Dynamo Dispatch (16/01/23)

Issue 221 | Howdy, Brick & Bolt, Mondu

Dynamo Dispatch. A 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 💭

🤝 Headed to Manifest 2023? Looking to grow your network with folks interested in supply chain?  If you answered yes to both of those questions then you’re in luck because the Dynamo team is headed to Manifest as well. Shoot Clay (clay@dynamo.vc) an email to ensure we get the chance to meet up.

🥰 Love reading the Dispatch? Be sure you forward it to anyone looking to stay up to date with all things supply chain and mobility.

We Are Dynamo,

Clay, Santosh, Jon, and the rest of the Dynamo team

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

Supply Chain 📦

🌟FedEx To Pare Sunday Deliveries Again As eComm Wanes. “The pullback will reduce the availability of Sunday service to “more than 50%” of the US population, according to an internal memo. FedEx had announced in July that it would slash coverage on that day to roughly 80% of US residents from 95%.” We hope we’re wrong, but it’s unclear whether Chattanooga will make the shortlist of densely-populated areas with strong consumer demand–we know you all are worried sick for us during this tough time (😉).

In all seriousness though, this is a big deal as FedEx has always touted residential delivery as its strong suit. This move is a part of a broader push to reduce costs by nearly $1B. The delivery behemoth has also raised delivery prices as of late to aid in the attempt to raise margin. And it’s not just FedEx, competitors like Amazon are shifting focus from rapid growth to controlling costs. For more, consider reading FedEx Plans More Cost Cuts As Soft Demand Hurts Profits and FedEx, UPS And Amazon Look To Shore-Up Margins In A Slower Market.

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Labor Unrest Spilling Into 2023 May Bog Down Global Trade. Already 38 protests or strikes have occurred that have significantly affected port operations, which is over four times the amount in 2022. Learn more by reading Leading With Lean, Supply Chain Snags And Labor Unrest.

Zimbabwe Bans Raw Lithium Exports To Curb Artisanal Mining. As a holder of some of the world’s largest hard lithium rock reserves, this could prove catastrophic to the clean energy industry. Learn more about the lithium supply chain by checking out Lithium Company Ioneer Scores $700M Conditional Loan From Energy Department For Nevada Plant.

Deere & Co. Will Allow Farmers To Repair Their Own Equipment. This memorandum will now enable independent mechanics to have access to the same diagnostic tools and information that Deere technicians are provided at a fair and reasonable price. This is just another win for the “right-to-repair” movement as input costs continue to rise along with repair costs. For more, consider reading Automakers Have Ground Massachusetts Right-To-Repair Law To A Halt and John Deere Vows To Open Up Its Tractor Tech, But Right-To-Repair Backers Have Doubts.

Starvation Threat To Chickens Prompts Emergency Delivery Order To UP. “For the second time in seven months, the US Surface Transportation Board (STB) has issued an emergency service order to rail operator Union Pacific (UP) to deliver urgently needed feed after delays were putting the lives of millions of chickens and thousands of cattle at risk.” For more, consider Farm Veterinarian Shortage In Virginia And US Could Affect Food Supply.

The Teamsters' New Chief Is Readying UPS Drivers For A Strike As He Heads Toward Contract Negotiations — And Key Moves Show He's Not Bluffing. New Chief Sean O’Brien has been steadily growing membership and preparing the UPS drivers to strike for the first time in nearly 25 years. The nearly $350M strike fund has already been able to bring payout turnaround times down from 8 days to 1. For more, consider UPS And The Package Wars.

Mining Firm: Europe’s Largest Rare Earth Deposit Found In Sweden. Swedish mining company LKAB found over 1M tons of rare earth oxides, useful for building EV batteries and wind turbines. This is the first rare earth element mining being conducted in Europe as China currently provides 98% of the EU's rare metal supply. Learn more by reading China Dominates The Rare Earths Market. This U.S. Mine Is Trying To Change That and Huge Deposits Of Rare Earth Elements "Crucial To Enable The Green Transition" Discovered In Sweden.

Mobility 🚗

🌟Automakers Are Cautiously Optimistic For A 2023 Rebound After Worst New Vehicle Sales In More Than A Decade. New vehicle sales estimates across the industry range anywhere from 13.7M-13.9M in 2022, equating to an 8-9% drop compared to 2021. Shoutout to GM for being one of the only automakers who didn’t post a dip in sales (+2.5%).

Nevertheless, automakers remain “cautiously optimistic” about the upcoming year despite recessionary fears, rising interest rates, and inflation. The main reason(s) for the positive industry outlook is that demand isn’t the issue–it’s supply and the lack thereof.  Of course, this has been the same story for the last few years ever since the semiconductor shortage began back in late 2020. And to no one’s surprise, the other reason for the faltering numbers is supply chain disruption. What are others saying regarding the 2023 outlook? TSMC Chief Executive Officer C.C. Wei believes that the supply crunch is easing and will continue to do so–which is great news for multiple industries, including automotive. For more, consider reading TSMC Cuts 2023 Capex After Record Q4 As Chip Demand Weakens and TSMC Chief Sees End To Chip Shortage That Hammered Auto Industry.

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All US Domestic Flights Grounded As Key FAA System Goes Down. An outage in a federal pilot alert system grounded all US domestic flights for two hours on Wednesday, January 11th causing more than 1K domestic flight cancellations. It appears to have been a result of a hardware failure which, after Southwest’s meltdown over the holidays, points to the fragility of these aviation systems which rely on aging technology. For more, see US Flight Disruptions Mount After FAA Grounding Order Ends.

Several Top Rivian Executives Depart The EV Startup. After falling short of their 2022 target of manufacturing 25K vehicles, Rivian’s VP of body and interior engineering, its VP of parts purchasing, a senior director of strategy, and a few other longer-tenured employees left the company over the past few months. For more on Rivian, see: Rivian Automotive Curtails Production In 2022 Due To Supply-Chain Disruptions.

Mercedes Is The First Automaker To Offer Level 3 Self-Driving In The US. Drive Pilot, the level three self-driving system produced by Mercedes, can take over the driving from the driver on busy highways, allowing the driver to watch a movie, take a video meeting, or anything else as long as they stay in the driver’s seat. For more on Drive Pilot, check out The Front Runner In Automated Driving And Safety Technologies.

Tesla Drastically Lowers EV Pricing In The US And Europe. The Model 3, X, S, and Y saw price cuts in the US and Europe ranging from 6% to 20% to even 30% if you include the EV tax credit. However, not everyone is happy about these price cuts, and protests have broken out in China, as Tesla owners demand refunds for the price difference. For more on Tesla, read Tesla Buyers In China Protest Price Cuts, Demand Refund and Tesla Becomes Top Luxury Auto Brand In The US.

New Pilot Contracts To Drive Up Costs At US Airlines. Major US airlines expect pilot pay—40% of labor expenses—to rise by 20% to 30% under new agreements with labor groups. This paired with a potential decline in travel demand from a looming recession doesn’t bode well for the future of airline profits. For more on airline news, read Delta Air Lines To Offer Free Wifi On Domestic Flights Starting In February and Higher Labor Costs Dent Delta’s Profit Forecast But Travel Demand Is Still Strong.

Tax Credits For EVs Are About To Get Confusing. The Biden administration put out a new but tentative list of vehicles that qualify for the $7.5K tax credit. Be on the lookout for changes to the law in March when Biden will implement plans to onshore battery manufacturing and raw material sourcing. For more details about the credit-qualifying vehicles, see Manufacturers And Models For New Qualified Clean Vehicles Purchased In 2023 Or After.

Over 1M Purely Electric Cars Now On German Roads. The number of EVs in Germany doubled from 309K on January 1st, 2021 to 619K exactly one year later, indicating a staggering growth in EV adoption in Europe with the current count at just over 1M. In other European EV news, read Afeela Plans Further Models And Launch In Europe.

Fundraises and M&A 💸

Howdy Raises $5M In Series A Funding. Based out of Austin, Howdy enables seamless logistics with LatAm contractors and the hiring of the best professional developers. The round was led by Obvious Ventures with participation from Greycroft. Funding will be used to better grasp the US market and scale commercialization.

ReelData AI Raises $8M In Series A Funding. The company is a Canadian data and automation provider that gives customized data and analytics to farmers and fisheries. Octopus Ventures led the round and was also joined by Route66 and Hoston Ventures.  Funding will be used to commercially launch their new product: ReelBiomass.

Brick & Bolt Raises $10M In Series A Funding. Brick & Bolt is an Indian home construction company that provides complete end-to-end services for home construction and business construction by making acquiring contractors far easier. The $10M Series A2 round was co-led by Accel and Celesta Capital and will be used to scale its leadership and tech stack teams and expand its geographic market into Europe and North America.

Mondu Raises $13M In Series A Funding. The German company provides b2b payments solutions for b2b commerce, manufacturing, building, and marketplaces. Funding was led by Valar Ventures and additionally joined by FinTech Collective. Funding will be used for general product development and to accelerate market growth.

World's Raises $21M In Series A Funding. Based out of Dallas, World’s enables digital twins and AI-based automation for ground floor operations of industrial warehouses and manufacturers. Funding was led by Moneta Ventures and followed by Capital Factory, Align Capital Green Park & Golf Ventures,  Piva Capital, and Chevron Technology Ventures. The funds will go towards expanding key partnerships and investing further in their AI platform.

Hystar Raises $26M In Series B Funding. The Norweigan company builds green hydrogen solutions to power numerous industrial operations and applications. Funding was coles by Mitsubishi Corporation and AP Ventures and joined by Firda, SINTEF Ventures, Trustbridge Partners, Fininndus, Hillhouse Investment, and Nippon Steel Trading. The round will enable Hystar to scale toward commercialization operations by 2025 and almost double its employees to 50.

Capella Space Raises $60M In Series C Funding. The San Fransisco-based company is the leader in Synthetic Aperture Radar for accurate earth observation data at all times. The $60M round was funded through the Thomas Tull US Innovation Technology Fund. This should provide Capella with enough capital to launch the Acadia line of SAR satellites that provide improved image quality and resolution.

Driving Dynamics Acquired By Smith System Driver Improvement Institute. The driver safety and training services provider is based out of Newark, Delaware and has helped numerous commercial fleet clients for over 30 years. Financial terms were not disclosed at this time.

Xiphos Systems Corporation Acquired By Epiq Solutions. Based out of Montreal, Xiphos works to provide computing solutions for LIDAR, lunar orbit, and other space-focused applications. The financial terms were undisclosed at this time.

Portage Plastics Acquired By Lacerta Group. Out of Portage Wisconsin, Portage Plastics thermoformed packaging products, industrial electronics, and other plastic materials. The financial terms of the deal were not disclosed at this time.

Stanfordville Machine & Manufacturing Acquired By RE3DTECH+GoProto. The company, based out of Poughkeepsie NY, is a CNC machining components manufacturer and assemblies supplier with over 12 service locations. The financial terms of the deal were not disclosed yet. 

Amherst Acquired By Specialty Building Products. Amerhart is a Green Bay-based building materials distributor that supplies specialty and custom building materials. The deal’s financial terms were not disclosed at this time.

SMS Assist Acquired By Lessen. SMS Assist is a Chicago-based facilities maintenance technology company, that excels in providing reactive and preventative maintenance. The acquisition’s financial terms were not yet disclosed.

WM Motor Holdings Acquired By Apollo Future Mobility Group.WM is a Shanghai-based EV maker, with over 5 models on the market. The acquisition occurred for a whopping $2.02B.

Business Building 🛠️

When to Shut Down Your Company. Resurfacing a post from four years ago by former YC Partner Aaron Harris to help founders thoughtfully navigate a deeply emotional decision. The unfortunate truth of the current market is that many startups will have to wind down.

Be Where Your Business Is. Steve Blank discusses the importance of location in building and scaling a business. The punch line is that a CEO must lead the effort to be close to customers - even if they might not like that location.

🎧How to Price Your Product. We’d direct your attention to topics around 1) what to include in a Freemium product, 2) Day 0 vs 100 pricing, and 3) how to restructure pricing, holistically.

Who's Hiring? 👩‍💻

Be sure to check out our Careers page on our website for more job opportunities that have opened up at some of our portfolio companies!

Associate Product Manager at Raft in London, England. 

Senior Cloud Engineer at Nextmv in Philadelphia, PA (remote ok).

Head Of Revenue at Factored Quality in NYC, NY (remote ok).

Random Statistic Of The Week 📈

⚔️ “Roughly 3.6K to 3.2K years ago, herders and villagers who mined tin ore fueled long-distance supply chains that transported the metal from Central Asia and southern Turkey to merchant ships serving societies clustered around the Mediterranean.” To learn more, consider reading Complex Supply Chains May Have Appeared More Than 3K Years Ago.