Sramana Mitra: If you were starting a company today focusing on the domain of logistics in e-commerce, what kind of a company would you start? Where do you see open problems and white spaces?
Devin Johnson: When someone asks you when you’re a little kid what you want to do when you grow up, you never say you want to be in shipping. It’s not a sexy profession. Now that I’m so immersed in what I do, I feel very lucky. If I could pick any job in the world, it would probably be doing what I’m doing. I feel very fortunate. It’s hard for me to conceive doing anything else.
Sramana Mitra: The question I’m asking is more from the perspective of pointers and assistance to young entrepreneurs to look for problems to solve and build companies around open problems.
Devin Johnson: If I were to start a new company, you have to be alert enough to recognize where a problem or an issue exists. Then you have to be creative enough to understand what is a possible solution to that problem. In your creativity, you have to make sure that you’re engineering that solution in a way that’s scalable.
If I plug one hole really well but I can only do it three times a year, there’s not a lot of hope in that outcome. When you want to start a new business, make sure you’re aware of your surroundings and that you’re paying attention. You need to make sure you have the creativity to understand what are some solutions to that problem.
Sramana Mitra: I’m asking for specific problems. I’m not looking for generic answers. I’m looking for very specific problems that you see in your observation of what’s happening in your industry.
Devin Johnson: There is one problem that I see that some people are trying hard to solve. The other thing that Amazon has done really well which is very hard to duplicate is their transit times aren’t only created by using the right carrier or by having really fast planes.
The biggest contributor to their transit times is the fact that they have this intelligence and ability to first have products located all over the country so that when you order something, it’s likely being shipped to within a hundred miles of wherever you’re at. It doesn’t have to get across the country in two days.
Second, they also have the knowledge and the data to understand where sales is going to come from. They now have the ability to say, “Based on data, we can guess that this product is going to be a hot item in this part of the country during this part of the year.” They can redirect the inventory to that part of the country. They’re guessing where these products are going to be sold. If I’m trying to understand what the big opportunities are, figuring out how to multi-locate inventory in multiple parts of the country in a way that’s scalable and cost-effective is a really big problem to solve.
If you can do it, you can hit these aggressive transit times in a much more cost-effective manner. The inherent challenge in that is that a lot of companies can’t afford to have lots of inventory all over the country. They can put smaller quantities but when you start moving smaller quantities, your cost per unit to get it in these multiple areas gets very expensive. I don’t know what the answer is.
Sramana Mitra: It was a very interesting conversation. Thank you for your time.