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.

Mizzen+Main

Overview

Mizzen+Main is a consumer apparel eCommerce startup focused on using advanced performance fabrics to make affordable, high quality, and good looking clothing.  They are constantly pushing the edge on fabric technology.  Currently their fabrics are water resistant, comfortable, wrinkle free, moisture wicking, stretchable, and do not look like normal performance fabrics.  The company primarily sells its products online but has in the last few years expanded to 400+ retail locations and popup locations.

The company is based in Dallas, Texas and currently has around 30 employees.

Why I like Them

Mizzen+Main is following the playbook that has made new consumer companies like Bonobos or Warby Parker such large successes - a reimagining of a long established product that is cool, good looking, and comfortable with an advanced design.  They have a die hard customer base among professional millennial males and have built their brand entirely online with social media.

I also like that the company is experiencing large traction with their biggest challenge their supply chain in order to match the product demand.  I would not be surprised if they are scooped up soon in the large retail and eCommerce war that is being waged between Amazon and traditional retailers currently.

Disclosure:  I have spoken to members of the team.

Brandless

Overview

Brandless is a recently launched consumer packaged good eCommerce startup.  Think of it as Trader Joe's meets The Dollar Store meets Dollar Shave Club.  They have impressively launched with several hundred privately packaged and curated core basic consumer products (think toothpaste, household cleaning supplies, salad dressing, etc.).  They also have a flat price guarantee across all their products of $3.  Similar to other newly successful consumer brands such as Tom's Shoes or Warby Parker, Brandless has a philanthropic component to its business with the company donating a meal for every order.  

The company plans to keep its costs down by only distributing online and never selling more than several hundred SKUs at any given time with a very limited selection of each product type.

At launch they offer their B.More membership program likely inspired by Amazon's Prime program for $36 to get faster and free shipping options.  Creatively, as a membership perk they double the meal donations per order sent to homeless shelters and upon joining donate 10 meals.

Brandless is based in San Francisco and Minneapolis and was launched in July 2017.  The founders, Tina Sharkey and Ido Leffler, are serial entrepreneurs with decades of consumer brand experience.

Why I like Them

Brandless is the convergence of several interesting trends in consumer packaged goods (CPG) - the rise of private label brands, direct to consumer, value in the form of low price for quality, businesses that give back, and simplicity (in packaging, choices, and the product itself).  Ironically, of course the company seeks to integrate all of these simultaneously by creating their own anti-brand as it were with a logo of a white blank space (trade marked of course!).  The company is specifically designed to incorporate everything the millennial demographic looks for in consumer products today and it is obviously this customer they are laser focused on.  The founders read every marketing study done on millennial consumers and custom built a company that checked the box on each finding.

Looking at the larger picture it will be fascinating to see how Brandless does against the Amazon and Walmart.coms of the world. My hunch is that they will find limited success, perhaps with certain product categories their brand becomes known for, but quickly learn eCommerce and consumer packaged goods are a hyper competitive industry in this day and age.  I predict their customer acquisition costs will be shockingly high on a unit economic basis and their lack of pricing power (one of their brand promises at launch is everything is $3) will greatly hamper them.  Doing some basic price comparison of their products revealed they aren't cheaper than equivalent competing brand products on many of their offerings. 

Also, one of the big things consumers now look for online is free shipping (the single biggest draw of Amazon's Prime membership) and at launch free shipping only occurs for orders above $72, requiring at least 24 purchased items.  Otherwise shipping is an expensive $9, discouraging those who want to order a handful of  items.  This seems like a large flaw for a company who's only distribution channel is online and is creating a consumer facing brand from scratch.

Overall, I strongly applaud their innovative business model of attempting to combine every CPG trend into one company but suspect they are trying to many things at once.  I predict they will ultimately be forced to abandon the every item is $3 policy, as well as adjust their shipping rates and policies at a bare minimum.  

It will be a fascinating study in the next generation of CPG but I remain skeptical.

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