‘The industry will shrink otherwise’
Dan Lewis, Co-Founder and CEO of digital freight company Convoy, didn’t start his business because he had a deep and enduring passion for trucking. At least not in the beginning.
The executive has a background in strategy and management consulting that has grown into a career in product development for top technology companies such as Google and Amazon. But when he was struck by the urge to start a business, he researched the money-gathering industries of the world, and then, with the help of AngelList, saw how many companies were trying to disrupt those industries.
His search yielded thousands of companies operating in sectors ranging from telecommunications and fashion to video games and food. Billions of dollars went into trucks every year, but fewer than 30 startups showed interest in the field.
“I saw a huge opportunity and few people went for it,” Lewis told Marketingwithanoy.
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Lewis and Grant Goodale co-founded Convoy in 2015 and have since attracted a string of high profile investors. A few years after Convoy was founded, in a pivotal turnaround, the company secured its Series B from YC Combinator’s Continuity Fund, a fund typically focused on early stage companies.
More recently, Convoy hit a $260 million Series E led by Baillie Gifford and T. Rowe Price, bringing the company’s valuation to $3.8 billion. To date, the company has raised nearly $1 billion to scale up its platform, which connects the fragmented network of shippers, carriers and brokers across the United States.
Speed is an important feature of building a startup, and it is also an important feature of not diluting as you can show huge progress and increase based on that at a higher valuation. Dan Lewis, Co-Founder and CEO of Convoy
We spoke to Lewis about the importance of being customer-centric when starting a business, why early-day compensation packages can help keep your business from diluting too much in future fundraisers, and how to set limits on the compromises you want to make. ll make as founder.
The following interview, edited for brevity and clarity, is part of an ongoing series that focuses on pioneers in the transportation industry.
TC: YC’s investment in your Series B was notable because Convoy was out of the Continuity Fund’s portfolio of portfolio companies at the time. What do you think made Convoy stand out?
Lewis: The YC culture is very curious, so they didn’t feel like they needed to stick in any particular direction, especially with the Continuity Fund, which focused on early-growth companies. When we met, I think the breakthrough was just the unique story. People usually don’t realize how fragmented, how big, how offline the truck industry is. So YC considered this a big disruptive game.
We were excited to partner with them because they are an incubator and accelerator, so their entire system is designed to help founders succeed. They had so many unique programs that helped us succeed and grow that I had never seen from other investors at the time.
You said that a good way to set a direction for a startup is to compare industries where there is a lot of money with companies trying to disrupt those industries. Is that still a good method?
I think it’s a very good method. It would be interesting to compile a list of industries and find out how much money is being spent in those industries and then see how many companies go after those industries. AngelList is a great resource to find the latest, most innovative companies going after these spaces.
Before ever starting the company, I wrote this article in Quora that went viral and was published by Forbes. It was an answer to the question: How do you come up with a startup idea. I wrote this very comprehensive theory, actually a script. So when I started my own business, I thought 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.