The robotics revolution is here! It started 7 billion picks ago.

supply chain was was fairly sleepy and then all of a sudden it was like oh my god supply chain it's it's a mess

and that's sort of the point it's like until there's a problem that's great actually you started on a very interesting point

I think without that you you really have nothing

yeah why do you start there when you started to think about the problems

you know it's sort of one of those things that happens behind the scenes you know you hope seamlessly I like to say that you know the the people that we're here to support. They want to trust that when something goes wrong, we're all on the same side of the table.

Do you see that also a lot today in the market that people start with technology instead of starting with the business problem?

To answer your question, I think it's absolutely paramount. I get asked the question quite a bit like why are you guys successful? And it's not cuz I'm handsome cuz that's clearly not the case. But

that's also but that's not the main reason.

We appreciate it. Um but nobody's going to write you a check for anything unless it solves their problem. Innovation starts with unhappy customers, not with technology. And I thought that was a very powerful title.

One of the reasons why I feel like, you know, we've had some success is we've had a very strong customer centricity to everything that we do. It it's not just about the robot that we built, but it's how it works, how people engage with it, the business model that we use, the support model, how easy is it to deploy it, what happens when you need to upgrade things. It's the entire journey. Again, very customer specific and customer centric

possible to actually really get a wider adoption in the market.

I think there's some possibility there.

How long do you think Welcome to our first episode of the supply chain technology network. My name is Nabil Malouli. I spent 20 years in supply chain working across different areas and leading the e-commerce business at DHL. And it's my pleasure to introduce this space to share best practices, knowledge from the brightest mind building the future of supply chain technology. And today we have our first special guest, Al Dekin from Locus. Al, welcome.

Thank you very much, Nabil. It's a pleasure to be here and uh I always like to be first. So

Yes, that's great. That's great. So Al is the CRO of Locus Robotics and also one of the co-founders of the company, and Locus definitely has made a name for itself as one of the leading companies in the automation space. So Al, for the ones that don't know Locus, let's jump into it. Tell us a bit about you and about the company. What do you do exactly in the company and and what does Locus do?

It's an excellent qu I sometimes wake up and try and answer that question myself like, what do I do? Um, because it's changed day to day, month over month, year over year. But um I think the best best way to understand Locus, and the journey is really to understand the founding of the company and how we built it essentially from scratch, from an idea, right? Um so I've been in the space like you for a number of years. I've had the privilege to work with um some really good people uh over the last 15, 20 years. And prior to Locus, I was working specifically with Mike Johnson, Sean Johnson, Bruce Welty, all members and founding members of a company called Quiet Logistics. So a third party logistics provider in the space um for many for many different years. Uh we started that business in 2008. We were the third Kiva Systems customer. So, for those who may not know the Kiva Systems story, Kiva was a robot-enabled fulfillment system. So one of the early really innovations in the space.

Um and we had the privilege to to to use the system to be a customer and to in and to to be an innovator ourselves and sort of the service side of the business. But um uh very long story short, I think some some of your audience will appreciate that Amazon bought Kiva, took it off the market in 2012.

Um the investors were rewarded heavily, but the customers like us were left in a bit of a bind. And so um we had to make a decision as to you know what it where were we going to go with the current company that we had. Um so a bit of a strategic challenge for for sure. Um ultimately after looking at you know different options in the market uh we made the decision to try and build something ourselves and you say well wait a minute you're a service business like what do you even know about robotics and I and I would I would openly admit and and even to this day I still don't necessarily consider ourselves a robotics business and I can come back to that

that's interesting

in in a minute but

um

but we really understood the space right we were operators you you know what that's all about to to operate a warehouse and understand the ins and outs and understand, you know, what you're paid to do, like what are the pressures, right? And so, as we stared at, you know, this challenge, we realized we actually know more about the problem that we need to solve than a lot of people who are out there building robots. Mhm.

And we said if we could just figure out how to build you know the right kind of robot uh to solve this particular problem you know maybe we'll have maybe we'll have something, and it was really, I think, having gone through the Kiva experience having understood how the technology worked the problems it could solve all that kind of stuff uh we said really I think that's the most valuable perspective you can you can have so so suddenly a bunch of operators uh albeit experienc experienced operators decided hey maybe we'll try and build our own robot or build our own robot uh enabled enabled solution. So um very long-winded way of saying you know we we had a we had a path we had a journey and a set of experiences that ultimately led us to build something to solve a problem not just to build build a robot

technology for the sake of technology

and and in and in the previous business I was responsible for the go to market aspects, so I effectively, at Locus, became the one and only salesperson it's a very lonely position for a long time. Um, but we were fortunate to to build a customer base and then and then ultimately build a business um, as opposed to just building a a solution. And so, like I said, long-winded way of answering your question, which is the role has evolved uh, significantly over time and and it's it's been a tremendous journey.

That's great. Actually you started on a very interesting point in the realization that you needed to have the industry knowledge before probably before the technology and you see many companies today that start with the technology and then they are looking for problems to solve that's very common. How important is it to actually have people within the company or how important was it for the company to have actually operators from the get-go that looked at the problems? I and do you see that also a lot today in the market that people start with technology instead of starting with the business problem? I

I I I to answer your question I think it's absolutely paramount. Um and I would I get asked the question quite a bit like why are you guys successful? And it's not cuz I'm handsome because that's clearly not the case but

that's also but that's not the main reason.

We appreciate it. Um but it it it's you know if you if you don't if you can't solve a problem for somebody you don't have a basis for a product and if therefore you don't have the basis for a product you don't have the basis for a company right that's sort of fundamental um and I think that you know there's a lot of desire to solve very complex technical problems and there's a lot of cool technology in the world um but nobody's going to write you a check for anything unless it solves their problem. And so because we had operated buildings and we're still operating them when we when we developed um the solution, we we were living day to day with the challenges of the broader market, and we could translate what we were doing. Well, first and foremost, we could build something that we thought really did have a true value prop, but we could then translate it to a broader audience. Um so I think without that, you you really have nothing.

Yeah. And where did you start? So Locus for the ones that are not familiar really has a focus on the picking and the pull away and maybe you can explain this better. Um why did you start there when you started to think about the problems uh to solve? Because there's a lot of problems to solve in supply chain in fulfillment why that area of the workflows.

Um yeah it's a it's it's a really good question because I you walk through a warehouse or any anything and you say oh that's a problem that's a problem. That's a problem. But um when you think about building a business, when you think about speaking speaking to potential investors, everybody wants to know is it a big problem?

Mhm.

Because you know that's how you build a sustainable business is by trying to tackle a a big problem where there's a lot of addressable market and a lot of lot of opportunity. So within the four walls of the warehouse, um if you understand that the the core problem is getting product out the door, um the quality and availability of labor and you know creating some efficiency around that process, you need to look at where that is most um apparent like where is I mean to be very direct where is the most labor where is the biggest labor challenge? um whether you think about that in terms of pure quantity or just the the efficiency around that labor. Uh and we chose picking because within sort of at the time this this really emerging world of e-commerce um e-commerce is is a very labor-intensive process. So think about it this way—you know this— but it's it's whether I go pick up a pallet which could have a thousand items on it or I pick up a box which could have 24 to 36 or I go get one pair of socks it's almost the same amount of effort right on a relative basis. So the fact that e-commerce means I have you know a 100,000 of these picks in a day means I need to have a lot of a lot of labor to go do that. So sort of low-hanging fruit, very complicated, and what we felt was a tremendous opportunity to to to find something that was valuable.

Yeah. Do you think it's also the main reason why Amazon purchased Kiva and they used that as the backbone of the actual entire workflow and automation because they saw that that was where the big money was especially in B2C.

It certainly was a tremendous validation of exactly what I what I just said. I mean, and they they they certainly are the poster child for having a highly scaled business that was very, you know, very dependent on on on labor. So, you just look at the number of employees in their warehouses, you look at the number of robots they've deployed. I mean, it's that is a perfect example.

Yeah. Yeah. It's it's um it's impressive, right? And I think what you said really resonate to me in the sense of focus where the money is and where the biggest spend is, not necessarily maybe the most complex and not necessarily the easiest, but really where there's a lot of there's a lot of money to actually save in absolute value. And that's how, you know, also when I worked at at DHL, we were looking at trying to focus on where the money is as opposed to where the noise is because sometimes there's a lot of noise, but there's not that much money also in solving some of these problems. And so then you might get distracted. Do you feel the same? Do you see the same across the customer base that you serve?

I I I think that's that's a great way of looking at it. I like the idea of of of of money versus noise because you're right there there's a you know a lot of different wheels can squeak throughout the day and there it's like rocks in your shoe you know it's just a pebble it's it's a nuisance but it's not really where if you spent your time you could create a lot of efficiency and and and value so I think that's I would say broadly speaking um if you look at the innovation within supply chain specifically Um I think there are number of number of companies who have done a really good job of saying yeah hey that's a big problem and I think uh there are others who have been forced to pivot to something different because they're sort of stuck in this innovation cycle and trying to figure out like okay what can I do with this technology or oh that one's not big enough let me go try try this other one. So if you back up I it's it's sort of fundamental to be able to say we're going to start from the beginning to attack a big problem because then you're laser focused on it. You design something that is uh you know very specific to that problem solve which means it doesn't carry extraneous bells and whistles. It doesn't drive your BOM cost off, doesn't distract people, and allows you to be very effective in saying if a customer pays me X, I know that they're going to derive a tremendous amount of value and I can build a good business around that.

Yeah. So I think the uh that focus really on the on the financials aspect of financial impact um make me think also about uh another dimension. There was this very interesting um Harvard Business Review uh article. It was was a couple of years ago back around like 2021 that said um innovation starts with unhappy customers not with technology. And I thought that was a very powerful title to basically make the point around well if you're not going to improve customer experience or your customers relationship with you into the whatever service or business or offering you're doing. In the absence of that, it's not really like worth to build technology towards that or at least if it's not that then it needs to be a financial incentive in term of cost competitiveness that you can decide then you know either you increase your margin or you you give it back to your customers you just make their business more efficient. Do do you feel the same? Do you feel like that's that's important especially today where we see a lot of AI discussions around like we spend so much time around the technology piece of it like the entire debate about humanoids as opposed to is actually does this solve a problem that we cannot solve today isn't it that the most important question here especially for the businesses

I think so and I think you know you haven't asked the question but one of the reasons why I feel like you know we've had some success is we've had a very strong customer centricity to everything that we do. It's not just about the robot that we built, but it's how it works, how people engage with it, the business model that we use, the support model, how easy is it to deploy it, what happens when you need to upgrade things. It's the entire journey. Again, very customer specific and customer centric. Um, and that gets back to we are, you know, that's relevant because you're solving you're solving a problem that exists. It's a real it's a real problem. So, if you do that and you can rinse and repeat, people are going to continue to, I'll say, confirm the value by by paying their bills, by paying paying that invoice.

Yeah, absolutely. So, you said certain level of success. Let's talk about that. Six billion picks—is that number seven? Okay. Seven billion. I love the by the way I think we'll talk about

7.5 if we're being precise

7.5 billion picks. We'll talk a bit about that specific um communication strategy a bit in a moment in in regards to tactic. But what was the first pick? Do you do you remember what was the first pick where actually the technology was really operating and like even if obviously the the software and the hardware has evolved. Do you remember what it was?

Yep. It was uh so I made mention of the previous business that we had. Um so we essentially incubated Locus within that business. We had warehouses, we had customers, we had we had products. So our first uh production pick was a piece of apparel

for uh an existing customer that we had at the time.

Okay.

I remember exactly where it took place. It was a corner of a warehouse and uh I think we had three robots in production.

Okay.

Technically.

Okay. that at that point apparel. So apparel is one of the big category that that you serve but not the only one right like the the business touch life science and healthcare products toys I mean it's it's today it's very diverse right

yeah it's ironic because when we when we launched the business I mean we when we were at Quiet Logistics when we were running the the 3PL business um we were heavily focused on fashion and apparel and heavily focused on e-commerce. It was a it was a world we knew really really well. And so we said, "Oh, great. Let's we're going to transfer this market knowledge and that's where our first customers are are are going to be in that, you know, that space." And we felt like we're just going to be picking apparel, you know, day in and day out. The irony is that our first sort of major um customer deployment uh was with DHL and it was in life sciences. And so here we are like, you know, we know how to fold clothes and put them in a box with tissue paper and we're we're we're uh we're doing medical, you know, medical devices and trying to ship stuff to a next day surgery and you know, and and it we're sort of scratching our head going, I guess kind of like e-commerce. It's got to get there and and hopefully you got the right stuff, right? Because otherwise somebody's going to be the customer's going to be angry. So there's some interesting parallels. obviously not not uh you know different different things at stake. Um but the process the fundamental process though was was very similar. I had you know I had to go out and I have to find this this and this this and I have to put them in a box and I have to make sure that it gets shipped on time and to the right place and you know so the the basic process was the was the same but it was just a different world for for us who had been in the apparel space for a long time.

Yeah. Actually, I think it was back in 2016 or 17. I went to that site in uh Memphis.

Yes.

In Memphis. And uh when I looked actually at the operational workflow what you said obviously the product category and the purpose of the product is completely different a but the next day replenishment into hospital at nationwide level with very short cycle the all the rest of the configuration or the parameter or the business requirement of the business were exactly the same than a time sensitive e-commerce a service level. So that that was quite quite interesting to see when I saw I was like my god this is exactly the same. So it made a lot of sense and also that tells you often time the right technology is defined more by the business requirement and profile of the SKUs rather than the category or the segment of the of the client itself right so so that's also something very interesting

and to if you don't and to your point though like so we you know that was our that was our first customer I mean we have a we have a strong business across all the major global thirdparty logistics providers but even there we're in multiple categy ories. We're in, you know, we're in uh technology, we're in life sciences, we're in retail or or or however they divide up their business. Um we have good relationships with with direct uh retailers and brands. Again, many large large global global players there. Healthcare

I mean I go to the doctor once a year. I don't know much about that industry but um you know as we've engaged with again a lot of the healthcare supply distribution companies um other med device companies uh that's become a big part of our business and then we're we're we're continuing to expand in industrial so think car parts and and and HVAC parts and and this they're all sort of bound by this one need to go find that one item and get it in the right box to the right person at the right time.

Yeah. Yeah. Absolutely. No, that's um that's definitely something that's going to continue to increase, right? I mean, if you look at penetration of e-commerce, across businesses, across the entire market, it's still it's still very likely to double, right? I mean we can argue we can debate the number but you know more or less in even in matur market like the US talking about still about like 20% you know 20 25 depending on which statistic you look at but we see this still going to increase. Do do you feel the same? Do you think like that that tailwind is still a long-term tailwind at least a good decade?

Well I I think there's um there's a couple of ways to look at it. The short answer is yes. um because you've got you know continued growth in these segments as you as you as you described. So the industries themselves are growing, e-commerce continues to grow. Um you also have a shift in distribution models which I think you you'll appreciate this is you know if you look at DHL you know 20 years ago there was a lot of pallet moves um each moves was very small part of the business right um then they went from pallets to cases and now cases to eaches so the how people want to move and and store inventory is is has taken on a a pretty dramatic change as well. So that sort of pushes, you know, where you're selling fork trucks maybe to move pallets around and there's still a lot of that to be fair, but the way people are pushing the inventory um, you know, sort of back up the channel now means that they really the the end retailers or others really just want to handle the each and be far more efficient. So that is another trend I think is driving driving up the demand for what we do specifically. Then there's if you look at the infrastructure there's there's a number of statistics out there that talk about choose your number 80 90% of the warehouses out there still don't have automation. So you think about the brownfield opportunities to to to add value which is which is something that's unique about what we do right and I know we haven't gone into the the details just yet but

one of the great things about our approach to to to to using robotics is that they can be deployed in a facility that's already been set up. it's already, you know, you've got racking, you've got a process there, and we we basically can take what's there and just make it make it better, which is unique. And so that opens up a lot of doors for us as well.

Yeah, I mean, I definitely will go into the detail of this because I think this is really a big a big unlock. Um, we talked about the 7.5 billion pics. Um just this week I was reading um there was a post from the CEO of TY the uh asset tracking device um company and he was sharing that the company just passed 100 million of AR which is quite impressive right like when you see that scale um and I'm not asking you to disclose any numbers around um around Locus but um that are confidential except if you want to um the ability for companies to go and get to that scale and then of from there even scale further um has been really limited like if you look at the number of success stories and to me you know u a again I don't have any insights on on on the the numbers of locus but you know the company has grown significantly with large enterprise clients at global scale it's impressive right like tell us like from the journey of like that a pick of apparel products in the US to today where the business is give us a couple of insights around like what happened what were some maybe of the critical pivots or moments you know I you know I love these stories of like looking at the business after but there's rarely people sharing really like what was the inflection point you know a contract a client uh a deal a marketing campaign whatever that might be what were some of these inflection points that that took you you know to get to the 7 billion because um when I saw also the evolution of the amount of volume that get processed you can clearly see that there is an acceleration of that right and and so so um yeah if you don't mind share with us a couple of things there around that like uh especially leading the the growth agenda for the company right

so there's a lot there in those in those questions and and obviously it's it's um you know for us over the last you know 10 years it's been a it's been a pretty significant journey I would say I sort of break it down into phases. I mean you can you can organize any of these journeys by sort of classic categorizations around okay product market fit and you know scale or or or and then diversification how however you want to think about it from a overarching theme perspective. I I I look at it a little bit differently in that early days we just needed to engage with customers and it's not just about yes it's about proving product market fit but it's about just learning and strengthening what you already kind of fundamentally know but strengthening in a way that it becomes easier and easier to rinse and repeat. Um, and you know, there's a lot there's a I mean, I could share a lot of stories about sometimes you don't know what you don't know until you it's it smacks you in the face, right? Um, and so, uh, I I think early days is like, can we just get one customer? Can we get two customers? Can we get three customers? And what did you learn from that process? And what did you learn from that deployment? And how could we, you know, look at each other honestly and say, "Okay, this worked. this didn't work and what do we see as the as the next opportunity. So that's one thing I think that's again I I talk about customer centricity till I'm blue in the face right and

because you have to demonstrate value but you learn you learn so much you know you you you you learn about like what worked from a deployment perspective you you learn like oh they these wheels maybe they're not as resilient as we thought they were whatever whatever it is right so that's absolutely critical um

the second thing is I go back to okay what do you how are you going to respond ond we were you know the innovator in the space when it came to the business model so um it's what we call robots as a service think of it as a as a take on SAS software as a service right

um whereas you know we would rather than require a large upfront capital investment which is sort of the normal

approach and the normal business model in the space um we would charge a recurring fee year after year on year on year on year for the use of not just the robots but the software for the the services allin-one and that was I mean it to investors and others like that's great you've built this recurring revenue model but I think it was more important to step back and understand that it was really a response to what we saw as I'll say just basic challenges somebody says I don't know I'm not going to write you a check for $5 million because this thing's never been used

so what's there's risk there's a risk risk profile. So, how do you derisk that? Right? Sort of one really important thing. Um the second was that recall that we're working with companies that are really um heavily reliant on labor and I think you'll you'll appreciate this from from your DHL days. It's it's like well, you know, you looked at labor as being able to if you added labor, you added capacity, right? And so everything comes back to like how much work do I have to do and how many orders do I need to get out out the door. And customers that we we would talk to would start to associate our robots almost as if they were it was labor. It was an alternative form of labor. Yeah. Right. And

we're like, well, wait a minute. Maybe if we just simplified like and and they would ask a question. They would ask a what would seem like a very simple question. How many robots do I need?

Reasonable question, right? and to go back and respond like, "Well, uh, you need 10 robots, but here's your install fee and here's your maintenance fee and here's this line item and here's this and like, you know, all sort of the traditional sort of technology pieces and components like this. They just didn't mesh, right?" And so, I think that was, you know, some tremendous learning early on as well, again, because you're you're engaged with these customers and you're trying to figure out how do you get from A to B to C, right? That's all you do every day. A to A to B to C. So that was fundamental. So get the customers, learn from them, figure out what works and then make some hard decisions around like where do we where do we go from here? Um so that was early that was early days. And then the the you know the recurring concept that I I I like to use is with customers, you always have to earn the right. You earn the right to learn about this. You earn the right to to ask for another order. you earn the right to go to another another site. You earn the right to do to do this to do this and that. And we always had sort of the the third leg of the stool here is we had this concept of land and expand.

Mhm.

So we wanted to focus on opportunities and a customer set where if we proved it once it would make it easier to go do the second and third and fourth one because there's some there are some upfront investments. There's integration into warehouse management system as an example. Well, if you do it the first time, you don't necessarily have to do it the second and third time. So, you know, you can rinse and repeat in a fairly very effective way. So, that idea of land and expand as a way to, you know, reduce go to market friction I think was was was also very important. And then we just I'll add one other one because I think this gets back to some of the stuff you're

you you were talking about earlier. Um the other was we didn't get distracted by other work streams. So you mentioned that we were highly focused on picking and and our our product line as you know has diversified significantly over time but

um we just stayed focused on picking

and we proved it one place we proved it again. We didn't we we even we talked about putaway putaway we do a lot of putaway as a as a complimentary process but

um we just wanted to do picking again and again and again and strengthen it and so I I I think those things were you know and they didn't all happen at once but they were sort of you know in the early two three years like those were the critical things that helped create a runway for us.

Yeah. Yeah. So there I think there are a couple of things there like like if I so that customer centricity that that you you clearly refer to adapting along the way I think the RAS story and I'm going to challenge a bit the RAS statement in in a minute. We'll come back to the RAS statement because I think there's different ways to look at that but absolutely the ability to get companies to adopt the solution without having to go through entire board of approvers and millions of dollars is huge. I think it's something that you guys have unlocked probably in a very unique way actually uh compared to the others. Um and then the uh I like the land of and expand motion. Actually, I would love to hear a bit more about that because I do think that many companies get into a large enterprise, they have the logo and they think from there it's going to take off by itself and it's absolutely doesn't. At least in contract logistic it absolutely doesn't. And we'll talk about that. And uh you know the focus on picking uh also I think it's really interesting one because it's it's really a question of focus no and being like do you go after I'm gonna be the best at this because I know the market is big enough and I know if I'm there I'm already solving the most critical part of it and then from there I can expand but at least I have a very strong focus. I think today many people are wondering if they are creating a technology should they expand how quick they expand and so on and on so so I think it's fantastic like let's let me um ask you more about like the lend and expand motion so I see this all the time you see technology companies. They got into DHL or GEODIS or GXO, or some of these big names, or Nike Zara and so on and then they are like okay great they have the logo amazing for investors amazing for for ego but then they don't follow. They don't follow through. They they assume that, oh, I have a master agreement. I have a contract. I have I have this business in and they don't sell. They don't continue to sell. They don't continue to actually heavily invest into the relationship.

And I see this all the time. And I always thought like this is probably the most untapped opportunity for many of these businesses. So, how did you do it? And and why was it so important? Um, and what's the ultimate outcome for all maybe the founders, all the people that are trying to really not land only these big deals, but then really make them actually really big, right? Like, uh,

yeah, it it's a I'd love to claim that we had 100% thought this through and and knew exactly how this was going to play out, but it but it comes back down to seeing what's in front of you and and and and reacting to it. I think the first thing that's important to understand is is in our world, right, you have a network of warehouses and you need to understand that they typically are standalone. There's somebody who runs them and yeah, they all roll up to somebody, but there's a lot of um that that that that person has a has a lot of authority. Um they may be doing something unique for a customer A and another another G, you know, GM general manager is doing something very different for customer B. And so they're they're certainly in the 3PL world they're they're run as individual you know P&Ls right they're they're almost standalone businesses. So we understood that inherently that you know these buildings are built in different you know different eras time frames. They may have different types of infrastructure in there and that you in order to project or understand the potential value you had to roll up your sleeves and go into them. So, you couldn't just say, "Great. Hey, uh you know, we've been successful here. Now, we're going to go do you have 2,000. Let's go do them." It just doesn't doesn't work that way. And and so, we treat we we learn to treat each and every customer almost as its own business, as its own flywheel. We say, "Okay, hey, we have to do this once."

And then we have to realize that the person who was successful over here, sure, they maybe they got promoted or there was some celebration of their success, but it it's limited. And so that's what you did for me yesterday. Now we have to go figure out what we're going to do tomorrow. And so it's incumbent on on the partner, the solution provider to to say, "Okay, I'm going to help sell this again. I've got to almost package it up as a case study and I've got to go, you know, find other sponsors and other people and and and build those bridges." And so um understanding how these organizations were shaped, what the different motivations were and and and that we you had to go sell you know distribution center by distribution center sort of forced us to to to acknowledge that the expand part of it still had work to do. So that's one that's one thing. I think the second thing and um you know our our our our CEO Rick is is an exceptional marketer and and very thoughtful around these things but um you know was very keen along with uh you know our marketing team to say how do we how do we celebrate and promote success? So it sounds like a it sounds like a simple thing like oh hey we should all you know clap our hands and feel good about something but um it started from when we you know when we built and delivered robots we actually had we there's there's something called a mast. It's it's a you know if you see it see it see the picture of our robot you'll understand what that means but it's a it's a vertical piece of plastic sort of protects protects where we have a a tablet etc. But it's but it's front and center. It's a big big um sort of piece of canvas, right?

Yeah.

And we sort of looking at it and say was it it serves a structural need, but it's like wait a minute, that'd be a great place for our logo. Well, wait a minute. Be a great place for our customers logo. Like when you're thinking about adoption and ownership and stuff like that, creating excitement and

um which is always with new technology is always a question is how do you drive adoption? How do you create excitement? So, we started with something as simple as that where we would put um you know, our logo sort of down at the bottom, but we would highlight our customers logo on this mass and it was they're cool. They're colorful. They're really compelling and sort of the first step towards, you know, enhanced ownership where now if you're taking a video of it and you want to distribute it to, you know, the vice president of operations in another another region, they say, "Oh, hey, that's my logo." Right? you you've got some you've got some affinity already built into that.

And then we would celebrate, you know, like, oh, hey, you reached this milestone, you reached this milestone. We had pins, we had cakes, we had other things, but um which was more than just celebration. It was an opportunity to continue to build relationship and build then sponsorship to that you could leverage to say, how do I continue to expand? And when other folks in the in the in the business said, wow, they're they're doing well. while they're having a good time, this thing really works. You know, now it's becomes one of how do I get involved, right? And so, you have to create that environment. It doesn't come to you. You have to you have to build it. You have to en encourage it. So,

yeah. Know, I love that. I love that. And I love actually the marketing. I mean, we were at uh at this event recently and even at the event that we attended in New York at Goldman Sachs, I saw the Locus booth at the Goldman Sachs logo on it and I thought it was genius because

they did invest in us. So we figured why not give them one bot, right?

Exactly. Exactly. And on top of it's always a good marketing, right? But it does call the attention. And I remember in my time at DHL, we had this marketing material that was corporate marketing material that had some of the images were LocusBots on them because they had this fleet of bots with the logo of DHL, the colors of DHL. And then of course people like, oh, what is this? Right? So, it's a it's a tactic, but it is it is a powerful tactic around how do you embed um how do you embed your brand into that business that it's visible and that people start to wonder what is this, right? It's not obvious that it's impactful, but I think it's really impactful. There's another example. Um I think you and I we joke about that, but um some of the bots even had at one point um some of the board members names on them when they went to see a site visit. So you have this a the divisional CEO and the CFO and so on and they had names that were uh tricked. So Oscar was the CEO of at that time, was the CEO of DHL Supply Chain. His real name is Oscar de Bok, and it was Oscar the Bot. He posted that, and you go online and you see the post he posted that on LinkedIn and you see the post has like thousands of views hundreds of of engagements and so on. It's like it's an amazing marketing, right? But it's not only about marketing. It does also create what you say is like I can tell you he remembers that story. He tells that story probably everywhere, you know, as a as a um you know, an anecdote, but it's it's it's powerful. Um how do you manage a the speed of a technology company and the patience that it requires to do business with big organizations? Because I've heard also so many complaints in my time as an executive in large corporations. people think, "Yeah, Nav, this is so long. It takes so long. It takes forever." How do you manage that pace? And maybe what what advice would you give to people that are maybe earlier into that journey?

First of all, I don't think there's a there's a magic bullet.

I think it's it's you clearly need to be patient, but I think it what it takes is a balanced approach. So I you know there's no I I don't we can talk about you know some of the tactics and some of the other things we we did to amplify success and you know extend the story and and and create additional champions all all of that certainly helps um but it takes time right and to deploy something in the physical world you talk about you know AI and that's where all the focus is I mean we've been doing physical AI for years and but still physical it's in the physical world and when you do things in the physical world, it takes time. And so, you just have to understand that we've done a a a good job of balancing um how we stay focused on existing customers and developing um success stories and the opportunity to expand with continuing to add new customers. So, I I I I would say you have to do both and you have to be thinking that way because, you know, who knows? You maybe you you you're working with a customer and and uh you're just on the verge of expanding to another couple sites and then they get bought

or they're they go bankrupt or something something happen or your champion leaves, you know, who who knows? Like, so there's a notion that you can't put all your eggs in one basket, right? And it seems obvious, but I I think it for smaller companies, it's very easy to get absorbed into the that one project or those two projects. And so I think you really need to continue to balance both. And and we had a I think we were always looking at okay, who you know, what are the new companies? What are the new logos or the new brands we're working with? And that always was a was a was a focus for us. And uh

um so even yes, while we certainly would work with large companies and want to expand you know, you you have to do both.

Yeah. I heard you um say at this event where we were last year in I think November or October talk about the importance of human relationships in the sales process and today you hear a lot about you know the latest AI softwares for go to market and for sales enablement and so on. What's what's your view when you sell to enterprise? I mean, how important is actually the personal relationship of like the good old school ways of doing business, which is taking people to dinners and spending time with them and knowing them a bit personally and that that really like personal touch in actually being successful in in scaling a into the business. How how important is that? Is it more important, less important than before? What what's your view? I think it's I think it's uh well it's always been important in our industry. Um and I I would argue that it's probably

more important today and I remind me to come back to that point. But I think everybody in sales you talk to say oh relationships are are are critical and you know you need to connect with people. But in our industry, for what we're selling, we're trying to build enduring relationships that are measured in, you know, years and years and years, right? Not, you know, months and months and months. And so, um, when we're when we're selling, when we're when we're trying to build these relationships, that's part of the diligence process is like, do I trust this company with my career, with my livelihood? Um and in particular in what's unique about supply chain, supply chain is one of those um it's actually funny because up until COVID and and you know you know ports getting shut down and other things happening, you know, supply chain was was fairly sleepy and then all of a sudden was like, oh my god, supply chain it's it's a mess.

And that's sort of the point. It's like until there's a problem, you know, it's sort of one of those things that happens behind the scenes, you know, you hope seamlessly. And, you know, I I I like to say that, you know, the the people that we're here to support, they want to trust that when something goes wrong, we're all on the same side of the table. We're all in the, you know, the proverbial same foxhole, like we're I can count on you. um because I know your stuff's going to work well you know most of the time but what what happens when there's an issue because as you know in the physical world in the warehouse we have a saying you know what if something can go wrong it will go wrong right so

that's part of the discussion that's part of the diligence that a lot of customers perform and and

um yeah do you you buy him dinner or whatever like okay great but it's it's more like how who are you and and do I trust you? And there's lots of different ways to build those bridges, but I think it's more important now than than ever before.

Yeah. So, yeah, you you definitely And how do you how do you coach um maybe some of the newcomers or maybe some of the younger generation that are coming into sales sales jobs around maybe they are new into the industry and so on. How do you coach them? Because I see also a lot especially since COVID, you know, a lot a lot has remained virtual, right? Um certainly a lot a lot has come back also to the way we were doing things in business before COVID, but the notion of virtual relationship and so on is is is pretty common now. You're like well I don't need to go to spend time with these people um or have dinners or or lunch or whatever. Um how do you coach people around the importance of personal relationships in our industry? And I think it's certainly in our industry like big time but it's I don't know that it's only in this industry. I think still there is a lot of value into

well and and and I mean I I have a I have a reputation for not using certain platforms.

Yeah.

In our company and you know you could argue it's because I'm older but uh but

like what like LinkedIn or

No. Yeah. There there's there's certain tools communication tools that that it's like I just think that's white noise. It's too much.

Okay. But and so I prefer to think about like where and how do you engage specifically where your where your customers are and there are some you know you have to be there you have to use the tools they use you have to use whether it's uh teams or zoom or or you know me uh you know messaging or what have you. I mean we even have shared um uh you know shared Slack uh channels between customers and and all those things are great.

Mhm.

But um I encourage my team to say go and see, go and meet, go and do. and um to the point where, excuse me, this may this may seem backwards, but I get a monthly report on travel and entertainment spend. And I'm usually looking for people who have not spent the money, which is sort of count it's sort of counter to like what you normally think, oh my god, we've we've blown out our butt. No, no, no. Like I I Yeah, you got to go on site. You've got to create relationships. And and this goes back to what we were talking about just a minute ago, which is I I don't think a lot of the customers end customers, whatever their role in our industry, actually trust a vendor if they've never set foot in their building,

right? It's like I have a warehouse. If you even you tell me it's going to work in my warehouse, but you've never been in my warehouse.

Yeah.

And that's that's not an unreasonable perspective to have, right? So So yes, do you need to go and and take that person out to lunch once a month? No. Do you need to show up and be a real person who cares about the outcomes of the business who who fundamentally is investing, you know, in in their outcome? Absolutely.

Yeah. I love the uh I love the uh the expense report. It reminds me

something that might change by the way to be clear. Yeah, I'm sure if the CFO uh of Locus is listening to this, I mean, you probably know that's your that's your your strategy. But it does make a lot of sense. In fact, there was this recent interview, I don't know if you saw it, but was quite viral with uh with Yansen Huang at Nvidia and he was saying that, you know, CEOs should be starting to look at, you know, particularly the areas of R&D and development. How much token do they use actually? Because if you have somebody that's highly paid, is not using tokens, is not consuming AI tools and not leveraging them, you're probably losing money. And I think it's it's in a certain way is kind of that spend money where we know it matters. And if you're not spending the money, it means that you're probably not executing on your job in the right way.

That's a great that's a great marriage of old school and new school right there. It's perfect example.

Yeah. Um that's that's great. Um and these are like small tactics, right? But they matter, right? because they do set the tone as to because in some organization you see the opposite right you see the hey customer first customer centricity but then you ask for travel and people like like no we don't travel we don't travel for anything we don't travel for for you know customerf facing meetings we don't travel for conferences so so that that is that is a tricky that is a tricky balance especially um when you have to really think about like do I invest the money for these personal relationships or not and at what point I'm starting to put also mechanisms that actually incentivize the behavior, right? That's great. One of the thing that um so we were at this conference in uh in New York um two or three weeks ago, right? And there was this big big discussion around why some of these technologies have not uh been adopted faster, right? And um I don't think it's your case. um you've done specific things like um the commercial model changes, the fact that you can retrofit into existing infrastructure with very low investments that certainly are are very helpful towards reducing friction. But what's your view as to why the industry has not widely adopted yet this type of technologies when you see the numbers of companies like Amazon you know in the 700 or 800 thousands of of bots um you know whatever that number is now um and you look right beyond them then it right away drops to maybe 10 to 15 or 20,000 a at the company level. Why is that? Um that's a loaded question.

I think you know you can look at uh the customers themselves and their strategies. Um Amazon is an example of a company even Walmart where they've said automation is central to our our our goals to achieving our goals to dealing with the challenges we have and and creating new opportunities you know growth cost containment what what have you. Um, you know, Amazon when they bought Kiva, that was an unprecedented move. I don't think there had ever been an acquisition of that type in our industry where a retailer had actually bought, you know, a technology company. It's interesting because, you know, just recently Home Depot bought a company called Simple.

Yeah.

Right. Um, so,

but you don't see that. You don't see a lot of that.

It was a lot of money at that time. It was 800 something millions, right? Like

uh 7 Yeah. 775. Yeah. Almost 800 almost 800. That was back in 2012. So it was a lot of money at that time. Yeah.

That' be like 20 billion today.

Yeah.

Um but no, that was that obviously significant and a huge strategic move. You know, we could talk about that another time and really break it down, but um and and they they've leveraged the you know, leveraged the heck out of it, but it take so that those are the obvious examples. You know, big companies, big budgets, strong vision. Um, but even DHL, which is a very large customer of of of ours, you know, I've get asked the question like, well, why are you successful with with DHL? Well, one is like to think it's because our solution works, right? That's sort of table stakes,

because you're handsome, too.

Well, there still debatable,

but there's um, you know, you you go back to you mentioned Oscar's name and, you know, had the had the privilege of of of meeting him several times. uh you know he was he was committed to the idea that um technology could be a differentiator in your business

and he championed it. He he invested in it. You had you know accelerated digitalization programs. There's like how do we go faster and there was also a willingness to fail but it was like we're going to go do this like there was a commitment to it. Um so it's things like that that uh I think we're seeing more and more of for sure. Um but those have the companies that do it will go faster and the companies that don't will you know they'll they'll be more more reactive. So that's I think that's that's one fundamental observation. Um the good news for us is let's continue to you know now it becomes no longer should I automate but when and how. So that you know that narrative is is is accelerating. The other is that there's um you know it it it's uh I mentioned this earlier like everywhere people say what do you guys do and you know tell me about a warehouse. First of all they're you know the person who's never been in a warehouse doesn't really understand the average warehouse is like six to eight football fields in size right they're massive. They're certainly small ones but

you know the average the average distribution center or fulfillment center is you know 300,000 square feet. They're they're they're huge. you know they have different products they have different different forms of infrastructure in them um and they're in different stages of maturity so you know we are and I mentioned this before you have to look at each and every building and say what's the opportunity in this building it's um it would be great if we just said hey there's um here's a seat license you have a 100,000 employees turn on this license for all 100,000 employees and I'll bill you and we'll all be happy right but But again in the physical world that is that is a reality that um yeah warehouse all warehouses are the same and that stuff comes in it sits and then it goes out. But you you know full well that that warehouse a in this part of the country is looks can be operated completely differently than than a warehouse in in Europe or the east coast or or what have you. Right.

Yeah. Yeah. Yeah, I mean even same companies within the same country in some cases use even different instances of WMS and and and the layouts and the workflows are very different. So one of the biggest topic and so how do we solve this like um so let me touch on the point around RAS the reason why I say I I want to to to talk a bit about that topic and that similar around RAS is that in my view we don't really have yet a true RAS model in the industry when it comes to you know to robotics and the reason is that in my mind if we really compare this to SAS is like well it's really a pay-peruse model u which I think you're pretty close now because now I think it's a monthly you can get the bots even on a monthly basis, right? Um but you don't get the bots on a pick as an example basis, right? Like so you still have kind of a monthly which I think is the closest that it gets to RAS from from everything I've seen in the market. Um but to me it's really when we get to RAS where it's like hey you're going to pay per pick and you know that you know a human operated pick cost you say 25 cents and I'm going to charge you five, I'm going to charge you 10 cents, right? And so then you have unit economics which probably than any warehouse could adopt um because they have no risks on their side. Obviously there's a huge capex attached to this and a huge risks because you could have bots everywhere just sitting around and having huge um cost base. Is that the challenge of really moving to the long tail of the market also and just get this type of technologies really like widely adopted because I don't know if the number is is exact but you know I will estimate that probably 75% of the warehouse operators in the US as an example have not even touched automation and robotics. It's a really long tale of companies there and many of them they just haven't touched it because they don't have engineering resources. they cannot put 400k into a project to get um the full cycle from RFP to to deployment to have you know at least a year or two of of running opex for for the investment is that is that one of the reasons you

I I would well I would argue it's not the RAS model okay

you have two you have two different you have two different concepts there so I think

from a RAS model perspective um

we have so at least in our our business we do have a lot we have a very granular capability. So we can add robots for you know Black Friday sales periods. Um we can scale up, we can scale down, right? Um and I think it's a question of like what's practical relative to the infrastructure and investment that's required to get into a building. So there is there is some threshold where it says listen I I you know I' I've got to put a server in and I've got to put a network in and there's some basic enabling capabilities that that cost a certain amount of money and um you want to make sure that the opportunity is is large enough to derive value and pay back that investment. Right? So so I don't know that that's the RAS model itself and I don't know that it's the like the payer pick model that solves for that. M

it's really more a question of you know volume and scale to justify doing the project in the first place. Um so the classic example is if if if a building is so small that I only have three pickers there what are you what are you saving you know you you can't cut people in half right so it becomes very hard just to understand like is there any real benefit at that level of scale

as you get bigger it becomes far more obvious and far more digestible and and the returns are are are clear right so there's I think it's more that

than it is paper pick versus paperbot or whatever because we're we're we're pretty we can align pretty well to capacity demands throughout a week, you know, shape of the week, shape of the month, that kind of stuff. And we have different ways to do that, but it's I would argue it's more that than the model. Um

and then um but I think you hit on another thing which is there it's the resources required to do these projects, right? And so um you know there are there are consultants there are engineers industrial engineers and and there are some that work in a company and there are some that go to a consultant and they come back to a company and they move around in different projects. So in an ideal world if you asked any executive operator uh you and you said hey would you know would you like to be fully automated tomorrow? The answer would be absolutely.

Yeah.

Right. So if all else being equal, I would yeah, let's let's do it. But the reality is to your point. Um I need to be able to integrate to a WS. We've talked about if you use the same WMS, there's some leverage there, but I still have to have integration. Um in our case, it's fairly limited. It's not a massive project, but I need the skills. Um there's the uh the engineering resource that manages the project. Not you know we obviously bring our own resource but somebody on the customer side needs to understand they need to be able to they need to be able to marshall and manage the internal resources at the on the customer side. So all that takes time and people and um I think if I mean you talk to to folks in the industry you know there's a huge push to develop um at the university level additional you know people in who have an interest in supply chain and industrial engineering who can step in and try and help facilitate some of that. So I think that's the larger challenge. Um and you know for us we just want to continue to be successful because we know that earns the right to do the next one and do the next one whatever that timeline may be. Do do you think um I'll let physical AI the next wave of physical AI and potentially humanoids unlock that where because you you spot on in the sense of like yeah there are use cases and there is existing technologies where the still the the volume base is just not enough to to actually replace humans in a way where it makes financial sense but there's humanoids or a robot on wheel that does have the level of dexterity and handling and manipulation that that a human would have. Does that change that change the logic and then makes it now um um possible to actually really get a wider adoption in the market?

I I think there's some possibility there. I I first of all think we're a long ways away from being able to to leverage that in a generalized fashion in in the world of warehouses, right? So,

how long do you think?

I mean, it's a wild guess, but like like you know, I mean, you're really well positioned to you speak to a lot of engineers and that.

Yeah, I mean 10 to 15 years.

Um, and and there's there's a couple of reasons for that. So, if we're going to talk about humanoids specifically, I mean, if you look at what we do and even look at our latest technology where we combine manipulation and mobility, that's that's almost it doesn't look like a humanoid, but essentially is it has the ability to move and has the ability to manipulate in a very structured way. So, but it's purpose-built, which means that the capabilities, the bomb costs, um, its ability to fit into that world, to be able to, you know, pick higher than a human, to travel quickly, to have, you know, an ability to be self-managed, self-charged, operate in large fleet. There's a lot of, um, capability that's been built up over the years that's very purpose-built for warehousing environments that will take time to replicate. And if you're talking about

generalized technology, well, it's generalized for lots of different things, right? And so,

um, you know, is it generalized to work in somebody's home? Is it generalized to work in a factory? Is it generalized to to work in a store? Is it general? All those are very different environments. And, you know, yeah, you could say, oh, well, if I can manipulate this thing, I can manipulate that thing. um you know over time sure but again all that stuff has to be learned and then you have to create the efficiencies around it and you have to be able to deploy it in a safe in a safe scalable way and that that takes time.

We are seeing a lot of videos and a lot of content that's coming particularly out of China. I think it's a perfect a perfect segue into into the um what's happening in China and I would love my understanding is that you guys primary manufacturing in the US. Is that correct?

Correct. Yeah.

Yeah. So you manufacture here in in the US. So that's interesting. We'll come back to this um to this point. The president um uh Trump just arrived in China, right? Like there's this this big meeting happening just today. Um what's your view around the Chinese competition? a in the US market and beyond the US market because I think there's there's really like these two almost different realities. I think when you are based in the US and you live here and you work here, you don't see that much. You don't see Chinese cars, you don't see Chinese mobile phones, you don't see Chinese telecommunication companies, but you go outside of the US and then it's impressive. You see cars that are coming from China. Everybody has mobile phones that are coming from China. not that are built in China, they are Chinese companies, brands and and so on. And so they are certainly racing for market dominance across the globe across multiple areas. Robotics is for sure one of these areas. What's your view around how do you compete knowing that they have an unbelievable um level of manufacturing capacity and knowledge and expertise and and also extremely competent in in the entire manufacturing space but also increasingly in all the other areas of of AI and software and so on. How do you compete against that in in markets where they are not restricted like maybe like in Europe or not as restricted as maybe like in Europe or in Latin America or in other places in Asia and how do you compete against them in the US?

Um wow it's a big big question. So I

you guys have had a good level I mean maybe you can also share about this. you've you've you've defended the business very effectively, right? Like like uh there has been competition, but you defended it very effectively. So that's why I'm asking you specifically like like what do you do? Do you focus on the software? Do you focus on relationships? Do you focus on on all of this? Like what is important in this case, you know, because it's not only for locus, obviously this are like for any business, I think you should look at China and for the people that never been there. If you go there, if you right away understand what is happening, it's not happening since the last year. It's happening since 2001. I live there for four years. I have tremendous respect for the country and for the people and for what they've accomplished. But I think many people, especially in the US, they they minimize this. And so I'd love to to hear your view. Um because I I also recently heard this statement from the you you were there when where the CEO of Appronic said um Jeff he said we need a Shenzhen in the US. Shenzhen for the one that are not familiar is a really one of the you know areas of the country where you have this huge combination of talent university manufacturing infrastructure um where where you have all of it to be hyper competitive to build for for the entire world right like so what's what's your I know I added another dimension here but I think it's all it's all linked together right like um especially because you guys produce in the US and so it's like how do you you know how do you

Yeah, we we well there's there's a number of things I'll touch on there. So so one is we were very purposeful to um maintain our supply chain and manufacturing capabilities to the US and sort of

because of Trump. No, no,

it was before that was decided before. Maybe on the first I would say in in acknowledging that uh geopolitical forces and other things that that pop up from time to time uh can produce stress

uh

to an emerging business. So wanting knowing that our largest market was the US knowing and that's where we started knowing that um our customers wanted to know like hey what what are you know do can you produce robots do you have what's the risk in your supply chain you know we would get asked these questions as customers did their own diligence we wanted to make sure that we had something that was dependable and available for our primary customer base as we as we mature the business. So, we felt that was critical. Um, you know, I I don't think it's any secret that there's also concerns about IP protection and other things. And so, um, you know, and we would see this at trade shows. So, so again, we wanted to be careful and we wanted to be thoughtful about, um, how we how we protected our business in our core market. So, that's one

one very important thing. Um you talk about internationally. Yeah. 25% of our business is international. I spend you know a fair amount of time in Europe for example. So things that you've mentioned I I I I see directly. It is different. Um and I I don't think that um the the general population in in the United States has a full appreciation for um the extent of uh the presence and the investment that's occurring. Um and it's at scale that is you know it is very different um for sure. Um and I'll come back to that in a second. I think what's also interesting about us you you asked like how did you protect and grow your business is understanding where we fit and what we were very good at. Like when we when we started the business we had uh a couple of primary competitors and who were using what we refer to as autonomous mobile robots, right? different than an ASRS or you know other other types of technologies um that you're very familiar with. But this this niche if you will um because it was a niche in early days there's nobody was running sort of autonomous cars inside a building like to the level that we do.

Um we we just became very very good at it. And so what you saw was copycat robots that popped up all over the globe.

Yeah. And

they didn't even bother to redo the design.

Oh, no. I mean, it it was it's what you read about. It's what you it's what you would expect, right?

It was Kiva with a K. That's it.

Blue on the whole thing. The same.

It was flattering.

Yeah.

And uh but at the same time, you know, it became very clear that our our special sauce and this was what goes back to remember remember when we started this discussion, they said, "Yeah, I don't know if we're really a robotics company. We're really a software company." And so that's an area again where innovation and understanding is one of continues to be one of the strengths I think in the US that I think that the Chinese for example are are are catching up and and can produce good software but um they've always been very good at hardware manufacturing right and and and and driving cost out of that but um you can have a lowcost robot that would be 1/100th the price of our bot but if it doesn't move and produce value, it's worthless.

Mhm.

Right. And so the value you derive from Locus is in how we orchestrate a fleet, how we can run 500 robots 24/7 in a, you know, in a ballet that's, you know, dependable and and and valuable to an end customer. And all of that is software. So, you think about navigation and and think about having like the the equivalent would be uh having robots on Fifth Avenue in Manhattan. Like that's that's the stuff we do. It's crazy and it's hard and it's it's um certainly been defensible for us. So, that's another example of like do what you do and do it very very well. Now, we compete with very different types different types of systems. So you know if you look at um you know so there is there's two Chinese companies there's high robotics there's geek plus they're companies you know but there's also uh uh two two very good European companies there's exotech and there's auto store and then we have slightly different concepts and you know we try to solve solve the same problem but with different different approaches so uh it's not that we don't compete with the Chinese per se but um it's that we've our approach. I think we've we've done a very good job of being differentiated and and defensible. So

that's the other piece. Now the last point, the macro point, you you mentioned Appronic, great company, good people. Um they uh you know the CEO there talked about like hey if you if you're the US maybe we should consider we should consider having a a Senzhen type of you know collective uh investment opportunity uh you know however however you want to define that a zone you know a concentration of of like-minded folks whatever it is it's just you know But at the end of the day, it's really about like the message is should we be investing more specifically um as a nation, as a country, uh be knowing like that is that is the obvious competition and this is what the competition is doing. And I and I would I I think that's a very um I think it's a very interesting idea. Yeah, I think it has I think it it merits some consideration. Um because I think the you know the idea is like to your point you you you step outside of of this country and you see oh hey that's a this is going to be a really bad analogy but there's a basketball they just signed Larry Bird and Michael Jordan and Scottie Pippen and you know Carl Malone and over here that's it's uh Allan Nabil you know like that's I worry that it that at some level maybe it gets to that point. So I I do think there's an opportunity for, you know, some considered cooperation to continue to not just help Locus, but broadly speaking, help help the industry and and and help at least selfishly this country continue to compete.

Yeah. I mean, I think um the basketball analogy, you know, it's uh it's a it's dated for sure. the um but I do I do think that what you're raising as as a fundamental idea there is is absolutely factually happening like um you look at industries like the automotive space and so on as an example and you look at the you know I mean there's this famous video also of Elon Musk making fun of BYD you know back in 2009 I mean he's joking about the car looking super ugly and so on and you know I have a huge respect for him but you know just making the point on these companies were completely dismissed as like valid companies to compete at the global scale. And now you see the combination of designs, reliability, a a consumption transition towards more sustainable energies, not only electric but also hybrid models

and you like wow right like like and so it is happening in certain industries. So I think uh I really liked the you know I didn't know him before um Jeff from Aptton but I'm also with you like I think that idea is definitely worth to consider because there's this entire debate around um you know how do you actually build and how do you bring back you know manufacturing but in the absence of having really a full ecosystem to do that it's going to be really hard because this is not only about the venture capitalist money you'll have the talent and you have the infrastructure and you don't have and I mean here we in Boston here there is a lot of there's a lot of talent that is trying to address complex problems and a lot of people that are trying to do innovative um you know project ideas you know a a make the world just a better place but you need more of that you know and I think I think the US definitely has to has to consider this because the the competition from China you can block it certainly in the US but you cannot block it internationally or in most of the world you cannot block it let's talk about um you touch on one point around a some of this competitive landscape. Uh switching gears a little bit. Um so there is this um notion of flexible versus fixed automation, right? So fixed automation, larger capex, more infrastructure, maybe a higher um human capital replacement in that in that context, longer ROI uh but maybe also higher throughput in some cases versus flexible automation, lower capex, faster time to value, more flexible model. Um, Locus being more on the flexible model, um, a profile. If if uh if I'm wrong, just just feel free to correct me. What wins? What wins in the long run?

I I would ask you, can you predict can you predict what what's going to be selling three years from now? Can you predict where it's going to be selling three years from now? Can you predict um how much things are going to be selling three years from now? I think that's a fundamental set of questions that when you sort of collectively look at it, you say this is a it's a time of uncertainty, right? And you can yeah, you throw tariffs in there, what whatever you want. Like there's a lot going on in the world. It's not a

it's not a boring place, right? By any stretch. Um so if you

with Washington right now we have some entertainment we have a very dynamic thinkers I call them uh right now around around uh many decision process which for us as supply chain professionals and people in the space you know um it creates opportunities for sure

nearshoring offshoring you know re reshoring it it's again I think that's what makes um things very very challenging so that's that's that's one thing. So you say, you know, flexible versus fixed. We've always believed that um flexibility is paramount. Again, we operated buildings, you know, as a 3PL, you know, we'd have clients change, we'd have forecast change, we have product types change, we have an introduction of somebody selling, uh, you know, a women's apparel line and suddenly they decide they should they're going to be the the next big thing in men's, right? And so it's just dynamic. Supply chains are by definition dynamic. Um, and so there was always a lot of automation over the years I I believe was driven by sort of the predictable the more predictable supply chains that you saw in large retailers. Groceries an example. Everybody eats. You're going to go to the store. They're highly optimized and low margin businesses. But when you talk about brand, you talk about expanding globally, you talk about changing consumer tastes, you you tell me. you if you if you can you give me a hot tip I'll I'll be more than happy to invest in it but it that is that is that is that is a major challenge. So we've always because we we lived there we always believe that flexibility is is is incredibly important. However, um I also think I the one place I would challenge you on is is your characterization of fixed as being, you know, sort of higher throughput. Um maybe even better value or uh you know, less of a

I didn't say better value, but I said okay, fair enough. I I did say higher throughput.

You say higher throughput uh maybe a higher reduction in in labor requirements and other things, right? So um and and I would say that's where we've been able to um push the boundaries in a very significant way. So if you if you looked at I'll ask sort of new prospects or consultants I'll say hey, a lot of people know Locus. We're fortunate to have a great brand, and um you know people are aware of us but what would be a big fleet a big robot fleet in your mind you mean you know you just know of us and somebody say oh I don't know you you you might run what do you run maybe 30 robots in a warehouse and so that's part of the challenge is that um we've been very successful, right, with a lot of, you know, we've we've we've we've automated a lot of what I would call midsize warehouses, but we've also we've also built a lot of um very high throughput um operations over the years as well. Um I mentioned a number before. We have multiple buildings in in in our broader network that'll run five, six, 700 bots 247.

I've seen some of them in that.

Yeah, I think you you're aware. Yeah, I don't think you're aware. But but but okay, you say, well, that you argue, well, that's you need those robots to ship a certain number of units. But the better way to look at that is those sites are are shipping hundreds of thousands of units a day. We had one one site which had a lower bot count by the way, still doing direct to consumer, which as you know is, you know, that it the order profiles sometimes can influence the numbers, but here it's direct to consumer. uh in Europe had a 500,000 unit day. And if you had asked anybody that you could ship 500,000 units direct to consumer um using AMRs, I don't think there's anybody in the world who really would have thought that possible. So, so we've always earned the right to get bigger, to scale, to figure out how to manage large fleets. Um so I, you know, our our journey is we always want to be flexible. Flexibility first. That's one of our one of our taglines. Like we're all about flexibility, but yet we don't want to compromise your ability to get stuff out the door to scaled to a level that is um first of all far more capital efficient than some of these other solutions and and and driving the same level of throughput. So um that's where we're pushing and and so it's I I think those lines are blurring.

Yeah. Yeah. that and that is why I wanted to make sure that that um that better value is is certainly it's certainly not what I believe. That's why I wanted to make sure that that was that was not uh misunderstood there. Um my experience was like if I looked at like most of the systems that I've seen and maybe these are like this is where it's going in term of like scale and I did I did see few sites that had yeah like 450 or 470 bots operating at the same time. It's pretty impressive. And and I mean also for the audience, right? Like that might not see like when you start to go into the league of 250,000 units to a half a million units per day. This is kind of as good as it gets, right? Like in the US market, right? Like this this is very large scale, very very large scale type of site. So So I think you're validating one thing and on the fact that yeah, it does it does scale up to a level. Uh, would it still be more cost-effective than an AS/RS solution if you go even at that scale? So um depending on the upfront investment that's required we we'll see typically that the paybacks from for some of those larger systems um minimum of 5 years and sometimes 7 to 10 years right that's a long time to get your money back and to see the value accumulate over it's a a very very long extended period of time. Um this sort of speaks to sort of where where we're going as well in that and I I think you saw the the the most recent um technology announcement we had where um we started to marry our mobility capabilities now with manipulation with arms right and um I touched on that briefly earlier but uh that's where again leveraging sort of the flexible concepts now we're even driving more and more um value creation by, you know, reducing the reliance on on labor even even further. So, um, we continue to push in that direction. The playing field's leveling out, but yet we can do that in a way that's far more capital um capital efficient and, you know, a quicker time to time to value, which I think is important when you're talking about I don't know what I'm doing three years from now, let alone five years from now, right?

Yeah. And I would love to deep dive on that one because I think that one is take us al into the boardroom or wherever that decision is being made. Why Locus Array? Why that solution? Why was that solution the natural next move? Um would be great to have your view on that. Why that? Because you could have done multiple things, right? So why is that kind of the right next move for Locus and is this an evolution or a revolution of the solution?

Yeah, it it's um I'll answer that last question first. I think it's it appears revolutionary because it's a very there it's a whole new mechanic for us, right? It's it's manipulation versus you know I've touched on this already. you know, we are very very good at navigation, autonomous navigation. We're very very good at the the mobility aspect and and I think again that's that's what's defined Locus over the years. Um, so you say, "Wow, that's revolutionary." But the fact that it's built on top of everything that we've built in a way that it's not standalone and complimentary to what we've we've already done. So as a very simple example, if I can automatically pick or autopick with an arm certain certain products or certain SKUs, there may be other things that are heavier or don't fit in that yet. Um I can pick them with my other robots for the other concept and it's all seamless to the customer. So it's a

in that sense from a customer experience perspective I view it to be more evolutionary. It's, you know, you can start here, you can continue to grow, evolve, change, you know, things that work here, let's put them in this. But again, it's it's seamless. It's seamless to the customer. So, I like to think of it as both and depends on, you know, I guess the glasses you're wearing.

Have you seen already like some signals that this was changing the game for some of the customers?

Yeah. So, um, we had a public launch of Array at MODEX, the large industry uh trade show in Atlanta this year um and we set some we set some uh you know with any product launch we set some modest goals say hey let's create some excitement around this I would say um we've been around you know we've been to these shows we've been in this industry for a long time we I mean even origin when we launched it was exciting and and cool. Uh this is next level. So um I think the the the sense of excitement um the sheer quantity of folks who said hey I want to evaluate that for for my uh my site I think was extraordinary. Um and even going back to your point about like flexible versus fixed, we had a number of customers or prospects probably more to the point who maybe hadn't engaged with us on what you know our original solutions and said wow that is revolutionary to use your term but um and now I want to take a closer look at it. So maybe they didn't maybe they weren't, you know, fully fully uh I I'll say bought into the flexible concepts or or the need for that for whatever reason. Maybe it's how their how their business was structured. But this suddenly opened up the door and said, "Wow, that's I got to take a look at that."

Okay, very good. Very good. Well, I'm uh I'm looking forward to see, you know, a more of that and and maybe we can follow up on that at a later stage as it gets more deployed, but I I know a couple of customers that are rolling it out. So,

I'd love to take you into a site.

We should. Yeah, absolutely. Absolutely. I'd love to, uh to come. Um we're going to go into the last section. So, let me ask you, um SpaceX has filed for an IPO. OpenAI, I think, created on secondaries like 75 they said 75 multi-millionaire people that took some money out a pre-IPO. Um, when is the Locus IPO?

I'm going to rearrange my myself here.

I needed to get you awake.

That's good. That's better than a cup of coffee.

What is that? Um, we've been very public that we think Locus can be a can be a public company. Um, we've our CEO is is as has as has said as much uh, you know, in in the press. I'll say we've built a company. I'd like to explain to customers and prospects when they come through our offices that um, you're seeing, you know, what we're what we're showing you today is not necessarily a solution, but it's the entirety of the business. We've we've built a business. um we've you know the the the metrics that we track the maturity of our supply chain all of these things are um at least I believe for a company our size next next level um and and so we had you know we set out to say we want to build a business right we're not just going to be a a technology you know developer or an R&D company we want to build a business so we have you know we've we've we've we've structured um our business in a way that that yeah it could be a public could certainly be a public company. I think you know to answer your question about you know where are we in that process and the like I mean there's lots of variables around market timing and other things that that uh they don't pay me enough to talk about but um but yeah it's it's uh I I I feel privileged to to be part of a company that is that is focused on on building a strong foundational business.

Yeah, that's great. Yeah. No, and you certainly are. And what happened then after IPO? What uh golfing and and going into uh into vacationing across the globe or what what happened then?

I I I I uh I I wake up every day considering what I need to do that day to be successful. So I I don't even think I could start to answer that question.

Not not yet. No, that's great. No, that's great. I know you I know you uh for all the members of the leadership team it's pretty impressive to see that level of passion you know not even like continuous but almost like building up actually even more and more so it's a it's a you guys you guys definitely have a great team from all the people that I know from uh Rick and also all the people I interacted with um give us like a closing thought on where does um the supply chain you know robotics warehousing space go from here like I you know and maybe let's really try to stay away from you know a lot of the noise and focus on the money and whether is the impact and whether it's going to be the biggest improvement you know I I always like to think about supply chain as we actually professional in industry can actually make things much better for everybody

because as you you think about like inflation and as you think about cost base Everything we consume, everything around us goes through warehouses, right? Like and so I I always like to think about us as an industry being actually pivotal and very important for the entire world. Um where do we go from here next 5 10 years? What happens? What is really important and what needs to happen for us to go towards that direction where supply chain continue to be more efficient? I I would I would say first I would echo your comment that um supply chain is critical. I mean it's interesting when when COVID hit um supply chain was immediately considered uh I don't know what the technical term was. I'll say critical industry like you know like like uh first responders and and others and scratch your head and people say you work in a warehouse. Well we you got to eat right things have to

product has to move things have to happen. So um absolutely is a is a is a critical part of everything that we that we do. Um, I think from terms of I'll say the automation side and and the opportunities there in, uh, I think you're going to see, um, you're going to see companies continue to emerge where they've been able to prove that they can reproduce initial success, so they can scale, they can rinse and repeat, right? Um, you mentioned Oscar de Bok earlier. uh he had a great saying that an idea is only a good idea if it scales

and and I think that's one of the challenges. I can tell you that

it's tattooed on your on your forehead.

Yes. Yes.

But but there's a lot of truth to that and it's you go to a trade show and you can see you know people can build prototypes these days. you can it it's um it's easy to to make a robot even like you know like I can make something automatically go from point A to point B. Um so there's a lot of there's a lot of noise there's a lot of um continued innovation in a good way. uh there's a lot of advancements in skills and in and and uh and capabilities, but I think those that have proven that they can they can do it over and over again in a way that has um significant value to the to the supply chain um means that they've earned the right to take advantage of some of those other innovations and add and grow and scale. So whether that's in the form of you know industry consolidation um uh you know or just you know companies like us continuing to innovate I think you'll see you'll see a lot more of of of that. I I I think it's um I think those are going to be the compelling opportunities for you know the next few years is and it and it's clear you talk to customers customers in the space early days when there was one or two AMR companies you would just talk to okay I can talk to you I can talk to you now it's like oh my god there's there's 12 and which ones are real and I just want to work with three best of breed providers right and the ones that I can trust so the things that have gone from being innovative, you know, early proof of concepts, the things that we started with at with with with DHL, for example. Now, it's like they're only worth investing in if you can dependably, you know, scale them and and and and rely on, you know, the the partners not to fail, right? And so that's become a big part of the narrative. And I think that's going to be critical. And I think that's going to uh be a dynamic that shapes the industry for you know the foreseeable foreseeable future. And then there's there's you know there's other things like what what becomes possible. Um you know right now if you look at manipulation for example um there's a lot of there's a lot of cool stuff going on. We we watch this space. give us give us another week or so and and

a week to invite you next week.

Yeah, maybe maybe you'll see some other things. Um but we continue to innovate as well others are and there's there's a lot of exciting advancements in the technology. So you know what else can happen? Um

is manipulation in your view? I always had the feeling that manipulation was the next if there was going to be a chip moment it would be manipulation in this space. Is your view different? That's the next big thing.

I think it's I I think it'll follow a natural maturity trajectory. Um there are there are a lot of enabling technologies around, you know, sort of second skin that allows a certain level of of sort of tactile capability.

Um there's a lot that can be done at a lower cost. uh that are things that are not fingers and don't have to be tactile. So, you know, I think it again it comes back to it comes back to, you know, what are you trying to solve for at at what price and what's the value you can deliver, right? And so, you know, do you need a fully, you know, tactile capable humanoid to go do these things? No. No. You can have a very simple robot that does the same thing over and over again. And so, you know, I'm not sure that answers your question directly, but it it's meant to say like I I think it depends. Um, I think there's a lot of things that are moving quickly. There's a lot of training that's going on. You know, we we're doing a lot our own manipulation capabilities have advanced significantly. Um, but are we all trying to fully replace the hand? I I don't know that that's necessary, right? So, manipulation.

Yeah. Yeah. And in my mind when I talk about manipulation, I'm really talking about like

the human hand replacement, right? Or or in term of capabilities that you achieve, you really achieve that level of sophistication. And what is the possibility of the human hand,

right? And my and my only counter to that is if I can just do a finger and a thumb or I can do some other sort of capability that's equally adept, then why do I need a full hand, right? And so um again that comes down to what are you trying what are you trying to solve for. So

yeah know I think I mean it's a great closing point right because sometimes we think about the overall um we think about the overall range of opportunity based on what we know but it's very similar to you know what's the impact of autonomous vehicle across logistic services. Do you need really to have fully autonomous vehicle at level five to see a massive disruption and the answer is absolutely not right like already at semi-assisted if you had semi-ass assisted vehicle across the entire country you will have changed already so many things and and I think your point is is extremely uh spot on is do I really need the full hand or is just couple of iteration of what is really required in a warehouse environment around yeah t-shirts or sweaters that are folded and and and the ability to pick really like any type of configuration of items. So no, that's great. Um Al, amazing. Uh thank you so much. A last point, where can the people follow you, learn more about Locus? I mean for sure we'll put some videos also um along the content and so so people can see the bots in uh in activity as we talked about. Um, but where can they follow you or reach out if they want to learn more about Locus obviously, but also if they if they enjoy some of the advice and and they want to follow up with you?

Um, certainly certainly on LinkedIn. Um, I would say the most direct way to to find me is [email protected]. Still an old email person. So, um, and and and love the opportunity to have conversations and and obviously you can you can you can find me through through Locus and the locusrobotics.com website. So,

that's great because when you say you're staying away from platforms, I was not sure which platforms you refer to, but we'll keep that for another conversation. Um, thank you so much guys for joining. This is the first episode. If you like it, just subscribe and we'll see you in the next one with the brightest mind building the future of supply chain technology. Thank you so much Alfa for coming. It was great. Really enjoyed the conversation.