Why I Invested in Haven

Supply chain automation firm Haven announced that they have raised an additional $11 million to automate and modernize freight procurement. It was great to see this validation of an investment that we originally made at O'Reilly AlphaTech Ventures (OATV) in 2014.

Nothing is as emblematic of the physical nature of world trade as the container ship. Most of us think of trade in the abstract, to the extent that we think about it at all – it’s a monthly number in a news report, perhaps, or a political issue. This is especially true in Silicon Valley, where most of the focus is on bits rather than atoms.

Container ships move the world’s commodities, medicine, and food. The ships that sail into the nearby Port of Oakland are carrying our furniture, glassware, and electrical machinery. But the shipping industry is struggling. A feat of engineering has given us the megaship – vessels larger than the Empire State Building, which carry tens of thousands of containers on each sailing. But the industry is notoriously poor at forecasting demand, so these ships frequently sail light, destroying the potential benefit of their economies of scale and environmental improvements. Despite this, carrier account managers are economically constrained into serving primarily very large customers. They still manage contracts and bookings via phone, fax, email, and Excel.

 And people who have goods to ship find the experience frustrating. Pricing is opaque. Response times are slow. Booking involves email chain negotiations, calling multiple parties for quotes, and trying to get to an apples-to-apples comparison. Importers and exporters know how much it costs to produce their goods. But how much it costs to ship them? That’s guesswork. Freight price volatility eats margin. Getting bumped from a sailing on a busy route destroys businesses; inventory is trapped on a dock, delivery dates are missed, customers get angry.

Back to bits. Bits transform industries. And in this market, software and access to data helps both buyer and seller. One of my favorite corporate slogans came from my friend Liam Casey, founder and CEO of PCH International, which helps Apple and other consumer electronics companies produce products in response to demand: "We replace inventory with information."

Years ago, Liam opened my eyes to just how much information would transform the world of physical products when he showed me the stark differences in country-by-country inventory carried by vendors who supported just-in-time inventory data and those who didn't.  “The warehouses of the future will be the white-bodied bellies of planes – there’s no way you’ll ever have a product sitting in a warehouse for weeks, expecting it to sell,” Casey says.

The next frontier for a made-on-demand competitive advantage is automated, agile logistics and transportation. That is a prize that companies like Amazon and Uber are eyeing, and it is also what Haven aims to help existing transport companies to do. Efficiency improvements in old industries aren’t always the most exciting for the tech press. But for a company like Apple, a delay in shipping could cost the company millions of dollars. For low-margin industry giants such as physical commodities producers, a savings of $3 per ton shipped opens up new markets. It makes food more accessible to people, and gets building materials to where they need to go – it’s the circulatory system of a global economy.

 Bits grow industries. Uber is a great example. Their technology grew a stagnant market. In their more mature cities, their revenues vastly exceeded those of the existing taxi industries. But more importantly, they replaced inventory – taxis driving the streets, waiting for a hail – with information – smart forecasting and demand-based routing of vehicles, including those driven by ordinary people. As a result, they are growing the market by appealing to customer segments that didn’t previously use taxis regularly.

Haven has the same potential. Once you increase access to capacity, what new businesses grow? What new markets open in response to that access? If you make physical products, check them out. But more importantly, if you’re an engineer looking for a meaningful problem to solve, they’re tackling one. Haven is changing the global economy – and it starts with shipping.

Photo credit Ingrid Taylar, Flickr Commons