A VC in Vacationland

Interesting thoughts on how to dominate global supply chains....

http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers-11032011.html

MicroVentures: A new option if you want to invest in startups

Image via CrunchBase

According to Xconomy, just a decade ago, if you wanted to invest in a start up you had to know someone. A lawyer, an accountant or a friend of friend would give you a referral to a company looking to raise money, or they’d invite you to invest with them. That’s how you got in the door. You had to have a lot of money to play – often $50,000 or more. And the startups you’d see were from your geographical region. That traditional scenario left a lot of interested angel investors sitting on the sidelines.

Today, it’s a lot easier to become an angel investor, due to crowd funding, micro lending and investment sites like Microventures Marketplace Inc., which is opening doors to those looking to invest $1,000 to $20,000 or more. The way to win at angel investing, of course, is to invest in the right start ups. To get there, you need: 1) Good deal flow from which to spot potential winners. 2) The ability to invest in multiple deals so you gain experience. 3) A knack for spotting companies, and more importantly people, who will succeed. Getting good deal flow is often the stumbling block for the average person looking to get started in angel investing.

And it’s one of the reasons Bill Clark founded MicroVentures. He wanted to begin investing, but didn’t have access to good deals. Like many others thinking about making angel investments, Clark wanted to invest smaller sums in more companies, allowing him to spread out his risk and also increase his changes of picking a winner. And he wanted access to great companies outside of the Austin area, which is his hometown. More than a thousand investors have joined MicroVentures since Clark launched the investment service a year ago. The service matches companies seeking money with investors looking to invest anywhere from $1,000 to $20,000 or more. MicroVenture helps investors learn about companies they may never have heard of, and to invest smaller sums, which is virtually unheard of with traditional investing. MicroVentures also helps with the initial due diligence process by filtering start-ups and then providing documents to help investors conduct their own due diligence to help them make a final decision. 

Supply Chain Innovators: RIP Keith Tantlinger--Inventor of the Container Lock

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When Malcolm McLean, trucking executive guru and the "godfather" of the ubiquitous global shipping container needed to solve the problem of how to stack the containers, he turned to Keith Tantlinger, an engineer at a truck trailer manufacturer in Washington to design a way to solve the problem. Keith developed a lock that connected the containers at the corners and allowed the crane operators to release or close the lock without leaving their cabs.

The lock, patented and introduced in the mid 1950's, presaged the birth of the container revolution over the next two decades. Instead of manually unloading pallets or boxes of cargo from ships and reloading them into rail cars or trucks, a container could be easily lifted off the vessel and placed on a truck chassis for transport to the final destination.  Not only were cost efficiencies realized with the new technology, but security was enhanced and valuable cargo could now be sealed incognito inside look-alike containers.

We all know the rest of the story--global trade exploded as did the standard of living in many third world countries where goods were made to satisfy developed nations demands. One could say that a simple lock, hardly hi-tech or attractive, is partly responsible for the comfortable lifestyles we now enjoy.

Rest in Peace, Keith Tantlinger (1919-2011), and thank you for being in the right place at the right time with the right idea.

Update: EquaShip

Curt Woodward on Xconomy reports that EquaShip, the Seattle startup that’s aiming to wrangle dramatically cheaper shipping costs for small and medium-sized businesses, has added another $600,000 in financing from undisclosed investors. That pushes the startup’s total funding to $1.5 million, following the announcement of a $900,000 investment in June.

EquaShip rolled out its service in October, targeting the small sellers—many of them doing business on eBay and Amazon—who don’t get big-account treatment fro FedEx and UPS. Founder and CEO Ron Wiener says there are millions of those businesses around the country, and EquaShip says it can offer them rates that are “typically 28 percent to 79 percent below UPS and FedEx residential ground rates.”

EquaShip does that by partnering with smaller carriers, who funnel packages through the U.S. Postal Service for final delivery—what’s known as a consolidator service. EquaShip also offers package tracking and insurance. The company plans to use the new investment to add software features and drop-off locations.

As fascinating as the idea continues to sound, please remember that shipping is a scale economics business and that UPS and FedEx are the winners on cost. Unless EquaShip can somehow amass the scale to go after them, it will remain a niche business that serves a niche clientele.

Supply Chain Innovators: Apple--Using Your Cash Hoard to Buy Supply

Image by marcopako  via Flickr

An amazing take by an anonymous user on Quora on why Apple products sometimes seem so superior. Because they are. Because they get them before anyone else.

 

We'll just quote it because it's great as it is:

When new component technologies (touchscreens, chips, LED displays) first come out, they are very expensive to produce, and building a factory that can produce them in mass quantities is even more expensive. Oftentimes, the upfront capital expenditure can be so huge and the margins are small enough (and shrink over time as the component is rapidly commoditized) that the companies who would build these factories cannot raise sufficient investment capital to cover the costs.

What Apple does is use its cash hoard to pay for the construction cost (or a significant fraction of it) of the factory in exchange for exclusive rights to the output production of the factory for a set period of time (maybe 6 - 36 months), and then for a discounted rate afterwards. This yields two advantages:

1. Apple has access to new component technology months or years before its rivals. This allows it to release groundbreaking products that are actuallyimpossible to duplicate. Remember how for up to a year or so after the introduction of the iPhone, none of the would-be iPhone clones could even get a capacitive touchscreen to work as well as the iPhone's? It wasn't just the software - Apple simply has access to new components earlier, before anyone else in the world can gain access to it in mass quantities to make a consumer device. One extraordinary example of this is the aluminum machining technology used to make Apple's laptops - this remains a trade secret that Apple continues to have exclusive access to and allows them to make laptops with (for now) unsurpassed strength and lightness.
2. Eventually its competitors catch up in component production technology, but by then Apple has their arrangement in place whereby it can source those parts at a lower cost due to the discounted rate they have negotiated with the (now) most-experienced and skilled provider of those parts - who has probably also brought his production costs down too. This discount is also potentiallysubsidized by its competitors buying those same parts from that provider - the part is now commoditized so the factory is allowed to produce them for all buyers, but Apple gets special pricing.

Apple is not just crushing its rivals through superiority in design, Steve Jobs's deep experience in hardware mass production (early Apple, NeXT) has been brought to bear in creating an unrivaled exclusive supply chain of advanced technology literally years ahead of anyone else on the planet. If it feels like new Apple products appear futuristic, it is because Apple really is sending back technology from the future.

Once those technologies (or more accurately, their mass production techniques) become sufficiently commoditized, Apple is then able to compete effectively on cost and undercut rivals. It's a myth that Apple only makes premium products - it makes them all right, but that is because they are literally more advanced than anything else (i.e. the price premium is not just for design), and once the product line is no longer premium, they are produced more cheaply than competitor equivalents, yielding higher margins, more cash, which results in more ability to continue the cycle.

Here's the whole thread →

An interesting part is that the seemingly well-sourced Quora responder credits Steve Jobs with this strategy, even though "the operations guy", "supply chain genius" at Apple is usually thought to be COO Tim Cook. It goes to show just how deep Jobs' expertise and execution goes, and how different Apple will probably be without him. 

Read more: http://www.businessinsider.com/apple-supply-chain-2011-7?utm_source=Triggermail&utm_medium=email&utm_term=SAI%20Select&utm_campaign=SAI_Select_070511#ixzz1TVMpv2TV

Supply Chain Innovators: Vivino

According to TechCrunch, Vivino helps you identify and locate your favorite antidote for future consumption. Use the Vivino app to take a photograph of any wine label. Vivino uses image recognition to match the label against its database of 450,000 wines and return you all the information available about the wine including, hopefully, where you can buy it locally. The app saves the details of all wines you have matched and you can also record whether you liked a particular wine or not.

The business model is based on a revenue share with wine distributors. “We’re the bridge between tasting a great wine and buying it” says Vivino co-founder Theis Sondergaard. Songergaard and co-founder Heini Zachariassen claim to reflect their target audience quite accurately. “We really like wine, but we don’t know that much about it. We know what we like, when we taste it, but we don’t have a wine-cellar, just a row of bottles in the kitchen.” continues Sondergaard. “We use the Vivino app to educate ourselves a bit about the wines we drink, remember what wines we’ve enjoyed and want to try again, and the ones to avoid. “

Swiss company Kooaba provides the image recognition technology. Kooaba can match against an image-set of 2 million labels in less than a second. Wine labels shot from different angles or in different lighting conditions can be matched; an important feature when dealing with images taken in restaurants or low-lit rooms. Currently Vivino can automatically match 60 percent of wine labels and the company aims to get up to 80 or 90 percent. When a label can’t be matched Vivino’s data team goes into Sherlock Holmes mode and tracks down the details within 24 hours to make a manual match. The most common matching error (2-4 percent of matches) is the vintage since this is often in small font on the labels. The data team also checks every automatic match to correct such errors. Vivino plans to combine object character recognition, basically a form of text recognition, with Kooaba’s image recognition to improve matching further.

Copenhagen-based Vivino isn’t alone in this space. Social wine review site Snooth launched its own wine recognition app in September, 2010. Snooth has a larger database of wines than Vivino and has a complementary and well-established review web site. However, it is very focused on the U.S. market. Snooth’s app is also only available for the iPhone whereas Vivino also supports Android, Blackberry and Windows 7. For an Android-owner who lives in Amsterdam, where Vivino lists several locations to buy the wines it identifies, there isn’t much contest. “Nobody has really claimed the top spot for being THE wine app.” says Sondergaard. Being the top global wine app is Vivino’s goal. Vivino’s most comprehensive coverage of wine outlets is currently in its home market of Denmark. Sondergaard told me that the Danish market is relatively complex, with many small players and exclusivity deals, making it a good test market. I asked Sondergaard about Vivino’s global ambitions. “This is a global concept but we need to roll out the business market by market like Groupon. Unlike Groupon we acquire customers via our free app. We start by creating the order and then figure out how to fulfill it (via local wine distributors)”.

Vivino is already a global company in that the development and data teams are located in Ukraine, Macedonia and India. According to Sondergaard “Being based in Europe gives us a certain advantage in European markets”. Every European country has a different language, taxes, shipping options and even currency. European developers have to internationalize from day one. However, Vivino’s next big target is the U.S. where it plans to roll out the “buy” feature in the next few months. The angel investment it recently received from Skype co-founder Janus Friis will help. “In 2002, Heini and I, along with Morten Lund, founded BullGuard, a consumer internet security company. Back then, we partnered with Kazaa, and even though Janus was no longer involved in Kazaa at that time, we got to know him. So when it was time to get an angel investor for Vivino, we knew who our first choice was.” Cracking the U.S. market is the company’s biggest goal for the next year. New features like special or group buying offers, based on which wines are popular in particular markets, are also on the agenda. But it won’t be all work and no play. “We want to drink some amazing wine and have a blast while we do it” concludes Sondergaard.

Supply Chain Innovators: Roadify--Transit Updates for Commuters

According to Xconomy, every commuter wants to find better ways to traverse busy cities. Subway delays and bus route changes may throw carefully timed travel plans into disarray. To ease such headaches, New York startup Roadify has developed a mobile app that delivers updates from transit agencies and input from users on the street.

The app has already won accolades for the one-year-old company. In March, Roadify beat more than fifty other developers to win the grand prize—which included $10,000 cash—at the NYC BigApps 2011 competition. The program, sponsored by Mayor Michael Bloomberg’s administration, invites software developers to create technology that improves life in the city. Judges of this year’s competition included Dawn Barber, co-founder of NY Tech Meetup; Jack Dorsey, co-founder of Twitter; and Fred Wilson, managing partner of Union Square Ventures.

Roadify currently provides real-time information on commuting routes just in the New York area, though the company plans to expand its services to other locations. Scott Kolber, chief operating officer with Roadify, says while transit information is typically available to the public, it is often scattered across multiple sources. Roadify collects data from entities such as Google Transit, the Metropolitan Transportation Authority, and the New York Department of Transportation into one platform that can be customized for each user. For example, Roadify can post alerts if there is a service change on a specific subway line. “People want to know what’s going on,” Kolber says. “When is the bus coming? Why is there a train delay? Which bridge or tunnel should I take?”

Kolber says readily available data on traffic from city agencies is vital to the app, but Roadify also crowdsources information from users on the street. When users post the actual arrival times of buses at their stops, for example, they alert others on that same route of potential delays. Kolber expects New York buses to have real-time GPS tracking installed in the next few years, which would reduce reliance on user updates. Roadify is free and currently available for the iPhone with an Android version due later this year.

The idea behind Roadify began with a familiar struggle in city life: the hunt for parking. Kolber says Roadify’s founder Nick Nyhan, who is also chief digital officer for Kantar, started a text-based service on the side to exchange parking information via cell phones with other locals in his neighborhood of Park Slope, Brooklyn. That led Nyhan to explore other data sources for mass transit updates.

Roadify incorporated in March 2010 and initially offered the text-based parking-space information. Last October, the first version of the iPhone app was released with bus schedules and other location information. Kolber became aware of Roadify first as a user and then met Nyhan and the development team. After a few months of conversation, Kolber took on a development role with the company that led to the chief operating officer position. “A big part of my focus at the moment is fundraising,” Kolber says.

Kolber says Nyhan is the primary funder for Roadify thus far. “There are a few other investors from the digital and data world,” Kolber says, but he would not disclose their names. He says the company plans to pursue a series A funding round in the fall. He believes winning this year’s BigApps competition may help Roadify attract more funding. “People know about us when we go to talk to investors,” he says.

Though Kolber devotes most of his time to Roadify, Nyhan retains his full-time job at Kantar, the market research division of communications services group WPP. Nyhan previously founded Dynamic Logic, a digital advertising research company that is now part of the Millward Brown research agency within Kantar.

Kolber worked for more than a decade at Viacom, helping launch syndicated television shows and developing satellite distribution strategies for MTV Networks. “I was part of the team that helped MTV expand internationally,” he says. He later worked as director of business development for satellite manufacturer and operator Loral Space & Communications. 

Roadify has a staff of five, and Kolber says the company plans to expand, particularly on the technology front. “We need more data experts; as we grow we’re going to be dealing with massive amounts of data,” he says. The company also wants to hire professionals in audience development to grow the user base. Kolber says with new funding the company will expand its services into new geographic markets. “We now have the ability to ingest a lot more data [from] around the country and the world,” he says.

Kolber says Roadify wants to find ways to monetize its user base, which could include partnering with location-based advertisers and marketers. “We want to tap into the fact we know where our users are,” he says. Such partnerships could, for example, offer coupons for a latté at a nearby coffee shop if the bus a user is waiting for is running late. “You could walk across the street, pay for it with a mobile payment service, and still make your bus,” Kolber says.

 

Commonred: take the “cold call/email/approach out of the networking process”

According to TechCrunch,  Commonred was essentially launched to not only help startup founders — but anyone in need of some professional networking — to more easily find shared points of interest between themselves and those they want to meet, network, or learn from. (Without the awkwardness ans without cold calling.)

To beef up its offerings for entrepreneurs and founders out there looking to have their ideas heard by people who matter, Commonred has launched a series of VIP meetings contests in which founders and entrepreneurs now have the opportunity to pitch VCs, journalists, Angels, and tech big wigs in an effort to push their businesses forward. The pitch with the most votes then wins a meeting with the person of interest, and, hopefully, the rest is history.

Traditionally, for those founders and entrepreneurs who may not necessarily have access to VCs or angels, or may not have had success with AngelList, accelerators, or pitching their ideas to media outlets, the road to victory can be a tough one. Which is what makes Commonred’s contests appealing to aspiring entrepreneurs out there.

What’s more, the startups has already run contests for people like Tony Conrad, the founder of About.me and True Ventures, Ryan Spoon of Polaris Ventures and Dogpatch Labs, and Nick Efstratis, Managing Director of Epic Ventures. TechCrunch’s own MG Siegler was even a participator; you can see his contest here, which led to a meeting for the winning startup, GetComparisons.

Commonred is currently running contests to get meetings with notables like David Bradford, the Chairman of publicly traded Fusion-io, who also has advisory and team roles with companies like Omniture, Novell, SCP Worldwide, as well as product designer, angel investor, TechCrunch contributor, and former CEO of Ustream, Chris Yeh.

Generally speaking, Vaporware and Commonred Founder Derek Andersen told us, it takes between 10 and 100 votes to win constests, and once an idea is chosen, the founder receives a meeting of up to one hour in duration with the VC, angel, or journalist hosting the contest.

For VCs and journalists, this is a great way to meet an awesome new entrepreneur without clogging their inbox with pitches, and for VCs et al to give back to the community — with the process allowing the best founders and ideas to rise to the top.

The contests are ongoing, with five contests usually running at any given time. This week in particular, Commonred will have eight to ten running simultaneously. As to how entrepreneurs and their ideas might stand out amidst the onslaught of pitches from eager founders? Anderson said that submitting parties should find common threads with the person reviewing pitches: “If the VIP went to MIT, mention that you did too. If they invested in a company like yours 10-yrs ago, mention the link. Show that you care enough to do some homework”.

And, again, with winners receiving coverage from tech publications and beyond, this can potentially be a game changer for startups looking for a jump start.

 

Supply Chain Innovators: Postmates-Local Couriers for Lazy/Busy People

 

According to Xconomy, you never have to leave your office/couch to get what you need.  Don’t want to sacrifice your lunch break to pick up those concert tickets you bought on Craigslist? Use Postmates, a local delivery service that connects businesses with freelance messengers, instead.

Postmates launched today at the TechCrunch Disrupt 2011 conference in San Francisco. The site connects local businesses with hundreds of carriers and bike messengers who are experiencing downtime so they can hire them to make short-range shipments. The company uses an iPhone application and web applications to schedule deliveries and pickups. Couriers use iPhones to view accept jobs when they have some downtime between shipments.

“It’s for any kind of shipment, from a birthday card to a refrigerator,” Postmates co-founder Bastian Lehmann said. “Most carriers pick up an additional five jobs a day using the service.”

Most local shipments are handled by two-way radios and Craigslist. It’s a $10 billion market that’s powered by a surprisingly low-tech market, Lehmann said. The company has 30 carriers to start, and the company insures every item shipped through Postmates. The company charges $15 per shipment in San Francisco, regardless of the shipment.

“Like Uber, normally you wouldn’t take a Limo, but that app made it so easy and so convenient to do so,” Lehmann said. “We’re making it cheap, fast and convenient like Uber to open up this market to everyone else.”

Postmates was founded earlier this month and has raised $875,000. The company is based in San Francisco, Calif.

 

Supply Chain Innovators: Food Delivery Search Engine GrubHub Raises $50M, Buys Campusfood And Allmenus

Image via CrunchBase

According to PeHUB, Chicago-based startup GrubHub, a service that lets you order food for delivery or take out from local restaurants online or by mobile phone, has raised $50 million in Series E funding led by Lightspeed Ventures with Mesirow Financial, Benchmark Capital, Greenspring Associates and DAG Ventures participating. The company has also acquired New York-based food delivery network Dotmenu, the parent company of Campusfood and Allmenus. This brings GrubHub’s total funding to $84 million.

GrubHub gives its users access to food delivery service from more than 13,000 restaurants in U.S. cities including: New York, Chicago, San Francisco, Oakland, Boston, Los Angeles, Washington DC, Philadelphia, San Diego, Seattle, Portland, Denver and Boulder.

GrubHub is free for diners who order and pay for their meals with while restaurants pay
commissions on each order processed. Restaurants that do not currently partner with GrubHub can still list their telephone numbers and menus for free. And of the 13,000 restaurant menus currently available on GrubHub, 5,000 establishments are paying GrubHub to manage and market a white-label online order and food delivery service.

Dotmenu has a foothold in menus and food delivery in the college market (with a presence in over 300 markets in the U.S.), and through the acquisition, GrubHub says it will have the largest restaurant listing platform in the country with 250,000 restaurant menus in over 50 major cities and college towns across the US. The two companies are projected to send over $225 million in combined order revenues to independent restaurants in 2011.

Benchmark’s Bill Gurley sais this of the deal and GrubHub: By combining its ability to aggressively scale its footprint and mobile platforms with Dotmenu’s proven leadership in college markets across the country, GrubHub is the clear leader in the online ordering space…This move will make GrubHub a household name, such as Benchmark’s other on-line portfolio companies OpenTable, Yelp and Zillow.

GrubHub founder Matt Maloney has a goal of taking GrubHub public, also following in the footsteps of OpenTable, which filed for an IPO “Going public is a very realistic opportunity for us within the next two years,” Maloney told us in March when the company raised $20 million.

At the time, Maloney said GrubHub had experienced a 300 percent increase in mobile food orders since last Fall and projects projects mobile orders to make up 20 percent of its total food sales by the end of 2011, which is compared to less than two percent in 2009 (mobile food orders accounted for 10 percent of total food sales in 2010).