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Cargomatic -- an 'Uber for truckers' with high-profile VC investment -- laid off 50% of its staff

CargomaticCargomatic/FacebookCargomatic provides an app that connects shippers that want to send goods with truckers who can deliver them.

Cargomatic, a Los-Angeles based logistics startup described as the “Uber for truckers” which has raised more than $10 million in funding, “blindsided” staff by laying off half of its workforce — around 50 to 60 employees — over the past couple of months, according to people familiar with the matter.

What most surprised staff was that up until recently the three-year-old company, which provides an app to connect businesses that need to ship goods locally with nearby truckers who have capacity in their vehicles, had been on a hiring spree.

The US trucking industry is big business — trucks are the way the majority of freight is transported in the States, with the industry generating $700.4 billion in revenue in 2014, according to The American Trucking Association (Cargomatic says the local US trucking industry is valued at $82 billion.)

The sheer size of the market and the fragmentation of the many old-school companies in the space is part of the reason VCs have been so interested in the sector, investing $63.25 million into “Uber-for-truckers”-type technology/logistics businesses in 2015, according to VentureBeat. Meanwhile, Uber itself is also plotting a move into the logistics space.

CargomaticiTunesA screenshot of the Cargomatic iPhone app.

In January 2015, Cargomatic announced an $8 million Series A funding round led by Canaan Partners, with participation from Volvo Group Venture Capital, Sherpa Ventures, SV Angel, Scott Banister, and others. It brought its total funding to $10.6 million.

At the time of the funding announcement, Cargomatic said it wanted to use the investment to broaden its operations from the Southern California and New York metro areas to other locations in the US.

“Everyone that was laid off was given no warning whatsoever”

Cargomatic’s recent recruitment spree came to a “dead stop” once January and February 2016 rolled around, one former employee told us.

The person added: “I think everyone had a sense that something was amiss when management implemented a sudden hiring freeze with no explanation. But no one could have expected something of this magnitude. Everyone that was laid off was given no warning whatsoever. They were completely blindsided.”

Cargomatic confirmed the layoffs with Business Insider, although the company wouldn’t confirm the number of jobs cut. The former employee, a source close to the company, and reviews on the anonymous employer rating service Glassdoor said 50% of jobs were axed — around 50 to 60 staff.

“Key to growing a successful company is knowing where to staff appropriately”

Jonathan kessler cargomaticLinkedInCargomatic cofounder and CEO Jonathan Kessler.

CEO Jonathan Kessler said in an emailed statement: “The Cargomatic marketplace continues to expand and has enjoyed year-over-year growth since our founding in 2013. Key to growing a successful company is knowing where to staff appropriately at different growth phases. Sometimes that means making difficult decisions, and to that end, we recently reduced the size of our marketplace operations and inside sales teams.”

Kessler added that the reduction has allowed the company to make new investments in building out its enterprise sales department, including the recent hires of two senior logistics sales executives: former VP for Carlile Transportation, Chuck Oeleis, as VP of sales and Meaghan Diem, a former VP at Coyote Logistics, as VP of enterprise sales.

The company has also made additions to its engineering team “to automate tasks that previously had been handled manually,” Kessler said.

The four current job openings on the company’s website are for two engineers, an enterprise sales executive, and an inside sales representative.

Kessler added: “Cargomatic remains laser-focused on developing world-class technology that provides increased efficiency, transparency, and affordability to the trucking industry.”

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