Convoy co-founder reflects on digital brokerage’s rise and fall

November 19, 2024

Dan Lewis, co-founder and former CEO of Convoy Inc., discussed the rise and fall of the digital freight brokerage he helped create and the lessons he learned along the way on Tuesday at FreightWaves’ F3: Future of Freight Festival.

Lewis, who spoke with FreightWaves CEO Craig Fuller during the annual event in Chattanooga, Tennessee, reflected on past decisions while at the helm of Convoy, acknowledging both successes and failures in the company’s eight-year journey to innovate the freight brokerage industry.

Lewis and another former Amazon executive, Grant Goodale, co-founded Convoy in 2015. In April 2022, Convoy was valued at $3.8 billion, but by October 2023, it was forced to shutter its core business operations.

Asked by Fuller during the fireside chat about the company’s legacy, Lewis said he wants Convoy to be remembered for its ethos of innovation, disruption and pushing the brokerage industry forward through its software and technology platform.

“We led to a lot of disruption in the industry. I think there’s about 40 companies that have started out of Convoy at this point,” Lewis said. “I think another one is just believing a lot of the things that people didn’t expect to happen. For example, getting the entire industry of about 85,000 carriers to start using this platform and getting people online. That was something we really pushed. And at the time, nobody was online.”

San Francisco-based Flexport Freight Tech LLC acquired Convoy’s technology stack in November 2023.

“I am very happy that the brand of Convoy and the spirit of what we’re doing lives on and that it’s actually kind of up and running, relaunched and fully embraced again in the carrier community,” Lewis said. “But it went through a pretty challenging time. I spent a lot of time when we had to transition Convoy, wind it down and relaunch it as Flexport. I learned a lot from that.”

Lewis said it was an expensive undertaking when Convoy set out to disrupt the trucking industry with a flexible drop-and-hook program and dynamic trailer pools.

“Many of us didn’t come from the industry so we were starting with first principles,” he said. “We’re going to go talk to hundreds of carriers and shippers and brokers and just kind of find out what’s working and not working, and then use available technology. At the time, it was big data, machine learning, just kind of the first generation of AI, and it was mobile.”

Convoy also faced pushback from legacy brokerages in its efforts to automate.

“We made some decisions and took some of these really big bets. It cost a lot to do that. It was an expensive thing to teach a system how to get pricing right,” Lewis said. “It took us probably five years until our automated system could cover about 98%- 99% of loads at better-than-industry-average margins.”

Convoy was able to reduce its operating costs per load by 40% in 2023, but Lewis said it took a lot longer than expected to get there.

He said Convoy made some large bets in 2019, when it decided to go national with its trailer pool and move forward with its flexible drop-and-hook idea.

“For the first time we added to our business; we took on a lot of contract risk right at the end of 2019 in Q3 [and] Q4,” Lewis said. “Obviously, with COVID hitting [in 2020], that was a really painful decision, because the rates shot up. We had all these assets, we had all these contracts. We had to kind of figure that out. So there were some moments along the way that were really expensive and really challenging.”

Convoy also struggled amid the ongoing freight recession and the pullback in lending from private equity- and VC-backed firms prior to its wind-down.

Lewis admits Convoy missed some opportunities to dismantle parts of its platform, and some strategic opportunities to merge its technology with other companies with significant freight volumes fell through in 2023, which was the death knell for Convoy.

“We didn’t want to give up on the vision, and we really believed it wasn’t one piece of Convoy that was the answer – it was the whole system,” Lewis said. “I think we could have done things as the market was changing, as the world was evolving, to dismantle some parts of our system, to break it up in different ways and maybe continue on in a different way.”

What’s next for Lewis?

He said he’s working on some ideas where AI can possibly replace the need for new platforms by interacting with customers through AI-generated emails, text and voice calls.

“I want to get this figured out this year, because I have some ideas, and I’m kind of starting to pursue these different tracks,” he said.

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