The Asia Tech Podcast was joined by Simon Webb, a co-Founder of Tarot Analytics.  Tarot Analytics is a logistics SaaS startup. Their platform, Tarot Routing, is a Route Optimisation and Delivery Management tool for businesses that manage fleets of vehicles that visit multiple destinations daily.
Some of the topics that Simon and I discussed:
  • His brothers are doctors
  • From an early age was always interested in business
  • Jesse Treharne‘s rose delivery story
  • The beginnings of Tarot Analytics
  • Going to Paris for the TechStars Accelerator
  • Understanding logistics’ territories and driver preferences
  • The importance of right-sizing vehicles
  • Microfulfillment
  • How logistics efficiency helps sustainability
  • The importance of the final delivery experience
  • The current paradox of electric delivery vehicles
  • Network effects
Other titles we considered for this episode:
  1. This Sounds Insane
  2. Someone’s Prepared to Pay Us
  3. We Had Half a Platform and No Customers
  4. If We Weren’t In the Right Space, We Weren’t Far Off It
  5. What Can I Do to Solve That?
  6. Why Is IT Forcing These Changes Upon Me?

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:02
Michael Waitze Media…Telling Asia’s Stories

Michael Waitze 0:10
We are on. Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast. Today we are joined by Simon Webb, a co-Founder of Tarot Analytics. I did it, even though I put the ‘T’ back in. Yeah. Simon, thank you for coming on the show. It’s great to have you here. How are you doing today?

Simon Webb 0:31
I’m fantastic. And thanks for having me.

Michael Waitze 0:34
It is my pleasure. So before we jump into the main topics, why don’t we get a little bit of your background for some context.

Simon Webb 0:43
A bit of my background, I grew up in a small town called Port Macquarie, which is about four hours north of Sydney, went to school in Sydney, and then University in Sydney. When I grew up, my father ran optometry practices. And he’s an optometrist. And so I was not so much interested in the medical side of things. Although my brothers are all doctors, I was much more interested in the business side of things I always had. A wants to run a business. And then I ended up studying engineering and commerce at the University of New South Wales. And along with one of my really good friends, Jesse, he was studying at the same university, but actuarial science. And we would always, you know, be looking and looking at different businesses and different industries and, and things and, and seeing well, you know, how could we do it differently? And how can we make money out of this? Or, you know, could we build a platform that could do that, and so on, and so forth. And then in the year when I was doing my engineering thesis he had Jesse had finished, and it was meant to start a graduate job at the start of February at a fund. So using his actuarial finance background, he was working for a debt fund, but then they messaged him and said, Oh, actually, because we’re just starting up, you know, can you delay your start date by a month from the first of February to the first of March? And he said, Sure. So that meant he had valentine’s day off. And his girlfriend at the time was overseas. And so being a little bit entrepreneurial, he’d signed up to deliver roses on Valentine’s Day, the courier company gave him a list of addresses in alphabetical order to deliver sorry, go ahead. And it was it was constrained into, you know, the the northern suburbs of Sydney, but the list is sitting there in alphabetical order. And so he looked at it and said, Well, you know, how am I going to do this, if I want to make the most money? Yeah, I want to get the most amount of money. So the amount of time that I’m putting into this, if I optimize this delivery, I can be make the most per hour. So he went online and found a little app, which allows you to do up to 10 addresses at once, and then manually entered, you know, 75 addresses using a little bit of the local knowledge and built a run. And then did it finished at the end of his end of his delivery round and called the courier company, and it was about 1230. And he was getting paid $4 per rose he delivered.

Michael Waitze 3:22
$4 per rose…

Unknown Speaker 3:29
Per delivery, I think, yeah, I can’t exactly remember. And there was gonna be 60 or 70 deliveries, he called them up at your 1230 and said, I’m finished and they said, How did you finish so soon? You can. And he said, Well, I plan my route. And they said, Oh, well, can you drive back out to the warehouse and give us the proof of delivery documents in the signatures? And he said, Well, can I scan them and email them to you? I don’t want to drive 45 minutes. Yeah, it makes no sense in this kind of, yeah. So we were having a beer the day after we were saying, Well, this seems insane. If he can do it as someone who’s never done this before, and the reaction of the courier company was, how did you finish I soon. So from that it worked out as a bit of a genesis of an idea. And we sat down one weekend and looked at what was available, and we built a little algorithm to solve it.

Michael Waitze 4:29
That’s the best founding story I’ve heard all year, not even close.

Simon Webb 4:33
And then we had maths student that we were tutoring with Jessie was tutoring and he was explaining this algorithm to the kid as a practical application of mathematics. Right. And the guy’s father was overhearing it, and turned around and said, Well, my company’s got a contract to service fire extinguishers for public housing. Right so we’ve got 500 different houses, we need to go and visit every month, because you build your algorithm to plan this for us. They paid us $5,000 To run a little pilots. And I guess the rest is nice. Today is a bit of history. And from there, we thought, well, someone’s prepared to pay us to do this. Let’s get serious about it. Of course, you know, as all founders will say, you know, we didn’t, we didn’t know what we didn’t know. And I guess how do we know and the complexities and the challenges of the logistics industry, maybe we would have realized that it could have been like a bit too much work, but maybe a naivety and coming into it, without having years of experience, you’re working in logistics. And having that background meant that we probably took a different approach to a few different things for for better or worse, in definitely a lot of cases. But you know, we’re here, where we are today. So from there, we ended up going through TechStars, Paris, being accelerated through TechStars, Paris, we kept the company afloat, doing custom development and a bit of like consulting work in the early years, building a platform and building optimization algorithms, our custom one off for companies. And we did that for about two years, funneling all the extra cash that we made into developing our platform until we were accelerated through textiles in Paris. And yeah, from there, we’ve got customers here in Australia, in Europe, and in the UK today.

Michael Waitze 6:28
When did the rose delivery thing happen? How long ago was that?

Simon Webb 6:32
That was 2014.

Michael Waitze 6:36
Oh, my God, that’s a long time ago.

Simon Webb 6:40
2014, we incorporated the company in 2016, mid 2016. And then I guess, got our first proper paying customer in 2017.

Michael Waitze 6:54
I love it. Can you tell me why you went to TechStars in Paris as opposed to anywhere else in the world.

Simon Webb 7:01
We launched the company in 2016, there was a program open time called the French Tech ticket. Yep. So we were looking for grant funding ways to get money into the company without really having to raise to fund development. So there’s a program called the French Tech Ticket, and it was modeled off a program, StartUp Chile. And the French Tech Ticket gave you 60,000, Euro grant and residency in France to build your platform, or to build your startup with as a way basically as a marketing program for French business because France didn’t have the the best reputations as a place to do business. So we took advantage of that we applied, we were accepted. We had a half a platform and no customers. But we were accepted then went across to France into Toulouse in the South of France. And we kept building the platform there. Part of it was adventure. You know, we were we were a bit open eyed, you know, saying is this the best decision to make for the company? We’ll probably not. But do we also think it’s going to be a fun adventure to go and live in the south of France? For a year? Probably yes. And, you know, it was my co founder and I and yeah, to build on a pun, we had nothing to lose.

Michael Waitze 8:26
So this is a like I said earlier, it’s a very interesting founding story. But I believe if you really want to build something of significance, right, you kind of have to be all in. I always say like, no one succeeds, like on a side hustle. It doesn’t mean anything, right? Do you remember the time where you and your buddy were sitting around and just gone? I think we’re onto something here. We really have to do this now. Because you’re not a logistics guy. He was an actuarial math guy. You know what I mean? Like, you don’t know anything about this. And I want to get back to that in a second too. But you remember that feeling of like, Dude, we got to be all in on this thing, because this could be big.

Simon Webb 8:58
Yeah, it was leading into when we incorporated the company. So obviously, prior to that, we’d had the demonstration, like, I guess the demo that we set up for the fire extinguishers and doing the servicing. But we just kept noticing, you know, the growth in your E commerce at the time. And you know, Amazon was really, you know, starting to become you, I think in Australia, people were buying their parcels. And, and we were just seeing again, again, in the news. And when we were looking at what was in the market, there was probably only, you know, three or four sort of platforms that were targeting the space that we were targeting, right? You’re not a massive transport management enterprise solutions, but then not just scanning, scanning and our platform. So that was I guess you’re leading into this we could see this happening that ecommerce is growing and if we weren’t in the right space, we weren’t far off it. You’re in for us as the founders and as you say, no one succeeds on this side. hussle getting the French Tech ticket money and being forced to move halfway. I mean, not forced to move. But moving halfway across the world. Well, that was really the, the opportunity to be right. This is the clean break. You know, we’re definitely quitting our jobs. And we’re moving over to France. And when we’re giving this a go, for better or for worse, also, you

Michael Waitze 10:21
guys had a full time job that was separate from this. I’ll call it a project now, I guess. And that’s when you decided, okay, we’re not doing these full time jobs anymore.

Simon Webb 10:30
Yeah, yeah, more or less once once we got accepted. And we and we said, well, we’ll Yeah, we’ll go into this. And so, yes, for better or for worse. It’s led us to Eric lettuce. Yeah.

Michael Waitze 10:43
And you said before that there were things that you knew, but things you definitely did not know about the logistics space. Right. And particularly about optimization. Can you talk about some of the things that maybe surprised you? Because it is really complex? Yeah. Which means for an engineer, it should be exciting. No, because you get to solve complex problems, right.

Simon Webb 11:01
It’s, it’s definitely what keeps me interested in seeing how the different areas of the businesses run, seeing how, you know, the challenges, and then also seeing the inefficiencies. And as an engineer, I’ve been like, ah, you know, what can I do to solve that, but then understanding that, ah, you know, that inefficiency is there for a reason. And I guess you’re one of I mean, it’s there for a reason. But, you know, we’re maybe not quite there. And maybe we don’t quite have the technology to solve it. Or, you know, there’s another step that there’s another piece of the puzzle that needs to go in place before we can eliminate that inefficiency. And I guess you’re one of the things that you we always looked at, and we thought, Well, why don’t companies have this optimization, you know, if we can build it? Yeah. Why don’t Why don’t the companies already have it? Yeah, that was always the question. And that’s where, you know, we’ve sat down, and we’ve been across the table from investors, and they’ve just said, companies have this. And we say, well, no, they don’t. Yeah, and if they do, and this was you, and more and more companies are adopting it. And as I understand, companies, like Amazon have really, you know, with their logistics, they’re really pushing this to the next level next level, with their technology. And, you know, they’re doing some really impressive things. But one of the things that we didn’t really understand was territories, and your drive or territories. And we always said, you know, it’s a really inefficient thing. So I guess, you know, traditionally, how logistics worked was, well, this is your three suburbs and off, you go to your three suburbs, and you do all the deliveries in these three suburbs. But the problem is, you might have 80 deliveries and making those three suburbs and then the three suburbs next to you has 20 deliveries to make. But the goods are constrained by your territory. Well, what would make sense is that the driver next to you gets 20 or 30 of your deliveries, and you do load balancing so that everyone gets delivered efficiently. And so we always built our algorithm around that and our platform around not saying that, well, this is the most efficient way to do it, efficient way of doing it. And then we’ve gone out to our customers. And I said, Well, yeah, but we need our territories. But why do you want territories? And I say, well, because the person who’s picking the pot out of the warehouse needs somewhere to put the par on the dock. If the driver pulls up to dock number one, we don’t want him having to walk all the way to dock number 15 to pick up a part to go in his vehicle and you say, Ah, well,

Michael Waitze 13:35
We can fix that too, though, right?

Simon Webb 13:37
Well, we can fix that too. But then it’s it’s a matter of, at what stage in the process? Do you do your optimization? And then you can you blend that because you know, really, if this territory is here and the territory next to you, if you’re on dock one, well, the guy driving the territory next view is probably undock, too. And so can you share your parcels in and around that? But then also, you know, what still surprised us was your driver preferences. And your drivers, when we gave it across to our algorithm to do the optimization, and that was sending them to places that there hadn’t been before? They were pushing back against it being like, well, I don’t normally go there. Why? Yeah, it was it’s yeah, one of our early customers was doing hot water system installation and maintenance. And so previously, they had three people that were sitting in and it was their job from, you know, 330 to 5pm every day to allocate the jobs for the next day, right. So we came in and we said, well, you get all the orders that have come in. You put them into the taro and you click a button and it’s calculated there in there. And you know, it’s great but then they would keep coming in and keep making go well, if they gave it straight to the drivers, the drivers would know that the technicians in this case and you know, our algorithm was Joe quite intelligent and we put up lot of thought in behind it and map the technicians and the skills that the technicians had, because there was electric systems, gas system, solar system, they all needed to have different skills to work on different systems. And when the drivers were getting routed to areas that they were unfamiliar with, it was a change in their day. And the change in their day and the change in their processes and the change in the way they worked. All of a sudden became, well, what’s this tool? Why is it making these changes or forcing these changes upon me?

Michael Waitze 15:33
That’s so interesting. Sorry. Yeah.

Simon Webb 15:36
I guess that surprised us when we know they were here. When we were first interacting with our customers. They were things that we didn’t expect. I guess I hadn’t pushed back.

Michael Waitze 15:47
Yeah, I mean, I’ve been thinking about logistics for the longest time. And I’ll tell you why, as an investor in a commerce right back in 2012, and 2013, you know, they looked around at the market in Thailand and said, and Franklin, the rest of Southeast Asia and said, No one’s optimizing deliveries. And as E commerce begins to pick up, just like you said, particularly in a city that’s so densely populated, but also the traffic is terrible, right. So if you’re not optimizing your deliveries, you’re just wasting a ton of time, right a ton of time, and also including traffic information. But it amazed me back then as well that the logistics companies themselves hadn’t built that. And I was actually told before I moved to Thailand by somebody who had lived here and then came back to Japan, where I was living the time, only planned on doing two things in one day. Because the roads are so crowded, that you’ll never be able to get to more than two places at once. And I thought about that in the context of logistics, but the one thing I never thought of was that the drivers or the technicians or the people would push back on the optimization. That’s really interesting.

Simon Webb 16:50
It’s yeah, it was interesting to us and and managing that is, I mean, we having done it, and having seen it, the first couple of times, it very quickly became a actually well, this is you, we need to produce some some stuff or some content that we can provide to the managers and that we can preempt these issues so that when they happen, well, it’s not a surprise. Right. Right. Right. But I guess that was a things that we didn’t expect.

Michael Waitze 17:18
I want to go back to this thing you said earlier about your but what’s his name? He said his name, I forgot. Jesse. Jesse. Yeah, so Jessie was contacting the flower shop or whatever was a delivery shop. And they said, Can you just jump back in your car and bring the signed documents and delivery documents out to us? So I’m thinking car, there’s no way in Bangkok, you could deliver by car, it just doesn’t make any sense, right? Because, again, the traffic, I was riding a Vesper for years here, and I just thought to me, there is no traffic, right? Because I can just go around everything. How do you look at at least from your perspective, different types of vehicle delivery, and the impact that that has on the efficiency? Right? Because size matters at some level? Even if the roads aren’t crowded? Do you don’t I mean, you don’t always want like a gigantic truck kind of thing. Yeah,

Simon Webb 18:05
absolutely. And right sizing for logistics companies, there’s a lot of money to be saved in making sure that you have the right size of vehicle doing your deliveries. Yeah, because, you know, if you get a you know, a small semi rigid truck gets a lot more expensive to, to hire to run to operate. And Dubai, then, you know, nine meters cubed, which is more expensive than the six meters cube, which is more expensive than the three meters cube, which is more expensive than a little cargo bike. And obviously, you know, when you think about the sustainability aspect as well, you know, the right sized vehicle to do the delivery, helps you be more efficient, more sustainable, and that sort of stuff. Yeah, when we’re thinking about it, all of our customers are using vehicles today, we don’t have any customers that are doing like delivery or or walking delivery, okay. But it is something that we see into the future as E commerce grows and logistics, logistics is going to be forced to become more and more efficient, because a more people are buying online, right? The delivery expectations that people have around receiving their packages, and same day or next day delivery. And then you know, the frustration people have around, you know, hey, sorry, we missed you come down to a post office and your parcel. Well, that’s all driving logistics to become more efficient. Now, I think there was a essential report a couple of months ago on sustainability in the final kilometer, and it was saying that we’re on track in Sydney, at least it was projecting that commutes on average would become 11 minutes longer because of the increase in the number of delivery vehicles if nothing changes, right. So what I think needs to happen, and what our platform we’re doing our platform towards is to be able to work more with local fulfillment or micro fulfillment. So these are your centers that are you they’re not your large warehouse. then your small delivery centers that can manage your orders in a much smaller area, that gives you them the benefit of, okay, you can have your large stock at a warehouse somewhere, and then you your orders get placed, they get picked at a large warehouse, and then they get put on a small number of larger vehicles, which then go and make a limited number of stops into your local fulfillment centers. And then your local fulfillment centers can then cross dock, you know, take it out of the big truck, put it into a smaller van or onto a cargo vehicle. And then they can do the delivery, you know, the 2030 stops. So the big truck is doing maybe 10 stops around the suburbs, you know, to key points where your local fulfillment centers are. And then your little vans or your cargo bikes or whatever are doing the the actual delivery to the apartments or to the people. And so then take that a step further. And maybe it’s not so much an application in in the Australian market, but in Europe, in Asia, in cities like Paris, where you’ve got really small streets, but then you’ve also got lots of small towns in the countryside. Yep, having a concept of, you know, a mobile, local fulfillment center. So this is where, you know, you’ve got your packages on a truck. And then it comes into the outskirts of the small town, where it’s met by or the or the edge of the suburb where it’s met by some cargo bikes or a little van. And then they quickly, you know, sort the parcels. And so then the bikes or the little van do the delivery around there. So that’s what we’re looking to build our platform towards. We already work really well with local delivery centers, local micro fulfillment, I think it’s where the industry is moving towards a we will see more and more like shopping centers and malls moving to become like this. I’m not sure if you saw in Australia, Westfield launched Westfield direct, I think two weeks ago. So Westfield is a big supermarket, big shopping mall, here in Australia. And they’ve offered a platform where you can buy from any of the retailers that are in the stores online, and then they will fulfill the order outside of their, from their Westfield center. Right. And the Westfield centers are already positioned so that most of Australia 70% of Australia leaves within 30 minutes driving time of a Westfield Shopping Center.

Michael Waitze 22:29
Right. This is what I was going to ask you next, right? I think I heard a statistic a couple of days ago. I don’t know if it’s 50, 60 or 70. But a similar number lives within an hour of warehouse of an Amazon warehouse, this whole idea of almost like instantaneous delivery. And we see companies like low ship trying to build this into their platform in Vietnam as well. They’re literally that a promising no matter where you are one hour delivery. And, you know, one of my buddies and I who talked about e commerce all the time are always having this question of what if I get somewhere I don’t have a cable? Right, I need to do a recording, and I’ve just left my XLR cable back at my studio. I should just be able to dial one up and have it in 30 minutes. Because it’s there. Right? We think about this a lot.

Simon Webb 23:13
It’s it’s there. I guess the the question is, how much how much you prepared to pay for? Because that’s the other? How much extra? Are you prepared to pay for that? 30 minutes.

Michael Waitze 23:26
It’s a really good point and delivery. And I have to talk about this when people talk about surge pricing for Uber, and I think this is a really unpopular opinion. But I used to think, okay, it’s three times the price. But have you ever been standing in the rain on this corner in New York City and taxis just keep going by you, you wouldn’t have paid 30 bucks instead of 10. Really? Right. Exactly. Exactly. If I need that cable and I’ve got a guest coming on. I’ll pay 1520 bucks for delivery. I don’t care. I need it kind of thing. Yeah.

Simon Webb 23:54
Yeah, exactly. As you talk about these, your local fulfillments that sort of stuff. And I’m sure you’ve seen all the 15 Minute grocery startups appearing they’re everywhere now. It wasn’t a thing 18 months ago, and now they’re everywhere. So I’m really interested to see how they’re going to make their business models work because 15 minutes means you’ve got a you can only really do one delivery at a time. See the drivers got to go out and back.

Michael Waitze 24:21
Here’s the question you said this earlier right? Where do you do your optimization? So when you were talking about dock one and dock five but they’re in the same they’re in would you say like a budding neighborhoods would you call them districts?

Michael Waitze 24:38
You had a term for the places where they’re going to deliver not a neighborhood it’s a territory. I come into dock one because dock one goes to territory a I come into dock four because dock four goes to territory pay. And you said so where do you do your optimization? And I was thinking we’ll just do it inside the warehouse. The warehouse knows how many packages are coming in for that day, at least or at least for the next four hours. Have them optimized, and no matter what dock you’re in, if your territories a buddy each other, just give more. So the guy doesn’t have to go to dock for you just goes to dock one and I thought, wait a second, if you’re doing micro fulfillment, right and at the mall, they’re using the stores kind of as a warehouse, then you can actually optimize at the store level. But then you can back up even further and say, we can write the optimization tools for your sales, so we know what you’re selling. So then you can keep in stock the right thing. So for you, this is like a never ending trail back to like direct to consumer factories in a way, which means that your work never runs out. Is that fair?

Simon Webb 25:42
Yeah, pretty much. I mean, within our platform today, there’s only so much that we can address and that we, as you just alluded to, you can always optimize back in another level and yeah, level on another level. But building a business and building a product. Well, is there somebody else a level up that can do that better than me? I understand. I’m saying it’s my platform on?

Michael Waitze 26:05
Yeah, I’m not suggesting you go do that. But I’m just thinking like, it’s a really interesting question. Where do you where do you start your optimization? It’s just really interesting, because the data goes all the way back literally to the factory that’s producing that thing. Yeah. Because logistics and because, look, we saw this in the Suez Canal. Last year, it was maybe it was this year, I can’t remember anymore. That boat got stuck for a few days in the entire world broke down from a logistic standpoint, right. That’s how sophisticated and how interconnected everything is. And I think a lot of those middle points are going to be disintermediated at some level, where if I want to order something, I don’t order it from El Gato. I order it from the factory, Well, God was producing it. And they’re just a brand that I like, and they just send it to me directly from the factory, because you make it so efficient, that it scale, there’s so much stuff coming in and out of that factory, that why would they send it to a distribution center, and then to a retailer, and then to an online marketplace, when they could just do it themselves? Yeah.

Simon Webb 26:57
And obviously, yeah, everyone’s taking their cut away here.

Michael Waitze 27:00
Yeah. So it should make it cheaper as well for consumers and maybe even more profitable for the factories. I have another question, though. You said something really interesting that if everything remains the same, right? And because e commerce is expanding, that means that they’re more delivery trucks, or cars or bikes or whatever, on the road. So everyone’s commute is gonna get longer pick a number you said 11 minutes, but it could be any number, right? Yeah. If there are more vehicles on the road, then it’s more pollution? If nothing changes, as well, is is there a sustainability angle to this? And what does that look like to you?

Simon Webb 27:38
Yeah, so it’s one of the it’s one of the aspects that we’ve always well liked about our product is that, you know, we’re driving efficiency, we’re helping companies save money, but we’re also reducing kilometers driven. Yeah. And for us in building a tool, we thought, you know, this is doing something that, you know, driving efficiency, reduce the number of kilometers driven per package delivered? Yes, it’s a sustainability thing that has an immediate effect. It feels like but obviously, as it grows, you know, most delivery vehicles today are internal combustion powered delivery vehicles. And so yeah, there’s in the same way that I think it was 11 minutes commute time increasing, I think it was 20% increase in co2 emissions from delivery vehicles now, and I have the number wrong.

Michael Waitze 28:26
But it’s more than zero. It’s more than zero.

Simon Webb 28:29
It’s more, it’s absolutely more than zero. And there’s a big challenge of you, how do we get to sustainability with our, your distribution and our home delivery? And, you know, the electrification of the vehicle fleet as well, is also a challenge. From one aspect. You know, the consumer is demanding faster and faster delivery and cheaper and cheaper delivery. There’s also there’s some really good statistics and studies that have been done into, you know, the cart abandonment from online marketplaces, because of shipping costs, and delivery times. Yeah, shipping costs and delivery times and the amount of carts that preferences that people will have because of that, and but then equally, and I think it’s, you know, I think it’s it’s a slightly separate topic, but you know, final delivery experience. Yeah, is, and we might have to come back to the actual experience of the delivery, because I think that’s really important. For a lot of these brands that are online, only the delivery is the only physical interaction that doesn’t go well. But is the customer going to come back you’ve spent all this money advertising to them, bringing them to your platform making the sale, but because you’ve chosen the cheapest courier to deliver and he’s thrown the package, you know, damage the package on arrival? Well, your customer is going to blame you, rather than blaming the courier. But I digress. But with ease your lower and lower shipping costs well, how electric vehicles are more expensive. We know compared to a at the moment with the technology we have today, delivery vehicles. Electric vehicles are more expensive than internal combustion vehicles. And the way that the industry is structured with a lot of subcontracted delivery drivers and delivery vehicles doesn’t really make, it doesn’t make the case to invest in an electric vehicle. Because the upfront cost of an electric vehicle is more than the upfront cost of the internal combustion vehicle. But the operating costs of an electric vehicle are lower. But often the contracts that are given to the drivers who are running, you know, their franchise, their delivery company they’re working for, you know, it’s a one year two year contract, right? It doesn’t have the length of time that, you know, justifies investing in an electric vehicle. So can we get consumers to pay more for sustainable electric delivery? Is, is one aspect of it. But then there’s another aspect on the distribution side of things is you how do we, how do we keep these electric vehicles running and keep these electric cars charged, because if you have a delivery vehicle, you want that delivery vehicle running for as many hours of the day as possible? Yeah. And having downtime to charge it is not what you want. And one of the practical issues is that when we have our customers in their warehouses, they will be dispatching delivery waves, one of our customers does automotive spare parts, actually have quite a few customers doing automotive parts. But the order cut off for one in particular is 10am. So the last order that the customer can place to get a new part delivered to their dealership or mechanic is 10am. So by the time all that flows through 1015, the last part of being picked out of bad or the warehouse and placed on the dock, and then the optimization, and then the goal is to have every vehicle departed from the warehouse at 1045, right?

Simon Webb 32:04
So you’ve got 30 vehicles sitting there at the warehouse, departing at 1045. If all of those 30 vehicles, you’re there arriving, and you as a logistics provider, I want those vehicles to arrive at 1015, pack everything that’s in there and depart at 1045. Because I want to start paying them at 1015 when they arrive, right? But if I’ve got 30 vehicles that are all of a sudden electric that all of a sudden want to plug in and recharge for 15 minutes or 20 minutes while they’re loading. Well, that’s it. Yeah, as a warehouse, I’ve now got to invest in the connection to be able to supercharge 30 vehicles for 15 minutes, while they’re all plugged in. And the fact that all these vehicles, your these delivery waves are coming at the same time means that those vehicles go out at 1045. And they come back at one and they’re all back at one repacking. You know changing things over signing in returns, whatever. But plugging in, if they’re electric plugging in, ready to charge again. And so you know, it’s a warehouse, how do you manage your if you need to charge 30 vehicles for two hours of the 24 hours of the day, you still need to have that really large connection to the grid? And is that possible? So there’s quite a few challenges in this space and the electrification of delivery vehicles. So you’re obviously there’s people that are far smarter than me that are addressing it. And looking into it, but you know, when we’re talking about optimizations, sustainability and the final kilometer, I think, yeah, these are really interesting things that are going on. And

Michael Waitze 33:44
you can’t ignore them, right? I mean, that’s a real thing. But also, if you want to start paying the driver 1015, but the car has to charge for 15 more minutes, maybe you have to pay the driver a little bit more right to sit and wait, while the other thing is charging.

Simon Webb 33:56
Yeah, and that’s potentially where the opportunity is, is well, okay, well, how do you optimize that? Yeah. Yeah, you say you totally do you do tell you the drivers that will come here at 10. And therefore, we’ve got an extra 15 minutes. And then, you know, we have some intelligence software that will throttle the chart, you will, it will charge the vehicles with a lower battery state faster, and it will charge the vehicles with a higher battery state lower you or, you know, it feeds that battery state back into your route optimization algorithms. So that when I’m when I’m when our software is running the optimization algorithm, right? Yeah, it knows that well, this vehicles got a charge state of 200 kilometers. So

Michael Waitze 34:37
you had done 10 to 50. Yeah, yeah.

Simon Webb 34:41
Or do you need to set send them to 50? Can you plan for them to stop somewhere on the way where is the most optimal place on the way, which is an interesting concept around what we’re looking for and what we look to build in our platform lol I guess anyone wants to build into a startup or a SASS platform, your network effects? And how do you build network effects into a route optimization platform? Well, one way into the future is charging station.

Michael Waitze 35:15
Yeah. And telling people where to build them for optimization. Yeah. Or building them yourself

Simon Webb 35:20
Building them yourself or telling people where to build them or having them available. One thing that your our platform and in our customers are obviously very sensitive about is that their deliveries and how they plan right you know, is is their intellectual property. So they don’t want that necessarily shared. But you know, charging stations, parking location, that sort of thing. You know, if I’m doing a delivery to, you know, an apartment block, and that apartment block has a charging station well as a courier driver, can I pull up into that park and I plug my vehicle in? And can I charge the vehicle for five minutes while I go in and knock on the person’s door and make the delivery? Yeah, yeah. And I think these are things that if we’re serious about sustainability in the in the final kilometer and electrifying delivery fleets, we need to consider how we how we do this and parking is probably a more immediate problem of what when I’m doing my delivery where he’s you know, the loading zone and if I you know, rather than going to this street, am I better off parking in the loading zone around the corner and Walking for two minutes to make the delivery? Lots to do? Yeah, lots to do lots to do and yeah, it’s all a matter of meeting the consumers demand for ever faster deliveries at an ever lower cost.

Michael Waitze 36:39
One more thing and then I’ll let you go I’m curious when you’re driving around just trying to live your regular life when you have time for it. If you’re just looking around going hmm, I forgot this was here kind of thing. And just trying to optimize as you’re living Does that make sense? You don’t I mean, can you get this out of your head or not? Really? Are you to deepen the morass on this one?

Simon Webb 37:00
Yeah, you definitely get it get it? Yeah. A bit too deep. My thing when I’m driving around or I’m going for a run or cycling and I see delivery vehicles from from brands that I didn’t know Right. Well, that’s a tough question. I haven’t seen Yeah, yeah, I bet they’re using Yeah, yeah, that’s that’s definitely what I do. When I’m out running and I notice the different brands or the and not so much the logistics companies but more the that are doing delivery and distribution. Yeah, but you don’t picture them as logistics companies and then often they don’t picture themselves as logistics companies but they make up a very significant portion of you know, delivery fleets and your automotive parts or construction material delivery or distribution to shops or your flower delivery that sort of stuff. You know, you don’t traditionally think of this stuff as as logistics because it’s not parcels you bought from from Amazon, but it is still delivery vehicles driving around and it is yeah, they’re there everywhere. And I think it’s your if you sit on the road on the side of a busy street for five minutes, and you count the number of you know, vans that go past and count the ones that you are from large logistics companies be very, very surprised. Yes. That’s that’s definitely what I do when I’m riding around, running around noticing all these vehicles going past before

Michael Waitze 38:35
I let you go Simon how can people get in touch with you if they want to?

Simon Webb 38:38
Yeah, the best way is via our website, so TarotAnalytics.com or directly to me, Simon@TarotAnalytics.com.

Michael Waitze 38:53
Yes. Perfect. Thank you so much for doing this Simon Webb, a co founder of Tarot analytics.

Simon Webb 39:01
Thanks, man. Thank you, Michael. Thank you for having me. Have a great day.

 

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