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Convoy CEO Dan Lewis.

In a little more than a year, on-demand trucking startup Convoy has raised nearly $19 million from a high-profile group of investors.

Convoy uses technology to bring more efficiency to trucking, an industry worth $800 billion in the U.S. The service matches truck drivers and trucking companies with shippers to coordinate freight shipments.

Silicon Valley venture capital firm Greylock Partners, Jeff Bezos’ investment company Bezos Expeditions, LinkedIn co-founder Reid Hoffman, and eBay Motors founder Simon Rothman, are just some of the high-profile investors on Convoy’s board.

Before Convoy, CEO Dan Lewis served as general manager of new shopping experiences at Amazon — a company he says continues to influence Convoy’s culture and strategy today. Lewis has also worked at Google, Microsoft, and in a number of logistics-related roles.

GeekWire chatted with Lewis about Convoy’s meteoric rise, what the company can learn (and fear) from Amazon, and more on GeekWire Radio. Listen to the audio below and continue reading for the edited transcript.

Todd Bishop: Jeff Bezos, Marc Benioff, and Reid Hoffmann — those are just a few of the investors in the startup whose CEO we’re going to be talking with this week. Another one is Hadi Partovi, the founder who said he hasn’t seen a bigger market opportunity than this startup is tackling since 2005, when he got involved with Facebook as an advisor. What startup are we talking about? It’s called Convoy. It’s based in Seattle and it runs an on-demand trucking system. We’re joined in the studio this week by Dan Lewis, the CEO of the company. Dan, it’s great to have you here.

Dan Lewis: Thanks for having me on, guys.

TB: What is your elevator pitch for Convoy? Because the trucking world is one that not a lot of us have a ton a familiarity with.

JC: You usually don’t think of high-tech and trucking.

TB: What is Convoy, and how would you describe it to people?

Convoy CEO and co-founder Dan Lewis. Photo via Convoy.
Convoy CEO and co-founder Dan Lewis. Photo via Convoy.

Lewis: Easiest way to think about it is, most of the companies that are shipping freight don’t have their own trucks. They need to get trucks on, often, short notice. Getting trucks is difficult because there are over a million small trucking companies in the country. Getting access to those trucks takes a lot of work. We take the work out of the problem. We let them figure out exactly what they need to ship. They tell that to us through the technology and then we go out there and we find the right truck for them. We handle everything from end-to-end, taking care of them, handling customer support, getting the truck where it needs to be at the right time.

TB: It sounds almost like Uber applied to trucking. Do you stay away from that comparison, or is that a fair comparison to make?

Lewis: It’s impossible to stay away from it.

JC: Until Uber gets into the trucking business. They’re getting into everything, so they could be a competitor.

Lewis: Exactly.

TB: You’ve got excess capacity, right? You’ve got people who need it and you’re connecting them with the people who have the capacity via a smartphone. There are some parallels there.

Lewis: Absolutely. The biggest parallel, I think, is that Uber made it lower cost and higher service levels by using technology. I think that, when we think about this business, that is the most important thing we can do. We can actually increase the service levels. We can make it easier for truckers to get more work. We can make it easier for shippers to have trucks on short notice, and know where their trucks are, which is something they don’t usually know today. We can actually offer those better levels of service for a lower price. That’s what Uber did.

The other thing is — a big difference, I would say — is that Uber had to essentially go out there and build all their capacity. They had to go get people to drive cars. They had to set up this whole system that didn’t really exist before. One of the things that’s really nice, in our world, is that we’re working with existing trucking companies. These guys are already out there running two or three trucks, trying to grow their business, and they’re looking for work. We can sign up a lot of these entrepreneurs and get them more work without having to sort of go build that from scratch.

JC: How many truckers to you have on the system today?

Lewis: We have thousands, actually.

JC: Across the U.S.?

Lewis: We’re in multiple regions now. The only region we’re really talking about now is the Pacific Northwest. We’re actually live in two other regions of the country, and we’ll be talking about that pretty shortly. I wish I could get into that now, but I’m going to hold off a little bit.

JC: You can give us some news later. We won’t keep pressing on you.

Lewis: Yeah, the Pacific Northwest, we have a few thousand trucks across, flatbeds, dry vans, different varieties.

JC: How does it work for the trucker — walk us through the experience — who might want a load to deliver from Puyallup to Enumclaw? I know I mispronounce that. I always mispronounce that.

TB: You always do that. It’s Enumclaw.

JC: I’m really showing that I’m a transplant.

TB: Okay, let’s say you were going from Seattle to Tacoma.

JC: That’s an easier one.

Lewis: Here’s what would happen. I own a trucking company. Let’s say the three of us own a trucking company. It’s Dan’s Trucking Company, and I’ve hired Todd and John, and we’re going to go, you guys are each running trucks. You’re in Seattle, and let’s say we’re based in Tacoma. I want you to get a job back to Tacoma.

TB: So, a pallet of wood or something like that?

Lewis: It could be a pallet of wood. The majority of what we do is actually full truckloads. You’re looking at a full 40-foot flatbed, 53-foot long dry van. The majority of our work is that. We also do a lot of the small stuff — five, 10 pallets, two, three pallets. Let’s say it’s two pallets and you’re heading back down. You want a job from Seattle to Tacoma so you’re not running empty.

TB: Got it.

Lewis: A good example of this would be, you’re up there, a job comes into our system, and somebody needs a pickup in two hours. We look at all of our truck drivers, our technology looks at all of them, and says, which truck drivers are able to do this job? Basically, the type of truck they have, do they have the right accessories? They’re called accessorials in the industry. Do you have the right certifications, etc.? Are you in the right place? If we think you’re the right truck for the job, or our technology does, we’re going to offer that to you via mobile app. It’s either going to go directly to you, if you own the truck and you’re an owner/operator. Or, if this is Dan’s Trucking Company, and you guys are my drivers, it goes to me. I look at that, and I can say, “Yup, I want that one.” I’m going to assign it to my driver, and it’s going to light up my driver’s phone, and you’re going to get that job, and you’re going to go pick that up in a couple of hours.

JC: So, you’re not putting it out to bid, for multiple drivers to potentially take a look at?

Lewis: That’s a really good point. We’re not putting out for bid. That’s a pretty big difference in the industry. When it comes to spot pricing, one of the things we thought we could do to really improve the industry was take that time, the bidding process, and all the time that goes into that, out of the process. Right now, how it would typically work is, a shipper would call a broker or a middleman of some sort, and say, “Hey, I need a truck.” That broker would go out and talk to a number of different trucking companies trying to get the right price. Different trucking companies would bid on that work. That takes a long time and if you need a truck on short notice, or even if you need a truck tomorrow, but you can’t actually take the next step in your day, or you can’t plan the next thing till you know when that truck is going to show up, it slows down your whole supply chain. We looked at that as one of the areas we could actually innovate and we’re building instant pricing. So, when you go on our website and you put in Seattle to Tacoma, and you say, “let’s say this is four pallets and it weighs 6,000 pounds,” a price pops up instantly. And if you say, “Yup, I’ll do it for that price,” we guarantee it. We get it done and you can move on with your day five seconds later.

JC: Let’s take this out way in the future, where Convoy plays a part. Let’s get to the point where there are self-driving trucks going around. What role do you see in the ecosystem, because from what I’ve heard, the trucking industry might be one of the first where you actually see autonomous vehicles take shape. I’m sure you’re thinking about this, and where things are headed with your own business. Where do you fit, in terms of the logistics, in that world?

Lewis: Yeah. I think that we’ll be in a really good position to embrace that.

JC: I would hope so, because that’s where it’s going, right?

Lewis: We’re in a good position to embrace that. The way we think about what we’re doing is we’re providing a full-service trucking solution for the customers who we work with. It’s not just the marketplace. It’s not just technology. When someone comes to us and asks us for a truck, we’re going to commit to that price that we charge them, and then we’re going to get the truck. If the first truck falls off, we’re going to go get a second truck for them. If there’s an issue — something’s wrong at the loading site — we’re going to call them. We’re going to handle that. We have customer support. We do a lot of the operations downstream and handle the billing to take all that work off the shipper’s plate and off the truck driver’s plate.

Because we’re enabling all these different transactions to happen, we’re providing that full-service support. We can plug in different types of trucks in the network and we can continue to improve our service by providing, maybe more autonomous vehicles that can drive for a longer period of time. Or with a driver assist, they can go 20 hours a day instead of 14 hours a day, things like that. Where we can then provide better service and lower prices.

TB: Dan, there are a lot of businesses out there that say, “Hey, we’re the Uber of ‘x’.” What does it take to actually succeed at being the Uber of anything, and how does your company take that on?

Lewis: Yeah, I think one of the most important things to consider when you’re looking at different companies that are doing gig economy, or on-demand marketplaces, or Uber for ‘x’, is, “Did that business exist before, or are you creating a new service layer that never existed before?” I hate to pick on Instacart. I actually like Instacart as a company, but it’s an example of a business that’s a little bit harder because there wasn’t this service layer of people delivering groceries to you. Everybody bought groceries but that service layer never existed. What happens when it doesn’t exist, means you have to go find people who will do that job, because that job class didn’t exist. You have to figure out the economics to the business, because no one was paying for that service before so someone has to pay for that now. And then, in order to provide that service, you have to maintain your capacity of shoppers who are going to do that. You have to pay them to be available because otherwise they going to go to a different job.

JC: That’s really interesting. I was trying to think about it in the context of another Seattle area company,, which does pet sitting, a marketplace for pet sitting. I guess in that instance, it’s the idea though, that there are people with excess capacity. I guess this maybe is the argument for Instacart, too, is that you do have excess capacity as a worker so you can take this on to make extra money. So are you saying there’s maybe not enough incentive there, or there’s not enough workforce there to justify it?

Lewis: I would say Rover’s a little bit different in the sense that a lot of the people who are doing it for Rover, at least initially, they already maybe had a dog.

JC: Or a dog walking service.

Lewis: Or they’re a dog walking service and they’re already doing this. This wasn’t their full-time job. They could do it as sort of a part-time thing. Whereas, with a lot of the other companies that are doing on-demand economy jobs, like Luxe, for example, doing parking. Instacart, even Lyft and Uber, when they bring on supply initially, they have to have minimums and guarantees for that supply. There’s a lot of cost to maintain that. Whereas when you’re working with an existing set of service providers, like existing trucking companies, and there’s already a service layer — the broker that’s kind of been matchmaking in the past — you actually work with existing providers, and you don’t have to have a whole separate effort to get them into the trucking industry. They’re already there.

JC: You’ve worked in a lot of different technology companies and capacities over the last several years. Why did you get into trucking? How’d you get on to this idea initially, and say, “I think there’s a problem here that needs to be solved?” CEO Hadi Partovi. CEO Hadi Partovi.

Lewis: It’s a great question. I have some background in logistics, actually. I worked doing some warehouse work with Pratt Whitney United, worked for the Panama Canal for a while, helped an airline get its supply chain set up in Europe, so I had exposure, but not in trucking. I kind of realized there’s this massive industry. There’s trillions of dollars spent on this in the United States every year. From my experience, there wasn’t a lot of technology. I was also talking to some of our earliest investors, Hadi and Ali Partovi. I was actually working them early on to brainstorm a couple of different ideas. I spent six weeks after I left Amazon doing guerrilla research, essentially. I had a couple of different business ideas I was working on but I went into warehouses. I went to truck stops. I spent a lot of time with truck drivers. My family used to host Eastern European refugees, and a number of them became truck drivers. I called all those guys. I just really kind of spent six weeks in the trenches — hundreds of conversations.

Coming out of that, I’ve had a lot startup ideas. I think a lot of people probably have had a startup idea or a new product they want to build. They want to go on Shark Tank and pitch it. Most of them, they sound great, in my mind. Then I tell 10 people, and every time maybe it sounds a little bit worse. At some point I’m like, it’s actually a bad idea. With this one, every time I had a conversation, it felt better and better and better.

JC: It was a real pain point.

Lewis: It was so clear that there was pain. Everybody I talked to wasn’t like, “I don’t know.” They’re like, “Yeah, that sounds great. Here’s where I would use it.” It was really encouraging. It felt like a really good fit, and the timing was great. This transformation couldn’t have happened until every driver had a smartphone. That wasn’t really the case until smartphones were low-cost enough and data plans were pervasive enough where that was the case. That was a couple of years ago. The timing was just really good, I think, for getting into it. Some of it was some background, some of it was encouragement from my early investors like Hadi to really double-down and dig into that industry. But ultimately it was the market just validating it through all those early conversations.

TB: Dan, we were talking at the very beginning about some of the very high-profile investors that you’ve been able to line up. Bezos Expeditions, which is Jeff Bezos’s investing arm. Reid Hoffman from LinkedIn, and Hadi Partovi. A number of really prominent investors. How have you done that? Every entrepreneur wants to know the secret to doing that. You’ve raised like, more than $16 million, right? How much have you raised?

Lewis: We’ve raised about, almost $19 million.

TB: $19 million, wow. How’d you do it?

Lewis: That’s a long answer. It’s a couple of things. The team’s amazing. I’ll say all those standard things. We had an amazing team, really impressive backgrounds, really strong, and helped me just get everything ready when it needed to be ready. We hit all of our goals early on that let us keep raising money. A big part of it came down to Hadi Partovi and some of the other early investors in Seattle that I met that really believed in this. He was our first investor.

The Convoy team. Photo via Convoy.
The Convoy team. Photo via Convoy.

I had some relationships and connecting, also, with some of his relationships, gave us access to a lot of the right folks. That’s part of it. The other part of it is, this is a huge idea. It’s really the combination of having the right relationships, the right introductions at the right time. But also, have something that’s really meaningful. When you’re going after an $800 billion industry, just in the U.S., $3, $4 trillion worldwide, and there’s a really compelling story around why this is the right time to go after the trucking industry. There’s a lot of pain, there’s a lot of real need for this. It’s transformative. Everything in this building was moved on multiple trucks. Trucking basically touches the lives of everyone in the country. I think it’s just a really big idea. The impact is massive. The financial impact, and also sort of environmental and sort of business impact of this is massive. This is the kind of thing that attracts people that are looking to do world-changing things. That’s why the really big names want to get behind it.

TB: That raises the question of business model. How do you make money in this business?

Lewis: Great question. We do it the same way that traditionally brokers make money, which is, they take a portion of the job. Today, brokers take between 15 percent and about 40 percent. Most of the time, it’s probably in the low twenties. It really depends on the type of job. They take that as a percent of the job for finding the truck, providing the customer support, making sure everything goes correctly end-to-end. We’re going to use the same model and take a portion of the job. We’re just going to take a much smaller portion. We think that because we’re going to use technology, a lot of the steps of the process, we can either automate or make self-service. Some things will continue to be manual for a long time, but enough is going to be automated and self-service that our economics are going to be a little bit better because we’re more efficient. We can actually have lower prices and higher-quality service.

TB: You’re starting this startup in Seattle. How’s that going? Because there is intense competition for talent here. Maybe not as much access to investors, although, you haven’t had any problems with that. What’s the experience been like for you, positive and negative, operating out of Seattle?

Lewis: It’s funny when you first said that, you were talking about talent, I was thinking about truck drivers. At least you know were my head is. I was like, here’s how we get the truck drivers out in the Northwest.

JC: There’s a shortage of those, too.

Lewis: Yeah, there’s a shortage of truck drivers.

JC: Just as there are computer engineers.

Lewis: That’s right. I think that, I’m really glad we’re in Seattle. There’s a lot of talent here, and people tend to be, I think, a little bit more loyal and personally invested in the companies they’re working for. Me and my co-founder, Grant Goodale, have great networks here. We have a lot of investors here. We’ve hired a lot of people who also have strong networks in Seattle. I think finding talent is something that is always a challenge for every company but I feel like we’re doing a really good job. And, we’re hiring. Of course.

JC: Oh yeah. I get that plug on the show every time. You’ve worked at Microsoft, Amazon, and Google during various parts of your career. Which of those big companies do you think has had the most influence on what you’re doing at Convoy right now?

Lewis: Amazon.

JC: Tell us more.

Lewis: I think, just culturally, a lot of the things that Amazon does — Amazon’s received some heat for certain areas of the culture — but Amazon’s very thoughtful about how they build high-performing teams and how they get a lot of energy and creativity and ownership out of the employees there. I think that in terms of the way that we want to think about our company and the culture we want to build, there are a lot of things around setting values and really giving ownership to people on the team that really is important, and I saw that hands-on at Amazon.

JC: Amazon, also, is getting into the logistics business in a very, very big way. Do you see any potential competition or parallels to what they’re doing? Could you potentially white-label this type of solution to an Amazon, or to a logistics company?

Lewis: Yeah, so I think there are two things — to your second part of your question, we could do white-label work. I don’t know if we’re going to do that. To the first part, is Amazon going to go build this sort of thing? Is Amazon getting more into logistics? I think we’ve seen a lot of news about that recently with Amazon getting into aircraft.

JC: Yeah, air freight.

Lewis: And some other things, and being a freight forwarder of China. I think that Amazon is going to do whatever it can do to deliver a better experience for its own customers. Amazon’s always said, “Hey, we want to have fast delivery. Fast, convenient delivery, lower prices.” Amazon building a really reliable infrastructure, not only for their website, but for their delivery infrastructure, is extremely important for them to actually deliver for their customers.

JC: Like Amazon Web Services. This is kind of how that started.

Lewis: That’s right. I actually think, and I’ve thought about this a lot, I’d be crazy to say that Amazon’s not going to do this, right? Because at some point, Amazon’s going to do everything, right?

JC: Seems like it. Yes.

Lewis: Any entrepreneur doing anything period should think, “Oh, when’s Amazon going to do this?” They’ll probably do a really good job. I think that it’s more a matter of when. But I think, let’s take AWS as a comparison. It turns out that AWS is — Amazon maybe has some unique advantages, given the scale they’re at, but so does Google. Microsoft has a lot of scale, as well. Facebook has a lot of scale. There are a lot of companies that have scale and can hire engineers to build really interesting technology, to offer web services. Amazon is uniquely positioned to have the best delivery logistics system in the world, I think, right now. I think for them to open that up and to make that an offering, more broadly, I don’t know, but that seems to me like they’d be giving away a lot more of their secret sauce than offering up AWS, which is something that is actually more commoditized than getting a parcel to your house.

TB: Very interesting. You mentioned earlier about Amazon having a real expertise in building high-impact teams. Is there one lesson, one practical tip that you picked up? I don’t know, do you do six-page memos at the beginning of every meeting?

JC: Write the press release first.

TB: Is there one tactical thing that you do, that you can trace back to what you learned there?

Lewis: The way we organize our teams can be reflected, kind of the two pizza team model. That’s one of the ways you want to work on that as we expand and go forward.

JC: Two pizza team model?

TB: Two pizza team.

JC: Explain that.

TB: You don’t want any team to get so big that you can’t feed it with two pizzas.

Lewis: That was an early kind of Amazon organizational decision. I think it works for allowing teams to feel a lot of ownership and be self-contained. They have the resources to get their job done. Maybe it’s slightly less efficient because multiple teams can be doing similar things but you’re moving a lot faster. I think we need to focus on, “how do we organize ourselves to move quickly?” That’s really important. I also love the sense that Amazon had around a lot of its values. We had different values, we want to actually have for our company, not the same exact list that Amazon has. I think that was also really powerful. Just part of the Amazon culture. You’re hiring somebody, you’re having a review, you’re talking about anything, you’re using the same language. It actually is kind of pervasive throughout the whole company. I think that’s important to build that sort of culture around common language, and then understanding what we care about and what matters to us.

TB: I know that there’ve been reports out there that you were a truck driver at one point, which I think might be a little bit exaggerated. You do have some experience with this industry hands-on. Maybe not as a long-haul trucker, but tell us about your experience.

Lewis: That’s right. I can’t claim I drove a big rig. I did drive a delivery route for a while, where I was delivering office supplies, pallets of paper. I kind of learned the business through all the issues of having to pack the van, carry bills of lading everywhere I went, get the signatures, make sure that I had confirmation, provide a little bit of support to the shippers that I was meeting with, and asked to do all sorts of random things when I get there, which truckers can relate to. You show up and they ask you to … we’ve even had truckers show up and they’re like, “Hey, can you help on the forklift and unload your truck?” It’s not very normal, right? Kind of dealt with all those little things, got a sense for it. Again, I can’t say I was a trucker, but I certainly have had to drive around, make deliveries, handle the paperwork, deal with routes, deal with timetables.

TB: All the stuff that your customers…

Lewis: All the stuff that the customers care about and that the drivers are doing no matter how big or small your delivery is, a lot of those same things matter to people.

JC: It’s still really early for your business. You’re in the very early stages of rolling this out. What’s the biggest challenge you’re facing right now at this stage in the business?

Lewis: The biggest challenge we’re facing right now? There are two challenges. The first time that Amazon went through Christmas, they probably had to figure out a bunch of new things, right? The first time they went through that cycle. We’re going through our first year of really being operational. Not every customer is going to ship all year long. Not every truck driver is going be available all year long. Some people go and do agricultural work for part of the year. Maybe they’re going to do retail work during part of the year. It’s really just learning how that seasonality curve works in the industry, in the different geographies where we are.

The second thing is, we’re looking to expand new geographies. I’m not going to talk about which ones right now. We’re actually kind of soft-launching a couple of additional markets outside the Pacific Northwest. Learning how to do that reliably, learning how the investments required to do that, to make sure every time we go into a new market we’re doing it more efficiently, and we’re maintaining the service level. That’s pretty hard. That’s what we’re figuring out.

JC: A big part of your model is making this whole process more efficient. Have you done any sort of analysis in looking at the actual delivery times and how much time you can shave off using the Convoy model versus the traditional model?

Lewis: That’s right. We have, actually. We’ve looked at a number of different things. Our trucks aren’t driving faster, so the actual transit times and things like that aren’t that much better than maybe what they would have been otherwise. It’s the, how fast can we find a truck, how fast can we match…

JC: That’s near the…

Lewis: That’s near the pickup.

JC: Yeah.

Lewis: Or that’s just interested in doing it for the right price. It might be a job that’s tomorrow, so it doesn’t really matter where they are if they can get there tomorrow. They have a job that’s going to be convenient for them tomorrow, so this second job makes sense for them. Really, that matchmaking is something we’ve been able to show a pretty decent improvement, actually, for a lot of our drivers. I don’t want to share all the stats. I’ll share one that one of our customers shared publicly. At a recent shipping conference, they got up and said, “Hey, Convoy saved me 27 percent.” That’s significant. We didn’t expect to be 27 percent less expensive than their alternative. We didn’t even know that…

JC: This way you can probably sign up truckers pretty quickly because they’re making more money.

Lewis: Yeah, the shipper was paying less, and we were actually paying truck drivers the same or more than they had been making previously because there was a lot of margin, a lot of traditional brokers were taking a really big cut out of what that shipper had been doing originally. The reason we can charge those lower prices is a reflection of the fact that this is more efficient.

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