving customers a better experience and charging less,” said Lewis, who has previous logistics experience from working on the Panama Canal and for an airline company.
Lewis also brought up the term “last mile,” which is often heard in relation to consumer-facing startups like Uber, Amazon.com, or Postmates that are trying to solve the “last mile” delivery equation to get items to customers more efficiently.
Convoy, meanwhile, is working on a similar problem, but instead for companies moving product via trucks during a “first mile” or “middle mile,” as Lewis explained.
“The thing that differentiates companies today is not just product or branding, but how fast they can get you something — it’s the on-demand, just-in-time world we live in,” he said. “But on the business side of things, we don’t see it as much, yet it’s happening in the same way. They need those networks to be more and more efficient so they can deliver things faster and with greater flexibility.”
Hadi Partovi, the Code.org co-founder and Seattle angel investor who led the financing round in Convoy, is extremely bullish about the startup.
“It’s the biggest market opportunity I’ve seen since I became an advisor to Facebook in 2005,” Partovi told GeekWire. “If I sound over the top, it’s because that’s how I feel about this company.”
Behar, the former Starbucks president who is also an investor, called Convoy a “game-changer” for truck drivers and companies needing to move freight.
“Nearly every business in this country relies on trucking, so Convoy’s benefits will be widely felt,” Behar said in a statement.
For now, Convoy is launching its service in Washington state. The company employs 16 people that have experience at places like Amazon, Microsoft, Google, Starbucks, Uber, Rover, the Army Transportation Corps, and freight brokerage and trucking companies.
“We have such a strong team that sees our vision of where this can go,” said Lewis, who co-founded Convoy with former Amazon manager Grant Goodale. “The goal is to build a big company and create massive opportunities for truck drivers.”