Venture capital giant SoftBank recently marked a momentous achievement, reaping more than $15 billion in profits from its 2016 purchase of Arm Holdings as the AI-enhancing semiconductor company went public last month. Simultaneously, SoftBank’s lesser-known but equally impactful investment in Symbotic, a Wilmington, Massachusetts-based software and robotics company, has been quietly gaining momentum, particularly with the substantial backing of retail powerhouse Walmart.
The transformation of logistics
Symbotic, renowned for its AI-powered robotic warehouse management systems that cater to clients including Walmart, Target, and Albertson’s, has joined forces with SoftBank in an exciting joint venture known as GreenBox Systems. This partnership has set its sights on a potentially enormous and transformative market, promising to provide AI-powered logistics and warehousing as a service to smaller companies that share facilities. The estimated value of this market stands at an astounding $500 billion, showcasing the transformative potential of AI in the broader economy.
If successful, GreenBox Systems could democratize access to advanced logistics solutions, reaching companies that previously could not afford the multi-million-dollar investments required. Dwight Klappich, an analyst at technology research firm Gartner, likened this accessibility to how cloud computing made high-end information technology accessible to a broader audience.
Joseph Giordano, an analyst at TD Cowen, expressed awe at the technology behind GreenBox, stating, “I’ve seen a lot of robotics tech, and I’ve never seen anything like it in my life.” He highlighted the stark contrast between GreenBox and SoftBank’s infamous investment in WeWork, suggesting that GreenBox has the potential to overshadow the ill-fated office-sharing venture.
GreenBox vs. WeWork: A different technological focus
Much like WeWork, GreenBox presents a fusion of technology and real estate. It markets itself as “warehouse as a service,” a phrase that resonates with WeWork’s “space as a service” slogan from its 2019 IPO prospectus. However, the critical distinction lies in the emphasis on technology’s role within GreenBox. While WeWork struggled to define its technological value over traditional offices or remote work, GreenBox positions technology at its core, focusing on tangible efficiency and profitability gains for warehouses.
Robert W. Baird analyst Rob Mason highlighted the manual nature of existing contract warehousing operations, underscoring the potential for GreenBox to disrupt this traditional model through technological innovation.
SoftBank, unsurprisingly, wishes to distance GreenBox from any comparison to WeWork. When asked for an interview with Vikas Parekh, SoftBank’s representative on Symbotic’s board (who is also on WeWork’s board), spokesperson Kristin Schwarz declined, emphasizing that the discussion should focus solely on GreenBox and not veer into unrelated SoftBank topics.
SoftBank currently owns more than 8% of Symbotic and facilitated its public listing through a special purpose acquisition company last year. Additionally, SoftBank maintains a 65% stake in the GreenBox venture, which commenced with an initial investment of $100 million by both companies. Walmart, on the other hand, holds an 11% stake in Symbotic, making it the company’s largest customer, responsible for nearly 90% of its revenue until the GreenBox venture gains momentum.
A bright future ahead
Symbotic CEO Rick Cohen emphasized the shared vision of GreenBox and SoftBank to expand rapidly in this massive market. Symbotic’s stock has already witnessed significant growth, soaring by 190% in the current year. The company reported a 77% increase in sales in its most recent quarter, with orders for its existing warehouse management systems reaching $12 billion. When factoring in the $11 billion commitment by GreenBox to purchase Symbotic software and follow-on services over six years, the backlog extends to an impressive $23 billion. The company anticipates achieving its first billion-dollar revenue year in fiscal 2023 and breaking even on an EBITDA basis in the fourth quarter.
Walmart’s involvement is indicative of the promising future for Symbotic and GreenBox. Walmart acquired its stake in Symbotic as part of an agreement to automate the retailer’s 42 U.S. regional distribution centers for packaged consumer goods.
The collaboration between SoftBank and Symbotic through GreenBox Systems represents a significant leap toward making advanced AI-driven logistics accessible to a wider audience. By placing technology at the forefront, GreenBox seeks to revolutionize the logistics industry and enhance efficiency and profitability for businesses of all sizes. In contrast to SoftBank’s previous challenges with WeWork, GreenBox’s clear focus on technology and practical applications positions it as a promising venture within the evolving logistics landscape.
