The Exchanges

Q Is the truck driver typically the one fronting the cash to buy the truck, and then they're signing with the trucking company to get them work? Is that how it works, or does the company own the trucks, the drivers rent the truck for a day, and then try and fill that day with as much work as possible?

A Both of those exist. So a very common model is I buy a truck. I have my own, you know, commercial driver's license, my own operating authority, um, from the DOT, and I can then run my own loads and I can run my own business. What also happens is people buy a truck. Uh, they don't want to actually run their own business. And so then they go work for a bigger trucking company and they bring their own assets, kind of like BYOB. It's like BYOT, bring your own truck in. And, and then you run on somebody else's authority, and you might switch back at some point and run your own business. And truck drivers go back and forth sometimes, depending on the market.

AI assessment note: “Both of those exist. So a very common model is I buy a truck.”

Q Okay. And, and walk me through where you're spending most of that money. Is it the engineering team? Is it just, again, you know, Uber has huge acquisition costs in terms of getting drivers signed up. Is that where you're spending most of that money? Where do you spend most of your money?

A A lot of the investment goes into building the technology. Trucking on the outside looks maybe straightforward, but it's really, really complicated figuring out automatically what the right price is, how to match supply and demand, how to build an app for the driver, you know, tools for shippers, tools for our teams. So we have a pretty big engineering and product team. Um, we do spend money acquiring carriers, acquiring supplies you mentioned, but it is pretty different from Uber and Lyft and other ride sharing companies. Here's the big difference. Those companies, Enter to market without available supply. They didn't go in and say, let's take the existing taxi cab drivers and let's get those taxi cab drivers onto the Uber or Lyft platform. They said, let's take people that don't do this as their full-time job and get them to come become drivers and build up a new supply of drivers. So if you're trying to get someone to leave their old job or whatever they were doing to make money before and start driving for Uber or Lyft to make, to make money, you need to really subsidize their income for a while Until there's enough business for it to be self sustaining. And so they created a new supply base from scratch. And there's a very, very large upfront, uh, cost in that. Whereas in trucking, it's different. There are millions of truck drivers where this is their full-time profession…

AI assessment note: “A lot of the investment goes into building the technology.”

Q Dan, it sounds more convenient. You're saving time from these people having to call the shipping, the trucker, you know, companies themselves. What about cost savings? You know, I use Uber because it's cheaper than taxi. It's also more convenient. Is your tool, does it, does it drive prices down for the small business?

A It does. And over time it allows us to drive the price down even more. Um, we can take out some of the operating costs of running a brokerage, which makes it so we can run a little bit more efficiently. We can also find more convenient trucks because we can see all of the trucks and we know where they are and we know which ones like to do, which types of runs. Our technology is great at taking a job and finding the ideal truck. Which is typically, uh, closer than someone else would be able to find that truck, which means we're able to save money in terms of sourcing that truck, which lowers the prices for everybody.

AI assessment note: “It does. And over time it allows us to drive the price down even more.”

Q Very good. Okay. So tell us about Convoy for folks not familiar with it. What do you do and what's your revenue model? How do you make money?

A Yeah. So here's what we do. Um, it's iconic consider the background noise of America. If you're not in the trucking industry, a lot of people don't think about trucking, but everything that you, that's in your office, there was probably moved on several different trucks and all the food we eat, everything we see was moved on trucks. So most companies that are shipping their freight, they don't own their own trucks. They use trucks from other companies and small trucking companies across the country are kind of hard to get ahold of. Sometimes the average one has two, three trucks. Um, and so they work through middlemen, like known as brokers that help companies like Unilever or Procter and Gamble, Starbucks find access to trucks. So we provide that service. We have thousands of small trucking businesses using convoy. They use our app on their phone. They use us to other business. They use us to get paid. And, uh, and then we go secure freight from these larger companies and we deliver it for them via this network of thousands of small trucking companies in our tech.

AI assessment note: “we provide that service. We have thousands of small trucking businesses using convoy.”

Q almost every industry fears Amazon jumping in and, you know, making it more efficient, whether it's healthcare or anything else. Is the fact that Bezos has put money in your company a sign that he's learning from you and getting information that way, or is it, or is it actually defensive on your end? He won't go into the market because he also, he already has exposure to the market.

A Yeah, I can't comment on Amazon's plans, but it's, it's certainly not the case where they're learning or getting data from Convoy. There's no, there's no relationship like that. Um, You know, I think, I think that we have a lot of respect for the operations that Amazon has built. They built a world class operation. Um, they've sort of changed the game when it comes to distribution and supply chain, uh, within retail. And so what we have been able to learn is to think about, you know, how do you, and one of the things that Bezos has thought a lot about is, you know, what are the values of a company that allowed to scale? What are the, um, what are kind of the, Evergreen problems that your customers never stop having. So one of the things that I think he figured out early on or his team did was customers that, you know, in retail always want lower prices, faster, more convenient delivery and greater selection. Those are kind of evergreen problems. And you might have a hundred solutions to those problems over, over the life of the company, but you're always trying to solve those problems in trucking. It's the same thing. There are evergreen first principle problems that exist. Where am I going to get my next load? Am I gonna get paid on time? Am I gonna get paid for all of my work? You know, from the shipper side, Where is my truck? Will I have a truck when I need it? Is my truck …

AI assessment note: “certainly not the case where they're learning or getting data from Convoy”

Q Got it. Good. Okay. Very good. Um, Reid Hoffman's on your board, uh, in a software circles, obviously he's a very well-known name. What's the most important question he's ever asked you at a board meeting that you just didn't expect?

A Um, You know, I, I think what he's been really good at is, uh, I'll call it breaking through a conversation where we're kind of focusing in on something, right? Maybe debating some nuances of something, exactly how much we should raise, when we should raise again, um, you know, exactly how to roll out and, and he can use it. One thing he does, it's really, really useful. So kind of step back and say, Hey guys, let's keep debating this, but like, this is really the big issue. And so maybe around, um, you know, our expansion plans, um, Just kind of stepping back and saying all of these nuances matter, but like at the end of the day, getting to this really big outcome is what really matters. We all know we need to do that. So let's actually just focus on what will get us there versus these other nuances. So kind of clarifying conversations. I don't have like a specific thing I'm going to share.

AI assessment note: “I don't have like a specific thing I'm going to share.”