Disrupting 90% of Everything
Last week (April 26th, 2016) marked the 60th anniversary of container shipping and the beginnings of the intermodal transport system. What started as an idea pioneered by a US trucking magnate now represents nearly 90% of the entire world’s commerce. From fuel and fashion, to cars and consumables, most goods spend a part of their lives in the container-based shipping supply chain. Many argue containerization has been one of the greatest facilitators of change in the world economy over the last century.
But despite the global impact, not much has changed in container shipping. Sure, the market has grown massively, containers sizes have become uniform, and the ships that carry them have gotten bigger, but the underlying components of this marketplace still look as they did in the mid-twentieth century.
Transportation of freight between shippers and carriers is executed by operators, known as freight forwarders. And while costs to ship goods have fallen significantly over the last six decades, nearly 60% of container space is still sold through middlemen. The results is an opaque marketplace that lacks pricing transparency, simple bid/ask mechanisms, and efficient demand and supply (read: market liquidity).
As venture capitalists, we at Sway Ventures love market inefficiencies like these because this is exactly the type of marketplace problem technology can solve for. Not to downplay the industry’s efforts, they’re in fact using technology, but it’s a patchwork of 20th century communications technologies, using phones, emails and even faxes (yes, faxes in 2016) to quote, book, bill, and confirm shipments. What’s needed is a technology-driven marketplace, one that creates the two essential elements missing, liquidity and efficiency.
Liquidity is the lifeblood of marketplaces. You see it in obvious examples like the financial markets with Nasdaq, FTSE, DAX, and Hang Seng, but it’s also the key component driving Uber (those who want local transportation and those supplying it), Airbnb (those who want short-term lodging and those supplying it), and Flipkart (those who want local grocery delivery and those supplying it). Think about how easy it is for consumers to book and use Uber, Airbnb and Flipkart; these marketplaces epitomize efficiency-driven consumption.
Haven is building the marketplace that will create liquidity and efficiency between shippers and carriers. For the shippers, Haven creates price transparency, simplifies the bid/ask process, and most importantly provides a consistent source of reliable carrier supply. For the carriers, Haven’s platform streamlines existing demand while opening doors to new customers, and provides competitive intelligence across the entire supply chain. Haven has built an algorithmic software platform that’s akin to a commodities trading engine and marketplace dynamics analytics engine, which, when combined together allows each market constituent to enable a much more efficient and productive existence. The result is automated procurement logistics – a dramatic change from the phone-and-fax state of the industry today.
At Sway Ventures, we like to bet on software platforms that enable marketplaces by creating liquidity where there was none, and in the process disintermediate legacy market constituents. Haven could ultimately become an ‘Amazon’ of the wholesale freight logistics market, serving as the unifying entity that creates market liquidity, efficiency, pricing transparency, and better economics for all involved.
The ambition was evident, but what drew us was the team’s ability to execute. Founder Matt Tillman assembled a diverse group, with deep expertise in programmatic marketplaces and global logistics from the likes of Apple, Nest, Jane Street, Société Générale, A.P. Moller Maersk Group, and MCC Transport. This background positions them very well in terms of understanding how to bring value to each level of the supply chain. It is always important for us to find entrepreneurs that have the experience but also the desire to do something that will have a dramatic impact on global technology.
At Sway Ventures, we’re very excited about what the future holds for this technology company. While their competition is limited to a handful of companies (many of whom are just providing market analytics around routes, pricing and trends), Haven can unify and deliver all of the necessary functions to disintermediate the market. In doing so, they are attracting many large, established customers in major industries such as commodities.
The future of where Haven can take this platform is quite astounding. If you look at the problem from an outcome-driven standpoint, it’s easy to see how Haven can move beyond the shipping component of the intermodal system and truly be the end-to-end, global platform. Haven represents a strategic macro investment for us, and we’re excited about what the future holds for this emerging company.
Haven is dedicated to making global trade as efficient as it can be. Instead of adding people and processes, we simplify and streamline your operations with technology. We’ve started that journey by reimagining transport management system software, but our vision expands to the world economy. Trade impacts everyone, from shippers and the businesses that depend on them, to consumers awaiting goods as necessary as basic food supplies. When trade is transparent, deals close faster, ships sail at capacity, and the entire supply chain benefits.