Dynamo Dispatch (12/23/19)

Issue 89 | Teraki, Glovo, Fixposition

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

Weekly Commentary 💭

Issue 89 will be the final Dispatch of 2019 and we look forward to starting 2020 off in full gear after a few days off with friends and family. 

ICYMI, check out the Manna fundraising announcement and also a portion of our investment memo detailing why we invested. On the podcast front, John Larkin joined us on the Future of Supply Chain to discuss both freight and business cycles going into 2020. A must-listen episode.

Happy Holidays from the Dynamo Team!

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 📦

📊DHL: Rethinking Packaging. In 2018, the global packaging industry was worth $886B, with Asia-Pacific countries being the largest consumers of packaging, accounting for 44% of the world total. DHL explains the need to rethink packaging so as to meet changing customer behavior and convenience expectations, rising e-commerce and D2C delivery volumes, and mounting pressure for sustainability and waste reduction. 

🌟Amazon Blocks Sellers from Using FedEx Ground-Delivery Shipping. Amazon caps off the year with another strike against FedEx, following the severance of its ground delivery contract back in August. Amazon is preventing third-party sellers from using FedEx’s ground-delivery shipping, however, sellers can still use FedEx’s Express shipping service. To note, third-party merchants now account for 58% of Amazon’s total merchandise volume. Amazon continues to signal aggression in its commitment to scaling up its delivery network, as this follows other major moves this year including the announcement of its $1.5B air hub in Kentucky slated to begin operations in 2021. By the way, Amazon’s Package Growth is skyrocketing, Amazon's Delivery Business on Track to Deliver 3.5 Billion Packages Globally This Year

California Allows Driverless Truck and Cargo Van Testing on Public Roads. The California DMV announced that it will now allow driverless light-duty trucks and cargo vans to be tested on the state’s public roads. Among other things, companies that want to test driverless delivery vehicles on California’s roadways will need a human safety driver on board or sufficient teleoperations. The ruling only applies to Class 1 and 2 commercial vehicles. That includes vans and pickup trucks, but not larger vehicles such as buses or semi-trucks.

📊CBRE: Reverse Logistics Stress in an Era of Free Returns. According to forecasts, consumers will return up to $95B worth of goods purchased over the holidays. That is up nearly 20% from last year. E-commerce orders will account for nearly half of this volume. Four out of five shoppers prefer returning or exchanging items in stores, and nearly three-quarters say they are likely to buy something else in the process. Catering to this sentiment is making waves in the retail world as companies look to reduce reverse logistics costs. UPS, alone, expects to handle more than 1M returned e-commerce packages a day this season, with volume peaking on January 2nd at about 1.9M packages. Related, Retailers Brace for Bigger Holiday Returns Season and Amazon Expands Free Return Policy

McKinsey: Bulky Is Beautiful. E-commerce has recently seen double-digit growth in many categories, including home goods. Wayfair Head of Supply Chain Sascha Hower foresees the market tripling by 2030 as new generations start buying new kinds of products and increase frequency on existing ones. Additionally, he expects a trend towards same-day delivery for most goods, but “it’s not only speed—customers’ service expectations will also rise by 2030.” For example, home furniture, which is bulky, heavy, and prone to damage. Today, it’s often delivered by transportation companies that have traditionally only done B2B. Companies are shifting to taking this last-mile fulfillment inhouse to more closely control customer experiences. Speaking of last-mile fulfillment, The Future of Last-Mile Logistics Takes Shape.

FedEx Will Cut Air Freight Capacity After 50% Margin Loss. After a regrettable decision to ramp up to 7-day service, the carrier will decrease domestic and international air capacity, retiring 10 aircraft and parking more. The move will decrease total flight hours by 68% YoY in Q4. Fred Smith also blamed the slowing industrial economy, which has lead to a steady decline in international air freight and B2B domestic parcel volume. He affirmed, the impact of losing Amazon as a customer was felt more intensely in the most recent quarter than the previous one.

Maritime Emissions Rule Triggers Split in Shipping Costs. With IMO 2020 imminent, the strategic decision to persist or outfit ships with scrubbers will have lasting impacts on shipping competition over the next few years. That’s because analysts estimate the new low-sulfur fuel aimed at meeting the environmental mandate will cost around 30% more than conventional fuel. The gap caused by this expense is part of the broader economic impact operators across transportation networks are wrestling with as regulators address heavy pollution in freight operations. The maritime world’s scrubber option is a rare instance where costs may be sharply different across the competitive field.

Virginia’s $3.7 Billion Rail Investment Intends to Ease Freight, Road Congestion. This week, Virginia Governor Ralph Northam announced a project to construct a new state-owned bridge across the Potomac River dedicated solely to passenger and commuter rail. The current bridge, built in 1904, carries every passenger and freight train that crosses the Potomac River. The rail expansion is expected to remove 5M cars and 1M trucks from Virginia’s highways. Moreover, it is expected to aid in accomplishing the Port of Virginia’s goal of moving 40% of containers by rail. Monthly freight barometers show that Rail Volume is Down for 9th Straight Month in November and the Cass Freight Index Report Points to November Shipment and Expenditures Declines.

Mobility 🚗

📊AAA and Virginia Tech: Does ADAS Lead to Unsafe Behaviors?. “The results indicate that the simultaneous use of ACC and LKA systems was associated with a 50% increase in the odds of engaging in any form of secondary task and an 80% increase in the odds of engaging in visual and/or manual secondary tasks, compared with when the same drivers who were not using the automated system.” More on the topic of driverless vehicles, Intel Gets IEEE to Ask ‘How Safe Is Safe Enough?’ for AVs and NHTSA in Talks with GM over Fleet of Self-Driving Cars with No Steering Wheels.

🌟Congress Declined to Extend EV Tax Credit. Congress declined to extend a $7,500 tax credit for EV manufacturers. GM and Tesla have been benefitting from the credit, but it expired once each automaker crossed the threshold of 200K EV sales. The revised extension to expand the cap to 400K vehicles at a $7,000 credit was shot down, facing significant opposition from the white house. The resulting credit benefit has shrunk to $1,875 for both automakers in the meantime and will dry up completely in Q1 2020. Related, Trump to Authorize 2020 Transportation Spending Bill.

Aurora Readies an Air-Traffic Control System for Self-Driving Cars. Amazon-backed Aurora is investing in a system dubbed “teleassist” that will connect trained technicians at remote facilities with a vehicle’s sensors to offer suggestions and guidance for unusual developments. As opposed to Phantom Auto and Starsky Robotic’s teleoperations, this system will be used on a more ad hoc basis, when a rider specifically requests guidance in an unfamiliar scenario. The company has taken a stance that teleoperations are not sufficient for taking over driving control, but rather they are best suited in an onboarding capacity and handling non-functional safety.

Boeing to Temporarily Shut Down 737 Max Production. Boeing will cut 737 MAX production from the current 42 planes a month to zero starting in January as it tries to fix problems in the troubled program. The 42 plane output rate is already a dropoff from the 52 planes the company produced in April. The category of nondefense aircraft and parts dominated by Boeing made up 3% of US manufacturing shipments last year. Its suppliers are making due adjustments. Notably, Safran is shrinking capacity from the current output of componentry down to the equivalent for 15 planes per month. Boeing now has about 400 planes in storage as the backlog continues to pile up. 

Share Now Is Exiting North America and Three European Cities. Formerly known as car2go, the Daimler-BMW co-owned carsharing service is set to pull out of NA in February of 2020, attributing the decision to excessive volatility in the global mobility market and low adoption rates. The company will also pull out of Florence, London, and Brussels based on similar circumstances. Share Now cites local factors such as high costs of operation and infrastructural complexities in creating an extremely cost-intensive barrier to scale. Among Daimler-BMW’s other 5 joint ventures, BMW, Daimler Ride-Hailing Venture Steps up Uber Challenge.

Lyft Launches a Car Rental Service with No Mileage Limit. Lyft is rolling out car rental services in SF and LA with a few key perks differentiating them from traditional services. Lyft will offer both the Mazda 3 and VW Atlas on its platform for as little as $35 a day. Lyft is taking a stab at established players with aggressive pricing and looser restrictions. Firstly, the company is offering the service to people as young as 22. Most car rental companies won’t rent to anyone younger than 25 without making them jump through hoops. Additionally, Lyft will not set any mileage limits and will not upcharge for refueling upon dropoff. 

MTA Deploys First All-Electric Articulated Bus Fleet. The NYC transit agency is taking major steps in electrifying and modernizing its fleet, starting with this launch on the 14th street busway. The NYC transit president asserted, “We are committed to a state-of-the-art bus fleet across the entire city that is green and sustainable, and that means moving toward all-electric technology.” The MTA plans to invest $1.1B over the next 5 years to modify depots for electric bus operations and to purchase 500 electric buses—claiming it removes 17M metric tons of carbon emissions from the air per year by providing public transit services as an alternative to personal vehicle use. Also, Virginia Has Big Plans for Electric School Buses in 2020.

Luna to Pilot CM-Level Positioning for E-Scooters in Dublin. San Antonio-based scooter company Blue Duck is working with Luna, a telematics startup in Dublin, to pilot centimeter-level GPS tech to manage dockless fleets and sidewalk clutter. Luna’s telematics device enables scooter operators to pinpoint the location of their scooters within a threshold of five centimeters—current GPS technology’s accuracy is measured in meters. The pilot project will take place on Dublin City University’s private campus. Blue Duck CEO Michael Keane commented, "that level of precision [Luna offers] would allow us to locate our scooters more efficiently and would lead to stricter compliance with geofencing requirements." Effacing micromobility, Winter Is Coming… for 90% of All Micromobility Markets and Bird Is ‘Hibernating’ It's Scooter Service During the Coldest Months of the Year in Certain Markets.

Fundraises, M&A, Talent 💸

Glovo Raises $165M from Mubadala. Spain-based food delivery startup Glovo reaches unicorn status with this most recent raise from the Abu Dhabi sovereign wealth fund Mubadala. Glovo’s app is mostly known for food delivery, but it also offers other categories ranging from groceries to pharmaceuticals. Glovo said with the new capital will be used to help hire 300 new engineers and developers by mid-2020 and to expand into new territories. Drake Enterprises, Idinvest, and Lakestar also participated. 

Gecko Robotics Raises $40M. Gecko Robotics started as a small team of robotics researchers from Carnegie Melon back in 2016 seeking to solve infrastructure problems. The team has since expanded beyond 100 as it plans to create an additional 40 robots over the next year. The robot-enabled software platform primarily serves to monitor and inspect environments such as warehouses and bridges.

Arbe Raises $32M from BAIC Capital, Catalyst CEL, and Others. Arbe is an Israel-based developer of a high-resolution radar chipset designed to assist autonomous vehicles with real-time object detection and identification. According to the company, its radar chipset generates an image 100x more detailed than any other solution on the market today. With this most recent raise, Arbe is pushing to bring its chipset to production and into the hands of Tier 1 suppliers. MissionBlue Capital and AI Alliance also participated as new investors in the round.

StradVision Raises $27M Led by Posco Capital. Stradvision is a Seoul-based provider of vision processing software, leveraging both cameras and lidar, for autonomous vehicle perception. The company of 105 employees is developing what it calls “skeleton detection”, which will provide necessary data to predict pedestrian behaviors. The round brings total funding to date up to $40M for this one of many dozen AV sensor companies, as they bring on an array of new automotive partners. 

Skyryse Raises $13M from Investors Including William Clay Ford Jr. Autonomous air taxi helicopter startup Skyryse has unveiled its main product and announced its total backing of $38M. Founder Mark Groden’s LA-based startup is building a suite of technologies that he says will make flying vastly easier for helicopter pilots, provide sophisticated protections in the event of system failures, and optimize routes and flight times. Groden believes he’ll be able to win approval from regulators to launch wide-scale transportation services much more quickly than the swaths of startups developing novel forms of autonomous electric aircraft.

Teraki Raises $11M Led by Horizons Ventures. Teraki is a Berlin-based supplier of edge processing software for automotive. The company’s platform processes telematics, video and 3D point cloud signals using an ultra-low footprint for its embedded software. Teraki will use this most recent capital infusion to expand beyond automotive use cases into other markets offering significant recurring revenues as clients start large-scale deployments of its technology.

Terradepth Raises $8M Led By Seagate. Austin-based Terradepth was founded by two Navy SEALs aiming to change the way we explore and survey the world’s oceans. The company has developed autonomous submersible vehicles that can provide access to deep ocean data as a data-as-a-service model. The company is planning to demo its service in an open-water environment next summer. In coastal waters, the data could be used to better maintain marine terminals, while deep-sea data could be used to better forecast routing across the ocean.

Seoul Robotics Raises $5M Led by KB investment. Seoul Robotics is developing a perception platform for lidar sensors that offers higher object detection accuracy at lower computational cost. The technology, which is used in both vehicle and industrial robotics applications, is currently being deployed for European OEMs, Korean corporations and institutions. With this most recent financing, Seoul Robotics will continue to scale its platform and expand to North America, building on pre-existing partnerships with Nvidia Inception and the Renesas R-Car Consortium. 

Fixposition Raises $3.4M From True Ventures. Fixposition helps autonomous robots navigate diverse and challenging environments. The new funding will help drive product investment and a global go-to-market push.

Mitsubishi and NTT to Buy 30% of Here. The $1B+ deal will give the Japanese duo access to 3D maps for AVs and join BMW, Audi, Daimler, Bosch, and Continental as shareholders.

Zomato Reportedly Set to Buy UberEats India. Indian food delivery startup Zomato is close to buying UberEats India as Uber looks for a path to profitability. This move comes as Zomato is positioning to close a new financing round of $600M, which Uber may make a $200M investment in as a part of the deal. UberEats never posed a real threat to Zomato and Swiggy, both of which process more than 1M orders each day, as Eats’ volume reached its peak at 600K.

Company Building 🛠️

The Enterprise Margin Crisis. Martin Casado of a16z discusses the broader trend of enterprise SaaS startups clocking in low margins. It might be that the current and future generations of SaaS exhibit different margin profiles than their predecessors.

🌟What Makes A Successful Founder?. “Confidence and humility are two different dimensions. One can be very confident yet very humble (low ego). Humble Operators is one of our highest performing archetypes.”

Thoughts On Hiring Independent Directors. OpenView shares thoughts on searching for and hiring an independent director. A few things that stick out: assess the gaps in your board, don’t rush the decision, be consistent with board compensation.

Who's Hiring? 👩‍💻

Enterprise Account Executive at LEAF Logistics in New York, NY.

Data Engineer at Skupos in San Francisco, CA.

Software Engineer at Vector AI in London, England.

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