Dynamo Dispatch (02/10/20)

Issue 95 | Emerge, Deliverr, TrueNorth

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 💭

Over the last several weeks, we’ve heard chatter that many late-stage, venture-backed companies are having a refocus in strategy and as a result, laying off some great talent. For the last 18 months, we’ve become increasingly cautious of late-stage supply chain companies raising large sums of capital with a lack of developed/developing fundamentals. Specifically, companies that have not necessarily achieved product/market fit, those with an unclear competitive advantage (or path to such an advantage), weak business model, and floundering go-to-market motions.

We pride ourselves on being growth-oriented but not advocates of growth at all costs. You’ll oftentimes hear us advise founders to build a product a customer wants to pay good money for and just as important, to learn how to quickly and cost-effectively sell the product. This is product/market fit. Further, as a company proves their viability, we work to help founders focus on developing themselves, hiring the BEST, building a customer-centric culture, and paying attention to unit economics. 

A startup is expected to grow quickly but also over time exhibit the ability to generate large sums of free cash flow. Too much money in the early innings can force Founders to deploy in a hurried manner and not allow them to properly set the cornerstones of the business. Product/market fit should be the harbinger of large raises that can be deployed to maximize long-term shareholder value.

If you’ve been affected by the aforementioned layoffs and are looking for a job, please reach out to us at hello@dynamo.vc with your LinkedIn and we will share it with our portfolio.

We Are Dynamo,

Santosh, Ted, Barry, and Jon

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

Supply Chain 📦

Coronavirus is a Greater Menace Than SARS to the Global Economy. While similar in humanitarian magnitude, the coronavirus has sent ripples throughout the economy on a scale far beyond the SARS epidemic of 2002. It’s a flagrant reminder of China’s evolution and the world’s growing dependence on the nation. Regarding supply chains, companies, especially those building advanced electronics, rely on componentry from suppliers 3 or 4 rungs down the chain. Many of these widgets come from Chinese factories with concealed lines of sight. Companies may see production lines come to an abrupt halt without any visibility into the source of the shortage. Related, JD Tests Robot and Drone Deliveries for Coronavirus Aid and Coronavirus: 16 Chinese Ports Offer Reduced Charges.

📊How Online Order Fulfillment Is Changing Grocery. Fabric’s report indicates that consumer demand for speedy fulfillment continues to be of principal importance and grocery is no exception. Findings include that 65% of consumers would consider shopping from a different retailer if their normal grocery store didn’t provide a same-day home delivery or curbside pickup option. Retailers are attuned to this and have doubled their number of curbside pickup locations on average. In the case of Amazon, Amazon Fresh and Whole Foods Grocery Deliveries More Than Doubled in Q4. And speaking of food, FMI and Nielsen on Digitally Engaged Food Shoppers.

Artificial Intelligence Works Its Way Into Supply Chains. The cost-savings and revenue-boosting effects of AI integration with supply chains are well documented. The main barrier preventing organizations from leveraging cognitive automation is the large and ever-growing number of disparate systems that supply chain managers must grapple with.

🌟What is SAP? Companies spend $41B on enterprise resource planning (ERP) every year. Moreover, 77% of the world’s transaction revenue flows through SAP. This piece offers an account of the history of ERP and SAP’s meteoric rise to power.

Six Ways to Reduce Last Mile Delivery Costs. It’s common knowledge that last-mile delivery is both the most expensive and time-consuming segment of the supply chain — accounting for 53% of the total cost of shipping, and up to 41% of the total supply chain costs. Mitigation can be found in offering more delivery options, using dispatching tech, optimizing routes, verifying completion, and leveraging real-time updates/data.

FAA Moves Toward Certifying Specific Drones for Package Deliveries. The FAA for the first time formally laid out a policy and plan to craft a set of new safety standards intended to vet the design and reliability of unmanned aerial vehicles. This has been dubbed as the “biggest step yet toward authorizing widespread delivery of packages by drones.” The FAA said its ultimate goal is to promote full integration of an array of drones and autonomous airborne taxis into US airspace. In other drone news, UPS Partners With Henry Schein to Explore New Drone Delivery SolutionsUnilever Teams up With Terra Drone Europe to Deliver Ice Cream, and Drones Using Autonomous Technology to Dodge Other Air Traffic.

Nuro Gets the First Driverless Vehicle Exemption From Feds. While the R2 is a light-weight, low-speed delivery vehicle, it’s the first foray into federal regulation of AVs more broadly. The shuttle will be used for food, grocery, and other retail delivery services. Given that R2 won’t move passengers it won’t require windshields or side-view mirrors. We’ll be interested to see how this precedent impacts others. See the official document here.

Mobility 🚗

🌟Self-Driving Cars’ $16B Cash Burn. Just three companies spent half of that money — Alphabet’s Waymo, GM’s Cruise, and Uber — and they all still have little, if any, revenue to show for it. It will likely be several more years and billions more in investment before any payoff is seen, and some companies like Uber may just dry up before that point.

📊AlixPartners: Global Survey Shows Limited Willingness to Pay for Autonomous Vehicles. The global auto industry is investing an estimated $75B in developing autonomous vehicles between 2019 and 2023. While many have become lost in the geekery of the technology, few have stopped to take a hard look at the age-old question — how much are people actually willing to pay for this? The answer may shock you. In this study, researchers discovered that consumers are willing to pay as much as $1,709 for Level 2 capability — and only $1,868 for Level 4 capability. That’s a measly 9% increase to go from today’s approach to hands-free driving. With that said, almost half of respondents also said they were willing to give up vehicle ownership, making a strong case for robotaxis as the ultimate business model for driverless tech. 

Lime Commits to 100% Zero-Emissions Operations Fleet Vehicles. Lime fully acknowledges that 25% of the world’s carbon is emitted by the transportation sector, making it the fastest-growing contributor to climate change. The company aims to play its part in changing this by going adopting a 100% emissionless operations fleet by 2030 and joining the Climate Group’s EV100. On the topic of micromobility, At Least 29 People Have Died in eScooter Crashes Since 2018 and Cuomo Details Plan for Legalizing eBikes, eScooters in New York.

📊EEA: The Key to Sustainable Urban Transport. A growing shift to walking, cycling, and public transport will be needed if Europe is to meet its long-term sustainability goals and policy objectives under the European Green Deal. From the report, the share of renewable energy used for transport in the EU rose from 7.4% in 2017 to 8.1% in 2018, which is a positive trend but well below the EU target of 10% set for 2020. 

Tesla Will Launch Ride-Sharing App With Its Own Driver Insurance. Tesla plans to launch its own ride-sharing app, the “Tesla Network,”  before achieving full autonomy, and the drivers will be covered under the automaker’s own driver insurance. Musk commented, “I think it will probably make sense to enable car sharing in advance of the kind of robotaxi fleet because the car-sharing can be done before Full Self-Driving is approved by regulators.” Related, Uber’s Plan to Turn Billion-Dollar Losses Into Profits Isn’t Crazy.

Congress Agrees on Road Infrastructure Demands but Lacks Plan. Representatives revealed an outline last month to invest $760B in infrastructure systems over five years to improve multimodal connectivity. Notably, allocation to road repairs remains critical considering that the Highway Trust Fund is on a path toward insolvency in two years time. The house demonstrated bipartisan support but neither party has revealed a long-term funding plan. Our neighbors in Georgia are Planning First-In-Nation Truck-Only Interstate Lanes.

Fundraises, M&A, Talent 💸

Cepton Technologies Raises $50M Led by Koito Manufacturing. Cepton is a San Jose-based developer of LiDAR solutions. The company plans to use the funding to ramp up R&D, expand in the automotive market, and support its increasingly global customer base.

Deliverr Raises $40M Led by Activant Capital. San Francisco-based delivery fulfillment startup Deliverr brings total funding to date to $70M for its 60-person logistics operation. The startup delivers products purchased online at ultra-fast speeds by renting decentralized warehouse space and stocking shelves based on regional popularity. 8VC, GLP, and Flexport CEO Ryan Peterson also participated.

Vineti Raises $35M Led by Cardinal Health. Vineti is an SF-based developer of logistics software for cell and gene clinics. Vineti’s platform is designed to orchestrate the many steps involved in the production and delivery of cell and gene therapies. The company now plans to expand through Europe and Asia-Pacific.

Turo Raises $30M in Series E Extension. P2P car rental marketplace Turo has raised another $30M, bringing total investment to half a billion dollars. This fundraise loops in NFL player Larry Fitzgerald and rapper 2 Chainz.

Rad Power Bikes Raises $25M Led by Vulcan Capital. Rad power bikes is a Seattle-based, D2C, mid-tier e-bike retailer. The company said the capital will be used to support new brick and mortar retail locations and will fuel the expansion of the company’s white glove delivery offerings.

HopSkipDrive Raises $22M Led by State Farm Ventures. Founded in 2015, LA-based HopSkipDrive is a rideshare company that pairs drivers with both families and school districts to ensure the safe arrival of homeless, foster children, and special-needs children. Greycroft also participated in the round.

Emerge Raises $20M Led by NewRoad Capital Partners. Emerge is a Phoenix-based digital freight marketplace designed for shippers and brokers to find and allocate truck freight more effectively across the long tail of available carriers. The company has processed more than $1B in freight with 1,500% YoY growth from 2018 to 2019. 

ClearMetal Raises $15M Led by Eclipse Ventures. Clearmetal is an SF-based continuous delivery experience platform. The company’s software uses artificial intelligence to analyze various real-time data points, including data on inventory and shipping, to help companies smooth out complex logistics operations.

SkySelect Raises $10M Led by Lux Capital. Skyselect is a platform that helps airlines and aircraft maintenance professionals quickly find and buy spare parts for aircraft. The company’s goal is to automate the suppliers' sales process and eliminate inquiry back and forth. 

Convelio Raises €9M Led by Global Founders Capital. Convelio is a Paris-based digital freight forwarder specializing in fine-art shipping. The company plans to use the funds to expand global coverage and explore new segments in the logistics market.

Nomagic Raises $8.6M Co-Led by Khosla Ventures and Hoxton Ventures. Poland-based Nomagic has developed a method for programming a robotic arm to identify an item from an unordered selection, pick it up, and then pack it into a box. The key item here is “from an unordered selection,” which is where the technology has traditionally fallen short.

Maven Machines Raises $7M Led by Allos Ventures. Maven is a Pittsburgh-based fleet management, telematics, and dispatching startup. The company plans to triple its workforce in 2020 across all departments, including engineering, ops, sales, and marketing. 

2hire Raises €5.6M Co-Led by  P101 and Linkem. Rome-based 2hire retrofits standard vehicles with connectivity devices facilitating fleet management operations. 

OptimoRoute Raises $6.5M Led by Prelude Ventures. Optimo is a Palo Alto-based logistics route optimization startup targeting underserved small businesses. The company offers both significantly lower prices and features such as live tracking, ETAs, and real-time adjustability.

FreightWeb Raises $3M Co-Led by Madrona Group and 8VC. FreightWeb is a service for instant quotes and booking of partial truckload shipments.

Magway Crowdfunds £1.5. The company is engineering a transport solution to move goods through underground pipes in an effort to subvert the traffic and air pollution spurred on by the growth of trade an eCommerce. The plan is to begin with short delivery routes for London airports.

TrueNorth Raises $600K From YC. TrueNorth provides a platform for independent truckers to manage insurance, fuel, and maintenance. Lattice CEO Jack Altman, Rippling CEO Parker Conrad, Eaze CSO Peter Fishman, Liquid2, and others also participated.

STG Logistics Hires ex-Celadon CEO Paul Svindland. Svindland takes the helm of STG Logistics. He has spent 25 years in the T&L industry as CEO of Farren International and EZE Trucking. His experience spans ocean and air logistics, freight forwarding, intermodal, over-the-road trucking and various 3PL services.

Company Building 🛠️

🎧Lessons of Greatness: Why Great Ideas Don’t Wait. “ It's tempting sometimes to say that you'll tackle it when you're ready, when you have more things in place, when you have your ducks in a row, when the economy is more stable in Todd's case, after you've graduated from Harvard in Bill's case. But the reality is if you plan to start something great, these types of opportunities are extremely rare, maybe even once in a lifetime. After all, great opportunities won't wait.”

🎥Olivier Pomel on Building Datadog To $12B. Some amazing perspective around the path to building a publically-traded, enterprise software company. I would point readers to the discussion around go-to-market.

Lessons from Keith Rabois: How to Become a Magnet for Talent and Assess Talent. “Crawl your personal network for your smartest friends, but after that you need to run a sales process on LinkedIn to get more candidates in the door. Look for potential not experience. Running a candidate pipeline takes a lot of time, make sure you ratchet up the time you invest based on the likelihood of the candidate being a fit.”

Who's Hiring? 👩‍💻

Principal Software Engineer at Gatik AI in Palo Alto, CA.

Client Manager - Supply Chain Solutions at Mobikit in Denver, CO.

ML Engineer at Vector AI in London, England.

Check out other jobs at Dynamo portfolio companies.

💥 Seen any interesting startups or have any tips for the Dispatch? Shoot us a note.
❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.