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  • What are the Upsides & Downsides of the Coming 4th Q 2021 Supply Chain Armageddon?

    We hope we don't get labeled as curmudgeons as a result of this post. We are trying to see the positives and negatives of the ongoing supply chain crises facing the world.  Supply chains have not been top of mind for anybody(but supply chain professionals) for years. Now it's top of mind for most everyone and will remain that way for a long time. And, truthfully, we hope we are wrong about the depth and length of the problems but we don't think so…

    We know it's coming. Manufacturing problems in Asia, too few containers & ships, overcrowded ports, lack of landside freight capacity in the US, Asia & Europe among other factors point to a further supply chain meltdown over the next three months.

    There's not much many of us can do about the continuing problems with supply chains. And it's not just one issue, it's many that are simultaneously interacting to produce the current crisis. If you are a huge global shipper like Ikea, you can charter container ships to move your boxes, but good luck getting them unloaded and transported inland with any decent transit times. For everyone else, you better buy holiday gifts early, if you even find any now.

    Let's focus on a few upsides first.

    From an infrastructure perspective, the current problems in global supply chains will put a fine focus on an area that has historically suffered from underinvestment, both in infrastructure and in technology. Expect to see governments ( we are thinking about you, Egypt, who should have widened the Suez Canal decades ago), European countries who need to expand rail capacity for inland freight (the roads are already overloaded), Asia to build out landside transportation from plants to ports and North America (just about all freight infrastructure upgrades are past due, also by decades). Will governments and private companies step up to the challenge? We'll see. We are not holding our breath. We are already seeing missives from the freight PR lobby that the supply chain crisis is due to over-ordering/buying by companies and consumers, not because carriers, ports, et.al. don't have enough capacity. There's some truth in this argument, but the word 'some' is operative.

    From a technology perspective, many carriers, shippers, ports, and affiliated players (forwarders, etc.) are on a supply chain technology buying binge. It remains to be seen how much of this technology will positively contribute to reducing backlogs in supply chain operations, but it's better than doing nothing. Why are we skeptical of these technologies as a solution? Often, these new technologies will focus on optimizing a single supply chain player's operations, not across the complex global supply chains that they participate in. There are definitely supply chain technology solutions that begin to optimize operations across multiple segments of the supply chain, but their adoption is the exception rather than the rule.

    How about the downsides?

    It's not going to get any better for global supply chains any time soon. Why? it's not just a few problems it's many and some, like COVID Delta (and newly emerging viruses), are outside the control of supply chain professionals. It will take years to restore any semblance of normalcy in supply chains as many of these current issues cannot be attacked simultaneously–we can build a lot more containers really fast, but it will take years to launch new container ships to move them.

    Consumers will discover the wonderful world of substitute products. Whole Foods and other supermarkets have bare shelves in every aisle, different ones every week. Even Amazon can't figure out how to correct supply chain problems. When's the last time you actually got an Amazon Prime order in two days? One of ours came today (Reid Hoffman's new book, Masters of Scale–highly recommended), the first one in months…and the last for a while, looking at estimated delivery dates on other orders. No Ritz crackers or Oreos for months? Mondelez workers are on extended strike, another twist to supply chain problems. Late July has some good substitutes, but their shelves are now empty as well from substitute buying.

    Companies will have to pare SKUs, increase prices and improve inventory positioning. We have lived through an era where SKU proliferation has created much more supply chain complexity, stuffing supply chains with 'new' products, ones that have minimal tweaks to the existing products but creating more stuff to move through the supply chain. We have also lived through a time when distribution center consolidation has led to fewer inventories sources nearer consumers. The growth of omnichannel shipping and next-day/same-day deliveries has companies scrambling to rent/build more warehouses closer to prime markets. It's going to be expensive for companies to make these transitions, require new facilities and technology, and keep the CFO up at night deciding how to pay for it all. And oh, by the way, product prices will be going up to pay for it all.

    So what's the average consumer to do in this wonderful world of supply chain crises? Grin and bear it? That's the reality for most. It's hard to find other supply chains to replace the ones that feed, cloth, and provide us with all the other products in our lives. Being creative in shopping is another approach. Wise supply chain gurus have always told us that Walmart is the least shorted of all the major chains, so showing up at 7 AM at a Walmart store near you may yield some of the products missing from your other retailers. Finally, it may be time to actually look at ways to reduce our overconsumption and do more with less product. Not an answer a lot of consumers want to hear, but when the shelf is bare, the shelf is bare.

    Looking forward to an interesting holiday season…

     

     

     

  • Middleware Assumes an Increased Importance in Supply Chain Management

    Let's be clear–middleware (or iPaaS, if you prefer the more modern term for platform integration) has been a key part of supply chain management for decades. B2B communications surrounding orders, freight bills, shipment status, invoices, etc. across the supply chain between retailers, distributors, manufacturers, suppliers, and others have been conducted using Electronic Data Interchange (EDI) since the 1970s. Recently, some of the more progressive retailers, such as Walmart and Target have begun using proprietary communications protocols, or APIs (Application Programming Interfaces) as their basic communications standards, requiring other supply chain partners to use them for all communications. B2B communications technologies based on streaming data tools are also emerging, allowing supply chain partners real-time access to each other's information, creating more opportunities to enhance supply chain efficiencies. But the B2B communications revolution is a topic for a future Blog.

    So where, you say, is middleware needed in other areas of supply chain management? Let's start with automation. Our plants, distribution centers, trucks, yards are becoming hives of new technologies, often from many different vendors. Take a warehouse for example–you can have automated forklifts, VR technologies, ASRS systems, picking robots all with their own control systems, all wanted to access the order management (OM) and warehouse management servers (WMS) at the same time. The reality is that allowing one system to immediately access the OM or WMS at the expense of others with a more critical (or more efficient) request is not good facility management. 

    Enter multi-automation technology optimization solutions, such as Seyo (in full disclosure, an SCV portfolio company). Founded by entrepreneurs with PhDs in computer science, Seyo can manage a fleet in a warehouse, or out in a remote robotic farm just as effectively. On-the-fly optimizations, by combining data at the edge with the Seyo Management System, missions and paths can be recalculated every time a robot changes its current state eliminating congestion and protecting the system from deadlock.

    And then there is the automation operator problem. All those different technologies require sophisticated and constant operator training as machine upgrades are commonly done via the Cloud, meaning an operator might show up in the morning and find a significant change has been made in the control system of their machine. And what if an operator is sick that day but the machine is a critical part of an assembly process? Are there other operators trained in the technology that can substitute? Note: this is a serious issue in aircraft manufacturing, where regulatory agencies require all parts to be produced by fully trained operators.

    Enter Covalent Networks (yes, another SCV portfolio company). Covalent is a cloud-based middleware software as a service solution that works on any internet-connected device, allowing for training, evaluation, and remediation processes to occur in the flow of work. It's easy for trainees, trainers, and supervisors to complete their action items in real-time and for leaders to match critical worker-competency data with broader operational data sets. Historically, managing in-facility training on automation was often handled by Excel spreadsheets–not the best way to manage complex training data across multiple machines and people. Launching a new procedural change that requires re-training? Deploy that training instantly to the workers that need it. Need to forecast your workforce's capability to meet next month's customer orders? Run an automatic analysis and identify gaps.

    All this can be done in a few minutes, as opposed to running around trying to find that Excel spreadsheet and decide who may or not be capable of running the latest version of the automated equipment.

    And now onto emerging issues in supply chain management that involve the use of blockchain technologies to manage B2B communications across the supply chain. Some innovative Tier 1 suppliers, looking to create a fully verified chain of custody with their Tier 2,3 4 suppliers are creating private blockchain solutions, especially as manufacturers and retailers want proof that the suppliers are not using slave labor, etc. Since widely acceptable blockchain standards do not yet exist ( and may never), a manufacturer seeking to connect with numerous private supplier blockchains, often with different cryptocurrencies needs a translation middleware to make sure all supply chain partners can speak to each other in their own languages.

    Enter Finboot (yes, another portfolio company). Finboot is the SaaS company behind MARCO, the enterprise-grade suite of blockchain applications and middleware solutions for value and supply chains. Finboot facilitates the adoption of  Distributed Ledger Technology (DLT) and Blockchain technologies into daily business operations, generating ecosystems based on trust, collaboration, and transparency– focusing on solving real business problems that quickly generate a return on investment. In particular, their technology allows companies to manage private blockchains with varying currencies and standards across a wide variety of supply chain partners. 

    And what about NFTs? Those NFTs (non-fungible token, read more here), currently popular with the art, media, and sports world, could prove useful in the tracking of individual items along the global supply chain from an authenticity and verification standpoint. Is it just hype? Hard to tell at present, but watch closely for any clear use cases that emerge with associated business value propositions.

    All in all, middleware is becoming an even more crucial tool in managing our increasingly complex supply chains. Look for lots more innovation in this space going forward. 

  • Why Real Time Data and AI is Critical to Supply Chain Optimization

    Let's contemplate the world of supply chain optimization for a few minutes. Optimization tools underlie most of our decision-making in both supply chain planning and execution. We in supply chain management could not do what we do without the tools we use every day. But are we really getting the most out of our execution and planning tools? Are there other capabilities that could be incorporated into these tools to improve their performance?

    Let's start with the underlying engines of these tools–optimization algorithms. There are a significant number of these exotic solution tools available, Academics spend careers fine-tuning these tools to produce better solutions. But algorithmic improvements often yield only tiny improvements in performance. Of course, some tools do provide significant improvements in performance but often only in very specific situations, not necessarily in the broad range of supply chain applications.  How can we enhance the capabilities of optimization tools with new approaches?

    Perhaps one of the most important advances over the last few years has been the emergence of real-time data that can enhance the information available to decision-making tools. Examples include weather, traffic, social media, customer behavior, driver behavior, among other information. Adding these data sources to optimization calculations can yield significant improvements in efficient route structures and demand forecasts. Foxtrot Systems,(in full disclosure, an SCV portfolio company), has incorporated real-time data into their optimization tools for local delivery results, yielding improvements in route efficiency of over 30% compared to tools that just use historical data to optimize across cost and service constraints. Similarly, http://www.solvoyo.com uses social media data on what consumers are saying about products to enhance forecast reliability, often reducing forecast error by 10% or more.

    Finally, artificial intelligence (AI) tools can glean important insights from historical data to improve execution and forecast accuracy in supply chains. By carefully examining freight movement and product demand data, AI can reveal hidden trends and tendencies not clear from the raw data. These new insights can be used to develop new constraints on the optimization tools to prevent common errors, such as 'Johnny can't deliver eight stops on rainy Thursdays, only six, so why continue to schedule him with eight'? Similarly, AI can expose trends in product consumption by region or customer segment that may not be obvious from the basic data sets.

    We have a long way to go before real-time data and AI become a major part of supply chain decision-making. The principal reason is that legacy supply chain decision support tools generally cannot incorporate real-time data nor utilize AI capabilities. New tools are being developed that sit on top of the legacy systems, drawing out the data they need, then adding real-time data and AI insights to produce better solutions, and returning data back to the systems of record, such as inventory management and freight payments to make the CFO happy.

    Finding startups that incorporate new data and data evaluation capabilities is what Supply Chain Ventures spends a lot of time looking for in the supply chain software ecosystem. Many startups promise they use new data sets and AI in their tools, but few do much beyond simple basics which yield only minor performance improvements. You have to kiss a lot of frogs to find a prince, but we'll keep at it. 

  • Ship Anything from Anywhere–Emerging Omnichannel Supply Chain Strategies

    There is an emerging strategy in supply chain networks–ship anything from anywhere. This is not a new trend but has gained new credence in the COVID time. Companies ran short of products or supplies and looked deep into their supply chains for alternative sources and shipping options. Once these new sourcing linkages are built across supply chains, there's no going back. Supply chain partners across all echelons need to prepare for a future where just having products available to ship in the part of the supply chain you directly control will not be a winning strategy.

    The concept of drop ship–the ability to source/ship a product or materials from various partners in a supply chain network–underlies the ship anything from anywhere strategy. Drop ship is not a new concept but became a necessity for many companies during COVID when they ran short of the ability to quickly satisfy consumer's (or manufacturing) demand from traditional sources. The usual suppliers ran short of materials or products and companies had to seek new sources, often companies with whom they had not done business in the past. And to meet demands, either the consumer of manufacturing, companies often asked whether these new sources could ship directly to a plant or consumer, not using traditional channels (for example supplier to distributor to company warehouse to consumer).

    Omnichannel delivery strategies have also contributed to the ship anything from anywhere paradigm. Retailers, for example, started to realize that they could drop ship to the consumer directly from their stores, instead of from their warehouse operations. Of course, one has to evaluate the cost to serve from these alternatives, but it is often cheaper and faster to use a variety of options to meet demands, rather than to rely on traditional 'linear' supply chains (where companies move products from suppliers or plants to their own distribution centers the to stores and the consumer).

    Difficulties in forecasting are just one of the issues that arise in implementing a ship anything from anywhere, or omnichannel, strategy. How do you plan demand when the consumer has so many alternative paths to your product–stores, company websites, marketplaces to name a few? The new paradigm will require upgraded supply chain decision software that has the ability to rapidly decide which product source is the best one to meet customer needs. Besides traditional cost & service, additional factors, such as the ability of a manufacturer or other supplier in the supply chain to manage a local delivery, especially one requiring special handling.

    Will it all go back to 'normal' when we get to the other side of the COVID economy? The simple answer is no–omnichannel supply chain strategies powered by drop ship are here to stay. All supply chain participants need to begin to modify their operations to conform to the new future state. Companies wishing to have their manufacturers or suppliers ship directly to customers may have to provide a range of digital commerce support capabilities that are not typically used by up-channel partners, including:

    • listing tools
    • commerce analytics
    • product information management
    • digital asset management
    • digital image capture
    • returns management
    • product marketing

    It is going to be a very interesting world in supply chains over the next decade as we witness all these changes.

     

  • The Democratization of Supply Chain Technology

    One of our emerging investing themes at Supply Chain Ventures is the democratization of supply chain technology. Over the past four or so decades, supply chains have become increasingly complex–think globalization, eCommerce, and the emergence of real-time data on traffic, weather, among other drivers of supply chain efficiencies. And supply chain planning and execution software has become more complex along with these changes,  incorporating the toolsets and data to deal with these complexities.

    All this is fine if you are a large company with sufficient resources to keep up with all the improvements in technology as well as hire smarter and more educated people to manage these tools. If you are a smaller company, less sophisticated packages do exist that provide adequate solutions but still require well-educated professionals to use them in many cases.

    Let's assume that large and smaller companies using expensive and complex supply chain software make up 30% of global companies that rely on supply chains to source, manage inventory, or ship goods. That leaves 70% (probably a large underestimate) on their own when it comes from running the supply chain part of their businesses. We realize that many of these companies may rely on homegrown or excel spreadsheets to approximate more sophisticated business tools, but many just wing it.

    At SCV, we've begun to see entrepreneurs developed slimmed down and inexpensive supply chain technology to help even tiny local businesses do a better job managing supply chains. We first saw larger companies software companies trying to dumb down their software for the SMB marketplace, but the resulting tools were often still too complex and expensive. What has begun emerging is what we call 'native' supply chain solutions, software built from the ground up with an unsophisticated business person in mind that sells for very affordable prices, often less than $20 per month.

    Our first investment in this space is Shipday,  a team out of Silicon Valley who have developed a simple local delivery management platform used globally by thousands of users in 50 countries (eight languages available) of local shops and businesses to organize customer deliveries. The technology enables direct web ordering without having to pay 30% to online marketplaces to do eCommerce. With no marketing and sales beyond a web presence and partnerships, Shipday has managed to create a global following that requires no more than a smartphone to operate.

     On the planning side of supply chain software, Inventoro, out of Prague sells sophisticated but easy-to-use sales& operations planning software for $49 per month to SMBs globally. Like Shipday, they do very little marketing, relying on web searches/word of mouth to acquire new clients. 

    Another investment of ours via SSC Venture Partners (where we are a limited partner) is Fisherman, which automatically builds and maintains business websites within five minutes for SMBs globally. Although there are lots of no-code/low code tools to build websites out there, most require some technical knowledge, which Fisherman does not. Even in the US, it's estimated that 30% of businesses do not have a web presence and many others have outdated websites that are difficult to maintain. And the number approaches 85% when global small businesses are included.

    Making supply chain toolsets available inexpensively across the globe to small businesses will help these companies increase profits, compete with neighboring shops, and generally improve the lives of millions of owners and their families. The democratization of supply chain technology is a real and important trend, one that will help create a better world for many. 

  • Continuing Education in Supply Chain

    We get asked all the time about how to keep up with what's going on in supply chains. There's no one source, so here are a few ways to be up-to-date with the latest news, innovation, and activities in logistics:

    1. We recommend the Wall Street Journal’s Logistics Report, which comes out each day for up to date news.
    2. The Council for Supply Chain Management puts on yearly conferences that attract thousands of supply chain professionals. This year’s one is virtual and held in September.
    3. Modern Logistics Management, Supply Chain Management Review, Supply  & Demand Chain Executive, Transport Topics and The Supply Chain Quarterly are a few of the journals that cover supply chain news and case studies
    4. Check out the Seven Principles of Supply Chain Management paper in the News & Resources section of our web site www.supplychainventure.com along with other papers.
    5. Sign up for MIT's supply chain newsletters, including the Supply Chain Frontiers Newsletter and consider taking one of their many online supply chain educational courses, for free, and taught by their top professors
    6. Sign up for the free AI/ML introductory course https://www.elementsofai.com/offered by the Finnish Government. AI/ML technology will be a critical part of the supply chain decision-making process going forward.

     

     

  • Venture Capital: Ships & Shipwrecks

    "The invention of the ship was also the invention of the shipwreck"

                                                            Paul Virilio

                                                             French Technologist and Philosopher, 1932-2018

     

    We've always used the principle of 'what's next' in our early-stage investing model. When you get one innovation or a new problem in the supply chain, you ask yourself, what are some logical next solutions that may become solutions and/or companies. These become our list of innovations to watch for. We are investors, not entrepreneurs (anymore) so we need to be patient to let these ideas come to us.

    A good example is the returns process for retailers and e-retailers. We have seen for years that e-commerce has broken traditional returns processes. And it's only getting worse as e-commerce ramps up the issue by not being able to 'see and try' a product prior to purchase. Returns rates for online purchases are in the mid 30%s today and rising. Companies take goods back, donate them, sell to resellers or trash them. Often, little attempt is made to see why the return is being made and whether the company can keep the revenue, but we saw no solutions until supply.ai came along. Our investment in supply.ai aims to give CSRs a range of options to deal with the return, including sending a new product (perhaps a different size and keeping the revenue) and/or getting the product to be returned to the right destination (still in original packaging and store-ready? or not). The fewer touches in the returns process, the better.

    Another example is freight visibility, or 'where's my stuff?'. Before we had the ability to track freight in transit, we had to estimate how long it would take to get from origin to destination. With traffic and weather also being unknowns in many cases, these estimates of transit times were often wildly wrong, leading to significant inefficiencies in logistics networks. We invested in Macropoint, which had drivers install an app on their smartphone so that GPS could relay exact vehicle information to shippers and carrier headquarters. Drivers liked it because it stopped numerous phone calls asking where they were and when they would get to their destination. Carriers loved it because they could better schedule their truck and shippers could better inform customers on when their shipment would arrive. The emergence of visibility data has led to entrepreneurs developing software that includes weather, traffic and visibility data to better manage logistics networks, another example of 'what's next'.

    But visibility is still not 100% accurate, given that wait times for truckers at facilities and port throughput times are not generally available and can significantly affect transit times and thus visibility. Wait time, or detention, has been on our 'what's next' list for a while and we just invested in true load times, a startup that is focusing on producing real-time data on wait times at NA plants and distribution centers. Carriers and brokers like it because they will be able to charge for detention time if a facility requires truckers to wait a long time to load or unload. Shippers or receivers may not be pleased to find some their facilities have significantly longer wait times but they can work to fix the problem, improving the efficiency of the overall logistics network.

    Venture capital, especially early-stage investing, is really a 'what's next' game. If you cannot see forward, you miss out on the truly innovative investment opportunities.

  • Managing Startups: Mentors, Advisers, Directors–Who Needs What?

    Dan, my partner, and Dave often see startups struggling to manage an assortment of advisers, mentors, and directors, even for a very small company. Some founders want to load up the bus with a bunch of luminaries for their pitch deck, even though the luminaries have little to do with how the company succeeds. So how's a founder to decide what's best for governing their startup and helping it grow.

    Let's look at the three potential 'helpers':

    • Mentors–before any other helpers, a founder needs the right mentors to assist them in thinking through how best to set up and run their startup. Mentors do not have to be gurus in the startup's space, but having basic knowledge of the startup world as well as an understanding of the space being tackled by the founder is important. The mentor often stays with the founder throughout the process of setting up and growing the company. The mentor gets to know the founder's strengths and weaknesses and is able to advise based on that knowledge, The founder comes to trust the mentor's judgment on key issues and will approach them any time something comes up that the founder may need help thinking through. Founders often have more than one mentor as a cross-check on decisions. Mentors realize that and generally do not take it personally if advice is not followed.
    • Advisers–mentors can be advisers as well, although we like to separate the roles. Advisers are generally people with deep knowledge of the space the founder is entering and can help define go-to-market and business models. They are also valuable for their networks, introducing founders to influential people in the space and potential clients. Advisers are often not as close to the founders as mentors are, not because they could not serve as mentors (and often do), but tend to be very busy and successful people in their field with not a lot of time for the mentor role. Advisers generally serve on an Advisory Board, which meets for a day or so a few time a year to review progress and offer advice on growth strategies, etc. Founders can (and often do) call advisers between these meetings to garner insights on specific competitor products or potential customers. Our experience with advisory boards is decidedly mixed–some of our companies are very adept at tapping the adviser's networks, others not so much.
    • Board Members— first and foremost, board members have a legal and fiduciary responsibility to shareholders of a company. Being a board member can be looked on as an honor, but often involves a lot more work than an adviser or mentor. Between often monthly Board meetings, numerous committee calls (financial, compensation,etc.) take place between the board meetings. To be clear, all startups boards are not as complex in terms of governance, but monthly board meetings are generally required. Board members have the duty to maximize shareholder value, which definitely includes the founders who may still own a majority of the equity. We prefer small, perhaps only three-person boards in young startups–a founder, the company lawyer and a person with deep industry experience (been there, done that is the best). Often, early angel investors will clamor for a board seat. Try and avoid that as they often do not have the expertise to help the company grow.

    So what's the best strategy for founders in deciding on what they need in terms of helpers? We prefer a simple solution–a mentor or two, a few advisers, but not an advisory board and a small three-person board should fill the needs for most founders. Having too many cooks can spoil the broth…

     

  • Are we about to witness the death of free shipping?

    I've seen a number of articles lately predicting an end to free product shipping, perhaps as early as this year for some retailers.

    The general argument is that rapidly rising freight labor costs, especially among the parcel carriers (UPS, USPS, FedEx, DHL), are already resulting in at least another 5% rate increase in January 2019 (with more likely to come). The ability of shippers to absorb new freight rate increases in landed product prices is becoming increasingly constrained by rising manufacturing costs (due to tariffs and higher wages in developing countries). Will the latest rate increases be the tipping point?

    It is too early to predict the end of free shipping.  Much depends on the ability of carriers to adopt new technologies and adapt to changing inventory positioning strategies by shippers. Let's be honest–the trend of consumer convenience and instant gratification is not going away. Retailers and other product companies are dependent on parcel companies to get their products to customers when they want them or lose market share. Amazon is building their own delivery fleets. They will siphon off the best freight for their network, leaving the more difficult deliveries (rural, inner city) to parcel carriers or outsourced contractors. This will not improve the cost situation for parcel carriers, leading perhaps to further rate increases as freight quality diminishes.

    From a carrier perspective, incorporating better real-time information into supply chain planning and execution decisions will provide some relief, but such changes to legacy technologies can take years to populate across global networks. Finding new lift capabilities, such as surplus belly air cargo routes is another option, especially to expand e-commerce deliveries into less developed parts of the world. Both these options are, again, multi-year solutions.

    On the shipper side, the trend to forward position more inventory, whether in brick & mortar stores or in small near-urban warehouses, will satisfy consumer desires, but at a higher cost to shippers. Retailers and manufacturers have spent the last three or so decades have been spent consolidating warehouses and inventory in large regional facilities, and are generally not well equipped to handle e-commerce shipping. Shippers now face the double-cost challenges of expanded inventory and local warehouses along with rising freight costs. Robotics may help some in the new facilities, but it is not a panacea.

    Can these consumer desire/shipper cost conundrums resolve themselves? We'll see, but the retailer, manufacturer and freight industries need to undergo some radical transformations if we are to maintain free shipping without significant product cost increases. Stay tuned…

  • Managing Startups: A Goal is a Dream with a Deadline

    'A Goal is a Dream with a Deadline'

            Chinese Fortune (Cookie, thanks to my fav Chinese restaurant)

    Every founder has a dream. If not, no one would pay much attention to them. And often, the dreams are big dreams–conquer the world type of dreams. We certainly have numerous examples–Amazon, Google, Facebook, Apple to name a few. But do all founders need to have such world-changing visions? The answer is 'not necessary'.

    We look for companies that can solve every day, often mundane, problems, like better managing back-office paperwork in the supply chain, or managing e-commerce shipping for mid-size retailers (who don't want to use, or can't afford, Amazon Prime), or better algorithms to manage local delivery that incorporate real-time traffic and weather data. These dreams are not going to change the world, but they make things cheaper and more efficient for companies.

    And we see perhaps 300+ startups a year who have a dream and are solving every day, often mundane problems. How do we choose among them? Among many factors, we see if they have goals for their dream with a deadline. What does a deadline mean to a VC?

    Here are a few examples:

    1. Beta Product Launched? Has it taken forever to get a product that customers can use without it crashing? Has the dev team missed numerous deadlines? Are founder promises not kept to earlier investors?
    2. Technology Platform Sound? Can the product scale, or did the dev team push a non-scalable product out the door and try and fix it later?
    3. Customer Contracts Forthcoming? are they in a perpetual pilot mode? Has any customer signed a clean (meaning no special deals) 3-year contract? Does the founder keep promising deals every quarter…for the last two years?

    I could go on, but you get the point–Goals are dreams with deadlines. You miss the deadline, even with good reasons and your credibility begins to slip with customers, investors and your team.

    The takeaway? Set goals with makeable deadlines and make them. Having a solid product with fewer bells & whistles is better than a kludged up monster that tries to serve every possible problem customers throw on the tables. 

    As a founder, you will sleep better at night, and preserve your dream–all because your dreams have goals and a deadline.