21st Century Logistics: Why We Invested in CommonSense Robotics
At Innovation Endeavors we believe large, underserved industries are ripe for transformation by founders wielding the bleeding edge of data, AI, and robotics. One of the industries we’re most excited about is logistics, an $8.1T (yes, that’s T for trillion) market central to both the global economy and our day-to-day lives.
Retail logistics in particular is undergoing nothing short of an upheaval, from the end customer experience down to the root of the supply chain, courtesy of Amazon and the powerful shift towards e-commerce. For two decades, Amazon has steadily and unapologetically raised consumer expectations for better, faster, and cheaper shopping and delivery. In 2017, virtually infinite selection, delivery within hours (and soon, minutes), and “free” are table stakes.
Meanwhile, during this time, the logistics infrastructure for nearly all other retailers hasn’t fundamentally changed. The collision of modern-day consumer “on-demand” expectations with 1970s-era logistics stacks creates severe cost pressures, handing retailers a lose-lose choice between matching Amazon’s customer experience vs. maintaining positive unit economics.
The problem only gets worse when we add groceries to the equation. Groceries are a notoriously high volume, razor-thin margin category with no margin for error that too is seeing fast-rising consumer expectations. Expectations Amazon is now set to deliver with its monster acquisition of Whole Foods, putting yet further distance between itself and the retail landscape.
This brewing turmoil creates ripe conditions for new ventures that can break the experience vs. economics trade-off and bring retail logistics stacks into the 21st century. CommonSense Robotics is a company we love doing exactly that, building autonomous, in-city micro-fulfillment centers that turn unit economics right side up for on-demand retail supply chains — -even for groceries! Today we’re excited to announce our seed investment, alongside our friends at Aleph.
As with every world-class company, it all starts with the founders. Elram Goren, Ovi Avraham, Eyal Goren, and Shay Cohen are a deep, multi-disciplinary team out of the IDF (Israel Defense Forces) with experience across hardware, software, machine learning, and operations.
Their approach to this domain is exactly the kind we love to see, combining state of the art technologies with a full stack business model. The company enables low-cost, small-footprint fulfillment centers by densely packing inventory in a self-driving, 3-dimensional lift- and grid-based system that brings items to stations where humans handle the “last yard”.
Thanks to a much smaller footprint and higher throughput per square foot, fulfillment costs per package can drop 50% and centers can more easily be placed in urban centers closer to end customers, further improving deliver speed and economics. CommonSense then turns around and captures value by directly offering economical on-demand, in-city fulfillment services to retailers. Retailers get Amazon-parity delivery at positive unit economics, and CommonSense starts aggregating and optimizing utilization of fulfillment centers across their customer base!
We’re at the very beginning of a broad transformation of logistics, where companies like CommonSense Robotics, and our other portfolio companies Kindred and ClearMetal, are just the first in a wave of next-generation logistics companies that will emerge in the coming decade. We can’t wait to see what lies ahead and support founders catalyzing this transformation.