A VC in Vacationland

Supply Chain Innovators: Instacart-The new Webvan?

According to Fortune, Instacart, a San Francisco-based same-day grocery delivery startup, is raising a new round of funding that could value the company at upwards of $400 million, according to TechCrunch. The company previously raised around $11 million, from firms like Sequoia Capital, Canaan Partners, Khosla Ventures and SV Angel. The round's lead may be  "no-VC investor."

Let's hope they are not the new Webvan, for the investors and employees sakes. Their business model, for one thing, is not 'build it and they will come', Webvan's one of many bad decisions. Nor do they deliver a pack of gum to Stanford U dorm rooms on demand. Keeping expenses under control is critical in the supply chain business, as are exploiting scale economies through carefully managing  route density. Hopefully, they got the memo...

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Instacart Receives $8.5 Mln in Series A Funding

Supply Chain Innovators: EASYPOST: Simplified Shipping

 

It’s a big hassle for technologically savvy businesses to integrate with antiquated shipping services like UPS, USPS, and FedEx. EasyPost removes the friction by sitting between developers and the shippers, and offering a RESTful JSON API to connect them. This lets developers access the best shipping rates, tracking information and more. It charges $0.05 per shipping label, and is aiming to take a nice cut of the $26 billion shipping industry. It’s been growing 179 percent month over month, has handled 70,000 shipments, and raised $850,000 from investors, including SV Angel. It’s facing competitors like Postmaster and ShipHawk, but hopes to win the market by specializing in top-notch support so businesses always know where their shipments are.

Supply Chain Innovators: CargoFish--An Underground Delivery Network?

According to bizjournal, Robert DeDomenico, of Pittsgrove, New Jersey, created the idea of a physical, underground network capable of transporting physical objects on demand to and from any other place. He calls it a "physical Internet for the delivery and movement of parcels," which could drastically save energy. "We've become so used to using our cars that we drive a 4,000-pound car to the pharmacy to pick up a one-ounce prescription, and we wonder why we have an energy problem," said DeDomenico, formerly an electronics technician for the U.S. Navy. His startup is called CargoFish. 

Robert presented at the CNBC 'Shark Tank' tryouts in Boston last week. No word on how he did. He should get in touch with Disney, who has developed an innovative underground delivery/trash removal system under their theme parks for advice. Or maybe we'll just bet on same day delivery services...

Managing Start-Ups: Perfect is the Enemy of Good

My good friend, Chris Jones, SVP, Services at Descartes, reminded me of this 'consultant's expression'. Perfect is the enemy of good is something founders should muse on often during their company build-out. And not just in product development--the concept should penetrate all aspect of the business. Here are a few examples, based on real-life experiences:

• Founder: 'We really need a strong C-level team'--Dave: what you really need is a bunch of guys that can get things done, not a bunch of guys looking to manage a bunch of guys getting things done...
• Founder: 'If we only had (XYZ) more bells & whistles, customers would by our stuff instantly'--Dave: sell what you got, buddy, customers don't often use the last 30% of a software's capability anyway..and if they ask for a 'special' report or application, say 'next release!'
• Founder: 'If I only had another million, I'd be successful!'--Dave: did you ever hear about resource allocation? If you need more <whatever>, how about re-prioritizing your current spend to focus on what's going to make you successful

You can continue the process yourself with you own 'pet' complaints about start up life, but remember that perfection is something only your mother sought from you, and it does not apply to the real world...

 

Managing Start-Ups: Outsourcing Your Manufacturing

I get asked all the time by entrepreneurs about how best to manage outsourced manufacturing arrangements. Here are a few tips to help you be more successful:

1. Hire the right in-house professionals--Often, companies outsource because they don't have the expertise to make the product. Fine, and you better have a team in-house that can manage outsourced operations or you are likely to be plagued with quality, delivery, and cost overruns. If you can't afford a full-time person, bring in an operations/engineering consultant to fill the void.
2. Use a local outsourcer initially--many of my calls with entrepreneurs start with the phrase, 'I want to outsource to China'. Great, perhaps in a few years when you understand your customer's needs and how to produce the actual product. Use a local outsourcer, if available. Perhaps a bit more expensive, but you will be able to learn how to manage the production process before you move it thousands of miles/many flying hours away.
3. Choose an outsourcer that can scale--too often, entrepreneurs choose a company that may be excellent at small batch operations, but cannot scale as production ramps. Nothing is more frustrating than to get a big order, only to have the outsourcer tell you that they can fit you into the schedule in two months.
4. Consider multiple suppliers--even if your outsourcer can scale, consider having more than one provider to avoid production issues, especially with a high growth start up. It may be more complex to manage and a bit more expensive, but beats missing sales opportunities.The same logic applies to parts and component supplier...more is better in a high growth world, and the lack of a two cent part from a single-source provider can shut down your production line.
5. Invest in in-house operations management technology--outsourcers usually can provide product design/production management technologies as part of their service, but web-based solutions are fairly inexpensive and assure that you have control over your own data.
6. Consider having an on-site manager at the outsourcer--having an employee spend part or full time at the outsourcer can help solve issues before they become problems.

There are many more pitfalls to watch out for, but these ought to help you get a good start on developing an effective outsourced manufacturing program for your start up.