Alphabet’s investment arm backs Convoy in $185M investment round

Increasingly, truckers
don’t have to rely on calling companies to find their next
job.

David McKnew/Getty
Images

• Alphabet’s
  investment arm, CapitalG, just announced a $185 million
  investment in Convoy, a technology-enabled trucking
  network. 
• Convoy allows trucking and shipping companies to connect over
  an app, rather than the traditional way of using a phone
  broker. 
• It’s not Alphabet’s first move into the world of freight. Its
  autonomous driving arm Waymo has
  developed self-driving trucks that have already made deliveries
  around the US.
• Tech companies like Tesla and
  Uber
  are also investing into the
  $740 billion trucking
  industry. 

Trucking is a
$740 billion industry — and one that relies on a lot of old
technology. 

When a small trucking company or a trucker who owns their own
vehicle needs a shipment to carry, it’s not unusual for them to
depend on
“voice brokers,” who call up warehouses and ask if there’s
anything that they can carry. About
15% to 25% of the time, trucks end up carrying nothing. 

What it’s like to book a
job on Convoy
Courtesy of
Convoy

That’s slowly starting to change. Trucking companies small and
large are increasingly turning to apps to see what’s available to
carry, and bidding directly on their phone or computer to take
those jobs. 

One of those apps is Convoy, a Seattle-based startup that’s
now valued at $1 billion. Some of its customers looking to
improve efficiency in the freight brokerage process
include Unilever and Anheuser-Busch InBev. 

“A lot of the people in Silicon Valley are talking about
automated driving as the biggest change in transportation,”
Convoy CEO Dan Lewis told Business Insider.

“If you look at the opportunity now, it’s really about efficiency
in the networks and efficiency in the brokerage process.”

Convoy announced
its most recent round of funding on Friday,
totaling $185 million. CapitalG, Alphabet’s growth equity
fund, led the investment round. YCombinator, Salesforce CEO
Marc Benioff, and T. Rowe Price Group have previously
invested in Convoy, as well.

It’s not Alphabet’s first move into the trucking industry.
Waymo, its
autonomous driving division, has
launched pilots of its self-driving trucks in places like
Georgia, Arizona, and California.  

A highly-fragmented industry — and one that’s ready for
disruption

Scads of tech companies are joining Alphabet in the trucking
sector. There’s Uber
Freight and the Tesla
Semi, as well as startups with significant investor backing
like Transfix, Trucker Path, and Keep Truckin. 

Many of these startups were founded by those outside the
logistics industry and sought to disrupt it. For instance,
Convoy’s co-founders, Lewis and CTO Grant Goodale, were most
recently at Amazon.

And while several of these startups are interested in
self-driving technology, most of them are seeking to solve
existing problems in the trucking industry.

Keep Truckin, for example, provides electronic logging devices
for more than 40,000 fleets so that companies can track their
employees on the road. Convoy, as well as Uber Freight and
Transfix, connects truckers and trucking firms to the shippers
themselves.

Trucking is a highly fragmented industry where small firms and
individual owner-operators dominate; the top five logistics firms
in the US together hold just
20% of the market share. According to Lewis, the average
trucking firm has just three to four trucks. These smaller firms
are less equipped to ensure that their trucks are always moving
freight. 

“If you’re able to run the brokerage system more efficiently,
truck drivers can get more jobs done per year,” Lewis said.