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Comment by dpflan | Hacker News Reader

Given that you were in the company and presumably have an idea of how the company functions: where did the funding go? $260M gone in 1 year?

"Convoy, which raised $260 million in a funding round last year that valued the business at $3.8 billion, on Wednesday told employees in an email that it would stop accepting shipments until further notice and that it was rescheduling or canceling existing loads." (wsj)

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They got caught in the same thing that happened to Flexport and others in the freight industry.

Price per shipment cratered -> Revenue cratered. (They make a % of each shipment) -> Losses spiked up. (Because they had fixed cost)

Flexport had a burn run rate of $600M a year. Convoy had less burn but also less in the bank.

https://www.theinformation.com/briefings/flexport-revenue-dr...

I thought Flexport was still hiring a month or two ago

They were and the ceo commented on twitter that he had no idea why that was and then rescinded offers to people who were starting the next week.

The CEO who was the founder and until he came back as CEO was on the BOD, the executive, in fact.

"No idea at all!"

I've worked at 1k employee-sized companies. The CEOs definitely know what's happening, who shits on who, who's hired/fired, what each project is going through at a glance, etc. So I would attribute this 100% to either lying, incompetence and/or "faking" by trying to emulate a Steve Jobs/CEO persona.

The founder left the company and brought in a new CEO from amazon. He was still on the board. Then he saw they were hiring and complained on twitter, presumably fired the new ceo and came back to rescind the offers. I think it's believable that he was chilling on the beach or something until he saw the hiring news.

They had that weird moment where they fired/rescinded a bunch of new hires after Peterson came back and basically said "oh yeah we weren't supposed to be hiring."

So Convoy's UVP was based all on price? Wouldn't the CEO/COO have seen this before rapid expansion?

>1,000 employees means a burn rate in the hundreds of millions per year just on the costs of having employees, $260m burned in a year sounds about right for a company of that size.

Burn is how much you lose, not how much you spend. If you have >1,000s of employees you presumably also have $100s of millions in revenue.

According to Bloomberg they had a headcount of 1500 at their peak, so assuming that USD 1000000 gets you 5 employees for a year, USD 26000000 would get you 1300 employees for a year. (That’s a lot of hand waving on my part but overall the amount of money burned doesn’t seem mysterious)

You’re off by a factor of 10: it’s $260 million, not $26 million. So that’s 13k employees using your conversion rate.

I think it's clear they forgot the 0, given that 5*250=1250

Yep, forgot a zero.

So many variables, but it's easy to spend $260M in 18 months at a decently sized company. If they have 1200 employees, that's about $12k per employee per month. So you could easily spend that much just on salary + benefits for software developers in Seattle.

I'm curious as well, that's an astoundingly high burn rate for a 500 person logistics company. Wonder if there were outstanding debts

Thanks for the comments, indeed, people costs reign supreme.

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