"The invention of the ship was also the invention of the shipwreck"
Paul Virilio
French Technologist and Philosopher, 1932-2018
We've always used the principle of 'what's next' in our early-stage investing model. When you get one innovation or a new problem in the supply chain, you ask yourself, what are some logical next solutions that may become solutions and/or companies. These become our list of innovations to watch for. We are investors, not entrepreneurs (anymore) so we need to be patient to let these ideas come to us.
A good example is the returns process for retailers and e-retailers. We have seen for years that e-commerce has broken traditional returns processes. And it's only getting worse as e-commerce ramps up the issue by not being able to 'see and try' a product prior to purchase. Returns rates for online purchases are in the mid 30%s today and rising. Companies take goods back, donate them, sell to resellers or trash them. Often, little attempt is made to see why the return is being made and whether the company can keep the revenue, but we saw no solutions until supply.ai came along. Our investment in supply.ai aims to give CSRs a range of options to deal with the return, including sending a new product (perhaps a different size and keeping the revenue) and/or getting the product to be returned to the right destination (still in original packaging and store-ready? or not). The fewer touches in the returns process, the better.
Another example is freight visibility, or 'where's my stuff?'. Before we had the ability to track freight in transit, we had to estimate how long it would take to get from origin to destination. With traffic and weather also being unknowns in many cases, these estimates of transit times were often wildly wrong, leading to significant inefficiencies in logistics networks. We invested in Macropoint, which had drivers install an app on their smartphone so that GPS could relay exact vehicle information to shippers and carrier headquarters. Drivers liked it because it stopped numerous phone calls asking where they were and when they would get to their destination. Carriers loved it because they could better schedule their truck and shippers could better inform customers on when their shipment would arrive. The emergence of visibility data has led to entrepreneurs developing software that includes weather, traffic and visibility data to better manage logistics networks, another example of 'what's next'.
But visibility is still not 100% accurate, given that wait times for truckers at facilities and port throughput times are not generally available and can significantly affect transit times and thus visibility. Wait time, or detention, has been on our 'what's next' list for a while and we just invested in true load times, a startup that is focusing on producing real-time data on wait times at NA plants and distribution centers. Carriers and brokers like it because they will be able to charge for detention time if a facility requires truckers to wait a long time to load or unload. Shippers or receivers may not be pleased to find some their facilities have significantly longer wait times but they can work to fix the problem, improving the efficiency of the overall logistics network.
Venture capital, especially early-stage investing, is really a 'what's next' game. If you cannot see forward, you miss out on the truly innovative investment opportunities.
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