Dynamo Dispatch (09/17/18)

Issue 35 | Merck's Supply Chain, Walmart & Latam Logisticstech, 3D Printing

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

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Weekly Commentary 💭

No commentary this week but lots in motion here are Dynamo. Enjoy this week's recommended reading!

We Are Dynamo,

Santosh 💥

What We’re Reading 📖

Merck to Expand Supply Chain Automation Efforts. Predictive analytics and AI augmentation is helping the healthcare company mitigate supply shortages, predict spikes in demand and bottlenecks for 100 fertility-related products. The plan is to expand it to over 5,000 products by the end of 2019. Merck believes they will gain a competitive advantage by being a first mover in augmenting their supply chain staff and automating many routine but critical functions. The system by venture-backed Aera currently offers suggestions, based on real-time demand data, such as whether to increase inventory, start production or identify a replacement product. Dynamo portfolio company, Slope identified early that there's a broad distribution of priorities and attitudes across healthcare as it relates to automation in operations and supply chain. The common theme, where investments are best justified to decision makers tend to be around patient outcomes (vs margin expansion or cost control). In Slope's case, given their focus on clinical trial supply chains, patient enrollment and service.

Walmart buys Cornershop for $225M. It's a significant step forward for the Mexican startup ecosystem and specifically, #logisticstech companies in the space (shout out to our portfolio company, Skydrop!). The transaction shows venture investors a market exists for exits that's underpinned by the fact US-based retailers increasingly seeing the opportunity in expanding abroad (Walmart/Flipkart in India; Amazon/Souq in Middle East) and now set their sights on LatAm. Earlier this month, Brazil's Rappi hit Unicorn Status and micro mobility startup, Yellow raised their Series A to supercharge their eScooter and eBike rollout.

Airware Shuts Down After Raising $118M. Last week, we got news that venture-backed Airware is calling it quits. After starting as a software company for enterprises to better collect and use drone data, the company began an effort to make it's own hardware. The shutdown shows the challenge of build a revolutionary, venture-backed business as well as the challenges associated with venture investing. I suspect we will see some great post-mortems and reflective analyses to learn from.

3D Printing & Supply Chain. Our good friend Alan Amling discusses the impact of 3D printing on the supply chain as we know it. He acknowledged the impact it will have on UPS' core areas of focus in storage and transportation. A few interesting takeaways 1) additive is a $10B business today and expected to grow to $100B in the coming years (vs $12T global manufacturing spend) but still very impactful. eCommerce is a great case study for market impact — low proportion of total retail sales but hugely impactful to logistics; 2) we will end up in a world where items are produced in smaller batches and closer to the point of consumption; 3) bulk material shipment and handling will increase (resins and metals used in 3D printing) and reveal opportunity. Industry and product-specific supply chains will transform as the dynamics around customer needs, raw materials, manufacturing, and inventory shifts — ask Adidas and Carbon. Oh, and for those asking about durable materials? Desktop Metal announced a new metal printing system this week.

Driverless is in the "Trough of Disillusionment". An interesting piece from the WSJ that counters the optimistic, "it's around the corner" narrative from many self driving companies. While I do believe self driving is an inevitability, I do agree it will take time, intense efforts to refine the technology, and infrastructure adjustments (not just upgrades). To dig in a bit more, a big issue might be that we know so little as to how the human brain develops as it processes subtle cues and the manner in which we create software systems to mimic that. We are trying to build a biologically-driven cognitive process without fully understanding the reference point. We have several investments related to autonomy that are breaking down the problem in various ways — by industry, use case, operating environment, and even execution parameters to avoid "treating it like one giant data problem." The issue with a general approach is the inherent subtlety in acknowledging environmental variables — construction zones, idling pedestrians, other transportation modes, etc. Further, it closes the door on commercially viable opportunities (think farming, construction, logistics). It's good to keep optimism in check and have realistic expectations around solving revolutionary problems on our march to a more autonomous future. Related: Applied Intuition: Simulation for Autonomous Driving.

Seed Stage Startups Are Now Graded on a Curve. Approaching a Series A moment, startups come with varying histories despite arriving at a similar point of traction (ex: $100k MRR for SaaS). NextView VC perfectly summarizes how startups are now being evaluated with contextual details — traction relative to the time and capital they've taken. In other words, even though traction among a cohort of companies might be the same/similar, the journey to that point is not. Related: Jason Lemkin on metrics required to get SaaS businesses funded as of July 2018.

Retail and eCommerce Round-up: Amazon Business to Hit $10B in sales as it give B2B retails like Office Depot, Staples, Grainger a run for their money. Kroger margins to face further declines as technology investments continue and Walmart expands delivery tower pilots — think large vending machines.

What We’re Listening To 🎧

The Tim Ferriss Show: Drew Houston of Dropbox. A great profile of Houston — he shares lessons related to productivity and stories of building a company from inception to IPO.

Who's Hiring? 👩‍💻

Data Engineer at SKUPOS in San Francisco, CA.

Operations & Customer Success at Stord in Atlanta, GA.

Head of Sales and more at Gatik AI in Sunnyvale, CA.

Check out other jobs at Dynamo portfolio companies.