6 River Systems

Overview

6 River Systems is a robotics startup that creates warehouse fulfillment robots and AI systems.  The team builds both the AI software that manages the robots as well as the physical robots themselves.  In most fulfillment warehouses today workers pick items for shipping off the shelves by following a piece of paper and manually picking their route.  In contrast, 6 River systems has the worker or "picker" as they are called in the industry follow the robot as it optimizes for the route while picking items off the shelf and giving them to the robot to carry.  The system dramatically increases the key metric in fulfillment centers of items picked/ hour.  Their system is quick to deploy, easy to use, and generates value from the first day of deployment.  Customers include 3rd party logistics companies, industrial suppliers, traditional retailers, and young eCommerce companies.

6 River Systems differs from Amazon's famous Kiva robots by having the pickers go to the item whereas in Amazon's fulfillment centers the robots actually bring the shelves to the picker.  6 River Systems will never have the throughput of Amazon style systems, as they don’t eliminate walking, but they are able to sell their product with much less equipment and for far less than an Amazon style system.  The company likes to describe this as having 80%  of the benefit of warehouse robotics at 20% of the cost.  

In terms of business model the company sells the systems and software as well as offers a Robotics as a Service option where they lease the robots out.  The Robotics as a Service offering is popular as many companies in this space have thin operating margins and don't like to make expensive capital expenditures.  6 River Systems robots will be used at 30 sites by the end of this year.

The company is based in Boston and has 60 people.

Why I like Them

eCommerce continues to boom and will grow over the coming years globally as physical retail continues to shrink.  Automating fulfillment centers will only become more important as companies try to stay competitive.  6 River Systems has the perfect product offering to replace what today is mostly a manual process.  Collaboration robotics, where both a human and robot work together simultaneously, is the big trend to watch over the next decade in the field.

Like a number of people who follow the technology industry I am very excited for the future of robotics and automation.  The team was kind enough to explain their view that the reasons robotics is starting to see widespread adoption today include the intersection of: 

• The miniaturaization and drop in costs of hardware including sensors, mainly due to the growth of the smartphone industry
• The rise of Open Source software allowing for accelerated software development especially by small startups
• Cloud based computing allowing infinite computing capacity for a low cost 

Disclosure:  I have spoken to members of the team.

Investor Discussion Series: Niko Bonatsos of General Catalyst

Niko Bonatsos is a managaing director and former entrepreneur at General Catalyst.

What Trends are you currently investing in, especially any that are more under the radar?

At General Catalyst we are generalist investors looking to be inspired by ridiculously ambitious entrepreneurs.  Lately I’ve been spending a lot of time on Augmented Reality and Virtual Reality.  VR is better than ever but still early.  I’m also spending a lot of time in the crypto space.   Other areas I’m interested in investing around include the end of life space which includes life insurance, finding caregivers, setting up wills, etc.   Another non-sexy area I am looking to invest is the medical tourism industry such as a booking.com for medical tourism.  This is a huge space that is not yet followed by the mainstream.

You’ve written a bit and invested around augmented reality.   What do you think of Augmented Reality right now?

AR is still in its early days with the platforms having a vested interest to push it hard which you are seeing as all mobile devices became AR capable.  Pokemon Go’s success was a great example of the potential of the space. 

There are also very interesting enterprise use cases for mobile first AR products such as collaboration, technician help applications, etc.  We are also seeing a lot of high quality talent coming into the space.  Even more importantly some enterprise focused AR plays are starting to make money so this is really happening right now.  Recently I invested in 6D.ai, platform as a service that is solving data persistency and building the ARcloud. 

Gaming will be the first killer application on this platform.  Houzz recently did a study on an AR feature in their product that showed when customers use the AR feature they would spend a lot more money.  AR will also be a boon to eCommerce.

What are some resources you use to stay up to date on the space?

I read a lot of stuff.  I also get to meet a lot of super high quality people including angel investors, executives, and entrepreneurs.  I then simply put in the hours to learn the space. 

Any advice to young venture capitalists and angel investors out there in sourcing deals?

●      Assume you will lose all your $ when you invest as an angel - only invest what you can afford to lose.

●      Come up with a mental framework (e.g. I only invest in people that I’d start a company with, etc.) of what type of opportunities you want to invest in.

●      As an angel investor the stuff you think will do well won’t do well and the stuff you think won’t do well will do well. 

●      Double down on stuff you are very certain will work out very well.

Any predictions for 2018-2019?

There will be a VR company with a million daily active users.  At least 3 or 4 more Pokemon Go types of companies that are AR enabled.  There will emerge a second killer app for crypto (beyond digital money) with crypto scaling so people can build off of them as platforms. 

Edgybees

Overview

Edgybees is an augmented reality startup focused on enterprise augmented reality for fast moving camera systems.  This include cameras on drones, cars, military vehicles, and body cameras.  They've found great initial traction among public safety organizations including fire,  search and rescue, disaster response, police departments, etc. with their product showing great value during the California fires and the Hurricane Irma floods.  Other customers they are engaging with are in media, defense, gaming, and other fields where situational awareness is critical. 

Edgybees software platform is flexible, able to work with any full motion camera hardware with the ability for other developers to build upon it.  Features include mapping, markers, and other data layer overlays with new features being continously added.  The team monetizes by selling software licenses per vehicle pilot, people on the ground, and people in the command center. 

The team is based in Palo Alto, California and Israel and currently has around 20 employees.  

Why I like Them

I like them because to date I believe augmented reality has been overhyped without any real application that solve an actual problem.  Edgybees solves the real world problem of situational awareness for when speed and accuracy are critical and thus has a real business built on solving actual customer pain points.  

This is also an area where there is a ton of demand for a solution like this and few competitors.  With more and more cameras everywhere generating a torrent of data, technology like Edgybees is vital in bringing context and identifying what is critical in real time so decision makers can quickly make the correct decisions.  

I agree with the team that drone technology and augmented reality are still in very early days and I can easily see Edgybees becoming a very large enterprise augmented reality and sensor company.

Disclosure:  I have spoken to members of the team.

Investor Discussion Series: Tae Hea Nahm of Storm Ventures

I recently had a chance to speak to Enterprise investor Tae Hea Nahm of Storm Ventures.  Tae is a successful entrepreneur and longtime venture capitalist with decades of experience.

What Trends are you currently investing in, especially any that are more under the radar?

Currently, I am interested in the intersection of AI and SaaS.  SaaS is just automating working flow in the cloud.  If you combine that with vertically focused AI you get intelligent workflow where the user takes an action and the AI makes a recommendation – the user can decide to follow the recommendation or not.  Through this the AI gets smarter.  This combination improves SaaS applications dramatically.  An example of a company I have invested in that follows this theme is BlueShift which is marketing automation with intelligence.   SaaS built on top of the AI is the next major disruption in the Enterprise space.

Can you talk about your new book Survival to Thrival?

Survival to Thrival is an Enterprise startup guide.  It will be split in two books, one that focuses on the company and one that focuses on the people.  The major stages of an Enterprise company are:

1) Founding the Company

2) Getting Product Market Fit  - at $1M in revenue

3) Go to Market Fit – adding $1M in revenue per quarter

4) Accelerating a Category Leader

5) Industry Leader - $500-$1B in sales

Each stage requires unique strategies and execution.  The key stage for enterprise startups is finding go to market fit which is when you unlock growth

As a key distinction from enterprise firms, for consumer companies product market fit is key and it doesn’t matter if the company is losing money.  In consumer companies product market fit isn’t correlated with money so the investing strategy is different.  However, getting product market fit in Enterprise is not enough to be successful. B2B key inflection is go to market. 

What do you think of AI these days - is it mostly hype with VCs crowded in and startups pitching to the hype?

AI is an extremely disruptive technology.  It’s not so much AI itself but AI integrated with the application to make user’s better.       

You have a lot of experience - how has the venture investing industry changed since you started it compared to today?

More startups are succeeding outside of silicon valley.  In B2B specifically what’s changed is customers more willing to buy things over the internet without having a face to face relationship.  You still need the sales team to close big deals but not early on. 

Any advice to young venture capitalists and angel investors out there?

For Angel investing do at least 20 deals. Try to do same dollar amount per deal with no follow ons.  Also be sure to follow someone you trust who is on the board.  This could be the Founder, a VC, another angel investor, etc.  They will act as your proxy. 

Any predictions for 2018?

The biggest transformation in Enterprise is the rise of the three cloud companies with Amazon, Google, Microsoft and the migration to the cloud.  The next compute platform is the cloud.  With the cloud you get big data + AI for free.   

Emerging Trend: The Rise of eSports

Probably one of the most prescient acquisitions of the last several years was Amazon's purchase of Twitch, the online video game streaming site, for what now looks like a bargain of $970M.  At the time many analysts were puzzled by what was then Amazon's largest acquisition.  By all reports, today Twitch is booming on every metric and is perfectly positioned to ride the eSports wave.

eSports (electronic sports) or competitive video game playing in front of spectators, has become one of the most engaging and watched forms of entertainment for the Millennial generation and Generation Z, not just in the US but globally.  Some of the biggest followed eSports include games such as Fortnite, League of Legends, Dota, and Overwatch.  eSports is a trend I've been following for the last 4-5 years and one that is rapidly growing but currently under-reported in the tech, entertainment, and mainstream media.  This is likely due to the fact that it initially really started catching on in Asia, most notably South Korea and has since become a global phenomenon.

More than a dozen countries now show eSports on regular cable television with large consumer brands such as Nike and Adidas giving eSport teams and players large endorsement deals.  Brands spent more than $500M on eSport advertising, media rights, and sponsorships in 2017 with consumers shelling out another $60M on tickets and merchandise.  Each year fans pack stadiums with more than 50,000 people to see tournaments live.  Professional leagues and teams have arisen along with full time players whose training regimes are as grueling as any pro athlete with as rabid of fanbases. 

Some fun facts about the eSports industry:

• More viewers watched the world finals for League of Legends than any game of the NBA Finals for the last 2 years.

• Analysts forecast a CAGR of 35% over the next 5 years with the expectation of eSports becoming a billion dollar industry in the next year - a high growth market indeed.

• Gaming and eSports is rapidly becoming pop culture with A list celebrities broadcasting their video game playing live to fans, furthering interest.

• There are currently estimated to be 400M eSports fans globally, almost exclusively under the age of 35.

• There is a huge amount of monetization opportunity here compared to traditional sports with the average basketball fan spending $15 a year while eSport fans spend less than $3 a year.

Little known is that most traditional live sports are actually seeing a declining fanbase with many Millennials/Generation Z not interested in watching the sports their parents did.  Even the once untouchable American pastime of football has seen declining ratings.  The theory behind this trend goes that shorter attention spans and cord cutting by younger generations means they are just not that interested in the format of traditional physical sports.  Some interesting facts about traditional sports:

• The average age of a Major League Baseball viewer is 57 with less than 50M fans in the US.

• The average age of a National Football league viewer is 50 with about 250M fans globally.

• ESPN in the last 5 years has watched viewership drop from 100M to 85M and it continues to plummet.

Am I predicting the imminent demise of traditional sports - certainly not!  But I do foresee traditional sports becoming a much smaller percent of the entertainment market in the coming decade as eSports rises as a global mainstream form of entertainment.  eSports as an industry has exponential growth ahead of it and is likely to remain a ripe area for investors and founders for years to come.  A second order effect the growing mainstream visibility of eSports will have is to boost the growth of the $100B global video game industry.