Marin Tchakarov, CEO of Kindred AI (Powered by Ocado Solutions) returns to share his thoughts on the rise of AI and robotics in ecommerce.

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Danny:

– Well hello and welcome to today’s IndustrialSage Executive Series interview. I am joined by Marin Tchakarov who is the CEO of Kindred, Powered by Ocado. Marin, thank you so much for joining me again on the IndustrialSage Executive Series.

Marin:

– Pleasure to be here, Danny. It’s been a while. Good to be back.

Danny:

– It has been a while. A lot has happened since then. Maybe for those who didn’t watch the first episode when you were on—and if they haven’t, they need to go listen or watch it right now—but for those who aren’t familiar with Kindred, tell me a little bit about who you guys are and what you do.

Marin:

– Sure, we’re a smart robotics company in the ecommerce fulfillment vertical space. We were founded in 2014 by a collection of brilliant artificial intelligence and machine learning engineers and scientists. Fast forward to 2017. We productized what today is known as SORT which is a smart robot solution that automates a manual sortation station, or as they are called, “put walls” in ecomm fulfillment centers across the country. And so the essence of what we do is, we utilize artificial intelligence that powers machine vision to singulate—that is machine-vision speak for seeing—an item set, the items within it distinct and separate from one another. And then we have a patented AutoGrasp technology that identifies where we will pick a particular item to then effect a successful scan and stow. We essentially automate via smart robotics-type, machine vision-type solution, manual put walls in ecomm fulfillment centers.

Danny:

– Excellent. Well there’s no, I’m sure, lack of challenges or opportunities in the industry right there, specifically as we look at ecomm and what has happened over the last several months. Really another big thing happened and a big change since when we had spoken last. I think it was probably, I think it was February, March, or April of 2020. I’m totally forgetting the time.

Marin:

– Perhaps a little bit later than that. I want to say July or so, but yeah, sometime in 2020.

Danny:

– It was definitely—it wasn’t BC, before Covid, it was after.

Marin:

– That’s right.

Danny:

– Certainly there are some things that have happened since then. There was an acquisition that happened. Tell us about that.

Marin:

– Yeah, extremely exciting. We closed the acquisition by Ocado Group in December of last year, of 2020. An extremely exciting endeavor for the company in ways that it affords us the ability to accelerate our product development, our initiatives. And so we were very much on path to do ambitious things prior to the acquisition, but many of those would have been serial in nature. They would have been sequential. We would have chosen one or two to do at the same time, if that, and then sequence them out in our future. Now, with the backing of the powerhouse that Ocado Group is, we can focus on a few things at a time. We have four key focal areas for Kindred in front of us. In no particular order, one is to invest in our technology stack to improve our capabilities, to enhance our capabilities to handle a variety of items. In other words, to enhance and expand our item set capabilities. It’s extremely exciting.

Another one that’s adjacent to that is we are also focused at the same time on expanding into different market segments and verticals that many of our existing and new customers would find extremely appealing. A third one is a very natural one, which the acquisition is a multinational conglomerate now is to look at expanding across the globe, so looking at different geographies. That would’ve been something that we wouldn’t have looked at for years to come on a standalone basis as a startup, as a small smart robotics startup in the space. But today we’re very much actively looking at geographic expansion across the globe.

And last but not least, with the growth that we’ve been experiencing which I think I should probably note has been, we’ve been on a 200-plus% CAGR since inception. We’ve more than doubled every year since inception. We’re tremendously happy and proud of our growth metrics, and so with that growth comes the challenges of scale. And so the fourth aspect, at the same time, as I said, is to build an organization of customer success, account management, and just excellence in customer and client service that is data-driven, that is augmentative in helping our customers in their pride for effectiveness and efficiency in their fulfillment centers.

Danny:

– Well that’s fantastic. Congratulations, first of all, on that. That sounds amazing. One quick question that I have on that: Was that in the cards, would you say, before Covid? Was that a result of Covid? Was it completely, had nothing to do with it whatsoever?

Marin:

– No, it had, I would say—nothing to do with it is the short and simple answer. I think the expanded answer is that I am, again, proud of the organization and the brilliance of our team. To share is… We had an extremely successful few years behind us. We’ve been in commercial operations for the last four years, so that’s not a lot in established industries and businesses, but it’s an eternity in the vertical and the nascent space in which we operate as a smart robotics company. And we’ve been crushing it for the last four years doing so. I think 2020 was just yet another year going back in time, pre-acquisition, I guess during Covid. 2020 was an incredibly successful year for Kindred in the face of adversity with respect to Covid and the pandemic and lockdowns and all of that. When many businesses were battening down the hatches and trying to control costs, we adopted an extremely aggressive stance towards the market. We saw an opportunity to really double-down on our technology, our expertise, and customer growth respectively, and we delivered. And so we posted some tremendous growth numbers in 2020, and when that happens, the world notices.

Danny:

– Yes, they do.

Marin:

– That’s just, I think, the story. There was nothing contemplative or really as a direct correlation with the pandemic itself. Many of these trends in our persistence and progress have been—that was in existence pre-Covid.

Danny:

– That makes sense, and I was just curious about that. It’s such a fascinating space, obviously with all the digital transformation and the technology shift that’s happening. Obviously Covid kind of threw gasoline on the fire. Now you’re looking at current challenges right now relative to—you’ve certainly got the supply chain issues, but you also have labor being a very big one, specifically when we’re talking about robotics and smart robotics. As I understand it, the Ocado Group is a very, pretty focused online grocery. When it comes to some of these ecomm solutions, I was hearing stats that in 2020 that ecomm grew by 40% over that year alone, so it put a tremendous stress on micro-fulfillment being a big thing, to… just in general with that. Do you see those challenges continuing on in the foreseeable future?

Marin:

– Absolutely. Covid’s been—one thing is for certain, to give a nod to and an acknowledgement is that Covid’s been now with the hindsight of what, almost 18 months, 15 months, whatever, something like that, and us living with it, things are clearing up in terms of what a force it has been, and it’s been a massive catalyst in a number of venues. One of those is the shift from traditional brick-and-mortar onto ecommerce. Again, the pandemic’s been a massive accelerant and a catalyst to that shift. That is one aspect that we certainly think and, from what we’ve seen so far and where we are today, we think that’s going to persist into the future as that trend is here to stay. Another one is the trend that we’ve seen pre-Covid which is to do with what many folks call today labor shortages. I’d like to think of as labor inflation, if you will, outpacing general inflation in some ways or other. That trend had been in existence, has been in existence pre-Covid. Again, that’s one thing that got boosted and accelerated, and aspects thereof. Social distancing and health and safety aspects in the workplace are certainly getting a boost from that recent history of ours.

Danny:

– Yeah, it’s interesting. I was reading a stat from, I guess recently, the conference that A3 put on. It was in Memphis. This was a couple weeks ago, on robotics. And there was a particular stat that came out saying, and I can’t remember the specific timeframe, but I didn’t think it was super long, like five years or so where because of the rapid growth with ecomm—and again, this was happening before Covid, but it just pushed it into more—is that just with the shifting, particularly when we’re looking at micro-fulfillment, that there’s a projection that there’s not enough people really to fulfill the jobs, that that is going to be created, that shift that is being created. Therefore when you start looking at these questions that people will pose when it comes to AI, when it comes to robotics is it, hey, is this taking people’s jobs? When you look at some of this data that’s coming, are you saying, well, there’s going to be a giant gap if we keep going down this road, which it kind of seems like we are. That’s interesting. What are your thoughts on that?

Marin:

– Yeah, I think by and large I share your sentiments and analysis of that. And the summary that you put forth is fairly accurate from what we observe in our environment. I would add that we focus on introducing a new way of collaboration between human and machine. I think the way that I would want folks to think about this and the way we certainly think about it in introducing our smart robotic solutions into ecommerce fulfillment centers across the country is a new way for humans to collaborate with smart robots or these types of new industry 4.0 machines at wide, and in general.

We therefore make while having the same human at fulfilling basically the same set of responsibilities. We add on a supervisory aspect to their job. In other words, they now are in charge of, typically, three to four robots. It’s important to note for the audience that one human can basically supervise up to four, sometimes even more, robots at a time. Then therefore that triples, quadruples, or more the output in terms of throughput and in terms of therefore efficiency into those operations. And at the same time, that collaboration is, dare we say, more fun. We have many instances in our customer sites where folks supervising robots have friendly competitions. They assign human characteristics and aspects to their fleet, to their mini-fleet of robots that they supervise. They call them names. They name them. They run stats against each other in teams. And so I think it’s a very new, 21st century way of collaborating with machines in a much more involved way than ever before. That’s how we like to think of what we bring in.

Danny:

– Absolutely. That definitely makes a lot of sense, and I love hearing about that interaction, co-bots, interacting, really assisting people in their jobs. It’s funny; you mentioned that it can be a lot more fun because the reality of it is a lot of these solutions where you’ve got super repetitive tasks from an ergonomic standpoint to safety issues, you’ve got issues. This helps to be able to really solve with that. I think it’s just some great solutions. We’re going to continue to see more innovation that’s coming out that’s going to, I think it’s really going to help solve a lot of these challenges. As we are starting to emerge, hopefully, from Covid and the pandemic, as we settle into the new normal, whatever that is, obviously we have some short-term challenges. Long-term, what are you seeing that is going to, I would say maybe challenges and opportunities. What is here to stay in the long term?

Marin:

– Yeah, in my view, and again having observed those trends over the last, especially with the catalyst in place and in the face of the pandemic, the trends that are here to stay are the continual shift from brick-and-mortar onto ecommerce. It’s difficult to say where that “equilibrium” would be, but I don’t think we’re there yet. From what we’ve observed, I think that would be something that would continue to trend, perhaps in a more accelerated fashion in our near to mid-term. It’s interesting to put that in perspective because from the advent of 3.0 and the internet and commerce and the internet two decades ago now in the early 2000s, ecomm had only grown pre-Covid, had only grown to teens. Teens, high teens perhaps, depending upon which survey you look at and in terms of overall volume. Teens would probably, in some surveys, be generous with respect to total commerce. Like you pointed out, just in the last year plus, we’ve seen a massive spike in that shift.

And so I think that’s put that shift on a different trajectory and a different vector, and so we think that that’s going to continue. Another aspect that’s going to continue is the desire to automate with respect to addressing issues to do with efficiency and overall effectiveness, therefore, of fulfillment centers. Certain players in the industry set the beat, and consumers like it and follow it. And so we all like to get our goods in 24 hours, 48 hours perhaps, and so it’s a constant race to those KPIs and how do different… How do all the folks in the space get as close as possible to those standards? And so effectiveness and efficiency are paramount. Last but not least, probably social distancing would be with us for some time, dare we say for a long time.

Danny:

– Sure, yeah, absolutely. It all makes a lot of sense. I was talking with my wife about this, actually, with the changing. What I think was interesting, and I guess maybe this is—I never thought about it this way. What’s interesting is that when you go to… typically in grocery… Ocado is, that’s a big focus there. We essentially are, you go to shop, you are the pickers. You are literally picking the product in a distribution facility. Now that’s all shifting, and people have—it’s interesting to see how the consumer trends are where—even now I was hearing of people, just anecdotally, my wife was talking to one of her friends. She was like, I don’t understand—I never did an Instacart or any of these things until recently, and oh my gosh, this was mind blowing. I’m never going to go back to the grocery store. I’m going to do things this way, or I’m going to get my groceries from Amazon or what have you.

I thought it was kind of interesting that—and maybe this is just my perception. I thought well, I thought everybody was doing this. Is this not—but obviously we’re still kind of—and not everyone has necessarily adopted it. It’s interesting when you look at the different experiences, and I’m curious. In the future, if you pull out a crystal ball, do you think that shoppers—and again, I’m not going to hold you to this—but do you think that it’s going to be 100% online where nobody’s going into stores anymore? Where do you think it gets to, and then it says okay, it’s going to kind of settle?

Marin:

– It’s a great question, and I wish I had that crystal ball, Danny.

Danny:

– We all do, right?

Marin:

– I would say there is an equilibrium. I don’t think that everything migrates over a period of time 100% to online activity. There is an equilibrium there. We still want to corroborate certain aspects of things that we acquire in our lives, whether it’s as basic as groceries or in apparel or bigger ticket items like appliances and cars and whatnot. In any case, what we ultimately want is a way to corroborate certain aspects of our behavior. That corroborative desire, I think, is with us and will persist. The question is what the equilibrium is. And also the question is in a way of perception, I believe what we determine is somewhat generic or has evolved to somewhat generic in the need for the corroboration.

In other words, a common basket of goods and/or services perhaps are going to see a faster migration to online shopping from brick-and-mortar than some of the other pricier/more seldom acquired type of goods and services. Perhaps the shorter answer to this question is that there’s an equilibrium somewhere. I just don’t think that we’ve necessarily reached it yet. I think there’s some growth, probably meaningful growth left for that journey from traditional in-store to brick-and-mortar. It’s interesting because a lot of the brick-and-mortar experiences are also evolving where there is the hybrid model now of checking it out online buying it online and wanting to go see it and pick it up in-store and maybe do more shopping while you’re there and you’re picking up the items that you definitely needed to buy which you did online. So there’s an interesting hybrid evolving between the two, which is fascinating.

Danny:

– Absolutely, absolutely. And again, trends we were seeing beforehand, but now obviously even more. I remember going into an REI and looking at a bike on my phone, and then later—this was years ago—and ended up getting retargeted for that specific product. I’m like, wow, they’re using my GPS, and they’re retargeting. They knew the exact product that I was looking at. Crazy stuff, but we’re seeing, to your point, some of that hybrid, and we’re going to continue to see more. I think it’s fascinating stuff. I think you have a big challenge. Where are the trends going? Now let’s adjust here in the micro-fulfillment. Are we going to be on-premise, or is it going to be more distribution facilities? Is it all of the above?

Marin:

– I would just add, if I may, that yes, it’s a challenge, but it’s an incredibly exciting and fun one to have in front of us. We’ve been extremely fortunate to have focused on ecomm fulfillment all along, from the inception of our commercial products, thereafter. That’s been an incredibly fortunate aspect. But on the other hand we chose it strategically, so there’s also that. I think the exciting part here is that we’ve been a witness, and a participating one at that, of this migration from brick-and-mortar to ecomm, and we’ve been with our customers every step of the way helping them realize that growth in their online businesses and efficiencies thereof as well, so that’s been incredibly exciting to see not only obviously to talk about our growth, but our growth really translates into our customers’ growth, or the other way around. Really I should say our customers’ growth translated into ours, and so that’s been incredibly exciting to see.

Danny:

– I think we just tapped into a little bit of passion there. I think you got a little excited there. That’s great. I love that, and I love having conversations with leaders of different organizations because you can sometimes pinpoint and see where, and obviously I feel like we hit something there. It’s a thrill. It sounds like you really like solving these— I would say instead of looking at them as challenges, here are the opportunities. How can we solve them?

Marin:

– You’re spot-on. I’m glad that it came through. It is a passion. I am passionate about—I get extremely passionate and excited about helping our customers grow. We… one of our key values is to constantly obsess about customer experiences and how to solve pain points for our customers. This is critical.

Danny:

– All good, it’s all good. I think that’s super exciting. I get super passionate about it as well. I just love solving these problems. There’s nothing better than when you see a challenge or an opportunity, and you can go help your customer to be able to go and do that and get those results for them. That’s super exciting. That’s just—I love it, especially with—I think what you guys are doing is awesome. I don’t have an engineering bone in me, so I can’t do that. Machine learning and AI and robotics and all that stuff, I love. I have deep appreciation for it, but yeah, you don’t want me on that team. My last question is really targeted more for you. And that is, as the leader of your organization, what are you doing to stay on top of your game?

Marin:

– More communication. I think it’s been incredibly challenging of a time for everyone the last, let’s call it 15 months. One of the things that I’ve done to try and stay on top of my game as a leader is to therefore accent on different venues of communication, different ways to bring the team together to share information as timely as possible. We live in a very asynchronous, in that way, world today as most of the workforce is remote or a few folks going in and out of offices. Effective, timely communication is paramount, so what I’ve done is instituted different, more frequent check-ins and different types of check-ins with the entire team, whether it’s the executive team, whether it’s the broader team. For example, we have an every Friday all-hands, for 15 minutes standing. If we don’t need to talk for 15 minutes and share experiences from the preceding week we call it short. But there’s always a forum to share what happened during the week, highlights, lowlights, no bias, same light, and open up to Q and A. It’s just an example of one thing that we do that we hadn’t done previous to the pandemic. I try to over-index on communication and timeliness and transparency.

Danny:

– That’s great, super important, especially now when, like you mentioned, things have changed. Things are changing very quickly and rapidly. Where are we? That’s super important. Marin, I really appreciate your insights. I really appreciate your time that you’ve spent with me here and our audience over at IndustrialSage. For those who would like to check more out about you guys, they can go to kindred.ai; that’s correct?

Marin:

– That’s correct.

Danny:

– Alright, perfect. I wish you continued success. It’s been fun following you guys for the last little bit. I really enjoyed our conversation. I will echo, for those who are watching or listening here to go listen to that first episode. We really dove more into Marin. You’ve got such an incredible story from how you immigrated over. I was just relooking some of the notes on how you had to jump in full—I think you said you were doing a PhD course, and you said every third word, you’d have to go in the dictionary to look. What are they saying here?

Marin:

– No PhD, no, it was my psych 101 in college. It took me three hours to read 20 pages, yeah.

Danny:

– Okay, that’s what it was. A little fuzzy on that, but—

Marin:

– No worries.

Danny:

– Still, I have such a deep appreciation for that, and I think we talked about that. My family has somewhat similar experiences, not maybe to the level that you guys have. I think you have a fascinating story, and we’ll continue to—

Marin:

– Thank you. I’d also like to use the opportunity to give a shout-out to the team and the company. Yes, I’m very proud of my story. It’s my story. Yes, it’s wonderful. But I would say our team is beyond brilliant, and I am so proud of what we’ve accomplished with this team. We would’ve never gotten to where we are without our team at large. I just want to use the opportunity to say a big thank you to Kindred, our entire team, for working so hard and being as brilliant as you all are. Thank you from the bottom of my heart.

Danny:

– That is awesome, and obviously what a great, passionate leader. It’s all about the teams, right?

Marin:

– Yeah.

Danny:

– Well I’m excited to continue to follow you guys, see what you guys do, all the solutions you come up with. It sounds like the future is very bright.

Marin:

– Thank you. Thank you for having me. Appreciate your time.

Danny:

– We’ll do it again. We’ll do a follow-up here in another year or two, so we’ll see you.

Marin:

– Great, looking forward to it.

Danny:

– Awesome. Well thanks so much. Alright, well that wraps up today’s IndustrialSage Executive Series interview with Marin Tchakarov. He is from Kindred Solutions, Powered by Ocado. I think I didn’t say that at the beginning, so if you are watching this, Powered by Ocado.

That’s all I’ve got for you today. Thank you so much for watching or listening. Listen, if you are not subscribed, I highly recommend you get on the email list. Why? Because you’re missing out on great content like this to hear from great leaders like Marin who was talking about how his team is awesome and how they’ve helped to solve these challenges and how they are continuing to grow. They’ve got a really, really great story. Get on the list so you can continue to learn from your peers, and you can just get a pulse of what’s going on in the industry. That’s all I’ve got for you today. Thank you so much for watching. I’ll be back next week with another episode on IndustrialSage.

 

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