About a month ago, Shipmonk announced that it was about to sign two acquisitions. So far, you have only informed about the takeover of the Mexican company El Mar Mexico, but not the other one. When will it be done?
We’re still working on the transaction because it’s really big. Thanks to it, the capacity of our warehouses will multiply. The Mexican company is smaller, but strategically important. We have a warehouse there close to the border with the United States, with which Mexico has an agreement that anything sent across the border with a price below $ 800 will not be subject to customs duties. The vast majority of our clients’ orders meet this price limit, which is why this service is in great demand by our clients.
What prevents the completion of the second acquisition?
These are mainly administrative processes. For example, we need the approval of the antitrust authority.
There has long been talk of ShipMonk’s expansion into Europe. Is it in the game that you will continue further east?
Our goal is to be a world leader in the industry within five years, so I can imagine that in a few years we will be dealing with Asia and Australia.
Is China possible?
I already have my own experience with China thanks to working in the Kiwi.com ticket seller and I must say that it is an extremely specific market. It goes beyond everything I’ve experienced, plus there are giant companies like Alibaba. It’s actually a question of whether to try to break through and if so. Last but not least, a lot will depend on our clients, where their customers will be located.
You have been in ShipMork for a little over a year after leaving Kiwi.com. What goals and visions did you come up with?
I came to the position of technology chief at a time of pandemic, when e-commerce grew tremendously, in a few months by tens of percent. This adds to our field, but at the same time it brings great challenges to optimize and further scale the operation of our service. My assignment was clear. We needed to expand the development team, complete a key investment introducing warehouse automation, and prepare for the pre-Christmas peak.
Let’s take it step by step. How has the number of developers been expanded?
There were about thirty of them when I boarded. Now there are about twice that and we plan further growth – next year about another 20 or 30 percent. The question is where to direct these new forces. We certainly want to further streamline warehouse processes through automation, but at the same time we want to improve the digital environment for our customers so that they are more productive and can focus primarily on growing their business.
Do you already have automation fully implemented?
In the original plan, automation is fully implemented and we are now optimizing the entire process. In practice, this means that we try to ensure that the individual parts of the tasks follow each other as best we can.
Where is the narrowest throat now?
For warehouses, it is always a whole system of interconnected activities. Once we solve one imperfection, there will be pitfalls or opportunities for greater efficiency elsewhere. We have been working like this for months, we are gradually catching it. It’s actually in our DNA. Our product will “never” be finished, we are constantly looking for opportunities for improvement.
Can you be more specific?
The narrowest throats are the places where all orders must “pass”. In our case, for example, a conveyor. If one part does not work, for example the scanner does not read the job barcode incorrectly, the entire job may be processed. Or worse, we’ll deliver another product. We have a lot of automation tools in stock – for example, a robotic arm for stacking boxes, a system for automatic weighing of orders or a sorting system for carriers. Each of these components has its own monitoring and based on this data we optimize the throughput of the entire system and reduce the error rate.
Do you have numbers about what the error rate in your warehouse is?
I’d say it’s under one percent. We check the quality both manually – by inspecting the consignment and automatically, for example, we consider the consignment and calculate whether it is equal to the estimated weight of the goods.
Who is your biggest competitor in the United States? I guess Amazon can’t count on your market.
Amazon has huge warehouses, but unlike us, it’s a store in itself. We are a company that helps small and medium-sized e-shops to strengthen their brand and offer goods through their sites. I dare say that we are already number one in the United States in this segment. But our competition is growing. For example, the American ShipBob was valued at more than a billion dollars after the last investment round.
Are you already a dollar unicorn, a company worth more than one billion dollars?
Valuation is always done when a new investor enters, so we do not know the current value. So we are not officially a unicorn, but we have certain indicators that already indicate this.
Comparing your warehouse to Amazon’s automation market leader, what’s the point of the American giant?
They started automation much earlier, they have a huge team of developers and capital. Also interesting in logistics and warehousing is how everyone approaches automation a little differently. Amazon is known for its Kiva robots, which transport “shelves” with goods to workers. We use Locus robots, which, on the other hand, collect several products at once throughout the warehouse and only then hand them in for the next process. In my opinion, the biggest difference in the functioning of warehouses is given by what products you have and what services you offer to customers.
You still use warehouse workers in your warehouses. Will logistics centers ever be fully automated?
I have not seen a fully autonomous warehouse yet, at least not in our segment. In short, the human hand is still the best tool for certain activities. Once we need to pack a T-shirt and once a fragile ceramic mug, it is clear that the two orders need to be approached differently. The robotic arm can’t handle such complexity yet, or at least not as fast as a human. So my answer is that we will need warehouse workers for a long time.
But what we are trying to do is to make these fellow warehouse workers as efficient as possible. This means that they have great hardware and software tools at their disposal and that the time required to move around the warehouse is as short as possible.
So how is your order processed today?
One possible way is for the robotic hand to make a box with a barcode, the conveyor will move it, the Locus robot will pick up the box and move it to the goods, the worker will scan the goods, check the barcode and place the order in the box, and the robot will take it back to the conveyor. The box then goes to the weighing room, where we check it, and if the weight agrees, the box is packed and sent for check-in.
Let’s get back to business. Last year, ShipMonk sold a minority stake. Will the ownership structure be stable for several years now, or are there any other changes at stake?
We have investors who will want to recoup their investment in ShipMonk within a certain time horizon. This does not mean that they are about to leave, they just have to reckon with the fact that if they feel that the company is properly valued, they will move their capital elsewhere. Then come three options – a full acquisition by another company, the entry of a new investor, or the stock exchange. The current setting in the company’s management is that we plan to go public, but we do not have a timetable.
What would you use the money for?
We want to continue our global expansion and offer our customers services around the world – at maximum quality and speed. We will have to be close to our customers’ customers. The goods cannot travel across half the world – today customers expect next day delivery, at the same time they do not want to pay for expensive transport. All this will require investment in new warehouses, technologies, integration with local carriers.
Christmas is approaching, the most important period for e-commerce. What results do you expect for this year?
Our goal for this year was to double sales to about 300 million euros, in terms of 6.7 billion crowns. We are well on our way to achieving that. Next year, we want to continue to grow, by tens of percent, thanks to acquisitions.
You have talked many times in the past about the potential of algorithms, not least in connection with automated processes in the warehouse. You even bet five years ago that it would be forbidden to drive by 2026, because the algorithms will take over fully. How do you really see it today?
It’s getting closer. Tesla and Waymo are investing huge sums in this and technology is moving forward. By 2026, the technology will definitely be here, I’m absolutely convinced of that. On highways and interurban roads, it will no longer make sense to drive. I can imagine the car will have two modes. Where possible, the robot will control. One will take control as needed and will not be needed at all in the future.
What about other modes of transport?
With rail vehicles, there is nothing to talk about at all, there is nothing to stop deployment there, maximum legislation and money. But it’s not just about vehicles. Passenger drones and automatic small electric planes will become more and more popular. I believe that progress in this area will accelerate and that only the legislation will remain the real brake. Convincing regulators that autonomous machines are safe may be a bigger challenge than developing technology.
Are there other fields that, due to the more massive deployment of algorithms, expect a similarly significant change?
For example, healthcare. I expect that in the future there will be much less seeing doctors and a lot of diagnostics will be handled by doctors remotely. But there will be opportunities in almost every area.
You have worked at Microsoft, Amazon, Netflix, SpaceX and Kiwi.com. Is there anything else you would like to accomplish professionally?
I am attracted by the idea of the already mentioned preparation for admission to the stock exchange. Such a process is extremely difficult in terms of preparation and organization and it must be a great experience.
All the listed companies have a significant personality at the helm. If we take Bill Gates, Jeff Bezos and Elon Musk, who is the most inspiring innovator?
Definitely Elon Musk, who has brought completely new products to decades-old markets, such as reusable rockets or mass-produced electric cars. In that, I would compare him to Thomas Edison. I would compare Bill Gates to him at the beginning of his career, when he really figured out a way to get a computer on every desk. Then, in my opinion, it was mainly about business growth, although it seems that Microsoft has been returning to its roots in recent years. Jeff Bezos is again a master of efficiency and the ability to explore every “alley” to see if there is any business.
Elon Musk is also a good marketer. To what extent do you believe in his visions and how do you perceive his wild projects, such as the Cybertruck electric pick-up or the Boring Company’s underground tunnel digging company?
I experienced it in SpaceX and I must say that he is an extremely competent boss who spent a lot of time in the company and really dealt with the areas in depth. But he also wants to have some fun, which we can see on his Twitter. So I would take some of his projects and statements with a grain of salt.
Even the ever-shifting deadlines?
Even the deadlines, I say this despite the fact that I have seen with my own eyes in SpaceX how developments in this part of the space industry are moving forward extremely fast. I was there between 2014 and 2018 and I remember that in the beginning there was one rocket flight and six months. Today, SpaceX can make three launches a week. That progress is really fast, so I believe that not only the Moon but also Mars Elon Musk can conquer. Perhaps by the end of the decade.
As Chief Technology Officer, he is responsible for defining and directing ShipMonk’s technological vision.
In previous years, he worked at Kiwi.com, SpaceX, Netflix, Amazon and Microsoft.
He graduated from the Faculty of Informatics at Masaryk University in Brno and the Brno International Business School.
He specializes in software engineering.