12 ms·

Amazon acquiring Kiva Systems for $775 million

151 points by LiveTheDream 15y ago

candre717 15y ago
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.
- sriramk 15y ago
  Also a great exit for Bain Capital.
  - portman 15y ago
    Bain Capital Ventures. Venture Capital, not Private Equity.
    - travem 15y ago
      I thought Bain Capital was the umbrella for all of their funds? Bain Capital Private Equity for the PE stuff and Bain Capital Ventures for the VC investments.
- beambot 15y ago
  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-acquires-kiva-systems-775-million-cash http://www.hizook.com/blog/2012/03/19/breaking-news-amazon-a...
iandanforth 15y ago
It's a great time to start a robotics company and I hope this exit will further accelerate the pace of new companies being created! Kiva is also a great example of nailing a single high-value problem even if it's not the sexiest challenge.
- swah 15y ago
  Unfortunately you can't start a robotics startup with almost no money (like sw startups) !
  - colinsidoti 15y ago
    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.
    - Maven911 15y ago
      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.
      - DilipJ 15y ago
        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.
      - colinsidoti 15y ago
        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.
samsol 15y ago
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 ??
- mc32 15y ago
  Good question. I hope they keep innovating and serving all clients rather than it being a competitive advantage move for Amazon itself as an in-house robotics developer.
- siong1987 15y ago
  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.
  - deleted 15y ago
    [deleted]
  - ippisl 15y ago
    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 this advantage.Amazon is known to play hardball.
    - dsl 15y ago
      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.
tpsreport 15y ago
On both a very unrelated and totally related note, one of the co-founders of Kiva, Rafaello D'Andrea, dominated robo-soccer for five years.
hegga 15y ago
I would have gone for this Norwegian system: http://m.youtube.com/watch?v=iyVDMp2bL9c http://m.youtube.com/watch?v=iyVDMp2bL9c
- larrys 15y ago
  Interesting video but the system appears to only be a small parts solution. I don't think it could even handle a 20" monitor.
- retroafroman 15y ago
  That system may be in Norway, but the technology is made by a company called Swisslog, which is located in Switzerland.
Retric 15y ago
I wonder if preventing their competitors from using Kiva is part of the goal for this acquisition.
- masonhensley 15y ago
  Or, perhaps even better, making your competition your customer.
  - mediaman 15y ago
    I agree, this is more likely given their behavior with AWS. They're happy to rent their IP and infrastructure to competitors.
xbryanx 15y ago
Was I the only one who thought that $775 million seemed like quite bit of cash for a non-profit micro-lendng company...oh wait, not that one.
mrbill 15y ago
This can also ease a lot of the criticism that Amazon is getting about slave-driving the (human) pickers in their warehouses lately.
- WalterBright 15y ago
  Until the robots unionize, of course.
- cvg 15y ago
  True. Ironically this will also result in criticism about how Amazon isn't employing enough humans.
BrainScraps 15y ago
I was wondering if anyone was going to draw the connection between today's news and this story from a few weeks ago: "I Was a Warehouse Wage Slave" http://news.ycombinator.com/item?id=3641184 http://news.ycombinator.com/item?id=3641184
hu_me 15y ago
This is a very smart play on part of Amazon. They have around 65 fulfillment centers and they are adding more this year.[1] It costs around 15-20million to get a kiva system for a large fulfillment center.[2] With the number of kiva system amazon would need in those centres they surely saved a whole bag of money by buying the company instead of just systems, not to mention first dibs on future innovations. [1]http://techcrunch.com/2012/03/19/amazon-acquires-online-fulfillment-company-kiva-systems-for-775-million-in-cash/ http://techcrunch.com/2012/03/19/amazon-acquires-online-fulf... [2]http://www.fastcompany.com/most-innovative-companies/2012/kiva-systems#profile http://www.fastcompany.com/most-innovative-companies/2012/ki...

151 points by LiveTheDream 15y ago

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.

sriramk 15y ago
Also a great exit for Bain Capital.
- portman 15y ago
  Bain Capital Ventures. Venture Capital, not Private Equity.
  - travem 15y ago
    I thought Bain Capital was the umbrella for all of their funds? Bain Capital Private Equity for the PE stuff and Bain Capital Ventures for the VC investments.
beambot 15y ago
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-acquires-kiva-systems-775-million-cash http://www.hizook.com/blog/2012/03/19/breaking-news-amazon-a...

iandanforth 15y ago

It's a great time to start a robotics company and I hope this exit will further accelerate the pace of new companies being created! Kiva is also a great example of nailing a single high-value problem even if it's not the sexiest challenge.

swah 15y ago
Unfortunately you can't start a robotics startup with almost no money (like sw startups) !
- colinsidoti 15y ago
  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.
  - Maven911 15y ago
    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.
    - DilipJ 15y ago
      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.
    - colinsidoti 15y ago
      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.

samsol 15y ago

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 ??

mc32 15y ago
Good question. I hope they keep innovating and serving all clients rather than it being a competitive advantage move for Amazon itself as an in-house robotics developer.
siong1987 15y ago
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.
- deleted 15y ago
  [deleted]
- ippisl 15y ago
  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 this advantage.Amazon is known to play hardball.
  - dsl 15y ago
    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.

tpsreport 15y ago

On both a very unrelated and totally related note, one of the co-founders of Kiva, Rafaello D'Andrea, dominated robo-soccer for five years.

hegga 15y ago

I would have gone for this Norwegian system: http://m.youtube.com/watch?v=iyVDMp2bL9c http://m.youtube.com/watch?v=iyVDMp2bL9c

larrys 15y ago
Interesting video but the system appears to only be a small parts solution. I don't think it could even handle a 20" monitor.
retroafroman 15y ago
That system may be in Norway, but the technology is made by a company called Swisslog, which is located in Switzerland.

Retric 15y ago

I wonder if preventing their competitors from using Kiva is part of the goal for this acquisition.

masonhensley 15y ago
Or, perhaps even better, making your competition your customer.
- mediaman 15y ago
  I agree, this is more likely given their behavior with AWS. They're happy to rent their IP and infrastructure to competitors.

xbryanx 15y ago

Was I the only one who thought that $775 million seemed like quite bit of cash for a non-profit micro-lendng company...oh wait, not that one.

mrbill 15y ago

This can also ease a lot of the criticism that Amazon is getting about slave-driving the (human) pickers in their warehouses lately.

WalterBright 15y ago
Until the robots unionize, of course.
cvg 15y ago
True. Ironically this will also result in criticism about how Amazon isn't employing enough humans.

BrainScraps 15y ago

I was wondering if anyone was going to draw the connection between today's news and this story from a few weeks ago: "I Was a Warehouse Wage Slave" http://news.ycombinator.com/item?id=3641184 http://news.ycombinator.com/item?id=3641184

hu_me 15y ago

This is a very smart play on part of Amazon. They have around 65 fulfillment centers and they are adding more this year.[1] It costs around 15-20million to get a kiva system for a large fulfillment center.[2] With the number of kiva system amazon would need in those centres they surely saved a whole bag of money by buying the company instead of just systems, not to mention first dibs on future innovations. [1]http://techcrunch.com/2012/03/19/amazon-acquires-online-fulfillment-company-kiva-systems-for-775-million-in-cash/ http://techcrunch.com/2012/03/19/amazon-acquires-online-fulf... [2]http://www.fastcompany.com/most-innovative-companies/2012/kiva-systems#profile http://www.fastcompany.com/most-innovative-companies/2012/ki...