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Amazon acquiring Kiva Systems for $775 million

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Re: Amazon acquiring Kiva Systems for $775 million

#21
post #14

Earlier quoted context omitted.

I think they will be getting the same service from Kiva. Netflix is one of the biggest user of EWS, yet, Amazon is pushing hard on their streaming service too.

If amazon wouldn't have offered EWS to netflix or have stopped offering it to netflix, netflix could have easily use some other cloud competitor. Maybe netflix would had to pay a bit more , but i don't think it would have been a big difference. I don't know much about kiva but if their service is hard to replace and is a unique competitive advantage(and looking at the purchase price,it seems so), amazon would use thi…

Netflix actually can't switch to an AWS competitor at this point because none of them are big enough. (source is some random cloud infrastructure presentation they did)

When AWS started they were basically running off the "christmas season" and end-of-life amazon.com boxes with almost no up front expenditures. Everyone else in the "cloud" business is buying new boxes to build out, which means its really hard for them to get to scale or handle surge loads.

Re: Amazon acquiring Kiva Systems for $775 million

#22
post #12

Earlier quoted context omitted.

Unfortunately you can't start a robotics startup with almost no money (like sw startups) !

Kiva Systems was started with almost no money... It's actually one of the better stories I've heard. The founder basically found various phds that were researching in related fields and convinced them to work for equity.

Almost no money...Do you have specific details/article ?

I would still think to make the prototypes and get the initial robots manufactured must have cost a pretty penny.

Re: Amazon acquiring Kiva Systems for $775 million

#23

Earlier quoted context omitted.

Kiva Systems was started with almost no money... It's actually one of the better stories I've heard. The founder basically found various phds that were researching in related fields and convinced them to work for equity.

Almost no money...Do you have specific details/article ? I would still think to make the prototypes and get the initial robots manufactured must have cost a pretty penny.

yeah, there's more to it. The founder Mick Mountz was an HBS guy, he went around for awhile networking with alums to try to get the initial cash investment. Eventually connected with Ajay Agarwal of Bain and landed some seed money.

Re: Amazon acquiring Kiva Systems for $775 million

#25
post #6

One interesting question is what will happen to the current clients of Kiva (of which many are competing with Amazon in ecommerce market) newegg. etc ??

What if Amazon were just positioning itself to do rebranded fulfillment? i.e. First Amazon equipment is sold to Target, etc. distribution centers; but you could spend more and have Amazon actually run the center; or you could have Amazon's distribution centers use your branded boxes and use their fulfillment centers.

Re: Amazon acquiring Kiva Systems for $775 million

#26
post #21
post #14

Earlier quoted context omitted.

If amazon wouldn't have offered EWS to netflix or have stopped offering it to netflix, netflix could have easily use some other cloud competitor. Maybe netflix would had to pay a bit more , but i don't think it would have been a big difference. I don't know much about kiva but if their service is hard to replace and is a unique competitive advantage(and looking at the purchase price,it seems so), amazon would use thi…

Netflix actually can't switch to an AWS competitor at this point because none of them are big enough. (source is some random cloud infrastructure presentation they did) When AWS started they were basically running off the "christmas season" and end-of-life amazon.com boxes with almost no up front expenditures. Everyone else in the "cloud" business is buying new boxes to build out, which means its really hard for them…

This one:

http://perfcap.blogspot.in/2012/03/cloud-architecture-tutori...

???

Re: Amazon acquiring Kiva Systems for $775 million

#27

Earlier quoted context omitted.

Kiva Systems was started with almost no money... It's actually one of the better stories I've heard. The founder basically found various phds that were researching in related fields and convinced them to work for equity.

Almost no money...Do you have specific details/article ? I would still think to make the prototypes and get the initial robots manufactured must have cost a pretty penny.

I'm trying to remember more, he spoke at a class I was in.

His office was his small apartment with a whiteboard. In the morning he would go out for a cup of coffee, and when he came back it was his office. If he didn't do that, it wouldn't feel like an office.

Previously he had worked with Webvan, and one of their costs that was unexpectedly high was product fulfillment. Kiva was built partly as a solution to that problem (though it was after Webvan went bankrupt).

Their initial prototypes (we saw pictures of them) we're extremely scrappy, and I believe too big to realistically be used. I think they raised money with the prototype and computer simulations?

The robots are talked to wirelessly, and apparently wireless represented a major technical challenge (it was before wifi took off I believe).

The co-founder with robo-soccer experience was targeted. He said something along the lines of "If you can make a robot play soccer, you can definitely make a robot follow a grid and pick up shelving."

I got the impression that he gave up a lot of equity to get co-founders at seemingly late points in the game, but didn't regret it. I think people normally put a ton of effort into maintaining equity, sometimes at the risk of losing a great team member. It looks things worked out.

The great thing about this company is that it's indisputably the best solution available, although high costs mitigate some customers. He told the story of a stress test they did with one major brand name. To simulate high buying season, they held up regular orders for three days, then pushed them through at once without an issue.

Other cool benefits: despite having to power these robots, the power bills with Kiva end up being less expensive because of savings in lighting, heating and AC. Most fulfillment solutions require the entire warehouse to be lit up and heated so a person can comfortably work, while Kiva keeps the main warehouse dark and temperature doesn't matter much.

At the time, they were the fulfillment solution of some companies that Amazon had acquired, but not Amazon itself. I suspect that's going to change.

Re: Amazon acquiring Kiva Systems for $775 million

#28

Earlier quoted context omitted.

Almost no money...Do you have specific details/article ? I would still think to make the prototypes and get the initial robots manufactured must have cost a pretty penny.

I'm trying to remember more, he spoke at a class I was in. His office was his small apartment with a whiteboard. In the morning he would go out for a cup of coffee, and when he came back it was his office. If he didn't do that, it wouldn't feel like an office. Previously he had worked with Webvan, and one of their costs that was unexpectedly high was product fulfillment. Kiva was built partly as a solution to that pr…

I may be able to provide some limited insight as well (source: used to work there, still keep in touch with a few people).

IIRC, Kiva raised ~$18M in funding, most of it from Bain. I read an article recently which broke it down to ~$1.5M in angel, with the remainder coming from Bain, but I can't track it down right now. Not a huge amount, but definitely not "no money". Great place to work, but most of that money was going right to the robots. :)

The robots do use Wi-Fi, but there are challenges with a multi-robot system of that scale which are somewhat novel, especially when they had to invent a lot of the backend IT infrastructure to get them to work.

The co-founders definitely came in right at the beginning, and it was Raff's robo-soccer team which actually inspired the concept of shelves which can "walk and talk." They found a great market - the Kiva approach isn't the best for all approaches, but it does happen to be particularly well suited for online retailers.

Also, a Kiva system is probably the closest you can come to real-life Frogger, but playing in the dark is not recommended.

Re: Amazon acquiring Kiva Systems for $775 million

#29

Kiva is a great company. They have been innovating since day 1, tapping into various industries. Last year, they put their robots on the floors of Boston Scientific's fulfillment center - a first for them in the highly-sensitive, highly-regulated medical arena. And, to be bought in CASH... I hope employees and the founding team made out well.

As I wrote on Hizook [1]... this acquisition is great news for robotics, but it kinda makes me sad. I would have liked to see Kiva go public. Plus, I certainly hope Amazon doesn't hoard Kiva away for itself and rob the world of efficient, robotic warehouses...

[1] http://www.hizook.com/blog/2012/03/19/breaking-news-amazon-a...

Re: Amazon acquiring Kiva Systems for $775 million

#30
post #12

Earlier quoted context omitted.

Unfortunately you can't start a robotics startup with almost no money (like sw startups) !

Kiva Systems was started with almost no money... It's actually one of the better stories I've heard. The founder basically found various phds that were researching in related fields and convinced them to work for equity.

According to reports, Kiva raised around $33 Million in VC funding [1]. Like I wrote before [2]:

I've been tracking venture capital (VC) funding of robotics companies for the better part of two years. Based on my (limited) data, VC funding in robotics exceeded $160 Million for 2011. This is just a rounding error compared to VC funding of Internet (web-based) companies, which hit a decade-long high of $6.9 Billion in 2011. My hope is that robotics will get more love in the next year(s), but getting VC funding for robotics is a decidedly tough nut to crack. Robotics companies have large capital requirements for robot hardware, few potential acquirers, and almost no "Google-scale" breakout success stories (ie. IPOs). I mean, c'mon... one of the best known robotics companies, iRobot, has a market cap of just $700 Million. This makes robotics a difficult sell to your typical VC firm. My hope is that this list can give others courage to pursue "swing for the fences" type projects along with a source for robotics-friendly VC firms.

So this acquisition is good news for robotics, and _exceeded_ the entire market cap of iRobot. Like I mentioned in a previous comment, I hope Amazon doesn't hoard Kiva to itself and rob the world of efficient, robotic warehouses.

[1] http://www.hizook.com/blog/2012/03/19/breaking-news-amazon-a...

[2] http://www.hizook.com/blog/2012/03/01/venture-capital-vc-fun...

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