Dynamo Dispatch (06/10/19)

Issue 67 | Modifi, Gatik, Cylus

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

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🎙 Check out Dynamo's podcast series, The Future of Supply Chain.

Weekly Commentary 💭

We are looking to invite the best supply chain and mobility startups to Founders Camp 2019. If you have questions or want to chat about the program, reach out to us at hello@dynamo.vc.

If you haven’t already, check out Episode 23 of the Future of Supply Chain where I chat with Dynamo portfolio company, LEAF Logistics about dynamic contracting, predictability in freight, and the rise of financial products in freight markets.

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 📦

How Starsky Built a Trucking Company. To date, Starsky has moved 2,200 loads using both traditional means as well as autonomous vehicles. Stefan and team have realized that they must scale the traditional trucking operation up roughly six months in advance to an autonomous ramp. For example, to hit the 25 autonomous truck goal in early 2020, they need to have 100 regular trucks. The markets are also increasingly embracing autonomy with 15 brokers actively providing Starsky opportunities to move loads.

The New Silk Road Has Promise If Subsidies Last. The Eurasian rail project could see 1M TEUs in volume within 10 years as long as China maintains subsidies. In 2018, volumes were at 370K TEUs (up 35% y/y) with the majority of freight coming via Kazakhstan through to Belarus and Poland.

Uber Brokering Freight at 1%. Uber is brokering at 1% margin to gain market share -  not too dissimilar from other digital brokerage rivals. The question is, what is the margin progression for digital brokers to be sustainable AND competitive? We suspect it will be a 5 to 7 year progress to a run rate margin to 4-5% which will require wide digitization, optimization efforts, and substantial process automation.

Amazon Robotics Unveils Xanthus and Pegasus Fulfillment Robots. Xanthus robots are smaller than the original Kiva models while the Pegasus model can intelligently route individual parcels vs moving entire storage racks. The former can be used with little customization across Amazon’s footprint while the latter will be used in sortation facilities. Related, Amazon Ramps Delivery Hub in Bremen as it sets sight on European logistics ramp. Also, Meet the New Amazon Drone - I’m unsure we will see this in the US anytime soon.

🌟 FedEx Ending Amazon Domestic Air Freight Deal. As it proceeds with a long-term untethering from Amazon, FedEx will focus on the broader retail and eCommerce market as Bezos & Co go from customer to competitor in the supply chain space. FedEx claimed that Amazon accounted for <2% of revenues in 2018 but will continue to serve Amazon in other business lines.

Ford Bidding on USPS Autonomous Delivery Truck Contract. Ford is realizing that there are similarities between the movement of freight and people. It’s one of the finalists for the $6.3B USPS contract to build the autonomous delivery truck of the future. “The postal service says that the goal is to have an autonomous USPS truck that can drive itself between delivery points and mailboxes. The vehicle will be able to monitor the environment and perform all safety-related traffic monitoring. The autonomous USPS truck will free the postal worker in the to sort the mail while the vehicle is in route to the delivery destination.” Also, BoxBot Testing Electric AVs for OnTrac.

Trucking Markets Showing Signs of Weakness: Schneider Not Seeing Bump in Freight Demand and Old Dominion Cautions on LTL Volumes. The latter is especially interesting given that shippers tend to ship lower volumes but also less in a contracting environment. LTL doesn’t appear to be insulated from a broader slow down in freight movements.

Mobility 🚗

Michelin and GM Unveils Airless Tires. The “Unique Puncture-proof Tire System” has no side walls or treads. In a world where 200M+ tires are thrown out each year and tires are the single most expensive component in a car, such innovation is a long time coming.

The Most Congested Cities in the World. Having been to two of the top five before, these rankings from TomTom bring back memories of bumper-to-bumper traffic. It’s during high school and later in college that my trips to India made me realize that bikes and scooters are the most effective modes in [dense] urban centers.

GM Cruise Mired in Technical Glitches. Hiccup highlights include: Cruise tracked “high severity ride discomfort” events once per mile; Cruise self-driving car prototypes take 80% longer than humans to complete a trip; Failure of Cruise’s recent road test for Honda CEO alarmed Cruise employees. It’s important to remember while it’s easy to criticize AV companies, this effort will take time, consistent effort, capital, and multi-stakeholder partnership (regulators, step it up!). Also, Details on Cruise’s “Apollo” Robotaxi Project.

🌟 Ireland Looking at Battery-Powered Trains. In an effort to upgrade its aging rail system, the national carrier Iarnród Éireann launched an RFP to purchase 600 new train carriages by 2040—a near-total overhaul of a fleet that currently contains 629 carriages nationally. All those new trains would run on electricity, and up to half could be powered by batteries (they run on diesel, today).

Bird Debuts New Moped. The new electric bike made by Juiced Bikes holds two people on a long seat, 52-volt battery, and custom made motor. Range and speed were not disclosed. BTW, Bird is Trying to Buy Scoot while Lyft is Suing SF to Maintain Exclusivity.

🎧 Merge Now Podcast: Why HD Mapping Matters with Shaun Stewart. A great auditory primer on mapping and relevance to AV. Stewart worked at Waymo previously and is now an investor and advisor to Carmera, a HD mapping company.

Uber Helicopter Comes to NYC. One can now go from lower Manhattan to JFK by helicopter with private transport arranged on either side. The sub 30-minute trip would run $200-225/person, one-way.

How Hot Wheels Are Designed. This is a fun one… it’s hard work to take that 1978 Mustang and make it small enough for our sons and daughters to play with.

Battery Alliances: JLR + BMW Partner on EVs, Toyota + Subaru Team Up Too. The alliances underpin the on-going capex requirements of advancing EVs (and AVs for that matter). I would also note that buy-in on certain platforms, configurations, and parts from major players will yield operating leverage down-the-road as volumes drive down the cost of manufacturing. Related, Walmart Parking Lots to Feature EV Charging from VW.

Strategic Developments, Fundraises, M&A 💸

🌟 Blackstone Buys GLP’s US Warehouse Portfolio for $18.7B. Blackstone is hitching its wagon to the Amazon effect. Despite reports of “a top” the secular trend is positive amid an on-going push/expectation of same hour and same/next day delivery that requires robust urban fulfillment capabilities.

Gatik AI Comes Out of Stealth with Walmart Partnership. The team has raised $4.5M and is facilitating “middle mile” logistics for Walmart’s Grocery program. Proud of this team’s execution prowess and allowing us to invest.

Kukui Raises $27M from SSM Partners. Kukui builds CRM and market software for the auto industry.

Cylus Raises $12M for Rail Cybersecurity. Magma Venture Partners and Vertex Ventures co-led the round.

Swiftly Raises $10M to Scale City Transit SaaS. Its software helps cities manage their transit systems and identify points in the schedule or route that negatively impact service efficiency and reliability. VIA ID led the round with participation from Aster Capital, Renewal Funds and Wind Capital.

Crowdz Raises $5.5M Series A Led by Barclays. Crowdz’s blockchain platform allows for expedited invoicing, collections, and financing across the supply chain.

Maersk Growth Invests €5.5M in Modifi. Modifi focuses on facilitating on-demand trade finance for SMEs with an improved underwriting model. It has both buyer (importer) and seller (exporter) offerings.

RIP Fiat Chrysler/Renault Merger. Apparently the merger discussions where a total mess- Nissan felt in the dark, governments were jockeying for jobs, and personalities were entirely mismanaged.

Transfix Hires New Chief Revenue Officer. El-Dardiry joins after a 19 year stint at Intel running sales for a large chunk of the chipmaker’s product lines. He views trucking as table stakes as Transfix ramps software that reach further upstream into its customers’ supply chains.

Company Building 🛠️

The DNA of the Product Manager. Great overview of the qualities great product managers have.

The Ideal Email Frequency. In our world, marketing is heavily focused in/around content and email is one of the most powerful channels to deliver through. It turns out the latest data points to certain email frequencies for high conversion.

A Blueprint for Executive Hiring. I have been spending a lot of time around the topic of “hiring the best people” in Q1 and Q2. I really appreciate this framework from Greylock that summarizes a lot of what’s said and done at our Series A and B investments.

Who's Hiring? 👩‍💻

Lead Software Engineer (Autonomy) at Gatik AI in Toronto, Ontario.

DevOps Engineer at SVT Robotics in Williamsburg, VA or Remote.

Product Manager (Teleoperation) at Starsky Robotics in San Francisco, CA.

Check out other jobs at Dynamo portfolio companies.

❤️ 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.