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Backing 6 River Systems in $25M Round to Automate Warehouses and Improve E-commerce

April 4, 2018

We’re thrilled to be announcing our investment in 6 River Systems, the leader in autonomous robotics and warehouse automation, and to be backing great founders with unique domain experience in Jerome Dubois and Rylan Hamilton. This investment came a little over a year after declaring robotics was a key investment area for Menlo Ventures and seeing over 20 companies. It’s clear we are entering a golden era of robotics where robotics will become mainstream, drive huge efficiencies, and in some cases make the impossible possible. The applications are as far reaching as surgery, security, personal assistants, warehouses, dishwashing, to pizza production! And the time is right given advances in AI, a reduction in key components like LiDAR, and a flood of talented entrepreneurs dedicating themselves to the opportunity.

In certain sectors like e-commerce where there is enormous growth and competitive pressure (in cost and shorter delivery times), there are huge labor shortages for warehouse workers. This makes the warehouse/logistics industry particularly ripe for automation and this is where 6 River comes in. In the warehouse/logistics industry, jobs are relatively low paying, suffer from extremely high turnover, have high training costs, and a high % of rework given the manual nature of the role. Recent announcements suggest Amazon alone is looking to hire hundreds of thousands of warehouse employees in the US this year. While Amazon will struggle to hire that number of employees, the issue is somewhat less acute for them as they are still reaping a competitive advantage in automation via the Kiva acquisition (now Amazon Robotics) they made several years ago. Their competitors are scaling with people and that is not sustainable. The industry needs a solution—a second-generation system to pick up where Kiva left off—and something to level the industry playing field.

Jerome and Rylan, co-founders of 6R, both worked at Kiva from pre product to >$100 million scale. They’ve seen the impact that it can have on e-commerce and understand why Amazon viewed it as a such a competitive advantage that they decided to take it in house and no longer offer it to other e-commerce companies or 3PLs (3rd-party logistics providers). A lot has changed since then too as demand for near real time delivery of physical goods and labor shortages have become more pronounced. Processes must scale and change, yet much of the industry remains the same. To make a finer point about the problem warehouses face, by many estimates 70% of warehouse costs are labor and 70% of that is people walking items around. The walking part is between picking and shipping and involves pushing (often heavy) carts to go to a predetermined location. Beyond that, much of the walking is inefficient as its between aisles looking for items 1 by 1. 6 River’s autonomous robots use AI and smart routing technology so the robot goes directly to items that a human needs to pick, thereby eliminating the pushing of the cart, and unnecessary walking to the shipping area. Additionally because the robot’s software subsystem integrates with the warehouse management system (WMS), the robot efficiently arrives at the right spot at the right time, eliminates paper based workflows and checklists, and reduces very costly rework associated with incorrectly picked items. The 6R robot is capable of more than doubling pick rates with the same number of people. This is an enormous advantage given the labor shortages in the sector, as well as spikes around various holidays and events.

Robotics is poised to be a top area of investment for the next decade. Look for that trend to accelerate as certain industries like e-commerce demonstrate a competitive advantage via robotics that pushes the industry forward. Jerome, Rylan, and the 6 River team are uniquely positioned to help take warehouse automation to the next level and provide a compelling example of how robotics can complement humans and drive new levels of efficiency. We couldn’t be happier to be behind them!