In The News

Recycle Track Systems starts first-ever municipal contract in Indiana

Read the full article here.

By Cole Rosengren

Dive Brief:

  • Recycle Track Systems (RTS), a New York-based service provider known for its technology platform, has won its first-ever municipal waste collection contract. Valued at $3.75 million, the deal with La Porte, Indiana runs for four years with the option of a three-year extension.

  • This contract was previously held by Waste Management. Now, RTS will facilitate service to 7,500 residential and government locations through local company LakeShore Recycling & Disposal. Every truck will be outfitted with the RTS technology platform, which allows residents to manage service and helps the city optimize routing.

  • "We're thrilled to start this partnership with the City of La Porte which is joining the smart cities movement to become more efficient in managing waste," said Adam Pasquale, co-founder and COO, in a statement. "Waste collection is an essential city service and we're excited to introduce our technology solutions to help improve services for residents and support the city's sustainability goals for the future."

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TraceLink Bags $93M, Plans A.I. & Blockchain Tools for Drug Tracking

Read the full article here.

By Jeff Engel

Xconomy Boston — Step one for TraceLink, a maker of software that helps track the supply chain of pharmaceuticals, was recruiting hundreds of thousands of companies and organizations to its digital platform.

Now, much like the playbooks of social media companies and other tech firms, step two will be to develop “new applications on top of that infrastructure”—thereby taking advantage of “the information and the network that we’ve built to drive even greater value for our customers” says TraceLink CEO Shabbir Dahod.

A new cash infusion might help the company in that endeavor. On Tuesday, the North Reading, MA-based firm announced it closed a $93 million funding round led by Georgian Partners, a later-stage investor based in Canada. Georgian was joined by new TraceLink investors Vulcan Capital and Willett Advisors, as well as earlier backers FirstMark Capital, Volition Capital, F-Prime Capital Partners, and Goldman Sachs, according to a press release.

The $93 million investment includes $60 million that was revealed in a June documentfiled with the SEC. TraceLink says it has now raised a total of $167 million from investors to date.

The 500-person company sells cloud-based software that enables companies in the pharmaceutical industry to perform various tasks around authenticating and tracking the drugs they work with. That includes meeting regulatory compliance standards, storing what can be a massive amount of data created by tracking individual packages of drugs, and interacting with other companies that use TraceLink (such as manufacturers coordinating with distributors).

As Xconomy has reported, the nine-year-old company aims to not only let customers track large amounts of data, but its software is also meant to let them exchange data on the platform, almost like a social network. TraceLink’s software capabilities include instantly notifying every organization in the network when there’s a drug recall. Organizations can then use the company’s inventory tracking functions to figure out where the product is located, Dahod says.

TraceLink’s software is currently tracking nearly 1 billion pharma products, Dahod says. Its network connects more than 270,000 pharmaceutical companies, contract manufacturers, wholesale distributors, hospitals, pharmacies, and other organizations worldwide. The company counts more than 950 of them as customers, Dahod says. He declined to share the company’s revenues, but he says they’re growing quickly.

The company’s future product ideas include developing machine learning applications for customers to crunch the vast amounts of supply chain data they’re accumulating, in order to, say, manage drug inventory better and predict shortages, Dahod says.

“All of this converges into a massive data store that now we’re building out,” he says. “We want to leverage it with new technologies, such as machine learning, to have better integrity of product … and more predictable forecasts.”

Another area of interest for TraceLink is blockchains, the online, distributed ledger systems that power cryptocurrencies such as Bitcoin. TraceLink is developing blockchain-based software to help the pharma industry meet certain track and trace requirements in the U.S. Drug Supply Chain Security Act, Dahod says. He says the company will release more details about the project by the end of the year.

There’s a lot of hype surrounding blockchains, but not many products having an impact. Still, TraceLink isn’t alone in attempting to apply the emerging technology to supply chains. IBM and Maersk, the European shipping and logistics company, have formed a joint venture working on blockchain software for supply chains. Meanwhile, Walmart and several other brands are starting to use IBM software to track the supply of food.

Dahod says TraceLink customers have “curiosity” and “early interest” in blockchain systems for the pharma supply chain. “We believe we have a very practical approach to a solution that is more in line with the value proposition that blockchains provide,” he adds.

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TraceLink, which helps pharma companies trace drugs through the supply chain, just raised $93 million

Read the full article here.

By Connie Loizos

TraceLink, a nine-year-old, software-as-a-service platform for tracking pharmaceuticals and trying to weed out counterfeit prescription drugs in the process, has raised $93 million in Series D funding. Most of the money — $60 million — was used to buy primary shares, with another $33 million used to buy up the shares of previous shareholders.

Georgian Partners led the round, with participation from Vulcan Capital and Willett Advisors, along with all of the company’s earlier investors. These include Goldman Sachs, whose growth equity arm had led the company’s $51.5 million Series C round last year, as well as FirstMark Capital, Volition Capital and F-Prime Capital.

As TC had reported at the time of that last round, TraceLink  helps pharma companies comply with country-specific track-and-trace requirements through their supply chain, which has grown increasingly important following the passage of the Drug Supply Chain Security Act in 2013. The consumer-protection measure aims to prevent individuals’ exposure to drugs that could be counterfeit, stolen, contaminated or otherwise harmful.

At the time of its enactment, it also gave the industry one decade before unit-level traceability becomes enforced, meaning the clock is ticking.

Like Uber, WeWork and a small-but-growing number of private companies, TraceLink also appears to be preparing for life as a publicly traded outfit by releasing some of its financial metrics, including, in TraceLink’s case, quarterly revenue and customer growth numbers.

Just last week, the company published its “financial growth highlights,” which include a 62 percent year-over-year increase in its second quarter revenue; a 42 percent year-over-year increase in all bookings over the same period; and two-year revenue compound annual growth rate of 71 percent.

In June, we reported on TraceLink’s initial $60 million of funding after spying an SEC form relating to its fundraising. The company, based in North Reading, Ma., has now raised $167 million altogether.

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'Uber for trash' uses rideshare technology to collect waste

Read the full article here.

By Gillian Brassil

Four years ago, Greg Lettieri and Adam Pasquale found their startup idea in the garbage.

The CEO and COO, respectively, of Recycle Track Systems (RTS) offers up environmentally focused waste removal and recycling by connecting its clients with independent haulers. Its major selling point, however, takes a page out of Uber's driving manual, using technology that tracks trash from pickup to drop-off.

New York-based RTS partners with local sanitation companies to transport garbage by installing rideshare tech in their trucks. Client companies get multiple notifications on where their waste is going via RTS's proprietary software and experts in waste management. RTS also offers on-demand service for larger items, like furniture or electronics. In June 2017, the company closed a series A financing round with Volition Capital worth $11.7 million.

The startup aims to take food waste straight to the farm where it is converted to soil. Waste with high potential to be laced with plastic gets sent to a facility to be cleaned. In fact, the CEO explained that environmental concerns are a focus of his company.

"Food waste is 35 percent of the waste stream, making it a real problem with landfills," Lettieri told CNBC recently. "We need more people on this, the amount of material being thrown out needs to change."

RTS Tweet

RTS operates in New York, Washington D.C., Philadelphia, Baltimore and Chicago, offering its services to restaurants, schools, hotels, stadiums and supermarkets.

RTS software collects data on what type of waste the company is producing and how to reduce their footprint, and a company expert can give a lesson about how the client can be more sustainable. One of those clients is WeWork, the booming work sharing company that has locations mushrooming all over New York City that started working with RTS back in February 2016.

Source: Recycle Track Systems 

"As we expand our footprint, we have to consistently consider our impact on the local community and the environment," said WeWork's director of Tri-State operations Jeff Safenowitz.

RTS's current list of clients also includes Whole Foods, the Barclays Center, Citi Field, SoulCycle, WeWork, the Washington Nationals and the D.C. United.

Citi Field, home of the New York Mets, has been working with RTS since October 2017. In one of their largest collaborations with the field, RTS helped clean up after the 2018 National Hockey League Winter Classic.

After the event, RTS donated 18,000 square footage of plywood used to build the rink, and 27 rolls of unused snow to Materials for the Arts, a Long Island City, NY-based program that supports thousands of non-profit organizations and public schools throughout the Big Apple.

"Baseball is getting serious about going zero waste and being more sustainable, it's a major responsibility for us and for sports teams and leagues in general" said Micheal Dohnert, Operations Director at Citi Field. "RTS has been pretty incremental in that: what needs to be replaced, what should we be looking for."

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Fastest Growing Companies: Assent’s ascent

Read the full article here.

By David Sali

Each year, OBJ recognizes the region’s rapidly growing firms with its Fastest Growing Companies awards. The aim is to honour the city’s top performers for substantial, sustainable and profitable growth. Recipients are ranked by their three-year revenue growth. They must have had revenues of at least $100,000 in the first of those three years under consideration. Revenues must have risen to at least $500,000 in their most recent fiscal year. The companies will be profiled online in the coming days and recognized at a cocktail reception on May 24 at You.i TV headquarters in Kanata. Click here for more information on the event.

An ever-expanding web of government red tape isn’t usually thought of as a strong catalyst for business growth.

But then again, Assent Compliance is no ordinary business.

The east-end Ottawa firm that makes software to help ensure companies and their suppliers around the world are complying with an ever-growing list of government regulations is in expansion mode itself as it makes its first appearance on OBJ’s list of fastest-growing companies.

A small outfit with just 25 employees four years ago, Assent Compliance now boasts a headcount that stands at a robust 320 and rising – about 240 of them at its head office on Coventry Road.

But as far as CEO Andrew Waitman is concerned, the 13-year-old company is just beginning to hit its stride.

“We’re at the end of the first inning,” he says, using a baseball analogy to emphasize his point. “Things only just now start to get really interesting. We’re in a business that has a global opportunity and literally has thousands to tens of thousands of companies that need what we do. I think that we have to continue to execute extremely well to go get that real opportunity that will be ours in the (2019-21) time frame.”

Fastest Growing Companies: Assent Compliance

Year founded: 2005
Local headcount: About 240, with about 80 more outside Canada
Product/service: Enterprise software that helps companies comply with government regulations
Three-year revenue growth: 280%
2018 ranking: #9

Although Waitman won’t divulge how many clients the firm has or who they are, he does say Assent already counts a number of Fortune 1000 companies among its customers. Collecting data on regulatory compliance is a daunting task, he notes, and once potential clients see what Assent can offer, they’re usually eager to jump on board – Waitman says the firm wins about 80 per cent of the contracts it bids on.

“A lot of what we do has been done manually in companies for years,” he explains. “We are in the business of automating the arduous.”

The key for Assent is finding its way in the door of more multinational firms for a chance to make its pitch. Investors are clearly betting it will – the company has landed $60 million in venture capital in the past few years, funding it is plowing into R&D and sales and marketing to improve its products and expand its reach.

Assent now has sales teams in the United States, United Kingdom, Malaysia and Kenya as well as a couple of eastern European countries.

“We are still in what I call the pursuit business,” Waitman says. “You can’t just overcome how people are doing things overnight. We’re growing decently, but we’re still below a large number of companies’ radar.”

Most of the firm’s growth has been organic as Assent adds more features to its products and customers subscribe to more of its services. Waitman won’t rule out pursuing acquisitions in the future, but for now, he says, the company already has enough on its plate to keep it in growth mode for some time to come.

“There’s a lot of growth just from expansion of existing customers as they consume more and more of the platform,” he says.

Bolstered by a $40-million funding round just last year, the firm isn’t worried about seeking more capital at the moment, its CEO adds. Another round could make sense, Waitman says, but for now it’s full speed ahead with building its products and acquiring more customers.

“That could happen in six months or it could happen in 12 months,” he says of launching a bid for more VC cash. “It just depends on a lot of factors. Right now, it’s not something that has the leadership team’s attention. We’re totally focused on execution.”

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Venture Capitalists Talk About the Big Investments They Didn’t Make

How does it feel to pass up the next Facebook? Or Lyft? Investors share their stories.


Read the full article here.

By Rob Curran

Being a venture capitalist means placing bets. Sometimes you hit it big with a startup. Sometimes you lose everything.

But sometimes you never place a bet at all—and end up missing out on an idea that turns out to be a multibillion-dollar winner.

One long-established venture-capital firm, Bessemer Venture Partners, lists its multibillion-dollar misses under the heading of “the Anti-Portfolio” on its Web site, memorializing, among other things, a partner’s description of a pre-IPO Apple as “outrageously expensive.”

We asked some seasoned investors to share their stories about the big chance that got away. Why did they pass on these startups? What didn’t they see that somebody else did? And what lessons did they take away from the experience that helped them make better decisions down the line?

Larry Cheng was a junior associate at venture-capital firm Battery Ventures when he heard about “The Face Book.” 

There might just be one thing worse than missing out on a bonanza by making the wrong call on an investment: missing out after making the right call.

In 2004, Larry Cheng was an associate at venture-capital firm Battery Ventures in the suburbs of Boston. He pitched investments to a committee of superiors but never had the final say.

In March of that year, he attended a Harvard University alumni event. During his visit, he asked some students what was new on campus.

“Everybody was saying, check out ‘Thefacebook,’ it’s blowing up on campus,” says Mr. Cheng, who estimated what was then an online Harvard student directory was about four weeks old.

Years later, in a blog post, Mr. Cheng described his “aha moment.”

“They had uploaded the Harvard course catalog into the network so that with a single drop-down menu, you could sort the entire network by those taking the same class as you,” Mr. Cheng, now a managing partner at Volition Capital , wrote on his blog.

That feature allowed students to find out more about classmates, a utility whose appeal would be clear to anyone who has ever had a classroom crush.

According to Mr. Cheng’s account and his records, he contacted Mark Zuckerberg electronically and arranged to meet him at the Charles Hotel in Cambridge. Mr. Zuckerberg brought a friend, Facebook co-founder Eduardo Saverin.

The duo’s ambition was clear, according to Mr. Cheng, but what really impressed him was their focus.

“They were focused on solving a problem for one college campus, and they did it in a very good way,” Mr. Cheng says. “They limited their focus and scope, then rolled out to a few more college campuses and solved the same problem.…That would not have existed if they had just opened to the masses.”

The next meeting was over breakfast back at the Charles Hotel. Mr. Cheng could tell the two students were “unaccustomed” to the morning schedule. “They came in looking a little bleary-eyed,” he says. The students’ apparent aversion to the early hour didn’t color Mr. Cheng’s impression of them, however, as he remembered being the same way himself.

The final meeting was in Battery Ventures’ former Wellesley offices in May 2004, Mr. Cheng says. In the intervening weeks, according to Mr. Cheng, Facebook had launched at about 20 other top-tier schools.

Mr. Cheng realized Messrs. Zuckerberg and Saverin probably couldn’t afford a taxi back to campus. So he gave the pair—who now have a combined net worth of about $80 billion—a lift back to Cambridge and $40 for the ride to Wellesley. It was, unfortunately for Mr. Cheng, the only stake that changed hands.

Mr. Cheng says he sent a memo to his superiors in Battery Ventures, extolling the potential of an investment in what became Facebook. He says he heard many objections to the idea. The principal impediment was an existing bet that Battery Ventures had made on Friendster—venture-capital firms seldom back two direct competitors. Other objections included the “limited scope” of the network at that stage and the employment status of the company founders.

Ultimately, Mr. Cheng says, he failed to persuade his superiors.

“Hindsight is 20/20,” says Battery Ventures General Partner Scott Tobin, in an email. At the time, he says, Friendster was popular in the Philippines, a huge market of social-media users. “Unfortunately, that didn’t make up for air-balling one of the most successful venture investments of all time.”

Facebook didn’t respond to requests for comment on the contact between the two firms.

One of the lessons Mr. Cheng learned from his brush with Facebook was the importance of persevering with strong hunches.

“In retrospect, I should have pushed the opportunity more aggressively, even though consensus was hard to come by—not just because Facebook was a historic success but because I’ve since learned that the best investments are never obvious at the time and it is so important to follow your convictions,” he says.

Mr. Curran is a writer in Denton, Texas. Email reports@wsj.com.

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Recycle Track Systems Wants To Be The Next Uber For Garbage

 

Legacy garbage giants like Waste Management and Republic Services are starting to feel pressure from startups aiming to reinvent the way garbage is carted and dumped. Forbes has written about Rubicon Global, a decade-old Atlanta company that uses technology to connect haulers with municipalities and businesses. Rubicon, which hit a $1 billion valuation at its last capital raise in September 2017, has attracted controversy, including a critical Bloomberg story that cast doubt on the $300 million in annual revenue Rubicon founder Nate Morris has claimed. While Rubicon has made headlines as the Uber for trash, another disruptor, Recycle Track Systems, has been quietly adding customers and expanding its reach beyond its home base in New York City. RTS was founded in 2014 by former Bank of America senior vice president Gregory Lettieri, 35, and his buddy Adam Pasquale, 41, whose great grandfather started in the garbage business with pushcarts on Mulberry Street in Manhattan’s Little Italy in the early 1900s. RTS has raised $11.7 million in investment capital and signed up more than 500 customers including WeWork, Whole Foods, Soul Cycle, the Barclays Center and the Pierre Hotel. It’s servicing WeWork and Soul Cycle locations in Washington, D.C. and Philadelphia, in addition to other customers in those cities. RTS’s main offering is its software platform and mobile app, which allow customers to schedule on-demand pick-ups of, say, a half-dozen dented desks from a WeWork location in Soho or a pile of broken stationary bikes from a Soul Cycle on the Upper East Side. Along with this Uber-like service, RTS does regularly scheduled pick-ups. It contracts with local haulers, providing them with tablets that run RTS software. Though it has no trucks, RTS owns trash and recycling containers that it supplies to clients. RTS staffers train clients in how to separate trash to comply with city regulations. Last year, RTS had revenue of more than $10 million. In this interview, which has been edited and condensed, RTS CEO Lettieri describes how he and Pasquale got the company off the ground and why he believes it can compete for a share of the $65 billion garbage market.

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Canada’s Assent Compliance raises $31.4M Series B round to help businesses stay in compliance

Read the full article here.

Assent Compliance, an Ottawa-based startup, isn’t in a sexy space. The company focuses on helping enterprises collect the necessary data to keep their global supply chains in compliance with local and international regulations. But while that may not sound like the most exciting space to be in, the company today announced that it has raised a $40 million CAD Series B round (that’s about $31.4 million U.S.) led by Greenspring Associates.

Other participants include existing investors Volition Capital, Open Text Enterprise Application Fund, Business Development Bank of Canada, National Research Council of Canada Industrial Research Assistance Program, Royal Bank of Canada and a number of private investors. With this round, the company has now raised $60 million CAD, making it one of the better-funded Canadian startups at the Series B stage.

It’s worth noting that the company has been around since 2005, but as its current CEO Andrew Waitman told me, the focus on compliance only really came in 2010. For the next five years, the team iterated on this idea. When Waitman came to the company in 2014 (after having met the company’s VP of marketing Matt Whitteker in the boxing ring), the company had about 20 employees. Today it has 225 employees and, according to its own numbers, works with 40 percent of the S&P 500 product companies, which gather data from more than 300,000 companies around the globe.

For most international companies, compliance is a major pain point, especially with regard to how they keep the various players in their supplier ecosystem in compliance. For some companies this is about avoiding conflict minerals or staying in compliance with Europe’s REACH regulations for chemicals or California’s Safe Drinking Water and Toxic Enforcement Act of 1986. Currently, even major Fortune 500 companies still tend to use Excel spreadsheets to audit and track their vendors, which isn’t exactly the most efficient way of doing this.

The company focuses on helping businesses request information from their suppliers and validate it. It also helps businesses report their findings to the respective authorities. While the company does some basic work on validating this information automatically, the plan is to use machine learning to better understand this data, which is often in standardized formats, but also often comes in as unstructured data.

It’s worth noting that Assent also offers its customers training and a number of educational materials to help companies understand the regulatory environment they work in.

As Waitman told me, the company’s $20 million CAD Series A round was mostly about expanding its product. With this Series B round, the team plans to focus on expanding its sales and marketing efforts. “It’s about air cover — making companies aware we exist,” he said. Because there aren’t really all that many companies that play in Assent’s space, Waitman doesn’t expect that the company will use the funding for acquisitions, though he left the door open for potential data acquisitions that will help it in its efforts to improve its data validation services.

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An ‘Uber for garbage’ picks up steam, and $11.7 million in Series A funding

Read the entire article here.

Sometimes, it seems like every possible on-demand service that could be created has already come along — and, in some casesgone away. But Recycle Track Systems (RTS), a two-year-old, New York-based waste and recycling management technology company, serves to remind that there remain plenty of opportunities for startups looking to turn our smartphones into lucrative businesses.

Indeed, while companies have sprung up around everything from on-demand family care to shipping, the waste industry — valued at anywhere from $45 billion to $65 billion when accounting for collection services, treatment and disposal — has largely been left untouched by tech founders.

That’s changing. Already, one company, nine-year-old Rubicon Global in Atlanta, has raised more than $145 million from investors — including private equity king Henry Kravis — to steal away market share from incumbents like Waste Management and Republic Services. Now, RTS is aiming to do the same by making it simple for customers to schedule on-demand pick-ups through its phone app.

A high-tech garbage service may sound ridiculous to the uninitiated. But it’s no joke to customers like WeWork, Whole Foods and SoulCycle that have signed multi-year contracts in exchange for RTS’s flexible pricing options, along with notifications about when a truck has arrived and reports about exactly where their waste is being sent.

Investors are taking the company seriously, too. For starters, RTS is an asset-light business. Instead of purchasing its own trucks, RTS is partnering with a growing number of mid-size, independent haulers that it provides with feature-rich tablets to make their work more efficient — even when they aren’t being used in service to RTS.

Another apparent part of RTS’s appeal is that it’s profitable, though that might change, now that the 17-person company has raised $11.7 million in Series A funding from the Boston-based growth equity firm Volition Capital —  money it plans to use to hit the gas. (Notably, Volition was the first outside money into Chewy, a pet supplies company that sold to PetSmart earlier this year in the biggest e-commerce sale to date, ever.)

To learn more, we talked yesterday with RTS co-founder and CEO Gregory Lettieri about the company and the opportunity it’s chasing. Our chat has been edited for length.

TC: Your business is centered around taking the guesswork out of the garbage-collection process. How did you decide this was something you could turn into a business?

GL: I met my co-founder Adam [Pasquale] about 12 years ago. We lived in the same apartment complex in New Jersey. A couple of years ago, I was working as a SVP at Bank of America, building tech portals for traders. Adam is meanwhile four generations in waste recycling; his father and grandfather before him [operated their own sanitation company]. One day, we were on a couch, watching a soccer game, and we got to talking about this idea and I think within 30 days we’d created the company.

TC: Is the idea to sort of complement the waste management services that are out there, or to replace them? Is this a service that’s focused mostly on customers who care about sustainability?

GL: It matters a lot to high sustainability customers, who want to know that their efforts to separate out food waste isn’t [a squandered effort]. They can now see that an organic truck picked up their material and took it to a waste energy facility or to a farm, and we can provide real numbers, not estimates.

We could work alongside [traditional waste vendors]. But there’s no reason to do that. We can compete head-to-head with them and beat them. In this business, you want to own the entire waste stream. That’s when you can affect change. You can train customers: here’s how you divert more, here’s how you get more out of the landfill . . .

TC: Say I’m using a waste service that’s basically fine. Beyond the tracking piece of your technology, why do I stop using my service and start using yours? How does the on-demand piece work?

GL: You want to get rid of something, extra material, anything that doesn’t fit in a garbage bag. WeWork has broken chairs sometimes, broken desks. Throughout its portfolio, especially when it’s remodeling a space, it has materials to get rid of. We pick them up.

TC: How do you charge? One fee for an unlimited number of on-demand pick-ups per month?

GL: We establish yearly contracts, charging so much per month for an office space after we do an audit on the business and establish that it generates, say, 50 bags of garbage in a set amount of time. Everything above that then is extra.

TC: Whose trucks are you using?

GL: Trucks that we don’t own. There are 18,000 mid-tier independent hauling companies in the U.S., and what [we’re telling them is that] we have the technology; we can get these clients. We’re using tech to fill out these routes that already exist. These trucks are traveling seven days a week anyway, but we’re providing them access to business that they didn’t have before. We’re bringing together these independent operators to create our own virtual fleet.

TC: You’re in New York, where Waste Management doesn’t operate anymore because it was too expensive. 

GL: They pulled out five-plus years ago because it wasn’t profitable for them. New York is very competitive. There are 120 licensed [waste management] companies. But it’s a great breeding ground for us. We work with 10 operators in New York, and we might add another one to two operators, but that’s sufficient enough to have operators to service the entire city.

TC: Where else are you operating?

GL: Philadelphia and Washington, D.C. We’re also in other markets, including Boston and San Francisco, but we haven’t employed our full approach there.

TC: What does your business look like in those other markets?

GL: San Francisco is a single territory market, for example, so we operate there as a consultant for our East Coast-based clients that have sites in California, like WeWork.

TC: You’re basically overseeing a marketplace. Can you share any metrics with us that highlight your growth to date?

GL: We’d rather not get into our numbers publicly. But we do have two [groups to please]. One is the “generator” as we say in this industry — it’s the customer that’s producing waste, like Whole Foods. Our other customer is the companies that own the garbage trucks.

You need customers, because the more customers you have, the more hauler relationships you have; it’s additional revenue for them. And the more haulers you have, the more access you have to cities and markets.

In some markets, we approach haulers first, then we’re putting salespeople there. In other markets, we have more salespeople and we need more hauler relationships.

TC: There’s also another market you might try tackling eventually. Can you elaborate?

GL: Because we’re able to separate out and track what’s on these trucks, we can turn that material into additional revenue. There’s a $90 billion secondary market for commodities like plastic and cardboard that are taken in big quantities and then sold to [specific] markets in the U.S. and Asia.

For example, right now, some of our customers will have us pick up broken light fixtures or construction materials. Sometimes, they’ll ask us to pick up and handle their electronics recycling. We have relationships with local facilities that will break up the circuit boards and tubes and separate them into different containers and send them out to the appropriate buyers. It’s not a huge part of our business today but it will be as we grow over time.

People are interested in smart cities and smart trucks, and controlling the flow of material and waste is only becoming more important.

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Manly Subscription Boxes Dad Will Enjoy Month After Month

These are the gifts that keep on giving—literally

Read the entire article here.

Shopping for Father’s Day can be tough. In addition to actually finding him something he’ll like, you have to spend time at the store, spend time in line, spend time schlepping all of the stuff back…you get the point.

For the, ahem, lazier sons out there, subscription box services can make your gift-buying experience a breeze. These companies curate the boxes for you, and then send them to any desired location—in this case, your father’s front door step. And if you like, you can send dad the gift that keeps giving. Many of these boxes have monthly delivery options, so you can make sure he gets a new microbrew or grill kit every month.

Whether dad wants to stay fit as a fiddle (check out this guide for more fitness gift ideas) or enjoys the feeling of a fresh shave, these ten subscription boxes will have him covered.

BOMBFELL

Does your dad need some help in the style department? If yes, Bombfell is here to help (and so is our style gift guide). The service has three simple steps: One, have your dad take the style quiz (yes, a quiz) to find out his fit and fashion tastes. Two, he has seven days to try on the clothes picked by one of Bombfell’s stylists. And three, he only pays for the clothes he likes—the rest are shipped back.

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The 8 Best Subscription Boxes for Guys

Read the entire article here.

Buy a man a shirt, as they say, and he’ll have something to wear for a day. Buy him a subscription box service, and he’ll have an entire wardrobe.

If you think that's plain genius, well, there are plenty of options now for gift givers. Since the launch of Trunk Club in 2009, box services, in which a box full of clothing or product arrives on a regular basis, the range of services and models has expanded rapidly. Today, it' s possible to dress like all you do is shop, when in fact all you really do is sign for UPS shipments. We subscribed to a whole pallet of boxes, testing which ones were the best. Just in time for Father’s Day, here are our picks:

Bombfell

What is it? Like Trunk Club, the five-year-old Bombfell places a heavy emphasis on personal styling. The U/X is extremely simple, if a little bro-tastic. Unlike Trunk Club, boxes arrive monthly.

Who's it for? The guy who wants more of the same, but just a little better.

What’s inside? A rather standard range of brands but well-curated and natural-fitting. Ben Sherman shorts, just in time for spring, a ribbed French Connection sweatshirt, plus a Penguin blazer and Life/After/Denim chinos.

Do you have to keep everything? Users have a 10-day try-on period then must return what they no longer wish to keep.

Cost? There is no membership fee but items, on average, run around $70. Mine ranged from $75 up to $199 for the blazer.

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PetSmart is acquiring Chewy.com for $3.35 billion in the largest e-commerce acquisition ever

 

PetSmart has agreed to make the biggest e-commerce acquisition in history, putting a deal in place to snatch up fast-growing pet food and product site Chewy.com for $3.35 billion, according to multiple sources familiar with the deal.

The deal is a huge one by any standard — bigger than Walmart’s $3.3 billion deal for Jet.com last year— and especially for a retail company like PetSmart, which was itself valued at only $8.7 billion when private equity investors took it over in 2015.

But Chewy.com has been one of the fastest-growing e-commerce sites on the planet, registering nearly $900 million in revenue last year, in what was only its fifth year in operation. The company had been a potential IPO candidate for this year or next, but was taken out by its brick-and-mortar competitor before that. It was not profitable last year.

Chewy was founded in 2011 by Ryan Cohen and Michael Day, and built a cult following for its excellent customer service, large selection and fast shipping. It had quietly raised at least $236 million in venture capital from investors including Volition Capital, T. Rowe Price and BlackRock.

Its under-the-radar status was probably aided by the fact that it was headquartered in Fort Lauderdale, Fla., and not in a big e-commerce market like New York, Los Angeles or Seattle. But it did have a big name in the industry as chairman: Mark Vadon, who also co-founded Blue Nile and Zulily.

The deal seems like the type of bet-the-company acquisition by a traditional retailer that commerce-focused venture capitalists have been betting on for some time. While Walmart’s acquisition of Jet.com was a huge deal by e-commerce standards, it represented just a fraction of Walmart’s market value. Silicon Valley investors are surely hoping more will follow in PetSmart’s path, as brick-and-mortar retailers struggle to adapt to the impact of changing shopping behaviors.

PetSmart had announced its intention to acquire Chewy on Tuesday morning, but didn’t disclose a price. PetSmart is owned by a group of private equity investors led by BC Partners.

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Meet the Young Founders of Chewy.com, Which PetSmart Just Bought for $3.35 Billion

 

Retail chain PetSmart has acquired pet food and product site Chewy for $3.35 billion on Tuesday, Recode reported. The deal is the largest e-commerce acquisition in history, beating Walmart's $3.3 billion acquisition of Jet.com in August 2016.

Chewy is one of the fast-growing e-commerce sites. In 2016, after just five years of operation, it counted nearly $900 million in revenue. The Fort Lauderdale-based company is known for its 24-hour customer service and sells products for dogs, cats, birds, reptiles and even horses.

CEO Ryan Cohen and CTO Michael Day launched the company in 2011, after meeting in a Java chat room. Cohen, 31, was working in affiliate marketing, the practice of collecting fees for referring customers to e-commerce sites, and met Day when trying to find a programmer for his website. Day dropped out of the University of Georgia to help him and eventually the two put $150,000 of their own money into an online jewelry startup. After attending a trade show, the pair realized they didn't have the passion for the business and sold their inventory for 80 cents on the dollar.

After ditching the jewelry business, Cohen and Day collected what was left in their personal bank accounts and started buying pet products from distributors. Once they found a third-party fulfillment center in Pennsylvania, they launched the site and matched the online prices of competitors.

Investors saw the company's appeal and Chewy raised $236 million in venture capital in late 2013. What's more, the online pet supply retailer saw a 2017 IPO as a possibility, but needed to become profitable (a feat it had not yet achieved).

Cohen and Day are tapping into a huge industry. In 2015, consumers spent a total of $60.2 billion on pet products and services, according to the American Pet Products Association. Since its inception, Chewy has attracted 3 million customers and has 4,000 employees.

PetSmart, which was valued at $8.7 billion in 2015, is expected to close the deal at the end of this year's second fiscal quarter. The company is owned by a group of private equity investors led by BC Partners.

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Fast-Growing Pet-Product Upstart Chewy Is Selling Out To PetSmart For A Reported $3.35 Billion

 

Chewy, the online pet product startup that rocketed to nearly $1 billion in reported sales in the space of five years, may have just set a record for the richest acquisition in Internet history. Earlier today we reported Chewy's sale to brick and mortar rival PetSmart, the nation’s largest pet store chain, for an undisclosed sum. (Forbes wrote about Chewy in January: “The Man Who Found Gold In Dog Food.”) Now tech news site Recode is reporting that "multiple sources familiar with the deal" say the price is $3.35 billion. That would edge Chewy above the previous record, set when Wal-Mart bought Jet last August for $3.3 billion.

Neither company is commenting beyond a press release from Phoenix-based PetSmart, which touts the deal as “a critical milestone in [PetSmart’s] transformational journey.” With $7 billion in revenue and more than 1,500 stores, 30-year-old privately held PetSmart opened 73 net new stores last year, but its same store sales, and same store sales at rival Petco, have been flat, according to a competitor who didn't want to be quoted critiquing a rival. Chewy, fueled by $236 million in venture capital, was siphoning off sales of bulk items like 40-lb. bags of dog food, which it offers to new customers at a discount, with free shipping. In recent months, Chewy said its revenue had exceeded $100 million a month.

While PetSmart still attracts customers with services like grooming and on-site veterinarians, it can’t ignore competition from online pet product sellers, says retail consultant Sucharita Mulpuru. That includes Amazon and Jet, both of which have been posting strong pet product sales. “The large players are all really eager to figure out how to win in digital,” she says. “They see upstarts coming out of nowhere, executing really well. To acquire them leapfrogs them to a level of digital excellence.” One of Chewy’s strengths is its 24-hour customer service, which 31-year-old Chewy cofounder and CEO Ryan Cohen has described as “Zappos on steroids.”

Chewy was growing at a breakneck pace, with a headcount of 3,400 at its 70,000-square-foot Dania, Fla. headquarters. As recently as 2012, cofounder Cohen, a college dropout from Montreal, was fielding rejections from Silicon Valley venture firms. But in late 2013, Boston’s Volition Capital, which seeks fast-growing ecommerce plays, invested $15 million in Chewy, followed by five more investors including BlackRock and T. Rowe Price. Chewy plowed the cash into staff and infrastructure, including a 600,000-square-foot fulfillment center in Mechanicsburg, Pa., opened in mid-2014.

At most fast-growing startups, notes Mulpuru, “entrepreneurs have a very, very inflated sense of self,” and no matter what the price they are offered, they prefer to push ahead on their own. "We want to be the No. 1 pet retailer in the world," Cohen told Forbes late last year. The most dramatic example of a founder turning down a big deal: Groupon CEO Andrew Mason’s refusal to sell his daily deal site to Google for $6 billion in 2010. 

When Forbes wrote about Chewy in January, Mulpuru pegged its value at $4 billion. Now she wonders whether the $3.35 billion price tag is too high. Though Cohen maintained that Chewy's unit economics were in the black, the company wasn't yet profitable and a pet industry veteran who knew three people familiar with Chewy's finances, was skeptical it ever would be, given customer acquisition costs that he pegged as high as $200 each. "I would have thought it was a great acquisition at less than $1 billion," says Mulpuru, but at $3.35 billion, Chewy may not be worth the price.  She points to eBay's $2.6 billion purchase of Skype in 2005, which it wrote down by $1.4 billion two years later. "Just because you buy an Internet darling, there is not always a path to profitability," she says. "If there's no path to profitability, then you've bought a dog--no pun intended."

According to the release from PetSmart, Cohen will remain at Chewy as CEO and Chewy will “operate largely as an independent subsidiary.”

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PetSmart Buys Online Pet Retail Rival Chewy.com

 

PetSmart has agreed to acquire online pet retailer Chewy.com in the latest deal by a brick-and-mortar titan for an e-commerce upstart.

On Tuesday, PetSmart—which was acquired a few years ago for $8.7 billion in a private equity backed leveraged buyout—said it agreed to buy Chewy.com to accelerate the company's efforts to sell pet products and services both in physical stores and online in North America. The deal is expected to close by the end of PetSmart's second fiscal quarter of 2017.

While terms of the transaction weren't disclosed by the partiesRecode—citing multiple sources—put the acquisition price at $3.35 billion in cash and near the $3 billion Wal-Mart Stores (WMT, -1.55%) paid for e-commerce startup Jet.com last year. A source with knowledge of the deal told Fortune that price was "inaccurate."

Regardless of the price, the acquisition is yet further proof that brick-and-mortar retailers want to get serious about how to compete in a world where more consumer spending is gravitating to online sources. That pivot in spending has resulted in retail bankruptcies at a pace that hasn't been seen since the financial crisis and hundreds of store closures. The surviving chains are quickly realizing that a compelling e-commerce strategy is needed to better compete. And while many brick-and-mortar chains have bulked up on their own internally developed operations, e-commerce startups like Chewy.com have in many ways been more savvy and have successfully stolen market share.

Chewy.com was only founded in 2011 but it already grew to generate over $880 million in sales in 2016 and the company was projecting to achieve over $1.5 billion this year.

"Retailer and e-commerce is all about execution. The barriers to entry are pretty low," Chewy CEO Ryan Cohen told Bloomberg in an interview last year. "We obsess over of customers and we know the products better than any other pet store."

Cohen had said that his goal was to build Chewy.com into a $10 billion business, though now, he will have to aim for that target under PetSmart's watchful eye. Following the closing of the deal, PetSmart said Chewy.com will still be led by Cohen and will operate "largely" as an independent subsidiary.

Chewy.com was often rumored to be a potential candidate for an initial public offering in 2017. The takeover eliminates that exit path, though other pet-focused companies have gone public in recent years, including Blue Buffalo Pet Products and Freshpet. PetSmart's main brick-and-mortar rival Petco also considered going public, but instead sold itself for around $4.6 billion in late 2015.

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A low-flying pet supplies company just sold to PetSmart in the biggest e-commerce sale ever

 

If you haven’t heard of Chewy, you aren’t alone. But PetSmart, the retail giant with more than 1,500 stores across the U.S., has clearly been tracking the low-flying, five-year-old pet supplies company. According to Recode, it just agreed to purchase its young rival for a stunning $3.35 billion, just slightly more than Walmart paid for Jet.com last year.

This editor only heard of Chewy for the first time last fall, when talking with one of its earlier investors, Larry Cheng of the Boston-based growth equity fund Volition Capital; Volition had written Chewy its $15 million Series A check in 2013, and the company had been growing quietly like a weed, he’d told me.

By design, that began to change late last year, when Bloomberg wrote a long profile about the Dania, Fla., company and the $236 million it had subsequently raised from investors, including BlackRock and New Horizon, the venture arm of mutual fund T. Rowe Price. Until then, said its chairman, billionaire e-commerce veteran Mark Vadon, his advice to the team had been to keep a low profile to better to avoid competition.

It was something of a feat. By the time Bloomberg published its story, the company had more than 3,000 employees and more than $880 million in annual revenue.

Its apparent key to success: personalization, from writing customers hand-written thank you and holiday cards to dedicating roughly one-sixth of its employees to customer service so pet owners’ questions could be answered quickly. Free shipping on orders over $49 also helped.

Perhaps as a result, the company hadn’t yet reached profitability, Bloomberg noted, but no matter. By the time its report was published, Chewy was reportedly talking with Goldman Sachs about preparing an IPO for this year.

No doubt Walmart and Amazon were following its moves, too. Another big profile that ran in Forbes in January reported that Chewy controls 43 percent of the online sales of pet food and litter in the U.S., just behind Amazon’s 48 percent.

As it turns out, Chewy’s traction proved the most irresistible to PetSmart, for immediate strategic reasons. PetSmart was taken private for $8.7 billion in 2014 by the private equity firm BC Partners, and as part of an overhauled designed to fuel its future growth, the company has been shifting more of its business online. Chewy also has a great reputation with its customers, which is less uniformly the case for PetSmart. Indeed, in a statement today, PetSmart CEO Michael Massey said of the deal, “Chewy’s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings.”

The acquisition is expected to close by the end of PetSmart’s second fiscal quarter of 2017.

Chewy cofounder and CEO, Ryan Cohen — who dropped out of college in Montreal to become an entrepreneur — will continue to lead Chewy as an independent subsidiary of the company.

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Interview with Manu Mathew, Co-Founder & CEO – Visual IQ

 

On Marketing Technology


MTS: Tell us a little bit about your role at Visual IQ and how you got here. (what inspired you to co-found a martech company)

Back in the early 2000s when digital was taking off, I was working on the Vonage account at a leading advertising agency. I was frustrated by my inability to use data to demonstrate how our campaigns impacted Vonage’s overall business goals to the company’s then CEO, a former finance expert who wanted to know exactly where, how and why his money was being spent. This frustration drove me to create Visual IQ in 2006, and launch an attribution solution that would enable marketers to leverage their data to gain an accurate and holistic view of performance, better allocate their marketing dollars, and prove the impact of their investments.

The company has grown significantly since 2006, and we now help some of the world’s largest and most successful brands manage, analyze and optimize their marketing and advertising spend. We’ve also significantly expanded the capabilities of our platform by adding audience data to the mix. In recent years, the balance of power has shifted from brands to consumers, who expect relevant and personalized experiences. By combining audience with attribution in a single platform, marketers can not only customize conversations with prospects and customers, but also optimize their spend within and across channels, devices and environments to drive engagement, sales, revenue and other desired business results.

MTS: Given the massive proliferation of marketing technology, how do you see the martech market evolving over the next few years?

We’re going to see a lot more consolidation. Today’s marketers use a multitude of tools and technologies to plan, execute, and measure the results of their marketing and advertising efforts. While these technologies provide access to more performance and audience data than ever before, its scattered across siloed systems with no easy way to tie it together.

To achieve ultimate effectiveness, marketers need the ability to combine the profile data they have about their consumers with analytics that provide a comprehensive view of their journey and the influence of each channel and tactic along their path to conversion. Only then can they match individual consumers with the right message, in the right place and at the very moment it’s relevant. In the age of the empowered consumer – where customers and prospects expect brands to know what they like and dislike based on their needs, preferences and behaviors – the ability to consolidate and normalize data from disparate adtech and martech solutions will become a marketer’s greatest asset.

MTS: What do you see as the single most important technology trend or development that’s going to impact us?

We’re going to see people-based marketing begin to dominate in the months and years ahead. Today, consumer expectations are soaring. They want their experiences with brands to be relevant, convenient and friction-free. Moreover, they expect brands to know them and earn their loyalty.

To continue acquiring and retaining customers, marketers need to deliver personalized ads, messages and experiences across online and offline channels, as well as devices. However, marketers have historically faced challenges recognizing customers and prospects across multiple screens and environments. Most of the marketing and advertising technologies marketers use today aren’t just siloed; they also generate their own unique identifiers for each individual consumer, making it difficult to get a comprehensive, 360-degree view of customers and prospects. A people-based approach combines all of these disparate digital, device and offline IDs into a single anonymous identifier.

The result is a comprehensive, end-to-end view of the consumer journey and how customers and prospects engage with a brand, regardless of where that interaction occurs. When these robust profiles are used to feed the attribution process, marketers get the actionable intelligence they need to optimize their budget across touchpoints, and deliver tailored messages and experiences at key moments of opportunity – whether online, across devices, in stores or elsewhere.

MTS: What’s the biggest challenge that CMOs need to tackle to make marketing technology work?

Harnessing the massive amounts of audience, marketing and business data that CMOs need to inform and enhance their efforts is probably the biggest challenge. Managing advertising and marketing channels separately using channel-specific strategies, tactics and metrics is no longer effective. To be successful, marketers need to move away from channel and functional siloes and operate through the lens of the consumer.

Sophisticated marketing intelligence platforms can help corral all of this disparate data to provide a consolidated view of the consumer and every marketing interaction leading up to a given success criteria (engagement, conversion, in-store visit, etc.). Armed with clarity around consumer attributes and how different audiences interact with your brand across channels and devices, marketers can optimize budgets and create the types of relevant and coordinated experiences that drive meaningful business results.

MTS: What would be your advice to CMOs when they start planning to invest in marketing technologies?

Introducing technological change in an organization can present a number of challenges. I typically advise CMOs to clearly define their business goals before investing in any solution. Every business has different metrics for success, and it’s important that CMOs understand what those measures are and what’s important to both their direct team, as well as executive leadership.

Operational aspects of technology investments are also often overlooked, such as team structure, workflows and training, and these factors can come back to bite you well after it’s too late to turn back. Success relies on dedicating time up front to educate internal stakeholders on the new technology, how it works, the timelines for implementation and adoption, and most importantly, the financial impact to the enterprise.

MTS: A lot of martech companies are preparing for an IPO. What are the factors that CEO considers before filing an IPO?

Deciding whether a company can, or should, go public is not an easy decision. There are a number of factors to consider, from sales and revenue projections to the management team itself. For instance, above industry average growth rates, a solid sales pipeline with indicators of continued growth, and strong revenue growth projections of the space by industry analysts are all important factors to look for. Moreover, preparing for an IPO can be a lengthy process, so CEOs need to make sure they have sufficient capital to see the company through to a successful public offering.

Finally, a strong management team must be in place. The demands of becoming a public company often require additional strengths and capabilities, from strong senior and mid-level management who can clearly articulate the company’s vision, to experienced bankers, legal counsel and audit partners who understand the complex financial and accounting requirements of going public.

MTS: What startups are you watching/keen on right now?

– Gainsight
– Asana
– Insidesales.com
– Visual IQ 

MTS: What tools does your marketing stack consist of in 2017?

Our marketing stack leverages a number technologies to drive our marketing and advertising efforts, from CRM systems and email platforms, to analytics tools, customer success platforms, and learning management systems. In 2017, we will add marketing automation and content curation tools to this stack as well. Perhaps most exciting, we also plan to leverage our platform to apply multi-touch attribution to our own efforts, so we can better understand which touchpoints drive performance and optimize accordingly.

MTS: Could you tell us about a standout Visual IQ campaign? (Who was your target audience and how did you measure success)

We recently announced the results of a very successful Facebook pilot program with our client, O2. As a business, O2 understood the reach, targeting and engagement value of Facebook, but third-party tracking limitations on the social platform prevented the company from measuring its effectiveness to the same degree as its other digital efforts.

Through a partnership with Facebook, we were able to ensure that information about O2’s Facebook campaigns, including its Custom Audience placements, were included in the attribution process. By integrating previously untracked Facebook touchpoints into our platform, O2 was able to eliminate blind spots in the consumer journey and measure the value of their Facebook investments relative to other digital channels, publishers and placements for the first time.

Not only was Facebook proven to be a key component of O2’s marketing and media strategy, but the company also uncovered some unexpected performance insights. For instance, O2 saw converter rates improve by 16% to as high as 123% when Facebook Custom Audience ad placements were used in combination with other digital channels, such as affiliates, paid social and paid search. The pilot also revealed the importance of people-based marketing and the efficiency gains driven by Facebook. When Custom Audience impressions were included in the broader tactical mix, O2 saw a 52% improvement in cost efficiency for new customer acquisition, and a 38% improvement for existing customers.

MTS: How do you prepare for an AI-centric world as a marketing leader?

Marketers have long referred to the ability to deliver the right message, to the right person, at the right place and time as the holy grail of marketing. But this isn’t possible without the ability to aggregate and analyze huge repositories of data. AI provides a way to uncover audience and performance insights to across huge sets of data, incredibly fast. For marketers, this means having actionable intelligence at their fingertips, so they can match the right content, offer, product, etc., to the right person at the right time, via the channel of their choice with greater speed and efficiency than ever before.

 

This Is How I Work

 

MTS: One word that best describes how you work.

Accessibility.

MTS: What apps/software/tools can’t you live without?

In addition to my newsfeed app, I use the Expensify and Salesforce apps regularly. Both are great for busy executives on the go.

MTS: What’s your smartest work related shortcut or productivity hack?

I love GoodNotes. It enables me to take notes directly on my iPad and instantly converts my handwriting into text. It’s a great time-saver.

MTS: What are you currently reading? (What do you read, and how do you consume information?)

I like to start my day with the Wall Street Journal and end it with a good novel.

MTS: What’s the best advice you’ve ever received?

From my father, who encouraged me to leave home and come to the US to pursue higher education. Even though the pull was to stay in Botswana, a place of comfort, he allowed me to test my wings and move on to the next thing. The journey teaches many lessons in life, and it’s important to always move forward knowing the best is yet to come. In the process, always be happy, as nothing else matters.

MTS: Something you do better than others – the secret of your success?

Team collaboration is big for me. It’s absolutely essential and critical—not only for building stronger relationships between our internal teams, but also with our clients.

MTS: Tag the one person whose answers to these questions you would love to read:

Richard Branson

MTS: Thank you Manu! That was fun and hope to see you back on MarTech Series soon.

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Chewy.com to Employ 700 in South Dallas

 

Since opening its local fulfillment center in February, the company has hired 360 people and plans to reach 500 employees in the next two weeks.


The newly opened Chewy.com fulfillment center in South Dallas accepted its first shipment at the end of February, and made its first shipment during the first week of March. The e-commerce pet retailer currently has 360 people working at the distribution facility and will reach 500 employees within the next two weeks, working towards reaching upwards of 700 total employees over time.

The Florida-based company, which sells pet food and pet-related products online, was founded in 2011 and brought in $26 million in 2012, its first full year. Last year the company recorded revenue of $900 million, a figure that’s projected to hit $2 billion in 2017. The company had existing fulfillment centers in Pennsylvania, Indiana, and Nevada. It’s keeping pace with its revenue growth by adding more fulfillment centers—one in Florida, one in Pennsylvania—in addition to the Dallas location. The Dallas facility on Grady Niblo Road is the company’s largest, at 663,000 square feet.

“Each of the fulfillment centers has our full catalogue, so we have close to 30,000 different products on our website, and [the Dallas location] will primarily serve all of the ZIP codes in the U.S. that it can reach in one to two days,” said Gregg Walsh, vice president of operations at Chewy.com. “So Pennsylvania will take the Northeast and Mid-Atlantic, Florida will have the Southeast, Dallas will have the South-Central portion of the U.S., Indiana the Midwest, and so forth, and then Nevada has the West.”

For Chewy, a top priority is the ability to reach each U.S. customer within one day of service. “Being in Texas gives us a very good footprint in the south and in the center of the country. So that was step one—that pointed towards Dallas,” Walsh said. Step two in bringing a fulfillment center to Dallas involved researching labor markets, in search of one that could support the large facility and sustain that work overtime. The third part was finding a suitable building. The team at Chewy was assisted by Mark Collins and Dean Collins of Cushman & Wakefield in securing its newest location.

“Lo and behold, we had this building here, so it was really a great match between location to our customers, great folks here in Dallas, and having a building that fit our needs,” Walsh said.

In addition to the fulfillment center, 10,000 square feet will be occupied by a photo studio that’s expected to be up and running by the end of April. The company will hire in-house photographers, videographers, and production assistants to photograph and make videos of its product there.

The planned capacity of the building is more than 1 million units shipped per week. That figure will be attained over time, as the company continues to fill the building with inventory.

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No. 1 online pet food retailer Chewy.com is aiming even higher

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C-founder Ryan Cohen has aggressively pursued the No. 1 position for online sales, but what he really wants is to become the largest pet retailer in the world.

 

MIAMI — The leading online purveyor of pet food and supplies almost never was. That’s because the founders of Chewy.com originally planned to go into the online jewelry business.

“We had actually bought jewelry inventory, and we were literally days away from launching the website,” says Ryan Cohen, Chewy’s 31-year-old chief executive officer. “We bought about $150,000 worth of jewelry. So we were that close to starting to sell jewelry.”

Cohen and Michael “Blake” Day, who met in an online chat room about computer programming, had pooled their money for the jewelry venture. They decided to sell everything at 80 to 90 cents on the dollar after Cohen convinced his business partner that pets had better market potential. Cohen came to that realization while shopping for his toy poodle, Tylee.

“I always wanted to do something with pets, but I couldn’t figure out how to monetize it,” he said. “So I was going to the pet store and realized the market online was really under-penetrated. I said, ‘This jewelry idea, we’re not passionate about what we’re doing. This is a much better opportunity.’ I understand the customer — because it’s myself. So we built the company.”

Cohen and Day redirected their finances and co-founded the company, which is headquartered outside Miami, in 2011. Neither holds a college degree, and at the start they lacked a business plan. But they had faith in their abilities, both having extensive experience with computers since their teens, Cohen said.

The privately held company registered $26 million in sales during its first full year in business. Chewy has since grown to 3,700 employees and is projected to increase revenues to nearly $2 billion this year — nearly a 7,600 percent growth spurt in just six years.

According to 1010Data, Chewy.com rules the online sales of pet food, with nearly 51 percent of the online market, including 40.5 percent in direct sales and 10.2 percent in subscription sales. The nearest competitor isn’t even close. Amazon.com cornered nearly 35 percent of the market, with 23.5 percent in direct sales, 7.6 percent in subscriptions and 3.6 percent at retail. By comparison, Walmart.com has less than 1 percent of the online market share.

Cohen has aggressively pursued the No. 1 position for online sales, but what he really wants is more of the overall market for pet food and supplies.

According to the American Pet Products Association, pet owners in the United States spent an estimated $62.75 billion on their animals last year, with $24.01 billion on food and $14.98 billion in supplies and over-the-counter medicine, making their target market roughly $40 billion. At $2 billion in sales, Chewy would command roughly 5 percent of the market.

“So if you look at where we are today in the business,” Cohen said, “we’re still scratching the surface in terms of the total addressable market. We want to be No. 1. We’re No. 1 online. We want to be the largest pet retailer in the world.”

That’s an admirable goal, but Chewy might need to diversify its sales approach to attain it, advised Steve Kirn, a lecturer in retail management at the University of Florida’s Warrington College of Business. Kirn pointed out that brick-and-mortar companies such as Petco and PetSmart dominate the field with more than half the overall market, even though their online presence is minimal, with 3.1 percent for Petco.com and 2.2 percent for Petsmart.com.

“The people who are going to be winners are the omnichannel or multichannel people who can satisfy you in a store, online, mobile, maybe even with a mail-order catalog,” Kirn said, explaining that brick-and-mortar stores offer services that online stores cannot match, such as grooming and training. There’s also the social aspect of shopping. Kirn even lets his border collie, Myka, partake of the experience.

“When we go to the pet store, our dog really likes to go along with us, and she sniffs around at all the toys and maybe she’ll land on one that she really likes,” he said. “We give her a little bit of a role in picking it out. This dog is a border collie, and she has a very clear point of view about things. We’ve ordered some things online, but generally we’ll go to PetSmart or Petco.”

While online sales are increasing as much as 20 percent per year, depending upon the category, as much as 90 percent of all purchases are still made in brick and mortar stores, Kirn said.

Cohen recognizes that Chewy.com needs to expand to provide his customers with fast and efficient service.

A network of warehouses in key parts of the country will enable the company to reduce both transport costs and delivery time. The company currently provides overnight delivery for more than 60 percent of its customers. The goal, he said, is to increase that to 80 percent by early next year.

Delivery, which is currently handled by FedEx ground, could prove an expensive proposition, especially to provide for those living in far-flung places, including one remote Texas town that a customer described as, “Honey, I live so far out in the woods there’s not even a Chipotle.”

Kirn asked, “Do the economies of doing this home delivery work out? It tends to work out in densely populated areas because it’s more efficient. You don’t have to go driving all over creation to deliver stuff. Places like New York or Chicago or Miami have the kind of population density where I think it can work out. But if you truly want to be a national service, delivering to everyone, you’ve got a problem.”

Cohen is aware of the many stumbling blocks strewn in the way of his dream. To date, the company has yet to register a profit, using investor money to support the increase in staff and capital improvements. The company currently serves more than 2 million customers nationwide, with the highest concentration of customers in the densest populations such as California and New York. His team is constantly scaling the business model to generate revenues that exceed costs.

Chewy is also following the model of superior customer service pioneered by online retailer Zappos. Chewy set a goal of answering the phone within five seconds — and with a live person who is knowledgeable about the entire line of products the company offers its customers.

“From the beginning,” Cohen said, “we came in saying that we want to provide pet parents with the most amazing customer experience. Period.” His aim is to build a bond based on trust, where customers recognize that Chewy personnel know their products and are not looking so much to make a sale as to satisfy the needs of the customer. “Being able to establish that trust is an amazing thing, because pet parents, like myself, are very vocal, and if we could do a good job at building that trust, then they will stay loyal.”

Those handling customer calls are encouraged to get creative in their efforts to awe the customer.

“The goal is with every interaction there’s a ‘wow’ experience,” said Kelli Durkin, vice president of customer service. “So, that customer should hang up the phone and go, ‘Did that really just happen?’”

Durkin wanted to send a burrito to the Texan who lived outside the orbit of a Chipotle. Instead, she sent a gift card for the restaurant, with a note that said, “Next time you’re in the big city, get yourself a burrito on Chewy.”

“He loved it, “ Durkin said, “and I’m sure he’s still a customer.”

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Getting into ‘the cloud game’ without high overhead

 

When an enterprise or a startup wants to build a cost-effective infrastructure and take advantage of the benefits of scale that the cloud provides, there are a number of factors to consider. The total cost of ownership will surprise you if you do not build correctly for scale and elasticity, according to Pedram Abrari (pictured), chief technology officer of Pramata Corp.

“People will be shocked by the kinds of bills they can receive from cloud vendors if they don’t manage and contain their problem effectively,” Abrari said.

He spoke with John Furrier (@furrier), host of theCUBE, SiliconANGLE Media’s mobile live streaming studio, at SiliconANGLE’s Palo Alto, California studio to break down the news from the Google Cloud NEXT event.

Abrari and Furrier talked about how cloud computing has created a new paradigm for businesses of all sizes to “get in the game” without high overhead.

Tradeoffs and the real total cost of ownership

 

The stakes have changed for high-tech startups, with the emergence of Infrastructure as a Service and the virtualization of hardware. Startups require upfront capital and investments in technology, and before Amazon Web Services rolled out its IaaS platform, the total cost of ownership and upgrades every two to three years made starting a business difficult, Abrari explained.

“So, before you could even focus on your core competency, there were all these layers of investment and the talent you had to attract just to get cloud software up and running. Cloud computing, particularly with IaaS, changed that game … and it allowed a lot more companies to have access and the ability to get into the game that previously couldn’t,” Abrari said.

The roles of DevOps, IT and operations have morphed over the years, and Abrari explained that the evolution of the cloud has created the need for DevOps teams to create additional “plumbing” for IaaS to keep things scalable, cost efficient and elastic.

“You have to rethink DevOps [as a] culture of developer and operations all working in concert, always designing software for scale in the cloud. It’s a very different paradigm. … If you think you have a service that you can throw on the cloud and magically get the benefits and costs get lowered, I’m here to tell you that if you don’t play your cards right, it can all blow up in your face very quickly,” he said.

As with all technology platforms, there are trade-offs, and according to Abrari, multi-cloud and cloud neutrality can come with a high price tag. He discussed the complexities of AWS and noted that the company’s billing department is a whole economy.

As a serial entrepreneur involved in a number of startups, he recommended that the focus should be on core IP and core differentiation. Platform as a Service is a way to pay attention to the business, but a company will end up giving up some control to AWS, Google or Azure; however, there are options to find the right fit for the business, Abrari explained.

“Give up control for productivity and cost reduction and you also gain from all the expertise and best practices they developed around security, audit … and you take care of your customer data and don’t expose them to risk,” Abrari advised.

Pramata Corp. works with clients like NCR and Hewlett Packard Enterprises to refine and transform messy contract data and disparate billing and CRM systems into a single, actionable source of customer intelligence. Machine learning and artificial intelligence are the company’s secret sauce to helping customers save money and make better business decisions, Abrari revealed.

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