Gates and Bezos go trucking to compete with ride service

AS BILL Gates and Jeff Bezos jockey for the designation of world’s wealthiest man, the billionaires are united behind at least one local venture. They’re both investors in a trucking logistics start-up that competes with Uber Technologies Inc.

Convoy Inc, a 2-year-old Seattle company, makes software that matches nearby and available truckers to a shipping job. Convoy said yesterday it raised a new round of funding from Bill Gates’s Cascade Investment and other backers. Gates joins Amazon.com Inc’s Bezos, who invested earlier. The latest financing totals $62 million (R808m).

The investment won’t break the bank for Gates or Bezos, whose fortunes are within $3 billion of each other, according to the Bloomberg Billionaires Index. But Convoy has become a hot start-up investment among fellow billionaires. Salesforce.com Inc chief executive officer Marc Benioff and KKR & Co co-chief executive Henry Kravis are also shareholders. IAC/InterActiveCorp chairman Barry Diller participated in the new round with Gates.

Convoy was initially pitched as an “Uber for trucking” and has raised $80m in total since starting in 2015. But this year, Uber rolled out its own version of on-demand trucking. The service, called Uber Freight, connects truck drivers with long-haul assignments.

There are other providers, such as Trucker Path, but Uber’s financial heft – having raised more than $15bn since its inception – makes it a force. That’s despite distractions posed by a lawsuit claiming a former Uber executive, who was working on autonomous trucking technology, conspired with the company to steal trade secrets from Alphabet Inc’s Waymo. Uber denies wrongdoing.

Convoy CEO Dan Lewis said he hopes to take advantage of Uber’s distractions. “It isn’t clear what’s going to happen with Uber,” Lewis said. “The leadership of the company in general is gone.”

Uber said its 2-month-old freight service has been greeted by enthusiasm. “We’ve learned an incredible amount already and are continuing to recruit the top minds in the industry as we ramp up our investment in this technology,” a spokeswoman said.

Shipments

Lewis said Convoy is fulfilling thousands of shipments and generating millions in sales a week. He said sales volume is doubling every quarter. Consumer giants Unilever and Anheuser-Busch InBev SA have signed on as customers. Lewis declined to comment on Convoy’s valuation.

The new funding was led by Y Combinator’s Continuity Fund. It’s the first time the Silicon Valley firm has invested in a company that wasn’t incubated in its start-up programme. (Willett Advisors, the investment arm for the personal and philanthropic assets of Michael Bloomberg, the founder and majority owner of Bloomberg LP, invests in Y Combinator startups.)

“The market opportunity is huge, and trucking is a space that has not had any innovation in two decades,” said Anu Hariharan, a partner at the Y Combinator venture fund.

The US trucking market is worth $800bn and is rife with inefficiency. Lewis said trucks are driving without cargo about 30 percent of the time. – Bloomberg