‘The industry is going to contract differently’
Dan Lewis, co-founder and CEO of digital freight company Convoy, didn’t start his company because he had a deep and abiding passion for trucking. At least, not at first.
The executive has a background in strategy and management consulting that progressed into a career in product development for top tech companies like Google and Amazon. But when he was struck by the urge to start a company, he researched the money-attracting industries of the world, and then, using AngelList, saw how many companies were trying to disrupt those industries.
His search yielded thousands of companies that were working on industries ranging from telecommunications and fashion to video games and food. Billions of dollars were going into trucking each year but fewer than 30 startups showed an interest in the field.
“I saw a massive opportunity and few people going after it,” Lewis told TC.
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Lewis and Grant Goodale co-founded Convoy in 2015, and since then, have brought on a series of high-profile investors. A couple of years after Convoy was founded, in a pivotal turn of events, the company secured its Series B from YC Combinator’s Continuity Fund, a fund that was usually geared toward earlier-stage companies.
More recently, Convoy secured a $260 million Series E, led by Baillie Gifford and T. Rowe Price, that brought the company’s valuation up to $3.8 billion. To date, the company has raised almost $1 billion to scale its platform, which connects the fragmented network of shippers, carriers and brokers across the United States.
Speed is a big feature of building a startup, and it’s also a big feature of not getting diluted, because you can show immense progress and then raise at a higher valuation based on that. Dan Lewis, co-founder and CEO of Convoy
We sat down with Lewis to talk about the importance of being customer-obsessed when starting a company, why compensation packages in the early days can help you avoid diluting your company too much in future fundraises, and how to set boundaries on the compromises you’ll make as a founder.
The following interview, which has been edited for brevity and clarity, is part of an ongoing series that focuses on founders in the transportation sector.
TC: YC’s investment in your Series B was notable because Convoy at the time was outside the Continuity Fund’s range of portfolio companies. What do you think made Convoy stand out?
Lewis: The YC culture is a really curious one, so they didn’t feel like they needed to stay in a particular lane, especially with the Continuity Fund, which was geared toward early growth-stage companies. When we met, I think the breakthrough was just the unique story. People don’t usually realize how fragmented, how large, how offline the trucking industry is. So YC viewed this as a major disruptive play.
We were excited to work with them because they’re an incubator and accelerator, so their whole system is designed around helping founders succeed. They had so many unique programs that helped us be successful and grow that I had never seen from other investors at the time.
You mentioned that a good way to decide on a direction for a startup was to compare industries where there’s lots of money against companies that are trying to disrupt those industries. Is that still a good method?
I think it is a really good method. It would be interesting to pull a list of industries and find out how much money is spent in those industries, and then see how many companies are going after those industries. AngelList is a great resource to find the newest, most innovative companies that are going after these spaces.
Before I ever started the company, I wrote this article in Quora that went viral and was published by Forbes. It was an answer to the question: How to come up with a startup idea. I wrote this really extensive theory, basically a playbook. So when I was going to start my own company, I was like, I should eat my own dog food. I went back and used my own process, and I can now say it’s credible because it works.
