Ep. #975 - Warehouse Automation Explained

Andrew Morgans 00:00
What’s up, Hustlers? Welcome back. This is Andrew Morgans, here as today’s host of Startup Hustle, covering all things e-commerce, startups, Amazon—you name it. We’re going to be getting into some warehousing stuff that has to do with e-commerce and automation today. Before I introduce today’s guest, I’d love to give a shout-out to our sponsor for today’s episode. Today’s episode of Startup Hustle is sponsored by Equip Bids Auctions—your Midwest online auction marketplace to buy and sell stuff. Equip Bid provides dedicated support to affiliates in Kansas, Missouri, Nebraska, and Iowa. Join the team and sell everything from heavy machinery to home goods to office furniture. Go to equip-bid.me/startup. That’s equip-bid.me/startup for details, or just click the link saved down in the show notes. That was a mouthful. I’m excited to introduce Lior to you guys today. He’s coming in from California today, and he’s going to be sharing with us about his business via robotics. Lior, welcome to the show.

Lior Elazary 00:59
Thank you so much, Andrew, for having me here. Really appreciate it.

Andrew Morgans 01:02
Yeah, sorry, that was a mouthful. We’ve had a little bit of issues getting started. But I’m excited to pick your brain today and just kind of learn more about your own story as well as, you know, everything you’re doing today and in the future. We’re talking a little bit before the show. But I’d like to get into your backstory a little bit. Like where did you get started in e-commerce? Did you always want to be an entrepreneur? You know, go as far back as you’d like to share from the beginning. Well, I mean, I never knew I was going to be an entrepreneur or business owner; I kind of fell into it. Some people were like, out of the womb ready to make money, you know. So what’s your story?

Lior Elazary 01:39
Yeah, my story started a little bit later, right after high school. I didn’t know what I was going to do. I actually joined a music program at a community college. I was really into music, so I knew that. But, at the same time, I started working at different PC stores that were set up and started doing the first early dial-up services and stuff like that. I worked from there. I have been really interested in computers my whole life. So I didn’t have a lot of background in programming, but it was mostly for fun and for doing stuff. And then, back in 94-95, you know, I had this vision while working at that store that will create this 3D Mall. And back then, 3D was like Burma. These lines that if you’ve ever seen Tron like that were, you know, yeah, walk through it and do the shopping and stuff like that. We created a company called Food Mood, actually, and we’re going to do it where different food stores actually went out in Santa Monica and Brentwood. It went to all the different stores and explained to them the idea that, hey, these people are going to be shopping online. And we’ll fax you the order, right. And you can have your store there, and they can see the food items and stuff.

Andrew Morgans 02:45
Let me ask you a question: was the Sims out in 95?

Lior Elazary 02:51
I think so. It might have been. I think it’s right around there. And they had, you know, it was like more. So the seams were sort of like a more programmed kind of thing. And it was going to be based loosely on that. But I just remember it being so revolutionary, like someone I was playing games with, and I was very involved with computers, even as a kid.

Andrew Morgans 03:03
And I remember when the cinemas came out, it was like, you know, you can see yours. It was like the first Oregon Trail. Do you remember when you got the name of your characters? Now Sims, we get it like, you know, do live with people that look like us. And we’re like walking around doing a job. I could very much see around that time being like, well, we could, we could shop, we could do all kinds of stuff like with these avatars. And I was just wondering if that technology came out? Yeah. Okay, so maybe it just came out or something around? Yeah, but it wasn’t web friendly yet.

Lior Elazary 03:34
So the thing that was friendly was like this, basically, you know, as HTML. And they also had this 3D. And they think it was called thermal, where you can actually do its HTML and 3D, and you can create different stock hurls basically back then to again. And it just, you know, it sort of is obvious. So we started that, right, we started to like going out to all these stores and trying to sell it to them. That was the first, you know, kind of thing for me going out in the real world right away from a job, away from a security thing. And nobody wanted to buy it. Like not only do you not want to buy and don’t even understand what the heck we’re talking about, you understand who’s gonna be ordering online and understand what they’re gonna do. They’re like, look, we’re gonna stick to the phonebook and not sell a single thing. Luckily, at some point, my partner got together with Caesars Palace, and they looked at it, and they’re like, why can we do this. We do our forum shops. We can load them up on that. And they totally thought about it from a branding point of view. They didn’t also didn’t think anybody was going to buy, but they thought it was going to show them how innovative it was. So they pay us quite a bit back then again, everything quite a bad thing was like the past like 60-70,000 or something like that to build that shop for them. And we did that but what we did do is we maintained all the rights for that shop. So then we started reselling that shop to other shopping carts right to other businesses as well. So as soon as we got Baskin Robbins and some other high-end clients. And then also we started getting some lower end clients as well, telling him now like, hey, you know, Caesars Palace is doing that capacity, Baskin Robbins is doing it, do you want to do it too? And slowly, people started, okay, you kind of see that and started picking up. And so we renamed the whole platform actually to host, bro. And we started just doing hosting and having the first, you know, kind of shopping cart experience and all that stuff. Hosts, later on, became web.com. So she sold the micron, Microsoft 200 grand, we branded it, and we still host web.com.

Andrew Morgans 05:34
Okay, but you had web.com.

Lior Elazary 05:37
Yeah, so, and then they kind of rebranded Holstebro because they kind of drove it, but And so that was the, you know, the story there. And it was the first, you know, startup. I was fairly young. I think I was like 2425. So McDonald’s sold it. They just sold the full cash. It was pretty lucky because we also sold in 1999 before everything just crashed. We had no idea that it was going to crash. It wasn’t any timing issue. It’s just somebody came in, I was, you know, micron, and they’re like, Hey, we’re gonna give you a bunch of cash. If he goes business, and we’re like, okay, yeah. And we didn’t take any investors back then either. So it was just three partners, you know, split everything equally.

Andrew Morgans 06:15
Talk to me about the crash, though. Talk to me about what you’re referring to. And in the crash, I knew the y2k was like a threat. But then, like, what really crashed from the whole dot-com boom.

Lior Elazary 06:24
Started crashing in 2000. So a lot of people because what happened is that, you know, the internet started really getting exciting. And a lot of people start investing tons of money in it, and technology and everything goes into a cycle. And at some point, people realize, well, it’s gonna be really tough to make money on certain aspects of things. Yeah, there are really good things. But in that sense, there were tons of, you know, Bs things that probably should not exist, but we’re doing. I feel like we’re actually living in that same kind of economic sense right now. Yeah, in a lot of startups that maybe show to not exist, but because there’s so much money being pumped in, there were all these crazy valuations, all these crazy things, and now we’re gonna see just a bunch of corrections. And there are real businesses that are providing something useful, not, you know, not basically what’s in the field. Jeff Bezos did at one point. So I think it’s really bad, but you know, selling, you know, $1 for 99 cents. It’s, you know, there are some aspects in there that maybe you got to do this. But at some point, you have to go and make some money. And it has to be a real business. I think we’re going to see a bunch of corrections now, especially next year.

Andrew Morgans 07:30
I think we saw that on the Amazon side, not to get too crazy. But you know, there were some crazy multiples the last couple of years with 20-something billion coming in and as aggregators and buying up Amazon brands, as well as when the pandemic happened, and there were fewer places for investors to put their money. They look toward e-commerce, product-based businesses because they are connected to the supply chain and warehousing, right, like goods, goods, etc. And they said, Oh, these are some actual profitable businesses that we can invest in, versus like, let’s say tech startups that have yet to prove, you know, the models, and it’s more about hypotheticals, they’re like, let’s go put our money somewhere Sure, where we know it’s making money. Seeing some of that, we also saw that what’s happened is a correction in that the banks, they’ve realized that banks or financial institutions don’t have the knowledge or experience to essentially run a good business online, good. The Amazon e-commerce business, and so it’s correcting again. But it’s interesting to see, and I just wanted to understand, you know, I was 16 years old in 2001, you know, I actually grew up in Africa. So I was coming back from Congo and in 2001 had been involved in computers, since then, since you could have the first PC, my dad was cool like that. And we had the first PC. So I had been playing around with dial-up and satellite internet and games and things like that but didn’t really understand the business side of what was happening. You know, during that time. I know, obviously, you know, September 11, 2001, changed a whole lot of things for us. But understanding from the development side, you know, on Amazon used to be able to just put a product up from 2012 to 2016, basically any type of product, and be successful. It was a crazy time. Things have changed. Now you have to be good at what you do. So I got a little context on, you know, kind of what you meant. We sold before that time, so you sold who to who, who later became?

Lior Elazary 09:29
Yeah, so we brought micron to Microsoft VC, and then later on the day, actually, we sold it and rebranded it as web.com. It was public. Okay, cool. Yeah. So that was like, you know, the first experience in real business, entrepreneurship, running a large company running, you know, having multiple people underneath me trying to deal with that, how does that work and how do you manage that and how do you get people to be productive and you know, I was really fortunate to have met you know, my partner also Alex, because Irani who is amazing and you know, just taught a lot of me about the business and stuff like that was more on the IT side, he was more on the business. So I learned a lot from him. Then afterward, I actually joined the Ph. D. program at USC. I actually went right to it. I started dealing a lot with robotics. I really enjoyed robotics. I was doing a bunch of research. And one of the professors there just said, Hey, you know, if you want, I can just get you into the Ph. D. program. So I was like, Oh, that’s awesome. So I did that. But at the same time, Alex, you know, called me to say we’re doing another business. Actually, this was the third business we did a knowledge base, which was a CRM solution. We’re competing with Salesforce. And the same thing, actually, we ended up selling it to two lists, maybe too soon. Salesforce was gonna remember back then and was really fighting hard to get things on the cloud. They spent tons of money on that, and we weren’t sure where we’re gonna stand. So we ended up selling it to the tiller. ZMA still made some money, but it wasn’t as big as we thought we wanted to take. But then again, it’s right after it. I joined a Ph. D program. Alex Goldman says we’re doing X gas now. So HKS was a CDN content distribution network. We’re going head to head with Akamai, at that point, Zen, and so that was an awesome experience. And we started building that. And then we sold that to Verizon. Just recently, in October 2014. And I knew I wanted to do something with robotics. I really wanted to figure out, you know, how do we? How do we automate things? I’m not too much into the philosophical aspects of robots, like, what is a robot? Is it alive? Is it something very simple? Can they do a task that we want them to do? And the way I differentiate it from a standard machine, can you adapt? Can it adapt to a different task in a very short timeframe or with very small resources? So, for example, right now, what we do is put robots into warehousing. And the reason we call them robots is that we can adapt to various warehouses, various shelves, and various things. So basically, we create an automatic storage and retrieval system and storage system. But we can work on any floor. I know. You work with Kiva, right? So you know, with Kiva, you have to go to mirrored finished floors. And they’re still robots, right? They’re still somewhat adaptable, but there were certain limitations. And we actually looked at the Kiva model when we first created inVia. And we thought that that was a good model, except that you have to raise the whole rack. And the randomness of things happens when you just bring the rack, and you often pick one, it’s always great if you end up picking two or three, but that’s extremely difficult and extremely difficult to predict that, like, you know, a week in advance when you did the replay. So this is why we decided, okay, you know, we really have to basically concentrate on the container. So it’s one item that gives us a lot of flexibility. But anyway, that’s one of the things.

Andrew Morgans 12:40
That’s for anyone listening. Let’s give them a little bit of a visual of, like, what that is like, what a robot in the warehouse is doing. So like, I physically worked in a UPS warehouse through college, you know, that 3:30am 8:30am, you know, shift where I’m picking them off of a train, loading them on the UPS truck, you know, marking them in order is it was a very hard job for a four-hour shift. Anything over four hours, I think, was overtime. So like, just to put it in perspective of like, the labor-intensive, you know, warehouse jobs at a high level are, you know, they’re fast-paced, and they’re like, down to the minute and the second, how many packages are you grabbing, and a handful and walking into that truck. And as you know, it’s just very optimized, at least at UPS, it was. And then, I worked at a US toy company. And we were exploding e-commerce. When I was there, I was the e-commerce manager. But all hands on deck, like in q4, we were a toy company. So if they needed us, we were going down to the warehouse, and you know, helping as much as we could volunteer, get me out of my desk, get me out of my cube, and go down there and load some trucks. And, you know, for me, it was the first time I saw Kiva robots. And for anyone listening, what they do is they have these like, and you can correct me if I’m wrong, but they have these locations on the ground, where, you know, it’s kind of like GPS coordinates more than it is just like free roaming. And you know, it has some kind of order system where it’s saying Go grab this stack, you know, and it goes, it’s a robot that almost looks like a Roomba. And it kind of goes under the rock and picks it up and then takes that rack over to the picker that might be like, you know, is prepping the package or like boxing it up, or whatever the case might be. And so what it’s doing is bringing that shelf or the selection over to the picker who then, as you know, there might be several selections there, and he’s reaching into one basket and grabbing the item, and I think what you’re discussing or describing is some of its shortcomings being that in that system. It’s usually like one pick per robot. The robots bring over a stack, you know, of options, but it’s usually probably just like one from row number three, grab it, you know, added to your package, and then another robot needs to come to bring you the next item in my fall.

Lior Elazary 14:55
That’s great. And then there’s another problem there that has to do with just the way humans work. So that person that you said picks at that shelf, right, so a big shelf will come into that person, person has to pick another big shelf comes in, person has to pick. So now what Amazon actually wants is for those people to be robots. And the reason for it is they have to operate at that rate that these robots are bringing the shelfs in, and robots are really consistent and are really good at just that consistency will bring it over and over again, people are not great at consistency, they like to burst, right? When you come into work, you kind of work for a little bit, and you want to take a break, or you have to go to the bathroom. I mean, this is why you hear Amazon, giving a hard time for people going to the bathroom, and you gotta look at it from their end, they got millions of dollars of automation, that person that was sitting there picking if they just left it a bathroom, those millions of dollars, automation, all the orders, everything is waiting on that person.

Andrew Morgans 15:50
So it’s all about people, people will find a loophole in a system. Exactly. I’m not hating on workers, I’m just saying we’ve all done it. What if you understand, okay, this system takes away my lunch break here, it takes away this or it takes away that, okay, I’m gonna take an extra 15 minutes in the bathroom, I’m gonna watch them TikTok videos, I’m gonna take a bathroom breaks because there’s no limit to the number of bathroom breaks, I can take, you know, and then the news gets a hold of it. And they’re running with the story. I’m not trying to discredit any of the truth to that. But I’m just saying like, when you’re looking at a system, and you’re like, Well, this is a this is an area that we have a problem, which is like, you know, focus attention, you know, all those things, so I can understand where they’re coming from in that regard from both sides, I guess. And just understanding that these are the loopholes, that when it comes down to labor and systems like that, okay, so, yeah.

Lior Elazary 16:40
And we saw, right, yeah, no, exactly. And we saw it firsthand, because when we first created our system, we did it like just a standard ASRS system. So an SRS system is basically an automatic storage and retrieval system. Kiva can be considered an ASRS system, but it carries the whole rack and brings it over. We were basically carrying just the container itself, instead of picking up the whole rack with those items, we can take those containers and we do it. But the way we’ve created this business is very unique, we actually create a robotic service. And I think we’re one of the ones that are really truly doing it robotic as a service. And that actually led us to various innovations that I’ll go over in a second. But what we mean with robotics as a service, it’s not a lease. So a lot of people would do automation, like Kiva was sold. So Cuba, you know, basically sold an implementation, the implementation itself cost millions of dollars, because you have to go in, you have to get mirrored finished floors, you have to redo the floors, redo the racks, redo everything. And that costs a lot of money and time. In fact, if you look at Amazon right now, I think about 30% of the warehouses are actually run by Kiva. The rest are not the rest are run by people, because it’s still very expensive to go and change everything. And there are limitations of what you can and cannot do. So they’re still running for me.

Andrew Morgans 17:54
For me, it was a it was a kind of crazy oxymoron, because the company I was at was like, a catalog company, like traditionally that was trying to move to e-commerce that was like trying to get out of the, like, old, you know, Dark Ages, so to speak of business. They were doing everything old school, but they had these robots. I couldn’t make sense of it. You know, it was like, everything was old school, except they had these like, you know, to me the most one of the most high tech things I had seen in a warehouse. They had these robots running, knowing what it must have cost. And maybe it was you know what it costs me for Amazon? I’m not sure if that was like, you know, a different price point when they were trying to get started versus like once they sold but Okay, so there’s like, Cool that you have this system, it’s 1000 bucks, but it’s 100,000 installers like for example, like just like, okay.

Lior Elazary 18:40
Yeah, so it’s exactly so you know, just ends up being quite expensive and takes a long time. And a lot of companies can’t afford that. Right? If you Delahaye said, you have to be out until you Okay, tomorrow, you’re gonna shut down your CPL for six months while we do that deployment. I mean, I’m a small person, I can’t go and start another warehouse somewhere and start moving. I just, you know, what can I do now? What can I do because right now I’m under pressure. And I think one thing people also don’t realize with e-commerce is we didn’t live in a world where half of the US, you know, was ordering online, the other half was picking for us. We actually live in a world that we as consumers used to go to the store and pick it ourselves, do the work, do the work. And we’re expecting personal shoppers now, right? Or even I joke around like, we want the Star Trek replicator. You look online, you click the button and you expect it to materialize right next to your doorstep. However it happens. You don’t even care. And if it happens, you know, within an hour, you’re like, Oh, that’s pretty cool. If it happens within two days, you’re like, I guess so. If it’s over a week, like what are they doing? I’m not gonna do this for two weeks too long. Right? But a lot of businesses are struggling to do that. And even just the labor itself, you know, people talked about, you know, they want a bathroom, they want to burst, they want to have more fun working at the warehouse. So the labor pool is very, very small. There. everybody’s fighting for a very tiny portion of it. And people clamor for all customers that we talk to, they just have a really hard time finding the people to work in, especially after COVID. Most people just want to do a remote job. Everything so that, you know that that causes a very big change now for us, like I mentioned, so we are a true but I believe robotic as a service, where we’re not leasing the robots, we’re not saying, Hey, we’re gonna give you you know, 10 robots, and you lease them at X number of dollars, let’s say $1,000 per robot per month, we’re actually selling the productivity of the robots, and that aligns the incentives very well, because what it means is that for you is like, hey, I need to fulfill X number of orders per hour. So we’ll supply a system that does that. And we’ll make sure we have enough robots to maintain the robots, we build a robot. Same thing is what happens today with email, right? Back in the old days, if you remember, you had to build your own email server, you had to get an IT person to maintain you have to do all that stuff. You’re really part of the IT business in some sense. One of you know, your companies where today, most businesses don’t have to be, you just go to Google, Yahoo, you know, Microsoft, and you get their own email server, they have it, they maintain everything for you. So we’re taking that same approach into robotics, that allows us to actually create some innovative things because of people. So now, we’re tied into people as well. So the productivity or our selling the productivity of the robots, or the productivity of the robots are tied to how the people are working. And we have to develop a system that will allow people to burst and to work on their own schedule and the robots to continually adjust. Yeah. And I think that really opened up the door for us quite a bit where, you know, we’re able to not just elevate the jobs that people do, but actually make them happy. We talked to a lot of pictures that said, You know what we’re thinking about quitting now, actually see myself retiring here. And we can go into more details on how our system does it. But we basically add a buffer. And because we’re able to manipulate the containers, and in a very unique way, allows us to build these picker walls that work ahead of time. So if you think of the Kiva robots, you can really do it with Akiva, because the shelf is just too big. But you can stack up all the shelves ahead of time and have the person just go one by one. And they converse, and then you basically set the other one. Now, what I like is batching, a little bit exactly, kind of Yeah, so you basically prepare your place. It said buffering, right? So you, but we’re buffering the containers, as opposed to the full on shelves being a lot smaller. Exactly. And that gives us a picture. So we basically build a wall with all of the orders that they have to pick right now. And as they’re picking it, the robots are manipulating the wall back then. So you know, if the person goes into a break, or does something, the robots are still building the wall, they’re still doing that. And when the person comes in, they are usually really good, like if they just went to the bathroom. And you know, you took a little break, and you got to keep up your productivity, you are actually really good at coming in and bursting really quickly. And then kind of going back into, you know, the standard mode. And that works really well because not that has been prepared for you, you can burst really fast and you go back. So overall, we actually get quite a bit of high pickers and you’ve probably heard, but we’re getting peak rates in 1000. Up ah, and that’s word to like 700 lines per hour, which it’s different touches. It’s not the same one. So it really works very, very well. In that by again, combining those kinds of what people do best and what robots do best. Right. And that’s what we believe to do.

Andrew Morgans 23:28
I have some questions. But before we do a reminder, today’s episode of Startup Hustle is brought to you by Equip Bid auctions, an online marketplace dedicated to growing small auction businesses, or solving problems and providing a fun read commerce liquidation shopping experience to value bidders. Go check out their incredible offerings and sign up at equipped dash bid.me backslash startup. Okay, so let’s just say one technology sounds absolutely amazing, too. I’m trying to visualize it. Okay, so I’m in. I’ve been in the e-commerce business, you know, helping brands, agencies, manufacturers for 11 years in the e-commerce space Amazon space for every Amazon FBA or like using Amazon’s fulfillment service. There’s also almost always an advanced strategy, a three PL backing up those FBA orders with something we call FBM, which is fulfilled by merchants, something similar to shipping website orders, right, just not from Amazon. I’ve got about 12 brands that we’re pushing, you know, maybe, and nothing insane, you know, maybe anything from 1000 orders, a couple of customers have 1000 orders on the DTC side a month, you know, so we’re probably less than 5000 picks a month just with like website orders and things like that. Obviously prepping products for Amazon and palette and palette AI is completely different. So a bit of a hybrid model as someone building my own brands is something I wanted to have control over my quality and my inserts and my kits and my ability to try a bunch of different things. What size? Does this start to make sense? Like, what size business? What size? You know, warehouse fulfillment centers do, you know this service makes sense for and at what level or like, you know, what needs to be done ahead of time before something like this starts to make sense?

Lior Elazary 25:25
Yeah, so that’s a really good question. And one of the things we actually started doing as well, is not only provide the robots but provide a full solution. So we also provide an ERP and warehouse execution system. And what that does is it makes sure that everything is balanced within the warehouse, we’ve seen it a lot, a lot of people sometimes deploy automation, they bring automation in, for example, you improve your picking speed. But if your packout is not improved, everything will just get held up over there. Or if you have problems with the hospital, you have problems with shorts, with people putting the wrong things at the wrong places, then you have all these kinds of things. And you really need a system to do that. The WMS systems sort of claimed to do it, but they really don’t do a good job, they basically get all the orders, they give it to the warehouse manager and they say good luck, you got to wave it, you got to figure out how to do that. So the ERP system now that every one of our customers uses can actually run by itself. So for a company like yours, we’ll probably start with that software portion, which just optimizes people’s paths, where they go and pick. We have this notion of will we have the system we developed called the NBS smart path, where we look at spatial batching. So sometimes, you know, you try to batch together the same item, we understand everything in 3D, we actually map it. So what we’re doing is if you have two items that are right next to each other, then it’ll be a good place to send a person there, because you’ll pick both of those items right away and not have to walk far. So we often start with that. And that is a full solution. Again, we include packout, QC, where we’re helping, both maintain not just the quality of what goes out, but also if there are any issues. So somebody right away, you know, said, Hey, this was sorted, this was the wrong item, the system automatically goes in and make sure that there’s another person picking that, because one of the things we’re always working with, and there’s something that WMS is don’t do is we work with SLAs, not necessarily priorities. So oftentimes in WMS systems, you would set a priority or say, Hey, this is a high priority for me. But that is a really difficult concept in the real warehouse. Because often what you do is let’s say you have your ups that go out at seven o’clock, you got to pick all the items before seven o’clock. So it doesn’t matter if one order is high priority, second, or high priority. And what usually happens, if you have something in the morning, it might be a low priority. But if you have, let’s say, you know, a 24 hour SLA and we say same day shipping SLA, then that means if it’s five o’clock, that order better be as close to the truck as possible, because that truck is leaving at seven o’clock. So in some sense, what the warehouse managers, they will kind of look at these orders and start upping up the priorities automatically. So this, so our system, instead, what we’ve done is just designed SLA right into it. So what you do is you say, hey, I need this order on the truck by seven o’clock, and the system will automatically sort of shifted priorities in real-time. So for example, if it got picked in the morning, but it was short, we might have some more time. We’ll wait. But if it’s seven o’clock, we might issue somebody right away to go pick it, because you gotta maintain that SLA gotta bring that, you know, order out the door. And that is something that I think every actual company needs before they even dig into automation, because we just see it time and time again, where they deploy just the automation, but they don’t have that system that the warehouse execution system that manages that. And then all that money that went into the automation doesn’t end up proving anything. And then they often don’t do it the second time, because they feel like you know, I didn’t get my ROI from it. This wasn’t great. This was my picking. But overall, how come my orders are still not getting up. And that’s something that we really have to fix first. So we often do that. So we start with the software first. And then when we introduce the robots, the robots in the sense are just shrinking the whole warehouse. So now with this buffer, we’re basically taking all these containers and even pre work, moving them closer to where the people are. So now they don’t have to walk as close as by the fact we lay them out the robots, you know, through that picker, we’ll put them right next to each other. So every touch is a pick. So you’re basically not moving inches between, you know, between every pick so that’s how we get those very high pick rates. And you just rip through that as quickly.

Andrew Morgans 29:31
Wow, that sounds amazing. That sounds amazing. You know as someone that has been running brands, in e-commerce for years, I’ve worked with over 300 brands so most of those brands had different warehouses there’s very few of them that were using the same warehousing right once in a while you have someone use the same partner as before, but I’ve talked to so many different warehouses and three POS they all have their own way of doing things right some of them are e-commerce for some are digital for some of them are not some of them are Oh palette and palette out. Some of them are pick Pack Ship, some of them are, you know, so many differences in the way that they do everything and understanding that, you know you’re talking about Okay, so you’ve set up these automations Why am I not fulfilling more orders faster, you know, even though my pick is faster because there’s bottlenecks supply chain and warehousing is a huge bottleneck for me in regards to growing businesses. You know, time and time again, whether it’s pandemic, whether its supply chain issues, even before that for the nine years before the pandemic, right? You know, there’s issues where we can only sell so much as, as the people can prep and get ready for Amazon or can get out the door. And so in, at least in the Amazon world, or the ecosystem, you start getting bad reviews, you start getting cancellations, you start getting dinged by Amazon, you start getting bad reviews. You know, that’s the thing about e-commerce and the Amazon ecosystem is that it’s all tied together. So you know, return rates, like all those things all play into the algorithms of continued momentum for sales, at least on Amazon, if we’re talking to Amazon’s world. So I understand that really, warehousing and supply chain is the starting point of a healthy ecosystem. It can, you know, it’s the straw that can break the camel’s back, you know, if you’re trying to push sales, and you have investors pushing you to grow all these businesses and things like that was like, if the warehouse isn’t prepping product, right, if the warehouse isn’t getting product out the door, if the warehouse isn’t, you know, thinking about, you know, restocks, and like what needs to be done and forecasting and all those things, then, you know, it doesn’t matter how good at my job I am, will get bottleneck there. And I don’t think enough people think about that, whenever they’re picking partners, whenever they’re like, you know, if they’re doing this internally or building it out. It’s just not, it’s just not their priority when they really think about growing a business or scaling it. But it’s absolutely so important as why, while I’m far from being pro at it, you know, as someone building my own brands, internally, and getting equity and others and things like that. I wanted to make sure it was something that I can control, you know, when the time came to grow my first 100 million dollar brand. And certainly, it’s all going to start and end with workflow in the warehouse and being able to be creative there. A lot of the profit margin is in the warehouse. Things people don’t think about, you know.

Lior Elazary 32:24
Yeah, one of the things we saw with some, some of our current customers, we’re sort of shifting the paradigm a little bit from like, grow at all cost to earnings. So companies are barely getting graded on how well they’re, you know, boasting their earnings. Well, in order to get earnings, you have to ship the stuff out the door, if you don’t ship it, the earnings are going to be squat. So they’re starting to see that and they’re starting to see all these bottlenecks and all these issues that they’re having in the warehouse that is directly tying in into their earnings and their Wall Street valuation of them. So we’re actually getting a lot of momentum from those people saying, Look, we need to automate, because we’re going to drown next year if we don’t do it. And I think that’s an important thing. And I think a lot of people do realize, like what needs to be done, or sorry, not what needs to be done, they realized that something has to be done, they’re just not quite sure what needs to be done. They know there’s a problem, you see it, when you go to the warehouse, you see the person running around aimlessly trying to find a product, or some people just sitting around or some people and it’s not their fault, right? It’s just their managers, often extremely busy, they’re handling many people. You know, I know Amazon gets really strict on their, you know, policy and stuff like that. But I’ve heard even now, because it’s a very, you know, the labor is so short that they’re giving a lot of leniency now, because they, you know, if they’ve hired this person, I mean, they’re gonna have a hard time, if they fire it, it’s going to be really difficult. Nobody else wants to do that. And I really believe as a, just as a society, we really should rethink the warehouse instead of like this big boring place that we’re going to want to build it like a spaceship, right? So it’s fully automated, where people are going to be like, I want to go work in the warehouse when I grow up. And we can build that and definitely provide the services that people want, right? So people want these things they want right away. And we have to make sure we can supply that but we have to supply it intelligently. We can’t. I can bet you can have a half of the US ordering things online and the other half running around in warehouses speaking for us, it’s not only it’s not going to scale, it’s just nobody’s going to want to do that.

Andrew Morgans 34:23
Yep, totally then that’s very well said. As we’re coming up on time, I want to wrap up with just a couple of questions for you like one what is you know what is what is some advice to a founder you know, that might have a three PL or warehouse or knows that like this is a problem in their business like you know, what’s one tip you would give them as a an area to focus on to start maybe on this journey, whether it’s working with you guys are just looking into automation looking at into how to get better, what’s it advice, a tip a piece of advice and then do something you guys are excited about in turn really, you know, that you guys are working on in the business?

Lior Elazary 35:04
Cool. Yeah. And so for the first production, I’ll break it into two parts. One, I would just say, you know, just from business in general, and entrepreneurship is that a lot of people don’t realize how difficult it is to get a business off the ground. And you often look at the success, you have a great idea, and you look at it success, but it’s all in the middle, that takes a lot of effort. And a lot of things just say, you just got to stick through it. And I think the people who sort of, quote-unquote, fail are the ones who just give up, they’re like, I can’t do that anymore. So definitely just, you know, you gotta keep thinking of new innovations and stuff like that, in terms of e-commerce, right. And being successful in e-commerce, I definitely think about finding the right partner, where the priorities of both companies sort of match. So often, I think, sometimes, you know, people just sell robots. And if you just sell the robot, well, now you’re part of the robot business, you’ve got to be in charge of its productivity, you got to be in charge of, you know, making that robot work. And we see that a lot where somebody just buys one robot, and then they don’t do it, obviously, because it’s not their business, their business is not robotics, their businesses being coming a three PL, and then they play around with it, and they just toss it and, you know, move forward. So I think really having that right relationship and the right priorities and making sure that it’s aligned together. So for example, like I said, with us, we really don’t sell robots.

Andrew Morgans 36:24
I mean, we sell the productivity and making sure they’re selling, you’re selling the quality of life for the warehouse workers. And the profitability of more efficient warehousing.

Lior Elazary 36:32
Exactly, yeah. So it’s about efficiency, but also like you mentioned, making sure you’re actually getting the work done. Because if you miss that order, now you get a bad review, and how much is that worth? And that becomes a really big problem. And a lot of customers that we started working with, I think just you can look at your warehouse, like how many mistakes do you have? Right? People just go to places where it’s actually not there anymore, because somebody else said, but they didn’t update the thing. And so there’s a lot of issues that, again, we call the digitization phase. So definitely, I think looking at digitizing the warehouse first, making sure you understand before we even introduced automation is a must otherwise you’re gonna introduce automation and might help you a little bit, but it’s definitely not going to utilize it as much as you know, you could upgrade to Yeah, it’s a great, big thing.

Andrew Morgans 37:19
And what are you guys working on internally? I mean, everything you’ve started already blew me away about what you got created, but, but just like something you guys are working on internally, you know, as a team that you’re excited about?

Lior Elazary 37:30
Yeah, so I think one really cool thing we’re doing, which is really difficult, and, you know, adds a lot to the density. So trying to get things extremely dense. So obviously, you know, we’re producing some now totally robots and getting a little bit higher. But we’re also doing containers that are very much alike, basically, but against each other. That means the robots have to be extremely precise. But we’re trying to do this with a very low-cost robot. So it’s not. And even if you look at standardized arrest systems, usually they have like four to five inches between gaps. And again, all that ends up eating up quite a bit of space throughout the warehouse. So right now, we’re basically bringing them together. We have our own patented versions of some things that we came up with and allow the robot to basically become a very cost-effective robot or robots are not super expensive, we’re able to produce that, but be able to take a container and basically have zero tolerance and push it out next to other containers. And in the end, they’re just built with tons of density. So you can have a very, very dense warehouse. And I think part of it is just real estate and having micro diseases that we’re working on that are in the city. And in the city, you’re not going to have a big warehouse, and you might have, you know, maybe one floor of 50,000 square feet, but you got a store with maybe 100,000 200,000 items in there and fulfill from there because that’s how you’re going to get that to that one hour. So I think all of that is going to lead to those kinds of things. And we’re very excited by that as we’re bringing that forward.

Andrew Morgans 38:52
No, that’s super cool. It’s gonna be fun to watch you guys come to live with that. As we sign off, where can people contact you? Where can people learn more? Where can people follow your journey? Get more information? Sure.

Lior Elazary 39:02
So obviously, our website is in VR robotics, that’s inVia Robotics stands for innovation via robotics. And you know, we have all the information there. If anybody wants to contact me personally, you can email me your API robotics.com.

Andrew Morgans 39:17
Lior, this has been so informational. It’s been a pleasure. And once again, this episode of Startup Hustle is sponsored by our friends over Equip Bid Auctions. Once again, this episode of Startup Hustle was sponsored by our friends over at Equip Bid Auctions. Join, sell, earn. It’s that easy with Equip-Bid Auctions. Become an affiliate and start or grow your independent business by visiting equip-bid.me/startup today. Even easier? Head to StartupHustle.XYZ. Click on our partner’s page. You’ll see Equip Bid’s founder, Andy, has everything set up for you to go make money. To build your business within a business! I personally am in real estate as well. One of my other ventures, and we find just the craziest things in houses. A great place to start with some of those you never know what you can make with some of the old stuff in your place. Lior, thank you so much for your time. I’m excited to continue to see innovation in the warehousing industry. And it’s amazing to know you’re leading the way. So thank you again for your time.

Lior Elazary 40:19
No problem. Thank you so much. I enjoyed it; a lot of fun and any other questions? We’ll be happy to answer.

Andrew Morgans 40:24
Of course, and thank you again, Startup Hustle family, for tuning in. We’ll see you next time.