Tag: EC Mobility Software

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Why Convoy’s Dan Lewis expects digital freight to go mainstream within the year

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 TechCrunch.

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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.

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The costs of driver incentives are weighing on Lyft, Uber

Lyft’s shares lost nearly a third of their value yesterday after the ride-hailing company reported its Q1 2022 results, despite the company beating market expectations for revenue.

If you delve a little deeper, it seems the market was instead focused about something else entirely: Slightly soft guidance on revenue growth in Q2 2022 when compared to analyst expectations, as well as the cost of driver incentives — supply stimulants that impact the company’s economic profile.

During the Lyft earnings call, analysts focused on the cost of incentivizing drivers to participate in the company’s two-sided marketplace, and they were not assuaged by its CEO and CFO’s responses.

Uber’s shares also fell in the wake of its earnings report. To understand the driver-incentive issue, we’ll first explore Lyft’s situation, and then compare it to what Uber said. The two companies are related and share competitive territory, but market reaction to their current state was sharp and notable. Let’s talk about it.

Lyft’s warning

In its earnings call, Lyft CFO Elaine Paul said the company expects revenues between $950 million and $1 billion in the second quarter, in line with current street expectations of about $995 million. (It’s worth noting that before the company’s report was digested by analysts, that figure was $1.02 billion.)

But more worrisome were Paul’s comments on the company’s profitability. Per the above-linked transcript (emphasis ours):

In terms of profitability, we expect Q2 contribution margin will be approximately 56%, which reflects the impact of growth investments on our leverage. Post omicron, we feel the worst is behind us, and this coming quarter is an opportunity to invest in kick-starting the next year of growth. We will do so with a focus on drivers, the overall marketplace, and some additional brand marketing. As a result, we expect adjusted EBITDA of between $10 million to $20 million for Q2.

Lyft’s adjusted EBITDA came to $54.8 million in Q1, implying that the company is about to eat heavily into its limited adjusted profitability in the second quarter, partially thanks to investments in its driver supply.

In its earnings call, Lyft stressed that while demand for rides can change rapidly — COVID-19 made that plain during its various waves — shifting driver supply takes more time. CEO Logan Green said that “supply adjustments” to its marketplace “are like moving the Titanic.”

Unfortunate metaphor aside, it seems that Lyft is going to spend to boost driver supply in anticipation of future demand; the company expects to grow more quickly this year than the 36% it posted last year, a feat that will require more cars available for hailing.

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Exclusive look at patent filings reveals Our Next Energy’s plans for a no-compromise EV battery pack

As automakers bet their futures on electric vehicles, they’re beginning to confront the hard realities of economics and physics. Prices for nickel and cobalt, two key elements used in EV batteries today, have skyrocketed, far outpacing inflation. At the same time, existing lithium-ion battery technology is improving, just not fast enough.

That’s sent companies searching for alternatives, from solid-state batteries to exotic materials and components. Many of those are years away from commercial use, though.

Mujeeb Ijaz, founder and CEO of Our Next Energy, thinks we already have many of the pieces we need. Ijaz wants to take two battery types — one optimized for daily commutes and the other for long road trips — and stuff them into the same pack. The idea is to let each type play to its strengths while the other covers for its weaknesses.

ONE grabbed headlines earlier this year after driving a Tesla 752 miles on a single charge, but not much was known about its technology. But now, TechCrunch has reviewed ONE’s patent applications and has an exclusive look at how, exactly, the company plans to merge different battery types into an uber-pack that’s twice as energy-dense as what’s in today’s EVs while still being able to handle everything from daily commutes to bladder-busting multi-state journeys.

If ONE can deliver, its technology could help free consumers from range anxiety while also making EVs cheaper and safer, potentially unlocking a wave of purchases.

The right chemistries

Typically, EV batteries use one type of battery chemistry, and that chemistry has to be optimized to balance competing demands, including how much energy they can store, how safe they’ll be in crashes, and how long they’ll last before they break down. Oh, and they shouldn’t be too expensive. It’s no easy task, and in the end, the battery ends up compromising on at least one of those goals.

Ijaz realized that while it’s unreasonable to try to fulfill all of those objectives with cells of a single type, it’s possible across a group of cells. All Ijaz had to do was figure out a way to make them work together.

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Why Latin America’s freight-forwarding opportunity is still attracting capital

“Investors are pouring money into Latin America’s logistics and shipping businesses,” our former colleague Jon Shieber wrote in 2019. But a pandemic later, amid unrest over gasoline prices across the globe, it’s time for a revisit.

Nowports (YC W19) is a good starting point for comparison. In February 2019, the Mexican startup was just graduating from Y Combinator, and in Shieber’s words, “sett[ing] itself up to be the Flexport of Latin America.” Fast-forward to today, and Nowports has raised $92.6 million in funding, including a $60 million Series B round led by Tiger.

Examples like this abound as investors have shown bullishness for freight forwarding all over the world. The pandemic played a role in boosting logistics startups, shining a light on how essential supply chains are. But venture capital keeps on flowing even as COVID-19 wanes, recent news shows.

Just this month, TechCrunch reported on three fundraising events in the freight-forwarding world. Seattle-based Convoy is valued at up to $3.8 billion following a $260 million Series E round. Nigeria’s OnePort landed a $5 million investment that will help it expand to three major African hubs by the end of the year. And in Latin America, DeltaX has its eyes set on the Andean region and $1 million in the bank.

Digitizing freight forwarding is a global challenge because the sector still lacks transparency and efficiency. Latin American startups have a steeper hill to climb, but this also drives them to innovate and help each other in interesting ways.

Much more than copycats

In Latin America, the problem isn’t just that freight forwarding is still very much analog — it is also suboptimized. In the region, “trucking demand outpaces capacity, yet 40% of the time trucks roll empty,” according to Mexican startup BeGo (YC W20).

According to Jonathan Lewy, whose fund Investo backed BeGo and Nowports, the two startups represent the sector’s main models: marketplaces and freight forwarders. Other examples would be Brazil’s CargoX on the marketplace side and Nuvocargo on the freight-forwarding side.

However, business models in Latin America are often blended, and Nuvocargo is a good example of this.

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Steer’s Anuja Sonalker explains the benefits of chasing the less glitzy side of autonomy

The autonomous vehicle industry is dominated by talk of robotaxis, self-driving trucks, sidewalk delivery robots and passenger vehicles like Teslas with automated driving functions. You know, the sexy side of autonomy.

Not much attention has been paid to the type of autonomy Steer Tech, a Maryland-based AV startup, has been pursuing — something the company’s founder and CEO Anuja Sonalker calls “endpoint autonomy.”

Since it was founded in 2016, Steer has focused on providing high-level autonomy for valet parking, a bit of tech that it’s been quietly earning revenue on by selling it to automakers.

Steer is now expanding that use case into the commercial sector through a partnership with Dallas Fort Worth International Airport, which will demonstrate how an automated parking ecosystem can alleviate congestion in traffic pick-up and drop-off areas.

The pilot will combine low-speed automated valet parking, a supervisory parking management system and a digital curb management system. It will test passenger vehicles that have been outfitted with Steer’s AV software and sensor suite.

Steer wants to bring this ecosystem to the endpoint of the logistics supply chain.

“We are focused on the depot side while others are focused on the long haul, and you need both if you want to do end-to-end autonomy,” Sonalker told TechCrunch. “Nobody is going to solve everything. Everybody is going to master one area and then work with others to create that end-to-end ecosystem.”

For most hackers, it’s not about the target they’re trying to breach; it’s about using that target as a springboard to something else. Anuja Sonalker, founder and CEO, Steer Tech

Sonalker didn’t cut her teeth solving for low-speed, private-space operational design domains. The founder spent three years at R&D firm Batelle, where she headed its automotive cyber innovation unit, which was later spun out and then acquired by Honeywell. She then set up and led the North American operations of TowerSec, an Israeli automotive cybersecurity startup that was eventually acquired by Harman.

We caught up with Sonalker to talk about the importance of automotive cybersecurity, how automating the “endpoint” can make freight more efficient and why focusing on less glamorous tech can help you build better products.

The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity.

TC: Steer is the third startup you’ve been involved with, and the previous two were acquired. Is that the goal for this one? 

Anuja Sonalker: With the previous ventures, I will say that the plan was not to get acquired, but that’s how the timing worked out. What I learned from the other previous startups was that the plan has to be bigger. You have to have a vision of where you’re going, and that vision has to be strong and able to resist any kind of upheavals, like a pandemic, in your way.

If there’s an acquisition, it will happen. You can’t stop it; it really is the timing. But I didn’t start with that goal. My goal here is to build a product. The last two startups were focused on automotive cybersecurity. This time, cybersecurity is a major part of the technology, but it is not the whole.

What do you think the biggest pain point is in automotive cybersecurity?

It has changed with time. When I started in this field, the problem really was denial and not realizing that there was a cybersecurity problem, so these vehicles were far more vulnerable. People were able to exploit those vulnerabilities and demonstrate attacks on vehicles that ranged from nuisances to being critical to safety. At the time, the ability to detect vulnerabilities was very important.

Then it changed to: “Okay, now that we have detected it, we have to do something about it.” It changed to prevention. The industry has gone through a tectonic shift in cybersecurity. Every automaker realizes that it’s not whether we are hackable or vulnerable — everything and everybody, given enough time and resources, is penetrable.

So it’s about figuring out that we are being attacked and how we can change that. The idea is to increase the internal resistance of your vehicles, and now the issue is really about designing the right amount of cybersecurity into your vehicles. Not too much, and not too little.

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What’s driving China’s autonomous vehicle frenzy?

China’s autonomous vehicle industry first started seeing some traction around 2016, when a bunch of ambitious startups mushroomed following advances in lidar, computing and machine learning. But the nascent sector was still driving in low gear, as the people working on the tech mostly had computer science backgrounds, and there weren’t many with extensive experience in the automobile industry.

Everyone wanted to build robotaxis at the time, recalls Hongquan Jiang, chairman and managing partner at Boyuan Capital, Bosch’s newly minted venture capital arm in China. “Back then, if you told people you were doing Level 2.5 or 3 [the human driver is expected to take over], you would be scorned. But people in the industry quickly realized Level 4 [the driver can take a nap in most circumstances] was still a distant dream,” Jiang told TechCrunch.

Regardless, these founders’ ambitions kept them on the path, and the industry is finally seeing a resurgence in China. Unlike the previous generation of founders, the space is now seeing more automobile expertise flow in. This generation also seems to be more pragmatic, and rather than shooting for the stars, they’re focused on market demand.

A lot of things can happen in China because of government support, but not necessarily elsewhere. Hongquan Jiang

This focus is reaping fitting rewards for startups. The industry saw a period of unprecedented acceleration in 2021, with over $8.5 billion invested in robotaxi startups, self-driving truck developers, lidar makers, smart electric car manufacturers, and chipmakers focused on vehicle automation, according to Crunchbase.

Investors these days have good reason to throw money at this industry, too: Sensors are getting cheaper and more capable, talent from the AI and automotive industries is coalescing, the government has introduced a slew of beneficial policies, and demand is rising as China prepares to cope with a drop in its working-age population.

There’s no fear when the state’s got your back

Momenta has a strategic partnership with the government of Suzhou, its home city, to put robotaxi fleets on the city’s roads. Image Credits: Momenta

Like other sectors that depend on public infrastructure, companies working to put driverless taxis, trucks and buses on the road in China have benefited greatly from government support.

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Via’s Tiffany Chu on the importance of govtech for planning mobility ecosystems

Tiffany Chu, SVP of Via and co-founder and former CEO of Remix, had been working in user experience design at ZipCar when, in 2014, she decided to take a year off for a fellowship at Code for America. With her background in architecture and urban planning from Massachusetts Institute of Technology, Chu had always been fascinated by the way transportation acts the lifeblood for built environments as a whole.

It was at this gathering of tech-minded individuals looking for ways to bring government into the digital age that Chu met her future Remix co-founders. Chu and her team built a simple grassroots transit planning prototype that helped suggest better routes to San Franciscans. An urban planning blog featured the project and it went as viral as a mapping and routing tool for public transit could.

Soon, Chu and her team were fielding requests from transit agencies that had ideas on how to make the tool even better, and unexpectedly, Remix was formed. The following year, Remix joined Y Combinator, raised a $2 million seed round and brought the Oregon Department of Transportation on board as its first customer. In the years that followed, Remix kept gaining momentum, and a total of $27 million in funding, until it garnered the attention of Via, an on-demand shuttle service.

Via acquired Remix in March for $100 million, which enabled the company to provide Remix’s suite of planning tools to city and transit agency partners and expand its role in the mobility ecosystem.

Today, the reach of the original Remix platform is extended even further as part of Via’s over 500 partnerships across five continents.

We sat down with Chu to discuss the proliferation of govtech, why cities need to be proactive about new forms of mobility, and how the private and public sectors can come together to create a comprehensive mobility system.

The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity.

TechCrunch: Remix started at a hackathon at Code for America, and then you went on to Y Combinator. How important were these institutions?

Tiffany Chu: Code for America was super important for us, because it brought together a bunch of like-minded, civic-oriented people who basically raised their hands and said they’d take a pay cut from their typical mid-career tech jobs to pursue public service for a year.

When we decided to do Y Combinator, that was really important to us, because none of us, with the exception of Dan Getelmen, my CTO, had co-founded a company before. So we didn’t know the first thing about running a business, much less running an enterprise, government-focused, B2G business. YC really gave us the business fluency and literacy we needed and connected us to other founders in highly regulated industries like healthcare and edtech that had to go face similar hurdles. I think we may have been the first ever govtech or civictech company that YC invested in.

Govtech and civictech are not something you see a lot of in Silicon Valley. What do you wish the startup world knew about this kind of tech and the applications it can be used for?

What’s special about this space is that it’s the intersection of a customer base that will always be around. Governments rarely go out of business, so there’s a very direct, targeted customer base that makes it clear who your product needs to serve.