It’s always a daunting proposition when a multi-billion dollar juggernaut enters your startup turf.
That happened this week for Seattle-based Convoy when Uber launched Uber Freight.
The two companies do essentially the same thing, more efficiently matching truckers with freight loads to haul.
“We take the guesswork out of finding and booking freight, which is often the most stressful part of a driver’s day,” Uber wrote in introducing the service. “What used to take several hours and multiple phone calls can now be achieved with the touch of a button.”
That’s essentially the same idea behind Convoy, which emerged on the scene two years ago with backing from the likes of Amazon founder Jeff Bezos and Salesforce founder Marc Benioff.
Interestingly, one of Convoy’s early backers was also Garrett Camp, the chairman and co-founder of Uber. That’s certainly got to be creating an uncomfortable situation given the new competitive threat that Uber poses to Convoy.
Even with deep-pocketed investors and a two-year lead, having Uber cruise onto the road certainly could be nerve-wracking.
Convoy shares so much in common with Uber, that many (including GeekWire) have often described the company as the “Uber for freight.”
Now, Uber is trying to become the Uber for freight.
In an interview with GeekWire last year, we asked Convoy CEO Dan Lewis about possible competition from Uber, something he said was likely.
In the interview, we asked Lewis about being called the “Uber for Trucking,” and he noted that it was impossible to avoid the comparison. That prompted me to note: “Until Uber gets into the trucking business. They’re getting into everything, so they could be a competitor.”
Lewis responded: “exactly.”
Beyond that, here’s what Lewis had to say when discussing parallels between Convoy’s business for matching truck drivers with freight loads, and Uber’s more traditional consumer-based ride-hailing service.
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.
At this time, Uber Freight is primarily operating in Texas, but it plans to expand nationwide. Texas also is the home base for uShip, another freight logistics operator that’s raised more than $70 million from DB Schenker, Benchmark, Kleiner Perkins and others.
We’ve asked Convoy for comment about Uber Freight, and we’ll update this post as we learn more. UPDATE: Here’s the statement that Convoy provided to GeekWire today:
This is further validation of what we are doing to improve this enormous industry. Uber has tried a few different approaches here, including acquiring a traditional brokerage as well as Otto. In the last several years of operation, we’ve learned how to succeed for our customers, and we remain confident in our mission of helping small trucking companies thrive.”
For its part, uShip says its different from Uber Freight since its peer-to-peer system involves a lower-cost bidding pricing model compare to standardized pricing. uShip also transports everything from boats to cars to construction equipment, and does so across the U.S., Europe and parts of South America.
Interestingly, Convoy — which earlier this month won Startup of the Year at the GeekWire Awards — hired former Uber Seattle engineering head Tim Prouty earlier this year. Will Prouty and the rest of the crew be able to outmaneuver Uber?
We’ll be closely watching.
Here’s a closer look at Uber Freight.