Dynamo Dispatch (10/1/18)

Issue 37 | Walmart Blockchain, Motor Carrier Act of 1980, JLL on Industrial Warehousing

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 💭

This week, let's talk about marketplaces in supply chain, specifically as it relates to freight logistics — the movement of boxes using bits and bytes. This past week, we’ve been in deliberation about the role of marketplaces in the industry and what is required to ultimately build a large business. Some thoughts as it relates to supply chain (and much more refined from by tweet-a-loud session last night) —

1/ Marketplaces are simply a mechanism for finding a clearing price of a commodity driven by supply and demand. They are rarely the end goal but a ways to a mean.

2/ In the short-and-medium term, pure marketplace businesses could be intriguing but long-term tend to not be viable. They are often a bandaid over short term problems. We’ve seen this in trucking and warehousing in various capacities (talent, digital brokerage, excess capacity listings).

3/ One must integrate the benefits of a marketplace with core supply chain functions — usually the “Viable” in MVP. It cannot sit separately for several reasons: stays niche — never used solve the problem at scale; limits growth — provides incremental vs revolutionary value; disjointed from operations — gives way to unintended operational complexity.

4/ Technology (and the innovative business models they enable) ultimately helps reduce friction. It bridges the physicality of supply chain with the service functions that cater to customer needs. While matching supply and demand in an affordable fashion is important, long term customer success and shareholder value is hinged on interoperability/integration into processes.

As founders consider a marketplace in a supply chain context, think about the broader system. Odds are that solving supply/demand imbalances is just one part of a broader solution and to capture the full market opportunity, a long-term, viable business usually requires product that run deeper.

We Are Dynamo,

Santosh 💥

What We’re Reading 📖

Walmart's Requiring Spinach and Lettuce Producers to Use Their Blockchain. Platform should help Walmart better the track the origin and flow of their produce and deal with contamination in a cost effect way — only discard what is tainted. While blockchain protocols prevent tampering at the software layer, there is not full immunity from bad actors in the physical layer (think someone who re-opens a carton and places produce inside). Long-term solutions will likely involve IoT, automated handling, and cross-verification processes.

The Impact of the Motor Carrier Act of 1980 on Wages. The Motor Carrier Act of 1980 deregulated trucking in an effort to stimulate an ailing US economy. Prior to the MCA, it was hard to start a trucking outfit, there was an odd-dynamic of rate-setting, and truckers were required to buy lanes which created artificial competition. The result were more expensive products — regulated products moved at rates almost 50% higher than unregulated items. The impact of deregulation has benefited consumers with cheaper goods — which is great — driven in part, by trucking wages than are 50% lower (vs 1970s).

JLL on the Industrial Market. According to JLL, 60% of new development are facilities 50k-250k sq ft as supply remains tight due to rising eCommerce volumes, lack of labor/need for warehouse automation, and little developable land in prime areas. It's interesting to see that warehouse operators (3PLs) are more readily embracing automation and are also receptive to the capital improvements and workforce retraining required to uphold customer satisfaction.

Empty Nesters Are Turning to Team Driver Opportunities. Persistently high freight rates in the midst of a driver shortage is mobilizing more latent sources of driver supply. The benefit team drivers bring include speed without the expense, safety, and generally higher driver satisfaction (companionship is important in long haul).

FreightRover Announced a $500M Factoring Partnership. A common area of discontent among drivers tend to be around are around payments — namely wages and detention fees. Depending on the carrier, payments can often times be severely delayed. In a driver-constrained environment, timely payments can help retention and foster drive happiness.

AI-first SaaS Funding Napkin. An initial release of the famous SaaS Funding Napkin for AI startups starting with parameters for the seed raise. Fairly in-line with what we’ve observed in the market (valuations can get a bit rich).

Meet Brad Porter, VP of Robotics at Amazon. Porter discusses the evolution of Amazon’s robotics efforts and how applications of machine learning are providing for a more streamlined approach to cycle counts, goods flow, and ID-ing misplaced inventory.

Ford, Uber, and Lyft Collaborate on Platform to Help Cities Improve Mobility. The data sets pledged will enable new tools to manage curb space in order to reduce congestion and emissions that cause climate change; improve the efficiency of city streets by making it easier for everyone to get around; and save lives by preventing traffic crashes. The ability to stitch together mobility data across locations, modalities, and vendors can be powerful (but hard to monetize) as we seek to move from point a to point b and want to make informed decisions.

Vertical Take-off/Landing Hovercrafts Coming to a City Near You. The FAA has approved the HoverSurf personal VTOL with pre-sales expected to begin on November 1st. Flying surprisingly doesn’t require a license but does have software to assist with navigation and safe flight.

What We’re Listening To 🎧

Strictly VC: An Interview with Softbank Vision Fund. Jeff Housenbold and Anna Lo of SoftBank share how the $100B Vision Fund works — how it decides to invest, what sectors interest (and don't) it, and how it views co-investments.

Who's Hiring? 👩‍💻

Full-Stack Developer at Vector AI in London, England or New York City.

Software Engineer — ML Infrastructure at Gatik AI in Sunnyvale, CA.

Head of Marketing at SKUPOS in San Francisco, CA.

Check out other jobs at Dynamo portfolio companies.