Dynamo Dispatch (08/20/18)

Issue #32 | Car Networking Layers, JD's supply chain efforts, and more

Dynamo Dispatch. Weekly update from Dynamo covering the latest and greatest in commerce and trade, #logisticstechnology, and building venture-scale businesses.

❤️ We would love your support. Please forward to friends or share on Twitter, Facebook, or LinkedIn.

🗞️ If you were forwarded this and found it , please sign up.

Weekly Commentary 💭

Hello from 35,000 ft in the air as I'm off to the Bay Area for a couple days. To begin, prior to my time off, we announced Chick-fil-A joining as a sponsor of Founders Camp. We look forward to learning and working with John, the New Ventures, and the Supply Chain teams in helping startup founders.

Interesting news last week out of Cargomatic who have just taken a fresh $35M Series B from Warburg Pincus. Rich Gerstein has done an amazing job turning around a company that was far from product/market fit in a competitive freight brokerage industry. Cargomatic now focuses on regional and local freight and is moving to streamline manual process using a proprietary TMS. It's a great initial beachhead in an industry that's highly fragmented, riddled with behavioral debt, and tends to have have levels of manual interaction due to the heterogeneity of it's offerings (varying freight with different needs going to vastly different locations).

I highlight Cargomatic as a reminder of three things: 1) That not all problems can be solved purely by technology. The heterogeneity and behavior of users in trucking requires more sophisticated NLP and conversational AI to dovetail into existing voice and email behaviors. At this point is when I can see a horizontal or marketplace play on trucking or the next $1B player emerge. 2) Further, markets often times have substantial sub-industries whose nuance might be more easily solved with technology — a deep focal point. Freight is a $700B+ market where many sub markets can prove to hatch large, market-leading businesses because of their sheer size and inefficiency. 3) Focus also lends itself to working on opportunities with good timing — is the end market ready to pay and use technology? Often this requires generational shifts in leadership, enabling technologies, operational overload all of which take time to develop and force a purchasing decision and push people to leave old habits. It's not easy building a big business and antiquated industry pose their own challenges — it's these types of challenges that we love working to help solve alongside excellent founding teams.

Wishing you a great week and final days of summer!

Cheers,

Santosh 💥

What We’re Reading 📖

JD's Having a Big Week: Blockchain as a Service Platform, Unilever to use JD Supply Chain in China, and JD and Walmart Invest $500M in Chinese Delivery Company. JD understands that eCommerce is a supply chain game and it's made a series of announcements in the last 7-10 days as it opens it's logistics infrastructure for others to use and continue to develop it as a best-of-breed supply chain platform. The blockchain announcement is the most interesting as it allows third-parties to benefit from JD's investments in blockchain protocols and infrastructure. In effect, JD is engendering Dapps to be built on it's blockchain — it will be interesting to see what works/doesn't work and how easy (or difficult) adoption will be. It will be a big win for JD if it's blockchain becomes the de facto for retail, logistics, and related payment and compliance functions in China.

Networking Technology in Cars Due for an Upgrade. Input from a car's sensors is traditionally passed through a CAN or Controller Area Network — fluid levels, diagnostics, powertrain status, engine metrics, etc. The CAN was architected over 30 years ago and is in need of an upgrade that allows for lower latency throughput for features like lane keeping, emergency braking, ADAS, and more. Makes sense, right?The Networking for Autonomous Vehicles Alliance is hoping a multi-gig automotive ethernet approach could be the successor for the data needs of connected vehicles. I suspect this will be a 10 year long transition where the ultimate winner will emerge from a field of several (think Bluray and HD DVD) with transmission optimized across "pipes" like how we do for IoT vs video streaming use cases. On the subject of enabling technologies in automotive, is the US behind in battery technology? Also, Stanford researchers have developed a new AI camera for improved image processing in areas like AV. It combines an optical computer (uses photos vs electrons for computation) and a traditional computer to ultimately increase speed of computation which is essential in AV.

Losses Mounting at Uber AV Unit. I think this comes as no surprise given the capital intensity required to build best-of-breed AV technology then deploy it in a ride network that's the size of Uber's. That said, investors seem to be think it might be wise to divest or commit into a JV of sorts. It might be that the investor base is erring on the side of preparing for an IPO moment and de-prioritizing an internally-developed AV platform. This might dovetail into my previous comment that Uber is in full-on IPO prep. This news comes in the after math of Uber shuttering it's AV trucking efforts and rehiring Lior Ron to run Uber Freight that's expected to generate $500M of annualized run rate revenue over the next 12 months. Related — new Federal guidelines don't provide sufficient transparency into the safety of AVs.

Walmart Repurposing Sam's Club Locations for Fulfillment. Following a June announcement to repurpose a Memphis retail location for e-commerce fulfillment, Walmart announced a second in Chicago. Note the reasons: "site’s access to airports, freight rail lines and interstate highways also factored into the decision to locate there." It turns out many shopping complexes, not just Walmart locations have these benefits too. I wrote about this last spring. Looking at emerging markets fulfillment and distribution, cold chain partnerships are providing access to mission capabilities to enable better delivery of perishable goods.

Elon Musk: Most Difficult Year of My Career. This interview of Musk was published on Thursday and flew under my radar till the weekend. Clearly Musk is going through a turbulent period and he details it for NYT. There are many naysayers out there who I've heard call him a variety of names. Ultimately, like any business, largely transformative or not, puts founders through the grind. They hit low, lows and in such times, founders must rally one another (co-founders are super important!), investors should lean in, and family is a source of emotional support. Despite being the Tony Stark of our age and seemingly invulnerable, Musk shows he is still human and working like a madman to make the Model 3 happen (among other things).

Now, I understand that for a lot of people (me included), working away, really hard on a goal is the best way to de-stress but that only works in spurts. In the long-run, delegating, prioritizing, and saying no is what helps us stay on top. Heck, realizing our limits and resetting from that baseline can be helpful — use it as a point to iterate from and improve off. I think we owe it to ourselves to to support founders through such times and cut the criticism. The gutsy women and men who are making sacrifices to try to change industry and make impacts on society deserve that — success isn't all fun and games, it's more so filled with hardship, stress, and times of loneliness. Founders, as summer winds down, maybe it's not a bad time to take a few days to gain some mental clarity prior to the year-end push.

PwC: Global Transportation & Logistics Deal Insights for Q2 2018. Deal volumes and values were down due to uncertainty related to global trade policy and tariffs. There were no deals north of $5B (vs 1 in Q1 2018). Strategic investments were the bright spot with average transaction size over $425M as valuations rise 12% y/y. At the end of the day — things are slow due to US/China/EU trade policy overhang. As uncertainty dissipates, I suspect at the very least, there will be more strategic investment

What We’re Listening To 🎧

Greymatter: Safely Scaling AV. Greylock's Reid Hoffman, Aurora co-founder and CEO Chris Urmson and Nauto founder and CEO Stefan Heck discuss the opportunities and challenges, including driver insurance and the digital divide, and the importance of working closely with policy makers and OEMs as we transition to autonomous vehicles.

Who's Hiring? 👩‍💻

Robotics Software Engineer at PlusOne Robotics.

iOS Lead at Zeelo.

SDR at Stord.

Check out other jobs at Dynamo portfolio companies.