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Minding the gap

Darren Hull/The Globe and Mail

As early as 6 a.m., Mallorie Brodie and Lauren Lake would put on steel-toe boots and hard hats, pick up coffee and doughnuts, and go in search of construction sites around Southwestern Ontario. In 2013, they were both in their final year at Western University—Brodie at the Ivey Business School and Lake in a civil engineering program. The pair knew they wanted to start a business, but that was the extent of their vision. So they went looking for inspiration, scanning the skyline for cranes to guide them to building sites.

“Our plan was to focus on construction, given Lauren’s engineering background and both our families having been in the business,” says Brodie. “From there, we understood that despite knowing a thing or two about the industry, we needed a fresh idea. The obvious next step was going out onto sites and learning directly about the industry’s challenges by talking to people working in it.”

The construction sector had been largely ignored by tech startups until a couple of years ago. Investors and developers shied away from what looked like a slow-moving industry, according to Lake. But after doing more than 500 interviews with general contractors, subcontractors, engineers and developers, Brodie and Lake realized construction’s supposed curmudgeonly resistance to tech solutions was a fiction. Instead, they found a gap in the market. “From our point of view, it’s not that the industry has been slow to adopt technology—it’s that technology firms have been slow to build for construction,” says Lake.

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Six years after its start, Bridgit now has two major construction software products. The first, Bridgit Field, launched in 2014, is essentially a user-friendly version of the traditional “punch list” workers and inspectors use to track unfinished tasks, stay organized and co-ordinate projects. It’s not the only such product on the market, but it was among the first to be developed.

Bridgit Bench, launched this year, is the first project management tool targeted specifically at construction. It focuses on resource planning, particularly human resources. That’s a major selling point for project managers, since the sector suffers from a labour shortage that makes it difficult to hire on short notice.

“Construction is pretty volatile, and we’re always competing for talent. You can think you’re starting a project one month and then get word from your client, saying, ‘Actually, we need to push that out and then we need to adjust hiring.’ Until Bridgit, we were managing these changes for large projects with spreadsheets and conversations, which was really inefficient,” says Grace Paladino, HR director of the Toronto-based construction firm Skygrid.

Field is sold on a project-by-project basis, but Bench works on a standard software-as-a-service model, where a company signs on for an annual agreement that covers a certain number of employees. The subscription-based revenue model is unusual in the project-based construction industry—but it’s working. Fifty companies across the U.S. and Canada use Bridgit Bench, 40% of which are on the ENR 400, a list of the largest contractors in the U.S. market. Last quarter, Bridgit had an average month-to-month growth rate of 40%.

The company’s headquarters are in Kitchener-Waterloo, Ontario’s tech hub since the heyday of BlackBerry. But in November, the firm set up its first satellite office, in Toronto. Set in the King East Design District, the new location opens Bridgit to the big city’s talent pool. The building houses a variety of startups and has the expected sleek, wood-forward common area, complete with a shared kitchen space and enough cozy seating for a crowd.

Bridgit takes up just a couple of offices in the building, since the Toronto team is small, for now. There’s one full-time and one part-time sales employee. Anticipating a growing need for sales reps and developers to support Bridgit Bench, Brodie and Lake initially aimed to double their team of 50. But those hiring goals were reduced to 10 to 15 for the near future. It’s not for a lack of business.

“After we launched, we made a couple of hires but found that the skill set of our existing team carried over much better than we expected it would,” says Brodie. In other words, the current employees could handle the extra work. But Brodie maintains this didn’t entail a major increase in workload—just some shifting of resources. “We’ve beaten our revenue and customer projections. It is a big win for the company. Head count is a great measure of success, but if you can accomplish more with a smaller head count, that’s an even better win in our eyes.”

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Any new hiring will centre on product development. Bench was launched with general contractors in mind. The company aims to build out the software to support other industry stakeholders, like architects and engineers, as well as to develop budget planning tools.

For all of the above, ease of use is the name of the game. Brodie is keen to draw on Toronto’s pool of design talent, since Bench and Field are both highly visual tools with clean, intuitive dashboards.

There have been challenges in building a team—construction isn’t the only sector with a limited hiring pool. “There are only so many people in tech, so in Waterloo, companies end up poaching from others,” says Lake. In pursuit of talent, Bridgit focuses on recruiting outside the typical pipeline. One of Brodie and Lake’s most recent marketing hires was a bartender with a college background in media but no product marketing experience. The pair got to know him after frequenting a restaurant in Kitchener and say they were impressed by the quality of his conversation. “We try to hire around people’s characteristics over their experience, and it’s working,” says Lake.

Bridgit has nearly equal gender parity and pay equity across all levels of seniority. But Lake insists that balance is not a guiding part of Bridgit’s hiring practices—rather, it’s a natural consequence of its recruitment strategy. A recent job posting for a project manager is looking for a “strategic thinker” who “can think on their feet and isn’t afraid to do so... Experience in software implementation is a bonus, but not a requirement,” it reads. Explains Brodie: “By opening up how we talk about these roles, we’ve ended up with a diverse pool of hires. It started out as a matter of necessity, but we eventually realized it was just better practice.”

As investment in the construction tech industry gains momentum—in the U.S., VC funding for construction software startups surged 324% in 2018, according to Crunchbase data—Brodie and Lake are optimistic about Bridgit’s prospects. The company has raised $13 million in equity financing, half of which came through a Series A round completed in December 2018. According to Lake, there’s space for competition. “Tech has just begun to tap into the construction sector,” she says. “There’s certainly room to grow.”

Kelowna state of mind

Darren Hu/The Globe and Mail

When venture capitalists approached Matt Bertulli two years ago, the Pela CEO was a bit wary. “I didn’t have a lot of experience in VC. But many of my friends do,” he says. “Most of them kept telling us that a lot of venture capitalists will give you a great deal of cash, but they will be more of a pain in the ass. So be really careful who you take money from.”

Pela eventually did take money from Marcy Venture Partners (MVP), a new VC fund co-founded by Jay-Z. They had something Pela wanted more than money.

Casually dressed in stretchy black pants, a navy T-shirt and low-cut black sneakers, Bertulli, 38, looks ready to jump on his Santa Cruz mountain bike and explore the trails zigzagging through the nearby hills of B.C.’s Okanagan Valley. Instead, he sits in a glass-walled boardroom in the company’s sixth-floor Kelowna headquarters explaining how Pela snagged a $2.5-million investment last October from America’s wealthiest musician.

His company produces compostable phone cases from Flaxstic, a biodegradable material invented by company founder Jeremy Lang and composed of flax straw, along with other materials. Approximately 1.5 billion smartphones were manufactured globally in 2018; 80% of owners buy a protective case, according to Statista. Old phone cases are often thrown away with every upgrade. As a result, 400 million pounds of plastic that cannot be recycled is discarded every year.

If enough consumers switched to Flaxstic cases, claims Pela, millions of pounds of plastic would be kept out of the world’s landfills and oceans. Pela—the Spanish word for “peel”—says when properly disposed of, its cases biodegrade in anywhere from three to 24 months.

On the surface, that doesn’t sound like a product that would grab the attention of a performer like Jay-Z, who is hardly known for tree-hugging lyrics. But the star is celebrated for his business acumen, in addition to his sometimes prophetic writing. In his 2008 song “A Billi,” he foresaw becoming rap’s first billionaire. Last June, Forbes magazine confirmed the 50-year-old rapper, born Shawn Carter, had fulfilled his prediction.

Jay-Z founded MVP, a seed and early-stage investing platform, in March 2018 along with two partners, his longtime pal and business associate Jay Brown and Silicon Valley VC veteran Larry Marcus. MVP bills itself as a “hits-driven” investment business “with a passion for building game-changing consumer businesses.”

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So just how did an eco-minded startup in Kelowna—B.C.’s third largest city—attract an investment from a trio that includes hip hop’s first billionaire? It took a sudden growth spurt, a lucky connection and an investing strategy partly based on knowing a good thing when it presents itself. As Jay-Z has said: “I didn’t go to any business school 101 or anything like that. I pretty much just followed my instincts.”

In a sense, Pela’s story can be traced back to a day when a 10-year-old Jeremy Lang went for a country drive in Saskatchewan with his father. “We were in my dad’s big old white Buick, floating down the highways,” recounts Lang, who spent much of his professional life as an environmental consultant cleaning up oil and gas well sites in Western Canada. “I could see the horizon was glowing orange ahead of us.” As they drove over a hill, flaming fields suddenly came into view. “I remember because I was scared,” he says. “It looked eerie.”

His father explained that farmers grew flax in those fields for the oil seed. But because the leftover straw was so strong it could plug up their equipment, the farmers burned it to ash every fall. The younger Lang looked quizzically at his dad. “I said, ‘If it’s that strong, the straw must be good for something.’ And he said, ‘Well, maybe when you get older, you can think of something.’ That was always in the back of my head,” says Lang. “What can we use that waste material for?”

Now 43, Lang found his answer shortly after a 2008 Christmas vacation in Hawaii. His family was on a beautiful secluded beach on Kauai’s Moloaa Bay, and Lang was digging holes in the sand with his 18-month-old son. “As we were digging there, we were finding little pieces of plastic everywhere. And it really bothered me. Who would do this to this beautiful beach?”

Back home in Saskatoon, Lang started thinking about making products with alternative materials to plastic. He learned about biopolymers, plastic-like biodegradable compounds derived from plant cellulose. However, items made from such materials were brittle, suitable only for limited single-use applications such as utensils. He wanted to develop something that was stronger and longer-lasting but still biodegradable.

One day, his mind went back to that childhood drive with his father. What about flax straw? If it was so tough it could tangle up farm machinery, surely it could make a strong basis for a new material.

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In 2009, working with engineers at the University of Saskatchewan and funded by a provincial grant, Lang began experimenting with shive, a lightweight, corky substance found in flax straw. His team tested various combinations of biopolymer binders, including “crazy stuff” like beeswax, to try to make a strong, mouldable, compostable substance. Lang eventually landed on the right combination of wheat, cornstarch and flax biopolymers in 2010. He dubbed the material “Flaxstic.” Now he had to figure out what to make with it.

When Pela was founded in 2011, the iPhone 4 was really taking off. However, with the upgrading mania prevalent in today’s phone market, “the average person will keep their phone for about 24 months,” says Lang. “Yet the plastic case that will protect it will last something like hundreds of thousands of years and probably end up in a landfill or ocean and not be recycled. That seems ridiculous and overengineered. So I decided to start with a phone case.”

At first glance, Larry Marcus, who both manages MVP and is an equity partner in the fund with Jay-Z and Jay Brown, appears to have little in common with either of his collaborators. The “two Jays,” as Marcus calls them, are both Black and grew up steeped in the world of rap and hip hop. Marcus, who bears a resemblance to Seinfeld’s George Costanza, lives in San Francisco, attended business school at the University of California-Berkeley and is, he adds, “more of a funk and rock and reggae guy.”

An active angel investor and mentor, Marcus was a founding investor in Pandora, a music recommendation and streaming site. He’s still a managing partner at Walden Venture Capital, a sprout-stage investment firm focused on digital media and cloud services that he joined 20 years ago.

When Jay-Z and Brown decided to create a VC fund, someone suggested they approach Marcus because of his deep experience in investing in the music content and tech space. But when the three met, recounts Marcus, “it turned out we had a lot of shared values around investment philosophies, particularly in going after brand building and companies that really have potential for positive impact in culture. So our whole fund is based around consumer and positive cultural impact.”

With MVP, says Marcus, he and the Jays are focused on supporting companies that promote health, wellness, inclusivity and sustainability. So far, MVP has invested in such entities as Rihanna’s Savage X Fenty lingerie company, which bills itself as an “inclusive” line for diversely shaped women; Hipcamp, a website that’s like Airbnb for campers (Will Smith’s Dreamers VC also invested); and the recently launched Wheels, an electric mini-bike sharing service founded in Los Angeles. Last October, MVP added Pela to that list, investing $5 million in the company’s future.

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In its first six years in Saskatoon, Pela crawled along as a basement operation, with Lang and his immediate family putting phone cases into envelopes on weekends. That changed in 2017, the year Bertulli joined the company as CEO. Before that point, Bertulli was the startup’s first significant investor. He’d met Lang in 2014 at a Mastermind Talk, an invite-only networking event for entrepreneurs.

Quipping that his background is “selling shit on the internet,” Bertulli founded Demac Media in 2008. He guided the Toronto-based company into place as Canada’s largest e-commerce agency, running platforms for clients such as Staples and Sleep Country before Chicago-based Bounteous acquired it in November 2018.

An outdoorsman, Bertulli admired what Lang aimed to do for the planet through Pela. “I started investing in Pela because I liked the concept,” he says. “I wanted to sell something that’s better for my soul.” Now the company’s majority owner, he would only say he made a mid-six-figure investment.

Bertulli didn’t think Pela would be a phone case company. He assumed there would be better, more marketable uses for Flaxstic. “I didn’t realize until late in 2017 how big the phone case market is.”

Even so, in Bertulli’s e-commerce world, phone cases had always been a no-fly zone. Other than OtterBox—known for its expensive, heavy-duty protective plastic cases—there were few brand names, and profits on such a commoditized product were generally thin. “There are still hardly any brands,” says Bertulli. “There’s no Warby Parker of phone cases. There’s no sex appeal. There’s no message.”

But Pela has a message. Its “big, hairy audacious goal,” according to its website, is to help make a waste-free future. Bertulli’s mission as CEO was to find the eco-conscious consumer out there in the phone case marketplace who cared about that message. And he did.

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After testing five fictional “personas” Pela might target in its marketing, the company settled on one: Olive. “We gave her a name,” explains Bertulli. He rattles off her attributes. “She’s under 35. Urban dwelling. She rides her bike to work. She’s been vegetarian or vegan.” She’s interested in environmental conservation causes and shops at Whole Foods, Patagonia and Lululemon. “We even have a list of books she reads,” he says.

In 2018, Pela began using Instagram to market its line of colourful phone cases—embossed with eco-friendly images of turtles, whales, honeybees, waves and more—to the Olives out there. Around that time, awareness about the billions of pounds of plastic polluting oceans began to surge. Pela’s sales started doubling every 90 days or so for the ensuing year. As Bertulli puts it, “Everything started to hockey stick. We’d found our customer.”

The company has since grown quickly to about 45 employees, most of them based in Kelowna. When Bertulli took on the CEO role, he hadn’t contemplated building Pela anywhere else but in Toronto. But then a friend asked him if Toronto was the right place to grow such an eco-oriented company. You wouldn’t headquarter an outdoor clothing firm like Patagonia (based in Venture, Calif.) in New York City, suggested the friend. Bertulli considered Victoria, Calgary and Vancouver, but a passionate pitch from Kelowna’s mayor and economic development folks sold him on the city’s lower cost of living and eagerness to become Pela HQ. While a portion of Pela’s cases are made in a Hong Kong facility, it recently moved its original Saskatoon manufacturing space to Kelowna as well. (Lang and his wife are staying in Saskatoon until their two children, now six and 12, are older.)

The company’s growth spurt caught the attention of numerous venture capital funds, among them MVP. Larry Marcus first heard of Pela from Tom Kennedy, the chair of Toronto-based Kensington Capital, who also knows Bertulli. Kennedy and Marcus had invested in some ventures together. “I was intrigued by what I heard,” says Marcus. He was so intrigued he mentioned Pela to Jay-Z and Jay Brown, who agreed MVP should look into the company further.

Last fall, Pela was invited to meet in Los Angeles at the headquarters of Roc Nation, the entertainment agency Jay-Z and Brown co-founded back in 2008. Jay-Z wasn’t there, though Brown and Marcus were. But all three, says Marcus, play equal roles in deciding who gets funded. “If Jay and Jay don’t like something, I’m not moving it forward.”

Bertulli attended with Pela’s chair, Brad Pedersen, a longtime friend who founded Tech 4 Kids in Red Deer, Alta., and grew it into one of Canada’s largest toy companies. They didn’t bring a pitch deck, says Bertulli. There was almost no talk of financials in what he describes as a warm and friendly meeting. However, there was plenty of discussion about Pela’s mission to keep plastics out of oceans and landfills with its cases (along with a new line of compostable and recyclable sunglasses).

“I think about 10 minutes into the meeting,” Bertulli recounts, “Jay Brown said, ‘I love it. We are in.’ Larry, though, was like, ‘Oh. Well, maybe we should talk more.’”

In the year before it signed the $5-million deal with MVP and Kensington Capital, Bertulli estimates Pela had been approached by about a dozen New York and Silicon Valley VC firms. Some of those earlier VCs, he says, even came with better financial terms. “But MVP offered so much more.”

What it had, beyond cash, explains Bertulli, was a deep understanding of cultural trends and mass media marketing, and ties to numerous celebrities who could help spread the word about Pela. Though the relationship is in its early days, things seem to be going well. “What I have learned about Jay-Z and Jay Brown is that they are super savvy,” says Bertulli. “They are very good businessmen.”

Then there is that other, immeasurable MVP strong point: Jay-Z himself. The benefit is not just his own influence, but his close bonds with famous athletes, musicians and other influencers through his talent agency, Roc Nation. As Jay-Z himself has put it: “I’m not a businessman. I’m a business, man.”

Shine theory

Darren Hull/The Globe and Mail

To see how Mejuri does things differently, visit the Toronto-based jewellery brand’s Instagram account: There are no posed engagement ring shots, no overstyled tableaux (a diamond solitaire perched on a snowy evergreen branch? Mejuri would never) and, perhaps most important, no photos of Ken-doll–handsome men presenting their wives or girlfriends with shiny baubles. The company targets women who want to buy fine but affordable jewellery for themselves—and judging by its rapid growth, the approach is working.

The company’s CEO, Noura Sakkijha, grew up in Amman, Jordan, where her family had been in the fine jewellery business for two generations. She wasn’t interested in joining them. “It was mainly classic pieces, like gold and diamonds, with high price points that were targeted for gifting, specifically to men buying for women,” she says. “That wasn’t an exciting angle for me, so I took a detour.” Sakkijha studied industrial engineering in Jordan, and then moved to Toronto to complete an MBA at Ryerson University before taking a job as an analyst in CIBC’s process engineering department.

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That’s when she noticed a glaring gap in the market. “I started to earn some disposable income, and I wanted to buy jewellery for myself, but my options were very, very limited,” she says. Where were the elegant, unfussy rings, necklaces, bracelets and earrings? Where were the companies speaking to women like her? Nowhere to be found.

In 2015, Mejuri officially launched with a perfectly modern and millennial-friendly motto—“buy yourself the damn diamonds”—and a clever retail technique. Instead of seasonal collections, the company uses a “drop” model, in which new, limited-edition pieces become available for purchase every Monday. The firm’s offerings, all made from at least 14-karat gold, range from a single stud earring ($25) to a dainty gold bracelet holding a single diamond ($195) to a chunky herringbone chain necklace ($395), with a few pricier options, including a $2,150 diamond cluster ring that works equally well as single-girl bling or a wedding band. The brand’s 680,000 Instagram followers eagerly anticipate each new drop.

Initially, Mejuri’s business model involved crowd-sourcing jewellery designs, but Sakkijha quickly realized the company needed a unified look. Enter Justine Lançon, a Parisian art director who has worked for companies such as Lacoste and Veuve Clicquot, and had recently relocated to Toronto. “I was looking for a partner who could help me build and establish Mejuri’s aesthetic and DNA,” Sakkijha says. “When I found Justine’s portfolio online, it was evident that she had extensive experience in luxury brands and their creative development. When we met in person, we instantly clicked.”

Releasing a steady stream of new pieces helps the company to monitor customers’ reactions and use that feedback to inform Lançon’s designs. It also allows sustained engagement with customers, according to Lisa Hutcheson, managing partner at retail consulting firm J.C. Williams Group. “Customers are looking for unique products, but [traditional jewellery retailers] buy their season and it all arrives. Then, as a customer, you go in and you see it, and there’s no real freshness,” she says. “So, from a customer point of view, a [weekly drop] certainly makes it more interesting.”

As Sakkijha anticipated, 75% of Mejuri’s customers are buying for themselves, and 30% of its monthly transactions are from repeat shoppers. About 70% are between the ages of 18 and 34, and 100,000 women are currently on one of several lists waiting to be alerted to upcoming drops. That loyal following has allowed the company to quadruple its revenue every year for the past four years (Mejuri doesn’t disclose sales figures) and to build its team to 120 people. The company has even expanded into retail with four bricks-and-mortar showrooms—the Toronto flagship opened in July 2018, followed by New York in December of that year, and Los Angeles and San Francisco in the last quarter of 2019.

Mejuri’s expansion plans have been supported by regular infusions of capital; the company received US$1 million in seed funding in 2016, closed a US$5-million financing round led by U.K. firm Felix Capital in September 2018 and then in April 2019, a US$23-million round led by New Enterprise Associates in the U.S. This type of investment makes it a rarity among fine jewellery brands, of which only a few—New York–based Aurate, Soko in San Francisco and India-based BlueStone—have attracted this level of interest.

For Vanessa Larco, a partner at NEA who had Mejuri on her radar for years before she led its Series B funding round, an ardent following was key. “There were really two things that made me want to invest. One is that people love the product. I mean, love the product. They are ambassadors for the brand,” she says. “And it’s impossible to replicate. People say, ‘How do I build a brand like that?’ I can give you a checklist, but I think some of it comes from authenticity, which [leads to] my second point, which is the team. There’s a piece of them reflected in everything the company puts out.”

There’s another factor that may explain the company’s ability to scale successfully: following through on the promise of its slick branding. When Sakkijha talks about building Mejuri, she focuses as much on process and supply chain as she does on product and visual identity, which is likely a remnant of her engineering past. The company also custom-built the technology for its e-commerce site. “This allows us to collect data and understand what cu-stomers want and how they perceive our products. We ensure the shopping experience is seamless,” she says.

“Noura’s not afraid of numbers,” Larco says. “I think she has more dashboards to analyze every corner of her business than some of our data analytics companies!”

All of this unglamorous behind-the-scenes work serves to present an effortless, unified brand to its audience. But it’s the cash-efficient, investor-friendly business practices that will allow Mejuri to carry out its expansion plans. “We’ve always had the goal of being the No. 1 global jewellery brand,” says Sakkijha. “So we have always been, since our inception, engineering and designing our company for growth—and fast growth.”

Vertical integration

Shaun Robinson/The Globe and Mail

Scott Gravelle was stumped. He’d been searching for a way to make distribution centres—the kind of vast, automated warehouses so common in the e-commerce era—more efficient. Then he saw a documentary about Walter Tschinkel, a U.S. entomologist who specializes in ants. It turns out the small but mighty insects are the original storage and retrieval experts. Colonies of ants dig chambers in the earth to stash their food and larvae.

When Tschinkel poured molten aluminum into these networks, the hardened tendrils of the casts revealed the prolific excavators’ storage genius: To Gravelle, they looked almost like a distribution centre turned on its side. “At that moment, I saw that ants access their storage vertically,” says Gravelle, who used to manufacture skateboards. “This was a massive paradigm shift, because humans access it horizontally, from the floor, and all other automation systems are derivatives of that row and aisle.”

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Gravelle and his partners launched Calgary-based Attabotics Inc. in 2015 (it’s named after the leafcutter ant, whose scientific name is Atta). Since then, their modular, robotics-based concept for revolutionizing the supply chains that support e-commerce has drawn attention from retail and software giants alike. The technology gets goods to customers faster, lowers labour costs and can be scaled up as required. It can also reduce floor space by up to 85%.

Taking its cues from ants, Attabotics’s fulfillment centres—the distribution hubs in and around cities from which T-shirts, auto parts, power tools and food processors get shipped to consumers—work vertically. Rather than using traditional racks accessed by machinery moving across the floor, the system is a grid-like structure of cubes and robotic shuttles that travel up and down, as well as laterally, on tracks. It’s a bit like 3-D Snakes and Ladders. “The whole idea,” says Gravelle, “was to make ant robots and emulate successful natural systems to create elegant technology tailored to fulfillment solutions for modern consumer behaviours.”

Amazon, which all other retailers now compete against, had already shown the promise of robots in the e-commerce industry, investing hundreds of millions of dollars in automation equipment across its massive network. However, while it might save money on human labour, Amazon still has to pay for all the space required to store orders—its fulfillment centres range from 400,000 to a million square feet. Attabotics’s vertical system slashes that footprint and the costs associated with it. “The payoff of this is dramatically increased density, taking advantage of the ceiling heights of modern warehouses,” says Gravelle. “When I did that math, we were a fraction of the square footage of a manual shelving warehouse.”

Attabotics has installed seven of its systems so far, at facilities owned by customers like high-end department store chain Nordstrom and Gordon Food Service, a restaurant supplier. (A deal with a major Canadian retailer that owns several banners has yet to be announced.) The technology has generated buzz far outside its home base—Attabotics got an honourable mention on Time magazine’s list of the best inventions of 2019.

Investors have been intrigued since the company’s inception. Attabotics has raised nearly US$33 million in investment capital. Its latest round, in 2019, drew US$25 million in funding from Honeywell (which manufactures everything from aircraft parts to paper shredders), the ventures arm of telecommunications company Comcast and the global investment firm Coatue; they joined existing backers Forerunner Ventures, based near San Francisco, and Calgary’s Werklund Growth Fund.

The early goal for Attabotics was to follow a well-worn path in Canadian tech: develop the intellectual property to a point where it would be attractive for a larger player to swoop in, buy it and commercialize it. But the company, which now employs nearly 250 people, decided to go it alone, believing it best understood the technology and its potential. (One of Gravelle’s partners, Tony Woolf, is director of operations; the other, Rob Cowley, is now retired.) Because of the operational success of early installations, in 2018 Attabotics proved to its backers it could be financially self-sustaining.

Under the current plan, the co-mpany aims to expand its offering beyond its main distribution product and go public in three to five years. But Gravelle is clinging to the notion that his firm remains a startup. “Is our core technology achieving industry performance metrics, and have we gone through commercialization of that core technology? Absolutely,” he says. “But there’s so much more to come, so I want to try to keep that startup mentality for as long as possible.”

Attabotics has remained based in Calgary, even as the local economy has sputtered. It hasn’t had any trouble hiring, with so many engineers and technical professionals at loose ends thanks to the downturn in the energy sector, and it has no plan to leave the city. “We have the most talented engineering group of any company I’ve ever had to interact with,” Gravelle says. “Passionate, skilled, with broad skill sets, too—electrical engineers, software developers, mechanical engineers who came out of the energy economy. It would have been almost impossible to attract that talent in a strong energy economy.” (Had Amazon opted to locate its second headquarters in Calgary, it might’ve been a different story, but no Canadian locale won that sweepstakes—instead, Amazon is headed to Arlington, Va.)

There’s no question the city wants Attabotics to stay put. The business was an early recipient of the Opportunity Calgary Investment Fund, whose goal was to support local companies as the city deals with financial stress and a massive increase in vacant commercial properties. Attabotics secured $4.5 million from the fund in 2018.

Attabotics’s next step is to further shrink the distribution footprint by putting “micro-fulfilment centres” near several cities operating in a network—an alternative to massive, centralized outposts. It’s testing the concept in partnership with Microsoft, whose software is encrypted over private cellular networks as part of the pilot project. The goal is to reduce both financial and environmental costs to companies and consumers globally.

“Certainly, e-commerce adoption keeps increasing every year, and when we look at the developing economies, especially India and China, there is so much opportunity,” Gravelle says. “This is truly a global problem, and we think we have the best solution for it.”

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If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

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