'Bot envy
If you’ve been following this column over the past year, you know I’ve been extremely bullish on warehouse and fulfillment robotics. And the investment trends have really borne much of that out. I can’t take too much credit, of course. The writing has been on the wall for a while now for one giant reason…
Amazon.
It’s the big question on the minds of every company in the online retail space — and, to an increasing degree, the world of parcel delivery. Amazon continues to be a Katamari Damacy ball of capitalism, hoovering up any companies and industries in its way, and leaving even its biggest competitors looking for some kind of edge. Robotics and automation offer some hope — though they represent another space where Amazon has developed its own edge.
The last number I saw — published over the summer — was 350,000 Amazon robots. It’s a number that continues growing. The promise of offering a way to maintain a competitive edge against Amazon’s army has led to some of the year’s biggest robotics investments. This week, for instance, Symbotic enlisted the support of Tiger Global in a bid to go public via SPAC. In addition to raising $725 million for the firm, the deal will give Symbotic a pro forma equity value of around $5.5 billion.
A lot of that excitement is built around Walmart’s vote of confidence. In July, the mega-retailer announced an expansion of a pilot program that would bring Symbotic’s automation to 25 of its distribution centers over the next several years. Walmart is also an investor in the company, and if the deal closes in the first-half of next year as planned, it will own 9% of Symbotic. That’s strong support from a company like Walmart, which has been dipping its toes in various robotics verticals — just as Bossa Nova, which suffered serious consequences from an ended contract.
It’s hard to blame them for putting so many eggs in that basket. Walmart is the sort of behemoth that can make or break a startup with a well-timed partnership. And as for Walmart, few companies have more to lose from potentially having their respective lunches eaten by Amazon. The company missed a huge opportunity to own online retail early on, and ought to be seeking any advantage possible to make sure it’s got a future, as fewer and fewer people seek out in-store experiences.
That last bit is, no doubt, only being exacerbated by the pandemic. These past couple of years have been the final nail in the coffin for countless brick and mortars. Add to that workforce shortages, shutdowns and health concerns, and you’ve got a rapidly escalating list of reasons why so many companies are taking a much more sober look at automating their workforces, for better and worse.
And that doesn’t even touch on the whole supply chain thing. When Jack White is launching a tour called “Supply Chain Issues,” you know this thing isn’t going to loosen its grip any time soon. That’s going to mean increased investment in parcel automation and, perhaps, a more serious re-examanination of localized manufacturing. In other words, expect Tiger Global to keep pumping money into the category.
The beginning of this year also saw Berkshire Grey announce a SPAC, hot on the heels of a $263 million raise. Locus Robotics (which has insisted on a commitment to remaining independent) has raised a whole bunch of money, while Fetch Robotics went ahead and got acquired by Zebra Technologies. As founder Melonee Wise told me in July:
I think it’s complicated. When I started the company, I never really planned on anything. I just wanted to go build something. I mean that in the most sincere way. I wanted to go build something and not fail. And the question is, what does not failing look like? I think the facts are that in the last 20-something years, almost no robotics company has IPO’ed. Now we’re starting to see SPACS, but there hasn’t been a robotics company that’s IPO’ed through the traditional route.
I would say that if you were to ask me on any given day, what I thought the probability of IPO versus acquisition, I probably would have said acquisition, because there’s just not a history of robotics companies IPO’ing. That’s for lots of reasons. It’s a hardware intensive business. It takes a lot of technology and investment. Typically, they’re held privately. It’s hard for large corporate entities to have the P&L to invest in this deep technology. I think that’s starting to change. And I think now that there’s SPACs, you’ll see a lot changing in that regard. But I would say you’re still going to see more acquisitions than you’re going to see IPOs for the next 10 years.
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