Shopify is Serious About Its Distribution Ambitions

Unbundling the 6 River Systems Acquisition

By: Santosh Sankar

News broke on Monday that Shopify has agreed to purchase 6 River Systems for $450M (60% in cash and 40% in stock). The news comes three months after Shopify announced its Fulfillment Network. The network provides Shopify merchants with the ability to store and distribute products from a nationwide network of warehouses run by 3PL partners that are powered by Shopify software.

Shopify Fulfillment Network

  • One back office: Reduce errors and frustration with always up to date order, inventory, and customer data that syncs across all warehouse locations and channels—all backed by our high-level service agreements.

  • Maintain inventory integrity: Schedule regular or ad-hoc cycle counts to maintain accurate inventory levels.

  • 99.5 percent certainty and accuracy: Orders are picked, packed, and out on time without error.

  • Your eyes at the warehouse: Work with a dedicated account manager who has logistics and Shopify expertise.

Source: Shopify

The Shopify Fulfillment Network is an asset-lite approach to building a robust distribution footprint and empowers those warehousing partners who own and maintain the assets with software. The 6 River acquisition shows promise of bolstering the network further.

The State of eCommerce Fulfillment

In 2018, American consumers bought $517B worth of merchandise online (up 15% y/y), accounting for 14% of total retail sales. By our estimates, that would imply associated supply chain spend of $134B (based on Armstrong & Associates research in 2017). This is a market that can crown three, four, or even five major winners. Amazon FBA has long been viewed as the best-of-breed solution for small and medium sellers. However, it now has credible competition that’s delivering a data-driven solution that’s affordable, effective, and scalable. 

Shopify’s ambitions to expand into warehousing and fulfillment underscore the troubles small and midsized shippers have in getting their customers' products where, when, and how their customers want. Legacy options are highly analog, offer little control over the customer experience, and offer no operational visibility to optimize the distribution footprint and inventory allocation recommendations to power fast, low-cost delivery experiences. 

Unbundling the Acquisition

I can’t help but parallel the Shopify/6 River deal to the 2012 acquisition of Kiva Systems by Amazon for $775M. Over the last seven years, Bezos & Co. have rolled the famous orange robots out across its fulfillment network. At last count in 2017, the fleet is now over 100,000 strong (have heard 160,000+ from some) and benefits independent merchants using FBA. 

I have little doubt that Shopify desires to own all of the “behind scenes” workflows that its merchants require. It might be using a similar playbook now that it has 600,000 merchants selling using its eCommerce software. Activity among those accounts is also strong, considering in Q4 2018 alone, merchants added 40M products to their stores. The captive demand Shopify has provides baseline volumes into the fulfillment network.

Focus on an inexpensive and scalable network. With a line of sight to volumes, the question now is - how do we make our distribution network as efficient (think cost) and scalable (think service quality) as possible? The announcements in June bring the necessary software tooling to the equation around network and inventory optimization. Less obvious/appreciated value is in the unified experience around order management, inventory management, pick/pack, labeling, and shipping. Now, mechanization is in place that can act on the telemetry and insights to automate routine operations while allowing people to focus on higher value workstreams.

Consider that Shopify is not taking responsibility for the warehouse asset (as far as we can tell). This is a capital-efficient and collaborative approach to increasing the velocity of freight through its network. Items can be all put-away, picked, counted, replenished in a manner that “doubles productivity and accuracy.” A 6 River deployment only requires “Chuck” (the robots) without the need for special racking or conveyor systems. The simple configuration requirements allow one to scale with demand where the step function change equals the cost of a bot. This also allows for a more straightforward path to ROI vs equipment like a sorter that can cost $3M. 

Get proven automation talent into the fold. Automating materials handling workflows in warehouses is challenging and requires experienced leadership to assess situations, design systems, implement solutions, and run operations. At Dynamo, you’ll notice that our robotics investments are generally led by industry veterans who are familiar with the challenges of building and selling such products. Shopify is clearly thinking about retaining and developing talent as it offered $69M of shares and options to 6 River founders and employees. I suspect this team will be charged with developing the future of “Shopify Robotics.”

Further-to, unlike Kiva, 6 River will keep selling to third parties where it can stay abreast of best practices and market knowledge, and maintain key relationships in the ecosystem. This decision won’t leave existing customers high-and-dry but instead bring them assurance that Chuck is a long-term member of their operations. I can’t ignore the back door strategy to capture some of the technology spend of major Fortune 500 retail shippers, many of whom are underserved.

Empowering a supplier network with baseline automation. Automation is commonplace in the captive distribution centers of major retailers like Walmart and Target, and select facilities operated by major supply chain outfits like UPS, FedEx, Geodis, et al. The “belly” of the warehousing industry lacks the capex budget (consider Amazon spends $60M automating a facility), knowledge of automation, and consistent baseline volumes to justify investments in robots. That’s all about to change as 6 River’s automated guided vehicles (AGVs) help warehouses deal with high volumes of throughput on behalf of the Shopify merchant, with an operational base made for dynamic environments. Tobi Lütke, CEO of Shopify’s seems to have similar expectations, “With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world.” 

If I had to guess, the Shopify Fulfillment Network largely comprises long-standing 3PLs that have been in eCommerce fulfillment for some time but didn’t have the wherewithal to handle a meaningful book of business. Speaking with A.K. Schultz, CEO of SVT Robotics, “6 River’s offering can be dropped into existing brownfields without much modification.  This is not only a cost-benefit but also a time benefit.  Existing real estate can be occupied in months instead of waiting 12 to 24 months to build.” 

As Shopify seeks a leadership position in eCommerce enablement, the 6 River acquisition certainly shows promise as it scales its Fulfillment Network. 

Thanks to Matt for editing and A.K. Schultz at SVT Robotics and Erik Nieves at PlusOne Robotics for offering perspective.

Dynamo Dispatch (09/09/19)

Issue 75 | Cazoo, Loadsmart, Nikola

Dynamo Dispatch. Weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

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Weekly Commentary 💭

The Dynamo team had an exciting post-summer week that’s only continuing to roll full steam ahead. As you start off the week, check out the latest episode of FoSC Origins featuring my partner Barry Large on his journey from operator to investor. 

We Are Dynamo,
Santosh 💥

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Supply Chain 📦

Ware2Go Rolls Out DIY Tools to Help With Distribution. The four tools comprise demand forecasting, warehouse network optimization, inventory level optimization, and service-level performance insights in an effort to assist with warehouse network optimization and inventory management. In maritime, Cargosmart and SSE Plan Index for Shipping Reliability and in intermodal, FreightWaves Adds Volumes, Status, Rates.

🌟RaaS: A Low Risk Path to Automation?. “In a fluid and low-margin business like e-commerce, the constant pressure to expand, get closer to the customer and scale up and down on seasonal trends can make it difficult for warehouses to accurately predict long-term needs. RaaS enables customers to reduce uncertainty and technological barriers to adoption and to deploy robots without large upfront costs.” Related, The Latest in Robotics Venture Investing and AMR Orders at 100K+.

McDonald’s Expanding Food Delivery. The McDelivery online ordering and delivery service is a partnership with GrubHub and Seamless which will expand to 500 stores in the NYC and tri-state area. In retail, Souq Launches Fulfillment Service while Walmart/Amazon Are Expected to Continue Expansion on Grocery Ambitions

Drones in the Trough of Disillusionment. The commercial UAV market has been slow to take shape due to regulation, slow to develop technology, and unclear business models. Incumbents have consolidated and looked outside of the US to build profit streams. On the regulatory front, Remote ID of UAVs Delayed Again.

Truckload Rates Expected to Rise During Holidays Per Coyote Curve. The Q3 Coyote Curve is projecting a coming inflection point, in which demand is increasing and driving spot market rates up higher, in advance of “surge” in Q4. Specifically, Coyote believes the Y/Y rate of decline for the rest of 2019 will decelerate and ultimately start to become inflationary into mid-2020.  Also, 2019 Has Been the Worst Year for Trucking Operators and Railroads Expect Difficulty Through 2019.

Detention Continues to Be An Issue in Trucking. The American Transportation Research Institute, a trucking industry group, and said waits of six hours or more jumped 27.4% y/y. The total cost to the industry is $1B in lost revenues with much of that faced by female drivers who are more likely to face delays than their male counterparts. Related, the next hot job could be all about Pretending to Be a Robot in areas like teleoperation.

Mobility 🚗

Chinese Funding Battery Facilities in Germany. CATL, a Chinese manufacturer of lithium-ion batteries is planning to expand into Arnstadt to manufacturer and distribute battery cells to Volvo and BMW. The CATL group has not provided local authorities with any detailed plans which is spurring some geopolitical concerns but has increased its budget for the project from $265M to $2B as demand grows. On the mainland, China Targets 60% EV Marketshare by 2035.

🌟NTSB Releases Report on 2018 Tesla Crash. It turns out a combination of human error, Autopilot design, and Tesla’s misleading explanation of ADAS contributed to the Model S crash in California. Speaking of automakers, Did Ford, Honda, BMW, VW Violate the Antitrust Code?

Meet the Porsche Taycan. Over 2,500 words on the ins/outs of this monster EV (800V battery back with range of 280 miles and 11 hours to go from  0-100% charge). For the visually-geared, The Official Global Unveiling.

Uber Evaluating Financial Products for Drivers. Alas, more support for those who believe that “all companies become fintech companies.” This effort would follow cash advances and leasing services that Uber has offered drivers in the past. Also, Uber Relaunches the Taxi Stand in Toronto.

DMVs Selling Personal Data to Third Parties. Multiple DMVs sell data on licensed and registered drivers for tens of millions of dollars a year. Mind you, DMV records are considered public but selling the data for specific purposes, like private investigators, towing, or insurance companies is supposedly considered a normal practice within the agencies. But most don’t know this and some transactions were unlawful such as data sold to unauthorized private investigators, bail bond firms, and bounty hunters.

Citibike Hit 90K Rides in A Single Day. This past Thursday, over 90K trips were taken in NYC on Citibikes as citizens acknowledge that it’s the fastest way to zip around The Big Apple. While the safety of riders is important, per usual, Deblasio is looking to over-regulate the industry via a mandate that requires helmets despite the mobility benefits it provides in the city.  Do you think that America Ready for the Electric Moped?

Fundraises, M&A, Talent 💸

CNH Industrial Leads $250M Series D in Nikola. The Series D round will give the investor syndicate that includes Bosch and Hanwha about 25% ownership post-close.

Cazoo Raises An Additional €27.7M. The online used car marketplace has pre-launch funding of €60M+ from dmg ventures, Stride.VC, Octopus Ventures and Entrée Capital.

Loadsmart Raises $19M. Maersk returned to lead the round as Loadsmart plans to launch a drayage initiative to improve the flow of freight through American ports.

Saltbox Raises $3.2M for “Concrete Class”. Village Global led the round in the co-working space for founders who also need warehousing.

Zippity Raises $3M for At-Work Car Maintenance. Schooner Capital joins BP Ventures and LaunchPad Ventures in the round.

Porsche Increases Steak in Rimac. Rimac builds electric cars, bikes as well as battery systems.

K&N and Temasek Launch Reefknot Investments. The $50M fund will focus on Series A and B opportunities in artificial intelligence, digital logistics, and trade finance.

Company Building 🛠️

Scaling in Lower Cost Locations. “The move from a centralized engineering structure to a decentralized one is a process and takes time to get right. And so I think it is best to start building those capabilities long before they become necessary.”

🌟Founding Sales. A comprehensive guide to sales and sales management for founders and first-time startup leaders.

Hidden Network Effects. The supply chain inherently is a large network where overtime, products and process give way to network effects that increase the value and defensibility of a business. We’ve at times been surprised at the “sudden ramp” of things like a “slow network” or “latent network.”

Who's Hiring? 👩‍💻

Customer Success at Leaf Logistics in New York, NY.
Financial Analyst at Gatik AI in Palo Alto, CA.
Integration Engineer at Stord in Atlanta, GA.

Check out other jobs at Dynamo portfolio companies.

❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting or helpful, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Dynamo Dispatch (08/26/19)

Issue 74 | Voyager, Starship, Zendrive

Dynamo Dispatch. Weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting or helpful, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Weekly Commentary 💭

It’s the last week of summer! It’s a perfect week to kick back with Episode 28 of The Future of Supply Chain where we chat with our friend Justin Hall on a variety of topics including the innovator’s dilemma, RPA in logistics, and the culture of innovative teams.

Enjoy the long weekend and the last days of soaking up the summer sun.

We Are Dynamo,
Santosh ⚡💥

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Supply Chain 📦

Maersk’s Integrator Strategy Takes Shape. It turns out in North America, Maersk’s efforts via their Accelerator offering is early proof that their integrator strategy might have legs. Via Accelerator, cargo will be delivered anywhere within a 50-mile radius of the Port of Los Angeles within 48 hours of discharge. This is accomplished by connecting APM Terminals, part of Marersk, with the carrier’s warehousing/distribution management capabilities and truck providers, which cuts average delivery times by three to five days. Also, Maersk Enters India via BlackBuck Partnership.

📊Industrial Robot Sales Up 7.2% in 1H 2019. North American companies ordered 16,488 industrial robots, valued at $869M with order growth coming primarily from the automotive sector. Speaking of data, Tonnage Rebounds 6.6% in July and ATA Expects Freight Revenues to Be $1.6T Over the Next Decade.

🌟Transfix Launches Carrier Payments Factoring at 0.99% Cost. “Transfix is continuing to build products and services to reach deeper inside of its partners’ operations so that it can find places to add value. What was a competitive differentiator five years ago, like end-to-end visibility, he said, is now “table stakes,” and it’s a constant iterative process to identify and solve pain points on both sides of the marketplace.” Elsewhere, KeepTruckin Launches Dwell Time Prediction Feature and Uber Launches Web Portal for Freight.

🐯How Animals Are Transported. An interesting and comprehensive view of the regulatory, zoological, and logistical processes of getting Baby Shark and Daniel Tiger to our aquariums and zoos.

Dominos Says No to Third Party Delivery. In a bid to better control the customer experience and related brand association, it appears major chains are less keen on partnering with the DoorDash, Postmates, etc of the world. Also, margins matter to this group who are less keen on giving a big cut to a third party, “As profit is extracted from the industry, I think we’re going to see a lot of players really struggle.”

Mobility 🚗

The Unlikely Way E-bikes Could Transform How We Age. E-bikes are helping keep seniors young and, in some instances, even alleviating the symptoms of Alzheimer’s and Parkinson’s. Related to micromobility, Ford’s Bid for Safer Scooters.

🌟Inside India’s Messy EV Revolution. A million electric rickshaws sprang up out of nowhere and are now being used by 60 million people a day. The government and vehicle makers are struggling to catch up. Back in the US, Electrify America and EVgo Ink Partnership to make charging easier for drivers and in China, the Government is Looking to Uphold a Frothy EV Industry

NYC’s Discounted Travel Ticket is Cutting Commute Times in Half. In an effort to improve transit equality, the MTA will extend a pilot that has been discounting fares on commuter rail lines in neighborhoods that lack good subway access for travel to city business centers. Did you know, Booming Economy Has Added 12 Minutes to Commute Times?

🎧Merge Now: Jason Stinson of Renovo. Stinson discusses how self-driving car developers are professionalizing their processes and Renovo sells those teams picks and shovels in the midst of the AV gold rush.

Quantas Testing 19 Hour Flights. The “research” flights from London and New York to Sydney will  help researchers understand how it affects passengers’ health. Most of the 40 passengers will be Quantas employees fitted with devices to measure body vitals. If all goes well, a go/no go decision is to be made by year-end.

Fundraises, M&A, Talent 💸

SpotHero Raises $50M Led by Macquarie Capital. The Series D funding in the on-demand parking company will be used to expand service across more cities, partnerships, and product investments.

Starship Raises $40M On the Back of 100K Deliveries. The fresh funding will help expand the service to 100 universities. Morpheus Ventures led the round.

Zendrive Raises $37M to Scale Automotive Risk Solutions. The Series B funding was led by XL Innovate, with participation by Hearst Ventures, BMW iVentures, ACME Capital, NYCA, SignalFire, and others.

Voyager Raises $1.5M Seed. Voyager provides software for bulk shipping. Investors include ATX Venture Partners, Blue Bear Capital, GreenHawk Capital, and Phaze Ventures.

DoorDash Acquires Scotty Labs. Scotty Labs, is a tele-operations company that enables people to remotely control self-driving cars. It had raised $6M seed round from Gradient Ventures, with participation from Horizon Ventures and Hemi Ventures, last March.

Porsche Invests in Trieye. TriEye is working on a sensor technology to help vehicle driver-assistance and self-driving systems see better in poor weather conditions like dust, fog and rain. The deal was an extension of the previously announced Series A.

Company Building 🛠️

Why Everyone Should Write. Everyone is full of ideas they’re not aware of and writing helps distill those ideas in a way speaking or thinking can’t.

“Angels,” Angels, and VCs. Founders should ask investors where their funds come from to understand motivations and incentives in the face of advice and behaviors they observe.

Confidence: The Currency of Acceleration. “One of the biggest mistakes of the startup community, fueled by an overcapitalized venture market and an overhyped argument about winner takes all market dynamics, is the belief that capital is a weapon that will win the startup wars.” (via Ty Findley)

Who's Hiring? 👩‍💻

Backend Engineer at Mobikit in Columbus, OH.
Business Development Manager at Stord in Atlanta, GA.
Senior Frontend Engineer at Verusen in Atlanta, GA.

Check out other jobs at Dynamo portfolio companies.

❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting or helpful, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Dynamo Dispatch (08/12/19)

Issue 73 | Scale AI, Cloudleaf, Teralytics

Dynamo Dispatch. Weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

❤️ We would love your support. Please forward to friends and share on social media.⛺ Apply to Founders Camp 2019.
🗞️ If you were forwarded this and found it interesting or helpful, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Weekly Commentary 💭

We are super excited by the startups that have applied to Founders Camp so far. Remember to get your application in by August 15th at 12 AM PT! 

Another big shout out to our headline sponsors Chick-fil-a, Covenant Transportation, Schneider National, and FreightWaves as well as our local sponsors EPB, Waller Lansden Dortch & Davis, and Market Street Partners.

We Are Dynamo,
Santosh 💥

Note: please add “dynamo@substack.com” to your email client so you don’t miss future issues due to aggressive spam filters.

Supply Chain 📦

MercuryGate Adds Uber Freight Pricing and Capacity. “This play allows Uber Freight to piggyback on MercuryGate’s network of shippers, and, more importantly, decouple freight volume growth from manual human effort (i.e., salespeople). By giving MercuryGate users access to on-demand capacity and real-time rates, Uber Freight is dramatically reducing the friction involved in joining its network.”

Loadsmart and Starsky Complete First Autonomous Truck Dispatch. In Grand Prarie, TX, Loadsmart digitally priced, tendered and booked the shipment for raw corn. Dynamo portfolio company, Starsky Robotics had a self-driving truck pick up and deliver the shipment to the customer. Joining the fray in the Lone Star State, Kodiak Robotics Launches Services in Texas and in San Francisco Postmates Close to Piloting Sidewalk Robots.

FedEx Ground Terminates Relationship with Amazon. Just two months after terminating a major air freight agreement, FedEx continues to distance itself from Amazon. It’s safe to assume that UPS will benefit from some of the ground business with Amazon revenues nearing a 10% threshold (triggering certain disclosure requirements). Elsewhere in LTL-land, AuptiX Rebrands as Flock Freight.

📊project44 on the Delivery Economy. project44 blind surveyed 750 consumers and 500 marketing executives to understand changing expectations of delivery and the customer experience and to examine how companies are adapting to these evolving expectations. Some interesting takeaways: 1) 52% of consumers cite free or discounted shipping as one of the most important factors in their purchase experience, the same weight given to the price of the product,  2) 74% of consumers say that when a package isn’t delivered when expected, it hurts their impression of the company, 3) 94% of people who make purchases for their company said they expect the same level of focus on customer satisfaction as when they’re making personal purchases. Also, project44 Bags Amazon and Walmart.

🌟New Financing Options Coming to Supply Chain. “Supply chain finance is not a new concept, but what has changed is the rise of platforms that make capital available more easily and can be directly linked to supply chain data, such as the location and condition of in-transit goods, through systems integrations.”

Air Freight Looking to Take Share from Ocean.  The thinking about supply chain is becoming more sophisticated and many factors can be taken into account when determining the best method of transport. It turns out that a variety of factors including cost vs service levels, tariffs, and inventory/distribution optimization can drive a modal shift between ocean and air into the new year.

Mobility 🚗

Germany Constructing “Car-free” Autobahn. The 62-mile bicycle trail will connect 10 German cities, including Duisburg, Bochum, and Hamm, as well as four universities. It has been built to help minimize car pollution and is projected to get 50,000 cars off the road every day.

Michigan Mobility Institute and Wayne State Launch Center for Advanced Mobility. The center will launch new programs focused on AVs, EVs, smart cities, and more. It’s believed to be the world’s first advanced and holistic mobility curriculum. Detroit continues its legacy in the automotive sector as a key source of talent and manufacturing in the era of AVs. See how AR Helps Mechanics Hone Skills.

India to Propose New Rules for Ride-Hailing Companies. The new rules will be an amendment to the Motor Vehicles Bill. The government will publish the rules after meeting all stakeholders and include guidelines around the types of allowed vehicles, surge pricing, and safety of women passengers. In the US, The Advisory Committee on Automation in Transportation was Officially Disbanded after not meeting for over 2 years.

🌟Continental is Betting on an Electric Future. The fourth-largest auto supplier is cutting its investment in ICEs, to better focus on the electric powertrain and what it dubs the future of automotive. The largest shift will be in Europe The biggest shift is expected in Europe due to strict regulations around emissions --  the share of gasoline and diesel engines is expected to fall to 42% by 2030, compared with 59% in the U.S. and 50% in China. Speaking of EVs, GM Partners with EV Connect for Real-Time Charge Data and How Europe’s Battery Leadership Can Fix the Metals Supply Chain.

Optimus Ride Shuttles Launch in Brooklyn. The MIT-spin out is operating six shuttles in a one-mile area to shuttle passengers between Dock 72 and the Gates of the Yard. The shuttles operate at 10-15 miles and will also begin pilots in California and Virginia. In China, EHang is Planning Autonomous Air Taxis in Guangzhou.

Uber and Lyft Suggest Cheap Rides Coming to An End. On their respective earnings calls this week, Uber and Lyft noted that they will ease in discounts and incentives to get riders on their platforms. Wall Street is looking for some signs that cash flows are stabilizing whereby Lyft noted 2018 as the big year of investment while Uber stated that 2019 will be the peak and expects cash outflows to be significantly lower in 2020.

Fundraises, M&A, Talent 💸

Scale AI Raises $100M Series C for Annotation Services. The company is building software to annotate images for training artificial intelligence for robots, self-driving cars, and drones. It is also working on natural language processing. Founders Fund led the round with participation from Accel, Coatue Management, Index Ventures, Spark Capital, and Thrive Capital and several angels.

Cloudleaf Raises $26M Led by Intel Capital and WRVI Capital. The supply chain tracking startup also raised from BluePointe Ventures, Bold Capital Partners, Mahindra Partners and Tandem Capital.

Teralytics Raises $17.5M for Mobility Data Prediction. Robert Bosch Venture Capital led the round together with Deutsche Bahn Digital Ventures, innogy Ventures, LBBW Venture Capital, Liil Ventures, Atomico and Lakestar.

XOi Raises $11M Series C. XOi provides field services communication tools. The round was led by PeakSpan Capital with participation from Grotech Ventures, Vocap Investment Partners, and Nashville Capital Network

Romeo Systems Raises $4M for EV Power Systems. HG Ventures led the round.

Voxel51 Raises $2M Seed. Voxel51 process video and labels it, not just with simple image recognition but with an understanding of motions and objects over time. eLab Ventures led the round.

AllSome Fulfillment Closes $1.9M Seed By East Ventures. AllSome provides supplier sourcing, offshore quality assurance, secured storage, pick and pack, door-to-door delivery, and parcel tracking. 

Nike Acquires Celect for Undisclosed Sum. Celect is expected to apply it’s demand forecasting technology to help Nike ramp its D2C ambitions.

Company Building 🛠️

Burn Budgets. Jason Lemkin suggests more founders create a burn budget for the entire company to help manage cash outflows throughout the year. It gets everyone on the same page, pulling as a team, managing burn through the ups/downs.

The Call to Make Before Moving Your Company. “If you must choose a long term headquarters for your startup, call an executive recruiter who focuses in that city.”

For Top Venture Capital Firms, Success Breeds Success. Yale researchers have complied data that suggests that past performance might be the best predictor of future performance due to the vagaries of VC. Check out, VersionOne VC’s Discussion on Portfolio Return Multiples.

Decisions-Making Frameworks and Exercises that Help One Make Hard Decisions. “The exercise allows everyone on the team to put their fears, hopes and social anxieties into the decision-making process, and see them taken seriously as important factors.”

Who's Hiring? 👩‍💻

Data Analyst at Skupos in Denver, CO.
Frontend Engineer at Mobikit in Columbus, OH.
Supplier Relations Manager at Stord in Atlanta, GA.

Check out other jobs at Dynamo portfolio companies.

❤️ We would love your support. Please forward to friends and share on social media.
Apply to Founders Camp 2019.
🗞️ If you were forwarded this and found it interesting or helpful, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Dynamo Dispatch (08/05/19)

Issue 72 | Odyn, Attabotics, Recogni

Dynamo Dispatch. Weekly update from Dynamo covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

❤️ We would love your support. Please forward to friends or share on Twitter or LinkedIn.
Apply to Founders Camp 2019.
🗞️ If you were forwarded this and found it interesting or helpful, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Weekly Commentary 💭

Quite an interesting week in the world of supply chain as Trump surprised us with an additional 10% tariff on Chinese imports as trade talks stall. There are signs that freight markets might be rebounding while economic indicators continue to imply that the economy is chugging along with the tailwind of a 25 bp drop in interest rates.

As seed investors, while we are mindful of regulation and related headwinds (and tailwinds), we are equally investing for the long-term. We believe in cycles such as this where with heightened friction in the system provide a great opportunity to launch the next stalwart in the industry. Related to cross border trade, we’re interested in: highly differentiated tracking solutions, demand forecasting solutions, network planning and optimization, among other things. We would love to chat (hello [at] dynamo [dot] vc) with founders who might be seeing this as an opportune time to build a big business.

Have a great week!

We Are Dynamo,
Santosh 💥

PS - Only 10 days left to apply to Founders Camp 2019!

Note: please add “dynamo@substack.com” to your email client so you don’t miss future issues due to aggressive spam filters.

Supply Chain 📦

🌟Autonomous Trains Are Ready But Will We Accept Them?. While autonomous trains are expected to go mainstream over the next five years, major challenges to uptake include: 1) unions; 2) allay fears around safety; 3) regulators. Not dissimilar to AVs, there is a varying sentiment among shippers to use autonomous trains with most unwilling to use them (49% of shippers surveyed). Also, CN’s CEO on Technology in Rail Operations.

Shopify to Invest $1B in Fulfillment Network. On it’s latest earnings call, Shopify shared that interest in its fulfillment offering was stronger than expected from customers and 3PL partners. While it’s unclear how the $1B will be allocated, it’s fair to assume a hefty chunk will be used to double down on Shopify’s strengths and scale in machine learning, demand forecasting, and smart inventory allocation.

DB Schenker Launches Connect 4.0 Platform in the US. “Customers will be able to get instant online quotes for ocean or air freight, book transportation and track their shipment from pickup to delivery, which are features that build on the company's previous online portal, eSchenker.​ The previous portal asked customers to fill out a form for a quote, promising a response within three business days.”

Schneider National Backs Off Last Mile. After two acquisitions over the last three years, Schneider is backing off last mile deliveries of oversized goods as unit economics prove difficult to manage. The basic economics in last mile are driven by: volume; size and type of freight; batching; pick up/drop off density; mode alignment; routes; delivery timing. Schneider’s focus was in bulky goods (couches, chairs, refrigerators, etc) that are particularly difficult to manage if volumes are inconsistent and pick up/drop off density is low.

Forwarders Mitigating Air Freight Volatility with Forward Contracts. Freight Investor Services (FIS) launched an Air Freight Forward Agreement (AFFA) market last month, and has seen several industry players use futures to hedge their forward exposure to price movements, using the TAC Index as the base. An AFFA is a cash-settled derivative contract with no physical delivery. It is used to hedge against adverse price movements and is taken out inversely to physical positions, or on a speculative basis to cover spot requirements.  

Takeoff Technologies & Wakefern Launch Automated Microfulfillment DC. The New Jersey-based micro-DC helps power ShopRite online order and pick up grocery services. The effort should help increase the speed and lower the cost of fulfilling online grocery orders.

Mobility 🚗

Meet the World’s Largest Plug-In Hybrid Ship. Color Line in Norway took delivery of a 160 meter-long ship with a capacity of 2,000 passengers and around 500 cars. The ship has a 5 Mwh battery (the equivalent of 50 Tesla Model S vehicles) and also reuses the heat from the cooling water and exhaust.

🌟The Road to AV Safety Has Potholes. According to experts, we’re still missing: 1) metrics for testing; 2) adopting “safety by design” AV development; 3) sharing, among AV developers, of data collected during testing; 3) building a feedback loop; and 5) more sophisticated system-level simulations.

Helicopter Service is Booming in NYC. Helicopter service in the region is up anywhere from 21 to 84% in the last year as high-income earners resort to helicopters as highways to airports and local destinations remain congested in America’s most populated city. That said, noise pollution is still an issue that’s yet to be dealt with. Related, Mobility Gaps in the Post-Ride-Hailing Era.

Electrify America and Stable Partner on Robotic EV Chargers. Stable will manage the overall project and pair its robotic technology and advanced scheduling software located at its facility with Electrify America's chargers. The dedicated fleet-charging facility will allow self-driving EV fleets to charge with no operators present: vehicles can park themselves anywhere inside a standard parking space, and Stable's robot will automate the connection between the vehicle and the charger. Related, VW Partners with Charging Software Company, Elli.

Consumer Confidence Low for AVs and EVs. Confidence in AVs clocked in at 34 while EV confidence came in at 55 (sentiment is segmented into three categories: low (0-40), neutral (41-60) and positive (61-100)). On AVs, it’s interesting that 66% of respondents had little to no knowledge on the matter whereby 71% stated they would be likely to buy or lease an AV if they understood it better. I can’t help but to think that the general sentiment is overly negative in regards to AVs…

📊Breathing New Life Into Used EV Batteries. While Li-Ion batteries have 10 year life spans, even after a decade, they can be reused  in markets that need stationary energy storage requiring less frequent cycling ($30B market by 2030) or recycled entirely to make new batteries. 

Fundraises, M&A, Talent 💸

Turvo Acquires Odyn. Dynamo portfolio company, Odyn was acquired by Turvo this week to enhance Turvo platform capabilities, enabling optimization of orders, shipments and inventory. Marc and Konstantin will lead Turvo’s new advanced technology center in Boston, MA focused on IoT, AI and data science.

Udaan Raises $500M Round at $2.2B. The B2B marketplace for Indian SMEs is in talks with Lightspeed Ventures and DST Global on the round.

Attabotics Raises $25M. The round was led by Coatue with participation from Honeywell, Comcast Ventures, and early investors, Forerunner Ventures and Werklund Growth Fund.

Recogni Raises $25M Series A for Low Power AI Processing for AVs. Great Point Ventures led the round with Toyota and BMW. 

Drip Capital Raises $25M Series B. The Accel-led round will be used to expand trade finance operations, offerings, and market reach.

OrderMark Raises $18M Led by Foundry Group. The restaurant online order and delivery management platform was founded by the “scion of the famous Canter’s Deli.”

Caviar Acquired by DoorDash for $410M. Square was finally able to offload Caviar for 4.5x what it purchased it for back in 2014. The deal can certainly add volume in core markets (theoretically helping unit economics) while bringing some new markets to the DoorDash platform with some critical mass in deliveries.

Ford acquires Quantum Signal. “while others might’ve been sleeping on Quantum Signal and the work it's done, it has been following the company closely, and will employ its experience in developing real-time simulation and algorithms related to autonomous vehicle control systems to help build out Ford’s self-driving vehicles, transportation-as-a-service platform, and both hardware and software related to both.”

Company Building 🛠️

Managing Technical Teams. Camille Fournier, a Managing Director at Two Sigma and the former CTO of Rent The Runway discusses everything from hiring, the first 90 day as a manager, 1 on 1s, to remote work and staying sharp as an engineering leader.

No BS Guide to Stock Options. Standardizing compensation and getting a philosophy in place is generally something boards discuss at a Series A (post product/market fit). Skillshare shares their guide to determining the size of grants as well as tools to help potential and current employees evaluate their option value.

Streamlining M&A with the Atlassian Open Term Sheet. “The Atlassian Term Sheet is more favorable to selling companies than any we’ve seen among strategic acquirers in technology. It’s guided by our research and includes explanations to make our approach more understandable. We’ve done this because we want to be fair to our future team members and we don’t want to spend energy and goodwill on things that almost never matter. And we believe that by being fair and transparent, we can make the M&A process more efficient, human, and aligned with why we acquire companies (and the incredible founders and teams behind them) in the first place.”

Who's Hiring? 👩‍💻

Financial Analyst at Gatik AI in Palo Alto, CA.
BDR at WorkHound in Chattanooga, TN.
Trucking Operations at Starsky Robotics in Dallas, TX.

Check out other jobs at Dynamo portfolio companies.

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