Tag: Mobility

In this installment of the AEye Insights series, AEye Founder and VP of Corporate Development, Jordan Greene, interviews Reilly Brennan, General Partner at Trucks Venture Capital and author of the popular newsletter, Future of Transportation (FoT). In this discussion, Reilly and Jordan pull out their crystal ball to talk about COVID’s lasting effects on logistics and delivery, the challenges in store for “structured” autonomy, what’s behind the flurry of AV and sensor SPACs, and why AV engineers are like chefs.
JG: Welcome to AEye Insights, where we talk industry trends with proven business leaders. Our guest today is Reilly Brennan, General Partner at Trucks Venture Capital and author of the popular newsletter, Future of Transportation. Reilly, welcome and thanks for joining us.RB: Thanks, Jordan, it’s great to talk to you. Usually our conversations are texts in the middle of the night about something big that’s going on, so to put it on Zoom here I feel is a little funny, but I’m happy to be here with you.
JG: This is true. It’s usually very candid off-the-cuff discussions, so I’m excited to riff about where the transportation market’s headed and I think that you’ll have some really interesting insights given the very holistic approach to the market that you take in the newsletter that you put out. I think the obvious way to start, and one of the most common subjects that’s discussed, is what is the impact of COVID on all of these different areas of the market or segments of the market? How do you think it’s going to play out with autonomous, ADAS and all the supporting functions in the automotive value chain?RB: Sure, well, first of all, thank you to the team for having me on. Before I get into your question, AEye was one of the first investments we made at Trucks Venture Capital back in 2016, right when our fund was getting off the ground, so it’s been great to be a partner of AEye for now over four years. My background coming into this discussion is: we run a small venture capital fund focused on transportation that’s very early stage. So, usually we’re giving the first check to a company as they’re getting off the ground. And it’s interesting because COVID has accelerated a lot of things that people think about, like software and things related to delivery, while also probably tamping down on some of the expectations for things that shared an asset like shared scooters and things like that, which had, in the beginning, a more difficult time. I think the big change with COVID, though, is all the behavioral changes that are probably going to be closer to permanent. There’s that old saying that it takes 28 days to form a habit. We’re well past the 28-day point with COVID, so all those things that people have been doing around delivery, particularly, I’m really fascinated about how those stick after a vaccine. I think if you look at the way that most of those services work — for example, we have a Shipt subscription, which you buy for 12 months, or Instacart would be the same way — so even if the vaccine gets delivered and everybody is “cured tomorrow”, there’s going to be a lot of people who have already paid in advance for a lot of the stuff. And I think a lot of those behavioral changes will remain, and that’s going to be interesting to watch over the next few months.
JG: It’s on the consumer buying side of things that you see those behavioral changes will have impacted people, and I’m curious about what that means from the technology side when you start looking up the value chain from there: what are the implications that has on what people start to invest in to make those more streamlined logistics and everything else?RB: Well, I guess one of the maybe big opportunities is, are we going to continue to operate in this universe where Amazon becomes the primary mechanism in North America to get you the goods that you need? A lot of people now think Amazon first and Amazon, of course, is building out a really interesting logistics network, potentially, with their Zoox acquisition, and potentially more with commercial vehicles down the road. Maybe the bigger question is, are there other ecosystems out there that are going to drive as much enthusiasm, and where you think of them first? And in that regard, I think about Shopify and other platforms that are out there in the ether that are knitting together a lot of parts of e-commerce. And ultimately, although it sounds kind of insane right now, would Shopify eventually have a logistics network? Would Shopify have a need for vehicles for trucking, for commercial delivery? I think you could probably imagine that’s not too far away for a Walmart in the United States or potentially a Loblaw in Canada or Costco or any of these other big retail entities to support systems like that. And so, I think about first the software that knits together the commerce and ultimately getting that to your door. Those are some of the things I’m thinking about to your question.
JG: And there is, I would assume, multiple levels of vertical integration within that logistics model, because I’ve seen everything from the companies that do just the logistics side of things and are trying to set up the ways to track items from the ports through to the consumer to the actual first-mile last-mile delivery vehicles and everything in between. I’m very curious what you see as the greatest opportunity there, because there are people like Amazon, who arguably are going to want to control everything end-to-end, and they started from the touch point of the consumer. I’m curious how that will impact companies and how they want to fit into the chain. What are your thoughts on that? And have you seen anything really cool?RB: Yeah, well, there’s a couple of macro trends to think about. One is, so much of commercial logistics is moving to short haul: things under 500 miles. So, whereas historically, you might move a bunch of goods from a big assembly facility or distribution center thousands of miles to get it to a local distribution center and ultimately put it in a retail store, now there are so many more moves around a retail location. A company might have multiple distribution centers, and that just as the background of this discussion is really fascinating from a real estate perspective. But it also means all the really different points along the journey that different entities or different vehicles might move a good. Instead of one long, sort of like linehaul trip to a distribution center (DC), you break that up into many other different trips, so the value of real estate, and the people who are holding these goods is really fascinating. There’s a company I’m sure you’ve heard of called Prologis. I’m always kind of keen on following what Prologis is doing because many times they’re Amazon’s landlord. They’re the people who will actually go and break ground, put in a warehouse, and then invite customers like Amazon, etc., in to use their warehouse, and they’ve been putting those facilities in some really interesting places. Then think about all the systems and need to service the moves between the distribution centers. We have a portfolio company called Gatik, which does exactly that. They move middle mile trips between DCs. Then we did an investment in a Canadian company called Swift. They basically will allow a retailer to do same day delivery by having a courier go and pick up things directly from a warehouse. There’s a ton of opportunity here, because if you look at the movement of how commerce is changing, coupled with consumer preferences and all these new trends around ecommerce and delivery, there’s so much movement under the hood of getting a package to you that’s actually way more interesting than Robotaxi. I know that when people got into autonomous vehicles four or five years ago, the dream was always around people. But I think for many years, many people considered the commercial delivery part of AVS, I always considered it like people thought of it as the Sancho Panza of autonomous vehicle investment. Then in 2020, everyone was like, oh, wait, that’s actually going to be more important. So, you’ve seen a rush of things into delivery, commercial goods, and that’s not going to change.
JG: I’m curious to hear your thoughts. First, I’ll start with Gatik, which has a big partnership that you can talk to that I believe is with Walmart, and they are doing some of the logistics side of that, but I know that a big part of their effort also starts to dovetail into the automation of the vehicles themselves as well, and how to create these logistics systems that are automated. Our prediction at AEye was there was going to be an emergence of all of these distilled down or more constrained versions of autonomy that are more limited in function, rather than automated vehicles that we were promised and people are still somewhat pursuing that go everywhere all the time. But there’s derivatives of it. There’s long-haul trucking, there’s middle-mile, there’s first and last mile. There’re all these different ways. And usually it’s about a technology reduction in scope. It’s like if you’re automating a truck from the hub, it’s a lot easier of a problem than trying to automate something that goes anywhere all the time. And similarly, these applications start to work themselves out because there’s business opportunities that exist with considerable demand and with a much more down scope technology problem. What are some of the applications that you’re seeing in that regard that have piqued your interest? What are some of the trends you’ve seen in those areas? Gatik and Swift are obviously examples of that, but I’m sure you have similar predictions in the space.RB: We came up with this term, I think it was in 2016, of “structured autonomy” and the thought was, look at all of these huge vertical markets. Everybody’s focused on Robotaxi, but what about ag and mining and construction and trucking — and actuall..