What To Build: Sune Stilling (Maersk)
Conversation with Sune Stilling, Head of Growth and VC @ Maersk Group. We chat about Maersk’s approach to investing into startups and their SLAs with startups once they’ve invested, Sune’s views on the major challenges in their space, and also why getting to a high revenue figure doesn’t necessarily equate to a successful business in logistics.
1. Tell us about yourself, where you currently work, and your path on getting there.
I have been working with Maersk in many different capacities and regions for around 20 years. My career has spanned five continents, focusing on radical industrial turnaround and transformation in emerging- and developed markets — the last 10 years in CEO and MD-level positions.
Maersk is a global transportation and logistics company. We are based in Copenhagen, Denmark, with subsidiaries and offices across 130 countries and around 88,000 employees.
2. Tell us about your role and what your mandate is and how this specifically relates to working with startups?
Currently I lead our venture arm, which got started about two years ago. We’re primarily an early stage fund (for seed and series A startups) but also have a separate vehicle to take on later series and larger ticket deals; we made our first investment in April 2018 and currently have ten portfolio startups.
Our focus areas are in: smart logistics, future of trade, food waste — and most recently Carbon Neutral solutions. Most of our investments have some AI/ML component but generally not as their core offering. We invest in business models enabled by technologies but not in the technologies themselves.
Our team reports to directly to the Maersk CEO and we work closely with each of our business units and products to understand their needs and see how our investments might be able to partner with them.
3. What are some of the interesting types of projects that you’re currently doing with startups?
We invested into a startup called Loadsmart late last year. At the core, Loadsmart is a technology company but also a digital road freight forwarder. The reason we invested is that we have a significant overlap in customers and because Loadsmart’s product offering fits well with Maersk’s and will allow us to provide additional value to our customers. Loadsmart is using machine learning to do trucking optimization in a way that we’re not right now; partnering with them allows us to expand our value chain beyond just the port / ocean freight.
We’re launching a joint project with Loadsmart called Maersktransportation.com that will exactly showcase our synergies. This is similar to how we work with all of their portfolio companies.
4. What number of these projects move into production? By what criteria? One of the challenges we see startups facing is how to move a customer from pilot to production.
We also see this as a major problem facing startups. There’s two angles to this:
1) We’d rather see a startup with one paying customer vs. 50 free pilots. There are some companies are very happy to do pilots with all the startups but they’re generally unpaid or very low fee pilots — but this doesn’t always translate to real commercial agreement later on. In any large corporate, you can always find someone who can sign for a $3K-$10K pilot but that doesn’t mean very much.
2) Before we invest in any company we ask ourselves if we can truly add value to this startup in a way that no other regular VC can. This is one of our first selection criteria. Our team knows the Maersk organization very well and we know what it’ll take to get things done for the startup in terms of partnerships with different parts of our organization. So we already select for startups who we can work with.
The reality is that we’re often searching for startups who can service our customers versus servicing Maersk directly. We ask: can you sell an integrated solution to our customers?
You never know for sure which startups will go from pilot to production with our customers but we try to focus on asking if what the startup has to offer fits with our current and future value proposition and strategy. We go into our business units and look for an (informal) executive sponsor, talk to people who might be interested in this solution and often do product demos for them to ensure that it solves a real problem before we invest. We mostly also engage with our customers before investing and ask them if they’d be interested to buy such and such a solution.
After the deal closes, our venture development team conducts workshops with our portfolio startup and asks what they need to scale up their business. We have service level agreements (SLAs) with the startup to deliver 3–5 things within a certain period of time and then we execute on the SLAs, which pertain to both Maersk and to our customers.
5. What are the major challenges in your industry these days, and specifically ones that you think can be addressed by the right type of AI and or robotics application? Can you give some detailed examples?
Our global transportation and logistics industry is extremely paper heavy and manual. Documentation and information don’t flow as smoothly as the actual products being moved around the world. Our industry has a notoriously poor customer experience partially driven by manual and obscure processes, which is only benefiting middle men and brokers.
There’s a clear case for automating some of these many manual processes using AI. Can you imagine millions of documents being scanned, typed and re-typed into many different systems in hundreds of different formats?
Another opportunity area is in the optimization of cargo flows both in-land and maritime: what’s the optimal way of routing and triangulating on physical flows by connecting the different players in ecosystem? Even just taking a small example — right now each captain decides how to run his vessel but is the vessel being run in the most possible optimal manner? If you had an algorithm assisting the captain would you get better and/or more uniform results? We see a lot of smart people working on these challenges from diff angles but the problem is still not solved.
Within warehousing there’s a definite need for robotics — people are not excited about walking around and putting boxes on shelves. Safety is another big topic area in warehousing, a place where people are driving around with forklifts next to people walking; accidents happen all the time in such environments. This applies similarly to ports where very heavy items are constantly being moved around by cranes and other heavy machinery. Ideally we’d have no humans in ports so that they stay out of harm’s way. Currently, a lot of the human related port tasks are manual and repetitive and we don’t have any effective automated solutions at scale yet.
One last example is in the area of track and trace or supply chain visibility; the common assumption is that in order to do this you’d need to put sensors on every asset you’re tracking but I want to challenge this perspective — rather than equip containers with sensors — can you track items using already existing data?
6. What type of startup would you be most excited to see?
Any startup that’s doing a great job in optimization, track and trace, areas that will help us expand our value proposition. I personally would be excited to see startups working on creating a more circular economic system in supply chain.
For example, right now if a T-shirt is produced in China, it gets packaged and transported to a port on a truck, then shipped to the USA and finally makes its way into a store where it’s sold. You buy the T-shirt and wear it a few times and throw it out. Wouldn’t it be good to know if that T-shirt had been made under good labor conditions with organic recycled cotton? I imagine the brands themselves might want to provide this type of provenance information to their customers in order to help them make more informed buying decisions. Afterwards, what if the consumer can bring the T-shirt back to the store to recycle it instead of just throwing it away? Something like this type of circular economy would be really exciting to see; how to make the product relevant to the customer throughout the entire product lifecycle.
7. What should startups know about your industry before going in? What nuances or details about the industry are not so apparent from someone looking in?
Our industry is very inefficient, very manual and hence very ripe for disruption. That said, startups are wrong if they think everyone in shipping and transportation are idiots because we haven’t solved these issues. Clearly there’s a lot of optimization to be done across the board but you have to keep in mind that our industry moves physical goods and that makes it that much harder to optimize.
In our industry, anybody can get to $500MM in revenue — it’s not very much because of the many price sensitive customers who are willing to switch providers for short-term subsidies. So you give them a nice customer experience and subsidize them and for sure you’ll find lots of customers. However, making your business profitable will be far more difficult. You might have started off building an asset light business only to realize that maybe those assets weren’t so bad after all. I think a lot of startups are hitting that realization today.
Ultimately, I think in order to disrupt this industry, you have to partner with it — it’s hard to believe that a startup in isolation can go out and disrupt the global transportation industry.
8. Lastly, any recommended resources / reading (ex. Industry conferences, publications, experts to follow, etc.) for startups looking to build in your space?
I would always recommend startups in the transportation and logistics space to start with us at Maersk Growth https://growth.maersk.com/. In 2018 we met more than 1,000 startups, invested in 10, and partnered with additional startups. If I were an entrepreneur in the industry, I would be excited about having access to 80,000 capable and motivated internal industry experts in the midst of a very large transformation and digitization journey.
Other than that Fontinalis Partners’ Mobility Matters, Dynamo Dispatch and Supply Chain Dive are all newsletters I would recommend reading.
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