(This story has been updated with comments emailed to FreightWaves by CEO Shoaib Makani and a copy of the letter sent to KeepTruckin employees.)
KeepTruckin, the maker of electronic logging devices, has laid off 18% of its global workforce.
Employees who received the termination notice on March 31 in a letter signed by CEO Shoaib Makani were told that the layoffs were effective that day. In an email to FreightWaves, he said the company now has 1,550 employees.
The layoffs affected 349 employees out of a team of 1,900 employees, Makani said in the letter.
Reasons for the layoffs should bring pause to anybody in the freight industry who has been comforted by the strong volumes and rising rates of the past few weeks. Those volumes and rates have been fueled by demand to resupply store shelves that have been emptied of supplies by concerned buyers. Keep Truckin is seeing some other worrying signs.
“Our data science team has observed a 10% reduction in vehicle activity in our network over the past two weeks, with the hardest-hit regions declining by more than 20%,” Makani wrote in the letter. “If this pandemic spreads across North America, we are facing an extended quarantine that will inevitably increase churn, lower rates of new customer acquisition and cause our total annual recurring revenue to contract.”
In the email to FreightWaves, Makani provided more details on the downturn the company has seen. He revised the letter’s statement on the size of recent declines to say that KeepTruckin’s data science team has seen a 12% drop in activity over the company’s network in the past two weeks. New England and the West Coast have been hit by drops of more than 20%.
KeepTruckin’s revenue is growing on a month to month basis, he said. But “we anticipate a meaningful increase in churn in April and May due to small trucking companies going out of business or pausing their operations, and lower rates of new customer acquisition,” Makani wrote. “The combination of those two could result in a decline in our total revenue.”
While KeepTruckin’s ELD business has a reputation of being focused on smaller operators, Makani said more than 50% of the company’s revenue comes from companies with more than 20 assets. Its customer base is 65,000 companies and 300,000 drivers, he said in his email.
FreightWaves Outbound Tender Volume Index in SONAR, the company’s market dashboard, reflected a steadily rising volume of freight for the last several weeks before a turndown in the most recent week.
There were several other steps that the company undertook, according to the letter. Bonuses earned in 2019 will not be paid out. Employees with a salary more than $50,000 will have their pay cut by 10%. Co-founders Ryan Johns and Obaid Khan are taking 50% cuts in pay. And Makani is taking no salary “until we get through this.”
The letter did refer to a severance package.
The cuts reportedly impacted virtually all the workers in the company’s Chicago office, which has only recently relocated to bigger space as part of a growth plan.
Survival is key, Makani suggested. “I have a duty to make sure that KT can weather any storm,” he wrote. “We are in the midst of the worst we have seen in our lifetimes.”
Although KeepTruckin has been known mostly as an electronic logging device (ELD) provider, it has sought to push into new areas. It purchased and then soon shuttered One Point Logistics, citing issues with trying to maintain the dual role of being a broker and operating a smart load board at the same time. In his email, Makani said the layoffs do not affect the team working on the load board.
A little more than a year ago, the company secured $149 million in a series D investment. Greenoaks Capital was the lead lender in that deal; existing investors also took part. With that investment, it brought KeepTruckin’s funding up to $229 million.
Makani, in his email, said KeepTruckin has $80 million of cash and cash equivalents. “The steps we have taken today will take us to cashflow profitability,” he said.
ELDs and what it calls the Smart Load Board are not the only products of the company. It also provides in-cab cameras and GPS tracking.
In a blog post in reaction to the pandemic published just the day before the layoff notice, KeepTruckin’s head of regulatory affairs Travis Baskin posted that the company’s engineering team “has ensured 24-hour coverage with on-call staff to monitor systems and respond to alerts.”
Anonymous
The worst thing hapenning right now is how blatantly the keeptruckin management is lying to press about how motivated the remaining worforce are after the lay offs. What hasnt been shared with the press is that the “essential cost cutting” initiative did not end at firing 350 people on a days notice and only providing as much severance as is required by the law, but also entails to a whopping 70% reduction in the variable sales compensation (commissions) of the remaining workforce.
Furthermore, a new system has been introduced to govern the base salaries. While purely merit based on paper, it is being blatantly exploited by internal politics with many questionable promotions.
Those objecting to such cases are being silenced by thre management.
Helpless employees are writing emails to the management begging for fairness, merit and transparency in deciding the new salary levels, with no response and only for those emails to be secretly deleted from their inbox overnight.
In simple words, they are taking advantage of people’s helplessness. THESE ARE BAD PEOPLE!
KeepLayin(off)
Where to start?
-The COO has no experience in leadership, trucking, ELDs or startups. How he has survived so long with so many departures under his tenure before these mass layoffs should concern anyone doing business with this company. Probably due to his family ties with the CEO. Guess the CEO can’t fire his brother in law.
-The smart load board is awful. The company uses experienced brokers to build it out, then laid them off, and thinks other brokerages will use it or carriers will want to use it. They are lying to themselves; the product is awful and doesn’t work. If you are a brokerage or a carrier, BEWARE of using the smart load board as it is an inferior product.
-Two back to back layoffs in one month of each other should cause all carriers and anyone doing business or investing in this company cause for concern. This is not due to COVID; this is just bad business by leaders that are only out to get paid. To payout brokerage managers for 2019 bonuses that were let go in Feb but not pay out managers that were let go in Mar says this leadership team has no morals and will not do the right thing. If you are a carrier and read this, thing of how they will leave you high avd dry if they will do it to their own people.
Get away from this come by as quickly as you can. There will be more layoffs. Someone will probably buy this company out and the carriers will have to absorb the blow.
KT supporter
Agreed. That Smart Loadboard is anything but smart. It’s a dumpster fire as they are light years behind the competition on this end and are clueless if they think otherwise as they don’t even know their audience. Kudos to you KT as you continue to impress with new lows every month. Can’t wait to see what steaming pile you throw out there next.
Another Anonymous
Regarding Managers and supervisors: It make take some time to figure out what they really know. It’s just plain rude and unprofessional to come out initially put these people on the spot and try to figure what their knowledge about anything really is. Over the years that I’ve been there it’s been disappointing, frustrating, surprising, infuriating, and sometimes just plain comical regarding what little many of these people know. They ask you to do things, but haven’t the slightest idea what is involved in doing things The impracticalities, the vagueness, the grandiosity, and the foolishness of their requests makes one good at biting their tongue. Yep – these people are leading this business….
Anonymous
Wow. Where to begin? Inferior products. They kept churning out latest and greatest products to fix well known flaws, but guess what? Nothing was ever fixed. A never ending stream of returned products from frustrated customers. This place bows at the alter of “diversity”. I’ve never seen a bunch of dumber folks than the foreigners they hire by the boatloads. I am amazed by what these people don’t know. But hey, if you can pay these folks a small fraction compared to qualified homegrown talent we have here in the US, why not , right? Oh wait – you reap what you sow. Expect more layoffs…
SCUM
Not to mention 2019-Bonus taken away during 2020 Pandemic. If that’s not GREED idk what is
AWFUL
KT fired employees, taking the 30-DAY HEALTH INSURANCE coverage away from these hard workers DURING A PANDEMIC. What does that say about the company?
Disappointed
Samsara announced today how they are handling these tough Covid-19 times and it looks like this. Due to the economic downturn resulting from COVID-19, Samsara put a hiring freeze in place for the next 6 months. In a massive effort to make sure that all 75 people in the recruiting org across all 3 geos were supported, leadership decided that instead of layoffs, they would funnel all of those affected in to different areas of the business for the time being. The entire time I worked at KT, Samsara was one step ahead and that’s because of their leadership. KT needs to replace the COO if there is any hope in saving what’s left. That’s kind of hard to do when it’s family. Or is it?
Robbemhigh
Silicon Valley BS
– Take an old software dog like ELD
– Put a new UI on it
– Never rode a truck. Don’t understand truckers at all. Make fun of them actually while eating Avocado toast.
– Wear a black turtleneck and say I am disrupting the space by lowering price. Nothing else.
– Screw the employees with highly diluted options. Poor suckers, they think they are going to get rich on 10,000 options when the total outstanding is 200M+ shares (this is a good time to ask what my stock options are worth, what percent of the total outstanding do I have, what are the pref stacks). VCs are going to clean up and take the top dollar in an exit.