
Amazon acquiring Kiva Systems for $775 million - LiveTheDream
http://www.zdnet.com/blog/btl/amazon-acquiring-kiva-systems-for-775-million/71976
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candre717
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.

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sriramk
Also a great exit for Bain Capital.

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portman
Bain Capital _Ventures_. Venture Capital, not Private Equity.

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travem
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.

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iandanforth
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.

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

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colinsidoti
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.

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Maven911
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.

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colinsidoti
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.

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

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

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

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

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

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tpsreport
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.

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

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masonhensley
Or, perhaps even better, making your competition your customer.

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mediaman
I agree, this is more likely given their behavior with AWS. They're happy to
rent their IP and infrastructure to competitors.

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

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retroafroman
That system may be in Norway, but the technology is made by a company called
Swisslog, which is located in Switzerland.

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samsol
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 ??

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siong1987
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.

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ippisl
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.

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dsl
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.

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samstave
This one:

[http://perfcap.blogspot.in/2012/03/cloud-architecture-
tutori...](http://perfcap.blogspot.in/2012/03/cloud-architecture-
tutorial.html)

???

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dsl
Yup. That is the one. Thanks!

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

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cvg
True. Ironically this will also result in criticism about how Amazon isn't
employing enough humans.

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hu_me
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-
fulf...](http://techcrunch.com/2012/03/19/amazon-acquires-online-fulfillment-
company-kiva-systems-for-775-million-in-cash/)

[2][http://www.fastcompany.com/most-innovative-
companies/2012/ki...](http://www.fastcompany.com/most-innovative-
companies/2012/kiva-systems#profile)

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BrainScraps
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>

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xbryanx
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.

