Several brilliant computer scientists had started a company with the idea to automate traditional warehouse forklift operations and, critically, to make the concept work without resorting to any additional warehouse infrastructure such as vehicle guideways, route markets, etc. It took them couple of years to build a fully operational prototype, capable of performing all of the required warehousing operations autonomously. In the development process, they discovered that autonomous vehicles needed much less room to operate effectively, compared to traditional vehicles. This allowed to allocate higher fraction of warehouse area to storage, generating additional income and making product value proposition very straightforward. Quite a few potential customers were interested and one of them even agreed to provide facilities, engineering resources and vehicles for a beta project. Yet despite a flurry of initial activity, all of the potential customers kept pushing the project back and the company found itself running out of funds while in the possession of the product which was clearly advantageous to the potential customer’s bottom line.
In evaluating this situation, Incupoint discovered that our client’s target market - large warehousing operators - were approaching automation at a very different pace from that envisioned by our client. Warehousing operators clearly liked the product and the value proposition it offered them. At the same time, there was no immediate pressure for them to adopt the new techology and their preferred timeline was very different from the timeline, necessary for our client to remain in business. In addition, it was evident that our client was expected to transition from, essentially, a software company, into a forklift operator, albeit an autonomous one, in order to be in sync with the expectations of the target market. That transition on its own was driving additional capital requirements and a new set of risks. From Incupoint’s point of view, in order for our client to succeed in the original target market they needed to consider alternative short-term options for revenue, which would not unduly tax their engineering team in the medium to long term.
From Incupoint's point of view, our client was, foremost, an autonomous vehicle developer. Our first action, therefore, was to help our client to change the way they viewed themselves. This critical step was necessary in order to expand their target market from a relatively conservative market of warehouse operators to a broader and more dynamic market of autonomous (driverless) passenger vehicles. As it turned out, it was not necessary for our client to have the capital or manpower, usually required to produce autonomous cars, as incredible efforts were made, at the time, by traditional automakers to create in-house autonomous vehicle competencies. Several automakers had gone on a shopping spree , trying to make up for lost time and jump start in-house programs. While our client did not wish to be acquired, they were open to a license agreement with an automaker. This relatively short-term project improved our client’s cash flow and strengthened their position regarding their primary customers. Of equal importance, is that by entering into the agreement with our client the automaker, in effect, endorsed our client's technology; thus, boosting warehouse operator's confidence in the technology.
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