Emerging Trends: The Coming Massive Disruption of Transportation and Energy

Fred Wilson recently shared one of the best talks I've seen this year.  It is by Stanford lecturer,  author, and entrepreneur Tony Seba about the future of transportation and energy and was given in June 2017.  If Tony is even half right there is a huge breadth of change coming much, much faster than people imagine.  His arguments and forecasts are based around cost curves and the exponential improvement we see in technology.  

Some points that drew my attention:

• His key message is that a 10x improvement in a cost basis from new technologies leads to industry changing disruption and mass adoption via an S-Curve with exponential growth - linear models are the wrong way to go about forecasting any type of significant change.
• The accelerating cost curve of Lithium Ion batteries and how they are dropping 20%+ a year is a fulcrum technology that will completely change transportation and energy in the next 10 years.  Batteries and energy storage will be ubiquitous since they will be so cheap.
• These cheap batteries are catalyzing electric vehicles over internal combustion engine (ICE) vehicles due to a 10x improvement in fuel costs and a 10x+ improvement in maintenance costs ( ICE vehicles have ~2,000 moving parts while electric vehicles have ~20 moving parts).  All of this means by 2025 every new vehicle in developed markets will be electric since an ICE vehicle will make no economic sense.
• By 2030: Electric Vehicles + Autonomous Driving + Transportation as a Service = Cost of Transportation will be 10x+ cheaper. New car and ICE industry demand will collapse as there will be 80% fewer cars on the road.  The auto insurance industry, parking garage ownership, etc will collapse.   70% of oil demand will collapse meaning all expensive oil sources (deepwater, tar sands, etc.) will be stranded along with oil pipelines, refineries, etc.  
• Solar cost curve has dropped in half every 2 years so by 2030 solar will be close to 100% of world power generation.  In 80% of the world solar energy today is at parity with grid power and continues to get cheaper.
• The disruption of the energy grid is already well underway with energy storage as a service leading to monthly cancellations of new power plants around the world.  By 2020 solar + self storage batteries at your house will be cheaper than power transmitted by the traditional electric grid.  It already is in some locations such as Dubai.

Overall, we all knew these changes were coming, but not how quickly they would be here, driven by cost curves and economic self interest.

Trucker Path

Overview

Trucker Path is a software company building out a suite of offerings for the trucking industry.  It offers three product lines targeting long haul truckers.  Its initial product was a navigational and trip planning app called Trucker Path.  More recently it added a freight hauling marketplace platform called Truckloads, and InstaPay which is a factoring service.  The company monetizes via a premium version of the app along with its factoring services offered via its Truckloads platform.

The company is based in Mountain View, California and has ~60 employees.  Its founder is Ivan Tsybaev, a serial entrepreneur.

Why I like Them

Although I don't usually like app companies, Trucker Path caught my attention because what started as a basic navigation app for truckers has been able to transform itself into a full platform and freight logistics marketplace for goods shipped via truck. Trucking is a slow moving, fragmented industry and the team was clever to get their app and brand known by first offering targeted navigation features to the professional long haul trucker customer.  By all reports truckers are delighted by the app with an average of 4.7 out of 5 stars and 35,000 user reviews.  Trucker Path leveraged this satisfied user base to solve the chicken and egg problem in building a freight marketplace. 

This smart progression in product offerings has rewarded the team with extremely strong traction as they have 600,000 truckers using the navigation app.  Their freight marketplace Truckloads, has over 100,000 carriers searching through over 3 million monthly loads posted by 800+ freight companies.  The biggest opportunity lies with their freight marketplace and factoring business since trucking in the US alone is a $700B+ industry.  There is an open field here to automate the currently inefficient trucking marketplace as can be seen by the recent news that competitor Convoy has recently raised a large sum of money.

Technology like Trucker Path's offering serves as an intermediary step between human based trucking and fully autonomous self driving trucks.  Most importantly they have data that is invaluable to an autonomous trucking fleet operator.  As their head of marketing, Sam Bokher, describes it - "We have the most comprehensive data on trucking-related points of interest, truck parking data – this data have been crowdsourced from our users, so no one else in the industry has such information. In addition to that we have information about where the freight is going and what the current rates are."  It is easy to see how their products could plug right into the technology stack of companies building fully autonomous trucks (Uber, Tesla, etc.).

I also had a chance to ask the team about their thoughts on fully autonomous trucking.  They don't see it being real for at least another 10 years and see the regulatory framework as not even close to where it would need to be to support fully autonomous trucking networks.

Trucker Path has strong prospects with the growth opportunity of their trucking freight marketplace business along with the value of their proprietary mapping and trucking related data trove.

Disclosure:  I have spoken to members of the executive team.

Navigation App

Samsara

Overview

Samsara is an Internet of Things startup that offers a cloud platform solution for industrial sensor data.  Their focus is on providing real time analytics and ease of analysis  for industrial sensor system across a number of industries.  Their product team is focused on a complete solution for their customers so they design the software, hardware, and necessary network infrastructure all in house.

Their in house designed sensor systems (no OEMs) focus on ease of deployment and provide the cloud backend so that their sensors drive meaningful improvements once installed.  Sensors to date include cameras, GPS systems, temperature gauges, environmental sensors, electrical power monitors, etc.

The firm was founded in San Franciso in early 2015 and is currently around 100 employees.  It's cofounders, Sanjit Biswas and John Bicket, are successful serial entrepreneurs who previously sold cloud networking company Meraki to Cisco Systems for $1.2B.

Why I like Them

I 100% agree with Marc Andreessen's belief that within 20 years every physical item will have a chip in it and a wireless antenna. Samsara is at the forefront of this wave with their focus on ease of deployment and making the data these items provide digestable and usable by the end customer.  The team is extremely focused on a plug and play model that offers a complete solution to industrial sensor users, many of which are industries that have not seen as much software automation as you'd expect.

Most of Samsara's business currently comes from logistic and transportation fleet tracking.  An example use case in this market is that the company immediately knows if one of their trucks has had an accident as well as track in real time the position, fuel efficiency, etc of a fleet of thousands of vehicles.  Reports from the team are that their product is a relatively easy sell to dispatch services and fleets.

Beyond the above I am also very excited about the potential applications of Samsara's cloud platform across many other industrial sectors.  It is easy to see how this product could be used across the food industry's cold chain to monitor produce conditions from the farm all the way to the checkout line in the grocery store.  Also, traditional manufacturers of physical goods can easily use this type of technology to monitor products during a manufacturing process, warehouse storage, and transportation.

By all reports their latest $40M in venture funding in June 2017 was driven by investor demand, not by a strong need by the company.

Fleet Tracking Overview Page of Samsara's cloud platform

Disclosure:  I have spoken briefly with members of the company's product team.

Konux

Overview

Konux is an industrial Internet of Things startup based in Munich, Germany.  Their focus in the emerging industrial IoT space is on infrastructure with their first offerings for  rail and subway system monitoring.  They offer a complete solution including cloud analytics, sensors, custom hardware, and AI based predictive forecasting.     

Systems like these give a real time and 'god' like view of public infrastructure that has been unavailable prior to today.  This allows preventive maintenance (i.e. lowering an operator's cost), reduces train delays, and rapid identification of any critical issues for increased safety.

They are a young company started in mid 2014.

Why I like Them

I like industrial IoT startups that seek to take a legacy industry (in Konux's case, rail operators) and seek to digitize it.  There are easily quantifiable cost reductions from this type of product that makes it an easy and sticky sell to industrial customers once they see the value.

In initially focusing on railway operators Konux has chosen a great customer base to focus on since it is large but for many parts of their network still operate using analog technology and manual inspections.  Konux has shown great early success due to their killer feature being the ability to monitor in real time rail switch monitoring, an area legacy technologies had difficulty with.

I also like that they withstood the siren call of Silicon Valley and have kept their company in the center of Europe to be based near their customers.  Europe is light years ahead of the US in terms of rail and public transit and growth will be swifter for Konux staying where they were founded.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.