Convoy CEO Dan Lewis, eyes watery from an emotional speech, said goodbye. Mark Okerstrom, president of the digital trucking marketplace, stood up and parted his flannel to show the Convoy logo on his shirt underneath, in an apparent attempt at a final display of solidarity.
And with that, an 8-year journey for one of Seattle’s most high-profile startups was essentially over.
Convoy exhausted every possible strategic option to survive over the past four months, but it wasn’t enough to save the trucking marketplace company from a sudden and surprising collapse.
That was the message to employees from Lewis and Okerstrom on a company-wide video conference call Thursday.
“This is shocking,” said Okerstrom. “You will be grieving as I have been grieving.”
GeekWire independently obtained and viewed a recording of the video call.
“I hoped this day would never come,” Lewis said on the call. “In fact, I really couldn’t fathom it.”
Okerstrom, the former Expedia CEO who joined Convoy in 2019, said it was his last day at the company, which laid off a majority of its workforce after abruptly shutting down operations on Wednesday.
Lewis broke down when explaining to employees that they wouldn’t receive severance because the company was not able to secure funding.
“Unfortunately, in the final hour of this, our ability to make that decision and our available budget was taken away by our lenders,” he said.
During the 13-minute video call, the executives reiterated much of the company’s memo to employees, citing the freight recession and dampened investor appetite.
Freight brokerages like Convoy, which built technology to connect truckers with shippers, are struggling with declining freight demand and decreased rates.
At the same time, venture capitalists are tightening their belts and it’s harder to raise capital, particularly for late-stage unprofitable startups.
“People are going to ask you what happened,” Okerstrom said. “So I want to tell you the truth, so you can tell them, and I want you to write this down. Consider this your safe place for you to go when you get the question, what happened.
“The truth is, the markets crushed us. There was a perfect storm. But you did great work.”
Okerstrom said the company went through an “exhaustive and exhausting process” with Goldman Sachs to find a deal in recent months but nothing materialized.
Convoy lined up an M&A deal in recent months but it fell through at the last minute, according to sources familiar with the matter.
“The most logical strategic acquirers of Convoy — the ones who we spoke to extensively, many of which are still exploring strategic options with us right now — those strategic acquirers are also suffering from this great market collapse,” Okerstrom said.
Okerstrom and Lewis did not take questions from employees on the video call.
Convoy went through four rounds of layoffs over the past year to help cut expenses. Other logistics startups that surged during the pandemic, such as Flexport and Flexe, have also laid off staff.
Before this week, Convoy had around 500 employees, down from a peak of about 1,500 people.
Founded in 2015 by two former Amazonians, Lewis and Grant Goodale, Convoy raised around $1 billion from a who’s-who list of investors that included Bill Gates, Jeff Bezos, Marc Benioff, former U.S. senator Bill Bradley, and even Bono and The Edge from U2 fame.
The company was valued at $3.8 billion after raising $260 million last year, which included $100 million from venture debt investor Hercules Capital. Convoy also secured an additional $150 million line of credit from J.P. Morgan at the time.
The Information reported that Convoy ultimately ran out of cash after revenue projections fell well short of expectations this year, and won’t be returning any money to equity investors. Hercules Capital is trying to sell off Convoy’s assets, according to The Information.
“I was hoping for a different and better outcome for you,” Lewis said on the call. “Because I think this is one of the most high-caliber, low-asshole ratios I’ve ever worked with, in this company. There’s just awesome fucking people here. And we built something that’s so incredible.”
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